<PAGE> 1
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
(Date of earliest event reported)
September 30, 1994
------------------
CLEVELAND-CLIFFS INC
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 1-8944 34-1464672
- ------------------------------------------------------------------------------
(State or jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1100 Superior Avenue, Cleveland, Ohio 44114-2589
--------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 694-5700
--------------
Not Applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report)
The Exhibit Index is located on page 6 of this filing.
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Item 2. Acquisition or Disposition of Assets.
-------------------------------------
On September 30, 1994, Cleveland-Cliffs Inc, an Ohio corporation
("Cliffs"), acquired through its wholly-owned subsidiary, Cliffs Minnesota
Minerals Company, a Minnesota corporation ("CMMC") (Cliffs and CMMC
collectively called "Buyers"), all of the outstanding shares of stock of Cyprus
Northshore Mining Corporation, a Delaware corporation ("Northshore")
(consisting of 100 shares of Common Stock, par value $1.00 per share), from
Cyprus Amax Minerals Company, a Delaware corporation ("Cyprus"). Northshore
in turn owns all of the issued and outstanding capital stock of Cyprus Silver
Bay Power Corporation, a Delaware corporation ("Power"). For the stock of
Northshore, Buyers made a cash payment to Cyprus of $66,000,000, plus an
estimated net working capital amount of $31,245,115.73, for a total of
$97,245,115.73. The Buyers paid for the acquisition from current cash and
marketable securities. An appropriate cash adjustment will be made
between the Buyers and Cyprus within forty-five (45) days of the closing date
to cover the difference between the estimated net working capital paid at
closing and actual net working capital determined upon receipt of actual
financial information as of the September 30, 1994 closing date, which
adjustment may be in either Cyprus or Buyers' favor.
Northshore is primarily engaged in the production of iron ore pellets
and Power is primarily engaged in the retail and wholesale sale of electric
power. The principal assets of Northshore consist of an iron ore mine and
processing facilities, with a current annual capacity of four million tons of
iron ore pellets, supported by six million tons of annual concentrate capacity,
and the principal asset of Power consists of a 115 megawatt power generation
plant. Cliffs intends that Northshore will continue its iron ore business as
presently conducted.
2
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Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
-----------------------------------------
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. It is impractical to
provide the required financial statements for Northshore at the time of this
report on Form 8-K. These financial statements will be filed as they are
available, which will be as soon as practicable, but shall in no event be later
than 60 days after October 15, 1994.
(b) PRO FORMA FINANCIAL INFORMATION. It is impractical to provide the
required pro forma financial information at the time of this report on Form
8-K. The pro forma financial information will be filed as soon as it is
available, which will be as soon as practicable, but shall in no event be later
than 60 days after October 15, 1994.
(c) EXHIBITS
2. Stock Purchase Agreement, dated as of September 30, 1994, among
Cleveland-Cliffs Inc, Cliffs Minnesota Minerals Company and Cyprus
Amax Minerals Company.(1)
_______________________________
(1) The Exhibits, Annexes and Schedules to the Stock Purchase Agreement do not
contain information which is material to an investment decision and which
is not otherwise disclosed in such Agreement. The omitted Exhibits,
Annexes and Schedules include the following: (i) Financial Statements of
Mining; (ii) Financial Statements of Power; (iii) Calculations of Net
Monetary Working Capital;
3
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_______________________________
1. Footnote Continued From Previous Page
(iv) Form of Opinion of Counsel to the Seller; (v) Form of Opinion of
Counsel to the Buyers; (vi) Adjustment Chart for Mix of Acid Pellet/Flux
Pellet Production; (vii) Form 8023A; (viii) Exceptions to the Seller's
Representations and Warranties Concerning the Transaction; (ix) Exceptions
to the Buyers' Representations and Warranties Concerning the Transaction;
(x) Exceptions to and Disclosure Related to the Buyers' Representations
and Warranties Concerning the Companies; (xi) Environmental and Other
Governmental Permits Issued in the Name "Cyprus"; (xii) Directors and
Officers of the Companies; (xiii) Notices, Filings and Consents
Contravention; (xiv) Exceptions to Title to Assets Representation; (xv)
Certain Significant Differences Between Seller's Standard Accounting
Practices and GAAP; (xvi) Exceptions to Subsequent Events
Representations; (xvii) Exceptions to Legal Compliance; (xviii) List of
Real Property in which the Companies have an Ownership or Leasehold
Interest. Encumbrances and Dispositions of Real Property since 1989;
(xix) Material Items of Intellectual Property; (xx) Exceptions to
Representations as to Material Contracts; (xxi) Exceptions to
Representations as to Accounts Receivable and Notes; (xxii) Material
Litigation; (xxiii) Names, Social Security Numbers and Outstanding
Workers' Compensation Claims of the Companies' Employees; (xxiv) List of
Employee Benefit Plans. Exceptions to Employee Benefit Plan
Representations; (xxv) Exceptions to Permits and Licenses
Representations. List of Permits and Licenses; (xxvi) Exceptions to MSHA
Representations. The registrant agrees to furnish a copy of any omitted
Exhibit, Annex or Schedule to the Securities and Exchange Commission upon
request.
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SIGNATURE
---------
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.
CLEVELAND-CLIFFS INC
(Registrant)
By /s/ John S. Brinzo
-------------------------
John S. Brinzo
Senior Executive - Finance
Date: October 13, 1994
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EXHIBIT INDEX
-------------
Exhibit Page
Number Exhibit Number
------ ------------------------------------ ------
2 Stock Purchase Agreement, 7-84
dated as of September 30, 1994,
among Cleveland-Cliffs Inc,
Cliffs Minnesota Minerals Company
and Cyprus Amax Minerals Company
6
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EXHIBIT 2
STOCK PURCHASE AGREEMENT
AMONG
CLEVELAND-CLIFFS INC,
CLIFFS MINNESOTA MINERALS COMPANY,
AND
CYPRUS AMAX MINERALS COMPANY
DATED SEPTEMBER 30, 1994
Page 7
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<TABLE>
STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
<CAPTION> PAGE
----
<S> <C> <C>
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Purchase and Sale of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Basic Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Closing Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Adjustment of Closing Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Contingent Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(e) The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(f) Deliveries at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3. Representations and Warranties Concerning the Transaction . . . . . . . . . . . . . . . . . . 13
(a) Representations and Warranties of the Seller . . . . . . . . . . . . . . . . . . . . . 13
(b) Representations and Warranties of the Buyer . . . . . . . . . . . . . . . . . . . . . 15
4. Representations and Warranties Concerning the Companies . . . . . . . . . . . . . . . . . . . 17
(a) Organization, Qualification, and Corporate Power . . . . . . . . . . . . . . . . . . . 17
(b) Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(c) Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(d) Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(e) Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(f) Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(g) Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(h) Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(i) Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(j) Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(k) Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(l) Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(m) Tangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(n) Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(o) Notes and Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(p) Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(q) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(r) Product Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(s) Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(t) Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(u) Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(v) Environmental Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(w) Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(x) MSHA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(y) Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
i
</TABLE>
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<TABLE>
<S> <C> <C>
5. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(b) Litigation Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(c) Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(d) Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(e) Administrative Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(f) Code Section 338(h)(10) Election and Allocation of Purchase Price . . . . . . . . . . 38
(g) Minnesota Occupation Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(h) Minnesota Taconite Production Tax . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(i) Other Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(j) Companies to Change Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(k) Reissuance of Permits and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(l) Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(m) Operation of Business of Companies After Closing; Employees . . . . . . . . . . . . . 57
(n) Workers Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6. Conditions of Obligation to Close . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(a) Conditions of Obligation of the Buyers . . . . . . . . . . . . . . . . . . . . . . . . 59
(b) Conditions to Obligation of the Seller . . . . . . . . . . . . . . . . . . . . . . . . 62
7. Remedies for Breaches of This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
(a) Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 63
(b) Indemnification Provisions for Benefit of the Buyers . . . . . . . . . . . . . . . . . 64
(c) Indemnification Provisions for Benefit of the Seller . . . . . . . . . . . . . . . . . 65
(d) Matters Involving Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
(e) Determination of Adverse Consequences . . . . . . . . . . . . . . . . . . . . . . . . 68
(f) Other Indemnification Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
(a) Press Releases and Public Announcements . . . . . . . . . . . . . . . . . . . . . . . 69
(b) No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
(c) Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
(d) Succession and Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
(e) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(f) Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(g) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(h) Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(i) Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(j) Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(k) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(l) Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(m) Incorporation of Exhibits, Annexes, and Schedules . . . . . . . . . . . . . . . . . . 72
9. Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
</TABLE>
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Exhibit A -- Financial Statements of Mining
Exhibit B -- Financial Statements of Power
Exhibit C -- Calculations of Net Monetary Working Capital
Exhibit D -- Form of Opinion of Counsel to the Seller
Exhibit E -- Form of Opinion of Counsel to the Buyers
Exhibit F -- [Reserved]
Exhibit G -- [Reserved]
Exhibit H -- Adjustment Chart for Mix of Acid Pellet/Flux Pellet
Production
Exhibit I -- Form 8023A
Annex I -- Exceptions to the Seller's Representations and Warranties
Concerning the Transaction
Annex II -- Exceptions to the Buyers' Representations and Warranties
Concerning the Transaction
Disclosure -- Exceptions to and Disclosure Related to the Buyers'
Schedule Representations and Warranties Concerning the Companies
Schedule -- Environmental and Other Governmental Permits Issued in the
5(k) Name "Cyprus"
iii
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INDEX TO DISCLOSURE SCHEDULE
Section 4(a) [ ] Directors and Officers of the Companies
Section 4(c) [ ] Notices, Filings and Consents Contravention
Section 4(e) [ ] Exceptions to Title to Assets Representation
Section 4(f) [ ] Certain Significant Differences Between Seller's
Standard Accounting Practices and GAAP
Section 4(g) [ ] Exceptions to Subsequent Events Representations
Section 4(i) [ ] Exceptions to Legal Compliance
Section 4(k) [ ] List of Real Property in which the Companies have an
Ownership or Leasehold Interest. Encumbrances and
Dispositions of Real Property since 1989
Section 4(l)(iii) [ ] Material Items of Intellectual Property
Section 4(n) [ ] Exceptions to Representations as to Material
Contracts
Section 4(o) [ ] Exceptions to Representations as to Accounts
Receivable and Notes
Section 4(q) [ ] Material Litigation
Section 4(s) [ ] Names, Social Security Numbers and Outstanding
Workers Compensation Claims of the Companies'
Employees
Section 4(t) [ ] List of Employee Benefit Plans. Exceptions to
Employee Benefit Plan Representations
Section 4(v) [ ] Exceptions to Permits and Licenses Representations.
List of Permits and Licenses
Section 4(x) [ ] Exceptions to MSHA Representations
iv
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STOCK PURCHASE AGREEMENT
Agreement dated September 30, 1994 by and between CLEVELAND-CLIFFS INC
and CLIFFS MINNESOTA MINERALS COMPANY, Ohio and Minnesota corporations,
respectively (the "Buyers"), and CYPRUS AMAX MINERALS COMPANY, a Delaware
corporation (the "Seller"). The Buyers and the Seller are referred to
collectively herein as the "Parties."
The Seller owns all of the issued and outstanding capital stock of
Cyprus Northshore Mining Corporation, a Delaware corporation (hereinafter
"Mining") which in turn owns all of the issued and outstanding capital stock of
Cyprus Silver Bay Power Corporation, a Delaware corporation (hereinafter
"Power").
This Agreement contemplates a transaction in which Buyers will
purchase from Seller, and Seller will sell to Buyers, all of the outstanding
capital stock of Mining in return for cash and deferred contingent cash
payments and all of the issued and outstanding stock of Power will continue to
be owned by Mining.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"Active Employees" means all persons who were employed by either of
the Companies immediately preceding the Closing Date, including those on
vacation, leave of absence or disability (whether short-term or long-term
disability or worker's compensation) and those subject to or on lay-off.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages,
<PAGE> 7
dues, penalties, fines, costs, amounts paid in settlement, Liabilities,
obligations, Taxes, liens, losses, expenses, and fees, including court costs
and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Sec. 1504 or any similar group defined under a similar provision of state
or local law.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"Buyers" has the meaning set forth in the preface above.
"Capacity" means four million Tons of dry Pellets [*].
"CERCLA Hazardous Substances" has the meaning set forth in Section
101(14) of the Comprehensive Environmental Response, Compensation and Liability
Act of 1990, as amended.
"Closing" has the meaning set forth in Section 2(e) below.
"Closing Date" has the meaning set forth in Section 2(e) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Companies" means Mining and Power.
[*] mean iron ore which has been beneficiated but not agglomerated and
which is (1) shipped and sold as a final product [*] or (2) shipped to a
pellet plant [*] for processing into Pellets for Buyers'
account.
"Confidential Information" means any information concerning the
businesses and affairs of the Companies that is not already generally available
to the public.
[*CONFIDENTIAL TREATMENT REQUESTED BY CLEVELAND-CLIFFS INC]
2
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"Controlled Group of Corporations" has the meaning set forth in Code
Sec. 1563. For purposes of Employee Benefit Plans, "Controlled Group of
Corporations" means, with respect to the Companies, (a) any corporation that is
a member of a controlled group of corporations, as determined under Section
414(b) of the Code, which includes such Company; (b) any member of an
affiliated service group, as determined under Section 414(m) of the Code, of
which such Company is a member; (c) any trade or business (whether or not
incorporated) that is under common control with such Companies, as determined
under Section 414(c) of the Code; and (d) any other organization or entity
which is required to be aggregated with the Companies under Section 414(o) of
the Code and regulations issued thereunder.
[*]
"Disclosure Schedule" has the meaning set forth in Section 4 below.
[*] means a production facility owned in whole or in part, directly
or indirectly or through one or more Affiliates, by either of the Buyers or
either of the Companies and located on the property of the Companies, [*].
[*] means any one or more modules/furnaces of production [*].
[*] means a production facility owned in whole or in part, directly
or indirectly or through one or more Affiliates, by either of the Buyers or
either of the Companies and located off the property of the Companies, [*]
entirely or in any part from iron ore concentrates supplied by Mining.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c)
[*CONFIDENTIAL TREATMENT REQUESTED BY CLEVELAND-CLIFFS INC]
3
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qualified defined benefit retirement plan or arrangement which is an Employee
Pension Benefit Plan (including any Multiemployer Plan), or (d) Employee
Welfare Benefit Plan or material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Sec. 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Sec. 3(l).
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and Recovery
Act of 1976, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings,
and charges thereunder) of federal, state and local governments (and all
agencies thereof) concerning pollution or protection of the environment,
including laws relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes into ambient air, surface water, ground water, or
lands or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"Financial Statement" has the meaning set forth in Section 4(g) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Indemnified Party" has the meaning set forth in Section 7(d) below.
4
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"Indemnifying Party" has the meaning set forth in Section 7(d) below.
"Intellectual Property" means (a) all inventions, whether patentable
or unpatentable and whether or not reduced to practice, all improvements
thereto, and all patents, patent applications, and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (b) all trademarks, service marks,
trade dress, logos, trade names, and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith, (c) all copyrightable works, all copyrights,
and all applications, registrations, and renewals in connection therewith, (d)
all mask works and all applications, registrations, and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (f) all computer
software (including data and related documentation), (g) all other proprietary
rights, and (h) all copies and tangible embodiments thereof (in whatever form
or medium).
"Interest Rate" means the annual rate of interest quoted from time to
time by Chemical Bank in New York City as its prime rate of interest for the
purpose of determining the interest rates charged by it for United States
dollar commercial loans in the United States.
"Knowledge" means actual knowledge after reasonable inquiry and, when
used with respect to Seller's representations and warranties in Section 4
hereof, means actual knowledge after reasonable inquiry, and includes actual
knowledge of officers of the Seller and the Companies.
5
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"Liability" means any liability, whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due, including any liability for Taxes.
"Material Adverse Effect" means a material adverse effect, or any
condition, situation or set of circumstances that could reasonably be expected
to have a material adverse effect on the business or the assets or the
financial condition or operations of the Companies taken as a whole and
"material", except where used with reference to the Buyers or Seller, means
material to the Companies taken as a whole except that matters involving
liabilities for money owed or for corrective expenditures which individually
exceed $250,000 shall be considered material. The inclusion of any item of
information in the Disclosure Schedule to this Agreement (or in any document
delivered coincidentally with the execution if this Agreement) shall not in and
of itself be deemed to be an acknowledgement by any party that such information
is material or has a Material Adverse Effect or has occurred outside the
Ordinary Course of Business.
"Mesabi Trust" means the entity which is the lessor/sublessor of
Mining's principal iron ore mineral reserves.
"Modified GAAP" means the Seller's standard accounting practices which
comply with GAAP at the corporate level but differ materially from GAAP at the
subsidiary level in the following respects: lack of required financial
statement footnotes, the format of financial statement schedules and the items
set forth in Section 4(f) to the Disclosure Schedule.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in
Section 4(f) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
4(f) below.
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"Most Recent Fiscal Year End" has the meaning set forth in Section
4(f) below.
"MSHA" has the meaning set forth in Section 4(x) hereof.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Net Monetary Working Capital" means the current assets, excluding
cash of the Companies minus their current liabilities, excluding accrued
liabilities for taxes which are to be paid by Seller pursuant to Sections 5(g),
(h) or (i), calculated in a manner consistent with Exhibit C hereto.
"Ordinary Course of Business" means the ordinary course of business
consistent with past practice, including with respect to quantity and
frequency.
"Parties" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pellets" means iron ore which has been beneficiated, agglomerated and
fused at high temperatures, including sinter feed and pellet chips.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity, or any department, agency, or political
subdivision thereof.
"Product" means iron ore, aggregate, concentrates and power which has
been mined and processed or produced by the Companies.
"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406
and Code Sec. 4975.
"Purchase Price" has the meaning set forth in Section 2(b) below.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"Securities Act" means the Securities Act of 1933, as amended.
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<PAGE> 13
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, material men's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes
that the taxpayer is contesting in good faith through appropriate proceedings,
(c) purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Share" means any share of the Common Stock issued and outstanding of
Mining.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the voting stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Tax" or "Taxes" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, production, premium, windfall profits, environmental (including
taxes under Code Sec. 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 7(d) below.
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<PAGE> 14
"Ton" means 2,240 pounds avoirdupois.
2. PURCHASE AND SALE OF SHARES.
(a) BASIC TRANSACTION. Subject to the terms and
conditions of this Agreement, Buyers agree to purchase from Seller,
and Seller agrees to sell to Buyers, all of the Shares for the
consideration specified below in this Section 2 (the "Purchase
Price").
(b) CLOSING PURCHASE PRICE. Buyers agree to pay to
Seller at the Closing (the "Closing Purchase Price") U.S. Sixty-Six
Million Dollars ($66,000,000) in cash plus an amount in cash equal to
the estimated Net Monetary Working Capital of the Companies as of the
Closing Date based upon the Most Recent Fiscal Month End balance
sheets of the Companies. The Closing Purchase Price shall be payable
at Closing by wire transfer or other delivery of immediately available
funds.
(c) ADJUSTMENT OF CLOSING PURCHASE PRICE. On or prior to
the forty-fifth (45th) day following the Closing, Seller shall provide
to Buyers balance sheets of the Companies as of the Closing Date and a
calculation of the Net Monetary Working Capital of the Companies as of
the Closing Date. In the event that the amount of Net Monetary
Working Capital as of the Closing Date (x) exceeds the amount of the
estimated Net Monetary Working Capital of the Companies paid to Seller
at the Closing, Buyers shall pay to Seller by wire transfer the amount
of such excess plus interest at the Interest Rate in effect on the
last business day preceding the date of such wire transfer or (y) is
less than the amount of the estimated Net Monetary Working Capital of
the Companies paid to Seller at the Closing, Seller shall pay Buyers
by wire transfer the amount of such difference plus interest at the
Interest Rate in effect on the last business day preceding the date of
such wire transfer. The wire transfer from Buyer to Seller or from
Seller to
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<PAGE> 15
Buyer, as the case may be, required by the provisions of this Section
2(c) shall be made on or prior to the tenth (10th) day following
receipt by Buyer of the Closing Date balance sheets of the Companies.
In the event that Buyers dispute Seller's calculation of the Net
Monetary Working Capital of the Companies as of the Closing Date,
Buyers shall, within thirty (30) days of receipt of Seller's
calculation, deliver to Seller a schedule describing in reasonable
detail their objections to such calculations. Seller and Buyers shall
thereafter cooperate and diligently and in good faith attempt to
resolve any differences. Any differences which cannot be resolved
within sixty days shall be submitted for final determination by a
national firm of independent certified public accountants mutually
acceptable to Seller and Buyers.
(d) CONTINGENT PURCHASE PRICE. After the Closing, Buyers
agree to make, or cause Mining to make, the following contingent cash
payments to Seller:
(1) [*] in cash per [*] and [*] per [*] up to
[*] produced by Mining in each calendar year commencing [*]
until a total of [*] has been paid to Seller or until [*]
whichever first occurs. [*] Each payment required to be made
to Seller pursuant to this paragraph (d)(1.) shall be made by
wire transfer on or prior to [*] succeeding the end of the
calendar year to which such payment pertains. Each such
payment shall be preceded by a delivery to Seller of a
certificate of Buyers'
[*CONFIDENTIAL TREATMENT REQUESTED BY CLEVELAND-CLIFFS INC]
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<PAGE> 16
Chief Financial Officer certifying the measurement of (i) [*]
and (ii) [*], upon which such payment is based. During the
period in which contingent payments may be payable hereunder,
Seller shall be entitled from time to time, upon reasonable
advance notice and during normal business hours, to inspect
all [*] similar documents, records and instruments at Mining
(or at such other locations as such records may be maintained)
for the purpose of determining the accuracy of Buyers' and
Mining's measurement [*]. Buyers shall afford Seller such
access.
(2) Buyers shall pay to Seller, not to exceed in
the aggregate the sum of [*] any combination of the following:
[*] and [*] and, [*]
[*CONFIDENTIAL TREATMENT REQUESTED BY CLEVELAND-CLIFFS INC]
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<PAGE> 17
(3) For purposes of paragraph (d)(2) above, the
term [*] and the term [*].
(4) Any payment required to be made by Buyers or
the Companies pursuant to paragraph (d)(2) above shall be made
in cash by wire transfer not later than [*], as the case may
be. Seller shall be entitled from time to time (x) to
inquire of Buyers as to the status of [*] as the case may be,
which would require payment by Buyers under paragraph (d)(2)
above and (y) upon reasonable notice and during normal
business hours, to inspect the facilities, properties and
premises referred to in paragraph (d)(2) above to ascertain
whether [*]. Buyers shall promptly respond to any such
inquiries and afford such access.
(e) THE CLOSING. The closing of the transactions
contemplated by this Agreement shall occur at a closing (the
"Closing") to take place at the offices of Seller's counsel in
Minneapolis, Minnesota commencing at 9:00 a.m. local time on
September 30, 1994 or such other date as Buyers and Seller may
mutually determine.
(f) DELIVERIES AT THE CLOSING. At the Closing, (i)
Seller will deliver to Buyers the various certificates, instruments,
and documents referred to in Section 6(a) below, (ii)
[*CONFIDENTIAL TREATMENT REQUESTED BY CLEVELAND-CLIFFS INC]
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Buyers will deliver to Seller the various certificates, instruments,
and documents referred to in Section 6(b) below, (iii) Seller will
deliver to Buyers stock certificates representing all of its Shares of
Mining, endorsed in blank or accompanied by duly executed assignment
documents, and (iv) Buyers will deliver to Seller the amount of the
Closing Purchase Price as specified in Section 2(b) above.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) Representations and Warranties of Seller. Seller
represents and warrants to Buyers that the statements contained in
this Section 3(a) are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Section 3(a)), except as
set forth in Annex I attached hereto.
(i) ORGANIZATION OF SELLER. Seller is duly
organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation.
(ii) AUTHORIZATION OF TRANSACTION. Seller has
full corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation
of Seller, enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency,
moratorium and other similar laws affecting the rights of
creditors generally and except for limitations imposed by
general principles of equity. Except as set forth in Annex I
hereto, Seller need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
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(iii) NONCONTRAVENTION. Except as set forth in
Annex I hereto, neither the execution and the delivery of this
Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order,
decree, directive or ruling of any government, governmental
agency, or court to which Seller is subject, or any provision
of its charter or bylaws or (B) conflict with, result in a
breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, permit, instrument, or
other arrangement to which Seller is a party or by which it is
bound or to which any of its assets is subject.
(iv) BROKERS' FEES. Seller has no Liability or
obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transaction contemplated
by this Agreement for which Buyers could become liable or
obligated.
(v) SHARES. Seller holds of record and owns
beneficially 100 Shares, constituting all of the issued and
outstanding equity securities of Mining, free and clear of any
restrictions on transfer (other than any restrictions under
the Securities Act and state securities laws), Security
Interests, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. Seller is not a
party to any option, warrant, purchase right, or other
contract or commitment that could require Seller to sell,
transfer, or otherwise dispose of any capital stock of the
Companies (other than this Agreement). Seller is not a party
to any voting trust,
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<PAGE> 20
proxy, or other agreement or understanding with respect to the
voting of any capital stock of the Companies.
(b) REPRESENTATIONS AND WARRANTIES OF BUYERS. Buyers
jointly and severally represent and warrant to the Seller that the
statements contained in this Section 3(b) are correct and complete as
of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date
were substituted for the date of this Agreement throughout this
Section 3(b)), except as set forth in Annex II attached hereto.
(i) ORGANIZATION OF THE BUYERS. Each of Buyers
is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its
incorporation.
(ii) AUTHORIZATION OF TRANSACTION. Each of Buyers
has full corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation
of each of Buyers, enforceable in accordance with its terms,
except as enforcement may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting the
rights of creditors generally and except for limitations
imposed by general principles of equity. Except as set out in
Annex II hereto, neither of Buyers need give any notice to,
make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement.
(iii) NONCONTRAVENTION. Neither the execution and
the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will
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<PAGE> 21
(A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, directive or ruling of
any government, governmental agency, or court to which either
of Buyers is subject, or any provision of either of Buyers'
charters or bylaws or (B) conflict with, result in a breach
of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement,
contract, lease, license, permit, instrument, or other
arrangement to which either of Buyers is a party or by which
either of Buyers is bound or to which any of the assets of
either of Buyers is subject.
(iv) BROKERS' FEES. Neither of Buyers has any
Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Seller could become
liable or obligated.
(v) INVESTMENT. Each of Buyers has such
knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of its
purchase of the Shares. Each of the Buyers confirms that
Seller and the Companies have made available to the Buyers the
opportunity to ask questions of the officers and management
employees of the Companies and to acquire additional
information about the businesses and financial condition of
the Companies. Each of the Buyers is acquiring the Shares for
investment and not with a view toward or for sale in
connection with any distribution thereof, or with any present
intention of distributing or selling the Shares. Each of the
Buyers agrees the Shares may not be sold, transferred, offered
for sale, pledged,
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<PAGE> 22
hypothecated or otherwise disposed of without registration
under the Securities Act, except pursuant to an exemption from
such registration available under the Securities Act.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANIES.
Seller represents and warrants to Buyers that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout
this Section 4), except as set forth in the disclosure schedule delivered by
the Seller to the Buyers on the date hereof and initialed by the Parties (the
"Disclosure Schedule "). The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 4.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER.
Each of the Companies is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of
its incorporation. Each of the Companies is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction
where such qualification is required. Each of the Companies has full
corporate power and authority and all licenses, permits, and
authorizations necessary to carry on its business as currently
conducted by it and to own and use the properties owned and used by
it. Section 4(a) of the Disclosure Schedule lists the directors and
officers of each of the Companies. The Seller has delivered to the
Buyers correct and complete copies of the charter and bylaws of each
of the Companies (as amended to date). The minute books (containing
the records of meetings of the stockholders, the board of directors,
and any committees of the board of directors), the stock certificate
books, and the stock record books of each of the
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Companies are correct and complete in all material respects. Neither
of the Companies is in material violation of its charter or bylaws.
Power is a "Qualifying Facility" as defined in 18 CFR Sec.
292.101(b)(1) because Power constitutes a "Cogeneration Facility" as
defined in 18 CFR Sec. 292.203(b). Power meets all applicable
operating and efficiency standards for cogeneration facilities
specified in 18 CFR Sec. 292.205(a). Seller has, as the owner of
Power, provided to the Federal Energy Regulatory Commission the
information set forth in 18 CFR Sec. 292.207(b)(2)(i) through (iv) and
has obtained Federal Energy Regulatory Commission certification that
Power is a Qualifying Facility which order is found at 51 FERC
62,035, issued April 13, 1990. Seller has received no notice of any
action seeking a revocation of the qualifying status of Power.
(b) CAPITALIZATION. The authorized capital stock of
Mining consists of 1,000 shares of common stock, $1.00 par value per
share, of which 100 shares are issued and outstanding and no shares
are held in treasury. The authorized capital stock of Power consists
of 1,000 shares of common stock, $1.00 par value per share, of which
100 shares are issued and outstanding and no shares are held in
treasury. All of the issued and outstanding shares of capital stock
of each of the Companies have been duly authorized, are validly
issued, fully paid, and non assessable. All of the issued and
outstanding shares of capital stock of Power are held of record by
Mining. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require either of
the Companies to issue, sell, or otherwise cause to become outstanding
any additional shares of its capital stock. There are no outstanding
or authorized stock appreciation, phantom
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stock, profit participation, or similar rights with respect to the
capital stock of the Companies. There are no voting trusts, proxies,
or other agreements or understandings with respect to the voting of
the capital stock of either of the Companies.
(c) NONCONTRAVENTION. Except as set forth in Section
4(c) of the Disclosure Schedule, neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, directive or
ruling of any government, governmental agency, or court to which
either of the Companies is subject, or any provision of the charter or
bylaws of either of the Companies or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract, lease,
license, permit, instrument, or other arrangement to which either of
the Companies is a party or by which it is bound or to which any of
its assets is subject (or result in the imposition of any Security
Interest upon any of its assets). Except as set forth in Section 4(c)
of the Disclosure Schedule, neither of the Companies needs to give any
notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement.
(d) BROKERS' FEES. Neither of the Companies has any
Liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement.
(e) TITLE TO ASSETS. The Companies have good title to,
or a valid leasehold or license interest in, the properties and assets
used by them in the conduct of their business
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as currently conducted, or shown on the Most Recent Balance Sheet or
acquired after the date thereof, free and clear of all Security
Interests, except for properties and assets disposed of in the
Ordinary Course of Business since the date of the Most Recent Balance
Sheet and except as set forth on Section 4(e) of the Disclosure
Schedule.
(f) FINANCIAL STATEMENTS. Attached hereto as Exhibit A
and Exhibit B are the following financial statements respectively for
each of Mining and Power (collectively the "Financial Statements"):
(i) consolidated and consolidating balance sheets and statements of
income and cash flow as of and for the fiscal year ended December 31,
1993 (the "Most Recent Fiscal Year End") for the Companies; and (ii)
consolidated and consolidating balance sheets and statements of income
and cash flow (the "Most Recent Financial Statements") as of and for
the eight months ended August 31, 1994 (the "Most Recent Fiscal Month
End") for the Companies. The Financial Statements have been prepared
in accordance with Modified GAAP consistently applied, present fairly
in all material respects the financial condition of each of the
Companies as of such date and the results of their operations for such
period, and are consistent with the books and records of the Companies
(which books and records are correct and complete in all material
respects):
(g) SUBSEQUENT EVENTS. Since January 1, 1994 (or such
earlier date as may be specified below) there has not been any change
that has had a Material Adverse Effect on the Companies. Without
limiting the generality of the foregoing, since that date, except as
disclosed in Section 4(g) to the Disclosure Schedule:
(i) neither of the Companies has sold, leased,
transferred, or assigned any of its material assets, tangible
or intangible, other than for a fair consideration
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in the Ordinary Course of Business;
(ii) since January 1, 1990 neither of the
Companies has entered into any agreement, contract, lease, or
license which is currently in effect (or series of related
agreements, contracts, leases, and licenses which are
currently in effect) outside the Ordinary Course of Business;
(iii) no party (including the Companies) has
accelerated, terminated, modified, or cancelled any material
agreement, contract, lease, or license (or series of related
material agreements, contracts, leases, and licenses) to which
either of the Companies is a party or by which either of them
is bound;
(iv) since January 1, 1990 neither of the
Companies has imposed any material Security Interest upon any
of its assets, tangible or intangible;
(v) neither of the Companies has made any capital
expenditure (or series of related capital expenditures) in
excess of $250,000 outside the Ordinary Course of Business;
(vi) neither of the Companies has made any
material capital investment in, any material loan to, or any
material acquisition of the securities or assets of, any other
Person (or series of related material capital investments,
material loans, and material acquisitions) outside the
Ordinary Course of Business;
(vii) since January 1, 1990 neither of the
Companies has issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation involving more
than $250,000 in the aggregate;
(viii) neither of the Companies has delayed or
postponed the payment of
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accounts payable or other material Liabilities outside the
Ordinary Course of Business;
(ix) neither of the Companies has cancelled,
compromised, waived, or released any material right or claim
(or series of related material rights and claims) outside the
Ordinary Course of Business;
(x) neither of the Companies has granted any
license or sublicense of any rights under or with respect to
any material Intellectual Property;
(xi) there has been no material change made or
authorized in the respective charters or bylaws of the
Companies;
(xii) neither of the Companies has issued, sold, or
otherwise disposed of any of its capital stock, or granted any
options, warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of its
capital stock;
(xiii) neither of the Companies has experienced any
material damage, destruction, or loss (whether or not covered
by insurance) to its property except for ordinary wear and
tear;
(xiv) since January 1, 1990 neither of the
Companies has made any material loan to, or entered into any
other material transaction with, any of its directors,
officers, and employees outside the Ordinary Course of
Business;
(xv) neither of the Companies has entered into any
employment contract or collective bargaining agreement,
written or oral, or modified the terms of any existing such
contract or agreement;
(xvi) neither of the Companies has granted any
increase in the base
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compensation of any of nor made any other material changes in
the terms of employment of, its officers or employees outside
the Ordinary Course of Business;
(xvii) neither of the Companies has adopted,
amended, modified, or terminated any bonus, profit-sharing
incentive, severance, or other plan, contract, or commitment
for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other
Employee Benefit Plan);
(xviii) neither of the Companies has made or pledged
to make any charitable or other capital contribution outside
the Ordinary Course of Business;
(xix) neither of the Companies has committed to any
of the foregoing.
(h) UNDISCLOSED LIABILITIES. To the Seller's Knowledge,
neither of the Companies has any material Liabilities except for (i)
liabilities set forth in the Financial Statements and the Most Recent
Balance Sheet, (ii) liabilities which have arisen after the Most
Recent Fiscal Month End in the Ordinary Course of Business and which,
in the aggregate, are not material, (iii) Liabilities disclosed to
Buyers (or Buyers' consultants) on or prior to the date hereof or
otherwise known to Buyers on the date hereof, or (iv) Liabilities not
known to Seller on the date hereof.
(i) LEGAL COMPLIANCE. Except as set forth in Section
4(i) to the Disclosure Schedule and except for any non-compliance
which would not have a Material Adverse Effect, the Companies have
complied with all applicable laws rules and regulations of each
jurisdiction in which the Companies conduct their businesses, and with
all judgments, orders, injunctions and decrees applicable to the
Companies or their properties.
(j) TAX MATTERS.
(i) Each of the Companies has filed all Tax
Returns that it was
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required to file. All such Tax Returns were correct and
complete in all material respects. All Taxes owed (whether or
not shown on any Tax Return) and which are due and payable
have been paid.
(ii) Each of the Companies has withheld and paid
all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third
party.
(iii) Neither of the Companies (A) has been a
member of an Affiliated Group filing a consolidated federal
income Tax Return (other than a group the common parent of
which was Seller) or (B) has any Liability for the Taxes of
any Person (other than itself) under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.
(k) REAL PROPERTY. Section 4(k) of the Disclosure
Schedule contains a complete list of all real property which either of
the Companies may claim an ownership or leasehold interest in at the
date of this Agreement (the "Real Property"). Except as is disclosed
in Section 4(k) of the Disclosure Schedule, the Companies have not
encumbered or disposed of their ownership or leasehold interests in
the Real Property since August of 1989.
(l) INTELLECTUAL PROPERTY.
(i) The Companies own or have the right to use
pursuant to license, sublicense, agreement, or permission all
Intellectual Property used in the conduct of the businesses of
the Companies as presently conducted. Each item of
Intellectual Property owned or used by either of the Companies
immediately prior
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to the Closing hereunder will be owned or available for use by
it on identical terms and conditions upon the Closing
hereunder. Each of the Companies has taken all necessary
action to maintain and protect each item of Intellectual
Property that it owns or uses.
(ii) During the three years preceding the date of
this Agreement, neither of the Companies has been sued or
charged in writing with or been a defendant in any claim,
suit, action or proceeding relating to its business which has
not been finally terminated prior to the date of this
Agreement and which involves a claim of interference,
infringement, misappropriation, or violation of Intellectual
Property rights of third parties (including any claim that
either of the Companies must license or refrain from using any
Intellectual Property rights of any third party). To the
Knowledge of Seller, no third party has interfered with,
infringed upon or misappropriated any Intellectual Property
rights of the Companies.
(iii) Section (4)(l)(iii) of the Disclosure
Schedule identifies each material item of Intellectual
Property owned by the Companies or which the Companies have
the right to use pursuant to license, sublicense, agreement or
permission. Seller has delivered to the Buyers correct and
complete copies of or has made available for inspection by
Buyers all patents, registrations, applications, licenses,
agreements, and permissions (as amended to date) and all other
written documentation evidencing ownership and prosecution (if
applicable) of each item of Intellectual Property identified
in Section 4(l)(iii) of the Disclosure Schedule. With respect
to each item of Intellectual Property identified in Section
4(l)(iii) of the Disclosure Schedule:
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(A) to the Seller's Knowledge, the
license, sublicense, agreement, or permission
covering the item is legal, valid, binding,
enforceable, and in full force and effect;
(B) to the Seller's Knowledge, the
license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms upon
the Closing;
(C) neither of the Companies is in
material breach or default, and to the Seller's
Knowledge, no event has occurred which with notice or
lapse of time would constitute a breach or default by
the Companies or permit termination,
modification, or acceleration under the licenses,
sublicenses, agreements or permissions covering such
items;
(D) the Companies have not received
notice to the affect that any other party to the
license, sublicense, agreement, or permission has
repudiated any provision thereof.
(iv) To the Knowledge of Seller, the operation of
the businesses of the Companies as presently conducted does
not interfere with, infringe upon,misappropriate, or otherwise
come into conflict with, any Intellectual Property rights of
third parties.
(m) TANGIBLE ASSETS. The Companies own or lease all
buildings, machinery, equipment, and other tangible assets used or
necessary for use in the conduct of their businesses as presently
conducted. Each such tangible asset which is actually in use and not
idle, has been maintained in accordance with normal industry practice,
is in good
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operating condition and repair (subject to normal wear and tear), and
is suitable for the purposes for which it presently is used.
(n) CONTRACTS. Seller has delivered to Buyers a correct
and complete copy of, or has made available for Buyers'
inspection, each written agreement to which either of the Companies is
a party and which is material to the conduct of the business of the
Companies. With respect to each such agreement, except as set forth
in Section 4(n) to the Disclosure Schedule: (A) the agreement is
legal, valid, binding, enforceable, and in full force and effect; (B)
the agreement will continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms upon consummation of
the transactions contemplated hereby; (C) neither of the Companies
nor, to Seller's Knowledge, any other party thereto is in breach or
default under the terms thereof, and to Seller's Knowledge, no event
has occurred which with notice or lapse of time would constitute a
breach or default, or permit termination, modification, or
acceleration, under any such agreement, except where any such default
or breach would not have a Material Adverse Effect; and (D) no party
has repudiated any provision of the agreement. To Seller's Knowledge,
the Companies are not a party to any material oral agreements.
(o) NOTES AND ACCOUNTS RECEIVABLE. Except as set forth
in Section 4(o) to the Disclosure Schedule, all notes and accounts
receivable of the Companies are reflected properly on the Companies'
books and records and, to the Seller's Knowledge, are subject to no
setoffs or counterclaims in excess of $10,000 in the aggregate.
(p) POWERS OF ATTORNEY. There are no outstanding powers
of attorney executed on behalf of either of the Companies.
(q) LITIGATION. Section 4(q) of the Disclosure Schedule
sets forth each instance
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in which either of the Companies (i) is subject to any outstanding
injunction, judgment, order, decree or ruling or (ii) is a party or,
to the Knowledge of Seller, is threatened to be made a party to, any
action, suit, proceeding, hearing, or investigation of, in, or before
any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator which,
if determined or resolved adversely to the Companies in accordance
with the plaintiff's demands could have a Material Adverse Effect on
the Companies.
(r) PRODUCT WARRANTY. No product manufactured, sold or
delivered by either of the Companies is subject to any written
warranty of the Companies beyond the applicable standard terms and
conditions of sale or lease.
(s) EMPLOYEES.
(i) To the Knowledge of the Seller, no executive,
key employee, or material group of employees has provided
notice of an intention to terminate employment with their
respective Companies. Neither of the Companies is a party to
or bound by any collective bargaining agreement, nor has any
of them experienced any strikes, grievances, claims of unfair
labor practices, or other collective bargaining disputes. To
the Seller's Knowledge, neither of the Companies has committed
any unfair labor practice. Except as disclosed in Section
4(s) of the Disclosure Schedule, no employee, past or present,
of either of the Companies has pending or, to the Seller's
Knowledge and except as disclosed in writing to Buyers,
threatened to bring any claim against the Companies of unjust
dismissal or a violation of the employee's civil or employment
rights. Section 4(s) of the Disclosure Schedule contains a
list of the
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<PAGE> 34
name and social security number of each of the current
employees of the Companies and those employees who have
outstanding workers compensation claims.
(ii) The employment agreements as set forth in
Section 4(s) of the Disclosure Schedule constitute the only
employment agreements which to the Knowledge of the Seller
exist with respect to the Companies.
(iii) To the Knowledge of Seller, the Active
Employees identified in Section 4(s)(iii) of the Disclosure
Schedule constitute the only Active Employees to which Seller
has promised to provide a single sum payment, payable at the
Active Employee's retirement or at such other time vested
accrued benefits are paid to the Active Employee, which
represents the actuarial present value of the difference in
the Active Employee's accrued benefit under the Hourly Pension
Plan or the Seller Pension Plan, as appropriate, when
calculated using actual date of hire by Seller compared to
when calculated using an adjusted date of hire. Seller will
provide to Buyers copies of all documents related to these
promises.
(t) EMPLOYEE BENEFIT PLANS.
(i) Employee Pension Benefit Plans. Except as
set forth in Section 4(t) of the Disclosure Schedule, with
respect to each Employee Pension Benefit Plan that either of
the Companies, and the Controlled Group of Corporations which
includes the Companies, maintains or to which any of them
contributes, to the Knowledge of Seller:
(1) Section 4(t)(i) of the Disclosure
Schedule lists each Employee Pension Benefit Plan
that each of the Companies maintains or
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<PAGE> 35
to which either contributes.
(2) Each such Employee Pension Benefit
Plan (and each related trust, insurance contract, or
fund) complies in form and in operation in all
material respects with the applicable requirements of
ERISA, the Code, and other applicable laws.
(3) Each Employee Pension Benefit Plan
is qualified under Section 401(a) of the Code and,
except for the Pension Plan for Hourly Employees of
Cyprus Northshore Mining Corporation, has received a
favorable determination letter, or is currently the
subject of a request for a determination letter, from
the Internal Revenue Service, and the Seller is not
aware of any circumstances likely to result in
refusal or revocation of any such favorable
determination letter.
(4) All required reports and
descriptions (including for the plan year beginning
January 1, 1993 and all prior plan years, Form 5500
Annual Reports, Summary Annual Reports, and summary
plan descriptions; and, for the plan year beginning
on January 1, 1994, and for all prior years PBGC Form
1) have been or will be filed or distributed
appropriately by the required due date with respect
to each such Employee Pension Benefit Plan.
(5) All contributions (including all
employer contributions and employee salary reduction
contributions) which are due have been paid to each
such Employee Pension Benefit Plan and all
contributions for any period ending on or before the
Closing Date which are not yet due have
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been paid to each such Employee Pension Benefit Plan
or accrued in accordance with the past practice of
the Companies.
(6) As set forth in Section 4(t)(i) of
the Disclosure Schedule, Seller has provided to the
Buyers correct and complete copies of the plan
documents and summary plan descriptions and all
related trust agreements, insurance contracts, and
other funding agreements which implement each such
Employee Pension Benefit Plan.
(7) No such Employee Pension Benefit
Plan has been completely or partially terminated or
been the subject of a Reportable Event as to which
notices would be required to be filed with the PBGC.
No proceeding by the PBGC to terminate any such
Employee Pension Benefit Plan has been instituted or
threatened.
(8) There have been no Prohibited
Transactions with respect to any such Employee
Pension Benefit Plan.
(9) No Fiduciary has been found liable
for or is the subject of a claim for breach of
fiduciary duty or any other failure to act or comply
in connection with the administration or investment
of the assets of any such Employee Pension Benefit
Plan.
(10) Except as provided in Section
4(t)(i) of the Disclosure Schedule, no action, suit,
proceeding, hearing, or investigation with respect to
the administration or the investment of the assets of
any such Employee Pension Benefit Plan (other than
routine claims for benefits) is pending or
threatened.
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(11) No such Employee Pension Benefit
Plan is currently under audit or, to the Seller's
Knowledge, scheduled for audit by the Internal
Revenue Service or the Department of Labor; and
neither of the Companies has incurred any liability
to the Internal Revenue Service or the Department of
Labor under the Code or ERISA, as applicable, with
respect to any such Employee Pension Benefit Plan.
(12) Neither of the Companies contributes
to, ever has contributed to, or ever has been
required to contribute to any Multiemployer Plan or
has any liability (including withdrawal liability)
under any Multiemployer Plan.
(13) Neither of the Companies has
incurred any liability to the PBGC (other than PBGC
premium payments) or otherwise under Title IV of
ERISA (including any withdrawal Liability) or under
the Code with respect to any such Employee Pension
Benefit Plan.
(ii) Employee Welfare Benefit Plans. Except as
set forth in Section 4(t)(ii) of the Disclosure Schedule, with
respect to each Employee Welfare Benefit Plan that either of
the Companies, and the Controlled Group of Corporations which
includes the Companies, maintains or to which any of them
contributes, to the Knowledge of Seller:
(1) Section 4(t)(ii) of the Disclosure
Schedule lists each Employee Welfare Benefit Plan
that each of the Companies maintains or to which
either contributes.
(2) Each such Employee Welfare Benefit
Plan (and each related
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trust, insurance contract, or fund) complies in form
and in operation in all material respects with the
applicable requirements of ERISA, the Code, and other
applicable laws.
(3) All required reports and
descriptions (including Form 5500 Annual Reports,
Summary Annual Reports, and summary plan descriptions
for the plan year beginning on January 1, 1993 and
all prior plan years) have been or will be filed or
distributed appropriately by the required due date
with respect to each such Employee Welfare Benefit
Plan.
(4) The requirements of Part 6 of
Subtitle B of Title I of ERISA and of Sec. 4980B of
the Code have been met with respect to each such
Employee Welfare Benefit Plan.
(5) All premiums or other payments for
all periods ending on or before the Closing Date have
been paid with respect to each such Employee Welfare
Benefit Plan.
(6) As set forth in Section 4(t)(ii) of
the Disclosure Schedule, Seller has provided to the
Buyers correct and complete copies of the plan
documents and summary plan descriptions and all
related trust agreements, insurance contracts, and
other funding agreements which implement each such
Employee Welfare Benefit Plan.
(7) There have been no Prohibited
Transactions with respect to any such Employee
Welfare Benefit Plan.
(8) No Fiduciary has been found liable
for or is the subject of a claim for breach of
fiduciary duty or any other failure to act or comply
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in connection with the administration or investment
of the assets of any such Employee Welfare Benefit
Plan.
(9) No action, suit, proceeding,
hearing, or investigation with respect to the
administration or the investment of the assets of any
such Employee Welfare Benefit Plan (other than
routine claims for benefits) is pending or
threatened.
(10) No such Employee Welfare Benefit
Plan is currently under audit or, to the Seller's
Knowledge, scheduled for audit by the Internal
Revenue Service or the Department of Labor; and
neither of the Companies has incurred any liability
to the Internal Revenue Service or the Department of
Labor under the Code or ERISA, as applicable, with
respect to any such Employee Welfare Benefit Plan.
(u) GUARANTIES. Neither of the Companies is a
guarantor or otherwise is liable for any material liability or
material obligation (including indebtedness) of any other
Person.
(v) ENVIRONMENTAL PERMITS. Except as set out in
Section 4(v) to the Disclosure Schedule and except where the
failure to hold any such environmental permit or other
governmental permit would not have a Material Adverse Effect,
to the Knowledge of Seller, each of the Companies holds all
material environmental permits and other material permits of
governmental authorities required under any Environmental Law
or other law, respectively, in connection with the operation
of the business of the Companies, and all such environmental
permits and other permits are listed in Section 4(v) to the
Disclosure Schedule.
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Except as set forth in Section 4(v) to the Disclosure
Schedule, none of the Companies has received any notification
pursuant to any Environmental Laws relating to the business of
the Companies that any currently held material environmental
permit relating to the business of the Companies is about to
be made subject to materially different limitations or
conditions, or is about to be revoked, withdrawn or
terminated. Except as noted in Section 4(v) to the Disclosure
Schedule, all Environmental Permits and other governmental
permits listed therein are valid and in full force and effect,
except for any failure to be valid and in full force and
effect which would not have a Material Adverse Effect.
(w) INVENTORY. The value of inventory of the
Companies consisting of materials, supplies, parts, work in
process and finished work is fairly reflected on the Most
Recent Balance Sheet in accordance with Modified GAAP.
(x) MSHA COMPLIANCE. The Companies operations
are in compliance with the Mine Safety and Health Act of 1977,
as amended ("MSHA"), and the applicable rules and regulations
thereunder except where any failure to be in compliance would
not have a Material Adverse Effect. Except as set forth in
Section 4(y) to the Disclosure Schedule all remedial or other
actions required to be taken by the Companies under orders or
directives issued pursuant to MSHA have been completed and no
citations are in effect.
(y) DISCLOSURE. The representations and
warranties contained in this Section 4 do not contain any
untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
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5. COVENANTS. The Parties agree as follows with respect to the
period following the Closing.
(a) GENERAL. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of
this Agreement, each of the Parties will take such further action
(including the execution and delivery of such further instruments and
documents) as any other Party reasonably may request, all at the sole
cost and expense of the requesting Party (unless the requesting Party
is entitled to indemnification therefor under Section 7 below).
Seller acknowledges and agrees that from and after the Closing the
Buyers will be entitled to possession of all documents, books, records
(excluding Tax records), agreements, and financial data of any sort
relating to the Companies. Seller will provide access to and copies
of Tax and other records that Buyers may request from time to time.
(b) LITIGATION SUPPORT. In the event and for so long as
any Party actively is contesting or defending against any action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand in connection with (i) any transaction contemplated under this
Agreement or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date
involving the Companies, each of the other Parties will cooperate with
the other and that Party's counsel in the contest or defense, make
available their personnel, and provide such testimony and access to
their books and records as shall be necessary in connection with the
contest or defense, all at the sole cost and expense of the contesting
or defending Party (unless the contesting or defending Party is
entitled to indemnification there for under Section 7 below).
Notwithstanding any other provision
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of this Agreement, in the event that any Party is contesting or
defending against any Tax audit or inquiry, Internal Revenue Service
appeal, or any action, suit, proceeding, claim or demand in connection
with liability for Taxes with respect to which such Party has an
indemnification obligation or payment obligation pursuant to Section 7
hereof or pursuant to Section 5(g), (h) or (i) hereof, such Party
shall have the right to control the conduct of the contest or defense
(including settlement) of such matter and each other party shall
cooperate with such Party and that Party's counsel as provided in the
foregoing sentence of this Section.
(c) TRANSITION. Seller will not take any action that is
designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of the
Companies from maintaining the same business relationships with them
after the Closing as it maintained with them prior to the Closing.
(d) CONFIDENTIALITY. Seller will treat and hold as such
all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and
deliver promptly to the Buyers, at the request and option of the
Buyers, all tangible embodiments (and all copies) of the Confidential
Information which is in its possession. In the event that Seller is
requested or required (by oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, Seller will notify the Buyers promptly of the request or
requirement so that the Buyers may seek an appropriate protective
order or waive compliance with the provisions of this Section 5(d).
If, in the absence of a protective order or the receipt of a waiver
hereunder, Seller is, on the advice of counsel, compelled to disclose
any Confidential Information
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to any tribunal, governmental authority or third party or else stand
liable for contempt or other sanction or Liability, Seller may
disclose the Confidential Information; provided, however, that the
Seller shall use its reasonable best efforts to obtain, at the request
and at the expense of the Buyers, an order or other assurance that
confidential treatment will be accorded to such portion of the
Confidential Information required to be disclosed as the Buyers shall
designate. The foregoing provisions shall not apply to any
Confidential Information which is generally available to the public
immediately prior to the time of disclosure. Effective on the Closing
Date, the Confidentiality Agreement previously entered into by Seller
and Buyers shall terminate.
(e) ADMINISTRATIVE SERVICES. Upon request of Buyers,
Seller agrees to provide to the Companies electronic data processing
and administrative services. Such services shall be available as
requested by the Companies at Seller's actual cost for a period of one
year from the Closing Date. The cost of services shall be billed
monthly in arrears to the recipient of the services.
(f) CODE SECTION 338(H) (10) ELECTION AND ALLOCATION OF
PURCHASE PRICE. At Closing, Seller will join with Buyers in making an
election under Sections 338(g) and 338(h) (10) of the Code by
executing at the Closing a Form 8023A which is attached hereto as
Exhibit I (collectively the "338 Election") with respect to the
purchase and sale of the Shares hereunder. Seller shall pay any Tax
attributable to the making of the 338 Election and will indemnify
Buyers and the Companies against any Adverse Consequences arising out
of any failure to pay such Tax. The Parties agree that the Purchase
Price and the appropriate liabilities of the Companies will be
allocated to the assets of the Companies for all purposes in
accordance with an appraisal which Buyers
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<PAGE> 44
will obtain. The Buyers, Seller and the Companies will file all Tax
Returns (including amended returns and claims - for refund) and
information reports in a manner consistent with the allocation.
(g) MINNESOTA OCCUPATION TAX. Upon Buyers request,
Seller will join with Buyers in preparing a single Minnesota
Occupation Tax return for the calendar year 1994, and Seller agrees to
cause the resulting tax liability, if any, to be apportioned between
Seller and the Companies based upon the Minnesota Occupation Tax
taxable incomes for each period. If the Companies are obligated to
pay the tax for the entire year of 1994, Seller agrees to reimburse
the Companies for the portion attributable to all periods prior to
Closing, as calculated above.
(h) MINNESOTA TACONITE PRODUCTION TAX. Seller shall be
liable for all Minnesota Taconite Production taxes incurred by the
Companies, based on Product produced up to and including the Closing
Date, and will reimburse the Companies for all such taxes that must be
paid after the Closing Date relating to any period prior to the
Closing Date. Upon receipt by the Companies of the Notice of
Determination issued by the Minnesota Minerals Tax Office of the
amounts due, Buyers shall cause the Companies to notify Seller of the
amounts it is obligated to reimburse the Companies, accompanied by a
copy of the Determination Letter and a calculation of the
apportionment provided for in this subsection. Seller will make such
payment to the Companies within seven (7) days of such request for
reimbursement.
(i) OTHER TAXES.
(1) MINNESOTA SALES AND USE TAX. Seller shall be
liable for all Minnesota Sales and Use taxes incurred by the
Companies on taxable purchases
39
<PAGE> 45
received by the Companies during the period up to and
including the Closing Date, and will reimburse the Companies
for all such taxes that must be paid after the Closing Date
relating to the receipt of such taxable purchases on or before
such date. Upon filing Minnesota Sales and Use tax returns
that include taxes that are the liability of the Seller, the
Companies will send the Seller a copy of such returns and a
computation of Seller's portion of the tax liability . The
Seller shall promptly reimburse the Companies for the Seller's
portion of the Minnesota Sales and Use tax due.
(2) PROPERTY TAX. Seller shall be liable for all
property taxes incurred by the Companies but not paid as of
the Closing Date. The liability shall be calculated based on
the statutory lien date. Therefore, the amount due to be paid
in October 1994, which is attributable to taxes incurred on
the January 2, 1993 lien date, are Seller's obligation and are
in addition to the Seller's portion of the taxes incurred on
the lien date of January 2, 1994. Seller shall be liable for
a portion of the taxes attributable to the January 2, 1994
lien date based upon a fraction, the numerator of which shall
be the number of days elapsed in 1994 up to and including the
Closing Date, and the denominator of which shall be 365. Upon
receipt of the applicable property tax bills, the Companies
shall submit a claim to the Seller together with copies of the
property tax billings, and in the case of the billing
attributable to the last half of 1994, a calculation of the
proration. Seller shall promptly remit reimbursement to the
Companies by the due date of the tax payments to the taxing
authorities.
(3) OTHER TAXES. Seller shall pay all other Taxes of the Companies
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attributable to all time periods up to and including the
Closing Date. Buyers shall pay all Taxes of the Companies
attributable to all time periods from and after the Closing
Date. For purposes of allocating the Seller's and Buyers'
respective income based Tax liabilities, taxable income and
expenses of the Companies shall be allocated based on an
accounting cutoff at the end of the Closing Date. Any item
that must be apportioned between the periods will be
apportioned based on the number of months in each period.
Seller shall be entitled to all Tax refunds or rebates related
to Taxes paid by Seller and Buyers shall remit and shall cause
the Companies to remit to Seller all such refunds or rebates
promptly upon receipt. The Buyers agree that except for Taxes
covered by Subsections 5(i)(1) and 5(i)(2) of this Section
5(i) Seller shall prepare all Tax Returns required to be filed
by the Companies after Closing with respect to any Tax periods
ending on or prior to the Closing Date. Seller shall prepare
such returns on a basis consistent with past practice and the
Buyers shall make available to the Seller all such books,
records and other information as Seller may reasonably
request, from time to time, for such purpose and shall sign
and shall cause the Companies to sign all tax returns, annual
reports and similar instruments and documents required to be
signed by Buyers or the Companies in connection with all tax
returns required to be filed by Seller hereunder. Buyers
shall complete, and Buyers shall cause the Companies to
complete all tax information forms and questionnaires
customarily used by Seller to prepare and file tax returns.
The Buyers shall prepare or cause to be prepared all Tax
Returns required to be filed by the Companies after Closing
with respect to Tax periods ending after the Closing Date.
Buyers will promptly notify
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Seller of any proposed or anticipated liability for Taxes
(j) COMPANIES TO CHANGE NAMES. The Buyer shall upon the
Closing change the name of each of the Companies whose name includes
the words "Cyprus" to some other name that does not include the words
"Cyprus" or other similar words that might lead any person to conclude
that such Companies were still associated with Seller or its other
Affiliates. Within ninety (90) days following Closing, the Buyers
shall ensure that none of the Companies or their respective successors
are using, in any manner, in carrying on their respective businesses,
the name "Cyprus" or any other similar name that might lead any person
to conclude that the Companies remain associated with Seller or its
Affiliates.
(k) REISSUANCE OF PERMITS AND LICENSES. Schedule 5(k)
hereto sets forth a list of environmental permits, licenses and
authorizations and other governmental permits, licenses and
authorizations pertaining to the business of the Companies and issued
in the name of Seller or in the name of one of the Companies
containing the word "Cyprus", or both, or which was transferred to the
Companies pursuant to an agreement or instrument to which Seller was a
party. The Buyers shall use their best efforts to obtain from the
relevant governmental authorities and agencies prior to the Closing,
substitute or reissued or replacement permits, licenses and
authorizations for each such instrument listed on Schedule 5(k)
hereto, which do not contain or reference the name of Seller or of any
entity whose name includes the word "Cyprus". The term best efforts
as used in the immediately preceding sentence shall not include a
requirement that Buyer's agree to a request or demand that
Cleveland-Cliffs Inc be named as a permittee on any such permit,
license or authorization. In the event that substitute or reissued or
replacement
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permits, licenses and authorizations are not obtained with respect to
each permit, license and authorization listed on Schedule 5(k) prior
to Closing, Seller may, in its sole discretion, waive the related
condition to Closing set forth in Section 6(b) hereof provided that
Buyers shall enter into a written indemnification of Seller in respect
of any and all liabilities of Seller after the Closing Date arising
out of or in connection with such failure to obtain substitute or
reissued or replacement permits, licenses and authorizations, such
indemnification to be in form and content acceptable to Seller.
(l) EMPLOYEE BENEFIT PLANS.
(A) Employee Pension Benefit Plans
(1) Pension Plan for Hourly Employees of
Northshore Mining Corporation.
(i) Effective as of the Closing
Date, Seller shall amend the Pension Plan for
Hourly Employees of Cyprus Northshore Mining
Corporation (the "Hourly Pension Plan") to
(A) make Northshore Mining Company the "plan
sponsor" (as such term is defined in Section
3(16)(B) of ERISA) and (B) provide that all
participants shall be 100% vested in their
accrued benefits thereunder as of the Closing
Date. Seller shall cause to be transferred,
as soon as reasonably practicable, but in any
event (unless both Buyers and Seller
otherwise agree in writing) within 90 days
after the Closing Date, to a trust Buyers
shall cause to be established under the
Hourly Pension Plan, all assets attributable
to such Hourly Pension Plan held under the
Cyprus Amax Minerals
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Company Master Trust.
(ii) Seller shall liquidate
long-term investments made by the Hourly
Pension Plan in the Cyprus Amax Minerals
Company Master Trust as of October 1, 1994,
and hold the proceeds from the liquidation in
a short-term investment fund account within
the Cyprus Amax Minerals Company Master Trust
until such time as a trust is established
under the Hourly Pension Plan.
(iii) Seller shall make their
pro-rata share of the minimum required
contribution to the Hourly Pension Plan for
the plan year beginning January 1, 1994, by
October 15, 1994. Buyers shall be
responsible for making their pro-rata share
of the minimum required contributions when
due to the Hourly Pension Plan after the
Closing Date. With respect to the Hourly
Pension Plan, the minimum required
contributions for 1993 and 1994 for purposes
of this Agreement shall be the minimum
required contribution under Section 412 of
the Code as determined by an actuary
appointed by Seller. Seller's share of the
minimum required contribution for 1993 will
be the entire minimum required contribution
for 1993. Seller's share of the minimum
required contribution for 1994 shall be
determined by multiplying the total minimum
required contribution for 1994 by the
fractional portion of 1994 preceding the
Closing Date. Buyers' share of the minimum
required contribution for 1994 shall be the
total minimum required
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contribution for 1994 minus Seller's share of
the minimum required contribution for 1994.
The minimum required contribution for the
plan year beginning January 1, 1994, shall be
determined without regard to the credit
balance and the credit balance shall be used
by Seller to offset its pro-rata share of the
minimum required contribution. If actual
contributions to the Hourly Pension Plan by
Seller exceed Seller's share of the minimum
required contributions then Buyers shall
reimburse Seller for the amount of such
excess plus interest at the same rate as
earned by the Hourly Pension Plan assets held
in the short-term investment fund account
under the Cyprus Amax Minerals Company Master
Trust prior to the transfer of assets under
Section (A)(1)(i) above. If Seller's share
of the minimum required contributions exceeds
Seller's actual contributions then Seller
shall reimburse Buyers for the amount of such
excess plus interest at the same rate as
earned by the Hourly Pension Plan assets held
in the short-term investment fund account
under the Cyprus Amax Minerals Company Master
Trust Fund prior to the transfer of assets
under Section (A)(1)(i) above.
(iv) The Hourly Pension Plan assets
as of the Closing Date shall be determined as
the market value of Hourly Pension Plan
assets on the Closing Date as determined by
the trustee of the Cyprus Amax Minerals
Company Master Trust plus any contributions
payable to the Hourly Pension Plan by the
Seller
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under Section (A)(1)(iii) above minus any
contributions made to the Hourly Pension Plan
by the Seller in excess of the Seller's share
of the minimum required contribution for
1994, as determined under Section (A)(1)(iii)
above. The actuarial present value of plan
liabilities shall be equal to the present
value of the accrued benefit, as provided for
and defined in accordance with the provisions
of the Hourly Pension Plan, for each
participant of the Hourly Pension Plan as of
the Closing Date. For this purpose, the
present value amount shall be based on an
8.25% annual rate of interest and the
mortality rates and retirement age
assumptions used in valuing the Hourly
Pension Plan for 1993 minimum funding
purposes. Such actuarial present value shall
be calculated as of the Closing Date by an
actuary appointed by Seller and agreed to by
an actuary appointed by Buyers. If the
Seller's actuary and Buyers' actuary
disagree, a third actuary shall be selected
by both Seller and Buyers and both Seller and
Buyers shall share equally the expense
therefor.
(v) Pending completion of the
transfer described in Section (A)(1)(i),
Seller and Buyers shall make arrangements for
any required benefit payments to employees
from the Hourly Pension Plan. Seller and
Buyers shall provide each other with access
to information reasonably necessary in order
to carry out the provisions of this Section.
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<PAGE> 52
(vi) Buyers shall be responsible for
the determination and administration of any
domestic relations order determined to be
qualified under Section 414(p) of the Code
and Section 206(d) of ERISA with respect to
Active Employees of the Companies.
(vii) Buyers shall be responsible for
completing and filing Form 5500 for the
Hourly Pension Plan, and for preparing and
distributing, as appropriate, all other
required notices, audits, or reports as
required under ERISA or the Code, for the
plan year ending December 31, 1994.
(viii) Buyers shall cause to be filed,
no later than December 31, 1994, with the
Internal Revenue Service, an application for
determination with respect to the qualified
status of the Hourly Pension Plan. The
application shall cover the Hourly Pension
Plan as amended and restated effective July
1, 1989, and as may be further amended
through December 31, 1994. Buyers shall
cause to be secured a favorable determination
from the Internal Revenue Service. Buyers
shall provide Seller with a copy of the
favorable letter of determination when issued
by the Internal Revenue Service.
(ix) Seller and Buyers shall provide
each other with access to information
reasonably necessary in order to carry out
the provisions of this Section.
(2) Retirement Plan for Salaried Employees of
Cyprus Amax Minerals
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<PAGE> 53
Company
(i) Buyers shall cause to be
established, effective January 1, 1995, an
appropriate pension plan (the "Northshore
Pension Plan") to provide that (A) all
service of Active Employees with the
Companies shall be recognized retroactively
from the Closing Date for all purposes
thereunder (including benefit accrual,
vesting and eligibility), (B) upon the
transfer of assets referred to below, the
service of Active Employees who participated
in the Retirement Plan for Salaried Employees
of Cyprus Amax Minerals Company (the "Seller
Pension Plan") shall be recognized for all
purposes thereunder (including benefit
accrual) to the extent such service was
recognized under the Seller Pension Plan, and
(C) upon such transfer, the accrued benefits
under the Northshore Pension Plan of Active
Employees who participated in the Seller
Pension Plan shall in no event be less than
their accrued benefits under such Seller
Pension Plan as of the Closing Date and such
accrued benefits shall be 100% vested under
the Northshore Pension Plan.
As soon as reasonably practicable, but
in any event (unless both Buyers and Seller
otherwise agree in writing) within 180 days
after the Closing Date, Seller shall cause to
be transferred from the trust under the
Seller Pension Plan to the trust under the
Northshore Pension Plan an amount in cash
equal to the actuarial present value,
determined as of the Closing Date, of the
accrued
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<PAGE> 54
benefits, as provided for and defined in
accordance with the provisions of the Seller
Pension Plan, of Active Employees who
participated in the Seller Pension Plan,
together with interest at the same rate
earned by the short-term interest fund
managed by the trustee of the Seller Pension
Plan, which amount shall be credited from the
Closing Date to the date of transfer. For
this purpose, the actuarial present value
amount shall be based on an 8.25% annual rate
of interest and the mortality rates and
retirement age assumption used in valuing the
Seller Pension Plan for 1993 minimum funding
purposes. To the extent Seller is unable to
transfer assets out of the Seller Pension
Plan in an amount so stated, Buyer shall be
equally compensated by an adjustment in the
Purchase Price for any difference between the
amount so defined above and the amount
transferred. Such actuarial present value
shall be calculated as at the Closing Date by
an actuary appointed by Seller and agreed to
by an actuary appointed by Buyers, and shall
be reduced by the amount of any benefit
payments made with respect to Active
Employees after the Closing Date but prior to
the date of transfer. If Seller's actuary
and Buyers' actuary disagree, a third actuary
shall be selected by both Seller and Buyers
and both Seller and Buyers shall share
equally the expense therefor.
Pending completion of the transfer
described in this Section (A)(2)(i), Seller
and Buyers shall make arrangements for any
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<PAGE> 55
required benefit payments to employees from
the Seller Pension Plan. Seller and Buyers
shall provide each other with access to
information reasonably necessary in order to
carry out the provisions of this Section.
(ii) Buyers shall be responsible for
the determination and administration of any
domestic relations order determined to be
qualified under Section 414(p) of the Code
and Section 206(d) of ERISA with respect to
Active Employees of the Companies.
(iii) Seller shall file and Buyers
shall cause to be filed Forms 5310A, if
required under Section 414(l) of the Code,
which filings shall serve as notice to the
Internal Revenue Service that assets from the
Seller Pension Plan will be transferred to
the Northshore Pension Plan.
(3) Cyprus Amax Minerals Company
Savings Plan and Trust
(i) Effective as of the day
immediately following the Closing Date,
Buyers shall cause to be established, an
appropriate defined contribution plan with a
cash or deferred arrangement (the "Northshore
Savings Plan") to provide that (A) the
service of Active Employees who participated
in the Cyprus Amax Minerals Company Savings
Plan and Trust (the "Seller Savings Plan")
shall be recognized for all purposes
thereunder to the extent such service was
recognized under the Seller Savings Plan, (B)
the account balances of such Employees which
are transferred from the Seller
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<PAGE> 56
Savings Plan to the Northshore Savings Plan
in accordance with this Section shall be 100%
vested at all times, and (C) any loans from
the Seller Savings Plan will continue to be
administered as if made under the Northshore
Savings Plan with all of the same terms and
conditions as agreed to in relevant
promissory notes executed under the Seller
Savings Plan.
As soon as reasonably practicable, but
in any event (unless both Buyers and Seller
otherwise agree in writing) within 45 days
after the Closing Date, Seller shall cause to
be transferred from the Seller Savings Plan
to the Northshore Savings Plan the liability
for the account balances of Active Employees
who participated in the Seller Savings Plan,
including any outstanding participant loans,
together with assets transferred in-kind, to
the extent possible, or otherwise in cash,
the fair market value of which is equal to
such liability.
(ii) Pending the completion of the
transfer described in Section (A)(3)(i),
Seller and Buyers shall make arrangements for
any required benefit payments to employees
from the Seller Savings Plan. Seller and
Buyers shall provide each other with access
to information reasonably necessary in order
to carry out the provisions of this Section.
(iii) Buyers agree that any stock of
the Seller that has been transferred from the
Seller Savings Plan to the Northshore
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<PAGE> 57
Savings Plan, other than such shares of
common stock of Cyprus Amax Minerals Company
that may be held as an investment in a mutual
or such other investment fund, must be and
shall be liquidated no later than the second
anniversary date of the Closing Date.
(iv) Buyers shall be responsible for
the determination and administration of any
domestic relations order determined to be
qualified under Section 414(p) of the Code
and Section 206(d) of ERISA with respect to
Active Employees of the Companies.
(v) Seller shall file and Buyers
shall cause to be filed Forms 5310A, if
required under Section 414(l) of the Code,
which filings shall serve as notice to the
Internal Revenue Service that assets from
Seller Savings Plan will be transferred to
the Northshore Savings Plan.
(4) Cyprus Amax Minerals Company
Restated and Amended Employee Stock
Ownership Plan
(i) Seller shall take all necessary
actions to provide that all Active Employees'
accounts under the Cyprus Amax Minerals
Company Restated and Amended Employee Stock
Ownership Plan (the "Seller ESOP") are merged
into the Seller Savings Plan and that all
cash and stock attributable thereto are
subsequently transferred from the Seller
Savings Plan to the Northshore Savings Plan
as soon as reasonably practicable after such
accounts are
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<PAGE> 58
transferred from the Seller ESOP into the
Seller Savings Plan.
(B) Employee Welfare Benefit Plans
(1) Effective as of the Closing Date,
Buyers shall cause to be established Employee Welfare
Benefit Plans (the "Northshore Employee Welfare
Benefit Plans"), which shall be substantially similar
to Seller's Employee Welfare Benefit Plans that cover
Active Employees. At the Closing, the Northshore
Employee Welfare Benefit Plans shall be substituted
for Seller's Employee Welfare Benefit Plans, Buyers
shall succeed to the rights, duties and obligations
of Seller on and after the Closing Date under the
Northshore Employee Welfare Benefit Plans, and
further, in Seller's stead, shall assume over and
perform in accordance with the Northshore Employee
Welfare Benefit Plans the duties and obligations of
Seller on and after the Closing Date thereunder to
employees of Seller covered under the Northshore
Employee Welfare Benefit Plans who continue to be
Active Employees, including, but not limited to, the
obligation to provide any amount solely by reason of
Buyers' sale of any portion of the business.
(2) Seller shall retain the
responsibility for providing for payment of all (A)
claims of Active Employees under any medical, dental,
hospital, health, vision, or prescription drug plans
for claims incurred prior to the Closing Date,
provided that a claim for such condition is made
within one year of the Closing Date, and (B) claims
incurred under any life insurance plans for death
occurring prior to the Closing Date.
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Seller and Buyers acknowledge that all
contributions under Seller's flexible spending
accounts on behalf of the Active Employees of the
Companies shall cease as of the Closing Date and all
such flexible spending accounts shall be frozen as of
the Closing Date and no further contributions for
Active Employees of the Companies shall be accepted
by Seller's flexible spending account plans.
Notwithstanding the sale of the Companies, Seller
will cause the administrator of the flexible spending
account plans to allow former Active Employees of the
Companies to be reimbursed for claims otherwise
permitted under such flexible spending account plans
up to the particular individual's frozen account
balance, provided that such claims arise prior to the
Closing Date and the individual requests
reimbursement pursuant to the terms of the applicable
flexible spending account plan. Seller shall provide
Buyers with access to information reasonably
necessary to enable Buyers to administer the flexible
spending accounts on behalf of Active Employees of
the Companies for the period commencing on the
Closing Date and ending December 31, 1994.
(3) Seller shall retain the
responsibility for providing for payments of all
long-term disability claims of any Active Employee on
long-term disability prior to the Closing Date in
accordance with the terms of Seller's plan. Seller
and Buyers shall equally share the cost, on a 50/50
basis, of any medical claims incurred on or after the
Closing Date of any such disabled Active Employee,
for the duration of the disability.
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<PAGE> 60
Seller and Buyers shall share equally, on a
50/50 basis, any periodic short-term or long-term
disability payments as well as the cost of any
medical claims incurred on or after the Closing Date
made to or on behalf of Active Employees on
short-term disability prior to the Closing Date, for
the duration of any short-term or long-term
disability.
(4) Seller shall retain the
responsibility for providing Employees who retired
(or if applicable who terminated with vested
benefits) prior to the Closing Date with retiree
health and life benefits under the Employee Welfare
Benefit Plan(s) which covered such former Active
Employees prior to the Closing Date. As of the
Closing Date, Buyers assume all liabilities for
post-retirement medical and life insurance benefits
with respect to Active Employees.
(5) ALLOCATION OF COBRA RESPONSIBILITY.
Seller shall retain the responsibility for providing
Active Employees who terminated employment with the
Companies prior to the Closing Date (and their
"qualified beneficiaries" within the meaning of
Section 4980B of the Code) with the continuation of
group health coverage required by Section 4980B of
the Code. Seller shall indemnify and hold harmless
Buyers for any loss or expense Buyers may incur in
respect to Seller's failure to satisfy such
responsibilities.
Buyers shall be responsible for compliance
with all requirements under Section 4980B of the Code
and Section 601 et seq. of ERISA, with respect to any
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<PAGE> 61
(A) Active Employees, or
(B) family members of such Active
Employees, who on the date immediately prior to the
Closing Date are qualified beneficiaries within the
meaning of Section 4980B(g)(1) of the Code ("Qualified
Beneficiaries") as a result of the transaction
contemplated in this Agreement and with regard to any
(A) Active Employees, or
(B) family members who are
Qualified Beneficiaries, who become Qualified
Beneficiaries on or after the Closing Date, and
Buyers shall indemnify and hold harmless Seller for
any loss or expense Seller may incur in respect to
Buyers' failure to satisfy such responsibilities.
(C) Other Employee Benefit Plans
(1) SEVERANCE AND OTHER BENEFITS.
Buyers shall indemnify Seller for any and all
severance benefits and other liabilities payable to
those individuals who are employees of the Companies
on the day before the Closing Date by reason of any
act of Buyers or the Companies occurring after the
Closing.
(D) INDEMNIFICATION. Seller agrees to defend,
indemnify and hold harmless the Buyers against and in respect
of any and all Adverse Consequences caused by, resulting or
arising from or otherwise relating to any breach or violation
of any of Seller's responsibilities or obligations under this
Section (5)(l), and Buyers agree to defend, indemnify and hold
harmless the Seller against and
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<PAGE> 62
in respect of any Adverse Consequences caused by, resulting or
arising from or otherwise relating to any breach or violation
of any of Buyers' responsibilities or obligation under this
Section (5)(l). The obligations of this Section (5)(l) shall
survive the Closing Date for no longer than a thirty-six month
period after the Closing Date.
(m) OPERATION OF BUSINESSES OF COMPANIES AFTER CLOSING;
EMPLOYEES.
(i) Buyers acknowledge that it is their present
intention to continue the corporate existence and operate the
businesses of the Companies as going concerns from and after
the Closing.
(ii) With respect to the Active Employees
identified in Section 4(s)(iii) of the Disclosure Schedule,
Buyers shall assume, on and after the Closing Date, all
liability with respect to providing a single sum payment to
each of the identified Active Employees, which single sum
payment shall be payable at the Active Employee's retirement
or at such other time vested accrued benefits are paid to the
Active Employee, and which single sum payment represents the
actuarial present value of the difference in the Active
Employee's accrued benefit under the Hourly Pension Plan or
the Seller Pension Plan, as appropriate, when calculated using
actual date of hire by Seller compared to when calculated
using an adjusted date of hire. The actuarial present value
of the liability to be assumed by Buyers shall be determined
as of the Closing Date by an actuary appointed by Seller, and
agreed to by an actuary appointed by the Buyers, and the Net
Monetary Working Capital shall be adjusted accordingly. The
actuarial present value of plan liabilities shall be equal to
the present value of the accrued benefit,
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as provided for and defined in accordance with the provisions
of the Hourly Pension Plan or the Seller Pension Plan, as
applicable as of the Closing Date, for each participant of the
Hourly Pension Plan or the Seller Pension Plan, as applicable
identified in Section 4(s)(iii) of the Disclosure Schedule.
For this purpose, the present value amount shall be based on
an 8.25% annual rate of interest and the mortality rates and
retirement age assumptions used in valuing the Hourly Pension
Plan or the Seller Pension Plan, as applicable, for 1993
minimum funding purposes. If Seller's actuary and Buyers'
actuary disagree, a third actuary shall be selected by both
Seller and Buyers and both Seller and Buyers shall share
equally the expense therefore. Buyers shall indemnify Seller
against any Adverse Consequences, caused by, resulting or
arising from or otherwise relating to any breach or violation
of Buyers' responsibilities or obligations imposed under this
Section.
(n) WORKERS COMPENSATION.
(i) Buyers shall cause a workers compensation
insurance policy, effective from and after October 1, 1994, to
be taken out in the name of the Companies and which covers
Liability for claims of employees of the Companies in
accordance with applicable law.
(ii) Buyers shall assume all Liabilities for
workers compensation claims for pre-closing occurrences which
are included in current liabilities for purposes of
determining Net Monetary Working Capital. Buyers shall also
assume all Liabilities for all incurred but not reported
claims from and after the Closing as determined by a closing
actuary report prepared by an actuary acceptable to the
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Minnesota Department of Commerce and which Liability is
included in Net Monetary Working Capital as determined
pursuant to Section 2(c) hereof.
(iii) Buyers shall use their best efforts to obtain
from the relevant governmental authorities a full release and
discharge of Seller, including return to Seller of its Letter
of Credit on deposit with the Department of Commerce of the
State of Minnesota, of any and all workers compensation
Liabilities of the Companies described in subparagraphs (i)
and (ii) above.
6. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF THE BUYERS. The
obligation of the Buyers to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
(i) the representations and warranties set forth
in Section 3(a) and Section 4 above shall be true and correct
in all material respects at and as of the Closing Date;
(ii) the Seller shall have performed and complied
with all of its covenants hereunder in all material respects
through the Closing;
(iii) the Companies shall have procured all of the
third party consents referred to in Section 4(c) above;
(iv) no action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would
(A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the
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transactions contemplated by this Agreement to be rescinded
following consummation, (C) affect adversely following
consummation of the right of the Buyers to own the shares and
to control the Companies, or (D) materially and adversely
affect the right of either of the Companies to own its assets
and to operate its businesses (and no such injunction,
judgment, order, decree, ruling, or charge shall be in
effect);
(v) Seller shall have delivered to Buyers a
certificate to the effect that each of the conditions
specified above in Section 6(a)(i)-(iv) is satisfied in all
respects;
(vi) all applicable waiting periods (and any
extensions thereof) under the Hart-Scott-Rodino Act shall have
expired or otherwise been terminated and the Parties and the
Companies shall have received all other authorizations,
consents, and approvals of governments and governmental
agencies referred to in Section 3(a) (ii), Section 3(b) (ii),
and Section 4(c) above;
(vii) Buyers shall have received from counsel to
the Seller an opinion in form and substance as set forth in
Exhibit D attached hereto, addressed to Buyers, and dated as
of the Closing Date;
(viii) the Buyer's shall have received the
resignations, effective as of the Closing, of each director
and officer of the Companies other than those whom the Buyers
shall have specified in writing at least five business days
prior to the Closing;
(ix) all certificates, opinions, instruments, and
other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in
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form and substance to the Buyers;
(x) receipt of results of an environmental audit
by a qualified consultant of Buyer's choice;
(xi) receipt of approvals of the respective Boards
of Directors of Buyers of this Agreement;
(xii) confirmation by Buyers of the reasonableness
of Seller's January 28, 1994 "Iron Ore Division Highlights" of
projections of the Companies' financial results;
(xiii) no change or development from the date hereof
to Closing in regard to (1) the business of the Companies, or
(2) the leaseholds with the Mesabi Trust which, in either
case, would have a Material Adverse Effect; and
The Buyers may waive any condition specified in this Section 6(a) if
they execute a writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE SELLER. The
obligation of the Seller to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
(i) the representations and warranties set forth
in Section 3(b) above shall be true and correct in all
material respects at and as of the Closing Date;
(ii) the Buyers shall have performed and complied
with all of its covenants hereunder in all material respects
through the Closing;
(iii) no action, suit, or proceeding shall be
pending before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction
or before any arbitrator wherein an unfavorable injunction,
judgment,
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order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this
Agreement or (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(iv) the Buyers shall have delivered to the Seller
a certificate to the effect that each of the conditions
specified above in Section 6(b)(i)-(iii) is satisfied in all
respects;
(v) all applicable waiting periods (and any
extensions thereof) under the Hart-Scott-Rodino Act shall have
expired or otherwise been terminated and the Parties and the
Companies shall have received all other authorizations,
consents, and approvals of governments and governmental
agencies referred to in Section 3(a) (ii), Section 3 (b) (ii),
and Section 4(c) above;
(vi) the seller shall have received from counsel
to the Buyers an opinion in form and substance as set forth in
Exhibit E attached hereto, addressed to the Seller, and dated
as of the Closing Date;
(vii) Buyers shall have complied with their
covenants set forth in Section 5(k);
(viii) all certificates, opinions, instruments, and
other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form
and substance to Seller. Seller may waive any condition
specified in this Section 6(b) if it executes a writing so
stating at or prior to the Closing.
7. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and
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warranties contained in Section 4 - REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANIES, and any related representations and
warranties contained in any other agreement or certificate delivered
pursuant to this Agreement, shall survive the Closing and continue in
full force and effect for a period of eighteen (18) months thereafter
except that the representations set forth in Section 4(t) hereof shall
continue in full force and effect for a period of thirty-six (36)
months thereafter. The representations and warranties contained in
Sections 3(a) and 3(b), Seller's covenants set forth in Sections 5(g),
(h) and (i) and the indemnities set forth in this Section 7 shall
survive indefinitely or for such shorter period as is specified
therein or herein. Any claim by a Party hereunder for a breach of a
representation, warranty, covenant, or agreement, or for
indemnification with respect thereto shall be preserved despite the
subsequent occurrence of the termination of the applicable survival
period herein; provided, however, that written notice of such claim is
given in accordance with this Agreement at the time of or prior to the
termination of such survival period and such claim is resolved or an
action or other proceeding is brought to enforce such claim within six
(6) months following the termination of such survival period.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYERS.
(i) In the event Seller breaches any of its
representations, warranties, and covenants contained herein
(other than representations and warranties in Section 3(a)
above), and, if there is an applicable survival period
pursuant to Section 7(a) above, provided that the Buyers make
a written claim for indemnification against Seller within the
period specified in Section 7(a), then Seller agrees to
indemnify the Buyers from and against the entirety of any
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Adverse Consequences the Buyers may suffer through and after
the date of the claim for indemnification (including any
Adverse Consequences the Buyers may suffer after the end of
any applicable survival period) resulting from, arising out
of, relating to, in the nature of, or caused by the breach (or
the alleged breach).
(ii) In the event Seller breaches (or in the event
any third party alleges facts that, if true, would mean Seller
has breached) any of its representations and warranties in
Section 3(a) above, and, if there is an applicable survival
period pursuant to Section 7(a) above, provided that the
Buyers make a written claim for indemnification against the
Seller within such survival period, then the Seller agrees to
indemnify the Buyers from and against the entirety of any
Adverse Consequences the Buyers may suffer through and after
the date of the claim for indemnification (including any
Adverse Consequences the Buyers may suffer after the end of
any applicable survival period) resulting from, arising out
of, relating to, in the nature of, or caused by the breach.
(iii) Seller agrees to indemnify Buyers and the
Companies from and against the entirety of any Adverse
Consequences Buyers or the Companies may suffer resulting
from, arising out of, relating to, in the nature of, or caused
by any Liability of either of the Companies for Taxes relating
to periods up to and including the Closing Date.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLER.
(i) In the event Buyers breach any of its
representations, warranties, and covenants contained herein,
and, if there is an applicable survival period pursuant to
Section 7(a) above, provided that Seller makes a written claim
for
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indemnification against Buyers within such survival period,
then each of the Buyers agree, jointly and severally, to
indemnify Seller from and against the entirety of any Adverse
Consequences Seller may suffer through and after the date of
the claim for indemnification (including any Adverse
Consequences seller may suffer after the end of any applicable
survival period) resulting from, arising out of, relating to,
in the nature of, or caused by the breach (or the alleged
breach).
(ii) Buyers' agree, jointly and severally, to
indemnify Seller from and against the entirety of any Adverse
Consequences Seller may suffer resulting from, arising out of,
relating to, in the nature of, or caused by any Liability of
the Companies under any Environmental Laws which results from,
arises out of, is related to or caused by actions taken by the
Companies or the failure to act by the Companies, from and
after the Closing Date.
(iii) Buyers agree, jointly and severally to
indemnify Seller from and against the entirety of any Adverse
Consequences Seller may suffer resulting from, arising out of,
relating to, in the nature of, or caused by any Liability of
either of the Companies for all Taxes relating to periods from
and after the Closing Date.
(iv) Buyers agree, jointly and severally, to
indemnify Seller from and against the entirety of any Adverse
Consequences Seller may suffer resulting from, arising out of,
relating to, in the nature of, or caused by any Liability of
Seller for all workers compensation claims (i) which are based
upon occurrences after the Closing Date or (ii) which are
based upon occurrences prior to the Closing Date the
Liabilities for which claims are assumed by Buyers pursuant to
Section 5(n) hereof.
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(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party
(the "Indemnified Party") with respect to any matter (a "Third
Party Claim") which may give rise to a claim for
indemnification against any other Party (the "Indemnifying
Party,") under this Section 7, then the Indemnified Party
shall promptly notify the Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the
Indemnified Party in notifying the Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder
unless (and then solely to the extent) the Indemnifying Party
thereby is prejudiced.
(ii) An Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party Claim
with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (A) the Indemnifying Party
notifies the Indemnified Party in writing within 15 days after
the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by
the Third Party Claim, (B) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (C) the
Third Party Claim involves only money damages and does not
seek an injunction or other equitable relief, (D) settlement
of, or an adverse judgment with respect to, the Third Party
Claim is
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not, in the good faith judgment of the Indemnified Party,
likely to establish a precedential custom or practice
materially adverse to the continuing business interests of the
Indemnified Party, and (E) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in accordance
with Section 7(d) (ii) above, (A) the Indemnified Party may
retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (C)
the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(e) DETERMINATION OF ADVERSE CONSEQUENCES. All
indemnification payments under this Section 7 shall be deemed
adjustments to the Purchase Price.
(f) OTHER INDEMNIFICATION PROVISIONS. The foregoing
indemnification provisions are in addition to, and not in derogation
of, any statutory, equitable, or common law remedy any Party may have
for breach of representation, warranty, or covenant. The obligations
of Seller pursuant to this Section 7 shall be subject to and limited
by each of the following qualifications:
(i) Seller's indemnity obligations hereunder
shall not apply where Buyers or any of the Companies would
otherwise be covered for the same loss
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under insurance policies of the Buyers, either of the
Companies or an Affiliate of any of the foregoing in the
absence of any indemnity hereunder;
(ii) Seller shall have no liability under this
Agreement or otherwise for or on account of Adverse
Consequences under Section 7(b) or 7(d), unless and until all
such damages in the aggregate exceed $1,000,000, in which case
Seller shall have liability only to the extent of the excess
of the aggregate of such claims over the initial $1,000,000 up
to a maximum of $11,000,000 of such claims.
8. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party
shall issue any press release or make any public announcement relating
to the subject matter of this Agreement prior to the Closing without
the prior written approval of Buyers and Seller; provided, however,
that any Party may make any public disclosure it believes in good
faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its reasonable best efforts to advise the
other Parties prior to making the disclosure).
(b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall
not confer any rights or remedies upon any Person other than the
Parties and their respective successors and permitted assigns.
(c) ENTIRE AGREEMENT. This Agreement (including the
documents referred to herein) constitutes the entire agreement among
the Parties with respect to matters coming within the scope of the
provisions of this Agreement and supersedes any prior understandings,
agreements, or representations by or among the Parties, written or
oral, to the extent they related in any way to the subject matter
hereof.
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(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and
their respective successors and permitted assigns. No Party may assign
either this Agreement or any of its rights, interests, or obligations
hereunder without the prior written approval of Buyers and Seller;
provided, however, that Buyers may (i) assign any or all of its rights
and interests hereunder to one or more of its Affiliates and (ii)
designate one or more of its Affiliates to perform its obligations
hereunder, in any or all of which cases the Buyers nonetheless shall
remain jointly and severally responsible for the performance of all of
their obligations hereunder.
(e) COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in
any way the meaning or interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall be
deemed duly given if (and then two business days after) it is sent by
registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:
If to the Seller: Cyprus Amax Minerals Company
9100 East Mineral Circle
Englewood, Colorado 80112
Attn: Secretary
If to the Buyers: Cleveland-Cliffs Inc
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1100 Superior Avenue
Cleveland, Ohio 44114
Attn: Secretary
Cliffs Minnesota Minerals Company
1100 Superior Avenue
Cleveland, Ohio 44114
Attn: Secretary
Any Party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at the
address set forth above using any other means, (including
personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any Party may
change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered
by giving the other Parties notice in the manner herein set
forth.
(h) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of
Minnesota without giving effect to any choice or conflict of law
provision or rule ( whether of the State of Minnesota or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Minnesota.
(i) AMENDMENTS AND WAIVERS. No amendment of any
provision of this Agreement shall be valid unless the same shall be in
writing and signed by Buyers and Seller. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to
any prior
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or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
(j) SEVERABILITY. Any term or provision of this
Agreement that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) EXPENSES. Each of the Parties will bear its own
costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated
hereby. The Seller agrees that the Companies have not borne or will
bear any of Seller's costs and expenses, including any of its legal
fees and expenses, in connection with this Agreement or any of the
transactions contemplated hereby.
(l) CONSTRUCTION. The Parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties and
no presumption or burden of proof shall arise favoring or disfavoring
any Party by virtue of the authorship of any of the provisions of this
Agreement. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires
otherwise. The word "including" shall mean including without
limitation. The Parties intend that each representation, warranty,
and covenant contained herein, shall have independent significance.
If any Party has breached any representation, warranty, or covenant
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contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject
matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact
that the Party is in breach of the first representation, warranty, or
covenant.
(m) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES.
The Exhibits, Annexes, and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
9. SUBMISSION TO JURISDICTION. Each of the Parties submits to
the jurisdiction of any state or federal court sitting in Minnesota, in any
action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought
and waives any bond, surety, or other security that might be required of any
other Party with respect thereto.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
CLEVELAND-CLIFFS INC
By: /s/ J. S. Brinzo
--------------------------------
Title: Senior Executive - Finance
-----------------------------
CLIFFS MINNESOTA MINERALS COMPANY
By: /s/ J. S. Brinzo
--------------------------------
Title: Executive Vice President
-----------------------------
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CYPRUS AMAX MINERALS COMPANY
By: /s/ Richard D. Mills
-----------------------------------
Title: Director Business Development
--------------------------------
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