Exhibit 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
THE LTV CORPORATION,
THE OTHER SELLERS NAMED HEREIN
AND
MAVERICK TUBE CORPORATION
DATED AS OF OCTOBER 15, 2002
TABLE OF CONTENTS
PAGE
Article 1 PURCHASE AND SALE OF THE ACQUIRED ASSETS....................... 3
1.1 Transfer of Acquired Assets........................................ 3
1.2 Excluded Assets.................................................... 5
1.3 Assumption of Liabilities.......................................... 7
1.4 Retention of Liabilities........................................... 8
1.5 Non-Assignment of Assigned Contracts............................... 8
Article 2 EMPLOYEE AND BENEFITS MATTERS.................................. 8
2.1 Severance Pay Plan................................................. 9
2.2 Management Bonus Program........................................... 9
2.3 Profit Sharing Plans............................................... 9
Article 3 CONSIDERATION.................................................. 9
3.1 Consideration...................................................... 9
3.2 Deposits........................................................... 9
3.3 Estimated Working Capital.......................................... 10
3.4 Purchase Price Adjustment.......................................... 10
Article 4 CLOSING AND DELIVERIES......................................... 12
4.1 Closing............................................................ 12
4.2 Sellers' Deliveries................................................ 12
4.3 Buyer's Deliveries................................................. 12
Article 5 REPRESENTATIONS AND WARRANTIES OF THE SELLERS.................. 13
5.1 Corporate Organization............................................. 13
5.2 Authorization and Validity......................................... 13
5.3 No Conflict or Violation........................................... 13
5.4 Consents and Approvals............................................. 14
5.5 Financial Statements............................................... 14
5.6 Compliance with Law................................................ 14
5.7 Litigation......................................................... 15
5.8 Title and Ownership................................................ 15
5.9 Material Contracts................................................. 15
5.10 Intellectual Property.............................................. 16
5.11 Permits............................................................ 16
5.12 Environmental Matters.............................................. 16
5.13 Sufficiency of Acquired Assets..................................... 17
Article 6 REPRESENTATIONS AND WARRANTIES OF BUYER........................ 17
6.1 Corporate Organization............................................. 17
6.2 Authorization and Validity......................................... 17
- i -
TABLE OF CONTENTS
(continued)
PAGE
6.3 No Conflict or Violation........................................... 17
6.4 Consents and Approvals............................................. 17
6.5 Availability of Funds.............................................. 18
6.6 Adequate Assurances Regarding Assigned Contracts................... 18
6.7 Investigation by Buyer............................................. 18
Article 7 SCOPE OF REPRESENTATIONS AND WARRANTIES........................ 18
7.1 Warranties Exclusive............................................... 18
7.2 Survival of Representations and Warranties......................... 19
Article 8 COVENANTS OF SELLERS........................................... 19
8.1 Actions Before Closing............................................. 19
8.2 Conduct of Business Before the Closing Date........................ 19
8.3 Sale Order......................................................... 20
8.4 Consents and Approvals............................................. 20
8.5 Access to Properties, Books and Records; Confidentiality........... 20
8.6 Phase I Environmental Site Assessments............................. 20
8.7 Additional Cure Costs.............................................. 20
8.8 Inventory.......................................................... 20
8.9 Further Assurances................................................. 21
8.10 Notification of a Breach........................................... 21
Article 9 COVENANTS OF BUYER............................................. 21
9.1 Actions Before Closing Date........................................ 21
9.2 Consents and Approvals............................................. 21
9.3 Adequate Assurances Regarding Assigned Contracts................... 21
9.4 Cure of Defaults................................................... 21
9.5 Access to Business Records......................................... 22
9.6 Union Agreement.................................................... 22
Article 10 ENVIRONMENTAL MATTERS.......................................... 22
10.1 Additional Environmental Investigation............................. 22
10.2 Environmental Escrow............................................... 24
Article 11 ANTITRUST MATTERS.............................................. 24
11.1 Antitrust Filings.................................................. 24
11.2 Cooperation; Confidentiality Agreement............................. 25
11.3 Objections or Other Challenges..................................... 25
Article 12 TAXES.......................................................... 26
12.1 Taxes Related to Purchase of Assets................................ 26
-ii-
TABLE OF CONTENTS
(continued)
PAGE
12.2 Proration of Real and Personal Property Taxes...................... 26
12.3 Cooperation on Tax Matters......................................... 26
12.4 Retention of Tax Records........................................... 26
12.5 Allocation of Purchase Price and Purchase Price Allocation Forms... 27
Article 13 CONDITIONS PRECEDENT TO PERFORMANCE BY PARTIES................. 27
13.1 Conditions Precedent to Performance by Sellers and Buyer........... 27
13.2 Conditions Precedent to Performance by Sellers..................... 27
13.3 Conditions Precedent to the Performance by Buyer................... 28
Article 14 TERMINATION AND EFFECT OF TERMINATION.......................... 29
14.1 Right of Termination............................................... 29
14.2 Termination Without Default........................................ 29
14.3 Effect of Failure of Sellers' Conditions to Closing................ 30
14.4 Effect of Failure of Buyer's Conditions to Closing................. 31
14.5 Termination on Alternative Transaction............................. 31
Article 15 INDEMNIFICATION................................................ 32
15.1 Indemnification by Buyer........................................... 32
15.2 Third-Party Indemnification Procedures............................. 32
Article 16 MISCELLANEOUS.................................................. 33
16.1 Successors and Assigns............................................. 33
16.2 Governing Law; Jurisdiction........................................ 33
16.3 Disclosure Schedule Supplements.................................... 33
16.4 Mutual Drafting.................................................... 33
16.5 Expenses........................................................... 33
16.6 Broker's and Finder's Fees......................................... 34
16.7 Severability....................................................... 34
16.8 Notices............................................................ 34
16.9 Amendments; Waivers................................................ 35
16.10 Public Announcements............................................... 35
16.11 Entire Agreement................................................... 35
16.12 Parties in Interest................................................ 36
16.13 Headings........................................................... 36
16.14 Gender and Number.................................................. 36
16.15 Currency........................................................... 36
16.16 Time of Essence.................................................... 36
16.17 Counterparts....................................................... 36
Article 17 DEFINITIONS.................................................... 36
17.1 Certain Terms Defined.............................................. 36
-iii-
TABLE OF CONTENTS
(continued)
PAGE
17.2 All Terms Cross-Referenced......................................... 39
-iv-
EXHIBITS
Exhibit A Form of Transition Services Agreement
Exhibit B Form of Working Capital Escrow Agreement
Exhibit C Form of Sale Order
SCHEDULES
Schedule 1.1(a) Owned Real Property
Schedule 1.1(b) Real Estate Leases
Schedule 1.1(c) Machinery and Equipment
Schedule 1.1(h) Pre-Petition Contracts
Schedule 1.1(k) Other Current Assets
Schedule 1.1(l) Intellectual Property
Schedule 1.1(o) Permits
Schedule 1.2(j) Excluded Software
Schedule 3.4(a) Agreed Principles
Schedule 3.4(e) Reference Balance Sheet
Schedule 5.4 Consents
Schedule 5.5 GAAP Exceptions
Schedule 5.6 Compliance with Law
Schedule 5.7 Litigation
Schedule 5.9 Material Contracts
Schedule 5.10 Intellectual Property Exceptions
Schedule 5.11 Permit Exceptions
Schedule 5.12 Environmental Matters
Schedule 5.13 Sufficiency of Assets
Schedule 8.6(a) Form of Phase I Reliance Letter
Schedule 8.6(b) Qualifications to Phase I Reports
Schedule 12.2 Proration of Taxes
Schedule 17.1 Permitted Liens
1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of October 15,
2002, is made by and among THE LTV CORPORATION, a Delaware corporation
("PARENT"), LTV STEEL COMPANY, INC., a New Jersey corporation ("LTV STEEL"), and
GEORGIA TUBING CORPORATION, a Delaware corporation (collectively with Parent and
LTV Steel, ("SELLERS"), and MAVERICK TUBE CORPORATION, a Delaware corporation
("BUYER"). Capitalized terms used in this Agreement are defined or
cross-referenced in Article 17.
BACKGROUND INFORMATION
A. On December 29, 2000 (the "PETITION DATE"), Parent and 48 of its
Affiliates commenced voluntary cases for reorganization (the "BANKRUPTCY CASES")
under Chapter 11 of the Bankruptcy Code, 11 U.S.C. Sections 101-1330 (the
"BANKRUPTCY CODE"), in the United States Bankruptcy Court for the Northern
District of Ohio, Eastern Division (the "BANKRUPTCY COURT").
X. Xxxxxxx are engaged in the business of manufacturing pipe and conduit
products at the LTV Tubular Plants (the "LTV TUBULAR BUSINESS").
C. Pursuant to an Order entered on June 4, 2002, the Bankruptcy Court has
approved procedures for the sale of, among other things, the LTV Tubular
Business (the "ASSET SALE PROCEDURES"). The Asset Sale Procedures provide for
the sale of the LTV Tubular Business, either alone or along with other business
units of Sellers and their Affiliates, in any case subject to Buyer's assumption
of the Assumed Liabilities and otherwise on the terms and conditions set forth
in the Asset Sale Procedures.
D. Buyer desires to purchase the Acquired Assets and assume the Assumed
Liabilities from Sellers, and Sellers desire to sell the Acquired Assets to
Buyer and to have Buyer assume 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.
E. The Acquired Assets and Assumed Liabilities are assets and liabilities
of 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, which order will include the authorization for the
assumption by Sellers and assignment to Buyer of certain executory contracts and
unexpired leases 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 in accordance with other applicable provisions of the
Bankruptcy Code.
2
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and their respective
representations, warranties, covenants and undertakings herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Sellers and Buyer hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF THE ACQUIRED ASSETS
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 the following property, but shall exclude the
Excluded Assets:
(a) the real property owned by any Seller and listed on Schedule
1.1(a), together with any Improvements erected thereon (the "OWNED REAL
PROPERTY");
(b) all of Sellers' interests in, to and under the leases (the "REAL
ESTATE LEASES") of real property listed on Schedule 1.1(b) (the real
property leased by any Seller pursuant to the Real Property Leases, the
"LEASED REAL PROPERTY" and, together with the Owned Real Property, the
"REAL PROPERTY");
(c) all of (i) Sellers' owned equipment, machinery, furniture,
fixtures, tooling and spare parts relating exclusively to the operation of
the LTV Tubular Business, whether located on the Real Property or
elsewhere (the "MACHINERY AND EQUIPMENT"); and (ii) any rights of Sellers
to the warranties and licenses received from manufacturers and sellers of
the Machinery and Equipment including, without limitation, the Machinery
and Equipment listed on Schedule 1.1(c);
(d) all of Sellers' owned cars, trucks and other motor vehicles
("OWNED VEHICLES") used exclusively in the operation of the LTV Tubular
Business;
(e) all sales orders or other similar Contracts entered into by any
Seller with purchasers of goods or services, but only to the extent
related to the LTV Tubular Business ("SALES ORDERS");
(f) all outstanding purchase orders or other similar Contracts
entered into by any Seller on or after the Petition Date with any supplier
of goods or services for materials, supplies or other items, but only to
the extent related to the LTV Tubular Business ("PURCHASE ORDERS");
(g) all Contracts (other than Sales Orders and Purchase Orders)
entered into by any Seller on or after the Petition Date, but only to the
extent related to the LTV Tubular Business (the "POST-PETITION
CONTRACTS");
3
(h) those Contracts (other than Sales Orders) entered into by any
Seller prior to the Petition Date that are executory and unexpired as of
the Closing Date and that are set forth on Schedule 1.1(h) (the
"PRE-PETITION CONTRACTS" and, together with the Real Estate Leases, the
Sales Orders, the Purchase Orders and the Post-Petition Contracts, but
excluding any contract listed as an Excluded Asset, the "ASSIGNED
CONTRACTS");
(i) any pre-paid expenses and deposits made by or on behalf of any
Seller in connection with any of the Assigned Contracts;
(j) all (i) finished goods, raw materials, work-in-progress and
supplies owned by Sellers on the Closing Date and relating exclusively to
the operation of the LTV Tubular Business (the "INVENTORY"), and (ii) any
rights of Sellers to the warranties received from suppliers with respect
to such Inventory and any related Claims (and rights to Claims), credits,
rights of recovery and set-off with respect thereto;
(k) all of Sellers' accounts receivable arising in connection with
the LTV Tubular Business (the "ACCOUNTS RECEIVABLE"), the current assets
listed on Schedule 1.1(k) and all Claims (and rights to Claims) arising in
connection therewith;
(l) all patents, patent applications, copyrights, copyright
applications, know-how, information, trademarks, service marks, trade
names, brands, private labels, or trade secrets and licenses and rights
with respect to the foregoing (to the extent such licenses or rights are
transferable), or other intellectual property owned by Sellers and
relating exclusively to the operation of the LTV Tubular Business or the
operation of the Acquired Assets (the "INTELLECTUAL PROPERTY"), including,
without limitation, the Intellectual Property listed on Schedule 1.1(l);
(m) any computer software or systems (including, without limitation,
process control software) owned by any Seller and used exclusively in the
operation of the LTV Tubular Business;
(n) all intangible personal property rights of Sellers relating
exclusively to the LTV Tubular Business and all goodwill of Sellers
relating exclusively to the LTV Tubular Business;
(o) all permits, authorizations and licenses issued by any
Government and relating exclusively to the LTV Tubular Business and all
pending applications therefor ("PERMITS") including, without limitation,
those Permits set forth on Schedule 1.1(o), but only to the extent (i)
Sellers have received Consent to transfer such Permits, or (ii) such
Permits are transferable under applicable Law without Consent;
(p) copies or originals of all books, files and records to the
extent they apply to the Acquired Assets or the LTV Tubular Business,
including customer lists, historical customer files, reports, plans, data,
accounting and tax records, test results, product specifications,
drawings, diagrams, training manuals, engineering data, safety and
environmental reports and documents, maintenance schedules, operating and
production records, inventory records, business plans, credit records of
customers, and marketing
4
and all other studies, documents and records, whether in hard copy or
electronic format (the "BUSINESS RECORDS");
(q) all assets to be acquired by Buyer pursuant to Article 2;
(r) all corporate seals, minute books, charter documents, corporate
stock record books, original tax and financial records and such other
files, books and records to the extent they relate exclusively to the
Acquired Assets; and
(s) to the extent assignable, all of Sellers' interest in any
tooling, equipment and machinery used in the LTV Tubular Business and
owned by any customer of the LTV Tubular Business or any third party and
in the possession of any Seller.
1.2 Excluded Assets. The Acquired Assets do not include (1) any right,
title or interest of any Person other than Sellers in any property or asset, (2)
Sellers' right, title and interest in, to and under properties and assets not
related exclusively to the operation of the LTV Tubular Business, and (3) the
properties and assets of Sellers listed or described in this Section 1.2 (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 xxxxx
cash in excess of $5,000, and undeposited checks;
(b) all Contracts (other than Sales Orders) entered into by any
Seller prior to the Petition Date that are not set forth on Schedule
1.1(h);
(c) all assets to be retained by Sellers pursuant to Article 2;
(d) all of Sellers' deposits and prepaid insurance premiums made
under any Contract that is not an Assigned Contract;
(e) except as provided in Section 1.1(j) and Section 1.1(k), all
rights to Claims, refunds or adjustments regarding matters occurring prior
to the Closing Date (regardless of when the claim is made), and all rights
to insurance proceeds or other insurance Contract recoveries relating to
Excluded Liabilities;
(f) any asset of any Seller that would constitute an Acquired Asset
(if owned by such Seller on the Closing Date) that is conveyed or
otherwise disposed of during the period from the date hereof until the
Closing Date either (i) in the ordinary course of business of such Seller
or (ii) as otherwise permitted by the terms of this Agreement;
(g) all losses, loss carryforwards and rights to receive refunds,
credits and loss carryforwards with respect to any and all Taxes of any
Seller incurred or accrued on or prior to the Closing Date, including
interest receivable with respect thereto;
(h) except as provided in Section 1.1(j) and Section 1.1(k), 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,
5
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 any
Seller or any Affiliate of any Seller, 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;
(i) all assets located at or related exclusively to the facilities
owned or leased by LTV Steel at Marion, Ohio (the "XXXXXX PLANT") and all
other assets (including, without limitation, real estate, machinery and
equipment, Contracts, accounts receivable and Intellectual Property) used
exclusively in or arising exclusively from Parent's and its Affiliates'
business conducted at the Xxxxxx Plant;
(j) the computer software or systems listed on Schedule 1.2(j);
(k) all shares of capital stock or other equity interests of all
Sellers and all Affiliates of Sellers;
(l) all corporate seals, minute books, charter documents, corporate
stock record books, original tax and financial records and such other
files, books and records to the extent they relate to any of the Excluded
Assets or to the organization, existence or capitalization of any Seller
or of any Affiliate of any Seller;
(m) 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;
(n) all accounts receivable and other amounts due to any Seller from
any Affiliate of such Seller and all Claims of any Seller against any
other Seller or any other Affiliate of such Seller;
(o) all rights to the LTV name, the Copperweld name and any
variation thereof;
(p) all Contracts that are "employee benefit plans" as defined by
section 3(3) of the Employee Retirement Income Security Act of 1974,
specified fringe benefit plans as defined in section 6039D of the Internal
Revenue Code of 1986, or other bonus, incentive-compensation,
deferred-compensation, profit-sharing, stock-option,
stock-appreciation-right, stock-bonus, stock-purchase,
employee-stock-ownership, savings, severance, change-in-control,
supplemental-unemployment, layoff, salary-continuation, retirement,
pension, health, life-insurance, disability, accident, group-insurance,
vacation, holiday, sick-leave, fringe-benefit or welfare plan, or any
other employee compensation or benefit plan, agreement, policy, practice,
commitment, contract or understanding (whether qualified or nonqualified
currently effective or terminated, written or unwritten) or any trust,
escrow or other agreement related thereto (each, a "LTV BENEFIT PLAN");
and
(q) all LTV Labor Agreements.
6
1.3 Assumption of Liabilities. At the Closing, Buyer shall assume, and
Buyer shall hereafter pay, perform and discharge when due, all of the following
liabilities (the "ASSUMED LIABILITIES"):
(a) all liabilities and obligations with respect to trade accounts
payable of the LTV Tubular Business arising on or after the Petition Date,
but excluding any trade accounts payable to any Affiliate of any Seller
(the "ACCOUNTS PAYABLE");
(b) all liabilities and obligations of Sellers under the Assigned
Contracts and cure costs not to exceed an aggregate of the cure costs set
forth on Schedule 1.1(h) associated with each Pre-Petition Contract to be
assumed by Buyer hereunder (the "AGGREGATE CURE COST"), required to be
paid pursuant to section 365 of the Bankruptcy Code in connection with the
assumption and assignment of the Assigned Contracts;
(c) all liabilities and obligations of Sellers to be assumed by
Buyer pursuant to Article 2;
(d) all liabilities and obligations of Sellers with respect to
tooling, equipment and machinery owned by any customer of the LTV Tubular
Business or any other third party, possession of which is conveyed to
Buyer by any Seller;
(e) all liabilities and obligations of Sellers for Transaction Taxes
payable in connection with the transactions contemplated by this
Agreement;
(f) all liabilities and obligations arising on or after the Closing
Date relating to or arising out of (i) the Acquired Assets, or (ii) the
operation of the LTV Tubular Business, including, without limitation, all
liabilities and obligations for real estate Taxes and assessments that are
a Lien but not yet due and payable and are attributable to time periods
after the Closing;
(g) all liabilities and obligations of any Seller, any of their
Affiliates or any of their respective Related Persons relating to any
Environmental Law, irrespective of whether such liability attaches or
accrues to Buyer or any Seller in the first instance, relating to the
Acquired Assets, but not including (i) any liability or obligation
resulting from the transport, disposal, storage or treatment of any
Hazardous Materials by any Seller prior to the Closing to or at any
location, other than the Real Property, (ii) 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, and (iii) any fine or other monetary penalty
imposed by any Government prior to the Closing Date; and
(h) all liabilities and obligations of the Sellers and their
Affiliates with respect to (i) Seller's MBP, (ii) accrued vacation, (iii)
the Cedar Springs plant hourly and salaried annual profit sharing plan,
and (iv) the Xxxxxx Plant and Ferndale plant hourly and salaried quarterly
profit sharing plans, in each case for persons who are employed by any
Seller or any of their Affiliates on the day before the Closing Date and
who are employed by the Buyer or one of its Affiliates after the Closing,
and which liabilities are included in the calculation of the Final Working
Capital.
7
1.4 Retention of Liabilities. Buyer is assuming only the Assumed
Liabilities and is not assuming any other liability or obligation of any Seller
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 shall include, without limitation, the following:
(a) other than as specifically set forth in Section 1.3(h) or
Article 2, all liabilities and obligations of Sellers to all present and
former employees of the LTV Tubular Business (and their respective spouses
and dependents), including, without limitation, all liabilities for
medical insurance, life insurance, worker's compensation and retirement
benefits;
(b) other than as specifically set forth in Section 1.3(h) or
Article 2, all liabilities and obligations of Sellers relating to or
arising out of any LTV Benefit Plan, including, without limitation, the
defined benefit pension plan covering the hourly employees at the Georgia
Tubing Corporation's Cedar Springs, Georgia plant or arising out of any
LTV Labor Agreement; and
(c) all liabilities and obligations for damages to Persons or
property arising out of alleged defects in products of the LTV Tubular
Business sold by Sellers, or arising under warranties issued by Sellers;
and all liabilities and obligations to repair or replace, or to refund the
sales price of, products manufactured by the LTV Tubular Business prior to
the Closing Date that any customer claims to be defective.
1.5 Non-Assignment of Assigned Contracts. Anything contained herein to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any Assigned Contract if, notwithstanding the provisions of sections 363
and 365 of the Bankruptcy Code, an attempted assignment thereof, without
obtaining a Consent, would constitute a breach thereof or in any way negatively
affect the rights of Sellers or Buyer, as the assignee of such Assigned
Contract. If, notwithstanding the provisions of sections 363 and 365 of the
Bankruptcy Code, such Consent is required but not obtained, Sellers shall, at
Buyer's sole cost and expense, cooperate with Buyer without further
consideration in any reasonable arrangement designed to provide for Buyer the
benefits of or under any such Assigned Contract, including, without limitation,
enforcement for the benefit of Buyer of any and all rights of any Seller against
a third party thereto arising out of the breach or cancellation thereof by such
third party. Any assignment to Buyer of any Assigned Contract that shall,
notwithstanding the provisions of sections 363 and 365 of the Bankruptcy Code,
require the Consent of any third party for such assignment as aforesaid shall be
made subject to such Consent being obtained.
ARTICLE 2
EMPLOYEE AND BENEFITS MATTERS
This Article 2 sets forth Buyer's and Sellers' acknowledgements, covenants
and undertakings with respect to certain matters related to employees of the LTV
Tubular Business not covered under LTV Labor Agreements.
8
2.1 Severance Pay Plan. At or before the Closing, Buyer shall institute a
severance pay plan ("BUYER'S SEVERANCE PAY PLAN") satisfying the following
criteria: (a) it shall apply to all persons who (i) are on the date of this
Agreement full-time employees of any Seller or any of their Affiliates, (ii) are
not represented by a labor union, (iii) are employed by any Seller or any of
their Affiliates on the day before the Closing Date ("ELIGIBLE EMPLOYEES"), and
(iv) are employed by Buyer or one of its Affiliates immediately after the
Closing; (b) it shall be substantially similar to the Copperweld Severance Pay
Plan effective January 1, 1994 (the "COPPERWELD SEVERANCE PAY PLAN"); (c) it
shall credit all Eligible Employees for all prior service with any Seller or any
of their Affiliates for purposes of determining the amount of any severance pay
due; and (d) it shall remain in effect, without material modification, until the
first anniversary of the Closing Date.
2.2 Management Bonus Program. At or prior to the Closing, Buyer shall
cause to be included in Buyer's existing Management Bonus Program for the year
in which the Closing occurs ("BUYER'S MBP") each person not represented by a
labor union who is employed by any Seller or any of their Affiliates on the date
of this Agreement and on the day before the Closing, who is a participant in the
LTV Copperweld Management Bonus Program - 2002 (the "MBP") and is employed by
Buyer or one of its Affiliates immediately after the Closing (a "MBP
PARTICIPANT"). Buyer will cause each MBP Participant to receive a bonus under
Buyer's MBP that is not less than the amount accrued for such MBP Participant in
the Final Working Capital.
2.3 Profit Sharing Plans. Buyer will cause each salaried or hourly worker
participating in (i) the Cedar Springs hourly and salaried annual profit sharing
plan (the "CEDAR SPRINGS PROFIT SHARING PLAN"), or (ii) the Xxxxxx Plant and
Ferndale plant hourly and salaried quarterly profit sharing plans (the "XXXXXX
AND FERNDALE PROFIT SHARING PLANS"), and who is employed by Buyer or one of its
Affiliates immediately after Closing (an "HOURLY AND SALARIED PROFIT PLAN
PARTICIPANT"), to receive a bonus under the Cedar Springs Profit Sharing Plan
and the Xxxxxx and Ferndale Profit Sharing Plans, as applicable, that is not
less than the amount accrued for such Hourly and Salaried Profit Plan
Participant in the Final Working Capital.
ARTICLE 3
CONSIDERATION
3.1 Consideration. The aggregate consideration for the sale and transfer
of the Acquired Assets (a) is $110,000,000 in cash (the "PURCHASE PRICE"), which
price is payable and deliverable at the Closing in accordance with Section 4.3
and may be subject to adjustment as provided in Section 3.3 and Section 3.4 and
(b) the assumption by Buyer of the Assumed Liabilities.
3.2 Deposits. On the date hereof, Buyer has executed and delivered to
Parent the Deposits Escrow Agreement and deposited with the Escrow Agent
$2,200,000 (the "INITIAL DEPOSIT"). Upon the Bankruptcy Court's entry of the
Sale Order, Buyer shall deposit with the Escrow Agent $2,200,000 (the
"ADDITIONAL DEPOSIT" and together with the Initial Deposit, the "DEPOSITS"). The
Deposits shall be held and disbursed pursuant to the terms of the Deposits
Escrow Agreement and this Agreement.
9
3.3 Estimated Working Capital. At least two Business Days prior to the
Closing, Sellers shall deliver to Buyer a certificate setting forth Sellers'
good faith estimated calculation (the "ESTIMATED WORKING CAPITAL") of Closing
Working Capital, with appropriate supporting documentation. If Estimated Working
Capital exceeds the Reference Balance (defined below), the Purchase Price shall
be increased by an amount equal to such excess. If the Reference Balance exceeds
Estimated Working Capital, the Purchase Price shall be decreased by an amount
equal to such excess.
3.4 Purchase Price Adjustment.
(a) As promptly as practicable, but no later than 45 days after the
Closing Date, Buyer shall cause to be prepared and delivered to Parent the
Closing Statement (as defined below) and a certificate based on such
Closing Statement setting forth Buyer's calculation of Closing Working
Capital. The closing statement (the "CLOSING STATEMENT") shall fairly
present the Net Working Capital of the LTV Tubular Business as of the end
of business on the Closing Date ("CLOSING WORKING CAPITAL"). "NET WORKING
CAPITAL" means the working capital items of the LTV Tubular Business in
the categories shown on the Reference Balance Sheet, reduced by the
current liabilities of the LTV Tubular Business in the line items shown on
the Reference Balance Sheet, in each case as determined in accordance with
GAAP as further defined by those accounting principles set forth on
Schedule 3.4(a), consistently applied between March 31, 2002 and the
Closing Date (GAAP as so further defined, the "AGREED PRINCIPLES"). The
preparation of the Closing Statement shall be solely for the purpose of
determining changes in Net Working Capital since March 31, 2002 (the
"BALANCE SHEET DATE"), based upon transactions and events occurring
between the Balance Sheet Date and the Closing Date.
(b) If Parent disagrees with Buyer's calculation of Closing Working
Capital delivered pursuant to Section 3.4(a) , Parent may, within 15 days
after delivery of the documents referred to in Section 3.4(a), deliver a
notice to Buyer disagreeing with such calculation and setting forth
Parent's calculation of such amount. Any such notice of disagreement shall
specify those items or amounts as to which Parent disagrees, and Parent
shall be deemed to have agreed with all other items and amounts contained
in the Closing Statement and the calculation of Closing Working Capital
delivered pursuant to Section 3.4(a).
(c) If a notice of disagreement shall be duly delivered pursuant to
Section 3.4(b), Buyer and Parent shall, during the 15 days following such
delivery, use their best efforts to reach agreement on the disputed items
or amounts in order to determine, as may be required, the amount of
Closing Working Capital, which amount shall not be less than the amount
thereof shown in Buyer's calculation delivered pursuant to Section 3.4(a)
nor more than the amount thereof shown in Parent's calculation delivered
pursuant to Section 3.4(b). If during such period, Buyer and Parent are
unable to reach such agreement, they shall promptly thereafter cause
Deloitte & Touche LLP (the "ACCOUNTING REFEREE") to review this Agreement
and the disputed items or amounts for the purpose of calculating Closing
Working Capital. In making such calculation, the Accounting Referee shall
consider only those items or amounts in the Closing Statement
10
with which Parent has disagreed, and Parent's calculation of such amounts.
The Accounting Referee shall deliver to Buyer and Parent, as promptly as
practicable (but in any case no later than 30 days from the date of
engagement of the Accounting Referee), a report setting forth such
calculation. Such report shall be final and binding upon Buyer and
Sellers. The cost of such review and report shall be borne equally by
Buyer and Parent.
(d) Buyer and Parent shall, and shall cause their respective
representatives to, cooperate and assist in the preparation of the Closing
Statement and the calculation of Closing Working Capital and in the
conduct of the reviews referred to in this Section 3.4, including, without
limitation, the making available to the extent necessary of books,
records, work papers and personnel.
(e) Attached hereto as Schedule 3.4(e) is a balance sheet showing
Net Working Capital as of March 31, 2002 (the "REFERENCE BALANCE SHEET").
The parties acknowledge that the Reference Balance Sheet was prepared in
accordance with the Agreed Principles.
(f) If Final Working Capital exceeds Estimated Working Capital,
Buyer shall pay to Sellers, in the manner and with interest as provided in
Section 3.4(g), the amount of such excess and, if Estimated Working
Capital exceeds Final Working Capital, Parent shall pay to Buyer, as an
adjustment to the Purchase Price, in the manner and with interest as
provided in Section 3.4(g), the amount of such excess. "FINAL WORKING
CAPITAL" means Closing Working Capital (i) as shown in Buyer's calculation
delivered pursuant to Section 3.4(a) if no notice of disagreement with
respect thereto is duly delivered pursuant to Section 3.4(b); or (ii) if
such a notice of disagreement is delivered, (A) as agreed by Buyer and
Parent pursuant to Section 3.4(c) or (B) in the absence of such agreement,
as shown in the Accounting Referee's calculation delivered pursuant to
Section 3.4(c); provided, however, that in no event shall Final Working
Capital be more than Sellers' calculation of Closing Working Capital
delivered pursuant to Section 3.4(b) or less than Buyer's calculation of
Closing Working Capital delivered pursuant to Section 3.4(a).
(g) Any payment pursuant to Section 3.4(f) shall be made at a
mutually convenient time and place within three Business Days after Final
Working Capital has been determined. Such payment shall be made (i) if by
Parent, first, in accordance with the terms of the Working Capital Escrow
Agreement, and second, if the funds therein are insufficient, by delivery
by a certified or official bank check or wire transfer, and (ii) if by
Buyer, by delivery of a certified or official bank check or wire transfer,
in any case, payable in immediately available funds to the other party or
by causing such payments to be credited to such account of such other
party as may be designated in writing by such other party. The amount of
any payment to be made pursuant to this Section 3.4 shall bear interest
from and including the Closing Date to but excluding the date of payment
at a rate per annum equal to the rate of interest announced by XX Xxxxxx
Chase from time to time as its base rate in New York City in effect from
time to time during the period from the Closing Date to the date of
payment. Such interest shall be payable at the same
11
time as the payment to which it relates and shall be calculated daily on
the basis of a year of 365 days and the actual number of days elapsed.
ARTICLE 4
CLOSING AND DELIVERIES
4.1 Closing. The consummation of the transactions contemplated hereby (the
"CLOSING") shall take place at the offices of Xxxxx, Day, Xxxxxx & Xxxxx, North
Point, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx at 11:00 a.m. on the third Business
Day following the satisfaction or waiver by the appropriate party of all the
conditions contained in Article 13 hereof, or on such other date or at such
other place and time as may be agreed to by the parties hereto (the "CLOSING
DATE").
4.2 Sellers' Deliveries.
(a) 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 otherwise consistent with
the terms of this Agreement and reasonably satisfactory in form and
substance to counsel for Buyer.
(b) At Closing, Sellers shall deliver two executed counterparts of a
transition services agreement (the "TRANSITION SERVICES AGREEMENT") in
substantially the form of Exhibit A.
(c) At Closing, Sellers shall deliver three executed counterparts of
the Working Capital Escrow Agreement, substantially in the form of Exhibit
B (the "WORKING CAPITAL ESCROW AGREEMENT").
(d) At Closing, if a portion of the Purchase Price is to be placed
in escrow as provided in Article 10, Sellers shall execute and deliver
three counterparts of the Environmental Escrow Agreement.
4.3 Buyer's Deliveries. On the Closing Date, in payment for the Acquired
Assets:
(a) Buyer shall direct the Escrow Agent to pay the Deposits to
Sellers in accordance with the terms of the Deposits Escrow Agreement, by
wire transfer of immediately available funds, to a bank account designated
by Parent in writing to Buyer (the "SELLERS' ACCOUNT").
(b) Buyer shall pay to Sellers the Purchase Price, adjusted as
provided in Section 3.3 and reduced by (i) the amount of the Deposits paid
pursuant to Section 4.3(a), (ii) $1 million to be placed in escrow
pursuant to the terms of the Working Capital Escrow Agreement and (iii)
the amount, if any, placed in escrow pursuant to Article 10, by wire
transfer of immediately available funds to Sellers' Account.
12
(c) If a portion of the Purchase Price is to be placed in escrow as
provided in Article 10, Buyer shall execute and deliver three counterparts
of the Environmental Escrow Agreement.
(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.
(e) Buyer shall deliver to Parent two executed counterparts of the
Transition Services Agreement.
(f) Buyer shall execute and deliver three copies of the Working
Capital Escrow Agreement.
(g) Buyer shall deliver the sum of $1 million to the Escrow Agent to
be held in escrow pursuant to the terms of the Working Capital Escrow
Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Sellers hereby jointly and severally represent and warrant to Buyer as
follows:
5.1 Corporate Organization. Each Seller is duly organized and validly
existing under the Laws of the jurisdiction of its organization. Subject to any
necessary authority from the Bankruptcy Court, each Seller has all requisite
corporate power and authority to own its properties and assets and to conduct
its business as now conducted.
5.2 Authorization and Validity. Each Seller has all requisite corporate
power and authority to enter into this Agreement and those Ancillary Agreements
to which it is or will be a party and, subject to the Bankruptcy Court's entry
of the Sale Order and the receipt of the Consents set forth on Schedule 5.4, to
carry out its obligations hereunder and thereunder. The execution and delivery
of this Agreement and those Ancillary Agreements to which any of them is or will
be a party and the performance of each Seller of its obligations hereunder and
thereunder have been duly authorized by all necessary corporate action by the
board of directors and stockholders of such Seller, and no other corporate
proceedings on the part of such Seller are necessary to authorize such
execution, delivery and performance. This Agreement has been, and each Ancillary
Agreement when executed on behalf of any Seller will have been, duly executed by
each Seller that is a party thereto and, subject to the Bankruptcy Court's entry
of the Sale Order, constitutes, and each Ancillary Agreement will when executed
on behalf of any Seller constitute, its valid and binding obligation,
enforceable against it in accordance with their respective terms.
5.3 No Conflict or Violation. Subject to (a) the receipt of all Consents
set forth on Schedule 5.4, (b) the Bankruptcy Court's entry of the Sale Order
and (c) the receipt of the Antitrust Approval, the execution, delivery and
performance by each Seller of this Agreement and those Ancillary Agreements to
which it is or will be a party do not and will not (i) violate or conflict with
any provision of the certificate of incorporation or by-laws (or equivalent
organizational documents) (collectively, the "ORGANIZATIONAL DOCUMENTS") of any
13
Seller, (ii) 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 any Seller, (iii) violate or result
in a breach of or constitute (with due notice or lapse of time or both) a
default under any Contract to which any Seller is a party or by which any of
them is bound or to which any of their properties or assets is subject which
violation, conflict, breach or default under this Section 5.3; (iii) would
reasonably be expected to have a Material Adverse Effect, or (iv) result in the
imposition of a material Lien, other than a Permitted Lien, upon or with respect
to any of the Acquired Assets. "MATERIAL ADVERSE EFFECT" means a state of facts,
event, change or effect with respect to the Acquired Assets, or the
enforceability of any Assigned Contract, that results in a material adverse
effect on the combined operations or value of the LTV Tubular Business taken as
a whole, but excluding any state of facts, event, change or effect caused by
events, changes or developments relating to (v) the transactions contemplated by
this Agreement or the announcement thereof; (w) changes or conditions affecting
the industries of which the LTV Tubular Business is a part generally; (x)
changes in economic, regulatory or political conditions generally; (y) changes
resulting from, or from any motion, application, pleading or Order filed under
or in connection with, the Bankruptcy Cases; or (z) any act(s) of war or of
terrorism.
5.4 Consents and Approvals. Except for the Bankruptcy Court's entry of the
Sale Order and the Antitrust Approval, Schedule 5.4 sets forth a true and
complete list of each material Consent, and each declaration to or filing or
registration with any Government, that is required in connection with the
execution and delivery of this Agreement and the Ancillary Agreements by Sellers
or the performance by Sellers of their obligations hereunder or thereunder
(including all consents necessary to the transfer of the Material Contracts).
5.5 Financial Statements. Prior to the date hereof, Sellers have provided
Buyer with the balance sheets of the LTV Tubular Business as of March 31, 2002
and December 31, 2001 and the income statements of the LTV Tubular Business for
the periods then ended, and the statement of LTV's investment and cash flow for
the year ended December 31, 2001 (the "FINANCIAL STATEMENTS"), together with the
report of Ernst & Young, LLP, independent certified public accountants ("E&Y")
on the Financial Statements for the year ended December 31, 2001. The Financial
Statements were prepared in accordance with United States GAAP, consistently
applied except, in the case of the income statement as of March 31, 2002 (the
"STUB PERIOD"), as set forth on Schedule 5.5. The Financial Statements fairly
present the financial condition, the results of operations, and the investments
and cash flow of the LTV Tubular Business in all material respects as at the
respective dates of and for the periods referred to in such Financial Statements
except, in the case of the Financial Statements for the Stub Period, for normal
year end adjustments and as might result from the exceptions set forth on
Schedule 5.5. No financial statements of any Person other than Sellers are
required by GAAP to be included in the financial statements of the LTV Tubular
Business.
5.6 Compliance with Law. Except as set forth on Schedule 5.6 and as may
result from the Bankruptcy Cases, no Seller has violated any Law (other than
with respect to Environmental Law, as to which the only representations and
warranties made by Sellers are those contained in Section 5.12), nor is any such
entity in default with respect to any Order, applicable to the LTV Tubular
Business or any of its assets, properties or operations, other than
14
violations and defaults the consequences of which would not reasonably be
expected to have a Material Adverse Effect.
5.7 Litigation. Except as set forth on Schedules 5.7, 5.10, 5.11 or 5.12,
there are no Claims, suits, proceedings or investigations pending or, to the
Knowledge of Sellers, threatened, before any court or Government brought by or
against any Seller that, if adversely determined, could reasonably be expected
to have a Material Adverse Effect or materially impair the ability of Sellers to
consummate the transactions contemplated by this Agreement. Other than the
Bankruptcy Cases, there is no material Order to which the LTV Tubular Business,
or any of the Acquired Assets, is subject and Sellers are not subject to any
material Order that relates to the LTV Tubular Business or any of the Acquired
Assets.
5.8 Title and Ownership. Subject to the entry of the Sale Order, at the
Closing, Sellers will have good and marketable title to, or right by Contract to
use, the Acquired Assets, free and clear of all Liens other than Permitted
Liens.
5.9 Material Contracts.
(a) Schedule 5.9 sets forth a complete and correct list of each of
the Assigned Contracts that:
(i) creates a right to lease, use or occupy real estate used
in the LTV Tubular Business;
(ii) would reasonably be expected to require the payment of
amounts in excess of $500,000 after the Closing Date;
(iii) has a remaining duration of more than one year (except
those that are terminable at a Seller's option upon less than 90
days' notice);
(iv) provides for the use, license, assignment, purchase or
sale of material Intellectual Property; or
(v) the consequences of a default under or termination of such
Assigned Contract would reasonably be expected to have a Material
Adverse Effect (collectively, the "MATERIAL CONTRACTS").
(b) Other than as set forth on Schedule 5.9, no Seller nor, to
Sellers' Knowledge, any other party to any of the Material Contracts has
commenced any action against any of the parties to such Material Contracts
or given or received any written notice of any material default or
violation under any Material Contract that was not withdrawn or dismissed,
except only for those defaults that will be cured in accordance with the
Sale Order (or that need not be cured under the Bankruptcy Code to permit
the assumption and assignment of the Assigned Contracts). Each of the
Material Contracts is, or will be at the Closing, valid, binding and in
full force and effect against a Seller, except as such Material Contract
may have been terminated in accordance with its terms or as otherwise set
forth on Schedule 5.9.
15
5.10 Intellectual Property. Schedule 1.1(l) sets forth a complete and
correct list of all material patents necessary to operate the LTV Tubular
Business as currently conducted and all registered trademarks used exclusively
in the LTV Tubular Business. One of the Sellers owns, individually or with
another Seller, all right, title and interest in and to, or has a valid and
enforceable license to use, all the Intellectual Property and not later than
five (5) Business Days prior to Closing Sellers shall provide buyer with a
schedule setting forth the owner of each piece of Intellectual Property for
which it is necessary to file notice of transfer with any Government. To
Sellers' Knowledge, the conduct of the LTV Tubular Business as currently
conducted does not conflict with or infringe upon any proprietary right of any
third party in any material respect. Except as set forth on Schedule 5.10, there
is no Claim pending or, to Sellers' Knowledge, threatened in writing, that (i)
alleges any such conflict or infringement with any third party's proprietary
rights or (ii) challenges any Seller's ownership or use of, or the validity or
enforceability of, any Intellectual Property. Except as set forth on Schedule
5.10, no Seller is under any obligation to pay royalties or other payments in
connection with any Contract to use the Intellectual Property or restricted from
assigning its rights respecting Intellectual Property.
5.11 Permits. As of the date of this Agreement, Schedule 1.1(o) sets forth
a complete and correct list of all material Permits and all pending applications
therefor obtained by any Seller in connection with the LTV Tubular Business.
Except as set forth on Schedule 5.11 or as would not reasonably be expected to
have a Material Adverse Effect, each such Permit is valid and in full force and
effect, and is not subject to any pending or, to Sellers' Knowledge, threatened
administrative or judicial proceeding to revoke, cancel, suspend or declare such
Permit invalid in any respect. Except as would not reasonably be expected to
have a Material Adverse Effect, the Permits are and will on the Closing Date be
sufficient and adequate in all material respects to permit the continued lawful
conduct of the LTV Tubular Business in the manner now conducted and, to Sellers'
Knowledge, none of the operations of the LTV Tubular Business is being conducted
in a manner that violates any of the terms or conditions under which any Permit
was granted.
5.12 Environmental Matters. To Sellers' Knowledge, except as set forth on
Schedule 5.12:
(a) Since January 1, 2001, 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.
(b) Sellers are in compliance with applicable Environmental Laws,
except where such non-compliance would not reasonably be expected to have
a Material Adverse Effect.
(c) There is not currently in effect, and since January 1, 2001
there has not been, any complaint, Order, directive, Claim, citation,
notice, information request or investigation by any Government or any
other Person with respect to any release, threatened release, spill, leak,
discharge or emission of any Hazardous Materials to the air, surface
water, groundwater or soil of the Real Property that is a violation or
alleged
16
violation of any applicable Environmental Laws, except where such matter
would not reasonably be expected to have a Material Adverse Effect.
(d) Sellers have in full force and effect all material environmental
permits, licenses and other authorizations required to conduct their
operations and are operating in material compliance thereunder, and to
Sellers' Knowledge there is no reason (other than facts about Buyer) that
would preclude Buyer from renewing or obtaining the reissuance in Buyer's
name of such permits, licenses or other authorizations required by any
Environmental Law to operate the Acquired Assets as currently operated by
Sellers.
5.13 Sufficiency of Acquired Assets. Except as set forth on Schedule 5.13,
the Acquired Assets constitute all of the assets currently used by Sellers to
operate the LTV Tubular Business as currently operated by Sellers.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows:
6.1 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 business as now conducted.
6.2 Authorization and Validity. Buyer has all requisite corporate power
and authority to enter into this Agreement and the Ancillary Agreements and to
carry out its obligations hereunder and thereunder. The execution and delivery
of this Agreement and the Ancillary Agreements and the performance of Buyer's
obligations hereunder and thereunder have been duly authorized by all necessary
corporate action by the board of directors of Buyer, and no other corporate
proceedings on the part of Buyer are necessary to authorize such execution,
delivery and performance. This Agreement has been duly executed by Buyer and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms.
6.3 No Conflict or Violation. The execution, delivery and performance by
Buyer of this Agreement and the Ancillary Agreements do not and will not violate
or conflict with any provision of the Organizational 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
time or both) a default under any material Contract to which Buyer is a party or
by which it is bound or to which any of its properties or assets is subject.
6.4 Consents and Approvals. The execution, delivery and performance of
this Agreement and the Ancillary Agreements by Buyer do not require the Consent
of, or filing with, any Government or any other Person except: (a) as required
under any Antitrust Law; (b) for entry of the Sale Order by the Bankruptcy
Court; or (c) for such Consents and filings, the failure to obtain or make would
not be reasonably be expected to have a material adverse effect on the ability
of Buyer to consummate the transactions contemplated hereby.
17
6.5 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.
6.6 Adequate Assurances Regarding Assigned 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 Assigned Contracts.
6.7 Investigation by Buyer. Buyer has conducted its own independent review
and analysis of the Acquired Assets and the Assumed Liabilities and the
business, operations, technology, assets, liabilities, financial condition and
prospects of the LTV Tubular Business and acknowledges that Sellers have
provided Buyer with access to the personnel, properties, premises and records of
the LTV Tubular Business for this purpose. Buyer has conducted its own
independent review of all Orders of, and all motions, pleadings, and other
submissions to, the Bankruptcy Court in connection with the Bankruptcy Cases. In
entering into this Agreement, Buyer has relied solely upon its own investigation
and analysis, and Buyer acknowledges that (a) neither Sellers nor any of their
Related Persons or Affiliates makes or has made any representation or warranty,
either express or implied, as to the accuracy or completeness of any of the
information provided or made available to Buyer or any of its Related Persons or
Affiliates, except as and only to the extent expressly set forth in Article 5
(which are subject to the limitations and restrictions contained in this
Agreement), and (b) to the fullest extent permitted by Law, none of Sellers or
any of their respective Related Persons or Affiliates shall have any liability
or responsibility whatsoever to Buyer or its Related Persons or Affiliates on
any basis (including, without limitation, in contract or tort, under securities
Laws or otherwise) based upon any information provided or made available, or
statements made, to Buyer or Related Persons or Affiliates (or any omissions
therefrom), including, without limitation, in respect of the specific
representations and warranties of Sellers set forth in this Agreement, except,
with regard to Sellers, as and only to the extent expressly set forth in Article
5 (which are subject to the limitations and restrictions contained in this
Agreement).
ARTICLE 7
SCOPE OF REPRESENTATIONS AND WARRANTIES
7.1 Warranties Exclusive. The representations and warranties contained
herein are the only representations or warranties given by the parties and 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,
BUYER ACKNOWLEDGES THAT NEITHER ANY SELLER NOR ANY OF THEIR RELATED PERSONS OR
AFFILIATES HAS MADE ANY REPRESENTATION OR WARRANTY CONCERNING (A) ANY USE TO
WHICH THE ACQUIRED ASSETS MAY BE PUT, (B) ANY FUTURE REVENUES, COSTS,
EXPENDITURES, CASH FLOWS, 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, (C) ANY OTHER INFORMATION OR
DOCUMENTS MADE AVAILABLE TO BUYER OR ITS RELATED PERSONS OR AFFILIATES, OR (D)
EXCEPT AS EXPRESSLY SET FORTH IN
18
ARTICLE 5, THE CONDITION OF THE ACQUIRED ASSETS, INCLUDING, WITHOUT LIMITATION,
(I) COMPLIANCE WITH ANY ENVIRONMENTAL LAWS OR OTHER LAWS AND (II) THE PHYSICAL
CONDITION OF ANY PERSONAL PROPERTY COMPRISING A PART OF THE ACQUIRED ASSETS OR
THAT IS THE SUBJECT OF ANY OTHER LEASE OR CONTRACT TO BE ASSUMED BY BUYER AT THE
CLOSING, THE ENVIRONMENTAL CONDITION OF ANY REAL PROPERTY UNDERLYING ANY OF THE
ACQUIRED ASSETS THAT ARE TO BE TRANSFERRED TO BUYER AT CLOSING OR ARE THE
SUBJECT OF ANY REAL PROPERTY LEASE TO BE ASSUMED BY BUYER AT THE CLOSING, THE
ZONING OF ANY SUCH REAL PROPERTY OR IMPROVEMENTS, THE VALUE OF THE ACQUIRED
ASSETS (OR ANY PORTION THEREOF), THE TERMS, AMOUNTS, VALIDITY OR ENFORCEABILITY
OF ANY ASSUMED LIABILITIES, THE COLLECTIBILITY OF THE ACCOUNTS RECEIVABLE, OR
THE FITNESS OF THE PERSONAL PROPERTY OR ANY OTHER PORTION OF THE ACQUIRED ASSETS
FOR ANY PARTICULAR PURPOSE. BUYER FURTHER ACKNOWLEDGES THAT NEITHER ANY SELLER
NOR ANY OF THEIR RELATED PERSONS OR AFFILIATES HAS MADE OR WILL MAKE ANY
REPRESENTATION OR WARRANTY IN ANY ANCILLARY AGREEMENT.
7.2 Survival of Representations and Warranties. None of the
representations or warranties of Sellers set forth in this Agreement or in any
certificate delivered pursuant to Section 13.3(a) or Section 13.3(b) shall
survive the Closing.
ARTICLE 8
COVENANTS OF SELLERS
Sellers hereby covenant to Buyer as follows:
8.1 Actions Before Closing. Sellers shall use commercially reasonable
efforts to perform and satisfy all conditions to Buyer's obligations to
consummate the transactions contemplated by this Agreement that are to be
performed or satisfied by Sellers under this Agreement.
8.2 Conduct of Business Before the Closing Date. Without the prior written
consent of Buyer and, to the extent required, the authorization of the
Bankruptcy Court, after notice and a hearing, between the date hereof and the
Closing Date, Sellers shall not, except as required or expressly permitted
pursuant to the terms hereof or of any Ancillary Agreement, make any material
change in the Acquired Assets, taken as a whole, or enter into any transaction
other than an Alternative Transaction other than in the ordinary course of
business consistent with past practices. Except as may be required by the
Bankruptcy Court and approved by Buyer, from the date hereof until the Closing,
Sellers shall conduct the LTV Tubular Business in the ordinary course consistent
with past practice since December 29, 2000. Between the date of this Agreement
and the Closing, Sellers shall not, without Buyer's consent, enter into any
Contract that would have been required to be listed on Schedule 5.9 had such
Contract been in effect on the date hereof. Upon such consent being given and
any Seller entering into any such Contract, Schedule 5.9 and, if applicable,
Schedule 5.4 shall automatically be amended to include such Contract.
19
8.3 Sale Order. Sellers shall obtain an entry by the Bankruptcy Court of
an Order approving the sale of the Acquired Assets to Buyer substantially in the
form of Exhibit B hereto (the "SALE ORDER").
8.4 Consents and Approvals. Sellers shall use commercially reasonable
efforts to obtain all necessary consents, waivers, authorizations and approvals
of all Governments, and of all other Persons, required to be obtained by Sellers
in connection with the execution, delivery and performance by them of this
Agreement; provided, however, that nothing in this Agreement shall impose on any
Seller any obligation to negotiate with, to obtain the consent of, or to obtain
any waiver from, the USWA or any other labor union.
8.5 Access to Properties, Books and Records; Confidentiality. Sellers
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 14) to all books and records of Sellers relating to the LTV Tubular
Business (to the extent permitted under Law). Upon reasonable prior notice,
Sellers shall also afford Buyer reasonable access, during normal business hours,
to the LTV Tubular Business, all operations of the LTV Tubular Business and to
all Acquired Assets throughout the period prior to the Closing Date. The rights
of access contained in this Section 8.5 are granted subject to, and on, the
following terms and conditions: (a) any such investigation shall not include
physical testing or sampling, other than (i) with the prior written consent of
Sellers, or (ii) as provided in Section 10.1, and shall be exercised in such a
manner as not to interfere unreasonably with the operation of the LTV Tubular
Business; (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 Sellers or their agents or representatives (whether pursuant to this Section
8.5 or otherwise) shall be governed by and subject to the Confidentiality
Agreement, dated as of June 13, 2002, between Buyer and Parent (the
"CONFIDENTIALITY AGREEMENT"); and (c) such rights of access shall not affect or
modify the conditions set forth in Article 13 in any way.
8.6 Phase I Environmental Site Assessments. Sellers shall cause the Phase
I Environmental Site Assessment for each of the five facilities constituting the
LTV Tubular Plants, each prepared by Civil & Environmental Consultants, Inc. and
dated June 28, 2002, to be certified to and for the benefit of Buyer and XX
Xxxxxx Xxxxx individually and as agent for Buyer's banking group in a statement
of reliance letter substantially in the form of Schedule 8.6(a), and subject to
the qualifications set forth on Schedule 8.6(b), specify thereon adherence to
ASTM Designation E-1527-00.
8.7 Additional Cure Costs. Sellers shall, on or prior to the Closing, cure
or make provision to cure any and all monetary defaults under the Assigned
Contracts greater than Aggregate Cure Costs that are required to be cured under
the Bankruptcy Code, so that such Contracts may be assumed by Sellers and
assigned to Buyer in accordance with the provisions of section 365 of the
Bankruptcy Code.
8.8 Inventory. The physical quantities at the various LTV Tubular Plants
will be verified through testing of the perpetual inventory records, on a
representative sample basis consistent with the past practices of LTV, not more
than three (3) days before the anticipated
20
Closing Date, with representatives of Sellers and Buyer present. Inventory at
warehouses and processors will be verified by written confirmation from the
warehouse or processor.
8.9 Further Assurances. Upon the request and at the sole expense of Buyer
at any time after the Closing Date, Sellers shall execute and deliver such
documents as Buyer or its counsel may reasonably request to effectuate the
purposes of this Agreement.
8.10 Notification of a Breach. Between the date of this Agreement and the
Closing Date, Sellers shall promptly notify Buyer in writing if any of the
Sellers become aware of (a) any fact or condition that causes or constitutes a
breach of any of Sellers' representations and warranties made as of the date of
this Agreement or (b) the occurrence after the date of this Agreement of any
fact or condition that would or be reasonably likely to (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had that representation or warranty been made as of
the time of the occurrence of, or Sellers' discovery of, such fact or condition.
Should any fact or condition require any change to a Schedule, Sellers shall
promptly take any action required by and in accordance with Section 16.3. During
the same period, Sellers also shall promptly notify Buyer of the occurrence of
any breach of any covenant of Sellers in this Article 8.
ARTICLE 9
COVENANTS OF BUYER
Buyer hereby covenants to Sellers as follows:
9.1 Actions Before Closing Date. Buyer shall use all commercially
reasonable efforts to perform and satisfy all conditions to Sellers' obligations
to consummate the transactions contemplated by this Agreement that are to be
performed or satisfied by Buyer under this Agreement.
9.2 Consents and Approvals. Buyer shall use all commercially reasonable
efforts to 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. Buyer shall 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.
9.3 Adequate Assurances Regarding Assigned Contracts. With respect to each
Assigned Contract, to the extent requested by the Bankruptcy Court, Sellers or
the counterparty to such Contract, Buyer shall provide the Bankruptcy Court,
Sellers or such counterparty, as the case may be, adequate assurance of the
future performance of such Assigned Contract by Buyer.
9.4 Cure of Defaults. Buyer shall, on or prior to the Closing, cure any
and all defaults under the Assigned Contracts that are required to be cured
under the Bankruptcy Code, so that such Contracts may be assumed by Sellers and
assigned to Buyer in accordance with the provisions of section 365 of the
Bankruptcy Code; provided, however, that Buyer shall not be required to expend
in excess of the Aggregate Cure Costs to cure such defaults.
21
9.5 Access to Business Records. From and after the Closing Date for a
period of not more than seven (7) years, Buyer shall provide to Sellers and
their attorneys, accountants and other representatives (after reasonable notice
and during normal business hours and without charge to Sellers) such access to
the Business Records as Sellers may reasonably deem necessary. Such access shall
include, without limitation, access to any computerized information systems that
contain data regarding the Acquired Assets. In addition, Buyer acknowledges that
Sellers have the right to retain originals or copies of the Business Records.
9.6 Union Agreement. Buyer will offer to enter into collective
bargaining agreements with the USWA for the Xxxxxx Plant, the Elyria Plant, the
Ferndale plant and the Youngstown Plant which offer wages and welfare benefits
to current active employees that are not less favorable to such employees than
the wages and welfare benefits proposed by Buyer to the USWA in drafts dated
August 30, 2002 at their first meeting, and will use commercially reasonable
efforts to enter into such collective bargaining agreements on or prior to
October 25, 2002.
ARTICLE 10
ENVIRONMENTAL MATTERS
10.1 Additional Environmental Investigation.
(a) Buyer has engaged MECX, LLC (the "ENVIRONMENTAL
CONSULTANT"), pursuant to the terms of a letter agreement dated October
1, 2002 (the "ASSESSMENT AGREEMENT"), to prepare a work plan for a
Phase II environmental assessment of each LTV Tubular Plant (each, a
"WORK PLAN") and, subject to the terms of this Section 10.1, to carry
out an environmental site assessment pursuant to each such Work Plan
and prepare a report of the findings arising therefrom for each LTV
Tubular Plant. The Assessment Agreement shall not be amended or
modified without Seller's consent. Buyer shall cause the Environmental
Consultant to carry out all work pursuant to the terms of this Section
10.1.
(b) Buyer has caused the Environmental Consultant to complete
Work Plans for a Phase II evaluation for each LTV Tubular Plant and
deliver copies thereof to Parent prior to the date hereof. Each Work
Plan was prepared at Buyer's sole expense and specifies in reasonable
detail all actions to be taken by the Environmental Consultant
including, without limitation, the area of concern, the location at
which soil and water samples are to be taken, the nature of the types
of samples to be taken, the procedures to be followed in performing the
sampling, the parameters for which sampling is to be performed and the
frequency of sampling at each sampling location.
(c) Buyer and Parent shall jointly review all Work Plans and
may, but shall not be required to, agree on any modification thereto.
On or prior to October 21, 2002, Parent shall notify Buyer whether any
Work Plan (with such modifications, if any, as have been agreed to) is
unacceptable.
(d) At any time after the conditions contained in Sections
13.2(d) and 13.3(c) have been satisfied or waived (the date of such
satisfaction, the "SATISFACTION DATE"),
22
Buyer may cause the Environmental Consultant to carry out a site
assessment in accordance with each Work Plan (each, a "SITE
ASSESSMENT"). Any such Site Assessment which Buyer elects to have
conducted shall be limited solely to those activities described on the
Work Plan; provided, however, that additional activities proposed by
the Environmental Consultant may be added to the Site Assessment if (i)
such additional activities will not delay delivery of the Environmental
Report beyond January 10, 2003; (ii) such additional activities address
potential Required Response Conditions disclosed by the Site
Assessment; and (iii) Parent gives its consent, which shall not be
unreasonably delayed or withheld. Each Site Assessment shall be
conducted at Buyer's sole cost and expense. Buyer shall be responsible,
at its sole cost and expense, for the management and disposal of any
wastes generated by Environmental Consultant during any Site Assessment
in compliance with all applicable laws and for restoring the condition
of any part of any LTV Tubular Plant that is disturbed as a result of
the Site Assessment. Parent shall permit the Environmental Consultant
access to the LTV Tubular Facilities to carry out the Site Assessments
and will use commercially reasonable efforts to facilitate Site
Assessments (without interfering with normal plant operations). Parent
(or its agents) shall be permitted to observe all aspects of each Site
Assessment. The Environmental Consultant shall complete each Site
Assessment and deliver a report to Buyer and to Parent (each, an
"ENVIRONMENTAL REPORT") as promptly as practicable, and in any event on
or prior to January 10, 2003; provided, however, that the due date for
each Environmental Report shall be extended beyond January 10, 2003 by
one (1) day for each day by which the Satisfaction Date is after
October 28, 2002, up to a maximum of 44 days.
(e) Each Environmental Report shall identify those sets of
circumstances and conditions, if any, that create a current affirmative
obligation under applicable Environmental Laws to undertake some
Response Action (each, a "REQUIRED RESPONSE CONDITION") and contain an
estimate of the cost of the most cost-effective Response Action, if
any, required under Environmental Laws to bring the Required Response
Condition into compliance with standards applicable to industrial
properties, assuming such LTV Tubular Plant remains in operation as a
manufacturing facility (the "COST ESTIMATE"). In preparing each Cost
Estimate, the Environmental Consultant shall (i) apply the most
cost-effective standards applicable to industrial locations, including
risk-based assessments, (ii) assume all required expenditures will be
made at the latest time consistent with Environmental Laws, (iii)
discount all future expenditures to take into account the time value of
money using an 6% discount rate, and (iv) identify the specific cost
(as opposed to a range of costs) that, in its professional judgment,
represents for each Required Response Condition the median (50th
percentile) statistical probability occurrence of the cost of
remediation. The Cost Estimate for any LTV Tubular Plant covered by any
Environmental Report not timely delivered shall be $0.
(f) If the sum of the Cost Estimates is less than $2.0
million, Buyer and Parent shall have no further rights under this
Section 10.1 and there shall be no Environmental Escrow Fund. If the
sum of the Cost Estimates exceeds $2.0 million, then (i) at Closing
Buyer shall place into escrow a portion of the Purchase Price equal to
the sum of (x) fifty percent (50%) of that portion of the Cost
Estimates that is greater than $2.0 million, but less than $6.0
million, plus (y) one-hundred percent (100%) of that
23
portion of the Cost Estimates that is greater than $6.0 million (the
sum of these amounts being the "ENVIRONMENTAL ESCROW FUND"); (ii) Buyer
and Seller shall have no further rights under this Section 10.1; and
(iii) the provisions of Section 10.2 shall apply.
10.2 Environmental Escrow. If Buyer is required to fund the
Environmental Escrow Fund at Closing, at Closing Buyer and Seller shall enter
into an escrow agreement having the following terms and conditions (the
"ENVIRONMENTAL ESCROW AGREEMENT"):
(a) The Environmental Escrow Fund shall be deposited by Buyer
at the Closing.
(b) The Escrow Agent shall be authorized, upon delivery by
Buyer of a proper certificate, to periodically release to Buyer from
the Environmental Escrow Fund an amount equal to the Sellers' Portion
of any Appropriate Environmental Expense. "SELLERS' PORTION" means (i)
zero percent (0%) of the cumulative Appropriate Environmental Expenses
up to $2.0 million; (ii) 50% of the cumulative Appropriate
Environmental Expenses in excess of $2.0 million but not in excess of
$6.0 million; and (iii) one-hundred percent (100%) of the excess of the
cumulative Appropriate Environmental Expenses over $6.0 million, up to
the full amount of the Environmental Escrow Fund. "APPROPRIATE
ENVIRONMENTAL EXPENSE" means (x) costs actually incurred by Buyer to
remediate a Required Response Condition into compliance with standards
applicable to industrial properties and applying the most
cost-effective remediation program consistent with applicable
Environmental Laws and (y) (without duplication) the net present value
(using a 6% annual discount rate) of costs to be incurred by Buyer to
remediate a Required Response Condition where the most cost-effective
means of remediation will require expenditures beyond the second
anniversary of the Closing Date. Appropriate Environmental Expenses
described in clause (y) of the definition thereof shall be calculated,
and the Sellers' Portion thereof shall be withdrawn from the
Environmental Escrow Fund, immediately prior to the second anniversary
of the Closing Date.
(c) Upon the earlier to occur of (i) substantial completion of
the remediation of all Required Response Conditions, or (ii) the second
anniversary of Closing, all remaining funds in the Environmental Escrow
Fund would be released to the Sellers.
(d) Terms and conditions not pertaining to the release of the
Environmental Escrow Fund will be substantially similar to the terms
and conditions of the Deposits Escrow Agreement; provided, however,
that Buyer shall have the right to collaterally assign its rights in
substantially the same manner as provided by Section 16.1.
ARTICLE 11
ANTITRUST MATTERS
Buyer hereby covenants to Sellers, and Sellers hereby covenant to
Buyer, as follows:
11.1 Antitrust Filings. Subject to the terms and conditions of this
Agreement, each party shall use its commercially reasonable efforts to (a) take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary under applicable Laws to consummate
24
the transactions contemplated by this Agreement; (b) file a Notification and
Report Form pursuant to the HSR Act within five Business Days after the date
hereof; (c) supply as promptly as practicable any additional information and
documentary material that may be requested or required pursuant to any Antitrust
Law, including, without limitation, the HSR Act; and (d) cause the expiration or
termination of the applicable waiting periods under the HSR Act or any other
Antitrust Law as soon as practicable.
11.2 Cooperation; Confidentiality Agreement. In connection with the
efforts referenced in Section 11.1 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 (a) cooperate 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; (b) keep the other
parties informed in all material respects of any material communication received
by such party from, or given by such party to, any Government 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 (c) permit the other party to review any material communication
given to it by, and consult with each other in advance of any meeting or
conference with any Government, including, without limitation, in connection
with any proceeding by a private party. The foregoing obligations in this
Section 11.2 shall be subject to the Confidentiality Agreement and any
attorney-client, work product or other privilege, and each of the parties hereto
shall 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 Antitrust Law. The parties
will not take any action that will have the effect of delaying, impairing or
impeding the receipt of any required authorizations, consents, Orders or
approvals. "ANTITRUST LAW" means the Xxxxxxx Act, as amended, the Xxxxxxx 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. "ANTITRUST
APPROVAL" means any approval or consent of any Government required under any
applicable Antitrust Law or the expiration or termination of any applicable
waiting period under any applicable Antitrust Law.
11.3 Objections or Other Challenges. If any objections are asserted
with respect to the transactions contemplated hereby under any Antitrust Law or
if any suit is instituted by any Government or any private party challenging any
of the transactions contemplated hereby as violative of any Antitrust Law, each
of the parties shall use commercially reasonable efforts to resolve such
objections or challenge as such Government or private party may have to such
transactions under such Antitrust Law, including to vacate, lift, reverse or
overturn any Order, whether temporary, preliminary or permanent, so as to permit
consummation of the transactions contemplated by this Agreement.
25
ARTICLE 12
TAXES
12.1 Taxes Related to Purchase of Assets. All state and local sales,
use, gross-receipts, transfer, gains, excise, value-added or other similar Taxes
in connection with the transfer of the Acquired Assets, and all recording and
filing fees that may be imposed by reason of the sale, transfer, assignment and
delivery of the Acquired Assets and that are not exempt under section 1146(c) of
the Bankruptcy Code (collectively, "TRANSACTION TAXES"), shall be paid by Buyer
on or prior to their due date.
12.2 Proration of Real and Personal Property Taxes. All 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 (a "STRADDLE PERIOD"), a
complete list of which has been attached by Sellers as Schedule 12.2, shall be
prorated between Buyer and Sellers as of the close of business on the Adjustment
Date based on the best information then available, with (a) Sellers being liable
for such Taxes attributable to any portion of a Straddle Period ending prior to
the Adjustment Date and (b) Buyer being liable for such Taxes attributable to
any portion of a Straddle Period beginning on or after the Adjustment Date.
Information available subsequent to the Adjustment Date that alters the amount
of Taxes due with respect to a Straddle Period will not be taken into account
and will not affect the amount of Taxes allocated to Sellers or Buyer. All such
prorations shall be allocated so that items relating to the portion of a
Straddle Period ending prior to the Adjustment Date shall be allocated to
Sellers based upon the number of days in the Straddle Period prior to the
Adjustment Date and items related to the portion of a Straddle Period beginning
on or after the Adjustment Date shall be allocated to Buyer based upon the
number of days in the Straddle Period from and after the Adjustment 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
that must be paid in order to convey the Acquired Assets to Buyer free and clear
of all Liens other than Permitted Liens shall be calculated and paid on the
Closing Date; all other prorations shall be calculated and paid as soon as
practicable thereafter.
12.3 Cooperation on Tax Matters. Buyer and Sellers shall furnish or
cause to be furnished to each other, as promptly as practicable, such
information and assistance relating to the LTV Tubular Business 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.
12.4 Retention of Tax Records. After the Closing Date and until the
expiration of all statutes of limitation applicable to Sellers' liabilities for
Taxes, Buyer shall retain possession of all accounting, business, financial and
Tax records and information that (a) relate to the Acquired Assets and are in
existence on the Closing Date and (b) come into existence after the Closing Date
but relate to the Acquired Assets before the Closing Date, and Buyer shall give
Sellers notice and an opportunity to retain any such records in the event that
Buyer determines to destroy or dispose of them during such period. In addition,
from and after the Closing Date, Buyer shall provide to Sellers and their
attorneys, accountants and other representatives (after
26
reasonable notice and during normal business hours and without charge to
Sellers) access to the books, records, documents and other information relating
to the Acquired Assets as Sellers may reasonably deem necessary to (i) properly
prepare for, file, prove, answer, prosecute and defend any Tax Return, claim,
filing, tax audit, tax protest, suit, proceeding or answer or (ii) administer or
complete any cases under chapter 11 of the Bankruptcy Code of or including
Sellers. Such access shall include, without limitation, access to any
computerized information systems that contain data regarding the Acquired
Assets.
12.5 Allocation of Purchase Price and Purchase Price Allocation Forms.
Buyer and Sellers shall allocate the Purchase Price, the Assumed Liabilities and
other relevant items among the Acquired Assets in accordance with section 1060
of the Code (the "ALLOCATION") as soon as reasonably practicable after the date
hereof. Such allocation shall be solely for purposes of federal taxation.
Sellers and Buyer shall cooperate in filing with the Internal Revenue Service
their respective Forms 8594 as provided for in section 1060 of the Code and any
other form required to be filed with any Government on a basis consistent with
the Allocation, and Buyer and Sellers shall reflect the Allocation on any
relevant Tax Returns required to be filed as a result of the transactions
contemplated hereby.
ARTICLE 13
CONDITIONS PRECEDENT TO PERFORMANCE BY PARTIES
13.1 Conditions Precedent to Performance by Sellers and Buyer. The
respective obligations of Sellers and Buyer to consummate the transactions
contemplated by this Agreement are subject to the satisfaction or waiver (other
than the condition contained in Section 13.1(a), the satisfaction of which
cannot be waived), on or prior to the Closing Date, of the following conditions:
(a) Sale Order. 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.
(b) Antitrust Approvals. The applicable waiting periods under
the HSR Act and any other Antitrust Law shall have expired or
terminated.
(c) No Violation of Orders. No preliminary or permanent
injunction or other Order that declares this Agreement or any of the
other Ancillary Agreements invalid or unenforceable in any respect or
that prevents the consummation of the transactions contemplated hereby
or thereby shall be in effect.
13.2 Conditions Precedent to Performance by Sellers. The obligations of
Sellers to consummate the transactions contemplated by this Agreement are
subject to the satisfaction, on or before the Closing Date, of the following
conditions, any one or more of which may be waived by Parent in its sole
discretion:
(a) Representations and Warranties of Buyer. All
representations and warranties made by Buyer in this Agreement shall be
true and correct on and as of the Closing Date as if again made by
Buyer on and as of such date (except for those representations and
warranties that expressly relate to a particular date, in which case
27
such representations and warranties shall have been true and correct as
of such date), except for failures to be true and correct as of such
date that have not resulted in a material adverse effect on Buyer's
ability to execute and deliver this Agreement or its ability to perform
its obligations hereunder, and Sellers shall have received a
certificate dated as of the Closing Date and signed by the President of
Buyer to that effect.
(b) Performance of the Obligations of Buyer. Buyer shall have
performed in all material respects 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 as of the Closing Date and signed by
the President of Buyer to that effect.
(c) Cure of Defaults. Buyer shall, on or prior to the Closing,
have cured any and all defaults under the Assigned Contracts that are
required to be cured under the Bankruptcy Code and have provided all
assurances of future performance required to be provided by Buyer
hereunder, so that the Assigned Contracts may be assumed by Sellers and
assigned to Buyer in accordance with the provisions of section 365 of
the Bankruptcy Code; provided, however, that Buyer shall not have been
required to expend more than the Aggregate Cure Costs to cure such
defaults.
(d) USWA Agreements. Buyer shall have entered into agreements
with the USWA recognizing it as the bargaining representative for the
employees with the existing bargaining units of the Xxxxxx Plant, the
Elyria Plant and the Youngstown Plan, Buyer shall have entered into
agreements with the USWA establishing the terms and conditions of
employment at such plants as of the Closing, and the USWA shall have
waived any right to bid on the Xxxxxx Plant.
(e) Environmental Condition. Parent shall have no further
termination rights under Section 14.2(a)(vii) or Section 14.2(a)(viii).
13.3 Conditions Precedent to the Performance by Buyer. The obligations
of Buyer to consummate the transactions contemplated by this Agreement are
subject to the satisfaction, on or before the Closing Date, of the following
conditions, any one or more of which may be waived by Buyer in its sole
discretion:
(a) Representations and Warranties of Sellers. All
representations and warranties made by Sellers in this Agreement shall
be true and correct on and as of the Closing Date as if again made by
Sellers on and as of such date (except for those representations and
warranties that expressly relate to a particular date, in which case
such representations and warranties shall have been true and correct as
of such date), except for any such failures to be true and correct as
would not result, individually or in the aggregate, in a Material
Adverse Effect; and Buyer shall have received a certificate dated the
Closing Date and signed by the President or a Vice President of each of
Sellers to that effect.
28
(b) Performance of the Obligations of Sellers. Sellers shall
have performed in all material respects all obligations required under
this Agreement to be performed by them on or before the Closing Date
(except with respect to the obligation to cure defaults under the
Assigned Contracts in accordance with the terms of Section 8.7 of this
Agreement, which obligation shall be performed in all respects as
required under this Agreement), and Buyer shall have received a
certificate dated the Closing Date and signed by the President or a
Vice President of each of Sellers to that effect.
(c) USWA Agreements. Buyer shall have entered into one or more
collective bargaining agreements, and to the extent required, each such
agreement shall have been ratified with the USWA for the Xxxxxx Plant,
the Elyria Plant, the Ferndale plant and the Youngstown Plant.
(d) Environmental Condition. Buyer shall have no further
termination rights under Section 14.2(a)(iv).
(e) Financial Statements. Sellers shall have delivered to
Buyer financial statements of the LTV Tubular Business for the nine
month period ending September 30, 2002 that meet the requirements of
Regulation S-X, 17 CFR Section 210 and that have been audited by E&Y.
ARTICLE 14
TERMINATION AND EFFECT OF TERMINATION
14.1 Right of Termination. Notwithstanding anything to the contrary
contained herein, this Agreement may be terminated only as provided in this
Article 14. In the case of any such termination, the terminating party shall
give notice to the other party specifying the provision pursuant to which the
Agreement is being terminated.
14.2 Termination Without Default.
(a) This Agreement may be terminated at any time before
Closing:
(i) by mutual consent of Parent and Buyer, given in
accordance with Sections 16.8;
(ii) by Buyer, on any date that is after January 15, 2003
(the "TERMINATION DATE"), if any condition contained in Section 13.1
has not been satisfied or waived as of such time; provided, however,
that Buyer shall not have the right to terminate this Agreement under
this Section 14.2(a)(ii) if Buyer's failure to fulfill any of its
obligations under this Agreement is the reason that the Closing has
not occurred on or before said date;
(iii) by Buyer, on any date after October 25, 2002 and
prior to November 2, 2002, if the condition contained in Section
13.3(c) has not been satisfied; provided, however, that Buyer shall
not have the right to terminate this Agreement under this Section
14.2(a)(iii) if Buyer's failure to fulfill any of its
29
obligations under Section 9.6 is the reason that satisfaction of such
condition has not occurred;
(iv) By Buyer, at any time prior to January 10, 2003, if
the sum of the Cost Estimates exceeds $20.0 million;
(v) by Parent, on any date that is after the Termination
Date, if any condition contained in Section 13.1 has not been
satisfied or waived as of such time; provided, however, that Parent
shall not have the right to terminate this Agreement under this
Section 14.2(a)(v) if Sellers' failure to fulfill any of their
obligations under this Agreement is the reason that the Closing has
not occurred on or before said date;
(vi) by Parent, on any date at any time after October 25,
2002, if the condition contained in Section 13.2(d) has not been
satisfied;
(vii) by Parent, at any time prior to October 21, 2002,
automatically upon notice to Buyer as permitted by Section 10.1(c)
that any Work Plan is unacceptable to Parent;
(viii) By Parent, at any time prior to January 10, 2003,
if the sum of the Cost Estimates exceeds $10.0 million; or
(ix) by either Buyer or Parent, immediately upon an Order
becoming final and non-appealable that declares this Agreement or any
of the Ancillary Agreements invalid or unenforceable in any material
respect or that prevents the consummation of the transactions
contemplated hereby or thereby (a "TERMINATION ORDER"); provided,
however, that neither Parent nor Buyer shall have the right to
terminate this Agreement pursuant to this Section 14.2(a)(ix) if such
party or any of its Affiliates has sought entry of, or has failed to
use all commercially reasonable efforts to oppose entry of, such
Termination Order.
(b) The Termination Date and the dates specified in each of
Section 14.2(a)(iv) and Section 14.2(a)(viii) shall be extended by one
(1) day for each day by which the Satisfaction Date is after October
28, 2002, up to a maximum of 44 days.
(c) If this Agreement is terminated pursuant to Section
14.2(a), (i) the Deposits, together with any interest accrued thereon,
shall be returned to Buyer, (ii) this Agreement shall become null and
void and have no effect (other than this Article 14, Article 15,
Article 16 and Article 17, which shall survive termination), and (iii)
none of Sellers, Buyer or any of their respective Related Parties shall
have any liability or obligation arising under or in connection with
this Agreement.
14.3 Effect of Failure of Sellers' Conditions to Closing. If, after the
Termination Date and before Closing (so long as Sellers' failure to fulfill any
of their obligations under this Agreement has not been the reason that the
Closing shall not have been consummated
30
on or before such date), any condition contained in Section 13.2(a), Section
13.2(b), Section 13.2(c) or Section 13.2(e) has not been satisfied or waived by
Parent, then:
(a) If the failure of the condition is due to Buyer's willful
failure to perform its obligations hereunder, Parent shall have the
right, subject to the waiver by Parent or satisfaction of the
conditions contained in Section 13.1, to obtain an Order requiring
Buyer to specifically perform all of its obligations under this
Agreement.
(b) If the failure of the condition is due to any inaccuracy
of any of Buyer's representations or warranties or to Buyer's failure
to perform its obligations hereunder for any reason, then Parent may
(i) terminate this Agreement; (ii) retain the Deposits, together with
any interest accrued thereon, as agreed damages and without the
necessity for proof of actual damages; and (iii) pursue any other
remedies available to Sellers at Law and Seller shall be able to
recover damages, if proven, provided, however, that in no event shall
the amounts paid to Sellers pursuant to clauses (ii) and (iii) of this
Section 14.3(b) exceed $13.0 million; provided, further, that Sellers
shall not have the right to terminate this Agreement under this Section
14.3(b) if Sellers' failure to fulfill any of its obligations under
this Agreement has been the reason that the Closing has not been
consummated on or before said date.
14.4 Effect of Failure of Buyer's Conditions to Closing.
(a) Buyer may terminate this Agreement at any time after the
Termination Date and before Closing if any condition contained in
Section 13.3(a), Section 13.3(b), Section 13.3(d) or Section 13.3(e)
has not been satisfied or waived as of such time; provided, however,
that Buyer shall not have the right to terminate this Agreement under
this Section 14.4(a) if Buyer's failure to fulfill any of its
obligations under this Agreement has been the reason that the Closing
has not been consummated on or before said date.
(b) If this Agreement is terminated pursuant to Section
14.4(a), (i) the Deposits, together with any interest accrued thereon,
shall be returned to Buyer, (ii) Sellers shall reimburse Buyer for its
actual, reasonable and documented out-of-pocket expenses incurred in
connection with this Agreement and the transactions contemplated
hereby, up to a maximum of $1.5 million, (iii) this Agreement shall
become null and void and have no effect (other than this Article 14,
Article 15, Article 16 and Article 17, which shall survive termination)
and (iv) except as specifically provided in this Section 14.4(b), none
of Sellers, Buyer or any of their respective Related Parties shall have
any liability or obligation arising under or in connection with this
Agreement.
14.5 Termination on Alternative Transaction.
(a) This Agreement may be terminated at any time before
Closing by either Buyer or Parent, upon Sellers' consummating any
Alternative Transaction.
(b) If this Agreement is terminated pursuant to Section
14.5(a), (i) the Deposits, together with any interest accrued thereon,
shall be returned to Buyer, (ii) Sellers shall pay Buyer a break-up fee
equal to $2,200,000, (iii) this Agreement shall become null and void
and of no effect (except for this Article 14, Article 15, Article 16
31
and Article 17, which shall survive termination), and (iv) except as
provided in this Section 14.5(b), none of Buyer, Sellers or their
respective Related Parties shall have any liability or obligation
arising under or in connection with this Agreement.
ARTICLE 15
INDEMNIFICATION
15.1 Indemnification by Buyer. Buyer shall indemnify, defend and hold
Sellers and their respective Affiliates and Related Persons (each, an
"INDEMNITEE") harmless from and against any and all losses, Claims, damages,
costs and expenses (including, without limitation, interest, penalties,
attorneys' and accountants' fees and investigation costs) (collectively,
"LOSSES") incurred by any Indemnitee as a result of, arising from or related to:
(a) the operation of the LTV Tubular Business or the ownership
and use of the Acquired Assets from and after the Closing;
(b) any failure by Buyer to assume, pay, perform and discharge
the Assumed Liabilities from and after the Closing;
(c) Buyer's or Buyer's Related Persons' or the Environmental
Consultant's entry upon the Real Property in connection with their
exercise of the right of access pursuant to Section 8.5, Section 10.1
or any and all other activities undertaken by Buyer or Buyer's Related
Persons or the Environmental Consultant on or with respect to any such
Real Property;
(d) any inaccuracy of any representation or warranty made by
Buyer in this Agreement or any of the Ancillary Agreements; and
(e) any breach of any covenant or undertaking of Buyer
contained in this Agreement or any of the Ancillary Agreements.
15.2 Third-Party Indemnification Procedures. An Indemnitee shall give
Buyer prompt written notice of any third-party claim that may give rise to a
claim for indemnification under this Article 15. Failure to give prompt notice
shall not affect the indemnification obligations hereunder in the absence of
actual prejudice. Buyer shall have the right to assume the defense of any such
claim through counsel of its own choosing, by so notifying the Indemnitee within
30 days of receipt of the Indemnitee's written notice; provided, however, that
Buyer's counsel shall be reasonably satisfactory to the Indemnitee. If an
Indemnitee desires to participate in any such defense assumed by Buyer, it may
do so at its sole cost and expense, and Buyer and its counsel shall give such
Indemnitee and its counsel reasonable access to the relevant records and
documents and employees of Buyer in connection therewith. If Buyer does not
assume any such defense, it shall be liable for all costs and expenses of
defending such claim incurred by any Indemnitee, including reasonable fees and
disbursements of counsel. Neither Buyer nor any Indemnitee shall settle,
compromise or offer to settle or compromise any claim or demand if such
settlement or compromise does not include an irrevocable and unconditional
release of all Sellers, their respective Affiliates and Related Parties and
Buyer for any Losses arising out of such claim or demand.
32
ARTICLE 16
MISCELLANEOUS
16.1 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; provided, however, that Buyer is
permitted to collaterally assign its rights under this Agreement to its
principal lender in order to secure financing; provided further that Buyer may
assign the right to acquire the Acquisition Assets (but not Buyer's obligation
hereunder) to a direct or indirect wholly-owned subsidiary of Buyer. This
Agreement shall inure to the benefit of and shall be binding upon the successors
and permitted assigns of the parties hereto.
16.2 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 Sellers are 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 Sellers are 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.
16.3 Disclosure Schedule Supplements. From time to time prior to the
Closing, Sellers shall supplement or amend the Schedules to this Agreement with
respect to any matter that, if existing, occurring or known at the date of this
Agreement, would have been required to be set forth or described in the
Schedules. The Schedules shall be deemed amended by all such supplements and
amendments for all purposes except for purposes of determining whether the
conditions set forth in Section 13.3(a) have been satisfied.
16.4 Mutual Drafting. This Agreement is the result of the joint efforts
of Buyer and Sellers, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of the parties and there is to be no
construction against either party based on any presumption of that party's
involvement in the drafting thereof.
16.5 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 Transaction Taxes payable upon or
in connection with, and all surveys, title insurance policies and title reports
obtained in connection with, this Agreement and the transactions contemplated
thereby and all filing fees required to be paid in connection with any filings
made or notices given pursuant to any Antitrust Law.
33
16.6 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,
whose fees and expenses shall, as between the parties hereto, be the
responsibility of Sellers, and, insofar as such party knows, no other broker or
other Person is entitled to any commission or finder's fee in connection with
any of these transactions.
16.7 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.
16.8 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given: (a) on the date of service if served personally on the party to whom
notice is to be given; (b) 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; (c) 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 (d) 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 any Seller:
c/o The LTV Corporation
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
Copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx and Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
34
If to Buyer:
Maverick Tube Corporation
00000 Xxxxxxxx Xxxxx Xxxx
Xxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Chief Executive Officer
Facsimile: (000) 000-0000
Copy to:
Gallop, Xxxxxxx and Xxxxxx, X.X.
000 X. Xxxxxx
Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Any party may change its address for the purpose of this Section 16.8
by giving the other party written notice of its new address in the manner set
forth above.
16.9 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 nor 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.
16.10 Public Announcements. 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 shall 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.
16.11 Entire Agreement. This Agreement, the Ancillary Agreements, and
the Confidentiality Agreement contain the entire understanding among 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.
35
16.12 Parties in Interest. Nothing in this Agreement is intended to
confer any rights or remedies under or by reason of this Agreement on any
Persons other than Sellers and Buyer and their respective successors and
permitted assigns. Nothing in this Agreement is intended to relieve or discharge
the obligations or liability of any third Persons to Sellers or Buyer. No
provision of this Agreement shall give any third Persons any right of
subrogation or action over or against Sellers or Buyer.
16.13 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.
16.14 Gender and Number. In this Agreement, unless the context
otherwise requires, words importing the singular include the plural and vice
versa and words importing gender include all genders. 16.15 Currency. Except
where otherwise expressly provided, all amounts in this Agreement are stated and
shall be paid in United States currency.
16.16 Time of Essence. Time is of the essence of this Agreement.
16.17 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute the
same agreement.
ARTICLE 17
DEFINITIONS
17.1 Certain Terms Defined. As used in this Agreement, the following
terms shall 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. Affiliate as it relates to Sellers shall include,
without limitation, Copperweld Corporation and its subsidiaries.
"ALTERNATIVE TRANSACTION" means a transaction involving a sale of all
or substantially all of the LTV Tubular Business or the Acquired Assets by
Sellers to a purchaser or purchasers other than Buyer.
"ANCILLARY AGREEMENTS" means the Deposits Escrow Agreement.
"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 Government action to close.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONSENT" means any consent, approval, authorization, qualification,
waiver or notification of a Government or any other Person.
36
"CONTRACT" means any written or oral contract, agreement, lease,
license, commitment, undertaking or arrangement, whether express or implied.
"COUNCE PLANT" means the facility owned by LTV Steel at Counce,
Tennessee.
"DEPOSITS ESCROW AGREEMENT" means the escrow agreement by and between
Buyer and Parent, dated as of even date herewith.
"ELYRIA PLANT" means the facility owned by LTV Steel at Elyria, Ohio.
"ENVIRONMENTAL LAWS" means all currently existing federal, state,
provincial, municipal, local and foreign 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, protection of the environment, or any health or safety matter,
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.
"ESCROW AGENT" means the escrow agent under the Deposits Escrow
Agreement.
"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, any state thereof or any
foreign government, including the employees and agents thereof.
"HAZARDOUS MATERIALS" means and includes any hazardous or toxic
substance or waste or any contaminant or pollutant regulated under Environmental
Laws, including, but not limited to, "hazardous substances" as currently defined
by the Comprehensive Environmental Response Compensation and Liability Act, as
amended, "hazardous wastes" as currently defined by the Resource Conservation
and Recovery Act, as amended, natural gas, petroleum products or byproducts and
crude oil.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"IMPROVEMENTS" means the buildings, improvements and structures now
existing on the Real Property or demised under the Real Estate Leases.
"KNOWLEDGE OF SELLERS," "SELLERS' KNOWLEDGE" or any other similar term
or knowledge qualification means the actual knowledge of X. X. Xxxxxx, D. E.
Young, X. X. Xxxxxxx, X. X. Xxxxxxxx, X. X. Xxxxxxx and X. X. Xxxxx.
"LIEN" means any mortgage, pledge, charge, security interest,
encumbrance, lien (statutory or other) or conditional sale agreement.
"LTV LABOR AGREEMENTS" means all Contracts that are past or present
collectively bargained labor agreements of any kind or description, including
without limitation, the following kinds of collectively bargained labor
agreements: basic labor agreements; settlement
37
agreements; local seniority agreements; local working condition agreements;
published or unpublished side letter agreements or memorandums of understanding;
pension agreements; neutrality agreements; retirement savings agreements;
gainsharing agreements; profit sharing agreements; incentive plan agreements;
supplemental unemployment benefit agreements; bonus agreements; voluntary
employee benefit association agreements; medical, hospitalization, vision,
dental, or prescription drug agreements; long or short term disability
agreements; life insurance agreements; accidental death or dismemberment
agreements; and any trust, fund, plan, account, escrow or other agreement
related to any past or present collectively bargained labor agreement whether
applicable to current employees, retirees, spouses or dependents.
"LTV TUBULAR PLANTS" means the Counce Plant, the Elyria Plant, the
Youngstown Plant, the facility owned by LTV Steel at Ferndale, Michigan and the
facility owned by Georgia Tubing Corporation at Cedar Springs, Georgia.
"PERMITTED LIENS" means: (i) all Liens set forth on Schedule 17.1,
provided that, such term shall not include standard preprinted exceptions shown
on any title commitment covering the LTV Tubular Plants and any deeds of trust,
mortgages, leases from the Ohio Air Quality Development Authority, security
interests or other monetary liens (other than as set forth in clauses (ii)
through (vi) of this paragraph), all of which Sellers shall cause to be removed
and deleted from Buyer's title insurance policy to be issued at Closing; (ii)
Liens for Taxes, assessments and Government or other similar charges that are
not yet due and payable or that, although due and payable, are being contested
in good faith; (iii) Liens related solely to the Assumed Liabilities; (iv) from
the date hereof until the Closing, Liens that will attach to proceeds of this
sale under this Agreement pursuant to section 363 of the Bankruptcy Code or that
will not survive the Closing; (v) such covenants, conditions, restrictions,
easements, encroachments or encumbrances, or any other state of facts, that in
the aggregate do not materially interfere with the present occupancy of the Real
Property or the use of such Real Property as it has been used by Sellers in the
LTV Tubular Business prior to the Closing Date or that do not materially impair
the value of such Real Property; and (vi) 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, premises
leased to Sellers (as lessee) pursuant to any of the Real Estate Leases.
"PERSON" means any individual, corporation, limited liability company,
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.
"RESPONSE ACTION" shall mean the abatement, cleanup, removal,
remediation, reclamation, or other response action required or contemplated
under Section 10.1(e) to meet applicable Environmental Laws.
"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
38
foregoing required to be filed or maintained in connection with the calculation,
determination, assessment or collection of any Taxes (including estimated
Taxes).
"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,
Transaction 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.
"TRANSFERRED EMPLOYEE" means all employees of any Seller or any of
their Affiliates who are hired by Buyer after the Closing.
"USWA" means the United Steelworkers of America, AFL-CIO-CLC.
"YOUNGSTOWN PLANT" means the facility owned by LTV Steel at Youngstown,
Ohio.
17.2 All Terms Cross-Referenced. Each of the following terms is defined
in the Section set forth opposite such term:
Term Section
Accounting Referee............................................................ 3.4(c)
Accounts Payable.............................................................. 1.3(a)
Accounts Receivable........................................................... 1.1(k)
Acquired Assets............................................................... 1.1
Additional Deposit............................................................ 3.2
Adjustment Date............................................................... 12.2
Affiliate..................................................................... 17.1
Aggregate Cure Cost........................................................... 1.3(b)
Agreed Principles............................................................. 3.4(a)
Agreement..................................................................... Preamble
Allocation.................................................................... 12.5
Alternative Transaction....................................................... 17.1
Ancillary Agreements.......................................................... 17.1
Antitrust Approval............................................................ 11.2
Antitrust Law................................................................. 11.2
Appropriate Environmental Expense............................................. 10.2(b)
Assessment Agreement.......................................................... 10.1(a)
Asset Sale Procedures......................................................... Background Information
Assigned Contracts............................................................ 1.1(h)
Assumed Liabilities........................................................... 1.3
Balance Sheet Date............................................................ 3.4(a)
Bankruptcy Cases.............................................................. Background Information
Bankruptcy Code............................................................... Background Information
39
Bankruptcy Court.............................................................. Background Information
Business Day.................................................................. 17.1
Business Records.............................................................. 1.1(p)
Buyer......................................................................... Preamble
Buyer's MBP................................................................... 2.2
Buyer's Severance Pay Plan.................................................... 2.1
Cedar Springs Profit Sharing Plan............................................. 2.3
Claims........................................................................ 1.1(h)
Closing....................................................................... 4.1
Closing Date.................................................................. 4.1
Closing Statement............................................................. 3.4(a)
Closing Working Capital....................................................... 3.4(a)
Code.......................................................................... 17.1
Confidentiality Agreement..................................................... 8.5
Consent....................................................................... 17.1
Contract...................................................................... 17.1
Copperweld Severance Pay Plan................................................. 2.1
Cost Estimate................................................................. 10.1(e)
Counce and Ferndale Profit Sharing Plans...................................... 2.3
Counce Plant.................................................................. 17.1
Deposits...................................................................... 3.2
Deposits Escrow Agreement..................................................... 17.1
E & Y......................................................................... 5.5
Eligible Employees............................................................ 2.1
Elyria Plant.................................................................. 17.1
Environmental Consultant...................................................... 10.1(a)
Environmental Escrow Agreement................................................ 10.2
Environmental Escrow Fund..................................................... 10.1(f)
Environmental Laws............................................................ 17.1
Environmental Report.......................................................... 10.1(d)
Escrow Agent.................................................................. 17.1
Estimated Working Capital..................................................... 3.3
Excluded Assets............................................................... 1.2
Excluded Liabilities.......................................................... 1.4
Final Working Capital......................................................... 3.4(f)
Financial Statements.......................................................... 5.5
Government.................................................................... 17.1
Hazardous Materials........................................................... 17.1
Hourly and Salaried Profit Plan Participant................................... 2.3
HSR Act....................................................................... 17.1
Improvements.................................................................. 17.1
Indemnitee.................................................................... 15.1
Initial Deposit............................................................... 3.2
Intellectual Property......................................................... 1.1(l)
Inventory..................................................................... 1.1(j)
Knowledge of Sellers.......................................................... 17.1
40
Law........................................................................... 5.3
Leased Real Property.......................................................... 1.1(b)
Lien.......................................................................... 17.1
Losses........................................................................ 15.1
LTV Benefit Plan.............................................................. 1.2(p)
LTV Labor Agreements.......................................................... 17.1
LTV Steel..................................................................... Preamble
LTV Tubular Business.......................................................... Background Information
LTV Tubular Plants............................................................ 17.1
Machinery and Equipment....................................................... 1.1(c)
Xxxxxx Plant.................................................................. 1.1(i)
Material Adverse Effect....................................................... 5.3
Material Contracts............................................................ 5.9(a)(v)
MBP........................................................................... 2.2
MBP Participant............................................................... 2.2
Net Working Capital........................................................... 3.4(a)
Order......................................................................... 5.3
Organizational Documents...................................................... 5.3
Owned Real Property........................................................... 1.1(a)
Owned Vehicles................................................................ 1.1(d)
Parent........................................................................ Preamble
Permits....................................................................... 1.1(o)
Permitted Liens............................................................... 17.1
Person........................................................................ 17.1
Petition Date................................................................. Background Information
Post-Petition Contracts....................................................... 1.1(g)
Pre-Petition Contracts........................................................ 1.1(h)
Purchase Orders............................................................... 1.1(f)
Purchase Price................................................................ 3.1
Real Estate Leases............................................................ 1.1(b)
Real Property................................................................. 1.1(b)
Reference Balance Sheet....................................................... 3.4(e)
Related Person................................................................ 17.1
Required Response Condition................................................... 10.1(e)
Response Action............................................................... 17.1
Sale Order.................................................................... 8.3
Sales Orders.................................................................. 1.1(e)
Satisfaction Date............................................................. 10.1(d)
Sellers....................................................................... Preamble
Sellers' Account.............................................................. 4.3(a)
Sellers' Knowledge............................................................ 17.1
Sellers Portion............................................................... 10.2(b)
Site Assessment............................................................... 10.1(d)
Straddle Period............................................................... 12.2
Stub Period................................................................... 5.5
Tax Return.................................................................... 17.1
41
Taxes......................................................................... 17.1
Termination Date.............................................................. 14.2(a)(ii)
Termination Order............................................................. 14.2(a)(viii)
Transaction Taxes............................................................. 12.1
Transferred Employee.......................................................... 17.1
Transition Services Agreement................................................. 4.2(b)
USWA.......................................................................... 17.1
Work Plan..................................................................... 10.1(a)
Working Capital Escrow Agreement.............................................. 4.2(c)
Youngstown Plant.............................................................. 17.1
42
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.
MAVERICK TUBE CORPORATION
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxx
------------------------------------
Title: President & CEO
------------------------------------
GEORGIA TUBING CORPORATION
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
------------------------------------
Title:
------------------------------------
LTV STEEL COMPANY, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
------------------------------------
Title: CEO
------------------------------------
THE LTV CORPORATION
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
------------------------------------
Title: CEO
------------------------------------
43
