1
Exhibit 10.54
WINSTON & ▇▇▇▇▇▇
================================================================================
CONTRIBUTION AND SALE AGREEMENT
LTV STEEL PRODUCTS, LLC,
as Purchaser
LTV STEEL COMPANY, INC.,
as Servicer
and
LTV STEEL COMPANY, INC.
and
GEORGIA TUBING CORPORATION,
as initial Sellers
Dated as of February 26, 1998
================================================================================
2
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I
DEFINITIONS............................................................................................-1-
1.1 Defined Terms.................................................................................-1-
1.2 Other Definitional Provisions.................................................................-1-
ARTICLE II
PURCHASE AND SALE OF INVENTORY.........................................................................-2-
2.1 Purchase and Sale of Inventory................................................................-2-
2.2 Purchase Price................................................................................-2-
2.3 Payment of Purchase Price.....................................................................-3-
2.4 No Repurchase.................................................................................-4-
2.5 Obligations Unaffected........................................................................-4-
2.6 Certain Charges...............................................................................-4-
ARTICLE III
CONDITIONS TO PURCHASE AND SALE.................................... ..................................-4-
3.1 Conditions Precedent to the Purchaser's Initial Purchase of Inventory.........................-4-
3.2 Conditions Precedent to All The Purchaser's Purchases of Inventory............................-5-
3.3 Conditions Precedent to each Seller's Obligations.............................................-5-
3.4 Conditions Precedent to the Addition of a Seller..............................................-6-
3.5 Suspension of Purchases.......................................................................-7-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES................................... .....................................-7-
4.1 Representations and Warranties of the Servicer................................................-7-
4.2 Representations and Warranties of each Seller.................................................-8-
ARTICLE V
AFFIRMATIVE COVENANTS.................................................................................-13-
5.1 Certificates; Other Information..............................................................-13-
5.2 Compliance with Laws, etc....................................................................-14-
5.3 Preservation of Corporate Existence..........................................................-14-
5.4 Visitation Rights............................................................................-14-
-i-
3
PAGE
----
5.5 Location of Records..........................................................................-14-
5.6 Furnishing Copies, etc.......................................................................-14-
5.7 Obligations with Respect to Obligors and Inventory...........................................-15-
5.8 Further Action...............................................................................-15-
5.9 Certain Agreements Regarding Inventory.......................................................-17-
ARTICLE VI
NEGATIVE COVENANTS....................................................................................-18-
6.1 Liens........................................................................................-18-
6.2 Change in Name...............................................................................-18-
6.3 Accounting of Purchases......................................................................-18-
6.4 Ineligible Inventory.........................................................................-19-
ARTICLE VII
PURCHASE TERMINATION EVENTS...........................................................................-19-
7.1 Purchase Termination Events..................................................................-19-
7.2 Additional Remedies..........................................................................-21-
ARTICLE VIII
MISCELLANEOUS.........................................................................................-21-
8.1 Payment......................................................................................-21-
8.2 Costs and Expenses...........................................................................-21-
8.3 Successors and Assigns.......................................................................-22-
8.4 GOVERNING LAW................................................................................-23-
8.5 No Waiver; Cumulative Remedies...............................................................-23-
8.6 Amendments and Waivers.......................................................................-23-
8.7 Severability.................................................................................-23-
8.8 Notices......................................................................................-23-
8.9 Counterparts.................................................................................-23-
8.10 Construction of Agreement as Security Agreement..............................................-23-
8.11 WAIVERS OF JURY TRIAL........................................................................-24-
8.12 Submission to Jurisdiction; Waivers..........................................................-24-
8.13 Addition of Sellers..........................................................................-25-
8.14 Optional Termination of Seller...............................................................-25-
8.15 No Bankruptcy Petition.......................................................................-25-
8.16 Termination..................................................................................-25-
8.17 Confidentiality..............................................................................-25-
8.18 Effectiveness................................................................................-26-
-ii-
4
ANNEX X Definitions
SCHEDULES
---------
1 Locations of Chief Executive Offices;
Locations of Books and Records
2 Legal and Corporate Names of Sellers
3 Form of Collateral Access Agreement
4 Listing of Applicable Bulk Sales Provisions
EXHIBITS
--------
A-1 Form of Sales and Valuation Report (Monthly)
A-2 Form of Sales and Valuation Report (Weekly)
A-3 Form of Sales and Valuation Report (Daily)
B Form of Price and Fees Agreement
-iii-
5
CONTRIBUTION AND SALE AGREEMENT, dated as of February 26, 1998, among
LTV STEEL COMPANY, INC., a corporation organized under the laws of the State of
New Jersey ("LTV Steel", and in its role as Servicer of the Purchased Inventory,
the "Servicer") and GEORGIA TUBING CORPORATION, a corporation organized under
the laws of the state of Delaware ("Georgia Tubing"), and such other sellers as
may become parties hereto under the terms of this Agreement (each individually
referred to herein as a "Seller" and collectively as "Sellers") and LTV STEEL
PRODUCTS, LLC, a limited liability company organized under the laws of the State
of Delaware (the "Company" or the "Purchaser").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, in the ordinary course of business, the Sellers
maintain Inventory;
WHEREAS, the Sellers desire to sell to the Purchaser, and the
Purchaser desires to purchase from the Sellers, all the Sellers' right, title
and interest in, to and under the Inventory (as hereinafter defined) now
existing or hereafter maintained;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. Capitalized terms used in this Agreement
shall have the respective meanings assigned to such terms in Annex X hereto
unless otherwise defined herein.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof",
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and section, subsection, schedule and exhibit references are to
this Agreement unless otherwise specified.
(b) As used herein and in any certificate or other document
made or delivered pursuant hereto, accounting terms relating to the Sellers and
the Purchaser, unless otherwise defined herein, shall have the respective
meanings given to them under GAAP.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
6
ARTICLE II
PURCHASE AND SALE OF INVENTORY
2.1 PURCHASE AND SALE OF INVENTORY. (a) Subject to the terms
and conditions of this Agreement, each Seller hereby sells, assigns, transfers
and conveys to the Purchaser, on the Effective Date and from time to time
thereafter, all its respective right, title and interest, in, to and under all
Inventory existing as of March 1, 1998 and thereafter maintained from time to
time, as provided in paragraph (b) below, and all related rights (but none of
the obligations) of each such Seller with respect to Inventory.
(b) On the Effective Date and on each subsequent date, as the
case may be (each, an "Inventory Purchase Date"), all of each Seller's right,
title and interest in and to (i) in the case of the Effective Date, all
Inventory existing as of March 1, 1998 and (ii) in the case of each such
subsequent date of purchase, all Inventory (if any) acquired by a Seller on such
date and then owned by such Seller shall be immediately and automatically sold,
assigned, transferred and conveyed to the Purchaser pursuant to paragraph (a)
above without any further action by the related Seller or any other Person.
(c) All sales of Inventory by each Seller hereunder shall be
without recourse to, or representation or warranty of any kind (express or
implied) by, the related Seller, except as otherwise specifically provided
herein and except as the provisions of Section 10.1 of the Inventory Processing
and Servicing Agreement may be applicable to a Seller in its capacity as
Servicer. The foregoing sale, assignment, transfer and conveyance does not
constitute and is not intended to result in a creation or assumption by the
Purchaser of any obligation of the related Seller or any other Person in
connection with the Inventory or any agreement or instrument relating thereto,
including any obligation to any Person from which such Inventory was acquired.
(d) In connection with the foregoing conveyances, each Seller
agrees at its own expense, (i) to indicate on the computer files and other
physical records relating to its Inventory that all Inventory included in such
list or print-out has been sold to the Purchaser in accordance with this
Agreement and (ii) in the case of LTV Steel and Georgia Tubing, to deliver to
the Purchaser a Sales and Valuation Report prepared as of a date no earlier than
thirty Business Days prior to the Effective Date.
2.2 PURCHASE PRICE. The amount payable by the Purchaser to
each Seller (the "Purchase Price") for Inventory to be purchased on any
Inventory Purchase Date under this Agreement shall be determined in accordance
with the letter agreement dated as of February 26, 1998 among LTV Steel, Georgia
Tubing and the Company, substantially in the form of Exhibit B hereto and as
amended from time to time (the "Price and Fees Agreement").
-2-
7
2.3 PAYMENT OF PURCHASE PRICE (a) Upon the fulfillment of the
conditions set forth in Article III, the Purchase Price for Inventory shall be
paid or provided for in the manner provided below. Each Seller hereby appoints
the Servicer as its agent to receive payment of the Purchase Price for Inventory
sold by it to the Purchaser and hereby authorizes the Purchaser to make all
payments due to each Seller directly to, or as directed by, the Servicer. The
Servicer hereby accepts and agrees to such appointment.
(b) The Purchase Price for Inventory purchased on the
Effective Date from each Seller shall be paid by the Purchaser as follows:
(i) to the extent the Purchaser has available cash for such
purpose, in cash;
(ii) by the delivery of Class A-1 Notes;
(iii) by the delivery of Subordinated Notes.
(c) The Purchase Price for Inventory purchased after the
Effective Date shall be paid by the Purchaser in accordance with the Price and
Fees Agreement as follows:
(i) in cash to the extent the Purchaser has cash available for
such purpose;
(ii) to the extent permitted by the Trust Agreement, by
delivery, or increase in the aggregate principal amount, of Class A-1
Notes; and
(iii) to the extent of any deficiency, by an increase in the
aggregate outstanding principal amount of Subordinated Notes.
(d) The Purchaser shall be entitled to pay all cash amounts in
respect of the Purchase Price of Inventory to an account of the Servicer for
further payment by the Servicer to the Sellers. To the extent that the Purchase
Price of Inventory is paid by delivery of Class A-1 Notes, such payment shall be
deemed made by entry on the records maintained by the Collateral Agent for such
purpose. All cash payments under this Agreement shall be made not later than
3:00 p.m. (New York City time) on the date specified therefor in Dollars in same
day funds or by check, as the Servicer shall elect and (i) if to the related
Seller, to the bank account designated in writing by the related Seller to the
Purchaser and the Servicer and (ii) if to the Servicer, to the bank account
designated in writing by the Servicer to the Purchaser.
(e) Whenever any payment to be made under this Agreement shall
be stated to be due on a day other than a Business Day, such payment need not be
made on such day, but may be made on the next succeeding Business Day with the
same force and effect as if made on the day
-3-
8
on which such payment is stated to be due. Amounts not paid when due shall bear
interest at a rate equal at all times to ABR plus 2%, payable on demand.
2.4 NO REPURCHASE. Except to the extent expressly set forth
herein, the Sellers shall not have any right or obligation under this Agreement,
by implication or otherwise, to repurchase from the Purchaser any Purchased
Inventory or to rescind or otherwise retroactively affect any purchase of any
Purchased Inventory after the Inventory Purchase Date relating thereto.
2.5 OBLIGATIONS UNAFFECTED. The obligations of each Seller to
the Purchaser under this Agreement shall not be affected by reason of any
irregularity of any Inventory or any sale of Inventory.
2.6 CERTAIN CHARGES. The Sellers and the Purchaser agree that
discounts from vendors and reversals or reductions of other fees and charges and
other similar items, whenever created, accrued in respect of Purchased Inventory
shall be the property of the Purchaser and shall be paid to the Purchaser by the
Sellers by adjustment to the Purchase Price of Inventory subsequently sold
hereunder notwithstanding the occurrence of an Early Termination.
ARTICLE III
CONDITIONS TO PURCHASE AND SALE
3.1 CONDITIONS PRECEDENT TO THE PURCHASER'S INITIAL PURCHASE
OF INVENTORY. (a) The obligation of the Purchaser to purchase Inventory
hereunder on the Effective Date from the Sellers is subject to the conditions
precedent, which may be waived by the Purchaser, that the conditions set forth
below shall have been satisfied on or before the Effective Date:
(i) the Purchaser shall have received copies of duly
adopted resolutions of the Board of Directors of each Seller as in
effect on the Effective Date and in form and substance reasonably
satisfactory to the Purchaser, authorizing this Agreement, the
documents to be delivered by each such Seller hereunder and the
transactions contemplated hereby, certified by the Secretary or
Assistant Secretary of such Seller;
(ii) the Purchaser shall have received duly executed
certificates of the Secretary or an Assistant Secretary of each Seller,
dated the Effective Date and in form and substance reasonably
satisfactory to the Purchaser, certifying the names and true signatures
of the officers authorized on behalf of such Seller to sign this
Agreement or any instruments or documents in connection with this
Agreement;
(iii) the Purchaser shall have received reports of UCC-1
and other searches of the Sellers with respect to the Inventory
reflecting the absence of Liens thereon, except
-4-
9
Liens in favor of the Purchaser or the Collateral Agent created in
connection with the sale by the Seller of an interest in the Purchased
Inventory, Liens on Ineligible Inventory that would be reasonably
expected not to have a Material Adverse Collateral Effect, Permitted
Liens and Liens as to which the Purchaser has received UCC termination
statements to be filed on or prior to the Effective Date.
(iv) the Purchaser shall have received a cash equity
contribution of at least $50,000,000 which will be deposited into the
Cash Received Account.
3.2 CONDITIONS PRECEDENT TO ALL THE PURCHASER'S PURCHASES OF
INVENTORY. The obligation of the Purchaser to purchase any Inventory on each
Inventory Purchase Date (including the Effective Date) shall be subject to the
further conditions precedent, which may be waived by the Purchaser, that on such
Inventory Purchase Date:
(a) the following statements shall be true:
(i) no Early Termination, Purchase Termination
Event or Incipient Purchase Termination Event with respect to
such Seller shall have occurred and be continuing; and
(ii) no Trust Agreement Event of Default shall
have occurred and be continuing.
(b) with respect to the Effective Date, the Purchaser shall
have received such other approvals, opinions or documents as the
Purchaser may reasonably request; and
(c) with respect to any Inventory Purchase Date other than the
Effective Date, the Equity Interest in the Purchaser equaled or
exceeded $10,000,000;
PROVIDED, HOWEVER, that the failure of any Seller to satisfy any of the
foregoing conditions shall not prevent such Seller from subsequently selling
Inventory upon satisfaction of all such conditions and PROVIDED FURTHER that the
acceptance by each Seller of the Purchase Price for any item of Inventory on any
Inventory Purchase Date shall constitute a representation and warranty by such
Seller that on such Inventory Purchase Date such statements are true and that
the representations and warranties of such Seller contained in SECTION 4.2 and,
in the case of LTV Steel, its representations and warranties contained in
SECTION 4.1, as applicable, shall be true and correct in all material respects
on and as of such Inventory Purchase Date as though made on and as of such date,
except insofar as such representations and warranties are expressly made only as
of another date.
-5-
10
3.3 CONDITIONS PRECEDENT TO EACH SELLER'S OBLIGATIONS. (a) The
obligations of each Seller on the Effective Date shall be subject to the
conditions precedent that such Seller shall have received on or before the
Effective Date the following, each dated the Effective Date and in form and
substance satisfactory to such Seller:
(i) a copy of duly adopted resolutions of the managers
of the Purchaser authorizing this Agreement, the documents to be
delivered by the Purchaser hereunder and the transactions contemplated
hereby, certified by the Secretary or Assistant Secretary of the
Purchaser; and
(ii) a duly executed certificate of the Secretary or
Assistant Secretary of the Purchaser certifying the names and true
signatures of the officers authorized on its behalf to sign this
Agreement and the other documents to be delivered by it hereunder.
(b) The obligations of the Sellers on each Inventory Purchase
Date shall be subject to the condition precedent that no Trust Agreement Event
of Default shall have occurred and be continuing.
3.4 CONDITIONS PRECEDENT TO THE ADDITION OF A SELLER. No
Affiliate of LTV approved by the Purchaser as an additional Seller pursuant to
subsection 8.13 shall be added as a Seller hereunder unless the conditions set
forth below shall have been satisfied on or before the date designated for the
addition of such Seller (the "Seller Addition Date"):
(i) the Purchaser shall have received a written request
to such effect duly executed and delivered by such Seller;
(ii) the Purchaser shall have received copies of duly
adopted resolutions of the Board of Directors or equivalent governing
body of such Seller as in effect on the related Seller Addition Date
and in form and substance reasonably satisfactory to the Purchaser,
authorizing the execution of a supplement to this Agreement making such
Affiliate a Seller hereunder, the documents to be delivered by such
Seller hereunder and the transactions contemplated hereby, certified by
the Secretary or Assistant Secretary of such Seller;
(iii) the Purchaser shall have received duly executed
certificates of the Secretary or an Assistant Secretary of such Seller,
dated the related Seller Addition Date and in form and substance
reasonably satisfactory to the Purchaser, certifying the names and true
signatures of the officers authorized on behalf of such Seller to
execute the instruments and documents executed in connection with the
addition of such Affiliate as a Seller under this Agreement;
-6-
11
(iv) LTV must own (directly or indirectly) at least 80%
of the issued and outstanding capital stock or other ownership
interests of such Seller;
(v) the representations and warranties made by each
Seller as of the Effective Date shall be made by such additional Seller
as of the initial Inventory Purchase Date with respect to such
additional Seller and shall be true and correct as to such additional
Seller in all respects as of such date;
(vi) the Purchaser shall have received secretary's
certificates, UCC lien search reports, UCC financing statements, legal
opinions and similar documentation required of the Sellers on or prior
to the Effective Date and such other documentation as may be reasonably
required by the Purchaser, the Administrative Agent or Collateral
Agent; and
(vii) if, after giving effect to such addition, such
Seller would be a Significant Seller, the Required Financing Parties
shall have approved such addition in writing.
3.5 SUSPENSION OF PURCHASES. The Purchaser and the Sellers
hereby agree that if on any Sales and Valuation Date the Equity Interest in the
Purchaser is less than $10,000,000 no further purchases of Inventory shall occur
under this Agreement until such time as the Equity Interest in the Purchaser
shall exceed $20,000,000.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF THE SERVICER. The
Servicer hereby represents and warrants to the Purchaser on the date hereof, on
the Effective Date and on each Inventory Purchase Date that:
(a) It (i) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation, and is duly qualified as a foreign corporation and is in
good standing in each jurisdiction in which the failure to so qualify
would have a Material Adverse Collateral Effect, and (ii) has the
requisite corporate power and authority to effect the transactions
contemplated hereby.
(b) The execution, delivery and performance by it of this
Agreement and all instruments and documents to be delivered hereunder
by it, and the transactions contemplated hereby and thereby, (i) are
within its corporate powers, have been duly authorized by all necessary
corporate action, including the consent of shareholders where
-7-
12
required and do not (A) contravene its charter or by-laws, (B) violate
any law or regulation or any order or decree of any court or
governmental instrumentality or (C) conflict with or result in the
breach of, or constitute a default under, any material indenture,
mortgage or deed of trust or any material lease, agreement or other
instrument binding on or affecting it or any of its subsidiaries or any
of its properties, unless such violation, conflict, breach or default
would not, either individually or in the aggregate, have a Material
Adverse Collateral Effect. This Agreement has been duly executed and
delivered by the Servicer and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms except
(A) as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general, and (B) as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in
equity).
4.2 REPRESENTATIONS AND WARRANTIES OF EACH SELLER. Each Seller
hereby represents and warrants (and with respect to SECTION 4.2(n) below LTV
Steel represents and warrants as to itself and each other Seller) for the
benefit of the Purchaser and its assigns (including the Collateral Agent) on the
Effective Date and on each Inventory Purchase Date as follows:
(a) ORGANIZATION AND GOOD STANDING. Such Seller is a
corporation duly organized and validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation
and has full corporate power to execute, deliver and perform its
obligations under this Agreement.
(b) DUE QUALIFICATION. Such Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which the
conduct of its business requires such qualification, licenses or
approvals and where the failure to preserve and maintain such
qualification, licenses or approvals is reasonably likely to have a
Material Adverse Collateral Effect.
(c) DUE AUTHORIZATION. The execution and delivery of this
Agreement and the other Transaction Documents to which it is a party
and the consummation of the transactions provided for therein have been
duly authorized by such Seller by all necessary corporate action on its
part.
(d) NO PURCHASE TERMINATION EVENT. No (i) Early Termination,
(ii) Purchase Termination Event or (iii) Incipient Purchase Termination
Event with respect to such Seller has occurred and is continuing.
(e) VALID SALE; BINDING OBLIGATIONS. Each transfer of
Inventory made pursuant to this Agreement shall constitute a valid
sale, transfer and assignment of the Inventory to the Purchaser which
is enforceable against creditors of, and purchasers from, the Seller;
and
-8-
13
this Agreement constitutes and each other Transaction Document to be
signed by such Seller when duly executed and delivered will constitute,
an enforceable obligation of such Seller in accordance with its terms,
except (A) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect affecting the enforcement of creditors'
rights in general, and (B) as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in
equity).
(f) NO VIOLATION. The execution, delivery and performance by
it of this Agreement and the other Transaction Documents to which it is
a party, and the transactions contemplated hereby and thereby, do not
(i) conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time
or both) a default under the Organizational Documents of such Seller or
any contract, indenture, loan agreement, mortgage, deed of trust, or
other agreement or instrument to which such Seller is a party or by
which such Seller or any of its properties is bound, (ii) result in the
creation or imposition of any Lien upon any of its properties pursuant
to the terms of any such contract, indenture, loan agreement, mortgage,
deed of trust, or other agreement or instrument, other than this
Agreement and the other Transaction Documents or (iii) violate any law
or any order, rule, or regulation of any court or of any federal,
state, local or other regulatory body, administrative agency, or other
governmental instrumentality of the United States of America having
jurisdiction over such Seller or any of its properties, except, in the
case of each of (i), (ii) and (iii) above, as shall not be reasonably
expected, either individually or in the aggregate, to have a Material
Adverse Collateral Effect.
(g) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the knowledge of such Seller, threatened against such
Seller before any court, regulatory body, administrative agency, or
other tribunal or governmental instrumentality in which there is a
reasonable possibility of an adverse determination or ruling that, in
the reasonable judgment of such Seller, (i) would invalidate this
Agreement or any other Transaction Document, (ii) would prevent the
consummation of any of the transactions contemplated by this Agreement
or any other Transaction Document, (iii) would materially and adversely
affect the performance by such Seller of its obligations under this
Agreement or any other Transaction Document or (iv) would materially
and adversely affect the validity or enforceability of this Agreement
or any other Transaction Document.
(h) BULK SALES ACT. Except as indicated on Schedule 4 hereto,
no transaction contemplated by this Agreement or any other Transaction
Document with respect to such Seller requires compliance with, or will
be subject to avoidance under, any bulk sales laws.
-9-
14
(i) GOVERNMENT APPROVALS. No authorization or approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body in the United States of America is
required for the due execution, delivery and performance by such Seller
of this Agreement or any other Transaction Document to which it is a
party except for (x) the filing of the UCC financing statements and
continuation statements referred to in Article III, all of which, at
the time required in Article III, shall have been duly made and shall
be in full force and effect, or (y) any authorization, approval,
notice, or filing which, if not obtained, would not, either
individually or in the aggregate, be reasonably likely to have a
Material Adverse Collateral Effect .
(j) BONA FIDE INVENTORY. Each item of Inventory of such Seller
is, or will be, either a raw material purchased by such Seller for use
in manufacturing processes undertaken by it in the ordinary course of
its business or a product manufactured or in the process of manufacture
by or for the account of such Seller in the ordinary course of its
business for the purposes of sale to customers of such Seller or such
Seller's Affiliates. Such Seller has no knowledge of any fact which
should have led it to expect as of the date of its classification of
any Inventory as Eligible Inventory hereunder that either (i) such
Inventory for any reason would not constitute Eligible Inventory or
(ii) that its Collateral Value, if any, would not be fully realizable
upon its liquidation, sale or other disposition.
(k) OFFICE. The principal place of business and the chief
executive office of such Seller are as indicated on Schedule 1 hereto
or at such other locations permitted pursuant to and in accordance with
Section 5.5, and the offices where such Seller keeps its records
concerning its Inventory (and, to the extent in such Seller's
possession, records concerning any such Inventory which becomes
Purchased Inventory) and related contracts and all purchase orders and
other agreements related to such Inventory (and, to the extent in such
Seller's possession, related contracts, purchase orders and agreements
related to any such Inventory which becomes Purchased Inventory) are as
indicated on Schedule 1 hereto or at such other locations permitted
pursuant to Section 5.5.
(l) MARGIN REGULATIONS. No use of any funds obtained by such
Seller under this Agreement or the other Transaction Documents will
conflict with or contravene any of Regulations G, T, U and X
promulgated by the Board from time to time.
(m) QUALITY OF TITLE. Each item of Inventory which is to be
transferred to the Purchaser by such Seller shall be transferred by
such Seller free and clear of any Lien (other than any Permitted Lien
or any Lien on Ineligible Inventory that would be reasonably expected
not to have a Material Adverse
-10-
15
Collateral Effect); immediately prior to such transfer such Seller
shall have had good and indefeasible title to, and was the sole owner
of, such Inventory free and clear of any Lien (other than any Permitted
Lien or any Lien on Ineligible Inventory that would be reasonably
expected not to have a Material Adverse Collateral Effect); and no
effective financing statement or other instrument similar in effect
covering any such Inventory, or any interest therein, is on file in any
recording office except such as may be filed in connection with any
Permitted Lien or any Lien on Ineligible Inventory that would be
reasonably expected not to have a Material Adverse Collateral Effect or
in favor of the Purchaser pursuant to this Agreement, and in favor of
the Collateral Agent.
(n) ACCURACY OF INFORMATION. All factual written information
set forth in the Confidential Information Memorandum dated January,
1998 relating to the transactions contemplated by the Transaction
Documents furnished by such Seller or its Affiliates (other than the
Purchaser) to the Purchaser, the Collateral Agent or the Financing
Parties is, and all other such factual, written information hereafter
furnished (if prepared by such Seller or any such Affiliate or, if not
prepared by such Seller or any such Affiliate, to the extent that
information contained therein was supplied by such Seller or any such
Affiliate) by such Seller or any such Affiliate to the Purchaser or the
Collateral Agent pursuant to or in connection with any Transaction
Document shall be, true and accurate in every material respect on the
date as of which such information is or will be furnished (unless such
information relates to another date), and such information is not, and
shall not be (as the case may be) incomplete by omitting to state a
material fact or any fact necessary to make the statements contained
therein not misleading as of such date, in each case in light of the
circumstances under which such information was provided, it being
understood and agreed that for purposes of this Section 4.2(n) the
reference to "factual information" shall not include projections and
pro forma financial information. All Inventory sold by each Seller
hereunder and designated on a Sales and Valuation Report as Eligible
Inventory will be, to the best knowledge of such Seller at its
respective Inventory Purchase Date, an item of Eligible Inventory.
(o) VALID TRANSFERS. No transfer of any Inventory to the
Purchaser by such Seller constitutes a fraudulent transfer or
fraudulent conveyance or is otherwise void or voidable under similar
laws or principles, the doctrine of equitable subordination or for any
other reason. The transfer of Inventory by such Seller to the Purchaser
pursuant to this Agreement, and all other transactions between such
Seller and the Purchaser, have been and will be made in good faith and
without intent to hinder, dely or defraud creditors of such Seller, and
such Seller acknowledges that it has received and will receive fair
consideration and reasonably equivalent value for the purchases by the
Purchaser of Inventory hereunder.
(p) TRADE NAMES. Such Seller uses no trade name in the
furnishing of its products or services which generate Inventory other
than its actual corporate name or other designations, each of which
begin with the phrase, "LTV". During the five years preceding the date
hereof (i) such Seller has not been known by any legal name or trade
name other than its corporate name and such other names as listed on
Schedule 2 hereto, (ii) nor has such Seller been the subject of any
merger or other corporate reorganization within the last five
-11-
16
years, EXCEPT that (x) effective December 31, 1997, LTV Steel Tubular
Products Company was merged into LTV Steel and (y) on and prior to June
27, 1993, Georgia Tubing was known as "LTV Aerospace and Defense
Company".
(q) COMPLIANCE WITH APPLICABLE LAWS. Such Seller is in
compliance with the requirements of all applicable laws, rules,
regulations, and orders of all governmental authorities (federal,
state, local or foreign, and including, without limitation,
environmental laws), except for breaches which, individually or in the
aggregate, would not be reasonably likely to have a Material Adverse
Collateral Effect.
(r) TAXES. All material tax returns and reports of each Seller
and its Affiliates required to be filed by any of them have been timely
filed, and all material taxes, assessments, fees and other governmental
charges upon each Seller and its Affiliates and upon their respective
properties, assets, income, businesses and franchises which are due and
payable have been paid. Each Seller is not aware of any proposed tax
assessment against such Seller or any of its Affiliates which is not
being actively contested by such Seller or such Affiliate in good faith
and by appropriate proceedings; PROVIDED that such reserves or other
appropriate provisions, if any, as shall be required in conformity with
GAAP shall have been made or provided therefor.
(s) ERISA MATTERS. Such Seller and each of its ERISA
Affiliates is in compliance in all material respects with the
applicable provisions of ERISA and the regulations and published
interpretations thereunder, except for such noncompliance which could
not reasonably be expected to have a Material Adverse Collateral Effect
with respect to such Seller or Inventory transferred by it.
(t) SOLVENCY. Both prior to and after giving effect to the
transactions contemplated by the Transaction Documents, (i) the
combined assets of the Sellers, at fair valuation, will exceed their
combined liabilities (including contingent liabilities), (ii) the
combined capital of the Sellers will not be unreasonably small to
conduct their combined business, and (iii) the Sellers will not have
incurred debts, and do not intend to incur debts, beyond their ability
to pay such debts as they mature.
(u) INVESTMENT COMPANY ACT. Neither such Seller nor any of
such Seller's Subsidiaries is (i) an "investment company" registered or
required to be registered under the Investment Company Act of 1940, as
amended, or (ii) a "holding company", or a "subsidiary company" or an
"affiliate" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(v) OWNERSHIP. All of the issued and outstanding Capital Stock
of such Seller is owned, directly or indirectly, by LTV.
-12-
17
(w) INDEBTEDNESS TO PURCHASER. Immediately prior to
consummation of the transactions contemplated hereby on the Effective
Date, such Seller had no outstanding Indebtedness to the Purchaser
other than amounts permitted by this Agreement.
(x) INVENTORY SCHEDULES. The Sales and Valuation Report dated
as of January 31, 1998 sets forth in all material respects an accurate
and complete listing as of the date or dates indicated thereon of all
Inventory as of such date and the information contained therein with
respect to the identity and Inventory Value and Collateral Value of
such Inventory is true and correct in all material respects as of the
dates indicated. As of the Effective Date, there has been no material
adverse change in the aggregate Collateral Value of the Inventory to be
transferred to the Purchaser on the Effective Date.
(y) FAIR LABOR STANDARDS ACT. All Inventory has or will have
been produced in compliance with the applicable requirements of the
Fair Labor Standards Act, as amended.
(z) SEPARATE LEGAL ENTITY. Each Seller acknowledges that the
Purchaser entered into this Agreement as a separate legal entity.
The representations and warranties set forth in this SECTION
4.2 shall survive the transfer and assignment of the respective Inventory to the
Purchaser pursuant to this Agreement. Each Seller hereby represents and warrants
to the Purchaser, as of the Effective Date and each Inventory Purchase Date,
that the representations and warranties of such Seller set forth in SECTION 4.2
are true and correct as of such date. Upon discovery by such Seller or the
Purchaser of a breach of any of the foregoing representations and warranties,
the party discovering such breach shall give prompt written notice to the other.
ARTICLE V
AFFIRMATIVE COVENANTS
Each Seller hereby agrees that, so long as there are any
amounts outstanding with respect to Purchased Inventory previously sold by any
Seller to the Purchaser or until an Early Termination with respect to such
Seller shall occur, whichever is later, such Seller shall:
5.1 CERTIFICATES; OTHER INFORMATION. Furnish to the
Purchaser:
(a) not later than 120 days after the end of each fiscal year
and not later than 60 days after the end of each of the first three
fiscal quarters of each fiscal year, a certificate of an Authorized
Officer of such Seller stating that, to the best of such Authorized
Officer's knowledge after due investigation, (A) such Seller during
such period has observed or performed in all material respects all of
its covenants and other agreements, and satisfied in
-13-
18
all material respects every condition, contained in this Agreement to
be observed, performed or satisfied by it and that such Authorized
Officer has obtained no knowledge of any Purchase Termination Event or
Incipient Purchase Termination Event except as specified in such
certificate, or (B) if a Purchase Termination Event or Incipient
Purchase Termination Event shall have occurred and be continuing or
there shall have occurred any material noncompliance with any such
obligations, specifying the facts relating to each such Purchase
Termination Event, Incipient Purchase Termination Event or other
material noncompliance known to such officer and the nature and status
thereof and the actions, if any, being taken to cure such Purchase
Termination Event, Incipient Purchase Termination Event or other
material noncompliance; and
(b) promptly, such additional information with respect to the
Purchased Inventory as the Purchaser or the Collateral Agent may from
time to time reasonably request.
5.2 COMPLIANCE WITH LAWS, ETC. Comply in all material respects
with all Requirements of Law applicable to the Purchased Inventory; PROVIDED,
HOWEVER, that such Seller may contest any act, regulation, order, decree or
direction in any reasonable manner which shall not materially adversely affect
the rights of the Purchaser in the Purchased Inventory. Such Seller will comply,
in all material respects, with its obligations under contracts with its
suppliers relating to the Purchased Inventory except to the extent such
compliance would result in a violation of a Requirement of Law.
5.3 PRESERVATION OF CORPORATE EXISTENCE. Do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence and maintain such legal existence separate from that of the
Purchaser.
5.4 VISITATION RIGHTS. At any reasonable time upon reasonable
prior notice during normal business hours and from time to time permit the
Purchaser, or any of its agents or representatives, (i) to examine and make
copies of and abstracts from the records, books of account and documents
(including computer tapes and disks) of such Seller relating to the Purchased
Inventory hereunder and (ii) to visit the properties of such Seller for the
purpose of examining such records, books of account and documents, and to
discuss the affairs of such Seller relating to the Purchased Inventory or such
Seller's performance hereunder with any of its officers or directors and with
its independent certified public accountants.
5.5 LOCATION OF RECORDS. Keep its chief place of business and
chief executive office, and the offices where it keeps the records concerning
the Purchased Inventory (and all original documents relating thereto), at the
locations referred to for it on Schedule 1 hereto or, upon 30 days' prior
written notice to the Purchaser, at such other locations in a jurisdiction where
all action required by SECTION 5.8(a) shall have been taken and completed and be
in full force and effect.
-14-
19
5.6 FURNISHING COPIES, ETC. Furnish to the Purchaser and the
Collateral Agent:
(a) within five Business Days of the Purchaser's request, a
certificate of the chief financial officer of such Seller certifying,
as of the date thereof, to the best knowledge of such officer, that no
Purchase Termination Event has occurred and is continuing and setting
forth the computations used by the chief financial officer of such
Seller in making such determination;
(b) promptly upon obtaining knowledge of the occurrence of any
Purchase Termination Event or Incipient Purchase Termination Event,
written notice thereof;
(c) promptly upon the chief legal officer of such Seller
obtaining knowledge of (a) the institution of any action, suit,
proceeding, governmental investigation or arbitration against or
affecting such Seller or (b) any material development in any such
action, suit, proceeding, governmental investigation or arbitration, in
which, in either case, there is a reasonable likelihood of an adverse
decision which, in the reasonable judgment of such Seller, would have a
Material Adverse Collateral Effect, written notice thereof;
(d) written notice of any other development that has resulted
in, or would be reasonably likely to have, a Material Adverse
Collateral Effect; and
(e) promptly upon determining that (i) any Purchased Inventory
designated as Eligible Inventory on the applicable Sales and Valuation
Report was not Eligible Inventory as of the date provided therefor or
(ii) (A) any Purchased Inventory is not Eligible Inventory at any other
subsequent date (other than by reason of the sale of such Purchased
Inventory to third parties, including Affiliates of such Seller) and
(B) the ineligibility of such Purchased Inventory would be reasonably
likely to have a Material Adverse Collateral Effect, written notice of
such determination.
5.7 OBLIGATIONS WITH RESPECT TO OBLIGORS AND INVENTORY. Take
all actions on its part reasonably necessary to maintain in full force and
effect its material rights under all contracts relating to the Purchased
Inventory.
5.8 FURTHER ACTION. In addition to the foregoing:
(a) Such Seller agrees that from time to time, at its expense,
it will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or
desirable in such Seller's reasonable judgment or that the Purchaser or
the Collateral Agent may reasonably request, in order to protect,
defend, or more fully evidence the Purchaser's right, title and
interest in the Purchased Inventory (or a perfected security interest
therein, with the priority contemplated by the Transaction Documents,
in
-15-
20
the event that the transactions contemplated hereby were characterized
as a financing notwithstanding the intent of the parties hereto to
consummate a sale), or to enable the Purchaser to exercise or enforce
any of its rights in respect thereof. Without limiting the generality
of the foregoing, such Seller will upon the request of the Purchaser or
the Collateral Agent (A) execute and file such financing or
continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or, in the opinion of the
Purchaser, advisable, (B) indicate on its books and records that the
Purchased Inventory has been purchased by the Purchaser, and provide to
the Purchaser, upon request, copies of any such records, (C) obtain the
agreement of any Person having a Lien on any Inventory owned by such
Seller (other than any Permitted Lien or any Lien on Ineligible
Inventory that would be reasonably expected not to have a Material
Adverse Collateral Effect) to release such Lien upon the purchase of
any such Inventory by the Purchaser and (D) defend the Purchaser's
right, title and interest in Inventory against any third party claims
(other than any such claims in respect of Permitted Liens and Liens on
Ineligible Inventory that would reasonably be expected not to have a
Material Adverse Collateral Effect) that exist against such Inventory
at the time of purchase by the Purchaser.
(b) Such Seller hereby irrevocably authorizes the Purchaser to
file one or more financing or continuation statements, and amendments
thereto, relative to all or any part of the Purchased Inventory sold or
to be sold by such Seller without the signature of such Seller.
(c) If such Seller fails to perform any of its agreements or
obligations under this Agreement, the Purchaser or the Collateral Agent
may (but shall not be required to) perform, or cause performance of,
such agreements or obligations, and the expenses of the Purchaser
incurred in connection therewith shall be payable by such Seller as
provided in SECTION 8.3.
(d) Such Seller agrees that, whether or not a Purchase
Termination Event has occurred:
(1) the Purchaser (and its assignees) shall have the
right to sell any Purchased Inventory to any Person for a
price that is acceptable to the Purchaser. If required by the
terms of SECTION 9-504 or 9-505 of the UCC, the Purchaser (and
its assignees) may offer to sell any item of Purchased
Inventory to any Person;
(2) such Seller shall, upon the Purchaser's request
and at such Seller's expense, (x) assemble all such Seller's
documents, instruments and other records (including credit
files and computer tapes or disks) that (1) evidence or will
evidence or record Inventory sold by such Seller and (2) are
otherwise necessary or desirable to permit liquidation and/or
sale of such Purchased Inventory (collectively, the "Sale
Documents") and (y) deliver the Sale Documents to the
Purchaser or its designee at
-16-
21
a place designated by the Purchaser. In recognition of such
Seller's need to have access to any Sale Documents which may
be transferred to the Purchaser hereunder, the Purchaser
hereby grants to such Seller a license to access the Sale
Documents transferred by such Seller to the Purchaser and to
access any such transferred computer software in connection
with any activity arising in the ordinary course of such
Seller's business, provided that such Seller shall not disrupt
or otherwise interfere with the Purchaser's use of and access
to the Sale Documents and its computer software during such
license period; and
(3) such Seller hereby irrevocably authorizes the
Purchaser or its designee to take any and all steps in the
Seller's name necessary or desirable to enforce all rights and
remedies of such Seller in respect of the Purchased Inventory.
5.9 CERTAIN AGREEMENTS REGARDING INVENTORY. In connection with
the conveyances provided for in SECTION 2.1 hereof, each Seller agrees from time
to time:
(a) to record and file, at its own expense, financing
statements (and continuation statements with respect to such financing
statements when applicable) with respect to the Purchased Inventory now
existing and hereafter acquired by the Purchaser from each Seller
meeting the requirements of applicable state law in such manner and in
such jurisdictions as are necessary to perfect the security interest of
the Purchaser in the Purchased Inventory under the UCC in the event the
transactions contemplated hereby were characterized as a financing
notwithstanding the intent of the parties hereto to effect a sale, and
to deliver evidence of such filings to the Purchaser on or prior to the
Effective Date (or, in the case of the filing of any such continuation
statements, at or before the time required);
(b) to cause the owner and operator of each Leased
Premises, Third-Party Warehouseman and Outside Processor and any other
Person in possession of Off-Site Inventory constituting Eligible
Inventory to execute and deliver to the related Seller an agreement
substantially in the form of Schedule 3A or 3B hereto (a "Collateral
Access Agreement") relating to access to such Off-Site Inventory that
is to be classified as Eligible Inventory now existing or hereafter
produced or acquired by the Purchaser which is at any time located at,
or in transit to, the premises owned or operated by such Person, and to
deliver to the Purchaser evidence of the execution and delivery of
Collateral Access Agreements with respect to all then existing Eligible
Inventory on or prior to the Effective Date (or the applicable Seller
Addition Date) along with an assignment in favor of the Purchaser
irrevocably assigning all right, title and interest of such Seller in
such Collateral Access Agreement to the Purchaser;
(c) to deliver to the Purchaser or its designee, at
its own expense, any Negotiable Documents of Title evidencing ownership
of Inventory acquired or to be acquired
-17-
22
by the Purchaser and to be classified as Eligible Inventory, such
Negotiable Documents of Title to contain a full chain of endorsement
from the original "to order" party thereof to such Seller and with an
endorsement from such Seller in blank;
(d) to enforce on behalf of the Purchaser all
warranties made to such Seller by third parties with respect to the
Purchased Inventory; and
(e) to not, by an act or omission to act, create any
Lien, claim or right in, to or on the interest of LTV Steel Products
and the Collateral Agent in the Collateral or any proceeds thereof,
other than Permitted Liens, Receivables Facility Liens and the Liens
created by the Trust Agreement, nor will the Sellers permit or suffer
to exist, and shall take such actions as are necessary to remove, any
Lien, claim or right in, to or on the interest of LTV Steel Products
and the Collateral Agent in the Collateral or any proceeds thereof,
other than Permitted Liens, the Liens created by the Trust Agreement,
Receivables Facility Liens and Liens on Ineligible Inventory that would
be reasonably expected not to have a Material Adverse Collateral Effect
and will defend the right, title and interest of LTV Steel Products and
the Collateral Agent in and to the Collateral against the claims and
demands of all Persons arising from any act or omission to act of the
Sellers in respect of any Lien other than the Liens created by the
Trust Agreement, Permitted Liens, Receivables Facility Liens and Liens
on Ineligible Inventory that would be reasonably expected not to have a
Material Adverse Collateral Effect.
ARTICLE VI
NEGATIVE COVENANTS
Each Seller hereby agrees that, so long as there are any
amounts owed to such Seller with respect to Purchased Inventory previously sold
by such Seller to the Purchaser or until an Early Termination with respect to
such Seller shall occur, whichever is later, such Seller shall not, directly or
indirectly:
6.1 LIENS. Except as otherwise provided herein and in the
other Transaction Documents, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Lien upon or with respect
to, any Inventory, or assign any right to receive proceeds in respect thereof
EXCEPT for Permitted Liens, Receivables Facility Liens and Liens on Ineligible
Inventory that are reasonably expected not to result in a Material Adverse
Collateral Effect.
6.2 CHANGE IN NAME. Change its name, identity or corporate
structure in any manner which would or might make any financing statement or
continuation statement relating to this Agreement seriously misleading within
the meaning of SECTION 9-402(7) of the UCC without 30 days' prior written notice
to the Purchaser.
-18-
23
6.3 ACCOUNTING OF PURCHASES. Prepare any financial statements
which shall account for the transactions contemplated hereby (other than capital
contributions contemplated hereby) in any manner other than as sales of the
Purchased Inventory by such Seller to the Purchaser or in any other respect
account for or treat the transactions contemplated hereby (including for
accounting purposes and, where taxes are not consolidated, for tax reporting
purposes, except as required by law), other than capital contributions, in any
manner other than as sales of the Purchased Inventory by such Seller to the
Purchaser.
6.4 INELIGIBLE INVENTORY. Without the prior written approval
of the Purchaser, take any action to cause, or which would permit, any item of
Eligible Inventory to cease to be Eligible Inventory, except (a) as otherwise
expressly provided by this Agreement or (b) unless the ineligibility of such
Purchased Inventory will be reasonably expected not to have a Material Adverse
Collateral Effect.
ARTICLE VII
PURCHASE TERMINATION EVENTS
7.1 PURCHASE TERMINATION EVENTS. If, with respect to any
Seller, any of the following events (herein called "Purchase Termination
Events") shall have occurred and be continuing:
(a) Such Seller shall fail to make any payment or deposit to
be made by it hereunder when due and such failure shall remain
unremedied for thirty days after the date such Seller becomes aware of
such failure; or
(b) A Trust Agreement Event of Default shall have occurred; or
(c) Any representation or warranty made or deemed to be made
by such Seller or any of its officers under or in connection with any
Transaction Document, Sales and Valuation Report or other information,
statement, record, certificate, document or report delivered pursuant
to a Transaction Document shall prove to have been false or incorrect
in any material respect when made or deemed made (including in each
case by omission of material information necessary to make such
representation, warranty, certificate or statement not misleading) and
such misrepresentation or breach of warranty shall continue unremedied
for a period of 30 days from the earlier of (A) the date any Authorized
Officer of such Seller obtains knowledge thereof and (B) the date such
Seller receives notice of the incorrectness of such representation or
warranty from the Purchaser; provided, further, that if such
misrepresentation or breach of warranty can be remedied and such Seller
is diligently pursuing such remedy and there shall not be in existence
a Cure Period Cut-off Event, then
-19-
24
such misrepresentation or breach of warranty shall not constitute a
Purchase Termination Event for a period of an additional thirty (30)
days; or
(d) Such Seller shall fail to perform or observe any other
term, covenant or agreement contained in SECTION 5.2, 5.6 or 5.7 or
Article VI of this Agreement on its part to be performed or observed
and any such failure shall remain unremedied for a period of 30 days
from the earlier of (A) the date any Authorized Officer of such Seller
obtains knowledge of such failure and (B) the date such Seller receives
notice of such failure from the Purchaser; provided, further, that if
any Seller's failure to observe or perform any other term, covenant or
agreement contained in SECTION 5.2, 5.6 or 5.7 or Article VI of this
Agreement can be cured and such Seller is diligently pursuing such cure
and there shall not be in existence a Cure Period Cut-off Event, then
such failure shall not constitute a Purchase Termination Event for a
period of an additional thirty (30) days; or
(e) Such Seller shall fail to perform or observe any other
term, covenant or agreement contained in any Transaction Document on
its part to be performed or observed and any such failure shall remain
unremedied for a period of 30 days from the earlier of (A) the date any
Authorized Officer of such Seller obtains knowledge of such failure and
(B) the date such Seller receives notice thereof from the Purchaser,
the Servicer, or the Collateral Agent; provided, however, that if such
failure may be cured and if such Seller has commenced and is diligently
pursuing a cure to such failure and there shall not be in existence a
Cure Period Cut-off Event, then such failure shall not constitute a
Purchase Termination Event for a period of an additional thirty (30)
days; or
(f) Any Transaction Document to which such Seller is a party
shall cease, for any reason, to be in full force and effect, or such
Seller shall so assert in writing, or any event shall occur or act be
taken or be omitted to be taken such that would cause the Purchaser to
fail to have a valid and perfected first priority security interest in
the Purchased Inventory under the UCC (subject to Permitted Liens and
Liens on Ineligible Inventory that would be reasonably expected not to
have a Material Adverse Collateral Effect) in the event the
transactions contemplated hereby were characterized as a financing
notwithstanding the intent of the parties hereto to effect a sale; or
(g) There shall occur an Insolvency Proceeding with respect to
such Seller and such Seller is a Significant Seller;
(h) There shall occur an Unmatured Involuntary Insolvency
Proceeding with respect to a Seller that has not been released or fully
vacated within five Business Days after commencement, filing or levy,
as the case may be; provided that such event shall not constitute a
Purchase Termination Event if within five Business Days of such
-20-
25
commencement, filing or levy, the Required Financing Parties have
waived such event by a writing provided to the Servicer and the
Collateral Agent;
(i) There shall occur an Unmatured Involuntary Insolvency
Proceeding with respect to the Purchaser that has not been released or
fully vacated within five Business Days after commencement, filing or
levy, as the case may be; provided that such event shall not constitute
a Purchase Termination Event if within five Business Days of such
commencement, filing or levy, the Required Financing Parties have
waived such event by a writing provided to the Servicer and the
Collateral Agent; or
(j) LTV Steel has been terminated as Servicer following a
Servicer Termination Event;
then, (x) in the case of any Purchase Termination Event described in paragraph
(b), (g), and (i) above or in paragraph (h) above with respect to a Significant
Seller, the obligation of the Purchaser to purchase Inventory shall thereupon
automatically terminate without further notice of any kind, which is hereby
waived by the Sellers, and (y) in the case of any other Purchase Termination
Event with respect to any Seller, so long as such Purchase Termination Event
shall be continuing, the Purchaser may, and at the direction of the Required
Financing Parties must, terminate its obligation to purchase Inventory from such
Seller by written notice to the Sellers (any termination with respect to one or
more of the Sellers but not all Sellers pursuant to this Article VII is herein
called an "Early Termination" with respect to the affected Seller or Sellers) .
7.2 ADDITIONAL REMEDIES. Upon the occurrence of any Purchase
Termination Event, the Purchaser shall have, in addition to all other rights and
remedies under this Agreement or otherwise, all other rights and remedies
provided under the UCC of each applicable jurisdiction in the event the
transactions contemplated hereby are characterized as a financing
notwithstanding the intent of the parties hereto to effect a sale and all other
rights and remedies provided under other applicable laws, which rights shall be
cumulative. Without limiting the foregoing, the occurrence of a Purchase
Termination Event shall not deny to the Purchaser any remedy (in addition to
termination of the Purchaser's obligation to purchase Inventory from the
affected Seller) to which the Purchaser may be otherwise appropriately entitled,
whether by statute or other applicable law, at law or in equity.
ARTICLE VIII
MISCELLANEOUS
8.1 PAYMENT. Each cash payment to be made by the Purchaser
shall be made as provided in Sections 2.3(d) and 2.3(e) of this Agreement.
-21-
26
8.2 COSTS AND EXPENSES. The Sellers, jointly and severally,
agree (a) to pay or reimburse the Purchaser and its assigns for all its
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement, the other Transaction Documents and any other documents prepared
in connection herewith and therewith, the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, all
fees and disbursements of counsel, (b) to pay or reimburse the Purchaser and its
assigns for all its costs and expenses incurred in connection with the
enforcement or preservation of any rights as against the Sellers under this
Agreement and any of the other Transaction Documents, including, without
limitation, the reasonable fees and disbursements of counsel to the Purchaser,
(c) to pay, indemnify, and hold the Purchaser and its assigns harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other similar taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement and any such
other documents and (d) to pay, indemnify, and hold the Purchaser harmless from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever (i) which may at any time be imposed on, incurred by
or asserted against the Purchaser in any way relating to or arising out of this
Agreement or the transactions contemplated hereby or in connection herewith or
any action taken or omitted by the Purchaser under or in connection with any of
the foregoing (all such other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements being
herein called "Indemnified Liabilities") or (ii) which would not have been
imposed on, incurred by or asserted against the Purchaser but for its having
purchased the Purchased Inventory hereunder (other than losses or other damages
caused by a change in commodity prices relating to Purchased Inventory,
PROVIDED, that the Sellers shall have no obligation under this subsection 8.2
hereunder to the Purchaser with respect to Indemnified Liabilities arising from
(x) the gross negligence or willful misconduct of the Purchaser, its agents
(excluding LTV Steel) or assignees or (y) any action taken, or omitted to be
taken, by a Servicer which is not an Affiliate of the Sellers. The agreements in
this subsection shall survive the sale and/or other liquidation of all Eligible
Inventory, the termination of this Agreement and the payment of all amounts
payable hereunder.
8.2 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the Sellers, the Purchaser and the Servicer and
their respective successors (whether by merger, consolidation or otherwise) and
assigns. Each Seller agrees that it will not assign or transfer all or any
portion of its rights or obligations hereunder without the prior written consent
of the Purchaser and the Collateral Agent. Each Seller acknowledges that the
Purchaser shall assign all of its rights hereunder to the Collateral Agent and
acknowledges that pursuant to the Trust Agreement, the Collateral Agent shall
have certain rights to transfer certain of its rights upon a Trust Agreement
Event of Default to the holders of the related Notes (each, a "Subsequent
Party"). Each Seller
-22-
27
consents to such assignment and agrees that the Collateral Agent and each
Subsequent Party, each to the extent provided in the Trust Agreement, shall be
entitled to enforce the terms of this Agreement and the rights (including,
without limitation, the right to grant or withhold any consent or waiver) of the
Purchaser directly against such Seller, whether or not a Purchase Termination
Event or a Servicer Termination Event has occurred. Each Seller further agrees
that, in respect of its obligations hereunder, it will act at the direction of
and in accordance with all proper requests and instructions from the Collateral
Agent or such Subsequent Party, as the case may be, until all amounts due to the
Collateral Agent or such Subsequent Party are paid in full; provided that if
instructions received from the Collateral Agent and such Subsequent Party are
inconsistent, such Seller shall comply with the instructions received from the
Collateral Agent. The Collateral Agent and each such Subsequent Party shall have
the rights of third-party beneficiaries under this Agreement.
8.4 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
8.5 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and
no delay in exercising, on the part of the Purchaser any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.
8.6 AMENDMENTS AND WAIVERS. Neither this Agreement, nor the
form of Subordinated Notes nor any terms thereof may be amended, supplemented or
modified except in a writing signed by the Purchaser, the Sellers, the Servicer
and the Collateral Agent.
8.7 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.8 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing delivered by hand
delivery or mail or transmitted via telecopy, and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered
by hand or three days after being deposited in the mail, first class postage
prepaid, to a domestic destination from the point where mailed or seven days
after being deposited in the mail, air mail postage prepaid, to an international
destination from the point where mailed, or,
-23-
28
in the case of telecopy notice, when received as evidenced by the confirmation
of receipt, addressed to such party at its Notice Address.
8.9 COUNTERPARTS. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Purchaser.
8.10 CONSTRUCTION OF AGREEMENT AS SECURITY AGREEMENT. (a) The
parties to this Agreement intend that the transactions contemplated hereby shall
be, and shall be treated as, a purchase by the Purchaser and a sale by the
Sellers of the Purchased Inventory with respect thereto and not as a lending
transaction. If, however, notwithstanding the intent of the parties, such
transactions are deemed to be loans, each Seller hereby grants to the Purchaser
a first priority security interest in all of such Seller's right, title and
interest in and to the Inventory now existing and hereafter created, all monies
due or to become due and all amounts received with respect thereto, including,
without limitation, all amounts received upon disposition of Inventory to secure
all such Seller's obligations hereunder.
(b) This Agreement shall constitute a security agreement under
applicable law.
8.11 WAIVERS OF JURY TRIAL. THE SELLERS, THE SERVICER AND THE
PURCHASER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
8.12 SUBMISSION TO JURISDICTION; WAIVERS. To the maximum
extent permitted by applicable law, the Sellers, the Servicer and the Purchaser
each hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Transaction
Documents and Sale Documents to which it is a party, or for recognition
and enforcement of any judgement in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New
York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
-24-
29
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Person at its address set forth in SECTION 8.8 or at
such other address of which the Purchaser shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to ▇▇▇ in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
8.13 ADDITION OF SELLERS. Subject to the terms and conditions
hereof, from time to time one or more Affiliates of LTV may become additional
Sellers party hereto. If any such Affiliate wishes to become an additional
Seller, it shall submit a written request to such effect to the Purchaser. The
Purchaser, in its sole and absolute discretion, may agree to or deny any such
request, PROVIDED that, if the Purchaser shall have failed to respond to any
such request within 30 days after receipt thereof, such request shall be deemed
to have been denied. If the Purchaser shall have agreed to any such request,
such Affiliate shall become an additional Seller party hereto on the related
Seller Addition Date upon satisfaction of the conditions set forth in subsection
3.4.
8.14 OPTIONAL TERMINATION OF SELLER. (a) One or more Sellers
may from time to time be terminated as a Seller hereunder on the date they cease
to be Affiliates of LTV, PROVIDED that the aggregate outstanding Inventory Value
of Purchased Inventory sold by all Sellers which so cease to be Affiliates at
such time (together with the aggregate outstanding Inventory Value of Purchased
Inventory sold by all Sellers which have been terminated pursuant to this
subsection within the preceding 90 days) shall not exceed 10% of the aggregate
outstanding Inventory Value of all Purchased Inventory at such time and
PROVIDED, FURTHER that no Purchase Termination Event or Incipient Purchase
Termination Event has occurred and is continuing, or would result as a result
thereof. From and after the date any such Seller ceases to be an Affiliate of
LTV, the Purchaser shall cease buying Inventory from such Seller. Each such
Seller shall be released as a Seller party hereto for all other purposes and
shall cease to be a party hereto on such date.
(b) A terminated Seller shall have no obligation to repurchase
Inventory previously sold by it to the Purchaser.
8.15 NO BANKRUPTCY PETITION. The Sellers and the Servicer
each covenant and agree that, prior to the date which is one year and one day
after all obligations payable to the Financing Parties under the Transaction
Documents have been paid in full, they will not institute against, or join any
other Person in instituting against, the Purchaser any Involuntary Insolvency
Proceeding. This SECTION 8.15 shall not be construed to limit the right of the
Servicer or any Seller to file any
-25-
30
claim in or otherwise take any action with respect to any such Involuntary
Insolvency Proceeding that was instituted against or with respect to the
Purchaser by any Person other than a Seller, the Servicer or any of their
respective Affiliates.
8.16 TERMINATION. This Agreement will terminate at such time
as (a) the Termination Date has occurred, and (b) all amounts owing to or by the
Purchaser hereunder shall have been paid in full; PROVIDED, HOWEVER, that the
indemnities of the Sellers to the Purchaser set forth in this Agreement shall
survive such termination.
8.17 CONFIDENTIALITY. The Purchaser agrees to keep
confidential all non-public information provided to it by the Sellers pursuant
to this Agreement; PROVIDED that nothing herein shall prevent the Purchaser from
disclosing any such information (i) to the Collateral Agent or the Financing
Parties, (ii) to its employees, directors, agents, attorneys, accountants and
other professional advisors, (iii) upon the request or demand of any
Governmental Authority having jurisdiction over the Purchaser, the Collateral
Agent or the Financing Parties (provided that notice of such request or demand
shall be furnished to the Sellers unless such notice is legally prohibited or
such Governmental Authority requests that such notice not be furnished to the
Sellers), (iv) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any Requirement of Law
(provided that notice of such order or requirement shall be furnished to the
Sellers unless such notice is legally prohibited or such court or Governmental
Authority requests that such notice or requirement not be furnished to the
Sellers), (vi) which has been publicly disclosed other than in breach of this
Agreement, or (vii) in connection with the exercise of any remedy hereunder or
under the Transaction Documents.
8.18 EFFECTIVENESS. This Agreement shall become effective on
the Effective Date.
-26-
31
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
all as of the day and year first above written.
LTV STEEL PRODUCTS, LLC
By:________________________________
Printed Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Manager
LTV STEEL COMPANY, INC., as a Seller
By:________________________________
Printed Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Treasurer
GEORGIA TUBING CORPORATION, as a Seller
By:________________________________
Printed Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Treasurer
LTV STEEL COMPANY, INC., as Servicer
By:________________________________
Printed Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Treasurer
-27-
32
SCHEDULE 1
----------
LOCATIONS OF CHIEF EXECUTIVE OFFICES;
LOCATIONS OF BOOKS AND RECORDS
------------------------------
===================================================================================================================================
State of Location of Offices Where
Seller Incorporation Chief Executive Office Records are Kept
----------------------------------------------------------------------------------------------------------------------------------
LTV Steel Company, Inc. New Jersey ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
----------------------------------------------------------------------------------------------------------------------------------
Georgia Tubing Corporation Delaware Highway ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
===================================================================================================================================
-28-
33
SCHEDULE 2
----------
LEGAL AND CORPORATE NAMES OF SELLER
-----------------------------------