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Exhibit 10.1    
    

        [COMPANY LOGO] 

 
 

SEPARATION AND GENERAL RELEASE AGREEMENT  
    

        
July 23, 2003 

John
L. Hilley

301 Springvale Road

Great Falls, VA 22066 

Dear
John: 

        This
Separation and General Release Agreement ("Letter Agreement") reflects our mutual agreements and understandings concerning your separation from employment as Executive Vice
President with The NASDAQ Stock Market, Inc. ("NASDAQ") effective as of July 31, 2003 ("Termination Date") in accordance with the terms your employment agreement with NASDAQ, dated as of
December 29, 2000, as amended as of February 1, 2002 (collectively, the "Employment Agreement"). Terms used but not defined in this Letter Agreement shall have the meanings given them in
the Employment Agreement. 

	I.
	Separation
Amounts 

        You
hereby agree and acknowledge that the following amounts that NASDAQ will pay you and benefits you will receive are in full satisfaction of any and all amounts and benefits due you
under the Employment Agreement as a result of your termination of employment with NASDAQ. 

	A.
	Severance
Pay

	1.
	NASDAQ
will pay you an aggregate of $2,400,000.00 in Annual Salary and Incentive Compensation (collectively, "Severance Pay") as calculated under Section 8(c) of the Employment
Agreement for the 24-month period from the Termination Date defined as the Severance Period. You will receive the Severance Pay in the form of a lump sum distribution within 30 days of the
Termination Date. You will not accrue or be entitled to any additional Incentive Compensation under the Corporate Incentive Program or otherwise.

	1.
	NASDAQ
will also pay you the sum of $70,252.09 and $31,489.35 (aggregate amount of $101,741.44) (the "Prorated Amount"), representing the prorated portion of the $90,000.00 and
$140,000.00 retained from your Incentive Compensation in 2002 and 2003, respectively, pursuant to the Retention Component of the Corporate Incentive Program, including interest accrued thereon. The
Prorated Amount paid pursuant to this paragraph I.A.2. will be made in the form of a lump sum distribution to be paid within 30 days of the Termination Date.

	B.
	Health
Benefits Continuation and Vacation Payout

	1.
	Your
group medical and dental benefits, if any, will terminate on the first to occur of (1) the date on which you notify NASDAQ's Human Resources Department in writing at 9513
Key West Avenue, Rockville, MD 20850 that you wish to terminate such benefits, or (2) the end of your Severance Period. You will be separately notified of your conversion privileges and "COBRA"
rights when your health and dental benefits terminate. Benefit coverage for your spouse and/or children, if any, will remain unaffected if you die during the Severance Period and they had coverage at
the time of your death. In such a case, their coverage will continue until the end of the Severance Period. Your share of the costs of these benefits will be the same as that of an active employee and
thus may change during the Severance Period due to 

1

 

premium
changes and the normal "open enrollment" benefit selection process. In addition, the coverage afforded under these benefits will be the same as that of an active employee and thus is subject
to change, modification, or elimination during the Severance Period. You agree to provide monthly payments in advance to NASDAQ for your share of the costs of these benefits as calculated by NASDAQ.
You agree that such advance monthly payments by you are a condition to continuation of your medical and dental benefits pursuant to this paragraph I.B.1. 

	2.
	You
will be paid the value of your accrued, unused vacation leave as of the Termination Date and will not accrue any additional leave of any kind. You will receive payment for the
value of this leave at the same time as you receive your Severance Pay.

	II.
	Termination
of Certain Benefits 

        You
further acknowledge and agree that the following benefits will terminate as set forth below. 

	A.
	Your
participation in The NASDAQ Stock Market, Inc. 401(k) Savings Plan (the "401(k) Plan") will end on the Termination Date. Your participation in the NASD Employees Retirement Plan
(the "Pension Plan") and the NASD's Supplemental Executive Retirement Plan (the "SERP" and with the 401(k) Plan and Pension Plan, the "Plans") will also end on the Termination Date. Any vested plan
benefits under any of the Plans will be disbursed as you may direct provided that such direction comports with applicable law and the requirements of the Plans, as such requirements may have been
modified by the Employment Agreement. Accordingly, the amount and timing of the payment of your benefits under the 401(k) Plan, the Pension Plan and/or the SERP will be determined under the terms of
such plan documents and the Employment Agreement, as applicable. Please refer to the Employment Agreement and the Summary Plan Descriptions related to the Plans that you have previously received for
more details.

	B.
	Your
participation in the Flexible Spending Accounts, if any, will end on the Termination Date.

	C.
	Your
participation, if any, in The NASDAQ Stock Market, Inc. Employee Stock Purchase Plan ("ESPP") will terminate on the Termination Date and dollars contributed during the current
offering period through the Termination Date will be refunded to you within 45 days of the Termination Date.

	D.
	Any
stock options or other stock based awards granted to you under the NASDAQ Equity Incentive Plan shall be governed by the terms of such plan, and the applicable award agreement
entered into by and between you and NASDAQ.

	E.
	Except
as may be otherwise provided in the Employment Agreement, your participation in any other benefits other than those stated in paragraph I. and II. above will end on the
Termination Date.

	III.
	General
Release, Confidentiality and Miscellaneous Provisions 

        In
acknowledgement of the additional and valuable consideration set forth in paragraph III.A. below, which both parties hereby acknowledge the sufficiency of, you agree to the General
Release and Confidentiality provisions of this paragraph III. The term "NASDAQ", when used in this Letter Agreement is understood to include the National Association of Securities Dealers, Inc.
("NASD"), as well as any other subsidiaries or affiliates of The NASDAQ Stock Market, Inc. 

	A.
	Following
the Effective Date (as defined below), you will be eligible for (a) professional out-placement assistance at NASDAQ's expense (which consists of outplacement services
and individual career counseling) and (b) the Executive Financial Planning Services Program 

2

 

(which
offers you services such as estate and gift planning, income tax planning and tax preparation, insurance planning, capital accumulation and investment planning, and retirement planning); your
eligibility to participate in (a) above will terminate on the earlier to occur of: (1) the date on which you commence other regular, full-time employment or become self-employed on a
regular, full-time basis or (2) 12 months from the Termination Date; your eligibility to participate in (b) above is limited to a total expenditure of $12,000 for calendar year 2003
(including any such expenditures incurred prior to the Termination Date) and will terminate on December 31, 2003. Your eligibility for these benefits begins upon your execution of this Letter
Agreement. Please contact the Human Resources Department to arrange for the commencement of these benefits. 

	B.
	You
agree to return all NASDAQ property to NASDAQ. This includes (i) all documents, data, materials, details, and copies thereof in any form (electronic or hard copy) that are
the property of NASDAQ or were created using NASDAQ's resources or during any hours worked for NASDAQ and (ii) all other NASDAQ property including, without limitation, all computer equipment,
and associated passwords, property passes, keys, hardware keys, credit cards, and identification badges.

	C.
	You
agree to cooperate with NASDAQ and to provide all information that NASDAQ may hereafter reasonably request with respect to any matter involving your present or former relationship
with NASDAQ, the work you have performed, or present or former employees or clients of NASDAQ so long as such requests do not unreasonably interfere with any other job or important personal activity
in which you are engaged. NASDAQ agrees to reimburse you for all reasonable out-of-pocket costs you incur in connection therewith.

	D.
	You
understand and agree that the terms and conditions of this Letter Agreement shall be kept confidential by you. You may, however, disclose the terms and conditions of this Letter
Agreement to your spouse, immediate family members, attorney, and/or tax and financial advisors or pursuant to court order or subpoena. You agree to notify the NASDAQ Office of General Counsel at 1801
K Street, N.W., Washington, D.C. 20006, as soon as practical after your receipt of such a court order or subpoena. NASDAQ agrees to keep the terms and conditions of this Letter Agreement
confidential, but reserves the right to reveal the terms of the Letter Agreement to certain members of management and its accounting, payroll, and legal staffs on a need-to-know basis, or as may be
otherwise required by law, including without limitation, applicable securities laws.

	E.
	You
agree that nothing in this Letter Agreement limits your obligations under Section 9 of the Employment Agreement and that any provisions of this paragraph III. of the
Letter Agreement are in addition to and not in lieu of Section 9 of the Employment Agreement. Nothing in this Letter Agreement shall limit NASDAQ's rights and remedies in the event of a breach
of the Employment Agreement.

	F.
	If
you materially breach or threaten to materially breach this Letter Agreement (a "Breach"), you acknowledge that NASDAQ's obligation to provide the benefits referred to in
paragraph III.A. above shall immediately cease, and that NASDAQ in addition shall have all other rights or remedies provided in law or in equity by reason of your Breach. You specifically agree
and acknowledge that NASDAQ, after affording you reasonable, written notice of the Breach and of the reasonable opportunity to cure, has the right to cease performing its obligations under this Letter
Agreement in advance of any termination of a Breach by a court of competent jurisdiction. If NASDAQ ceases performing its obligations due to such Breach and a court of competent jurisdiction later
determines that such action was without right, NASDAQ agrees to pay you all monies thus withheld plus simple interest at the prime rate in effect at the time the payments ceased and your reasonable
costs and 

3

 

expenses
incurred in such action (including attorney fees) and you agree to accept this as your exclusive remedy therefore. If NASDAQ ceases performing its obligations due to such Breach or threatened
Breach and a court of competent jurisdiction later determines that a Breach occurred and that such action was thus appropriate and permitted, you agree to pay, in addition to such other costs as the
court may direct, all of NASDAQ's reasonable costs and expenses, including attorney's fees, unless prohibited by applicable law or regulation. 

	G.
	The
law of the State of New York shall govern this Letter Agreement without giving effect to its conflict of law principles. Should a court of competent jurisdiction find that any
provision of this Letter Agreement is void, voidable, illegal, or unenforceable, no other provision shall be affected thereby and the balance shall be interpreted in a manner that gives effect to the
intent of the parties. The parties agree that the normal rule of construction that holds that all ambiguities are construed against the drafting party will not apply to the interpretation of this
Letter Agreement.

	H.
	You
and NASDAQ acknowledge that the headings in the Letter Agreement are for convenience only and have no bearing on the meaning of this Letter Agreement.

	I.
	You
understand and acknowledge that NASDAQ is under no obligation to hire you in the future. You further acknowledge that you will not be entitled to any special consideration should
you apply for employment with NASDAQ in the future and that any such application will be considered in the same manner and under the same procedures as any other external application.

	J.
	You
acknowledge that NASDAQ has advised you to consult an attorney, at your expense, with regard to this Letter Agreement. You have 45 days from your receipt of this Agreement
and its waiver and release provisions to accept and sign it, although you may do it sooner. You will have seven (7) days to revoke your acceptance of this Agreement and its waiver and release
provisions after signing it, with the eighth day following execution referred to as the "Effective Date." You agree to send notice of such revocation by certified mail to the attention, Human
Resources, The NASDAQ Stock Market, Inc. 9513 Key West Avenue, Rockville, Maryland 20850.

	K.
	You
agree that all required federal, state, local, and social security taxes will be withheld from the amounts payable to you pursuant to this Letter Agreement.

	L.
	Employee
Release 

        In
consideration of the benefits referred to in paragraph III.A. above and other benefits offered to me by NASDAQ (and not the payment of an incentive compensation award, if any),
I hereby accept this separation package and thereby release, discharge, and agree to hold harmless NASDAQ, its predecessors, successors, subsidiaries, affiliates, employees, officers, parent,
shareholders, employee benefit plans, Plan Administrators, trusts, trustees, Boards of Governors, members of any Boards of Governors, any Board of Directors, members of any Boards of Directors, heirs,
successors, and assigns (hereinafter referred to in this paragraph III.L. as "NASDAQ"), from all claims, liabilities, demands, and causes of action at law or equity, known or unknown, fixed or
contingent, which I have, may have, will have, or claim to have against NASDAQ as a result of my employment and/or this separation and the conclusion of my employment with NASDAQ at any time up to and
including the date of the execution of this Letter Agreement, excluding all claims that arise out of an asserted breach of this Letter Agreement (the "Excluded Claims"). This includes, but is not
limited to, claims arising under federal, state, or local laws prohibiting employment discrimination, including Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in
Employment Act, as amended (including the Older Workers Benefit Protection Act), the Employment Retirement Income Security Act of 1974, as amended, the Equal Pay Act, the District of Columbia Human
Rights Act, as amended, the 

4

 

Maryland
Human Relations Act, the New York Executive Law, as amended, the New York City Administrative Code, as amended, claims growing out of any legal restrictions on an employer's right to
terminate its employees in any jurisdiction, such as claims for wrongful or constructive discharge, breach of any express or implied contract, and/or any claims on any basis whatsoever regarding my
status, pay, position, or title while employed by NASDAQ. Excluded from this Letter Agreement are claims which cannot be lawfully waived, including the right to file an administrative charge of
discrimination with federal or state agencies. I am, however, waiving all rights to monetary recovery in connection with any such charge. Notwithstanding the foregoing, I retain my rights, if any, to
seek indemnification from NASDAQ for costs incurred by me as a result of any liability imposed in connection with my service as an employee and officer of NASDAQ and/or its affiliates. 

        I
specifically promise not to sue NASDAQ in any forum for any of the above-mentioned claims, except that I may bring a lawsuit to challenge the validity of this Letter Agreement under
the Age Discrimination in Employment Act ("ADEA") and any actions related to Excluded Claims and any claims for indemnification referred to in the final sentence of the preceding paragraph. If I
violate this covenant, I will be required to pay NASDAQ's defense costs, including its reasonable fees; alternatively, at NASDAQ's option, NASDAQ's remaining obligations to pay severance money and/or
benefits under this Letter Agreement shall cease, and I will be required to repay to NASDAQ upon demand all but $100.00 (one hundred dollars) of the severance pay and other benefits I received under
this Letter Agreement. The above payment/repayment provisions do not apply in the event I sue NASDAQ under the ADEA. 

        By
signing below, I, John L. Hilley, certify that I have read, carefully reviewed, fully understand, and agree to all the provisions of this Letter Agreement, which sets forth the
entire agreement and understanding between NASDAQ and me. I acknowledge that I have not relied upon any representation or statement, written or oral, not set forth in this document. 

	For NASDAQ:	 	 	 	 
	

/s/  THOMAS CARDY      
	
 	

 
	

Date:	
 	

7/23/2003	
 	

 
	

/s/  JOHN L. HILLEY      
 John L. Hilley	
 	

 
	

Date:	
 	

July 23, 2003	
 	

 

	cc:	 	NASDAQ Human Resources

NASDAQ Office of General Counsel

	 	 

5

QuickLinks

Exhibit 10.1

SEPARATION AND GENERAL RELEASE AGREEMENTExhibit 10.22

 

 

 

AMENDED AND RESTATED

 

PURCHASE AGREEMENT AND PLAN OF
MERGER

 

Among

 

WALTER INDUSTRIES, INC.,

 

APPLIED INDUSTRIAL MATERIALS
CORPORATION,

 

GANS TRANSPORT AGENCIES (USA),
INC.,

 

AIMCOR (FAR EAST), INC.

 

and

 

OXBOW CARBON & MINERALS LLC

 

 

Dated as of November 13, 2003

 

 

 

 

Table of Contents

 

 

	
  ARTICLE I THE MERGERS AND THE SALE AND
  TRANSFER OF Securities

  	
   

  
	
  1.1

  	
  The Mergers.

  	
   

  
	
  1.2

  	
  Effective Time.

  	
   

  
	
  1.3

  	
  Limited Liability Company Agreement

  	
   

  
	
  1.4

  	
  Officers

  	
   

  
	
  1.5

  	
  Status and Conversion of the Securities.

  	
   

  
	
  1.6

  	
  Sale of Securities Interest

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II PURCHASE PRICE AND ADJUSTMENTS 

  	
   

  
	
  2.1

  	
  Purchase Price.

  	
   

  
	
  2.2

  	
  Purchase Price Adjustment.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES
  OF THE SELLER

  	
   

  
	
  3.1

  	
  Due Organization

  	
   

  
	
  3.2

  	
  Authorization and Validity of Agreement.

  	
   

  
	
  3.3

  	
  Sold Companies; Subsidiaries; Venture
  Interests.

  	
   

  
	
  3.4

  	
  No Conflict

  	
   

  
	
  3.5

  	
  Financial Statements.

  	
   

  
	
  3.6

  	
  Absence of Changes

  	
   

  
	
  3.7

  	
  Real Properties; Personal
  Properties; Condition of Properties.

  	
   

  
	
  3.8

  	
  Contracts.

  	
   

  
	
  3.9

  	
  Legal Proceedings

  	
   

  
	
  3.10

  	
  Intangible Property Rights.

  	
   

  
	
  3.11

  	
  Insurance

  	
   

  
	
  3.12

  	
  Tax Matters.

  	
   

  
	
  3.13

  	
  Labor Matters; Employee Benefit Plans.

  	
   

  
	
  3.14

  	
  Disclosure

  	
   

  
	
  3.15

  	
  Compliance with Laws

  	
   

  
	
  3.16

  	
  Finders; Brokers

  	
   

  
	
  3.17

  	
  Environmental Matters.

  	
   

  
	
  3.18

  	
  Transactions with Affiliates

  	
   

  
	
  3.19

  	
  Certain Products

  	
   

  
	
  3.20

  	
  No Other Representations or Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
  THE BUYER

  	
   

  
	
  4.1

  	
  Due
  Organization and Power of the Buyer

  	
   

  

 

2

 

	
  4.2

  	
  Authorization
  and Validity of Agreement.

  	
   

  
	
  4.3

  	
  No Conflict

  	
   

  
	
  4.4

  	
  Finders; Brokers

  	
   

  
	
  4.5

  	
  Purchase for Investment

  	
   

  
	
  4.6

  	
  Financial Capacity

  	
   

  
	
  4.7

  	
  Legal Proceedings

  	
   

  
	
  4.8

  	
  Investigation

  	
   

  
	
  4.9

  	
  Disclaimer Regarding Projections

  	
   

  
	
  4.10

  	
  Disclaimer
  Regarding Condition

  	
   

  
	
  4.11

  	
  No Other Representations or Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V COVENANTS

  	
   

  
	
  5.1

  	
  Access; Information and Records;
  Confidentiality

  	
   

  
	
  5.2

  	
  Conduct of the Business Prior to the
  Closing Date

  	
   

  
	
  5.3

  	
  Consents
  and Approvals.

  	
   

  
	
  5.4

  	
  Non-Solicitation.

  	
   

  
	
  5.5

  	
  Further Actions.

  	
   

  
	
  5.6

  	
  Access to Records and Personnel.

  	
   

  
	
  5.7

  	
  Employee Relations and Benefits.

  	
   

  
	
  5.8

  	
  Guarantees

  	
   

  
	
  5.9

  	
  [Intentionally omitted.]

  	
   

  
	
  5.10

  	
  Termination
  of Intercompany Arrangements

  	
   

  
	
  5.11

  	
  Insurance.

  	
   

  
	
  5.12

  	
  Update.

  	
   

  
	
  5.13

  	
  Litigation and Insurance Claim Support

  	
   

  
	
  5.14

  	
  Directors’ and Officers’ Indemnification and
  Insurance.

  	
   

  
	
  5.15

  	
  Software

  	
   

  
	
  5.16

  	
  Insurance

  	
   

  
	
  5.17

  	
  Dispositions

  	
   

  
	
  5.18

  	
  Cash Management

  	
   

  
	
  5.19

  	
  No Negotiations

  	
   

  
	
  5.20

  	
  Bank Matters

  	
   

  
	
  5.21

  	
  Financing.

  	
   

  
	
  5.22

  	
  Expenses

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI TAX MATTERS

  	
   

  
	
  6.1

  	
  Purchase Price Allocation

  	
   

  
	
  6.2

  	
  Restructuring Transactions

  	
   

  
	
  6.3

  	
  Section 754 Elections

  	
   

  
	
  6.4

  	
  Tax Matters Cooperation

  	
   

  
	
  6.5

  	
  Transfer Taxes

  	
   

  

 

3

 

	
  6.6

  	
  Tax Indemnification.

  	
   

  
	
  6.7

  	
  Preparation and Filing of Tax
  Returns, Reports and Forms

  	
   

  
	
  6.8

  	
  Tax Refunds and Credits.

  	
   

  
	
  6.9

  	
  Procedures Relating to
  Indemnification of Tax Claims.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII CONDITIONS

  	
   

  
	
  7.1

  	
  Conditions Precedent to Obligations of
  the Buyer and the Seller

  	
   

  
	
  7.2

  	
  Conditions
  Precedent to Obligation of the Seller

  	
   

  
	
  7.3

  	
  Conditions Precedent to
  Obligation of the Buyer

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII CLOSING

  	
   

  
	
  8.1

  	
  Closing Date.

  	
   

  
	
  8.2

  	
  Buyer Deliveries

  	
   

  
	
  8.3

  	
  Seller Deliveries

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX INDEMNIFICATION

  	
   

  
	
  9.1

  	
  Indemnification by the Seller.

  	
   

  
	
  9.2

  	
  Indemnification
  by the Buyer.

  	
   

  
	
  9.3

  	
  Limitations on Indemnification.

  	
   

  
	
  9.4

  	
  Indemnification Calculations.

  	
   

  
	
  9.5

  	
  Survival.

  	
   

  
	
  9.6

  	
  Assignment

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X TERMINATION

  	
   

  
	
  10.1

  	
  Termination Events

  	
   

  
	
  10.2

  	
  Termination Fee.

  	
   

  
	
  10.3

  	
  Effect
  of Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI DISPUTE RESOLUTION

  	
   

  
	
  11.1

  	
  Dispute Resolution.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII MISCELLANEOUS AGREEMENTS OF THE
  PARTIES

  	
   

  
	
  12.1

  	
  Notices

  	
   

  
	
  12.2

  	
  Further
  Assurances

  	
   

  
	
  12.3

  	
  Expenses

  	
   

  
	
  12.4

  	
  Entire Agreement

  	
   

  
	
  12.5

  	
  No Third Party Beneficiaries

  	
   

  
	
  12.6

  	
  Assignability

  	
   

  
	
  12.7

  	
  Amendment and Modification; Waiver

  	
   

  
	
  12.8

  	
  Public Announcements

  	
   

  
	
  12.9

  	
  Schedules and Exhibits

  	
   

  
	
  12.10

  	
  Section Headings; Table of Contents

  	
   

  

 

4

 

	
  12.11

  	
  Severability

  	
   

  
	
  12.12

  	
  Counterparts

  	
   

  
	
  12.13

  	
  Enforcement

  	
   

  
	
  12.14

  	
  Governing Law

  	
   

  
	
  12.15

  	
  Certain Definitions

  	
   

  

 

5

 

EXHIBITS

 

	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  [Intentionally omitted.]

  	
   

  
	
  Exhibit B

  	
  FORM OF BUYER’S COUNSEL’S LEGAL OPINION

  	
   

  
	
   

  	
  (Steel Hector & Davis LLP)

  	
   

  
	
  Exhibit C

  	
  FORM OF SELLER’S COUNSEL’S LEGAL OPINION

  	
   

  
	
   

  	
  (Simpson Thacher & Bartlett LLP)

  	
   

  
	
  Exhibit D

  	
  FORM OF SELLER’S COUNSEL’S LEGAL OPINION

  	
   

  
	
   

  	
  (Victor Patrick, Esquire)

  	
   

  
	
  Exhibit E

  	
  FORM OF RESIGNATION

  	
   

  

 

SCHEDULES

 

	
   

  	
   

  	
   

  
	
  Schedule 2.2(a)(i)

  	
  Preliminary Net Working Capital Statement

  	
   

  
	
  Schedule 2.2(a)(ii)

  	
  Preliminary Cash Statement

  	
   

  
	
  Schedule 3.1

  	
  Exceptions to Due Organization

  	
   

  
	
  Schedule 3.2

  	
  Authorization and Validity of Agreement

  	
   

  
	
  Schedule 3.3(a)

  	
  Shares of the Sold Companies

  	
   

  
	
  Schedule 3.3(b)

  	
  Subsidiaries of the Sold Companies

  	
   

  
	
  Schedule 3.3(c)

  	
  Venture Entities

  	
   

  
	
  Schedule 3.3(d)

  	
  Exceptions to Delivery of Corporate Documents by
  Seller

  	
   

  
	
  Schedule 3.3(e)

  	
  Exceptions to Shares Owned

  	
   

  
	
  Schedule 3.4

  	
  Consents and Approvals

  	
   

  
	
  Schedule 3.5(a)

  	
  Financial Statements and Exceptions to Financial
  Statements

  	
   

  
	
  Schedule 3.5(b)

  	
  Material Liabilities and Obligations Required by
  GAAP

  	
   

  
	
  Schedule 3.6

  	
  Exceptions to Absence of Material Changes

  	
   

  
	
  Schedule 3.7(a)

  	
  Parcels and Exceptions to Subleases, Licenses,
  Concessions or Other Written Agreements Pertaining to Parcels

  	
   

  
	
  Schedule 3.7(b)

  	
  Leases

  	
   

  
	
  Schedule 3.7(c)

  	
  Exceptions to Condition of Properties

  	
   

  
	
  Schedule 3.8(a)(i)

  	
  Exceptions to Contracts:  Borrowing, Mortgaging or Pledging in Excess of $100,000

  	
   

  
	
  Schedule 3.8(a)(ii)

  	
  Exceptions to Contracts:  Lending or Investing in Excess of $100,000

  	
   

  
	
  Schedule 3.8(a)(iii)

  	
  Exceptions to Contracts:  Guaranty in Excess of $100,000

  	
   

  
	
  Schedule 3.8(a)(iv)

  	
  Exceptions to Contracts:  Letters of Credit, Guarantees, Etc.

  	
   

  
	
  Schedule 3.8(a)(v)

  	
  Exceptions to Contracts:  Agency, Representation, Distribution or Franchise Agreements

  	
   

  
	
  Schedule 3.8(a)(vi)

  	
  Exception to Contracts:  Supply Agreements

  	
   

  
	
  Schedule 3.8(a)(vii)

  	
  Exceptions to Contracts:  Prohibition or Restriction from Engaging in Business

  	
   

  

 

6

 

	
  Schedule 3.8(a)(viii)

  	
  Exceptions to Contracts:  Transportation Agreements

  	
   

  
	
  Schedule 3.8(a)(ix)

  	
  Exceptions to Contracts:  Other Contracts in Excess of $100,000 in Twelve Months

  	
   

  
	
  Schedule 3.8(b)

  	
  Material Contract Disputes or Disagreements

  	
   

  
	
  Schedule 3.9

  	
  Legal Proceedings

  	
   

  
	
  Schedule 3.10(a)

  	
  Patent Rights

  	
   

  
	
  Schedule 3.10(b)

  	
  Trademark Rights

  	
   

  
	
  Schedule 3.10(c)

  	
  Copyright Rights

  	
   

  
	
  Schedule 3.11

  	
  Exceptions to Insurance

  	
   

  
	
  Schedule 3.11(a)

  	
  Insurance Policies

  	
   

  
	
  Schedule 3.11(b)

  	
  Exceptions to Performance of Insurance Obligations

  	
   

  
	
  Schedule 3.11(c)

  	
  Insurance Claims

  	
   

  
	
  Schedule 3.12(b)

  	
  Exceptions to Tax Returns Filed and Taxes Paid

  	
   

  
	
  Schedule 3.12(c)

  	
  Exceptions to Tax Deficiencies; Audits and Statute
  of Limitations

  	
   

  
	
  Schedule 3.12(d)

  	
  Tax Sharing Agreements

  	
   

  
	
  Schedule 3.13(a)

  	
  Labor Controversies

  	
   

  
	
  Schedule 3.13(b)

  	
  Employee Benefit Plans

  	
   

  
	
  Schedule 3.14

  	
  Exceptions to Disclosure

  	
   

  
	
  Schedule 3.15

  	
  Exceptions to Licenses, Permits and Compliance with
  Laws

  	
   

  
	
  Schedule 3.17(a)

  	
  Environmental Licenses and Permits

  	
   

  
	
  Schedule 3.17(b)

  	
  Exceptions to Environmental Compliance, Licenses and
  Permits

  	
   

  
	
  Schedule 3.18

  	
  Exceptions to Transactions with Affiliates

  	
   

  
	
  Schedule 3.19

  	
  Exceptions to Certain Products

  	
   

  
	
  Schedule 3.19(a)

  	
  Grand Forks County, North Dakota Cases

  	
   

  
	
  Schedule 4.8

  	
  Buyer Knowledge of Untrue or Incorrect Seller
  Representations and Warranties

  	
   

  
	
  Schedule 5.2

  	
  Exceptions to Conduct of Business

  	
   

  
	
  Schedule 5.5(b)

  	
  Seller Names

  	
   

  
	
  Schedule 5.8

  	
  Guarantees

  	
   

  
	
  Schedule 5.10

  	
  Intercompany Arrangements

  	
   

  
	
  Schedule 5.15

  	
  Software

  	
   

  
	
  Schedule 6.1

  	
  Purchase Price Allocation and 1060 Allocation

  	
   

  
	
  Schedule 6.2

  	
  Restructuring Transactions

  	
   

  
	
  Schedule 7.1(b)

  	
  Regulatory Authorizations

  	
   

  
	
  Schedule 9.1(a)(ii)

  	
  Certain Actions

  	
   

  
	
  Schedule 12.16(k)(i)

  	
  Knowledge of the Seller

  	
   

  
	
  Schedule 12.16(k)(ii)

  	
  Knowledge of the Buyer

  	
   

  

 

7

 

Index of Defined Terms

 

	
  1060 Allocation

  	
  43

  
	
  1997 Agreement

  	
  52

  
	
  1997 Indemnification Obligation

  	
  55

  
	
  Accounts

  	
  42

  
	
  Actions

  	
  15

  
	
  Affiliate

  	
  66

  
	
  Agreement

  	
  1

  
	
  AIMCOR DE

  	
  1

  
	
  AIMCOR DE Certificate of Merger

  	
  50

  
	
  AIMCOR DE Common Stock

  	
  3

  
	
  AIMCOR DE Merger

  	
  2

  
	
  AIMCOR DE Merger Consideration

  	
  3

  
	
  AIMCOR DE Merger Effective Time

  	
  2

  
	
  AIMCOR Enterprises

  	
  1

  
	
  AIMCOR FAR EAST

  	
  1

  
	
  AIMCOR GmbH

  	
  1

  
	
  AIMCOR Securities Consideration

  	
  3

  
	
  Amended Stock Purchase Agreement

  	
  1

  
	
  Antitrust Division

  	
  32

  
	
  Benefit Plans

  	
  20

  
	
  Blackstone

  	
  42

  
	
  Books and Records

  	
  34

  
	
  Buyer

  	
  1

  
	
  Buyer 401(k) Plan

  	
  37

  
	
  Buyer Losses

  	
  51

  
	
  Cash

  	
  66

  
	
  Cash Adjustment Statement

  	
  5

  
	
  Cash Deficiency Amount

  	
  5

  
	
  Cash Statement

  	
  5

  
	
  CERCLA

  	
  24

  
	
  Claimant

  	
  61

  
	
  Closing

  	
  50

  
	
  Closing Date

  	
  50

  
	
  Code

  	
  17

  
	
  Conclusive Cash Adjustment Statement

  	
  7

  
	
  Conclusive Cash Statement

  	
  7

  
	
  Conclusive Net Working Capital Adjustment Statement

  	
  7

  
	
  Conclusive Net Working Capital Statement

  	
  6

  
	
  Confidentiality Agreement

  	
  29

  
	
  Control

  	
  66

  
	
  Controlled by

  	
  66

  
	
  Credit Agreement

  	
  66

  
	
  Debt Obligations

  	
  66

  
	
  DGCL

  	
  1

  
	
  Dispute

  	
  61

  
	
  Disputed Items

  	
  6

  
	
  DLLCA

  	
  1

  
	
  Employees

  	
  35

  
	
  Enterprises

  	
  52

  
	
  Environmental Condition

  	
  24

  
	
  Environmental Laws

  	
  24

  
	
  Environmental Liability

  	
  25

  
	
  Environmental Licenses or Permits

  	
  25

  
	
  ERISA

  	
  19

  
	
  ERISA Affiliate

  	
  20

  
	
  Excess Cash Amount

  	
  5

  
	
  Existing Indemnification Obligations

  	
  55

  
	
  Financial Statements

  	
  10

  
	
  Financings

  	
  42

  
	
  First Deposit

  	
  4

  
	
  First Parties

  	
  52

  
	
  Former Employee

  	
  35

  
	
  FTC

  	
  32

  
	
  GAAP

  	
  5

  
	
  GANS

  	
  1

  
	
  Gans Transport

  	
  3

  
	
  Gans Transport PSI

  	
  3

  
	
  Germany LP

  	
  52

  
	
  Governmental Antitrust Authority

  	
  31

  
	
  Governmental Authority

  	
  15

  
	
  Guarantees

  	
  39

  
	
  Hazardous Substance

  	
  25

  
	
  HSR Act

  	
  10

  
	
  IMC Agreement

  	
  55

  
	
  IMC Indemnification Obligation

  	
  55

  

 

8

 

	
  Incentive Plan

  	
  38

  
	
  Indemnitees

  	
  40

  
	
  Leases

  	
  13

  
	
  Licenses and Permits

  	
  22

  
	
  Liens

  	
  66

  
	
  Losses

  	
  54

  
	
  Luxembourg LP

  	
  52

  
	
  MAC Limitation

  	
  67

  
	
  Material Adverse Change

  	
  67

  
	
  Material Contracts

  	
  15

  
	
  Mergers

  	
  2

  
	
  Merging Entities

  	
  1

  
	
  Metals Business

  	
  67

  
	
  Net Working Capital

  	
  5

  
	
  Net Working Capital Adjustment Statement

  	
  5

  
	
  Net Working Capital Deficiency Amount

  	
  5

  
	
  Net Working Capital Excess Amount

  	
  5

  
	
  Net Working Capital Statement

  	
  5

  
	
  Neutral Arbitrator

  	
  6

  
	
  Notice of Claim

  	
  61

  
	
  Original Stock Purchase Agreement

  	
  1

  
	
  OSHA

  	
  24

  
	
  Parcel

  	
  12

  
	
  Pension Assets

  	
  36

  
	
  Pension Plans

  	
  36

  
	
  Permitted Lien

  	
  67

  
	
  Person

  	
  68

  
	
  Petcoke Business

  	
  68

  
	
  Pre-Closing Tax Period

  	
  44

  
	
  Preliminary Cash Statement

  	
  5

  
	
  Preliminary Net Working Capital Statement

  	
  5

  
	
  Prime Rate

  	
  7

  
	
  Projections

  	
  28

  
	
  Purchase

  	
  1

  
	
  Purchase Price

  	
  3

  
	
  Purchase Price Allocation

  	
  43

  
	
  RCRA

  	
  24

  
	
  Reimbursement Account Plans

  	
  37

  
	
  Release

  	
  25

  
	
  Remedial Action

  	
  25

  
	
  Resolution Period

  	
  6

  
	
  Respondent

  	
  61

  
	
  Restructuring Transactions

  	
  43

  
	
  Rules

  	
  62

  
	
  Second Deposit

  	
  4

  
	
  Section
  754 Entities

  	
  43

  
	
  Securities Act

  	
  27

  
	
  Security Agreement

  	
  49

  
	
  Seller

  	
  1

  
	
  Seller 401(k) Plan

  	
  37

  
	
  Seller Losses

  	
  54

  
	
  Seller Master Trust

  	
  36

  
	
  Seller Names

  	
  34

  
	
  SG

  	
  42

  
	
  Shares

  	
  1

  
	
  Sold Companies

  	
  1

  
	
  Stockholders

  	
  52

  
	
  Straddle Period

  	
  45

  
	
  Subsidiaries

  	
  9

  
	
  Subsidiaries Certificates of Merger

  	
  50

  
	
  Subsidiaries Mergers

  	
  2

  
	
  Subsidiaries Mergers Effective Times

  	
  2

  
	
  Success Agreement

  	
  38

  
	
  Target Cash

  	
  5

  
	
  Target Net Working Capital

  	
  5

  
	
  Tax

  	
  17

  
	
  Tax Claim

  	
  47

  
	
  Tax Return

  	
  17

  
	
  Taxes

  	
  17

  
	
  Termination Fee

  	
  61

  
	
  The best knowledge of

  	
  68

  
	
  The knowledge of

  	
  68

  
	
  The Seller’s Tax Knowledge

  	
  68

  
	
  Transfer Taxes

  	
  44

  
	
  Transferred Employee

  	
  35

  
	
  Under common control with

  	
  66

  
	
  Venture Entities

  	
  9

  
	
  Venture Interests

  	
  9

  

 

9

 

AMENDED AND RESTATED PURCHASE
AGREEMENT AND PLAN OF MERGER

 

THIS AMENDED AND RESTATED PURCHASE AGREEMENT AND PLAN
OF MERGER (this “Agreement”) is entered into on November 13, 2003 by
WALTER INDUSTRIES, INC., a Delaware corporation (the “Seller”), Applied
Industrial Materials Corporation, a Delaware corporation and a wholly owned
subsidiary of Seller (“AIMCOR DE”), Gans Transport Agencies (USA), Inc.,
a Delaware corporation and a wholly owned subsidiary of AIMCOR DE (“GANS”),
AIMCOR (FAR EAST), Inc., a Delaware corporation (“AIMCOR FAR EAST”), and
a wholly owned subsidiary of AIMCOR Enterprises International Incorporated, a
Nevada corporation and a wholly owned subsidiary of AIMCOR DE (“AIMCOR
Enterprises”), and OXBOW CARBON & MINERALS LLC, a Delaware limited
liability company (the “Buyer”). 
AIMCOR DE, GANS and AIMCOR FAR EAST are collectively referred to herein
as the “Merging Entities.”

 

RECITALS

 

WHEREAS, Seller
and Buyer entered into that certain Stock Purchase Agreement, dated as of
September 22, 2003 (the “Original Stock Purchase Agreement”), as amended
by the First Amendment thereto, dated September 22, 2003 (the “Amended Stock
Purchase Agreement”);

 

WHEREAS, this
Agreement amends and restates the Amended Stock Purchase Agreement in its
entirety;

 

WHEREAS, the
respective Boards of Directors of each of Seller and the Merging Entities and
the sole member of Buyer, upon the terms and subject to the conditions set
forth in this Agreement, have approved, and declared advisable, the merger of
each of the Merging Entities into Buyer; and

 

WHEREAS, the
Buyer desires to indirectly acquire all of the outstanding shares of capital
stock (the “Shares”) of Applied Industrial Materials Germany GmbH, a
company organized under the laws of Germany (“AIMCOR GmbH”, and together
with AIMCOR DE, the “Sold Companies”), owned by the Seller; and

 

WHEREAS, the
Board of Directors of each of the Seller and the Buyer has approved the
indirect acquisition of the Shares and the sale and purchase of the Gans
Transport PSI (as defined below) (collectively with the Mergers, the “Purchase”).

 

NOW, THEREFORE,
in consideration of the premises and the mutual promises contained herein, the
parties hereby agree as follows:

 

ARTICLE I

 

THE MERGERS AND THE SALE AND TRANSFER OF SECURITIES

 

1.1                                 The Mergers. 
Upon the terms and subject to the satisfaction or waiver of the
conditions set forth in this Agreement, at the Closing, the following
transactions shall take place in accordance with the provisions of Section 264
of the Delaware General Corporation Law (the “DGCL”) and Section 18-209 of the
Delaware Limited Liability Company Act (the “DLLCA”):

 

10

 

(a)                                  At the Subsidiaries
Mergers Effective Times (as defined in Section 1.2) each of GANS and AIMCOR FAR
EAST will be merged into the Buyer and shall cease to exist (the “Subsidiaries
Mergers”), and the Buyer shall be the surviving limited liability company
in each of the Subsidiaries Mergers and shall continue its existence under the
laws of the State of Delaware and shall succeed to all rights, privileges, powers,
franchises, assets, liabilities and obligations of each of GANS and AIMCOR FAR
EAST and Buyer in accordance with the provisions of the DGCL and the DLLCA.

 

(b)                                 Promptly following the
Subsidiaries Mergers Effective Times, and on the Closing Date, AIMCOR DE will
be merged into Buyer and shall cease to exist (the “AIMCOR DE Merger”),
and Buyer shall be the surviving limited liability company in the AIMCOR DE
Merger and shall continue its existence under the laws of the State of Delaware
and shall succeed to all rights, privileges, powers, franchises, assets,
liabilities and obligations of each of AIMCOR DE and Buyer in accordance with
the provisions of the DGCL and the DLLCA. 
The AIMCOR DE Merger and the Subsidiaries Mergers are collectively
referred to herein as the “Mergers”.

 

1.2                                 Effective Time.

 

(a)                                  Each of the
Subsidiaries Mergers shall become effective at the time of the filing of the
applicable Subsidiaries Certificates of Merger (as defined in Section 8.1(c))
with the Secretary of State of the State of Delaware (or at such later time as
shall be agreed by Seller and Buyer and as shall be set forth in such
certificates) in accordance with the DGCL and the DLLCA.  The dates and times when the Subsidiaries
Mergers become effective are herein referred to as the “Subsidiaries Mergers
Effective Times.”

 

(b)                                 Promptly following the
Subsidiaries Mergers Effective Times, and on the Closing Date, the AIMCOR DE
Merger shall become effective at the time of the filing of the AIMCOR DE
Certificate of Merger (as defined in Section 8.1(b)) with the Secretary of
State of the State of Delaware (or at such later time as shall be agreed to by
Seller and Buyer and as shall be set forth in such certificate) in accordance
with the DGCL and the DLLCA.  The date and time when the AIMCOR DE Merger
becomes effective is herein referred to as the “AIMCOR DE Merger Effective
Time.”

 

1.3                                 Limited Liability Company Agreement.  The limited liability company agreement of
Buyer, as in effect immediately prior to the Subsidiaries Mergers Effective
Times, shall continue in effect as the limited liability company agreement of
Buyer, as the surviving limited liability company in each Merger, until
thereafter amended.

 

1.4                                 Officers.  The
officers of Buyer immediately prior to the Subsidiaries Mergers Effective Times
shall be the officers of the surviving limited liability company in each
Merger, each to hold office until their respective successors are duly elected
or appointed and qualified or until their earlier death, resignation or removal.

 

1.5                                 Status and Conversion of the Securities.

 

(a)                                  At the Subsidiaries
Mergers Effective Times, and substantially concurrently and without any action
on the part of the holder thereof, by virtue of the Subsidiaries Mergers, each
share of common stock of each of GANS and AIMCOR FAR EAST

 

11

 

outstanding immediately prior to the applicable Subsidiaries Mergers
Effective Times shall be cancelled and retired, shall cease to exist and no
consideration shall be delivered in exchange therefor and all rights in respect
of such shares shall cease to exist.

 

(b)                                 Promptly following the
AIMCOR DE Merger Effective Time, and on the Closing Date, by virtue of the
AIMCOR DE Merger and without any action on the part of the holders thereof:

 

(i)                                     
all of the shares of common stock, par value $.01 per share, of AIMCOR DE
outstanding immediately prior to the Effective Time (the “AIMCOR DE Common
Stock”) collectively shall be converted into the right to receive the
AIMCOR DE Merger Consideration (as defined in Section 2.1); and

 

(ii)                                  all
rights in respect of outstanding shares of AIMCOR DE Common Stock shall cease
to exist, other than the right to receive cash as described above.

 

1.6                                 Sale of Securities Interest.  Subject to the satisfaction or waiver of the
conditions set forth in this Agreement, at the Closing as such term is defined
in Section 8.1 hereof, the Seller shall deliver to the Buyer the perpetual
securities interest (the “Gans Transport PSI”) in Gans Transport B.V., a
company organized under the laws of The Netherlands and a wholly owned
subsidiary of AIMCOR Enterprises (“Gans Transport”), in exchange for the
AIMCOR Securities Consideration (as defined in Section 2.1(c) hereof), free and
clear of all Liens.

 

ARTICLE II

 

PURCHASE PRICE AND ADJUSTMENTS

 

2.1                                 Purchase Price.

 

(a)                                  The total
consideration paid by Buyer pursuant to this Agreement shall be One Hundred
Twenty Seven Million Seven Hundred Fifty Thousand U.S. Dollars
(US$127,750,000), subject to the adjustments as provided in Section 2.2 hereof
(the “Purchase Price”).

 

(b)                                 One Hundred Twenty Two
Million Seven Hundred Fifty Thousand U.S. Dollars (US$122,750,000), subject to
the adjustments to the Purchase Price as provided in Section 2.2 hereof, of the
Purchase Price shall be paid by Buyer in the AIMCOR DE Merger (the “AIMCOR
DE Merger Consideration”).

 

(c)                                  Five Million U.S.
Dollars (US$5,000,000), subject to the adjustments to the Purchase Price as
provided in Section 2.2 hereof, of the Purchase Price shall be paid by Buyer
for the Gans Transport PSI (the “AIMCOR Securities Consideration”).

 

(d)                                 The Purchase Price
shall be payable at the Closing in immediately available funds to such bank
accounts as shall be designated by the Seller prior to Closing.

 

12

 

(e)                                  In accordance with
the terms of the Original Stock Purchase Agreement, the Buyer has deposited
with the Seller, in immediately available funds, Three Million Dollars
(US $3,000,000) (the “First Deposit”).  If the Closing shall have occurred on or prior to
December 31, 2003, the amount of the First Deposit and any and all
earnings accrued thereon shall be immediately payable to the Seller and
credited against the AIMCOR DE Merger Consideration payable pursuant to Section 2.1(a).  If the Closing shall not have occurred on or
prior to December 31, 2003, and the Seller is not then in default or
breach of any of its representations, warranties, covenants or agreements in
this Agreement, which default or breach has caused a failure to satisfy a
Closing condition, the First Deposit and any and all earnings accrued thereon
shall become immediately and irrevocably payable to the Seller; provided, however, that in such event the
Buyer and its affiliates shall be irrevocably released hereby from any claim by
Seller (or any of its affiliates) related to the inability of the Seller to
claim a loss for U.S. federal income tax purposes on the sale of the Sold
Companies for the year ending December 31, 2003.  If this Agreement is terminated pursuant to Section 10.1(a) or by
Seller pursuant to Section 10.1(e), then in any such event, the First Deposit
(and all earnings thereon) shall immediately and irrevocably either be (x)
credited against any amounts which may be payable by Buyer to Seller as of such
termination date or (y) payable to Buyer, as applicable.  The First Deposit shall be invested by the
Seller in obligations of or guaranteed by the United States of America, in
commercial paper obligations rated A-1 or P-1 or better by Moody’s Investors
Services, Inc. or Standard & Poor’s Corporation, respectively, or in
certificates of deposit, bank repurchase agreements or banker’s acceptances of
commercial banks with capital exceeding $500 million.  The First Deposit and any and all earnings
accrued thereon shall be segregated from other funds held by the Seller.

 

(f)                                    In addition, if the
Closing shall not have occurred on or prior to December 31, 2003, the Buyer
shall deposit with the Seller within three business days thereafter, in
immediately available funds, an additional Three Million Dollars (US
$3,000,000) (the “Second Deposit”). 
If the Closing shall have occurred on or prior to July 2, 2004, the
amount of the Second Deposit and any and all earnings accrued thereon shall be
immediately payable to the Seller and credited against the AIMCOR DE Merger
Consideration payable in accordance with Section 2.1(a).  If the Closing shall not have occurred on or
prior to July 2, 2004 as a result of a failure to obtain all required consents
and approvals in accordance with Section 5.3 hereof, the Second Deposit and any
and all earnings accrued thereon shall become immediately and irrevocably
payable to the Seller; provided
that, if (i) the Buyer has complied in all respects with its obligations and
undertakings in accordance with Section 5.3 hereof or (ii) the Seller has not
complied in all respects with its obligations and undertakings in accordance
with Section 5.3 hereof, then, in either case the amount of the Second Deposit
and any and all earnings accrued thereon shall be immediately and irrevocably
payable to the Buyer.  The Second
Deposit shall be invested by the Seller in obligations of or guaranteed by the
United States of America, in commercial paper obligations rated A-1 or P-1 or
better by Moody’s Investors Services, Inc. or Standard & Poor’s
Corporation, respectively, or in certificates of deposit, bank repurchase
agreements or banker’s acceptances of commercial banks with capital exceeding
$500 million.  The Second Deposit and
any and all earnings accrued thereon shall be segregated from other funds held
by the Seller.

 

(g)                                 In addition to all
other amounts payable by Buyer to Seller under this Agreement, the Buyer shall
pay the Seller Eighteen Thousand U.S. Dollars (US$18,000) per day

 

13

 

for each day from and including November 7, 2003 to but not including
the Closing Date.  Such payments shall
be made in the same manner as the Purchase Price is to be paid and shall be
paid on the earlier to occur of the Closing Date or the second business day
after the termination of this Agreement.

 

2.2                                 Purchase Price Adjustment.

 

(a)                                  (i)  Attached hereto as Schedule 2.2(a)(i) is a
statement (the “Preliminary Net Working Capital Statement”) setting
forth the estimated calculations of the targeted Net Working Capital (as
defined below) of the Sold Companies, the Venture Entities (as defined in
Section 3.3(c)(i)) and the Subsidiaries (as defined in Section 3.3(b)) as of
the close of business on the Closing Date (the “Target Net Working Capital”).  “Net Working Capital” shall mean
(A) current assets (excluding Cash and deferred income Tax assets) less
(B) current liabilities (excluding income Tax liabilities), all as determined
in accordance with the methods used in preparing the balance sheet included in
the Financial Statements and with United States generally accepted accounting
principles, consistently applied (“GAAP”); provided, however, that,
notwithstanding the foregoing, the parties hereby agree that the Conclusive Net
Working Capital Statement shall include a provision for a current liability of
$1,500,000 in respect of Pension Plan underfunding.

 

(ii)                                  Attached
hereto as Schedule 2.2(a)(ii) is a statement (the “Preliminary
Cash Statement”) setting forth the estimated calculations of Cash of the
Sold Companies, the Venture Entities and the Subsidiaries as of the close of
business on the Closing Date (the “Target Cash”).

 

(b)                                 (i)  Within sixty (60) calendar days after the
Closing Date, the Buyer shall cause to be prepared and delivered the Seller a
statement (the “Net Working Capital Statement”) setting forth the Net
Working Capital, and the components and calculation thereof, as of the close of
business of the Sold Companies, the Venture Entities and the Subsidiaries on
the Closing Date.  At the same time, the
Buyer shall also cause to be prepared and delivered to the Seller a statement
(the “Net Working Capital Adjustment Statement”) setting forth the
calculation of the amount by which the Net Working Capital as shown on the Net
Working Capital Statement either (A) exceeds Target Net Working Capital (the “Net
Working Capital Excess Amount”) or (B) is less than Target Net Working
Capital (the “Net Working Capital Deficiency Amount”).  The Seller shall provide the Buyer with
access to the relevant books and records of the Seller to the extent reasonably
necessary to prepare the Net Working Capital Statement and the Net Working
Capital Adjustment Statement.

 

(ii)                                  Within
sixty (60) calendar days after the Closing Date, the Buyer shall cause to be
prepared and delivered to the Seller a statement (the “Cash Statement”)
setting forth the Cash, and the components and calculation thereof, as of the
close of business of the Sold Companies, the Venture Entities and the Subsidiaries
on the Closing Date.  At the same time,
the Buyer shall also cause to be prepared and delivered to the Seller a
statement (the “Cash Adjustment Statement”) setting forth the
calculation of the amount by which the Cash as shown on the Cash Statement
either (A) exceeds Target Cash (the “Excess Cash Amount”) or (B) is less
than Target Cash (the “Cash Deficiency Amount”).  The Seller shall provide the Buyer with
access to the relevant books and

 

14

 

records of the Seller to the extent reasonably
required to prepare the Cash Statement and the Cash Adjustment Statement.

 

(c)                                  After receipt of the
Net Working Capital Statement, the Net Working Capital Adjustment Statement,
the Cash Statement and the Cash Adjustment Statement, the Seller will have
forty-five (45) calendar days to review the Net Working Capital Statement, the
Net Working Capital Adjustment Statement, the Cash Statement and the Cash
Adjustment Statement.  The Buyer will
give, or cause to be given, to the Seller reasonable access to all documents,
records, work papers, facilities and personnel used in their preparation.  Unless the Seller delivers written notice to
the Buyer setting forth the specific items disputed by the Seller on or prior
to the 45th day after the Seller’s receipt of the Net Working
Capital Statement, the Net Working Capital Adjustment Statement, the Cash
Statement and the Cash Adjustment Statement, the Seller will be deemed to have
accepted and agreed to the Net Working Capital Statement, the Net Working
Capital Adjustment Statement, the Cash Statement and the Cash Adjustment
Statement and such statements (and the calculations contained therein) will be
final, binding and conclusive.  If the
Seller so notifies the Buyer of its objections to any of the Net Working
Capital Statement, the Net Working Capital Adjustment Statement, the Cash
Statement or the Cash Adjustment Statement, (or any calculations contained
therein), the Seller and the Buyer will, within thirty (30) days following such
notice (the “Resolution Period”), attempt to resolve their differences
with respect to the items specified in the notice (the “Disputed Items”),
all other undisputed items (and all calculations relating thereto) will be
final, binding and conclusive.  Any
resolution by the Buyer and the Seller during the Resolution Period as to any
Disputed Items will be final, binding and conclusive.

 

If the Buyer and the Seller do not resolve all
Disputed Items by the end of the Resolution Period, then all Disputed Items
remaining in dispute will be submitted within thirty (30) days after the
expiration of the Resolution Period to Ernst & Young or such other national
independent accounting firm mutually acceptable to the Buyer and the Seller
(the “Neutral Arbitrator”).  The
Neutral Arbitrator shall act as an arbitrator to determine only those Disputed
Items remaining in dispute, consistent with this Section 2.2 and shall request
a statement from each party regarding such Disputed Items.  All fees and expenses relating to the work,
if any, to be performed by the Neutral Arbitrator will be allocated between the
Buyer and the Seller in the same proportion that the aggregate amount of the
Disputed Items so submitted to the Neutral Arbitrator that is unsuccessfully
disputed by each such party (as finally determined by the Neutral Arbitrator)
bears to the total amount of such Disputed Items so submitted.  In addition, the parties shall give the
Neutral Arbitrator access to all documents, records, work papers, facilities
and personnel as reasonably necessary to perform its function as
arbitrator.  The Neutral Arbitrator will
deliver to the Buyer and the Seller a written determination (such determination
to include a work sheet setting forth all material calculations used in arriving
at such determination and to be based solely on information provided to the
Neutral Arbitrator by the Seller and the Buyer) of the Disputed Items submitted
to the Neutral Arbitrator within thirty (30) days of receipt of such Disputed
Items, which determination will be final, binding and conclusive and judgment
may be entered on the award.  The final,
binding and conclusive Net Working Capital Statement, Net Working Capital
Adjustment Statement, Cash Statement and Cash Adjustment Statement, in each case
based either upon agreement by the Buyer and the Seller or the written
determination delivered by the Neutral Arbitrator in accordance with this
Section 2.2, will be the “Conclusive Net Working Capital Statement”, the
“Conclusive Net Working Capital Adjustment

 

15

 

Statement”, the “Conclusive Cash
Statement” and the “Conclusive Cash Adjustment Statement”,
respectively.  If either party fails to
submit a statement regarding any Disputed Items submitted to the Neutral
Arbitrator within the time determined by the Neutral Arbitrator or otherwise
fails to give the Neutral Arbitrator access as reasonably requested, then the
Neutral Arbitrator shall render a decision based solely on the evidence timely
submitted and the access afforded to the Neutral Arbitrator by the Buyer and
the Seller.

 

(d)                                 (i)                                     If the Conclusive
Net Working Capital Adjustment Statement contains a Net Working Capital
Deficiency Amount, then the Purchase Price will be reduced by such Net Working
Capital Deficiency Amount (pro-rated between the AIMCOR DE Merger Consideration
and the AIMCOR Securities Consideration), and the Seller shall pay to the Buyer
an amount in cash equal to such Net Working Capital Deficiency Amount.  If the Conclusive Net Working Capital
Adjustment Statement contains a Net Working Capital Excess Amount (pro-rated
between the AIMCOR DE Merger Consideration and the AIMCOR Securities
Consideration), then the Purchase Price will be increased by such Net Working
Capital Excess Amount, and the Buyer shall pay to the Seller an amount in cash
equal to such Net Working Capital Excess Amount.

 

(ii)                                  If
the Conclusive Cash Adjustment Statement contains a Cash Deficiency Amount,
then the Purchase Price will be decreased by such Cash Deficiency Amount, and
the Seller shall pay to the Buyer an amount in cash equal to such Cash
Deficiency Amount.  If the Conclusive
Cash Adjustment Statement contains an Excess Cash Amount, then the Purchase
Price will be increased by such Excess Cash Amount, and the Buyer shall pay to
the Seller an amount in cash equal to such Excess Cash Amount.

 

(iii)                               All
payments to be made pursuant to this Section 2.2(d) will be made on the second
business day following the date on which the Buyer and the Seller agree to, or
the Neutral Arbitrator delivers, the Conclusive Net Working Capital Statement,
the Conclusive Net Working Capital Adjustment Statement, the Conclusive Cash
Statement and the Conclusive Cash Adjustment Statement.  Any payment required to be made by the Seller
or the Buyer pursuant to this Section 
2.2(d) shall bear interest from the Closing Date through the date of
payment at a rate of interest equal to the prime rate per annum publicly
announced from time to time by Citibank, N.A. at its principal office in New
York City (the “Prime Rate”), and shall be payable by wire transfer of
immediately available funds to an account or accounts designated by the party
entitled to receive such funds prior to the date when such payment is due.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF THE SELLER

 

The Seller represents and warrants to the Buyer as
follows:

 

16

 

3.1                                 Due Organization.

 

(a)                                  The Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite power and authority to
enter into this Agreement and to perform its obligations hereunder.

 

(b)                                 Each of the Sold
Companies and the Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation.

 

(c)                                  Each of the Sold
Companies and the Subsidiaries (i) has all requisite power and authority to own
its properties and assets and to carry on its business as it is now being
conducted and (ii) is in good standing and is duly qualified to transact
business in each jurisdiction (foreign or domestic) where the nature of its
business or the nature or location of its assets requires such qualification,
and where the failure to be so qualified would not have a material adverse
effect on the Petcoke Business or the Metals Business, as applicable.

 

3.2                                 Authorization and Validity of Agreement.

 

(a)                                  The execution,
delivery and performance by the Seller and each of the Merging Entities of this
Agreement and the consummation by the Seller and each of the Merging Entities
of the transactions contemplated hereby have been duly authorized by all
necessary action on the part of the Seller and each of the Merging Entities and
no other action on the part of any of the Seller and the Merging Entities is
necessary for the execution, delivery and performance by any of the Seller and
the Merging Entities of this Agreement and the consummation by the Seller and
the Merging Entities of the transactions contemplated hereby.

 

(b)                               This Agreement has been
duly executed and delivered by each of the Seller and the Merging Entities and
is a legal, valid and binding obligation of each of the Seller and the Merging
Entities, enforceable against each of the Seller and the Merging Entities, in
accordance with its terms, except to the extent that its enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting creditors’ rights generally and by general equity
principles.

 

3.3                                 Sold Companies; Subsidiaries; Venture Interests.

 

(a)                                  Schedule 3.3(a)
sets forth the authorized capital stock and the number of shares of outstanding
capital stock of each of the Sold Companies. 
All of the Shares have been validly issued and are fully paid and
nonassessable and are owned beneficially and of record by the Seller free and
clear of all Liens except as set forth on Schedule 3.3(a).  Except as set forth on Schedule 3.3(a),
neither the Seller nor any of the Sold Companies has issued, granted, or
entered into with any person any outstanding agreement, understanding, option,
warrant or other right of any kind (including any right of preferential
purchase) relating to the sale, issuance or voting of any of the Shares or any
shares of capital stock of any class of, or other equity or ownership interest
in, any of the Sold Companies, or any securities or interests convertible into
or evidencing the right to purchase any Shares or any such shares of capital
stock or other equity or ownership interest.

 

(b)                                 Schedule 3.3(b)
sets forth (i) a complete list of the legal entities in which any of the Sold
Companies directly or indirectly own or control more than 50% of the stock or
other equity or ownership interests, the holder of which is generally entitled
to vote for the

 

17

 

election of the board of directors or other governing body of or
otherwise control such entity (the “Subsidiaries”), and (ii) the
authorized capital stock, the number of shares of outstanding capital stock,
the number of shares of such outstanding capital stock or other equity
interests owned by each owner thereof and the name of each such owner.  All of the outstanding shares of capital stock
or other outstanding equity or ownership interests of the Subsidiaries have
been validly issued and are fully paid and nonassessable and are owned by one
or more of the Sold Companies or Subsidiaries free and clear of all Liens,
except as set forth on Schedule 3.3(b). 
Except as set forth on Schedule 3.3(b), neither the Sold
Companies nor any of the Subsidiaries has issued, granted or entered into with
any person any outstanding agreement, understanding, option, warrant or other
right of any kind (including any right of preferential purchase) relating to
the sale, issuance or voting of any shares of capital stock of any class of, or
other equity or ownership interest in, any of the Subsidiaries or any
securities or interests convertible into or evidencing the right to purchase
any shares of capital stock of any class of, or other equity or ownership
interest in, any of the Subsidiaries.

 

(c)                                  Schedule 3.3(c)
sets forth (i) a complete list of the legal entities (the “Venture Entities”)
in which any of the Sold Companies or the Subsidiaries own or control, directly
or indirectly, 50% or less of the stock or other equity or ownership interests
(the “Venture Interests”) the holder of which is generally entitled to
vote for the election of the board of directors or other governing body of or
otherwise control such Venture Entity and (ii) a description of the Venture
Interests and the number of Venture Interests owned by the Sold Companies or
the Subsidiaries.  All of the Venture
Interests owned by the Sold Companies or the Subsidiaries have been validly issued
and are fully paid and nonassessable and, except as set forth in Schedule
3.3(c)(ii), are owned by one or more of the Sold Companies and the
Subsidiaries, free and clear of all Liens. 
Except as set forth on Schedule 3.3(c), none of the Sold Companies,
Subsidiaries or Venture Entities has issued or granted to or entered into with
any person any outstanding agreement, understanding, option, warrant or other
right of any kind (including without limitation any preferential right of
purchase) relating to the sale, issuance or voting of any Venture Interest or
any securities or interests convertible into or evidencing the right to
purchase any shares of capital stock of any class of, or other equity or
ownership interest in, any of the Venture Entities.

 

(d)                                 Except as set forth on
Schedule 3.3(d), the Buyer has been furnished with access to (i) true
and complete copies of the certificates of incorporation (including all the
amendments thereto), the by-laws as amended and currently in force, similar
venture, partnership or other governing or organizational documents (in the
case of any person not a corporation), stock certificates and records and
corporate minute books and records of each of the Sold Companies and the
Subsidiaries and (ii) all current partnership agreements or other governing or
organizational documents (including all amendments thereto) of each Venture
Entity.  All stock certificates and
records and corporate minute books and records of each of the Sold Companies
and Subsidiaries which have not been delivered to the Buyer and are not in the
possession of the Seller are in the possession or control of the Sold Company
or Subsidiary to which they relate.

 

(e)                                  Except as set forth
on Schedule 3.3(e) and for the Venture Entities and the Subsidiaries,
none of the Sold Companies owns, directly or indirectly, any shares of capital
stock of any class of, or other ownership interest in, any person or any
securities or interest convertible into or evidencing the right to purchase any
such shares or ownership interest.

 

18

 

(f)                                    There are no Debt
Obligations of any kind or nature, except as set forth on any schedule to this
Agreement.

 

3.4                                 No Conflict. 
Except as set forth on Schedule 3.4 and, except as specifically
contemplated in this Agreement, the execution, delivery and performance by the
Seller of this Agreement and the consummation by the Seller of the transactions
contemplated hereby:  (i) will not
violate any provision of any law, rule or regulation, order, judgment or decree
of any jurisdiction (including those outside of the United States) applicable
to any of the Seller, the Sold Companies or the Subsidiaries; (ii) will not
require any consent or approval of, or filing with or notice to, any Governmental
Authority under any provision of law applicable to any of the Seller, the Sold
Companies or the Subsidiaries, except for (A) the requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR
Act”), (B) any consent, approval, filing or notice as may be required under
similar laws in any applicable jurisdictions outside the United States and
which is set forth on Schedule 3.4, and (C) any consent, approval,
filing or notice requirements that become applicable solely as a result of the
specific regulatory status of the Buyer or its affiliates or which the Buyer or
its affiliates are otherwise required to obtain; (iii) will not violate any
provision of the certificate of incorporation, by-laws, similar venture,
partnership or other governing or organizational documents, as applicable of
any of the Seller, the Sold Companies, the Venture Entities or the
Subsidiaries; and (iv) will not, with or without the giving of notice or the
passage of time or both, require any consent or approval under, or conflict
with, or result in the breach or termination of, or constitute a default under,
or result in the acceleration of the performance by any of the Seller, the Sold
Companies, the Subsidiaries under any note, bond, indenture, mortgage, deed of
trust, lease, license, franchise, contract, agreement or other instrument to
which any of the Seller, the Sold Companies or the Subsidiaries or is a party
or by which it, or any of its assets, is bound or encumbered, or result in the
creation of a Lien on any of the assets of the Seller, the Sold Companies or
the Subsidiaries.

 

3.5                                 Financial Statements.

 

(a)                                  Schedule 3.5(a)
contains a copy of the unaudited consolidated balance sheet of the Sold
Companies and the Subsidiaries as of June 30, 2003, December 31, 2002 and
December 31, 2001 and the related statements of operations for the six month
period ended June 30, 2003 and the fiscal years ended December 31, 2002
and December 31, 2001 (collectively, the “Financial Statements”).  Except as set forth on Schedule 3.5(a),
the Financial Statements present fairly in all material respects the
consolidated financial position and results of operation of the Sold Companies,
the Venture Entities and the Subsidiaries as of the dates and for the periods
indicated, and have been prepared in accordance with GAAP.  The Financial Statements have been prepared
from the books and records of the Sold Companies and the Subsidiaries.  THE SELLER MAKES NO REPRESENTATION WITH
RESPECT TO ANY FINANCIAL INFORMATION OF THE SOLD COMPANIES, THE VENTURE
ENTITIES AND THE SUBSIDIARIES DELIVERED TO THE BUYER OTHER THAN AS CONTAINED IN
OR PURSUANT TO THIS AGREEMENT.  EXCEPT
AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE SELLER MAKES NO REPRESENTATION
OR WARRANTY WITH RESPECT TO SUCH FINANCIAL INFORMATION PRESENTED IN THE
FINANCIAL STATEMENTS.

 

19

 

(b)                                 Except as set forth in
Schedule 3.5(b), none of the Sold Companies or the Subsidiaries has any
liability or obligation relating to its business or operations (secured or
unsecured and whether absolute, accrued, contingent or otherwise and whether
due or to become due) which is of a nature required by GAAP to be reflected in
a balance sheet and which is not accrued or reserved against in the June 30,
2003 balance sheet included as part of the Financial Statements, other than
liabilities or obligations (i) otherwise specifically disclosed in this
Agreement or the Schedules hereto and (ii) incurred since June 30, 2003 in the
ordinary course of business consistent with past practice.

 

3.6                                 Absence of Changes.  Except as otherwise disclosed on Schedule
3.6 or as specifically contemplated by this Agreement, since June 30, 2003 the
business of (a) each of the Sold Companies, the Subsidiaries and, to the
Seller’s knowledge, the Venture Entities has been conducted in all material
respects in the ordinary course consistent with past practice and (b) none of
the Sold Companies, the Subsidiaries, or, to the Seller’s knowledge, the
Venture Entities, has:

 

(i)                                     incurred,
permitted or allowed any of its assets or properties material to the Petcoke
Business or the Metals Business, as applicable to be subjected to any Lien
other than a Permitted Lien;

 

(ii)                                  incurred
or created any indebtedness or other obligation in the nature of indebtedness,
or assumed or guaranteed (whether by way of guarantee, endorsement, indemnity,
warranty or otherwise) any indebtedness or other obligation in the nature of
indebtedness of any other person, in each case in excess of $50,000,
individually or in the aggregate, other than (i) loans, advances, capital
contributions or investments between any of the Sold Companies or Subsidiaries
and (ii) letters of credit entered into in the ordinary course of business and
which are disclosed in Schedule 3.8(a).

 

(iii)                               sold,
transferred, leased, or otherwise disposed of any assets or properties except
(A) for properties and assets which are immaterial or for which equivalent
value was received and, in either case, in the ordinary course of business
consistent with past practice and (B) distributions of Cash to the Seller and
its affiliates to the extent permitted under this Agreement;

 

(iv)                              incurred
any liabilities or obligations material to the Petcoke Business or the Metals
Business, as applicable, other than any capital expenditures permitted under
this Agreement;

 

(v)                                 suffered
any damage, destruction, interruption in use or loss (whether or not covered by
insurance) of any assets or properties material to the Petcoke Business or the
Metals Business, as applicable;

 

(vi)                              waived
any right which is material to the Petcoke Business or the Metals Business, as
applicable, or entered into any material transaction outside the ordinary
course of its business;

 

20

 

(vii)                           committed
any breach under, or made any amendment or modification to, or terminated
(partially or completely) any Material Contract or any Environmental Permit or
License which is material to the Petcoke Business or the Metals Business, as applicable;

 

(viii)                        made any
payment, loan or advance to, or entered into any agreement, arrangement or
transaction with, any of its partners or their affiliates, or any business or
entity in which any of its partners or their affiliates, or any directors, officers,
or employees of any of the foregoing have either a direct or indirect interest
other than in the ordinary course of business consistent with past practice and
on terms and conditions no less favorable than those available in a bona-fide
arms-length transaction with a non-affiliated person;

 

(ix)                                amended
its certificate of incorporation, bylaws, or other governing or organizational
documents;

 

(x)                                   consummated
or entered into any agreement to consummate a merger, acquisition,
consolidation or other business combination with any other person; or

 

(xi)                                reached
any understanding or entered into any contract or commitment (contingent or
otherwise) to do or engage in, or which could reasonably be expected to result
in, any of the foregoing.

 

3.7                                 Real Properties; Personal Properties;
Condition of Properties.

 

(a)                                  Schedule 3.7(a)
lists by location all real property owned by each of the Sold Companies and the
Subsidiaries.  With respect to each such
parcel of real property (a “Parcel”) listed on Schedule 3.7(a),
except as disclosed on Schedule 3.7(a) and except with respect to any
Parcel located in Billings, Montana:

 

(i)                                     the
entity owning such Parcel has good and marketable fee simple title to such
Parcel, free and clear of all Liens other than Permitted Liens;

 

(ii)                                  the
Seller has no knowledge of any pending or threatened condemnation proceedings,
litigation or administrative actions relating to any Parcel;

 

(iii)                               there
are no subleases, licenses, concessions or other written agreements granting to
any party the right of entry, use or occupancy of any portion of any Parcel;

 

(iv)                              there
are no parties (other than one or more of the Sold Companies or the
Subsidiaries) in possession of any Parcel, other than tenants under any written
leases disclosed in Schedule 3.7(a) who are in possession of space to
which they are entitled;

 

21

 

(v)                                 there
are no zoning, building, restrictive covenants of record, or other similar
local laws or restrictions which may reasonably be expected to materially
impair the current use of any Parcel; and

 

(vi)                              the
Seller has delivered (or has caused the Sold Companies or Subsidiaries to
deliver) to the Buyer copies of all surveys and title reports which it (or any
of the Sold Companies or Subsidiaries) has in its possession with respect to
any Parcel.

 

(b)                                 Schedule 3.7(b)
lists by location all real property leased by the Sold Companies and the
Subsidiaries pursuant to any real property lease providing for annual payments
by any of the Sold Companies or Subsidiaries of an amount in excess of $50,000
or which is material to the business operations of the Petcoke Business or the
Metals Business, as applicable (the “Leases”).  With respect to each Lease, except as disclosed on Schedule
3.7(b):

 

(i)                                     each
such Lease is pursuant to a written Lease which has been executed and is in
full force and effect;

 

(ii)                                  none
of the Sold Companies or Subsidiaries, as applicable, which is a party to such
Lease nor, to the knowledge of the Seller, any other party to such Lease, is in
material breach or default and, to the knowledge of the Seller, no event has
occurred which, with notice or lapse of time or both, would constitute such a
breach or default or permit any termination, modification or acceleration,
under such Lease;

 

(iii)                               no
Sold Company or Subsidiary or, to the knowledge of the Seller, no other party
to any such Lease, has repudiated or disavowed any material provision thereof;

 

(iv)                              such
Lease will continue to be binding upon the parties thereto in accordance with
its terms following the Closing, except as may result from actions that may be
taken by the Buyer or its affiliates following the Closing, and except for
Leases referred to in Schedule 3.4;

 

(v)                                 there
are no zoning, building, restrictive covenants of record, or other similar
local laws or restrictions which may reasonably be expected to materially
impair the current use of any real property subject to such Lease;

 

(vi)                              except
as disclosed on Schedule 3.7(b), none of the Seller, the Sold Companies
or Subsidiaries has subjected or caused to be subjected any Lease to any Liens
other than Permitted Liens;

 

(vii)                           neither
the Seller nor any of the Sold Companies or the Subsidiaries has any knowledge
of any pending or threatened condemnation proceedings relating to any real
property subject to any Lease;

 

(viii)                        except as
set forth on Schedule 3.7(b) and except for any right of entry granted
to a landlord pursuant to a Lease, there are no subleases, licenses,

 

22

 

concessions or
other written agreements granting to any party the right of entry, use or
occupancy of any portion of any real property subject to any Lease; and

 

(ix)                                there
are no parties (other than one or more of the Sold Companies or the Subsidiaries)
in possession of any real property subject to any Lease, other than tenants
under any written subleases disclosed in Schedule 3.7(b) who are in
possession of space which they are legally entitled to occupy.

 

(c)                                  Except as set forth
on Schedule 3.7(c) and except with respect to assets and property
located on the Parcel at Billings, Montana, (i) the Sold Companies and the
Subsidiaries own good title or lease under valid written leases all buildings,
machinery, equipment and other tangible and intangible assets necessary for the
conduct of their businesses as presently conducted free and clear of all Liens
other than Permitted Liens and (ii) the buildings, fixtures and equipment and
other assets and properties owned or leased by the Sold Companies, and the
Subsidiaries (and, to the Seller’s knowledge, all Venture Entities) reasonably
necessary for the conduct of their business as presently conducted are in
sufficient operating condition and repair to permit their use in the continuing
operations of the Sold Companies, the Subsidiaries and the Venture Entities as
such operations are presently conducted, subject to normal wear and tear.

 

3.8                                 Contracts.

 

(a)                                  Except as set forth
on any Schedule to this Agreement, including, without limitation, the Schedules
related to this Section 3.8(a) and for agreements and arrangements with respect
to the matters referred to in Section 3.13, none of the Sold Companies, or the
Subsidiaries is a party to or bound by, nor are any of their assets affected by
any:

 

(i)                                     agreement
or indenture relating to the borrowing of money or to the mortgaging or
pledging of any of its assets in excess of $100,000;

 

(ii)                                  agreement
with respect to the lending or investing of funds in excess of $100,000;

 

(iii)                               guaranty
of any obligation for borrowed money or otherwise in excess of $100,000, other
than endorsements made for collection in the ordinary course of business;

 

(iv)                              outstanding
letters of credit, guarantees, payment, performance, bid or completion bonds,
swaps, derivatives, surety or indemnification agreements or other reimbursement
obligations, except for immaterial indemnity and reimbursement obligations
entered into in the ordinary course of business or for indemnities or other
reimbursement obligations included in other Material Contracts;

 

(v)                                 agency,
representation, distribution or franchise agreements that cannot be canceled or
terminated by the Sold Companies or Subsidiaries which are a party thereto
without payment or penalty upon notice of sixty (60) days or less;

 

23

 

(vi)                              supply
or sales agreement pursuant to which any of the Sold Companies or the
Subsidiaries makes purchases and sales of inventory that cannot be canceled or
terminated without payment or penalty upon notice of sixty (60) days or less;

 

(vii)                           contract
which prohibits or restricts any of the Sold Companies or Subsidiaries from
engaging in the business currently conducted by it after the date of this
Agreement in any geographic region or with any person;

 

(viii)                        contract,
understanding or other agreement for transportation services to be provided to
any of the Sold Companies or Subsidiaries that extends beyond three months or
requires payments in excess of $250,000; or

 

(ix)                                any
other contract not described above (including any lease) which involves the
payment of $250,000 or more in any 12-month period.

 

(b)                                 Except as set forth on
Schedule 3.8(b), (i) each contract or commitment listed on Schedule
3.8(a) which provides for payment to or by the counterparty thereunder in
excess of $1,000,000 (the “Material Contracts”) is valid, binding and
enforceable against the Sold Company or Subsidiary which is a party to such
Material Contract and, to the knowledge of the Seller, against each other party
thereto; (ii) each of the Sold Companies and the Subsidiaries has performed all
material obligations under the Material Contracts required to be performed by
it (and there has occurred no event or circumstance which, with the giving of
notice, the passage of time, or both, would constitute a breach or default by
any such person thereunder or an event of acceleration or termination) and none
of the Sold Companies or Subsidiaries has received any written notice of any
claim of breach or default or any acceleration or termination under any
Material Contract; and (iii) the Seller has no knowledge of any acceleration,
termination, breach or anticipated breach of any material term or condition by
any other party to any Material Contract.

 

(c)                                  Schedule 3.8(b)
sets forth all material disputes or disagreements in interpretation existing,
to the knowledge of the Seller, under any Material Contract.

 

3.9                                 Legal Proceedings.  Except as set forth on Schedule 3.9:

 

(a)                                  there are no actions,
suits, proceedings or orders (“Actions”) pending or affecting or, to the
knowledge of the Seller, threatened against any of the Sold Companies, the
Subsidiaries or, to the Seller’s knowledge, the Venture Entities or any of
their material assets at law or in equity before any international tribunal or
arbitration forum or any federal, state, municipal, local, foreign, provincial
or other governmental department, commission or other administrative authority,
board, bureau, agency, court or instrumentality, domestic or foreign (“Governmental
Authority”);

 

(b)                                 none of the Sold
Companies or Subsidiaries or, to the Seller’s knowledge, the Venture Entities
is subject to any order, writ, injunction, judgment or decree of any
Governmental Authority affecting any material assets or a material portion of
its business;

 

(c)                                  there are no Actions
pending or, to the knowledge of the Seller, threatened against or affecting the
Seller or any of its affiliates (or any of their material assets) at law or in

 

24

 

equity by any Governmental Authority, and neither the Seller nor any of
its affiliates is, to its knowledge, subject to any order, writ, injunction,
judgment or decree of any Governmental Authority which, in each case, would or
seeks to enjoin, rescind, or materially delay the transactions contemplated by
this Agreement or otherwise hinder the Seller from timely complying with the
terms and provisions of this Agreement; and

 

(d)                                 all Actions have been
reported to the appropriate Insurer (if any) under and in accordance with
applicable insurance policies of the Sold Companies and Subsidiaries; and

 

(e)                                  the Seller has
afforded the Buyer and its counsel access to files and records within its
control (except as may be limited by applicable attorney-client and attorney
work product privileges) pertaining to each Action and has disclosed to the
Buyer and its counsel all non-privileged written information which it may have
regarding each Action.

 

3.10                           Intangible Property Rights.

 

(a)                                  Except as set forth
in Schedule 3.10(a), (i) the Sold Companies, and the Subsidiaries own,
are licensed or have the right to use the patent rights described in Schedule 3.10(a)
free and clear of all Liens; (ii) there are no pending actions or proceedings
challenging the validity or ownership of such patent rights or the Sold
Companies’ or Subsidiaries’ right to use such patent rights; (iii) the patent
rights described in Schedule 3.10(a) constitute the material patent
rights owned, licensed or used by the Sold Companies and the Subsidiaries in
connection with the operation of the business of the Sold Companies and the
Subsidiaries; (iv) to the knowledge of the Seller, the issued patents under
such patent rights are valid and subsisting and none of said patents is now
being infringed by others; (v) there are no written licenses or sublicense
agreements now in effect regarding the Sold Companies’ or Subsidiaries’ use of
such patent rights; and (vi) none of the Sold Companies or Subsidiaries is
infringing any U.S. or foreign patent owned by third parties in the current operation
of its business.

 

(b)                                 Except as set forth in
Schedule 3.10(b), (i) the Sold Companies and Subsidiaries own, are
licensed or have the right to use the trademarks and any trade dress associated
therewith as set forth in Schedule 3.10(b) free and clear of all Liens;
(ii) to the knowledge of the Seller, all registrations for such trademarks and
trade dress are valid and subsisting; and (iii) no action or proceeding by
third parties with regard to the use by any of the Sold Companies or the
Subsidiaries of any of such trademarks and trade dress is pending or has been
made or, to the knowledge of the Seller, threatened and, to the knowledge of
the Seller, none of the trademarks listed on Schedule 3.10(b) is being
infringed by others.

 

(c)                                  Except as set forth
in Schedule 3.10(c), there are no pending or, to the knowledge of the
Seller, threatened Actions by or against any of the Sold Companies or
Subsidiaries with respect to any copyright rights or their use thereof by any
person.

 

3.11                           Insurance. 
Except as disclosed in Schedule 3.11:

 

(a)                                  The Sold Companies
and the Subsidiaries have in force (or the Seller has in force on behalf of
such entities) policies of insurance with reputable insurance companies or

 

25

 

associations in amounts and with retentions and deductibles and
covering such risks (on a claims made or occurrence basis, as set forth in Schedule
3.11(a)) as are in accordance with reasonable business practices and such
policies (or policies of insurance of substantially the same character and
coverage) shall continue in full force and effect to the Closing Date and all
premiums relating thereto have been (or will be) paid or accrued as current
liabilities in the consolidated books and records of the Sold Companies and
Subsidiaries prior to the Closing.  None
of the Sold Companies or Subsidiaries has received any notice of cancellation
of any insurance policy maintained in favor of the Sold Companies or Subsidiaries
or has been denied insurance coverage.  Schedule
3.11(a) sets forth all current insurance policies and coverages for the
Sold Companies and the Subsidiaries.

 

(b)                                 Except as set forth in
Schedule 3.11(b), none of the Sold Companies or Subsidiaries has (i)
breached or otherwise failed to perform in any respect any material obligation
under any of the insurance policies set forth in Schedule 3.11(a); or
(ii) received any written notice from any insurer with respect to any such
breach or failure.

 

(c)                                  Schedule
3.11(c) sets forth all material outstanding claims made under each
insurance policy set forth in Schedule 3.11(a).  Except as set forth in Schedule 3.11(c),
no denial or notice of any reservation of rights has been received from any
Insurer regarding any such material claim and none of the aggregate limits
under any of the insurance policies set forth in Schedule 3.11(a) have
been exhausted by the payment of any claims thereunder or otherwise.

 

(d)                                 None of the Sold
Companies or Subsidiaries have failed to notify or report to the appropriate Insurer
under and in accordance with any policies of insurance applicable to such
entities any loss, liability, damage, claim or other occurrence which it has
suffered or may suffer and which may be covered thereunder, except where the
failure to so report or notify would not adversely effect any of the Sold
Companies’ or Subsidiaries’ rights under such insurance policy.

 

3.12                           Tax Matters.

 

(a)                                  Certain Defined
Terms.  For purposes of this
Agreement, the following definitions shall apply:

 

(i)                                     “Code“
means the Internal Revenue Code of 1986, as amended.

 

(ii)                                  “Tax”“
and “Taxes” means all taxes, charges, fees, levies, or other
assessments, including, without limitation, income, profits, gains, gross
receipts, net worth, premium, value added, ad valorem, excise, real and
personal property, sales, use, stamp, transfer, license, payroll, franchise,
Social Security, unemployment and withholding taxes, together with any
interest, penalties and additions thereto imposed or required to be withheld by
any Governmental Authority.

 

(iii)                               “Tax
Return” means any report, return, election, estimate, declaration,
information statement and other forms and documents (including all schedules,
exhibits and other attachments thereto or amendments thereof) relating to, and
required to be filed with any Governmental Authority in connection with, any
Taxes.

 

26

 

(b)                                 Tax Returns Filed
and Taxes Paid.  Except as provided
on Schedule 3.12(b), (i) all Tax Returns required to be filed by or on behalf
of the Sold Companies and the Subsidiaries have been duly filed on a timely
basis and all such Tax Returns are accurate and complete in all material
respects, (ii) all Taxes due (whether or not shown to be due and payable on
such Tax Returns) have been paid in full on a timely basis or adequate reserves
have been established with respect to such Taxes, (iii) each of the Sold
Companies and the Subsidiaries has withheld and paid over all Taxes required to
have been withheld and paid over, and complied with all information reporting
requirements, in connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party for all periods for which
the statute of limitations has not expired and (iv) there are no Liens on any
of the assets of any of the Sold Companies and the Subsidiaries with respect to
Taxes, other than Liens for Taxes not yet due and payable or for Taxes that the
Sold Companies, or the Subsidiaries are contesting in good faith through
appropriate proceedings and for which appropriate reserves have been
established.

 

(c)                                  Deficiencies;
Audits; Statutes of Limitations. 
Except as set forth on Schedule 3.12(c): (i) there is no audit by
a Governmental Authority or Taxing authority in process or pending with respect
to any Tax owed or alleged to be owed by any of the Sold Companies, the Venture
Entities and the Subsidiaries; (ii) no deficiencies exist or have been asserted
in writing with respect to any Taxes of the Sold Companies, the Venture
Entities and the Subsidiaries and none of the Sold Companies, the Venture
Entities or the Subsidiaries has received written notice that it has not filed
a Tax Return or paid Taxes required to be filed or paid by it, (iii) no waiver
or extension of any statute of limitations is in effect with respect to any
Taxes of the Sold Companies, or the Subsidiaries, and (iv) no Action is now
pending (or to the Seller’s knowledge, has been threatened in writing) against
any of the Sold Companies or the Subsidiaries in respect of any Tax.

 

(d)                                 Tax Sharing.  Except as set forth on Schedule 3.12(d),
since October 16, 1997, none of the Sold Companies or the Subsidiaries is or
has been a party to any tax sharing or allocation agreement or has assumed the
liability for Taxes of any other person under any contract or other
arrangement.

 

(e)                                  Other Persons.  Neither any of the Sold Companies nor the
Subsidiaries (i) is currently or has ever been a member of an affiliated group
(other than a group the common parent of which is the Seller, the Sold
Companies or any Subsidiary) filing a consolidated federal income tax return or
(ii) has any liability for the Taxes of any person other than the Seller, the
Sold Companies or any of the Subsidiaries under Treasury Regulations Section
1.1502-6 (or any similar provision of state, local, or foreign law).

 

(f)                                    Other Tax
Matters.  Since October 16, 1997,
none of the Sold Companies or the Subsidiaries has entered into a closing
agreement pursuant to Section 7121 of the Code.

 

(g)                                 Accounting Changes.  There are no outstanding adjustments for Tax
purposes applicable to any of the Sold Companies or the Subsidiaries as a
result of changes in methods of accounting

 

(h)                                 Tax
Shelters.  To the Seller’s Tax
Knowledge, none of the Seller, the Sold Companies, the Subsidiaries or the
Venture Entities has participated directly or indirectly in any

 

27

 

transaction involving any of Sold Companies, the Subsidiaries or the
Venture Entities that (i) would constitute a “reportable transaction” as
defined in Treas. Reg. 1.6011-4(b) (excluding, however, any “reportable
transaction” described solely in Treas. Reg. 1.6011-4(b)(3) unless any
participant in such transaction was provided with a tax opinion letter (from a
promoter, law firm or accounting firm) describing the tax consequences of such
transaction), or (ii) that is a “tax shelter” within the meaning of Code
Section 6662(d)(2)(C)(iii).  To the
knowledge of the Seller, none of the Seller, the Sold Companies, the
Subsidiaries and the Venture Entities has participated directly or indirectly
in any transaction involving any of Sold Companies, the Subsidiaries, or the
Venture Entities that (i) to the knowledge of the Seller, would constitute a
“reportable transaction” as defined in Treas. Reg. 1.6011-4(b) (excluding,
however, any “reportable transaction” described solely in Treas. Reg.
1.6011-4(b)(3) unless any participant in such transaction was provided with a
tax opinion letter (from a promoter, law firm or accounting firm) describing
the tax consequences of such transaction) or (ii) is a “tax shelter” within the
meaning of Code Section 6662(d)(2)(C)(iii).

 

3.13                           Labor Matters; Employee Benefit Plans.

 

(a)                                  Labor
Controversies.  Except as described
on Schedule 3.13(a), (i) the Sold Companies and the Subsidiaries are in
compliance in all material respects with all applicable laws respecting or
pertaining to employment and employment practices, terms and conditions of
employment and wages and hours (including without limitation, equal employment
opportunities and discrimination), (ii) there is no unfair labor practice
complaint or grievance pending, or to the Seller’s knowledge threatened,
against any of the Sold Companies or Subsidiaries before the National Labor
Relations Board or before any similar Governmental Authority in any other
jurisdiction, (iii) there is no labor strike, dispute, grievance, slowdown or
stoppage or any union organizational effort actually pending or threatened
against or affecting any of the Sold Companies or Subsidiaries, (iv) within the
past three years, none of the Sold Companies or Subsidiaries has experienced
any strike or work stoppage and (v) none of the Sold Companies or Subsidiaries
is a party to, or subject to, a collective bargaining agreement with any labor
union or other person, and no collective bargaining agreement relating to any
of the employees of any of the Sold Companies or Subsidiaries, is currently
being negotiated.

 

(b)                                 Employee Benefit
Plans.  Except as set forth in Schedule
3.13(b):

 

(i)                                     Schedule
3.13(b), Parts I and II, sets forth a complete list of each material
“employee benefit plan” (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”)), all
material severance, change in control, employment or consulting plans, programs
or agreements, and all material vacation, fringe benefit, incentive, deferred
compensation, bonus, retirement, pension, individual annuity policies (other
than any investment held in connection with another Benefit Plan), employee
insurance programs, stock option, stock purchase, and restricted stock plans,
programs or policies, (whether foreign or domestic, formal or informal, written
or, to the knowledge of the Seller, oral), other than those required to be
provided under foreign law or by a foreign Governmental Authority, which are
sponsored or maintained by or on behalf of, or required to be contributed to or
are contributed to by, the Seller or any of the Sold Companies or Subsidiaries,
and under which any director, officer, employee, former employee, independent
contractor or consultant of any of the

 

28

 

Sold Companies or Subsidiaries participates or
receives benefits or is entitled to participate or receive benefits now or in
the future (collectively, the “Benefit Plans”).  The Seller has delivered or made available
(or has caused the Sold Companies and Subsidiaries to deliver or make
available) to the Buyer copies of all Benefit Plans and any related trust
documents and summary plan descriptions set forth in Part I of Schedule
3.13(b).

 

(ii)                                  The
Benefit Plans (including any related trust documents and summary plan
descriptions) are in compliance in all material respects with all applicable
requirements of ERISA and all other applicable laws, orders, rules, decrees and
regulations (foreign and domestic) and have been administered and operated in
all material respects in accordance with their terms and such laws, orders,
rules, decrees and regulations.  All
contributions required to be made under the terms of the Benefit Plans and
applicable law with respect to the current and any prior Benefit Plan year have
been timely made in the amounts so required, and all benefits and current
insurance premiums required to be paid under the terms of the Benefit Plans and
applicable law have been paid when due in the proper amounts, including without
limitation any benefits or premiums to the PBGC or otherwise under the terms of
the Benefit Plans.  Each Benefit Plan
that is intended to be qualified within the meaning of Section 401 of the Code
has received a favorable determination letter from the IRS as to its
qualification and, to the tax-exempt status under Section 501(a) of the Code of
its trust, and any proposed amendments to such Benefits Plan on which any such
favorable determination letters were conditioned have been timely adopted by
each such Benefit Plan’s sponsor, and, to the knowledge of the Seller, no event
or circumstance (including without limitation any failure to pay benefits) has
occurred that reasonably could be expected to adversely affect such Benefit
Plan’s qualification or a trust’s tax-exempt status.

 

(iii)                               Except
as a result of, or in connection with, this Agreement or the transactions
contemplated herein, since the effective date of the last applicable Form 5500
filed with respect to any Benefit Plan, there has been no “reportable event”
(as defined in Section 4043(c) of ERISA) for which the 30-day reporting
requirement is applicable and has not been waived that reasonably could be
expected to result in material liability to such Benefit Plan or to the Petcoke
Business or the Metals Business, as applicable.

 

(iv)                              No
“accumulated funding deficiency” (as defined in Section 302 of ERISA), whether
or not waived by the IRS, has occurred with respect to any Benefit Plan subject
to Section 412 of the Code or Part 3 of Title I(B) of ERISA within the last six
years.

 

(v)                                 No
withdrawals have occurred so as to cause any Benefit Plan (or the Petcoke
Business or the Metals Business, as applicable) to become subject to material
liability under the provisions of Section 4063 of ERISA, nor has any Sold
Company or any of its affiliates (as determined under Sections 414(b), (c), (m)
or (o) of the Code (“ERISA Affiliate”)) ceased making any contributions
to any Benefit Plan to which either any Sold Company or ERISA Affiliate made
contributions during the six years prior to

 

29

 

the date
hereof, which would make it subject to material liability under Section 4064 of
ERISA.

 

(vi)                              Neither
the Seller, or any Sold Company or Subsidiary nor, to the knowledge of the
Seller, any other person has engaged in a prohibited transaction (as defined in
Section 406 of ERISA and Section 4975 of the Code) which would subject any of
the Sold Companies or the Subsidiaries to any Taxes, penalties or other
liabilities under ERISA or the Code with respect to any of the Benefit Plans,
which Taxes, penalties or liabilities would have a material adverse effect on
any of the Benefit Plans or result in any material liability for the Petcoke
Business or the Metals Business, as applicable.

 

(vii)                           (A)
There are no Actions pending (or, to the knowledge of the Seller, threatened)
by or before any Governmental Agency (including any Actions brought by any
Benefit Plan participant or beneficiary) with regard to any of the Benefit
Plans or any of the assets held thereunder, or to any of the obligations of the
Seller or any Sold Company or Subsidiary regarding any Benefit Plan and (B) to
the knowledge of the Seller, no event has occurred and no condition exists
that, in each case of (A) and (B), would reasonably be expected to subject any
Sold Company or Subsidiary, either directly or through its ERISA Affiliates, to
any Tax, Lien, fine, penalty or other liability or obligation under ERISA, the
Code or any other applicable laws, rules or regulations (foreign or domestic)
(including, without limitation, as a result of any voluntary or involuntary
termination or partial termination of any Benefit Plan subject to Title IV
of ERISA), which Tax, fine, Lien, penalty or liability would have a material
adverse effect on any Benefit Plan or result in any material liability for the
Petcoke Business or the Metals Business, as applicable.

 

(viii)                        None of
the Benefit Plans is a “multiemployer plan” (as defined in Section 3(37) of
ERISA) and neither any of the Sold Companies nor any ERISA Affiliate sponsors,
maintains or has any liability or obligation in respect of any such
multiemployer plan.

 

(ix)                                The
execution of this Agreement and the consummation of the transactions
contemplated hereby, will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any Benefit Plan
that may result in any entitlement to payment (whether of severance pay or
otherwise and whether or not such payment would constitute a parachute payment
as defined in Section 280G of the Code), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation of any
Sold Company or Subsidiary to fund benefits under any Benefit Plan.

 

(x)                                   There
are no outstanding liabilities or obligations of the Seller, the Sold Companies
or the Subsidiaries with respect to any of the Benefit Plans, whether accrued,
contingent or otherwise, which are or will be required to be accrued in the
Financial Statements or the Conclusive Net Working Capital Statement and which
are not properly or will not be properly accrued in the Financial Statements or
the Conclusive Net Working Capital Statement.

 

30

 

3.14                           Disclosure. 
Except as set forth on Schedule 3.14, (a) the copies of all
written materials concerning the Sold Companies, the Subsidiaries and the
Venture Entities that the Seller has delivered to or made available to the
Buyer or its representatives constitute accurate copies of the originals
thereof; (b) neither this Agreement or the Schedules hereto contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading; and (c) there is no fact known to
the Seller which could reasonably be expected to be material to the Sold
Companies, the Subsidiaries and the Venture Entities, taken as a whole, which
has not been disclosed to the Buyer.

 

3.15                           Compliance with Laws.  Except as disclosed on Schedule 3.15:

 

(a)                                  (i) each of the Sold
Companies and the Subsidiaries has all licenses, permits or franchises issued
by any Governmental Authority and other governmental certificates,
authorizations and approvals (collectively “Licenses and Permits”)
required for the operation of its business as conducted as of the date of this
Agreement, and the absence of which would have a material adverse effect on the
business or operations of such entity; (ii) all such Licenses and Permits are
in full force and effect and no action, claim, enforcement action, notice of
violation or other civil, criminal, formal or informal administrative or other
proceeding is pending, nor to the knowledge of the Seller, is threatened, to
suspend, revoke, revise, limit, restrict or terminate any of such Licenses and
Permits or declare any such License and Permit invalid; (iii) to the knowledge
of the Seller, each of the Sold Companies and the Subsidiaries has filed all
necessary reports and maintained and retained all necessary records pertaining
to such Licenses and Permits; and (iv) each of the Sold Companies and the Subsidiaries
has otherwise complied in all material respects with all of the laws, rules,
ordinances, decrees, awards, regulations and orders of all Governmental
Authorities which as of the date of this Agreement are applicable to it or its
respective properties or business.

 

(b)                                 To the Seller’s
knowledge, none of the Sold Companies, the Subsidiaries or the Venture Entities
or any director, officer, agent or employee of any of such persons or any other
person acting for or on behalf of any such person, has directly or indirectly
made any contribution, gift, bribe, rebate, payoff, influence payment,
kick-back or other payment to any person, private or public, regardless of
form, whether in money, property or services (i) to obtain favorable treatment
in securing business, (ii) to pay for favorable treatment for business secured
or (iii) to obtain special concessions or for special concessions already
obtained, in each case for or in respect of any of the Sold Companies, the
Subsidiaries or any Venture Entity (A) in violation of any law, rule,
regulation, order, judgment or decree of any Governmental Authority, or (B)
that was not properly recorded and disclosed in the Financial Statements.

 

3.16                           Finders; Brokers.  With the exception of fees and expenses payable by the Seller to
Merrill Lynch & Co. and Cutfield Freeman & Co. Ltd., which shall be the
Seller’s sole responsibility, the Seller is not a party to any agreement with
any finder, broker or other person, or in any way obligated to any finder, broker
or other person for any commissions, fees or expenses in connection with the
origin, negotiation, execution or performance of this Agreement.

 

31

 

3.17                           Environmental Matters.

 

(a)                                  Schedule 3.17(a)
sets forth all material Environmental Licenses and Permits held by the Sold
Companies and the Subsidiaries.  Except
as would not reasonably be expected to result in material liability under
Environmental Laws, and except as disclosed in Schedule 3.17(a), (i) no
modification, reissuance, alteration, transfer or amendment of any of the
Environmental Licenses and Permits is required as a result of the consummation
of the transactions herein contemplated and (ii) the Environmental Licenses and
Permits are all that are required to be held by the Sold Companies and the
Subsidiaries with respect to the operation of their respective businesses as
currently conducted.

 

(b)                                 Except as disclosed on
Schedule 3.17(b) and except as would not reasonably be expected to
result in material liability under Environmental Laws:

 

(i)                                     each
of the Sold Companies and the Subsidiaries are in compliance with all
Environmental Laws (as defined below);

 

(ii)                                  no
Environmental Condition has occurred or presently exists on any property owned,
operated or leased by any of the Sold Companies or the Subsidiaries, in each
case to the extent relating to the conduct of the Metals Business;

 

(iii)                               since
October 16, 1997, no Environmental Condition has been discovered by any of the
Sold Companies or the Subsidiaries (or Seller or any of its subsidiaries) on
any property operated, owned or leased by any of the Sold Companies or the
Subsidiaries since October 16, 1997;

 

(iv)                              the
Sold Companies and the Subsidiaries hold and are in compliance with all
Environmental Licenses and Permits and, to the Seller’s knowledge, there is no
actual or contingent liability in connection with any Environmental Condition;

 

(v)                                 none
of the Sold Companies or the Subsidiaries has entered into or agreed to any
consent decree or order, or is a party to any Action in which an outstanding
judgment, decree or judicial order has been issued relating to compliance with
any Environmental Law or Environmental Licenses and Permits or to the existence
of any Environmental Condition or the investigation, cleanup or other
remediation of Hazardous Substances under any Environmental Laws;

 

(vi)                              there
are no Hazardous Substances in, on or under any of the real property listed in Schedules
3.7(a) or (b) or otherwise owned, leased or operated by any of the Sold
Companies or the Subsidiaries which are being stored, used or disposed of in
violation of applicable Environmental Laws and Environmental Licenses and
Permits, and, for so long as such property or the applicable part thereof has
been owned, leased or operated by any of the Sold Companies or the
Subsidiaries, as applicable, all Hazardous Substances used or Released on such
property or transported or disposed of by them have been used, Released,
transported or disposed of in compliance with all applicable Environmental Laws
and Environmental Licenses and Permits; and

 

(vii)                           none of
the Sold Companies or the Subsidiaries has received any written request for
information, notice of the institution, threatened institution or

 

32

 

pendency of any Action or lawsuit, action, proceeding,
investigation or claim by any person regarding or alleging any Environmental
Liability.

 

(c)                                  As used herein:

 

(i)                                     “Environmental
Condition” means any event, circumstance or condition existing as of or
prior to the Closing Date and constituting (i) the current or past Release or
threatened Release of any Hazardous Substance into the environment, in each
case in violation of the Environmental Law; or (ii) the on-site or off-site
treatment, storage, disposal or other handling of any Hazardous Substance
originating on or from any property owned, leased or operated by any of the
Sold Companies or the Subsidiaries in a manner that would reasonably be
expected to result in liability under Environmental Laws; or (iii) any
violation of Environmental Laws at or on any part of any body of water or any
property owned, leased or operated by any of the Sold Companies or the
Subsidiaries or arising from their activities at any of the facilities located upon
any property owned, leased or operated by any of the Sold Companies or the
Subsidiaries.  Notwithstanding the
foregoing, the presence, treatment, storage, disposal, transporting or other
handling of petroleum coke in compliance with all applicable Environmental
Licenses or Permits and Environmental Laws shall not be deemed an Environmental
Condition or a Release.

 

(ii)                                  “Environmental
Laws” means every applicable domestic, foreign, federal, state, interstate
or local statute, law or regulation in effect in any jurisdiction where the
Sold Companies or the Subsidiaries presently conduct or previously conducted
business, which is in effect and is binding upon any of the Sold Companies or
the Subsidiaries as of the Closing Date and any applicable order, injunction,
judgment, decree or other enforceable requirement of any Governmental Authority
thereunder that relates to the protection of the environment, including any of
the foregoing related to: (i) Remedial Actions; (ii) the reporting, licensing,
permitting, or investigating of the emission, discharge, Release or threatened
Release of Hazardous Substances into the air, surface water, groundwater or
land; or (iii) the manufacture, Release, distribution, use, generation,
treatment, storage, disposal, transport or handling of Hazardous
Substances.  Environmental Laws include,
without limitation, the Comprehensive Environmental Recovery, Compensation, and
Liability Act, as amended, 42 U.S.C. §9601, et
seq. (“CERCLA”); the Resource Conservation and Recovery Act,
as amended, 42 U.S.C., §9601 et seq.
(“RCRA”), the Clean Air Act, as amended, 42 U.S.C., §7401, the
Occupational Safety and Health Act, as amended, 29 U.S.C. §600, et seq. (“OSHA”), the Federal Water
Pollution Control Act, as amended, 33 U.S.C. §401, et seq., and every other applicable law, regulation order,
injunction, judgment, decree or other enforceable requirement (foreign or
domestic) relating to emissions, discharges, Releases, or threatened Releases
of pollutants, contaminants, chemicals, pesticides, or industrial, infectious,
toxic or hazardous substances or wastes into the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or otherwise relating to the treatment, storage, disposal, transport
or handling of pollutants, contaminants, or infectious, toxic, or hazardous
substances or wastes.

 

33

 

(iii)                               “Environmental
Licenses or Permits“ means any applicable Licenses or Permits issued by any
Governmental Authority pursuant to any Environmental Laws or otherwise relating
to the protection of the Environment.

 

(iv)                              “Environmental
Liability“ means any liability or obligation (including any fine or
penalty) arising under or related to any Environmental Law or otherwise to the
extent pertaining to an Environmental Condition to the extent relating to any
act or omission of the Sold Companies or the Subsidiaries (or any other person
associated with or acting on behalf of such person) at or prior to the Closing
Date, and shall include any liability therefor under common law or statutory
theories of trespass, nuisance, strict liability and negligence.

 

(v)                                 “Hazardous
Substance“ means (i) any substance or material regulated under applicable
Environmental Laws or any other product, substance, pollutant, chemical,
material or waste whose presence, nature, quantity and/or intensity of
existence, use, manufacture, disposal, transportation, spill, Release or
effect, either by itself or in combination with other materials on the
premises, is either potentially injurious to the public health, safety or
welfare, or the environment, or (ii) would reasonably be expected to provide a
basis for liability of any of the Sold Companies or the Subsidiaries to any
Governmental Authority or other person under any applicable Environmental
Law.  Hazardous Substance shall include,
without limitation, infectious or toxic substances, toxic hydrocarbons,
petroleum products, gasoline, oil, diesel fuel or polychlorinated biphenyls or
any products, by-products or fractions thereof, and asbestos.

 

(vi)                              “Release“
shall have the meaning provided under 42 U.S.C. §9601(22).

 

(vii)                           “Remedial
Action“ means any response action, removal action, remedial action,
corrective action, monitoring program, sampling program, investigation or other
cleanup activity pertaining to any Hazardous Substance.

 

(d)                                 Notwithstanding the
generality of any other representations and warranties in this Agreement, the
representations and warranties in this Section 3.17 shall be deemed the only
representations and warranties in this Agreement with respect to matters
relating to Environmental Laws or to Hazardous Substances.

 

3.18                           Transactions with Affiliates.  Except as set forth herein, including,
without limitation, as set forth in Schedule 3.18 or as expressly set forth in
the Financial Statements, none of the Sold Companies or the Subsidiaries has
engaged in any transaction with the Seller or its affiliates (other than the
Sold Companies and the Subsidiaries) since June 30, 2003 other than
transactions entered into in the ordinary course of business consistent with
past practice and which are on terms and conditions no less favorable than
those available in a bona fide arms-length transaction with a non-affiliated person.  Schedule 3.18 sets forth all
arrangements, obligations, commitments, contracts and other understandings and
agreements (oral and written) between the Seller and any of its affiliates
(other than the Sold Companies and the Subsidiaries) on the one hand, and any
of the Sold Companies, and the Subsidiaries on the other hand.

 

34

 

3.19                           Certain Products.  Except as set forth on Schedule 3.19 since January 1,
1997, none of the Sold Companies or the Subsidiaries (or to the Seller’s
knowledge, any of the Venture Entities) has produced or sold any products
which, to the Seller’s knowledge, contain asbestos.  The affidavit of John Freeman, Esq. dated June 8, 2001, served in
connection with the Grand Forks County, North Dakota Cases listed in Schedule
3.19(a) is true and correct in all respects.

 

3.20                           No Other Representations or Warranties.  Except for the representations and
warranties contained in this Agreement, neither the Seller nor any other person
makes any other express or implied representation or warranty to the Buyer
regarding the Seller, the Sold Companies, the Venture Entities, the
Subsidiaries or this Agreement and the transactions contemplated hereby.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE BUYER

 

The Buyer represents and warrants to the Seller as
follows:

 

4.1                                 Due Organization and Power of the Buyer.  The Buyer is a limited liability company
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite limited liability
company power and authority to enter into this Agreement and perform its
obligations hereunder.

 

4.2                                 Authorization and Validity of Agreement.

 

(a)                                  The execution,
delivery and performance by the Buyer of this Agreement and the consummation by
the Buyer of the transactions contemplated hereby have been duly authorized by
the sole member of the Buyer, and no other action on the part of the Buyer is
or will be necessary for the execution, delivery and performance by the Buyer
of this Agreement and the consummation by the Buyer of the transactions
contemplated hereby.

 

(b)                                 This Agreement has
been duly executed and delivered by the Buyer and is a legal, valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with its
terms, except to the extent that enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting
creditors’ rights generally and by general equity principles.

 

4.3                                 No Conflict. 
Except for any consent, approval, filing or notice that would not, if
not given or made, or any violation, conflict, breach, termination, default or
acceleration which does not impair the execution, delivery or performance by
the Buyer of this Agreement or the consummation by the Buyer of the
transactions contemplated hereby:  (i)
will not violate any provision of law, rule or regulation, order, judgment or
decree of any jurisdiction (including those outside of the United States)
applicable to the Buyer; (ii) will not require any consent or approval of, or
filing or notice to, any Governmental Authority under any provision of law
applicable to the Buyer, except for the requirements of the HSR Act and any
filings set forth in Schedule 3.4, any consent, approval, filing or notice as
may be required under similar laws in any applicable jurisdiction outside the
United States and except for any consent, approval, filing or notice
requirements which become applicable solely as a result of the specific
regulatory

 

35

 

status of the Seller or which the Seller or any of its affiliates are
otherwise required to obtain; (iii) will not violate any provision of the
governing or organizational documents of the Buyer; and (iv) will not, with or
without the giving of notice or the passage of time or both, require any
consent or approval under, and will not conflict with, or result in the breach
or termination of, or constitute a default under, or result in the acceleration
of the performance by the Buyer under, any note, bond, indenture, mortgage,
deed of trust, lease, license, franchise, contract, agreement or other
instrument to which the Buyer is a party or by which it or any of its assets is
bound or encumbered, or result in the creation of a Lien on any of the assets
of the Buyer.

 

4.4                                 Finders; Brokers.  With the exception of fees and expenses payable by the Buyer to
Callisto Partners, LLC, the Buyer is not a party to any agreement with any
finder, broker or other person, or in any way obligated to any finder, broker
or other person for any commissions, fees or expenses, in connection with the
origin, negotiation, execution or performance of this Agreement.

 

4.5                                 Purchase for Investment.  The Buyer is aware that the Gans Transport
PSI being acquired pursuant to the transactions contemplated hereby are not
registered under the Securities Act of 1933, as amended (the “Securities Act”),
or under any state or foreign securities laws. 
The Buyer is an “accredited investor” within the meaning of Rule 501(a)
of Regulation D of the Securities Act. 
The Buyer is not an underwriter, as such term is defined under the
Securities Act, and is purchasing such the Gans Transport PSI solely for
investment, with no present intention to distribute any such Gans Transport PSI
to any person, and the Buyer will not sell or otherwise dispose of such Gans
Transport PSI except in compliance with the registration requirements or
exemption provisions under the Securities Act and the rules and regulations
promulgated thereunder, or any other applicable securities laws.

 

4.6                                 Financial Capacity.  The Buyer (together with its affiliates) has
the financial wherewithal to pay all amounts which may be payable by it
pursuant to this Agreement.  In connection
with the consummation of the transactions contemplated hereby and the
incurrence of any indebtedness therewith, the Buyer does not intend that the
Sold Companies and the Subsidiaries would incur, and does not believe that the
Sold Companies and the Subsidiaries will incur, debts that would be beyond the
ability of the Sold Companies and the Subsidiaries to pay as such debts mature.

 

4.7                                 Legal Proceedings.  There are no Actions pending or, to the
knowledge of the Buyer, threatened against or affecting the Buyer or any of its
affiliates (or any of their material assets) at law or in equity before any
Governmental Authority and neither the Buyer nor any of its affiliates is, to
its knowledge, subject to any order, writ, injunction, judgment or decree of
any Governmental Authority which, in each case, would or seeks to enjoin,
rescind, or materially delay the transactions contemplated by this Agreement or
otherwise hinder the Buyer from timely complying with the terms and provisions
of this Agreement.

 

4.8                                 Investigation. 
The Buyer acknowledges that, except for the matters that are expressly
covered by the provisions of this Agreement, the Buyer is relying on its own
investigation and analysis in entering into the transactions contemplated
hereby.  The Buyer is knowledgeable
about the industries in which the Sold Companies, the Venture Entities and the
Subsidiaries operate and is capable of evaluating the merits and risks of the
Mergers and its

 

36

 

purchase of the Gans Transport PSI as contemplated by this Agreement
and is able to bear the substantial economic risk of such investment for an
indefinite period of time.  The Buyer
has been afforded access to the books and records, facilities and personnel of
the Sold Companies and the Subsidiaries for purposes of conducting a due
diligence investigation of the Sold Companies, the Venture Entities and the
Subsidiaries and has conducted a due diligence investigation of the Sold
Companies, the Venture Entities and the Subsidiaries; provided, however, that such
access shall not in any way limit or effect any of the provisions of this
Agreement (or any remedy or liability based thereon).  Except to the extent set forth in Schedule 4.8, the
Buyer has no knowledge that any of the representations or warranties contained
in Article III is, as of the date of this Agreement, untrue or incorrect in any
material respect.

 

4.9                                 Disclaimer Regarding Projections.  In connection with the Buyer’s investigation
of the Sold Companies, the Venture Entities and the Subsidiaries, the Buyer has
received from the Seller and its affiliates and agents certain projections and
other forecasts, including, without limitation, projected financial statements,
cash flow items, and certain business plan information related to the Sold
Companies, the Venture Entities and the Subsidiaries (collectively, the “Projections”).  The Buyer acknowledges that (a) there are
uncertainties inherent in attempting to make such Projections and, accordingly,
is not relying on them, (b) the Buyer is familiar with such uncertainties and
is taking full responsibility for making its own evaluation of the adequacy and
accuracy of all Projections furnished to it and (c) the Buyer shall have no
claim under this Agreement against anyone with respect to the accuracy of such
Projections (other than claims based on or arising out of any fraud).  Accordingly, the Buyer acknowledges that the
Seller has made no representation or warranty with respect to such Projections.

 

4.10                           Disclaimer Regarding Condition.  Notwithstanding anything herein to the
contrary, but without limitation of any representation of warranty or agreement
of the Seller herein contained, the Buyer acknowledges that THE SELLER MAKES NO
WARRANTY WITH RESPECT TO THE VALUE OF THE GANS TRANSPORT PSI OR THE VALUE,
CONDITION OR USE OF THE SOLD COMPANIES, THE VENTURE ENTITIES OR THE
SUBSIDIARIES OR THE ASSETS OF ANY OF THEM, WHETHER EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.

 

4.11                           No Other Representations or Warranties.  Except for the representations and
warranties contained in this Article IV, neither the Buyer nor any other person
makes any other express or implied representation or warranty to the Seller
regarding the Buyer, any of its affiliates or this Agreement and the
transactions contemplated hereby.

 

ARTICLE V

 

COVENANTS

 

5.1                                 Access; Information and Records;
Confidentiality.  During the period
commencing on the date hereof and ending on the Closing Date:

 

(a)                                  The Seller shall and
shall cause the Sold Companies and the Subsidiaries (and shall use all
commercially reasonable efforts to cause the Venture Entities) to, upon

 

37

 

reasonable request and notice, afford to the Buyer, its counsel,
accountants and other representatives reasonable access during normal business
hours to the plants, properties, senior management, employees, books and
records of the Seller (but only insofar as they pertain to the Sold Companies,
the Venture Entities and the Subsidiaries), the Sold Companies, the
Subsidiaries and the Venture Entities in order that the Buyer may have the
opportunity to make such reasonable investigations as it shall desire to make
of the Sold Companies, the Subsidiaries and the Venture Entities; provided, however, that any contacts with
such senior management or other employees shall be made only in accordance with
those written procedures which shall be established by the Seller within ten
Business Days after the date hereof, which procedures shall not unreasonably
withhold, condition or delay such access. 
The Seller will cause its officers, employees, accountants and other
agents to furnish to the Buyer such additional financial and operating data and
information with respect to the Sold Companies, the Venture Entities and the
Subsidiaries as the Buyer may from time to time reasonably request.

 

(b)                                 The Buyer shall not
contact any suppliers or customers of the Seller, the Sold Companies, the
Venture Entities or the Subsidiaries in connection with or pertaining to any
subject matter of this Agreement except in accordance with those written
procedures which shall be established by the Seller within ten Business Days
after the date hereof, which procedures shall not unreasonably withhold,
condition or delay such contacts.

 

(c)                                  The Buyer will hold,
and will cause its respective directors, officers, employees, accountants,
counsel, financial advisors and other representatives and affiliates to hold,
any information disclosed hereunder in confidence to the extent required by,
and in accordance with, the provisions of the letter dated April 23, 2003
between the Buyer and the Seller (as supplemented by letter dated July 15,
2003) (the “Confidentiality Agreement”).

 

5.2                                 Conduct of the Business Prior to the Closing
Date.  Except as otherwise
contemplated by this Agreement or as disclosed in Schedule 5.2 or in
respect of the operations or assets conducted or located at the Parcel in
Billings, Montana, or as required by a Governmental Authority of competent
jurisdiction or by applicable law, rule or regulation, the Seller covenants
that until the Closing it will, and it will cause the Sold Companies and the
Subsidiaries (and shall use all commercially reasonable efforts to cause all
Venture Entities) to, use all commercially reasonable efforts, in a manner
consistent with past practices, to maintain and preserve intact the business of
the Sold Companies, Subsidiaries and the Venture Entities and to maintain the
ordinary and customary relationships of the Sold Companies, Subsidiaries and
the Venture Entities with their respective suppliers, customers and others
having business relationships with them; provided, however, that, subject to
Section 5.18, nothing contained in this Agreement shall prevent the removal by
the Seller of Cash from any of the Sold Companies or the Subsidiaries
consistent with past cash management practices.  Until the Closing Date, (a) the Seller shall, and shall cause the
Sold Companies and the Subsidiaries (and shall use all commercially reasonable
efforts to cause all other Venture Entities) to, continue to operate and
conduct the business of the Sold Companies, the Venture Entities and
Subsidiaries in the ordinary course, and maintain the books and records of the
Sold Companies, the Venture Entities and the Subsidiaries in accordance with
past practices and (b) the Seller shall not, and shall cause the Sold Companies
and the Subsidiaries (and shall use all commercially reasonable efforts to
cause all other Venture Entities) not to, without the prior written approval of
the Buyer, which consent shall not be unreasonably withheld, conditioned or
delayed, or as otherwise contemplated or permitted by

 

38

 

this Agreement or Schedule 5.2, take any of the following actions with
respect to any of the Sold Companies, the Venture Entities and the
Subsidiaries.

 

(a)                                  amend its charter or
by-laws (or analogous governing or organizational documents), or issue or agree
to issue any additional shares of capital stock, any voting securities or
equity equivalent of any class or series, or any securities convertible into or
exchangeable for shares of capital stock, voting securities or equity
equivalent, or issue any options, warrants or other rights to acquire any
shares of capital stock or such securities;

 

(b)                                 sell, transfer or
otherwise dispose of or encumber or subject to any Liens (other than Permitted
Liens) any of its properties or assets other than (i) in the ordinary course of
business, (ii) any property or asset which is not material to the Petcoke
Business or the Metals Business, as the case may be, (iii) in any disposition
between any of the Sold Companies and the Subsidiaries and (iv) in the case of
any sale, transfer or other dispositions only, if equivalent value is received
therefor;

 

(c)                                  grant any increase in
the compensation of officers or employees, except for increases (i) in the
ordinary course of business and consistent with past practice, and which in any
event do not exceed for any person the greater of 6% of such person’s current
salary or $5,000 per annum; (ii) as required under any collective bargaining
agreement; (iii) as required by any Benefit Plan, or other agreement, policy or
arrangement in effect as of the date of this Agreement and disclosed hereunder
or (iv) as required by law;

 

(d)                                 make any capital
expenditure or commitment, other than (i) in the ordinary course of business
and which do not exceed $250,000 individually or $1,000,000 in the aggregate;

 

(e)                                  except with respect
to the endorsement of negotiable instruments in the ordinary course of its
business, incur, assume or guarantee any indebtedness for borrowed money other
than (i) purchase money borrowings; (ii) refundings of any existing
indebtedness which is reflected in the Conclusive Net Working Capital
Statement; and (iii) indebtedness to one of the Sold Companies or the
Subsidiaries;

 

(f)                                    issue, deliver,
sell, pledge, redeem, dispose of or subject to any Lien any of the Shares or
Venture Interests or any other voting securities or equity equivalent or any
interest or securities convertible into, or any rights, warrants or options to
acquire, any such Shares or Venture Interests, voting securities or convertible
securities or equity equivalent;

 

(g)                                 change its accounting
methods or practices (including any change in depreciation or amortization
policies or rates thereof) except as mandated by GAAP;

 

(h)                                 make any Tax election,
change any annual Tax accounting period, amend any Tax Return, settle or
compromise any material income Tax liability, enter into any closing agreement,
settle any Tax claim or assessment with respect to any material Tax, surrender
any right to claim a material Tax refund or consent to an extension or waiver
of the limitations period applicable to any Tax claim or assessment; provided, however, that notwithstanding
the foregoing, the Seller shall have the right in its sole discretion to settle
the California income Tax audit of AIMCOR DE for years May 1999 – December
2000, the Texas income Tax audit of

 

39

 

AIMCOR DE for years May 1999 – December 2001 and the Masterloy Canadian
federal income Tax audit for 2000, 2001 and 2002, and shall have the right to
amend the corresponding Tax Returns in accordance with such settlements;

 

(i)                                     enter into any
contract or commitment for purchases or sales other than a contract or
commitment which is in the ordinary course of its business and is on
commercially reasonable terms and conditions, based on those business and
financial terms and conditions then available in comparable bona fide
arms-length transactions with non-affiliated persons;

 

(j)                                     prepay any
material obligations other than in the ordinary course of business consistent
with past practice;

 

(k)                                  declare, set aside,
make or pay any dividend or other distribution payable in stock or property
with respect to the Shares;

 

(l)                                     waive or release
any rights of material value, or cancel, compromise, release or assign any
material indebtedness owed to it or any material claims held by it;

 

(m)                               cancel or terminate any
insurance policy naming it as a beneficiary or a loss payable payee;

 

(n)                                 enter into or amend
any collective bargaining or employment agreement, except as required by
applicable law;

 

(o)                                 adopt or vote in favor
of a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of any
of the Sold Companies, the Venture Entities or the Subsidiaries;

 

(p)                                 purchase assets (other
than purchases of inventory and capital expenditures, each in the ordinary
course of business) or equity securities of any person, or merge or consolidate
with any person;

 

(q)                                 amend, modify or adopt
any Benefit Plan, except as required to comply with any applicable law, or
adopt, whether formally or informally, or ratify any plan, arrangement,
understanding, policy or program which would constitute a Benefit Plan; or

 

(r)                                    agree, whether in
writing or otherwise, to do any of the foregoing.

 

5.3                                 Consents and Approvals.

 

(a)                                  Each of the Seller
and the Buyer shall use its reasonable best efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary under
applicable antitrust laws and regulations of any Governmental Antitrust
Authority to consummate and make effective the transactions contemplated by
this Agreement, including, without limitation, (i) to comply promptly with
all legal requirements which may be imposed on it with respect to this
Agreement and the transactions contemplated hereby by any Governmental
Authority with regulatory jurisdiction over enforcement of any applicable
antitrust, anti-takeover, merger or change in control laws (“Governmental
Antitrust Authority”) (which actions

 

40

 

shall include, without limitation, furnishing all information required
by applicable law in connection with approvals of or filings with any
Governmental Antitrust Authority), including filing, or causing to be filed, as
promptly as practicable, any required notification and report forms
(A) under the HSR Act with the Federal Trade Commission (the “FTC”)
and the Antitrust Division of the United States Department of Justice (the “Antitrust
Division”) or (B) under other applicable non-U.S. laws with the
applicable non-U.S. Governmental Antitrust Authority, (ii) to obtain any
consent, authorization, order or approval of, or any exemption by, any
Governmental Antitrust Authority required to be obtained or made by the Seller
and the Buyer, or any of their respective subsidiaries or affiliates in
connection with the transaction contemplated by this Agreement or the taking of
any action contemplated by this Agreement, and (iii) to take any action
necessary to defend vigorously, lift, mitigate or rescind the effect of any
litigation or administrative proceeding involving any Governmental Antitrust
Authority adversely affecting the transactions contemplated by this Agreement
or this Agreement, including promptly appealing any adverse court or
administrative decision and prosecuting such appeal until the earlier to occur
of (A) the termination of this Agreement and (B) the Closing.  Without limitation of the foregoing, the
Buyer and its respective affiliates(s) (x) shall not extend any waiting period
under the HSR Act or any other foreign antitrust or merger control laws or
enter into any agreement with the FTC or the Antitrust Division of the U.S.
Department of Justice or any other Governmental Antitrust Authority not to
consummate the transactions contemplated by this Agreement, except with the
prior written consent of the Seller and (y) shall retain all resources such as
counsel, accountants, economists or other consultants which may be reasonably
necessary to discharge its obligations under this Section 5.3.

 

(b)                                 Without limiting the
generality of the undertakings and subsections (a) and (c) of this
Section 5.3 and subject to appropriate confidentiality protections, the
Seller and Buyer shall each furnish to the other such necessary information and
reasonable assistance as the other party may request in connection with the
foregoing and shall each provide counsel for the other party with copies of all
filings made by such party, and all correspondence between such party (and its
advisors) with any Governmental Antitrust Authority and any other information
supplied by such party and such party’s affiliates to a Governmental Antitrust
Authority in connection with this Agreement and the transactions contemplated
hereby.  Each party shall, subject to
applicable law, permit counsel for the other party to review in advance any
proposed written communication to any Governmental Antitrust Authority.  Upon the terms and subject to the conditions
herein provided, in case at any time after the Closing Date any further action
is necessary or desirable to secure the approvals from any and all Governmental
Antitrust Authorities necessary to carry out the purposes of this Agreement,
the proper officers and/or directors of the parties shall use their reasonable
best efforts to take or cause to be taken all such necessary action.  The Seller and the Buyer agree to offer the
other party, if possible, a reasonable opportunity to participate in all
telephonic calls and all meetings with a Governmental Antitrust Authority
relating in any way to the review of the transactions contemplated by this
Agreement by any Governmental Antitrust Authority.

 

(c)                                  Without limiting the
generality of the undertakings and subsections (a) and (b) of this
Section 5.3, the Seller and the Buyer agree to take or cause to be taken
the following actions prior to any termination of this Agreement in accordance
with its terms:  (i) to use their
reasonable best efforts to provide as promptly as practicable information and
documents requested by any Governmental Antitrust Authority necessary, proper
or advisable to permit

 

41

 

consummation of the transactions contemplated by this Agreement and
(ii) take promptly, if any permanent or preliminary injunction or other
order is entered or becomes reasonably foreseeable to be entered in any
proceeding that would make consummation of the transactions contemplated by
this Agreement in accordance with the terms of this Agreement unlawful or that
would prevent or delay consummation of any such transactions, any and all steps
(including the appeal thereof or the posting of a bond) which are necessary to
vacate, modify or suspend such injunction or order so as to permit such consummation
on a schedule as close as possible to that contemplated by this Agreement.  Notwithstanding the foregoing, the Buyer
shall not be required to take any action that would, either individually or in
the aggregate, be materially adverse to the financial condition or results of
operations of the Buyer, the Sold Companies, the Venture Entities and the
Subsidiaries, taken as a whole.

 

(d)                                 The filing fees under
the HSR Act or any other foreign antitrust merger control laws shall be borne
by the Buyer.

 

5.4                                 Non-Solicitation.

 

(a)                                  The Buyer and its
affiliates will not, from and after the date hereof and for a period of one
year following any termination of this Agreement pursuant to Section 10.1 and,
in the case of employees of any of the Sold Companies, the Venture Entities and
the Subsidiaries, from and after the date hereof until the Closing Date,
without the prior written approval of the Seller, directly or indirectly,
solicit, encourage, entice or induce any person who is an employee of the
Seller or any of its subsidiaries to terminate his or her employment with the
Seller or any of its subsidiaries.  The
Buyer agrees that any remedy at law for any breach by it of this Section 5.4(a)
would be inadequate, and the Seller would be entitled to injunctive relief in
such a case.  If it is ever held that
the restriction placed on the Buyer by this Section 5.4(a) is too broad to
permit enforcement of such restriction to its fullest extent, the Buyer agrees
that a court of competent jurisdiction may enforce such restriction to the
maximum extent permitted by law, and the Buyer hereby consents and agrees that
such scope may be judicially modified accordingly in any proceeding brought to
enforce such restriction.

 

(b)                                 The Seller and its
subsidiaries will not, for a period of one year following the Closing Date,
without the prior written approval of the Buyer, directly or indirectly,
solicit, encourage, entice or induce any person who is an employee of any of
the Sold Companies, the Venture Entities or Subsidiaries at the Closing Date to
terminate his or her employment with the Buyer or any of the Sold Companies,
the Venture Entities or Subsidiaries. 
The Seller agrees that any remedy at law for any breach by it of this
Section 5.4(b) would be inadequate, and the Buyer would be entitled to
injunctive relief in such a case.  If it
is ever held that the restriction placed on the Seller by this Section 5.4(b)
is too broad to permit enforcement of such restriction to its fullest extent,
the Seller agrees that a court of competent jurisdiction may enforce such
restriction to the maximum extent permitted by law, and the Seller hereby
consents and agrees that such scope may be judicially modified accordingly in
any proceeding brought to enforce such restriction.

 

42

 

5.5                                 Further Actions.

 

(a)                                  Subject to the terms
and conditions of this Agreement, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement, including
using its reasonable best efforts:  (i)
to obtain, in addition to approvals discussed in Section 5.3 hereof, any licenses,
permits, consents, approvals, authorizations, qualifications and orders of
Governmental Authorities and parties to contracts with any of the Sold
Companies, the Venture Entities or the Subsidiaries as are required in
connection with the consummation of the transactions contemplated hereby; (ii)
to effect, in addition to filings discussed in Section 5.3 hereof, all
necessary registrations and filings required in connection with the
consummation of the transactions contemplated hereby; (iii) to defend any
lawsuits or other legal proceedings, whether judicial or administrative,
whether brought derivatively or on behalf of third parties (including, without
limitation, Governmental Authorities or officials), challenging this Agreement
or the other transactions contemplated hereby; (iv) to furnish to each other
such information and assistance and to consult with respect to the terms of any
registration, filing, application or undertaking as reasonably may be requested
in connection with the foregoing; and (v) to cause the other party’s conditions
to Closing set forth in Article VII, and which are within a party’s reasonable
control, to be met.  For purposes of
this Section 5.5, the “reasonable best efforts” of the Buyer shall include any
of the actions by the Buyer set forth in Section 5.3(c), subject to any
limitations set forth therein.

 

(b)                                 Neither the Buyer nor
any of its affiliates shall in any way use, beginning on the Closing Date, any
trademark, service mark, trade name, brand mark, brand name, trade dress or
logo owned or used in the continuing business of the Seller or any of its
affiliates and which is listed in Schedule 5.5(b) (collectively, the “Seller
Names”), or use any trademark, trade name, brand mark, brand name, trade
dress or logo which is likely to cause confusion with any Seller Name or be
associated with the Seller or any of its affiliates, on or as of the Closing
Date; provided, however, that
each of the Sold Companies, the Subsidiaries and the Venture Entities shall (i)
have a reasonable period of time to replace (but in no event greater than six
months after Closing) any signage, stationary or other materials that may use
the Seller Names and (ii) be responsible for indemnifying Seller and its
affiliates for any Losses which are incurred by any of Seller and its
affiliates in any Action against any of Seller and its affiliates and
attributable to such use of the Seller Names. 
If this Section 5.5(b) is breached or threatened to be breached, the Buyer
expressly consents that in addition to any other remedy the Seller and its
affiliates may have, the Seller or such affiliate shall be entitled to apply
for and receive injunctive relief in order to prevent the continuation of any
existing breach or the occurrence of any threatened breach.

 

5.6                                 Access to Records and Personnel.

 

(a)                                  The Buyer shall, and
shall cause its affiliates to, retain the books, records, documents,
instruments, accounts, correspondence, writings, evidences of title, historic
computer records and systems and other papers relating to the Sold Companies,
the Venture Entities and the Subsidiaries in their possession as of the Closing
Date (the “Books and Records”) for a period of ten (10) years from the
Closing Date or for such longer period as may be required by law or any applicable
court order.

 

43

 

(b)                                 The Buyer shall, and
shall cause its affiliates to, provide the Seller and its representatives with
reasonable access to such Books and Records, and to personnel having knowledge
of the whereabouts and/or contents of such Books and Records, for legitimate
business reasons, including, without limitation, the preparation of financial
statements, Tax Returns or the defense of litigation or Tax audits or for
purposes of determining liability under this Agreement.  The Seller shall (and shall cause its
representatives to) hold in confidence and not disclose to any person, all
information obtained from such Books and Records and personnel in accordance
with the provisions of Section 5.1(c); provided,
however, that information contained in such Books and Records or
otherwise disclosed by personnel which (i) was in the public domain or (ii)
becomes known to the Seller (or its representatives) from or through a third
party not under an obligation of non-disclosure to the disclosing party, shall
not be deemed to be subject to the foregoing obligation of confidentiality; and
provided, further, that the
Seller and its representatives shall not be prevented from disclosing any
information to the extent required by any law, regulation or rule of any public
agency or other Governmental Authority or by obligations pursuant to any
listing agreement with any securities exchange or any securities exchange
regulations.

 

5.7                                 Employee Relations and Benefits.

 

(a)                                  In General.

 

(i)                                     Except
as otherwise provided in this Section 5.7, for the period from the Closing Date
through December 31, 2004, the Buyer, to the extent permitted by applicable
law, shall, or shall cause its affiliates to, provide (A) each Transferred
Employee (as defined below) with salary or wages, as applicable, and bonus
opportunity at least equal to that provided to such Transferred Employee
immediately prior to the Closing Date, and (B) each Employee (as defined below)
with employee benefits that are no less favorable in the aggregate than the
employee benefits provided to such Employee immediately prior to the Closing
Date.  For purposes of this Agreement, “Transferred
Employee” means an employee of any of the Sold Companies or the Subsidiaries
immediately prior to the Closing Date. 
For purposes of this Agreement, “Former Employee” means a former
employee of any of the Sold Companies or the Subsidiaries, in each case, who is
entitled to a current or future benefit from the Seller, any of the Sold
Companies, any of the Subsidiaries or any ERISA Affiliates.  The Transferred Employees together with the
Former Employees shall be referred to herein as “Employees”.

 

(ii)                                  The
Buyer and its affiliates shall give Employees full credit for all purposes
under any employee benefit plans or arrangements maintained by the Buyer or any
of its affiliates (including, without limitation, any welfare plan, incentive
plan, pension plan, vacation program or severance program) in which any
Employee participates on or after Closing for such years of service of such
Employee with the Seller, the Sold Companies, the Subsidiaries or any affiliate
and/or any predecessor entity, to the same extent recognized by the Seller, the
Sold Companies, the Subsidiaries and/or such affiliate or predecessor entity
immediately prior to the Closing Date, except to the extent such credit would
result in an unintended duplication of benefits.

 

44

 

(iii)                               To
the extent permitted by applicable law, the Buyer shall, or shall cause its
affiliates to, (A) waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Employees under any welfare benefit plans of the
Buyer or its affiliates (including, without limitation, the reimbursement
account plans described in Section 5.7(d) below) in which such Employees may be
eligible to participate on or after the Closing Date and (B) provide each
Employee with credit for any co-payments and deductibles paid prior to the
Closing Date in satisfying any applicable deductible or out-of-pocket
requirements under any welfare benefit plans of the Buyer or its affiliates
that any such Employee may be eligible to participate in on or after the
Closing Date.

 

(iv)                              Notwithstanding
the provisions of this Section 5.7, with respect to any Employees covered by a
collective bargaining agreement that is assumed by the Buyer or its affiliates
or retained by any Sold Company or Subsidiary, such collective bargaining
agreement shall govern to the extent required therein.

 

(b)                                 Pension Plans.

 

(i)                                     Prior
to or on the Closing Date, the Seller shall cause the trustee of the Walter
Industries, Inc. Subsidiaries Master Pension Trust (the “Seller Master Trust”)
to segregate the assets in the Seller Master Trust equal to the aggregate fair
market value of the assets related to (A) the Retirement Plan for Hourly
Employees of Applied Industrial Materials Corporation Represented by Local 2528
United Steel Workers of America and (B) the Retirement Plan for Hourly
Employees of Applied Industrial Materials Corporation (collectively, the “Pension
Plans”) (the “Pension Assets”). 
On the Closing Date, the Seller shall cause the trustee of the Seller
Master Trust to transfer all the Pension Assets to a trust or trusts
established or designated by the Buyer for the benefit of the participants and
beneficiaries covered by each Pension Plan.

 

(ii)                                  On
and after the Closing Date, the Sold Companies shall continue to be liable for
the obligations arising under and in connection with the Pension Plans and the
assets related thereto, and the Seller and its affiliates shall have no further
liability or obligation with respect to the Pension Plans and assets related thereto.  The Buyer shall, or shall cause its
affiliates to, maintain the Retirement Plan for Hourly Employees of Applied
Industrial Materials Corporation without any modification (except as required
by applicable law) through December 31, 2004. 
Prior to or on the Closing Date, Seller shall timely adopt (or cause to
be adopted) all amendments to the Pension Plans required by law to be adopted
prior to the Closing Date or by any date which is within 45 days after the
Closing Date.

 

(iii)                               Notwithstanding
the foregoing, nothing in Section 5.7(b)(ii) above shall limit or release any
obligation or liability under applicable law which the Seller has to the
Pension Plans or participants thereunder.

 

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(c)                                  401(k) Plans.

 

(i)                                     Prior
to or on the Closing Date, Seller shall timely adopt all amendments to the
Seller 401(k) Plan (as defined below) required by law to be adopted prior to
the Closing Date.

 

(ii)                                  Effective
as of the Closing Date, (A) the Seller shall cause the account balance of
each Employee to become fully vested and (B) the participation of each
Employee in the Walter Industries 401(k) Plan (the “Seller 401(k) Plan”)
shall cease.  Each Employee (including
any “alternate payee” as described in Section 414(p) of the Code) shall
have the option to (x) retain the Employee’s account balance under the
Seller 401(k) Plan (provided that such Employee’s account balance
is in excess of $5,000) or (y) make an elective rollover of the balance of
the Employee’s account, including any notes evidencing loans under the Seller
401(k) Plan, in accordance with Section 401(k) of the Code and the
regulations promulgated thereunder, to the 401(k) Plan established or to be
established by Buyer (the “Buyer 401(k) Plan”).

 

(iii)                               If
any Employee chooses to make a rollover election, the Seller shall cause the
trustee of the Seller 401(k) Plan to transfer in cash and/or kind (including
any notes evidencing loans under the Seller 401(k) Plan) the full account
balances with respect to such Employee under the Seller 401(k) Plan (which
account balances will have been credited with appropriate earnings and reduced
by any necessary benefit or withdrawal payments to or in respect of such
Employee as of the Closing Date and with respect to the period from the Closing
Date to the date of such transfer) to the appropriate trustee designated by the
Buyer or its affiliate under the trust agreement forming a part of the Buyer
401(k) Plan as soon as reasonably practicable after such election.  The Buyer shall take all actions reasonably
necessary to permit the Employees to roll over any loan balances outstanding
under the Seller 401(k) Plan as of the Closing Date and to otherwise effectuate
the asset transfer described in the preceding sentence, including making (or
causing to be made) all filings and submissions to the appropriate Governmental
Authorities which are required to be made by the trustee or sponsor of the
Buyer 401(k) Plan in connection with any such rollovers.

 

(d)                                 Reimbursement
Account Plans.  On or as soon as
practicable after the Closing Date, the Seller shall transfer to the Buyer or
its affiliate the account balances under the Seller’s Health Care Reimbursement
Account and Dependent Care Reimbursement Account plans (the “Reimbursement
Account Plans”) with respect to the calendar year that includes the Closing
Date for each participant who is an Employee. 
The Buyer shall, or shall cause its affiliate to, provide health care
reimbursement and dependent care reimbursement programs substantially
comparable to those provided under the Reimbursement Account Plans at least
through the end of the plan year in effect as of the Closing Date.  Upon the transfer of such account balances,
the Buyer shall, or shall cause its affiliate to, assume responsibility for
such account balances and shall indemnify the Seller and its affiliates against
all liability with respect to such account balances, but only to the extent
such liability arises upon or after the transfer of such account balances; provided that the Buyer or its affiliate
shall be responsible for all liability for and administration of reimbursement
claims that have not been received by the Seller as of the date the Seller
transfers such assets to the Buyer, regardless of when the claim was incurred.

 

46

 

(e)                                  Severance.  On and after the Closing Date, the Buyer or
its affiliates shall be solely responsible for, and neither the Seller nor any
of its affiliates shall have any obligation or liability for, severance pay or
any other severance obligations in respect of the Employees.  For the period from the Closing Date through
December 31, 2004, the Sold Companies shall retain the AIMCOR Severance Policy
and maintain such Severance Policy for the benefit of the Transferred Employees
and any Former Employees entitled to a benefit thereunder without any
modification (except as required by applicable law).

 

(f)                                    Incentive Plan.  On and after the Closing Date, the Sold
Companies shall retain the AIMCOR Executive Incentive Plan (the “Incentive
Plan”), maintain the Incentive Plan without any modification (except as
required by applicable law) and apply the performance targets and calculate
bonuses in a manner consistent with the manner applied and calculated by the
Sold Companies immediately prior to the Closing Date through December 31, 2003,
and none of the Seller or its affiliates shall have liabilities or obligations
with respect to such Incentive Plan; provided,
however, that the Conclusive Net Working Capital Statement shall
pro-rate the liability of the Buyer and the Seller with respect to such
Incentive Plan (determined based on the target amounts provided for therein),
such that the Buyer is effectively responsible under Section 2.2 hereof only
for amounts payable under such Incentive Plan for the plan year in which the
Closing occurs based on the number of days remaining in the plan year after the
Closing Date.

 

(g)                                 Severance/Success
Agreements.  On the Closing Date,
the Sold Companies shall retain and be liable for each AIMCOR Executive
Severance/Success Agreement (each, a “Success Agreement”); provided, however, that the Seller
shall as of Closing assume all liability thereunder for the Success Fee (as
defined in Section 3 thereof), which the Seller shall pay directly to each
person in accordance with the applicable terms of each such Success Agreement; provided, further, that the Conclusive
Net Working Capital Statement pro-rates the liability of the Buyer and the
Seller with respect to the pro-rata bonus payable pursuant to the Pro-rata
Bonus Section of such Success Agreement (determined based on the target amounts
provided for therein), such that the Buyer is effectively responsible under
Section 2.2 hereof only for amounts payable under such Pro-rata Bonus Section
for the calendar year in which the Closing occurs based on the number of days
remaining in the calendar year after the Closing Date.

 

(h)                                 Retiree Medical.  On and after the Closing Date, the Sold
Companies shall retain the AIMCOR Retiree Health Reimbursement Account Plan
(for Former Employees of Bridgeport), without modification (except as required
by applicable law) and with respect to the participants in such Benefit Plan as
of the Closing Date, until all benefits thereunder have been paid in full with
respect to such participants.

 

5.8                                 Guarantees. 
The Buyer shall use its reasonable best efforts (which shall not include
agreeing to any modifications of the terms of the underlying obligations) to
either replace or cause itself or one or more of its affiliates to be
substituted in all respects for the Seller and any of its subsidiaries or
affiliates (other than any of the Sold Companies and the Subsidiaries),
effective as of the Closing in respect of all obligations of the Seller and any
such subsidiaries or affiliates under each of the guarantees, indemnities,
surety bonds, letters of credit and letters of comfort obtained by the Seller
or any such subsidiaries or affiliates for the benefit of the Sold

 

47

 

Companies and the Subsidiaries and listed on Schedule 5.8 (the “Guarantees”).  If the Buyer is unable to effect such a
replacement or substitution with respect to any such Guaranty after using its
reasonable best efforts to do so, then the Buyer shall obtain letters of
credit, on terms and from financial institutions satisfactory to the Seller,
with respect to the obligations covered by each of the Guarantees for which the
Buyer does not effect such substitution or replacement.

 

5.9                                 [Intentionally omitted.]

 

5.10                           Termination of Intercompany
Arrangements.  Except as expressly
set forth in this Agreement, and except for such obligations, commitments,
contracts and other agreements which are set forth on Schedule 5.10, on
or prior to the Closing Date, (i) all intercompany receivables, payables and
loans between the Seller and any of its subsidiaries and affiliates (other than
any of the Sold Companies and Subsidiaries), on the one hand, and any of the
Sold Companies or Subsidiaries, on the other hand, shall be settled in the
manner described to the Buyer by the Seller prior to Closing and (ii) all other
arrangements, obligations, commitments, contracts and other understandings or
agreements (oral and written) between the Seller and any of its subsidiaries
and affiliates (other than any of the Sold Companies and Subsidiaries), on the
one hand, and any of the Sold Companies or Subsidiaries, on the other hand,
shall be terminated unless (other than in the case of the Administrative
Services Agreement between Seller and AIMCOR DE dated June 1, 1998), entered
into on commercially reasonable terms and conditions based on those business
and financial terms and conditions then available in comparable bona fide
arms-length transactions with non-affiliated persons.

 

5.11                           Insurance.

 

(a)                                  Subject to clause (b)
below, effective on and after the Closing Date, the Seller shall have no
obligation to provide insurance coverage for the Sold Companies, the Venture
Entities and the Subsidiaries for occurrences after the Closing Date.  After the Closing Date, any third party
administrator who administered claims prior to the Closing Date shall continue
to administer for the benefit of the Sold Companies and the Subsidiaries, as to
occurrences prior to the Closing Date, all such insurance programs in
accordance with the terms and conditions in effect on the date hereof.  The Sold Companies and the Subsidiaries will
be liable for and will pay all additional associated costs that are charged by
such third party administrator with respect to administrative activities
related to the rights of the Sold Companies and the Subsidiaries under this
Agreement.  If after Closing either
party requests from the other party claims data, payroll or other information
reasonably required in order to make any filings with any insurance companies
or associations or to renew (or apply for the renewal) of any insurance
programs, the other party shall use commercially reasonable efforts to comply
as promptly as practicable with such request.

 

(b)                                 The Seller shall use
its commercially reasonable efforts, subject to the consent of the underwriters
of such policies, to have, as of or as soon as reasonably practicable
immediately following the Closing, the Buyer named as the insured under any
insurance policies under which the Seller currently is named as the insured
that covers exclusively the business or other activities of any of the Sold
Companies and the Subsidiaries.

 

48

 

5.12                           Update.

 

(a)                                  Each of the Buyer and
the Seller shall notify the other party in writing of any breach of any
representations, warranties, covenants or agreements made respectively by Buyer
or Seller in this Agreement promptly upon acquiring knowledge thereof, provided
that the Seller shall not be obliged to notify the Buyer of any breach by the
Buyer of Section 4.6, Section 5.3, Section 8.1 or Section 8.2 or any breach by
the Buyer of Section 5.5(a) relating to the subject matter of any of the
foregoing Sections.

 

(b)                                 Except to the extent
the Buyer or the Seller has the right to terminate this Agreement pursuant to
Section 10.1(b) or (d) by reason of a breach of a representation, warranty,
covenant or other agreement (excluding Section 5.3) of which it has been
notified pursuant to Section 5.12(a) and exercises that right (and without
limitation of any claim, right or remedy of the terminating party based upon or
relating to such termination), any written notice given by either party
pursuant to Section 5.12 will be deemed, except in the case of a breach by
the Buyer of Section 4.6, Section 5.3, Section 8.1 or Section  8.2 or any breach by the Buyer of Section
5.5(a) relating to the subject matter of any of the foregoing Sections, to have
amended the relevant Schedule, to have qualified the applicable
representations, warranties, covenants and agreements and to have cured any
breach of any representation, warranty, covenant or agreement that otherwise
might have existed hereunder by reason of the existence of the breach.

 

5.13                           Litigation and Insurance Claim Support.  If and for so long as any party actively is
contesting or defending any third party action 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 any of the Sold Companies or the Subsidiaries, the other party will
cooperate with it and its counsel in the contest or defense, make available
their personnel and (upon prior notice and at reasonable times and pursuant to
reasonable terms and conditions) 
provide such testimony and access to their books and records as shall be
reasonably necessary in connection with such 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 therefor pursuant
to Article IX).

 

5.14                           Directors’ and Officers’ Indemnification and
Insurance.

 

(a)                                  After the Closing,
the Buyer shall and shall cause the Sold Companies and the Subsidiaries to (i)
indemnify and hold harmless, and provide advancement of expenses to, all
employees of any of the Sold Companies and the Subsidiaries as of the Closing
(in all of their capacities with the Sold Companies and the Subsidiaries,
including as officers and directors thereof, collectively, the “Indemnitees”)
(A) to the same extent such Indemnitees are indemnified or have the right to
advancement of expenses as of the date hereof by the Sold Companies and the
Subsidiaries pursuant to their respective organizational documents and
indemnification agreements, if any, in existence on the date hereof with such
Indemnitees, and (B) without limitation to clause (A), to the fullest extent
permitted by law, in each case for acts or omissions occurring at or prior to
the Closing (including for acts or omissions occurring in connection with the
approval of this Agreement and the consummation of the transactions
contemplated hereby) and (ii) include and cause to be maintained in effect in
the Sold Companies’ and the Subsidiaries’ (or any successor’s) organizational
documents after the Closing and for a period of six  years, provisions regarding elimination of liability of
directors, indemnification and

 

49

 

advancement of expenses which are, in the aggregate, no less
advantageous to the Indemnitees than the corresponding provisions contained in
the organizational documents of the Sold Companies and the Subsidiaries as of
the date hereof.  The obligations of the
Buyer, the Sold Companies and the Subsidiaries under this Section 5.14(a) shall
not be terminated or modified in such a manner so as to adversely affect of the
Indemnitees to whom this Section 5.14(a) applies without the consent of such
Indemnitee (it being expressly agreed that the Indemnitees shall be third party
beneficiaries hereof).

 

(b)                                 Any extended coverage
provided by the Seller for the directors’ and officers’ liability insurance
policies referred to in Section 5.16 shall be primary to any indemnification
and advancement of expenses which may be provided pursuant to Section 5.14(a)
and no indemnification payment or advancement shall be required to be made to
any Indemnitee if such person is covered thereunder, it being the intent of the
parties that (i) no duplicate payments shall be made to such Indemnitees and
(ii) the rights of any of the Sold Companies and the Subsidiaries are
subrogated to the rights of any of the Indemnitees who receive any payments
pursuant to Section 5.14(a) under the insurance provided in Section 5.16.

 

5.15                           Software.  The
Seller will use its commercially reasonable efforts to obtain rights for the
Sold Companies, the Venture Entities and the Subsidiaries to use, on
substantially the same terms and conditions and in substantially the same
manner as used as of the date of this Agreement, the software programs listed
on Schedule 5.15 hereto; provided that the Seller shall not be
required to bear any incremental or other out-of-pocket costs in connection
with obtaining such rights for the Sold Companies, the Venture Entities and the
Subsidiaries as of and after the Closing.

 

5.16                           Insurance. 
Seller shall, prior to Closing and at its cost and expense, provide
extended coverage for six years for all claims-made insurance policies
(including directors’ and officers’ liability insurance policies for the
benefit of the directors and officers of each of the Sold Companies and the
Subsidiaries as of the Closing Date (and all previous directors and officers of
such persons) in connection with any claims or liabilities (and any defense
thereof) arising out of or relating to any events or acts or omissions
occurring prior to the Closing Date (including for acts or omissions occurring
in connection with the approval of this Agreement and the consummation of the
transactions contemplated hereby)) maintained by Seller and its subsidiaries
other than the Sold Companies and the Subsidiaries, pertaining to the business of
the Sold Companies and the Subsidiaries and which are listed on Schedule
3.11(a), which will enable the Buyer to tender any claims which may be
covered thereby to the Insurer thereunder, notwithstanding when such claim
actually is made.

 

5.17                           Dispositions. 
Prior to Closing: (i) AIMCOR Enterprises shall assign, distribute, sell
or otherwise transfer or dispose of its ownership interest in Applied
Industrial Materials Luxembourg, S.A., such that it no longer owns any shares
of capital stock or other equity or ownership interest in such entity, and
provide the Buyer with evidence of such disposition, in form and substance
reasonably acceptable to the Buyer; and (ii) AIMCOR DE shall assign or
otherwise transfer or dispose of all of its right, title and interest to the
Parcel in Billings, Montana (and all assets and improvements located thereon)
to a third party other than the Sold Companies, any Venture Entity or any
Subsidiary, and shall provide the Buyer with evidence of such disposition in
form and substance reasonably acceptable to the Buyer.

 

50

 

5.18                           Cash Management. 
From and after the date hereof, the Seller shall use all commercially
reasonable efforts to operate and manage the business of the Sold Companies and
the Subsidiaries and to make such distributions of cash to the Seller and its
affiliates such that the cash shown on the Cash Statement will not be less than
$5,000,000.  The Seller shall otherwise
be entitled to declare, set aside, make or pay any dividends or distributions
with respect to the Shares which is consistent with the foregoing obligation.

 

5.19                           No Negotiations. 
Until the earlier of the Closing or any termination of this Agreement in
accordance with its terms, neither the Seller nor any of their affiliates,
advisors or agents shall, directly or indirectly, initiate discussions with,
engage in negotiations with or provide any information to any corporation,
partnership, person or other entity or group involving any possible sale, divestiture,
transfer or joint venture, directly or indirectly involving the Sold Companies,
the Venture Entities or the Subsidiaries to any person other than the Buyer and
other than with respect to transactions permitted by Section 5.2.

 

5.20                           Bank Matters. 
Prior to the Closing, the Seller shall deliver to the Buyer copies of
all signature or authorization cards for all bank, investment, cash management,
lock-box or other similar type accounts (the “Accounts”) held by (or for
the benefit of) any of the Sold Companies or the Subsidiaries.  Prior to the Closing and effective as of the
Closing Date, the Seller shall remove from such signature or authorization
cards the names of any persons who will not be employees of the Sold Companies
or the Subsidiaries as of the Closing, such that such persons shall have no
further authority to make withdrawals from, or otherwise exercise any right
with respect to, such Accounts after the Closing.

 

5.21                           Financing. 
The Buyer acknowledges and agrees that the Closing is not subject to or
contingent upon its closing of any financing or credit facility which will
provide any portion of the Purchase Price. 
However, and not in derogation of the foregoing, the Buyer represents
that it is arranging a financing and credit facility with Société Générale (“SG”)
and a financing with Blackstone Mezzanine Partners, L.P. (“Blackstone”)
(collectively, the “Financings”). 
The Buyer shall provide the Seller and its financial advisor, Merrill
Lynch & Co., with (a) copies of all term sheets, commitment letters and
agreements which the Buyer (or its affiliates) may execute with either SG or
Blackstone in respect of the Financings (promptly after the execution thereof)
and (b) reasonable assistance in contacting both SG and Blackstone to discuss
the proposed terms of the Financings.

 

5.22                           Expenses.  The
Buyer agrees that it shall reimburse the Seller, from time to time, promptly
following the submission by the Seller to the Buyer of reasonable written
evidence of such expenditures, for all out-of-pocket expenses incurred by or on
behalf of Seller in connection with the negotiation, preparation, review,
execution and performance of the amendments to the Original Stock Purchase
Agreement and all documentation related to the Restructuring Transactions, including
without limitation, attorneys’, accountants’ and other advisors’ fees and the
fees and expenses of any agent retained by Seller in connection with this
Agreement; provided, however,
that notwithstanding the foregoing Buyer shall not be obligated under this
Section 5.22 to reimburse any such expenses that Seller (a) would have incurred
under the Original Stock Purchase Agreement without giving effect to the
amendments thereto and (b) incurred in connection with the negotiation,
preparation, review and execution of the Amended

 

51

 

Stock Purchase Agreement; and provided further that in no event
shall the Buyer be required to pay the Seller an aggregate amount in excess of
$350,000 pursuant to this Section 5.22.

 

ARTICLE VI

 

TAX MATTERS

 

6.1                                 Purchase Price Allocation.  The Seller and the Buyer have agreed in Schedule 6.1
to the allocation of the Purchase Price between the shares of AIMCOR DE and the
Gans Transport PSI (the “Purchase Price Allocation”).  The Seller and the Buyer have agreed in
Schedule 6.1 to the principles to be utilized to further allocate that portion
of the Purchase Price allocated to the shares of AIMCOR DE pursuant to the
Purchase Price Allocation among the assets of AIMCOR DE in accordance with
section 1060 of the Code and the regulations promulgated thereunder (the “1060
Allocation”), which allocation shall be finalized as soon as practicable
following the Closing Date but in no event later than 15 days prior to the date
set forth for delivery of the Internal Revenue Service Form 8594 described in
the next sentence.  The Purchase Price
Allocation and the 1060 Allocation shall be used by the parties in preparing
Internal Revenue Service Form 8594, Asset Acquisition Statement, for the Seller
and the Buyer (which Form 8594 shall be completed, executed and delivered by
such parties as soon as practicable after the Closing Date but in no event
later than 15 days prior to the date such form is required to be filed) and
neither party shall take any contrary position on any Tax Return except to the
extent such position is inconsistent with applicable law.  Seller and Buyer each shall file
Form 8594 prepared in accordance with this Section 6.1 with the U.S.
federal income Tax Returns for their tax period which includes the Closing
Date.  The Purchase Price Allocation and
the 1060 Allocation shall be binding upon the parties hereto and upon each of
their successors and assigns, and the parties hereto shall report the
transactions contemplated by this Agreement in accordance with such allocations
and use reasonable efforts to sustain such reporting of such transactions in
any subsequent Tax dispute to the extent consistent with applicable law.

 

6.2                                 Restructuring Transactions.  The Seller and its affiliates and the Buyer
and its affiliates shall take all actions reasonably necessary in the time and
in the manner set forth in the Buyer’s instructions attached hereto as Schedule
6.2 to effect the transactions set forth on Schedule 6.2 prior to the Closing (such
transactions, the “Restructuring Transactions”).  The
Seller and the Buyer agree that, unless otherwise required by applicable law,
they will not report on any U.S. tax return or otherwise assert for U.S. tax
purposes that any of the Restructuring Transactions constitute either (a) a
“reorganization” (as described in section 368(a) of the Code) or (b) a
transaction which qualifies as a tax-free transaction under section 351 of the
Code.

 

6.3                                 Section 754 Elections.  The Seller agrees that
at the Buyer’s written request it will cause Tennessee Alloys Company (Alabama)
and shall use commercially reasonable efforts to cause Gans USA LLC (Delaware)
(the “Section 754 Entities”) to make the Section 754 elections for the
taxable year including the Closing Date (if not already in effect) to adjust
the bases of all properties and assets of such Section 754 Entities to account
for the indirect transfer of Seller’s interests in the Section 754 Entities to
Buyer for federal and, to the extent applicable, state and local income tax
purposes.

 

52

 

6.4                                 Tax Matters Cooperation.  The Seller and the Buyer shall provide each other with such
cooperation and information as either of them reasonably may request of the
other in undertaking the Restructuring Transactions and in filing any Tax
Return, amended Tax Return, determining a liability for Taxes, or participating
in conducting any audit or other proceeding in respect of Taxes.  Such cooperation and information shall
include (a) providing copies of relevant Tax Returns or portions thereof,
together with accompanying schedules, related work papers and documents
relating to rulings or other determinations by Tax authorities, and (b) making
their respective employees and those of its subsidiaries, available (and
causing their agents, auditors and other representatives to be available) to
provide explanations of any documents or information provided hereunder, and to
otherwise reasonably cooperate with such activity.  Each of the Seller and the Buyer, as applicable, shall retain all
Tax Returns, schedules and work papers, records and other documents in its
possession relating to Tax matters of the Sold Companies, the Venture Entities
and the Subsidiaries and the business and assets of the Sold Companies, the
Venture Entities and the Subsidiaries for each taxable period first ending
after the Closing Date and for all prior taxable periods until the later of (x)
the expiration of the statute of limitations of the taxable periods to which
such Tax Returns and other documents relate, without regard to extensions
except to the extent notified by the other party in writing of such extensions
for the respective Tax periods, and (y) ten years following the Closing Date.  Any information obtained under this Section
shall be kept confidential in accordance with the provisions of Section 5.1(c)
of this Agreement except as may be otherwise necessary in connection with the
filing of any Tax Returns or claims for refund or in conducting an audit or
other proceeding.

 

6.5                                 Transfer Taxes. 
Subject to Section 6.6(b) of this Agreement, all Transfer Taxes incurred
in connection with this Agreement and the transactions contemplated hereby
shall be borne by the Buyer and the Seller in equal portions.  The Seller and the Buyer shall cooperate in
timely making all filings, returns, reports and forms as may be required to
comply with the provisions of such tax laws and in making reasonable
arrangements to lawfully minimize the payment of any such Taxes.  For purposes of this Agreement, “Transfer
Taxes” shall mean transfer, documentary, sales, use, registration and other
such taxes (including all applicable real estate transfer taxes).

 

6.6                                 Tax Indemnification.

 

(a)                                  (i) The Seller shall
indemnify and hold the Buyer and its affiliates harmless from (A) all
liability for Taxes of the Sold Companies, the Subsidiaries and the Venture
Entities with regard to any and all taxable periods of such Persons and Seller
ending on or before the Closing Date and the portion ending on the Closing Date
of any taxable period that includes (but does not end on) such day (the “Pre-Closing
Tax Period”), (B) all Taxes arising out of or related to a breach of
any of the representations and warranties set forth in Section 3.12 of
this Agreement, and (C) all liability (as a result of Treasury Regulation
§1.1502-6(a), or any similar provision of state, local or foreign law) for
Taxes of the Seller or any other person (other than the Sold Companies, the
Subsidiaries or the Venture Entities) which is or has been affiliated with any
of the Sold Companies, the Subsidiaries or the Venture Entities prior to
Closing (including with regard to any audit of Seller which commences in 2003);
provided,
however, that the Seller shall not have any obligation under this
Section 6.6(a)(i) to indemnify the Buyer and its affiliates with respect
to any of the Venture Entities (including, without limitation, with respect to
a breach

 

53

 

of representation contained in Section 3.12 as to such Venture
Entity) for Taxes in excess of the Buyer’s share therein based on the Buyer’s
percentage ownership interest in such Venture Entity.

 

(ii)                                  With respect to a
taxable period which begins before and ends after the Closing Date (a “Straddle
Period”), the portion of such Taxes attributable to the Pre-Closing Tax
Period shall be calculated as though the tax year terminated as of the close of
business on the Closing Date; provided, however, that in the case of a
Tax not based on income, receipts, proceeds, profits or similar items, such
Taxes shall be equal to the amount of Tax for the taxable period multiplied by
a fraction, the numerator of which shall be the number of days from the
beginning of the taxable period through the Closing Date and the denominator of
which shall be the number of days in the taxable period.

 

(b)                                 The Buyer and its
affiliates shall indemnify the Seller and its affiliates for the amount of any
Taxes incurred by the Seller and its affiliates resulting from the consummation
of the Restructuring Transactions that are in excess of the amount of such
Taxes that would have been borne by the Seller and its affiliates pursuant to
the terms of the Original Stock Purchase Agreement if the transactions
contemplated by the Original Stock Purchase Agreement (including without
limitation the Buyer Elections, as defined in the Original Stock Purchase
Agreement) had been consummated in a timely manner in accordance with the terms
of such agreement.  Notwithstanding
anything in the foregoing to the contrary, the Buyer and its affiliates shall
indemnify the Seller and its affiliates for the full amount of any Taxes in the
nature of Transfer Taxes resulting from the consummation of the Restructuring
Transactions that would not have been imposed if the Restructuring Transactions
had not been undertaken, including, without limitation, the full amount of any
stamp tax imposed on the transfer of Applied Industrial Materials (UK) Ltd.
pursuant to Schedule 6.2.

 

6.7                                 Preparation and Filing of Tax Returns,
Reports and Forms.  For any taxable
period of the Sold Companies or any Subsidiaries that ends on or before the
Closing Date, the Seller shall timely prepare and file, or shall cause to be
timely prepared and filed, with the appropriate authorities all U.S. federal
income and state income and franchise Tax Returns, reports and forms required
to be filed, and shall pay all Taxes due with respect to such returns, reports
and forms.  The Buyer and the Seller
agree to the extent possible to file all Tax Returns, reports and forms for the
Sold Companies and the Subsidiaries for any Straddle Period on the basis that
the relevant taxable period ended as of the close of business on the Closing
Date.  The Buyer shall use reasonable
best efforts to timely prepare all Tax Returns, reports and forms required to
be filed with respect to the Sold Companies or any Subsidiaries that are not
described in the first sentence of this Section 6.6 and shall deliver such
Tax Returns, along with a calculation of those Taxes owed by the Seller (as
determined pursuant to Section 6.6) to the Seller for review and comment
within thirty (30) days prior to the filing of any such Tax Return.  The Seller and the Buyer agree to consult
and resolve in good faith any issue arising as a result of the Seller’s review
of such Tax Returns.  Upon resolution of
any disputed items, the Buyer shall timely file such Tax Return and pay all
Taxes due with respect to such Tax Returns. 
If the parties are unable to resolve any dispute by the time for filing
of such Tax Return, the Buyer shall timely file the Tax Return and the parties
shall jointly request that the Neutral Arbitrator resolve any issue.  The scope of the Neutral Arbitrator’s review
shall be limited to the disputed items and the parties shall, if necessary,
file an amended Tax Return reflecting the final resolution of the disputed
items.  The Seller and the Buyer shall
each pay one-half of the Neutral

 

54

 

Arbitrator’s fees and expenses. 
The Buyer shall not extend the statute of limitations with respect to
any Tax Return of the Sold Companies or any of the Subsidiaries for any
Pre-Closing Tax Period without the written consent of the Seller, such consent
not to be unreasonably withheld, conditioned or delayed.

 

6.8                                 Tax Refunds and Credits.

 

(a)                                  Subject to
clause (b) below, any refunds or credits of Taxes of the Sold Companies or
the Subsidiaries for any Pre-Closing Tax Period shall be for the account of the
Seller.  Any refunds or credits of Taxes
of the Sold Companies or the Subsidiaries for any other taxable period shall be
for the account of the Buyer.  The Buyer
shall, if the Seller so requests and at the Seller’s expense, cause the Sold
Companies or the Subsidiaries to file for and obtain any refunds or credits to
which the Seller is entitled.  Any
proceeding with respect to such a claim shall be governed by the provisions of
Section 6.8.  The Buyer shall cause
the Sold Companies and the Subsidiaries to forward to the Seller any such
refund within ten (10) days after the refund is received (or reimburse the
Seller for any such credit within ten (10) days after the credit is
applied against other Tax liability); provided however, that the Seller shall
indemnify the Buyer for any amount paid pursuant to this sentence if any such
refund or credit is subsequently disallowed).

 

(b)                                 Filing of Amended
Returns.  The Seller shall be
responsible for filing any amended U.S. federal income and state income and
franchise Tax Returns for taxable years of the Sold Companies and the
Subsidiaries ending on or prior to the Closing Date which are required as a
result of examination adjustments made by the Internal Revenue Service or by
the applicable taxing authorities for such taxable years as finally
determined.  For all other Tax Returns
filed by or with respect to the Sold Companies or the Subsidiaries, for any
Pre-Closing Tax Period any required amended returns resulting from any
examination adjustments, as finally determined, shall be prepared by the Buyer
and furnished to the Seller for review and comment thirty (30) days prior
to the due date for filing such returns and the Buyer shall incorporate all
reasonable comments of the Seller.  The
Buyer shall not permit any of the Sold Companies or the Subsidiaries to file an
amended Tax Return, report or form described in the previous sentence without
the prior written consent of the Seller which consent may not be unreasonably
withheld, conditioned or delayed, provided that such consent shall be considered
to be unreasonably withheld if such amended tax return, report or form would
not prejudice the Seller.

 

(c)                                  No Extraordinary
Transactions.  On the Closing Date,
the Buyer shall cause each of the Sold Companies, the Venture Entities and the
Subsidiaries to conduct its business in the ordinary course in substantially
the same manner as presently conducted and on the Closing Date shall not permit
the Sold Companies, the Venture Entities or the Subsidiaries to effect any
extraordinary transactions (other than any such transactions expressly required
by applicable law or provided for or permitted pursuant to this Agreement) that
could result in Tax liability to the Sold Companies, the Venture Entities or
any of the Subsidiaries in excess of Tax liability associated with the conduct
of its business in the ordinary course.

 

55

 

6.9                                 Procedures Relating to Indemnification
of Tax Claims.

 

(a)                                  If a claim shall be
made by any Governmental Authority, which, if successful, might result in an
indemnity payment to the Buyer or its affiliates pursuant to Section 6.5,
the Buyer shall promptly notify the Seller in writing of such claim (a “Tax
Claim”).

 

(b)                                 With respect to any
Tax Claim, the Seller shall control all proceedings taken in connection with
such Tax Claim (including selection of counsel) and, without limiting the
foregoing, may in its sole discretion pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with any taxing authority
with respect thereto, and may, in its reasonable discretion, either pay the Tax
claimed and sue for a refund where applicable law permits such refund suits or
contest the Tax Claim in any permissible manner.  All costs and expenses incurred in connection with such
proceedings shall be borne by the Seller. 
In the event that the Seller elects not to control such proceedings, the
Buyer shall control such proceedings and the Seller shall bear all of the
Buyer’s reasonable costs and expenses in connection therewith.  Notwithstanding the foregoing, the Seller
and the Buyer shall jointly control all proceedings taken in connection with
any Tax Claim relating solely to Taxes for a Straddle Period.  Neither party shall settle a Tax Claim
relating solely to Taxes of the Sold Companies or the Subsidiaries for a
Straddle Period without the other party’s prior written consent (which consent
may not be unreasonably withheld, conditioned or delayed; and which consent
shall be considered to be unreasonable withheld if such settlement has no
adverse effect on the other party).

 

(c)                                  The Buyer and its
affiliates (including after the Closing, the Sold Companies, the Venture
Entities and the Subsidiaries), on the one hand, and the Seller and its
subsidiaries, on the other hand, shall cooperate with each other in contesting
any Tax Claim, which cooperation shall include, without limitation, the
retention and, at the contesting party’s request and expense, the provision of
records and information which are reasonably relevant to such Tax Claim, and
making employees available on a mutually convenient basis to provide additional
information or explanation of any material provided hereunder or to testify at
proceedings relating to such Tax Claim.

 

ARTICLE VII

 

CONDITIONS

 

7.1                                 Conditions Precedent to Obligations of the
Buyer and the Seller.  The
respective obligations of the Buyer and the Seller to consummate the
transactions contemplated by this Agreement shall be subject to the
satisfaction at or prior to the Closing Date of the following conditions:

 

(a)                                  No Injunction.  At the Closing Date, there shall be no
injunction, restraining order or decree of any nature of any Governmental
Authority of competent jurisdiction that is in effect that restrains or
prohibits the consummation of the Purchase; provided,
however, that the party invoking this condition shall use their best
efforts to have such injunction, order or decree vacated or denied.

 

(b)                                 Regulatory
Authorizations.  The applicable
waiting periods specified under the HSR Act with respect to the transactions
contemplated by this Agreement shall have

 

56

 

lapsed or been terminated and all clearances, approvals or
confirmations required pursuant to the applicable requirements of other merger
or investment control statutes or regulations or those of any other
Governmental Antitrust Authority set forth on Schedule 7.1(b) shall have
been obtained.

 

7.2                                 Conditions Precedent to Obligation of
the Seller.  The obligation of the
Seller to consummate the transactions provided for in this Agreement is subject
to fulfillment of each of the following conditions:

 

(a)                                  Accuracy of the
Buyer’s Representations and Warranties. 
The representations and warranties of the Buyer contained in this
Agreement that are qualified as to materiality shall be true and correct and
the representations and warranties of the Buyer set forth in this Agreement and
that are not so qualified shall be true and correct in all material respects,
in each case on the date of this Agreement and on the Closing Date as though
made on the Closing Date, except those representations and warranties that
address matters only as of a particular date or only with respect to a specific
period of time, which need only be true and accurate (or true and accurate in
all material respects, as applicable) as of such date or with respect to such
period; provided, however, that a
breach of any of the foregoing representations and warranties shall not
constitute the non-fulfillment of the foregoing condition (x) if such breach is
cured prior to the Closing or the termination of this Agreement in accordance
with its terms or (y) unless such breach, individually or in the aggregate with
all other breaches, impairs the execution, delivery or performance by the Buyer
of this Agreement or the consummation by the Buyer of the transactions
contemplated hereby.

 

(b)                                 Performance.  The Buyer shall have performed and complied
in all material respects with all agreements, obligations and covenants
contained in this Agreement to be performed or complied with by it at or prior
to Closing.

 

(c)                                  Officer’s
Certificate.  The Seller shall have
received a certificate signed by an officer of the Buyer certifying to the
fulfillment of the conditions specified in Sections 7.2(a) and (b).

 

(d)                                 [Intentionally omitted.]

 

(e)                                  Opinion of Counsel.  The Seller shall have received an opinion of
Steel Hector & Davis LLP, dated the Closing Date and addressed to the
Seller, substantially in the form of Exhibit B hereto.

 

7.3                                 Conditions Precedent to Obligation
of the Buyer.  The obligation of the
Buyer to consummate the transactions provided for in this Agreement is subject
to fulfillment of each of the following conditions:

 

(a)                                  Accuracy of
Representations and Warranties of the Seller.  The representations and warranties of the Seller contained in this
Agreement that are qualified as to materiality shall be true and correct and
the representations and warranties of the Seller set forth in this Agreement
and that are not so qualified shall be true and correct in all material
respects, in each case on the date of this Agreement and, if the Closing occurs
on or prior to November 3, 2003, as

 

57

 

though made on the Closing Date, and, if the Closing occurs after
November 3, 2003, as though made on November 3, 2003, except those
representations and warranties (i) that address matters only as of a particular
date or only with respect to a specific period of time, which need only be true
and accurate (or true and accurate in all material respects, as applicable) as
of such date or with respect to such period and (ii) that are contained in
Sections 3.1(b) and 3.2(b) and in the second and third sentences of each of
Sections 3.3(a), (b) and (c), which shall be true and correct in all material
respects, in each case on the date of this Agreement and as though made on the
Closing Date, notwithstanding when the Closing occurs; provided, however, that a breach of any of
the foregoing representations and warranties shall not constitute the
non-fulfillment of the foregoing condition (x) if such breach is cured prior to
the Closing or the termination of this Agreement in accordance with its terms
or (y) unless such breach, individually or in the aggregate with all other
breaches, causes or will cause Buyer Losses in excess of $15,000,000 (if
indemnifiable hereunder without regard to any applicable minimum dollar
thresholds set forth in Article IX), excluding any Buyer Losses, individually
or in the aggregate, including without limitation any loss of customers or
suppliers, resulting from or relating to any MAC Limitation.

 

(b)                                 Performance.  The Seller shall have performed and complied
in all material respects with all agreements, obligations and covenants
contained in this Agreement to be performed or complied with by it at or prior
to Closing.

 

(c)                                  Officer’s
Certificate.  The Buyer shall have
received a certificate signed by an officer of the Seller certifying to the
fulfillment of the conditions specified in Sections 7.3(a) and (b).

 

(d)                                 [Intentionally omitted.]

 

(e)                                  Encumbrances.

 

(i)                                     The
Seller shall have delivered to the Buyer certificates evidencing the shares of
capital stock of (A) AIMCOR DE, (B) AIMCOR Enterprises International,
Incorporated, (C) Gans Transport Agencies (USA), Inc. and (D) AIMCOR
(Far East) Inc., each pledged, as of the date of this Agreement, to Bank of
America, N.A. pursuant to the Securities Pledge Agreement, dated as of
April 17, 2003, among the Seller, each of the subsidiaries of the Seller
from time to time party thereto and Bank of America, N.A., as administrative
agent.

 

(ii)                                  The
security interests granted to Bank of America, N.A. pursuant to the Security
Agreement, dated as of April 17, 2003, among the Seller, each of the
subsidiaries of the Seller from time to time party thereto and Bank of America,
N.A. (the “Security Agreement”) by each of AIMCOR DE, AIMCOR Enterprises
International, Incorporated and Gans Transport Agencies (USA), Inc. and AIMCOR
(Far East) Inc. shall have been released pursuant to and in accordance with
Section 29 of the Security Agreement.

 

(iii)                               The
Seller shall have delivered to the Buyer certificates evidencing the
outstanding shares of capital stock of AIMCOR St. Croix, Inc.

 

(f)                                    Opinions of
Counsel.  The Buyer shall have
received opinions, dated the Closing Date and addressed to the Buyer, of
(i) Simpson Thacher & Bartlett LLP, substantially

 

58

 

in the form of Exhibit C hereto, and of (ii) Victor Patrick,
Esq., substantially in the form of Exhibit D hereto.

 

(g)                                 Material Adverse
Change.  There shall not have
occurred or been identified any Material Adverse Change as of (i) the Closing
Date (if the Closing occurs on or prior to November 3, 2003) or (ii) November 3,
2003 (if the Closing occurs after November 3, 2003), which has not been cured
prior to the Closing or the termination of this Agreement in accordance with
its terms.

 

(h)                                 Resignations.  The Buyer shall have received written
resignations from all directors and officers of any of the Sold Companies and
the Subsidiaries who also are directors, officers or employees of Seller or any
of its subsidiaries or affiliates (other than the Sold Companies or the
Subsidiaries), all effective as of the Closing Date and substantially in the
form set forth in Exhibit E.

 

(i)                                     Dispositions.  The dispositions set forth in Section 5.17
shall have occurred in accordance with the terms thereof.

 

ARTICLE VIII

 

CLOSING

 

8.1                                 Closing Date.

 

(a)                                  Unless this Agreement
shall have been terminated and the transactions herein shall have been
abandoned pursuant to Article X hereof, and subject to the satisfaction or
waiver of the conditions set forth in Article VII, the closing of the
transactions contemplated by this Agreement (the “Closing”) shall take
place at 10:00 a.m. on the earlier to occur of (x) the second business day
following written notice to the Seller from the Buyer that SG and Blackstone
are prepared to close the Financings or (y) December 15, 2003 (such date of
closing referred to herein as the “Closing Date”) at the offices of
Steel Hector & Davis LLP, 777 South Flagler Drive, West Palm Beach, FL
33401, unless another date, time or place is agreed to in writing by the
parties hereto.  The written notice
referred in clause (x) shall be delivered promptly following SG and Blackstone
advising the Buyer that they are prepared to close the Financings.  The Closing shall be deemed effective as of
12:01 a.m., Miami time, on the Closing Date.

 

(b)                                 On the Closing Date,
the Buyer shall execute certificates of merger providing for the Subsidiaries
Mergers (the “Subsidiaries Certificates of Merger”) and cause the
Subsidiaries Certificates of Merger to be delivered for filing and recordation
with the Secretary of State of the State of Delaware in accordance with the
DGCL and the DLLCA.

 

(c)                                  Promptly following
the Subsidiaries Mergers Effective Times, and on the Closing Date, Buyer shall
execute a certificate of merger providing for the AIMCOR DE Merger (the “AIMCOR
DE Certificate of Merger”) and cause the AIMCOR DE Certificate of Merger to
be delivered for filing and recordation with the Secretary of State of the
State of Delaware in accordance with the DGCL and the DLLCA.

 

59

 

8.2                                 Buyer Deliveries.  At the Closing, the Buyer shall deliver to the Seller:

 

(a)                                  the Purchase Price as
provided in Section 2.1 and any other amounts payable by Buyer to Seller under
this Agreement;

 

(b)                                 the documents
described in Section 7.2 hereof; and

 

(c)                                  such other documents
and instruments as counsel for the Buyer and the Seller mutually agree to be
reasonably necessary to consummate the transactions described herein.

 

8.3                                 Seller Deliveries.  At the Closing, the Seller shall deliver or cause one or more of
their respective affiliates to deliver to the Buyer:

 

(a)                                  the certificate
evidencing the Gans Transport PSI  and
any appropriate instruments of transfer;

 

(b)                                 the documents
described in Section 7.3 hereof; and

 

(c)                                  such other documents
and instruments as counsel for the Buyer and the Seller mutually agree to be
reasonably necessary to consummate the transactions described herein.

 

ARTICLE IX

 

INDEMNIFICATION

 

9.1                                 Indemnification by the Seller.

 

(a)                                  Subject to any
applicable limits set forth in this Section 9.1, from and after Closing the
Seller shall defend, indemnify and hold the Buyer and its affiliates harmless
from and against and in respect of any and all actual losses, liabilities,
damages, fines, judgments, settlements and expenses (including reasonable out-of-pocket
attorneys’, accountants’ investigators’ and experts’ fees and expenses) and
whether or not as a result of a third party claim, but excluding consequential,
punitive, special or indirect damages (other than any such damages granted or
awarded to a third party in an Action or other proceeding against any of the
Buyer and its affiliates) (hereinafter “Buyer Losses”):

 

(i)                                     arising
out of or incurred in connection with, subject to Section 9.5(a), any
breach of any of the Seller’s representations, warranties or covenants
contained in this Agreement (other than a breach of representation or warranty
pursuant to Section 3.12, which shall be covered by Section 6.6); provided, that any Buyer Losses arising
out of a breach of a representation, warranty or covenant pertaining to a
Venture Entity shall be limited to the Buyer’s share thereof based on the
Buyer’s percentage ownership interest in such Venture Entity;

 

60

 

(ii)                                  related
to or arising out of the Actions set forth on Schedule 9.1(a)(ii)
or any Action commenced after the date of this Agreement asserting personal
injury arising out of or incurred in connection with any human exposure to
silica or bentonite to the extent such exposure occurred on or prior to the
Closing Date and relates to the products, properties or operations of any Sold
Company or Subsidiary on or prior to the Closing Date;

 

(iii)                               related
to or arising out of any Environmental Condition, violation of Environmental
Law or Release of Hazardous Substances, in each case occurring or existing on
or prior to the Closing Date and relating to the Parcel at Billings, Montana
and the operations of any of the Sold Companies and the Subsidiaries at such
Parcel;

 

(iv)                              to
the extent that any Buyer Losses (other than Buyer Losses relating to human
exposure to silica or bentonite) relating to or arising out of the Gloucester,
Ontario, Canada facility would have been subject to indemnification under
Section 7.3(a)(iii) of that certain Stock Purchase Agreement (the “1997
Agreement”), dated as of September 19, 1997, by and among the
stockholders of AIMCOR DE which are a party thereto (the “Stockholders”),
the stockholders of Aimcor Enterprises International, Inc., a Nevada
corporation, which are a party thereto (“Enterprises”), Aimcor (Germany)
Limited Partnership, a Delaware limited partnership (“Germany LP”), and
Aimcor (Luxembourg) Limited Partnership, a Delaware limited partnership (“Luxembourg
LP” and, together with the Stockholders, Enterprises and Germany LP, the “First
Parties”) and the Seller, but for the relevant time limitation provided for
in Section 7.4(g) of the 1997 Agreement or to the extent that Buyer Losses
(other than Buyer Losses relating to human exposure to silica or bentonite)
would have been subject to indemnification under Section 7.3(a)(viii) of
the 1997 Agreement but for the relevant time limitation provided for in
Section 7.4(f) of the 1997 Agreement; and

 

(v)                                 relating to or arising
out of any Environmental Condition, violation of Environmental Law, or Release
of Hazardous Substances, in each case occurring or existing on or prior to the
Closing Date and relating to the Metals Business, including, without
limitation, any Remedial Action required now or in the future to comply with
any such Environmental Law or redress any such Environmental Condition.

 

(b)                                 The Buyer shall give
the Seller prompt written notice of any third party claim or other circumstance
which may give rise to any indemnity obligation under this Section 9.1,
together with the estimated amount of such claim or liability relating to such
circumstance, and the Seller shall have the right to assume the defense of any
such claim or address such circumstance, including without limitation
performing any required Remedial Action, through counsel or consultants of its
own choosing by so notifying the Buyer within sixty (60) days of receipt
of the Buyer’s written notice; provided, however, that the Seller’s
counsel and consultants shall be reasonably satisfactory to the Buyer.  Failure to give prompt notice shall not
affect the indemnification obligations hereunder in the absence of actual
prejudice.  If the Buyer desires to
participate in any such defense or Remedial Action assumed by the Seller, it
may do so at its sole cost and expense. 
If the Seller declines to assume any such defense or Remedial Action, it
shall be liable for all reasonable costs and expenses of defending such claim
or undertaking such Remedial Action incurred by the Buyer, including reasonable
fees and disbursements of the

 

61

 

Buyer’s counsel and consultants. 
Neither party shall, without the prior written consent of the other
party (which consent shall not be unreasonably withheld, conditioned or
delayed) settle, compromise or offer to settle or compromise any such claim or
demand on a basis which would result in the imposition of a consent order,
injunction or decree which would restrict the future activity or conduct of the
other party or any subsidiary or affiliate thereof or if such settlement or
compromise does not include an unconditional release of the other party for any
liability arising out of such claim or demand or any related claim or
demand.  Notwithstanding the foregoing,
the Seller shall have sole and absolute control of the defense of any Action,
including the selection of counsel, set forth in Schedule 9.1(a)(ii)
and shall have the right, in its sole discretion, to settle, compromise or
offer to settle or compromise any such Action; provided, that any such
settlement, compromise or offer includes an unconditional release of the Buyer
and its affiliates from any liability arising out of such Action.

 

(c)                                  The Seller shall not
have any obligation under Section 9.1(a)(i) to indemnify the Buyer and its affiliates
from and against any Buyer Losses caused by the breach of any representations
or warranties of the Seller (i) unless the Buyer Losses for which any of the
Buyer and its affiliates seeks indemnification in respect of each breach, or
aggregation of related breaches, of any such representation or warranty is
equal to or greater than $50,000; provided, that the foregoing limitation shall
only apply to those representations and warranties which are not qualified with
respect to materiality; and provided further that the foregoing limitation
shall not apply to the representation and warranty in the last sentence of
Section 3.19, and (ii) until the aggregate amount of all Buyer Losses for which
any of the Buyer and its affiliates seeks indemnification in respect of all
breaches of such representations and warranties exceeds $1,750,000 (after which
point the Seller shall be obligated to indemnify the Buyer and its affiliates
for the amount of any Buyer Losses in excess of $1,000,000; provided that the
foregoing limitation shall not apply to the representations and warranties in
Sections 3.1(b) and 3.2(b), the second and third sentences of each of Sections
3.3(a), (b) and (c) and the last sentence of Section 3.19).  Notwithstanding the foregoing, the aggregate
liability of the Seller to indemnify the Buyer and its affiliates for all
claims made under Section 9.1(a)(i) or Section 9.1(a)(iii) shall not exceed
$30,000,000; provided, that none
of the limitations set forth in this sentence shall apply to any breach of any
representations and warranties set forth in Sections 3.1(b) and 3.2(b) and the
second and third sentences of each of Sections 3.3(a), (b), and (c) and the
last sentence of Section 3.19, which shall be subject to an aggregate
limitation equal to the Purchase Price. 
No provision of this Section 9.1(b) shall apply to any breach or alleged
breach by the Seller of any of its covenants contained in this Agreement.

 

(d)                                 Following the Closing,
the indemnities provided in this Section 9.1 and in Section 6.6(a)(ii)
shall be the sole and exclusive remedies of the Buyer and its affiliates
against the Seller and its affiliates at law or equity for any Buyer Losses
arising out of or resulting from this Agreement and the transactions
contemplated hereby, including without limitation those relating to
Environmental Laws, except for any claims based on or arising out of or
incurred in connection with  any fraud; provided, that the foregoing shall not limit the right of
the Buyer and its affiliates to obtain injunctive relief to enforce any of the
provisions of this Agreement, whether pursuant to Section 5.5 or
otherwise.

 

62

 

9.2                                 Indemnification by the Buyer.

 

(a)                                  Subject to any
applicable limits set forth in this Section 9.2, from and after Closing
the Buyer shall defend, indemnify and hold the Seller and its affiliates
harmless from and against and in respect of any and all actual losses,
liabilities, damages, fines, judgments, settlements and expenses (including
reasonable out-of-pocket attorneys’, accountants’, investigators’ and experts’
fees and expenses) and whether or not as a result of a third party claim, but
excluding consequential, punitive, special or indirect damages (other than any
such damages granted or awarded to a third party in an Action or other
proceeding against any of Seller and its affiliates) (hereinafter “Seller
Losses”; and together with Buyer Losses, “Losses”) arising out of or
incurred in connection with (i) subject to Section 9.5(b), any breach of
any of the Buyer’s representations and warranties or covenants contained in
this Agreement, (ii) except for liabilities and obligations for which the
Seller or its affiliates are responsible or which are expressly stated to be
the responsibility of the Seller under this Agreement (whether by reason of
indemnification or otherwise), the possession, use, operation or management of
the Sold Companies, the Venture Entities and the Subsidiaries (provided,
that the foregoing shall not limit any indemnification herein provided or any
liability based thereon) or (iii) any Guarantee which remains outstanding
following the Closing until such Guarantee is replaced or released (except to
the extent due to any action or inaction on the part of Seller or its affiliates
that is prohibited by this Agreement). 
The Seller shall give the Buyer prompt written notice of any third party
claim or other circumstance which may give rise to any indemnity obligation
under this Section 9.2, together with the estimated amount of such claim or
liability relating to such circumstance, and the Buyer shall have the right to
assume the defense of any such claim or address such circumstance through
counsel or consultants of its own choosing by so notifying the Seller within
sixty (60) days of receipt of the Seller’s written notice; provided,
however, that the Buyer’s counsel and consultants shall be
reasonably satisfactory to the Seller. 
Failure to give prompt notice shall not affect the indemnification
obligations hereunder in the absence of actual prejudice.  If the Seller desires to participate in any
such defense assumed by the Buyer, it may do so at its sole cost and
expense.  If the Buyer declines to assume
any such defense, it shall be liable for all reasonable costs and expenses of
defending such claim incurred by the Seller or its affiliates, including
reasonable fees and disbursements of the Seller’s counsel or consultants.  Neither party shall, without the prior
written consent of the other party (which consent shall not be unreasonably
withheld, conditioned or delayed), settle, compromise or offer to settle or
compromise any such claim or demand on a basis which would result in the
imposition of a consent order, injunction or decree which would restrict the
future activity or conduct of the other party or any subsidiary or affiliate
thereof or if such settlement or compromise does not include an unconditional
release of the other party for any liability arising out of such claim or
demand.

 

(b)                                 The Buyer shall not
have any obligation under Section 9.2(a)(i) to indemnify the Seller and
its affiliates from and against any Seller Losses caused by the breach of any
representations or warranties of the Buyer (i) unless the Seller Losses
for which any of the Seller and its affiliates seeks indemnification in respect
of any breach, or aggregation of related breaches, of any such representation
or warranty is equal to or greater than $50,000; provided that the foregoing
limitation shall only apply to those representations and warranties which are
not qualified with respect to materiality and (ii) until the aggregate
amount of all Seller Losses for which any of the Seller and its affiliates
seeks indemnification in respect of all breaches of such representations and
warranties exceeds $1,750,000 (after which point the Buyer will only be
obligated to indemnify the Seller and its affiliates for the amount of such
Seller Losses in

 

63

 

excess of the $1,000,000). 
Notwithstanding the foregoing, the aggregate liability of the Buyer to
indemnify the Seller and its affiliates for all claims made under
Section 9.2(a)(i) shall not in any event exceed $30,000,000.  No provision of this Section 9.2(b)
shall apply to any breach or alleged breach by the Buyer of any of its
covenants contained in this Agreement.

 

(c)                                  Following the
Closing, the indemnity provided in this Section 9.2 shall be the sole and
exclusive remedy of the Seller and its affiliates against the Buyer and its
affiliates at law or equity for any Seller Losses arising out of or resulting
from this Agreement and the transactions contemplated hereby, except for any
claims based on or arising out of or incurred in connection with any fraud;
provided, that the foregoing shall not limit the right of the Seller and its
affiliates to obtain injunctive relief to enforce any of the provisions of this
Agreement whether pursuant to Section 5.5 or otherwise.

 

9.3                                 Limitations on Indemnification.

 

(a)                                  The Buyer and its
affiliates shall not be entitled to recover from the Seller under Section 9.1
any Buyer Losses related to or arising out of a breach of Section 3.17 or any
matter specifically referred to in Sections 9.1(a)(ii), (iii), (iv) or (v), to
the extent of any actual recovery by any of the Sold Companies, the Venture
Entities (but only in respect of Buyer’s percentage ownership interest in such
Venture Entity) or the Subsidiaries with respect to such breach or matter
pursuant to the indemnification provisions set forth in (i) Section 6.3 of that
certain Stock Purchase Agreement dated October 31, 1986 (the “IMC Agreement”),
between Industry Holdings, Inc., a Delaware corporation, and International
Minerals & Chemical Corporation, a Delaware corporation (now known as
Mallinckrodt Group, Inc., the “Mallinckrodt Group”), IMC Industry Group
Inc., a Delaware corporation, and IMC Industry Group (Quartz) Inc., a Delaware
corporation (the “IMC Indemnification Obligation”), or (ii) Section 7.3
of the 1997 Agreement (the “1997 Indemnification Obligation” and,
together with the IMC Indemnification Obligation, the “Existing
Indemnification Obligations”).

 

(i)                                     Upon
the occurrence of a Buyer Loss for which the Seller reasonably determines that
any of the Seller and its current or former indemnified affiliates may be entitled
to, or be granted, indemnification under any of the Existing Indemnification
Obligations, the Buyer or its indemnified affiliates shall use their reasonable
diligent efforts to exercise all rights to indemnification under the 1997
Agreement or the IMC Agreement, or both, as the case may be, including the
commencement and diligent prosecution of litigation or arbitration proceedings,
the expense of which shall be added to any Buyer Losses.

 

(ii)                                  If
the Buyer or its indemnified affiliates seek indemnification for a Buyer Loss
which the Seller reasonably determines that any of the Seller and its current
or former indemnified affiliates may be entitled to, or be granted,
indemnification under any of the Existing Indemnification Obligations, the
Buyer and its indemnified affiliates shall delay enforcement of any claim for
indemnification against the Seller under Section 9.1 of this Agreement with
respect to such Buyer Loss (without any prejudice thereto) until the expiration
of the earlier to occur of:

 

64

 

(A)                              a
judicial or arbitral determination that none of the Seller and its current or
former indemnified affiliates is entitled to indemnification under any of the
applicable Existing Indemnification Obligations; and

 

(B)                                the
second anniversary of (x) the date of commencement by the Buyer of proceedings
under, or with respect to, such Buyer Loss which address all material
applicable IMC Indemnification Obligations and (y) the date on which the Buyer
provides the Seller with all information reasonably required by the Seller to
commence proceedings under, or with respect to, such Buyer Loss which addresses
all material applicable 1997 Indemnification Obligations.

 

(iii)                               If
the Seller makes an indemnity payment to the Buyer or its affiliates hereunder
or otherwise incurs costs in connection with exercising its rights under
Section 9.1(b), in relation to any potential Buyer Loss which the Seller
reasonably determines may be indemnifiable under any of the Existing Indemnification
Obligations or any insurance policy held by or to the benefit of any of the
Sold Companies or the Subsidiaries, the Buyer and its affiliates shall cause
the Seller to be subrogated to the rights of the Sold Companies and the
Subsidiaries under the applicable IMC Indemnification Obligation or insurance
policy to the extent of such indemnity payment or other such cost.  If a court or arbitral panel awards damages
to the Buyer or its affiliates, or the Buyer or its affiliates reach a
settlement with respect to a matter that constitutes a Buyer Loss under this
Agreement that is a potential Buyer Loss which the Seller reasonably determines
may be indemnifiable under any of the Existing Indemnification Obligations or
any insurance policy held by or to the benefit of any of the Sold Companies or
the Subsidiaries, the indemnification claim of the Buyer and its affiliates for
such Buyer Loss shall be reduced by the amount of such award or settlement
actually received by the Buyer or its affiliates.

 

(iv)                              The
Seller hereby guarantees the payment by the Mallinckrodt Group to the Buyer or
its indemnified affiliates of any Buyer Losses determined to be owed to the
Buyer and its indemnified affiliates pursuant to an IMC Indemnification
Obligation; provided, however,
that the Seller’s guarantee obligation pursuant to this Section 9.3(a)(iv)
shall apply only upon receipt by the Seller of reasonable evidence of a default
by the Mallinckrodt Group in the payment of a Buyer Loss determined to be owed
to Buyer or its indemnified affiliates pursuant to an IMC Indemnification
Obligation.  The Seller shall perform
under this guarantee obligation by payment to the Buyer of the applicable
amount within thirty (30) days following the date of receipt of such
evidence.

 

(b)                                 If any of the Buyer or
its affiliates incurs a Buyer Loss related to or arising out of a breach of
Section 3.17 or any matter specifically referred to in Section 9.1(a)(ii),
(iii), (iv) or (v), for which the Seller or any of its current or former
affiliates has a right to indemnification from any of the First Parties (as
defined in Section 9.1(a)(iv) herein) under Section 7.3 of the 1997
Agreement, then the Seller shall use all reasonable efforts to cause the Buyer
and its affiliates to be subrogated to the rights of the Seller under the 1997
Agreement with respect to such breach or matter.  The Buyer hereby agrees that it shall, and shall cause its
affiliates to cooperate with the Seller in connection with the foregoing.  The Seller hereby guarantees the payment by
the First Parties of any payment to which the Seller or any of its

 

65

 

current or former affiliates are entitled for any Buyer Loss under the
1997 Agreement and this Section 9.3(b); provided,
however, that the Seller’s guarantee obligation pursuant to this
Section 9.3(b) shall apply only upon receipt by the Seller of reasonable
evidence of a default by the First Parties pursuant to an obligation to make a
payment for such a Buyer Loss.  The
Seller shall perform under this guarantee obligation by payment to the Buyer of
the applicable Buyer Loss within thirty (30) days following the date of
receipt of such evidence.

 

(c)                                  The Buyer and its
affiliates shall not be entitled to recover indemnification hereunder for Buyer
Losses to the extent that such Losses are specifically reserved for in the
Conclusive Net Working Capital Statement.

 

(d)                                 Notwithstanding any
other provision of this Agreement to the contrary, the Buyer and its affiliates
shall not be entitled to recover any indemnification under Section 9.1(a)(i)
for any Buyer Losses specifically relating to any breach of any representation
or warranty provided in Section 3.17 to the extent that any such breach relates
to the conduct or operation by Seller or its affiliates of the Petcoke
Business, except for any such breach with respect to which the Seller had
knowledge prior to the date of this Agreement and did not include on Schedule
3.17 or otherwise disclose to the Buyer or its affiliates prior to the date
of this Agreement.

 

(e)                                  The Buyer and its
affiliates shall not be entitled to recover any indemnification for Buyer
Losses under Section 9.1(a)(ii) to the extent that (i) written notice
providing specific details supporting the claim for such indemnification has
not been provided to the Seller prior to the seventh (7th)
anniversary of the Closing Date, or (ii) such Buyer Losses exceed, in the
aggregate, $20,000,000.  Notwithstanding
any other provision of this Agreement to the contrary, Section 9.1(a)(ii)
constitutes the sole and exclusive remedy to the Buyer or any of its affiliates
from or against the Seller or any of its affiliates for any Buyer Losses
relating to or arising out of the Actions set forth on Schedule 9.1(a)(ii)
or otherwise relating to or arising out of human exposure to silica or
bentonite in relation to the business and operations of any Sold Company or
Subsidiary on or prior to the Closing Date.

 

(f)                                    The Buyer and its
affiliates shall not be entitled to any indemnification for Buyer Losses under
Section 9.1(a)(iii) to the extent that such Buyer Losses, when aggregated
with all Buyer Losses indemnified pursuant to Section 9.1(a)(i), exceed
$30,000,000.

 

(g)                                 The Buyer and its
affiliates shall not be entitled to recover any indemnification for Buyer
Losses under Section 9.1(a)(iv) to the extent that (i) written notice
providing specific details supporting the claim for such indemnification has
not been provided to the Seller prior to the fifteenth (15th)
anniversary of the Closing Date, or (ii) the Buyer or any of the Buyer’s
affiliates was aware of a basis to make a timely claim for indemnity regarding
such Buyer Losses prior to the expiration of the indemnity periods set forth in
Section 7.4(f) or 7.4(g) of the 1997 Agreement, as applicable, but failed
to do so.

 

(h)                                 The Buyer and its
affiliates shall be entitled to recover only seventy-five (75) percent of
the Buyer Losses, as each such Buyer Loss is incurred, that would otherwise be
subject to indemnification under Section 9.1(a)(v).  Without limiting the foregoing, the Buyer
and its affiliates shall not be entitled to recover any indemnification for
Buyer Losses under

 

66

 

Section 9.1(a)(v) to the extent that (i) written notice
providing specific details supporting the claim for such indemnification has
not been provided to the Seller prior to the tenth (10th)
anniversary of the Closing Date, or (ii) such Buyer Losses (whether or not
indemnified hereunder) exceed, in the aggregate, $20,000,000, so that the
obligations of the Seller and its affiliates under Section 9.1(a)(v) shall
under no circumstances exceed $15,000,000.

 

(i)                                     Buyer’s Losses
that would otherwise be subject to indemnification under
Sections 9.1(a)(i) (but only to the extent relating to any breach of
Section 3.17), 9.1(a)(iii), 9.1(a)(iv) or 9.1(a)(v), shall not be subject
to indemnification under Article IX to the extent that the Buyer and it
affiliates fail to take or omit taking all commercially reasonable actions to
mitigate any such Buyer Losses.  Without
limitation of the foregoing, Buyer and its affiliates shall not (x) undertake
any Remedial Action for which it seeks indemnification hereunder unless
required by applicable Environmental Laws, (y) importune any Governmental Authority
to require any such Remedial Action, or (z) conform in any such Remedial Action
to remedial standards materially more stringent than those least stringent
applicable standards required under applicable Environmental Laws (unless
required to do so by a Governmental Authority) and, if reasonably requested by
the Seller in any Action or other matter in which the Buyer is seeking
indemnification as provided in this Agreement, the Buyer shall agree to deed
restrictions limiting the use of the relevant properties of the Sold Companies
and Subsidiaries to industrial uses.

 

(j)                                     Notwithstanding
any other provision of this Agreement to the contrary, to the extent that any
specific matter is subject to indemnification under more than one subsection of
Section 9.1, the Buyer and its affiliates shall only be entitled to recover
indemnification for any Buyer Loss arising out of or related to such matter
under the one such subsection which addresses such matter with the greatest
particularity.  By illustration, to the
extent that a matter is (without giving effect to any limitation on
indemnification provided under Section 9.3) subject to indemnification under
any of Sections 9.1(a)(ii), (iii), (iv) or (v), the Buyer and its affiliates
shall have no recovery pursuant to Section 9.1(a)(i) in respect of such
matter.  If the Buyer and its affiliates
timely seek indemnification under a subsection of Section 9.1 and an arbitrator
determines under Article XI that in accordance with the first sentence hereof
indemnification should have been sought under another subsection of Section
9.1, then notwithstanding any other provision of this Agreement to the
contrary, the Buyer and its affiliates shall not be time-barred from seeking
indemnification under such other subsection determined to be applicable by the
arbitrator if they would not have been time-barred from doing so when they
first sought such indemnification.

 

(k)                                  Notwithstanding any
other provision of this Agreement to the contrary, the Buyer and its affiliates
shall not be entitled to recover any indemnification for Buyer Loss related to
or arising out of any underfunding of Pension Plans which have been disclosed
on Schedule 3.13(b); it being agreed that the provision for a current liability
of $1.5 million in respect of Pension Plan underfunding referred to in Section
2.2(a)(i) shall be the sole remedy of the Buyer and its affiliates for any
underfunding of the aforementioned disclosed Pension Plans.

 

9.4                                 Indemnification Calculations.

 

(a)                                  The amount of any
Losses for which indemnification is provided under this Article IX shall
be computed net of any insurance proceeds received by the indemnified

 

67

 

party in connection with such Losses; provided,
that the foregoing is not intended to preclude a party from recovering as a
Loss any increase in insurance premiums incurred as a result of such payment or
related insurance claim.

 

(b)                                 The parties agree that
any indemnification payments made pursuant to this Agreement shall be treated
for Tax purposes as an adjustment to the Purchase Price, unless otherwise
required by applicable law.

 

(c)                                  The amount of any
Losses for which indemnification is provided under this Article IX shall
be computed net of any foreign, federal, state or local income tax benefits
inuring to the indemnified party in connection with such Losses.

 

9.5                                 Survival.

 

(a)                                  The representations
and warranties of the Seller contained in this Agreement shall survive until
the 545th day after the date of the Closing; provided, that (i) the representations and
warranties in Sections 3.1(b), 3.2(b) and the second and third sentences of
each of Sections 3.3(a), (b) and (c) and 3.19 shall survive for ten years after
Closing; (ii) the representations and warranties set forth in Section 3.3(e)
shall survive for three years after the Closing; (iii) the representations and
warranties set forth in Section 3.12 and the representations and warranties
relating to compliance with all applicable laws in Sections 3.13(b)(ii) and
(viii) and payments of all obligations and benefits in Section 3.13(b)(ii)
shall survive until the expiration of the applicable statute of limitations;
and (iv) the representations and warranties set forth in Section 3.17 shall
survive until the first to occur of (x) the expiration of the applicable
statute of limitations and (y) three years after the Closing.  Any claims made by a party under Section 9.1
in accordance with the terms of Article IX prior to the expiration of the
survival period with respect to an applicable representation or warranty shall
survive the expiration of the representations and warranties until finally and
conclusively resolved pursuant to Article IX and the expiration of such
survival period shall not act as a limitation on any Buyer Losses recoverable
thereunder.

 

(b)                                 The representations
and warranties of the Buyer contained in this Agreement shall survive until the
545th day after the date of Closing; provided, that the representations and warranties contained
in Section 4.2 shall survive for ten years after Closing.  Any claims made by a party under
Section 9.2 in accordance with the terms of Article IX prior to the
expiration of the survival period with respect to an applicable representation
or warranty shall survive the expiration of the representations and warranties
until finally and conclusively resolved pursuant to Article IX and the
expiration of such survival period shall not at as a limitation on any Seller
Losses recoverable thereunder.

 

9.6                                 Assignment. 
Notwithstanding the provisions of Section 12.6, the indemnity
provided under Section 9.1(a)(v) may be assigned by the Buyer or any
affiliate to any purchaser, assignee or transferee of all or substantially all
of the Metals Business, or any purchaser, assignee or transferee of all or
substantially all of the assets used in the Metals Business, provided that such
indemnity remains subject to all limitations and restrictions provided for
under Article IX of this Agreement, including without limitation, those
provided for under Section 9.3.

 

68

 

ARTICLE X

 

TERMINATION

 

10.1                           Termination Events.  Subject to Section 10.2(b), and  without prejudice to other rights or remedies which may be
available to the parties by law or pursuant to this Agreement, this Agreement
may be terminated and the transactions contemplated herein may be abandoned:

 

(a)                                  by mutual written
consent of the Buyer and the Seller hereto;

 

(b)                                 by either the Buyer or
the Seller by written notice to the other party given on or after, in the case
of Buyer, December  31, 2003 or, in the case of Seller, December 15, 2003
if the Closing shall not have occurred on or before in the case of Buyer,
December   31, 2003 or, in the
case of Seller, December 15, 2003, unless extended by written agreement of the
parties hereto, so long as the party terminating this Agreement shall not be in
default or breach of any of its representations, warranties, covenants or
agreements hereunder, which default or breach has caused a failure to satisfy a
Closing condition; provided that,
if the Closing shall not have occurred on or before, in the case of Buyer,
December 31, 2003 or, in the case of Seller, December 15, 2003, as a result of the non terminating
party’s default or breach of any of its representations, warranties, covenants
or agreements hereunder (other than a breach of Section 5.3 or a breach by
Buyer of Section 4.6, Section 8.1 or Section 8.2 or a breach by Buyer of
Section 5.5 relating to the subject matter of any of the foregoing Sections),
such date shall be extended to the 45th day following the date on
which the non terminating party first obtained actual knowledge of the default
or breach; provided, further that
if the reason the Closing shall not have been consummated prior to such date is
attributable to the failure to obtain any consent from any Governmental
Antitrust Authority and the non terminating party is not then in default or
breach of any of its obligations under Section 5.3, such date shall
automatically be extended to July 2, 2004;

 

(c)                                  [Intentionally omitted.]

 

(d)                                 by the Buyer, upon
written notice to the Seller at any time prior to Closing, if (i) the
Seller has given the Buyer notice pursuant to Section 5.12 above,
(ii) the breach that is the subject of such notice results in a failure to
satisfy the conditions set forth in Section 7.3(a) or Section 7.3(g),
and (iii) the breach has not been cured (such that such conditions are
satisfied) within 45 days after the Seller first obtained actual knowledge
of the breach; or

 

(e)                                  by either the Buyer
or the Seller, without cause, by written notice to the other party given at any
time prior to any other termination of this Agreement in accordance with its
terms and payment of the Termination Fee set forth in Section 10.2(a).

 

10.2                           Termination Fee.

 

(a)                                  If either party
terminates this Agreement pursuant to Section 10.1(e), then the
terminating party shall pay the non-terminating party a termination fee of
$20 million if the terminating party terminates this Agreement on or prior
to December 31, 2003 and $15 million if the terminating party
terminates this Agreement after December 31, 2003 (the “Termination

 

69

 

Fee”), which Termination Fee shall
be paid not later than two (2) business days after delivery of the notice
set forth in Section 10.1(e) by wire transfer of immediately available
funds to an account designated by the non-terminating party.

 

(b)                                 Any party entitled to
receive payment of the Termination Fee pursuant to Section 10.2(a) hereby
agrees that such payment is intended to and shall be the sole and exclusive
remedy and recovery of such party and its affiliates (and is in lieu of any
other rights or remedies available to such party and its affiliates, including
without limitation, for any recovery of damages or otherwise) on account of or
relating to the termination of this Agreement by the terminating party,
including without limitation for any Losses arising out of or relating to or
based upon any of the circumstances of such termination.

 

10.3                           Effect of Termination.  In the event of any termination of the
Agreement as provided in Section 10.1 above:

 

(a)                                  this Agreement shall
forthwith become wholly void and of no further force and effect and there shall
be no liability on the part of the Buyer and the Seller, except that
(i) the obligations of the Buyer and the Seller under Sections 5.1(c)
and 5.3(d) and Article X and Article XII of this Agreement shall
remain in full force and effect including without limitation the obligation of
either party to pay the Termination Fee pursuant to Section 10.2(a) (which such
obligation shall remain in full force and effect until such amount is fully
paid) and (ii) subject to Section 10.2(b),  such
termination shall not preclude either party from bringing any action against
the other party for any breach of this Agreement which may have occurred and
otherwise enforcing its rights and remedies hereunder or at law or equity in
connection therewith; and

 

(b)                                 The Buyer will
(i) deliver to the Seller all documents, work papers and other materials
of the Seller, the Sold Companies, the Venture Entities and the Subsidiaries
previously delivered to the Buyer and relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, and
(ii) shall comply with the Confidentiality Agreement.

 

ARTICLE XI

 

DISPUTE RESOLUTION

 

11.1                           Dispute Resolution.

 

(a)                                  General.  Any disagreement, dispute, controversy or
claim arising out of or relating to this Agreement or the interpretation hereof
or any arrangements relating hereto or contemplated herein or the validity,
breach or termination hereof (each, individually, a “Dispute”) shall be
resolved and settled pursuant to the terms of this Article 11.  In the event of a Dispute between the
parties, either party (the “Claimant”) may initiate the Dispute
resolution procedures of this Section 11.1 by providing written notice
(the “Notice of Claim”) to the other party (the “Respondent”)
identifying the nature and scope of the Dispute and stating the desire to
resolve the Dispute.  Insofar as is
practicable, any documentation that supports the Claimant’s Notice of Claim
shall be included with said Notice of Claim. 
Within fifteen (15) days after receiving the Notice of Claim,
Respondent will respond in writing by stating its position

 

70

 

(including any related claims it may have) and setting forth a proposed
resolution of the Dispute.  Insofar as
is practicable, any documentation that supports the Respondent’s defense shall
be included with such response.  If Claimant and Respondent are
not able to resolve the Dispute within ten (10) days thereafter, then the
parties shall proceed in accordance with the provisions of Section 11.1(b)
hereof.

 

(b)                                 Informal Resolution.  If a Dispute is not promptly resolved after
the submission of the Notice of Claim and response specified in
Section 11.1(a) hereof, then each party shall promptly nominate a senior
officer of its management to meet to resolve the Dispute.

 

(c)                                  Arbitration.  If the parties have not resolved the Dispute
within fifteen (15) days after the date of the commencement of informal
resolution proceedings set forth in paragraph (b) above, then either party
may initiate arbitration of the Dispute by notifying the other party in writing
that arbitration of the Dispute is demanded. 
The arbitration shall be conducted in accordance with the CPR Institute
for Dispute Resolution Rules for Non-Administered Arbitration (the “Rules”)
by one (1) arbitrator.  Unless the
parties agree on an individual arbitrator by name, each party shall appoint
one (1) arbitrator, obtain its appointee’s acceptance of such appointment,
and deliver written notification of such appointment and acceptance to the
other party within ten (10) days after delivery of the written notice
demanding arbitration.  The two party
appointed arbitrators shall then jointly appoint a third arbitrator, obtain the
appointee’s acceptance of such appointment and notify the parties in writing of
such appointment and acceptance within ten (10) days after their appointment
and acceptance.  The arbitrator
appointed by the two party appointed arbitrators shall serve as the sole
arbitrator.  If the party appointed
arbitrators fail to appoint an arbitrator within the time limits specified
herein, the CPR Institute for Dispute Resolution shall appoint the arbitrator
in accordance with Article 6 of the Rules. 
The arbitration shall be governed by the Federal Arbitration Act,
9 U.S.C. §§ 1-16, and judgment upon the award rendered by the
arbitrator may be entered by any court having jurisdiction thereof.  Unless otherwise agreed, the place of the
arbitration shall be Naples, Florida.  The
parties agree and consent to the jurisdiction of the courts of the State of Florida
for the purpose of enforcing this Section 11.1 and for the purpose of
confirming an award and entering judgment upon said award, and the parties
further waive all objections to jurisdiction and venue in any such courts.

 

(d)                                 Costs.  All Dispute resolution costs, which shall
include any fee for the arbitrator for services rendered, shall be borne
equally by the parties.  Each party
shall pay its own counsel fees and expenses.

 

ARTICLE XII

 

MISCELLANEOUS AGREEMENTS OF THE PARTIES

 

12.1                           Notices. 
All notices, requests, demands, waivers and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally or mailed,
certified or registered mail with postage prepaid, or sent by telecopy, as
follows:

 

71

 

	
  If to the Buyer:

  	
   

  	
  Oxbow Carbon & Minerals LLC

  1601 Forum Place, Suite 1400

  West Palm Beach, FL  33401

  
	
   

  	
   

  	
  Attention:

  	
  Brian Acton, President and

  Richard P. Callahan, General Counsel

  
	
   

  	
   

  	
  Fax:  (561)
  640-8812

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Steel Hector & Davis LLP

  1900 Phillips Point West

  777 South Flagler Drive

  West Palm Beach, FL  33401

  
	
   

  	
   

  	
  Attention:  Barry A. Weiss

  
	
   

  	
   

  	
  Fax:  (561) 655-1509

  
	
   

  	
   

  	
   

  
	
  and to:

  	
   

  	
  Oxbow Carbon & Minerals LLC

  1601 Forum Place

  Suite 1400

  West Palm Beach, FL  33401

  
	
   

  	
   

  	
  Attention:  J. Michael Smith, Counsel

  
	
   

  	
   

  	
  Fax:  (561)
  640-8812

  
	
   

  	
   

  	
   

  
	
  If to the Seller:

  	
   

  	
  Walter Industries, Inc.

  4211 W. Boy Scout Boulevard

  Tampa, Florida  33607

  
	
   

  	
   

  	
  Attention:

  	
  Charles Cauthen, Controller and

  Victor Patrick, General Counsel

  
	
   

  	
   

  	
  Fax: 
  813-871-4420

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Simpson Thacher & Bartlett LLP

  425 Lexington Avenue

  New York, New York  10017

  
	
   

  	
   

  	
  Attention:  Peter J. Gordon

  
	
   

  	
   

  	
  Fax: 
  212-455-2502

  
					

 

or to such other person or address as a party shall specify by notice
in writing to the other parties.  All
such notices, requests, demands, waivers and communications shall be deemed to
have been received on the date of personal delivery or on the third business
day after the mailing thereof or, in the case of notice by telecopier, when
receipt thereof is confirmed by telephone.

 

12.2                           Further Assurances.  From time to time, at the Buyer’s or the Seller’s request,
whether before, at or after the Closing Date, the Buyer or the Seller, as the
case may be, shall, and shall cause their respective affiliates to, execute and
deliver such further instruments of conveyance and transfer, cooperate and
assist in providing information for making and completing regulatory filings,
and take such other actions as the Buyer or the Seller, as the case may be, may
reasonably require of the other party with respect to compliance with
obligations of the Buyer or the Seller in connection with and in furtherance of
the transactions contemplated hereby.

 

72

 

12.3                           Expenses. 
Whether or not the transactions contemplated hereby are consummated,
except as expressly provided otherwise herein (including in Section 5.21
hereof), the Seller and the Buyer shall each pay their respective fees and
expenses in connection with the negotiation, preparation, review, execution and
performance of this Agreement, including, without limitation, attorneys’,
accountants’ and other advisors’ fees and expenses and the fees and expenses of
any broker, finder or agent retained by such party in connection with the
transactions contemplated by this Agreement.

 

12.4                           Entire Agreement.  This Agreement (including the Schedules and Exhibits hereto and
the documents referred to herein) constitutes the entire agreement between the
parties hereto regarding the subject matter hereof and supersedes all prior
agreements and understandings, oral and written, between the parties hereto
with respect to such subject matter , including without limitation, the Original
Stock Purchase Agreement and the Amended Stock Purchase Agreement.

 

12.5                           No Third Party Beneficiaries.  This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
assigns.  Other than Sections 5.14,
9.1 and 9.2, nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.

 

12.6                           Assignability. 
This Agreement shall not be assigned by any of the parties hereto
without the prior written consent of the other parties hereto; provided that
the Buyer may, without the prior written consent of the Seller, assign all of
its rights under this Agreement to an assignee, which is either a direct or
indirect wholly owned subsidiary of the Buyer or a parent company of the Buyer;
provided,
further, that, notwithstanding any such permitted assignment, the
Buyer shall remain liable to perform all of its obligations hereunder,
including, without limitation, the obligations to fund the full amount of the
Purchase Price.  This Agreement may be assigned by Buyer more than once as provided
above, but there shall be no more than one assignment in effect at any single
point in time.

 

12.7                           Amendment and Modification; Waiver.  This Agreement may be amended, modified and
supplemented by a written instrument authorized and executed on behalf of the
parties hereto at any time prior to the Closing Date with respect to any of the
terms contained herein.  No waiver by
any party of any of the provisions hereof shall be effective unless explicitly
set forth in writing and executed by the party so waiving.  Except as provided in the preceding sentence,
no action taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party to this Agreement, any further
negotiations or discussions between the parties, or any proposed changes in
terms that are not set forth in a writing executed by the parties shall
be deemed to constitute a waiver by the party taking such action of compliance
with any representations, warranties, covenants or agreements contained herein,
and in any documents delivered or to be delivered pursuant to this Agreement
and in connection with the Closing hereunder, including without limitation the
representations and warranties set forth in Section 4.6 of this Agreement.  In
particular, no action or inaction by Seller to assist Buyer with respect to
Buyer’s efforts to obtain the Financings or to facilitate such efforts shall be
deemed a waiver by the Seller of such compliance or shall result in the Buyer’s
obligations under this Agreement being deemed conditioned upon successfully
obtaining the Financings.  The
waiver by any party hereto of a breach of any provision of this Agreement shall

 

73

 

not operate or be construed as a waiver of any other or subsequent
breach.  If the Closing does not occur
on or before December 15, 2003, this Agreement shall not be deemed a partial or
complete waiver by Seller of, and shall not otherwise prejudice, any claims
(whether for breach of contract, fraud or otherwise) which Seller may have
against any of Buyer and its affiliates as of the date hereof or in the future
under the Amended Stock Purchase Agreement, without giving effect to this
Agreement or any amendment thereof.

 

12.8                           Public Announcements.  Unless otherwise required by law or any regulation or rule of any
public agency or other Governmental Authority (including without limitation any
obligations pursuant to any listing agreement with any securities exchange or
any securities exchange regulations), prior to the Closing Date, no news
release or other public announcement pertaining to the transactions
contemplated by this Agreement will be made by or on behalf of any party.  Prior to issuing a press release or other
public announcement required by law with respect to the execution and delivery
of or the transactions contemplated by this Agreement, the Buyer and the Seller
shall consult with each other and each party shall have reasonable opportunity
to comment on such press release and, prior to issuing a press release or other
public announcement with respect to the Closing, the Buyer and the Seller shall
agree on the form of such press release or other public announcement.

 

12.9                           Schedules and Exhibits.  All Exhibits and Schedules hereto are hereby incorporated by
reference and made a part of this Agreement. 
All statements contained in Schedules and certificates attached hereto
or delivered by the Seller pursuant hereto shall be deemed representations and
warranties by the Seller.  Any fact or
item which is clearly disclosed on any Schedule to this Agreement or in the
Financial Statements in such a way as to make its relevance to a representation
or warranty made elsewhere in this Agreement or to the information called for
by another Schedule to this Agreement clearly and readily apparent on its face
shall be deemed to be an exception to such representation or warranty or to be
disclosed on such other Schedule, as the case may be, notwithstanding the
omission of a reference or cross-reference thereto.  Any fact or item disclosed on any Schedule hereto shall not
solely by reason of such inclusion be deemed to be material and shall not be
employed as a point of reference in determining any standard of materiality
under this Agreement.

 

12.10                     Section Headings; Table of Contents.  The section headings contained in this
Agreement and the Table of Contents to this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.

 

12.11                     Severability.  If any provision of this Agreement shall be
declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement shall not be affected and
shall remain in full force and effect.

 

12.12                     Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.

 

12.13                     Enforcement. 
Subject to Article XI, the parties agree that irreparable damage would
occur if any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties
shall be

 

74

 

entitled to seek an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any court referred to in clause (a) below, this being in addition
to any other remedy to which they are entitled at law or in equity.  In addition, subject to the provisions of
Section 2.2 and Article XI, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of the United States District Court for the
Southern or Western Districts of Florida or any court of the State of Florida
located in such districts in connection with the foregoing, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction or venue by
motion or other request for leave from any such court and (c) agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than such courts.

 

12.14                     Governing Law. 
This Agreement shall be governed and construed in accordance with the
laws of the State of New York applicable to contracts made and to be performed
therein; notwithstanding the foregoing, questions concerning arbitrability
under Section 11.1 hereof shall be governed exclusively by the Federal
Arbitration Act, 9  U.S.C. §§ 1-16, and  questions concerning the Mergers shall be
governed exclusively by the DGCL and the DLLCA.

 

12.15                     Certain Definitions.  For purposes of this Agreement, the term:

 

(a)                                  “Affiliate” of
a person means a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
the first mentioned person; the term “Control” (including the terms “Controlled
by” and “Under common control with”) as used both in this definition
and elsewhere in this Agreement means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
the person, whether through the ownership of voting securities or other equity
interest, by contract or otherwise;

 

(b)                                 “Cash” shall
mean the sum of cash, cash equivalents and liquid investments (plus all
uncollected bank deposits and less all outstanding checks) of the Sold
Companies and the Subsidiaries;

 

(c)                                  “Credit Agreement”
shall mean the Credit Agreement, dated as of April 17, 2003, among the
Seller, the lenders parties thereto, Bank of America, N.A., as administrative
agent, SunTrust Bank, as syndication agent, and BNP Paribas and Credit Lyonnais
New York Branch, as co-documentation agents, as amended, supplemented or
otherwise modified from time to time;

 

(d)                                 “Debt Obligations”
shall mean the sum of all outstanding indebtedness or liabilities of the Sold
Companies, the Venture Entities and the Subsidiaries under loan agreements,
promissory notes, indentures, mortgages, pledge agreements, chattel mortgages,
deeds of trust, guarantees, letters of credit and similar instruments or
undertakings;

 

(e)                                  “Liens” means
(i) with respect to any asset, including the Shares, any charge, claim,
“adverse claim” (as defined in Section 8-102(a)(1) of the New York Uniform
Commercial Code), equitable interest, easement, encumbrance, option, lien,
pledge, hypothecation, assignment, deposit arrangement, security interest,
mortgage, deed of trust or retention of title agreement and (ii) with respect
to the Shares, any right of first refusal, right of

 

75

 

first offer, preemptive right, or other restriction on, or right
granted with respect to, the use, voting, transfer, receipt of income or
exercise of any other attribute of ownership with respect thereto;

 

(f)                                    “Material
Adverse Change” means (i) any event, circumstance or condition materially
impairing Seller’s ability to consummate the transactions contemplated by this
Agreement or (ii) any change (or changes taken together) in, or events having
an effect on, any of the Sold Companies or the Subsidiaries that is materially
adverse to the financial condition or results of operation of the Sold
Companies and the Subsidiaries taken as a whole; provided, however, that no changes or effects, individually
or in the aggregate, including without limitation any loss of customers or
suppliers, resulting from or relating to any of the following (each, a “MAC
Limitation”) shall be deemed individually or together to constitute a “Material
Adverse Change” to the extent such changes or effects do not result from or
relate to or are not exacerbated by any corporate malfeasance resulting in a
material Buyer Loss or any material failure to comply with any law, rule or
regulation or authoritative interpretation thereof by Seller or any of the Sold
Companies and the Subsidiaries (or any of their directors or officers): (A)
changes or developments in the U.S. or global economy or financial, commodity
or other capital markets generally; (B) any changes in conditions or
developments applicable generally to the industries or wholesale or retail
markets in which any of the Sold Companies and the Subsidiaries or their
respective customers or suppliers are involved (and which also effect other
similar companies); (C) any condition that is cured (including by the payment
of money) before the earlier of the Closing Date or the termination of this
Agreement under Section 10.1; (D) the execution and delivery of this Agreement
by the parties and the public announcement of the identity of the Buyer and of
the transactions contemplated hereby; (E) the taking of any action specifically
required or contemplated by this Agreement (and in conformance therewith); or
(F) earthquakes or similar catastrophes or acts of war, sabotage, terrorism,
military action or any escalation or worsening thereof;

 

(g)                                 “Metals Business”
means the Sold Companies’ and the Subsidiaries’ business and operations
regarding the manufacture, sale or distribution of ferroalloys and other metals
as now or previously conducted.

 

(h)                                 “Permitted Lien”
means (A) installments or special assessments not yet delinquent and of which
the Buyer has notice, (B) Taxes not yet due and payable or the validity of
which are being contested in good faith by appropriate proceedings (provided an
appropriate reserve therefore has been established in the Financial
Statements), (C) statutory liens arising or incurred in the ordinary course of
business, such as carriers’, warehousemen’s, materialmen’s and mechanic’s liens
and other similar liens, with respect to which the underlying obligations are
not delinquent or the validity of which is being contested in good faith by
appropriate proceedings, (D) encroachments and recorded encumbrances,
easements, covenants and restrictions, including exceptions which are listed on
any title insurance policy, or deeds or other documents of record relating to a
Parcel, in each case which do not impair the current use, occupancy or value of
the property subject thereto, (E) Liens incurred pursuant to actions of the
Buyer or its affiliates, (F) Liens reflected on the Financial Statements or (G)
Liens expressly disclosed in the Schedules;

 

76

 

(i)                                     “Person”
means an individual, corporation, partnership, limited liability company, joint
venture, firm, association, trust, joint stock company, unincorporated
organization, Governmental Authority or other entity;

 

(j)                                     “Petcoke
Business” means all of the businesses and operations of the Sold Companies,
the Subsidiaries and the Venture Entities (other than the Metals Business),
including but not limited to, the Sold Companies’, the Venture Entities’, and
the Subsidiaries’ petcoke cutting, stockpiling, marketing, trading and handling
business; and

 

(k)                                  “Seller’s Tax Knowledge”
shall mean, with respect to any matter in question, the actual knowledge of any
person who has held the position of Tax Director of Seller, any Sold Company or
any Subsidiary since October 16, 1997, Cindy Eisch (the current Director of Tax
of Seller), Mary Lee Oldenburg or Gail Tucker of Seller or any person who has
held the position of Chief Financial Officer of AIMCOR DE since October 16,
1997.

 

(l)                                     “The knowledge
of“ or “The best knowledge of“ a party hereto shall mean (i) with
respect to the Seller, with respect to any matter in question, the actual
knowledge of those individuals listed in Schedule 12.16(k)(i) and (ii)
with respect to the Buyer, with respect to any matter in question, the actual
knowledge of those individuals listed in Schedule 12.16(k)(ii).

 

IN WITNESS WHEREOF,
the parties have caused this Agreement to be duly executed as of the date first
above written.

 

	
   

  	
  WALTER INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CHARLES E. CAUTHEN

  
	
   

  	
   

  	
  Name:

  	
  Charles E. Cauthen

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  APPLIED INDUSTRIAL MATERIALS CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/CHARLES E. CAUTHEN

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Charles E. Cauthen

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GANS TRANSPORT AGENCIES (USA) INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CHARLES E. CAUTHEN

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Charles E. Cauthen

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
						

 

77

 

	
   

  	
  AIMCOR (FAR EAST) INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CHARLES E. CAUTHEN

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Charles E. Cauthen

  
	
   

  	
   

  	
  Title

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  OXBOW CARBON & MINERALS LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ B. ACTON

  	
   

  
	
   

  	
   

  	
  Name:

  	
  B. Acton

  
	
   

  	
   

  	
  Title:

  	
  President & COO

  
						

 

78

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