SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT
REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT July 19, 2014
(Date of Earliest Event Reported)
AK STEEL
HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
Commission File No. 1-13696
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Delaware |
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31-1401455 |
(State of Incorporation) |
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(I.R.S. Employer
Identification No.) |
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9227 Centre Point Drive
West Chester, OH |
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45043 |
(Address of principal
executive offices) |
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(Zip Code) |
Registrants telephone number, including area code: (513) 425-5000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Solicitation material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 |
Entry into Material Definitive Agreement. |
Membership Interests
Purchase Agreement
On July 19, 2014, AK Steel Corporation (the Company), a wholly-owned subsidiary of AK Steel Holding
Corporation (AK Holding), entered into a Membership Interest Purchase Agreement (the Purchase Agreement) dated as of July 18, 2014, by and among Severstal Columbus Holdings, LLC (Severstal), Severstal
Dearborn, LLC (Dearborn) and the Company. Pursuant to and subject to the terms and conditions of the Purchase Agreement, the Company will acquire all of Severstals membership interests in Dearborn. Dearborn owns a steelmaking
facility located in Dearborn, Michigan, a cokemaking plant in Follansbee, West Virginia, as well as equity interests in three joint ventures. The purchase price is $700 million on a cash- and debt-free basis, subject to certain adjustments.
The Purchase Agreement contains representations and warranties, affirmative and negative covenants, and indemnification obligations that are customary for
acquisition agreements of this type. Dearborn is required to conduct its business in the ordinary course during the interim period between the execution of the Purchase Agreement and the consummation of the transaction and not to take certain
actions prior to the closing of the transaction without the prior approval of the Company.
The Purchase Agreement contains certain termination rights for
the parties, including the right for either party to terminate the Purchase Agreement if the transaction is not consummated prior to April 18, 2015. The transaction is subject to customary closing conditions, including the expiration or
termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The Company and Severstal have agreed to use commercially reasonable efforts to obtain antitrust approval. Subject to the closing conditions, the
parties anticipate completing the transaction in the fourth quarter of 2014.
The foregoing description does not constitute a complete summary of the
Purchase Agreement and is qualified by reference in its entirety to the full text of the Purchase Agreement, a copy which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The representations, warranties and covenants contained in the Purchase Agreement were made only for purposes of the Purchase Agreement and as of specific
dates, were solely for the benefit of the parties to the Purchase Agreement, and are subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection
with the execution of the Purchase Agreement. The representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the Purchase Agreement instead of establishing these matters as facts, and may
be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Purchase Agreement and should not rely on the representations,
warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or conditions of Dearborn or AK Holding. Moreover, information concerning the subject matter of the representations and warranties may change
after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in AK Holdings public disclosures.
Bridge Facility Commitment Letter
In connection with the acquisition of Dearborn and concurrently with the entry into the Purchase Agreement, the Company entered into a commitment letter, dated
July 19, 2014, with Credit Suisse AG, Cayman Islands Branch and Credit Suisse Securities (USA) LLC, that provides a commitment (the Commitment Letter), subject to satisfaction of standard conditions, for a senior unsecured bridge
loan facility of up to $730 million, representing the purchase price to acquire Dearborn plus estimated fees and expenses related to the acquisition transaction and anticipated related financing transactions, as discussed below. The amount of the
bridge loan facility available at closing is subject to reduction in accordance with the terms of the Commitment Letter, including but not limited to reduction upon the expected issuance of debt and/or equity securities used to finance the
acquisition transaction. The Company currently intends to finance the acquisition transaction and related fees and expenses with cash on hand and the proceeds from the issuance of debt and/or equity securities, and, only to the extent necessary,
borrowings under the bridge facility.
The foregoing description does not constitute a complete summary of the Commitment Letter and is qualified by
reference in its entirety to the full text of the Commitment Letter, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference. This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of any vote or approval.
Forward-Looking
Statements
The statements in this Current Report on Form 8-K with respect to future results reflect managements estimates and
beliefs and are intended to be, and hereby are identified as forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as expects,
anticipates, believes, intends, plans, estimates and other similar references to future periods typically identify such forward-looking statements.
The Company cautions readers that such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from
those currently expected by management, including that the acquisition of Dearborn may not be consummated, or may not be consummated in a timely manner; that regulatory approval not be obtained or may only be obtained subject to conditions that are
not anticipated; that Dearborn will not be integrated successfully into the Company following the consummation of the acquisition; and that cost savings, synergies, accretion to earnings, increased shipments and other anticipated benefits and
opportunities from the acquisition may not be fully realized or may take longer to realize than expected. In addition, our results and financial condition and any benefits from the acquisition, if consummated, could be adversely affected by reduced
selling prices, shipments and profits associated with a highly competitive industry with excess capacity; changes in the cost of raw materials and energy; the Companys significant amount of debt and other obligations; severe
financial hardship or bankruptcy of one or more of the Companys major customers; reduced demand in key product markets due to competition from alternatives to steel or other factors;
increased global steel production and imports; excess inventory of raw materials; supply chain disruptions or poor quality of raw materials; production disruption or reduced production levels; the Companys healthcare and pension obligations;
not timely reaching new labor agreements; major litigation, arbitrations, environmental issues and other contingencies; regulatory compliance and changes; climate change and greenhouse gas emission limitations; conditions in the financial, credit,
capital and banking markets; the Companys use of derivative contracts to hedge commodity pricing volatility; the value of the Companys net deferred tax assets; inability to fully realize benefits of long-term cost savings and margin
enhancement initiatives; lower quantities, quality or yield of estimated coal reserves of AK Coal Resources, Inc.; increased governmental regulation of mining activities; inability to hire or retain skilled labor and experienced manufacturing and
mining managers; and IT security threats and sophisticated cybercrime; as well as those risks and uncertainties discussed in the Companys Annual Report on Form 10-K for the year ended December 31, 2013, as updated in subsequent Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K filed with or furnished to the Securities and Exchange Commission. Except as required by law, the Company disclaims any obligation to update any
forward-looking statements to reflect future developments or events.
Item 9.01 |
Financial Statements and Exhibits. |
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2.1 |
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Membership Interest Purchase Agreement, dated July 18, 2014, by and among Severstal Columbus Holdings, LLC, Severstal Dearborn, LLC and AK Steel Corporation. |
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10.1 |
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Commitment Letter, dated July 19, 2014, with Credit Suisse AG, Cayman Islands Branch and Credit Suisse Securities (USA) LLC. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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AK STEEL HOLDING CORPORATION |
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By: |
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/s/ David C. Horn |
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David C. Horn |
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Secretary |
Dated: July 22, 2014
EXHIBIT INDEX
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Exhibit No. |
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Description |
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2.1 |
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Membership Interest Purchase Agreement, dated July 18, 2014, by and among Severstal Columbus Holdings, LLC, Severstal Dearborn, LLC and AK Steel Corporation. |
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10.1 |
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Commitment Letter, dated July 19, 2014, with Credit Suisse AG, Cayman Islands Branch and Credit Suisse Securities (USA) LLC. |
Exhibit 2.1
EXECUTION VERSION
MEMBERSHIP INTEREST PURCHASE AGREEMENT
by and among
SEVERSTAL COLUMBUS
HOLDINGS, LLC,
SEVERSTAL DEARBORN, LLC
and
AK STEEL CORPORATION
dated as of July 18, 2014
Table Of Contents
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Page |
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ARTICLE I PURCHASE AND SALE OF MEMBERSHIP INTERESTS; CLOSING |
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1 |
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1.01 |
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Purchase and Sale of Membership Interests |
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1 |
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1.02 |
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Closing |
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1 |
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1.03 |
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Purchase Price Adjustment |
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3 |
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1.04 |
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Purchase Price Allocation |
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5 |
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ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLER |
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6 |
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2.01 |
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Organization, Authority and Qualification |
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7 |
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2.02 |
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Capitalization |
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7 |
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2.03 |
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Subsidiaries; Investments |
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8 |
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2.04 |
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No Conflicts |
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9 |
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2.05 |
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Governmental Consents and Approvals |
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9 |
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2.06 |
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Financial Statements; No Undisclosed Liabilities; Internal Controls |
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10 |
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2.07 |
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Litigation |
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11 |
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2.08 |
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Compliance with Laws; Permits |
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11 |
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2.09 |
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Taxes |
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11 |
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2.10 |
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Employee Benefits |
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12 |
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2.11 |
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Labor Matters |
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14 |
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2.12 |
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Real Property |
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15 |
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2.13 |
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Intellectual Property |
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16 |
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2.14 |
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Environmental Matters |
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17 |
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2.15 |
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Absence of Certain Changes |
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18 |
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2.16 |
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Material Contracts |
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19 |
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2.17 |
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Customers and Suppliers |
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20 |
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2.18 |
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Foreign Corrupt Practices Act |
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20 |
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2.19 |
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Affiliate Transactions |
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21 |
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2.20 |
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Title; Sufficiency of Assets |
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21 |
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2.21 |
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Brokers |
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21 |
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2.22 |
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Insurance |
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21 |
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2.23 |
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Disclaimer |
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22 |
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER |
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22 |
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3.01 |
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Organization and Authority of Purchaser |
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22 |
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3.02 |
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No Conflicts |
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22 |
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3.03 |
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Governmental Consents and Approvals |
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22 |
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3.04 |
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Litigation |
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23 |
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3.05 |
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WARN Act |
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23 |
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3.06 |
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Permits |
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23 |
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3.07 |
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Qualification to Purchase |
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23 |
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3.08 |
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Union Matters |
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23 |
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3.09 |
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Brokers |
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24 |
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3.10 |
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Availability of Funds |
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24 |
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3.11 |
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Solvency; Fraudulent Conveyance |
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24 |
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3.12 |
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Investigation by Purchaser |
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24 |
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3.13 |
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Disclaimer |
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25 |
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Table Of Contents
(Continued)
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ARTICLE IV COVENANTS AND AGREEMENTS |
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25 |
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4.01 |
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Conduct of the Business |
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25 |
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4.02 |
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Access to Information; Confidentiality |
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27 |
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4.03 |
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Regulatory and Other Authorizations; Notices and Consents |
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28 |
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4.04 |
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Fulfillment of Conditions |
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30 |
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4.05 |
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Contact with Customers and Suppliers |
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30 |
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4.06 |
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Further Assurances; Post-Closing Cooperation |
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31 |
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4.07 |
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Indemnification and Insurance |
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31 |
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4.08 |
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Employee Benefit Matters |
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31 |
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4.09 |
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Books and Records; Access |
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33 |
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4.10 |
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Credit and Performance Support Obligations |
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33 |
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4.11 |
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Termination of Insurance Coverage |
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34 |
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4.12 |
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Financing |
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34 |
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4.13 |
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Corporate Name |
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35 |
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4.14 |
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Termination of Intercompany Agreements |
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36 |
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4.15 |
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[Intentionally Omitted.] |
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36 |
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4.16 |
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Provisions Respecting Representation of the Company |
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36 |
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ARTICLE V TAX MATTERS |
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37 |
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5.01 |
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Sellers Indemnification |
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37 |
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5.02 |
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Purchasers Indemnification |
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39 |
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5.03 |
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Refunds or Credits |
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39 |
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5.04 |
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Tax Returns |
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39 |
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5.05 |
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Mutual Cooperation |
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40 |
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5.06 |
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Contests |
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40 |
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5.07 |
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Transfer Taxes |
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41 |
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5.08 |
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Survival of Obligations and Sole Remedy |
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41 |
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ARTICLE VI CONDITIONS |
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41 |
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6.01 |
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Conditions to the Obligations of Purchaser |
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41 |
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6.02 |
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Conditions to the Obligations of Seller |
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42 |
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ARTICLE VII TERMINATION |
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43 |
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7.01 |
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Termination |
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43 |
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7.02 |
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Effect of Termination |
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43 |
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ARTICLE VIII INDEMNIFICATION AND SURVIVAL |
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43 |
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8.01 |
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Survival of Representations, Warranties, Covenants and Agreements |
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43 |
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8.02 |
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Indemnification |
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44 |
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8.03 |
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Indemnity Procedures |
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46 |
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8.04 |
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Tax Effect |
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48 |
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ii
Table Of Contents
(Continued)
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Page |
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8.05 |
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Insurance Offset |
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48 |
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8.06 |
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Subrogation |
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48 |
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8.07 |
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Exclusivity |
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48 |
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8.08 |
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Article V to Apply to Taxes and Tax Returns |
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49 |
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ARTICLE IX DEFINITIONS |
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49 |
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9.01 |
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Definitions |
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49 |
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ARTICLE X MISCELLANEOUS |
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59 |
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10.01 |
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Assignment |
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10.02 |
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Public Announcements |
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59 |
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10.03 |
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Expenses |
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59 |
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10.04 |
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Amendment |
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59 |
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10.05 |
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Severability |
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60 |
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10.06 |
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No Third Party Beneficiaries |
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60 |
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10.07 |
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Waiver |
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60 |
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10.08 |
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Governing Law |
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60 |
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10.09 |
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Arbitration and Jurisdiction |
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60 |
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10.10 |
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Specific Performance |
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62 |
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10.11 |
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Headings |
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62 |
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10.12 |
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Counterparts |
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62 |
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10.13 |
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Notices |
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62 |
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10.14 |
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Construction |
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63 |
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10.15 |
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Notification of Certain Matters |
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64 |
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10.16 |
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Entire Agreement |
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64 |
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Annexes
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Annex A |
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Form of Guaranty |
Annex B |
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Form of Purchaser FIRPTA Certificate |
Annex C |
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Form of Release |
Annex D |
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Net Working Capital Calculation |
Annex E |
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Purchaser Commitment Letter |
iii
This MEMBERSHIP INTEREST PURCHASE AGREEMENT, dated as of July 18, 2014, is made and entered
into by and among Severstal Columbus Holdings, LLC, a Delaware limited liability company (Seller), Severstal Dearborn, LLC, a Delaware limited liability company (the Company) and AK Steel Corporation, a Delaware
corporation (Purchaser). Capitalized terms not otherwise defined herein have the meanings set forth in Section 9.01 hereof.
WHEREAS, Seller owns all of the currently issued and outstanding Units of Membership Interest of the Company (the Membership
Interests);
WHEREAS, upon the terms and subject to the conditions set forth in this Agreement, Seller proposes to sell to
Purchaser, and Purchaser desires to purchase from Seller, the Membership Interests; and
WHEREAS, in order to induce Purchaser to enter
into this Agreement, OAO Severstal and its Affiliate, OOO Mining Holding Company, have delivered to Purchaser, substantially concurrently with the execution and delivery of this Agreement, a duly executed guaranty of Sellers and, prior to the
Closing, the Companys obligations and performance in connection with this Agreement in the form attached as Annex A (the Guaranty).
NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements set forth in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF
MEMBERSHIP INTERESTS; CLOSING
1.01 Purchase and Sale of Membership Interests. Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing, Purchaser shall purchase from Seller, and Seller shall sell, assign, transfer and deliver to Purchaser, the Membership Interests free and clear of any Encumbrances.
1.02 Closing.
(a) Upon
the terms and subject to the conditions set forth in this Agreement, the purchase and sale of the Membership Interests (the Closing) shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 155 N.
Wacker Drive, Chicago, Illinois 60606 or at such other place as Purchaser and Seller mutually agree, commencing at 10:00 A.M. local time, on the later of (i) the tenth (10th) Business Day following the satisfaction or waiver of each of the
conditions set forth in Article VI (excluding conditions that, by their terms, cannot be satisfied until the Closing, but the Closing shall be subject to the satisfaction or waiver of those conditions) and (ii) the fourteenth
(14th) Business Day following the day on which Purchaser shall have received (and its Financing Sources shall have had access to) the Required Information, or at such other time or date as Purchaser and Seller may mutually agree (the
Closing Date); provided, however, that if the Closing Date would otherwise be (x) after August 15, 2014 but prior to September 15, 2014, (y) after November 21, 2014 but prior to
December 12, 2014, or (z) after December 19, 2014 but prior to January 16, 2015, Purchaser may elect, by written notice delivered to Seller no later than five
(5) Business Days prior to the date that would otherwise be the Closing Date, to delay the Closing to September 15, 2014, December 12, 2014 or January 16, 2015, respectively, or such earlier date as may be set forth in such
written notice, except that the Closing on such date shall be subject to the satisfaction or waiver of each of the conditions set forth in Article VI as of such date (excluding conditions that, by their terms, cannot be satisfied until the
Closing, but the Closing shall be subject to the satisfaction or waiver of those conditions). Unless Purchaser and Seller agree otherwise, the Closing shall be deemed to have occurred at 12:01 a.m. local time in each applicable jurisdiction on the
Closing Date; provided, however, that for the purposes of Article V the Closing shall occur on delivery of the items listed in Section 1.02(b).
(b) At the Closing:
(i) Purchaser shall deliver (A) to Seller, the Initial Purchase Price, less (x) the Intercompany Indebtedness Amount,
(y) the Bank of America Credit Agreement Amount and (z) the amount of Indebtedness at Closing, if any, associated with the item set forth on Schedule 2.06(c), as determined by the Company in concurrence with its independent public
accountants or other Big 4 independent accounting firm, by wire transfer of immediately available funds, free and clear of any withholdings or deductions, to an account designated by Seller by written notice delivered to Purchaser at
least two (2) Business Days before the Closing Date, (B) to the lenders under the Bank of America Credit Agreement, the Bank of America Credit Agreement Amount, by wire transfer of immediately available funds, free and clear of any
withholdings or deductions, to an account designated pursuant to the payoff letters contemplated by Section 1.02(b)(ii), (C) to Seller (or Sellers designee), the Intercompany Indebtedness Amount by wire transfer of immediately
available funds, free and clear of any withholdings or deductions, to an account designated by Seller by written notice delivered to Purchaser at least two (2) Business Days before the Closing Date and (D) to Seller, such documents
regarding the corporate organization, existence, authorization and similar matters relating to Purchaser as Seller may reasonably request; and
(ii) Seller shall deliver to Purchaser (A) a duly executed amendment to the limited liability company agreement of the
Company, evidencing the transfer of the Membership Interests to Purchaser and any certificates evidencing the Membership Interests duly endorsed in blank, or accompanied by stock powers duly executed in blank, (B) written resignations from each
director or member of the board of managers of the Company and its Subsidiaries (except that, in the case of Double Eagle, Seller shall only deliver to Purchaser resignations for the members of the management committee designated by the Company) as
requested by the Purchaser not less than ten (10) Business Days prior to the Closing Date, (C) such documents regarding the corporate organization, existence, authorization and similar matters relating to Seller and the Company and its
Subsidiaries as Purchaser may reasonably request, (D) payoff letters from Bank of America to the Company, in form and substance reasonably acceptable to Purchaser, reflecting the payment in full of all obligations of the Company and its
Subsidiaries under the Bank of America Credit Agreement and any necessary lien discharges, UCC termination statements or other releases as may be reasonably required by Purchaser to
2
evidence the satisfaction of all obligations of the Company and its Subsidiaries under the Bank of America Credit Agreement, (E) an affidavit of non-foreign status satisfying the
requirements of Section 1445 of the Code from the Parent, in the form of Annex B, (F) a written release from the Seller, on behalf of itself and its Affiliates, for the benefit of the Company and its Subsidiaries, in the form of
Annex C, including a statement of the Intercompany Indebtedness Amount and certification of the satisfaction thereof and (G) a permanent electronic copy of all documents, records, agreements, statements, files or other information which
Seller has made available to Purchaser, effective as of the Closing Date, in the transaction data room maintained by Merrill Corporation.
1.03 Purchase Price Adjustment.
(a) Initial Purchase Price.
(i) For purposes of determining the Initial Purchase Price payable by Purchaser at the Closing, not less than three
(3) Business Days prior to the Closing Date, Seller shall prepare and deliver to Purchaser a statement setting forth an estimate of Net Working Capital (determined in accordance with Section 1.03(b)(ii)), including in reasonable
detail the basis for the computation thereof, as of 12:01 a.m. local time on the Closing Date (the Effective Time). Such statement shall be referred to as the Estimated Closing Statement. The Seller and the
Company shall consider in good faith any comments by the Purchaser on the Estimated Closing Statement.
(ii) The
Initial Purchase Price, as used in this Agreement, shall mean an amount equal to $700,000,000, plus the amount by which, if any, the Net Working Capital set forth on the Estimated Closing Statement (the Estimated
Net Working Capital) is greater than $300,000,000; or, as the case may be, minus the amount by which, if any, the Estimated Net Working Capital is less than $300,000,000.
(b) Final Purchase Price Adjustments.
(i) As soon as practicable, but not later than sixty (60) days, after the Closing Date, Purchaser shall prepare and
deliver to Seller a statement setting forth the Net Working Capital (determined in accordance with Section 1.03(b)(ii)), including in reasonable detail the basis for the computation thereof, as of the Effective Time (the Closing
Statement). During such sixty (60) day period and any other periods of review, investigation or dispute provided for in this Section 1.03(b), Purchaser and Seller shall reasonably cooperate with each other in the
preparation of the Closing Statement, the Protest Notice and the Final Closing Statement, comply with their obligations under the last sentence of Section 1.03(b)(iii), and, in the case of Purchaser, comply with its obligations under
Section 4.09(b), and, during any period in which Purchaser or Seller, as applicable, is not so cooperating or complying with such obligations, the other party may elect to extend the sixty (60) day period or other period of review,
investigation or dispute, as applicable, for an amount of time equal to such period of non-cooperation or non-compliance.
3
(ii) For purposes of this Agreement, the term Net Working
Capital means the difference between the current assets (other than income tax receivables) and current liabilities (other than (A) the current portion of outstanding Indebtedness (excluding the current portion of capitalized leases),
including accrued interest, and (B) income tax payables) of the Company and its consolidated Subsidiaries, including MSC, determined in accordance with and calculated in the manner set forth on Annex D hereto. Notwithstanding anything
herein to the contrary, Net Working Capital shall not include any cash and/or cash equivalents of the Company and/or MSC as of the Effective Time that is subsequently swept or otherwise removed by Seller or any of its Affiliates from the
Company and/or MSC prior to the Closing.
(iii) Seller shall have sixty (60) days after delivery of the Closing
Statement by Purchaser to review the same and to deliver to Purchaser a written statement thereon (the Protest Notice). The Protest Notice shall list those items included in the Closing Statement, if any, to which Seller takes
exception and Sellers proposed adjustment, including in reasonable detail the basis for the computation thereof. The failure of Seller to deliver such Protest Notice within such sixty (60) day period following delivery of the Closing
Statement will constitute Sellers acceptance of the Closing Statement as prepared by Purchaser. If Seller timely delivers a Protest Notice to Purchaser and Purchaser does not give Seller notice of its objections to such Protest Notice within
thirty (30) days following receipt of such Protest Notice, Purchaser shall be deemed to have accepted the Closing Statement as adjusted by Seller in the Protest Notice. If Purchaser objects to the Protest Notice within said thirty (30) day
period following delivery to Purchaser of the Protest Notice (the adjustments to which Purchaser objects being referred to herein as the Contested Adjustments), Seller and Purchaser shall attempt to resolve the dispute regarding
the Contested Adjustments. If a final resolution thereof is not reached within ten (10) Business Days of Sellers receipt of Purchasers objections thereto, either Seller or Purchaser shall thereafter be entitled to refer any
remaining Contested Adjustments to an Independent Accounting Firm acceptable to Seller and Purchaser or, in the absence of agreement on the Independent Accounting Firm within five (5) days of notice by either Seller or Purchaser of intent to
initiate such a referral, to PricewaterhouseCoopers (who will thereafter be considered the Independent Accounting Firm). If there is such a referral to an Independent Accounting Firm, each of Seller and Purchaser agree, if
requested by the Independent Accounting Firm, to execute a reasonable engagement letter and shall submit to the Independent Accounting Firm not later than ten (10) Business Days after its appointment, a written statement summarizing its
position on the Contested Adjustments, together with such supporting documentation as it deems necessary. The Independent Accounting Firm shall (i) act as an arbitrator to determine, based solely on the materials submitted and presentations by
Seller and Purchaser, and not by independent review, only the Contested Adjustments that have not been settled by negotiation, (ii) employ the terms and definitions of this Agreement when making its decision, (iii) assign values to each
Contested Adjustment no higher than the highest amount, nor lower than the lowest amount, proposed by either party with respect to such Contested Adjustment and (iv) be instructed to render its decision within forty-five (45) days of its
appointment or as soon thereafter as is reasonably practicable. The decision of the Independent Accounting Firm as to the Contested Adjustments shall be final and binding on, and shall not be subject to
4
appeal by, Seller or Purchaser and may be entered and enforced by any court having jurisdiction. The Closing Statement shall be revised as necessary to reflect the decision of the Independent
Accounting Firm and the other modifications thereto previously agreed by Seller and Purchaser. Each of Seller and Purchaser shall bear its own expenses incurred in connection with the resolution of the Closing Statement, and the fees and expenses of
the Independent Accounting Firm shall be shared equally by Seller, on the one hand, and Purchaser, on the other hand. The term Final Closing Statement, as used in this Agreement, shall mean the definitive Closing Statement
accepted by Purchaser or Seller or agreed to by Purchaser and Seller or the definitive Closing Statement resulting from the determinations made by the Independent Accounting Firm in accordance with this Section 1.03(b)(iii) (in addition
to those items theretofore accepted by Purchaser or Seller or agreed to by Purchaser and Seller). Purchaser and Seller shall furnish to each other and to the Independent Accounting Firm such work papers and other documents and information relating
to the Contested Adjustments as the Independent Accounting Firm may request and are available to that party (or its independent public accountants) and shall be afforded the opportunity to present to the Independent Accounting Firm any material
related to the disputed items and to discuss the items with the Independent Accounting Firm.
(iv) Within seven
(7) days of the determination of the Final Closing Statement:
(1) if the Net Working Capital set forth on the Final
Closing Statement (the Final Net Working Capital) is greater than the Estimated Net Working Capital, Purchaser shall pay to Seller the amount of such excess; or
(2) if the Final Net Working Capital is less than the Estimated Net Working Capital, Seller shall pay to Purchaser the amount
of such shortfall.
(v) Any payments pursuant to this Section 1.03(b) shall be made by wire transfer of
immediately available funds to the account or accounts designated by Seller or Purchaser, as applicable.
1.04 Purchase Price
Allocation.
(a) Within ninety (90) days following the determination of the Final Closing Statement in accordance with
Section 1.03(b), Purchaser shall provide Seller with a statement containing an allocation (the Purchase Price Allocation) of the total consideration paid for the Membership Interests among the assets of the Company
(and, to the extent applicable, the assets of its Subsidiaries). The Purchase Price Allocation shall be prepared in accordance with the provisions of Section 1060 of the Code and the Treasury Regulations promulgated thereunder.
(b) If, within fifteen (15) days after receipt of the Purchase Price Allocation, Seller notifies Purchaser that it reasonably objects to
the Purchase Price Allocation, the parties shall attempt to resolve the dispute in good faith. If Purchaser and Seller reach a written agreement within fifteen (15) days after receipt of Sellers notice by Purchaser, the Purchase Price
Allocation, including any amendment thereto under such agreement, shall be deemed to be
5
the final Purchase Price Allocation. If the parties are unable to reach a written agreement within the period described in the preceding sentence, the dispute shall be submitted to the
Independent Accounting Firm and resolved by the Independent Accounting Firm within fifteen (15) days after submission.
(c) The
Purchase Price Allocation made pursuant to this Section 1.04 shall be binding on Purchaser and Seller for all Tax purposes. The parties and their respective Affiliates shall (i) timely file all Tax Returns required to be filed in
connection with the Purchase Price Allocation (including IRS Form 8594 and any supplemental filings to reflect any revisions to the Purchase Price Allocation) and (ii) prepare and file all Tax Returns and determine all Taxes in a manner
consistent with the Purchase Price Allocation, except as may otherwise be required pursuant to a determination within the meaning of Section 1313(a) of the Code (or similar provision of state, local or foreign Tax law). Each of the
parties shall notify the other party if it (or any of its Affiliates) receives notice that any Taxing Authority proposes any allocation that differs from the Purchase Price Allocation.
(d) In the event that there is any adjustment to the total consideration paid for the Membership Interests following the delivery of the
Purchase Price Allocation, Purchaser shall revise the Purchase Price Allocation to reflect any such adjustment using the same methodology as used in the preparation of the initial Purchase Price Allocation, consistent with the principles set forth
in this Section 1.04 and shall promptly deliver such revised Purchase Price Allocation to Seller. Any dispute between the parties regarding such revised Purchase Price Allocation shall be resolved in accordance with the procedures of
Section 1.04(b).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLER
Except as otherwise set forth in a disclosure schedule relating to any particular representation and warranty (collectively, the
Disclosure Schedules), the Company and Seller represent and warrant to Purchaser that all of the statements contained in this Article II are true. Each exception set forth in the Disclosure Schedules is identified by
reference to, or has been grouped under a heading referring to, a specific individual section or subsection of this Agreement; provided, however, that the inclusion of any item referenced in one section or subsection of the Disclosure
Schedules shall be deemed to refer to another section or subsection of the Disclosure Schedules (and accordingly to the applicable sections or subsections of this Agreement which contain references to the Disclosure Schedules), whether or not an
explicit cross-reference appears, if the applicability of such item to such other section or subsection is reasonably apparent on the face of such disclosure. An exception set forth in the Disclosure Schedules identified by reference to, or grouped
under a heading referring to, a specific individual section or subsection of this Agreement shall be deemed an exception to such individual section or subsection whether or not such section or subsection explicitly calls for a Disclosure Schedule.
The inclusion of any information in the Disclosure Schedules shall not be deemed to be an admission or evidence of the materiality of such item, nor shall it establish a standard of materiality for any purpose whatsoever. Notwithstanding anything to
the contrary contained in this ARTICLE II, all representations and warranties with respect to Double Eagle are made to the Knowledge of Seller as of the date of this Agreement.
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2.01 Organization, Authority and Qualification.
(a) The Company is a limited liability company, duly organized, validly existing and in good standing under the Laws of the State of Delaware
and has all necessary corporate power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as conducted at the date of this Agreement. The Company is duly licensed or
qualified to do business and, in jurisdictions where such concept is recognized, is in good standing (or its local equivalent) in each jurisdiction in which the properties owned or leased by it or the operations of its business make such licensing
or qualification necessary or desirable, except to the extent that the failure to be so licensed, qualified or in good standing individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. The execution and
delivery of this Agreement by the Company, the performance by the Company of its obligations hereunder and the consummation by the Company of the transactions contemplated hereby have been duly authorized by all requisite action on the part of the
Company. The Company has made available to Purchaser copies of the Organizational Documents of the Company, and such copies are true and complete as of the date hereof. This Agreement has been duly executed and delivered by the Company and, assuming
due authorization, execution and delivery by Purchaser, this Agreement is a legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors rights generally.
(b) Seller is duly organized, validly existing and in good standing under the jurisdiction of its organization or formation. Seller has all
necessary power and authority to enter into, execute, deliver and perform its obligations under this Agreement. The execution, delivery and performance of this Agreement by Seller have been duly authorized by all requisite action on the part of
Seller. This Agreement has been duly executed and delivered by Seller and, assuming due authorization, execution and delivery by the Purchaser, this Agreement is a legal, valid and binding obligation of Seller, enforceable against it in accordance
with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors rights generally.
2.02 Capitalization.
(a)
The Membership Interests consist of 100 Units of Membership Interest. All of the Membership Interests are owned by Seller. Seller is the sole record and beneficial owner of the Membership Interests and the Seller has good title to the Membership
Interests, free and clear of any Encumbrances. The Membership Interests are duly authorized, validly issued, fully paid and non-assessable.
(b) Except for the Membership Interests, there are no outstanding or authorized shares of capital stock, units, membership, or other equity or
profit interests of any kind in the Company There are no outstanding or authorized securities, options, warrants, rights, commitments, preemptive rights or agreements of any kind to which the Company is a party or by which the Company is bound which
would obligate the Company to issue, deliver, redeem,
7
purchase, repurchase or sell any additional shares of capital stock, units, membership, or other equity or profit interests of any kind in the Company. There are no outstanding stock appreciation
rights, phantom stock, profit participation or similar rights with respect to the Company.
(c) Schedule 2.03 sets forth a true and
complete list of the Subsidiaries and, with respect to each Subsidiary, the jurisdiction in which it is incorporated or organized and the percentage of share capital and voting rights held, directly or indirectly, by the Company in such Subsidiary.
The Company has made available to Purchaser copies of the Organizational Documents of the Subsidiaries of the Company, and such copies are true and complete as of the date hereof.
2.03 Subsidiaries; Investments.
(a) Except as set forth on Schedule 2.03, the Company owns all of the issued and outstanding limited liability company interests or
partnership interests of its Subsidiaries, free and clear of all Encumbrances. All of such limited liability company interests or partnership interests are duly authorized, validly issued, fully paid and non-assessable. Except as set forth on
Schedule 2.03, there are no outstanding or authorized shares of capital stock, units, membership, or other equity or profit interests of any kind in any Subsidiary of the Company. There are no outstanding or authorized securities, options,
warrants, rights, commitments, preemptive rights or agreements of any kind to which the Company or any of its Subsidiaries is a party or by which any of them is bound which would obligate any of them to issue, deliver, redeem, purchase, repurchase
or sell any additional shares of capital stock, units, membership, or other equity or profit interests of any kind in any of the Subsidiaries of the Company. There are no outstanding stock appreciation rights, phantom stock, profit participation or
similar rights with respect to any Subsidiary of the Company.
(b) Each Subsidiary (a) is a limited liability company or partnership,
as applicable, duly organized, validly existing and in good standing under the laws of its respective jurisdiction of formation; (b) has all requisite limited liability company or partnership power, as applicable, to own, operate or lease the
properties and assets now owned, operated or leased by it and to carry on its business as conducted at the date of this Agreement; and (c) is duly licensed or qualified to do business and, in jurisdictions where such concept is recognized, is
in good standing (or its local equivalent) in each jurisdiction in which the properties owned or leased by it or the operations of its business make such licensing or qualification necessary or desirable, except, in each case, where the failure to
be so existing and in good standing, to have such power and authority or to be so licensed, qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(c) Except as set forth on Schedule 2.03(c), there are no agreements obligating the Company or any Subsidiary of the Company to make any
investment (in the form of a loan, capital contribution or otherwise) in any Person other than the Company, any of its Subsidiaries, or provide or maintain any guarantee, performance bond, security deposit or other credit support with respect to the
obligations of, any Person.
(d) [Intentionally omitted.]
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(e) The Company owns a 49% interest in Delaco Processing, L.L.C., a Michigan limited liability
company (Delaco) (the Delaco Interests), free and clear of all Encumbrances. The Delaco Interests are duly authorized, validly issued, fully paid and non-assessable. The Company has made available to Purchaser a
true and complete copy of the Operating Agreement of Delaco Processing, L.L.C. dated as of September 3, 1997 (the Delaco Agreement). The Delaco Agreement has not been amended, supplemented or restated in whole or in part and
is valid and binding on the Company and, to the Knowledge of the Company, is valid and binding on all the other members of Delaco. Neither the Company nor, to the Knowledge of the Company as of the date hereof, the other member of Delaco is in
material default or breach under the Delaco Agreement.
(f) The Company owns a 48% interest in Spartan Steel Coating, L.L.C., a Michigan
limited liability company (Spartan Steel) (the Spartan Steel Interests), free and clear of all Encumbrances. The Spartan Steel Interests are duly authorized, validly issued, fully paid and non-assessable. The
Company has made available to Purchaser a true and complete copy of the Operating Agreement of Spartan Steel Coating, L.L.C., as amended, dated as of November 14, 1996 (the Spartan Agreement). The Spartan Agreement has not
been amended, supplemented or restated in whole or in part and is valid and binding on the Company and, to the Knowledge of the Company, is valid and binding on all the other members of Spartan Steel. Neither the Company nor, to the Knowledge of the
Company as of the date hereof, the other member of Spartan Steel is in material default or breach under the Spartan Agreement.
2.04 No
Conflicts. Assuming that all Consents contemplated by Section 2.05 have been obtained, and except as set forth on Schedule 2.04 or as may result from any facts or circumstances relating to Purchaser or any of its Affiliates,
the execution, delivery and performance of this Agreement by Seller and the Company do not and shall not: (a) violate, conflict with or result in the breach of the Organizational Documents of Seller, the Company or any of its Subsidiaries;
(b) conflict with or violate any Law or Governmental Order applicable to Seller, the Company or any of its Subsidiaries, as applicable, or their respective assets or properties; or (c) violate, conflict with, result in a breach of or
default or acceleration of obligations under (with or without due notice or lapse of time or both), create in any party the right to terminate or modify, or require any notice, consent or waiver under any of the terms, conditions or provisions of
any Material Contract, Lease or material Permit of the Company or its Subsidiaries or result in the creation of any Encumbrance upon the assets of the Company or its Subsidiaries, except, in the case of clauses (b) and (c), as would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
2.05 Governmental Consents and
Approvals. The execution, delivery and performance of this Agreement by Seller and the Company do not and shall not require any Consent of any Governmental Authority, except: (a) pursuant to the requirements of the HSR Act or under the
antitrust or competition Laws of applicable foreign jurisdictions; (b) for any notification, or where appropriate, consultation or negotiations with a labor union, labor board or relevant Governmental Authority as set forth on Schedule
2.05, (c) as may be necessary as a result of any facts or circumstances relating to Purchaser or any of its Affiliates; or (d) to the extent that the failure to obtain any such Consent would not reasonably be expected to have a
material impact on the Purchasers ownership of the Membership Interests or the ability of the Company and each of its Subsidiaries to continue to conduct the Business immediately following the Closing on substantially the same terms as
immediately prior to the Closing.
9
2.06 Financial Statements; No Undisclosed Liabilities; Internal Controls.
(a) Schedule 2.06(a) contains the following financial statements: (i) the audited consolidated financial statements of the Company
and its Subsidiaries (other than MSC and Double Eagle) as of December 31, 2012 and December 31, 2013 (including all notes thereto), consisting of the audited balance sheet and the related consolidated statements of operations, changes in
shareholders equity and comprehensive income and cash flows for the fiscal years ended December 31, 2012 and December 31, 2013 and (ii) the unaudited consolidated financial statements of the Company and its Subsidiaries (other
than MSC and Double Eagle) as of March 31, 2014, consisting of the balance sheet and the related consolidated statement of operations for the year-to-date period then ended (collectively, the Financial Statements). The
Financial Statements have been prepared in accordance with GAAP, consistently applied throughout the periods indicated (except as set forth in the notes attached thereto) and present fairly, in all material respects, the consolidated financial
position of the Company and its Subsidiaries (other than MSC and Double Eagle) as of the dates thereof and the results of operations and cash flows of the Company and its Subsidiaries (other than MSC and Double Eagle) for the periods covered
thereby, except that the unaudited financial statements contained in the Financial Statements omit footnotes and are subject to normal, recurring year-end adjustments and accruals (the effect of which will not, individually or in the aggregate, be
materially adverse to the Business).
(b) Except as would not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, and except as set forth on Schedule 2.06(b), the Company and its Subsidiaries (other than MSC and Double Eagle) do not have any Liabilities that would be required to be reflected or reserved against in a consolidated balance
sheet of the Company and its Subsidiaries, prepared in accordance with GAAP as applied in preparing the balance sheets of the Company and its Subsidiaries (other than MSC and Double Eagle), as included in the Financial Statements, except for
(i) Liabilities incurred in the ordinary course of business after March 31, 2014; (ii) Liabilities and obligations disclosed, reflected or reserved for in the Financial Statements (including the notes thereto); (iii) Liabilities
and obligations incurred in connection with the transactions contemplated by this Agreement or otherwise as contemplated or permitted hereby; (iv) Liabilities discharged or paid in full prior to the date hereof in the ordinary course of
business consistent with past practice, and (v) Liabilities to be included in the calculation of Final Net Working Capital.
(c)
Except as set forth on Schedule 2.06(c), as of the Closing (i) the Company and its Subsidiaries will have no Indebtedness other than (x) pursuant to the Bank of America Credit Agreement (which, at the Closing, will be in an amount
equal to the Bank of America Credit Agreement Amount) and (y) the Intercompany Indebtedness Amount, and (ii) other than with respect to Plans, there are no payments due and owing by the Company or its Subsidiaries to any director, officer
or employee of the Company or any of its Subsidiaries in connection with or as a result of the consummation of the transactions contemplated by this Agreement. The Bank of America Credit Agreement Amount and the Intercompany Indebtedness Amount, in
the aggregate, at Closing will not exceed the Initial Purchase Price.
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2.07 Litigation. As of the date hereof, no Action by or against the Company or any of its
Subsidiaries is pending or, to the Knowledge of the Company, threatened, challenging the legality, validity or enforceability of this Agreement or the consummation of the transactions contemplated hereby. Except as set forth on Schedule
2.07, there are no Actions pending, or to the Knowledge of the Company, threatened in writing against the Company or any Subsidiary by or before any Governmental Authority in which the amounts in dispute are in excess of $500,000 or which
otherwise could reasonably be expected to have a material impact on the Business immediately after the Closing.
2.08 Compliance with
Laws; Permits. Except with respect to those matters described in Section 2.07, Section 2.09, Section 2.10, Section 2.11, Section 2.13, Section 2.14 and
Section 2.18, (i) each of the Company and its Subsidiaries is and, for the last three years, has been, in compliance with all Laws applicable to the Company or its Subsidiaries or any of their respective assets and properties,
except for any such non-compliance which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect and (ii) none of Seller, the Company or its Subsidiaries has received, at any time during the prior
three years, any written notice from any Governmental Authority regarding a violation of, or failure to comply with, any term or requirement of any Law that remains unresolved and could reasonably be expected to have a material adverse impact on the
Business. The Company and its Subsidiaries are in possession of all Permits necessary to carry on the Business, except where the failure to possess any such Permit would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect of their ability to operate the Business immediately after the Closing. Each such Permit is valid and in full force and effect, and no Action is pending or threatened in writing (or to the Knowledge of the Company, otherwise
threatened) relating to the revocation or limitation of any of the Permits. Each of the Company and its Subsidiaries is in compliance with all Permits in all material respects.
2.09 Taxes. With respect to taxable periods for which the statute of limitations has not expired:
(a) All material Tax Returns required to be filed by or with respect to the Company or its Subsidiaries on or prior to the Closing Date have
been or will be filed within the applicable statutory period. All such Tax Returns are or will be complete and accurate in all material respects. Each of the Company and its Subsidiaries has timely withheld and paid or will timely withhold and pay
over to the appropriate Taxing Authority all material amounts required to be so withheld and paid on or prior to the Closing Date as required by Law.
(b) All material Taxes of or with respect to the Company and its Subsidiaries due and payable on or prior to the Closing Date have been or will
be fully and timely paid, except for any such Taxes being contested or challenged in good faith and set forth on Schedule 2.09(b).
(c) There are no pending written claims, actions, suits, proceedings or investigations for the assessment or collection of any material Taxes
with respect to the Company or any of its Subsidiaries.
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(d) Neither the Company nor any of its Subsidiaries has waived any statute of limitations in
respect of material Taxes or agreed to any extension of time with respect to a material Tax assessment or deficiency. No written claim has been made by a Taxing Authority in a jurisdiction where the Company or any of its Subsidiaries does not file
Tax Returns that the Company or any of its Subsidiaries is or may be subject to taxation in that jurisdiction.
(e) The Company (with
respect to the period since January 1, 2011) and each of its Subsidiaries has been, and at all times up to and including the Closing Date will be, properly characterized as either a partnership or disregarded entity under Treasury Regulation
Section 301.7701-3 for United States federal, state and local income tax purposes. Neither the Company nor any of its Subsidiaries has elected to be classified as a corporation pursuant to Section 301.7701-3 of the Treasury Regulations,
and no such election will be made by or on behalf of the Company or any of its Subsidiaries at any time up to and including the Closing Date.
(f) Neither the Company nor any of its Subsidiaries is a party to or subject to (i) any Tax allocation, indemnification or sharing
agreement with any Person that is not one of the Company and its Subsidiaries (except to the extent that such agreement has no force and requires no payments after the Closing Date), (ii) any private letter ruling of the IRS or comparable
rulings of other Taxing Authorities, (iii) any closing agreement as described in Section 7121 of the Code (or any similar provision of applicable Law), or (iv) any agreement with a Taxing Authority that relates to a Tax
exemption or Tax holiday.
(g) Neither the Company nor any of the Subsidiaries has entered into, has any Liability in respect of, or has
any filing obligations with respect to, any reportable transactions, as defined in Section 1.6011-4 of the Treasury Regulations.
(h) There is no power of attorney given by or binding upon the Company or any Subsidiary with respect to Taxes for any period for which the
statute of limitations (including any waivers or extensions) has not yet expired.
(i) There are no liens for Taxes against the
Companys or any of its Subsidiaries assets, except for Encumbrances for Taxes that are Permitted Encumbrances.
(j) Neither the
Company nor any of its Subsidiaries has been a member of an affiliated (or similar) group filing a consolidated, combined or unitary Tax Return.
The
representations and warranties set forth in this Section 2.09 and Section 2.10 shall constitute the Companys sole and exclusive representations with respect to Taxes and Tax Returns.
2.10 Employee Benefits.
(a) Schedule 2.10(a) contains a true and complete list as of the date hereof of each (i) deferred compensation, bonus, incentive
compensation, or equity compensation plan, program, agreement or arrangement; (ii) severance or termination pay, medical, surgical, hospitalization, life insurance and other welfare plan, fund or program (within the meaning of
Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (ERISA)); (iii) profit-sharing, stock bonus or other pension plan, fund or program (within the meaning of
12
Section 3(2) of ERISA); (iv) employment, consulting, tax gross up, termination or severance agreement; and (v) other employee benefit plan, fund, program, agreement or arrangement,
in each case, that (A) is sponsored, maintained or contributed to or required to be contributed to by the Company or by any Subsidiary, (B) to which the Company or a Subsidiary is a party, for the benefit of any current or former employee,
director or individual independent contractor of the Company or any of its Subsidiaries or (C) to which the Company or a Subsidiary has any Liability (collectively, but not including any Multiemployer Plan (as defined below), the
Plans). Except as separately identified on Schedule 2.10(a), no Plan is subject to Section 302 or Title IV of ERISA or Section 412 of the Code. No plan subject to Section 302 or Title IV of ERISA or
Section 412 of the Code is sponsored by any ERISA Affiliate of the Company or a Subsidiary.
(b) With respect to each Plan, the
Company has heretofore delivered or made available to Purchaser true and complete copies of each of the following documents: (i) a copy of the Plan and any amendments thereto; (ii) a copy of the two most recent annual reports and actuarial
reports, if applicable; (iii) a copy of the most recent Summary Plan Description required under ERISA with respect thereto; (iv) if the Plan is funded through a trust or any third party funding vehicle, a copy of the trust or other funding
agreement and the latest financial statements thereof; and (v) the most recent determination letter received from the IRS with respect to each Plan intended to qualify under Section 401 of the Code.
(c) All contributions required to be made with respect to any Plan on or prior to the date hereof have been timely made or are reflected on the
Companys (or applicable Subsidiarys) balance sheet. Each Plan has been operated and administered in all material respects in accordance with its terms and applicable Law, including but not limited to ERISA and the Code. There are no
pending or, to the Knowledge of the Company, threatened or anticipated Actions by or on behalf of any Plan, by any employee or beneficiary covered under any such Plan, or otherwise involving any such Plan (other than routine claims for benefits). To
the Knowledge of the Company, no prohibited transaction, within the meaning of Section 4975 of the Code, has occurred with respect to any Plan.
(d) Each Plan intended to be qualified within the meaning of Section 401(a) of the Code has received a determination letter
from the IRS stating that it is so qualified, the trusts maintained thereunder are exempt from taxation under Section 501(a) of the Code and nothing has occurred which could reasonably be expected to cause the loss of such qualification or
exemption.
(e) Except as set forth in Schedule 2.10(e), neither the Company, nor a Subsidiary contributes to or is required to
contribute to any health plan providing health or life insurance to retirees of the Company, a Subsidiary, an ERISA Affiliate or Rouge Steel Corporation.
(f) Except as provided on Schedule 2.10(f), the consummation of the transactions contemplated by this Agreement will not, either alone
or in combination with another event, (i) entitle any current or former employee, officer or other individual service provider of the Company or any Subsidiary to severance pay, unemployment compensation or any other payment or increase any
benefits under any Plans, (ii) accelerate the time of payment or vesting, or increase the amount of compensation due any such employee or officer.
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(g) [Intentionally omitted.]
(h) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, each Plan that is
nonqualified deferred compensation plan subject to Section 409A of the Code, if any, has been operated in compliance with Section 409A of the Code, and the applicable Treasury Regulations and IRS guidance thereunder so as to
avoid any Tax pursuant to Section 409A of the Code and the document or documents that evidence each such Plan have conformed to the provisions of Section 409A of the Code.
(i) Except as set forth in Schedule 2.10(i), neither the Company nor a Subsidiary nor an ERISA Affiliate contributes or is required to
contribute to a multiemployer pension plan, as defined in Section 3(37) of ERISA (a Multiemployer Plan). With respect to each Multiemployer Plan to which the Company or a Subsidiary or an ERISA Affiliate
contributes, is required to contribute or has within the six years prior to the date hereof been required to contribute, neither the Company nor such Subsidiary nor an ERISA Affiliate has made or suffered a complete withdrawal or a
partial withdrawal, as such terms are respectively defined in Sections 4203 and 4205 of ERISA nor has the Company or a Subsidiary or an ERISA Affiliate incurred any Liability due to the termination or reorganization of a Multiemployer
Plan and there are no facts or circumstances that would be reasonably likely to result in the imposition of Liability on the Company or a Subsidiary in connection with a Multiemployer Plan contributed to (or required to be contributed to) by an
ERISA Affiliate (other than a Subsidiary of the Company). No Multiemployer Plan is in endangered or critical status, as defined in Section 305 of ERISA or Section 432 of the Code. From and after the Closing, Purchaser will not have
(i) any obligation to make any contribution to any Multiemployer Plan or (ii) any withdrawal liability from any such Multiemployer Plan under Section 4201 of ERISA that it would not have had but for the transactions contemplated by
this Agreement.
(j) Except as set forth in Schedule 2.10(j), none of the Company, any Subsidiary or any ERISA Affiliate has in the
last six years contributed or has been obligated to contribute to any plan subject to Section 302 or Title IV of ERISA or Section 412 of the Code.
(k) There does not now exist, nor do any circumstances exist, that could reasonably be expected to result in, any Controlled Group Liabilities
that the Company or any Subsidiary would be liable for on or following the Closing.
2.11 Labor Matters. Except as set forth on
Schedule 2.11 or except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect:
(a) the Company and its Subsidiaries are neither party to, nor bound by, any labor agreement or collective bargaining agreement with any labor
union or labor organization;
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(b) there is not presently pending or, to the Knowledge of the Company, threatened, any strike,
slowdown, picketing, lockout, work stoppage, material employee grievance or material arbitration against or affecting the Company or any of its Subsidiaries;
(c) there is not presently pending or, to the Knowledge of the Company, threatened, any proceeding against or affecting the Company or any
Subsidiaries relating to the alleged violation of any Law pertaining to labor relations or employment matters, including, but not limited to, any charge or complaint with the National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable Governmental Authority;
(d) to the Knowledge of the Company, no labor union, labor organization or group of
employees of the Company or any of its Subsidiaries has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or
threatened in writing or to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority;
(e) over the last three (3) years, to the Knowledge of the Company, there have been no representation or certification proceedings or
petitions seeking a representation proceeding brought or threatened, verbally, in writing or filed with the National Labor Relations Board or any other labor relations tribunal or authority;
(f) to the Knowledge of the Company, there are no labor union organizing activities with respect to any employees of the Company or any of its
Subsidiaries, and there has been no such activity within the past three (3) years; and
(g) the Company and its Subsidiaries are in
compliance with all applicable laws respecting employment and employment practices, including without limitation, all laws respecting terms and conditions of employment, health and safety, wages and hours, immigration, employment discrimination,
disability rights or benefits, equal opportunity, classification of employees and independent contractors, plant closures and layoffs, affirmative action, workers compensation, labor relations, employee leave issues and unemployment insurance.
2.12 Real Property.
(a) Schedule 2.12(a)(i) contains a list as of the date hereof of all material leases, subleases, licenses or other occupancy agreements
(together with any amendments, extensions or renewals, and guarantees, the Leases) pursuant to which the Company or any of its Subsidiaries leases real property (the Leased Real Property) as tenant, the name of
the current tenant thereunder and the location of such Leased Real Property. The Company has made available to Purchaser a true and complete copy of each of the Leases. Except as set forth on Schedule 2.12(a)(ii), with respect to each of the
Leases, (i) such Lease is in full force and effect and the Company or its applicable Subsidiary has a good, valid and enforceable leasehold interest in the Leased Real Property pursuant to such Lease in each case free and clear of all
Encumbrances other than Permitted Encumbrances, except in each case where such failure would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
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Effect and (ii) there are no defaults by the Company or its applicable Subsidiary (or any conditions or events that, after notice or the lapse of time or both, would constitute a default by
the Company or its applicable Subsidiary) under any Lease and to the Knowledge of the Company, there are no defaults by any other party to any Lease (or any conditions or events that, after notice or the lapse of time or both, would constitute a
default by such other party) under any Lease, except where such defaults would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 2.12(a)(iii), no third party
currently occupies or uses the Leased Real Property pursuant to any lease, license or occupancy agreement. No Lease has a corresponding guaranty. There are no outstanding rights or options of any party to any Lease (other than the Company or its
Subsidiaries) to terminate such Lease prior to the expiration of the term thereof except as expressly set forth in the Lease.
(b)
Schedule 2.12(b)(i) contains a list of all real property owned in fee by the Company or the Subsidiaries (the Owned Real Property) and the record owner and location thereof. Except as set forth on Schedule
2.12(b)(ii), (i) either the Company or one of its Subsidiaries has good and marketable fee simple title to all of the Owned Real Property, free and clear of any Encumbrances other than Permitted Encumbrances; (ii) there are no leases,
licenses or occupancy agreements pursuant to which any third party is granted the right to use of all or any part of the Owned Real Property; and (iii) there are no outstanding options or rights of first refusal to purchase the Owned Real
Property, except in each case where exercise of such option, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Copies of all of the most recently completed title policies and surveys of the Owned
Real Property that are in the possession of the Company have previously been made available to Purchaser in legible format.
(c) Except as
set forth on Schedule 2.12(c), with respect to the Real Property, as of the date hereof: (i) there are no pending or, to the Knowledge of the Company, threatened condemnation proceedings or threatened litigation, claims, actions, suits,
proceedings, investigations or administrative actions relating to such Real Property; and (ii) the existing buildings and improvements located on such Real Property may lawfully be used under applicable zoning and land use laws for the purposes
for which they are presently being used, except in each case where such failure, or to the extent the same, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except in any such case as has not
resulted in and would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, all buildings, structures, fixtures and improvements included within the Leased Real Property and Owned Real Property (the
Material Improvements) are in good repair and operating condition, subject only to ordinary wear and tear. The Owned Real Property and the Leased Real Property constitute all material interests in real property currently used,
occupied or currently held for use, in connection with the business of the Company.
2.13 Intellectual Property.
(a) Schedule 2.13(a) sets forth a true and complete list of all Intellectual Property owned by the Company or any of its Subsidiaries
that is material to the Business (Owned Intellectual Property).
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(b) Except as would not reasonably be expected to have a Material Adverse Effect, or except as
set forth on Schedule 2.13(b), (i) the use of the Intellectual Property by the Company and its Subsidiaries in connection with the operation of the Business does not, to the Knowledge of the Company, infringe, misappropriate or otherwise
violate the Intellectual Property rights of any other Person and (ii) there are no pending or threatened Actions of which the Company has been given written (or, to the Knowledge of the Company, oral) notice by any Person against its use of any
Intellectual Property.
(c) The Company and its Subsidiaries have such ownership of or such rights, free and clear of all Encumbrances, by
license, lease or other agreement to the Intellectual Property as are related to or used in connection with the operations of the business of the Company and its Subsidiaries as currently conducted, except where the failure to have such rights would
not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(d) To the Knowledge of the Company as of
the date hereof, no Person is engaging in any activity that infringes, misappropriates or otherwise violates any Owned Intellectual Property in any material respect.
(e) Schedule 2.13(e) sets forth a true and complete list of all Intellectual Property the Company or its Subsidiaries are licensed to
use (excluding off-the-shelf software licenses) (the Licensed Intellectual Property) that is material to the Business. The Company or its Subsidiaries have the right to use all Licensed Intellectual Property necessary for the
operation of the Business.
2.14 Environmental Matters.
(a) Except as set forth on Schedule 2.14(a) or as has otherwise been fully resolved (including the payment of any related Losses or the
inclusion of appropriate reserves on the Financial Statements for any related Loss), the Company and each Subsidiary are and have been since January 1, 2009 in compliance with all applicable Environmental Laws (which compliance includes, but is
not limited to, the possession by the Company and each Subsidiary of all Environmental Permits required under applicable Environmental Laws, and compliance with the terms and conditions thereof), except where failure to be in compliance would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 2.14(a) or as has otherwise been fully resolved (including the payment of any related Losses or the inclusion of
appropriate reserves on the Financial Statements for any related Loss), since January 1, 2009, neither the Company nor any Subsidiary has received any communication (written or oral), whether from a Governmental Authority, citizens group,
employee or any other Person, alleging that the Company or any Subsidiary is not in such compliance with applicable Environmental Laws, except where the failure to be in such compliance would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(b) All material Environmental Permits necessary for the operation of the Company and each
Subsidiary have been obtained and are in effect and, where applicable, applications for renewal or amendment thereof have been timely filed. All such Environmental
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Permits and pending applications as of the date hereof are set forth on Schedule 2.14(b). No proceeding is pending or, to the Knowledge of the Company, threatened which would reasonably be
expected to result in the revocation of or placement of additional restrictions in any such Environmental Permits.
(c) Except as set forth
on Schedule 2.14(c), since January 1, 2009, neither the Company nor any of its Subsidiaries has received any communication (written or oral), whether from a Governmental Authority, citizens group, employee or any other Person of an
Environmental Claim that would reasonably be expected to have a Material Adverse Effect, other than any such Environmental Claim that has been fully resolved with no further Liability to the Company or any of its Subsidiaries.
(d) Except as set forth on Schedule 2.14(d), to the Knowledge of the Company, neither the Company, nor any Subsidiary nor any other
person has placed, stored, deposited, discharged, Released, buried, dumped or disposed of Hazardous Materials at, on, or beneath any property that is owned or operated by the Company or any Subsidiary that has not been remediated or is not in the
process of being remediated in accordance with and to the extent required by applicable Environmental Laws, except for inventories of such substances to be used, and wastes generated therefrom, in the ordinary course of the business of the Company
and in compliance with applicable Environmental Laws, or except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(e) Neither the Company nor any Subsidiary is the subject of any order, decree, investigation, judgment or similar ruling from a Governmental
Authority or party to any contract which imposes material obligations to be performed or observed after the date of this Agreement upon the Company or any of its Subsidiaries with respect to any Environmental Law, remedial action or Release or
threatened Release of Hazardous Materials.
(f) Neither the Company nor any Subsidiary is negotiating any order, decree, settlement or
judgment with a Governmental Authority or any other Person, or a modification, amendment, addenda or revision to any such existing order, decree, settlement or judgment, which imposes Liabilities or obligations upon the Company or any of its
Subsidiaries with respect to any Environmental Law, remedial action or Release or threatened Release of Hazardous Materials in excess of $1,000,000.
(g) To the Knowledge of the Company, as of the date of this Agreement, the Company and Seller have made available to the Purchaser, in written
or electronic format, all material environmental site assessments and audit reports applicable to the Companys and each Subsidiaries operations prepared since January 1, 2005, related to compliance with Environmental Laws, Hazardous
Materials at the properties owned or operated by the Company or any of its Subsidiaries, or the environmental condition of the facilities of the Company or any of its Subsidiaries in the possession or control of the Company or Seller.
2.15 Absence of Certain Changes.
(a) Except as set forth in Schedule 2.15(a), since March 31, 2014 to the date of this Agreement, none of the Company nor any of its
Subsidiaries have taken any action that would have been prohibited by subsections (a), (b), (f), (g), (h), (i), (j), (l) or (m) of Section 4.01 if such action had been taken during the period from the date hereof through the
Closing Date.
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(b) Except as set forth in Schedule 2.15(b), since March 31, 2014, there has not
occurred any change or event that would reasonably be expected to have a Material Adverse Effect.
2.16 Material Contracts.
Schedule 2.16 contains an accurate list as of the date of this Agreement of all the Contracts, together with all material amendments and supplements thereto, currently in effect of the following types to which the Company or a Subsidiary is a
party or to which any of its assets or properties are subject (other than Leases) (the Material Contracts):
(a) any
collective bargaining agreement or labor agreement;
(b) any Contract with any officer or director of the Company or the Subsidiaries, or
in each case, any member of such Persons immediate family (other than an agreement with respect to compensation) or any Person directly or indirectly owning, controlling or holding with power to vote, 5% or more of the fully-diluted equity
interests of the Company or any of its Subsidiaries (other than any Contract between the Company and a Subsidiary or between a Subsidiary and another Subsidiary);
(c) any Contract or agreement purporting to restrict or prohibit the Company or any Subsidiary from engaging or competing in the steelmaking
business in any material respect;
(d) any Contract or agreement purporting to restrict or prohibit the Company or any Subsidiary from
hiring or soliciting any individuals for employment outside the ordinary course of business with a remaining term in excess of one year;
(e) any Contract that is material to the Business containing any most favored nations terms and conditions granted by the Company
or any of its Subsidiaries or any put, call, exclusivity, right of first refusal or right of first offer or similar right granted by the Company or any of its Subsidiaries;
(f) [Intentionally omitted.]
(g)
any Contract, including any raw material, supply or customer Contract which involves the payment or receipt of an amount in excess of $2,500,000 (over the course of twelve (12) months);
(h) any agreement, commitment or other Contract relating to Indebtedness of the Company or a Subsidiary;
(i) any guarantee of any material obligation (other than a guarantee by the Company of a Subsidiarys debts or a guarantee by a Subsidiary
of the Companys debts or another Subsidiarys debts);
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(j) any Order, settlement or agreement with any Governmental Authority (other than Permits), in
each case, that is material to the Business;
(k) any Contract involving the sale of any business entered into by the Company or its
Subsidiaries pursuant to which the Company or its Subsidiaries have a continuing indemnification obligation;
(l) any Contract under which
the Company or its Subsidiaries has continuing material indemnification obligations to any third Person, other than those entered into in the ordinary course of business consistent with past practices;
(m) agreements under which the Company has granted any Person registration rights;
(n) any partnership, joint venture, strategic alliance or other similar agreement; and
(o) any other Contract not made in the ordinary course of business that is material to the Business.
The Company has made available to Purchaser a true and complete copy of each Material Contract, together with all material amendments and
supplements thereto. Each Material Contract is valid and binding on the Company or its applicable Subsidiary and, to the Knowledge of the Company, is valid and binding on the other parties thereto, except, in each case, as would not reasonably be
expected to have a Material Adverse Effect. Except as set forth on Schedule 2.16, as of the date hereof, the Company or its applicable Subsidiary that is a party to the Material Contract and, to the Knowledge of the Company, the other parties
thereto are not in material default or breach under any such Material Contract, and there are no pending claims affecting the Material Contracts as of which the Company and its Subsidiaries have written notice, except where such default, breach or
claim would not reasonably be expected to have a Material Adverse Effect.
2.17 Customers and Suppliers. Schedule 2.17 lists,
by dollar volume paid for the twelve (12) months ended June 30, 2014, (i) the ten (10) largest suppliers to the Company and its Subsidiaries, taken as a whole (the Material Suppliers), and (ii) the ten
(10) largest customers of the Company and its Subsidiaries, taken as a whole (the Material Customers). Neither the Company nor any of its Subsidiaries has, as of the date hereof, since December 31, 2013, received any
written or, to the Knowledge of the Company, oral notice from any of the Material Suppliers or Material Customers to the effect that any such customer will materially adversely change its business relationship with the Company or any of its
Subsidiaries.
2.18 Foreign Corrupt Practices Act. Neither the Company, nor any of its Subsidiaries, nor any of their respective
directors, officers, agents or employees has, in connection with the operation of the Business, (1) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity or made or offered any
unlawful payment of funds to foreign or domestic government officials or employees, foreign or domestic political parties or campaigns, any official or employee of a Public International Organization (each, an Official Party), or
to any finder, agent, or other party acting on behalf of or under the auspices
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of any Governmental Authority, Public International Organization or official or employee thereof or (2) taken any other action or made any omission; in each case, in violation of any Law
applicable to the Company or any of its Subsidiaries governing corrupt practices, money laundering, anti-bribery or anticorruption or that otherwise prohibits payments to any government or public officials or other Official Party, including, if
applicable, the Foreign Corrupt Practices Act of 1977, 15 U.S.C. §§ 78dd-1, et seq., the UK Bribery Act 2010 and any Law implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business
Transactions (all such Laws, Anticorruption Laws). For the past three years, none of Seller, the Company or any of its Subsidiaries has, in connection with the businesses or operations of the Company and its Subsidiaries, received
any written notice alleging any such violation or conducted any material internal investigation with respect to any actual or alleged violation of any Anticorruption Law, except, in each case, as has not resulted in and would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
2.19 Affiliate Transactions. Schedule 2.19 contains
a true and complete list as of the date hereof of all existing material Contracts in effect between (a) the Company or any of its Subsidiaries, on the one hand, and (b) Seller or any Affiliate of Seller (other than the Company or any of
its Subsidiaries), on the other hand, including any Contracts for Indebtedness owed by or indebtedness owed to the Company or any of its Subsidiaries, guarantees provided by or on behalf of the Company or any of its Subsidiaries or agreements to
provide to or receive from the Company or any of its Subsidiaries material goods and services. A true and complete copy of each such Contract has been made available to Purchaser prior to the date hereof.
2.20 Title; Sufficiency of Assets. The Company or one or more of its Subsidiaries has good and marketable title to all of the material
assets owned by them, free and clear of all Encumbrances other than Permitted Encumbrances. The assets owned, leased, licensed or otherwise used by Company and its Subsidiaries as of the Closing will constitute all of the assets reasonably necessary
or used to operate the Company and its Subsidiaries in substantially the same manner as it has been operated.
2.21 Brokers. Seller
shall be solely responsible for the fees and expenses of any broker, finder or investment banker entitled to any brokerage, finders or other fee or commission in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Seller, the Company or any of its Subsidiaries.
2.22 Insurance. Schedule 2.22 sets
forth a correct and complete list of all material insurance policies, fidelity bonds and surety bonds held by the Company or any of its Subsidiaries for the benefit of the Company or any of its Subsidiaries as of the date hereof, correct and
complete copies of which have been made available to the Purchaser (collectively, the Insurance Policies). All Insurance Policies are in full force and effect, all premiums due and payable in respect of such insurance policies
have been timely paid and none of the Company or any of its Subsidiaries have reached or exceeded its policy limits for any such insurance policies.
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2.23 Disclaimer. EXCEPT AS SET FORTH IN THIS ARTICLE II, NONE OF SELLER, THE
COMPANY, THEIR RESPECTIVE AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES MAKE OR HAVE MADE ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF SELLER, THE COMPANY OR
THEIR RESPECTIVE AFFILIATES. ANY SUCH OTHER REPRESENTATION OR WARRANTY IS HEREBY EXPRESSLY DISCLAIMED.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
3.01 Organization and Authority of Purchaser. Purchaser is a corporation organized, validly existing and in good standing under the Laws
of the State of Delaware. Purchaser has all necessary corporate power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as conducted at the date of this Agreement. The
execution and delivery of this Agreement by Purchaser, the performance by Purchaser of its obligations hereunder and the consummation by Purchaser of the transactions contemplated hereby have been duly authorized by all requisite corporate action on
the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser, and assuming due authorization, execution and delivery by Seller and the Company, this Agreement is a legal, valid and binding obligation of Purchaser,
enforceable against it in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of
creditors rights generally.
3.02 No Conflicts. Assuming that all Consents contemplated by Section 3.03 have been
obtained, the execution, delivery and performance of this Agreement by Purchaser does not and shall not: (a) violate, conflict with or result in the breach of the Organizational Documents of Purchaser; (b) conflict with or violate any Law
or Governmental Order applicable to Purchaser; or (c) violate, conflict with or result in a breach of or default under (with or without due notice or lapse of time or both), result in the acceleration of obligations under, create in any party
the right to terminate or modify, or require any notice, consent or waiver under any of the terms, conditions or provisions of any Contract to which Purchaser or any of its Subsidiaries is a party or by which Purchaser or any of its Subsidiaries or
any of their respective properties or assets may be bound except, in the case of clauses (b) or (c), as would not, individually or in the aggregate, materially and adversely affect the ability of Purchaser to carry out its obligations under,
and to consummate the transactions contemplated by, this Agreement.
3.03 Governmental Consents and Approvals. The execution,
delivery and performance of this Agreement by Purchaser does not and shall not require any Consent of any Governmental Authority, except: (a) pursuant to the requirements of the HSR Act or under the antitrust or competition Laws of applicable
foreign jurisdictions; or (b) to the extent failure to obtain such Consent would not prevent or materially delay the consummation by Purchaser of the transactions contemplated by this Agreement.
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3.04 Litigation. As of the date hereof, no Action by or against Purchaser or any of its
Affiliates are pending or, to the Knowledge of the Purchaser, threatened, challenging the legality, validity or enforceability of this Agreement or the consummation of the transactions contemplated hereby.
3.05 WARN Act. To the extent that Purchaser may engage in a plant closing or mass layoff, as such terms are
defined in the WARN Act or any similar applicable state or local Law, the Purchaser will comply with the requirements of the WARN Act or any similar applicable state or local Law.
3.06 Permits. To the Knowledge of Purchaser, Purchaser (or its successor or permitted assigns) shall be as the owner of the Company
qualified to hold any permits necessary to operate the Company.
3.07 Qualification to Purchase.
(a) The Membership Interests are being acquired for investment purposes only for Purchasers own account and not with a view to or in
connection with any distribution, reoffer, resale, or other disposition not in compliance with the Securities Act and applicable state securities laws.
(b) Purchaser is an Accredited Investor as defined in the Securities Act and Regulation D thereunder. Purchaser is experienced and
sophisticated with respect to the transactions contemplated by this Agreement and has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Membership
Interests. Purchaser is aware that it must bear the economic risk of its investment in the Company for an indefinite period of time because the Membership Interests have not been registered under the Securities Act or under any applicable state
securities laws and, therefore, cannot be sold unless the Membership Interests are subsequently registered under the Securities Act and any applicable state securities laws or pursuant to an exemption thereunder. Purchaser recognizes the highly
speculative nature and risk of loss associated with an investment in the Company and that it could suffer a complete loss of the investment and is capable of bearing the economic risks of such loss.
3.08 Union Matters. Effective as of the Closing, Purchaser shall cause (a) the Company to continue to honor, on and following the
Closing, the terms and conditions of employment set forth in the collective bargaining agreement between Dearborn and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, UAW, dated as of April 9,
2012 (the Dearborn CBA), with respect to employees of Dearborn whose terms and conditions of employment were governed by the Dearborn CBA immediately before the Closing (the Dearborn Union Employees); and
(b) Mountain State Carbon, LLC (MSC) to honor, on and following the Closing, the terms and conditions of employment set forth in any collective bargaining agreement that MSC may enter into prior to the Closing, in accordance
with Schedule 3.08, with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (the USW), with respect to employees of MSC who are represented by the
USW before the Closing (the MSC Union Employees and with the Dearborn Union Employees, collectively, the Union Employees).
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3.09 Brokers. Purchaser shall be solely responsible for the fees and expenses of any
broker, finder or investment banker entitled to any brokerage, finders or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Purchaser and its
Subsidiaries.
3.10 Availability of Funds. Purchaser will at the Closing have sufficient immediately available funds, in cash, to
pay the Initial Purchase Price and to pay any other amounts payable pursuant to this Agreement and to effect the transactions contemplated hereby. Attached hereto as Annex E are true and complete copies of an executed debt commitment letter
and the term sheets with respect thereto (the Commitment Letter) from Credit Suisse AG (or such of its affiliates or branches as it deems appropriate, including Credit Suisse Securities (USA) LLC) (the Lenders),
pursuant to which the Lenders have committed to provide on the terms and conditions set forth therein the amounts set forth therein to Purchaser for the purpose of funding the transactions contemplated hereby (the Bridge
Financing). Such Commitment Letter has been duly and validly authorized, executed and delivered by Purchaser and (to the Knowledge of the Purchaser) the Lenders. There are no conditions precedent or other contingencies related to the
funding of the full amount of the Bridge Financing other than as specifically set forth in the Commitment Letter. Purchaser has no reason to believe that any of the conditions to the Bridge Financing will not be satisfied on a timely basis or that
the Bridge Financing will not be available on the terms set forth in the Commitment Letter.
3.11 Solvency; Fraudulent Conveyance.
Immediately after giving effect to the transactions contemplated hereby, the Purchaser and each of its Subsidiaries (including, after Closing, the Company and its Subsidiaries) (i) shall be able to pay their respective debts as they become due
and (ii) shall own assets which have a fair saleable value (if sold as an entirety with reasonable promptness in an arms length transaction under present conditions) in excess of their Liabilities (whether liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, secured, unsecured or otherwise). Immediately after giving effect to the transactions contemplated hereby, the Purchaser and each of its Subsidiaries (including, after Closing, the Company and
its Subsidiaries) shall have adequate capital to carry on their respective businesses. No transfer of property is being made and no obligation is being incurred in connection with the transactions contemplated by this Agreement with the intent to
hinder, delay or defraud either present or future creditors of the Purchaser and its Subsidiaries (including, after Closing, the Company and its Subsidiaries).
3.12 Investigation by Purchaser. Purchaser has conducted its own independent review and analysis of the businesses, assets, condition,
operations and prospects of the Company and its Subsidiaries and acknowledges that it has been provided access to the properties, premises and records of the Company and its Subsidiaries for this purpose. In entering into this Agreement, Purchaser
has relied solely upon the representations and warranties made by the Seller and the Company set forth herein and its own investigation and analysis, and Purchaser acknowledges that, except for the representations and warranties of Seller and the
Company expressly set forth in Article II, none of Seller or the Company nor any of their respective directors, officers, employees, agents or advisors makes any representation or warranty, either
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express or implied, as to the accuracy or completeness of any of the information provided or made available to Purchaser or any of its directors, officers, employees, agents or advisors. Without
limiting the generality of the foregoing, none of Seller or the Company nor any of their respective directors, officers, employees, agents or advisors or any other Person has made a representation or warranty to Purchaser with respect to
(a) any projections, estimates or budgets for the Company and its Subsidiaries or (b) any material, documents or information relating to the Company or its Subsidiaries made available to Purchaser or its directors, officers, employees,
agents or advisors in any data room or otherwise, except as expressly and specifically covered by a representation or warranty set forth in Article II.
3.13 Disclaimer. EXCEPT AS SET FORTH IN THIS ARTICLE III, NONE OF PURCHASER, ITS RESPECTIVE AFFILIATES OR ANY OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES MAKE OR HAVE MADE ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF PURCHASER OR ITS RESPECTIVE AFFILIATES. ANY SUCH OTHER REPRESENTATION OR WARRANTY IS
HEREBY EXPRESSLY DISCLAIMED.
ARTICLE IV
COVENANTS AND AGREEMENTS
4.01
Conduct of the Business. From the date of this Agreement until the Closing (or until the earlier termination of this Agreement in accordance with Section 7.01), except as expressly required by applicable Law, as set forth on
Schedule 4.01, as specifically contemplated by or required to implement this Agreement or as otherwise waived or consented to in writing by Purchaser (which consent, in the case of Section 4.01(m), shall not be unreasonably withheld,
conditioned or delayed) Seller shall cause the Company and its Subsidiaries to:
(a) carry on their respective businesses in all material
respects in the ordinary course of business consistent with past practice;
(b) use commercially reasonable efforts to maintain and
preserve intact the goodwill of their respective businesses and the relationships of the Company and its Subsidiaries with their customers, suppliers, distributors, contract manufacturers and landlords;
(c) not amend Organizational Documents of the Company or any of its Subsidiaries or take any action with respect to any such amendment or any
recapitalization, reorganization, restructuring, consolidation, merger, complete or partial liquidation, winding up or dissolution of the Company or any of its Subsidiaries;
(d) not authorize, issue, redeem, split, pledge, encumber, sell or otherwise dispose of any shares of capital stock, units, membership, or
other equity or profit interests of any kind in the Company (including any warrants, options, convertible or exchangeable securities, subscriptions, rights (including any pre-emptive or similar rights), calls or other rights to purchase or acquire
any capital stock, units, membership, or other equity or profit interests of any kind in the Company or any of its Subsidiaries) or enter into any agreement with respect thereto or make any changes (by recapitalization, reclassification, stock
dividend, stock split, combination, reorganization or otherwise) in the capital structure of, the Company or any of its Subsidiaries;
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(e) not declare, set aside or pay any dividend or other distribution (other than dividends or
other distributions payable solely in cash) in respect of the capital stock or other equity interests of the Company or any of its Subsidiaries or make any distribution of property to the Seller or its Affiliates (other than to the Company or any of
its Subsidiaries);
(f) not make any commitments to or commence or continue any acquisition of or investment, including loans, advances or
capital contributions, in any business enterprise or substantially all of the assets or any equity of any business enterprise by the Company or any of its Subsidiaries involving the payment by the Company or any of the Subsidiaries of an amount in
excess of $500,000, in each case, other than with respect to the Company or its Subsidiaries or, with respect to cash capital contributions actually made prior to the Closing Date, the Joint Ventures;
(g) not make any change in accounting methods, principles or practices, except as may be required by GAAP or applicable Law;
(h) not (1) establish or adopt any new material employee benefit plan, terminate any existing Plan or amend any existing Plan in any
material respect, (2) other than as reasonably necessary to fill vacancies, increase or grant any new compensation or benefits to, or enter into or amend any employment, retention, severance, termination or similar agreement with, any of its
current or former employees, directors or individual independent contractors, or (3) accelerate the timing of payment or vesting of any payments or benefits to any current or former employees, directors or individual independent contractors
except, in each case, as required under applicable Law or any Plan in effect as of the date of this Agreement and previously made available to the Purchaser or as provided in Section 4.08 of this Agreement;
(i) not (1) sell, lease, transfer or otherwise dispose of any assets or properties having a value per transaction in excess of $250,000,
other than in the ordinary course of business consistent with past practice, (2) write off, forgive, waive or otherwise cancel, in whole or in part, any material account receivable (other than intercompany receivables), except as required by
GAAP or applicable Law, (3) write off, forgive, waive or otherwise cancel, in whole or in part, any other material Liability (other than intercompany Liabilities), except as required by GAAP or applicable Law, or (4) acquire any material
asset or material property other than in the ordinary course of business;
(j) not (1) make, change or revoke any material Tax
election (it being understood and agreed that any entity classification election pursuant to Treasury Regulation Section 301.7701-3(c) to be classified as an association taxable as a corporation is material), (2) amend any material Tax
Return, (3) file any material Tax Return unless such Tax Return shall have been prepared consistent with past practice, (4) enter into any closing agreement pursuant to Section 7121 of the Code (or any similar provision of applicable
Law) or any Tax sharing, allocation or indemnity agreement, (5) settle or compromise any claim, liability or assessment relating to Taxes involving amounts in excess of $500,000, (6) surrender any right to claim a refund of material Taxes,
or (7) obtain any Tax ruling;
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(k) not enter into, assume, assign, cancel, terminate, renew, modify, release or amend any Lease,
Material Contract, or contract that would be a Material Contract or a Lease if in effect on the date hereof, or assign, compromise, release or waive any rights thereunder; provided, however, that nothing in this Agreement shall
preclude MSC from finalizing a collective bargaining agreement with the USW on terms and conditions no less favorable to MSC than those set forth on Schedule 3.08 or preclude the Company or MSC from satisfying any effects bargaining
obligations as a result of the transactions contemplated by this Agreement with respect to the Union Employees;
(l) not make any capital
expenditures other than pursuant to the Companys capital expenditure budget, a copy of which has been made available to Purchaser prior to the date hereof or otherwise in the ordinary course of business;
(m) except as set forth on Schedule 4.01(m)(1), not settle or compromise any Action (including any permit appeal, consent decree or
modification or amendment to a consent decree) involving an amount individually or in the aggregate in excess of $2,000,000 or the imposition of injunctive or equitable relief against the Company or any of the Subsidiaries, including those Actions
listed on Schedule 4.01(m)(2); and
(n) not authorize any of, or commit or agree to take any of the foregoing actions.
4.02 Access to Information; Confidentiality.
(a) From the date hereof until the Closing (or until the earlier termination of this Agreement in accordance with Section 7.01),
upon reasonable notice, Seller shall, and shall cause the Company to: (i) afford Purchaser and its authorized Representatives reasonable access to the properties and Books and Records of the Company and its Subsidiaries, including to the extent
such access is required for the Purchaser to secure insurance for the Company and its Subsidiaries for the period after Closing; (ii) furnish to the officers, directors, employees, and authorized Representatives of Purchaser such additional
financial and operating data and other information regarding the business of the Company, including information concerning properties, contracts and personnel (or copies thereof) as Purchaser may from time to time reasonably request; and
(iii) provide such cooperation as may be reasonably requested by the Purchaser in order to facilitate the integration and transition of ownership of the business and operations of the Company and its Subsidiaries at the Closing;
provided, however, that any such access or furnishing of information shall be scheduled and coordinated through the Person(s) set forth on Schedule 4.02 and shall be conducted at Purchasers expense, during normal business
hours and in such a manner as not to unreasonably interfere with the normal operations of the business of the Company; further provided, however, that neither the Company nor any of its Subsidiaries shall be required to disclose
any information to Purchaser if such disclosure would be reasonably likely to: (x) jeopardize any attorney-client or other legal privilege; or (y) contravene any applicable Laws, fiduciary duty or binding agreement entered into prior to
the date hereof provided that the Company has used reasonable best efforts to seek a waiver of any such restriction or otherwise seek to provide access to such information in a manner that does not violate such restriction.
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(b) Notwithstanding anything expressed or implied in this Agreement, Seller shall not be required
to disclose, to any Person, any Tax information or Tax Return that does not relate solely and exclusively to the Company and its Subsidiaries (it being understood that, in the case of any consolidated, combined or unitary Tax Return that includes
the Company and any other Person, Seller shall provide Purchaser, at Purchasers request, with pro forma Tax Returns relating solely to the Company and its Subsidiaries).
(c) The terms of the Confidentiality Agreement, dated as of March 14, 2014, between Purchaser and Parent (the Confidentiality
Agreement), shall continue in full force and effect until the Closing, at which time such Confidentiality Agreement and the obligations of Purchaser under this Section 4.02(c) shall terminate (including, for the avoidance of
doubt, any provisions that purport to survive termination of the Confidentiality Agreement); provided, however, that, from and after the Closing, except as would have been permitted under the terms of the Confidentiality Agreement,
Purchaser shall, and shall cause its officers, directors, employees, authorized Representatives and Affiliates to, treat and hold as confidential, and not disclose to any Person, information related to the discussions and negotiations between the
parties regarding this Agreement and the transactions contemplated hereby and all confidential information relating to Seller. Notwithstanding the foregoing, Purchaser shall be permitted to use such confidential information to the extent reasonably
necessary in connection with the Financing. If this Agreement is, for any reason, terminated prior to the Closing, the Confidentiality Agreement shall continue in full force and effect.
(d) Nothing provided to Purchaser pursuant to this Agreement shall in any way amend or diminish Purchasers obligations under the
Confidentiality Agreement. Purchaser acknowledges and agrees that any information provided to Purchaser by or on behalf of Seller or the Company or any of their respective officers, directors, employees or authorized representatives shall be subject
to the terms and conditions of its Confidentiality Agreement.
(e) From and after the Closing, the Seller shall, and shall cause its
Representatives to, keep all documents, materials, records and other information that it has or has obtained prior to or after the Closing regarding the Purchaser or the Company or any of its Subsidiaries (Confidential
Information) strictly confidential and will not disclose such information without the Purchasers prior written consent. Confidential Information shall not include information that (i) is or becomes publicly available
(other than as a result of a disclosure by Seller or its respective Representatives in violation of this Section 4.02(e)), (ii) is or becomes available to them from a source that, to their knowledge, is not prohibited from
disclosing such information to them by a legal, contractual or fiduciary obligation or (iii) has been independently developed by them (other than by or with respect to the Company or any of its Subsidiaries) without reference to Confidential
Information.
4.03 Regulatory and Other Authorizations; Notices and Consents.
(a) Each of Seller and Purchaser shall use its commercially reasonable efforts to obtain promptly all Consents of all Governmental Authorities
that may be or become necessary for the performance of its and the other parties obligations pursuant to, and the consummation of the transactions contemplated by, this Agreement. Seller, the Company and Purchaser shall cooperate in promptly
seeking to obtain all such Consents; provided, however,
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that Seller and the Company shall not be required to pay any fees or other payments to any such Governmental Authorities in order to obtain any such Consent (other than normal filing fees that
are imposed by Law on the Company). None of Seller, the Company or Purchaser shall knowingly enter into any acquisition or other agreement or make any announcement with respect to any transaction that could reasonably be expected to have the effect
of materially delaying, impairing or impeding the receipt of any Consents of any Governmental Authority. Seller and Purchaser each agree to make, or to cause to be made: (i) if required, an appropriate filing of a notification and report form
pursuant to the HSR Act; and (ii) any other filing or notification required by any other antitrust or competition Laws of applicable foreign jurisdictions, in each case, with respect to the transactions contemplated by this Agreement as
promptly as practicable after the date of this Agreement, and to supply promptly any additional information and documentary material that may be requested pursuant to the HSR Act or any other antitrust or competition Laws of applicable foreign
jurisdictions. If any objections are asserted with respect to the transactions contemplated hereby under the HSR Act or any other antitrust or competition Laws of applicable foreign jurisdictions or if any suit or proceeding is instituted or
threatened by any Governmental Authority or any private party challenging any of the transactions contemplated hereby as violative of the HSR Act or any other antitrust or competition Laws of applicable foreign jurisdictions, each of Seller and
Purchaser shall use its commercially reasonable efforts to promptly resolve such objections. In furtherance of the foregoing and provided that nothing in this Agreement shall be deemed to require Purchaser or any of its Affiliates to take any action
that, in Purchasers good faith judgment, would adversely and materially affect (i) the strategic benefits sought by Purchaser in effecting the transactions contemplated by this Agreement or (ii) any material line of business or class
of products of the Purchaser or any of its Affiliates (including the Company and its Subsidiaries) from and after the Closing, Purchaser shall, and shall cause its respective Affiliates to, take all action, including agreeing to hold separate,
divest, license, transfer or otherwise dispose of any of the businesses or properties or assets of Purchaser or any of its respective Affiliates, or to terminate any existing relationships or contractual rights and obligations, as may be required
by: (i) the applicable Governmental Authority in order to resolve any such objections as such Governmental Authority may have to such transactions under applicable Law; or (ii) any domestic or foreign court or other tribunal, in an Action
brought by a private party or Governmental Authority challenging such transactions as violative of any applicable Law, in order to avoid the entry of, or to effect the dissolution, vacating, lifting, altering or reversal of, any order that has the
effect of restricting, preventing or prohibiting the consummation of the transactions contemplated by this Agreement.
(b) Each party to
this Agreement shall promptly notify the other parties of any communication it or any of its Affiliates receives from any Governmental Authority relating to the matters that are the subject of this Agreement and permit the other parties to review in
advance any proposed communication by such party to any Governmental Authority relating to the matters that are the subject of this Agreement. Neither Seller nor Purchaser, as applicable, shall agree to participate in any meeting with any
Governmental Authority in respect of any filings, investigation (including any settlement of the investigation), litigation or other inquiry related to the transactions contemplated by this Agreement unless it consults with the other parties in
advance and, to the extent permitted by such Governmental Authority, gives the other parties the opportunity to attend and participate at such meeting. Subject to the Confidentiality Agreement, the parties to this Agreement shall coordinate and
cooperate fully with each other in
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exchanging such information and providing such assistance as the other party may reasonably request in connection with the foregoing and in seeking early termination of any applicable waiting
periods including under the HSR Act and any other applicable antitrust or competition Laws of applicable foreign jurisdictions. Subject to the Confidentiality Agreement, the parties to this Agreement shall provide each other party with copies of all
correspondence, filings or communications between them or any of their Representatives, on the one hand, and any Governmental Authority or members of its staff, on the other hand, with respect to this Agreement and the transactions contemplated by
this Agreement.
(c) At the Purchasers request and expense, the Seller agrees to take all reasonable actions the Purchaser reasonably
deems prudent in order to reasonably assist the Purchaser in obtaining any actions, consents, undertakings, approvals, waivers or authorizations by or from any Governmental Authority for or in connection with, and to reasonably assist the Purchaser
in litigating or otherwise contesting any objections to or proceedings or other actions challenging, the consummation of the transactions contemplated by this Agreement.
(d) The Seller shall cause the Company to give (and shall cause any applicable Subsidiary to give) any notices to third Persons, and use (and
shall cause any applicable Subsidiary to use) commercially reasonable best efforts to obtain any consents or approvals from third Persons required in connection with the consummation of the transactions contemplated by this Agreement;
provided, however, that the Seller and the Company shall not be required to pay or commit to pay any amount to (or incur any obligation in favor of) any Person from whom any such Consent or assignment may be required, except where any
such amount is advanced to Seller or the Company by Purchaser. If the Company or any Subsidiary fails to obtain any such consent from a third Person, then the Seller shall (and shall cause the Company and its Subsidiaries to) use commercially
reasonable best efforts to limit the adverse effect upon the Company and its Subsidiaries from the failure to obtain such consent. The Purchaser shall use commercially reasonable efforts to assist the Company and its Subsidiaries in obtaining all
such consents and providing such notices, including providing any reasonable information or executing any documents reasonably required in connection therewith.
4.04 Fulfillment of Conditions. Subject to the terms and conditions of this Agreement:
(a) Seller shall take all commercially reasonable steps necessary or desirable and proceed diligently and in good faith to satisfy each
condition to the obligations of Purchaser contained in this Agreement.
(b) Purchaser shall take all commercially reasonable steps
necessary or desirable and proceed diligently and in good faith to satisfy each condition to the obligations of Seller contained in this Agreement.
4.05 Contact with Customers and Suppliers. Until the Closing Date, Purchaser and its Representatives shall contact or communicate with
the customers, suppliers, distributors and licensors of the Company and its Subsidiaries in connection with the transactions contemplated hereby only with the prior written consent of Seller (which consent, following the satisfaction of the closing
condition set forth in Section 6.01(b), shall not be unreasonably withheld, conditioned or delayed).
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4.06 Further Assurances; Post-Closing Cooperation. Subject to the terms and conditions of
this Agreement, at any time or from time to time after the Closing, each of the parties hereto shall execute and deliver such other documents and instruments, provide such materials and information and take such other actions as may reasonably be
necessary, proper or advisable, to the extent permitted by Law, to fulfill its obligations under this Agreement or to otherwise effect the transactions contemplated hereby. In the event of any conflict between the terms of any such documents and
this Agreement, the terms of this Agreement shall control.
4.07 Indemnification and Insurance. For a period of six years following
the Closing, Purchaser shall cause the Company not to make any changes to its limited liability agreement that would adversely affect the rights of persons who are currently or who were officers or directors of the Company or any of its Subsidiaries
(the Indemnitees) to claim indemnification from such entity under the terms of its limited liability agreement as in effect on the Closing Date, except as required by applicable Law. Purchaser agrees that for a period of six
(6) years after the Closing, Purchaser shall maintain, or cause to be maintained, for the benefit of the Indemnitees, an insurance and indemnification policy that provides coverage for events occurring on or before the Closing Date (the
D&O Insurance) on terms and conditions substantially equivalent (in both amount and scope) to, and in any event not less favorable in the aggregate than, the existing policy or policies maintained by the Company and its
Subsidiaries or, if substantially equivalent insurance coverage is unavailable, the best available coverage; provided, however, that Purchaser shall not be required to pay an annual premium for the D&O Insurance in excess of three
hundred percent (300%) of the last annual premium paid by the Company and its Subsidiaries prior to the date hereof, which last annual premium is set forth on Schedule 4.07, but in such case Purchaser shall purchase as much coverage as
is available for such amount. The provisions of the immediately preceding sentence shall be deemed to have been satisfied if Purchaser purchases prior to the Closing extended reporting endorsements consistent with the requirements set forth above,
which provide such Indemnitees with coverage for an aggregate period of six (6) years with respect to claims arising from facts or events that occurred on or before the Closing, including in respect of the transactions contemplated by this
Agreement. If such prepaid policies have been obtained prior to the Closing, Purchaser shall maintain, or cause to be maintained, such policies in full force and effect, and continue to honor the obligations thereunder. To the extent that policies
other than such prepaid policies are in effect, the Company and its Subsidiaries shall cooperate with Purchaser to obtain tail-based coverage on such other policies. The provisions of this Section 4.07 are intended for the benefit of the
current and former officers and directors of the Company and its Subsidiaries, and shall be enforceable by such individuals and their heirs and representatives.
4.08 Employee Benefit Matters.
(a) Effective as of the Closing and continuing through the first anniversary thereof, Purchaser shall ensure that employees of the Company and
its Subsidiaries who are not Union Employees and who remain in the employment of Purchaser or its Affiliates at the Closing (the Continuing Employees) receive compensation and employee benefits that, in the aggregate, are
substantially comparable to those provided generally to similarly situated employees of Purchaser (not taking into account the value of any equity or equity related grants or transaction related compensation), but solely to the extent such employees
remain in employment during such period. Effective as of the Closing, the Dearborn Union Employees
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shall have the terms and conditions of employment as set forth in the Dearborn CBA. Effective as of the Closing, the MSC Union Employees shall have the terms and conditions of employment as set
forth in any collective bargaining agreement between MSC and the USW entered into in accordance with this Agreement or, if MSC and the USW have not entered into a collective bargaining agreement, the terms and conditions of employment that applied
to such MSC Union Employee immediately prior to the Closing. In addition (and without limitation of Section 4.08(e)), for a period of one year following the Closing, Purchaser shall or shall cause its Affiliates to provide to the
Continuing Employees who do not have an individual agreement that contains a contractual severance obligation and who remain in the employment of Purchaser or any of its Affiliates (including the Company or any of its Subsidiaries) severance
benefits, if any, which are substantially comparable to the severance benefits that are provided generally to similarly situated employees of Purchaser. Nothing in this Section 4.08 or otherwise in this Agreement shall limit the right of
Purchaser, the Company or its other Affiliates to terminate the employment of any Continuing Employee at any time.
(b) With respect to any
welfare plan maintained by Purchaser or its Affiliates in which Continuing Employees will be eligible to participate after the Closing, Purchaser shall, and shall cause the Company and its other Affiliates to (i) waive all limitations as to
preexisting conditions and exclusions with respect to participation and coverage requirements applicable to such employees to the extent such conditions and exclusions were satisfied or did not apply to such employees, prior to the Closing, under
comparable benefit plans that are welfare plans during the plan year that includes the Closing Date, and (ii) provide each such employee with credit for any deductibles and out-of-pocket requirements paid for the plan year that includes the
Closing Date under a benefit plan that is a welfare plan in satisfying any comparable deductible or out-of-pocket requirements to the extent applicable under any comparable plan following the Closing Date with respect to the plan year that includes
the Closing Date.
(c) Each Continuing Employee shall be given credit for all service with the Company or its Subsidiaries (or service
credited by the Company or its Subsidiaries) under all employee benefit plans, programs, policies and arrangements (other than any defined benefit pension plans) maintained by Purchaser or its Affiliates in which they participate or in which they
become participants for purposes of eligibility and vesting, but solely to the extent such employee was credited with service for such purposes under a comparable benefit plan as of the Closing Date.
(d) Notwithstanding anything in Section 4.08(b) or 4.08(c) to the contrary, service shall not be included for any of the
purposes described in those Sections to the extent the inclusion of such service results in the duplication of any benefit.
(e) From and
after the Closing, Purchaser will cause the Company and its Subsidiaries to honor, in accordance with its terms, any written agreement with the Company or any of its Subsidiaries that contains a contractual severance obligation with respect to any
Continuing Employees to the extent set forth on Schedule 2.10(a).
(f) It is expressly understood and agreed that the provisions of
this Section 4.08 are not intended to confer any third-party beneficiary rights and no employees or other Person (excluding any party hereto) shall have any rights or remedies, including rights of enforcement, with respect to this
Section 4.08 and no employee or other Person is or is intended to be a third-party beneficiary hereof.
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4.09 Books and Records; Access.
(a) For a period of seven (7) years after the Closing Date, Purchaser shall preserve and retain, or cause the Company to preserve and
retain, all corporate, accounting, Tax, legal, auditing or other books and records of the Company and its Subsidiaries (including any documents relating to any governmental or non-governmental actions, suits, proceedings or investigations) relating
to the conduct of the business and operations of the Company and its Subsidiaries prior to the Closing Date. Notwithstanding the foregoing, during such seven-year (7-year) period, Purchaser and the Company may dispose of any such books and records
which are offered to, but not accepted by, Seller. Purchaser shall not, and shall not permit the Company or its Subsidiaries to, dispose of any such books and records at any time after such seven-year (7-year) period without first offering such
books and records to Seller.
(b) After the Closing Date, Purchaser shall, and shall cause the Company and its Subsidiaries to, permit
Seller and its authorized Representatives to have reasonable access to, and to inspect and copy, all materials referred to in Section 4.09(a) and to meet with officers and employees of Purchaser and the Company and its Subsidiaries on a
mutually convenient basis in order to obtain explanations with respect to such materials and to obtain additional information to the extent necessary or useful in connection with any matters referred to in Section 1.03(b),
Section 1.04 and any audit, investigation, dispute or litigation, provided, however, that the Seller shall reimburse the Purchaser for all reasonable and documented out-of-pocket costs and expenses incurred in connection
with any such request. Notwithstanding the foregoing, (i) any such access rights shall be exercised in such manner as not to unreasonably interfere with the normal business operations of the Purchaser or the Company and its Subsidiaries, and
(ii) the Purchaser may withhold any document (or portions thereof) or information to the extent that (x) it may not be disclosed as such disclosure would contravene any applicable Laws, fiduciary duty or binding agreement entered into
prior to the date hereof; provided, however, that Purchaser shall use reasonable efforts to obtain a waiver of such restriction or otherwise seek to provide access to such information in a manner that does not violate such restriction,
or (y) the disclosure would cause the Purchaser or the Company or any of its Subsidiaries to jeopardize any attorney-client or other legal privilege with respect to such information.
4.10 Credit and Performance Support Obligations. Purchaser agrees to use all commercially reasonable efforts to cause Seller and its
Affiliates (other than the Company and its Subsidiaries) to be absolutely and unconditionally relieved on or prior to the Closing of all Liabilities arising out of the letters of credit, performance bonds, corporate guarantees and other similar
items issued and outstanding in connection with the Company and its Subsidiaries that are (i) set forth on Schedule 4.10 or (ii) entered into between the date hereof and the Closing Date in the ordinary course of business consistent
with past practice and, in each case which are outstanding as of immediately prior to the Closing, and Purchaser shall indemnify Seller and its Affiliates (other than the Company and its Subsidiaries) against any Losses of any kind whatsoever with
respect to such Liabilities. Purchaser agrees to continue to use all commercially reasonable efforts after the Closing to relieve Seller and its Affiliates (other than the Company and its Subsidiaries) of all such Liabilities.
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4.11 Termination of Insurance Coverage. Purchaser acknowledges that, except to the extent
provided in this Section 4.11, all insurance coverage for the Company and its Subsidiaries under policies of Seller and its Affiliates (collectively, Seller Insurance Policies) shall terminate as of the Closing.
Notwithstanding the foregoing, the Company and its Subsidiaries shall remain entitled from and after the Closing to all coverage and other rights under (i) Seller Insurance Policies with respect to any claim, act, omission, event, circumstance,
occurrence or loss that occurred or existed prior to the Closing Date (and then only to the extent that such claim, act, omission, event, circumstance, occurrence or loss occurred or existed on or prior to the Closing Date) (a
Pre-Closing Date Event) and was reported to the applicable insurer in accordance with the provisions of the applicable Seller Insurance Policy prior to the Closing Date and (ii) occurrence-based insurance coverage under
Seller Insurance Policies (the Occurrence-Based Coverage), in respect of any loss or liability arising from a Pre-Closing Date Event that is insured or potentially insured in whole or in part under any Occurrence-Based Coverage.
Seller and its Affiliates shall provide reasonable cooperation, including to the extent necessary by naming Purchaser as additional insured or pursuing claims on behalf of Purchaser, to the Company and its Subsidiaries (at the sole expense of the
Company) in the pursuit of any such coverage and other rights (it being understood that such cooperation does not include commencement or prosecution of litigation by Seller against an insurer).
4.12 Financing.
(a)
Notwithstanding anything contained in this Agreement to the contrary, Purchaser acknowledges and agrees that Purchasers obligations hereunder are not conditioned in any matter upon Purchaser obtaining any financing. The failure, for any
reason, of Purchaser to deliver sufficient funds to pay the Initial Purchase Price on the Closing Date shall constitute a willful and material breach of this Agreement. In addition, for the avoidance of doubt, Purchaser acknowledges and agrees that
the existence of any conditions contained in the Commitment Letters or the Financing shall not constitute, nor be construed to constitute, a condition to the consummation of the transactions contemplated hereby; it being acknowledged, however, that
the foregoing does not impact the rights of the Parties to rely on the conditions to the Closing set forth in this Agreement.
(b)
Purchaser shall use its reasonable best efforts to (i) arrange the Bridge Financing on the terms and conditions described in the Commitment Letter, (ii) to the extent the funding thereunder is required to finance the transactions
contemplated hereby, enter into a definitive agreement with respect thereto on the terms and conditions contained in the Commitment Letter in no event later than the Closing, and (iii) consummate the Bridge Financing or other financing
sufficient to permit the Company to pay the Initial Purchase Price and such other amounts payable by it pursuant to this Agreement (the Financing) no later than the Closing. In the event that any portion of the Bridge Financing
becomes unavailable in the manner or from the sources contemplated in the Commitment Letter, (A) Purchaser shall immediately notify Seller and (B) Purchaser shall use its reasonable best efforts to arrange to obtain any such portion from
alternative sources, on terms that are not materially more adverse to the Company or Seller, as promptly as practicable following the occurrence of such event, including entering into definitive agreements with respect thereto (such definitive
agreements entered into pursuant to the first or second sentence of this Section 4.12(b) being referred to as the Financing Agreements). Purchaser shall (x) furnish to Seller complete, correct and
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executed copies of the Financing Agreements promptly upon their execution, (y) give Seller prompt notice of any material breach by any party of the Commitment Letter, any alternative
financing commitment or the Financing Arrangements of which Purchaser becomes aware or any termination thereof and (z) otherwise keep Seller reasonably informed of the status of Purchasers efforts to arrange the Financing.
(c) Purchaser acknowledges and agrees that Seller and the Company and their respective Affiliates and employees have no responsibility for any
financing that Purchaser may raise in connection with the transactions contemplated hereby; provided, however, that Seller has agreed to cooperate with Purchaser as set forth in Section 4.12(d).
(d) The Company and the Seller shall, and shall cause the Subsidiaries of the Company to, use commercially reasonable efforts to cause their
officers, employees, representatives and advisors to, provide such cooperation as may be reasonably requested by Purchaser in connection with the Financing and the consummation thereof, including (i) participating in a reasonable number of due
diligence sessions (including without limitation accounting and legal diligence sessions); (ii) assisting in reviewing prospectuses, confidential bank memoranda, offering memoranda and similar documents; (iii) providing as promptly as
reasonably practicable to Purchaser and its financing sources the information set forth on Schedule 4.12(d) (the Required Information) and (iv) providing authorization letters to the Lenders authorizing the
distribution of information to other prospective lenders and containing a customary representation to the arrangers of the Bridge Financing contemplated by the Commitment Letter that the information concerning the Company and its Subsidiaries
contained in any confidential information memorandum contemplated by the Commitment Letter does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading; provided, however, that the actions of the Company in the foregoing clauses (i) through (iv) do not (A) unreasonably interfere with the ongoing operations of
Seller or the Company or any of the Subsidiaries of the Company or (B) require Seller or the Company or any of the Subsidiaries of the Company to pay any out-of-pocket fees or expenses, or incur any liability, prior to the Closing that are not
simultaneously reimbursed or indemnified by the Purchaser.
4.13 Corporate Name. Purchaser acknowledges that Seller and/or its
Affiliates have the absolute and exclusive proprietary right to all names, tradenames, trademarks, service names and service marks incorporating the word Severstal. Purchaser shall not, and shall cause its Affiliates (including the
Company and its Subsidiaries) not to use the word Severstal or any derivation thereof and any corporate symbols or logos related thereto in connection with the offer or sale of any goods or services or otherwise in the conduct of its or
their businesses; provided, however, that, the Purchaser and its Affiliates may continue to use the Seller Marks and such other Trademarks in connection with (x) products of the Company and its Subsidiaries and all associated
packaging or labeling and (y) to the extent existing as of Closing, signage, invoices, purchase orders, letterhead, business cards, stationery, promotional brochures, and other promotional correspondence (not including domain names or
websites), in each case for a reasonable time after Closing, not to exceed twelve (12) months after Closing in the case of the foregoing clause (x) and three (3) months after Closing in the case of the foregoing clause (y). Within 60
days following the Closing Date, Purchaser shall cause the Company and its
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Subsidiaries to make all filings with the appropriate Governmental Authorities and take such other actions as may be necessary to change the corporate name of the Company and each of its
Subsidiaries to a name which does not include the word Severstal or any word confusingly similar thereto.
4.14 Termination
of Intercompany Agreements.
(a) Except as set forth on Schedule 4.14(a), prior to or concurrently with the Closing, all
contracts, arrangements or Liabilities between the Company or any of its Subsidiaries, on the one hand, and Seller or any of its Affiliates (including Severstal Columbus, LLC and its Subsidiaries), on the other hand, shall be terminated without any
ongoing Liability of any party thereto, and Seller shall take such action as may be necessary so that, effective as of the Closing, there shall be no Liabilities owed to or from the Company or any of its Subsidiaries, on the one hand, and the Seller
or any of its Affiliates (including Severstal Columbus, LLC and its Subsidiaries) on the other hand.
(b) Prior to or concurrently with the
Closing, any Indebtedness owed by the Company or any of its Subsidiaries to Seller or any of its Affiliates, other than Indebtedness related to the Intercompany Indebtedness Amount, shall be cancelled, repaid or, to the extent permitted under the
applicable loan documents, converted into equity.
4.15 [Intentionally Omitted.]
4.16 Provisions Respecting Representation of the Company. Each of the parties to this Agreement hereby agrees, on its own behalf and on
behalf of its Representatives, that Skadden, Arps, Slate, Meagher & Flom LLP may serve as counsel to Seller and its Affiliates (individually and collectively, the Seller Group), on the one hand, and the Company and its
Subsidiaries, on the other hand, in connection with the negotiation, preparation, execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, and that, following consummation of the
transactions contemplated hereby, Skadden, Arps, Slate, Meagher & Flom LLP (or any successor) may serve as counsel to the Seller Group, in connection with any Action, litigation, claim or obligation arising out of or relating to this
Agreement or the transactions contemplated by this Agreement notwithstanding such representation or any continued representation of the Company and/or any of its Subsidiaries, and each of the parties hereto (on its own behalf and on behalf of its
Representatives) hereby consents thereto and irrevocably waives any conflict of interest arising therefrom, and each of such parties shall cause any Affiliate thereof to consent to irrevocably waive any conflict of interest arising from such
representation. The parties agree to take the steps necessary to ensure that any privilege attaching as a result of Skadden, Arps, Slate, Meagher & Flom LLP representing the Company or any of its Subsidiaries in connection with the
transactions contemplated by this Agreement shall survive the Closing and shall remain in effect, provided, however, that such privilege from and after the Closing shall be controlled by Seller. As to any privileged attorney-client communications between Skadden, Arps, Slate, Meagher & Flom LLP and the Company or any of its Subsidiaries prior to the Closing Date (collectively, the Privileged
Communications), the Purchaser, the Company, and each of its Subsidiaries together with any of their respective Affiliates, Subsidiaries, successors or assigns, agree that no such party may use or rely on any of the Privileged
Communications in any action against or involving any of the Seller Group after the Closing.
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ARTICLE V
TAX MATTERS
5.01
Sellers Indemnification.
(a) Seller shall be liable for, and shall indemnify and hold Purchaser Indemnitees harmless from,
and shall pay to Purchaser Indemnitees the amount of, or reimburse Purchaser Indemnitees for, (without duplication) any and all Losses suffered, incurred or sustained by a Purchaser Indemnitee by reason of or resulting from:
(i) Any Taxes of the Company or its Subsidiaries (or for which the Company or any of its Subsidiaries is liable) payable for
any taxable year or taxable period ending on or before the Closing Date; provided, however, that no indemnity shall be provided by Seller for Taxes resulting from any transaction undertaken by Purchaser or any of its Affiliates
(including the Company and any of its Subsidiaries) after the Closing on the Closing Date;
(ii) With respect to any
taxable year or taxable period beginning before the Closing Date and ending after the Closing Date (a Straddle Period), the portion of any Taxes of the Company or its Subsidiaries (or for which the Company or any of its
Subsidiaries is liable) attributable to that portion of such Straddle Period ending on and including the Closing Date, as determined under Section 5.01(b) (together with any taxable years or taxable periods ending on or prior to the
Closing Date, a Pre-Closing Tax Period); provided, however, that no indemnity shall be provided by Seller for any Taxes resulting from any transaction undertaken by Purchaser or any of its Affiliates (including the
Company and any of its Subsidiaries) after the Closing on the Closing Date;
(iii) Taxes (A) imposed on any member
(other than the Company or any of its Subsidiaries) of any affiliated group with which the Company or any of its Subsidiaries files or has filed a Tax Return on a consolidated, combined or unitary basis for a taxable year beginning before the
Closing Date and for which the Company or any of its Subsidiaries is liable as a result of filing such a Tax Return on a consolidated, combined or unitary basis or (B) of any Person for which the Company or any of its Subsidiaries is liable
(i) under any Contract to the extent such Contract was executed on or before the Closing Date, (ii) as a transferee or successor, by assumption or by operation of Law to the extent the event giving rise to such transfer, succession,
assumption or operation of law occurred before Closing, or (iii) otherwise arising on or before the Closing Date; provided, however, that no indemnity shall be provided by Seller for Taxes resulting from any transaction undertaken by
Purchaser or any of its Affiliates (including the Company and any of its Subsidiaries) after the Closing on the Closing Date;
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(iv) Taxes imposed on the Parent and for which the Company is liable as a result
of the Company being disregarded as an entity separate from the Parent for income tax filing purposes; and
(v) Taxes
imposed on the Company or any of its Subsidiaries as a result of (A) a breach of any representation or warranty set forth in Section 2.09 of this Agreement or (B) any nonfulfillment of, or failure to perform, any covenant or
agreement on the part of Seller or, with respect to covenants or agreements to be performed prior to the Closing, the Company, contained in this Agreement with respect to Taxes (in the case of each of clauses (A) and (B) above, determined
without regard to any qualification related to materiality contained therein).
(b) In order to apportion appropriately Taxes relating to
any Straddle Period between the Pre-Closing Tax Period and that portion of the Straddle Period commencing after the Closing Date (a Post-Closing Tax Period), the parties shall apply the provisions of Section 5.01(b)(i)
and 5.01(b)(ii) below, as appropriate:
(i) In the case of Taxes that are either (1) based upon or related to
income or receipts, or (2) imposed in connection with any sale or other transfer or assignment of property (real or personal, tangible or intangible), such Taxes shall be allocated to the Pre-Closing Tax Period and the Post-Closing Tax Period
based on an interim closing of the books as of the close of business on the Closing Date (provided, however, that (A) for purposes of determining the marginal tax rate applicable to income or receipts during such period in a
jurisdiction in which such tax rate depends upon the level of income or receipts, annualized income or receipts shall be taken into account, if appropriate, for an equitable sharing of such Taxes and (B) exemptions, allowances or deductions
that are calculated on a time basis, such as the deduction for depreciation, shall be apportioned on a time basis);
(ii)
In the case of Taxes not described in subparagraph (i) above (including those imposed on a periodic basis or measured by the level of any item), the amount of such Taxes allocated to the Pre-Closing Tax Period shall be the amount of such Taxes
for the entire Straddle Period (or, in the case of such Taxes determined on an arrears basis, the amount of such Taxes for the immediately preceding Straddle Period) multiplied by a fraction, the numerator of which is the number of calendar days in
the Pre-Closing Tax Period and the denominator of which is the number of calendar days in the entire Straddle Period, and the amount of such Taxes allocated to the Post-Closing Tax Period shall be the amount of such Taxes for the entire Straddle
Period (or, in the case of such Taxes determined on an arrears basis, the amount of such Taxes for the immediately preceding Straddle Period) multiplied by a fraction, the numerator of which is the number of calendar days in the Post-Closing Tax
Period and the denominator of which is the number of calendar days in the entire Straddle Period, in each case irrespective of the lien or assessment date of such Taxes; and
(iii) All Taxes relating to actions outside the ordinary course of business occurring after the Closing on the Closing Date
shall be apportioned to the period ending after the Closing Date.
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5.02 Purchasers Indemnification. Except as otherwise provided in this ARTICLE
V, Purchaser shall be liable for, and shall indemnify and hold Seller Indemnitees harmless from, and shall pay to Seller Indemnitees the amount of, or reimburse Seller Indemnitees for (without duplication), any and all Taxes imposed on or with
respect to the Company or any of its Subsidiaries for any Post-Closing Tax Period or any taxable period beginning after the Closing Date.
5.03 Refunds or Credits. Purchaser shall pay to Seller, by wire transfer of immediately available funds, any refunds or credits of Taxes
of the Company or any of its Subsidiaries for any Pre-Closing Tax Period (determined by applying the provisions of Sections 5.01(b)(i)-(ii)) (net of all reasonable out-of-pocket expenses, including Taxes, incurred in connection with
such refund or credit and without interest), within ten (10) days of receipt of such refund or credit by Purchaser or the Company or any of its Subsidiaries. Purchaser shall be entitled to all other refunds and credits of Taxes.
5.04 Tax Returns.
(a)
Seller shall prepare and file or cause to be prepared and filed when due all Pass-Through Tax Returns that are required to be filed by or with respect to the Company or any of its Subsidiaries. Seller shall request that each Joint Venture make a
valid election under Section 754 of the Code (and any similar election under state or local law) to be made on any Pass-Through Tax Return for the taxable year of the applicable Joint Venture that ends on or includes the Closing Date.
(b) Seller shall prepare and file or cause to be prepared and filed when due all Tax Returns (other than any Pass-Through Tax Return described
in Section 5.04(a)) that are required to be filed by or with respect to the Company or any of its Subsidiaries for taxable years or taxable periods ending on or before the Closing Date, and shall timely remit all Taxes shown as due on
such Tax Returns (taking into account all extensions properly obtained). All such Tax Returns shall, unless otherwise required by Law, be prepared and filed in a manner consistent with past practice. To the extent that such Tax Returns are filed
after the Closing Date, Seller shall provide Purchaser or cause Purchaser to be provided with a copy of each such Tax Return at least twenty (20) days prior to the due date for filing such Tax Return (or in any event as soon as practicable),
and shall permit Purchaser to review and approve such Tax Return prior to filing (which approval shall not be unreasonably withheld or delayed).
(c) Purchaser shall prepare and file or cause to be prepared and filed when due all Tax Returns (other than any Pass-Through Tax Return
described in Section 5.04(a)) that are required to be filed by or with respect to the Company or any of its Subsidiaries after the Closing Date for Straddle Periods, and shall timely remit all Taxes shown as due on such Tax Returns
(taking into account all extensions properly obtained). To the extent that such Tax Returns relate to Pre-Closing Tax Periods, such Tax Returns shall, unless otherwise required by Law, be prepared and filed in a manner consistent with past practice.
Purchaser shall provide Seller with a copy of each such Tax Return at least twenty (20) days prior to the due date (taking into account any proper extension thereof) for filing such Tax Return, and shall permit Seller to review and approve such
Tax Return prior to filing (which approval shall not be unreasonably withheld or delayed). The Seller shall remit to Purchaser the amount of Taxes for which the Seller is responsible pursuant to Section 5.01 not later than five
(5) days prior to the due date for the payment of Taxes with respect to such Tax Return (taking into account all extensions properly obtained).
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5.05 Mutual Cooperation. As soon as practicable, but in any event within fifteen
(15) days after either Sellers or Purchasers request, as the case may be, Purchaser shall deliver to Seller or Seller shall deliver or cause to be delivered to Purchaser, as the case may be, such information and other data relating
to the Tax Returns and Taxes of the Company or any of its Subsidiaries and shall provide such other assistance as may reasonably be requested, to cause the completion and filing of all Tax Returns or to respond to audits by any Taxing Authorities
with respect to any Tax Returns or taxable periods or to otherwise enable Seller or Purchaser to satisfy their accounting or Tax requirements; provided, however, that Seller shall not be required to disclose, to any Person, any Tax information or
Tax Return that does not relate solely and exclusively to the Company and its Subsidiaries (it being understood that, in the case of any consolidated, combined or unitary Tax Return that includes the Company and any other Person, Seller shall
provide Purchaser, at Purchasers request, with pro forma Tax Returns relating solely to the Company and its Subsidiaries).
5.06
Contests. Whenever any Taxing Authority asserts a claim, makes an assessment, or otherwise disputes the amount of Taxes for which Seller may reasonably be expected to be liable under this Agreement (a Tax Claim), Purchaser
shall upon receipt of notice of such Tax Claim, promptly inform Seller in writing; provided, however, that failure to give such notice as provided herein shall not relieve Seller of its obligations under this Article V except to
the extent that Seller is materially prejudiced thereby. Seller shall have the right to elect to control the defense of any Tax Claim relating to taxable periods ending on or before the Closing Date, or otherwise relating to Taxes for which Seller
may be liable under this Agreement (other than with respect to a Straddle Period), at its sole cost and expense by written notice to Purchaser within ten (10) days of receipt of notice thereof; provided, however, that Purchaser
may, at its sole cost and expense, retain separate counsel of its choosing to participate in the defense or settlement of such Tax Claim by Seller. If Seller timely elects to control the defense of any such Tax Claim in accordance with this
Section 5.06, (i) Seller shall keep Purchaser reasonably apprised of the status of the Tax Claim and the defense thereof and shall reasonably consider recommendations made by Purchaser with respect thereto and (ii) Purchaser
shall have the right to consent, which consent may not be unreasonably withheld, conditioned or delayed, to any settlement to the extent such settlement would affect the amount of Taxes for which Purchaser or its Affiliates may be liable for taxable
periods ending after the Closing Date. If Seller elects not to control the defense or thereafter fails or ceases to defend any such Tax Claim, Purchaser shall have the right to control the defense of such Tax Claims at its sole cost and expense, and
Seller shall have the right to consent, which consent may not be unreasonably withheld, conditioned or delayed, to any settlement thereof to the extent such settlement would affect the amount of Taxes for which Seller may be liable under this
Agreement. Except as otherwise required by the foregoing provisions of this Section 5.06, Purchaser shall have the right to control any proceedings relating to Taxes of or with respect to the Company or any of its Subsidiaries;
provided, however, that, in the case of a Tax Claim with respect to a Straddle Period, Seller shall be entitled to participate in such proceeding (at its sole cost and expense) to the extent such Tax Claim is related to the portion of
such Straddle Period that is a Pre-Closing Tax Period, and Purchaser shall not settle such portion of such Tax Claim without the Sellers consent, which consent may not be unreasonably withheld, conditioned or delayed, if such settlement would
affect the amount of Taxes for which Seller may be liable under this Agreement.
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5.07 Transfer Taxes. Purchaser shall be responsible for (and shall indemnify Seller
against) the timely payment of all sales (including bulk sales), use, value added, documentary, stamp, gross receipts, registration, transfer, conveyance, excise, recording, license and other similar taxes and fees (Transfer
Taxes), arising out of or in connection with or attributable to the transactions effected pursuant to this Agreement. Purchaser shall prepare and in a timely manner file all returns in respect of Transfer Taxes; provided,
however, that any such returns shall be subject to the approval of Seller, which approval shall not be unreasonably withheld.
5.08
Survival of Obligations and Sole Remedy. The obligations of the parties set forth in this Article V shall be unconditional and absolute, and shall survive the Closing and remain in effect until ninety (90) days following the
expiration of the applicable statute of limitations. The rights and obligations of the parties with respect to indemnification for any and all matters relating to Taxes and Tax Returns shall be governed solely by this Article V and
Sections 8.02(c)(xi) 8.02(f), 8.04 and 8.05.
ARTICLE VI
CONDITIONS
6.01 Conditions to
the Obligations of Purchaser. The obligations of Purchaser hereunder to consummate the Closing and purchase the Membership Interests are subject to the fulfillment, at or before the Closing, of each of the following conditions (all or any of
which may be waived in writing in whole or in part by Purchaser in its sole discretion):
(a) Representations, Warranties and
Covenants. (i) each representation or warranty of Seller and the Company contained in Sections 2.01, 2.02, 2.06(c) and 2.15(b) shall be true and correct in all respects as of the date of this Agreement and as of
the Closing as if made as of the Closing (other than any such representation and warranty as is made as of another date, which shall be true and correct in all respects as of such other date), and (ii) each other representation and warranty of
Seller and the Company contained in this Agreement that is qualified as to materiality or by reference to Material Adverse Effect shall be true and correct in all respects and each other representation and warranty that is not qualified as to
materiality or by reference to Material Adverse Effect shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing as if made as of the Closing (other than any such representation and
warranty as is made as of another date that is qualified as to materiality or by reference to Material Adverse Effect, which shall be true and correct in all respects as of such other date, and any such representation and warranty as is made as of
another date that is not qualified as to materiality or by reference to Material Adverse Effect, which shall be true and correct in all material respects as of such other date). The covenants and agreements contained in this Agreement to be complied
with by Seller and the Company on or before the Closing shall have been complied with in all material respects, and Purchaser shall have received a certificate signed on behalf of Seller by an officer of Seller with respect to the foregoing
provisions in this Section 6.01(a).
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(b) HSR Approval. Any waiting period (and any extension thereof) under the HSR Act
applicable to the purchase of the Membership Interests contemplated by this Agreement shall have expired or shall have been terminated.
(c) No Order and No Action. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental
Order (whether temporary, preliminary or permanent) that has the effect of making the transactions contemplated by this Agreement illegal or otherwise prohibiting the consummation of such transactions. No Action initiated by any Governmental
Authority by or against the Purchaser, the Seller, the Company or any of its Subsidiaries shall be pending challenging the legality, validity or enforceability of this Agreement or the consummation of the transactions contemplated hereby which the
Purchaser, in its reasonable judgment, believes to be potentially materially adverse to the Purchaser from and after the Closing.
(d)
Other Deliveries. Seller shall have delivered to Purchaser the closing deliveries set forth in Section 1.02(b)(ii).
6.02 Conditions to the Obligations of Seller. The obligations of Seller hereunder to sell the Membership Interests are subject to the
fulfillment, at or before the Closing, of each of the following conditions (all or any of which may be waived in writing in whole or in part by Seller in its sole discretion):
(a) Representations, Warranties and Covenants. Each representation and warranty of Purchaser contained in this Agreement that is
qualified as to materiality shall be true and correct in all respects and each representation and warranty of Purchaser that is not qualified by materiality shall be true and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing as if made as of the Closing (other than any such representation and warranty as is made as of another date that is qualified as to materiality, which shall be true and correct in all respects as of such other date,
and any such representation and warranty as is made as of another date that is not qualified as to materiality, which shall be true and correct in all material respects as of such other date). The covenants and agreements contained in this Agreement
to be complied with by Purchaser on or before the Closing shall have been complied with in all material respects. Seller shall have received a certificate signed on behalf of Purchaser by an officer of Purchaser with respect to the foregoing
provisions in this Section 6.02(a).
(b) Governmental Approvals. Any waiting period (and any extension thereof) under
the HSR Act applicable to the purchase of the Membership Interests contemplated by this Agreement shall have expired or shall have been terminated.
(c) Columbus Closing. The sale of the membership interests in Severstal Columbus, LLC, pursuant to that certain purchase agreement
between the Seller and Steel Dynamics, Inc. shall have been consummated.
(d) No Order. No Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any Governmental Order (whether temporary, preliminary or permanent) that has the effect of making the transactions contemplated by this Agreement illegal or otherwise prohibiting the consummation of
such transactions.
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(e) Other Deliveries. Purchaser shall have paid the amounts required by, and delivered to
Seller the closing deliveries set forth in, Section 1.02(b)(i).
ARTICLE VII
TERMINATION
7.01
Termination. This Agreement may be terminated, and the transactions contemplated hereby may be abandoned at any time prior to the Closing:
(a) by mutual written agreement of Seller and Purchaser;
(b) upon written notice, by Seller or Purchaser to the other parties hereto, in the event that any Governmental Order or Law restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement shall have become final and non-appealable; or
(c) by either Seller or Purchaser, upon written notice to the non-terminating parties by the terminating party, if the Closing shall not have
occurred by April 18, 2015; provided, however, that the right to terminate this Agreement under this Section 7.01(c) shall not be available to: (x) Seller if any failure by Seller or the Company to fulfill its
obligations under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date; or (y) Purchaser if Purchasers failure to fulfill its obligations under this Agreement
shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date.
7.02 Effect of
Termination. In the event of termination of this Agreement as provided in Section 7.01, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto or any of their respective Affiliates
or their or their respective Affiliates respective Representatives or shareholders except: (a) as set forth in Sections 4.02(c) and (d), this Section 7.02 and Article X; and (b) that nothing herein
shall relieve any party from Liability as a result of fraud or for any willful breach of this Agreement occurring prior to such termination, provided, that no party hereto shall be entitled to recover any special, indirect, incidental,
punitive or consequential damages whatsoever in respect of such breach by the other party, including any claims for damages based on lost revenues or lost profits, however caused or on any theory.
ARTICLE VIII
INDEMNIFICATION AND
SURVIVAL
8.01 Survival of Representations, Warranties, Covenants and Agreements. The representations and warranties contained in
this Agreement shall survive the Closing and expire on the date that is eighteen (18) months following the Closing Date, except (i) for the Fundamental Representations, which shall survive the Closing and continue until the expiration of
the applicable statute of limitations, at which time they shall expire, and (ii) as otherwise provided in Article V. Except as otherwise provided in this Agreement, the covenants and agreements of Seller and Purchaser shall remain in
full force and effect in accordance with their terms. Any representation, warranty, covenant or agreement in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate
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pursuant to this Section 8.01 if a Claim Notice or Indemnity Notice (as applicable) shall have been timely given in good faith based on facts reasonably expected to establish a valid
claim under this Article VIII on or prior to such termination date, until, but only for the purpose of, the satisfaction or other resolution as provided in this Article VIII of the related claim for indemnification.
8.02 Indemnification.
(a)
Subject to the provisions of this Article VIII, from and after the Closing, Seller shall indemnify and hold harmless Purchaser and its Affiliates and their respective Representatives, successors and assigns (collectively, the
Purchaser Indemnitees) from, and shall pay to Purchaser Indemnitees the amount of, or reimburse Purchaser Indemnitees for, any and all Losses suffered, incurred or sustained by Purchaser Indemnitees by reason of, arising out of,
relating to or resulting from (i) any inaccuracy or breach of a representation or warranty of the Seller and Company contained in Article II of this Agreement as of the date hereof or as of the Closing or any certificate delivered by the
Seller pursuant to Section 6.01 (other than indemnification for matters relating to Taxes, which are addressed separately in Article V), (ii) any nonfulfillment or breach of or failure to perform any covenant or agreement on
the part of Seller or, with respect to covenants or agreements to be performed prior to the Closing, the Company, contained in this Agreement (other than indemnification for matters relating to Taxes, which are addressed separately in Article
V), (iii) any Liabilities of the Seller and its Affiliates (other than the Company and its Subsidiaries), whether incurred before or after the Closing, and (iv) one-half of the capital expenditures that may be required to be expended
by the Company or MSC by reason of the matters listed on Schedule 8.02 (the Special Matters); provided, however, that the Purchaser Indemnitees shall not seek indemnification, and the Seller shall not be
responsible, for the first $5 million of capital expenditures for through walls and such $5 million shall not count toward the deductible in Section 8.02(c)(iv); provided, however, that, for purposes of this
Section 8.02(a), any qualifications as to materiality, material adverse effect or Material Adverse Effect, shall be disregarded and not given effect for determining whether a breach has occurred or in calculating any Losses,
except in the case of the representations and warranties set forth in Section 2.06(a) and Section 2.15(b).
(b)
Subject to the provisions of this Article VIII, from and after the Closing, Purchaser and the Company shall indemnify and hold harmless Seller and its Affiliates and their respective Representatives, successors and assigns (collectively, the
Seller Indemnitees) from, and shall pay to Seller Indemnitees the amount of, or reimburse Seller Indemnitees for, any and all Losses suffered, incurred or sustained by Seller Indemnitees by reason of, arising out of, relating to
or resulting from (i) any inaccuracy or breach of a representation or warranty of Purchaser contained in Article III as of the date hereof or as of the Closing or any certificate delivered by the Purchaser pursuant to
Section 6.02 or (ii) any nonfulfillment or breach of or failure to perform any covenant or agreement on the part of Purchaser or, with respect to covenants or agreements to be performed from and after the Closing, the Company,
contained in this Agreement (other than indemnification for matters relating to Taxes, which are addressed separately in Article V); provided, however, that, for purposes of this Section 8.02(b), any qualifications
as to materiality, material adverse effect or Material Adverse Effect shall be disregarded and not given effect for determining whether a breach has occurred or in calculating any Losses.
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(c) The indemnity obligations of the parties under this Article VIII shall be limited as
set forth in this Section 8.02(c), except that such limitations shall not apply to Losses arising from claims with respect to the Sellers, the Companys or the Purchasers fraud or willful breach, as the case may be.
(i) No indemnity shall be payable under this ARTICLE VIII with respect to Losses for which the Indemnified Party has not
provided the Indemnifying Party a Claim Notice or Indemnity Notice, as applicable, with respect to such claim, setting forth in reasonable detail the specific facts and circumstances pertaining thereto as soon as practical following the time at
which the Indemnified Party discovered such claim (except to the extent the Indemnifying Party is not materially prejudiced by any delay in the delivery of such notice), and in any event prior to the date that is eighteen months following the
Closing Date.
(ii) No indemnity shall be payable with respect to any individual Loss under Section 8.02(a)(i)
that does not exceed $100,000.
(iii) With respect to individual Losses under Section 8.02(a)(i) that are in
excess of $100,000 (Covered Losses), no indemnity shall be payable until the aggregate of such Covered Losses exceeds $5,250,000, after which only such Losses in excess of such amount shall be recoverable.
(iv) With respect to Losses under Section 8.02(a)(iv), no indemnity shall be payable until the aggregate of such
Losses exceeds $5,000,000.
(v) With respect to individual Losses under Section 8.02(b) that are in excess of
$100,000, no indemnity shall be payable until the aggregate of such Losses exceeds $5,250,000, after which all Losses shall be recoverable.
(vi) No Purchaser Indemnitee shall be entitled to any further indemnification under Section 8.02(a)(i) after the
aggregate of all Covered Losses paid by Seller equals $87,500,000.
(vii) No Purchaser Indemnitee shall be entitled to any
further indemnification under Section 8.02(a)(iv) after the fifth anniversary of the Closing or after the aggregate of all such Losses for which the Purchaser Indemnitees have responsibility thereunder exceeds $35,000,000.
(viii) No Seller Indemnitee shall be entitled to any further indemnification under Section 8.02(b) after the
aggregate of all Covered Losses paid by Purchaser equals $87,500,000.
(ix) Each Indemnified Party shall use commercially
reasonable efforts to mitigate any Losses after becoming aware of any event that could reasonably be expected to give rise to any Losses that are indemnifiable hereunder.
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(x) An Indemnifying Partys indemnity obligations under this Article
VIII shall be reduced to the extent the Losses arise from or were caused by actions taken or failed to be taken by any Indemnified Party after the Closing.
(xi) Seller shall have no indemnity obligations under ARTICLE V or this Article VIII for Losses to the extent
such Losses (A) are reserved as a Liability of the Company or any Subsidiary on the balance sheets as of March 31, 2014 included in the Financial Statements, (B) are included in the calculation of Final Net Working Capital, or
(C) arise out of changes after the Closing Date in applicable Law.
(xii) No Indemnifying Party shall have any
indemnity obligations for special or punitive damages except to the extent arising in connection with a Third Party Claim.
(d) The
limitations on indemnification contained in Section 8.02(c)(i), 8.02(c)(iii) and 8.02(c)(v) shall not apply to Losses arising from breach of the Fundamental Representations.
(e) RG Steel Indemnification. From and after Closing, Seller shall indemnify the Purchaser Indemnitees for any and all Losses arising
out of or resulting from the RG Steel Liabilities.
(f) Notwithstanding anything to the contrary contained in Article V and this
Article VIII, but without limiting the provisions of Section 10.10, none of Seller, Purchaser nor any of their respective Affiliates shall have any Liability under this Agreement in excess of the Final Purchase Price.
8.03 Indemnity Procedures. All claims for indemnification by any Indemnified Party under Section 8.02 shall be asserted and
resolved as set forth in this Section 8.03.
(a) In the event any claim or demand in respect of which an Indemnified Party
might seek indemnity under Section 8.02 is asserted against or sought to be collected from such Indemnified Party by a Person other than Seller, Purchaser or any Affiliate of Seller or Purchaser (a Third Party Claim),
the Indemnified Party shall promptly deliver a Claim Notice to the Indemnifying Party. The Indemnifying Party shall have the right to elect to control the defense of such Third Party Claim at the Indemnifying Partys sole cost and expense by
written notice to the Indemnified Party given within 30 days of receiving such Third Party Claim Notice (or sooner if the nature of the Third Party Claim so requires) with counsel and other Representatives chosen by it and reasonably acceptable to
the Indemnified Party. During such 30-day period, the Indemnified Party may make such filings, including motions for continuance (and answers if a motion for continuance has not been granted), as may be necessary to preserve the parties
positions and rights with respect to such Third Party Claim, and shall reasonably cooperate with the Indemnifying Party. The Indemnified Party shall cooperate with the Indemnifying Party and its counsel in contesting any Third Party Claim, including
in making any counterclaim against the Person asserting the Third Party Claim, or any cross-complaint against any Person (other than the Indemnifying Party or any of its Affiliates). The Indemnified Party may, at its sole cost and expense, retain
separate counsel and appropriate local counsel of the Indemnified Partys
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choosing to participate in, but not control, any defense or settlement of any Third Party Claim by the Indemnifying Party. The Indemnifying Party shall keep the Indemnified Party advised of the
status of the Third Party Claim and the defense thereof and shall reasonably consider recommendations made by the Indemnified Party with respect thereto.
(b) If the Indemnifying Party, within 30 days after written notice of any such Third Party Claim (or sooner if the nature of the Third Party
Claim so requires) does not assume control of the defense or thereafter fails or ceases to defend such Third Party Claim, then (i) the Indemnified Party shall have the right to undertake the defense of such Third Party and (ii) the
reasonable and documented fees and expenses of counsel to the Indemnified Party in connection therewith shall be considered Losses for purposes of this Agreement.
(c) Notwithstanding anything in this Section 8.03 to the contrary, (i) the Indemnifying Party shall not, without the prior
written consent of the Indemnified Party (such consent not to be unreasonably withheld, conditioned or delayed), settle or compromise any Third Party Claim or consent to the entry of any judgment which (A) does not include as an unconditional
term the giving by the claimant or the plaintiff to the Indemnified Party of an unconditional release from all Liability in respect of such Third Party Claim, (B) would adversely affect the ongoing operations of the Indemnified Party or its
Affiliates, or (C) would impose a judgment that provides relief other than the payment of monetary damages and (ii) the Indemnified Party shall not, without the prior written consent of the Indemnifying Party (such consent not to be
unreasonably withheld, conditioned or delayed), settle or compromise any Third Party Claim or consent to the entry of any judgment which does not include as an unconditional term the giving by the claimant or the plaintiff to the Indemnifying Party
of an unconditional release from all Liability in respect of such Third Party Claim.
(d) In the event any Indemnified Party should have a
claim under Section 8.02 against any Indemnifying Party that does not involve a Third Party Claim, the Indemnified Party shall promptly deliver an Indemnity Notice to the Indemnifying Party. The Indemnifying Party may, within 30 days
after receipt by such Indemnifying Party of such an Indemnity Notice, deliver to the Indemnified Party a written response disputing such claim. If the Indemnifying Party in such written response contests the payment of the Claim Amount, then the
Indemnifying Party and the Indemnified Party shall use good faith efforts to arrive at a mutually acceptable resolution of such dispute within the next 30 days.
(e) Notwithstanding anything in this Agreement to the contrary, from the Closing until the Sellers indemnification obligations have
terminated pursuant to Section 8.02(c)(vii), Seller shall have the right to participate equally in the defense and handling of any of the Special Matters, which participation shall include the right to attend meetings and participate in
conference calls with Third Parties, review in advance and comment on any documents or proposals to be made to Third Parties regarding any Special Matter, and be involved in any other manner consistent with Seller being kept informed of any
developments with respect to the Special Matter and having meaningful input in how such Special Matter is being handled. The Purchaser Indemnitees shall provide regular updates to the Seller regarding the Special Matters, provide copies of all
written documents and communications related to the Special Matters with as sufficient time to allow the Seller to review and comment on the response or preparation of such materials, and incorporate all reasonable comments on
47
documents or proposals made with respect to the handling or defense of the Special Matters, Neither the Seller nor the Purchaser Indemnitees shall settle or compromise any of the Special Matters
without the prior approval of the other party, which approval shall not be unreasonably withheld. The Sellers rights under this Section 8.03(e) take effect immediately at Closing and are not dependent upon the aggregate of Losses
exceeding the threshold set forth in Section 8.02(c)(iv).
8.04 Tax Effect.
(a) The amount of any Loss for which indemnification is provided under Article V or this Article VIII shall be (i) reduced
to take account of any net Tax benefit actually realized in the form of a cash Tax refund or reduction in cash Tax otherwise payable by the Indemnified Party, in each case, for the taxable year in which the Loss is incurred and arising from the
incurrence of any such Loss and (ii) increased by the amount of the income Tax, if any, attributable to the receipt of such indemnity payments.
(b) Any amounts paid pursuant to Article V or this Article VIII shall be considered an adjustment to the Purchase Price for Tax
purposes to the extent allowed under applicable Law. Purchaser and Seller, and each of their respective Affiliates, shall prepare and file, and cause their Affiliates to prepare and file, Tax Returns consistent with the treatment described in the
foregoing sentence.
8.05 Insurance Offset. The amount of any Loss for which indemnification is provided under Article V or
this Article VIII shall be determined net of any amounts recovered, recoverable or for which there is a right of recovery by an Indemnified Party or any of such Indemnified Partys Affiliates under or pursuant to any insurance policy,
title insurance policy, indemnity, reimbursement arrangement or contract pursuant to which or under which such Indemnified Party or such Indemnified Partys Affiliates is a party or has rights (collectively, Alternative
Arrangements).
8.06 Subrogation. Each Indemnified Party hereby waives any subrogation rights that its insurer may have
with respect to any indemnifiable Losses. After any indemnification payment is made to any Indemnified Party pursuant to this Article VIII, the Indemnifying Party shall, to the extent of such payment, be subrogated to all rights (if any) of
the Indemnified Party against any third party in connection with the Losses to which such payment relates. Without limiting the generality of the preceding sentence, any Indemnified Party receiving an indemnification payment pursuant to the
preceding sentence shall execute, upon the written request of the Indemnifying Party, any instrument reasonably necessary to evidence such subrogation rights.
8.07 Exclusivity. After the Closing, to the extent permitted by Law and except as provided in Section 4.10 or with respect
to claims for fraud or willful breach, the indemnities set forth in this Article VIII and in Article V shall be the exclusive remedies of Purchaser and Seller and their respective officers, directors, employees, agents and Affiliates
for any inaccuracy in any representation or warranty, misrepresentation, breach of warranty or nonfulfillment or failure to be performed of any covenant or agreement contained in this Agreement. Without limiting the generality of the foregoing, no
party shall have any rights to set off indemnifiable Losses pursuant to this Article VIII and in Article V against other obligations owed to another party hereto.
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8.08 Article V to Apply to Taxes and Tax Returns. Except as set explicitly set forth in
Article V, the rights and obligations of the parties with respect to indemnification for any and all matters relating to Taxes and Tax Returns shall be governed solely by Article V.
ARTICLE IX
DEFINITIONS
9.01 Definitions. As used in this Agreement, the following defined terms have the meanings indicated below:
Actions means any action, suit, proceeding, arbitration or Governmental Authority investigation.
Affiliate means, with respect to any Person, any other Person directly or indirectly controlling or controlled by, or under
direct or indirect common control with, such Person.
Agreement means this Membership Interest Purchase Agreement, the
Disclosure Schedules, Annexes and Exhibits hereto, as amended, modified or supplemented from time to time.
Alternative
Arrangements has the meaning ascribed to such term in Section 8.05.
Anticorruption Laws has the
meaning ascribed to such term in Section 2.18.
Bank of America means Bank of America N.A.
Bank of America Credit Agreement means that certain Loan Agreement dated as of November 27, 2013, as amended to date,
among the Company, the lenders party thereto, the issuers party thereto, Bank of America, N.A., as agent and co-collateral agent, General Electric Capital Corporation as co-collateral agent, and Wells Fargo Capital Finance, LLC, as syndication
agent.
Bank of America Credit Agreement Amount means all principal amounts, which as of June 30, 2014 equal
$108,416,243, plus accrued interest thereon, owed to the lenders under the Bank of America Credit Agreement and any fees, premiums and penalties payable thereunder as of the Closing Date.
Books and Records means all files, documents, instruments, papers and other books and records relating to the business of
the Company and its Subsidiaries, including financial statements, Tax Returns and related work papers and letters from accountants, budgets, pricing guidelines, ledgers, journals, deeds, title policies, minute books, stock certificates and books,
stock transfer ledgers, customer lists, computer files and programs, retrieval programs, operating data and plans and environmental studies and plans.
Bridge Financing has the meaning ascribed to such term in Section 3.10.
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Business means the business of the Company and its Subsidiaries, taken as a
whole, as presently conducted.
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 New York, New York.
Claim Notice means written notification pursuant
to Section 8.03 of a Third Party Claim as to which indemnity under Section 8.02 is sought by an Indemnified Party, enclosing a copy of all papers served, if any, and specifying the nature of and basis for such Third Party
Claim and for the Indemnified Partys claim against the Indemnifying Party under Section 8.02, together with the amount or, if not then reasonably determinable, the estimated amount (if known), determined in good faith, of the Loss
arising from such Third Party Claim.
Closing has the meaning ascribed to such term in Section 1.02.
Closing Date has the meaning ascribed to such term in Section 1.02.
Closing Statement has the meaning ascribed to such term in Section 1.03(b)(i).
Code means the U.S. Internal Revenue Code of 1986, as amended.
Commitment Letter has the meaning ascribed to such term in Section 3.10.
Company has the meaning ascribed to such term in the preamble of this Agreement.
Company Operating Agreement means the Second Amended and Restated Limited Liability Company Agreement of the Company, dated
December 31, 2013.
Confidential Information has the meaning ascribed to such term in Section 4.02(e).
Confidentiality Agreement has the meaning ascribed to such term in Section 4.02(c).
Consent means any consent, approval, authorization, consultation, waiver, permit, grant, agreement, certificate, exemption,
order, registration, declaration, filing, notice of, with or to any Person or under any Law, or the expiration or termination of a waiting period under the HSR Act or any antitrust or competition Laws of applicable foreign jurisdictions, in each
case required to permit the consummation of the transactions contemplated by this Agreement.
Contested Adjustments has
the meaning ascribed to such term in Section 1.03(b)(iii).
Continuing Employees has the meaning ascribed
to such term in Section 4.08(a).
Contract means any loan or credit agreement, bond, debenture, note,
mortgage, indenture, lease, supply agreement, license agreement, development agreement or other contract, agreement, obligation, commitment or instrument that is legally binding, including all amendments thereto.
Controlled Group Liabilities means any and all liabilities (i) under Title IV of ERISA, (ii) under
Section 302 of ERISA, (iii) under Section 412 and 4971 of the Code, or (iv) under Section 4980(B) of the Code (or Sections 601-607 of ERISA), other than with respect to a Plan or any Multiemployer Plan to which the Company
or a Subsidiary contribute.
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Covered Losses has the meaning ascribed to such term in
Section 8.02(c)(iii).
D&O Insurance has the meaning ascribed to such term in Section 4.07.
Dearborn CBA has the meaning ascribed to such term in Section 3.08.
Dearborn Union Employees has the meaning ascribed to such term in Section 3.08.
Delaco has the meaning ascribed to such term in Section 2.03(d).
Delaco Agreement has the meaning ascribed to such term in Section 2.03(d).
Delaco Interests has the meaning ascribed to such term in Section 2.03(d).
Disclosure Schedules has the meaning ascribed to such term in the preamble to Article II.
Double Eagle means Double Eagle Steel Coating Company.
Effective Time has the meaning ascribed to such term in Section 1.03(a)(i).
Encumbrance means any encumbrance, lien, charge, pledge, mortgage, title retention agreement, security interest of any
nature, adverse claim, exception, reservation, easement, right of occupation, any matter capable of registration against title, option, right of pre-emption or privilege or any agreement or other commitment, whether written or oral, to create any of
the foregoing (excluding restrictions on transfer arising under securities Laws).
Environmental Claim means any claim,
action, cause of action, investigation, information request or notice by any Person alleging potential Liability (including, without limitation, potential Liability for investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from (a) the presence, or Release into the environment, of any Hazardous Material by the Company or any Subsidiary at any location or
(b) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law by the Company or any Subsidiary.
Environmental Law means any Law or Governmental Order relating to pollution or protection of human health or the
environment, including without limitation, laws relating to the exposure to, or Releases or threatened Releases of, Hazardous Materials or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, Release, transport
or handling of Hazardous Materials and all laws and regulations with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials.
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Environmental Permits means all permits, licenses, registrations, approvals,
exemptions or other authorizations required to be obtained pursuant to Environmental Laws for the operation of the Company and each Subsidiary, including permits for which renewal applications have been timely submitted and which allow for continued
operation under the terms of the environmental permit or the expired permit.
ERISA has the meaning ascribed to such
term in Section 2.10(a).
ERISA Affiliate shall mean any entity (whether or not incorporated) other than
the Company that, together with the Company is a member of (i) a controlled group of corporations within the meaning of Section 414(b) of the Code; (ii) a group of trades or businesses under common control within the meaning of
Section 414(c) of the Code; or (iii) an affiliated service group within the meaning of Section 414(m) of the Code.
Estimated Closing Statement has the meaning ascribed to such term in Section 1.03(a)(i).
Estimated Net Working Capital has the meaning ascribed to such term in Section 1.03(a)(ii).
Final Closing Statement has the meaning ascribed to such term in Section 1.03(b)(iii).
Final Net Working Capital has the meaning ascribed to such term in Section 1.03(b)(iv)(1).
Final Purchase Price means the Initial Purchase Price adjusted pursuant to Section 1.03(b) and
Section 8.04(b).
Financial Statements has the meaning ascribed to such term in
Section 2.06(a).
Financing has the meaning ascribed to such term in Section 4.12.
Financing Agreements has the meaning ascribed to such term in Section 4.12(b).
Financing Sources means the entities (including the Lenders) that have committed to provide or arrange or otherwise entered
into agreements in connection with the Financing (including the Bridge Financing), the Financing Agreements (including the Commitment Letter) or other financings in connection with the transactions contemplated hereby, and the parties to any joinder
agreements, indentures or credit agreements entered pursuant thereto or relating thereto, together with their respective Affiliates, and there and their respective Affiliates officers, directors, employees, agents and representatives and their
respective successors and assigns.
Fundamental Representations means those representations and warranties contained in
Section 2.01 (Organization, Authority and Qualification), Section 2.02 (Capitalization), Section 2.06(c) (Financial Statements) and Section 2.21 (Brokers).
GAAP means United States generally accepted accounting principles consistently applied from period to period and throughout
any period in accordance with the past practices of the Company.
52
Governmental Authority means any United States federal, state or local or any
non-United States governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body or self-regulatory organization.
Governmental Order means any order, writ, judgment, injunction, decree, stipulation, determination or award entered or
issued by or with any Governmental Authority.
Guaranty has the meaning ascribed to such term in the recitals.
Hazardous Materials means all substances defined as Hazardous Substances, Oils, Pollutants or Contaminants in the National
Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. §300.5 or defined as such by, or otherwise regulated as such under any Environmental Law.
HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
ICC has the meaning ascribed to such term in Section 10.09(a).
Indebtedness means, without duplication (a) obligations for borrowed money whether current, short-term or long-term,
secured or unsecured, including the principal, interest and fees owing under the Bank of America Credit Agreement; (b) indebtedness evidenced by any note, bond, debenture, mortgage, indenture or other debt instrument or debt security;
(c) any accrued interest, fees, premiums, penalties and other obligations relating to the foregoing payable in connection with the repayment thereof on or prior to the Closing Date; (d) all capitalized lease obligations; and (e) any
indebtedness or obligations of another Person (the Other Person) of the type referred to in the foregoing clauses (a) through (e) (A) that is guaranteed by the Company or any of its Subsidiaries, (B) in respect
of which the Company or any of its Subsidiaries pledges its assets or provides any other credit support or (C) in respect of which the Company or any of its Subsidiaries has promised to maintain or cause to be maintained the financial position
or financial covenants of such Other Person or to purchase such indebtedness or other obligations of such other Person; provided, however, that Indebtedness shall not be deemed to include any of the following: (A) any
intercompany Indebtedness owing by between or among the Company and any of its Subsidiaries, and (B) any operating leases.
Indemnified Party means any Person claiming indemnification under any provision of Article VIII.
Indemnifying Party means any Person against whom a claim for indemnification is being asserted under any provision of
Article VIII.
Indemnitees has the meaning ascribed to such term in Section 4.07.
Indemnity Notice means written notification pursuant to Section 8.03(d) of a claim for indemnity under
Article VIII by an Indemnified Party, specifying the nature of and basis for such claim, together with the amount or, if not then reasonably determinable, the estimated amount, determined in good faith, of the Loss arising from such claim.
53
Independent Accounting Firm has the meaning ascribed to such term in
Section 1.03(b)(iii).
Initial Purchase Price has the meaning ascribed to such term in
Section 1.03(a)(ii).
Insurance Policies has the meaning ascribed to such term in Section 2.22.
Intellectual Property means (a) trademarks, service marks, trade names, Internet domain names, designs, logos,
slogans and general intangibles of like nature, together with goodwill, registrations and applications relating to the foregoing; (b) patents, copyrights (including registrations and applications for any of the foregoing); and
(c) software, confidential information, technology, know-how, inventions, processes, formulae, algorithms, models and methodologies.
Intercompany Indebtedness Amount means all principal amounts, which as of June 30, 2014 equal $226,825,781, plus
accrued interest thereon, owed to Seller and/or its Affiliates (other than the Company and its Subsidiaries and Severstal Columbus, LLC and its Subsidiaries) by the Company and its Subsidiaries as of the Closing Date.
IRS means the Internal Revenue Service.
Joint Ventures means Spartan Steel and Delaco.
Knowledge of the Company means the actual knowledge, after reasonable inquiry, of the officers and employees of the Company
listed in Schedule 9.01(a).
Knowledge of the Purchaser means the actual knowledge, after reasonable inquiry, of
the officers and employees of the Purchaser listed on Schedule 9.01(b).
Law means any United States federal,
state, local or foreign statute, law, ordinance, regulation, rule, code, order, other requirement or rule of law.
Leased Real
Property has the meaning ascribed to such term in Section 2.12(a).
Leases has the meaning
ascribed to such term in Section 2.12(a).
Lenders has the meaning ascribed to such term in
Section 3.10.
Liabilities means any and all debts, liabilities and obligations, whether accrued or fixed,
absolute or contingent, known or unknown, matured or unmatured or determined or determinable, including those arising under any Law, Action or Governmental Order and those arising under any Contract, arrangement or undertaking (but excluding any
future performance obligations under any such Contracts, arrangements or undertakings).
Licensed Intellectual Property
has the meaning ascribed to such term in Section 2.13(e).
54
Loss means any and all damages, Liabilities, Taxes, fines, fees, costs and
expenses (including reasonable attorneys fees).
Material Adverse Effect means any change, effect, event,
circumstance, condition, occurrence, state of facts or development that individually or in the aggregate, is materially adverse to the business, assets, financial condition or results of operations of the Company and its Subsidiaries, taken as a
whole; provided, however, that none of the following shall be deemed (either alone or in combination) to constitute, and none of the following shall be taken into account in determining whether there has been, a Material Adverse
Effect: (i) any adverse change attributable to the execution of this Agreement, the disclosure or consummation of the transactions contemplated by this Agreement, the taking of any action contemplated thereby or the identity of Purchaser, other
than with respect to any matters contemplated by Section 2.04(c), (ii) changes in, or effects arising from or relating to, general business or economic conditions affecting the industry in which the Company and its Subsidiaries
operate, (iii) changes in, or effects arising from or relating to, national or international political or social conditions, (iv) changes in, or effects arising from or relating to, financial, banking, or securities markets,
(v) changes in, or effects arising from or relating to changes in GAAP or Laws, (vi) changes or effects arising from or relating to any seasonal fluctuations in the business, (vii) any failure, in and of itself, of the Company and its
Subsidiaries to achieve any projections, forecasts, estimates, plans, predictions, performance metrics or operating statistics (but the event, circumstance or change underlying such failures shall not be excluded), or (vi) any action or
inaction by the Purchaser; provided, however, that any such adverse effect described in the preceding clauses (ii) through (vi) shall be excluded only to the extent that such adverse effect does not disproportionately
adversely affect the Company and its Subsidiaries, taken as a whole, relative to other Persons engaged in the industries in which the Company and its Subsidiaries operate.
Material Contracts has the meaning ascribed to such term in Section 2.16.
Material Customers has the meaning ascribed to such term in Section 2.17.
Material Improvements has the meaning ascribed to such term in Section 2.12(c).
Material Suppliers has the meaning ascribed to such term in Section 2.17.
Membership Interests has the meaning ascribed to such term in the recitals to this Agreement.
MSC has the meaning ascribed to such term in Section 3.08.
MSC Union Employees has the meaning ascribed to such term in Section 3.08.
Multiemployer Plan has the meaning ascribed to such term in Section 2.10(i).
Net Working Capital has the meaning ascribed to such term in Section 1.03(b)(ii).
Occurrence-Based Coverage has the meaning ascribed to such term in Section 4.11.
Official Party has the meaning ascribed to such term in Section 2.18.
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Organizational Documents means (a) the certificate or articles of
incorporation or charter documents and bylaws of each person that is a corporation, (b) the certificate of formation, articles of organization, limited liability company agreements or regulations, as applicable, of each person that is a limited
liability company, (c) the certificates of limited partnership and the agreements of limited partnership of each person that is a limited partnership, and (d) the memorandum and/or articles of association, charter, constitution,
shareholders agreement, business license or other documentation governing the formation, organization, governance, ownership and existence of any person organized under the Laws of a jurisdiction other than the United States, the District of
Columbia or any State of the United States.
Owned Intellectual Property has the meaning ascribed to such term in
Section 2.13(a).
Owned Real Property has the meaning ascribed to such term in Section 2.12(b).
Parent means Severstal US Holdings, LLC, a Delaware limited liability company.
Pass-Through Tax Return means any income Tax Return filed by or with respect to the Company or any of its Subsidiaries to
the extent that (i) the Company or any of its Subsidiaries is treated as a pass-through or disregarded entity for purposes of such Tax Return and (ii) the results of operations reflected on such Tax Returns are also reflected on the Tax
Returns of the Seller, the Parent or any direct or indirect owners of Seller or Parent.
Permit shall mean any permit,
license, franchise or authorization of any Governmental Authority.
Permitted Encumbrances means (a) Encumbrances
imposed by law such as carriers, warehousemans, mechanics, materialmens, landlords, laborers suppliers and vendors liens and other statutory liens incurred in the ordinary course of business securing
obligations which are not yet delinquent or the validity of which are being contested in good faith by appropriate actions; (b) Encumbrances that do not, individually or in the aggregate, materially impair or materially interfere with the
present use of the assets or otherwise materially impair present business operations at the properties; (c) Encumbrances for Taxes, assessments and other governmental charges (1) not yet delinquent or (2) the validity of which are
being contested in good faith by appropriate actions; (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business consistent with past practice; (e) all matters of record, reciprocal easement agreements and other encumbrances on title to real property that do not, and would not be reasonably expected to, materially detract
from the use or operation of the property subject thereto as currently used or operated by the Company or any Subsidiary; (f) all applicable zoning, entitlement, conservation restrictions, land use restrictions and other governmental rules and
regulations; (g) leases and subleases or other occupancy agreements to third party tenants; (h) the terms and conditions of the leases or other occupancy agreements pursuant to which the Company or any Subsidiary is a tenant or occupant;
(i) matters that would be disclosed by a current survey of the property; (j) existing utility, access and other easements and rights of way of record; (k) Encumbrances in connection with any Indebtedness disclosed on Schedule
2.16(h); (l) Encumbrances and other imperfections or defects in title that do not, individually or in the aggregate, have a material adverse effect on the value of the affected asset or the use or operation of the affected asset as
currently used or operated; and (m) Encumbrances identified in Schedule 9.01(c).
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Person means any individual, corporation, partnership, limited partnership,
joint venture, limited liability company, trust or unincorporated organization or Governmental Authority or any other entity.
Plans has the meaning ascribed to such term in Section 2.10.
Post-Closing Tax Period has the meaning ascribed to such term in Section 5.01(b).
Pre-Closing Date Event has the meaning ascribed to such term in Section 4.11.
Pre-Closing Tax Period has the meaning ascribed to such term in Section 5.01(a)(ii).
Privileged Communications has the meaning ascribed to such term in Section 4.16.
Protest Notice has the meaning ascribed to such term in Section 1.03(b)(iii).
Public International Organization shall have the meaning given to such term in the Foreign Corrupt Practices Act of 1977,
15 U.S.C. §§ 78dd-1, et seq.
Purchase Price Allocation has the meaning ascribed to such term in
Section 1.04(a).
Purchaser has the meaning ascribed to such term in the preamble of this Agreement.
Purchaser Indemnitees has the meaning ascribed to such term in Section 8.02(a).
Real Property means the Leased Real Property and the Owned Real Property.
Release means any release, spill, emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal, leaching
or migration into the indoor or outdoor environment (including, without limitation, ambient air, surface water, groundwater and surface or subsurface strata) or into or out of any property, including the movement of Hazardous Materials through or in
the air, soil, subsurface vapor, surface water, groundwater or property.
Representatives means the directors,
officers, employees, agents or advisors (including, without limitation, attorneys, accountants, consultants, bankers and financial advisors) of Seller and Purchaser and their Affiliates.
Required Information has the meaning ascribed to such term in Section 4.12(d).
RG Steel Liabilities means any Liability arising out of or resulting from the Settlement Agreement and Mutual Release,
dated the 18th day of June, 2014, by and between the Debtors (as defined therein) and The Renco Group, Inc., on the one hand, and Severstal US Holdings, LLC, Severstal US Holdings II, LLC, Severstal Dearborn, LLC, the Company, Seller, SNA Carbon,
LLC, and their subsidiaries and affiliates, and Mountain State Carbon, LLC, on the other hand, or any Losses arising out of or resulting from claims made by The Renco Group, Inc. or its affiliates (including RG Steel, LLC), or creditors or claimants
arising from the divestiture, ownership or operation of the businesses of Severstal Sparrows Point, LLC and its subsidiaries Severstal Warren, LLC and Severstal Wheeling, LLC.
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Securities Act means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
Seller has the meaning ascribed to such term in the preamble of this Agreement.
Seller Group has the meaning ascribed to such term in Section 4.16.
Seller Indemnitees has the meaning ascribed to such term in Section 8.02(b).
Seller Insurance Policies has the meaning ascribed to such term in Section 4.11.
Spartan Agreement has the meaning ascribed to such term in Section 2.03(e).
Spartan Steel has the meaning ascribed to such term in Section 2.03(e).
Spartan Steel Interests has the meaning ascribed to such term in Section 2.03(e).
Special Matters has the meaning ascribed to such term in Section 8.02(a).
Straddle Period has the meaning ascribed to such term in Section 5.01(a)(ii).
Subsidiaries means, as of the relevant date of determination, with respect to any Person, a corporation or other Person of
which 50% or more of the voting power of the outstanding voting equity securities or 50% or more of the outstanding economic equity interest is held, directly or indirectly, by such Person. Unless otherwise qualified, or the context otherwise
requires, all references to a Subsidiary or to Subsidiaries in this Agreement shall refer to a Subsidiary or Subsidiaries of the Company.
Tax Claim has the meaning ascribed to such term in Section 5.06.
Tax Return means any report, return, document, declaration or other information or filing filed or required to be filed
with any Taxing Authority or jurisdiction (foreign or domestic) with respect to Taxes.
Taxes means (i) any and
all taxes, fees, levies or other assessments, including, without limitation, Federal, state, local, or foreign income, gross receipts, excise, real or personal property, sales, escheat, unclaimed property, withholding, social security, occupation,
use, service, service use, value added, license, net worth, payroll, franchise or similar taxes, imposed by any Taxing Authority; and (ii) any interest, penalties or additions to tax and additional amounts imposed with respect to any amount
described in clause (i).
Taxing Authority means any agency or political subdivision of any federal, foreign, state,
local or municipal government entity with the authority to impose any Tax.
Third Party Claim has the meaning ascribed
to such term in Section 8.03(a).
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Transfer Taxes has the meaning ascribed to such term in
Section 5.07.
Union Employees has the meaning ascribed to such term in Section 3.08.
Unit of Membership Interests has the meaning ascribed to such term in the Company Operating Agreement.
USW has the meaning ascribed to such term in Section 3.08.
WARN Act means the Worker Adjustment and Retraining Notification Act of 1988, as amended.
ARTICLE X
MISCELLANEOUS
10.01 Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors
and assigns. No assignment shall be made by any party without the prior written consent of the other parties hereto; provided, however, that any party may, at any time prior to the Closing, assign its rights and obligations under this
Agreement without such consent to an Affiliate of such party if such assignee delivers an instrument in writing confirming that it is bound by and shall perform all of the obligations of the assigning party under this Agreement as if it were an
original signatory and provided further that the assigning party shall not be relieved of its obligations hereunder. In the event of an assignment as contemplated above, any reference in this Agreement to the assigning party shall be
deemed to either (x) include the assignee or (y) in the case of a substitution as contemplated by the foregoing sentence, be a reference to the assignee. Any purported assignment in contravention of this Section 10.01 shall be
null and void.
10.02 Public Announcements. No party hereto shall issue or make any public announcement, press release or other
public disclosure regarding this Agreement or its subject matter without Sellers prior written consent, in the case of any proposed disclosure by Purchaser or the Company, or without Purchasers prior written consent, in the case of any
proposed disclosure by Seller, except for any such disclosure that is, in the opinion of the disclosing partys counsel, required by applicable Law or the rules of any applicable stock exchange. In the event a party is, in the opinion of its
counsel, required to make a public disclosure by applicable Law or the rules of any applicable stock exchange, such party shall, to the extent practicable, submit the proposed disclosure in writing to Seller, in the case of any proposed disclosure
by Purchaser, or the Purchaser, in the case of any proposed disclosure by Seller, prior to the date of disclosure and provide Seller or Purchaser, as applicable, a reasonable opportunity to comment thereon.
10.03 Expenses. Whether or not the transactions contemplated hereby are consummated, and except as otherwise specified herein, each
party shall bear its own expenses with respect to the transactions contemplated by this Agreement.
10.04 Amendment. This Agreement
may be amended by the parties hereto at any time. This Agreement may not be amended except by an instrument in writing signed by the Purchaser, the Company and the Seller; provided, however, that no amendment to this Agreement that
would adversely affect the rights of the Financing Sources (including the Lenders) under Sections 10.06, 10.08 and 10.09 or this Section 10.04 shall be made without their consent.
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10.05 Severability. If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future Laws effective during the term hereof in a final judgment of a court of competent jurisdiction, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement, a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
10.06 No Third Party Beneficiaries. Except as set forth in Section 4.07, this Agreement
is for the sole benefit of the parties hereto and their permitted assigns and nothing herein, express or implied (including Article VIII), shall give or be construed to give to any Person, other than the parties hereto and such permitted
assigns, any legal or equitable rights hereunder; provided, however, that the Financing Sources (including the Lenders under the Commitment Letter) shall be third party beneficiaries of, and shall be entitled to enforce, the provisions
of Sections 10.04, 10.08 and 10.09.
10.07 Waiver. The failure of any party to enforce any condition or part of
this Agreement at any time shall not be construed as a waiver of that condition or part, nor shall it forfeit any rights to future enforcement thereof. Any waiver hereunder shall be effective only if delivered to the other parties hereto in writing
by the party making such waiver.
10.08 Governing Law. This Agreement, and any claim, controversy or disputes arising under or
related in any way to this Agreement shall be construed and enforced in accordance with and governed by the internal, substantive Laws of the State of Delaware applicable to agreements entered into and to be performed solely within such state
without regard to the conflicts of Laws provisions thereof. Notwithstanding the foregoing, any claim, controversy or dispute arising under or related in any way to the Financing (including the Commitment Letter) shall be governed by, and construed
in accordance with, the laws of the State of New York, without regard to the conflicts of law rules of such State that would result in the application of the laws of any other State.
10.09 Arbitration and Jurisdiction.
(a) The parties hereto agree that any dispute, controversy or claim arising out of or relating to this Agreement, including any question
regarding its existence or the breach, termination or invalidity thereof shall be finally settled by arbitration under the auspices of and pursuant to the Rules of Arbitration of the International Chamber of Commerce (ICC) in
effect at the time of execution of this Agreement. The language of the arbitration proceedings shall be English, and the seat of the arbitration shall be New York, New York. The arbitration proceedings shall be conducted by three arbitrators
appointed in accordance with the Rules of Arbitration of the ICC. Notwithstanding the foregoing, neither party shall be precluded at any
60
time from seeking equitable relief in any forum of competent jurisdiction, and such action shall not be incompatible with the agreement to arbitrate contained herein or the availability of
interim measures of protection under the ICC Rules of Arbitration. Any award rendered by an arbitral tribunal shall be reasoned and in writing, final, and may be entered and enforced in any court of competent jurisdiction. All matters and
information relating to the arbitration proceedings, including the existence thereof, shall be deemed confidential. Confidentiality shall survive the termination of the arbitral proceedings. The parties shall, during the course of such arbitration,
share the costs of such arbitration as assessed by the ICC. A final award issued by the arbitral tribunal may allocate the costs of the arbitration proceedings, including administration fees, fees of the arbitrators, and the parties
attorneys fees and expenses among the parties as the tribunal deems appropriate. During the period when the dispute is being resolved, except for the matters being disputed, the parties shall in all other respects continue to perform their
obligations hereunder.
(b) Notwithstanding anything in this Agreement to the contrary, each of the parties further acknowledges and agrees
that (i) the Financing Sources (including the Lenders) shall not be subject to clause (a) above and (ii) it will not bring or support any Action, claim, cross-claim or third-party claim of any kind or description, whether in law or in
equity, whether in contract or in tort or otherwise, against the Financing Sources (including the Lenders) in any way relating to this Agreement or any of the transactions contemplated by this Agreement, including but not limited to any dispute
arising out of or relating in any way to the Financing Sources (including the Commitment Letter) or the performance thereof, in any forum other than the Supreme Court of the State of New York, County of New York, or, if under applicable law
exclusive jurisdiction is vested in the Federal courts, the United States District Court for the Southern District of New York sitting in the Borough of Manhattan (and appellate courts thereof). Notwithstanding anything in this Agreement to the
contrary, none of the Financing Sources (including the Lenders) will have any liability to the Company or its Affiliates relating to or arising out of this Agreement, the Financing (including the Commitment Letter) or otherwise, whether at law, or
equity, in contract, in tort or otherwise, and neither the Company nor any of its Affiliates will have any rights or claims against any of the Financing Sources hereunder or thereunder. In no event shall the Company be entitled to seek the remedy of
specific performance of this Agreement against the Financing Sources.
(c) EACH OF THE PARTIES HERETO WAIVES TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (INCLUDING
AGAINST THE FINANCING SOURCES). EACH OF THE PARTIES HERETO HEREBY: (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER; AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTION 10.09(c).
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10.10 Specific Performance. The parties acknowledge that, in view of the uniqueness of the
transactions contemplated by this Agreement, each party would not have an adequate remedy at Law for money damages in the event that this Agreement has not been performed in accordance with its terms, and therefore agrees that the other parties
shall be entitled to specific enforcement of the terms hereof in addition to any other remedy to which it may be entitled (in accordance with Section 10.09), at Law or in equity.
10.11 Headings. The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not be deemed
to constitute a part hereof.
10.12 Counterparts. The parties may execute this Agreement in one or more counterparts, and each fully
executed counterpart shall be deemed an original. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or by electronic delivery in portable document format or other electronic format will be effective as delivery
of a manually executed counterpart of this Agreement
10.13 Notices. All communications, notices and consents provided for herein
shall be in writing and be given in person or by means of telex, facsimile or other means of wire transmission (with request for assurance of receipt in a manner typical with respect to communications of that type), by overnight courier or by mail,
and shall become effective: (a) on delivery if given in person; (b) on the date of transmission if sent by telex, facsimile or other means of wire transmission; (c) one (1) Business Day after delivery to the overnight service; or
(d) four (4) Business Days after being mailed, with proper postage and documentation, for first-class registered or certified mail, prepaid. Notices shall be addressed as follows:
If to Purchaser, to:
AK Steel
Corporation
9227 Centre Pointe Drive
West Chester, Ohio 45069
Facsimile No.: (513) 425-5607
Attn: Roger K. Newport
Joseph
C. Alter
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New
York 10024
Facsimile No.: (212) 310-8007
Attn: Raymond O. Gietz
If to
Seller or the Company, to:
c/o Severstal US Holdings, LLC
14661 Rotunda Drive
Dearborn,
Michigan 48120
Facsimile: 313-337-0152
Attention: Martin Szymanski
62
with copies to:
OAO Severstal
Klara Tsetkin Str,
2
Moscow, Russia 127299
Facsimile No.: +7 495-789-87-30
Attn: Vladimir Lukin
Dmitry
Fedotov
and
Skadden, Arps,
Slate, Meagher & Flom LLP
155 North Wacker Drive
Chicago, Illinois 60606-1720
Facsimile No.: 312/407-0411
Attn: Gary P. Cullen
Shilpi
Gupta
provided, however, that if any party shall have designated a different address by notice to the others, then to the last address so
designated.
10.14 Construction. The language in all parts of this Agreement shall be construed, in all cases, according to its fair
meaning. The parties acknowledge that each party and its counsel have reviewed and revised this Agreement and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement. Words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other gender as the context requires. The terms hereof,
herein, and herewith and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules hereto) and not to any particular provision of this
Agreement. Article, Section and Schedule references are to the Articles, Sections, and Schedules to this Agreement unless otherwise specified. Unless otherwise stated, all references to any agreement shall be deemed to include the exhibits,
schedules and annexes to such agreement. The word including and words of similar import when used in this Agreement shall mean including, without limitation, unless the context otherwise requires or unless otherwise
specified. The word or shall not be exclusive. Unless otherwise specified in a particular case, the word days refers to calendar days. References herein to this Agreement shall be deemed to refer to this Agreement as of the
date of such agreement and as it may be amended thereafter, unless otherwise specified. All references to dollars or $ shall be deemed references to the lawful money of the United States of America. Unless otherwise expressly
provided herein, any agreement or instrument defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement or instrument as from time to time amended, modified or supplemented, including by waiver or
consent. Unless otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered hereunder shall be prepared, in
accordance with GAAP.
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10.15 Notification of Certain Matters. Prior to the Closing, each party shall give prompt
notice to the other party upon becoming aware of (i) any notices, complaints, investigations or hearings (or communications indicating that the same may be contemplated) of any Governmental Authorities with respect to the transactions
contemplated by this Agreement, (ii) any written notices or other written communications from any third Persons alleging that the consent of such Person is or may be required with respect to the transactions contemplated by this Agreement,
(iii) the institution of any material Action involving such party or any of its Affiliates relating to the transactions contemplated by this Agreement.
10.16 Entire Agreement. This Agreement (including the Disclosure Schedules and Annexes referred to herein), the Guaranty and the
Confidentiality Agreement constitute the entire agreement among the parties and supersedes any prior understanding, agreements, or representations by or among the parties, written or oral to the extent they relate in any way to the subject matter
hereof.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their duly authorized representatives as of the date first written above.
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SEVERSTAL COLUMBUS HOLDINGS, LLC |
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By: |
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/s/ Martin Szymanski |
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Name: Martin Szymanski |
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Title: Vice President |
[Membership Interest Purchase Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their duly authorized representatives as of the date first written above.
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SEVERSTAL DEARBORN, LLC |
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By: |
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/s/ Martin Szymanski |
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Name: Martin Szymanski |
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Title: Vice President |
[Membership Interest Purchase Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their duly authorized representatives as of the date first written above.
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AK STEEL CORPORATION |
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By: |
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/s/ James L. Wainscott |
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Name: |
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James L. Wainscott |
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Title: |
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Chairman, President and Chief Executive Officer |
[Membership Interest Purchase Agreement]
Exhibit 10.1
EXECUTION VERSION
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CREDIT SUISSE SECURITIES (USA) LLC
Eleven Madison Avenue New York, NY
10010 |
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CREDIT SUISSE AG
Eleven Madison Avenue New York, NY
10010 |
CONFIDENTIAL
July 19, 2014
AK Steel Holding Corporation
AK Steel Corporation
9227 Centre Pointe Drive
West Chester, Ohio 45069
Attention: Roger K. Newport
PROJECT 711
$730,000,000 Senior Unsecured Bridge Facility
Commitment Letter
Ladies and Gentlemen:
AK Steel Corporation (the Borrower) and AK Steel Holding Corporation (Holdings and,
together with the Borrower, you) have advised Credit Suisse AG (acting through such of its affiliates or branches as it deems appropriate, CS) and Credit Suisse Securities (USA) LLC (CS
Securities and, together with CS and their respective affiliates, Credit Suisse, we or us) that you intend to acquire (the
Acquisition) all of the units of membership interests of Severstal Dearborn, LLC, a Delaware limited liability company (the Company) from Severstal Columbus Holdings, LLC, a Delaware limited
liability company (the Seller) pursuant to that certain Membership Interest Purchase Agreement, dated July 18, 2014, among the Seller, Severstal US Holdings LLC, the Company and the Borrower (the
Acquisition Agreement), and in connection therewith pay fees and expenses incurred in connection with the Transactions (as defined below) (the Transaction Costs). You have further advised us that,
in connection therewith, Holdings or the Borrower will (i) seek to issue senior unsecured notes (the Notes) and shares of Holdings common stock (the Stock) generating aggregate proceeds
of $730,000,000 and (ii) to the extent the Borrower is unable to issue the Notes and/or the Stock on or prior to the Closing Date, borrow up to $730,000,000 in aggregate principal amount of senior unsecured loans under the senior unsecured
credit facility (the Facility) described in the Summary of Principal Terms and Conditions attached hereto as Exhibit A (the Term Sheet), as such amount may be reduced in accordance with
Mandatory Prepayments and Commitment Reductions. The foregoing transactions described in this paragraph are collectively referred to herein as the Transactions. Capitalized terms used but not defined herein have
the meaning assigned to such terms in the Term Sheet.
Commitment Letter
1. Commitments.
In connection with the foregoing, CS (in such capacity, the Initial Bridge Lender) is pleased to advise you of its
commitment to provide the entire principal amount of the Facility, upon the terms and subject to the conditions set forth in this commitment letter (including the Term Sheet and other attachments hereto, this Commitment
Letter); provided that the amount of the Facility and the aggregate commitments with respect thereto shall be automatically reduced at any time on or after the date hereof as set forth in the section titled Mandatory
Prepayments and Commitment Reductions in the Term Sheet.
2. Titles and Roles.
You hereby appoint (a) CS Securities to act, and CS Securities hereby agrees to act, as bookrunner and lead arranger for the Facility, and
(b) CS to act, and CS hereby agrees to act, as sole administrative agent for the Facility upon the terms and subject to the conditions set forth in this Commitment Letter. Each of CS Securities and CS, in such capacities, will perform the
duties and exercise the authority customarily performed and exercised by it in such roles.
You shall have the right (the
Designation Right), on or prior to the date that is 10 days after the date of this Commitment Letter, to appoint up to two additional lead arrangers and bookrunners and an unlimited number of additional managers, agents and
co-agents, and to confer other titles in respect of the Facility (any such agent, co-agent, co-arranger, manager or holder of another title, an Additional Committing Lender), in each case in a manner and with economics
determined by you; provided that (a) each Additional Committing Lender will assume a portion of the commitments of the Facility that is equal to the proportion of the applicable economics allocated to such Additional Committing Lender
(and the commitments of the Initial Bridge Lender with respect to such portion of the Facility will be reduced), (b) CS shall be entitled to no less than 60% of the economics of the Facility and (c) the economics allocated to each
Additional Committing Lender in respect of its commitment shall not exceed its percentage of the commitments hereunder.
CS Securities
will appear on the top left of the cover page of all marketing materials for the Facility and will hold the roles and responsibilities conventionally understood to be associated with such name placement. Except as set forth above, no other agents, co-agents, lead arrangers, co-arrangers, bookrunners, managers or co-managers will be appointed, no other titles will be awarded and no
compensation (other than that expressly contemplated by this Commitment Letter and the Fee Letters referred to below) will be paid in connection with the Facility unless you and we shall so agree.
3. Syndication.
CS Securities reserves
the right prior to and/or after the execution of definitive documentation for the Facility, to syndicate all or a portion of CSs commitment with respect to the Facility to a group of banks, financial institutions and other institutional
lenders (together with CS and the Additional Committing Lenders, the Lenders) identified by us in consultation with you, and you agree to provide CS Securities with a period of at least 10 consecutive business days
following receipt by CS Securities (which receipt CS Securities shall immediately acknowledge to the Borrower) of the information reasonably requested by CS Securities (on or prior to the date hereof) from the Borrower in order for CS Securities to
prepare the Information Materials (as defined below) to syndicate the Facility (provided that such period shall either (i) be completed, and the Closing Date shall have occurred, on or prior to August 15, 2014, (ii) commence on
or after September 2, 2014 and be completed, and the Closing Date shall have occurred, on or prior to November 21, 2014, (iii) commence on or after December 1, 2014 and be completed, and the Closing Date shall have occurred, on
or prior to December 19, 2014 or (iv) commence on or after January 5, 2015). We intend to commence syndication efforts promptly upon the execution of
Commitment Letter
2
this Commitment Letter, and you agree to actively assist us in completing a syndication that is reasonably satisfactory to us and you until the earliest of (x) the termination of the
syndication as determined by CS Securities, (y) the consummation of a Successful Syndication (as defined in the Facility Fee Letter), and (z) 60 days after the Closing Date (such period, the Syndication Period).
Such assistance shall include (a) your using commercially reasonable efforts to ensure that any syndication efforts benefit materially from your existing lending and investment banking relationships and the existing lending and investment
banking relationships of the Company, (b) direct contact between senior management, representatives and advisors of you (and, to the extent consistent with the Acquisition Agreement, your using commercially reasonable efforts to cause direct
contact between senior management, representatives and advisors of the Company) and the proposed Lenders at mutually agreed upon times and locations, (c) assistance by you (and, to the extent consistent with the Acquisition Agreement, your
using commercially reasonable efforts to cause the Company to assist) in the preparation of a Confidential Information Memorandum for the Facility and other customary marketing materials and presentations to be used in connection with the
syndication (the Information Materials), (d) your providing or causing to be provided a reasonably detailed business plan or projections of Holdings and its subsidiaries for the years 2014 through 2020 and for the
seven quarters beginning with the second quarter of 2014, in each case in form and substance satisfactory to CS Securities, (e) your ensuring (or, in the case of the Company and its subsidiaries, your using commercially reasonable efforts to
ensure that), during the Syndication Period, there shall be no other issues of debt securities or commercial bank or other credit facilities of Holdings, the Company or their respective subsidiaries being announced, offered, placed or arranged
(other than (i) the Notes, (ii) indebtedness permitted to be incurred under the Acquisition Agreement, (iii) any industrial revenue bonds, (iv) any mortgage, capitalized leases or purchase money financings, (v) any credit
extensions and commitments under the Existing Credit Agreement (including any amendment, restatement, modification, replacement or other refinancing thereof (provided, that any syndication thereof shall be in consultation with CS Securities)
that results in an increase to the commitments and outstanding loans thereunder by an aggregate principal amount not to exceed $600,000,000), (vi) any other revolving credit indebtedness incurred in the ordinary course of business of the
Company or Holdings and its subsidiaries for capital expenditures and working capital purposes and (vii) other indebtedness approved by CS Securities (collectively, the Clear Markets Permitted Debt)) without the prior
written consent of CS Securities, if such issuance, offering, placement or arrangement could reasonably be expected to impair the primary syndication of the Facility, (f) using your commercially reasonable efforts to procure prior to the launch
of the syndication a public corporate credit rating from Standard & Poors Ratings Service (S&P) and a public corporate family rating from Moodys Investors Service, Inc.
(Moodys), in each case with respect to the Borrower (but no specific rating in either case), and public ratings for each of the Facility (if requested by the Lenders or us) and the Notes (but no specific rating) from
each of S&P and Moodys and (g) the hosting, with CS Securities, of a reasonable number of meetings of prospective Lenders at mutually agreed upon times and locations. Notwithstanding CS Securities right to syndicate the Facility
and receive commitments in respect thereof, but without limiting your obligation to assist with the syndication efforts as set forth herein (but subject to the provisions of Section 2 above), (i) CS shall not be relieved, released or
novated from its obligations hereunder (including its commitments hereunder) in connection with any syndication, assignment or participation of the Facility, including its commitments in respect thereof, until after the funding of the Facility on
the Closing Date has occurred, (ii) no assignment or novation shall become effective (as between you and us) with respect to all or any portion of CSs commitment in respect of the Facility until the funding on the Closing Date and
(iii) CSs commitments hereunder are not conditioned upon the Borrowers compliance with the foregoing or the commencement, conduct or completion of the syndication of the Facility or the completion of a Successful Syndication.
Commitment Letter
3
You agree, at the reasonable request of CS Securities, to assist in the preparation of a version of the
Information Materials to be used in connection with the syndication of the Facility, consisting exclusively of information and documentation that is either (a) publicly available (or contained in the prospectus or other offering memorandum for
the Notes) or (b) not material with respect to Holdings, the Company or their respective subsidiaries or any of their respective securities for purposes of foreign, United States Federal and state securities laws (all such Information Materials
being Public Lender Information). Any information and documentation that is not Public Lender Information is referred to herein as Private Lender Information. Before distribution of any Information
Materials, you agree to execute and deliver to CS Securities, (i) a customary letter in which you authorize distribution of the Information Materials to Lenders employees willing to receive Private Lender Information and (ii) a
separate customary letter in which you authorize distribution of Information Materials containing solely Public Lender Information and represent that such Information Materials do not contain any Private Lender Information, which letter shall in
each case include a customary 10b-5 representation. You further agree that each document to be disseminated by CS Securities to any Lender in connection with the Facility will, at the reasonable request of CS Securities, be identified by
you as either (A) containing Private Lender Information or (B) containing solely Public Lender Information. You acknowledge that the following documents contain solely Public Lender Information (unless you notify us promptly prior to their
intended distribution that any such document contains Private Lender Information): (1) drafts and final definitive documentation with respect to the Facility, including term sheets; (2) administrative materials prepared by Credit Suisse
for prospective Lenders (such as a lender meeting invitation, bank allocation, if any, and funding and closing memoranda); (3) notification of changes in the terms of the Facility; and (4) other materials (excluding the Projections (as
defined below)) intended for prospective Lenders after the initial distribution of Information Materials.
CS Securities will manage all
aspects of any syndication in consultation with you, including decisions as to the selection of institutions to be approached and when they will be approached, when their commitments will be accepted, which institutions will participate, the
allocation of the commitments among the Lenders, any naming rights and the amount and distribution of fees among the Lenders. To assist CS Securities in its syndication efforts, you agree promptly to prepare and provide (and to use commercially
reasonable efforts to cause the Company promptly to provide) to CS Securities all information with respect to Holdings, the Company and their respective subsidiaries, the Transactions and the other transactions contemplated hereby, including all
financial information, projections and other forward-looking information (collectively, the Projections), as CS Securities may reasonably request.
4. Information.
You hereby represent and
warrant (with respect to written factual information relating to the Company and its subsidiaries, to your actual knowledge) that (a) all written factual information other than the Projections and information of a general economic or industry
nature (the Information) that has been or will be made available to Credit Suisse by or on behalf of you or any of your representatives is or will be, when furnished and when taken as a whole, correct in all material
respects and does not or will not, when furnished and when taken as a whole, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in
light of the circumstances under which such statements are made and (b) the Projections that have been or will be made available to Credit Suisse by or on behalf of you or any of your representatives have been or will be prepared in good faith
based upon assumptions that are reasonable at the time made and at the time the related Projections are made available to Credit Suisse (it being
Commitment Letter
4
understood that such Projections are as to future events and are not to be viewed as facts and are subject to significant uncertainties and contingencies and that no assurance can be given that
any particular Projections will be realized). You agree that if at any time prior to the later of (i) the Closing Date and (ii) the last day of the Syndication Period, any of the representations in the preceding sentence would be incorrect
(to your actual knowledge with respect to Information and Projections relating to the Company and its subsidiaries), in any material respects if the Information and Projections were being furnished, and such representations were being made, at such
time, then you will promptly supplement the Information and the Projections so that such representations will be correct in all material respects under those circumstances. In arranging and syndicating the Facility, we will be entitled to use and
rely primarily on the Information and the Projections without responsibility for independent verification thereof.
5. Fees.
As consideration for CSs commitment hereunder, and our agreements to perform the services described herein, you agree to pay to CS
Securities and CS the fees set forth in this Commitment Letter, the Fee Letter dated the date hereof and delivered herewith with respect to the Facility (the Facility Fee Letter) and the Agent Fee Letter dated the date
hereof and delivered herewith with respect to the Facility (the Agent Fee Letter and, together with the Facility Fee Letter, the Fee Letters).
6. Conditions Precedent.
CSs
commitment hereunder, and our agreements to perform the services described herein, are subject solely to (a) there shall not have occurred any event, change or condition since December 31, 2013 that has had, or could reasonably be expected
to have, a Company Material Adverse Effect (as defined below), (b) the execution and delivery of definitive documentation with respect to the Facility on the terms set forth in the Term Sheet, and (c) the conditions set forth or referred
to in Exhibit B hereto. For purposes hereof, Company Material Adverse Effect means any change, effect, event, circumstance, condition, occurrence, state of facts or development that individually or in the aggregate, is
materially adverse to the business, assets, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole; provided, however, that none of the following shall be deemed (either alone or in
combination) to constitute, and none of the following shall be taken into account in determining whether there has been, a Company Material Adverse Effect: (i) any adverse change attributable to the execution of the Acquisition Agreement, the
disclosure or consummation of the transactions contemplated by the Acquisition Agreement, the taking of any action contemplated thereby or the identity of Holdings, other than with respect to any matters contemplated by Section 2.04(c) of the
Acquisition Agreement, (ii) changes in, or effects arising from or relating to, general business or economic conditions affecting the industry in which the Company and its Subsidiaries operate, (iii) changes in, or effects arising from or
relating to, national or international political or social conditions, (iv) changes in, or effects arising from or relating to, financial, banking, or securities markets, (v) changes in, or effects arising from or relating to changes in
GAAP or Laws, (vi) changes or effects arising from or relating to any seasonal fluctuations in the business, (vii) any failure, in and of itself, of the Company and its Subsidiaries to achieve any projections, forecasts, estimates, plans,
predictions, performance metrics or operating statistics (but the event, circumstance or change underlying such failures shall not be excluded), or (vi) any action or inaction by Holdings; provided, however, that any such adverse
effect described in the preceding clauses (ii) through (vi) shall be excluded only to the extent that such adverse effect does not disproportionately adversely affect the Company and its Subsidiaries, taken as a whole, relative to other
Persons engaged in the industries in which the Company and its Subsidiaries operate. Capitalized terms in the definition of Company Material Adverse Effect and not defined herein have the meanings assigned to them in the Acquisition Agreement. There
shall be no conditions to closing and funding other than those expressly referred to in this Section 6.
Commitment Letter
5
Notwithstanding anything in this Commitment Letter (including each of the exhibits hereto), the
Fee Letters or the definitive documentation or any other agreement or undertaking related to the Facility to the contrary, (a) the only representations the accuracy of which shall be a condition to the availability of the Facility on the
Closing Date shall be (i) such of the representations made by or on behalf of the Company and its subsidiaries in the Acquisition Agreement as are material to the interests of the Lenders, but only to the extent that you have (or an affiliate
of yours has) the right to terminate (or decline to perform) your (or its) obligations under the Acquisition Agreement as a result of a breach of such representations in the Acquisition Agreement (the Acquisition Agreement
Representations) and (ii) the Specified Representations (as defined below) and (b) the terms of the definitive documentation for the Facility shall be in a form such that they do not impair the availability of the Facility on
the Closing Date if the conditions set forth in this Section 6 are satisfied. For purposes hereof, Specified Representations means the representations and warranties set forth in the Term Sheet relating to corporate
existence, power and authority, due authorization, execution and delivery, in each case as they relate to the entering into and performance by the Borrower of the definitive documentation for the Facility, the enforceability of such documentation,
Federal Reserve margin regulations, the PATRIOT Act, laws applicable to sanctioned persons, the Foreign Corrupt Practices Act, the Investment Company Act, no conflicts between the definitive documentation for the Facility and the organization
documents of the Loan Parties, any agreement governing indebtedness of the Borrower in an aggregate principal amount greater than $50,000,000 (including the Amended and Restated Loan and Security Agreement, dated as of March 17, 2014, among the
Borrower, Bank of America, N.A., as agent, and the other parties thereto (the Existing Credit Agreement), the Notes (if any) and the Existing Notes) or applicable material law, status of the Facility and the guarantees
thereof as senior debt and solvency as of the Closing Date.
Each of the parties hereto agrees that this Commitment Letter is a binding
and enforceable agreement with respect to the subject matter contained herein, including an agreement to negotiate in good faith the Loan Documents by the parties hereto in a manner consistent with this Commitment Letter, it being understood and
agreed that the commitments provided hereunder and the funding of the Facility on the Closing Date are subject solely to the conditions precedent set forth in this Section 6 and in Exhibit B to this Commitment Letter. The parties hereto agree
to use good faith efforts to negotiate and finalize the Loan Documents reasonably in advance of the anticipated Closing Date and (if requested by the Borrower) to execute the Loan Documents by the anticipated Closing Date.
7. Indemnification; Expenses.
You agree
(a) to indemnify and hold harmless Credit Suisse and its officers, directors, employees, agents, advisors, representatives, controlling persons, members and successors and assigns (each, an Indemnified Person) from and
against any and all losses, claims, damages, liabilities and reasonable and documented out-of-pocket expenses, joint or several, to which any such Indemnified Person may become subject arising out of or in connection with this Commitment Letter, the
Fee Letters, the Transactions, the Facility or any related transaction or any claim, litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any such Indemnified Person is a party thereto (and regardless of
whether such matter is initiated by a third party or by Holdings, the Company or any of their respective affiliates or
Commitment Letter
6
equity holders), and to reimburse each such Indemnified Person promptly following written request therefor for any reasonable and documented out-of-pocket legal or other expenses incurred in
connection with investigating or defending any of the foregoing (limited, in the case of legal fees and expenses, to one firm of primary counsel to such Indemnified Persons taken as a whole (and, in the case of any conflict of interest, one firm of
additional counsel to each similarly affected group of Indemnified Persons, taken as a whole), one firm of special counsel for each applicable jurisdiction and one firm of local counsel in each applicable jurisdiction (and, in the case of any
conflict of interest, one firm of additional local counsel to each similarly affected group of Indemnified Persons, taken as a whole)); provided that the foregoing indemnity will not, as to any Indemnified Person, apply to losses, claims,
damages, liabilities or expenses to the extent (i) they are found in a final, non-appealable judgment of a court of competent jurisdiction to have resulted from the bad faith, willful misconduct or gross negligence of such Indemnified Person or
its controlled affiliates, controlling persons, directors, officers or employees, or, in the case of persons acting at such Indemnified Persons direction, its advisors, agents or representatives (each, a Related
Person), or such Indemnified Persons or Related Partys material breach of this Commitment Letter without the fault of you or your affiliates or (ii) they arise out of any dispute solely among Indemnified Persons (other
than (x) claims against Credit Suisse in its capacity as administrative agent or lead arranger under the Facility and (y) claims arising out of any act or omission on the part of you or your affiliates), (b) to reimburse Credit Suisse
from time to time, upon presentation of a summary statement, for all reasonable and documented out-of-pocket expenses (including, but not limited to, expenses of Credit Suisses due diligence investigation, consultants fees, syndication
expenses, travel expenses and fees, and disbursements and other charges of counsel) (limited, in the case of legal fees and expenses, to one firm of primary counsel to such Indemnified Persons taken as a whole (and, in the case of any conflict of
interest, one firm of additional counsel to each similarly affected group of Indemnified Persons, taken as a whole), one firm of special counsel for each applicable jurisdiction and one firm of local counsel in each applicable jurisdiction (and, in
the case of any conflict of interest, one firm of additional local counsel to each similarly affected group of Indemnified Persons, taken as a whole)), incurred in connection with the Facility and the preparation and negotiation of this Commitment
Letter, the Fee Letters, the definitive documentation for the Facility and any ancillary documents and security arrangements in connection therewith and (c) to reimburse Credit Suisse from time to time, upon presentation of a summary statement,
for all reasonable and documented out-of-pocket expenses (including, but not limited to, consultants fees, travel expenses and fees, and disbursements and other charges of counsel (limited, in the case of legal fees and expenses, to one firm
of primary counsel to such Indemnified Persons taken as a whole (and, in the case of any conflict of interest, one firm of additional counsel to each similarly affected group of Indemnified Persons, taken as a whole), one firm of special counsel for
each applicable jurisdiction and one firm of local counsel in each applicable jurisdiction (and, in the case of any conflict of interest, one firm of additional local counsel to each similarly affected group of Indemnified Persons, taken as a
whole)), incurred in connection with the enforcement of this Commitment Letter, the Fee Letters, the definitive documentation for the Facility and any ancillary documents and security agreements in connection therewith. You agree that,
notwithstanding any other provision of this Commitment Letter, no Indemnified Person shall have any liability (whether direct or indirect, in contract or tort or otherwise) to you or your subsidiaries or affiliates or to your or their respective
equity holders or creditors or any other person arising out of, related to or in connection with any aspect of the Transaction, except to the extent of direct, as opposed to special, indirect, consequential or punitive, damages determined in a
final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Persons or its Related Partys bad faith, gross negligence or willful misconduct or from such Indemnified Persons or Related
Partys material breach of this Commitment Letter without the fault of you or your affiliates.
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7
8. Sharing Information; Absence of Fiduciary Relationship; Affiliate Activities.
You acknowledge that Credit Suisse may be providing debt financing, equity capital or other services (including financial advisory services) to
other companies in respect of which you may have conflicting interests regarding the transactions described herein or otherwise; provided, that Credit Suisse shall not arrange or provide (or contemplate to arrange or provide) any form of
acquisition financing to other potential purchasers of the Company at any time prior to the abandonment by you of your proposed acquisition of the Company or the termination of the Acquisition Agreement). Consistent with Credit Suisses policy
to hold in confidence the affairs of its customers, Credit Suisse will not furnish confidential information obtained from you by virtue of the transactions contemplated by this Commitment Letter or our other relationships with you to other
companies. You also acknowledge that we do not have any obligation to use in connection with the transactions contemplated by this Commitment Letter, or to furnish to you, confidential information obtained by us from other companies.
You further acknowledge and agree that (a) no fiduciary, advisory or agency relationship between you and Credit Suisse is intended to be
or has been created in respect of any of the transactions contemplated by this Commitment Letter, irrespective of whether Credit Suisse has advised or is advising you on other matters, (b) Credit Suisse, on the one hand, and you, on the other
hand, have an arms-length business relationship that does not directly or indirectly give rise to, nor do you rely on, any fiduciary duty on the part of Credit Suisse, (c) you are capable of evaluating and understanding, and you
understand and accept, the terms, risks and conditions of the transactions contemplated by this Commitment Letter, (d) you have been advised that Credit Suisse is engaged in a broad range of transactions that may involve interests that differ
from your interests and that Credit Suisse has no obligation to disclose such interests and transactions to you by virtue of any fiduciary, advisory or agency relationship and (e) you waive, to the fullest extent permitted by law, any claims
you may have against Credit Suisse for breach of fiduciary duty or alleged breach of fiduciary duty and agree that Credit Suisse shall have no liability (whether direct or indirect) to you in respect of such a fiduciary duty claim or to any person
asserting a fiduciary duty claim on behalf of or in right of you, including your equity holders, employees or creditors. Additionally, you acknowledge and agree that Credit Suisse is not advising you as to any legal, tax, investment, accounting or
regulatory matters in any jurisdiction (including, without limitation, with respect to any consents needed in connection with the transactions contemplated hereby). You shall consult with your own advisors concerning such matters and shall be
responsible for making your own independent investigation and appraisal of the transactions contemplated hereby (including, without limitation, with respect to any consents needed in connection therewith), and Credit Suisse shall have no
responsibility or liability to you with respect thereto. Any review by Credit Suisse of Holdings, the Borrower, the Company, the Transactions, the other transactions contemplated hereby or other matters relating to such transactions will be
performed solely for the benefit of Credit Suisse and shall not be on behalf of you or any of your affiliates.
You further acknowledge
that Credit Suisse is a full-service securities firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, Credit Suisse may provide
investment banking and other financial services to, and/or acquire, hold or sell, for its own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of you,
the Company and other companies with which you or the Company may have commercial or other relationships. With respect to any securities and/or financial instruments so held by Credit Suisse or any of its customers, all rights in respect of such
securities and financial instruments, including any voting rights, will be exercised by the holder of the rights, in its sole discretion.
Commitment Letter
8
9. Assignments; Amendments; Governing Law, Etc.
This Commitment Letter shall not be assignable by you without the prior written consent of CS and CS Securities (and any attempted assignment
without such consent shall be null and void), is intended to be solely for the benefit of the parties hereto (and Indemnified Persons), and is not intended to confer any benefits upon, or create any rights in favor of, any person other than the
parties hereto (and Indemnified Persons). Notwithstanding anything to the contrary herein (including in Section 3 hereof), CS may, with your consent, assign its commitment hereunder to one or more prospective Lenders, provided that prior
to funding of the Facility, CS shall not be released from any portion of its commitment hereunder so assigned (except assignments to Additional Committing Lenders pursuant to Section 2 above). Any and all obligations of, and services to be
provided by, CS Securities or CS hereunder (including, without limitation, CSs commitment) may be performed and any and all rights of CS Securities or CS hereunder may be exercised by or through any of their respective affiliates or branches
and, in connection with such performance or exercise, CS Securities and CS may exchange with such affiliates or branches information concerning you and your affiliates that may be the subject of the transactions contemplated hereby and, to the
extent so employed, such affiliates and branches shall be entitled to the benefits afforded to CS Securities and CS hereunder. This Commitment Letter may not be amended or any provision hereof waived or modified except by an instrument in writing
signed by CS Securities, CS and you. This Commitment Letter may be executed in any number of counterparts, each of which shall be an original and all of which, when taken together, shall constitute one agreement. Delivery of an executed counterpart
of a signature page of this Commitment Letter by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart hereof. Section headings used herein are for convenience of reference only, are not part of
this Commitment Letter and are not to affect the construction of, or to be taken into consideration in interpreting, this Commitment Letter. You acknowledge that information and documents relating to the Facility may be transmitted through SyndTrak,
IntraLinks, the Internet, e-mail or similar electronic transmission systems, and that Credit Suisse shall not be liable for any damages arising from the unauthorized use by others of information or documents transmitted in such manner.
Notwithstanding anything in Section 12 to the contrary, Credit Suisse may place advertisements in financial and other newspapers and periodicals or on a home page or similar place for dissemination of information on the Internet or World Wide
Web as it may choose, and circulate similar promotional materials, after the closing of the Transactions in the form of a tombstone or otherwise describing the names of you and your affiliates (or any of them), and the amount, type and
closing date of such Transactions, all at Credit Suisses expense. This Commitment Letter and the Fee Letters supersede all prior understandings, whether written or oral, between us with respect to the Facility. Your obligations hereunder and
under the Fee Letters shall be joint and several. THIS COMMITMENT LETTER AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS COMMITMENT LETTER (INCLUDING, WITHOUT LIMITATION, ANY CLAIMS SOUNDING IN CONTRACT LAW OR TORT LAW
ARISING OUT OF THE SUBJECT MATTER HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK; PROVIDED, THAT, NOTWITHSTANDING THE PRECEDING SENTENCE AND THE GOVERNING LAW PROVISIONS OF
THIS COMMITMENT LETTER AND THE FEE LETTERS, IT IS UNDERSTOOD AND AGREED THAT (A) THE INTERPRETATION OF THE DEFINITION OF COMPANY MATERIAL ADVERSE EFFECT (AND WHETHER OR NOT A COMPANY MATERIAL ADVERSE EFFECT HAS OCCURRED),
(B) THE
Commitment Letter
9
DETERMINATION OF THE ACCURACY OF ANY ACQUISITION AGREEMENT REPRESENTATION AND WHETHER AS A RESULT OF ANY INACCURACY THEREOF YOU HAVE (OR AN AFFILIATE OF YOURS HAS) THE RIGHT TO TERMINATE (OR
DECLINE TO PERFORM) YOUR (OR ITS) OBLIGATIONS UNDER THE ACQUISITION AGREEMENT AND (C) THE DETERMINATION OF WHETHER THE ACQUISITION HAS BEEN CONSUMMATED IN ACCORDANCE WITH THE TERMS OF THE ACQUISITION AGREEMENT AND, IN ANY CASE, CLAIMS OR
DISPUTES ARISING OUT OF ANY SUCH INTERPRETATION OR DETERMINATION OR ANY ASPECT THEREOF, IN EACH CASE, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF THE LAWS THAT MIGHT
OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
10. Jurisdiction.
Each of the parties hereto hereby irrevocably and unconditionally (a) submits, for itself and its property, to the exclusive jurisdiction
of any New York State court or Federal court of the United States of America sitting in the Borough of Manhattan in New York City, and any appellate court from any thereof, in any suit, action or proceeding arising out of or relating to this
Commitment Letter, the Fee Letters or the transactions contemplated hereby or thereby, and agrees that all claims in respect of any such suit, action or proceeding may be heard and determined only in such New York State court or, to the extent
permitted by law, in such Federal court; provided that suit for the recognition or enforcement of any judgment obtained in any such New York State or Federal court may be brought in any other court of competent jurisdiction, (b) waives,
to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Commitment Letter, the Fee Letters or the
transactions contemplated hereby or thereby in any New York State court or in any such Federal court, (c) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such suit, action or
proceeding in any such court and (d) agrees that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Service of
any process, summons, notice or document by registered mail addressed to you at the address above shall be effective service of process against you for any suit, action or proceeding brought in any such court.
11. Waiver of Jury Trial.
EACH OF THE
PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING OUT OF THIS COMMITMENT LETTER, THE FEE LETTERS OR THE PERFORMANCE OF
SERVICES HEREUNDER OR THEREUNDER.
12. Confidentiality.
This Commitment Letter is delivered to you on the understanding that neither this Commitment Letter nor the Fee Letters nor any of their terms
or substance, nor the activities of Credit Suisse pursuant hereto, shall be disclosed, directly or indirectly, to any other person except (a) to your officers, directors, members, partners, employees, attorneys, accountants, agents and advisors
on a confidential and need-to-know basis, (b) as required by applicable law or compulsory legal, regulatory or administrative process (in which case you agree, to the extent
Commitment Letter
10
permitted by applicable law, rule or regulation, to inform us promptly thereof prior to such disclosure), (c) you may disclose this Commitment Letter and the contents hereof (but not
the Fee Letters or the contents thereof other than the existence thereof and the contents thereof as part of projections, pro forma information and a generic disclosure of aggregate sources and uses to the extent customary in marketing materials and
other required filings) (i) to the Company and the Seller and their respective officers, directors, members, partners, stockholders, employees, attorneys, accountants, agents and advisors on a confidential and need-to-know basis and
(ii) in any prospectus or other offering memorandum relating to the Notes, in any syndication or other marketing material relating to the Facility or in connection with any public filing requirement, (d) you may disclose the Fee Letters
redacted in a manner reasonably satisfactory to Credit Suisse to the Company and the Seller and their respective officers, directors, members, partners, employees, attorneys, accountants, agents and advisors on a confidential and need-to-know basis,
(e) to actual or potential Additional Committing Lenders on a confidential basis, (f) the Term Sheet may be disclosed on a confidential basis to actual or potential Lenders and to any rating agency in connection with the Transactions, the
Facility and the Notes and (g) to the extent that such information becomes publicly available other than by reason of disclosure by you in violation of this paragraph.
We will treat as confidential all confidential information provided to us by or on behalf of you hereunder; provided that nothing
herein shall prevent us from disclosing any such information (a) pursuant to the order of any court or administrative agency or in any pending legal, regulatory or administrative proceeding, or otherwise as required by applicable law or
compulsory legal, regulatory or administrative process (in which case we agree, to the extent permitted by applicable law, rule or regulation, to inform you promptly thereof prior to disclosure thereof), (b) upon the request or demand of any
regulatory authority having jurisdiction over us, (c) to the extent that such information becomes publicly available other than by reason of disclosure by us in violation of this paragraph, (d) to our affiliates and to our and their
respective employees, legal counsel, accountants, independent auditors, advisors and other experts or agents who are informed of the confidential nature of such information and on a need-to-know basis, (e) to actual or potential assignees,
participants or derivative investors in the Facility who agree to be bound by the terms of this paragraph or substantially similar confidentiality provisions, (f) to the extent permitted by Section 9 or (g) for purposes of
establishing a due diligence defense. This paragraph shall automatically terminate and be superseded by the confidentiality provisions in the definitive documentation for the Facility upon the execution and delivery of such documentation
and in any event shall terminate on the first anniversary of the date hereof.
Notwithstanding anything herein to the contrary, any party
to this Commitment Letter (and any employee, representative or other agent of such party) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Commitment
Letter and the Fee Letters and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure, except that (i) tax treatment and tax structure shall not include the
identity of any existing or future party (or any affiliate of such party) to this Commitment Letter or the Fee Letters and (ii) no party shall disclose any information relating to such tax treatment and tax structure to the extent nondisclosure
is reasonably necessary in order to comply with applicable securities laws. For this purpose, the tax treatment of the transactions contemplated by this Commitment Letter and the Fee Letters is the purported or claimed U.S. Federal income tax
treatment of such transactions and the tax structure of such transactions is any fact that may be relevant to understanding the purported or claimed U.S. Federal income tax treatment of such transactions.
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11
13. Surviving Provisions.
The compensation, reimbursement, indemnification, confidentiality, syndication, jurisdiction, governing law and waiver of jury trial provisions
contained herein and in the Fee Letters and the provisions of Section 8 of this Commitment Letter shall remain in full force and effect regardless of whether definitive financing documentation shall be executed and delivered and (other than in
the case of the syndication provisions) notwithstanding the termination of this Commitment Letter or CSs commitment hereunder and our agreements to perform the services described herein.
14. PATRIOT Act Notification.
Credit
Suisse hereby notifies you that, pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the PATRIOT Act), Credit Suisse and each Lender is required to
obtain, verify and record information that identifies the Borrower and each guarantor, which information includes the name, address, tax identification number and other information regarding the Borrower and each guarantor that will allow Credit
Suisse or such Lender to identify the Borrower and each guarantor in accordance with the PATRIOT Act. This notice is given in accordance with the requirements of the PATRIOT Act and is effective as to Credit Suisse and each Lender. You hereby
acknowledge and agree that Credit Suisse shall be permitted to share any or all such information with the Lenders.
15. Acceptance and Termination.
If the foregoing correctly sets forth our agreement with you, please indicate your acceptance of the terms of this Commitment Letter and
of the Fee Letters by returning to us executed counterparts hereof and of the Fee Letters not later than 5:00 p.m., New York City time, on July 25, 2014. CSs offer hereunder, and our agreements to perform the services described
herein, will expire automatically and without further action or notice and without further obligation to you at such time in the event that Credit Suisse has not received such executed counterparts in accordance with the immediately preceding
sentence. This Commitment Letter will become a binding commitment on CS only after it has been duly executed and delivered by you in accordance with the first sentence of this Section 15. In the event that the Closing Date does not occur on or
before 5:00 p.m., New York City time, on April 18, 2015 (or such earlier date on which the Acquisition Agreement terminates or either party thereto publicly announces its intention not to proceed with the Acquisition), then this Commitment
Letter and CSs commitment hereunder, and our agreements to perform the services described herein, shall automatically terminate without further action or notice and without further obligation to you unless Credit Suisse shall, in its
discretion, agree in writing to an extension.
[Remainder of this page intentionally left blank]
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Credit Suisse is pleased to have been given the opportunity to assist you in connection with the
financing for the Acquisition.
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Very truly yours, |
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CREDIT SUISSE SECURITIES (USA) LLC |
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By |
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/s/ Adam Forchheimer |
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Name: Adam Forchheimer |
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Title: Authorized Signatory |
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CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH |
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By |
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/s/ Michael Spaight |
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Name: Michael Spaight |
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Title: Authorized Signatory |
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By |
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/s/ Whitney Gaston |
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Name: Whitney Gaston |
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Title: Authorized Signatory |
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Accepted and agreed to as of the date first above written: |
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AK STEEL HOLDING CORPORATION |
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By |
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/s/ Roger K. Newport |
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Name: Roger K. Newport |
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Title: SVP, Finance and CFO |
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AK STEEL CORPORATION |
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By |
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/s/ Roger K. Newport |
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Name: Roger K. Newport |
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Title: SVP, Finance and CFO |
Commitment Letter
13
EXHIBIT A
CONFIDENTIAL
PROJECT 711
$730,000,000 Senior Unsecured Bridge Facility
Summary of Principal Terms and Conditions1
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Borrower: |
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AK Steel Corporation, a Delaware corporation (the Borrower). |
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Agent: |
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Credit Suisse AG, acting through one or more of its branches or affiliates (CS), will act as sole administrative agent (in such capacity, the Agent) for a syndicate of banks,
financial institutions and other institutional lenders (together with CS and the Additional Committing Lenders, the Lenders), and will perform the duties customarily associated with such role. |
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Bookrunner and Lead Arranger: |
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Credit Suisse Securities (USA) LLC will act as bookrunner and lead arranger for the Facility described below (collectively, in such capacities, the Arranger), and will perform the duties customarily
associated with such roles. |
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Syndication Agent: |
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At the option of the Arranger, one financial institution identified by the Arranger and reasonably acceptable to the Borrower (in such capacity, the Syndication Agent). |
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Documentation Agent: |
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At the option of the Arranger, one financial institution identified by the Arranger and reasonably acceptable to the Borrower (in such capacity, the Documentation Agent). |
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Facility: |
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Senior unsecured bridge loans (the Loans) in an aggregate principal amount of $730,000,000 (the Facility) minus the sum of (a) Net Cash Proceeds (as defined below) received
by the Borrower from the issuance of any Notes on or prior to the date of the funding of the Facility (the Closing Date) and (b) Net Cash Proceeds received by the Borrower in connection with the issuance of any
Stock. |
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Purpose: |
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The proceeds of the Loans will be used by the Borrower on the Closing Date, together with cash on hand and the Net Cash Proceeds from the issuance of Notes (if any) and the issuance of Stock (if any), solely (a) to pay the
purchase price of the Acquisition (the Acquisition Consideration) and (b) to pay the Transaction Costs. |
1 |
All capitalized terms used but not defined herein have the meanings given to them in the Commitment Letter to which this term sheet is attached. |
Term Sheet
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Availability: |
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The Facility must be drawn in a single drawing on the Closing Date. Amounts borrowed under the Facility that are repaid or prepaid may not be reborrowed. |
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Ranking: |
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The Loans will constitute senior indebtedness of the Borrower and will rank pari passu in right of payment with the Borrowers other senior indebtedness, including the Existing Credit Agreement. |
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Guarantees: |
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All obligations of the Borrower under the Facility will be unconditionally guaranteed (the Guarantees) by AK Steel Holding Corporation (Holdings) and each wholly owned domestic
restricted subsidiary of the Borrower, limited to any subsidiary that is a guarantor under the Existing Credit Agreement or the Existing Notes (such guarantors, together with the Borrower, collectively the Loan Parties).
Existing Notes means the Borrowers (i) 7.625% Senior Notes due 2020, (ii) 8.750% Senior Secured Notes due 2018, (iii) 8.375% Senior Notes due 2022 (the 2022 Notes) and (iv) 5.00% Exchangeable
Senior Notes due 2019. |
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Security: |
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None. |
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Interest Rates: |
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Interest for the first three-month period commencing on the Closing Date shall be equal to Adjusted LIBOR (as defined below) plus 675 basis points (the Initial Margin). Three months after the Closing Date
and at the end of each three month period thereafter, the spread over Adjusted LIBOR shall be increased by 50 basis points (the Initial Margin plus each 50 basis point increase described above, the Applicable Margin).
Adjusted LIBOR means the London interbank offered rate for U.S. dollars (for a three-month interest period), which will at all times include statutory reserves and shall be deemed to be not less than 1.00% per
annum. |
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Notwithstanding anything to the contrary set forth above, at no time shall the per annum interest rate on the Loans, the Extended Term Loans (as defined below) or the Exchange Notes (as defined below) exceed the Total Cap (as
defined in the Facility Fee Letter). Upon the occurrence of a Demand Failure Event (as defined in the Facility Fee Letter), the outstanding Loans will automatically and immediately accrue interest at the Total Cap and be subject to the call
protection provisions of the Exchange Notes (and the Conversion Fee (as defined in the Facility Fee Letter) shall be immediately due and payable). |
Term Sheet
A-2
|
|
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Interest Payments: |
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Interest on the Loans will be payable in cash, quarterly in arrears. Calculation of interest shall be on the basis of the actual number of days elapsed over a 360-day year. |
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Default Rate: |
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At any time an event of default exists as a result of the Borrowers failure to make any payment in respect of the Facility, such
overdue amount shall bear interest at 2.0% per annum above the rate otherwise applicable thereto.
Notwithstanding anything to the contrary set forth herein, in no event shall any cap or limit on the yield or interest rate payable with respect to the Loans,
Extended Term Loans or Exchange Notes affect the payment in cash of any default rate of interest in respect of any Loans, Extended Term Loans or Exchange Notes. |
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Conversion and Maturity: |
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On the first anniversary of the Closing Date (the Conversion Date), any Loan that has not been previously repaid in
full will be automatically converted into a senior term loan (each an Extended Term Loan) due on the date that is seven years after the Closing Date (or, if earlier, 90 days prior to the maturity date of the 2022 Notes if
any such notes are outstanding at that time) (the Maturity Date). At any time on or after the Conversion Date, at the option of the applicable Lender, the Extended Term Loans may be exchanged in whole or in part for senior
exchange notes (the Exchange Notes) having an equal principal amount; provided that the Borrower may defer the first issuance of Exchange Notes until such time as the Borrower shall have received requests to issue at
least $150 million in aggregate principal amount of Exchange Notes. The Extended Term
Loans will be governed by the provisions of the Loan Documents (as defined below) and will have the same terms as the Loans except as expressly set forth on Annex I hereto. The Exchange Notes will be issued pursuant to an indenture that will have
the terms set forth on Annex II hereto. |
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Mandatory Prepayments and Commitment Reductions: |
|
The Loans shall be prepaid with (and, prior to the Closing Date, the commitment under the Facility, pursuant to the Commitment Letter and the Loan Documents, shall be automatically and permanently reduced by), subject to certain
exceptions to be agreed upon, (i) the Net Cash Proceeds from the issuance, offering or placement of any debt obligations (other than (i) any Clear Markets Permitted Debt (except to the extent the proceeds thereof are applied to pay
the |
Term Sheet
A-3
|
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purchase price of the Acquisition or to pay the Transaction Costs) and (ii) other indebtedness in an aggregate principal amount not to exceed
$50,000,000 (such indebtedness set forth in clauses (i) and (ii), collectively, the Permitted Debt)) or publicly offered equity securities by Holdings or any of its subsidiaries; provided that in the event that any
Lender that committed to provide a portion of the Loans pursuant to the Commitment Letter (each, an Initial Bridge Lender) or any of its affiliates purchases debt securities from Holdings or its subsidiaries pursuant to a
securities offering under the Facility Fee Letter at an issue price above the level at which such Initial Bridge Lender or affiliate has determined such debt securities can be resold at the time of such purchase by such Initial Bridge
Lender or affiliate to a bona fide third party that is not a Lender under the Facility or an affiliate thereof or a participant in the Facility at such time (and notifies the Borrower thereof), the Net Cash Proceeds received by Holdings and its
subsidiaries in respect of such debt securities may, at the option of such Initial Bridge Lender or affiliate, be applied first to prepay the Loans of such Initial Bridge Lender or affiliate (provided that if there is more than one such
Initial Bridge Lender or affiliate then such Net Cash Proceeds will be applied pro rata to prepay the Loans of all such Initial Bridge Lenders or affiliates in proportion to such Initial Bridge Lenders or affiliates principal
amount of debt securities purchased from Holdings or its subsidiaries) prior to being applied to prepay the Loans held by other Lenders; and (ii) the Net Cash Proceeds from any non-ordinary course asset sales by Holdings or any of its
subsidiaries (including proceeds from the issuance of equity securities of Holdings and any of its subsidiaries), other than asset sales having Net Cash Proceeds up to $50,000,000 in the aggregate. The Borrower will also be required to offer to
prepay the Loans following the occurrence of a Change of Control (to be defined) at 100% of the outstanding principal amount thereof (plus all accrued and unpaid interest thereon).
Net Cash Proceeds means:
(a) with respect to any asset sale, the aggregate amount of all cash (which term, for the
purpose of this definition, shall include cash equivalents) proceeds (including any cash proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment or otherwise, but only as
and when received) actually received in respect of such asset sale, including property |
Term Sheet
A-4
|
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|
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insurance or condemnation proceeds paid on account of any loss of any property or assets, net of (1) all reasonable attorneys fees,
accountants fees, brokerage, consultant and other customary fees and commissions, title and recording tax expenses and other reasonable fees and expenses incurred in connection therewith, (2) all taxes paid or reasonably estimated to be
payable as a result thereof, (3) all payments made, and all installment payments required to be made, with respect to any obligation (A) that is secured by any assets subject to such asset sale, in accordance with the terms of any lien upon such
assets, or (B) that must by its terms, or in order to obtain a necessary consent to such asset sale, or by applicable law, be repaid (including pursuant to any mandatory prepayment or redemption requirement) out of the proceeds from such asset sale,
(4) all distributions and other payments required to be made to minority interest holders in subsidiaries or joint ventures as a result of such asset sale, or to any other person (other than Holdings or any of its subsidiaries) owning a beneficial
interest in the assets disposed of in such asset sale, and (5) the amount of any reserves established by Holdings or any of its subsidiaries in accordance with GAAP to fund purchase price or similar adjustments, indemnities or liabilities,
contingent or otherwise, reasonably estimated to be payable in connection with such asset sale (provided that to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds),
provided that such Net Cash Proceeds of asset sales shall not include insurance and condemnation proceeds to the extent reinvested (or committed to be reinvested) in other assets used or useful in the business of Holdings or any of its
subsidiaries (including any investments and acquisitions) within 12 months of receipt of such proceeds or, if so committed within such period, reinvested within 6 months thereafter; and
(b) with respect to any equity issuance or debt incurrence, the aggregate amount of all
cash proceeds actually received in respect of such equity issuance or debt incurrence, net of reasonable fees, expenses, costs, underwriting discounts and commissions incurred in connection therewith and net of taxes paid or reasonably estimated by
the Borrower to be payable as a result thereof. |
|
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Voluntary Prepayments: |
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The Loans may be prepaid, in whole or in part, at par plus accrued and unpaid interest upon not less than 3 business days prior written notice, at the option of the Borrower at any
time. |
Term Sheet
A-5
|
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Credit Documentation |
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The definitive documentation for the Facility (the Loan Documents) shall be substantially consistent with the Commitment Letter (including this Term Sheet), shall contain only those conditions, mandatory
prepayments, representations, warranties, affirmative and negative covenants, events of default and other provisions expressly specified in the Commitment Letter (including all Exhibits and Annexes thereto), and shall otherwise be substantially
consistent with the indentures for the Existing Notes (modified as appropriate for a bridge credit agreement format), subject to Section 4 of the Facility Fee Letter); provided that, the only conditions to the availability of the Facility on
the Closing Date shall be those expressly set forth in Section 6 of the Commitment Letter and Exhibit B. |
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Representations and Warranties: |
|
The Loan Documents will contain solely the following representations and warranties relating to Holdings, the Borrower and its subsidiaries (in each case, substantially consistent with the corresponding provisions of the Existing
Credit Agreement): organization and qualification; power and authority; no conflicts; no consents; enforceability; capital structure; corporate names; locations; title to properties; financial statements; no material adverse change; surety
obligations; taxes, brokers, intellectual property; governmental approvals; compliance with laws; compliance with environmental laws; burdensome contracts; litigation; no defaults; ERISA; trade relations; labor relations; Investment Company Act;
non-regulated entity status; margin stock; sanctions; and complete disclosure; and also: the PATRIOT Act; the Foreign Corrupt Practices Act; status of the Facility and the guarantees thereof as senior debt and solvency as of the Closing
Date. |
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Conditions Precedent to Borrowing: |
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The borrowing under the Facility will be subject solely to the conditions precedent set forth in Section 6 of the Commitment Letter and Exhibit B to the Commitment Letter. |
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Covenants: |
|
The Loan Documents will contain covenants that are substantially consistent with the indentures for the Existing Notes, subject to Section 4 of the Facility Fee Letter, which in the case of negative covenants, will be
incurrence-based covenants and in no event will contain any financial maintenance covenants; provided that prior to the Conversion Date, there will be debt, lien and restricted payments covenants applicable to the Loans that shall be more
restrictive than those customary for publicly traded high-yield securities and those applicable to the Extended Term Loans and the Exchange Notes in a manner to be reasonably agreed. |
Term Sheet
A-6
|
|
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Events of Default: |
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Limited to the following (subject, where appropriate, to thresholds and grace periods to be agreed upon): nonpayment of principal, interest or other amounts; violation of covenants; incorrectness of representations and warranties in
any material respect; cross default with respect to payments at maturity and cross acceleration; bankruptcy; material judgments; or actual or asserted invalidity of Guarantees. |
|
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Unrestricted Subsidiaries: |
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The Loan Documents will contain provisions pursuant to which, subject to limitations to be agreed (including customary limitations on investments, loans, advances and guarantees) the Borrower will be permitted to designate any
subsequently acquired or organized subsidiary as an unrestricted subsidiary and subsequently re-designate such unrestricted subsidiary as a restricted subsidiary; provided that no unrestricted subsidiary designated as a restricted
subsidiary may subsequently be designated as an unrestricted subsidiary; provided further that no unrestricted subsidiary shall be a restricted subsidiary under the Existing Credit Agreement, the Existing Notes or any other indebtedness.
Unrestricted subsidiaries will not be subject to the affirmative or negative covenants or events of default and other provisions of the Loan Documents. |
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Voting: |
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Amendments and waivers of the Loan Documents will require the approval of Lenders holding more than 50% of the aggregate principal amount of the commitments or Loans, except that the consent of (a) each affected Lender shall be
required with respect to (i) increases in the commitment of such Lender, (ii) reductions or forgiveness of principal, interest or fees payable to such Lender, (iii) extensions of the Conversion Date or final maturity of such Lenders
Loans or of the date for payment to such Lender of any interest or fees, (iv) changes that impose any additional restriction on such Lenders ability to assign any of its rights or obligations and (b) each Lender shall be required with respect
to (i) modifications to certain provisions requiring the pro rata treatment of Lenders, (ii) modification to voting requirements or percentages, and (iii) releases of all or substantially all of the value of the Guarantees. |
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Cost and Yield Protection: |
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Usual for facilities and transactions of this type, including customary tax gross-up provisions (including but not limited to provisions relating to Dodd-Frank and Basel
III). |
Term Sheet
A-7
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Assignments and Participations: |
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Each Lender will be permitted to make assignments in minimum amounts to be agreed; provided, however, that, prior to the Conversion
Date, so long as no payment or bankruptcy event of default or Demand Failure Event exists, the consent of the Borrower (not to be unreasonably withheld, delayed or conditioned) shall be required with respect to any assignment if, after giving effect
thereto, the Arranger and its affiliates would hold, in the aggregate, less than a majority of the outstanding Loans or commitments with respect thereto.
The Lenders will be permitted to sell participations in Loans without restriction. Voting rights of participants shall be limited to matters in respect of
(a) reductions or forgiveness of principal, interest or fees payable to such participant, (b) extensions of the Conversion Date or final maturity of, or date for payment of interest or fees on, the Loans in which such participant
participates and (c) releases of all or substantially all of the value of the Guarantees. |
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Expenses and Indemnification: |
|
The Borrower will indemnify the Arranger, the Agent, the Syndication Agent, the Documentation Agent, the Lenders, their respective affiliates, successors and assigns and the officers, directors, employees, agents, advisors,
controlling persons and members of each of the foregoing (each, an Indemnified Person) and hold them harmless from and against all reasonable and documented out-of-pocket costs and expenses (including reasonable fees,
disbursements and other charges of counsel (limited, in the case of legal fees and expenses, to one firm of primary counsel to such Indemnified Persons taken as a whole (and, in the case of any conflict of interest, one firm of additional counsel to
each similarly affected group of Indemnified Persons, taken as a whole), one firm of special counsel for each applicable jurisdiction and one firm of local counsel in each applicable jurisdiction (and, in the case of any conflict of interest, one
firm of additional local counsel to each similarly affected group of Indemnified Persons, taken as a whole)) and liabilities of such Indemnified Person arising out of or relating to any claim or any litigation or other proceeding (regardless of
whether such Indemnified Person is a party thereto and regardless of whether such matter is initiated by a third party or by the Borrower, the Company or any of their respective affiliates or equity holders) that relates to the Transactions,
including the financing contemplated |
Term Sheet
A-8
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hereby, the Acquisition or any transactions connected therewith; provided that no Indemnified Person will be indemnified for any cost, expense or liability to the extent (i) determined in the final, non-appealable judgment of
a court of competent jurisdiction to have resulted from the bad faith, willful misconduct or gross negligence of such Indemnified Person or its controlled affiliates, controlling persons, directors, officers, employees or, in the case of persons
acting at such Indemnified Persons direction, its advisors, agents or representatives (each, a Related Person), or (ii) they arise out of any dispute solely among Indemnified Persons (other than (x) claims against the
Agent or the Arranger in its capacity as such and (y) claims arising out of any act or omission on the part of any Loan Party or its affiliates). In addition, the Borrower shall pay (a) all reasonable and documented out-of-pocket expenses
(including, without limitation, reasonable fees, disbursements and other charges of counsel (limited, in the case of legal fees and expenses, to one firm of primary counsel to such Indemnified Persons taken as a whole (and, in the case of any
conflict of interest, one firm of additional counsel to each similarly affected group of Indemnified Persons, taken as a whole), one firm of special counsel for each applicable jurisdiction and one firm of local counsel in each applicable
jurisdiction (and, in the case of any conflict of interest, one firm of additional local counsel to each similarly affected group of Indemnified Persons, taken as a whole)) of the Arranger, the Agent, the Syndication Agent and the Documentation
Agent in connection with the syndication of the Facility, the preparation and administration of the definitive documentation and amendments, modifications and waivers thereto and (b) all reasonable and documented out-of-pocket expenses (including,
without limitation, fees, disbursements and other charges of counsel (limited, in the case of legal fees and expenses, to one firm of primary counsel to such Indemnified Persons taken as a whole (and, in the case of any conflict of interest, one
firm of additional counsel to each similarly affected group of Indemnified Persons, taken as a whole), one firm of special counsel for each applicable jurisdiction and one firm of local counsel in each applicable jurisdiction (and, in the case of
any conflict of interest, one firm of additional local counsel to each similarly affected group of Indemnified Persons, taken as a whole)) of the Arranger, the Agent, the Syndication Agent, the Documentation Agent and the Lenders for enforcement
costs and documentary taxes associated with the Facility. |
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Governing Law and Forum: |
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New York. |
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Counsel to the Agent and the Arranger: |
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Davis Polk & Wardwell LLP. |
Term Sheet
A-9
ANNEX I
to Exhibit A
Extended Term
Loans
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Maturity: |
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The Extended Term Loans will mature on the date that is seven years after the Closing Date (or, if earlier, 90 days prior to the maturity date of the 2022 Notes if any such notes are outstanding at that time). |
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Interest Rate: |
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The Extended Term Loans will bear interest at an interest rate per annum equal to the Total Cap. Interest shall be payable on the last day of each fiscal quarter of the Borrower and on the Maturity Date, in each case payable in
arrears and computed on the basis of a 360-day year. |
|
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Guarantees: |
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Same as the Loans. |
|
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Security: |
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None. |
|
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Covenants and Events of Default: |
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Upon and after the Conversion Date, the covenants, events of default and mandatory prepayments applicable to the Exchange Notes will also be applicable to the Extended Term Loans. |
Term Sheet
ANNEX II
to Exhibit A
Exchange Notes
|
|
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Issuer: |
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The Borrower, in its capacity as the issuer of the Exchange Notes (the Issuer). |
|
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Issue: |
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The Exchange Notes will be issued under an indenture capable of being qualified under the Trust Indenture Act of 1939, as amended. |
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Maturity: |
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The Exchange Notes will mature on the date that is seven years after the Closing Date (or, if earlier, 90 days prior to the maturity date of the 2022 Notes if any such notes are outstanding at that time). |
|
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Interest Rate: |
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The Exchange Notes will bear interest at a fixed rate equal to the Total Cap. |
|
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Optional Redemption: |
|
The Exchange Notes will be non-callable until the third anniversary of the Closing Date (subject to customary equity clawback provisions). Thereafter, each Exchange Note will be callable at par plus accrued interest plus
a premium equal to 50% of the coupon on such Exchange Note, which premium shall decline ratably on each yearly anniversary of the Closing Date to zero on the date that is one year prior to the maturity of the Exchange Notes. |
|
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Offer to Repurchase upon a Change of
Control: |
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The Issuer will be required to offer to repurchase the Exchange Notes following the occurrence of a Change of Control (to be defined) at 101% of the outstanding principal amount thereof (plus all accrued and unpaid interest
thereon). |
|
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Defeasance Provisions: |
|
Consistent with the 2022 Notes. |
|
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Modification: |
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Consistent with the 2022 Notes. |
|
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Registration Rights: |
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The Issuer will (unless a Shelf Registration Statement (as defined below) covering such Exchange Notes is already effective and available) use commercially reasonable efforts to file within 60 days after the date of each issuance of
Exchange Notes (each, an Issue Date), and will use commercially reasonable efforts to cause to become effective as soon thereafter as practicable, a shelf registration statement with respect to such Exchange Notes (a
Shelf Registration Statement) and/or a registration statement relating to a Registered Exchange Offer (as defined below). If a Shelf Registration Statement is filed, the Issuer will
keep |
Term Sheet
|
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|
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such registration statement effective and available (subject to customary exceptions) until the later of two years after the issue of such
Exchange Notes and the date it is no longer needed to permit unrestricted resales of Exchange Notes.
If within 120 days from an Issue Date, a Shelf Registration Statement for the applicable Exchange Notes has not been declared effective or the Issuer has not
effected an exchange offer (a Registered Exchange Offer) whereby the Issuer has offered registered notes having terms identical to such Exchange Notes (the Substitute Notes) in exchange for all
such Exchange Notes (it being understood that a Shelf Registration Statement is required to be made available in respect of Exchange Notes, the holders of which could not receive Substitute Notes through the Registered Exchange Offer that, in the
opinion of counsel to the Lenders, would be freely saleable by such holders without registration or requirement for delivery of a current prospectus under the Securities Act of 1933, as amended (other than a prospectus delivery requirement imposed
on a broker-dealer who is exchanging Exchange Notes acquired for its own account as a result of market making or other trading activities)), then the Issuer will pay liquidated damages of 0.50% per annum on the principal amount of Exchange
Notes outstanding to holders thereof who are, or would be, unable to freely transfer Exchange Notes from and including the 121st day after such Issue Date (the Default Registration Date) to but excluding the earlier of the
effective date of such Shelf Registration Statement or the date of consummation of such Registered Exchange Offer. Such liquidated damages shall increase by 0.50% per annum on the date that is 90 days after the Default Registration Date and
each 90-day anniversary thereof, up to a maximum of 2.0% per annum. The Issuer will also pay such liquidated damages for any period of time (subject to customary exceptions) following the effectiveness of a Shelf Registration Statement that
such Shelf Registration Statement is not available for resales thereunder. All accrued liquidated damages will be paid in arrears on each quarterly interest payment date. |
|
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Covenants: |
|
Based on the 2022 Notes, subject to Section 4 of the Facility Fee Letter. |
|
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Events of Default: |
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Based on the 2022 Notes, subject to Section 4 of the Facility Fee Letter. |
Term Sheet
A-II-2
EXHIBIT B
PROJECT 711
$730,000,000 Senior Unsecured Bridge Facility
Summary of Additional Conditions Precedent2
The borrowing under the Facility shall be subject to the following additional conditions precedent:
1. The Acquisition and the other Transactions shall be consummated substantially concurrently with the closing under the Facility on the terms
and conditions described in the Acquisition Agreement (without any amendment, modification or waiver thereof by the Borrower or any consent thereunder by the Borrower which is materially adverse to the Lenders or the Arranger without the prior
written consent of the Agent, such consent not to be unreasonably withheld, delayed or conditioned (it being understood and agreed that any (a) decrease in the Acquisition Consideration (except to the extent such reduction is applied
dollar-for-dollar to reduce the Facility), (b) increase in the Acquisition Consideration (provided, that any increase in the Acquisition Consideration of up to 10% shall not be deemed to be materially adverse to the Lenders or the
Arranger) or (c) amendment or waiver of any provision of the Acquisition Agreement of which the Arranger or the Lenders are specifically identified as third-party beneficiaries as of the date hereof, shall in each case be deemed to be a
modification which is materially adverse to the Lenders). The Acquisition Agreement (including all schedules and exhibits thereto) shall be reasonably satisfactory to the Agent; provided that the Agent agrees that the Acquisition Agreement
delivered to it on July 19, 2014 at 6:14 a.m. EDT and marked EXECUTION VERSION is satisfactory to it.
2. After
giving effect to the Transactions and the other transactions contemplated hereby, Holdings and its subsidiaries shall have outstanding no indebtedness or preferred stock other than (a) the loans and other extensions of credit under the Existing
Credit Agreement and the Existing Notes, (b) the Notes and/or the Loans, (c) other indebtedness existing on the date hereof and (d) any other Permitted Debt.
3. The Agent shall have received (a) U.S. GAAP audited consolidated balance sheets and related statements of income, stockholders
equity and cash flows of Holdings and the Company for the 2011, 2012 and 2013 fiscal years (and, to the extent available, the related unaudited consolidating financial statements) and each subsequent fiscal year ended at least 90 days before the
Closing Date and (b) U.S. GAAP unaudited consolidated and (to the extent available) consolidating balance sheets and related statements of income, stockholders equity and cash flows of Holdings and the Company for each subsequent fiscal
quarter ended at least 45 days before the Closing Date; provided, that the filing of such financial statements on Form 10-K or Form 10-Q by Holdings shall satisfy the foregoing condition with respect to Holdings only.
4. The Agent shall have received a pro forma consolidated balance sheet and related pro forma consolidated statements of income and cash flows
of Holdings as of and for the twelve-month period ending on the last day of the most recently completed four-fiscal quarter period for which financial statements have been delivered pursuant to paragraph 3 above, prepared after giving effect to the
Transactions as if the Transactions had occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the case of such other financial statements).
2 |
All capitalized terms used but not defined herein have the meanings given to them in the Commitment Letter to which this Exhibit B is attached, including Exhibits A thereto. |
Summary of Additional
Conditions Precedent
5. The Agent shall have received a certificate from the chief financial officer (or other officer
with reasonably equivalent duties) of Holdings, substantially in the form of Annex I to this Exhibit B, certifying that Holdings and its subsidiaries, on a consolidated basis after giving effect to the Transactions and the other transactions
contemplated hereby, are solvent. The Agent shall have received customary opinions of counsel to the Borrower and the Guarantors (which shall cover, among other things, authority, legality, validity, binding effect and enforceability of the
documents for the Facility, and non-contravention consistent, with the Specified Representations) and customary corporate resolutions, good standing certificates, officers incumbency certificates and a borrowing notice.
6. (a) One or more investment banks satisfactory to Credit Suisse (collectively, the Investment Bank) shall have been
engaged to publicly sell or privately place the Notes and Stock, and Credit Suisse and the Investment Bank each shall have received, (i) a complete printed preliminary offering document (an Offering Document) suitable
(A) for use in a customary high-yield road show, in case of the Notes, and (B) for an equity offering, in case of the Stock, which contains all information (including all audited financial statements, all unaudited financial
statements (which shall have been reviewed as provided in the procedures specified by the Public Company Accounting Oversight Board in AU 722) and all appropriate pro forma financial statements prepared in accordance with generally accepted
accounting principles in the United States and prepared in accordance with Regulation S-X under the Securities Act of 1933, as amended), and all other data that the Securities and Exchange Commission
would require in a registered offering of the Notes, the Stock, or, in each case, are customarily included in Offering Documents of such type, and (ii) a customary comfort letter (which shall also provide negative assurance comfort)
that is customary in the context of a transaction where the most recent financial statements are not more than 135 days old) from the independent accountants for the Borrower and the Company (and any other accountant to the extent financial
statements audited or reviewed by such accountants are or would be included in any Offering Document) and (b) the Investment Bank shall have been afforded a period of at least 10 consecutive business days following receipt of an Offering
Document including the information described in clause (a) to seek to place the Notes and the Stock with qualified purchasers thereof (provided that such period shall either (i) be completed, and the Closing Date shall have
occurred, on or prior to August 15, 2014, (ii) commence on or after September 2, 2014 and be completed, and the Closing Date shall have occurred, on or prior to November 21, 2014, (iii) commence on or after December 1,
2014 and be completed, and the Closing Date shall have occurred, on or prior to December 19, 2014 or (iv) commence on or after January 5, 2015).
7. To the extent requested at least ten (10) business days prior to the Closing Date, the Agent shall have received, at least five
business days prior to the Closing Date, all documentation and other information required by regulatory authorities under applicable know your customer and anti-money laundering rules and regulations, including, without limitation, the
PATRIOT Act.
8. All fees due to the Agents, the Arranger and the Lenders shall have been paid, and all expenses to be paid or reimbursed
to the Agents and the Arranger, in each case that are required to be paid on or prior to the Closing Date pursuant to the terms of the Commitment Letter or the Fee Letters, that have been invoiced at least two business days prior to the Closing Date
shall have been paid (which amounts may be offset against the proceeds of the Facility).
9. The Acquisition Agreement Representations and
the Specified Representations shall be true and correct on the Closing Date.
Summary of Additional
Conditions Precedent
2
ANNEX I TO
EXHIBIT B
FORM OF SOLVENCY
CERTIFICATE
[][], 20[]
This Solvency Certificate is being executed and delivered pursuant to Section [] of that certain []1 (the Credit Agreement; the terms defined therein being used herein as therein defined).
I, [], the [Chief Financial Officer/equivalent officer] of Holdings, in such capacity and not in an individual capacity,
hereby certify as follows:
1. |
I am generally familiar with the businesses and assets of Holdings and its subsidiaries, taken as a whole, and am duly authorized to execute this Solvency Certificate on behalf of Holdings pursuant to the Credit
Agreement; and |
2. |
As of the date hereof and after giving effect to the Transactions and the incurrence of the indebtedness and obligations being incurred in connection with the Credit Agreement and the Transactions, that, (i) the
sum of the debt (including contingent liabilities) of Holdings and its subsidiaries, taken as a whole, does not exceed the fair value of the present assets of Holdings and its subsidiaries, taken as a whole; (ii) the capital of Holdings and its
subsidiaries, taken as a whole, is not unreasonably small in relation to the business of Holdings or its subsidiaries, taken as a whole, contemplated as of the date hereof; (iii) Holdings and the Borrower have assets with a present fair
saleable value not less than the amount that will be required to pay their debts and other liabilities as they become absolute and matured; and (iv) Holdings and its subsidiaries, taken as a whole, do not intend to incur, or believe that they
will incur, debts (including current obligations and contingent liabilities) beyond their ability to pay such debt as they mature in the ordinary course of business. For the purposes hereof, the amount of any contingent liability at any time shall
be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. |
[Remainder of page intentionally left blank]
1 |
Describe Credit Agreement. |
Form of Solvency
Certificate
ANNEX I TO
EXHIBIT B
IN WITNESS WHEREOF, I have executed this Solvency Certificate on the date first written
above.
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By: |
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Name: [] |
Title: [Chief Financial Officer or equivalent officer] |
Form of Solvency
Certificate
AK Steel (NYSE:AKS)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
AK Steel (NYSE:AKS)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024