dated as of

 

June 7, 2021

 

by and between

 

PERCY ACQUISITION LLC

 

and

 

UNITED STATES STEEL CORPORATION

 

relating to the purchase and sale of

100% of the equity interests of

 

TRANSTAR, LLC

ARTICLE 1 Definitions		1
	Section 1.01 Definitions	1
	Section 1.02 Other Definitional and Interpretative Provisions	19
ARTICLE 2 Purchase and Sale		21
	Section 2.01 Purchase and Sale	21
	Section 2.02 Purchase Price.	21
	Section 2.03 Closing	22
	Section 2.04 Estimated Closing Calculations	22
	Section 2.05 Closing Deliverables	22
	Section 2.06 Adjustment Amount	23
	Section 2.07 Withholding.	25
ARTICLE 3 Representations and Warranties of Seller		26
	Section 3.01 Existence and Power	26
	Section 3.02 Seller Authorization.	26
	Section 3.03 Governmental Authorization	26
	Section 3.04 Non-Contravention	27
	Section 3.05 Company Capitalization	27
	Section 3.06 Subsidiaries	27
	Section 3.07 Financial Statements	28
	Section 3.08 Ownership of Interests	28
	Section 3.09 Absence of Certain Changes	28
	Section 3.10 No Undisclosed Material Liabilities	30
	Section 3.11 Material Contracts.	31
	Section 3.12 Litigation	32
	Section 3.13 Compliance with Laws; Permits; Critical Technologies.	33
	Section 3.14 Real Property	33
	Section 3.15 Personal Property; Condition; Sufficiency.	34
	Section 3.16 Intellectual Property	35
	Section 3.17 Labor Relations.	35
	Section 3.18 Employee Benefit Plans.	37

	Section 3.19 Environmental Matters	38
	Section 3.20 Taxes	39
	Section 3.21 Material Customers and Vendors.	41
	Section 3.22 Related Party Agreements	42
	Section 3.23 Finders’ Fees	42
	Section 3.24 No Additional Representations or Warranties	43
ARTICLE 4 Representations and Warranties of Buyer		43
	Section 4.01 Existence and Power	43
	Section 4.02 Authorization	43
	Section 4.03 Governmental Authorization	43
	Section 4.04 Non-Contravention	44
	Section 4.05 Financial Capacity	44
	Section 4.06 Purchase for Investment	45
	Section 4.07 Litigation	45
	Section 4.08 Finders’ Fees	45
	Section 4.09 Solvency	46
	Section 4.10 Inspections; No Other Representations	46
ARTICLE 5 Covenants		47
	Section 5.01 Pre-Closing Obligations.	47
	Section 5.02 Certain Filings	49
	Section 5.03 Efforts; Further Assurances.	50
	Section 5.04 Access.	52
	Section 5.05 Notices of Certain Events.	52
	Section 5.06 Non-Solicitation.	53
	Section 5.07 Seller Marks.	54
	Section 5.08 Public Announcements; Confidentiality	54
	Section 5.09 Intercompany Matters	55
	Section 5.10 Directors and Officers.	55
	Section 5.11 R&W Insurance Policy	56
	Section 5.12 Financing.	56

	Section 5.13 Return of Assets; Post-Closing Railroad Asset Transfers.	60
	Section 5.14 Financial Statement Assistance	61
	Section 5.15 Redemption of USS Portfolio Shares	61
	Section 5.16 Guarantees; Letters of Credit.	61
	Section 5.17 FCC Radio Licenses.	62
	Section 5.18 Shared Contracts.	63
	Section 5.19 Further Assurances.	63
	Section 5.20 Real Estate Matters.	63
	Section 5.21 Existing Asbestos Litigation and US Smelter Existing Claims.	65
	Section 5.22 Cooperation with Legal Proceedings.	65
	Section 5.23 Books and Records; Company Data.	66
	Section 5.24 Pre-Closing Restructuring.	67
	Section 5.25 Cancelled or Forgiven CARES Act Payroll Taxes.	67
	Section 5.26 Transition Services Agreement.	67
	Section 5.27 Permit-Sharing..	68
ARTICLE 6 Employee Matters		68
	Section 6.01 Maintenance of Compensation and Benefits	68
	Section 6.02 Collective Bargaining Agreements	69
	Section 6.03 Company Employees	69
	Section 6.04 Service Credit	69
	Section 6.05 Welfare Plans	70
	Section 6.06 Pre-Existing Conditions and Co-Payments	70
	Section 6.07 WARN Act	70
	Section 6.08 U.S. Defined Contribution Plans	71
	Section 6.09 U.S. Defined Benefit Plans	71
	Section 6.10 Accrued Vacation and Sick Leave	72
	Section 6.11 Workers Compensation	72
	Section 6.12 Existing Agreements	72
	Section 6.13 No Third Party Beneficiaries	72
	Section 6.14 Cooperation..	72

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT (together with the exhibits and schedules hereto and as this Agreement and any of the foregoing may be amended from time to time in accordance with its terms, this “Agreement”) dated as of June 7, 2021 by and between Percy Acquisition LLC, a Delaware limited liability company (“Buyer”), and United States Steel Corporation, a Delaware corporation (“Seller”), relating to the purchase and sale of 100% of the equity interests of Transtar, LLC, a Delaware limited liability company (the “Company”).  Each of Seller and Buyer may be referred to herein as a “Party” and collectively the “Parties”.

 

Recitals

 

 

 

NOW THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein (the receipt and sufficiency of which are hereby acknowledged and agreed), the Parties, intending to be legally bound, hereby agree as follows:

 

ARTICLE 1

 

 

“AAA” has the meaning set forth in Section 11.11(c)(i).

 

“Access Agreements” has the meaning set forth in Section 5.20(c).

 

“Adjustment Amount” has the meaning set forth in Section 2.06(d).

 

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person.  For purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by Contract or otherwise, and the terms “controlling” and “controlled” have correlative meanings under this Agreement; provided, however, that neither SoftBank Group Corp. nor any of its Subsidiaries and portfolio investments (other than Fortress Transportation and Infrastructure Investors LLC and its Subsidiaries) shall be Affiliates of Buyer for purposes of this Agreement.  For the avoidance of doubt, (a) Affiliates of Seller will include the Company Group prior to Closing, and (b) Affiliates of Buyer will include the Company Group after Closing.

 

“Agreement” has the meaning set forth in the Preamble.

 

“Alternative Financing” means alternative Debt Financing or such portion of the Debt Financing, on terms (including structure, covenants and pricing) not materially less favorable (taken as a whole) to Buyer (as reasonably determined by Buyer) or as otherwise acceptable to Seller and with lenders or holders, as applicable, reasonably satisfactory to Buyer, from the same or alternative sources, which may include one or more of a senior secured debt financing or other financing, or any combination thereof, in an amount such that the aggregate funds that would be available to Buyer at the Closing, including cash on hand, will be sufficient to satisfy Buyer’s obligations under this Agreement and to consummate the transactions contemplated hereby and to pay all fees and expenses required to be paid in connection herewith and with the Debt Financing.

 

“Applicable Law” means, with respect to any Person, all domestic federal, state or local Laws that apply to such Person.

 

“Assignment Agreement” means the assignment agreement, dated as of the Closing Date, to be entered into by Seller and Buyer, substantially in the form of Exhibit F.

 

“Auditor” has the meaning set forth in Section 2.06(c).

 

“Balance Sheet Date” has the meaning set forth in Section 3.07.

 

“Birmingham Southern” means Birmingham Southern Railroad Company, an Alabama corporation.

 

“Business” means the business of owning and operating Railroad Assets and providing rail transportation and logistics services, as conducted by the Company Group during the 12-month period immediately prior to the date of this Agreement, which shall include, (a) as of the Closing Date, the Zug Island Bridges and the Gary Locomotive Shop, as further described in Section 5.20, (b) the Railroad Assets (other than locomotives and rail cars) and rights owned, leased or otherwise held by the Company Group members set forth on the diagrams attached to Section 1.01(a) of the Seller Disclosure Schedule, (c) the locomotives and rail cars set forth on Section 1.01(b) of the Seller Disclosure Schedule and (d) the real property depicted or otherwise described on Section 1.01(g) of the Seller Disclosure Schedule owned by the following Company Group members: Delray Connecting Railroad Company, a Michigan corporation, The Lake Terminal Railroad Company, a Delaware corporation, and Texas & Northern Railway Company, a Texas corporation.  For the avoidance of doubt and notwithstanding anything to the contrary in this Agreement, the “Business” shall not include (a) the Railroad Assets (other than locomotives and rail cars) and rights owned, leased or otherwise held by Seller or its Affiliates (other than the Company Group members) set forth on the diagrams attached to Section 1.01(a) of the Seller Disclosure Schedule, (b) any locomotives and rail cars that are not set forth on Section 1.01(b) of the Seller Disclosure Schedule, and (c) WGN and any of its assets or operations.

 

“Business Day” means any day, other than a Saturday or Sunday or other day on which commercial banks in New York, New York are authorized or required by Applicable Law to close.

 “Buyer” has the meaning set forth in the Preamble.

“Buyer Cure Period” has the meaning set forth in Section 10.01(a)(v).

 

“Buyer DB Plan” has the meaning set forth in Section 6.09.

 

“Buyer Fundamental Warranties” shall mean the representations and warranties set forth in Section 4.01, Section 4.02, Section 4.03, Section 4.04(a), Section 4.04(b), and Section 4.08.

 

“Cap” has the meaning set forth in Section 9.03(a).

 

“Cash” means, with respect to any Person as of any time, all cash or cash equivalents, checks, money orders, marketable securities, short-term instruments, pre-paid expenses, bank and other depositary accounts, security deposits, certificates of deposit, time deposits, negotiable instruments, securities and brokerage accounts, funds in time and demand deposits or similar accounts held by or on behalf of such Person at such time, and shall include checks, ACH transactions and other wire transfers and drafts deposited or available for deposit for the account of such Person at such time, in each case calculated and determined in accordance with GAAP; provided that Cash shall be calculated net of any written or issued but uncleared checks, ACH transactions and other wire transfers and drafts written or issued by such Person as of such time.

 

“Closing” has the meaning set forth in Section 2.03.

 

“Closing Cash” means the aggregate amount of Cash of the Company Group as of the Reference Time; provided, however, that in not event shall Closing Cash exceed $10,000,000.

 

“Closing Date” means the date of the Closing.

 

“Closing Indebtedness” means the aggregate amount of Indebtedness as of the Reference Time calculated in accordance with GAAP; provided that, for the sake of clarity and notwithstanding the Reference Time, Closing Indebtedness shall be calculated after giving effect to the settlement of all intercompany accounts pursuant to Section 5.09.

 

“Closing Net Working Capital” means Net Working Capital as of the Reference Time; provided that, for the sake of clarity and notwithstanding the Reference Time, Closing Net Working Capital shall be calculated after giving effect to the settlement of all intercompany accounts pursuant to Section 5.09.

 

“Closing Net Working Capital Adjustment Amount” means an amount, which may be positive, negative or zero, equal to (a) if Closing Net Working Capital is greater than Target Net Working Capital plus $1,413,000, or if Closing Net Working Capital is less than Target Net Working Capital minus $1,413,000, then Closing Net Working Capital minus Target Net Working Capital, or (b) if Closing Net Working Capital is within the range of Target Net Working Capital plus $1,413,000 and Target Net Working Capital minus $1,413,000, then zero.

 “Closing Purchase Price” means $640,000,000 in cash, plus (a) the Closing Net Working Capital Adjustment Amount, if any, minus (b) Closing Indebtedness, if any, minus (c) Closing Transaction Expenses, if any, plus (d) Closing Cash, each as finally determined pursuant to Section 2.06.

“Closing Transaction Expenses” means the aggregate amount, without duplication, of (a) all out-of-pocket fees and expenses (whether or not yet invoiced), incurred by or to be paid by, any Company Group member in connection with the negotiation, preparation or execution of this Agreement or the Transaction Agreements or the performance or consummation of the transactions contemplated hereby or thereby, in each case, to the extent unpaid and incurred by or to be paid by any Company Group member, as of the Closing, and (b) all amounts payable by Seller or any Company Group member (i) under any “change of control”, sale bonus, retention or other similar agreements or arrangements with Company Employees entered into prior to the Closing that are payable by Buyer or its Affiliates (including any Company Group member) solely as a result of the consummation of the transactions contemplated hereby (and not as a result of any action taken by Buyer or any of its Affiliates (including any Company Group member) following Closing), including the special incentive awards set forth on Section 6.12 of the Seller Disclosure Schedule, and (ii) with respect to the employer portion of employment Taxes payable in connection with the payments described in clause (i) above, in each case, to the extent unpaid as of the Closing; provided that “Closing Transaction Expenses” shall not include (x) any fees or expenses incurred by, or on behalf of, Buyer or any of its Affiliates (including any such costs incurred at the Closing and where “Affiliates” is not deemed to include the Company Group members) in connection with the performance by Buyer or any of its Affiliates of the transactions contemplated hereby or (y) any fees, expenses or liabilities specified in this Agreement to be incurred at the expense of Buyer or any of its Affiliates.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Comingled Data” has the meaning set forth in Section 5.23(d).

 

“Commercially Reasonable Efforts” means, with respect to the efforts to be expended by a Person with respect to any objective under this Agreement, such efforts to accomplish the objective as such Person would normally use to accomplish a similar objective as expeditiously as reasonably possible under similar circumstances exercising reasonable business judgment.  “Commercially Reasonable Efforts” will not require a Party (a) to make payments to unaffiliated third parties, incur non-de minimis liabilities to unaffiliated third parties or grant any non-de minimis concessions or accommodations, in each case, in order to obtain a consent from such unaffiliated third party or in connection with the replacement of any Seller Guarantees issued to such unaffiliated third parties in accordance with Section 5.16 unless the other Party agrees to reimburse and make whole such Party to its reasonable satisfaction for such payments, liabilities, concessions or accommodations requested to be made by the other Party (such reimbursement and make whole to be made promptly after the determination thereof following the Closing or, with respect to items incurred after the Closing, promptly thereafter), (b) to violate any Law, or (c) to initiate any Legal Proceeding.

 

“Company” has the meaning set forth in the Preamble.

 

“Company Benefit Plan” means any Employee Benefit Plan that is, or as of the Closing will be, sponsored or maintained by a member of the Company Group.

 

“Company Books and Records” means (a) all corporate or limited liability company minute books and related stock records of the Company Group members and (b) all other books, records, files and papers, whether in hard copy or computer format, including invoices, ledgers, correspondence, plats, drawings, photographs, product literature, sales and promotional literature, equipment test records, studies, reports, manufacturing and quality control records and procedures, research and development files, manuals and data, sales and purchase correspondence, distribution lists, customer lists, lists of suppliers, personnel and employment records and accounting and business books, records, files, documentation and materials, in each case, to the extent Related to the Business.

 

“Company Data” means all Data of Seller and its Affiliates and the Company Group, in each case, to the extent Related to the Business.

 

“Company Employee” means any employee, who, as of immediately prior to the Closing Date, is employed by the Company Group (including any employees who are furloughed, out on disability, absent from work on leave of absence or otherwise).

 

“Company Group” means, collectively, the Company and each of its direct and indirect Subsidiaries, excluding WGN.

 

“Company Group Tax Claim” has the meaning set forth in Section 7.02(a).

 

“Company Intellectual Property Rights” means, collectively, all Intellectual Property Rights owned by Company Group members and all Intellectual Property Rights owned by Seller or its Affiliates (other than Company Group members) and used primarily by any Company Group member in the conduct of the Business.

 

“Confidential Information” means (a) with respect to Buyer, the terms of this Agreement and the other Transaction Documents and all confidential and/or proprietary information regarding Buyer and its Affiliates (including, from and after the Closing, the Company Group) and (b) with respect to Seller, the terms of this Agreement and the other Transaction Documents and all confidential and/or proprietary information regarding Seller and its Affiliates (excluding, from and after the Closing, the Company Group).  Notwithstanding the foregoing, in no event shall “Confidential Information” include (y) any information that is, or thereafter becomes, available to and known by the public other than through a violation of the Mutual Confidentiality Agreement or the receiving Party’s obligations in Section 5.08(b) or (z) any information that is, or thereafter becomes, available to a Party or its Representatives on a non-confidential basis from a third-party source, provided that such third party is not and was not prohibited from disclosing such Confidential Information to such Party or its Representatives by a legal, fiduciary, or contractual obligation.

 

“Continuation Period” has the meaning set forth in Section 6.01.

 

“Contract” means any legally binding executory contract, subcontract, agreement, license, sublicense, lease, sublease, instrument, indenture, promissory note or other legally binding commitment or undertaking, whether written or oral.

 

“Controlled Group” means any trade or business (whether or not incorporated) (i) under common control within the meaning of Section 4001(b)(1) of ERISA with the Company or any other member of the Company Group or (ii) which together with the Company or any other member of the Company Group is treated as a single employer under Section 414(t) of the Code.

 

“Covered Person” has the meaning set forth in Section 3.09(c)(vii).

 

“COVID Action” means any commercially reasonable actions that Seller or the Company reasonably determines are necessary or prudent for any Company Group member to take in connection with (a) the public health emergency, epidemic, pandemic, or disease outbreak caused by the COVID-19 virus or any variant or strain thereof, (b) reinitiating operation of all or a portion of the respective businesses of the Company Group members to the extent shut down or slowed down in response to the events referenced in clause (a) of this definition, (c) mitigating the adverse effects on the respective businesses of the Company Group members of the events referenced in clause (a) of this definition, (d) any customer request or any slow down or shut down in a customer’s business in response to the events referenced in clause (a) of this definition, and (e) protecting the health and safety of customers, employees and other business relationships and to ensure compliance with any Applicable Law, pronouncement or guideline issued by a Governmental Authority or order of any state Governor in which any Company Group member operates or where the Company Employees reside providing for business closures, “sheltering-in-place” in each case in response to the events referenced in clause (a) of this definition.

 

“Current Representation” has the meaning set forth in Section 11.09(a).

 

“Damages” means any damage, loss, liability, Tax and expense (including reasonable expenses of investigation and reasonable attorneys’ fees and expenses in connection with any Legal Proceeding whether involving a Third Party Claim or a claim solely between the Parties); provided that, notwithstanding the foregoing, “Damages” (a) shall not include any punitive or exemplary damages, except in each case, to the extent actually required to be paid pursuant to a Third Party Claim that has been Finally Determined and (b) for purposes of claims for indemnification pursuant to Section 9.02(a)(ii) (other than for Willful Breach), Sections 9.02(a)(iii) through (a)(v), Section 9.02(b)(ii) (other than for Willful Breach), and Section 9.02(b)(iii), shall not include any incidental, indirect, consequential or other speculative forms of damages, or damages based on diminution in value or multiples.

 

“Data” means all data and collections of data, whether machine readable or otherwise, including to the extent applicable the following: financial and business information, including rates and pricing data and information, earnings reports and forecasts, macro-economic reports and forecasts, marketing plans, business and strategic plans, general market evaluations and surveys, budgets, accounting, financing and credit-related information, quality assurance policies, procedures and specifications, customer information and lists, and business and other processes, procedures and policies (including, for example, handbooks and manuals, control procedures, and process descriptions), including any blueprints, diagrams, flow charts, or other charts, user manuals, training manuals, training materials, command media, and documentation, and other financial or business information.

 

“Debt Commitment Letter” means that certain executed commitment letter, dated as of the date of this Agreement (together with each exhibit, annex, schedule or other attachment thereto, as amended, supplemented, replaced, extended or otherwise modified in accordance with Section 5.12 from time to time after the date of this Agreement) from the lenders party thereto (including any lenders that become party thereto by joinder in accordance with the terms thereof) (collectively, the “Lenders”) pursuant to which the Lenders have agreed, subject to the terms and conditions thereof, to provide the debt amounts set forth therein (such debt financing and any Alternative Financing, the “Debt Financing”) in the form provided to Seller via email from Chris Folmsbee at Sidley Austin LLP on June 5, 2021.

 

“Debt Financing Related Parties” means any former, current or future general or limited partners, stockholders, managers, members, agents, Representatives, Affiliates, successors or assigns of the Debt Financing Sources.

 

 

“Debt Financing Source” means each Person (including each agent and arranger) that has committed to provide or to cause to provide the Debt Financing pursuant to the Debt Commitment Letter, together with their respective Affiliates and Representatives involved in the Debt Financing and their permitted successors and assigns.

 

“Deductible” has the meaning set forth in Section 9.03(a).

 

“Deficit Amount” has the meaning set forth in Section 2.06(e).

 

“Determination Date” has the meaning set forth in Section 2.06(c).

 

“Dispute” has the meaning set forth in Section 11.11(a).

 

“Disputed Items” has the meaning set forth in Section 2.06(c).

 

“Employee Benefit Plan” means any written or unwritten (a) “employee benefit plan” as defined in Section 3(3) of ERISA (whether or not subject to ERISA) or (b) employee benefit or compensation plan, program, practice, policy, agreement or arrangement, including any employment, consulting or severance arrangement, salary continuation, bonus, incentive, equity or equity-based compensation, retirement, pension, profit sharing, deferred compensation, retention, change-in-control, health, dental, vision, post-employment or post-retirement, welfare, employee loan, life insurance, disability, fringe benefit, tuition, vacation or paid time off plan, agreement, Contract, fund or arrangement, in each case that is maintained or contributed to by Seller or any of its Subsidiaries for the benefit of any current or former Company Employees.

 

“End Date” has the meaning set forth in Section 10.01(a)(ii).

 

“Enforceability Exception” has the meaning set forth in Section 3.02(b).

 

“Environmental Laws” means any and all Applicable Laws that have as their principal purpose the protection, preservation, investigation, remediation, or restoration of, or prevention of harm or damage to, natural resources or the environment, or (to the extent addressing human exposure to Hazardous Substances) occupational or human health and safety, including the Comprehensive Environmental Response, Compensation and Liability Act; the Resource Conservation and Recovery Act; the Hazardous Materials Transportation Act; the Federal Insecticide, Fungicide, and Rodenticide Act; the Toxic Substances Control Act; the Clean Water Act; the Clean Air Act; and the Oil Pollution Act.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Estimated Closing Cash” has the meaning set forth in Section 2.04.

 

“Estimated Closing Indebtedness” has the meaning set forth in Section 2.04.

 

“Estimated Closing Net Working Capital” has the meaning set forth in Section 2.04.

 

“Estimated Closing Purchase Price” means, without duplication, $640,000,000 in cash, plus (a) the Estimated Net Working Capital Adjustment Amount, minus (b) Estimated Closing Indebtedness, minus (c) Estimated Closing Transaction Expenses, plus (d) Estimated Closing Cash.

 

“Estimated Closing Transaction Expenses” has the meaning set forth in Section 2.04.

 

“Estimated Net Working Capital Adjustment Amount” means an amount, which may be positive, negative or zero, equal to (a) if Estimated Closing Net Working Capital is greater than Target Net Working Capital plus $1,413,000, or if Estimated Closing Net Working Capital is less than Target Net Working Capital minus $1,413,000 then Estimated Closing Net Working Capital minus Target Net Working Capital, or (b) if Estimated Closing Net Working Capital is within the range of Target Net Working Capital plus $1,413,000 and Target Net Working Capital minus $1,413,000, then zero.

 

“Existing Asbestos Litigation” has the meaning set forth in Section 5.21.

 

“Existing Shared Permits” has the meaning set forth in Section 5.27.

 

“FCC” has the meaning set forth in Section 5.17.

 

“FCC Licenses” has the meaning set forth in Section 5.17.

 

“Fee Letter” has the meaning set forth in Section 4.05(b).

 

“Final Allocation Schedule” has the meaning set forth in Section 2.02(b).

 

“Final Closing Statement” has the meaning set forth in Section 2.06(a).

 

“Finally Determined” means, (a) in respect of any Third Party Claim, that such claim has been resolved by (i) a written settlement entered into in accordance with this Agreement or (ii) an Order of a Governmental Authority with competent jurisdiction (in each case without possibility of appeal or where the time for appeal has expired) and (b) in respect of any other claim, that such claim has been resolved by (i) a written agreement between the Indemnifying Party and the Indemnified Party or (ii) an Order of a Governmental Authority with competent jurisdiction (in each case without possibility of appeal or where the time for appeal has expired).

 

“Financial Statements” has the meaning set forth in Section 3.07.

 

“Financing Failure Termination” has the meaning set forth in Section 10.02(c).

 

“Financing Termination Fee” has the meaning set forth in Section 10.02(c).

 

“Fraud” means actual and intentional common law fraud committed by a Party with respect to the making of the representations and warranties included herein.

 

“FSA” has the meaning set forth in Section 6.05.

 

“FSA Amount” has the meaning set forth in Section 6.05.

 

“Fundamental Warranties” shall mean, collectively, the Buyer Fundamental Warranties and the Seller Fundamental Warranties.

 

“GAAP” means generally accepted accounting principles in the United States.

 

“Gary Locomotive Shop” has the meaning set forth in Section 5.20(b).

 

“Gary Works” means Seller’s steel making and finishing plant located in Gary, Indiana with an annual steel production capacity of 7.5 million tons.

 

“Governmental Authority” means any domestic federal, state, municipal or local government (including any subdivision, court, administrative agency, regulatory body or commission or other authority thereof, any state Governor or the President of the United States), or any quasi‑governmental or private body exercising any regulatory, importing or other governmental or quasi-governmental authority.

 

“GRW” means Gary Railway Company, a Delaware corporation.

 

“Hazardous Substances” means any pollutant, contaminant or any toxic, radioactive or otherwise hazardous substance, waste or material, including petroleum, as such terms are defined in, identified pursuant to, or give rise to liability under any Environmental Law.

 

“Historical Financial Statements” has the meaning set forth in Section 3.07.

 

“ICCTA” means the ICC Termination Act of 1995, as amended.

 

“Inactive Company Employee” means any employee of Seller or its Affiliates who primarily provides services for the benefit of the Company Group and who, as of immediately prior to the Closing, is not actively providing services (e.g., an employee on a short or long term disability, military leave or another leave of absence, but not an employee who is on a vacation).

 

“Increase Amount” has the meaning set forth in Section 2.06(e).

 

“Indebtedness” means all payment obligations (including in respect of principal, interest, premiums (including make-whole premiums), prepayment penalties, breakage costs, fees, expenses or similar charges arising as a result of the discharge of such amount owed and payments or premiums attributable to, or which arise as a result of, the transactions contemplated hereby) of the Company Group, without duplication, in respect of: (a) borrowed money, (b) obligations evidenced by bonds, notes, debentures or other similar instruments, (c) lease obligations that are required to be capitalized in accordance with GAAP, (d) extensions of credit to or for the account of that Person (including reimbursement or payment obligations of such Person relating to drawn letters of credit, bankers’ acceptances, surety or other bonds or similar instruments) or for the deferred purchase price of property or other assets or services or arising under conditional sale or other title retention agreements, in each case other than trade payables arising in the ordinary course of business, (e) any indebtedness or other obligations of any other Person of the type described in the preceding clauses (a) through (d) to the extent guaranteed by any Company Group member, (f) any indebtedness or other obligations of any other Person described in the preceding clauses (a) through (e) to the extent secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned by any Company Group member, (g) any payroll Taxes the payment or deposit of which are being deferred pursuant to Section 2302 of the Coronavirus Aid, Relief, and Economic Security Act, as amended, (h) any accrued Federal Employers Liability Act liabilities that remain unpaid as of the end of the day on the Closing Date, (i) any accrued asset retirement obligations that remain unpaid as of the end of the day on the Closing Date, (j) any outstanding remediation costs related to the May 2019 fuel leak at the Gary Works, and (k) any accrued restructuring and severance costs, including restructuring costs and any remaining severance costs in connection with the prior employee arbitration settlement first paid in November of 2020, in each case, that remain unpaid as of the end of the day on the Closing Date; provided that notwithstanding anything to the contrary in the foregoing, Indebtedness shall not include any Closing Transaction Expenses or any Liability under operating leases.

 

“Indemnified Party” has the meaning set forth in Section 9.03.

 

“Indemnifying Party” has the meaning set forth in Section 9.03.

 

“Indemnified Taxes” means, without duplication, any (a) income Taxes of any Company Group member for any Pre-Closing Tax Period and, with respect to any Straddle Period, the portion of such Straddle Period ending on and including the Closing Date, (b) Taxes of an affiliated, consolidated, combined, unitary or similar group of which any Company Group member (or any direct or indirect predecessor of any Company Group member) is or was a member on or prior to the Closing Date (including pursuant to Treasury Regulation Section 1.1502-6 or similar provisions of state, local or foreign Tax Law), (c) any Taxes of any Person (other than a Company Group member) imposed on any Company Group member as a transferee or successor, by Contract or pursuant to any Applicable Law (other than pursuant to commercial Contracts that do not primarily relate to Taxes), which Taxes relate to an event or transaction occurring before the Closing, (d) Taxes arising as a result of the transactions contemplated by Section 5.15 (Redemption of USS Portfolio Shares), or Section 5.24 (Pre-Closing Restructuring), (e) Transfer Taxes arising as a result of the transfer of real and personal property pursuant to Section 5.20 (Real Estate Matters) and (f) Taxes arising from the matters set forth in clauses (a), (b) and (c) in Section 3.20(a)(v)(1) of the Seller Disclosure Schedule; provided, however, that no such Tax shall constitute an Indemnified Tax to the extent such Tax (x) was taken into account in computing Closing Indebtedness, Closing Transaction Expenses or Net Working Capital (for the avoidance of doubt, it being understood that the inclusion of such Tax in the computation of Closing Indebtedness, Closing Transaction Expenses or Net Working Capital resulted in a reduction to the Purchase Price), (y) is attributable to any action or event occurring on the Closing Date after the Closing that is outside the ordinary course of business and not expressly contemplated by this Agreement or (z) is attributable to a breach of covenant or agreement made or to be performed by Buyer or any of its Affiliates pursuant to Article 7.

 

“Intellectual Property Rights” means any trademark, service mark, trade name, rights in logos, trade dress, domain name, mask work, invention, patent, trade secret, copyright, moral rights, database rights, rights in designs, rights in confidential information, or know-how (in each case whether registered or unregistered, and including any registrations or applications for registration of any of the foregoing), in each case anywhere in the world.

 

“Interests” has the meaning set forth in the Recitals.

 

“Interim Financial Statements” has the meaning set forth in Section 3.07.

 

“IRS” means the United States Internal Revenue Service.

 

“Knowledge of Seller” or “Seller’s Knowledge” or any other similar knowledge qualification in this Agreement means the actual knowledge, as of the date the underlying representation or warranty is being made, of those individuals set forth in Section 1.01(c) of the Seller Disclosure Schedule which shall be deemed to include the knowledge any such individual should have had as of the date of the representation after reasonable consultation with all of such individual’s direct reports who would reasonably be expected to have knowledge of the applicable matters.

 

“Law” means any law, statute, code, ordinance, rule, regulation, treaty, decree, directive, convention or Order of any Governmental Authority.

 

“Leased Personal Property” has the meaning set forth in Section 3.15(b).

 

“Leased Real Property” means the real property subject to the Real Property Leases.

 

“Legal Proceeding” means any judicial, administrative or arbitral action, suit, claim, investigation or proceeding (public or private) by or before a Governmental Authority or arbitrator.

 

 

“License Agreements” has the meaning set forth in Section 5.18(c).

 

“Lien” means, with respect to any property or asset, any mortgage, deed of trust, deed to secure debt, charge, pledge, lien, assignment, hypothecation, easement, encumbrance, security interest, title retention or any other security agreement or arrangement in respect of such property or asset.

 

“Limited Guaranty” has the meaning set forth in Section 4.05(a).

 

 

“Marketing Period” means the period commencing with the date of this Agreement and ending on the date that is 45-days after the date of this Agreement.

 

“Material Adverse Effect” means a material adverse effect on the financial condition, business, assets or results of operations of the Company Group, taken as a whole; provided, however, that any such effect resulting or arising from or relating to any of the following matters will not be considered when determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur:  (a) changes in GAAP or changes in accounting requirements applicable to any industry in which the Company Group operates, (b) changes in the financial, securities, commodities currency, capital or credit markets or in general economic, political or regulatory conditions in any jurisdiction in which the Company operates, (c) conditions generally affecting any industry in which the Company Group operates, (d) acts of war, sabotage or terrorism, natural disasters (including hurricanes, tornadoes, floods, earthquakes and weather-related events), (e) any public health emergencies, pandemics, epidemics or disease outbreak or the worsening of any of the foregoing conditions (including the COVID-19 virus or any variant or strain thereof) which are existing on the date of this Agreement, (f) trade disputes or the imposition or removal of tariffs, (g) changes in Applicable Laws, pronouncements or guidelines (or revised guidelines) issued by a Governmental Authority providing for business closures, “sheltering-in-place” or other restrictions that relate to, or arise out of, health conditions (including any public health emergency, pandemic, epidemic or disease outbreak (including the COVID-19 virus or any variant or strain thereof)), (h) except as provided in clause (y) in the exceptions below, any temporary shutdown, outage, closure, idling, suspension of operations or other similar disruption to any facility owned or operated by Seller or its Affiliates and served by the Business, in each case, resulting or arising from or relating to any of the matters set forth in the foregoing clauses (a) through (g), (i) the negotiation, execution or performance of this Agreement, the announcement, pendency or consummation of the transactions contemplated hereby, the identity of Buyer or any facts or circumstances relating to Buyer or the announcement or other disclosure of Buyer’s plans or intentions with respect to the Company after the Closing, including the effect of any of the foregoing on the relationships, contractual or otherwise, of the Company with clients, customers, employees, suppliers, vendors, service providers or Governmental Authorities, (j) changes in the composition, number or identity of the Company Employees, (k) any failure to meet any internal or analysts’ projections, forecasts or predictions in respect of financial performance (it being understood that any underlying facts giving rise or contributing to such failure that are not otherwise excluded from the definition of “Material Adverse Effect” may be taken into account in determining whether there has been a Material Adverse Effect), (l) any action taken (or omitted to be taken) at the request of or with the consent of Buyer, (m) any action taken by Seller or the Company that is required or contemplated pursuant to this Agreement or (n) any strike, shutdown, other labor dispute, lockout, or local, national or international political, labor or social conditions, except (x) in the case of clauses (a) through (h), to the extent the Business, taken as a whole, is materially and disproportionately affected thereby relative to other participants in the industry or industries in which the Business operates (in which case only the incremental material and disproportionate effect or effects may be taken into account in determining whether there has been a Material Adverse Effect) and (y) any Specified Facility Event shall be deemed to be a Material Adverse Effect.  For the avoidance of doubt, a “Material Adverse Effect” shall be measured only against past performance of the Company Group, and not against any forward-looking statements, projections or forecasts of the Company Group or any other Person.

 

“Material Customer” has the meaning set forth in Section 3.21(a).

 

“Material Supplier” has the meaning set forth in Section 3.21(b).

 

“Material Contracts” has the meaning set forth in Section 3.11(a).

 

“Material Regulatory Concession” has the meaning set forth in Section 5.03(b)(i).

 

“Mon Valley Works” means Seller’s integrated steelmaking operation with an annual steel production capacity of 2.9 million tons that is composed of Seller’s Clairton Plant located in Clairton, Pennsylvania, Edgar Thomson Plant located in Braddock, Pennsylvania, and Irvin Plant located in West Mifflin, Pennsylvania.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 3(37) of ERISA.

 

“Mutual Confidentiality Agreement” means the Mutual Confidentiality Agreement between Fortress Worldwide Transportation and Infrastructure General Partnership and Seller, dated as of September 17, 2020.

 

“Net Working Capital” means, as of any date, (i) the aggregate value of the current assets of the Company Group as of such date minus (ii) the aggregate value of the current liabilities of the Company (including accrued non-income Taxes not yet due and payable) as of such date, in each case, to the extent specifically listed, and strictly limited to the line items on the illustrative calculation of Net Working Capital set forth in Exhibit A and calculated in accordance with GAAP; provided that Net Working Capital shall exclude deferred Tax assets, deferred Tax liabilities, Taxes of any Seller Group member to be borne by Seller or any of its Affiliates (for the avoidance of doubt, excluding any Company Group member after the Closing), all Closing Cash (without regard to the $10,000,000 cap), Closing Indebtedness and Closing Transaction Expenses.

 

“New Permits” has the meaning set forth in Section 5.27.

 

“Order” means any order, injunction, judgment, decree, ruling, writ, assessment or arbitration award of a Governmental Authority of competent jurisdiction.

 

“ordinary course of business” means, unless specifically indicated otherwise, any actions taken by the Company Group members (individually or collectively, as applicable), which are (a) consistent with the past usual customs and practices of the applicable Company Group members or Seller or (b) a COVID Action.

 

“Organizational Documents” means (a) the articles or certificates of incorporation and the by-laws of a corporation, (b) the partnership agreement and any statement of partnership of a general partnership, (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership, (d) the operating or limited liability company agreement and the certificate of formation of a limited liability company, (e) any charter, joint venture agreement, stockholders’ agreement, voting agreement, registration rights agreement or similar document adopted, entered into, or filed in connection with the creation, formation or organization of a Person or otherwise, and (f) any amendment to or equivalent of any of the foregoing.

 

“Owned Real Property” means all real property currently owned by any Company Group member, including all real property owned in fee simple.

 

“Party” has the meaning set forth in the Preamble.

 

“Permits” has the meaning set forth in Section 3.13(b).

 

“Permitted Liens” means (a) mechanics, materialmen’s and similar Liens with respect to any amounts not yet delinquent or which are being contested in good faith and for which adequate reserves have been established on the Financial Statements in accordance with GAAP, (b) Liens for Taxes, assessments and other governmental levies, fees or charges not yet delinquent or which are being contested in good faith and for which adequate reserves have been established on the Financial Statements in accordance with GAAP, (c) purchase money Liens and Liens securing rental payments under capital lease agreements, (d) imperfections, defects or irregularities in title on real property (including easements, covenants, conditions, rights of way and similar restrictions of record) that were not incurred in connection with any Indebtedness and do not materially interfere with the use of such real property in the Business by any member of the Company Group, (e) Liens on real property that are matters of public record or would be disclosed by a current, accurate survey or physical inspection of such real property; provided, however, that any such matters do not materially interfere with the use of such real property in the Business by any member of the Company Group, (f) zoning, building codes and other applicable land use Laws regulating the uses or occupancy of real property or the activities conducted thereon that are imposed by any Governmental Authority having jurisdiction over such real property and that are not materially violated by the current use or occupancy of such real property or the applicable Company Group member’s operations, (g) to the extent terminated on or before Closing, Liens securing payment, or any other obligations, of the Company Group with respect to Indebtedness, (h) Liens constituting a lease, sublease or occupancy agreement that gives any third party any right to occupy any real property, (i) any right, interest, Lien or title of a fee owner, grantor, lessor, sublessor or licensor under an easement, right of way or access agreement, lease, sublease, license or other occupancy or use agreement or in the property being leased or so conveyed or licensed not granted by any member of the Company Group, (j) Liens arising under worker’s compensation, unemployment insurance, social security, retirement or similar Laws, and (k) Liens described in Section 1.01(d) of the Seller Disclosure Schedule.

 

“Person” means an individual, firm, body corporate (wherever incorporated), partnership, limited liability company, association, joint venture, trust, works council or employee representative body (whether or not having separate legal personality) or other entity or organization, including a government, state or agency of a state or a Governmental Authority.

 

“Personal Property Leases” has the meaning set forth in Section 3.15(b).

 

“Potential Contributor” has the meaning set forth in Section 9.07.

 

“Pre-Closing Tax Period” means any Tax period ending on or before the Closing Date.

 

“Preliminary Closing Statement” has the meaning set forth in Section 2.04.

 

“Proposed Allocation Schedule” has the meaning set forth in Section 2.02(b).

 

“Purchase Price” has the meaning set forth in Section 2.02(a).

 

“R&W Insurance Binder” means the conditional binders for the R&W Insurance Policy attached hereto as Exhibit D.

 

“R&W Insurance Policy” means the buy-side representation and warranty insurance policies issued by the R&W Insurer to Buyer with respect to this Agreement in substantially the form attached hereto as Exhibit D.

 

“R&W Insurer” means collectively, (a) Euclid Transactional LLC (on its own behalf and on behalf of North American Capacity Insurance Company, Aspen Specialty Insurance Company, General Security Indemnity Company of Arizona, Steadfast Insurance Company), (b) Illinois Union Insurance Company and (c) AIG Specialty Insurance Company.

 

“Railway Services Agreement” means the railway services agreement, dated as of the Closing Date, to be entered into by Seller (or its designee) and the Company (or its designee on behalf of the Company Group), substantially in the form of Exhibit B.

 

“Railroad Assets” means rail track, rail ties, rail bed, ballast, bridges, culverts, tunnels, locomotives, rail cars, maintenance of way equipment, and the buildings, plants and structures used for railroad operation of maintenance.

 

“Real Property Leases” means the leases, licenses, subleases, sublicenses, track leases, trackage rights and other rights of use pursuant to which any Company Group member has a leasehold interest or rights to use any real property.

 

“Reference Time” means 12:01 am (Eastern time) on the Closing Date.

 

“Regulatory Failure Termination” has the meaning set forth in Section 10.02(b).

 

“Regulatory Restraint” has the meaning set forth in Section 10.02(b).

 

“Regulatory Termination Fee” has the meaning set forth in Section 10.02(b).

 

“Related Party Agreement” means any Contract between the Company or any Subsidiary of the Company, on the one hand, and Seller or any Affiliate of Seller (other than any Company Group Member), on the other.

 

“Related to the Business” means (other than with respect to Company Intellectual Property Rights) used in or arising, directly or indirectly, out of or related to the operation or conduct of the Business.

 

“Release Agreement” means the release agreement, dated as of the Closing Date, to be entered into by Seller, Buyer and the Company, substantially in the form of Exhibit C.

 

“Representatives” means, with respect to any Person, any officer, director, principal, partner, manager, attorney, accountant, agent, employee, consultant, financial or other advisor or other authorized representative of such Person.

 

“Section 338(h)(10) Election” has the meaning set forth in Section 7.07.

 

“Section 338(h)(10) Election Notice” has the meaning set forth in Section 7.07.

 

“Securities Act” means the Securities Act of 1933.

 

“Seller” has the meaning set forth in the Preamble.

 

“Seller Benefit Plan” means any employee benefit or compensation plan or arrangement, including each Employee Benefit Plan, that is, or as of the Closing will be, sponsored, maintained or contributed to by Seller or any of its Subsidiaries or to which Seller or any of its Subsidiaries is a party or has any liability, other than any Company Benefit Plan.

 

“Seller Cure Period” has the meaning set forth in Section 10.01(a)(iv).

 

“Seller DB Plan” has the meaning set forth in Section 6.09.

 

“Seller Disclosure Schedule” means the disclosure schedule with respect to this Agreement delivered by Seller to Buyer on the date hereof.

 

“Seller Entities” has the meaning set forth in Section 11.09(a).

 

“Seller Fundamental Warranties” means the representations and warranties set forth in Section 3.01, Section 3.02, Section 3.03, Section 3.04(a), Section 3.04(b), Section 3.05, Section 3.06, Section 3.08 and Section 3.23.

 

“Seller Group” means any affiliated, consolidated, combined, unitary or other similar group for income or other applicable Tax purposes of which Seller or any of its Affiliates is a member, including the affiliated group (within the meaning of Section 1504(a) of the Code) of which Seller is the common parent.

 

“Seller Group Tax Return” means the consolidated U.S. federal income tax return of the affiliated group (within the meaning of Section 1504(a) of the Code) of which Seller is the common parent and any other Tax Return of any other Seller Group for state or local income or other applicable tax purposes.

 

“Seller Guarantees” means all obligations of Seller or any of its Affiliates (other than the Company Group members) under any guarantee, letter of credit, bond or other similar commitment, obligation or arrangement in existence as of the Closing Date relating to the Company Group for which Seller or any of its Affiliates (other than the Company Group members) is or may be liable, as guarantor, indemnitor, original tenant, primary obligor, Person required to provide financial support or collateral in any form whatsoever, or otherwise (including by reason of performance guarantees), in each case, set forth in Section 1.01(e) of the Seller Disclosure Schedule.

 

“Seller Marks” has the meaning set forth in Section 5.07(b).

 

“Seller Welfare Plan” has the meaning set forth in Section 6.05.

 

“Seller’s Bank Account” means an account or accounts designated by Seller, by notice to Buyer, which notice shall be delivered not later than two Business Days prior to the Closing Date.

 

“Shared Contract” means any Contract, sales order, purchase order, instrument or other commitment, obligation or arrangement entered into prior to the Closing that is between Seller or any of its Subsidiaries (including the Company Group members), on the one hand, and one or more third parties, on the other hand, that inures to the benefit or burden of both the Business and the remainder of Seller’s business (other than the Business), including as set forth on Section 1.01(f) of the Seller Disclosure Schedule, other than any Employee Benefit Plan and collective bargaining agreements.

 

“Shared Contractual Liability” means Liabilities in respect of Shared Contracts.

 

“Specified Facility Event” means, (a) that all railcar volumes at Gary Works or Mon Valley Works in the period beginning after the date hereof and ending on the Closing Date are reduced to an average of (i) 400 or fewer railcars at Gary Works or (ii) 500 or fewer railcars at Mon Valley Works, in each case, during any continuous period of three consecutive months or (b) Seller publicly announces its intention to permanently cease material steel production at Gary Works or Mon Valley Works (as applicable); provided, however, that the foregoing shall exclude shutdowns or idling (i) required for scheduled and unscheduled maintenance of such facility, (ii) required by a Governmental Authority (including pronouncements or guidelines issued by a Governmental Authority or order of any state Governor in connection with the COVID-19 or any variant or strain thereof), (iii) resulting from strike, work stoppage, lockout or other labor dispute, or (iv) fires, acts of war, sabotage or terrorism or natural disasters (including hurricanes, tornadoes, floods, earthquakes and weather-related events).

 

“Sponsor” has the meaning set forth in Section 4.05(a).

 

“STB” means the U.S. Surface Transportation Board or any predecessor or successor Governmental Authority.

 

“STB Approval” has the meaning set forth in Section 5.03(f).

 

“Straddle Period” means a Tax period that begins on or before, but ends after, the Closing Date.

 

“Subsidiary” means, with respect to a Person, any other Person of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions are at the time directly or indirectly owned by such first Person; provided, however, that for purposes of this Agreement, WGN shall not be deemed a Subsidiary of any Company Group member.  For the avoidance of doubt, (a) the Company is a Subsidiary of Seller prior to Closing, and (b) the Company is a Subsidiary of Buyer after Closing.

 

“Target Net Working Capital” means negative $14,130,000.

 

“Tax” means any U.S. federal, state or local, or non-U.S. income, gross receipts, license, payroll, railroad retirement, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding on amounts paid to or by any Person, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, ad valorem, alternative or add-on minimum, estimated, or other tax or governmental fee or other like assessment in the nature of a tax of any kind whatsoever, including any interest, penalty, or addition, whether disputed or not.

 

“Tax Return” means any return, statement, report, election, declaration or form for Taxes (including any estimated tax or information return or report) filed or required to be filed with any Taxing Authority.

 

“Tax Sharing Arrangement” means any written agreement or arrangement between any Company Group member, on the one hand, and any member of any Seller Group (other than any Company Group member), on the other hand, providing for the allocation or payment of Tax liabilities or of Tax benefits, other than pursuant to commercial Contracts that do not primarily relate to Taxes.

 

“Taxing Authority” means any Governmental Authority responsible for the imposition or collection of any Tax.

 

“Terminating Buyer Breach” has the meaning set forth in Section 10.01(a)(v).

 

“Terminating Seller Breach” has the meaning set forth in Section 10.01(a)(iv).

 

“Third Party Claim” has the meaning set forth in Section 9.04(a).

 

“Transaction Agreements” means this Agreement, the Assignment Agreement, the Railway Services Agreement, the Transition Services Agreement, the Access Agreements, the License Agreements and the Release Agreement.

 

“Transfer Tax” means any transfer, documentary, sales, use, stamp, registration, value added or other similar non-income Tax.

 

“Transition Services Agreement” means the transition services agreement, dated as of the Closing Date, to be entered into by Seller (or its designee) and Buyer (or its designee), substantially in the form of Exhibit E.

 

“Transtar 401(k) Plan” has the meaning set forth in Section 6.08.

 

“TSA Consent” means a Third Party Consent (as defined in the Transitions Services Agreement)

 

“USS Portfolio” means USS Portfolio Delaware, Inc., a Delaware corporation.

 

“US Smelter Acceptance Correspondence” means the correspondence from Esther Klisura of Seller to Richard Verkler of Canadian National dated June 23, 2020.

 

“US Smelter Existing Claims” means the requests set forth in the US Smelter Notice and the acceptance of tender and defense of such requests set forth in the US Smelter Acceptance Correspondence.

 

 

“Waiving Parties” has the meaning set forth in Section 11.09(a).

 

“WARN” has the meaning set forth in Section 3.17(d).

 

“WATCO Purchase Agreement” means the Agreement for Sale of Certain Assets and Rights and Assumption of Certain Obligations of Birmingham Southern and WGN to Birmingham Terminal Railway, L.L.C., dated December 1, 2011.

 

“WGN” means Warrior & Gulf Navigation LLC, an Alabama limited liability company.

 

“WGN Equity” has the meaning set forth in Section 5.24.

 

“Willful Breach” has the meaning set forth in Section 10.02(a).

 

“Working Hours” means 9:00 a.m. to 5:30 p.m. on a Business Day in the relevant location.

 

“Zug Island Bridges” has the meaning set forth in Section 5.20(a).

 

 

(a)          The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

 

(b)          The headings and captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.

 

(c)          References to Articles, Sections, Schedules and Exhibits are to Articles, Sections, Schedules and Exhibits of this Agreement unless otherwise specified.

 

(d)          All Schedules (including the Seller Disclosure Schedule) and Exhibits annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.

 

(e)          Any capitalized terms used in any Schedule (including the Seller Disclosure Schedule) or Exhibit but not otherwise defined therein shall have the meaning as defined in this Agreement.

 

(f)          Where there is any inconsistency between the definitions set out in Section 1.01 and the definitions set out in any other Section or any Schedule (including the Seller Disclosure Schedule) or Exhibit, then, for the purposes of construing such Section, Schedule or Exhibit, the definitions set out in such Section, Schedule or Exhibit shall prevail.

 

(g)          The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other theory extends and such phrase shall not mean “if”.

 

(h)          The Parties have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.

 

(i)          Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular.

 

(j)          References to one gender shall include all genders.

 

(k)          Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “, but not limited to,”, whether or not they are in fact followed by those words or words of like import.

 

(l)          “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form.

 

(m)          References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder.

 

(n)          References to any agreement or Contract are to that agreement or Contract as amended, modified or supplemented from time to time in accordance with the terms thereof.

 

(o)          References to any Person include the successors and permitted assigns of that Person.

 

(p)          References from or through any date mean, unless otherwise specified, from and including or through and including, respectively.

 

(q)          References to “$” are to United States dollars.

 

(r)          When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded.  If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

 

(s)          The word “or” is not exclusive, unless the context otherwise requires.

 

(t)          For the purposes of this Agreement, any document that is described as being “delivered,” “furnished” or “made available” shall be treated as such if a copy of such document has been put in the virtual dataroom prepared by Seller and hosted by Datasite^® or otherwise provided to Buyer or any of its Representatives in electronic or hard-copy format at least one Business Day prior to the date hereof.

 

 

ARTICLE 2

Purchase and Sale

 

 

Section 2.02 Purchase Price.

 

(a)          The purchase price for the Interests (the “Purchase Price”) shall equal the sum of (i) the Estimated Closing Purchase Price, plus (ii) the Adjustment Amount (if applicable).  The Purchase Price shall be paid in accordance with Section 2.05 and shall be subject to adjustment as provided in Section 2.06 and Section 7.08.

 

(b)          Within 90 days after the Determination Date, Buyer will submit to Seller a schedule setting forth a proposed allocation of the Purchase Price (and any other relevant amounts for U.S. federal income tax purposes) (i) among the assets of the Company and any Subsidiary of the Company that is disregarded as separate from Seller for U.S. federal income tax purposes and (ii) if Buyer timely provides the Section 338(h)(10) Election Notice pursuant to Section 7.07, among the assets of each Company Group member for which a Section 338(h)(10) Election will be made, which allocation shall be prepared in accordance with Sections 338 and 1060 of the Code and the Treasury Regulations issued thereunder (the “Proposed Allocation Schedule”).  If, within 30 days following delivery of the Proposed Allocation Schedule, Seller does not notify Buyer in writing of its disagreement with the Proposed Allocation Schedule, the Proposed Allocation Schedule shall be final and binding.  If Seller submits to Buyer a written notice of objection to any portion of the Proposed Allocation Schedule within 30 days of Seller’s receipt of the Proposed Allocation Schedule, then the Parties shall work in good faith for a period of 30 days (or such longer period as they may mutually agree) of Buyer’s receipt of such objection to resolve any and all disagreements with respect to the Proposed Allocation Schedule and if they are able to do so shall make such revisions to the Proposed Allocation Schedule to reflect such resolution, which shall be final and binding.  If, within 30 days following Buyer’s receipt of such objection, Seller and Buyer are unable to resolve such disagreement, the Parties shall request an independent accounting firm to be mutually selected to make a final determination of any disputed items within 30 days and any such determination by the independent accounting firm shall be final and binding.  The costs of the independent accounting firm shall be borne equally by Seller and Buyer.  In the event the Parties agree on the Proposed Allocation Schedule or revisions of such are deemed accepted and rendered final or resolved by the independent accounting firm (in each case, the “Final Allocation Schedule”), each Party will not (and will cause its Affiliates to not) take any position inconsistent with the Final Allocation Schedule on any Tax Return (including IRS Form 8594 and, if applicable, IRS Form 8883) or in any audit, examination or other proceeding relating to Taxes that is inconsistent with the Final Allocation Schedule, except to the extent otherwise required by Applicable Law.

 

 

 

 

(a)          At or prior to Closing, Seller shall deliver or cause to be delivered to Buyer:

 

 

(ii)         copies of the Transaction Agreements, duly executed by Seller and the Company, as applicable;

 

(iii)        a certification from Seller that Seller is not a “foreign person” within the meaning of Section 1445 of the Code (it being understood that an IRS Form W-9 shall be acceptable); and

 

(iv)        the certificate referred to in Section 8.02(c).

 

(b)          At or before Closing, Buyer shall deliver or cause to be delivered to Seller:

 

(i)          copies of the Transaction Agreements, duly executed by Buyer;

 

 

(iii)        the certificate referred to in Section 8.03(c).

 

(c)          At Closing, Buyer shall pay, to Seller, the Estimated Closing Purchase Price in U.S. dollars and in immediately available funds by wire transfer to Seller’s Bank Account.

 

 

(a)          As soon as reasonably practicable following the Closing Date, and in any event within 90 calendar days thereof, Buyer shall prepare and deliver to Seller, Buyer’s calculation of (i) Closing Net Working Capital, (ii) Closing Indebtedness, (iii) Closing Transaction Expenses, (iv) Closing Cash, (v) Closing Net Working Capital Adjustment Amount, and (vi) on the basis of the foregoing, a calculation of the Closing Purchase Price (together with the calculations referred to in clauses (i) through (v) above, the “Final Closing Statement”).  The Closing Net Working Capital, Closing Indebtedness and Closing Cash shall be prepared in accordance with GAAP and the defined terms used in this Section 2.06(a); provided, however, that the Final Closing Statement (and any amounts included therein) shall not give effect to any act or omission by Buyer or any of its Subsidiaries or the Company taken after the Reference Time or reflect any payments of cash in respect of the Purchase Price, or any financing transactions in connection therewith or reflect any expense or liability for which Buyer is responsible under this Agreement.  For the avoidance of doubt, neither Section 2.04 nor this Section 2.06 is intended to be used to adjust the Closing Purchase Price for errors or omissions, under GAAP or otherwise, that may be found with respect to the Financial Statements or the Target Net Working Capital.  No fact or event, including any market or business development, occurring after the Closing Date, and no change in GAAP or Applicable Law after the Balance Sheet Date, shall be taken into consideration in the calculations to be made pursuant to Section 2.04 or this Section 2.06.  If Buyer fails to timely deliver the Final Closing Statement in accordance with the first sentence of this Section 2.06(a) within such 90-day period, then the Preliminary Closing Statement delivered by Seller to Buyer pursuant to Section 2.04 shall be deemed to be Buyer’s proposed Final Closing Statement, for all purposes hereunder, and Seller shall retain all of its rights under this Section 2.06 with respect thereto, including the right to dispute the calculations set forth therein in accordance with the provisions of this Section 2.06.

 

(b)          Following the Closing, Buyer shall provide Seller and its Representatives access to the records, properties, personnel and (subject to the execution of customary work paper access letters if requested) auditors of the Company Group relating to the preparation of the Final Closing Statement and shall cause the personnel of the Company Group to cooperate with Seller in connection with its review of the Final Closing Statement.

 

(c)          If Seller shall disagree with any of Buyer’s calculations contained in the Final Closing Statement, it shall notify Buyer of such disagreement in writing, setting forth in reasonable detail the particulars of such disagreement, within 60 days after its receipt of the Final Closing Statement.  In the event that Seller does not provide such a notice of disagreement within such 60-day period, Seller shall be deemed to have agreed to the Final Closing Statement (including the determinations included therein) delivered by Buyer, which shall be final, binding and conclusive for all purposes hereunder.  In the event any such notice of disagreement is timely provided, Buyer and Seller shall work in good faith for a period of 30 days (or such longer period as they may mutually agree) to resolve any disagreements with respect to any calculations contained in the Final Closing Statement.  If, at the end of such period, they are unable to resolve such disagreements, then any such remaining disagreements (such remaining disagreements, the “Disputed Items”) shall be resolved by KPMG LLP, or if KPMG LLP is unavailable for such engagement or at the time of such proposed engagement is no longer independent, such other independent accounting firm of internationally recognized standing as may be mutually selected by Buyer and Seller (such firm, the “Auditor”).  Buyer and Seller shall promptly provide their assertions regarding the Disputed Items in writing to the Auditor and to each other.  The Auditor shall be instructed to render its determination with respect to the Disputed Items as soon as reasonably possible (which the Parties agree should not be later than 45 days following the date on which the disagreement is referred to the Auditor).  The Auditor shall base its determination solely on (i) the written submissions of the Parties and shall not conduct an independent investigation and (ii) the extent (if any) to which Closing Net Working Capital, Closing Indebtedness, Closing Transaction Expenses and/or Closing Cash require adjustment (only with respect to the Disputed Items submitted to the Auditor) in order to be determined in accordance with Section 2.06(a) (including the definitions of the defined terms used in Section 2.06(a)).  The Auditor shall not assign a value to any Disputed Item submitted to the Auditor greater than the greatest value for such item claimed by either Party or less than the smallest value for such item claimed by either Party.  The determination of the Auditor shall be final, conclusive and binding on the Parties.  The date on which Closing Net Working Capital, Closing Indebtedness, Closing Transaction Expenses, Closing Cash, Closing Net Working Capital Adjustment Amount and Closing Purchase Price are finally determined in accordance with this Section 2.06(c) is hereinafter referred to as the “Determination Date.”  All fees and expenses of the Auditor relating to the work, if any, to be performed by the Auditor hereunder shall be borne between Buyer and Seller, based upon a fraction, the numerator of which is the portion of the aggregate amount of the Disputed Items not awarded to the applicable Party and the denominator of which is the aggregate amount of the Disputed Items.  (For example, if Seller challenges items underlying the calculations of Closing Net Working Capital, Closing Indebtedness and/or Closing Cash in the net amount of $1,000,000, and the Auditor determines that Seller has a valid claim for $400,000 of the $1,000,000, Seller shall bear 60% of the fees and expenses of the Auditor and Buyer shall bear 40% of the fees and expenses of the Auditor.)

 

(d)          The “Adjustment Amount,” which may be positive or negative, shall mean the Closing Purchase Price (as finally determined in accordance with Section 2.06(a) or Section 2.06(c), as applicable) minus the Estimated Closing Purchase Price.  The Adjustment Amount shall be paid in accordance with Section 2.06(e).

 

(e)          If the Adjustment Amount is a positive number (such amount, the “Increase Amount”), then, promptly following the Determination Date, and in any event within three Business Days of the Determination Date, Buyer shall pay to Seller an amount equal to the Increase Amount in immediately available funds by wire transfer to Seller’s Bank Account.  If the Adjustment Amount is a negative number (the absolute value of such amount, the “Deficit Amount”), then, promptly following the Determination Date, and in any event within three Business Days of the Determination Date, Seller shall pay to Buyer an amount equal to the Deficit Amount in immediately available funds by wire transfer to an account of Buyer designated by Buyer.  The Parties agree that any payment made pursuant to this Section 2.06(e) shall be treated as an adjustment to the Purchase Price for U.S. federal income (and other applicable) tax purposes, except to the extent otherwise required by Applicable Law.

 

Section 2.07 Withholding.  Notwithstanding anything to the contrary contained in the Transaction Agreements, Buyer, its Affiliates and, effective upon the Closing, each Company Group member, and any of their respective agents, shall be entitled to deduct and withhold from any amount otherwise payable pursuant to the Transaction Agreements such amounts as are required to be deducted and withheld with respect to the making of such payment under Applicable Law; provided, however, that if a Person intends to make any deduction or withholding from any such payment it shall inform the other Person at least five days in advance of the relevant payment of its intention to make such deduction or withholding (or as soon as practicable if later, in the case of (a) an obligation to deduct or withhold as a result of a change in Law within such five day period or (b) any payment due within five days of Buyer becoming aware of its obligation to make such payment), including the amount to be deducted and withheld and the basis for such deduction and withholding, and reasonably cooperates with the other Person to reduce or eliminate such deduction or withholding.  In the event that any amounts are so withheld, Buyer shall (a) timely remit, or cause to be remitted, such amounts to the applicable Governmental Authority in accordance with Applicable Law and (b) cooperate with Seller as and to the extent reasonably requested in connection with filing and pursuing any claim for a refund of such Taxes.  If any amount is so withheld and paid over to the applicable Governmental Authority or other appropriate Person, such withheld amounts shall be treated for all purposes of the Transaction Agreements as having been paid to the Person with respect to which such deduction or withholding was imposed.  Assuming that Seller provides the closing deliverable described in Section 2.05(a)(iii), each of Buyer and Seller hereby agrees that it is not aware of any Applicable Law in effect as of the date hereof that would require Buyer or any of its Affiliates to deduct and withhold from any amounts payable to any Person pursuant to this Agreement.

 

	if to Buyer to:
		Percy Acquisition LLC
		c/o Fortress Investment Group LLC
		1345 Avenue of the Americas, 45th Floor
		New York, NY 10105
		Attention:	Kenneth J. Nicholson
			Frank Carfora
		Email:	knicholson@fortress.com
			fcarfora@fortress.com
		with a copy to:
		Sidley Austin
		1501 K Street, N.W.
		Washington, D.C. 20005
		Attention:	Terence Hynes
		Email:	thynes@sidley.com

	if to Seller to:
		United States Steel Corporation
		600 Grant Street
		Pittsburgh, PA 15219
		Attention:	Richard Fruehauf
			Mark Furry
		Email:	RLFruehauf@uss.com
			mwfurry@uss.com
		with a copy to:
		Jones Day
		500 Grant Street, Suite 4500
		Pittsburgh, PA 15219
		Attention:	David A. Grubman
		Email:	dgrubman@jonesday.com

	PERCY ACQUISITION LLC
	By:	/s/ Kenneth Nicholson
		Name:	Kenneth Nicholson
		Title:	Treasurer
	UNITED STATES STEEL CORPORATION
	By:	/s/ Richard Fruehauf
		Name:	Richard Fruehauf
		Title:	Senior Vice President – Strategic Planning and Chief  Strategy & Development Officer

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