Exhibit 10.8
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ASSET PURCHASE AGREEMENT
by and between
WLR ACQUISITION CORP.
and
LTV STEEL COMPANY, INC.
THE RIVER TERMINAL RAILWAY COMPANY
THE CHICAGO SHORT LINE RAILWAY COMPANY
CUYAHOGA VALLEY RAILWAY
Dated as of February 26, 2002
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of February
26, 2002 (the "Execution Date"), is made by and among LTV STEEL COMPANY, INC., a
New Jersey corporation ("LTV"), RIVER TERMINAL RAILWAY COMPANY, an Ohio
corporation ("RTR"), CHICAGO SHORT LINE RAILWAY COMPANY, an Illinois corporation
("CHICAGO SHORT LINE"), THE CUYAHOGA VALLEY RAILWAY COMPANY, an Ohio corporation
("CUYAHOGA", together with RTR and Chicago Short Line, the "RAILROAD
SUBSIDIARIES" and collectively with LTV, the "SELLERS" and each a "SELLER"), THE
LTV Corporation, a Delaware corporation ("LTV Corp."), LTV Electro-Galvanizing,
Inc., a Delaware corporation ("LTVEG" and collectively with LTV Corp., the "LSE
Sellers") (the "LSE Sellers" collectively with the Sellers, the "LTV Companies")
and WLR ACQUISITION CORP., a Delaware corporation ("BUYER"). Capitalized terms
used in this Agreement are defined or cross-referenced in ARTICLE 11.
BACKGROUND INFORMATION
A. On December 29, 2000 (the "PETITION DATE"), LTV and 48 of its
Affiliates (collectively, the "LTV PARTIES") (excluding the Railroad
Subsidiaries) commenced voluntary cases for reorganization (the "BANKRUPTCY
CASES") under Chapter 11 of the Bankruptcy Code, 11 U.S.C. Section 101-1330 (the
"BANKRUPTCY CODE"), in the United States Bankruptcy Court for the Northern
District of Ohio, Eastern Division (the "BANKRUPTCY COURT").
B. Pursuant to an order entered by the Bankruptcy Court on December 7,
2001, the LTV Parties have obtained approval of and are implementing an asset
protection plan (the "APP"), pursuant to which LTV has ceased operation of, and
is currently maintaining in hot-idle for a limited period of time, its Indiana
Harbor Works located in East Chicago, Indiana ("INDIANA HARBOR") and its
Cleveland East Works located in Cleveland, Ohio (together with the Cleveland
West Works, located in Cleveland, Ohio, the "CLEVELAND WORKS"). Pursuant to an
order entered by the Bankruptcy Court on December 7, 2001, the Bankruptcy Court
has approved bidding procedures, certain bidder protections in connection
therewith and the conduct of an auction of assets (collectively, the "ASSET SALE
AND AUCTION PROCEDURES") in order to sell, together or otherwise, substantially
all of the assets related to each of Indiana Harbor and Cleveland Works subject
to Buyer's assumption of the Assumed Liabilities.
C. Until on or about December 9, 2001, LTV engaged in the steel
manufacturing, processing and finishing business (the "BUSINESS") at Indiana
Harbor, Cleveland Works, its finishing facility in Hennepin, Illinois
("HENNEPIN"), the pellet handling terminal in Lorain, Ohio (the "LORAIN PELLET
HANDLING TERMINAL"), the coke battery in Warren, Ohio (the "▇▇▇▇▇▇ ▇▇▇▇ BATTERY,
the lime processing facility in Grand River, Ohio (the "GRAND RIVER LIME
FACILITY"), the technology center in Independence, Ohio (the "INDEPENDENCE
CENTER"). LTV Corp. owns all of the issued and outstanding stock of EGL-LTV
Holding Company, a Delaware corporation ("LSE Holding"), which owns LTV's joint
venture interest in the L-S Electro-Galvanizing Company LSE Finishing Facility
at Cleveland Works (the "LSE").
D. LTV is also engaged in the business of manufacturing and selling
tubular products (the "TUBING BUSINESS") at facilities located in Counce,
Tennessee, Elyria, Ohio, Youngstown, Ohio, Marion, Ohio, and Ferndale, Michigan
(the "TUBING PLANTS").
E. Buyer desires to purchase the Acquired Assets and assume the Assumed
Liabilities from Sellers, and Sellers desire to sell, convey, assign and
transfer to Buyer, the Acquired Assets together with the Assumed Liabilities,
all in the manner and subject to the terms and conditions set forth in this
Agreement and in accordance with sections 105, 363 and 365 and other applicable
provisions of the Bankruptcy Code.
F. The Acquired Assets and Assumed Liabilities include assets and
liabilities of LTV and the LSE Sellers, which are to be purchased and assumed by
Buyer pursuant to an order of the Bankruptcy Court approving such sale pursuant
to sections 105, 363 and 365 of the Bankruptcy Code (the "SALE ORDER"), which
order will include the authorization for the assumption by LTV and assignment to
Buyer of the Executory Contracts and liabilities thereunder under section 365 of
the Bankruptcy Code, all in the manner and subject to the terms and conditions
set forth in this Agreement and the Sale Order and in accordance with other
applicable provisions of the Bankruptcy Code.
G. Concurrently with the execution of this Agreement, the principal
stockholders of Buyer have executed a Guaranty, pursuant to which such parties
have guaranteed the obligations of Buyer under this Agreement.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and their respective
representations, warranties, covenants and agreements herein contained, and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, Seller and Buyer hereby agree as follows:
ARTICLE 1. PURCHASE AND SALE OF THE ACQUIRED ASSETS.
SECTION 1.1. TRANSFER OF ACQUIRED ASSETS. At the Closing, and upon the
terms and conditions herein set forth, Sellers shall sell to Buyer, and Buyer
shall acquire from Sellers, all of Sellers' right, title and interest in, to and
under the Acquired Assets, free and clear of all Liens (other than Permitted
Liens). "ACQUIRED ASSETS" shall mean certain of the LSE Sellers' assets and all
of Sellers' right, title and interest in, to and under all assets of (i) each
Railroad Subsidiary (ii) and of LTV used in the Business that are located at
Indiana Harbor, Cleveland Works, Hennepin, Lorain Pellet Handling Terminal,
▇▇▇▇▇▇ ▇▇▇▇ Battery, Grand River Lime Facility, Independence Center and such
additional locations as are specified below or on the Schedules hereto, real or
personal, tangible and intangible, existing or acquired hereafter, whether or
not reflected on the books or financial statements of Sellers, including without
limitation the following assets:
(a) all real property and leases of, and other interests in, real
property used or owned or held for use in the Business, in each case together
with all buildings, fixtures, and Improvements erected thereon (the "Real
Property") as listed on SCHEDULE 1.1(a) hereto;
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(b) all (i) Sellers' owned equipment, machinery, furniture, fixtures
and improvements and tooling located on the Real Property and elsewhere used in
the Business (the "OWNED MACHINERY AND EQUIPMENT"), including, without
limitation, those which form a part of the systems and process lines related to
the Business as set forth on SCHEDULE 1.1(b), and (ii) rights of Sellers to the
warranties and licenses received from manufacturers and sellers of the Owned
Machinery and Equipment;
(c) all (i) Sellers' equipment, machinery, furniture, fixtures and
improvements and tooling located on the Real Property and elsewhere used in the
operation of the Business, including, without limitation, those which form a
part of the systems and process lines related to the Business as set forth on
SCHEDULE 1.1(b) that are leased pursuant to an Executory Contract with respect
to which Buyer has not notified Sellers that such contract will constitute an
"Excluded Contract" prior to the date that is 21 days following the Execution
Date (the "LEASED MACHINERY AND EQUIPMENT," and collectively with the Owned
Machinery and Equipment, the "MACHINERY AND EQUIPMENT"), and (ii) rights of
Sellers to the warranties and licenses received from manufacturers and lessors
of the Leased Machinery and Equipment;
(d) those leases (including, without limitation, leases of Real
Property and of Machinery and Equipment) and other Contracts (together with all
of Sellers' deposits thereunder) entered into by Sellers and the LSE Sellers
that are executory and unexpired as of the Closing Date and are listed on
SCHEDULE 1.1(d) (and any other Contract related to the Business which Buyer has
requested and Sellers have agreed (such agreement not to be unreasonably
withheld) be deemed to be an Executory Contract) with respect to which Buyer has
not notified Sellers that such contract(s) will constitute an "EXCLUDED
CONTRACT" prior to the date that is 21 days following the Execution Date (the
"EXECUTORY CONTRACTS") (it being acknowledged and understood that Buyer shall
not have the right to designate as an Excluded Contract any contract which
Sellers have designated as a "NON-EXCLUDIBLE CONTRACT" on SCHEDULE 1.1(d));
(e) all Supplies (other than Excess Supplies) located on the Real
Property;
(f) all rights of Sellers to warranties received from suppliers with
respect to Inventory and related Claims with respect thereto;
(g) all patents, patent applications, copyrights, copyright
applications, know-how, information, processes, trade secrets, proprietary data,
formulae, research and development data, trademarks relating to finished goods
and processes, trade names relating to finished goods and processes and other
intangible property (collectively "INTELLECTUAL PROPERTY"), including, without
limitation, those listed on SCHEDULE 1.1(g) hereto;
(h) all cars, trucks, fork lifts, other industrial vehicles and other
motor vehicles owned by Sellers ("OWNED MOTOR VEHICLES") or leased by Sellers
("LEASED MOTOR VEHICLES" together with Owned Motor Vehicles, the "Motor
Vehicles") (provided in the case of Leased Motor Vehicles, the lease is an
Acquired Asset) located on the Real Property and elsewhere;
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(i) all computer software owned by the Sellers (including, without
limitation, process control software) used in connection with the operation of
the Machinery and Equipment or otherwise used in the Business in conjunction
with the Acquired Assets, including, without limitation, those listed on
SCHEDULE 1.1(i) hereto;
(j) to the extent transferable under applicable Law, all permits,
authorizations and licenses issued by any Government and used in the Business in
conjunction with the Acquired Assets and all pending applications therefor (the
"PERMITS"), including, without limitation, those Permits set forth on SCHEDULE
1.1(j);
(k) copies or originals of all books, files and records used in the
Business relating to the Acquired Assets described in this Section 1.1,
including plans, data, test results, drawings, diagrams, training manuals,
engineering data, safety and environmental reports and documents, maintenance
schedules and operating and production records, in each case that are used in
the Business or relate to the Acquired Assets, whether in hard copy or
electronic format;
(l) the Additional Assets;
(m) all of LTV Corp.'s equity interest in LSE Holding;
(n) all goodwill associated with the Business or the Acquired Assets,
together with the right to represent to third parties that Buyer is the
successor to the Business;
(o) all air emissions, credits and allowances Sellers have, are
entitled to or applied for, including any air emissions where Sellers have
credit for or have banked, applied to bank or agreed to sell or trade;
(p) all (i) prepaid expenses and (ii) deposits of Sellers made in
connection with the Business and held by utilities, including, without
limitation, those set forth on SCHEDULE 1.1(p) hereto;
(q) to the extent not otherwise specified above in this SECTION 1.1,
all assets of the Railroad Subsidiaries including all real property and leases
of Real Property, rights of way, locomotives, cars and track repair equipment;
and
(r) the insurance binder or commitment described in Section 7.2(h).
Notwithstanding the foregoing, Acquired Assets shall exclude the
Excluded Assets.
SECTION 1.2. EXCLUDED ASSETS. The Acquired Assets do not include any
right, title or interest of any Person other than Sellers in any property or
asset, or Sellers' right, title and interest in, to and under properties and
assets not relating exclusively to the operation of the Business and the
following properties and assets of Sellers (all such assets not being acquired
by Buyer being herein referred to as the "EXCLUDED ASSETS"):
(a) all of Sellers' cash and cash equivalents, including all ▇▇▇▇▇ cash
and undeposited checks;
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(b) all of Sellers' prepaid insurance premiums and insurance deposits
and rights to refunds or adjustments in respect of periods prior to the Closing
Date with respect thereto and all rights to insurance proceeds or other
insurance Contract recoveries;
(c) any items of Inventory that are removed, sold, leased or disposed
of by Sellers prior to the Closing Date in accordance with SECTION 1.6;
(d) all LTV's accounts receivable and Claims arising in connection
therewith;
(e) all sales orders or other commitments to purchasers of goods or
services or products produced by the Business (the "SALES OBLIGATIONS") of LTV;
(f) all outstanding purchase orders or other commitments to suppliers
of goods and services for materials, supplies or other items (the "PURCHASE
ORDERS") of LTV;
(g) any and all rights, claims, credits, allowances, rebates, causes of
action, known or unknown, pending or threatened (including, without limitation,
all causes of action arising under sections 510, 544 through 551 and 553 of the
Bankruptcy Code or under similar state Laws including, without limitation,
fraudulent conveyance claims, and all other causes of action of a trustee and
debtor-in-possession under the Bankruptcy Code) or rights of set-off
(collectively, "CLAIMS"), of Sellers or any Affiliate of Sellers, including but
not limited to, Claims arising out of or relating in any way to the Bankruptcy
Cases, or any of the transactions contemplated thereby or entered into as a
consequence thereof, including, without limitation, any claims (as defined in
section 101(5) of the Bankruptcy Code) filed, scheduled or otherwise arising in
the Bankruptcy Cases;
(h) all rights to or claims for refunds, overpayments or rebates of
Taxes for periods ending on or prior to the Closing Date, and, for any period
that includes but does not end on the Closing Date, a percentage of any refund,
overpayment or rebate of Taxes that relates to such period equal to the
percentage calculated by dividing the number of days that have elapsed in such
period up to and including the Closing Date by the total number of days in such
period;
(i) all shares of capital stock of Empire Iron Mining Partnership,
Columbus Coatings Company, Walbridge Coatings and TWB Company L.L.C., and all
corporate seals, minute books, charter documents, record books, original tax and
financial records and such other files, books and records as pertain to any of
the Excluded Assets or to the organization, existence or capitalization of
Sellers;
(j) all rights of Sellers under any collective bargaining agreement,
agreement with any labor union, employment agreement, or severance agreement;
(k) all of Sellers' rights to recovery of collateral given to obtain
letters of credit; and rights to recover amounts drawn or paid on letters of
credit;
(l) all amounts due to Sellers from any Affiliate of Sellers;
(m) a copy or the original of all files and records described in
SECTION 1.1(k);
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(n) all of Sellers' rights under any Excluded Contract;
(o) all of Sellers' right, title and interest in and to all Real
Property or Machinery and Equipment related to the Chicago Coke Battery and any
other plant or facility (other than Cleveland West) not used primarily in the
Business or not maintained as of the Closing Date in hot idle condition, except
for such plants and facilities not maintained as of the Closing Date in hot idle
condition which Buyer has otherwise identified as an Acquired Assets;
(p) all capital stock of the Railroad Subsidiaries and all pension
related benefits maintained by Sellers;
(q) all Intellectual Property used exclusively in the Tubing Business
and those trade names and trademarks listed an SCHEDULE 1.2(q);
(r) all assets (including, without limitation, any Acquired Asset
covered in Section 1.1(b)-(k) and Sections 1.1(n)-(r)) which Buyer has notified
Sellers that such asset shall constitute "Excluded Assets" prior to the date
that is 21 days following the Execution Date (it being agreed and understood
that Buyer shall not have the right to designate any owned Real Property, the
equity interest in LSE Holding, the Additional Assets or Non-Excludible
Contracts as Excluded Assets);
(s) all furniture, office equipment, personal computers, supplies and
similar property used exclusively by persons listed on SCHEDULE 5.1(j);
(t) all assets of the Tubing Facilities, all prepaid expenses of and
deposits made in connection with the Tubing Business and all property used
exclusively in the Tubing Business;
(u) all Contracts of LTV not listed on SCHEDULE 1.1(d);
(v) six hundred (600) tons per ozone season of NOx emissions allowances
allocated by the U.S. Environmental Protection Agency to boilers A, B, C, D and
3 at the Cleveland Works under Section 126 of the Clean Air Act as the
administration of such program may be assumed by incorporation in the Ohio state
implementation plan (provided that at all times the emissions allowances
received by Buyer pursuant to Section 1.1 with respect to such boilers are at
least one hundred sixty one (161) tons per ozone season of NOx allowances (and
Seller covenants to reconvey its allowances to Buyer to the extent Buyer's
allowances are reduced below such amount by incorporation in the Ohio state
implementation plan)); and
(w) all of the assets of the LSE Sellers not listed on Schedule 1.1(d).
SECTION 1.3. ASSUMPTION OF LIABILITIES. At the Closing, Buyer shall
assume, and Buyer hereby agrees to thereafter pay, perform and discharge when
due, and indemnify, defend and hold harmless Sellers, their Affiliates and all
of their respective Related Persons from and against, all of the following
liabilities (the "ASSUMED LIABILITIES"):
(a) all liabilities and obligations of Sellers under the Executory
Contracts and all cure costs required to be paid pursuant to section 365 of the
Bankruptcy Code in connection with the assumption and assignment of the
Executory Contracts;
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(b) 50% of the liabilities for Transaction Taxes payable in connection
with the transactions contemplated by this Agreement;
(c) all liabilities and obligations arising on or after the Closing
Date relating to or arising out of the Acquired Assets;
(d) all obligations of LTV under the LSE partnership agreement;
(e) all liabilities and obligations of Sellers, their Affiliates and
all of their respective Related Persons arising under any Environmental Law,
irrespective of whether such liability attaches or accrues to Buyer or Sellers
in the first instance, relating to the Acquired Assets, but not including: (i)
any liability or obligation resulting from the transport, disposal or treatment
of any Hazardous Materials by Sellers in connection with the Business prior to
the Closing Date to or at any location other than the Real Property, or (ii) any
liability, obligation, or claim for personal injury resulting from exposure to
Hazardous Materials, where such exposure occurred prior to the Closing Date. and
(f) all liabilities and obligations of the Railroad Subsidiaries
arising after the Closing under Sales Obligations and Purchase Orders.
SECTION 1.4. RETENTION OF LIABILITIES. Buyer is assuming only the
Assumed Liabilities and is not assuming any other liability or obligation of
whatever nature, whether presently in existence or arising hereafter. All such
other liabilities and obligations shall be retained by and remain liabilities
and obligations of Sellers (all such liabilities and obligations not being
assumed being herein referred to as the "EXCLUDED LIABILITIES"). The Excluded
Liabilities include, without limitation, the following liabilities and
obligations:
(a) all liabilities and obligations of LTV under the Sales Obligations
and the Purchase Orders;
(b) all liabilities and obligations of Sellers relating to any
environmental, health or safety matter (including, without limitation, any
liability or obligation arising under any Environmental Law) (i) relating to any
property or assets other than the Acquired Assets; (ii) resulting from the
transport, disposal or treatment of any Hazardous Materials by Sellers in
connection with the Business prior to the Closing Date to or at any location
other than the Real Property; or (iii) relating to any liability, obligation, or
claim for personal injury resulting from exposure to Hazardous Materials or
otherwise, where such exposure or other event or occurrence occurred prior to
the Closing Date;
(c) all liabilities and obligations for damages to Persons or property
arising out of alleged defects in products of the Business sold by Sellers, or
arising under warranties issued by Sellers;
(d) all liabilities and obligations to repair or replace, or to refund
the sales price (plus commercially reasonable related expenses) of, products
manufactured by the Business prior to the Closing Date that any customer claims
to be defective;
(e) all liabilities and obligations of Sellers under any collective
bargaining agreement, agreement with any labor union, employment agreement or
severance agreement;
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(f) all liabilities and obligations of Sellers to all present and
former employees of the Business (and their respective spouses and dependents),
including, without limitation, all liabilities for medical insurance, life
insurance, worker's compensation and retirement benefits;
(g) all liabilities and obligations of Sellers relating to or arising
out of (i) any LTV Benefit Plan or (ii) any other employee benefit plan,
practice, policy, agreement or arrangement maintained or contributed to by
Sellers or any member of a "controlled group" (as defined in Section
4971(e)(2)(B) of the Code) of which Sellers are or have been a member, or to
which Sellers or such "controlled group" member is or has been a party;
(h) 50% of the liabilities for Transaction Taxes payable in connection
with the transactions contemplated by this Agreement; and
(i) all liabilities and obligations of the LTV Companies (or any
predecessor owner of all or part of the business or assets) with respect to the
Excluded Assets and all other liabilities and obligations other than the Assumed
Liabilities of whatever nature whether presently in existence or hereafter
arising including, without limitation, any claim, action, suit or proceeding
pending against, or judgment against, Sellers or the Acquired Assets as of the
Closing Date.
SECTION 1.5. NON-ASSIGNMENT OF CONTRACTS. Anything contained herein to
the contrary notwithstanding, this Agreement shall not constitute an agreement
to assign any Executory Contract, if, notwithstanding the provisions of sections
363 and 365 of the Bankruptcy Code, an attempted assignment thereof, without the
consent of the third party thereto, would constitute a breach thereof or in any
way negatively affect the rights of Sellers or Buyer, as the assignee of such
Executory Contract, as the case may be, thereunder. If, notwithstanding the
provisions of sections 363 and 365 of the Bankruptcy Code, such consent or
approval is required but not obtained, Sellers will cooperate with Buyer without
further consideration (other than as provided in clause (b) of this SECTION 1.5)
in any reasonable arrangement designed to both (a) provide Buyer with the
benefits of or under any such Executory Contract, and (b) cause Buyer to bear
all costs and obligations of or under any such Executory Contract. Any
assignment to Buyer of any Executory Contract that shall, notwithstanding the
provisions of sections 363 and 365 of the Bankruptcy Code, require the consent
or approval of any third party for such assignment as aforesaid shall be made
subject to such consent or approval being obtained.
SECTION 1.6. LIMITED RIGHT TO SELL INVENTORY AND MOTOR VEHICLES.
(a) As of the date of this Agreement, there are Inventory and Supplies
located on the Real Property and elsewhere. With the exception of those items
which have been previously sold and are listed on SCHEDULE 1.6(a), from the date
hereof and through the expiration of the Initial Negotiation Period as defined
in SECTION 1.6(b), Sellers shall not remove from the Real Property, and/or sell,
lease or otherwise dispose (or agree to do any of the foregoing) of such
Inventory or Supplies (other than finished goods located in third party
warehouses). Upon the expiration of the Initial Negotiation Period or at such
earlier time as Buyer and Sellers may mutually agree, Sellers shall have the
right to remove from the Real Property, and/or sell, lease or otherwise dispose
of all Inventory not listed on the Negotiated Inventory as defined in SECTION
1.6(b) (all such Inventory, the "Removable Inventory"). Notwithstanding anything
herein to the contrary, the items specified in SCHEDULE 1.6(a) may be removed
from the Real
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Property at any time prior to the date set forth in such Schedule for the
removal of such items; PROVIDED, HOWEVER, that all such items must be removed
from the Real Property no later than 30 days after the Closing Date.
(b) Buyer, within three (3) days after receipt of the Initial Inventory
delivered by Sellers pursuant to SECTION 3.2(a), shall deliver to Sellers a
response ("Buyer's Response") detailing the items of Inventory Buyer wishes to
purchase and a proposed price for each such item of Inventory contained in the
Buyer's Response; it being acknowledged and understood that Buyer's Response
shall include all slabs, raw materials and iron ore chips included in the
Initial Inventory and located on the Real Property and that the agreed prices
with respect thereto are as set forth on SCHEDULE 1.6(b). With respect to all
other items of Inventory and Excess Supplies (other than slabs, raw materials
and iron ore chips), if Sellers are not in agreement with the proposed prices
submitted in the Buyer's Response, Sellers and Buyer shall negotiate on an
exclusive basis for not less than three (3) days following delivery of the
Buyer's Response (the "Initial Negotiation Period") to determine mutually
satisfactory prices for the items listed in the Buyer's Response. At the end of
the Initial Negotiation Period, Sellers and Buyer shall prepare a schedule
detailing the items of Inventory and Excess Supplies from the Buyer's Response
which will be purchased by the Buyer (which Schedules shall include at a minimum
all slabs, raw materials and iron ore chips included on the Initial Inventory
and located on the Real Property) and the respective price of each such item
(collectively, the "INVENTORY PURCHASE PRICE") agreed upon by the parties (the
"Negotiated Inventory").
(c) If Sellers remove an item of Removable Inventory from the Real
Property (other than by sale, lease or other disposition) in accordance with
SECTION 1.6(a), Sellers shall do so prior to the delivery of the Closing Date
Inventory. If Sellers sell, lease or otherwise dispose of any item of Inventory
in accordance with SECTION 1.6(a), Sellers shall do so prior to the delivery of
the Closing Date Inventory and shall require that such item be removed from the
Real Property no later than the one day prior to the Closing Date.
(d) All items on the Negotiated Inventory and all items of Removable
Inventory remaining on the Real Property on the Closing Date (other than those
items listed in SCHEDULE 1.6(a)) and the Negotiated Inventory shall comprise the
Additional Assets.
ARTICLE 2. CONSIDERATION
SECTION 2.1. CONSIDERATION. The aggregate consideration for the sale
and transfer of the Acquired Assets is (i) $80,000,000 in cash (the "ACQUIRED
ASSET PURCHASE PRICE") with respect all of the Acquired Assets other than the
Additional Assets and (ii) an amount to be mutually agreed upon between Buyer
and Sellers in accordance with SECTION 1.6(b) payable in cash with respect to
the Additional Assets (the "INVENTORY PURCHASE PRICE", together with the
Acquired Asset Purchase Price, the "PURCHASE PRICE"), which price shall be
payable and deliverable in accordance with SECTION 3.3, and (iii) the assumption
by Buyer of the Assumed Liabilities.
SECTION 2.2. PERFORMANCE DEPOSIT. On or prior to the date hereof, Buyer
has executed and delivered to Sellers the Performance Escrow Agreement and
deposited with the Escrow Agent $6,000,000 (the "PERFORMANCE DEPOSIT"). The
Performance Deposit shall
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be held and disbursed pursuant to the terms of the Performance Escrow Agreement
and this Agreement.
ARTICLE 3. CLOSING AND DELIVERIES
SECTION 3.1. CLOSING. The consummation of the transactions contemplated
hereby (the "CLOSING") shall take place at the offices of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ &
▇▇▇▇▇, North Point, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ at 10:00 a.m. on the
second Business Day following the satisfaction or waiver by the appropriate
party of all the conditions contained in ARTICLE 7 hereof, or on such other date
and/or at such other place and time as may be mutually agreed to by the parties
hereto (the "CLOSING DATE").
SECTION 3.2. SELLER'S DELIVERIES.
(a) Sellers will deliver to Buyer at least ten (10) days prior to the
Closing Date an inventory statement (the "Initial Inventory"), in form
reasonably satisfactory to Buyer, setting forth amount, type and location of
each of the following items of Inventory (which shall be categorized in
accordance with customary practices consistently applied): (i) slabs, (ii) raw
materials, (iii) iron ore chips, (iv) finished goods, and (v) work-in-process
and the Excess Supplies, in each case located on the Real Property and elsewhere
and Sellers' proposed purchase price for items (iv) and (v) and the Excess
Supplies.
(b) At or prior to the Closing Date, Sellers will deliver to Buyer an
inventory statement dated the Closing Date (the "Closing Date Inventory"), in
form reasonably satisfactory to Buyer, setting forth the items and locations of
Inventory which will comprise Additional Assets pursuant to Section 1.6(d) or
which Buyer and Sellers have otherwise mutually agreed to include as part of the
Additional Assets.
(c) The sale, transfer, assignment and delivery by Sellers of the
Acquired Assets to Buyer, as herein provided, shall be effected on the Closing
Date by quit claim deeds, bills of sale, endorsements, assignments and other
instruments of transfer and conveyance, excluding any representations,
warranties or covenants and shall otherwise be consistent with the terms of this
Agreement reasonably satisfactory in form and substance to counsel for Buyer.
SECTION 3.3. BUYER'S DELIVERIES. AT THE CLOSING:
(a) the Escrow Agent shall pay the Performance Deposit to Sellers in
accordance with the terms of the Performance Escrow Agreement by wire transfer
of immediately available funds to a bank account designated by Sellers in
writing to Buyer at least two Business Days prior to the Closing Date (the
"SELLERS' ACCOUNT");
(b) Buyer shall deliver to the Escrow Agent an amount equal to ten
percent (10%) of the Acquired Asset Purchase Price (the "Escrow Amount"), to be
held and disbursed in accordance with and pursuant to the terms of the Escrow
Amount Escrow Agreement;
(c) Buyer shall pay to Sellers the Acquired Asset Purchase Price and
the Inventory Purchase Price determined pursuant to SECTION 1.6, less the
Performance Deposit and the Escrow Amount, by wire transfer of immediately
available funds to the Sellers' Account; and
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(d) Buyer shall execute and deliver to Sellers an instrument of
assumption of liabilities with respect to the Assumed Liabilities reasonably
satisfactory in form and substance to counsel for Sellers.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF SELLERS. Sellers and LTV
Companies represent and warrant to Buyer as follows:
(a) CORPORATE ORGANIZATION. Each LTV Company and LSE Holding is a
corporation duly organized, validly existing and in good standing under the Laws
of the jurisdiction of its organization. Each LTV Company has all requisite
corporate power and authority to own its properties and assets. Subject to
approval by the Bankruptcy Court, each LTV Company has all requisite corporate
power and authority to own its properties and assets and authority to consummate
the transactions contemplated hereby and by the Ancillary Agreements to which it
is a party.
(b) AUTHORIZATION AND VALIDITY. Each LTV Company has all requisite
corporate power and authority to enter into this Agreement and the Ancillary
Agreements to which it is a party and, subject to (i) the Bankruptcy Court's
entry of the Sale Order, (ii) the receipt of the consents, waivers and approvals
set forth on SCHEDULE 4.1(d), (iii) the receipt of the required approvals or
exemptions under the ICC Termination Act, and (iv) the termination or expiration
of the waiting period under the HSR Act, to perform and carry out its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and those Ancillary Agreements to which a LTV Company is a party and
its performance of its obligations hereunder and thereunder have been duly
authorized by all necessary corporate action by the board of directors and
stockholders of such LTV Company, and no other corporate action on the part of
such LTV Company is necessary to authorize such execution, delivery and
performance. This Agreement and each of the Ancillary Agreements to which a LTV
Company is a party has been duly executed by such LTV Company and, subject to
the Bankruptcy Court's entry of the Sale Order, constitute such LTV Company's
valid and binding obligations, enforceable against such LTV Company in
accordance with their terms.
(c) NO CONFLICT OR VIOLATION. Subject to (i) the Bankruptcy Court's
entry of the Sale Order, (ii) the receipt of the consents, waivers and approvals
set forth on SCHEDULE 4.1(d), (iii) the receipt of the required approvals or
exemptions under the ICC Termination Act, and (iv) the termination or expiration
of the waiting period under the HSR Act, the execution, delivery and performance
by the LTV Companies of this Agreement and those Ancillary Agreements to which a
LTV Company is a party (x) do not and will not violate or conflict with any
provision of the certificate of incorporation or by-laws of such LTV Company,
(y) do not and will not violate any provision of law, regulation, rule or other
legal requirement of any Government ("LAW") or any order, judgment or decree of
any court or Government ("ORDER") applicable to such LTV Company, and (z) do not
and will not give rise to a right of termination, cancellation or acceleration
of any obligation under, or loss of a benefit relating to the Business under, or
result in the creation of any Lien (other than Permitted Liens) upon any of the
Acquired Assets or violate or result in a breach of or constitute (with due
notice or lapse of time or both) a default under any contract, lease, loan
agreement, mortgage, security agreement, trust indenture
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or other agreement or instrument ("CONTRACT"), to which such LTV Company is a
party or by which it is bound or to which any of its properties or assets is
subject, which violation, conflict, breach or default would reasonably be
expected to have a Material Adverse Effect. "MATERIAL ADVERSE EFFECT" means a
state of facts, event or change or effect with respect to the Acquired Assets,
the Assumed Liabilities or the enforceability of any Executory Contract(s), that
results in a material adverse effect on the value of the Acquired Assets, taken
as a whole, or a material increase in the amount of the Assumed Liabilities
(other than increases with respect to environmental remediation and compliance
which have been included in the Estimated Remediation Costs), taken as a whole,
but excludes any state of facts, event, change or effect caused by events,
changes or developments relating to (A) any action of any or all of the LTV
Parties pursuant to any Order of the Bankruptcy Court entered prior to the date
hereof, including, without limitation, the implementation of the APP, the
transactions contemplated by this Agreement, any of the Ancillary Agreements or
the announcement thereof; (B) changes or conditions affecting the steel industry
generally; (C) changes in economic, regulatory or political conditions
generally; or (D) changes resulting from, or from any motion, application,
pleading or Order filed related to, the Bankruptcy Cases.
(d) CONSENTS AND APPROVALS. SCHEDULE 4.1(d) sets forth a true and
complete list of each material consent, waiver, authorization or approval of any
Government or of any other Person (other than (i) the Bankruptcy Court's entry
of the Sale Order, (ii) the receipt of the required approvals or exemptions
under the ICC Termination Act, and (iii) the termination or expiration of the
waiting period under the HSR Act), and each material declaration to or filing or
registration with any such Government (other than those required to be made to
or filed with the Bankruptcy Court), that is required in connection with the
execution and delivery of this Agreement and each of the Ancillary Agreements to
which a LTV Company is a party by such LTV Company or the performance by a LTV
Company of its obligations hereunder and thereunder.
(e) COMPLIANCE WITH LAW. Except as set forth on SCHEDULE 4.1(e) and as
may result from the Bankruptcy Cases (and other than any violation of
Environmental Law, the only representation as to which is made in SECTION
4.1(l)), to the best of each Seller's Knowledge such Seller is not in material
violation of any Law, nor is such Seller in material default with respect to any
Order, applicable to the Acquired Assets or the transactions contemplated under
this Agreement.
(f) LITIGATION. As of the date of this Agreement and except as set
forth on SCHEDULE 4.1(f) or SCHEDULE 4.1(l), there are no claims, actions,
suits, proceedings or investigations pending or, to the Sellers' Knowledge,
threatened in writing, brought by or against any Seller or any of their
subsidiaries that, if adversely determined, would reasonably be expected to have
a Material Adverse Effect or materially impair the ability of the Sellers to
consummate the transactions contemplated by this Agreement.
(g) SUFFICIENCY OF AND TITLE TO ASSETS. Except as would not have a
Material Adverse Effect, the Acquired Assets constitute and on the Closing Date
will constitute all of the assets or property held on the date hereof and used
or formerly used in the Business except the Excluded Assets and for items of
Inventory and Supplies removed, sold, leased or otherwise disposed in accordance
with Section 1.6. LTV Companies have good title to, or right by license,
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lease or other agreement to use, the Acquired Assets. Subject to the entry of
the Sale Order, at the Closing, LTV Companies will have the right to transfer
the Acquired Assets to Buyer free and clear of all Liens, other than Liens
included in the Assumed Liabilities and Permitted Liens.
(h) EXECUTORY CONTRACTS. Copies of all Executory Contracts (including
all material modifications and amendments) have been provided or made available
to Buyer. Except as set forth on SCHEDULE 4.1(h), giving pro forma effect to the
Sale Order, all of the Executory Contracts are valid and binding agreements of
LTV Companies and are in full force and effect in all material respects. Upon
entry of the Sale Order and payment of cure costs and/or provision of adequate
assurances, (i) LTV Companies will not be in breach or default in any material
respect thereunder, (ii) to the Knowledge of Sellers, no condition exists that
with notice or lapse of time or both would constitute a material default
thereunder, (iii) and, to the Knowledge of Sellers, no other party to any of the
Executory Contracts is in material breach or default thereunder. With respect to
all TBT Agreements set forth on SCHEDULE 1.1(d), such SCHEDULE 1.1(d) sets forth
the maximum available amount and expiration date of all letters of credit
securing the obligations of Sellers and their Affiliates thereunder.
(i) PERMITS. SCHEDULE 1.1(j) sets forth a complete and correct list of
all material Permits currently held by any Seller in connection with the
Business or the Acquired Assets (including the date of expiration of each such
Permit). Except as set forth on SCHEDULE 4.1(i) and except for matters which
would not be reasonably likely to have a Material Adverse Effect and except as
may arise out of the fact that the Business is not currently being actively
conducted, such Permits are valid and in full force and effect and the Sellers
are not in default under, and no condition exists that with notice or lapse or
time or both would constitute a default under any such Permit.
(j) CAPITAL STOCK.
(i) SCHEDULE 4.1(j) sets forth all of the partnership interest
in LSE of which LSE Holding is the record or beneficial owner (the "LSE
INTEREST") stating the percentage interest owned. LSE Holding has good,
valid and marketable title to the LSE Interest set forth in SCHEDULE
4.1(j), free and clear of all Liens other than Permitted Liens.
(ii) LTV Corp. is the owner of all of the capital stock of LSE
Holding free and clear of all Liens. There are no options or other
rights in favor of any third party to acquire shares of LSE Holding
capital stock.
(iii) LSE Holding no assets or liabilities other than those
arising out of or in connection with the Executory Contracts. LSE
Holding is not in breach or default in any material respect under the
LSE partnership agreement and there are no outstanding capital calls
under the LSE partnership agreement.
(k) LSE FINANCIAL STATEMENTS.
(i) Sellers have previously furnished to the Buyer financial
statements (the "LSE FINANCIAL STATEMENTS") of LSE for the year ended
December 31, 2001 (including a balance sheet and statements of income,
operations and cash flows). The Financial
14
Statements were prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied and fairly
represent the financial position, results of operations and cash flows
of LSE for the period presented.
(ii) Since December 31, 2001, LSE has not borrowed, incurred,
assumed, prepaid, guaranteed, or become subject to any liability or
modified any existing liability (absolute, accrued or contingent) other
than in the ordinary course of business consistent with past practice
in nature and amount or as shown on the LSE Financial Statements or as
set forth on SCHEDULE 4.1(k) or which have been discharged, satisfied
or paid in the ordinary course of business since December 31, 2001.
(l) ENVIRONMENTAL MATTERS. Except as set forth in the Monthly Reports
and on SCHEDULE 4.1(l), to the Knowledge of Seller:
(i) There has been no release, threatened release, spill, leak,
discharge or emission of any Hazardous Materials to the air, surface water,
groundwater or soil of the Real Property requiring corrective action under, or
that is a violation of, any applicable Environmental Laws, except as would not
reasonably be expected to have a Material Adverse Effect.
(ii) There is no pending or, to Sellers' Knowledge, threatened civil,
criminal or administrative action, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter that affects or applies to
the Real Property or the Acquired Assets relating in any way to any
Environmental Laws or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder.
(iii) Sellers have obtained all material Permits which are required
with respect to the operation of the Acquired Assets under any Environmental
Law, and, except as set forth in SCHEDULE 4.1(l), Sellers are in material
compliance with all terms and conditions of the required permits, licenses and
authorizations required by any Environmental Law.
(iv) Except as set forth in SCHEDULE 4.1(l)(iv), Sellers have provided
to Buyer copies of all material information necessary for an understanding of
the presence or migration of Hazardous Materials on, in or under the Real
Property.
(m) CURE PAYMENTS. SCHEDULE 4.1(m) sets forth as of March 1, 2002 and
as of April 1, 2002 the approximate amount of all cure payments required to be
made under section 365 of the Bankruptcy Code with respect to each Contract
listed on SCHEDULE 1.1(d).
(n) PROPERTY. Except as listed on SCHEDULE 4.1(n), SCHEDULE 1.1.(a)
identifies all of the Real Property owned or leased by Seller and used primarily
in the Business.
(i) Except as would not have a Material Adverse Effect, the
buildings and structures constituting part of the Real Property are in
substantially the same condition as they were on December 31, 2001.
(ii) There are no encroachments or other facts or conditions
affecting any of the Real Property that would be revealed by an
accurate survey or inspection thereof which
15
would, individually or in the aggregate, materially detract from the
value of such property or materially adversely affect the continued use
of such property in the conduct of Business. None of the material
buildings and structures on the Real Property materially encroaches
upon real property of another person or upon the area of any easement
(other than encroachments on utility easements to the extent such
encroachments would not, individually or in the aggregate, materially
detract from the value of such property or materially adversely affect
the use of such property in the conduct of Business) affecting the Real
Property.
(o) CERTAIN ADVERSE CHANGES. Except as set forth on SCHEDULE 4.1(o),
since January 1, 2002, there has not been:
(i) any creation or assumption by the Railroad Subsidiaries of
any Lien (other than Permitted Liens) on any Acquired Asset other than
in the ordinary course of business consistent with past practices;
(ii) any transaction or commitment made, or any contract or
agreement entered into, by the Railroad Subsidiaries relating to the
Business or any Acquired Asset (including the acquisition or
disposition of any such assets) or any relinquishment by the Railroad
Subsidiaries of any contract or other right, in any such case, that is
material to the Business, taken as a whole;
(iii) any damage, destruction or other casualty loss (whether
or not covered by insurance) or condemnation or other governmental
taking or sale in lieu thereof affecting the Business or any Acquired
Asset which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect.
(p) EMPLOYEES. SCHEDULE 4.1(p) sets forth a true and complete list as
of December 31, 2001 of the names, titles and salaries of all officers of Seller
and all other employees of Seller engaged in the Business with respect to the
Acquired Assets.
(q) INTELLECTUAL PROPERTY. SCHEDULE 4.1(q) contains a list of all
patents, material trade secrets, material know-how, material copyrights,
material trademarks or material trade names (including any registration or
applications for registration of any of the foregoing) material inventions or
any other similar type of material proprietary intellectual property right
(including all process control software) in each case which is owned by Sellers
and used or held for use in the Business (collectively, the "Intellectual
Property Rights"). SCHEDULE 4.1(q) lists all licenses, sublicenses and other
agreements to which any Seller is a party and pursuant to which any Person is
authorized to use such Intellectual Property Rights.
(i) Except as set forth on SCHEDULE 4.1(q), neither Sellers has been
named as a defendant in any pending action, suit, investigation or proceeding
relating to, or otherwise has been notified in writing of, any alleged claim of
material infringement of any patents, trademarks, trade names, service marks,
service names, or copyrights of any third party and (ii) Sellers have no
Knowledge of any continuing material infringement by any other person of any
Intellectual Property Right. No Intellectual Property Right is subject to any
outstanding judgment, injunction, order or decree restricting the use thereof by
Seller or any of its
16
subsidiaries or restricting the licensing thereof by Sellers or any of their
subsidiaries to any Person.
(r) OWNED AND LEASED MACHINERY AND EQUIPMENT. SCHEDULE 1.1(b) contains
true and correct lists of all material systems and process lines related to the
Business and included in the Acquired Assets.
(s) HOT IDLE. Each item of Machinery and Equipment has been maintained
in all material respects in accordance with any procedures applicable (including
where applicable "hot idle" procedures) applicable thereto set forth on SCHEDULE
4.1(s).
(t) INITIAL INVENTORY. As of the date of its delivery to Buyer, the
Initial Inventory will contain a true and complete list of (and location) of
slabs, raw materials and iron ore chips located on the Real Property.
(u) CLOSING DATE INVENTORY. As of the Closing Date, the Closing Date
Inventory will contain a true and complete list (and location) of each item of
Inventory and Excess Supplies which will constitute part of the Additional
Assets.
(v) DEPOSITS. SCHEDULE 1.1(p) contains a list, true and complete in all
material respects, of all deposits held by utilities in connection with the
Business as of the Closing Date.
SECTION 4.2. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby
represents and warrants to Sellers as follows:
(a) CORPORATE ORGANIZATION. Buyer is a corporation duly incorporated,
validly existing and in good standing under the Laws of the jurisdiction of its
incorporation, and has all requisite corporate power and authority to own its
properties and assets and to conduct its businesses as now conducted.
(b) AUTHORIZATION AND VALIDITY OF AGREEMENT AND THE ANCILLARY
AGREEMENTS. Buyer has all requisite corporate power and authority to enter into
this Agreement and the Ancillary Agreements to which it is a party and to carry
out its obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Ancillary Agreements to which it is a party and the
performance of Buyer's obligations hereunder and thereunder have been duly
authorized by all necessary corporate action by the investment committee of
Buyer, and no other corporate action on the part of Buyer is necessary to
authorize such execution, delivery and performance. This Agreement and each of
the Ancillary Agreements to which Buyer is a party have been or will be duly
executed by Buyer and constitute, or will when executed constitute, its valid
and binding obligation, enforceable against it in accordance with their terms.
(c) NO CONFLICT OR VIOLATION. The execution, delivery and performance
by Buyer of this Agreement and the Ancillary Agreements to which it is a party
do not and will not violate or conflict with any provision of the certificate of
incorporation or by-laws (or equivalent documents) of Buyer and do not and will
not violate any provision of Law, or any Order applicable to Buyer, nor will
they result in a breach of or constitute (with due notice or lapse of
17
time or both) a default under any Contract to which Buyer is a party or by which
it is bound or to which any of its properties or assets is subject.
(d) CONSENTS AND APPROVALS. The execution, delivery and performance of
this Agreement and the Ancillary Agreements to which Buyer is a party do not and
will not require the consent or approval of, or filing with, any Government or
any other Person except (i) as may be required to be obtained by Buyer after the
Closing in order to own or operate any of the Acquired Assets; (ii) as required
pursuant to the HSR Act; (iii) as required under the ICC Termination Act; (iv)
for entry of the Sale Order by the Bankruptcy Court; or (v) for such consents,
approvals and filings, of which the failure to obtain or make would not,
individually or in the aggregate, have a material adverse effect on the ability
of Buyer to consummate the transactions contemplated hereby.
(e) AVAILABILITY OF FUNDS. Buyer has, and on the Closing Date will
have, sufficient funds available to finance and consummate the transactions
contemplated by this Agreement, including the payment of the Purchase Price and
the satisfaction of the Assumed Liabilities.
(f) ADEQUATE ASSURANCES REGARDING EXECUTORY CONTRACTS. Buyer is and
will be capable of satisfying the conditions contained in sections 365(b)(1)(C)
and 365(f) of the Bankruptcy Code with respect to the Executory Contracts.
(g) INVESTMENT REPRESENTATIONS. Buyer understands that the stock of LSE
Holding has not been registered under the Securities Act of 1933, as amended
(the "SECURITIES ACT") and that such stock is being offered and sold to Buyer
pursuant to an exemption from registration contained in the Securities Act based
in part upon Buyer's representations contained in this Agreement.
(i) The stock of the LSE Holding which may be purchased by
Buyer hereunder will be acquired for investment for Buyer's own
account, and not as a nominee or agent for any other person, and not
with a view to the public resale or distribution thereof within the
meaning of the Securities Act, and Buyer has no present intention of
selling, granting any participation in, or otherwise distributing the
same.
(ii) Buyer has read and is familiar with the definition of
"accredited investor" as defined in Rule 501(a) of Regulation D under
the Securities Act. Buyer is an "accredited investor" within such
definition.
(iii) Buyer has received or has had full access to all the
information it considers necessary or appropriate to make an informed
investment decision with respect to the stock of LSE Holding to be
purchased from LTV Corp. Buyer has had the opportunity to ask questions
of and receive answers from LTV Corp. and its officers, directors, and
management regarding the LSE's business, management, and financial
affairs and the terms and conditions of the offer and sale of the stock
of LSE Holding pursuant to this Agreement and to obtain additional
information (to the extent LTV Corp. possessed such information or
could acquire it without unreasonable effort or expense) necessary to
verify any information furnished to Buyer or to which Buyer had access.
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(h) Buyer is self-insured and has the financial capability to pay all
liabilities, costs and expenses which may arise from personal injury to Buyer's
agents or representatives suffered or incurred in connection with such agents'
or representatives' entry onto the Real Property or Improvements in connection
with Buyer's exercise of its right to access pursuant to SECTION 5.1(b).
SECTION 4.3. WARRANTIES EXCLUSIVE. The parties acknowledge that the
representations and warranties contained in ARTICLE 4 are the only
representations or warranties given by the parties and that all other express or
implied warranties are disclaimed. Without limiting the foregoing Buyer
acknowledges that the Acquired Assets are conveyed "AS IS", "WHERE IS" and "WITH
ALL FAULTS" and that all warranties of merchantability or fitness for a
particular purpose are disclaimed. WITHOUT LIMITING THE FOREGOING THE BUYER
ACKNOWLEDGES THAT SELLERS AND SELLERS' AFFILIATES AND THEIR RESPECTIVE RELATED
PERSONS HAVE MADE NO REPRESENTATION OR WARRANTY CONCERNING (I) ANY USE TO WHICH
THE ACQUIRED ASSETS MAY BE PUT, (II) ANY FUTURE REVENUES, COSTS, EXPENDITURES,
CASH FLOW, RESULTS OF OPERATIONS, FINANCIAL CONDITION OR PROSPECTS THAT MAY
RESULT FROM THE OWNERSHIP, USE OR SALE OF THE ACQUIRED ASSETS OR THE ASSUMPTION
OF THE ASSUMED LIABILITIES, (III) ANY OTHER INFORMATION OR DOCUMENTS MADE
AVAILABLE TO BUYER OR ITS AFFILIATES OR RELATED PERSONS. BUYER FURTHER
ACKNOWLEDGES THAT SELLERS AND SELLERS' AFFILIATES AND RELATED PERSONS HAVE MADE
NO REPRESENTATIONS OR WARRANTIES IN ANY ANCILLARY AGREEMENT.
ARTICLE 5. COVENANTS AND OTHER AGREEMENTS.
SECTION 5.1. COVENANTS OF SELLERS. Sellers covenants as follows:
(a) COMMERCIALLY REASONABLE EFFORTS. Between the date hereof and the
Closing Date, the LTV Companies shall use commercially reasonable efforts to (i)
obtain all necessary consents, waivers, authorizations and approvals of all
Governments, and of all other Persons, required to be obtained by the LTV
Companies in connection with the execution, delivery and performance by it of
this Agreement, (ii) take, or cause to be taken, all action, and to do, or cause
to be done, all things necessary or proper, consistent with applicable Law, to
consummate and make effective in an expeditious manner the transactions
contemplated hereby, (iii) assist Buyer in the transfer of or obtaining all
Permits required to operate the Business or own the Acquired Assets, and (iv)
subject to SECTION 5.5 and SECTION 5.1(k), maintain Cleveland East, Indiana
Harbor and ▇▇▇▇▇▇ ▇▇▇▇ Battery on "hot idle" substantially in accordance with
Seller's current practices and procedures as set forth in SCHEDULE 4.1(s) and as
reasonably requested by Buyer. Without limiting the generality of the foregoing,
from the date hereof until the Closing Date, Sellers will not:
(i) sell, lease, license or otherwise dispose of (x) property,
plant or equipment constituting part of the Acquired Assets or (y) any
other Acquired Assets other than in accordance with Section 1.6; or
(ii) agree or commit to do any of the foregoing.
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Notwithstanding anything herein or in any Ancillary Agreement to the
contrary, Sellers may furnish information concerning the Business or the
Acquired Assets and the Assumed Liabilities to any Person in connection with a
potential Alternative Transaction and negotiate, enter into and consummate an
Alternative Transaction.
(b) ACCESS TO PROPERTIES AND RECORDS; CONFIDENTIALITY. The LTV
Companies shall afford to Buyer, and to the accountants, counsel and
representatives of Buyer, reasonable access during normal business hours
throughout the period prior to the Closing Date (or the earlier termination of
this Agreement pursuant to ARTICLE 8) to all books and records of the LTV
Companies relating to the Acquired Assets and the Assumed Liabilities. Upon
reasonable prior notice, Sellers shall also afford Buyer reasonable access,
during normal business hours, to Indiana Harbor, Cleveland Works, Hennepin,
Lorain Pellet Facility, ▇▇▇▇▇▇ ▇▇▇▇ Battery, Grand River Lime Facility and LSE
and to all Acquired Assets throughout the period prior to the Closing Date. In
addition, notwithstanding any provision of the Confidentiality Agreement to the
contrary, Buyer shall have the right to contact and negotiate directly with
Sellers' joint venturers and other partners, parties to the Executory Contracts
and lenders with respect to any Acquired Assets or Assumed Liabilities. The
rights of access contained in this SECTION 5.1(b) are granted subject to, and
on, the following terms and conditions: (A) any such investigation shall not
include physical testing or sampling, in each case related to environmental
matters and will otherwise be conducted in a reasonable manner; (B) during the
period from the date hereof to the Closing Date, all information provided to
Buyer or its agents or representatives by or on behalf of Seller or its agents
or representatives (whether pursuant to this SECTION 5.1(b) or otherwise) will
be governed and protected by the Confidentiality Agreement between Buyer and LTV
Corp. (the "CONFIDENTIALITY AGREEMENT") or the Antitrust CA; and (C) such rights
of access shall not affect or modify the conditions set forth in ARTICLE 7 in
any way. It is acknowledged and understood that no investigation by Buyer or
other information received by Buyer shall operate as a waiver or otherwise
affect any representation, warranty or other agreement given or made by Sellers
hereunder. From the date hereof through the Closing Date, LTV shall provide to
Buyer, at no charge, the right to use reasonable office space at Independence
Center and/or Cleveland Works as requested by Buyer and shall provide
appropriate equipment and facilities for reasonable use by Buyer including
parking spaces, phones, fax machines and copy machines.
(c) ACCESS TO RECORDS AFTER CLOSING. If the Closing shall occur and the
transactions contemplated by this Agreement are consummated, upon reasonable
prior notice, the LTV Companies shall afford to Buyer, and to the accountants,
counsel and representatives of Buyer, reasonable access during normal business
hours to all books and records retained by the LTV Companies relating to the
Acquired Assets and the Assumed Liabilities.
(d) FURTHER ASSURANCES. At the request and the sole expense of Buyer,
at any time after the Closing Date, LTV Companies shall execute and deliver such
documents as Buyer or its counsel may reasonably request to effectuate the
purposes of this Agreement.
(e) CONFIDENTIALITY. After the Closing, LTV Companies will hold, and
will use their reasonable commercial efforts to cause their officers, directors,
employees, accountants, counsel, consultants, advisors and agents to hold, in
confidence, unless required (or unless the LTV Companies determine that it is
reasonably appropriate) to disclose pursuant to judicial or
20
administrative process or by other requirements of law or if reasonably
necessary in connection with any disputes arising in connection with this
Agreement or the transactions contemplated hereby, all confidential documents
and information concerning the Business, except to the extent that such
information can be shown to have been (A) in the public domain through no fault
of the LTV Companies or (B) later lawfully acquired by LTV Companies from
sources other than those related to LTV Companies' prior ownership of the
Business and the Acquired Assets.
(f) LTV Companies shall promptly notify Buyers of:
(i) any written notice or communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any written notice or other communication from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to Sellers' Knowledge, threatened against,
relating to or involving or otherwise affecting LTV Companies, the
Acquired Assets or the Business that, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to
Section 4.1(f) or that relate to the consummation of the transactions
contemplated by this Agreement;
(iv) the damage or destruction by fire or other casualty of
any Acquired Asset or part thereof or in the event that any Acquired
Asset or part thereof becomes the subject of any proceeding or, to the
Knowledge of Sellers, threatened proceeding for the taking thereof or
any part thereof or of any right relating thereto by condemnation,
eminent domain or other similar governmental action;
(v) any material item that would have been required to be
described on SCHEDULE 4.1(l) if Sellers had Knowledge of such item on
or prior to the date hereof and any material adverse change in any of
the items described on SCHEDULE 4.1(l).
(g) Unless legally precluded, LTV Companies shall promptly notify
Buyers of, and furnish Buyers any information either of them may reasonably
request with respect to, the occurrence to Sellers' Knowledge of any event or
condition or the existence to Sellers' Knowledge of any fact that would
reasonably be expected to cause any of the conditions to Buyers' obligations to
consummate the purchase and sale of the Acquired Assets not to be fulfilled.
(h) Sellers shall use commercially reasonable efforts to obtain entry
by the Bankruptcy Court on or before the date that is 30 days after the
Execution Date of the Sale Order in substantially the form attached as SCHEDULE
5.1(h).
(i) Sellers agree that they will maintain and pay all premiums with
respect to insurance policies with types of coverage and amounts that are
consistent with their current practices.
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(j) Other than as set forth on SCHEDULE 5.1(j) (which Schedule shall be
delivered by Seller no later than March 1, 2002 and shall contain only such
names as are reasonably acceptable to Buyer) and for employees employed in the
Tubing Business, the Sellers shall terminate the employment of each employee
prior to the Closing Date and shall (a) provide (i) at least 60 days or such
other time as required by law prior to their respective date of termination
written notice of such termination to the affected employees or their Union
representative, the State Dislocated Worker Unit and the Chief Elected Official
of the appropriate Unit of Local Government in accordance with the Worker
Adjustment and Retaining Notification Act ("WARN Act") or (ii) up to 60 days or
such other period as required by law pay and benefits in lieu of such notice and
(b) comply with any other requirements of the WARN Act. The Sellers shall
indemnify and hold harmless Buyer from all costs, liabilities and expenses,
including, without limitation, reasonable attorneys fees, incurred by Buyer as a
result of any violation of, or failure to comply with, the WARN Act based on the
transaction contemplated by this Agreement. For purposes of the WARN Act and
this section, "Closing Date" shall mean the "effective date" of the transaction
contemplated by this Agreement, as defined in the WARN Act. Notwithstanding the
foregoing, prior to the Closing Date, Buyer shall have the right to negotiate
terms of employment to become effective immediately after the Closing with such
employees of Sellers as is determined by Buyer in its sole discretion.
(k) LICENSE AGREEMENTS. Neither Sellers nor any Affiliate of Sellers
will, between the date hereof and the Closing Date, enter into any license,
sublicense or other similar agreement with respect to the Intellectual Property
Rights with any Person (other than any license for employee-related databases
granted to the PBGC).
(l) OPERATION OF LSE. LTV Corp. will use reasonable commercial efforts
to cause LSE to operate in the ordinary course of business consistent with past
practices and will not permit LSE to sell, lease or other dispose of any
material asset or permit LSE to enter into any agreement to sell, lease or other
dispose except in the ordinary course of business without the prior written
consent of Buyer. From the date hereof through June 15, 2002 (the "ASSIGNMENT
DATE"), LTV Corp. will cause LTV Steel Products, L.L.C. ("LTV Products") to
comply with all of its obligations under the L/C Agreement, dated February 1,
1999, as amended (the "L/C Agreement"), among LTV Products, Sumikin EGL Corp.
and Cleveland Steel Facility, L.L.C. (including, without limitation, the
obligation to maintain in full force and effect the LTV Letter of Credit (as
defined in the L/C Agreement)), it being understood that LTV Products may assign
the L/C Agreement to LTV on or before the Closing Date (in which event, LTV
shall comply with the obligations of this Section). On the Assignment Date, for
no additional consideration, LTV Corp. shall cause LTV Steel to assign, and
Buyer shall assume, all of LTV Steel's obligations under the L/C Agreement.
Between the date hereof and the Assignment Date, Buyer agrees (i) to reimburse
LTV Corp. and LTV Products upon demand for any out-of-pocket fees and expenses
incurred by them in order to comply with its obligations under the L/C Agreement
and (ii) to indemnify LTV Corp. and LTV Steel with respect to any losses or
claims it may incur as a result of any drawing under the LTV Letter of Credit.
LTV Corp. agrees to cause LTV Products not to amend or modify the L/C Agreement
without the consent of Buyer.
SECTION 5.2. COVENANTS OF BUYER. Buyer covenants as follows:
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(a) COMMERCIALLY REASONABLE EFFORTS. Buyer shall use all commercially
reasonable efforts to (i) obtain all consents and approvals of all Governments,
and all other Persons, required to be obtained by Buyer to effect the
transactions contemplated by this Agreement, and (ii) take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary or
proper, consistent with applicable Law, to consummate and make effective in an
expeditious manner the transactions contemplated hereby.
(b) ADEQUATE ASSURANCES REGARDING EXECUTORY CONTRACTS AND REQUIRED
ORDERS. With respect to each Executory Contract, Buyer shall provide adequate
assurance of the future performance of such Executory Contract by Buyer. Buyer
agrees that it will promptly take all actions as are reasonably requested by
Sellers to assist in obtaining the Bankruptcy Court's entry of the Sale Order,
including, without limitation, furnishing affidavits, financial information or
other documents or information for filing with the Bankruptcy Court and making
Buyer's employees and representatives available to testify before the Bankruptcy
Court.
(c) CURE OF DEFAULTS. Buyer shall, at or prior to the Closing, cure any
and all defaults under the Executory Contracts as described on SCHEDULE 4.1(m),
which defaults are required to be cured under the Bankruptcy Code, so that such
Executory Contracts may be assumed by LTV and assigned to Buyer in accordance
with the provisions of section 365 of the Bankruptcy Code.
(d) PERFORMANCE UNDER EXECUTORY CONTRACTS. Buyer shall (i) from and
after the Closing Date assume all obligations and liabilities of Sellers under
the Executory Contracts that accrue from and after the Closing Date, (ii) from
and after the Closing Date take all actions necessary to satisfy its obligations
and liabilities under the terms and conditions of each of the Executory
Contracts, and (iii) indemnify, defend and hold harmless the LTV Parties, the
LTV Parties' Affiliates, and all of their respective Related Persons from and
against any damages, losses, costs, reasonable expenses and other liabilities
arising out of a breach of this SECTION 5.2(d).
(e) CLIFFS PELLETS. SCHEDULE 5.2(e) sets forth a list of approximate
locations at which iron ore pellets ("CLIFFS PELLETS") owned by Cleveland-Cliffs
Inc. ("CLIFFS") are located on the Real Property, together with the approximate
amount of the Cliffs Pellets at each of such locations. Between the date hereof
and the Closing Date, Buyer will use commercially reasonable efforts to reach an
agreement with Cliffs regarding the terms and conditions upon which Buyer would
purchase from Cliffs and pay Cliffs for the Cliffs Pellets on the Closing Date.
If Buyer and Cliffs do not reach agreement on such terms and conditions prior to
the Closing Date, then Buyer shall (i) permit Cliffs to store the Cliffs Pellets
on the Real Property without cost until the 90th day after the Closing Date;
provided, however, that if the location of the Cliffs Pellets interferes with
Buyer's operation of the facility during such period, Buyer may at its costs
move the Cliffs Pellets elsewhere on the Real Property, and (ii) allow Cliffs
and its agents to enter on the Real Property for the purposes of, and will at
Cliffs' expense reasonably cooperate with Cliffs and its agents until such
90(th) day in, the inspecting, handling, moving, loading, transferring and
removing any Cliffs Pellets.
(f) COOPERATION WITH THE PBGC. Buyer shall cooperate with the Pension
Benefit Guaranty Corporation (the "PBGC") and its agents in connection with
their activities in respect
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of the LTV Benefit Plans which are subject to Title IV of ERISA and persons or
groups of persons at any time covered by, or beneficiaries of, LTV Benefit
Plans. Without limiting the generality of the foregoing, Buyer shall, at the
PBGC's request, use, or require third parties to use, any of the Acquired
Assets, (including, without limitation, records, computers, computer software,
and rights under Executory Contracts) to make any calculation necessary or
desirable, or to provide any information necessary or desirable, to the
administration of any LTV Benefit Plan, the making of any benefit determination
or the taking by the PBGC of any action it determines to take in respect of any
person or group of persons at any time covered by, or a beneficiary of, any LTV
Benefit Plan. It shall be a condition precedent to a Buyer's obligations in this
SECTION 5.2(f) that the PBGC shall have agreed to reimburse Buyer for all actual
out-of-pocket expenses (including, without limitation, expenses of having third
parties run computer programs to generate information), reasonably incurred by
Buyer in the performance of this covenant upon presentation of reasonable
evidence thereof.
(g) EMPLOYEE RECORDS RETENTION. Buyer shall retain all Employee Records
as required by Law. In addition, prior to the sixth anniversary of the Closing
Date, Buyer shall not dispose of any Employee Records unless Buyer has given
three months prior written notice to the PBGC, specifying in reasonable detail
the Employee Records to be disposed of and offering to make those records
available to the PBGC. If the PBGC notifies Buyer that it desires to receive all
or any portion of the Employee Records to be disposed of, Buyer shall use
commercially reasonable efforts to provide such Employee Records to the PBGC in
a form reasonably satisfactory to the PBGC. It shall be a condition precedent to
a Buyer's obligations in this SECTION 5.2(g) that the PBGC shall have agreed to
reimburse Buyer for all actual out-of-pocket expenses (including, without
limitation, expenses of having third parties run computer programs to generate
information), reasonably incurred by Buyer in the performance of this covenant
upon presentation of reasonable evidence thereof.
(h) TBT AGREEMENT COVENANTS. Buyer shall operate in place any Acquired
Assets that are subject to a TBT Agreement and shall procure, at or prior to the
Closing, without cost, expense or continuing obligation to Sellers, their
Affiliates or any of their respective Related Persons, the release, surrender or
termination of all letters of credit securing the obligations of Sellers and
their Affiliates under the TBT Agreements.
SECTION 5.3. HSR ACT.
(a) Subject to the terms and conditions of this Agreement, each of the
parties will (i) use commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary under
applicable Antitrust Laws to consummate the transactions contemplated by this
Agreement, (ii) use commercially reasonable efforts to file a Notification and
Report Form pursuant to the HSR Act with respect to the transactions
contemplated hereby within 15 Business Days of the date hereof, supplying as
promptly as practicable any additional information and documentary material that
may be requested pursuant to the HSR Act and (iii) use commercially reasonable
efforts to cause the expiration or termination of the applicable waiting periods
under the HSR Act as soon as practicable. Sellers shall pay 50% and Buyer shall
pay 50% of the filing fees required in connection with all filings by Buyer and
Sellers under the HSR Act.
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(b) In connection with the efforts referenced in SECTION 5.3(a) to
obtain all requisite approvals and authorizations for the transactions
contemplated by this Agreement under the HSR Act or any other Antitrust Law,
each of the parties shall use commercially reasonable efforts to (i) cooperate,
and assist as reasonably requested, with each other in connection with any
filing or submission and in connection with any investigation or other inquiry,
including any proceeding initiated by a private party, (ii) keep the other
parties informed in all material respects of any material communication received
by such party from, or given by such party to, the Federal Trade Commission (the
"FTC"), the Antitrust Division of the Department of Justice (the "DOJ") or any
other Government authority and of any material communication received or given
in connection with any proceeding by a private party, in each case regarding any
of the transactions contemplated hereby and (iii) permit the other parties to
review any material communication given to it by, and consult with each other in
advance of any meeting or conference with, the FTC, the DOJ or any other
Government authority in connection with any proceeding by a private party. The
foregoing obligations in this SECTION 5.3(b) shall be subject to the
Confidentiality Agreement and a confidentiality agreement (the "ANTITRUST CA")
by and between Sellers and Buyer of even date herewith with respect to the
confidential information of Buyer, and any attorney-client, work product or
other privilege, and each of the parties hereto will coordinate and cooperate
fully with the other parties hereto in exchanging such information and providing
such assistance as such other parties may reasonably request in connection with
the foregoing and in seeking early termination of any applicable waiting periods
under the HSR Act. Any competitively sensitive information that is disclosed
pursuant to this SECTION 5.3(b) will be limited to each party's respective
counsel and economists pursuant to a separate customary confidentiality
agreement.
SECTION 5.4. FILINGS AND APPROVALS REGARDING THE RAILWAY SUBSIDIARIES.
(a) Within ten (10) days following the date of this Agreement, Buyer
shall make or cause to be made all filings with and submissions to the Surface
Transportation Board under the ICC Termination Act that are required in
connection with the consummation of the transactions contemplated by this
Agreement in respect of the Railway Subsidiaries. Sellers shall be responsible
(or shall reimburse Buyer) for 50% of the filing fees in connection with such
filings and submissions. Sellers shall assist and support, and LTV shall cause
the Railway Subsidiaries to assist and support, Buyer in the preparation of such
filings and submissions, and Buyer shall provide Sellers an opportunity to
review and comment on all such filings and submissions prior to their
transmittal to the Surface Transportation Board.
(b) If the approvals or exemptions of the transactions from the Surface
Transportation Board contemplated by this Agreement in respect of the assets of
the Railroad Subsidiaries have not been obtained or become effective by the
Closing Date, then notwithstanding anything to the contrary herein, until such
approvals or exemptions are obtained, this Agreement shall not constitute an
agreement to assign the assets of the Railroad Subsidiaries, and to the extent
permitted by Law and subject to any required exemptions or approvals, from and
after the Closing Date (i) LTV shall use commercially reasonable efforts to
cause the Railroad Subsidiaries to continue to operate in the ordinary course of
business or as otherwise reasonably directed by Buyer; (ii) LTV shall, and LTV
shall cause the Railroad Subsidiaries to, enter into any reasonable arrangement
designed to provide Buyer with the benefits of, and cause Buyer to
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bear the costs and obligations of, LTV's ownership of the Railroad Subsidiaries;
(iii) LTV shall not accept any dividends or other distributions in respect of
the stock of the Railway Subsidiaries and shall have no obligation to make any
additional capital contributions to the Railway Subsidiaries; and (iv) Buyer
shall indemnify Sellers for any losses arising out of the operation of the
Railway Subsidiaries from and after the Closing Date.
SECTION 5.5. CONSENTS REGARDING LSE HOLDING. If LTV Corp. is unable to
obtain the consent Sumikin EGL Corp. necessary to transfer LTV Corp.'s equity
interest in LSE Holding, then, such failure shall not constitute an inaccuracy
of representation or warranty or breach of a covenant for a period of sixty (60)
days from and including the Closing Date and, notwithstanding anything to the
contrary herein, this Agreement shall not constitute an agreement to transfer
LTV Corp's equity interest in LSE Holding (and assume LTV Corp.'s obligations
related thereto) until such consent is obtained and from and after the Closing
Date (i) LTV Corp. shall use, and LTV Corp. shall cause LSE Holding to use,
commercially reasonable efforts to cause LSE to operate in the ordinary course
of business or as otherwise reasonably directed by the Buyer; (ii) LTV Corp.
shall cause LSE Holding to use its commercially reasonable efforts to cause LSE
to enter into any reasonable arrangement designed to provide Buyer with the
benefit of LSE Holding's percentage ownership of LSE, (iii) with the exception
of transfers to the Buyer or its Affiliates, LTV Corp. shall not transfer, sell
or hypothecate or otherwise dispose of its equity interest in LSE Holding; (iv)
LTV Corp. shall prohibit LSE Holding from selling, transferring, hypothecating
or otherwise disposing of its interest in LSE; (v) LTV Corp. shall not accept
any dividends or other distributions in respect of its equity interests in LSE
Holding; (vi) Buyer shall bear all costs and obligations relating to its equity
interest in LSE Holding and its obligations arising under the LSE partnership
agreement (but excluding the obligation to provide or pay for a letter of
credit); (vii) LTV Corp. shall cause LSE Holding and LTV Products to comply with
their obligations under the LSE Partnership Agreement and the L/C Agreement,
respectively and (viii) LTV Corp. shall use its reasonable commercial efforts to
obtain the consent of its joint venture partner in LSE necessary to transfer LTV
Corp.'s equity interest in LSE Holding to the Buyer. If LTV Corp. is unable to
transfer LTV Corp.'s equity interest in LSE Holding to Buyer on or prior to the
day that is sixty (60) days after the Closing Date (or such later date as the
parties may agree), then Buyer shall have a claim for inaccuracy of
representation and warranty pursuant to Section 4.1(j) and breach of the
covenant set forth in Section 1.1 and will be entitled to indemnification as
provided in Section 9.1.
SECTION 5.6. HOT IDLE DEPOSIT. On February 28, 2002, if Buyer is
selected as the winning bidder at the Auction, Buyer shall deposit with the
Escrow Agent $5,172,000 (the "HOT IDLE DEPOSIT"). The Hot Idle Deposit and sums
subsequently deposited in the account maintained pursuant to the Hot Idle Escrow
Agreement (collectively, the "HOT IDLE ACCOUNT") shall be held and disbursed
pursuant to the terms of the Hot Idle Escrow Agreement and this Agreement.
SECTION 5.7. OFFICE SPACE. From the Closing Date through December 31,
2002, Buyer shall permit, at no charge to Sellers, the employees listed on
Schedule 5.1(j) and consultants currently engaged by Seller and a reasonable
number of temporary employees to continue to utilize in accordance with their
previous practice their current offices and the office equipment and facilities
(including parking spaces) currently used by them at Independence Center.
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ARTICLE 6. TAXES.
SECTION 6.1. TAXES RELATED TO PURCHASE OF ASSETS. All federal, state
and local sales, transfer, gains, excise, value-added or other similar Taxes,
including, without limitation, all state and local Taxes in connection with the
transfer of the Acquired Assets, and all recording and filing fees
(collectively, "TRANSACTION TAXES"), that may be imposed by reason of the sale,
transfer, assignment and delivery of the Acquired Assets, and are not exempt
under section 1146(c) of the Bankruptcy Code, shall be paid by 50% by Buyer and
50% by Sellers. Buyer and Sellers agree to cooperate to determine the amount of
Transaction Taxes payable in connection with the transactions contemplated under
this Agreement. Buyer agrees to assist Sellers reasonably in the preparation and
filing of any and all required returns for or with respect to such Transaction
Taxes with any and all appropriate taxing authorities.
SECTION 6.2. PRORATION OF REAL AND PERSONAL PROPERTY TAXES. The items
listed on SCHEDULE 6.2 hereto relating to real and personal property taxes and
assessments on the Acquired Assets for any taxable period commencing prior to
the day immediately preceding the Closing Date (the "ADJUSTMENT DATE") and
ending after the Adjustment Date shall be prorated between Buyer and Seller as
of the close of business on the Adjustment Date. Such proration shall not be
affected by any changes in the applicable assessments following the Adjustment
Date. All such prorations shall be allocated so that items relating to time
periods ending prior to the Adjustment Date shall be allocated to Seller based
upon the number of days in the period prior to the Closing Date and items
related to time periods beginning on or after the Adjustment Date shall be
allocated to Buyer based upon the number of days in the period from and after
the Closing Date; provided, however, that the parties shall allocate any real
property Tax in accordance with Section 164(d) of the Code. The amount of all
such prorations shall be settled and paid on the Closing Date; provided,
however, that final payments with respect to prorations that are not able to be
calculated on the Closing Date shall be calculated and paid as soon as
practicable thereafter.
SECTION 6.3. COOPERATION ON TAX MATTERS. (a) Buyer and LTV Companies
agree to furnish or cause to be furnished to each other, as promptly as
practicable, such information and assistance relating to the Acquired Assets and
the Assumed Liabilities as is reasonably necessary for the preparation and
filing of any Tax Return, claim for refund or other required or optional filings
relating to Tax matters, for the preparation for and proof of facts during any
Tax audit, for the preparation for any Tax protest, for the prosecution or
defense of any suit or other proceeding relating to Tax matters and for the
answer to any governmental or regulatory inquiry relating to Tax matters.
(b) Buyer agrees to retain possession, at its own expense, of all
accounting, business, financial and Tax records and information (i) relating to
the Acquired Assets or the Assumed Liabilities that are in existence on the
Closing Date and transferred to Buyer hereunder and (ii) coming into existence
after the Closing Date that relate to the Acquired Assets or the Assumed
Liabilities before the Closing Date, for a period of at least six years from the
Closing Date. In addition, from and after the Closing Date, Buyer agrees that it
will provide access to Sellers and their attorneys, accountants and other
representatives (after reasonable notice and during normal business hours and
without charge), to the books, records, documents and other information relating
to the Acquired Assets or the Assumed Liabilities as Sellers may reasonably deem
27
necessary to (x) properly prepare for, file, prove, answer, prosecute and/or
defend any such Tax Return, claim, filing, tax audit, tax protest, suit,
proceeding or answer or (y) administer or complete any cases under chapter 11 of
the Bankruptcy Code of Sellers or the other LTV Parties. Such access shall
include, without limitation, access to any computerized information retrieval
systems relating to the Acquired Assets or the Assumed Liabilities.
SECTION 6.4. ALLOCATION OF PURCHASE PRICE AND PURCHASE PRICE ALLOCATION
FORMS. Buyer and Sellers agree to allocate the Purchase Price and the Assumed
Liabilities among the Acquired Assets in accordance with a schedule to be
reasonably agreed by them prior to the Closing Date (the "ALLOCATION"), provided
that if Buyer and Sellers are not able to agree on the Allocation prior to the
Closing Date, the Buyer's schedule of allocation shall be the Allocation.
Sellers and Buyer will cooperate in filing with the Internal Revenue Service
their respective Forms 8594 as provided for in SECTION 1060 of the Code on a
basis consistent with the Allocation, and the Allocation shall be reflected on
any Tax Returns required to be filed as a result of the transactions
contemplated hereby.
ARTICLE 7. CONDITIONS PRECEDENT TO PERFORMANCE BY PARTIES.
SECTION 7.1. CONDITIONS PRECEDENT TO PERFORMANCE BY SELLERS. The
obligation of LTV Companies to consummate the transactions contemplated by this
Agreement is subject to the fulfillment, at or before the Closing Date, of the
following conditions, any one or more of which (other than the condition
contained in SECTION 7.1(c)(i)) may be waived by LTV Companies in their sole
discretion:
(a) REPRESENTATIONS AND WARRANTIES OF BUYER. The representations and
warranties of Buyer made in Section 4.2 of this Agreement that are qualified as
to materiality or Material Adverse Effect shall be true and correct as of the
Closing Date as though made as of such time, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties shall be true and correct in all
material respects on and as of such earlier date). The representations and
warranties of Buyer made in Section 4.2 of this Agreement that are not qualified
as to materiality or Material Adverse Effect shall be true and correct in all
material respects as of the time of the Closing as though made as of such time,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties shall be true
and correct in all material respects on and as of such earlier date) and Sellers
shall have received a certificate, dated the Closing Date and signed by the
President of Buyer, to that effect.
(b) PERFORMANCE OF THE OBLIGATIONS OF BUYER. Buyer shall have performed
or complied in all material respects with all obligations required under this
Agreement to be performed by it on or before the Closing Date (except with
respect to the obligation to pay the Purchase Price in accordance with the terms
of this Agreement, which obligation shall be performed in all respects as
required under this Agreement), and Sellers shall have received a certificate
dated the Closing Date and signed by the President of Buyer, to that effect.
(c) CONSENTS AND APPROVALS.
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(i) The Bankruptcy Court shall have entered the Sale Order,
and no Order staying, reversing, modifying or amending the Sale Order
shall be in effect on the Closing Date.
(ii) The applicable waiting period under the HSR Act shall
have expired or terminated.
(d) NO VIOLATION OF ORDERS. No preliminary or permanent injunction or
other Order that declares this Agreement or the Guaranty invalid or
unenforceable in any respect or which prevents the consummation of the
transactions contemplated hereby shall be in effect.
(e) CURE OF DEFAULTS. At or prior to the Closing, Buyer shall have
cured, or made arrangements, satisfactory to Sellers in their sole discretion,
to promptly cure, any and all defaults under the Executory Contracts set forth
on SCHEDULE 4.1(m) that are required to be cured under the Bankruptcy Code, so
that such Executory Contracts may be assumed by Sellers and assigned to Buyer in
accordance with the provisions of section 365 of the Bankruptcy Code.
SECTION 7.2. CONDITIONS PRECEDENT TO THE PERFORMANCE BY BUYER. The
obligations of Buyer to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, at or before the Closing Date, of the
following conditions, any one or more of which (other than the condition
contained in SECTION 7.2(e)(i)) may be waived by Buyer in its sole discretion:
(a) REPRESENTATIONS AND WARRANTIES OF SELLERS. The representations and
warranties of the LTV Companies made in SECTION 4.1 of this Agreement that are
qualified as to Material Adverse Effect shall be true and correct as of the date
hereof and as of the Closing Date as though made as of such time, except to the
extent such representations and warranties expressly relate to an earlier date
(in which case such representations and warranties shall be true and correct in
all material respects on and as of such earlier date). The representations and
warranties of LTV Companies made in SECTION 4.1 of this Agreement that are not
so qualified shall be true and correct except as would not have a Material
Adverse Effect as of the date hereof and as of the Closing as though made as of
such time, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and warranties
shall be true and correct in all material respects on and as of such earlier
date) and Buyer shall have received a certificate, dated the Closing Date and
signed by the President or a Vice President of each LTV Company, to that effect.
(b) PERFORMANCE OF THE OBLIGATIONS OF SELLERS. Except as would not have
a Material Adverse Effect, LTV Companies shall have performed in all respects
all obligations required under this Agreement to be performed by it on or before
the Closing Date, and Buyer shall have received a certificate, dated the Closing
Date and signed by the President or a Vice President of each Seller, to that
effect. For the purposes of this Section 7.2(b) only (and without affecting the
interpretation of any other provision of this Agreement), the inability (if any)
of Seller to convey substantially all of the assets of the Railroad Subsidiaries
(to the extent not excluded from Acquired Assets by Buyer) to Buyer free and
clear of all Liens (other than Permitted Liens) on the Closing Date shall be
deemed to constitute a Material Adverse Effect.
29
(c) NO VIOLATION OF ORDERS. No provision of any applicable statute,
rule, regulation, executive order, decree, temporary restraining order,
judgment, preliminary or permanent injunction or other order enacted, entered,
promulgated, enforced or issued by any Federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (a "Governmental Entity") shall be in effect that (x) prevents the sale
and purchase of the Acquired Assets or any of the other transactions
contemplated by this Agreement, (y) would adversely affect or interfere with the
operation of the Business as contemplated to be conducted after the Closing in a
manner which would reasonably be expected to constitute a Material Adverse
Effect, or (z) would require the Buyer or any of its Affiliates to sell or
otherwise dispose of, hold separate or otherwise divest itself of, or operate in
any particular manner which would reasonably be expected to constitute a
Material Adverse Effect, any of the Acquired Assets to be acquired by Buyer or
any of the assets, properties or business of Buyer or any of its Affiliates.
(d) NO LITIGATION. There shall not be pending or threatened in writing
by any Governmental Entity any suit, action or proceeding, (i) challenging or
seeking to restrain, prohibit, alter or materially delay the sale and purchase
of the Acquired Assets or any of the other transactions contemplated by this
Agreement, or seeking to obtain from the Buyer or any of its Affiliates in
connection with the sale and purchase of the Acquired Assets to be acquired by
Buyer, any material damages or (ii) seeking to prohibit the applicable Buyer or
any of its Affiliates from effectively controlling or operating a material
portion of the Business or the Acquired Assets to be acquired by the Buyer.
(e) CONSENTS AND APPROVALS.
(i) The Bankruptcy Court shall have entered the Sale Order in
substantially the form attached as SCHEDULE 5.1(h), and no Order
staying or reversing or modifying or amending in any manner materially
adverse to Buyer the Sale Order shall be in effect on the Closing Date.
(ii) The applicable waiting period under the HSR Act shall
have expired or terminated.
(f) NO MATERIAL ADVERSE EFFECT. Since the date hereof, there shall not
have been any Material Adverse Effect.
(g) TITLE INSURANCE. The Title Company shall have issued a commitment
to issue to Buyer, upon Buyer's payment of the cost therefor and all fees and
expenses of the Title Company and to Buyer's delivery of all customary
documents, certificates and instruments required to by the Title Company, an
ALTA (or local equivalent) owner's coverage policy of title insurance for each
of the properties described as Item 1 on SCHEDULE 1.1(a), insuring the interest
to be acquired by Buyer in each property, subject only to standard survey
exceptions and Permitted Liens, and in each case in an amount not less than the
portion of the Purchase Price allocated to the property being insured
thereunder.
(h) INSURANCE POLICY BINDER. American International Group, Inc. (AIG
Environmental) ("AIG") (or another top-rated (by A. M. Best) insurance company
reasonably
30
acceptable to Buyer) shall have issued a binder (or an irrevocable commitment to
issue a binder) for insurance policies covering environmental remediation costs
arising out of or relating to pre-existing contamination of the Acquired Assets
(assuming their continued operation) providing for all of the coverages under
the AIG PLL Select Policy and Cost Cap Coverage (or substantial equivalents
thereof in the event a company other than AIG is underwriting the policies)
relating thereto and otherwise satisfying the conditions of this Section. The
attachment point of the policy shall be $200 million or less and the policy
payout limit shall be $100 million or more over a ten year term. The total
premium amount payable by Buyer (upon assignment) shall not exceed $15 million
over the term of the policy. The binder (or commitment) shall provide that it is
immediately transferable to Buyer upon the Closing. The condition set forth in
this Section 7.2(h) shall become null and void on March 16, 2002 if this
Agreement is not terminated by Buyer on March 15, 2002 pursuant to Section
8.1(g)(ii).
ARTICLE 8. TERMINATION.
SECTION 8.1. CONDITIONS OF TERMINATION. This Agreement may be
terminated at any time before the Closing:
(a) By mutual written consent of Sellers and Buyer;
(b) By Sellers, by notice to Buyer, on or after the date that is 45
days after the date hereof (the "WARRANTY TERMINATION DATE"), if the condition
contained in SECTION 7.1(a) has not been satisfied or waived;
(c) By Sellers, by notice to Buyer, if Sellers have previously provided
Buyer with written notice of Buyer's failure to perform any material covenant of
Buyer contained in this Agreement or any Ancillary Agreement and Buyer has
failed within five days after such notice to perform such covenant or provide
adequate assurance to Sellers of Buyer's ability to perform such covenant;
(d) By Sellers, by notice to Buyer, on or after the date that is 45
days after the date hereof (the "APPROVAL TERMINATION DATE"), if any condition
contained in SECTION 7.1(c) or SECTION 7.1(d) has not been satisfied or waived;
provided, however, that Sellers shall not have the right to terminate this
Agreement under this SECTION 8.1(d) if Sellers sought, or failed to use
reasonable commercial efforts to oppose, the entry of any Order described in
SECTION 7.1(d);
(e) By Buyer, by notice to Sellers, on or after the date that is 45
days after the date of this Agreement, if the condition contained in SECTION
7.2(a) has not been satisfied or waived;
(f) By Buyer, by notice to Sellers, if Buyer has previously provided
LTV Companies with written notice of a failure to perform any material covenant
of the LTV Companies contained in this Agreement or any Ancillary Agreement and
the LTV Companies have failed within five days after such notice to perform such
covenant or provide adequate assurance to Buyer of LTV Companies' ability to
perform such covenant and such failure, individually or in the aggregate with
any other such failure, results or would reasonably be expected to result in a
Material Adverse Effect;
31
(g) (i) By Buyer, by notice to Sellers, on or after the date that is 45
days after the date of this Agreement, if any condition contained in SECTION
7.2(b) - SECTION 7.2(g) has not been satisfied or waived, or (ii) by Buyer, by
notice to Sellers on March 15, 2002 (time being of the essence with respect to
this clause), if the condition contained in SECTION 7.2(h) has not been
satisfied or waived on or prior to such date;
(h) Automatically, upon LTV consummating any transaction (or series of
transactions) involving a sale of all or substantially all of the Business or
the Acquired Assets (other than the Additional Assets) to a purchaser or
purchasers other than the Buyer (an "ALTERNATIVE TRANSACTION"); or
(i) By Seller, by notice to Buyer, on or after the Approval Termination
Date, if any condition contained in SECTION 7.1(b) or 7.1(c) has not been
satisfied or waived.
Notwithstanding the foregoing, neither Sellers nor Buyer may rely on
the failure of any condition to closing, set forth in SECTION 7.1 or 7.2
respectively, to be satisfied as a basis for termination if such failure was
caused by such party's breach of this Agreement or failure to use its reasonable
efforts to cause the Closing to occur, as provided for in this Agreement or if
such party is otherwise in material breach of this Agreement.
SECTION 8.2. EFFECT OF TERMINATION; REMEDIES.
(a) In the event of termination pursuant to SECTION 8.1, this Agreement
shall become null and void and have no effect (other than Articles 8, 9, and 10,
which shall survive termination), with no liability on the part of the LTV
Companies or Buyer, or their respective Affiliates or Related Persons, with
respect to this Agreement or any Ancillary Agreement, except for (i) the
liability of a party for its own expenses pursuant to SECTION 10.3; and (ii) any
liability provided for in SECTION 8.2(b) through SECTION 8.2(g), inclusive.
(b) If this Agreement is terminated pursuant to SECTION 8.1(d) (solely
with respect to the conditions set forth in 1(c)(i) or 7.1(d) not being
satisfied or waived), SECTION 8.1(e), SECTION 8.1(f), SECTION 8.1(g) (solely
with respect to the conditions set forth in Sections 7.2(b), 7.2(c), 7.2(d),
7.2(e)(i), 7.2(f), 7.2(g) and 7.2(h) not being satisfied or waived) and SECTION
8.1(h) then, upon such termination, the Performance Deposit shall be returned to
Buyer, the balance held in the Hot Idle Account shall be paid to Buyer, and
Sellers shall pay to Buyer an amount equal to the amount paid to Sellers from
the Hot Idle Account. In addition, Buyer shall be reimbursed by Sellers upon
demand for all of its out-of-pocket expenses (subject to a $1,000,000 cap only
in the case of a termination pursuant to Section 8.1(g) arising out of the
condition set forth in Section 7.2(h) not being satisfied or waived) incurred in
connection with this Agreement and the transactions contemplated hereby.
(c) If this Agreement is terminated pursuant to (i) Section 8.1(a) or
(ii) SECTION 8.1(d) or 8.1(G) as a result of the failure to satisfy the
conditions set forth in SECTION 7.1(c)(ii) or 7.2(e)(ii), respectively,then,
upon such termination, the Performance Deposit shall be returned to the Buyer,
the balance held in the Hot Idle Account shall be paid to the Buyer, and the
Sellers shall pay to the Buyer an amount equal to 50% of the amount paid to
Sellers from the Hot Idle Account. In addition, Buyer shall be reimbursed by
Sellers upon demand for 50% of its out-of-
32
pocket expenses incurred in connection with this Agreement and the transactions
contemplated thereby.
(d) If this Agreement is terminated pursuant to SECTION 8.1(b), then
Sellers shall retain all amounts paid to it from the Hot Idle Account and shall
be paid the Performance Deposit and the balance held in the Hot Idle Account,
together with any interest accrued thereon, in accordance with the terms of the
Performance Escrow Agreement and the Hot Idle Escrow Agreement.
(e) If this Agreement is terminated pursuant to SECTION 8.1(c) or
8.1(i), Sellers shall retain all amounts paid to it from the Hot Idle Account,
be paid the Performance Deposit and the balance held in the Hot Idle Account,
together with any interest accrued thereon.
(f) If this Agreement is terminated pursuant to SECTION 8.1(h) because
an Alternative Transaction was consummated, then, in addition to the amounts set
forth in SECTION 8.2(b), Buyer shall be entitled to receive from LTV a payment
in the amount equal to $4,000,000 (the "Break-Up Fee"). Such Break-Up Fee shall
be paid on the date of consummation of the Alternative Transaction without the
requirement of any notice or demand from Buyer. The Break-Up Fee shall be
payable directly from and secured by the cash component consideration of the
Alternative Transaction consummated by LTV. The obligations of LTV to pay the
Break-Up Fee shall be entitled to administrative expense claim status under 11
U.S.C. SECTIONS 503(b)(1)(A) and 507(A)(1), which shall not be subordinate to
any other administrative expense claim.
(g) If this Agreement is terminated pursuant to SECTION 8.1(e) or
8.1(f) and subsequent thereto, an Alternative Transaction is consummated, then,
in addition to the amounts set forth in SECTION 8.2(b), Buyer shall be entitled
to receive from LTV a payment in the amount equal to $4,000,000 ($3,000,000 if
the aggregate gross proceeds received (counting any indebtedness issued or
assumed by the purchaser in such transaction at the face amount thereof) in the
Alternative Transaction with respect to the Acquired Assets (other than the
Additional Assets) is less than the Acquired Asset Purchase Price) (the
"Break-Up Fee") Such Break-Up Fee shall be paid on the date of consummation of
the Alternative Transaction without the requirement of any notice or demand from
Buyer. The Break-Up Fee shall be payable directly from and secured by the cash
component consideration of the Alternative Transaction consummated by LTV. The
obligations of LTV to pay the Break-Up Fee shall be entitled to administrative
expense claim status under 11 U.S.C. Section 503(b)(1)(A) and 507(A)(1), which
shall not be subordinate to any other administrative expense claim.
ARTICLE 9. SURVIVAL AND INDEMNIFICATION.
SECTION 9.1. SURVIVAL; REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Agreement shall survive for a period
of one (1) year after the Closing Date and shall not be extinguished by the
Closing or any investigation made by or on behalf of any party hereto.
SECTION 9.2. INDEMNIFICATION OF BUYER BY SELLERS. LTV Companies hereby
agree to indemnify and hold harmless Buyer against any and all loss, liability
and damage
33
(including, without limitation, amounts paid in settlement, legal expenses,
including attorneys' fees, and costs of investigation) (hereinafter referred to
collectively as the "Losses") resulting or arising from claims asserted within
the period specified in SECTION 9.1 insofar as such Losses arise out of or are
based upon (a) the inaccuracy of any representation or warranty of LTV Companies
contained herein (excluding in determining whether there has been any such
inaccuracy any Knowledge qualification contained in SECTION 4.1(1)), or (b)
breach of any covenant or other agreement contained herein on the behalf of LTV
Companies. Any claim for indemnification of Buyer by LTV Companies pursuant to
this SECTION 9.2 shall be paid solely out of the Escrow Amount and Buyer shall
not have any additional recourse against LTV Companies for such indemnification
claims.
SECTION 9.3. INDEMNIFICATION OF SELLERS BY BUYER. Buyer hereby agrees
to indemnify and hold harmless LTV Companies against any and all loss, liability
and damage (including, without limitation, amounts paid in settlement, legal
expenses, including attorneys' fees, and costs of investigation) (hereinafter
referred to collectively as the "Losses") resulting or arising from claims
asserted within the period specified in SECTION 9.1 insofar as such Losses arise
out of or are based upon (a) the inaccuracy of any representation or warranty of
Buyer contained herein, or (b) breach of any covenant or other agreement
contained herein on the behalf of Buyer.
SECTION 9.4. NOTICE OF CLAIM OR ACTION. If any action, proceeding or
claim shall be brought against one of the parties hereto, by any third party,
which action, proceeding or claim, if determined adversely, would entitle a
party hereto to indemnification under SECTIONS 9.2 or 9.3 of this Agreement, the
party against whom such claim, action or proceeding is brought shall promptly
notify the other party of such claim, action or proceeding in writing; provided.
however, that failure to provide such notice shall only affect a party's right
to indemnification hereunder to the extent that the rights of the indemnifying
party were actually prejudiced by such failure to provide notice.
SECTION 9.5. EXCLUSIVE REMEDY. The parties agree that except as set
forth in this SECTION 9.5, following the Closing Date, Buyer's and LTV
Companies' sole and exclusive remedy for any claim arising out of or in
connection with this Agreement shall be the indemnification rights set forth in
this ARTICLE IX. Notwithstanding the foregoing, in the event of a breach of the
covenants set forth in SECTIONS 5.1(c), 5.1(d) or 5.1(e), Buyer shall have the
right to seek a court order providing for specific performance of such
provisions.
ARTICLE 10. MISCELLANEOUS.
SECTION 10.1. SUCCESSORS AND ASSIGNS. Except as otherwise provided in
this Agreement, no party hereto shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other party
hereto, and any such attempted assignment without such prior written consent
shall be void and of no force and effect. Buyer will have the right to assign
this Agreement to one or more of its Affiliates provided that the obligation of
such Affiliates under this Agreement are made subject to the Guaranty. This
Agreement shall inure to the benefit of and shall be binding upon the successors
and permitted assigns of the parties hereto.
34
SECTION 10.2. GOVERNING LAW; JURISDICTION. This Agreement shall be
construed, performed and enforced in accordance with, and governed by, the Laws
of the State of Ohio (without giving effect to the principles of conflicts of
Laws thereof), except to the extent that the Laws of such State are superseded
by the Bankruptcy Code. For so long as LTV is subject to the jurisdiction of the
Bankruptcy Court, the parties hereto irrevocably elect as the sole judicial
forum for the adjudication of any matters arising under or in connection with
the Agreement, and consent to the exclusive jurisdiction of, the Bankruptcy
Court. After LTV is no longer subject to the jurisdiction of the Bankruptcy
Court, the parties hereto irrevocably elect as the sole judicial forum for the
adjudication of any matters arising under or in connection with this Agreement,
and consent to the jurisdiction of, any state or federal court having competent
jurisdiction over Cuyahoga County, Ohio.
SECTION 10.3. EXPENSES. Except as otherwise provided herein, each of
the parties hereto shall pay its own expenses in connection with this Agreement
and the transactions contemplated hereby, including, without limitation, any
legal and accounting fees, whether or not the transactions contemplated hereby
are consummated. Buyer shall pay the cost of all surveys, title insurance
policies and title reports ordered by Buyer.
SECTION 10.4. BROKER'S AND FINDER'S FEES. Each of the parties
represents and warrants that it has dealt with no broker or finder in connection
with any of the transactions contemplated by this Agreement other than The
Blackstone Group, L.P., whose fees and expenses shall, as between the parties
hereto, be the responsibility of Sellers, and, insofar as each party knows, no
other broker or other Person is entitled to any commission or finder's fee in
connection with any of these transactions.
SECTION 10.5. SEVERABILITY. In the event that any part of this
Agreement is declared by any court or other judicial or administrative body to
be null, void or unenforceable, said provision shall survive to the extent it is
not so declared, and all of the other provisions of this Agreement shall remain
in full force and effect only if, after excluding the portion deemed to be
unenforceable, the remaining terms shall provide for the consummation of the
transactions contemplated hereby in substantially the same manner as originally
set forth at the later of the date this Agreement was executed or last amended.
SECTION 10.6. NOTICES. (a) All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given: (i) on the date of service, if served personally on the
party to whom notice is to be given; (ii) on the day of transmission, if sent
via facsimile transmission to the facsimile number given below, and telephonic
confirmation of receipt is obtained promptly after completion of transmission;
(iii) on the day after delivery to Federal Express or similar overnight courier
or the Express Mail service maintained by the United States Postal Service; or
(iv) on the fifth day after mailing, if mailed to the party to whom notice is to
be given, by first class mail, registered or certified, postage prepaid and
properly addressed, to the party as follows:
If to LTV Companies:
LTV Steel Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
copy to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
North Point
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer:
WLR Acquisition Corp.
▇/▇ ▇▇ ▇▇▇▇ & ▇▇. ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇ ▇▇▇▇▇)
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
Stroock & Stroock & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Any party may change its address for the purpose of this SECTION
10.6 by giving the other party written notice of its new address in the manner
set forth above.
SECTION 10.7. AMENDMENTS; WAIVERS. This Agreement may be amended or
modified, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by the
parties hereto, or in the case of a waiver, by the party waiving compliance. Any
waiver by any party of any condition, or of the breach of any provision, term,
covenant, representation or warranty contained in this Agreement, in any one or
more instances, shall not be deemed to be or construed as a furthering or
continuing waiver of any such condition, or of the breach of any other
provision, term, covenant, representation or warranty of this Agreement.
SECTION 10.8. PUBLIC ANNOUNCEMENTS. Promptly after the execution and
delivery of this Agreement, the parties shall make a joint press release in form
and substance reasonably satisfactory to both of them regarding the transaction
contemplated herein.
36
Thereafter, no party shall make any press release or public announcement
concerning the transactions contemplated by this Agreement without the prior
written approval of the other parties, unless a press release or public
announcement is required by Law or Order of the Bankruptcy Court. If any such
announcement or other disclosure is required by Law or Order of the Bankruptcy
Court, the disclosing party agrees to give the nondisclosing party or parties
prior notice of, and an opportunity to comment on, the proposed disclosure. The
parties acknowledge that Sellers shall file this Agreement with the Bankruptcy
Court in connection with obtaining the Sale Order.
SECTION 10.9. ENTIRE AGREEMENT. This Agreement, the Ancillary
Agreements, the Confidentiality Agreement and the Antitrust CA contain the
entire understanding between the parties hereto with respect to the transactions
contemplated hereby and supersede and replace all prior and contemporaneous
agreements and understandings, oral or written, with regard to such
transactions. All schedules hereto and any documents and instruments delivered
pursuant to any provision hereof are expressly made a part of this Agreement as
fully as though completely set forth herein.
SECTION 10.10. PARTIES IN INTEREST.
(a) The PBGC is an intended third party beneficiary of Buyer's
covenants contained in SECTION 5.2(f) and SECTION 5.2(g).
(b) Except as provided in SECTION 10.10(a), nothing in this Agreement
is intended to or shall confer any rights or remedies under or by reason of this
Agreement on any Persons other than LTV Companies and Buyer and their respective
successors and permitted assigns. Nothing in this Agreement is intended to or
shall relieve or discharge the obligations or liability of any third Persons to
LTV Companies or Buyer. This Agreement is not intended to nor shall give any
third Persons any right of subrogation or action over or against LTV Companies
or Buyer.
SECTION 10.11. HEADINGS. The article and section headings in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
SECTION 10.12. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument.
SECTION 10.13. JOINT AND SEVERAL OBLIGATIONS. The obligations of the
LTV Companies hereunder shall be joint and several.
ARTICLE 11. DEFINITIONS.
SECTION 11.1. CERTAIN TERMS DEFINED. as used in this Agreement, the
following terms have the following meanings:
"AFFILIATE" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such other Person.
"ANCILLARY AGREEMENTS" mean the Guaranty, the Hot Idle Escrow Agreement
and the Performance Escrow Agreement.
37
"ANTITRUST LAW" means the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇ Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other Laws and Orders, that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade or lessening of competition through merger or acquisition.
"APP" means the Asset Protection Plan approved by the Bankruptcy Court
on December 7, 2001.
"BUSINESS DAY" means any day other than Saturday, Sunday and any day
that is a legal holiday or a day on which banking institutions in Cleveland,
Ohio are authorized by Law or other governmental action to close.
"CODE" means the Internal Revenue Code of 1986, as amended.
"EMPLOYEE RECORDS" means all employment and benefit records (in
whatever form maintained) in the possession of Buyer or its agents and
pertaining to any Person formerly employed by Sellers, or any spouse, dependent
or other beneficiary of any such Person.
"ENVIRONMENTAL LAWS" means all applicable federal, state and local
statutes, ordinances, rules, Orders, regulations and other provisions having the
force of law, all judicial and administrative Orders and determinations, and all
common law concerning pollution or protection of human health and the
environment, including, without limitation, all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control or cleanup of any Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGENT" means The Huntington National Bank, N.A.
"EXCESS SUPPLIES" means those Supplies not reasonably required by Buyer
to start up the Business and maintain customary operations and processing for a
period of four months from the Closing Date.
"GOVERNMENT" means any agency, division, subdivision, audit group,
procuring office or governmental or regulatory authority in any event or any
adjudicatory body thereof, of the United States, or any state thereof, including
the employees or agents thereof.
"GUARANTY" means the Guaranty, dated as of the date hereof, by the
principal stockholder of Buyer in favor of LTV Companies.
"HAZARDOUS MATERIALS" means any hazardous or toxic substance or waste
or any contaminant or pollutant regulated or otherwise creating liability under
Environmental Laws, including, but not limited to, "hazardous substances" as
defined by the Comprehensive Environmental Response Compensation and Liability
Act, as amended, "toxic substance" as defined by the Toxic Substance Control
Act, as amended, "hazardous wastes" as defined by the Resource Conservation and
Recovery Act, as amended, "hazardous materials" as defined by the
38
Hazardous Materials Transportation Act, as amended, thermal discharges,
radioactive substances, PCBs, natural gas, petroleum products or byproducts, and
crude oil.
"HOT IDLE ESCROW AGREEMENT" means the Hot Idle Escrow Agreement by and
among Buyer, Sellers and the Escrow Agent, dated as of the date hereof.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"ICC TERMINATION ACT" means the ICC Termination Act of 1995, as
amended.
"IMPROVEMENTS" mean the buildings, improvements and structures now
existing on the Real Property and/or demised under any lease of, or other
Contract for the use of, Real Property.
"INVENTORY" means all slabs, raw materials, iron ore chips, finished
goods, work-in- process, spare parts and Excess Supplies located on the Real
Property and elsewhere.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE OF SELLER," "Seller's Knowledge" or any other similar term
or knowledge qualification means the actual conscious knowledge of (a) the
division managers, general manager and the plant manager and at Indiana Harbor
with respect to Indiana Harbor, (b) the division managers, general manager and
the plant manager at Cleveland Works with respect to Cleveland Works, in each
case as of the date hereof, (c) the plant managers, general managers, division
managers of Hennepin, Lorain Pellet Handling Terminal, ▇▇▇▇▇▇ ▇▇▇▇ Battery,
Grand River Lime Facility and Independence Center with respect to their
respective plants and facilities and (d) ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien
(statutory or other) or conditional sale agreement, other than (a) a lessor's
interest in, and any mortgage, pledge, security interest, encumbrance, lien
(statutory or other) or conditional sale agreement on or affecting a lessor's
interest in, property underlying any leases; (b) any imperfection of title with
respect to any asset that does not materially interfere with the present
occupancy, use or marketability of such asset and the continuation of the
present occupancy or use of such asset; and (c) such covenants, conditions,
restrictions, easements, encroachments or encumbrances that are not created
pursuant to mortgages or other financing or security documents, or any other
state of facts, that do not materially interfere with the present occupancy or
use of an asset.
"LTV BENEFIT PLAN" means any employee benefit plan (as defined in
SECTION 3(3) of ERISA) maintained or contributed to by LTV.
"MONTHLY REPORTS" mean the Monthly Report of the LTV Steel Company,
Inc. Environmental Control Department for the months January through October,
2001, attached as composite Exhibit A.
39
"PERMITTED LIENS" mean: (a) all Liens set forth on SCHEDULE 11.1; (b)
Liens for Taxes, assessments and Government or other similar charges that are
not yet delinquent, that relate to pre-petition periods or that are being
contested in good faith; and (c) Liens that will attach to the proceeds of the
sale under this Agreement pursuant to section 363 of the Bankruptcy Code or will
not survive the Closing.
"PERFORMANCE ESCROW AGREEMENT" means that Performance Escrow Agreement
by and among Buyer, Sellers and Escrow Agent, dated as of the date hereof.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint- stock company, trust, unincorporated organization or
Government.
"RELATED PERSON" means, with respect to any Person, all past, present
and future directors, officers, members, managers, stockholders, employees,
controlling persons, agents, professionals, attorneys, accountants, investment
bankers or representatives of any such Person.
"SUPPLIES" means all supplies, items and materials (including spare
parts) utilized to operate and maintain the Machinery and Equipment or to
process raw materials and work in process.
"TAXES" means all taxes, however denominated, including any interest,
penalties or additions to tax that may become payable in respect thereof,
imposed by any Government, which taxes shall include all income taxes, payroll
and employee withholding, unemployment insurance, social security (or similar),
sales and use, excise, franchise, gross receipts, occupation, real and personal
property, stamp, transfer, workmen's compensation, customs duties, registration,
documentary, value added, alternative or add-on minimum, estimated,
environmental (including taxes under section 59A of the Code) and other
obligations of the same or a similar nature, whether arising before, on or after
the Closing Date; and "Tax" shall mean any one of them.
"TAX RETURN" means any report, return, information return, filing or
other information, including any schedules, exhibits or attachments thereto, and
any amendments to any of the foregoing required to be filed or maintained in
connection with the calculation, determination, assessment or collection of any
Taxes (including estimated Taxes).
"TBT AGREEMENT" means any Executory Contract identified in SCHEDULE
4.1(h) as a TBT Agreement.
"TITLE COMPANY" means any one or more of Chicago Title Insurance
Company, Meridian Title Corporation, Commonwealth Land Title Company or other
title insurance company reasonably acceptable to Buyer.
SECTION 11.2. ALL TERMS CROSS-REFERENCED. Each of the following terms
is defined in the Section set forth opposite such term:
TERM SECTION
---- -------
Acquired Assets...................................... Section 1.1
40
Acquired Asset Purchase Price........................ Section 2.1
Additional Assets.................................... Section 1.6(b)
Adjustment Date...................................... Section 6.2
Affiliate............................................ Section 11.1
Agreement............................................ Preamble
Allocation........................................... Section 6.4
Alternative Transaction.............................. Section 8.1(h)
Ancillary Agreements................................. Section 11.1
Antitrust CA......................................... Section 5.3(b)
Antitrust Law........................................ Section 11.1
APP.................................................. Background Information
Approval Termination Date............................ Section 8.1(d)
Asset Sale and Auction Procedures.................... Background Information
Assumed Liabilities.................................. Section 1.3
Bankruptcy Cases..................................... Background Information
Bankruptcy Code...................................... Background Information
Bankruptcy Court..................................... Background Information
Break-Up Fee......................................... Section 8.2(e)(ii)
Business............................................. Background Information
Business Day......................................... Section 11.1
Buyer................................................ Preamble
Buyer's Response..................................... Section 1.6(b)
Chicago Short Line................................... Preamble
Claims............................................... Section 1.2(g)
Cleveland Works...................................... Background Information
41
Cliffs............................................... Section 5.2(e)
Cliffs Pellets....................................... Section 5.2(e)
Closing.............................................. Section 3.1
Closing Date......................................... Section 3.1
Closing Date Inventory............................... Section 3.2(b)
Code................................................. Section 11.1
Confidentiality Agreement............................ Section 5.1(b)(b)
Contract............................................. Section 4.1(c)
Cuyahoga............................................. Preamble
DOJ.................................................. Section 5.3(b)
Employee Records..................................... Section 11.1
Environmental Laws................................... Section 11.1
ERISA................................................ Section 11.1
Escrow Agent......................................... Section 11.1
Escrow Amount........................................ Section 3.3(b)
Estimated Remediation Cost........................... Section 2.3
Excluded Assets...................................... Section 1.2
Excluded Contract.................................... Section 1.1(d)
Excluded Liabilities................................. Section 1.4
Execution Date....................................... Preamble
Executory Contracts.................................. Section 1.1(d)
Excess Supplies...................................... Section 11.1
FTC.................................................. Section 5.3(b)
Government........................................... Section 11.1
Governmental Entity.................................. 7.2(c)
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Grand River Lime Facility............................ Background Information
Guaranty............................................. Section 11.1
Hazardous Materials.................................. Section 11.1
Hennepin............................................. Background Information
Hot Idle Account..................................... Section 5.5
Hot Idle Deposit..................................... Section 5.5
Hot Idle Escrow Agreement............................ Section 11.1
HSR Act.............................................. Section 11.1
ICC Termination Act.................................. Section 11.1
Improvements......................................... Section 11.1
Independence Center.................................. Background Information
Indiana Harbor....................................... Background Information
Initial Inventory.................................... Section 3.2(a)
Initial Negotiation Period........................... Section 1.6(b)
Intellectual Property Rights......................... Section 4.1(q)
Inventory............................................ Section 11.1
IRS.................................................. Section 11.1
Knowledge of Sellers................................. Section 11.1
Law.................................................. Section 4.1(c)
Leased Machinery and Equipment....................... Section 1.1(c)
Lien................................................. Section 11.1
Lorain Pellet Handling Terminal...................... Background Information
Losses............................................... Section 9.2
LSE.................................................. Background Information
LSE Interest......................................... Section 4.1(j)(i)
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LTV.................................................. Preamble
LTV Benefit Plan..................................... Section 11.1
LTV Parties.......................................... Background Information
Machinery and Equipment.............................. Section 1.1(c)
Maintenance Budget................................... Section 5.1(k)
Material Adverse Effect.............................. Section 4.1(c)
Monthly Reports...................................... Section 11.1
Motor Vehicles....................................... Section 1.1(h)
Negotiated Inventory................................. Section 1.6(b)
Order................................................ Section 4.1(c)
Owned Machinery and Equipment........................ Section 1.1(b)
PBGC................................................. Section 5.2(f)
Performance Deposit.................................. Section 2.2
Performance Escrow Agreement......................... Section 11.1
Permits.............................................. Section 1.1(j)
Permitted Liens...................................... Section 11.1
Person............................................... Section 11.1
Petition Date........................................ Background Information
Purchase Orders...................................... Section 1.2(f)
Purchase Price....................................... Section 2.1
Railroad Subsidiaries................................ Preamble
Railway Stock........................................ Section 1.1(h)
Railway Subsidiaries................................. Section 1.1(h)
Real Property........................................ Section 1.1(a)
Related Person....................................... Section 11.1
44
RTR.................................................. Preamble
Sale Order........................................... Background Information
Sales Obligations.................................... Section 1.2(e)
Securities Act....................................... Section 4.2(g)
Sellers.............................................. Preamble
Sellers.............................................. Preamble
Sellers Property..................................... Section 1.6(a)
Sellers' Account..................................... Section 3.3(a)
Sellers' Knowledge................................... Section 11.1
Supplies............................................. Section 11.1
Tax.................................................. Section 11.1
Tax Return........................................... Section 11.1
Taxes................................................ Section 11.1
TBT Agreement........................................ Section 11.1
Transaction Taxes.................................... Section 6.1
WARN Act............................................. Section 5.1(j)(a)(i)
Warranty Termination Date............................ Section 8.1(b)
▇▇▇▇▇▇ ▇▇▇▇ Battery.................................. Background Information
[Signatures are on the following page.]
45
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
WLR ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
--------------------------------------
Name:
Title:
LTV STEEL COMPANY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman, President and
Chief Executive Officer
RIVER TERMINAL RAILWAY COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
CHICAGO SHORT LINE RAILWAY COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
THE CUYAHOGA VALLEY RAILWAY COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
46
Title: President
THE LTV CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: CEO
LTV ELECTRO-GALVANIZING, INC.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: CEO
47