Exhibit 10.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
by and among
RT ACQUISITION LLC
as Purchaser,
and
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC,
NIMISHILLEN & TUSCARAWAS, LLC,
BLISS & XXXXXXXX, LLC,
REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC
and
RTI CAPITAL CORP.
as Sellers
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS .......................................................................... 2
Section 1.1 Definitions .................................................................. 2
Section 1.2 Terms Generally .............................................................. 12
ARTICLE II PURCHASE AND SALE OF ASSETS ......................................................... 13
Section 2.1 Purchase and Sale of the Purchased Assets .................................... 13
Section 2.2 Excluded Assets .............................................................. 15
ARTICLE III LIABILITIES ASSUMED ................................................................ 16
Section 3.1 Assumption of Liabilities .................................................... 16
ARTICLE IV PURCHASE PRICE ...................................................................... 20
Section 4.1 Purchase Price for Purchased Assets .......................................... 20
Section 4.2 Payment of Purchase Price .................................................... 20
ARTICLE V REPRESENTATIONS AND WARRANTIES AND RELATED UNDERTAKINGS .............................. 21
Section 5.1 Representations and Warranties of Sellers .................................... 21
Section 5.2 Representations and Warranties of Purchaser .................................. 35
Section 5.3 Amendments to Disclosure Schedules ........................................... 36
ARTICLE VI EMPLOYEE MATTERS .................................................................... 36
Section 6.1 Employees .................................................................... 36
Section 6.2 Employee Benefit Plans ....................................................... 37
Section 6.3 Workers' Compensation ........................................................ 39
Section 6.4 Management Incentive Plans ................................................... 39
Section 6.5 Mutual Cooperation ........................................................... 39
ARTICLE VII TAX MATTERS ........................................................................ 40
Section 7.1 Transfer Taxes ............................................................... 40
Section 7.2 Proration of Real and Personal Property Taxes ................................ 40
Section 7.3 Tax Returns; Cooperation on Tax Matters ...................................... 41
Section 7.4 Allocation Purchase of Price and Purchase Price Allocation Forms ............. 42
ARTICLE VIII COVENANTS AND ADDITIONAL AGREEMENTS ............................................... 42
Section 8.1 Approval Proceedings ......................................................... 42
Section 8.2 Good Faith Deposit ........................................................... 42
Section 8.3 Access to Information, Confidentiality ....................................... 43
Section 8.4 Notification of Certain Matters .............................................. 44
Section 8.5 HSR Act ...................................................................... 44
Section 8.6 Filings and Approvals Regarding the Railroad Subsidiary ...................... 45
Section 8.7 Further Action ............................................................... 45
Section 8.8 Conduct of the Business ...................................................... 46
Section 8.9 Non-Assignable Contracts ..................................................... 48
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Section 8.10 Acquisition Agreements ...................................................... 48
Section 8.11 Indemnification Agreements .................................................. 49
Section 8.12 Litigation .................................................................. 49
Section 8.13 Public Announcements ........................................................ 50
Section 8.14 Filings and Authorizations .................................................. 50
Section 8.15 Amendment to List of Purchased Contracts .................................... 50
Section 8.16 Use of Cartersville Proceeds ................................................ 50
Section 8.17 Insurance ................................................................... 51
Section 8.18 Bulk Sale ................................................................... 51
Section 8.19 Creation of Easement ........................................................ 51
ARTICLE IX CONDITIONS TO THE CLOSING ........................................................... 51
Section 9.1 Conditions to Obligations of Purchaser ...................................... 51
Section 9.2 Conditions to Obligations of Seller ......................................... 53
ARTICLE X CLOSING .............................................................................. 54
Section 10.1 Closing ..................................................................... 54
Section 10.2 Documents to be Delivered at Closing by Sellers ............................. 54
Section 10.3 Documents to be Delivered at Closing by Purchaser ........................... 56
ARTICLE XI INDEMNIFICATION ..................................................................... 56
Section 11.1 Survival; Representations and Warranties .................................... 56
Section 11.2 Indemnification of Purchaser ................................................ 57
Section 11.3 Indemnification of Sellers .................................................. 57
Section 11.4 Limitation on Seller' Indemnification Liability ............................. 57
Section 11.5 Limitation on Purchaser's Indemnification Liability ......................... 58
Section 11.6 Satisfaction of Purchaser Claims ............................................ 58
ARTICLE XII TERMINATION, AMENDMENT AND WAIVER .................................................. 58
Section 12.1 Termination ................................................................. 58
Section 12.2 Effect of Termination ....................................................... 60
Section 12.3 Break-Up Fee; Expense Reimbursement ......................................... 60
ARTICLE XIII MISCELLANEOUS ..................................................................... 61
Section 13.1 Expenses .................................................................... 61
Section 13.2 Governing Law; Forum ........................................................ 61
Section 13.3 Notices ..................................................................... 61
Section 13.4 Headings .................................................................... 62
Section 13.5 No Assignment; Benefit to Third Parties ..................................... 62
Section 13.6 Entire Agreement ............................................................ 63
Section 13.7 Counterparts ................................................................ 63
Section 13.8 Waiver ...................................................................... 63
Section 13.9 Amendment ................................................................... 63
Section 13.10 Severability ................................................................ 63
Section 13.11 Further Assurances .......................................................... 63
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EXHIBITS
--------
Assumption Agreement Exhibit A
Bidding Procedures Order Exhibit B
Xxxx of Sale Exhibit C
Lender Retention Program Exhibit D
Successor Labor Agreement Exhibit E
Limited Warranty Deed Exhibit F
lease assignment and assumption agreement Exhibit G
Seller's Officer's Certificate Exhibit H
Seller's Secretary Certificate Exhibit I
Sellers' FIRPTA Certificate Exhibit J
Purchaser's Officer's Certificate Exhibit K
Purchaser's Secretary Certificate Exhibit L
Indemnity Interest Formula Exhibit M
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SCHEDULES
---------
Excluded Plants Schedule 1.1
Real Property Schedule 2.1(a)
Owned Machinery and Equipment Schedule 2.1(b)
Railroad Subsidiary Assets Schedule 2.1(d)
Seller's Corporate Headquarters Assets Schedule 2.1(e)
Purchased Plants - Fixed Assets Schedule 2.1(f)
Purchased Contracts Schedule 2.1(k)
Claims of Credit Schedule 2.1(n)
Sellers Excluded Assets or Properties Schedule 2.2(b)
Excluded Real Property Schedule 2.2(f)
Consents, Approvals or Authorizations Schedule 5.1(c)
Intellectual Property Rights Schedule 5.1(d)
Material Contracts Schedule 5.1(e)(i)
Terminated Material Contracts; Cure Amounts Schedule 5.1(e)(ii)
Non-Violative Agreement Exceptions Schedule 5.1(g)
Governmental Authority - Permits and Licenses Schedule 5.1(h)
Owned Real Property Schedule 5.1(i)
Leased Real Property Schedule 5.1(j)
Violations; Defects Schedule 5.1(m)
Tax Certiorari Proceedings Schedule 5.l(p)
Certain Actions Schedule 5.1(q)
Compliance With Laws Schedule 5.1(r)(i)
Environmental Matters Schedule 5.1(r)(ii)
Employee Matters Schedule 5.1(s)
Employer Plan Liability Schedule 5.1(t)(i)
Liability Under Employee Benefit Plans Subject to Non-U.S. Laws Schedule 5.1(t)(ii)
Unaudited Financial Statements Schedule 5.1(u)(iii)
Tax Matters Schedule 5.1(v)
35 Largest Customers Schedule 5.l(w)(i)
35 Largest Suppliers Schedule 5.1(w)(ii)
Customer and Supplier Status Schedule 5.1(w)(iii)
Inventory Schedule 5.1(x)
Affiliate Transactions Schedule 5.1(y)
Insurance Schedule 5.1(aa)
Certain Changes or Events Schedule 5.1(bb)
Fees Schedule 5.1(dd)
Litigation Schedule 5.1(gg)
Vacation Accruals Schedule 6.2(b)
Key Managers Schedule 6.4(a)
Key Management Severance and Termination Plans Schedule 6.4(b)
System-Wide or Regional Changes Schedule 8.8(i)
Prohibited Agreements Schedule 8.8(j)
Indemnification Agreements Schedule 8.11
Consents and Approvals Related to Purchased Contracts Schedule 9.1(e)
Required Consents and Approvals Schedule 9.2(e)
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of June 7, 2002, by and among
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC, a Delaware limited liability company
("Republic"), NIMISHILLEN & TUSCARAWAS, LLC, a Delaware limited liability
company, BLISS & XXXXXXXX, LLC, a Delaware limited liability company, REPUBLIC
TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC, a Delaware limited liability company,
and RTI CAPITAL CORP., a Delaware corporation (together with Republic, "Sellers"
and each a "Seller") which Sellers, other than Nimishillen & Tuscarawas, LLC,
are debtors in possession under Chapter 11 of Title 11, United States Code (as
amended from time to time, the "Bankruptcy Code"), and RT ACQUISITION LLC, a
Delaware limited liability company ("Purchaser").
WHEREAS, Sellers have determined that it is in their best interest to
sell to Purchaser and Purchaser desires to purchase certain of the assets used
or usable in connection with Sellers' business (the "Business"), and Purchaser
desires to assume certain specified liabilities of Sellers which are related to
the Business, all on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, Republic and certain of its subsidiaries commenced cases in
the United States Bankruptcy Court for the Northern District of Ohio, Eastern
Division under Chapter 11 of the Bankruptcy Code on April 2, 2001 (collectively,
the "Chapter 11 Cases"); and
WHEREAS, Republic and certain of its subsidiaries continue in the
management and possession of their properties as debtors in possession in
the Chapter 11 Cases pursuant to sections 1107(a) and 1108 of the Bankruptcy
Code and, following approval of this Agreement, subject to the terms and
conditions of this Agreement; and
WHEREAS, the transactions contemplated by this Agreement have been
implemented through the filing of a motion seeking the entry of an order by the
Bankruptcy Court approving this Agreement and the terms of the sale of the
Purchased Assets and the assumption of the Assumed Liabilities pursuant to
Section 363 of the Bankruptcy Code in accordance with the terms of this
Agreement; and
WHEREAS, subject to the entry of the Sale Order and on the terms and
conditions set forth herein, Purchaser shall purchase the Purchased Assets and
assume the Assumed Liabilities of Sellers.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Acquisition Agreements" has the meaning set forth in Section 8.10.
"Action" means any claim, charge, action, suit, arbitration,
mediation, inquiry, proceeding or investigation by any Person or Governmental
Authority before any Governmental Authority.
"Adjustment Date" has the meaning set forth in Section 7.2.
"Affiliate" of a Person means any other Person that directly or
indirectly, through one or more intermediaries, Controls, is Controlled by, or
is under common Control with, the first mentioned Person.
"Agreement" means this Agreement, including the Schedules and the
Exhibits, as amended from time to time in accordance with its terms.
"Allocation" has the meaning set forth in Section 7.4.
"Approvals" means all certificates, licenses, permits or other
approvals required to be obtained by Seller or its Subsidiaries in connection
with the use or ownership of its or their assets or properties or the operation
of its or their business.
"Assets" means the assets of every type and description, tangible or
intangible, real or personal that are owned, leased or licensed by any Seller.
"Assumed Liabilities" has the meaning set forth in Section 3.1(a).
"Assumption Agreement" means one or more assignment and assumption
agreements in substantially the form attached to this Agreement as Exhibit A.
"Attendant Documents" has the meaning set forth in Section 5.1(a).
"Auction" means, as more fully described in the Bidding Procedures
Order, the auction to be held prior to the Sale Hearing for consideration of
qualifying higher and better offers that may be presented to Sellers.
"Audited Financial Statements" has the meaning set forth in Section
5.1(u)(ii).
"Bank Lenders" means the institutional lenders that are parties to the
Debtor-in-Possession Revolving Credit Facility at the date hereof.
"Bankruptcy Code" has the meaning set forth in the Preamble.
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"Bankruptcy Court" means the United States Bankruptcy Court for the
Northern District of Ohio, Eastern Division, or such other court as may have
jurisdiction over the Chapter 11 Cases.
"Bidding Procedures Order" means the order of the Bankruptcy Court
entered on May 31, 2002, a copy of which is attached hereto as Exhibit B.
"Xxxx of Sale" means one or more bills of sale in substantially the
form attached to this Agreement as Exhibit C.
"Break-Up Fee" has the meaning set forth in Section 12.3.
"Business" has the meaning set forth in the Recitals.
"Business Combination" means with respect to any Person any (a)
merger, consolidation or combination to which such Person is a party, (b) any
sale, dividend, split or other disposition of any capital stock or other equity
interests of such Person, or any acquisition of capital stock or equity
interests or securities of such Person, representing in any such case at least
25% of such class of capital stock or equity interests, (c) any tender offer
(including, without limitation, a self-tender), exchange offer or
recapitalization for or affecting the outstanding equity or debt securities of
such Person, (d) any plan of reorganization under Chapter 11 of the Bankruptcy
Code, (e) any liquidation, dissolution or similar transaction involving such
Person, (f) any sale, dividend or other disposition of all or a material portion
of the assets of such Person or (g) the entering into of any agreement or
understanding, or the granting of any rights or options, with respect to any of
the foregoing.
"Business Day" means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by Law to be closed in the City of
New York.
"Canadian Steel Asset Purchase Agreement" means the asset purchase
agreement by and between Purchaser and Canadian Drawn Steel Company, Inc., a
wholly owned Subsidiary of Republic pursuant to which Purchaser will purchase
substantially all of the assets of such subsidiary in the form reasonably
acceptable to each of Purchaser and Republic.
"Canton EPA Corrective Action Order" means the Administrative Order on
Consent (U.S. EPA Docket No. R8H-5-99-006) ordered by the U.S. Environmental
Protection Agency, Region 5, on June 16, 1999 proceeding under Section 3008(h)
of the Resource Conservation and Recovery Act, as amended, in the matter of
Republic Engineered Steels, Inc., with respect to the facility at 0000 Xxxxxx
Xxxxxx X.X., Xxxxxx, Xxxx 00000.
"Cartersville Asset Sale" means the sale of certain assets associated
with the Cartersville Cold Finishing Plant, located in Cartersville, Georgia
pursuant to the terms of that certain asset purchase agreement, dated as of May
20, 2002, by and between Republic and AmeriSteel Corporation.
"Cash Consideration" has the meaning set forth in Section 4.1(a).
"Chapter 11 Cases" has the meaning set forth in the Recitals.
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"Chapter 11 Expenses" means the costs incurred and expenses paid or
payable by Debtor Sellers in connection with the administration of the Chapter
11 Cases, including, without limitation, (a) fees and expenses related to the
Debtor-in-Possession Revolving Credit Agreement, (b) obligations to pay
professionals' fees and expenses in connection with the Chapter 11 Cases
(including, without limitation, fees of attorneys, accountants, investment
bankers, financial advisors, and consultants retained by Debtor Sellers, the
Creditors' Committee or the pre-petition lenders, and any compensation for
making a substantial contribution in the Chapter 11 Cases) and reimbursement of
any expenses incurred by Debtor Sellers prior to the Closing Date in connection
therewith (including, without limitation, any obligations to pay any holdback of
any such fees and expenses), (c) fees and expenses payable to the United States
trustee under Section 1930 of title 28, United States Code and (d) expenses of
members of the Creditors' Committee.
"Closing" has the meaning set forth in Section 10.1.
"Closing Date" has the meaning set forth in Section 10.1.
"Code" means the Internal Revenue Code of 1986, as amended, together
with the rules and regulations promulgated thereunder.
"Competing Bid" means a Qualified Bid that is determined to be the
highest or best offer at the Auction in accordance with the procedures set forth
in the Bidding Procedures Order.
"Competing Bidder" means a Person other than Purchaser that submits a
Qualified Bid.
"Conducted" has the meaning set forth in Section 5.1(a).
"Contract" means any written agreement, arrangement, understanding,
lease or instrument or other contractual or similar arrangement.
"Control" (including the terms "Controlled by" and "under common
Control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management
policies of a Person, whether through the ownership of capital stock, including
as trustee (other than a Chapter 11 trustee) or executor, by contract or credit
arrangement or otherwise.
"Copyrights" has the meaning set forth in Section 2.1(i).
"Creditors' Committee" means the statutory committee of unsecured
creditors appointed by the United States trustee in the Chapter 11 Cases.
"Cure Costs" means all monetary liabilities, including pre-petition
monetary liabilities, of Debtor Sellers that must be paid or otherwise satisfied
to cure all of each Debtor Seller's monetary defaults under the Purchased
Contracts or Reference Leases at the time of the assumption thereof and
assignment to Purchaser as provided hereunder as such amounts are determined by
the Bankruptcy Court.
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"DB Plan" means a defined benefits plan as described in Section 3(35)
of ERISA.
"Debtor-in-Possession Revolving Credit Agreement" means the
Debtor-in-Possession Revolving Credit Agreement, dated as of April 3, 2001,
among Republic, Republic's subsidiary guarantors that are a party thereto and
the Bank Lenders, as supplemented or modified from time to time.
"Debtor Sellers" means those Sellers that are named as debtors and
debtors-in-possession in the Chapter 11 Cases.
"DOJ" has the meaning set forth in Section 8.5(b).
"Employee Benefit Plan" means (1) each employee benefit plan within
the meaning of Section 3(3) of ERISA and (2) each personnel policy; stock option
plan; collective bargaining agreement; bonus plan or arrangement; incentive
award plan or arrangement; workers' compensation program; vacation policy;
voluntary employees' beneficiary association (VEBA); severance pay plan, policy
or agreement; deferred compensation agreement or arrangement; executive
compensation or supplemental income arrangement; consulting agreement;
employment agreement; and other employee benefit plan, agreement arrangement,
program, practice, or understanding, which is sponsored, maintained, or
contributed to by Republic or any ERISA Affiliate for the benefit of any
employee(s), former employee(s), independent contractor(s), or agent(s) of
Republic or any ERISA Affiliate, or has been so sponsored, maintained, or
contributed to at any time since 1974.
"Encumbrance" means (except for any lien for Taxes not yet due) any
claim, liability, charge, lease, covenant, easement, encumbrance, security
interest, lien, option, pledge, right of others, mortgage, hypothecation,
conditional sale, or restriction (whether on voting, sale, transfer, defenses,
set-off or recoupment rights, disposition, or otherwise) against or with respect
to tangible or intangible property or rights, whether imposed by agreement,
understanding, law, equity, or otherwise, except for any restrictions on
transfer generally arising under any applicable federal or state securities law.
"Environmental Law" has the meaning set forth in Section
5.1(r)(iii)(B).
"Environmental Reports" has the meaning set forth in Section
5.1(r)(iii)(C).
"Equipment" means all Owned Machinery and Equipment and all of
Sellers' equipment, machinery, furniture, fixtures and improvements and tooling
located at or associated with the operation of the Purchased Plants that are
leased pursuant to Purchased Contracts;
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with the rules and regulations promulgated thereunder.
"ERISA Affiliate" has the meaning set forth in Section 5.1(t)(i).
"Escrow Agent" has the meaning set forth in Section 8.2.
"Excluded Assets" has the meaning set forth in Section 2.2 hereof.
5
"Excluded Contracts" means any Contracts to which any Seller is a
party or its assets are bound that are not Purchased Contracts.
"Excluded Liabilities" has the meaning set forth in Section 3.1(b).
"Excluded Plants" means the plants and xxxxx described on Schedule
1.1.
"Expense Reimbursement Amount" has the meaning set forth in Section
12.3.
"Final Order" means an order of the Bankruptcy Court (a) as to which
the time to appeal shall have expired and as to which no appeal shall then be
pending, or (b) if an appeal shall have been filed or sought, either (i) no stay
of the order shall be in effect or (ii) if such a stay shall have been granted
by the Bankruptcy Court, then (A) the stay shall have been dissolved or (B) a
final order of the district court having jurisdiction to hear such appeal shall
have affirmed the order and the time allowed to appeal from such affirmance or
to seek review or rehearing thereof shall have expired and the taking or
granting of any further hearing, appeal or petition for certiorari shall not be
permissible, and if a timely appeal of such district court order or timely
motion to seek review or rehearing of such order shall have been made, any court
of appeals having jurisdiction to hear such appeal or motion (or any subsequent
appeal or motion to seek review or rehearing) shall have affirmed the district
court's (or lower appellate court's) order upholding the order of the Bankruptcy
Court and the time allowed to appeal from such affirmance or to seek review or
rehearing thereof shall have expired and the taking or granting of any further
hearing, appeal or petition for certiorari shall not be permissible; provided,
however, that Purchaser in its sole discretion may treat as not being a Final
Order, any order for which an appeal, motion to seek review, motion to seek
rehearing, or any similar motion is pending notwithstanding that such order is
not then subject to stay.
"FTC" has the meaning set forth in Section 8.5(b).
"Good Faith Deposit" has the meaning set forth in Section 8.2.
"Governmental Authority" means any United States federal, state or
local, or any foreign, government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal or judicial or arbitral
body.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"Hazardous Substance" has the meaning set forth in Section
5.1(r)(iii)(A).
"Hired Employees" has the meaning set forth in Section 6.1(a).
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"ICC Termination Act" means the ICC Termination Act of 1995, as
amended.
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"Indebtedness" means, at any time and with respect to any Person, (a)
all indebtedness of such Person for borrowed money, (b) all indebtedness of such
Person for the deferred purchase price of property or services (other than
property, including inventory, and services purchased, and trade payables, other
expense accruals and deferred compensation items arising, in the ordinary course
of business, consistent with past practice), (c) all obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments (other than
performance, surety and appeal bonds arising in the ordinary course of business
in respect of which such Person's liability remains contingent), (d) all
indebtedness of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of Sellers or lender under such agreement
in the event of default are limited to repossession or sale of such property),
(e) all obligations of such Person under leases which have been or should be, in
accordance with U.S. GAAP, recorded as capital leases, to the extent required to
be so recorded, (f) all reimbursement, payment or similar obligations of such
Person, contingent or otherwise, under acceptance, letter of credit or similar
facilities, (g) all Indebtedness of others referred to in clauses (a) through
(f) above guaranteed directly or indirectly by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement (i) to pay
or purchase such Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness, (ii) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness, (iii) to supply funds
to or in any other manner invest in the debtor (including any agreement to pay
for property or services irrespective of whether such property is received or
such services are rendered) or (iv) otherwise to assure a creditor against loss
in respect of such Indebtedness, and (h) all Indebtedness referred to in clauses
(a) through (g) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any
Encumbrance upon or in property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such Indebtedness, and including in clauses
(a) through (h) above any accrued and unpaid interest thereon.
"Indemnification Agreements" has the meaning set forth in Section
8.11.
"Indemnification Claim" has the meaning set forth in Section 8.10.
"Indemnity Escrow" has the meaning set forth in Section 11.6.
"Indemnity Escrow Agreement" has the meaning set forth in Section
11.6.
"Indemnity Interests" has the meaning set forth in Section 11.6.
"Insurance Policies" has the meaning set forth in Section 5.1(aa).
"Intellectual Property Rights" has the meaning set forth in Section
2.1(i).
"Inventory" has the meaning set forth in Section 2.1(l).
"IRS" means the U.S. Internal Revenue Service.
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"Key Managers" has the meaning set forth in Section 6.4(a).
"Knowledge" means the knowledge, after reasonable inquiry, of any of
the following executive officers and managers of Republic and other Sellers:
Xxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxx, Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxx, Xxx
Macuzak, Xxxxx Xxxx, Xxxxxxx Xxxxxxxxxx and Xxxx X. Xxxxxxxxxx.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law
(other than an Environmental Law).
"Lease Assignment and Assumption Agreement" has the meaning set forth
in Section 10.2(c).
"Lender Retention Program" means the plan or program attached hereto
as Exhibit D created for the benefit of each of the Key Managers and certain
other employees of Republic by the Bank Lenders pursuant to which the Bank
Lenders have agreed to provide compensation to such employees in order to create
an incentive for such Persons to complete any liquidation of Debtor Sellers.
"Letter of Intent" means that certain letter of intent, dated on or
about May 17, 2002, between Republic and RTI Acquisition Corporation.
"Lorain Property" has the meaning set forth in Section 8.19.
"Material Adverse Effect" means, with respect to Sellers, any change,
circumstance or effect that, individually or in the aggregate with other
changes, circumstances and effects, is materially adverse to (i) the business,
operations, assets, liabilities, financial condition, results of operations or
prospects of such entity and its subsidiaries taken as a whole or (ii) the
validity or enforceability of this Agreement or the ability of Sellers to
perform their respective obligations hereunder in a timely fashion.
"Material Contracts" has the meaning set forth in Section 5.1(e).
"New Credit Facility" means an amended and restated credit facility by
and among Purchaser, or any affiliated designee of Purchaser, and the Bank
Lenders to be executed at Closing to refinance up to a maximum amount of Three
Hundred Twenty Million U.S. Dollars ($320,000,000.00) of Indebtedness at Closing
under the Debtor-in-Possession Revolving Credit Facility.
"Non-Debtor Sellers" means those Sellers that are not named as debtors
or debtors-in-possession in the Chapter 11 Cases.
"Owned Machinery and Equipment" has the meaning set forth in Section
2.1(b).
"Patents" has the meaning set forth in Section 2.1(i).
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"Permits" means licenses, franchises, permits, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents granted from any Governmental Authority.
"Permitted Real Estate Liens" means (i) all presently existing and
future liens of real estate taxes or assessments and water rates, water meter
charges, water frontage charges and sewer taxes, rents and charges, if any,
provided that such items are not yet due and payable and are apportioned to the
extent provided in this Agreement; (ii) rights of tenants in possession, if any,
under leases disclosed by Sellers to the Purchaser provided same does not
materially and adversely affect the use and operation of the applicable parcel
of Real Property as currently being used and operated by the applicable Seller;
(iii) unpaid state and local franchise, general corporation and/or income taxes,
mechanics liens, or other monetary liens; provided that, based upon a deposit by
any Seller with the Title Company, an indemnity by any Seller to the Title
Company, the order of a bankruptcy court having jurisdiction, or other
assurances by the applicable Seller to the Title Company, such Seller is able to
induce the Title Company to omit such lien or encumbrance as an exception to
title, or insure against its collection out of or enforcement against the
applicable Real Property with respect to the applicable Title Policy issued by
the Title Company; (iv) such matters as the Title Company shall be willing to
omit as exceptions to coverage or, subject to Purchaser's reasonable approval,
by endorsement in form and substance acceptable to Purchaser in its reasonable
discretion, insure against collection out of or enforcement against such Real
Property, with respect to the applicable Title Policy issued by the Title
Company; (v) minor variations between the tax lot lines and the legal
description of each parcel of Real Property; or (vi) any other matter or thing
affecting title to any parcel of Real Property that does not materially and
adversely affect the marketability or the use and operation of the applicable
parcel of Real Property as such parcel of Real Property is currently used and
operated.
"Person" means an individual, corporation, partnership, association,
limited liability company, trust, joint venture, unincorporated organization,
other entity or group (as defined in Section 13(d)(3) of the Securities and
Exchange Act of 1934, as amended).
"Purchase Price" has the meaning set forth in Section 4.1(a).
"Purchased Assets" has the meaning set forth in Section 2.1.
"Purchased Contracts" has the meaning set forth in Section 2.1(k).
"Purchased Plants" has the meaning set forth in Section 2.1(a).
"Purchaser" has the meaning set forth in the Preamble.
"Purchaser Interests" means membership interests of Purchaser.
"Purchaser Member" means a limited partnership to be formed by
affiliates of Purchaser which will be the sole member of Purchaser immediately
prior to the Closing.
"Purchaser Operating Agreement" means the amended and restated limited
liability company agreement among the Purchaser Member and Republic in such form
9
reasonably acceptable to each of Purchaser and Republic which agreement shall,
among other things, include the terms set forth in Sections II.B and III.B.5 of
the Letter of Intent.
"Purchaser Representatives" has the meaning set forth in Section
8.3(c).
"Purchaser's Plans" has the meaning set forth in Section 6.2(a).
"Qualified Bid" means a bid submitted at the Auction to purchase
assets of Sellers pursuant to the Bidding Procedures Order.
"Railroad Subsidiary" has the meaning set forth in Section 2.1(d).
"Real Property" has the meaning set forth in Section 2.1(a).
"Reference Lease" means a lease, sublease, license, use or occupancy
agreement or other arrangement conveying the right to use real or personal
property (tangible or intangible, or a combination thereof) to be assumed by
Sellers and assigned to Purchaser as set forth on Schedule 5.1(j).
"Republic" has the meaning set forth in the Preamble.
"Required Creditor Notices" has the meaning set forth in Section
8.1(c).
"Sale Hearing" means the hearing before the Bankruptcy Court to
approve this Agreement and the consummation of the transactions contemplated by
this Agreement as more fully described in the Bidding Procedures Order.
"Sale Order" means an order of the Bankruptcy Court in form and
substance satisfactory to Purchaser and Sellers granting, among other things,
(i) a general release by Sellers and the bankruptcy estate to Purchaser at the
time of Closing, including a release of successor liability, that specifically,
upon Closing, the Purchaser shall not be deemed to (A) be the successor of
Sellers, (B) have, de facto or otherwise, merged with or into the Sellers, or
(C) be a mere continuation or substantial continuation of Sellers or the
enterprise of the Sellers; (ii) that such sale shall be, pursuant to Sections
105, 363(b) and 363(f) of the Bankruptcy Code, free and clear of all
Encumbrances other than Assumed Liabilities; (iii) that all agreements,
contracts, and leasehold interests required to be assumed by Sellers and
assigned to Purchaser are so assumed and assigned free and clear of all
Encumbrances and Excluded Liabilities other than Assumed Liabilities and
Permitted Real Estate Liens pursuant to Section 365 of the Bankruptcy Code; (iv)
that Purchaser is deemed to have purchased the Purchased Assets in good faith
pursuant to Section 363(m) of the Bankruptcy Code; and (v) that Sellers are
authorized and directed to execute, upon request by Purchaser, one or more
assignments in form, substance, and number reasonably acceptable to Purchaser,
evidencing the conveyance of the Purchased Assets to Purchaser.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning set forth in the Preamble.
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"Seller SEC Reports" has the meaning set forth in Section 5.1(u).
"Sellers" has the meaning set forth in the Preamble.
"Sellers' Employees" has the meaning set forth in Section 6.1(a).
"Senior Secured Notes" means the senior secured notes to be governed
by the Senior Secured Note Indenture and issued at Closing by Purchaser or an
affiliated designee of Purchaser in the aggregate principal amount equal to the
lesser of (i) 105% of the net orderly liquidation value of the assets included
in the Purchased Assets that secure the outstanding 13 3/4% Senior Secured Notes
of Republic, as agreed by Purchaser and the holders of such 13 3/4% Senior
Secured Notes on the basis of a valuation provided by McDonald Investments Inc.
or as determined by the Bankruptcy Court or (ii) Fifty Million U.S. Dollars
($50,000,000.00).
"Senior Secured Note Indenture" means the indenture governing the
Senior Secured Notes in such form reasonably acceptable to each of Purchaser and
Republic which agreement shall, among other things, include the terms set forth
in Section V of the Letter of Intent.
"Subsidiary" means any corporation, limited liability company,
partnership, joint venture or other legal entity of which any Seller or any
other Person, as the case may be (either alone or through or together with any
other Subsidiary), owns, directly or indirectly, 50% or more of the capital
stock or other equity interests the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such
corporation, limited liability company, partnership, joint venture or other
legal entity.
"Successor Labor Agreement" means the collective bargaining agreement,
dated on or about April 24, 2002, between Purchaser and the United Steel Workers
of America attached hereto as Exhibit E.
"Surveys" means current surveys of each parcel of owned Real Property,
prepared in insurable form in accordance with ALTA standards applicable to
registered and licensed land surveyors making surveys in the state in which such
Real Property is located.
"SWMU/AOC" has the meaning set forth in Section 3.1(a)(viii).
"Tax" or "Taxes" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Tax authority including, without limitation:
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains taxes; and customs' duties,
tariffs, and similar charges; and liability for the payment of any of the
foregoing as a result of (x) being a member of an affiliated, consolidated,
combined or unitary group, (y) being party to any tax sharing agreement and (z)
any obligation to indemnify any other Person with respect to the payment of any
of the foregoing.
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"Tax Return" means any return, declaration, report, and claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Third Party Lease" means each lease or other right of occupancy
affecting or relating to a property in which any Seller (or an entity in which
it directly or indirectly has an interest) is the landlord, either pursuant to
the terms of a lease agreement or as successor to any prior landlord.
"Title Company" means any nationally recognized title insurance
company or companies engaged to deliver the Title Policies.
"Title Policies" means the ALTA owner's (extended coverage) policies
of title insurance with respect to each parcel of owned Real Property issued by
the Title Company.
"Trademarks" has the meaning set forth in Section 2.1(i).
"Transfer Tax" has the meaning set forth in Section 7.1.
"Transition Services Agreement" means the transition services
agreement between Purchaser and Republic pursuant to which Purchaser will be
permitted to remove certain assets from the Excluded Plants and Republic will
operate certain of the Excluded Plants designated by Purchaser in such form
reasonably acceptable to each of Purchaser and Republic which agreement shall
include the terms set forth in Section III.B.6 of the Letter of Intent.
"Unaudited Balance Sheet" has the meaning set forth in Section
5.1(u)(iii).
"Unaudited Financial Statements" has the meaning set forth in Section
5.1(u)(iii).
"U.S. GAAP" means United States generally accepted accounting
principles in effect from time to time.
"WARN Act" means the Worker Adjustment and Retraining Notification
Act.
Section 1.2 Terms Generally. As used in this Agreement (a) words in the
singular shall be held to include the plural and vice versa, (b) words of one
gender shall be held to include the other genders as the context requires, (c)
the terms "hereof", "herein" and "herewith" and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement and not to any
particular provision of this Agreement, (d) references to Article, Section,
paragraph, Exhibit and Schedule are references to the Articles, Sections,
paragraphs, Exhibits and Schedules to this Agreement, unless otherwise
specified, (e) the word "including" and words of similar import when used in
this Agreement, shall mean "including, without limitation", unless otherwise
specified, and (f) the word "or" shall not be exclusive.
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ARTICLE II
PURCHASE AND SALE OF ASSETS
Section 2.1 Purchase and Sale of the Purchased Assets. On the Closing
Date, Sellers shall transfer, sell, assign, and deliver to Purchaser, and
Purchaser shall purchase from Sellers, in each case on the terms and subject to
the conditions set forth in this Agreement and the Sale Order, all of Sellers'
right, title and interest in, to and under any and all assets, properties and
business of every kind and description, whether tangible or intangible, real,
personal or fixed wherever situated, owned, held or used by Sellers or in which
Sellers have any right, title or interest, other than the Excluded Assets (all
such assets, properties and business are referred to in this Agreement as the
"Purchased Assets"), free and clear of all Encumbrances, other than the Assumed
Liabilities and the Permitted Real Estate Liens. The Purchased Assets include,
without limitation, the following:
(a) all real property and leases or subleases of, and any other
interests in, real property used or owned or held for use in the Business and
listed on the attached Schedule 2.1(a) (the "Real Property"), in each case
together with all buildings and other structures, facilities or improvements
currently or hereafter located thereon, all fixtures of Sellers attached or
appurtenant thereto and all easements, licenses, rights and appurtenances
relating to the foregoing (the "Purchased Plants");
(b) all Sellers' owned equipment, machinery and tooling located at
or associated with the operation of the Purchased Plants and the equipment,
machinery, furniture, fixtures and improvements and tooling listed on the
attached Schedule 2.1(b) (the "Owned Machinery and Equipment");
(c) all cars, trucks, fork lifts, other industrial vehicles and
other motor vehicles owned by Sellers located at, or associated with, the
operation of the Purchased Plants;
(d) all Assets of Nimishillen & Tuscarawas, LLC (the "Railroad
Subsidiary"), including all owned, leased or subleased real property of the
Railroad Subsidiary, and any other interests in, real property used or owned by
the Railroad Subsidiary, rights of way, locomotives, cars and track repair
equipment, including, but not limited to, the Assets listed on the attached
Schedule 2.1(d);
(e) all Assets of or related to Republic's corporate headquarters
located at 0000 Xxxxxxx Xxxxxxx, Xxxxx, Xxxx, including, but not limited to, the
Assets listed on the attached Schedule 2.1(e);
(f) all furniture, fixtures, improvements and other fixed assets
that are located at or associated with the Purchased Plants, including the
assets listed on the attached Schedule 2.1(f);
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(g) to the extent transferable under applicable Law and applicable
Environmental Law, all Permits used in the Business in conjunction with the
Purchased Assets and all pending applications therefor, including, without
limitation, those Permits described on the attached Schedule 5.1(h);
(h) customer relationships, the goodwill and all other intangible
assets relating to, symbolized by or associated with the Business;
(i) all (i) patents, patent applications, provisional patent
applications, patent disclosures, and all related continuation,
continuation-in-part, divisional, reissue, re-examination, utility model,
certificate of invention and design patents, patent application, registrations
and applications for registrations ("Patents"), (ii) trademarks, service marks,
trade dress, logos, trade names, domain names and corporate names and
registrations and applications for registration thereof ("Trademarks"), (iii)
copyrights, copyright applications and registrations ("Copyrights"), (iv)
commercial and technical trade secrets, know-how, confidential information,
other proprietary property rights and interests, and (v) licenses, engineering,
production and other designs, drawings, specifications, formulae, technology,
computer and electronic data processing programs and software, software
licenses, and proprietary property rights and interests and any licenses in
respect thereof (collectively, "Intellectual Property Rights") which are used in
connection with the operation of the Business, including those set forth on the
attached Schedule 5.1(d);
(j) copies or originals of all books, files and records used in
the Business relating to the Purchased Assets described in this Section 2.1,
including plans, data, test results, drawings, diagrams, employment records,
sales records, customer and supplier lists, advertising and promotional
materials, engineering data, safety and environmental reports and documents,
maintenance schedules and operating and production records, all other files,
indices, market research studies, surveys, reports, analyses and similar
information of every kind and nature, and in whatever format used in connection
with the operation of the Business;
(k) all contracts, agreements and purchase orders set forth on
Schedule 2.1(k) (the "Purchased Contracts");
(l) all items of inventory of the Business wherever located,
including, without limitation, raw materials, work in process, finished goods,
supplies used to operate and maintain the Equipment or process raw materials and
work in process, spare parts and supply and packaging items including any of the
aforementioned owned by Sellers but in the possession of manufacturers,
customers, suppliers or dealers, or in transit or returned goods ("Inventory"),
which, for avoidance of doubt, includes any Inventory related to or located at
any of the Excluded Plants;
(m) all notes (including notes from employees), accounts
receivable and other receivables, cash, deposits, advances and prepaid expenses
(other than prepaid Taxes) of Sellers related to the Business together with any
unpaid interest or fees accrued thereon or other amounts due with respect
thereto, and any security or collateral therefor, including recoverable advances
and deposits, which, for avoidance of doubt, includes any of the foregoing
related to the Excluded Plants;
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(n) all prepayments, prepaid expenses and deferred items, refunds,
rights, claims, credits, causes of action, condemnation proceedings, rights of
set-off or other rights against third parties (other than Tax refunds and
credits), including without limitation any rights concerning any litigation in
which, in connection with or with respect to the Business, any Sellers is a
claimant, including without limitation, those identified on Schedule 2.1(n),
except Bankruptcy Code avoiding power actions and claims;
(o) all rights under or pursuant to all warranties,
representations and guarantees made by suppliers, manufacturers and contractors
in connection with the operation of the Business or affecting the Equipment;
(p) all computer hardware, software programs, databases and other
technology assets whether owned, licensed (subject to applicable restrictions),
leased or internally developed and all documentation related to such computer
software programs and databases used or held for use by Sellers and wherever
located, including any of the foregoing related to the Excluded Plants;
(q) that portion of any refunds or refunded pre-payments related
to the Insurance Policies equal to the relative value of the Purchased Assets
compared to the Excluded Assets;
(r) any and all assets held in a VEBA (as described in Section
501(c)(9) of the Code) or other trust or welfare benefit fund used to fund
medical, dental, disability, or other welfare benefits for active or retired
employees but only if and to the extent such assets have not been used to pay
benefits under any disability plan that is funded through the VEBA (determined
as of the signing of this Agreement) as of the date Republic no longer has any
obligations to participants under such plan;
(s) to the extent that the Cartersville Asset Sale is consummated
after the Closing, all proceeds from the Cartersville Asset Sale; and
(t) all air emissions credits and allowances Sellers have, are
entitled to or have applied for, relating to the Purchased Assets or other
emissions units now or previously located on the Real Property, including any
such air emissions credits and allowances that Sellers have credit for or have
banked, applied to bank or agreed to sell or trade.
Section 2.2 Excluded Assets. Any provision of this Agreement to the
contrary notwithstanding, the following (collectively, the "Excluded Assets")
shall not be included in the Purchased Assets and shall not be sold or assigned
by Sellers to Purchaser pursuant to this Agreement:
(a) the minute books, stock books, corporate seals and other
corporate records of Sellers relating to their respective organization and
existence; provided, however, that after execution of this Agreement, Sellers
shall, on request by Purchaser, provide copies of such books, records and other
materials not previously provided to Purchaser;
(b) any assets or properties of the Sellers described on attached
Schedule 2.2(b);
15
(c) all Tax Returns of Sellers; provided, however, that after
execution of this Agreement, Republic shall, on request by Purchaser, provide
copies of such Tax Returns not previously provided to Purchaser;
(d) any capital stock owned beneficially or of record by any Seller;
(e) causes of actions and recoveries, in each case under chapter 5 of
the Bankruptcy Code; and
(f) the real property associated with the Excluded Plants and the
other real property set forth on Schedule 2.2(f);
(g) except as otherwise specifically provided herein, any Contract
associated with any Employee Benefit Plan;
(h) any refunds or refunded pre-payments related to the Insurance
Policies not acquired by Purchaser pursuant to Section 2.1(q); and
(i) all air emissions credits and allowances Sellers have, are
entitled to or have applied for, including any such air emissions credits and
allowances that Sellers have credit for or have banked, applied to bank or
agreed to sell or trade, to the extent not conveyed pursuant to Section 2.1(t).
ARTICLE III
LIABILITIES ASSUMED
Section 3.1 Assumption of Liabilities.
(a) Assumed Liabilities. On and as of the Closing Date, in connection
with its acquisition of the Purchased Assets, Purchaser shall, except to the
extent specifically excluded under Section 3.1(b) as an Excluded Liability,
assume, and indemnify, defend and hold Sellers harmless with respect to, the
following liabilities and obligations of Sellers and no others (collectively,
the "Assumed Liabilities"):
(i) Indebtedness of Republic equal to the aggregate principal
amount outstanding at Closing under the Debtor-in-Possession Revolving
Credit Agreement up to an aggregate of Three Hundred Twenty Million U.S.
Dollars ($320,000,000.00), which Indebtedness shall be assumed by
Purchaser pursuant to the terms and conditions of the New Credit Facility;
(ii) executory obligations of any Seller arising or continuing
after the Closing Date under the Purchased Contracts, including Cure
Costs, if any, payable in connection with the assumption and assignment of
the Purchased Contracts to Purchaser;
16
(iii) trade payables of any Seller incurred in the ordinary course
of business after the filing of the Chapter 11 Cases in an aggregate
amount not to exceed Thirty-Two Million U.S. Dollars ($32,000,000.00),
which amount shall include up to but not more than Nine Million U.S.
Dollars ($9,000,000.00) of trade payables owed to U.S. Steel Corp.;
(iv) obligations of any Seller arising or continuing after the
Closing Date under each Reference Lease relating to leased Real Property,
including Cure Costs, if any, payable in connection with the assumption
and assignment of the Reference Leases to Purchaser;
(v) accrued freight, utilities, revolver fees and other
miscellaneous current liabilities incurred by any Seller in the ordinary
course of business after the filing of the Chapter 11 Cases in an
aggregate amount of up to Two Million Six Hundred Thousand U.S. Dollars
($2,600,000.00);
(vi) real property Taxes incurred by any Seller in the ordinary
course of business solely with respect to the Real Property after the
filing of the Chapter 11 Cases in an aggregate amount of up to Three
Million Six Hundred Thousand U.S. Dollars ($3,600,000.00);
(vii) all liabilities arising from or under the Purchased Assets,
but only to the extent that all of the events or states of facts giving
rise to any such liability occur wholly and entirely after the Closing
Date and not as a result of any pre-Closing act or omission by Sellers or
their respective predecessors; and
(viii) the post-Closing Date prospective obligations of any Seller
under the Canton EPA Corrective Action Order to perform Work (as defined
therein) with respect to the release or potential release of hazardous
waste or hazardous constituents from solid waste management units or areas
of concerns ("SWMU/AOC") (all as defined therein) located on the Real
Property located in Canton, Ohio, to be acquired by Purchaser pursuant to
this Agreement, provided that (A) Purchaser does not assume hereunder and
shall not be liable for any Work or other obligation of Seller under the
Canton EPA Corrective Action Order, or otherwise, relating to any
Hazardous Substance existing on any other property whatsoever, including
without limitation (i) SWMU/AOCs identified now or in the future under the
Canton EPA Corrective Action Order that are not located on Real Property,
including without limitation SWMU/AOCs 1, 2, 4 (described as the "RCRA EAF
Dust Waste Area" in the Order), 15, 16, 18, 19, 20, 21, 23, 24, 25, 27,
28, 31, 85, 87, 89, 91 and 106 (described as "Xxxxxx Triangle"), and (ii)
any groundwater, surface water or sediment located outside of such Real
Property (unless and only to the extent such contamination is solely
attributable to SWMU/AOCs located on the Real Property); and (B) Purchaser
does not assume hereunder, and shall not be liable for, any remedies,
sanctions, stipulated penalties or penalties assertable or assessable by
the U.S. Environmental Protection Agency for any violation of such Order
by any Seller or the Respondent (as defined therein).
17
(b) Excluded Liabilities. Purchaser shall not assume and shall not
be liable for, and Sellers shall indemnify, defend and hold Purchaser harmless
against, any of the following liabilities or obligations of Sellers, regardless
of the type or nature of such liabilities or obligations (collectively, the
"Excluded Liabilities"):
(i) Sellers' professional fees and expenses for advisors,
including without limitation, advisors retained pursuant to an order of
the Bankruptcy Court;
(ii) Chapter 11 Expenses;
(iii) all existing Contracts, whether written or oral, between
Sellers and their respective advisors and consultants;
(iv) all employment and change in control agreements (or such
similar agreements) and all stock option agreements and stock purchase
agreements to which any Seller is a party, except for the employment
agreement between Xxxxxx Xxxxxxxx and Republic to be assumed and assigned
to Purchaser pursuant to this Agreement;
(v) all Contracts, whether written or oral, between Sellers and
their respective Affiliates, unless any such Contract is a Purchased
Contract;
(vi) liabilities of Sellers to Sellers' Employees not expressly
assumed under this Agreement;
(vii) other than as expressly assumed herein, any liabilities
attributable to or incurred in respect of Hired Employees prior to the
Closing, including by reason of the WARN Act;
(viii) all obligations, liabilities or amounts payable to any
existing equity holders of Sellers pursuant to any Contract or otherwise;
(ix) any liabilities or obligations in respect of or relating to
the Excluded Assets, except as expressly set forth in the Transition
Services Agreement;
(x) all Taxes other than (i) real property Taxes to the extent
set forth in Section 3.1(a)(vi), (ii) Taxes allocated to Purchaser to the
extent set forth in Section 7.2, and (iii) Taxes with respect to any
indemnity provision, tax sharing agreement or other arrangement contained
in a Purchased Contract but only to the extent that all of the events or
states of facts giving rise to any such liability occur wholly and
entirely after the Closing;
(xi) liabilities or obligations in respect of Indebtedness, except
for any that are Assumed Liabilities;
(xii) liabilities and obligations, whether known or unknown,
relating to any environmental, health or safety matter (including, without
limitation, any liability or obligation arising under Laws or
Environmental Laws) that are not expressly assumed under this Agreement,
including without limitation:
18
(A) any liabilities or obligations associated with any of the
Excluded Plants or the real property associated therewith;
(B) any liabilities or obligations of Sellers resulting from the
transport, storage, disposal, treatment, or other management of any
Hazardous Substance by Sellers, any predecessors of Sellers, or any other
Person in connection with the Business prior to the Closing (whether
generated at the Purchased Plants or the Excluded Plants) to or at any
location or facility other than the Real Property;
(C) any liabilities, obligations or claims for personal injury
resulting from exposure to Hazardous Substances or otherwise, where such
exposure or other event or occurrence occurred prior to the Closing;
(D) any liabilities under application of any Laws or Environmental
Laws imposing successor liability, creating obligations with respect to
any Excluded Assets, or imposing joint and several liability for any
co-mingled contamination;
(E) any liabilities or obligations under the Canton EPA Corrective
Action Order not expressly assumed under Section 3.1(a)(viii);
(F) any liabilities or obligations under the Director's Final
Findings and Order issued on June 16, 1999, to Republic Engineered Steels,
Inc., as now or hereafter amended, or otherwise relating to the EAF Dust
Waste Area located on the excluded portion of the property at Canton
(including closure and post-closure obligations imposed by Environmental
Law);
(G) any fines or penalties associated with violations or alleged
violations arising out of or relating to events, conditions or
circumstances occurring prior to the Closing;
(H) any other liabilities, whether known or unknown and whether
arising prior to or after the Closing Date, relating to, arising from, or
occurring on, at, or from any Excluded Assets or property other than Real
Property, including but not limited to (i) excluded properties adjacent or
proximate to the Purchased Plant located in Lorain, Ohio (which excluded
properties include the former coke plant complex, the blast furnace slag
processing area, a construction/debris disposal area, the Charleston Gate
area, the Pipe Mill Lagoon, and various locations, such as those known as
the East Fill and North Fill and the area near the heron rookery, used for
by-product material staging and/or historic waste and dredgings disposal),
(ii) excluded properties adjacent or proximate to the Purchased Plant
located in Canton, Ohio (which excluded properties include those
SWMUs/AOCs identified in Section 3.1(a)(viii)), and (iii) excluded
properties adjacent or proximate to the Purchased Plant located in Gary,
Indiana (which
19
excluded properties include the former iron bearing landfill area
and an ancillary building at the Xxxx Dunes Plant);
(xiii) trade payables or general unsecured claims not expressly
assumed under this Agreement;
(xiv) obligations, other than Cure Costs, arising under each
Reference Lease relating to leased Real Property prior to the Closing
Date;
(xv) obligations, other than Cure Costs, arising under each
Purchased Contract prior to the Closing Date;
(xvi) the Excluded Contracts;
(xvii) all obligations and liabilities associated with any
Employee Benefit Plan; and
(xviii) any other liability or obligation not expressly assumed
pursuant to Section 3.1(a).
ARTICLE IV
PURCHASE PRICE
Section 4.1 Purchase Price for Purchased Assets.
(a) The purchase price for the Purchased Assets shall be (i) Ten
Million U.S. Dollars ($10,000,000.00) in cash (the "Cash Consideration"); (ii)
the Senior Secured Note; (iii) Purchaser Interests which shall represent
twenty-five percent (25%) of the issued and outstanding Purchaser Interests as
of the Closing Date calculated without giving effect to any Purchaser Interests
issuable pursuant to any management incentive plan of Purchaser; and (iv) the
assumption by Purchaser of the Assumed Liabilities (clauses, (i), (ii), (iii)
and (iv), collectively, the "Purchase Price").
Section 4.2 Payment of Purchase Price.
(a) On the Closing Date, Purchaser shall deliver to Republic (i) in
cash, by wire transfer (pursuant to wire transfer instructions provided by
Republic at least two (2) Business Days prior to the Closing Date), in
immediately available funds, the Cash Consideration, a portion of which
Purchaser may satisfy pursuant to Section 8.2 herein; (ii) the Senior Secured
Note, duly executed by Purchaser and authenticated by the trustee under the
Senior Secured Note Indenture; and (iii) a certificate, duly authorized and
issued by Purchaser, representing the Purchaser Interests to be issued to
Republic or other evidence that the Purchaser Interests to be issued to Republic
have been issued, which on the Closing Date will be validly issued, fully paid
and nonassessable.
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(b) On the Closing Date, Purchaser or its designees shall execute
and deliver to Sellers the Assumption Agreement and Sellers shall execute and
deliver to Purchaser or its designees the Xxxx of Sale and the Assumption
Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES AND RELATED UNDERTAKINGS
Section 5.1 Representations and Warranties of Sellers. Sellers hereby
jointly represent and warrant to Purchaser as follows:
(a) Authority. Each Seller is organized and validly existing
under the laws of the jurisdiction of its organization, and has all corporate or
other power required to own, lease and operate the Purchased Assets and to carry
on the Business as now conducted by such Sellers ("Conducted"). Subject only to
the approval of the Bankruptcy Court in the case of the Debtor Sellers, each
Seller has the corporate or other power and authority to enter into this
Agreement, to enter into any and all agreements contemplated in this Agreement
(the "Attendant Documents") to which it is or is intended to be a party and to
consummate the transactions contemplated hereby and thereby. Subject only to the
approval of the Bankruptcy Court in the case of the Debtor Sellers, this
Agreement and all of the Attendant Documents to which each Seller is a party,
and the consummation of the transactions contemplated hereby and thereby, have
been duly authorized and approved by all necessary and proper corporate or other
action on the part of each Seller. Subject to the approval of the Bankruptcy
Court in the case of the Debtor Sellers, this Agreement, and all of the
Attendant Documents to which each Seller is a party, have been (or to the extent
to be entered into on or prior to the Closing, will be) duly authorized and duly
and validly executed and delivered, and constitute legal, valid and binding
obligations of each Seller enforceable against each Seller in accordance with
their respective terms. Each Non-Debtor Seller is duly authorized to conduct its
business and is in good standing under the laws of each jurisdiction where such
qualification is required. There is no pending or, to Sellers' Knowledge,
threatened action for the dissolution, liquidation, insolvency or rehabilitation
of any Non-Debtor Seller.
(b) Assets. Other than the Excluded Assets, there are no Assets
necessary to the operation of the Business as Conducted which are not included
in the Purchased Assets. Upon consummation of the transactions contemplated
hereby, Purchaser will have acquired good and insurable title in and to, or a
valid leasehold interest in or assignment of each of the Purchased Assets to be
acquired by it, free and clear of all Encumbrances, except for the Assumed
Liabilities and Permitted Real Estate Liens. The Purchased Assets constitute, in
the aggregate, all of the Assets necessary for the conduct of the Business at
the Purchased Plants substantially in the manner in which and to the extent to
which such Business is Conducted at the Purchased Plants during the pendency of
the Chapter 11 Cases. The Purchased Assets have been maintained in accordance
with normal industry practices.
(c) Consents, Approvals or Authorizations. Except as set forth
in Schedule 5.1(c), no consent, approval, waiver, or authorization of, filing or
registration with, or notification to, any Governmental Authority is required in
connection with the execution and
21
delivery of this Agreement by Sellers or the consummation by Sellers of the
transactions contemplated hereby. Except as set forth in Schedule 5.1(c), no
consent, approval, waiver or authorization of any Person is required in
connection with the execution and delivery of this Agreement by Sellers or the
consummation by Sellers of the transactions contemplated hereby. Schedule 5.1(c)
sets forth all consents that must be obtained from any Person in order to sell,
transfer and assign to Purchaser any Purchased Assets to be acquired from any
Non-Debtor Seller pursuant to this Agreement.
(d) Intellectual Property. Except as set forth in Schedule
5.l(d), Sellers hold free and clear of all Encumbrances (other than Encumbrances
set forth in Schedule 5.1(d), which upon the Closing will be released, or
Assumed Liabilities) and free and clear from all contractual restrictions and
any other restriction, all right, title and interest in and to, or valid and
subsisting licenses in, all Intellectual Property Rights material to the
operation of the Purchased Assets as Conducted. All of such Intellectual
Property Rights registrations are valid and subsisting and all pending
applications for such Intellectual Property Rights are live. Sellers are not in
default, and, to Sellers' Knowledge, no event has occurred which with notice or
lapse of time would constitute a material default under any of the agreements,
licenses or sublicenses of Sellers relating to Intellectual Property Rights. To
Sellers' Knowledge, none of the Intellectual Property Rights of Sellers are used
by Sellers in violation of the rights of any third party and no Seller has
received notice alleging that it is infringing on or in violation of the
intellectual property rights of others. Schedule 5.1(d) lists all agreements,
licenses and sublicenses by which Sellers have granted to a third party any
rights to use or possess any Intellectual Property Rights of Sellers. Schedule
5.1(d) lists all Patents, Trademarks and Copyrights owned by Sellers and all
Contracts relating to any third party Intellectual Property Rights licensed or
sublicensed to Sellers. Except as set forth in Schedule 5.1(d), to Sellers'
Knowledge no third party has infringed upon, misappropriated or wrongfully used
any of Sellers' Intellectual Property Rights. Other than the Intellectual
Property Rights, no intellectual property is necessary to enable Sellers to
conduct the Business as Conducted. There are no claims, demands or proceedings
instituted or pending or, to the Sellers' Knowledge, threatened in writing by
any Person contesting or challenging the right of any Seller to use any
Intellectual Property Rights of Sellers. To Sellers' Knowledge, there are no
patents, trademarks, trade names, copyrights, trade secrets or similar
intellectual property rights owned by a Person other than the Sellers which any
Seller is using without a license to do so.
(e) Material Contracts.
(i) The attached Schedule 5.1(e)(i) identifies all
Contracts (collectively, the "Material Contracts") in effect as of
the date of this Agreement to which any Seller is a party as set
forth below:
(A) any lease of personal property involving any annual
expense in excess of Two Hundred Thousand U.S. Dollars ($200,000.00)
and not cancelable without liability within 90 days;
(B) any Contract for the purchase of materials,
supplies, goods, services, consulting, equipment or other assets
that provides for either (x) annual payments from and after December
31, 2001 by Sellers of Two Hundred
22
Thousand U.S. Dollars ($200,000.00) or more or (y) aggregate payments
by Sellers of Two Hundred Thousand U.S. Dollars ($200,000.00) or more,
in each case that is not cancelable without liability within 90 days;
(C) any sales, distribution or similar Contract providing
for the sale by any Seller of materials, supplies, goods, services,
equipment or other assets that provide for either (x) annual payments
to Sellers of Two Hundred Thousand U.S. Dollars ($200,000.00) or more
or (y) aggregate payments to Sellers of Two Hundred Thousand U.S.
Dollars ($200,000.00) or more, in each case that is not cancelable
without liability within 90 days;
(D) any Contract substantially related to the ownership of
the Purchased Assets or operation of the Business containing warranty
obligations on the part of Sellers;
(E) any Contract substantially related to the ownership of
the Purchased Assets or operation of the Business containing
provisions or covenants limiting the freedom of Sellers to engage in
any line of business or compete with any Person or prohibiting or
limiting the ability of any Person to compete with Sellers or
prohibiting or limiting disclosure of confidential or proprietary
information;
(F) any Contract substantially related to the ownership of
the Purchased Assets or operation of the Business relating to
Indebtedness for borrowed money, the issuance of any debt security or
the assumption, guarantee or endorsement of the obligations of any
Person;
(G) any Contract between or among any Seller and any
Affiliate of any Seller;
(H) (x) all Contracts providing for a commitment of
employment or consultation services for a specified or unspecified
term, the name, position and rate of compensation of each Person to
such Contract and the expiration date of each such Contract; and (y)
any severance agreements or any Contracts or written or unwritten
representations, commitments, promises, communications or courses of
conduct involving an obligation of Sellers to make payments (with or
without notice, passage of time, or both) to any Person in connection
with, or as a consequence of, the transactions contemplated hereby;
(I) all partnership, joint venture, shareholders' or other
similar Contracts with any Person substantially related to the
Purchased Assets;
(J) all Contracts with independent contractors,
distributors, dealers, manufacturers' representatives, sales agencies
or franchisees substantially related to the Purchased Assets;
(K) all Contracts substantially related to the Purchased
Assets and concerning (x) the future disposition or acquisition of any
asset or property,
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other than dispositions or acquisitions in the ordinary course of
business and the provisions of this Agreement, and (y) any Business
Combination;
(L) all Contracts substantially related to the Purchased
Assets and concerning the sharing, allocation or indemnification for
Taxes;
(M) all Contracts that contain a right of first refusal with
respect to any Purchased Assets or properties with a fair market value
in excess of Two Hundred Thousand U.S. Dollars ($200,000.00);
(N) all Contracts substantially related to the Purchased
Assets that provide for the payment or receipt of any licensing fee,
royalty payment or the like;
(O) all Contracts substantially related to the Purchased
Assets that provide for hedging or any similar financial arrangement;
(P) all Contracts substantially related to the Purchased
Assets pursuant to which a third party has agreed to indemnify any
Seller;
(Q) all Reference Leases relating to Real Property and all
Third Party Leases; and
(R) all licenses substantially related to the Purchased
Assets with respect to computer software that are necessary for the
operation of the Business.
(ii) Each Contract required to be disclosed in Schedule 5.1(e)(i)
was entered into in the ordinary course of business, and except as set
forth on Schedule 5.1(e)(ii), each such Contract that is material to the
Purchased Assets or to the operation of the Business at the Purchased
Plants is in full force and effect and constitutes a legal, valid and
binding agreement, enforceable in accordance with its terms, of Sellers
and, to Sellers' Knowledge, each other party thereto; and no Seller has
received written notice that it is in violation or breach of or default
under any such contract (or with notice or lapse of time or both, would be
in violation or breach of or default under any such contract). Except as
set forth on Schedule 5.1(e)(ii), no "cure" amount will be payable upon
the assumption by the Sellers or any of its Subsidiaries of any Contract.
(iii) True and complete copies (or written summaries in the case
of oral Contracts) of all of the Sellers' Contracts have been provided or
made available to Purchaser.
(f) Personal Property. Sellers own or hold under a valid lease all
personal property reflected on the Unaudited Balance Sheet and all personal
property of Sellers acquired by Sellers since the date thereof (except such
property as have been disposed of in the ordinary course of business), that is
material to the Purchased Assets or the operation of the Business at the
Purchased Plants free and clear of any Encumbrance, except for those that will
be discharged concurrently with the Closing and Assumed Liabilities. To Sellers'
Knowledge, each of the
24
Purchased Plants (together with all Equipment therein) is in condition
satisfactory to permit operation of such plants (together with all Equipment
therein) consistent with past practice during the pendency of the Chapter 11
Cases in all material respects.
(g) Non-Violative Agreement. Except as set forth on Schedule 5.1(g),
neither the execution and delivery of this Agreement or the Attendant Documents
to which any Seller is a party nor the consummation of the transactions
contemplated in this Agreement do or will (i) conflict with or violate in any
material respect any Law, Environmental Law or Governmental Order applicable to
Sellers or by which any of their respective assets or properties is bound, (ii)
result in any breach of or constitute a default under (or an event which, with
notice or lapse of time or both, would become a default), or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of an Encumbrance on any of the properties or assets of any Seller
pursuant to, any Material Contract that is a Purchased Contract, (iii) with
respect to any Non-Debtor Seller, conflict with or violate the certificate of
formation or operating agreement (or other charter documents) of such Non-Debtor
Seller or (iv) with respect to any Non-Debtor Seller, result in any breach of or
constitute a default under (or an event which, with notice or lapse of time or
both, would become a default), or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of an
Encumbrance on any of the properties or assets of any Non-Debtor Seller pursuant
to, any agreement, contract, lease, license, instrument or other arrangement to
which any Non-Debtor Seller is a party, to which any Non-Debtor Seller is bound
or to which the properties or assets of any Non-Debtor Seller is subject.
(h) Permits. The attached Schedule 5.1(h) contains a complete and true
list of Permits that relate to the Business or any of the Purchased Assets and
that are material to the conduct, use or operation or ownership thereof. Sellers
currently have and will use their commercially reasonable efforts to maintain in
effect until the Closing Date all such Permits. No governmental proceeding is
pending nor, to Sellers' Knowledge, is there any threat by any Governmental
Authority to cancel, modify, or fail to renew any such Permit. All such Permits
held by Sellers shall, to the extent permissible, be transferred to Purchaser at
the Closing.
(i) Owned Real Property. Schedule 5.1(i) contains a complete and
correct list of all Real Property owned by Sellers.
(j) Leased Real Property. Schedule 5.1(j) contains a complete and
correct list of all Real Property leased by or to Sellers. True, correct and
complete copies of all Reference Leases relating to the leased Real Property
have heretofore been delivered by Sellers to Purchaser. Each such Reference
Lease is valid, binding and in full force and effect and is enforceable by each
Seller that is a party thereto and no Seller has subleased, demised or otherwise
granted any interest in any such Reference Lease or property subject thereto,
except as set forth on Schedule 5.1(j). Sellers have good and valid title to the
leasehold estate or other interest created under each Reference Lease, and to
Sellers' Knowledge, no lessee under any Reference Lease relating to leased Real
Property is in material default of its obligations thereunder.
25
(k) Use and Operation. To Sellers' Knowledge, the use and operation
of the Real Property in the conduct of the Business does not in any material
respect violate any instrument of record or agreement affecting the Real
Property.
(l) Title Insurance. To Sellers' Knowledge, Sellers have provided
true and complete copies of all title insurance policies in Sellers' possession
that insure the respective Sellers' fee simple title to the Real Property owned
by such Seller and all surveys conducted in connection with obtaining such title
insurance policies. No material claim has been made against any such title
insurance policy.
(m) Violations; Defects. Except as provided in Schedule 5.1(m), (i)
each Permit or license from any Governmental Authority having jurisdiction over
any of the Purchased Plants or any agreement, easement or other right which is
material and is necessary to permit the lawful use and operation of the
buildings and improvements on any of the Real Property (as currently being used
and operated by Seller) or which is material and is necessary to permit the
lawful use and operation (as currently being used and operated by Seller) of all
driveways, roads and other means of egress and ingress to and from any of the
Purchased Plants has been obtained and is in full force and effect, and to
Sellers' Knowledge there is no pending threat of modification or cancellation of
any of the same, (ii) no Seller has received written notice issued by any
Governmental Authority of any violation of any federal, state or municipal law,
ordinance, order, regulation or requirement relating to the Real Property, (iii)
to Sellers' Knowledge there are no material structural defects relating to any
Purchased Plant, or (iv) to Sellers' Knowledge there is no material physical
damage to any Purchased Plant for which there is no insurance in effect covering
the cost of the restoration. To Sellers' Knowledge, Republic has made available
to Purchaser all engineering reports in Sellers' possession with respect to the
Purchased Plants.
(n) Condemnation; Zoning. No Seller has received any notice in
writing that (i) any condemnation proceeding is pending or threatened with
respect to any Real Property or (ii) any zoning, building or similar law, code,
ordinance, order or regulation is or will be violated by the continued
maintenance, operation or use of any buildings or other improvements on any Real
Property or by the continued maintenance, operation or use of the parking areas.
(o) Oral Agreements. To Sellers' Knowledge, Sellers have no material
oral agreements with respect to the Conduct of the Business.
(p) Tax Certiorari Proceedings. Except as set forth in Schedule
5.l(p), there are no ongoing tax certiorari proceedings with respect to Real
Property owned by Sellers.
(q) Certain Actions. Except as disclosed in Schedule 5.1(q):
(i) there are no Actions or proceedings pending or, to the
Knowledge of any Seller, threatened against, relating to or affecting any
of the Purchased Assets individually or in the aggregate, which, if
adversely decided against Sellers, would reasonably be expected to result
in the imposition of material liability against Sellers;
26
(ii) to Sellers' Knowledge, there are no facts or circumstances
relating to the Purchased Assets that would give rise to any Action or
proceeding against any Seller that would reasonably be expected to result
in a Material Adverse Effect;
(iii) none of the Sellers has received written notice, and no
Seller otherwise has Knowledge, of any orders outstanding against any
Seller; and
(iv) prior to the execution of this Agreement, Republic has
delivered or made available to Purchaser all responses of counsel for
Sellers to auditors' requests for information regarding Actions or
proceedings pending or threatened against, relating to or affecting Sellers
during the three-year period prior to the date hereof.
(r) Compliance with Applicable Laws and Regulations.
(i) General. Except as set forth on Schedule 5.1(r)(i), to
Sellers' Knowledge, Sellers are and for the last three (3) years have been
in compliance in all material respects with all Laws that are (or were)
material to the operation of the Business.
(ii) Environmental Matters. To Sellers' Knowledge, except as set
forth on Schedule 5.1(r)(ii), (a) the Business and the Purchased Assets are
and for the last five (5) years have been in compliance in all material
respects with Environmental Laws; (b) there have not been and there are no
actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence
or disposal of any Hazardous Substance on any of the Real Property, that
could reasonably be expected to prevent, hinder or limit continued
compliance in all material respects with Environmental Laws or could
reasonably be expected to form the basis of a material environmental claim
against Sellers or against any Person whose liability for any environmental
claim a Seller has or may have retained or assumed either contractually or
by operation of law; (c) none of the following exists at any of the Real
Property: (i) under- or above-ground storage tanks, (ii) friable asbestos
containing material, (iii) transformers containing polychlorinated
biphenyls at concentrations greater than 500 parts per million, or (iv)
landfills, surface impoundments, or disposal areas (except as could not
reasonably be expected to form the basis of a material claim); and (d)
Sellers have provided true and accurate copies of (i) all material reports,
studies and analyses of the cost for the Business as Conducted to maintain
or achieve compliance with proposed future requirements of Environmental
Law, and (ii) Environmental Reports.
(iii) Definitions. For purposes of this agreement:
(A) "Hazardous Substance" means any material, substance, or
waste, or combination thereof which is classified as hazardous, toxic,
pollutant or contaminant or words of similar meaning, whether solid,
liquid or gaseous in nature, under Environmental Laws, including
without limitation petroleum (including crude oil or any fraction
thereof), polychlorinated biphenyls (PCBs), asbestos and radioactive
materials;
27
(B) "Environmental Law" means any and all applicable federal,
state, and local statutes, laws, regulations, ordinances, orders,
common law, and similar provisions currently in existence and
applicable and having the force or effect of law, concerning public
health or safety, worker health or safety, pollution or protection of
the environment, including, but not limited to, the Clean Air Act, 42
U.S.C.ss.7401 et seq. (the "Clean Air Act"), the Clean Water Act, 33
U.S.C.ss.1251 et seq., the Resource Conservation Recovery Act, 42
U.S.C. 6901 et seq. ("RCRA"), the Toxic Substances Control Act, 15
U.S.C.ss.2601 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C.ss.9601 et seq. ("CERCLA"),
the Occupational Safety and Health Act of 1970 (but only to the extent
it regulates occupational exposure to Hazardous Substances), all as
amended, and any and all other applicable laws, all as amended, which
govern: (i) the existence, cleanup, removal and/or remedy of
contamination or threat of contamination at, on or under owned or
leased real property; (ii) the release, threatened release, emission
or discharge of Hazardous Substances into the environment; (iii) the
control of Hazardous Substances; or (iv) the presence, use,
manufacturing, refining production, generation, transport, treatment,
storage, disposal, distribution, importing, labeling, testing,
processing, removal, recycling, handling or recovery of Hazardous
Substances; and
(C) "Environmental Reports" means any and all environmental
review and assessment reports that Republic, its corporate
predecessors, or any Subsidiary of Republic has ever caused to be
prepared or has ever received within the last five (5) years with
respect to the owned Real Property or leased Real Property.
(s) Employment and Labor Matters. Except as set forth on Schedule
5.1(s), (A) there are no material claims or Actions pending or, to Sellers'
Knowledge, threatened between Republic or any of its Subsidiaries and any of
their respective employees; (B) neither Republic nor any of its Subsidiaries is
a party to any collective bargaining agreement or other labor union contract
applicable to Persons employed by Republic or any such Subsidiary; (C) there are
no unfair labor practice complaints pending or to Sellers' Knowledge threatened
against Republic or any of its Subsidiaries before the National Labor Relations
Board or any similar state or foreign agency or any current union representation
questions involving employees of Republic or any of its Subsidiaries; (D) there
are no union claims to represent the employees of the Business; (E) there is no
material grievance arising out of any collective bargaining agreement or other
grievance procedure; (F) there are no concerted strikes slowdowns, work
stoppages or lockouts by or with respect to any group of employees of Republic
or any of its Subsidiaries and during the past five years there has not been any
such action; (G) there is not any organizational effort presently being made or,
to Sellers' Knowledge, threatened involving any of Republic's or its
Subsidiaries' employees; (H) Republic and each of its Subsidiaries are, and have
at all times been, in material compliance with all applicable Laws relating to
employment and employment practices, including, without limitation, provisions
thereof relating to terms and conditions of employment, wages, hours of work,
occupational safety and health, collective bargaining, the payment of social
security and other payroll or similar taxes, equal employment opportunity,
employment discrimination or harassment, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
Law,
28
ordinance or regulation; (I) to Sellers' Knowledge, neither Republic nor any of
its Subsidiaries is liable for any arrears of wages or penalties for failure to
comply with any of the foregoing; (J) Sellers have not received notice of the
intent of any federal, state, local or foreign agency responsible for the
enforcement of labor or employment laws to conduct an investigation with respect
to Sellers and, to Sellers' Knowledge, no such investigation is in progress; and
(K) there are no complaints, lawsuits or other proceedings pending or, to
Sellers' Knowledge, threatened in any forum by or on behalf of any present or
former employee of Republic or any Subsidiary of Republic, any applicant for
employment or classes of the foregoing alleging breach of any express or implied
contract for employment, any law or regulation governing employment or the
termination thereof or other discriminatory, wrongful or tortious conduct in
connection with the employment relationship. Except as set forth in Schedule
5.1(s), there are no employment contracts or severance agreements with any
employee of Republic or any Subsidiary of Republic.
(t) Employee Benefits.
(i) Except as set forth in Schedule 5.1(t)(i), Republic, any
Subsidiary of Republic or by any trade or business, whether or not
incorporated that, together with Republic or a Subsidiary of Republic,
would be deemed a "single employer" within the meaning of Section 414(b),
(e), (m), or (o) of the Code or Section 4001(b) of ERISA (an "ERISA
Affiliate") have no liability, and this transition will not cause Purchaser
to have any liability (including, but not limited to, withdrawal liability)
with respect to any multi-employer plan as defined in ERISA Section
4001(a)(3) or any Employee Benefit Plan subject to Title IV of ERISA.
(ii) Except as set forth in Schedule 5.1(t)(ii), with respect to
all employee benefit plans and policies of Seller and its ERISA Affiliates
which are subject to Laws other than those of the United States, each such
plan has been operated and funded in accordance with its terms and
applicable Law and in such a manner such that there is no lien on the
Purchased Assets as of the Closing Date or earlier.
(iii) There has been no material failure of a group health plan
(as defined in Section 5000(b)(1) of the Code) sponsored, contributed to,
or maintained by Republic or any ERISA Affiliate to meet the requirements
of Section 4980B(f) of the Code with respect to a qualified beneficiary (as
defined in Section 4980B(f) of the Code). Republic has provided or will
provide to Purchaser: (i) copies of all such group health plans and their
respective summary plan descriptions, and (ii) accurate and complete
information regarding the costs of such group health plans for active
employees, retirees and COBRA participants for the last two (2) years,
including an accurate breakdown of numbers of plan participants by category
(actives, COBRA, retirees) and plant location (for COBRA recipients and
retirees, the last plant where they worked).
(iv) A true and complete copy of the Lender Retention Program is
attached hereto as Exhibit D. Such program or plan is in full force and
effect and has not been modified, amended, supplemented or replaced.
29
(v) With respect to each Employee Benefit Plan under which
Purchaser may incur any liability as a result of Purchaser complying with
any provision of this Agreement, including any Assumed Liability, all
obligations, whether arising by operation of applicable Law or under the
terms of such Employee Benefit Plan and its operative documents, required
to be performed with respect to such Employee Benefit Plan have been
performed and performed timely in all material respects, and there have
been no material defaults, omissions, or violations by any party with
respect to such Employee Benefit Plan, and each such Employee Benefit Plan
has been administered in compliance in all material respects with its
governing documents and all applicable Law.
(u) Reports and Financial Statements.
(i) Republic and Republic Technologies International
Holdings, LLC have filed, other than immaterial filings, all required
reports, schedules, forms and other documents required or agreed to be
filed by either of them with the Securities and Exchange Commission since
April 10, 1999 (collectively, including all exhibits thereto, the "Seller
SEC Reports"). None of the Seller SEC Reports, as of their respective dates
(and if amended or superseded by a filing prior to the date of this
Agreement of the Closing Date, then the date of such filing), contained an
untrue statement of material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(ii) Each of the financial statements (including related
notes) included in the Seller SEC Reports present fairly, in all material
respects, the consolidated financial position and consolidated results of
operation and cash flows of the filer thereof and its direct and indirect
Subsidiaries as of the respective dates or for the respective periods set
forth therein, all in conformity with U.S. GAAP consistently applied during
the periods involved except as otherwise noted therein, and, subject, in
the case of the unaudited interim financial statements, to the absence of
complete notes and normal year-end adjustments. Such financial statements
include the audited balance sheet of Republic Technologies International
Holdings, LLC and its direct and indirect Subsidiaries on a consolidated
basis as of December 31, 2001 (the "Audited Balance Sheets"), and the
related audited statements of income and cash flows for the fiscal year
then ended filed as part of the Republic Technologies International
Holdings, LLC Annual Report on Form 10-K as filed with the Securities and
Exchange Commission on April 1, 2002 (together with the Audited Balance
Sheets, including the notes thereto, the "Audited Financial Statements").
(iii) The unaudited combined consolidating balance sheets
of Sellers as of March 31, 2002 (the "Unaudited Balance Sheets") and the
related combined consolidating statements of income and cash flows for the
Sellers for the three-month period then ended (together with the Unaudited
Balance Sheet, including the notes thereto, the "Unaudited Financial
Statements") are attached as Schedule 5.1(u)(iii) and were prepared from,
and in accordance with, Sellers' books and records in accordance with U.S.
GAAP consistently applied, and present fairly in all material respects the
financial position, results of operations and cash flows of Sellers on a
combined
30
consolidating basis as of the dates and for the periods indicated, subject
to the absence of complete notes and normal year-end adjustments.
(v) Tax Matters.
(i) Except as set forth on the attached Schedule 5.1(v), to the
Sellers' Knowledge (A) no Encumbrances have been filed on or against the
Purchased Assets as a result of Sellers' failure to pay, in whole or in
part, any Taxes; (B) Sellers have no reason to believe that an Encumbrance
might be filed or imposed in the future on or against the Purchased Assets
or any owned Real Property or leased Real Property as a result of Sellers'
failure to pay, in whole or in part, any Taxes; (C) Sellers have timely and
properly filed all Tax Returns required to be filed by them, and such Tax
Returns are true, correct and complete and, except as prohibited or stayed
by the Bankruptcy Court, Sellers have paid all Taxes due from them; and (D)
none of the Sellers has received any notice of any audit, dispute or claim
threatened by any taxing authority.
(ii) None of the Sellers is a foreign person for purposes of Section
1445 of the Code.
(iii) Except as set forth on the attached Schedule 5.1(v), to Sellers'
Knowledge (A) Republic has not been and is not now in violation (and with
notice or lapse of time, or both, would not be in violation) of any
applicable Law relating to the payment or withholding of Taxes; and (B)
Republic has duly and timely withheld from employee salaries, wages and
other compensation and paid over to the appropriate taxing authorities all
amounts required to be so withheld and paid over for all periods under all
applicable Laws.
(w) Substantial Customers and Suppliers. Schedule 5.l(w)(i) lists the
thirty-five (35) largest customers of Sellers, other than the Railroad
Subsidiary, on the basis of revenues for goods sold or services provided for the
most recent fiscal year. Schedule 5.1(w)(ii) lists the thirty-five (35) largest
suppliers of Sellers, other than the Railroad Subsidiary, on the basis of cost
of goods or services purchased for the most recent fiscal year. Except as
disclosed in Schedule 5.1(w)(iii), to Sellers' Knowledge, since December 31,
2001, no such customer or supplier has ceased or materially reduced its
purchases from or sales or provision of services to, or materially modified its
relationship with, Sellers and has not threatened to cease or materially reduce
such purchases or sales or provision of services or has any reason to terminate
or modify such relationship. To Sellers' Knowledge, no such customer or supplier
is threatened with bankruptcy or insolvency.
(x) Inventory; Accounts Receivable.
(i) Except as disclosed in Schedule 5.1(x), to Sellers' Knowledge,
all Inventory reflected on the Unaudited Balance Sheet included in Section
5.1(u) consisted, and all such Inventory acquired since the date of that
balance sheet, consists of a quality and quantity usable and salable in the
ordinary course of business consistent with past practice, net of any
applicable reserve, and was produced or acquired by Sellers in the ordinary
course of business.
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(ii) The accounts and notes receivable of the Sellers reflected on the
Audited Balance Sheet and the Unaudited Balance Sheet included in the
Unaudited Financial Statements and all accounts and notes receivable
arising subsequent to the date of the Unaudited Balance Sheet (A) arose
from bona fide sales transactions in the ordinary course of business
consistent with past practice and are payable on ordinary trade terms, (B)
are legal, valid and binding obligations of the respective debtors
enforceable in accordance with their respective terms, (C) are not subject
to any valid set-off or counterclaim, (D) do not represent obligations for
goods sold on consignment, on approval or on a sale-or-return basis or
subject to any other repurchase or return arrangement, and (E) are not the
subject of any Actions or Governmental Order brought by or on behalf of the
Seller or any Subsidiary.
(y) Affiliates. Except as disclosed in Schedule 5.1(y) and for
transactions solely between Republic and its Subsidiaries, no Seller is a party
to any transaction with any Affiliate of any Seller. All of such Contracts
listed on Schedule 5.1(y) have been entered into on an arm's-length basis and
are commercially reasonable.
(z) Disclosure. No representation or warranty by Sellers contained in this
Agreement and no statement contained in any of the Attendant Documents or any
other certificate or instrument furnished or to be furnished pursuant to this
Agreement or in connection with the transactions contemplated in this Agreement
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact, necessary in order to make any of the
statements, in light of the circumstances under which they were made, not
misleading.
(aa) Insurance. Sellers are covered by valid, outstanding and enforceable
policies of insurance covering their respective properties, assets and business
against risks of the nature normally insured against by companies in the same or
similar lines of business and in coverage amounts typically and reasonably
carried by such companies including, without limitation, policies with respect
to workers compensation (the "Insurance Policies"). Such Insurance Policies are
valid and binding and in full force and effect, and all premiums due thereon
have been paid. Sellers have complied with all material provisions of such
Insurance Policies. Schedule 5.1(aa) contains a complete and correct list of all
Insurance Policies and all amendments and riders thereto, and identifies the
name and address of the insurers, the expiration dates thereof, type(s) and
amounts of insurance coverage, policy numbers, the annual premiums and payment
terms thereof, the policy periods for each policy and a brief description of the
interests insured thereby, copies of which have been provided or made available
to Purchaser by Seller. During the three-year period prior to the date hereof,
no Seller has made any claim under any of the Insurance Policies, or has
suffered any losses that would give rise to any such claims, for any amount in
excess of Two Hundred Fifty Thousand U.S. Dollars ($250,000.00), except as set
forth on Schedule 5.1(aa). Schedule 5.1(aa) contains a list of all outstanding
claims made under any insurance policy covering Sellers for any amount in excess
of Two Hundred Fifty Thousand U.S. Dollars ($250,000.00). No Seller (i) has
permitted or suffered any act or omission that would cause nor (ii) knows of any
reason or state of facts that could lead to, the cancellation of or reduction of
coverage provided by such policies. The Insurance Policies listed in Schedule
5.1(aa) are in amounts and have coverages as required by any Contract to which
such Seller is a party or by which any of their Purchased Assets or
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properties is bound. No Seller has (i) received written notice, and Seller does
not otherwise have Knowledge, that any insurer under any policy referred to in
this Section 5.1(aa) is denying liability with respect to a claim thereunder or
defending under a reservation of rights clause nor (ii) assigned, pledged,
mortgaged, hypothecated or otherwise transferred the rights under such insurance
policies. Sellers have recorded a reserve for such liabilities in and no
liability beyond such reserve would reasonably be expected to result in a
Material Adverse Effect. Workers' compensation claims outside the State of Ohio
for all employees of Sellers have been covered under fully insured programs
since December 31, 2001 and there have been no gaps in such coverage.
(bb) Absence of Certain Changes or Events. From and after March 31, 2002,
except (x) as contemplated or permitted by this Agreement, or (y) as set forth
in Schedule 5.1(bb), Sellers have conducted their business only in the ordinary
course and in a manner in all material respects consistent with past practice,
and whether or not in the ordinary course during such period, there has not been
any event which, individually or together with any other events, has had or
would reasonably be expected to result in, a Material Adverse Effect. In
addition, without limiting the foregoing, except as expressly contemplated
hereby and except as disclosed in Schedule 5.1(bb), there has not occurred since
March 31, 2002 (i) any damage, destruction or loss (whether or not covered by
insurance) with respect to any Purchased Assets in excess of $200,000.00, (ii)
any material change by Sellers in their accounting methods, principles or
practices, (iii) any revaluation by Sellers of any of the Purchased Assets,
including, without limitation, writing down the value of inventory or writing
off notes or accounts receivable other than in the ordinary course of business,
(iv) any entry by Sellers into any commitment or transaction, or series of
commitments or transactions, in respect of Indebtedness of Sellers, (v) any
declaration, setting aside or payment of any dividends or distributions in
respect of the capital stock of Sellers or any redemption, purchase or other
acquisition of any of its securities, (vi) any transfer, lease or other
disposition of any of Sellers' assets or properties, except for fair
consideration in the ordinary course of business consistent with past practices
or pursuant to a Bankruptcy Court order, (vii) any acquisition of any of
Sellers' assets or properties, except in the ordinary course of business,
consistent with past practices, (viii) any investment of a capital nature,
whether by purchase of stock or securities, contributions to capital, property
transfers or otherwise, in any partnership, corporation or other entity, or
entry into any agreement or commitment to do the same, (ix) any acquisition of
(or commitment to acquire) the stock or equity interests of any entity or the
operating assets of any going business, (x) any forgiving, release,
cancellation, compromise or lapse of any debt or claim of Sellers, other than in
the ordinary course of business consistent with past practices or pursuant to a
Bankruptcy Court order, (xi) any incurrence of Indebtedness by Sellers or (xii)
any increase in the compensation payable or to become payable to any officer or
employee of Sellers except for increases in salaries or wages in the ordinary
course of business and in a manner consistent with past practice, or any
material increase in the benefits under, or the establishment of, any employee
benefit plan, including any DB Plan; and Sellers have not agreed to, and do not
intend, to take any action contemplated by the foregoing clauses (i) through
(xii) of this Section 5.1(bb).
(cc) Undisclosed Liabilities. None of Sellers has any material liability,
except for (i) liabilities set forth on the face of the Unaudited Balance Sheet
(rather than in any notes thereto) and (ii) liabilities which have arisen after
March 31, 2002 in the ordinary course of business of Sellers.
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(dd) Other Negotiations; Brokers. None of Sellers or any Person retained by
or acting for or on behalf of any Seller, or any Affiliate of any such Person
(i) has entered into any agreement that conflicts with any of the transactions
contemplated by this Agreement or (ii) has entered into any agreement or had any
discussions with any third party regarding any transaction involving any Seller,
which could result in any such Seller, Purchaser, or their respective
shareholders, members or any general partner, limited partner, manager, officer,
director, employee, agent or Affiliate of any of them being subject to any claim
for liability to said third party as a result of entering into this Agreement or
consummating the transactions contemplated hereby or thereby. Except as set
forth in Schedule 5.1(dd), no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission payable by Seller or any
Subsidiary of Seller in connection with this Agreement or the transactions
contemplated hereby based upon arrangements made by and on behalf of Seller.
(ee) Investment. Each Seller (i) understands that the Purchaser Interests
and the Senior Secured Note have not been, and will not be, registered under the
Securities Act or under any state securities Laws, and are being offered and
sold in reliance upon federal and state exemptions for transactions not
involving any public offering, (ii) will bear the economic risk of acquiring the
Purchaser Interests and the Senior Secured Note and will not be deemed to be an
underwriter under the Securities Act or any rules or regulations promulgated
thereunder, (iii) acknowledges that Purchaser has made no representations or
warranties to it as to the future financial performance or prospects of
Purchaser, the present or future value of the Purchaser Interests and the Senior
Secured Note, or the likelihood that the obligations constituting the Purchaser
Interests and the Senior Secured Notes will be paid in full and in a timely
fashion, (iv) agrees that it has, independently and without reliance on
Purchaser, and based on each such Seller's detailed knowledge of the Purchased
Assets as owner of such assets and the Assumed Liabilities and such other
documents and information as it has deemed appropriate, made its own analysis of
Purchaser, its future financial performance and its prospects and value of the
Purchaser Interests and the Senior Secured Note and has made its own decision to
accept the Purchaser Interests and the Senior Secured Note as part of the
Purchase Price, (v) agrees that it will, independently and without reliance upon
Purchaser, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement and the Attendant Documents,
and (vi) is an "accredited investor" as defined in Regulation D promulgated
under the Securities Act. Each Seller further acknowledges that each Seller will
be restricted from transferring the Purchaser Interests pursuant to the terms of
the Purchaser Operating Agreement or from transferring the Senior Secured Note
pursuant to the terms thereof.
(ff) Solvency of Non-Debtor Sellers. None of the Non-Debtor Sellers is now
insolvent, nor will any Non-Debtor Seller be rendered insolvent by any of the
transactions contemplated by this Agreement. As used in this Section 5.1(ff),
the term "insolvent" means that the sum of the debts and other probable
liabilities of the applicable Non-Debtor Seller exceeds the fair present value
of such Non-Debtor Seller's assets. Immediately after giving effect to the
consummation of the transactions contemplated by this Agreement: (A) each
Non-Debtor Seller will be able to pay its liabilities as they become due in the
ordinary course of business of such Non-Debtor Seller; and (B) each Non-Debtor
Seller will not have unreasonably small capital with which to conduct its
present or proposed business.
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(gg) Litigation. Schedule 5.1(gg) sets forth each instance in which
any Non-Debtor Seller (i) is subject to any outstanding injunction, judgment,
order, decree, ruling, or charge or (ii) is a party or, to Sellers' Knowledge,
threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or administrative agency of any
federal, state, local, or foreign jurisdiction. None of the actions, suits,
proceedings, hearings and investigations set forth in Schedule 5.1(gg) questions
the enforceability of this Agreement or the transactions contemplated by this
Agreement or, if adversely determined, would reasonably be expected to adversely
affect the Purchased Assets to be acquired from such Non-Debtor Seller,
individually or in the aggregate, by an amount of Two Hundred Thousand U.S.
Dollars ($200,000.00) or more.
Section 5.2 Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to Sellers the following:
(a) Good Standing and Authority. Purchaser is a limited liability
company organized, validly existing and in good standing under the laws of the
State of Delaware. Purchaser is duly qualified to do business as a foreign
entity and is in good standing in each jurisdiction in which it is required to
be qualified. Purchaser has full limited liability company power and authority
to enter into this Agreement, to enter into the Attendant Documents to which it
is a party and to consummate the transactions contemplated in this Agreement.
This Agreement and all of the Attendant Documents to which Purchaser is a party,
and the consummation of the transactions contemplated in this Agreement, have
been or will be, on or prior to the Closing Date, duly authorized and approved
by all necessary and proper limited liability company action on the part of
Purchaser. This Agreement, and all of the Attendant Documents to which Purchaser
is a party, when executed and delivered, will constitute legal, valid and
binding obligations of Purchaser enforceable against such Purchaser in
accordance with their respective terms.
(b) Non-Violative Agreement. Neither the execution and delivery of
this Agreement or the Attendant Documents to which Purchaser is a party nor the
consummation of the transactions contemplated in this Agreement will conflict
with, result in the breach or violation of or constitute a default under the
terms, conditions or provisions of Purchaser's certificate of formation or
limited liability company agreement or any other material agreement or
instrument to which Purchaser is a party, or by which Purchaser is bound.
(c) Consents, Approvals or Authorizations. Except as contemplated by
this Agreement, no consent, approval or authorization of, filing or registration
with, or notification to, any Governmental Authority is required in connection
with the execution and delivery of this Agreement by Purchaser or the
consummation by Purchaser of the transactions contemplated hereby, other than
any consent, approval or authorization, filing or registration with, or
notification to, which if not obtained or made would not materially and
adversely affect Purchaser's ability to consummate the transactions contemplated
hereby. No consent, approval or authorization of any Person is required in
connection with the execution and delivery of this Agreement by Purchaser or the
consummation by Purchaser of the transactions contemplated hereby.
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(d) Purchaser Interests. All of the issued and outstanding
Purchaser Interests (i) have been duly authorized, are validly issued, fully
paid, and nonassessable, and (ii) were issued in compliance with all applicable
state and federal securities Laws. The Purchaser Interests to be issued pursuant
to this Agreement will be duly authorized, validly issued, fully paid and
nonassessable and will on the Closing Date be issued in compliance with all
applicable federal and state securities Laws.
(e) Options and Warrants. There is no existing option, warrant,
call, right, commitment or other agreement of any character to which the
Purchaser or Purchaser Member is a party requiring, and there are no securities
of Purchaser outstanding which upon conversion or exchange would require, the
issuance, sale or transfer of any additional Purchaser Interests or other equity
securities of Purchaser or other securities convertible into, exchangeable for
or evidencing the right to subscribe for or purchase Purchaser Interests or
other equity securities of Purchaser. Except for the limited liability company
agreement of Purchaser, neither the Purchaser nor the Purchaser Member is a
party to any voting trust or other voting agreement with respect to any of the
Purchaser Interests or to any agreement relating to the issuance, sale,
redemption, transfer or other disposition of equity interests of Purchaser.
(f) Operations of Purchaser. Purchaser was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has and on the Closing Date will have, conducted
its operations only as contemplated hereby.
(g) Financing. Purchaser shall have on the Closing Date sufficient
unrestricted funds on hand or committed lines of credit or funds to
pay the Cash Consideration.
Section 5.3 Amendments to Disclosure Schedules. From time to time prior to
the Closing, Sellers shall, by written notice to Purchaser or upon the written
request of Purchaser, amend the Schedules to this Agreement to reflect any
matters hereafter arising or which hereafter come to their attention which, if
existing, occurring or known to Sellers at the date of this Agreement, would
have been required to be set forth or described in the Schedules to this
Agreement; provided that (i) no such notice or amendment to the Schedules
pursuant to this Section 5.3 shall be deemed to cure any breach of any
representation or warranty which is made in this Agreement as of the date hereof
as of the date of such delivery, and (ii) no such notice or amendment shall have
any effect for purposes of determining whether the condition in Section 9.1(c)
has been satisfied.
ARTICLE VI
EMPLOYEE MATTERS
Section 6.1 Employees.
(a) Termination and Rehire of Sellers' Employees. Effective as of
the Closing Date, Sellers shall terminate the employment of all employees of
Sellers at the Purchased Plants ("Sellers' Employees") and Purchaser shall offer
or cause to be offered employment to certain of Sellers' Employees in accordance
with the xxxxxxx plan agreed to by
36
Purchaser and Republic as of the date hereof and as may be amended from time to
time by mutual agreement prior to the Closing. Nothing contained in this
Agreement shall require the Purchaser to maintain the employment of any Hired
Employee. For purposes of this Agreement, Sellers' Employees who are offered
and, on or after the Closing Date, accept and actually commence employment with
Purchaser or any Subsidiary of Purchaser shall be referred to herein as "Hired
Employees."
(b) WARN Act Notices. The Sellers shall indemnify and hold harmless
Purchaser and its Affiliates from all costs, liabilities and expenses,
including, without limitation, reasonable attorneys fees, incurred by Purchaser
or any of its Affiliates as a result of any violation of, or failure to comply
with, the WARN Act based on the transaction contemplated by this Agreement. For
purposes of the WARN Act and this Section 6.1(b), "Closing Date" shall mean the
"effective date" of the transaction contemplated by this Agreement, as defined
in the WARN Act. Notwithstanding the foregoing, prior to the Closing Date,
Purchaser shall have the right to negotiate terms of employment with non-union
represented individuals to become effective immediately after the Closing with
such employees of Sellers as is determined by Purchaser in its sole discretion.
(c) Alternative Tax Procedure. Pursuant to the "Alternative
Procedure" provided in Section 5 of Revenue Procedure 96-60, 1996-2 C.B. 399,
(i) Purchaser and Republic shall report on a predecessor/successor basis as set
forth therein, (ii) Sellers will be relieved from filing a Form W-2 with respect
to any Hired Employees for the year that includes the Closing Date; and (iii)
Purchaser will undertake to file (or cause to be filed) a Form W-2 and any of
the other tax related forms permitted to be filed on a predecessor/successor
basis in Section 5 of Revenue Procedure 96-60 for each such Hired Employees for
the year that includes the Closing Date (including the portion of such year that
such employee was employed by Seller). Republic shall provide Purchaser on a
timely basis with all payroll and employment-related information with respect to
each Hired Employee.
Section 6.2 Employee Benefit Plans.
(a) Employee Benefit Plans and Fringe Benefit Plans and Policies.
Effective as of the Closing Date, Purchaser shall cause the Hired Employees to
be covered under new or existing employee benefit plans and fringe benefit plans
which, in the aggregate, provide Hired Employees with such benefits as Purchaser
deems appropriate in its sole discretion ("Purchaser's Plans"); provided,
however, that Purchaser's Plans shall meet the requirements of each collective
bargaining agreement to which Purchaser is a party with respect to those Hired
Employees whose terms and conditions of employment are subject to such
collective bargaining agreement; provided further that the compensation and
benefits offered by Purchaser to the Hired Employees shall be sufficient so as
not to constitute a "constructive termination" for purposes of triggering the
WARN Act and other applicable state and federal law.
(b) Current Vacation Accruals. Effective as of the Closing Date,
Purchaser shall, in accordance with Schedule 6.2(b), provide each Hired Employee
with the number of his or her unused accrued vacation days (but not sick or
other paid time off days) outstanding as of the Closing Date under the
applicable vacation policy of Sellers or the Successor Labor Agreement and shall
not cause any forfeiture of any such days such that Purchaser shall pay the
37
cash equivalent of any such days that remain unused as of the Hired Employee's
termination of employment with Purchaser to the extent applicable; provided,
however, that in determining the number of any such days that are unused as of a
Hired Employee's termination of employment with Purchaser, such Hired Employee
shall be deemed to have used days credited under this Section 6.2(b) prior to
any vacation days accrued while such Hired Employee is employed by Purchaser.
(c) Group Health Plan. Republic shall continue to maintain its group
health plan for so long as there are any employees at either Republic or any
ERISA Affiliate; provided, however, that Republic may terminate such group
health plan prior to the termination of all such employees if and when it
becomes prohibitively expensive for Republic to maintain such group health plan,
but in no event shall such plan be terminated prior to January 1, 2003.
(d) Expense Reimbursement. Purchaser will reimburse Republic for
pre-Closing compensation expenses with respect to both the Hired Employees and
Sellers' employees who do not become Hired Employees, but only if and to the
extent such expenses (i) were incurred in the ordinary course of business
consistent with past practice, (ii) were accrued as of the Closing Date, (iii)
are not covered by any insurance maintained by any Seller, not payable from any
assets held in a VEBA or other welfare benefit fund of any Seller, and not the
obligation of any third party, (iv) consist exclusively of accrued wages, back
payroll taxes (withholding only), accrued vacation benefits, accrued management
performance incentives, health insurance benefits incurred but not reported, and
workers' compensation, and (v) do not in the aggregate exceed Twenty-Nine
Million, Five Hundred Thousand U.S. Dollars ($29,500,000.00), subject to the
following conditions and limitations:
(i) Such accrued wages will be reimbursed only for (x) hourly
employees (both hourly Hired Employees and hourly employees who do not
become Hired Employees) and (y) if Closing occurs other than on the 15th or
last work day of a month, salaried employees (both salaried Hired Employees
and salaried employees who do not become Hired Employees).
(ii) Such accrued vacation will be reimbursed only for Hired
Employees (both hourly Hired Employees and salaried Hired Employees).
(iii) Such incurred but unreported health insurance benefits
will be reimbursed only for (x) Hired Employees (both hourly Hired
Employees and salaried Hired Employees) and (y) Sellers' hourly employees
represented by the United Steel Workers of America who do not become Hired
Employees, but in the case of such hourly employees who do not become Hired
Employees, only if and to the extent such expenses consist exclusively of
health insurance benefits incurred but not reported and only if and to the
extent such expenses do not in the aggregate exceed Two Million, One
Hundred Thousand U.S. Dollars ($2,100,000.00).
(iv) Such workers' compensation claims will be reimbursed only
for Ohio employees (both Ohio Hired Employees and Ohio employees who do not
become Hired Employees).
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(v) Such back payroll taxes will be reimbursed for both
Hired Employees and employees who do not become Hired Employees.
(vi) Such management incentives will be reimbursed only for
salaried employees (both salaried Hired Employees and salaried employees
who do not become Hired Employees).
(vii) Reimbursement will be made by Purchaser as soon as
administratively practicable following receipt of written notice of payment
of any such eligible expenses along with documentation that such payment
complies with the requirements for reimbursement set forth herein.
(viii) Purchaser will have no reimbursement obligation under
this Section 6.2(d) for any expenses for which Purchaser receives notice of
a claim following thirteen months after the Closing.
Section 6.3 Workers' Compensation. Sellers shall be responsible for all
workers' compensation claims arising out of events occurring on or prior to the
Closing Date, except as expressly assumed by Purchaser in this Agreement.
Purchaser shall be responsible for all workers' compensation claims arising out
of events occurring after the Closing Date.
Section 6.4 Management Incentive Plans.
(a) Key Management Employment Benefits. Purchaser shall provide
to the managers listed on Schedule 6.4(a) ("Key Managers") employment benefits
similar to those provided by Sellers to such individuals at the date hereof
other than those provided under the Lender Retention Program.
(b) Key Management Severance and Termination Plans. Purchaser
shall assume the severance and termination plans and protections provided by
Sellers described in Schedule 6.4(b) with respect to Key Managers or adopt new
severance and termination plans and protections on substantially similar terms.
(c) Equity Incentive Plan. After the Closing, Purchaser shall
adopt an equity-based incentive program for the managers of Purchaser and such
other Persons as the board of directors of Purchaser may determine from time to
time. Such equity-based incentive program initially shall reserve up to 9% of
the Purchaser Interests outstanding immediately after Closing and shall grant
equity incentives to participants in such plan under terms, conditions and
amounts to be determined by the board of directors of Purchaser. The terms of
any such plan will provide for the granting of options and the issuance of
Purchaser Interests. Purchaser Interests issued under such plan will dilute
ratably all equity interests in Purchaser that are outstanding immediately after
Closing.
Section 6.5 Mutual Cooperation. Each of the parties hereto shall mutually
cooperate and provide the other party with such records, information,
documentation and assistance as such party reasonably requests in order to carry
out the party's respective obligations under this Article VI.
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ARTICLE VII
TAX MATTERS
Section 7.1 Transfer Taxes. Subject to bankruptcy court approval, in
accordance with Section 1146(c) of the Bankruptcy Code, the making or delivery
of any instrument of transfer under a plan confirmed under Section 1129 of the
Bankruptcy Code shall not be taxed under any law imposing a stamp tax or similar
tax. The instruments transferring the Purchased Assets to Purchaser shall
contain the following endorsement:
"Because this [instrument] has been authorized pursuant to Order of the
United States Bankruptcy Court for the Northern District of Ohio,
Eastern Division, relating to a plan of reorganization of the Grantor,
it is exempt from transfer taxes, stamp taxes or similar taxes pursuant
to 11 U.S.C. ss. 1146(c), and any officer receiving this [instrument]
is hereby authorized and directed to permit the transfer contemplated
by this [instrument] without the payment of any stamp tax, transfer tax
or similar tax."
Purchaser and Sellers shall cooperate in providing each other with any
appropriate resale exemption certifications and other similar documentation.
In the event real estate, stamp taxes or similar taxes (including,
without limitation, transfer taxes) ("Transfer Taxes") are required to be paid
in order to record the deeds to be delivered to Purchaser in accordance
herewith, or in the event any such Transfer Taxes are assessed at any time
thereafter, such real estate Transfer Taxes incurred as a result of the
transactions contemplated hereby shall be paid 50% by Purchaser and 50% by
Sellers. In the event sales, use or other Transfer Taxes are assessed on the
transfer of any Purchased Assets as a result of the transactions contemplated
hereby, such Transfer Taxes shall be paid 50% by Purchaser and 50% by Sellers.
Purchaser and Sellers agree to cooperate to determine the amount of
Transaction Taxes payable in connection with the transactions contemplated under
this Agreement. Purchaser agrees to assist Sellers reasonably in the preparation
and filing of any and all required returns for or with respect to such
Transaction Taxes with any and all appropriate taxing authorities. Nothing in
this Section 7.1 shall require Purchaser to be liable for any of the income tax
liability of Seller.
Section 7.2 Proration of Real and Personal Property Taxes. The real and
personal property Taxes and assessments on the Purchased Assets for any taxable
period commencing prior to the day immediately preceding the Closing Date (the
"Adjustment Date") and ending after the Adjustment Date shall be prorated
between Purchaser and Seller as of the close of business on the Adjustment Date.
All such prorations shall be allocated so that items relating to time periods
ending on the Adjustment Date shall be allocated to Republic based upon the
number of days in the period prior to the Closing Date and items related to time
periods beginning after the Adjustment Date shall be allocated to Purchaser
based on the number of days in the period from and after the Closing Date;
provided, however, that the parties shall allocate
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any real property Tax subject to the limitation set forth in Section 3.1(a)(vi).
The amount of all such prorations shall be settled and paid on the Closing Date;
provided, however, that final payments with respect to prorations that are not
able to be calculated on the Closing Date shall be calculated and paid as soon
as practicable thereafter.
Section 7.3 Tax Returns; Cooperation on Tax Matters.
(a) Republic shall be responsible for the preparation and filing of
all Tax Returns for Sellers for all periods as to which Tax Returns are due
after the Closing Date (including the consolidated, unitary and combined Tax
Returns for such Seller) which include the operations of the Business for any
period ending on or before the Closing Date. Republic shall make all payments
required with respect to any such Tax Returns, to the extent not prohibited,
stayed or discharged by the Bankruptcy Court.
(b) Purchaser shall be responsible for the preparation and filing of
all Tax Returns for the Business for all periods as to which Tax Returns are due
after the Closing Date (other than for Taxes with respect to periods for which
the consolidated, unitary, and combined Tax Returns of Republic will include the
operations of the Business). Purchaser will make all payments required with
respect to any such Tax Returns; provided, however, that Republic shall
reimburse Purchaser three (3) Business Days prior to the due date for filing
such Tax Returns to the extent any payment Purchaser makes relates to the
operation of the Business for any period or portion thereof ending on or before
the Closing Date.
(c) Purchaser and Republic agree to furnish or cause to be furnished
to each other, as promptly as practicable, such information and assistance
relating to the Purchased Assets and the Assumed Liabilities as is reasonably
necessary for the preparation and filing of any Tax Return, claim for refund or
other required or optional filings relating to Tax matters, for the preparation
for and proof of facts during any Tax audit, for the preparation for any Tax
protest, for the prosecution or defense of any suit or other proceeding relating
to Tax matters and for the answer to any governmental or regulatory inquire
relating to Tax matters.
(d) Purchaser agrees to retain possession, at its own expense, of all
accounting, business, financial and Tax records and information (i) relating to
the Purchased Assets or the Assumed Liabilities that are in existence on the
Closing Date and transferred to Purchaser hereunder and (ii) coming into
existence after the Closing Date that relate to the Purchased Assets or the
Assumed Liabilities before the Closing Date, for a period of at least six years
from the Closing Date. In addition, from and after the Closing Date, Purchaser
agrees that it will provide access to Sellers and their attorneys, accountants
and other representatives (after reasonable notice, during normal business hours
and in a manner so as not to interfere with the normal business operations of
Purchaser), to the books, records, documents and other information relating to
the Purchased Assets or the Assumed Liabilities and to any officers of Purchaser
that are Hired Employees as Sellers may reasonably deem necessary to (x)
properly prepare for, file, prove, answer, prosecute and/or defend any such Tax
Return, claim, filing, tax audit, tax protest, suit, proceeding or answer or (y)
administer or complete any cases under Chapter 11 of the Bankruptcy Code of
Sellers. Such access shall include, without limitation, access to any
computerized information retrieval systems relating to the Purchased Assets or
the Assumed Liabilities.
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Section 7.4 Allocation Purchase of Price and Purchase Price Allocation
Forms. Purchaser and Sellers agree to allocate the Purchase Price and the
Assumed Liabilities among the Purchased Assets (and among Sellers) in accordance
with a schedule to be reasonably agreed to between them prior to the Closing
Date (the "Allocation"), provided that if Purchaser and Sellers are not able to
agree on the Allocation prior to the Closing Date, Purchaser's schedule of
allocation will be the Allocation with Republic's consent, which consent shall
not be unreasonably withheld. Sellers and Purchaser will cooperate in filing
with the IRS their respective Forms 8594 as provided for in Section 1060 of the
Code on a basis consistent with the Allocation, and the Allocation shall be
reflected on any Tax Returns required to be filed as a result of the
transactions contemplated hereby.
ARTICLE VIII
COVENANTS AND ADDITIONAL AGREEMENTS
Section 8.1 Approval Proceedings.
(a) Sellers shall refrain from knowingly taking any action that would
be likely to result in the revocation of, the entry of the Bidding Procedures
Order.
(b) Sellers shall (i) use their commercially reasonable efforts to
cause the entry of the Sale Order by the Bankruptcy Court on or before July 15,
2002, which date Purchaser may waive or extend at its sole discretion, and (ii)
use their commercially reasonable efforts to obtain, and shall refrain from
knowingly taking any action that would be likely to delay, prevent, impede or
result in the revocation of the entry by the Bankruptcy Court of the Sale Order.
(c) Sellers shall provide notice of the proposed sale of the
Purchased Assets, in form and substance reasonably acceptable to Purchaser and
in such manner as may be required by Law, to Sellers' creditors, all
Governmental Authorities that have filed a notice of appearance in the Chapter
11 Cases, all parties to the Purchased Contracts and Reference Leases and all
parties entitled to notice of the Sale Motion by such date as shall allow
sufficient time for the Sale Order to be entered by the Bankruptcy Court on or
before July 9, 2002 (the "Required Creditor Notices").
Section 8.2 Good Faith Deposit. Within two (2) Business Days after the
deadline for receipt of Qualified Bids, but, in any event, prior to the date of
the Auction, Purchaser shall cause to be issued a letter of credit to an escrow
agent to be jointly selected by Purchaser and Republic (the "Escrow Agent") in
the amount of Five Million U.S. Dollars ($5,000,000.00) (the "Good Faith
Deposit"). The Escrow Agent shall hold the Good Faith Deposit pursuant to a
customary escrow agreement in form and substance reasonably satisfactory to
Purchaser and Republic. Purchaser shall not be required to provide the Good
Faith Deposit in the event Seller does not receive any Qualified Bids by the
deadline therefor. The Good Faith Deposit may be drawn down by Republic only if
(a) Republic terminates this Agreement pursuant to Section 12.1(e) and Sellers
are not then in material breach of their representations, warranties or
covenants under this Agreement or (b) at Closing, at the sole election of
Purchaser, to satisfy a
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portion of the Cash Consideration. In all other circumstances, the Good Faith
Deposit shall be promptly returned to Purchaser.
Section 8.3 Access to Information, Confidentiality.
(a) Sellers shall, and shall cause each of their respective officers,
directors, employees, auditors and other agents of Sellers to afford the
Affiliates, officers, directors, employees, auditors and other agents of
Purchaser and its Affiliates reasonable access during normal business hours to
the officers, directors, employees, agents, properties, offices, plants and
other facilities of Sellers and to all books and records of Sellers, and shall
furnish Purchaser and its Affiliates with all financial, operating and other
data and information with respect to the business and properties of Sellers as
Purchaser, through its Affiliates and their respective officers, employees or
agents.
(b) Sellers shall promptly provide Purchaser with drafts of all
documents, motions, orders, filing or pleadings that Seller or any of its
Subsidiaries proposes to file with the Bankruptcy Court which relate to (i) this
Agreement or the transactions contemplated hereunder, (ii) entry of the Sale
Order and, (iii) the sale of the Purchased Assets by Sellers and assumption of
Assumed Liabilities by Purchaser, and will provide Purchaser with a reasonable
opportunity to review such documents in advance of their service and filing.
Sellers shall consult and cooperate with Purchaser, and consider in good faith
the views of Purchaser with respect to all such filings. Notwithstanding any
provision to the contrary herein, Sellers shall not seek to amend or modify any
provision of the Bidding Procedures Order or the Sale Order without the prior
written consent of Purchaser.
(c) From the date hereof until the Closing Date, except as may be
required by Law, neither Purchaser nor its Affiliates, employees, agents, and
representatives (collectively, "Purchaser Representatives") will disclose to any
third party the information concerning Sellers that it may have acquired from
Sellers in the course of its due diligence investigation with respect to Sellers
in Section 8.3(a) and (b) hereof without the prior written consent of Seller;
provided, however, Purchaser Representatives may disclose any such information
as follows: (i) to the extent that the information is or becomes generally
available to the public through no fault of any Purchaser Representative making
such disclosure; (ii) to the extent that the same information is in the
possession of the Purchaser Representative making such disclosure prior to
receipt of such information; (iii) to the extent that the Purchaser
Representative that received the information independently developed the same
information prior to the date the Purchaser Representative received such
information from Sellers without relying on any information; or (iv) to the
extent that the same information becomes available to such Purchaser
Representative making such disclosure on a non-confidential basis from a source
other than a Purchaser Representative which is not known by Purchaser
Representative to be confidential. If the transactions contemplated hereby are
not consummated, the Purchaser Representatives will return or destroy the
confidential information upon the written request of Seller. In the event that
Purchaser or any Purchaser Representative is required by Law or legal process to
disclose all or any part of any such confidential information, Purchaser shall
promptly notify Republic of the existence, terms and circumstances surrounding
such a request so that it may seek an appropriate protective order, at
Republic's sole cost and expense, prior to Purchaser's disclosure of such
information.
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Section 8.4 Notification of Certain Matters. Sellers shall give prompt notice
to Purchaser of (i) the occurrence or non-occurrence of any event the occurrence
or non-occurrence of which would be likely to cause any representation or
warranty contained in this Agreement to be materially untrue or inaccurate
(without giving effect to any limitation as to "materiality" set forth therein),
(ii) any failure of Sellers to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder and (iii) the
occurrence or non-occurrence of any event the occurrence or non-occurrence of
which would have a Material Adverse Effect; provided, however, that the delivery
of any notice pursuant to this Section 8.4 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
Section 8.5 HSR Act.
(a) Subject to the terms and conditions of this Agreement, each of
the parties will (i) use commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary under
applicable antitrust Laws to consummate the transactions contemplated by this
Agreement, (ii) use commercially reasonable efforts to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and (iii) use commercially reasonable efforts
to cause the expiration or termination of the applicable waiting periods under
the HSR Act as soon as practicable.
(b) In connection with the efforts to obtain all requisite approvals
and authorizations for the transactions contemplated by this Agreement under the
HSR Act or any other antitrust Law, each of the parties shall use commercially
reasonable efforts to (i) cooperate, and assist as reasonably requested, with
each other in connection with any filing or submission and in connection with
any investigation or other inquiry, including any proceeding initiated by a
private party, (ii) keep the other parties informed in all material respects of
any material communication received by such party from, or given by such party
to, the Federal Trade Commission (the "FTC"), the Antitrust Division of the
Department of Justice (the "DOJ") or any other Governmental Authority and of any
material, communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby and (iii) permit the other parties to review any material communication
given to it by, and consult with each other in advance of any meeting or
conference with, the FTC, the DOJ or any other Governmental Authority in
connection with any proceeding by a private party. Each of the parties thereto
will coordinate and cooperate fully with the other parties hereto in exchanging
information and providing such assistance as such other parties may reasonably
request in connection with the foregoing and in seeking early termination of any
applicable waiting periods under the HSR Act. Sellers shall maintain in the
strictest confidence any material, non-public information about Purchaser or any
of Purchaser's direct or indirect Affiliates obtained in connection with the
foregoing efforts and shall cause any employee, officer, director or
representative of Sellers to maintain such information in the strictest
confidence.
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Section 8.6 Filings and Approvals Regarding the Railroad Subsidiary.
(a) As soon as practicable following the date of this Agreement,
Purchaser shall make or cause to be made all filings with and submissions to the
Surface Transportation Board under the ICC Termination Act that are required in
connection with the consummation of the transactions contemplated by this
Agreement in respect of the Railroad Subsidiary. Sellers shall assist and
support, and Republic shall cause the Railroad Subsidiary to assist and support,
Purchaser in the preparation of such filings and submissions, and Purchaser
shall provide Republic an opportunity to review and comment on all such filings
and submissions prior to their transmittal to the Surface Transportation Board.
(b) If the approvals or exemptions of the transactions from the
Surface Transportation Board contemplated by this Agreement in respect of the
assets of the Railroad Subsidiary have not been obtained or become effective by
the Closing Date, Sellers shall continue to use their commercially reasonable
efforts to obtain all approvals or exemptions and, notwithstanding anything to
the contrary herein, until such approvals or exemptions are obtained, this
Agreement shall not constitute an agreement to assign the assets of the Railroad
Subsidiary and to the extent permitted by Law and subject to any required
exemptions or approvals, from and after the Closing Date (i) Republic shall use
commercially reasonable efforts to cause the Railroad Subsidiary to continue to
operate in the ordinary course of business or as otherwise reasonably directed
by Purchaser, (ii) Republic shall, and Republic shall cause the Railroad
Subsidiary to, enter into any reasonable arrangement designed to provide
Purchaser with the benefits of, and cause Purchaser to bear the costs and
obligations of, Republic's ownership of the Railroad Subsidiary and (iii)
Purchaser shall indemnify Sellers for any losses arising out of the operation of
the Railroad Subsidiary from and after the Closing Date.
Section 8.7 Further Action.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use its commercially reasonable efforts to take or cause to
be taken all appropriate action and to do or cause to be done all things
necessary, proper or advisable under applicable Laws to consummate the
transactions contemplated by this Agreement as promptly as practicable,
including using its commercially reasonable efforts to obtain all Permits and
orders from Governmental Authorities and consents, approvals and authorizations
from parties to contracts with any Seller as are necessary for the consummation
of the transactions contemplated by this Agreement and to fulfill the conditions
to the Closing. Sellers shall use their commercially reasonable efforts, in
cooperation with Purchaser, to secure, transfer, assign or otherwise convey to
Purchaser all Permits necessary for the continued post-Closing operation of the
Purchased Assets or discharge the Assumed Liabilities in compliance with all
applicable Laws and Environmental Laws.
(b) Each party hereto agrees to cooperate in obtaining any other
consents and approvals that may be required in connection with the transactions
contemplated by this Agreement; provided, however, that no party hereto shall be
required to compensate any third party to obtain any such consent or approval.
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(c) Prior to the execution and delivery of this Agreement,
Purchaser instructed a Title Company to obtain title insurance commitments and
corresponding Surveys. Promptly after Purchaser receives such title commitments
and corresponding Surveys, Purchaser shall deliver copies thereof, as well as
further continuations, supplements or revisions thereto, directly to Sellers.
Purchaser shall use commercially reasonably efforts for the market in which the
respective properties are located to cause the Title Company to deliver title
insurance commitments and to cause the corresponding Surveys to be completed as
soon as possible and in any event delivered prior to Closing.
Section 8.8 Conduct of the Business. Except as contemplated by this
Agreement or with the prior written consent of Purchaser, Sellers covenant and
agree that, during the period between the date of this Agreement and the
Closing, Sellers shall (i) conduct the Business in a manner consistent with past
practice, and (ii) confer on a regular and frequent basis with one or more
Purchaser Representatives to report operational matters and the general status
of ongoing operations including sales levels, profit margins, cost increases,
changes or modifications to the operations of Sellers or their Subsidiaries and
adverse trends. Notwithstanding the generality of the foregoing, Sellers and
their Subsidiaries shall not, during the period between the date of this
Agreement and the Closing, directly or indirectly do, or propose or commit to
do, any of the following, except as provided by this Agreement or following (x)
the prior written notice thereof to Purchaser and (y) receipt by Sellers of
Purchaser's written non-objection thereto:
(a) amend or otherwise change the Certificates of Incorporation,
Bylaws or other constitutive documents of Sellers;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, (i) any shares of capital
stock of any class or any securities, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital stock or
any securities, or any other ownership interest, of Republic or any of its
Subsidiaries or (ii) any Purchased Assets, except for sales of inventory in the
ordinary course of business and in a manner consistent with past practice;
(c) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or any of
its securities;
(d) (i) acquire (by merger, consolidation or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof or collection of assets constituting all or substantially all
of a business or business unit; (ii) incur any Indebtedness or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any Person (provided that Seller
shall be permitted to borrow money under the Debtor-in-Possession Revolving
Credit Agreement); (iii) enter into any material Contract, agreement or lease
other than in the ordinary course of business and in a manner consistent with
past practice; or (iv) enter into or amend any contract, agreement, commitment
or arrangement with respect to any of the matters set forth in this Section
8.10(d);
(e) enter into any Contract or amend or modify any existing
Contract with any of its shareholders, members, officers, directors, employees,
including making any loan or advance to any such Affiliate other than advances
historically made to employees in the ordinary
46
course in connection with the performance of their employment, vacation
advances, relocation loans and travel advances, in each case made in the
ordinary course of business and consistent with past practice.
(f) close any production facility or reject any Reference Leases
or Third Party Leases, provided that Sellers shall renew in accordance with its
terms any Reference Lease that is subject to renewal if, but only if, Purchaser
shall have delivered written notice to Sellers not less than 15 Business Days
prior to the lease renewal date for such Reference Lease directing Seller to
renew such Reference Lease;
(g) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected or reserved against in the Unaudited
Financial Statements of Sellers or incurred in the ordinary course of business
in a manner consistent with past practice including payments due and payable
under the Debtor-in-Possession Revolving Credit Agreement;
(h) restructure, write-off or forgive, or agree to restructure
write-off or forgive, any receivables;
(i) introduce system-wide or regional changes in operations or
products, other than operations or products consistent with the continuing
operation of the production facilities and purchase orders of Republic and any
of its Subsidiaries, except as described on attached Schedule 8.8(i);
(j) other than in the ordinary course of business, (A) enter into,
or agree to enter into, any new purchasing or distribution agreements, or amend
or agree to amend any existing purchasing or distribution agreements or (B)
enter into, or agree to enter into, any contract or agreement of a type which,
if it had been in effect on the date of this Agreement, would have been required
to have been identified on Schedule 5.1(e)(i), except, in each case, as
described on attached Schedule 8.8(j);
(k) enter into new leases in respect of real property not leased
by Sellers as of the date hereof or modify the terms of any Reference Lease or
enter into any sublease with respect to any Reference Lease;
(l) change or revoke any federal, state, local or foreign Tax
election, settle any federal, state, local or foreign Tax audit or file any
amended Tax Return with respect to federal, state, local or foreign Taxes for
which Purchaser would be responsible;
(m) change any method or period of accounting or change any
significant accounting policy, practice, or procedure or any material estimates;
(n) take or omit to take any action that would make any
representation or warranty of Seller and its Subsidiaries hereunder inaccurate
in any material respect;
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(o) increase, except pursuant to existing contracts or
established practice, the salary, compensation or benefits payable to any
employees, directors or consultants or modify, establish or enter into any
employee benefit plan, including any DB Plan; or
(p) agree or otherwise commit to take any of the actions
prohibited by the foregoing clauses (a) through (o).
Section 8.9 Non-Assignable Contracts.
(a) Notwithstanding anything contained in this Agreement to the
contrary, this Agreement shall not constitute an agreement to assign any
Purchased Contract or any claim, right or benefit arising thereunder or
resulting therefrom if an attempted assignment thereof without the consent of a
third party thereto would constitute a breach or other contravention thereof,
would be ineffective with respect to any such third party, or would in any way
adversely affect the rights of Purchaser or Sellers thereunder.
(b) With respect to any such Purchased Contract for which the
consent of a party thereto shall not have been obtained at Closing and any
claim, right or benefit arising thereunder or resulting therefrom, Sellers and
Purchaser shall each use their reasonable good faith efforts to obtain as
expeditiously as possible the written consent of the other parties to such
Purchased Contract for the assignment thereof to Purchaser.
(c) Unless and until any consent, waiver, confirmation, novation
or approval is obtained with respect to any such Purchased Contract, Sellers and
Purchaser shall cooperate to establish an arrangement satisfactory to Purchaser
under which Purchaser would obtain the claims, rights and benefits and assume
the corresponding liabilities and obligations thereunder (including by means of
any subcontracting, sublicensing or subleasing arrangement) or under which
Sellers would enforce for the benefit of Purchaser, with Purchaser assuming and
agreeing to pay Sellers' obligations, any and all claims, rights and benefits of
Sellers against a third party thereto. In such event, (i) Sellers will promptly
pay to Purchaser, when received, all moneys received by it under any such
Purchased Contract or any claim, right or benefit arising thereunder, and (ii)
Purchaser will promptly pay, perform or discharge, when due, any and all
obligations and liabilities arising thereunder, other than those being contested
in good faith.
Section 8.10 Acquisition Agreements. To the extent that any of the
acquisition agreements set forth on the attached Schedule 2.1(k) (the
"Acquisition Agreements") are not assignable without the consent of another
party, such consent is not obtained and there is hereafter discovered any event
or occurrence for which Purchaser would have been entitled to indemnification if
such Acquisition Agreement had been assigned to Purchaser (an "Indemnification
Claim"), Sellers shall, upon receipt of written notice from Purchaser, pursue
such Indemnification Claim on Purchaser's behalf at Purchaser's sole reasonable
expense. Purchaser shall control the investigation, defense and settlement
(including choice of counsel in its sole discretion) of any Indemnification
Claim and shall reimburse Sellers for all reasonable costs and expenses relating
thereto promptly upon presentation by Sellers of invoices or other documentation
evidencing such amounts to be reimbursed. Sellers shall make available to
Purchaser, at Purchaser's reasonable expense, its counsel and other
representatives, all information and documents available to them that relate to
such Indemnification Claim. Sellers
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shall also render to Purchaser, at Purchaser's reasonable expense, such
assistance and cooperation as may reasonably be required to ensure the proper
and adequate pursuit of such Indemnification Claim. Sellers shall promptly remit
and turn over to Purchaser any recovery (including pursuant to any settlement,
arbitration, judicial proceeding or otherwise) relating to any such
Indemnification Claim and such recovery shall be deemed to be a Purchased Asset.
Section 8.11 Indemnification Agreements. Sellers and Purchaser shall
cooperate to establish arrangements reasonably acceptable to each of Purchaser
and Republic under which Purchaser would obtain certain claims, rights and
benefits and assume certain corresponding liabilities and obligations under the
indemnification agreements set forth on the attached Schedule 8.11 (the
"Indemnification Agreements") with respect to the Purchased Assets. Without
limiting the generality of the foregoing, if there is discovered any event or
occurrence for which indemnification would have been provided under such
Indemnification Agreements, Sellers shall, upon receipt of written notice from
Purchaser, pursue such indemnification claim on Purchaser's behalf at
Purchaser's sole reasonable expense. Purchaser shall control the investigation,
defense and settlement (including choice of counsel in its sole discretion) of
any such indemnification claim asserted under any Indemnification Agreement and
shall reimburse Sellers for all reasonable costs and expenses relating thereto
promptly upon presentation by Sellers of invoices or other documentation
evidencing such amounts to be reimbursed. Sellers, at Purchaser's reasonable
expense, shall make available to Purchaser, its counsel and other
representatives, all information and documents available to them that relate to
any such indemnification claim. Sellers also shall, at Purchaser's reasonable
expense, render to Purchaser such assistance and cooperation as may reasonably
be required to ensure the proper and adequate pursuit of any such
indemnification claim. Sellers shall promptly remit and turn over to Purchaser
any recovery (including pursuant to any settlement, arbitration, judicial
proceeding or otherwise) relating to any such indemnification claim and such
recovery shall be deemed to be a Purchased Asset. Purchaser shall be entitled to
satisfy any payment obligation, threshold amount or other condition to the
receipt of indemnification under any Indemnification Agreement. To the extent
that Purchaser and Republic may benefit from an indemnification claim asserted
under any Indemnification Agreement, and Purchaser contributes to the
satisfaction of any payment obligation, threshold or other condition, then
Purchaser and Republic shall share in the benefit of any recovery therefrom pro
rata based upon their respective contributions to the satisfaction of any such
condition. To the extent that any liability for which Purchaser is indemnified
by Sellers under Section 11.2 would be covered under any of the Indemnification
Agreements, such claim may be asserted by Purchaser against Sellers, but any
such claim for indemnification shall not be due and payable to Purchaser until
such claim has been asserted by Sellers under such Indemnification Agreement and
no recovery is obtained thereunder.
Section 8.12 Litigation. Sellers will promptly supply to Purchaser copies
of all litigation or legal proceedings pertaining to the Purchased Assets which
may arise subsequent to the execution of this Agreement but prior to the Closing
Date, and will also advise Purchaser promptly in writing of any written threat
of litigation or other legal proceeding (including actions or motions in the
Bankruptcy Court) which is made between the date of this Agreement and the
Closing Date pertaining to the Purchased Assets or the Seller' ability to
perform its obligations under this Agreement.
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Section 8.13 Public Announcements. Prior to the Closing Date, the parties
shall consult with each other before issuing any press release or otherwise
making any public statement or holding any discussion with the Bank Lenders,
Creditors Committee, and any ad hoc meeting of trade creditors with respect to
this Agreement and the transactions contemplated hereby, and shall not issue any
such press release or make any such public statement without the prior approval
thereof by the other party, which approval shall not be unreasonably withheld.
Nothing in this Section 8.13 shall prevent disclosure by Sellers or Purchaser,
or any of their Affiliates, with respect to this Agreement and the transactions
contemplated hereby as Sellers or Purchaser, or such Affiliate, may be required
to make by applicable Law or as may be required to the Bank Lenders, provided,
however, that the party required to make such disclosure shall give prior notice
to the other party of the nature of the requirement, the identity of the Person
or Persons to whom disclosure is required to be made and the information to be
disclosed.
Section 8.14 Filings and Authorizations. Each of Sellers and Purchaser, as
promptly as practicable, shall (i) make, or cause to be made, all such filings
or submissions under Laws applicable to it as may be required for it to
consummate the transaction contemplated herein; (ii) use its and their
commercially reasonable efforts to obtain, or cause to be obtained, all
authorizations, approvals, consents and waivers from all Persons and
Governmental Authorities necessary to be obtained by it in order for it so to
consummate such transactions; and (iii) use its and their commercially
reasonable efforts to take, or cause to be taken, all other actions necessary,
proper or advisable in order for it to fulfill its obligations hereunder.
Section 8.15 Amendment to List of Purchased Contracts. Notwithstanding
anything herein to the contrary, at any time prior to the Closing Purchaser
shall be entitled in its sole discretion to remove any executory Contracts or
unexpired leases from the list of Purchased Contracts by providing written
notice thereof to Republic and any Contracts so removed shall not constitute
Purchased Assets at Closing. At any time before or after the Closing Purchaser
shall be entitled in its sole discretion to request the Sellers to add to the
list of Purchased Contracts any executory Contracts or unexpired leases of
Sellers by providing written notice thereof to Republic, and any Contracts so
added shall constitute Purchased Assets; provided that Purchaser shall not be
entitled to add to the list of Purchased Contracts any executory Contracts or
unexpired leases of Sellers that any Seller has rejected by order of the
Bankruptcy Court. Sellers shall give written notice to Purchaser prior to the
submission of any motion in the Chapter 11 Cases to reject any executory
Contracts or unexpired leases. Sellers shall use commercially reasonable efforts
to have such Contracts and leases assigned to the Purchaser as soon as
practicable after receipt of such notice (but no earlier than the Closing).
Section 8.16 Use of Cartersville Proceeds. To the extent that the
Cartersville Asset Sale has been consummated prior to the Closing, Sellers shall
promptly pay to the Bank Lenders the net proceeds therefrom, after repayment of
the industrial revenue bonds that are secured by the assets of the Cartersville
facility, for the exclusive purpose of repaying any outstanding principal and
accrued and unpaid interest on the Debtor-in-Possession Revolving Credit
Agreement.
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Section 8.17 Insurance. Following the Closing Date, Sellers shall maintain
insurance policies that provide the same level of coverage as the Insurance
Policies and that cover claims made and events occurring prior to the Closing
Date; provided, however that such insurance policies may only cover the Excluded
Assets and liabilities not assumed by Purchaser hereunder.
Section 8.18 Bulk Sale. Each of the parties to this Agreement hereby
waives compliance with the bulk sales or bulk transfer laws that are applicable
to the sale of the Purchased Assets with respect to the Excluded Liabilities.
Section 8.19 Creation of Easement. With respect to the property known as
0000 Xxxx 00xx Xxxxxx in Lorain, Ohio (the "Lorain Property"), Purchaser and
Sellers shall, prior to Closing, negotiate and record an easement agreement
reasonably acceptable in all respects to Purchaser and Sellers over the portion
of the Lorain Property being transferred to Purchaser in order to provide
ingress and egress to a public road from the portion of the Lorain Property
being retained by Sellers.
ARTICLE IX
CONDITIONS TO THE CLOSING
Section 9.1 Conditions to Obligations of Purchaser. The obligations of
Purchaser to effect the Closing shall be subject to the prior and/or
simultaneous satisfaction or written waiver by Purchaser of each of the
following conditions:
(a) Bidding Procedures Order. The Bidding Procedures Order (i)
shall not have been stayed, modified, amended, dissolved, revoked or rescinded
without Purchaser's consent and (ii) shall be in full force and effect on the
Closing Date.
(b) Sale Order. The Sale Order (i) shall have been entered on or
before July 15, 2002, which date may be waived or extended by Purchaser in its
sole discretion, (ii) shall not have been stayed, modified, amended, dissolved,
revoked or rescinded without Purchaser's consent and (iii) shall be in full
force and effect on the Closing Date. The Sale Order shall be in form and
substance reasonably acceptable to Purchaser.
(c) Representations and Warranties. (i) The representations and
warranties of Sellers set forth in this Agreement qualified by materiality shall
be true and correct in all respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date (except that to
the extent such representations and warranties expressly speak as of an earlier
date, such representations and warranties shall be true and correct in all
respects as of such specified date); (ii) the representations and warranties of
Sellers set forth in this Agreement that contain no qualification with respect
to materiality shall be true and correct in all material respects as of the date
of this Agreement and as of the Closing Date as though made on and as of the
Closing Date (except to the extent such representations and warranties expressly
speak as of an earlier date, such representations and warranties shall be true
and correct in all material respects as of such specified date); and (iii)
Purchaser shall have received a certificate dated the Closing Date signed by the
Chief Executive Officer of each Seller to such effect.
51
(d) Covenants. Sellers shall have performed in all material
respects all of the obligations, covenants and agreements required to be
performed by them under this Agreement at or prior to the Closing Date and
Purchaser shall have received a certificate, dated the Closing Date and signed
by the Chief Executive Officer of each Seller to that effect.
(e) Consents, Approvals and Permits. Sellers and Purchaser shall
have received all consents or approvals and made all applications, requests,
notices and filings with any Person or Governmental Authority required to be
obtained or made in connection with the consummation of the transactions
contemplated by this Agreement, including, but not limited to, any required
consents to the assignment of Purchased Contracts, which required consents and
approvals are set forth on Schedule 9.1(e). Purchaser shall have either (i)
obtained (whether by transfer, assignment or otherwise) all Permits necessary
for the continued post-Closing operation of the Purchased Assets in compliance
with all applicable Laws and Environmental Laws, or (ii) be in the process of
obtaining such Permits with adequate assurances from Governmental Authorities
that such lawful post-Closing operation of the Purchased Assets may continue
pending receipt of such Permits.
(f) No Order. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
injunction or other Governmental Order (whether temporary, preliminary or
permanent) which is in effect and has the effect of making the transactions
contemplated by this Agreement illegal or otherwise restraining or prohibiting
consummation of such transactions; or which would otherwise materially adversely
affect or interfere with the operation of the Business following Closing.
(g) New Credit Facility. Purchaser shall have entered into the
New Credit Facility on terms, conditions and a duration satisfactory to
Purchaser.
(h) Qualification of Senior Note Indenture. The Senior Secured
Note Indenture shall have been qualified under the Trust Indenture Act of 1939,
as amended.
(i) No Material Adverse Effect. There shall not have occurred any
event, change, occurrence, development or state of facts or circumstances which
has had or would reasonably be expected to have a Material Adverse Effect, but
excluding effects resulting from or arising in connection with this Agreement,
the transactions contemplated hereby or the announcement hereof.
(j) Closing Deliveries. Sellers shall have delivered or caused to
be delivered to Purchaser each of the items listed in Section 10.2 hereof.
(k) HSR Waiting Period. The applicable waiting period under the
HSR Act shall have expired or terminated.
(l) Canadian Steel Asset Purchase Agreement. All conditions to
the consummation of the transactions contemplated by the Canadian Steel Asset
Purchase Agreement shall have been satisfied or waived.
(m) Successor Labor Agreement. All conditions to the
effectiveness of the Successor Labor Agreement shall have been satisfied or
waived.
52
(n) Xxxxxxxx Employment Contract. Xx. Xxxxxx Xxxxxxxx'x current
employment agreement with Republic shall have been assumed by Republic and
assigned to Purchaser pursuant to this Agreement.
(o) Title Policy and Surveys. (i) The Title Company shall have
issued the Title Policies, without any exceptions thereto, except for the
Assumed Liabilities and the Permitted Real Estate Liens; and (ii) Purchaser
shall have received the Surveys, containing the original signature and seal of
the surveyor and any additional matter required by the Title Company showing no
Encumbrances other than the Assumed Liabilities and the Permitted Real Estate
Liens.
(p) No Termination. This Agreement shall not have been terminated
pursuant to Section 12.1.
Section 9.2 Conditions to Obligations of Seller. The obligations of
Sellers to effect the Closing shall be subject to the prior and/or simultaneous
satisfaction or written waiver by Seller of each of the following conditions:
(a) Bidding Procedures Order. The Bidding Procedures Order (i)
shall not have been stayed, modified, amended, dissolved, revoked or rescinded
without Purchaser's consent and (iii) shall be in full force and effect on the
Closing Date.
(b) Sale Order. The Sale Order (i) shall have been entered on or
before July 15, 2002, which date may be waived or extended by Purchaser in its
sole discretion, (ii) shall not have been stayed, modified, amended, dissolved,
revoked or rescinded without Purchaser's consent and (ii) shall be in full force
and effect on the Closing Date. The Sale Order shall be in form and substance
reasonably acceptable to Purchaser.
(c) Representations and Warranties. (i) The representations and
warranties of Purchaser set forth in this Agreement qualified by materiality
shall be true and correct in all respects as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing date (except that
to the extent such representations and warranties expressly speak as of an
earlier date, such representations and warranties shall be true and correct in
all respects as of such specified date); (ii) the representations and warranties
of Purchaser set forth in this Agreement that contain no qualification with
respect to materiality shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date (except to the extent such representations and warranties
expressly speak as of an earlier date, such representations and warranties shall
be true and correct in all material respects as of such specified date); and
(iii) Republic shall have received a certificate dated the Closing Date and
signed on behalf of Purchaser by the chief executive officer of Purchaser to
such effect.
(d) Covenants. Purchaser shall have performed in all material
respects all obligations, covenants and agreements required to be performed by
it under this Agreement at or prior to the Closing Date and Republic shall have
received a certificate, dated the Closing Date and signed by the chief executive
officer of Purchaser, to that effect.
53
(e) Consents and Approvals. Sellers and Purchaser shall have
received all consents or approvals and made all applications, requests, notices
and filings with any Person or Governmental Authority required to be obtained or
made in connection with the consummation of the transactions contemplated by
this Agreement which required consents and approvals are set forth in the
attached Schedule 9.2(e).
(f) No Order. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
injunction or other Governmental Order (whether temporary, preliminary or
permanent) which is in effect and has the effect of making the transactions
contemplated by this agreement illegal or otherwise restraining or prohibiting
consummation of such transactions.
(g) Closing Deliveries. Purchaser shall have delivered or caused
to be delivered to Seller each of the items listed in Section 10.3 hereof.
(h) HSR Waiting Period. The applicable waiting period under the
HSR Act shall have expired or terminated.
(i) Successor Labor Agreement. All conditions to the
effectiveness of the Successor Labor Agreement shall have been satisfied or
waived.
(j) Canadian Steel Asset Purchase Agreement. All conditions to
the consummation of the transactions contemplated by the Canadian Steel Asset
Purchase Agreement shall have been satisfied or waived.
(k) No Termination. This Agreement shall not have been terminated
pursuant to Section 12.1.
ARTICLE X
CLOSING
Section 10.1 Closing. The closing (the "Closing") of the transactions
contemplated in this Agreement shall take place as soon as practicable after the
satisfaction or waiver of each of the conditions set forth in Article IX (the
"Closing Date") at the offices of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
located at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other time and
place as the parties may agree.
Section 10.2 Documents to be Delivered at Closing by Sellers. At the
Closing, Sellers shall properly execute (if necessary) and deliver (or cause to
be delivered) to Purchaser:
(a) The Purchaser Operating Agreement, duly executed by Republic.
(b) The Transition Services Agreement, duly executed by Republic
or its designees.
54
(c) The Indemnity Escrow Agreement, duly executed by Republic and
the escrow agent thereunder.
(d) The Xxxx of Sale, duly executed by Sellers.
(e) The Assumption Agreement, duly executed by Sellers.
(f) Such other deeds, bills of sale, assignments, releases,
consents to assignments and other instruments of sale, conveyance, assignment,
assumption and transfer as Purchaser or its counsel may reasonably request,
satisfactory in form and in substance to Purchaser and its counsel, in order to
convey to Purchaser all of Sellers' rights, title and interests in and to the
Purchased Assets and to assign to Purchaser all of the Assumed Liabilities in
the manner provided for in this Agreement.
(g) Limited warranty deeds for each parcel of the owned Real
Property substantially in the form of Exhibit F attached hereto.
(h) Lease Assignment and Assumption Agreements with respect to
each parcel of leased Real Property substantially in the form of Exhibit G
attached hereto (the "Lease Assignment and Assumption Agreement"), duly executed
by Sellers.
(i) Any other duly executed document or instrument effecting
transfer of the Real Property which is required by the Title Company in order to
insure the Purchaser's title to the Real Property under the Title Insurance
Policies; and all consents of third parties required under any Reference Lease
or Third Party Lease, in form and substance as agreed to by the parties.
(j) Certified copies of the Sale Order and the Bidding Procedures
Order and a copy of the docket sheet for the Chapter 11 Cases showing their
entry and that no order has been entered that modifies, amends, stays,
dissolves, revokes or rescinds either of such orders and that no motion seeking
any such relief has been filed.
(k) A certificate of the Secretary of each Seller in the form
attached hereto as Exhibit H.
(l) A certificate of an officer of each Seller referred to in
Section 9.1(d) in the form attached hereto as Exhibit I.
(m) A certificate of Republic certifying that each of the Sellers
is not a foreign person for the purposes of section 1445 of the Code, which
certificate shall comply with the requirements of Treasury Regulation 1.1445-2
and shall be in the form of Exhibit J.
(n) A cross-receipt for the Cash Consideration paid by Purchaser
to Sellers at the Closing.
(o) Such other documents and instruments as are contemplated in
this Agreement or as Purchaser or Purchaser's counsel may reasonably request in
order to evidence
55
or consummate the transactions contemplated by this Agreement or to effectuate
the purpose or intent of this Agreement.
Section 10.3 Documents to be Delivered at Closing by Purchaser. At the
Closing, Purchaser shall properly execute (if necessary) and deliver (or caused
to be delivered) to Sellers:
(a) The Cash Consideration, a portion of which Purchaser may
satisfy with the proceeds of the Good Faith Deposit, if any.
(b) The Transition Services Agreement, duly executed by
Purchaser.
(c) The Senior Secured Note, dated as of the Closing Date and
authenticated by the trustee under the Senior Secured Note Indenture.
(d) A stock certificate representing the Purchaser Interests
which, as of the Closing Date, shall be duly authorized, validly issued, fully
paid and nonassessable.
(e) The Purchaser Operating Agreement, duly executed by Purchaser
and the Purchaser Member.
(f) The Assumption Agreement, duly executed by Purchaser or any
designee of Purchaser.
(g) The Lease Assignment and Assumption Agreement, duly executed.
(h) The Indemnity Escrow Agreement, duly executed by Purchaser
and the escrow agent thereunder.
(i) A certificate of an officer of Purchaser referred to in
Section 9.2(b) and Section 9.2(c) in the form attached hereto as Exhibit K.
(j) A certificate of the Secretary of Purchaser in the form
attached hereto as Exhibit L.
(k) Such other documents and instruments as are contemplated in
this Agreement or as Sellers or Sellers' counsel may reasonably request in order
to evidence or consummate the transactions contemplated in this Agreement or to
effectuate the purpose or intent of this Agreement.
ARTICLE XI
INDEMNIFICATION
Section 11.1 Survival; Representations and Warranties. All representations
and warranties made in this Agreement shall survive for a period of one (1) year
after the Closing Date and shall not be extinguished by the Closing or any
investigation made by or on behalf of any party hereto.
56
Section 11.2 Indemnification of Purchaser. From and after the Closing
Date, Sellers hereby agree to jointly and severally indemnify, defend and hold
harmless Purchaser and its Affiliates from and against any and all liabilities,
damages and losses, including reasonable attorney's fees and expenses, suffered
or incurred ("Losses") by Purchaser or any of its Affiliates resulting or
arising from claims asserted within the period specified in Section 11.1 insofar
as such Losses arise out of or are based upon (a) the inaccuracy or breach of
any representation or warranty of any Seller contained in this Agreement or an
Attendant Document; (b) any breach of any covenant or agreement of any Seller
contained in this Agreement or an Attendant Document; or (c) any Excluded
Liabilities; provided, however, that within sixty (60) days after learning of
the assertion of any third party claim against which Purchaser claims
indemnification under this Article XI, Purchaser shall notify Sellers and afford
them the opportunity to join in the defense or settlement thereof at Sellers'
own expense with counsel of their choosing, and Purchaser shall cooperate to
make available to Sellers all pertinent information under its control or in its
possession. Failure to so notify shall not effect the obligation to indemnify
unless material prejudice results therefrom. Purchaser shall have the right to
afford Sellers the opportunity to assume the defense or settlement of such third
party claims at their own expense with counsel of their choosing; provided that
Sellers shall not settle any such claim without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld, conditioned
or delayed.
Section 11.3 Indemnification of Sellers. From and after the Closing Date,
Purchaser hereby agrees to indemnify, defend and hold harmless Sellers and their
Affiliates from and against any and all Losses resulting or arising from claims
asserted within the period specified in Section 11.1 insofar as such Losses
arise out of or are based upon (a) the inaccuracy or breach of any
representation or warranty of Purchaser contained in this Agreement or an
Attendant Document to which Purchaser is a Party; (b) any breach of any covenant
or agreement of Purchaser contained in this Agreement or an Attendant Document
to which Purchaser is a party; or (c) any Assumed Liabilities; provided,
however, that within sixty (60) days after learning of the assertion of any
third party claim against which any Seller claims indemnification under this
Article XI, Sellers shall notify Purchaser and afford it the opportunity to join
in the defense or settlement thereof at Purchaser's own expense with counsel of
its choosing, and Sellers shall cooperate to make available to Purchaser all
pertinent information under their control or in their possession. Failure to so
notify shall not effect the obligation to indemnify unless material prejudice
results therefrom. Republic shall have the right to afford Purchaser the
opportunity to assume the defense or settlement of such third party claims at
its own expense with counsel of its choosing; provided that Purchaser shall not
settle any such claim without the prior written consent of Republic, which
consent shall not be unreasonably withheld, conditioned or delayed.
Section 11.4 Limitation on Seller' Indemnification Liability. The Sellers'
aggregate liability for money damages under this Agreement and all Attendant
Documents related to the inaccuracy or breaches of representations or warranties
and breaches of covenants or agreements shall not exceed an amount equal to
Fifteen Million U.S. Dollars ($15,000,000.00), which shall be satisfied as set
forth in Section 11.6. The Sellers shall have no liability for money damages
related to the inaccuracy of the representations or warranties or the breaches
of covenants or agreements contained herein until the aggregate damages claimed
under Section 11.2 exceeds Two Hundred Fifty Thousand U.S. Dollars
($250,000.00).
57
Section 11.5 Limitation on Purchaser's Indemnification Liability. The
Purchaser's aggregate liability for money damages under this Agreement and all
Attendant Documents related to the inaccuracy or breaches of representations or
warranties and breaches of covenants or agreements shall not exceed an amount
equal to Five Million U.S. Dollars ($5,000,000.00). Purchaser shall have no
liability for money damages related to the inaccuracy of the representations or
warranties or the breaches of covenants or agreements contained herein until the
aggregate damages claimed under Section 11.3 exceeds Two Hundred Fifty Thousand
U.S. Dollars ($250,000.00). Sellers shall not have any additional recourse
against Purchaser for such indemnity claims, except in instances of fraud by
Purchaser.
Section 11.6 Satisfaction of Purchaser Claims. The amount of indemnifiable
damages or losses arising from any claim under this Article 11 made by Purchaser
or its Affiliates shall be paid by issuing additional Purchaser Interests
("Indemnity Interests") to the Purchaser Member, in accordance with the formula
set forth on Exhibit M attached hereto. The parties acknowledge and agree that
the value of Purchaser Interests used for the purpose of calculating the number
of Indemnity Interests, if any, to be issued to satisfy indemnity claims under
this Agreement shall not be binding on the parties or determinative of such
value for any other purpose. Notwithstanding the foregoing, at Closing, Seller
shall establish an escrow account (the "Indemnity Escrow") pursuant to an escrow
agreement in form and substance reasonably acceptable to Purchaser (the
"Indemnity Escrow Agreement") and shall promptly thereafter fund such escrow
account with up to Five Million U.S. Dollars ($5,000,000.00) of available cash
and for the first six months after the Closing Date, Purchaser also may satisfy
indemnifiable Losses from the Indemnity Escrow. The Cash Consideration shall not
be a source from which indemnifiable claims may be satisfied. In no event shall
Purchaser be entitled to payment for indemnity claims under this Article XI for
the inaccuracy of representations or warranties or breaches of covenants or
agreements contained in this Agreement in excess of Fifteen Million U.S. Dollars
($15,000,000.00), up to Five Million U.S. Dollars ($5,000,000.00) of which may
be satisfied from the Indemnity Escrow as set forth above and the remainder of
which shall be satisfied with the issuance of Indemnity Interests as calculated
in accordance with Exhibit M attached hereto. Any claim for indemnification of
Purchaser pursuant to this Article XI shall be paid solely out of the Indemnity
Escrow and the Indemnity Interests, and Purchaser shall not have any additional
recourse against Sellers for such indemnity claims, except in instances of fraud
by Sellers.
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER
Section 12.1 Termination. Notwithstanding anything herein to the contrary,
this Agreement may be terminated and the transactions contemplated hereby
abandoned at any time prior to the Closing:
(a) by mutual written consent of Purchaser and Republic; or
(b) by Purchaser, if any or all of Sellers agree to transfer a
material portion of the Purchased Assets to a third party; or
58
(c) by Purchaser or Republic, if the Bankruptcy Court or any
other court of competent jurisdiction in the United States or other Governmental
Authority shall have issued an order, decree, ruling or taken any other action
restraining, enjoining or otherwise prohibiting the purchase of the Purchased
Assets on the terms and conditions contained herein and such order, decree,
ruling or other action shall have become a Final Order; or
(d) by Purchaser if there is a material breach by any Seller of
any representation, warranty or covenant of the Sellers under this Agreement and
Sellers are unable or shall fail or refuse to cure such breach within ten (10)
days after written notice from Purchaser specifying such breach; or
(e) by Republic if there is a material breach by Purchaser of any
representation, warranty or covenant of Purchaser under this Agreement and
Purchaser is unable or shall fail or refuse to cure such breach within ten (10)
days after written notice from Republic specifying such breach; or
(f) by Purchaser on or prior to June 14, 2002 if Purchaser
determines in its sole discretion that the results of Purchaser's due diligence
with respect to any matters, other than environmental matters, related to the
prospects, business, assets, contracts, rights, liabilities and obligations of
Sellers (and of Purchaser after giving effect to the Closing), including,
without limitation, engineering, financial, marketing, employee, labor, ERISA,
employee benefits, legal and regulatory matters, are not satisfactory; provided
that Purchaser shall be deemed to have waived its right of termination under
this Section 12.1(f) for all purposes if it does not terminate this Agreement by
such date; or
(g) by Purchaser on or prior to June 28, 2002 if Purchaser
determines in its sole discretion that the results of Purchaser's due diligence
with respect to environmental matters related to the Purchased Assets and the
prospects, business, assets, contracts, rights, liabilities and obligations of
Sellers (and of Purchaser after giving effect to the Closing) are not
satisfactory; provided that Purchaser shall be deemed to have waived its right
of termination under this Section 12.1(g) for all purposes if it does not
terminate this Agreement by such date; or
(h) by Purchaser, if (i) the Bidding Procedures Order shall not
have become a Final Order on or prior to the date that is 10 days after its
entry or (ii) the Sale Order shall not have been entered by the Bankruptcy Court
on or prior to July 15, 2002 or (iii) the Sale Order shall not have become a
Final Order on or prior to the date that is ten (10) days after the entry of the
Sale Order unless Purchaser has waived the requirement for a Final Order; or
(i) by Purchaser on or before 5:00 p.m., July 2, 2002 if
Purchaser shall not have obtained from appropriate environmental Governmental
Authorities written assurances, satisfactory to Purchaser in the exercise of
Purchaser's reasonable discretion, that such Governmental Authorities shall not
seek to impose on Purchaser any Excluded Liabilities or obligations as described
hereinabove in Section 3.1(b)(ix) and Section 3.1(b)(xii); or
59
(j) by Purchaser or Republic, if the Closing shall not have
occurred on or prior to July 31, 2002; provided, however, that the right to
terminate this Agreement under this Section 12.1(i) shall not be available to
any party whose failure to fulfill any obligation under this Agreement shall
have been the cause of, or shall have resulted in, the failure of the Closing or
the failure to enter the Sale Order or the failure of such Sale Order to become
a Final Order on or prior to such date; or
(k) by Purchaser, upon the conversion of the Chapter 11 Cases to
cases under chapter 7 of the Bankruptcy Code, appointment of a Chapter 11
trustee or an examiner with expanded powers, or entry of an order pursuant to
Section 362 of the Bankruptcy Code lifting the automatic stay with respect to
any material portion of the Purchased Assets; provided, however that Purchaser
shall not be entitled to exercise its right to terminate this Agreement pursuant
to this Section 12.1(k) until Purchaser has given Republic five days' prior
written notice, and Republic shall be permitted to cure any such event during
such five-day period.
Section 12.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 12.1, this Agreement shall forthwith become
void and have no effect and there shall be no liability on the part of any party
hereto or its Affiliates, directors, officers, shareholders, or agents except
under Section 8.2, with respect to the Good Faith Deposit, if any, and Section
12.3.
Section 12.3 Break-Up Fee; Expense Reimbursement. From and after the entry
of the Bidding Procedures Order, if this Agreement is terminated for any reason
other than pursuant to Section 12.1(e), Sellers shall reimburse Purchaser (and
the direct and indirect owners of the equity of Purchaser) for documented
reasonable out-of-pocket costs and expenses (including legal, accounting,
engineering and other consultant fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby (the "Expense
Reimbursement Amount") in an amount up to (i) One Million U.S. Dollars
($1,000,000.00) or (ii) Two Million U.S. Dollars ($2,000,000.00) in the event
this Agreement is terminated pursuant to Section 12.1(b) or as a result of
Seller accepting a Competing Bid. From and after (i) the date on which Purchaser
has waived its rights to terminate this Agreement pursuant to Section 12.1(f)
and (g) or both such rights have lapsed due to the passage of time, and (ii) the
receipt by Purchaser of a firm commitment from the Bank Lenders with respect to
the New Credit Facility, if this Agreement is terminated for any reason other
than pursuant to Section 12.1(e), Sellers shall pay Purchaser (x) the Expense
Reimbursement Amount in an amount up to Two Million U.S. Dollars ($2,000,000.00)
plus (y) Three Million U.S. Dollars ($3,000,000.00) (the "Break-Up Fee") in the
event this Agreement is terminated pursuant to Section 12.1(b) or as a result of
Seller accepting a Competing Bid. The payment of the Expense Reimbursement
Amount and the Break-Up Fee shall be made by wire transfer of immediately
available funds promptly following the termination of this Agreement and, in the
event this Agreement is terminated pursuant to Section 12.1(d) or as a result of
Seller accepting a Competing Bid, no later than the date that any definitive
agreement is executed with respect thereto and shall be paid first from any
deposits by a third party purchasers of a material portion of the Purchased
Assets. The claim of Purchaser against Sellers with respect to the Break-Up Fee
and the Expense Reimbursement Amount pursuant to this Section 12.3 shall
constitute an administrative expense claim in the Chapter 11 Cases that will
rank pari passu with all other administrative expense claims, including claims
under Section 507(b) of the Bankruptcy Code.
60
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Expenses. Except as otherwise set forth in this Agreement
(including without limitation Section 12.3), Sellers and Purchaser shall each
bear the expenses incurred by them in connection with the preparation and
negotiation of this Agreement and the Attendant Documents and the consummation
of the transactions contemplated in this Agreement, including, without
limitation, that Sellers shall pay all fees and expenses of McDonald Investments
Inc.
Section 13.2 Governing Law; Forum. This Agreement shall be governed by,
and construed in accordance with, the Laws of the State of New York and, to the
extent applicable, the Bankruptcy Code. If the Bankruptcy Court does not have
subject matter jurisdiction over any action or proceeding arising out of or
relating to this Agreement, then each party (a) agrees that all such actions or
proceedings shall be heard and determined in federal court of the United States
for the Southern District of New York, (b) irrevocably submits to the
jurisdiction of such court in any such action or proceeding, (c) consents that
any such action or proceeding may be brought in such court and waives any
objection that such party may now or hereafter have to the venue jurisdiction or
that such action or proceeding was brought in an inconvenient court, and (d)
agrees that service of process in any such action or proceeding may be effected
by mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to such party at its address as provided
in Section 13.3 (provided that nothing herein shall affect the right to effect
service of process in any other manner permitted by New York law).
Section 13.3 Notices. Any and all notices, requests, demands and other
communications permitted under or required pursuant to this Agreement shall be
in writing and shall be deemed given if personally delivered or if mailed,
postage prepaid, certified or registered mail, return receipt requested, to the
parties at the addresses set forth below, or at such other addresses as they may
indicate by written notice given as provided in this Section 13.4:
If to Purchaser: With required copies to (which shall not constitute
--------------- ---------------------------------------------------
notice):
-------
RT Acquisition LLC KPS Special Situations Fund, L.P.
000 Xxxx Xxxxxx, 58/th/ Floor 000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx Attention: Xxxxxxx Xxxxxx
--and--
Xxxx Investment Group, X.X.
Xxxxxxxx Place
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxx Xxxxx
61
--and--
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx
--and--
Xxxxxx & Xxxxxx, L.L.P.
000 Xxxxx Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
If to Seller: With required copies to (which shall not constitute
------------ ---------------------------------------------------
notice):
-------
Republic Technologies International, LLC McDonald, Hopkins, Xxxxx & Xxxxx Co., L.P.A.
0000 Xxxxxxx Xxxxxxx 0000 Xxxx Xxx Xxxxxx
Xxxxx, Xxxx 00000 000 Xxxxxxxx Xxxxxx, X.
Attention: Xxxxxx Xxxxxxxx Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxx Xxxxx
--and--
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Simeon Gold
Section 13.4 Headings. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 13.5 No Assignment; Benefit to Third Parties.
(a) No party may assign its rights and obligations under this
Agreement without the prior written consent of the other parties, except that
Purchaser may assign all or any of its rights and obligations hereunder to any
wholly owned Subsidiary of Purchaser upon the execution of a written instrument
whereby any such assignee agrees to assume all of the assignor's obligations
hereunder and be bound by all the terms and conditions of this Agreement, and,
after the Closing, Sellers may assign all of their rights and obligations
hereunder pursuant to an order of the Bankruptcy Court to a single entity whose
primary purpose is the liquidation of Sellers' assets; provided that the Sellers
may assign the Senior Secured Notes to a separate entity for such primary
purpose pursuant to an order of the Bankruptcy Court so long as such assignment
is subject to all rights of Purchaser with respect to such Senior Secured Notes
under this Agreement; provided, further, that Purchaser may assign any of its
rights hereunder to one or
62
more of its financing sources as security for financing for collateral purposes;
provided, however, that no such assignment shall relieve the assigning party of
its obligations hereunder. This Agreement shall be binding on and inure to the
benefit of the parties and their respective successors and assigns.
(b) The terms and provisions of this Agreement (including
provisions regarding employee and employee benefit matters) are intended solely
for the benefit of the parties hereto and their respective successors and
permitted assigns and are not intended to, and shall not, confer third-party
beneficiary rights upon any other Person.
Section 13.6 Entire Agreement. This Agreement, including the Exhibits and
the Schedules attached or to be attached to it, together with the Attendant
Documents is and shall be deemed to be the complete and final expression of the
agreement between the parties as to the matters contained in and related to this
Agreement and supersedes any previous agreements between the parties pertaining
to such matters.
Section 13.7 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which, taken together,
shall be considered one and the same agreement.
Section 13.8 Waiver. At any time prior to the Closing Date, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall only be valid if
set forth in an instrument in writing signed by the party or parties to be bound
thereby. The failure of any party to assert any of its rights hereunder shall
not constitute a waiver of any such rights. The waiver by any party of any
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent or similar breach.
Section 13.9 Amendment. This Agreement may only be amended by written
agreement executed by each of the parties hereto.
Section 13.10 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision will
not affect the validity or enforceability of the other provisions hereof, and
this Agreement shall be interpreted so as to most fully give effect to its terms
and still be valid and enforceable; provided, however, that any provision
altered pursuant to this Section 13.10 shall not result in a material adverse
impairment of the rights or obligations of any party hereto.
Section 13.11 Further Assurances. From time to time after the Closing Date,
at Purchaser's request and without further consideration, Sellers shall execute
and deliver or cause to be executed and delivered such further instruments of
conveyance, assignment and transfer and shall take such other action as
Purchaser may reasonably request in order more effectively to convey, transfer,
reduce to possession or record title to any of the Purchased Assets purchased
pursuant to this Agreement. On Purchaser's request, Sellers shall cooperate and
use their commercially reasonable efforts to have their officers, directors,
employees and agents cooperate
63
with Purchaser on or after the Closing Date by furnishing information, evidence,
testimony and other assistance in connection with any actions, proceedings,
arrangements or disputes involving Purchaser and which are based on contracts,
leases, arrangements or acts of Sellers which were in effect or occurred on or
prior to the Closing Date.
[Rest of Page Intentionally Left Blank]
64
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be executed by its duly authorized officers as of the day and year
first written above.
RT ACQUISITION LLC
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
NIMISHILLEN & TUSCARAWAS, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
BLISS & XXXXXXXX, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
Signature Page to Asset Purchase Agreement
REPUBLIC TECHNOLOGIES
INTERNATIONAL HOLDINGS, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
RTI CAPITAL CORP.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
Signature Page to Asset Purchase Agreement
EXECUTION COPY
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This FIRST AMENDMENT (this "Amendment"), dated as of August 16th, 2002
to that certain ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of June 7,
2002, by and among REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC, a Delaware limited
liability company ("Republic"), NIMISHILLEN & TUSCARAWAS, LLC, a Delaware
limited liability company, BLISS & XXXXXXXX, LLC, a Delaware limited liability
company, REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC, a Delaware limited
liability company, and RTI CAPITAL CORP., a Delaware corporation (together with
Republic, "Sellers" and each a "Seller") which Sellers, other than Nimishillen &
Tuscarawas, LLC, are debtors in possession under Chapter 11 of Title 11, United
States Code (as amended from time to time, the "Bankruptcy Code"), CANADIAN
DRAWN STEEL COMPANY, INC., a Canadian corporation and wholly owned subsidiary of
Republic ("CDSC"), and REPUBLIC ENGINEERED PRODUCTS LLC (f/k/a RT ACQUISITION
LLC), a Delaware limited liability company ("Purchaser"), and 2011448 ONTARIO
LIMITED, an Ontario company and wholly owned subsidiary of the Purchaser
("Ontario Purchaser").
W I T N E S S E T H :
WHEREAS, the parties hereto wish to amend the terms of the Agreement,
as set forth herein;
WHEREAS, pursuant to a Stipulation Settling Disputes dated July 11,
2002 (the "Stipulation"), among Republic, KPS, Xxxx, Fleet Capital Corporation
as agent for the lenders to Republic under the Debtor-in-Possession Revolving
Credit Agreement, and the Majority Noteholders (as defined in the Stipulation),
the Purchaser agreed, among other things, in connection with the transactions
contemplated in this Agreement, to issue the Senior Secured Notes and to make
the Installment Payments (each as defined below), in each case for the benefit
of the holders of the RTI Notes (as defined below);
WHEREAS, the parties desire to add CDSC and, solely as to Section 8.20
of this Agreement, the Ontario Purchaser, as parties to this Agreement; and
WHEREAS, all capitalized terms not otherwise defined herein shall have
such meaning as ascribed to them in the Agreement;
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
1. Amendment to the Definition of "Canadian Steel Asset Purchase
Agreement" in Section 1.1. The definition of "Canadian Steel Asset Purchase
Agreement" contained in Section 1.1 of the Agreement is hereby deleted in its
entirety and the following is hereby substituted in place thereof:
"`Canadian Steel Asset Purchase Agreement' has the meaning set forth
in Section 8.20(a)."
2. Amendment to Section 1.1. Section 1.1 of the Agreement is hereby
amended by deleting in their entirety the definitions of "Indemnity Interests"
and "Purchaser Operating Agreement."
3. Amendment to Section 1.1. Section 1.1 of the Agreement is hereby
amended by adding after the definition of "Indemnity Interests" the following
definition:
"'Installment Payments' mean the five (5) equal monthly installment
payments commencing thirty (30) days after the Closing Date and ending six (6)
months after the Closing Date in the amount of One Million U.S. Dollars
($1,000,000) per installment and equaling an aggregate amount of Five Million
U.S. Dollars ($5,000,000), which shall be paid by Purchaser for the benefit of
the holders of the outstanding RTI Notes to The Bank of New York as successor to
United States Trust Company of New York, trustee under the RTI Indenture, or
such other agent as designated in writing by the holders of a majority of the
outstanding face amount of the RTI Notes. The rights and remedies of the holders
of the outstanding RTI Notes in respect of any failure of Purchaser to satisfy
its obligations to make the Installment Payments shall not be subject to the
limitations on liability for indemnification provided in Sections 11.4 and 11.6
of this Agreement."
4. Amendment to Section 1.1. Section 1.1 of the Agreement is hereby
amended by adding after the definition of "Letter of Intent" the following
definition:
"'Liquidating Trust' means the Republic Liquidating Trust formed for
the benefit of holders of the RTI Notes in furtherance of the stipulated
settlement contained in the Sale Order entered by the Bankruptcy Court on July
23, 2002."
5. Amendment to Section 1.1. Section 1.1 of the Agreement is hereby
amended by adding after the definition of "Required Creditor Notices" the
following definitions:
"'RTI Indenture' means the indenture dated as of August 13, 1999, by
and among Republic and RTI Capital Corp., as issuers, and Republic Technologies
International Holdings, LLC, Bliss & Xxxxxxxx, LLC and CDSC, as guarantors of
the RTI Notes, and United States Trust Company of New York, as indenture
trustee."
"'RTI Notes' means those certain 13 3/4% senior secured notes due 2009
previously issued by Republic and RTI Capital Corp. pursuant to the RTI
Indenture."
6. Amendment to the Definition of "Senior Secured Notes" in Section 1.1.
The definition of "Senior Secured Notes" contained in Section 1.1 of the
Agreement is hereby deleted in its entirety and the following is hereby
substituted in place thereof:
"'Senior Secured Notes' mean the senior secured notes to be governed
by the Senior Secured Note Indenture and issued at Closing by Purchaser and/or
an affiliated designee of Purchaser in the aggregate principal amount equal to
Eighty Million U.S. Dollars ($80,000,000.00) in cash, with a seven-year term and
interest accruing at an annual rate of 10% payable quarterly in arrears."
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7. Amendment to the Definition of "Senior Secured Note Indenture" Section
1.1. The definition of "Senior Secured Note Indenture" contained in Section 1.1
of the Agreement is hereby deleted in its entirety and the following is hereby
substituted in place thereof:
"'Senior Secured Note Indenture' means the indenture governing the
Senior Secured Notes in such form reasonably acceptable to each of Purchaser and
Republic which agreement shall, among other things, include the terms set forth
in the Stipulation (as defined in and attached as Exhibit B to the Sale Order)."
8. Amendments to Section 2.1.
(a) The lead-in to Section 2.1 of the Agreement is hereby deleted in its
entirety and the following is hereby substituted in place thereof:
"Section 2.1 Purchase and Sale of the Purchased Assets. On the Closing
Date, Sellers and, with respect to Section 2.1(l) and (m) only, also CDSC, shall
transfer, sell, assign, and deliver to Purchaser, and Purchaser shall purchase
from Sellers and, with respect to Section 2.1(l) and (m) only, also from CDSC,
in each case on the terms and subject to the conditions set forth in this
Agreement and the Sale Order, all of Sellers' and, with respect to Section
2.1(l) and (m) only, also CDSC's, right, title and interest in, to and under any
and all assets, properties and business of every kind and description, whether
tangible or intangible, real, personal or fixed wherever situated, owned, held
or used by Sellers and, with respect to Section 2.1(l) and (m) only, also CDSC,
or in which Sellers and, with respect to Section 2.1(l) and (m) only, also CDSC,
have any right, title or interest, other than the Excluded Assets (all such
assets, properties and business are referred to in this Agreement as the
"Purchased Assets"), free and clear of all Encumbrances, other than the Assumed
Liabilities and the Permitted Real Estate Liens. The Purchased Assets include,
without limitation, the following:"
(b) Section 2.1(d) of the Agreement is hereby deleted in its entirety and
the following is hereby substituted in place thereof:
"(d) all owned, leased or subleased real property of Nimishillen &
Tuscarawas, LLC (the "Railroad Subsidiary"), and any other interests in, real
property used or owned by the Railroad Subsidiary, including, without
limitation, easements and rights of way."
(c) Section 2.1(l) of the Agreement is hereby deleted in its entirety and
the following is hereby substituted in place thereof:
"(l) all items of inventory of the Business and CDSC wherever
located, including, without limitation, raw materials, work in process, finished
goods, supplies used to operate and maintain the Equipment or process raw
materials and work in process, spare parts and supply and packaging items
including any of the aforementioned owned by Sellers or CDSC but in the
possession of manufacturers, customers, suppliers or dealers, or in transit or
returned goods ("Inventory"), which, for avoidance of doubt,
3
includes any Inventory related to or located at any of the Excluded Plants,
including without limitation, CDSC's plant in Hamilton, Ontario;"
(d) Section 2.1(m) of the Agreement is hereby deleted in its entirety and
the following is hereby substituted in place thereof:
"(m) all notes (including notes from employees), accounts receivable
and other receivables, cash, deposits, advances and prepaid expenses (other than
prepaid Taxes) of Sellers and CDSC related to the Business and CDSC's business
together with any unpaid interest or fees accrued thereon or other amounts due
with respect thereto, and any security or collateral therefor, including
recoverable advances and deposits, which, for avoidance of doubt, includes any
of the foregoing related to the Excluded Plants, including without limitation,
CDSC's plant in Hamilton, Ontario;"
9. Amendment to Section 2.2. Section 2.2 of the Agreement is hereby
amended by adding a new Section 2.2(j) as follows:
"any assets or properties of the Sellers or any Subsidiary that are
the subject of the Option (as such term is defined in Section 8.20(a) herein);
provided that any assets and properties of CDSC to be acquired pursuant to
paragraphs (l) or (m) of Section 2.1 shall not be Excluded Assets."
10. Amendment to Section 2.2. Section 2.2 of the Agreement is hereby
amended by adding a new Section 2.2(k) as follows:
"(j) any Assets of the Railroad Subsidiary not acquired by Purchaser
pursuant to Section 2.1(d), including, without limitation, locomotives, trucks,
computers, equipment and tools."
11. Amendment to Section 4.1. Section 4.1 of the Agreement is hereby
deleted in its entirety and the following is hereby substituted in place
thereof:
"Section 4.1 Purchase Price for Purchased Assets. The purchase price
for the Purchased Assets shall be (i) Ten Million U.S. Dollars ($10,000,000.00)
in cash (the `Cash Consideration'); (ii) the Senior Secured Notes; (iii) the
Installment Payments; and (iv) the assumption by Purchaser of the Assumed
Liabilities (clauses, (i), (ii), (iii) and (iv), collectively, the `Purchase
Price'). Republic hereby directs Purchaser to issue the Senior Secured Notes to
the Liquidating Trust for the benefit of the holders of the RTI Notes."
12. Amendment to Section 4.2(a). Section 4.2(a) of the Agreement is hereby
deleted in its entirety and the following is hereby substituted in place
thereof:
"(a) On the Closing Date, (i) Purchaser shall deliver to Republic in
cash, by wire transfer (pursuant to wire transfer instructions provided by
Republic at least two (2) Business Days prior to the Closing Date), in
immediately available funds, the Cash Consideration, a portion of which
Purchaser may satisfy pursuant to Section 8.2 herein and (ii) Purchaser shall
deliver to the Liquidating Trust the Senior Secured Notes,
4
duly executed by Purchaser and authenticated by the trustee under the Senior
Secured Note Indenture."
13. Amendment to Section 5.1(a). Section 5.1(a) of the Agreement is hereby
amended by inserting immediately after the last sentence the following:
"CDSC has the corporate or other power and authority to enter into this
Agreement, to enter into the Attendant Documents to which it is or is intended
to be a party and to consummate the transactions contemplated hereby and
thereby. This Agreement and all of the Attendant Documents to which CDSC is a
party, and the consummation of the transactions contemplated hereby and thereby,
have been duly authorized and approved by all necessary and proper corporate or
other action on the part of CDSC. This Agreement and all of the Attendant
Documents to which CDSC is a party have been (or to the extent to be entered
into on or prior to the Closing, will be) duly authorized and duly and validly
executed and delivered, and constitute legal, valid and binding obligations of
CDSC enforceable against CDSC in accordance with their respective terms."
14. Amendment to Section 5.1(x). Section 5.1(x)(ii) of the Agreement is
hereby amended by inserting the words "and of CDSC" after the word "Sellers" in
the first line.
15. Amendment to Section 5.1(ee). Section 5.1(ee) of the Agreement is
hereby deleted in its entirety and the following is hereby substituted in place
thereof:
"(ee) Investment. Each Seller (i) acknowledges that Purchaser has
made no representations or warranties to it as to the future financial
performance or prospects of Purchaser, the present or future value of the Senior
Secured Notes, or the likelihood that the obligations constituting the Senior
Secured Notes will be paid in full and in a timely fashion, (ii) agrees that it
has, independently and without reliance on Purchaser, and based on each such
Seller's detailed knowledge of the Purchased Assets as owner of such assets and
the Assumed Liabilities and such other documents and information as it has
deemed appropriate, made its own analysis of Purchaser and its future financial
performance, (iii) agrees that it will, independently and without reliance upon
Purchaser, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement and the Attendant Documents,
and (iv) is an "accredited investor" as defined in Regulation D promulgated
under the Securities Act."
16. Amendment to Section 5.1(ff). Section 5.1(ff) of the Agreement is
hereby deleted in its entirety and the following is hereby substituted in place
thereof:
"(ff) Solvency of CDSC and Non-Debtor Sellers. None of CDSC or any of
the Non-Debtor Sellers is now insolvent, nor will CDSC or any Non-Debtor Seller
be rendered insolvent by any of the transactions contemplated by this Agreement.
As used in this Section 5.1(ff), the term "insolvent" means that the sum of the
allocated good faith debts and other probable liabilities as allocated in good
faith to CDSC or the
5
applicable Non-Debtor Seller, as the case may be, exceeds the fair present value
of such entity's assets. Immediately after giving effect to the consummation of
the transactions contemplated by this Agreement: (A) CDSC and each Non-Debtor
Seller will be able to pay its respective liabilities as they become due in the
ordinary course of business of such entity; and (B) none of CDSC or any of the
Non-Debtor Sellers will have unreasonably small capital with which to conduct
its present or proposed business."
17. Amendment to Sections 5.2(d), 5.2(e), 9.1(l), 9.2(j), 10.2(a), 10.3(d)
and 10.3(e). Each of Sections 5.2(d), 5.2(e), 9.1(l), 9.2(j), 10.2(a), 10.3(d)
and 10.3(e) of the Agreement is hereby deleted in its entirety and the following
is hereby substituted in place thereof:
"[Intentionally omitted.]"
18. Amendment to Section 6.2. The first clause (iv) of Section 6.2(d) of
the Agreement is hereby deleted in its entirety and the following is hereby
substituted in place thereof:
"(iv) consist exclusively of accrued wages, back payroll taxes
(withholding only), accrued vacation benefits, accrued management performance
incentives and health insurance benefits incurred but not reported, and"
19. Amendment to Section 6.2. The second clause (iv) of Section 6.2(d) of
the Agreement is hereby deleted in its entirety and the following is hereby
substituted in place thereof:
"[Intentionally omitted.]"
20. Amendment to Section 6.2. Section 6.2 of the Agreement is hereby
amended by adding a new Section 6.2 (e) as follows:
"(e) Spending Account Plans. As soon as administratively practicable
after the Closing Date, but subject to Republic and Purchaser entering into a
stipulation to amend the Asset Purchase Agreement to provide for this Section
6.2(e) and subject further to the entry of an order by the Bankruptcy Court
approving the terms and conditions of such stipulation, (i) Seller shall cause
the participation and accounts of the Hired Employees in each Employee Benefit
Plan that is a health flexible spending arrangement (within the meaning of
Proposed Treasury Regulation ss. 1.125-2, Q&A-7) and each Employee Benefit Plan
that is a dependent care assistance program (within the meaning of section 129
of the Code) to be transferred to the corresponding Purchaser's Plan in
accordance with the respective documents entitled "Spin-Off of Certain
Participation in the Republic Technologies, LLC Health Care Spending Account
Plan and Merger With and Into the Republic Engineered Products LLC Health Care
Spending Account Plan" and "Spin-Off of Certain Participation in the Republic
Technologies, LLC Dependent Care Spending Account Plan and Merger With and Into
the Republic Engineered Products LLC Dependent Care Spending Account Plan,"
copies of which are attached hereto as Exhibits O and P, respectively, and (ii)
Purchaser shall cause each such Purchaser's Plan to accept such transfer in
accordance with such documents."
6
21. Amendment to Section 7.2. Section 7.2 of the Agreement is hereby
deleted in its entirety and the following is hereby substituted in place
thereof:
"Section 7.2 Proration of Real and Personal Property Taxes(a). The
real and personal property Taxes and assessments on the Purchased Assets for any
taxable period commencing prior to the day immediately preceding the Closing
Date (the "Adjustment Date") and ending after the Adjustment Date shall be
prorated between Purchaser and Seller as of the close of business on the
Adjustment Date. All such prorations shall be allocated so that items relating
to time periods ending on the Adjustment Date shall be allocated to Republic
based upon the number of days in the period prior to the Closing Date and items
related to time periods beginning after the Adjustment Date shall be allocated
to Purchaser based on the number of days in the period from and after the
Closing Date; provided, however, that the parties shall allocate any real
property Tax subject to the limitation set forth in Section 3.1(a)(vi). The
amount of all such prorations for real property Taxes and assessments shall be
settled and paid on the Closing Date; provided, however, that final payments
with respect to such prorations that are not able to be calculated on the
Closing Date shall be calculated and paid as soon as practicable thereafter.
22. Amendment to Section 8.6. Section 8.6 of the Agreement is hereby
amended by adding a new paragraph (c) at the conclusion thereof as follows:
"(c) After the Closing, the Railroad Subsidiary shall continue to operate
in the ordinary course of business or as otherwise reasonably directed by
Purchaser for a period of sixty (60) days or such shorter period to allow for
the acquisition or lease by Purchaser or its permitted assignee of locomotives,
trucks, computers, equipment, tools and other items of personal property that
are adequate, in the reasonable discretion of Purchaser or its permitted
assignee, to continue the operations of the Railroad Subsidiary, which
operations shall be transferred from the Railroad Subsidiary to Purchaser or its
permitted assignee upon the effectiveness of any required approvals or
exemptions of the transfer from the Surface Transportation Board. During such
period, (i) Republic shall, and Republic shall cause the Railroad Subsidiary to,
enter into any reasonable arrangement designed to provide Purchaser with the
benefits of, and cause Purchaser to bear the costs and obligations of,
Republic's ownership of the Railroad Subsidiary and (ii) Purchaser shall
indemnify Sellers for any losses arising out of the operation of the Railroad
Subsidiary for the benefit of Purchaser or its permitted assignee."
23. Amendment to Section 8. Section 8 of the Agreement is hereby amended by
adding a new Section 8.20 as follows:
"Section 8.20. Option to Acquire Canadian Drawn Steel Company, Inc.
(a) Option. The Sellers hereby grant to Ontario Purchaser, for a
period of one (1) year from the date hereof, an irrevocable option (the
"Option") to purchase substantially all of the assets of CDSC in accordance with
the terms of the Canadian Drawn Steel Asset Purchase Agreement substantially in
the form annexed as
7
Exhibit N hereto (the "Canadian Steel Asset Purchase Agreement"). The exercise
price of the Option shall be the "Purchase Price" as defined in the Canadian
Steel Asset Purchase Agreement; to wit, the total sum of (i) Ten Canadian
Dollars in cash, and (ii) the assumption by Ontario Purchaser of certain
liabilities of CDSC, all upon the terms and conditions set forth in the Canadian
Steel Asset Purchase Agreement.
(b) Condition to Exercise of Option. It shall be a condition to the
exercise of the Option by Ontario Purchaser that, contemporaneously with the
exercise of the Option and acquisition of substantially all of the assets of
CDSC, Ontario Purchaser shall (i) execute and deliver a security agreement,
pledge agreement and mortgage in favor of the indenture trustee under the Senior
Secured Note Indenture and a guaranty of all of the Issuers' obligations under
and as defined in the Senior Secured Notes, in order to grant a collateral lien
in favor of the indenture trustee under the Senior Secured Note Indenture with
respect to substantially all of those assets acquired by Ontario Purchaser from
CDSC that secured the RTI Notes, and (ii) become a Guarantor under and as
defined in the New Credit Facility and shall have pledged its assets of the type
pledged by the Purchaser and the Subsidiary Guarantors (as defined in the New
Credit Facility) in favor of Fleet Capital Corporation, as administrative agent
for the benefit of the Bank Lenders under the New Credit Facility, in order to
grant a collateral lien in favor of the administrative agent for the benefit of
the Bank Lenders under the New Credit Facility with respect to those assets
formerly owned by CDSC that secured the Debtor-in-Possession Revolving Credit
Facility.
(c) Certain Actions. Subject to Subsection (d), Sellers and their
Subsidiaries shall not, during the period between the date of this Amendment and
the earlier to occur of the expiration or exercise of the Option, directly or
indirectly do, or propose or commit to do, any of the following:
(i) issue, sell, pledge, dispose of or encumber, or authorize
the issuance, sale, pledge, disposition or encumbrance of, (A) any shares
of capital stock of any class or any securities, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
capital stock or any securities, or any other ownership interest, of CDSC,
or (B) any Purchased Assets (as defined in the Canadian Steel Asset
Purchase Agreement) except for sales of inventory in the ordinary course of
business of CDSC and in a manner consistent with past practice, except, in
the case of each of (A) and (B), to Purchaser or Ontario Purchaser;
(ii) (A) dissolve or liquidate CDSC in whole or in part, (B)
pursuant to or within the meaning of Title 11 of the Bankruptcy Code or any
similar federal, state or foreign law for the relief of debtors, commence a
voluntary case against CDSC or consent to the entry of an order for relief
against CDSC in an involuntary case, (C) consent to the appointment of a
receiver, trustee, assignee, liquidator or similar official of CDSC or for
all or substantially all of its property, (D) make a general assignment for
the benefit of creditors of CDSC, or (E) admit in writing CDSC's inability
to pay its debts generally as they become due; or
8
(iii) permit or cause CDSC to (A) incur any Indebtedness or
issue any debt securities or assume, guarantee or endorse, or otherwise as
an accommodation become responsible for, the obligations of any Person, (B)
enter into any material Contract, agreement or lease, or (C) enter into or
amend any Contract with respect to any of the matters set forth in this
Section 8.20(b)(iii), in the case of each of (A), (B) and (C), other than
in the ordinary course of business and in a manner consistent with past
practice.
(d) Notwithstanding any provision in Subsection (c) to the contrary,
Republic may merge or consolidate CDSC, sell all or substantially all of the
assets of CDSC in one or a series of related transactions, or sell 100% of the
voting securities of CDSC, in each case, into, with or to any Person other than
the Sellers or any of their Affiliates, provided that Republic shall promptly
pay the net proceeds of each such transaction to the trustee of the Senior
Secured Note Indenture for the benefit of the holders of outstanding Senior
Secured Notes, or to such other agent as designated in writing by the holders of
a majority of the outstanding principal amount of the Senior Secured Notes, in
partial satisfaction and redemption of the outstanding principal amount of the
Senior Secured Notes; provided, further, that Republic shall have delivered to
Purchaser written notice of such transaction not less than sixty (60) days prior
to the closing thereof. For the avoidance of doubt, nothing contained in this
Agreement shall restrict the right of Ontario Purchaser to exercise the Option
at any time prior to the closing of any such transaction. The rights and
remedies of the holders of the outstanding RTI Notes in respect of any failure
of Republic to pay the net proceeds of each such transaction to the trustee of
the Senior Secured Note Indenture for the benefit of the holders of outstanding
Senior Secured Notes shall not be subject to the limitations on liability for
indemnification provided in Sections 11.4 and 11.6 of this Agreement.
24. Amendment to Section 9.1(h). Section 9.1(h) of the Agreement is hereby
deleted in its entirety and the following is hereby substituted in place
thereof:
"[Intentionally omitted.]"
25. Amendment to Section 11.4. Section 11.4 of the Agreement is hereby
deleted in its entirety and the following is hereby substituted in place
thereof:
"Section 11.4 Limitation on Sellers' Indemnification Liability. The
Sellers' aggregate liability for money damages under this Agreement and all
Attendant Documents related to the inaccuracy or breaches of representations or
warranties and breaches of covenants or agreements shall not exceed an amount
equal to Five Million U.S. Dollars ($5,000,000.00), which shall be satisfied as
set forth in Section 11.6. The Sellers shall have no liability for money damages
related to the inaccuracy of the representations or warranties or the breaches
of covenants or agreements contained herein until the aggregate damages claimed
under Section 11.2 exceeds Two Hundred Fifty Thousand U.S. Dollars
($250,000.00)."
26. Amendment to Section 11.5. Section 11.5 of the Agreement is hereby
deleted in its entirety and the following is hereby substituted in place
thereof:
9
"Section 11.5 Limitation on Purchaser's Indemnification Liability. The
Purchaser's aggregate liability for money damages under this Agreement and all
Attendant Documents related to the inaccuracy or breaches of representations or
warranties and breaches of covenants or agreements shall not exceed an amount
equal to the aggregate amount of cash deposited by Sellers into the Indemnity
Escrow pursuant to Section 11.6. Purchaser shall have no liability for money
damages related to the inaccuracy of the representations or warranties or the
breaches of covenants or agreements contained herein until the aggregate damages
claimed under Section 11.3 exceeds Two Hundred Fifty Thousand U.S. Dollars
($250,000.00). Sellers shall not have any additional recourse against Purchaser
for such indemnity claims, except in instances of fraud by Purchaser."
27. Amendment to Section 11.6. Section 11.6 of the Agreement is hereby
deleted in its entirety and the following is hereby substituted in place
thereof:
"Section 11.6 Satisfaction of Purchaser Claims. On the Closing Date,
Sellers shall establish an escrow account (the "Indemnity Escrow") pursuant to
an escrow agreement in form and substance reasonably acceptable to Purchaser
(the "Indemnity Escrow Agreement") and shall promptly thereafter fund such
escrow account with up to Five Million U.S. Dollars ($5,000,000.00) of available
cash and for the first twelve months after the Closing Date, Purchaser may
satisfy indemnifiable Losses from the Indemnity Escrow. The Cash Consideration
shall not be a source from which indemnifiable claims may be satisfied. In no
event shall Purchaser be entitled to payment for indemnity claims under this
Article XI for the inaccuracy of representations or warranties or breaches of
covenants or agreements contained in this Agreement in excess of Five Million
U.S. Dollars ($5,000,000.00), which may be satisfied from the Indemnity Escrow
as set forth above. Any claim for indemnification of Purchaser pursuant to this
Article XI shall be paid solely out of the Indemnity Escrow, and Purchaser shall
not have any additional recourse against Sellers for such indemnity claims,
except in instances of fraud by Sellers."
28. Amendment to Section 12.1(h). Section 12.1(h) of the Agreement is
hereby deleted in its entirety and the following is hereby substituted in place
thereof:
"(h) by Purchaser, if (i) the Bidding Procedures Order shall not have
become a Final Order on or prior to the date that is 10 days after its entry or
(ii) the Sale Order shall not have been entered by the Bankruptcy Court on or
prior to July 15, 2002 (not giving any effect to any amendment to the Sale Order
mutually agreed to by Sellers and Purchaser) or (iii) the Sale Order shall not
have become a Final Order on or prior to the date that is ten (10) days after
the entry of the Sale Order unless Purchaser has waived the requirement for a
Final Order; or"
29. Amendment to Section 12.1(j). Section 12.1(j) of the Agreement is
hereby deleted in its entirety and the following is hereby substituted in place
thereof:
"(j) by Purchaser or Republic, if the Closing shall not have occurred
on or prior to August 16, 2002; provided, however, that the right to terminate
this
10
Agreement under this Section 12.1(j) shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have been the cause
of, or shall have resulted in, the failure of the Closing or the failure to
enter the Sale Order or the failure of such Sale Order to become a Final Order
on or prior to such date; or"
30. Exhibits. Exhibit M is hereby deleted in its entirety and the
following is hereby substituted in place thereof:
"[Intentionally omitted.]"
31. Effect of Amendment. Except as expressly modified hereby, all of the
terms, covenants and conditions of the Agreement shall remain in full force and
effect and are hereby ratified, approved and confirmed. This Amendment shall be
effective as of the date first above written.
32. Miscellaneous. The provisions of Article XIII ("Miscellaneous") of the
Agreement shall apply to this Amendment as if such provisions were set out
herein in full and as if each reference therein to "this Agreement" included a
reference to this Amendment.
[Remainder of Page Intentionally Left Blank]
11
IN WITNESS WHEREOF, the undersigned have executed this First Amendment as
of the date first written above.
REPUBLIC ENGINEERED PRODUCTS LLC
(f/k/a RT ACQUISITION LLC)
By: /s/ Xxxxxxx Xxxxxx
--------------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
REPUBLIC TECHNOLOGIES
INTERNATIONAL, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
NIMISHILLEN & TUSCARAWAS, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
BLISS & XXXXXXXX, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
Signature Page to First Amendment
REPUBLIC TECHNOLOGIES
INTERNATIONAL HOLDINGS, LLC
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
RTI CAPITAL CORP.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
CANADIAN DRAWN STEEL COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
ACKNOWLEDGED AND AGREED TO
AS TO SECTION 8.20 ONLY:
2011448 ONTARIO LIMITED
By: /s/ Xxxxxx Xxxxxxxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxxxxxxx
Title: Vice President
Signature Page to First Amendment
