<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended March 31, 1998 Commission File No. 1-4368
THE LTV CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-1070950
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
200 Public Square 44114-2308
Cleveland, Ohio (Zip Code)
Registrant's telephone number, including area code: (216) 622-5000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
99,834,447 shares of common stock
(as of March 31, 1998)
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE LTV CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1998 1997
------- -------
<S> <C> <C>
SALES $ 1,127 $ 1,072
Costs and expenses:
Cost of products sold 985 931
Depreciation and amortization 65 68
Selling, general and administrative 45 37
Results of affiliates' operations 9 -
Net interest and other income (9) (9)
------- -------
Total 1,095 1,027
------- -------
INCOME BEFORE INCOME TAXES 32 45
Income tax provision:
Taxes payable 2 2
Taxes not payable in cash 11 16
------- -------
Total 13 18
------- -------
NET INCOME $ 19 $ 27
======= =======
Earnings per share:
Basic $ 0.19 $ 0.25
======= =======
Dilutive $ 0.19 $ 0.25
======= =======
Cash dividends per common share $ 0.03 $ 0.03
======= =======
</TABLE>
See notes to consolidated financial statements.
I-1
<PAGE> 3
THE LTV CORPORATION
CONSOLIDATED BALANCE SHEET
(in millions, except per share data)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 161 $ 160
Marketable securities 346 360
------- -------
Total cash and marketable securities 507 520
Receivables, less allowance for doubtful accounts 479 470
Inventories:
Products 656 656
Materials, purchased parts and supplies 219 246
------- -------
Total inventories 875 902
Prepaid expenses, deposits and other 17 12
------- -------
Total current assets 1,878 1,904
------- -------
INVESTMENTS IN AFFILIATES 323 312
OTHER NONCURRENT ASSETS 190 169
PROPERTY, PLANT AND EQUIPMENT 4,162 4,096
Allowance for depreciation (992) (935)
------- -------
Total property, plant and equipment 3,170 3,161
------- -------
$ 5,561 $ 5,546
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 344 $ 354
Accrued employee compensation and benefits 368 365
Other accrued liabilities 227 219
------- -------
Total current liabilities 939 938
------- -------
NONCURRENT LIABILITIES
Long-term debt 360 355
Postemployment health care and other insurance benefits 1,565 1,570
Pension benefits 548 548
Other 446 459
------- -------
Total noncurrent liabilities 2,919 2,932
------- -------
SHAREHOLDERS' EQUITY
Convertible preferred stock (aggregate liquidation value $50.0) 1 1
Common stock (par value $0.50 per share) 53 53
Additional paid-in capital 1,043 1,032
Retained earnings 677 661
Treasury stock (5 million shares at cost) (68) (68)
Accumulated other comprehensive loss and other (3) (3)
------- -------
Total shareholders' equity 1,703 1,676
------- -------
$ 5,561 $ 5,546
======= =======
</TABLE>
See notes to consolidated financial statements.
I-2
<PAGE> 4
THE LTV CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
1998 1997
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 19 $ 27
Adjustments to reconcile net income to net cash
provided by operating activities:
Noncash losses of affiliates 9 -
Depreciation and amortization 65 68
Income tax provision not payable in cash 11 16
Defined benefit pension expense 1 11
Postemployment benefit payments more than related expense (5) -
Changes in assets, liabilities and other (13) (60)
--------- ---------
Net cash provided by operating activities 87 62
--------- ---------
INVESTING ACTIVITIES
Capital expenditures (73) (59)
Investment in steel-related businesses (33) (10)
Net sales of marketable securities 14 85
Other - 2
--------- ---------
Net cash (used in) provided by investing activities (92) 18
--------- ---------
FINANCING ACTIVITIES
Borrowings 11 -
Dividends paid (4) (5)
Share repurchases and other (1) (10)
--------- ---------
Net cash provided by (used in) financing activities 6 (15)
--------- ---------
Net increase in cash and cash equivalents 1 65
Cash and cash equivalents at beginning of period 160 107
--------- ---------
Cash and cash equivalents at end of period $ 161 $ 172
========= =========
Supplemental cash flow information is presented as follows:
Interest payments $ 1 $ 1
Income tax payments 2 1
Capitalized interest 8 4
Purchases of marketable securities 1,057 749
Sales and maturities of marketable securities 1,071 837
</TABLE>
See notes to consolidated financial statements.
I-3
<PAGE> 5
THE LTV CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998
NOTE (1) - The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and disclosures required by generally accepted accounting principles for
complete financial statements. All adjustments that are, in the opinion of
management, necessary for a fair presentation have been made and are of a
recurring nature unless otherwise disclosed herein. Certain prior period amounts
have been reclassified to conform with the current period presentation. The
results of operations for the interim periods are not necessarily indicative of
results of operations for a full year. For further information, refer to the
consolidated financial statements and the notes thereto for the year ended
December 31, 1997 included in the LTV Annual Report to Shareholders incorporated
by reference into the 1997 Annual Report on Form 10-K filed with the Securities
and Exchange Commission.
NOTE (2) - On February 28, 1998, the Company ceased operations at the Pittsburgh
coke plant and began the closure process. LTV established reserves for the cost
of the closure and clean-up in the third quarter of 1997.
NOTE (3) - LTV Steel entered into a new $250 million five-year credit facility
("Inventory Facility"), replacing the existing $150 million Letter of Credit
Facility effective as of March 1, 1998. The Inventory Facility, secured by
essentially all of the Company's inventory through a special purpose entity,
permits borrowings of up to $250 million for working capital and general
corporate purposes, $150 million of which may be used to issue letters of
credit. Interest will accrue at the Company's option of either the Chase
Manhattan Bank's base rate or 1% above LIBOR rates. At March 31, 1998, there
were no outstanding borrowings against the Inventory Facility, and letters of
credit totaling $69 million were outstanding under this facility. The borrower
under the Inventory Facility is LTV Steel Products, L.L.C., a consolidated
structured finance special purpose entity wholly owned by LTV Steel, which
purchases and pledges essentially all of the inventory generated by LTV Steel.
The creditors of LTV Steel Products, L.L.C. have a claim on the assets of that
Company prior to those assets becoming available to other creditors of LTV or
its affiliates.
NOTE (4) - At March 31, 1998, accumulated other comprehensive loss included in
the balance sheet amounted to $3 million with no material changes since December
31, 1997. The accumulated other comprehensive loss at March 31, 1997 was $12
million, with no material changes since December 31, 1996.
NOTE (5) - VP Buildings has secured a $3 million, ten-year, 7.25% mortgage on
its headquarters building located in Memphis, Tennessee, effective April 1, 1998
with principal and interest payments due monthly. Additionally, VP Buildings
borrowed $8 million on a short-term basis under its $20 million demand facility
at a rate of 6.4%.
I-4
<PAGE> 6
NOTE (6) - The following is a summary of the financial information related to VP
Buildings, which was acquired on July 2, 1997, for the first quarter 1998 (in
millions):
<TABLE>
<CAPTION>
Results of operations 1998
---------
<S> <C>
Net sales $ 72
Costs and expenses 71
---------
Pretax income $ 1
=========
Total assets $ 254
Capital expenditures 3
</TABLE>
NOTE (7) - The Company has a 50% interest, accounted for under the equity
method, in an unconsolidated joint venture, Trico Steel Company, L.L.C. ("Trico
Steel"), which began commercial operations in April 1997. Included in LTV's
consolidated results is a pretax loss of $9 million representing the Company's
share of Trico Steel operating results. The following is a summary of the
financial information related to Trico Steel (in millions):
<TABLE>
<CAPTION>
Results of operations 1998
---------
<S> <C>
Net sales $ 80
Costs and expenses 98
---------
Pretax loss $ (18)
=========
Financial Position at March 31, 1998
Current assets $ 96
Noncurrent assets 530
Current liabilities (43)
Noncurrent liabilities (273)
---------
Net assets $ 310
=========
</TABLE>
I-5
<PAGE> 7
NOTE (8) - LTV's wholly-owned subsidiary, LTV Steel Company, Inc., has fully and
unconditionally guaranteed the Company's obligation to pay principal, premium,
if any, and interest with respect to the Senior Notes due September 2007. The
following supplemental consolidating condensed financial statements of The LTV
Corporation present: the balance sheets as of March 31, 1998 and December 31,
1997; statements of operations for the three months ended March 31, 1998 and
1997; and statements of cash flows for the three months ended March 31, 1998 and
1997. The LTV Corporation (Parent), LTV Steel Company, Inc. (Guarantor) and the
combined Non-Guarantor Subsidiaries' investments in subsidiaries are accounted
for using the equity method. Necessary elimination entries have been made to
consolidate the Parent and all of its subsidiaries.
Consolidating Condensed Balance Sheet
(in millions)
<TABLE>
<CAPTION>
March 31, 1998
----------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash, cash equivalents and marketable securities $ 465 $ (19) $ 61 $ - $ 507
Receivables 3 (21) 497 - 479
Inventories:
Finished goods - - 656 - 656
Raw materials and supplies - - 219 - 219
Other current assets 3 8 6 - 17
------- ------- ------- ------- -------
Total current assets 471 (32) 1,439 - 1,878
Intercompany, net 87 1,312 (1,399) - -
Investments and other noncurrent assets 1,487 229 463 (1,666) 513
Property, plant and equipment, net - 2,949 221 - 3,170
------- ------- ------- ------- -------
Total assets $ 2,045 $ 4,458 $ 724 $(1,666) $ 5,561
======= ======= ======= ======= =======
Total current liabilities $ 30 $ 793 $ 116 $ - $ 939
Long-term debt 298 58 4 - 360
Postemployment health care and other insurance benefits - 1,450 115 - 1,565
Pension benefits - 537 11 - 548
Other 14 411 21 - 446
Shareholders' equity 1,703 1,209 457 (1,666) 1,703
------- ------- ------- ------- -------
Total liabilities and shareholders' equity $ 2,045 $ 4,458 $ 724 $(1,666) $ 5,561
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
December 31, 1997
----------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash, cash equivalents and marketable securities $ 467 $ (15) $ 68 $ - $ 520
Receivables 4 (23) 489 - 470
Inventories:
Finished goods - 650 6 - 656
Raw materials and supplies - 209 37 - 246
Other current assets 4 7 1 - 12
------- ------- ------- ------- -------
Total current assets 475 828 601 - 1,904
Intercompany, net 83 475 (558) - -
Investments and other noncurrent assets 1,470 186 432 (1,607) 481
Property, plant and equipment, net - 2,939 222 - 3,161
------- ------- ------- ------- -------
Total assets $ 2,028 $ 4,428 $ 697 $(1,607) $ 5,546
======= ======= ======= ======= =======
Total current liabilities $ 37 $ 776 $ 125 $ - $ 938
Long-term debt 298 57 - - 355
Postemployment health care and other insurance benefits - 1,458 112 - 1,570
Pension benefits - 538 10 - 548
Other 17 419 23 - 459
Shareholders' equity 1,676 1,180 427 (1,607) 1,676
------- ------- ------- ------- -------
Total liabilities and shareholders' equity $ 2,028 $ 4,428 $ 697 $(1,607) $ 5,546
======= ======= ======= ======= =======
</TABLE>
I-6
<PAGE> 8
Consolidating Condensed Statement of Operations
(in millions)
<TABLE>
<CAPTION>
Three Months Ended March 31, 1998
---------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ - $ 681 $ 601 $ (155) $ 1,127
Costs and expenses:
Cost of products sold - 572 568 (155) 985
Depreciation and amortization - 58 7 - 65
Selling, general and administrative 4 32 9 - 45
Results of affiliates operations (29) (4) 9 33 9
Net interest and other (7) (8) 6 - (9)
------ ------- ------ ------- -------
Total (32) 650 599 (122) 1,095
------ ------- ------ ------- -------
Income before income taxes 32 31 2 (33) 32
Income tax provision (13) (13) - 13 (13)
------ ------- ------ ------- -------
Net income $ 19 $ 18 $ 2 $ (20) $ 19
====== ======= ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended March 31, 1997
---------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ - $ 1,010 $ 236 $ (174) $ 1,072
Costs and expenses:
Cost of products sold - 886 219 (174) 931
Depreciation and amortization - 64 4 - 68
Selling, general and administrative 3 30 4 - 37
Results of affiliates operations (38) (2) - 40 -
Net interest and other (10) 2 (1) - (9)
------ ------- ------ ------- -------
Total (45) 980 226 (134) 1,027
------ ------- ------ ------- -------
Income before income taxes 45 30 10 (40) 45
Income tax provision (18) (12) (4) 16 (18)
------ ------- ------ ------- -------
Net income $ 27 $ 18 $ 6 $ (24) $ 27
====== ======= ====== ======= =======
</TABLE>
Consolidating Condensed Cash Flows Statement
(in millions)
<TABLE>
<CAPTION>
Three Months Ended March 31, 1998
---------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash provided by operating activities $ 1 $ 67 $ 19 $ - $ 87
------ ------- ------ ------- -------
Investing activities:
Capital expenditures - (70) (3) - (73)
Investment in affiliates - - (33) - (33)
Net sales of marketable securities 14 - - - 14
Other - - - - -
------ ------- ------ ------- -------
Net cash provided by (used in) investing
activities 14 (70) (36) - (92)
------ ------- ------ ------- -------
Financing activities:
Proceeds from offering - - 11 - 11
Pension funding to restored plans - - - - -
Dividends paid (4) - - - (4)
Share repurchases and other (1) - - - (1)
------ ------- ------ ------- -------
Net cash (used in) provided by
financing activities (5) - 11 - 6
------ ------- ------ ------- -------
Net increase (decrease) in cash and cash
equivalents 10 (3) (6) - 1
Cash and cash equivalents at beginning of period 108 (16) 68 - 160
------ ------- ------ ------- -------
Cash and cash equivalents at end of period $ 118 $ (19) $ 62 $ - $ 161
====== ======= ====== ======= =======
</TABLE>
I-7
<PAGE> 9
<TABLE>
<CAPTION>
Three Months Ended March 31, 1997
----------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash provided by (used in) operating activities $ (10) $ 51 $ 21 $ - $ 62
------ ------- ------ ------- -------
Investing activities:
Capital expenditures - (59) - - (59)
Investment in affiliates - - (10) - (10)
Net sales of marketable securities 85 - - - 85
Other - 1 1 - 2
------ ------- ------ ------- -------
Net cash provided by (used in) investing
activities 85 (58) (9) - 18
------ ------- ------ ------- -------
Financing activities:
Pension funding to restored plans - - - - -
Share repurchases and other (10) - - - (10)
Dividends paid (5) - - - (5)
------ ------- ------ ------- -------
Net cash used in financing activities (15) - - - (15)
------ ------- ------ ------- -------
Net increase (decrease) in cash and cash
equivalents 60 (7) 12 - 65
Cash and cash equivalents at beginning of period 62 (15) 60 - 107
------ ------- ------ ------- -------
Cash and cash equivalents at end of period $ 122 $ (22) $ 72 $ - $ 172
====== ======= ====== ======= =======
</TABLE>
I-8
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS - COMPARISON OF FIRST QUARTER 1998 AND 1997
Sales
- -----
Sales of $1,127 million in the first quarter of 1998 increased by $55
million (5%) from the first quarter of 1997. First quarter 1998 steel shipments
of 2.1 million tons increased by 15,000 tons (1%) from the first quarter of
1997. The overall sales increase in the first quarter of 1998 resulted from the
VP Buildings sales of $72 million included since its acquisition on July 2,
1997, partially offset by lower average steel selling prices of 2%.
Production and Costs
- --------------------
Raw steel production of 2.2 million tons in the first quarter of 1998
remained the same as the first quarter of 1997. The average operating rate (of
AISI defined capacity) at the Company's steelmaking facilities during the first
quarter of 1998 was 105% compared with 108% in 1997 due to an increase in the
AISI defined rated capacity of LTV steelmaking facilities.
Cost of products sold as a percentage of sales increased 1% in the
first quarter of 1998 compared to the 1997 period. The increase is primarily due
to the lower average selling prices in the 1998 period, partially offset by
lower steel production costs.
Results of Affiliates Operations
- --------------------------------
Results of affiliates operations consist principally of LTV's share of
start-up operating losses from its 50% interest in Trico Steel Company, L.L.C.
("Trico"), which commenced commercial operations in the second quarter of 1997.
Trico continues to incur expenses in excess of revenues as part of its start-up
process.
LIQUIDITY AND CAPITAL RESOURCES
The Company's sources of liquidity include cash and cash equivalents,
marketable securities, cash from operations, amounts available under credit
facilities and other external sources of funds. Management believes that these
sources are sufficient to fund the current requirements of working capital,
capital expenditures, investments in steel-related businesses, pensions and
postemployment health care.
During the first three months of 1998, cash provided by operating
activities amounted to $87 million. Major uses of cash during the first three
months of 1998 included capital expenditures of $73 million and $33 million
invested in steel-related businesses. Since December 31, 1997, total cash, cash
equivalents and marketable securities have decreased by $13 million to $507
million at March 31, 1998.
I-9
<PAGE> 11
LTV Steel entered into a new $250 million five-year credit facility
("Inventory Facility") replacing the existing $150 million Letter of Credit
Facility effective as of March 1, 1998. The new Inventory Facility, secured by
essentially all of the Company's inventory through a special purpose entity,
permits borrowings of up to $250 million for working capital and general
corporate purposes, $150 million of which may be used to issue letters of
credit. Interest will accrue at the Company's option of either the Chase
Manhattan Bank's base rate or 1% above LIBOR rates. At March 31, 1998 there were
no outstanding borrowings against the Inventory Facility, and letters of credit
totaling $69 million were outstanding under this facility.
The Company's receivables credit facility permits borrowings of up to
$320 million for working capital requirements and general corporate purposes,
$100 million of which may be used to issue letters of credit. At March 31, 1998,
$320 million was permitted to be borrowed; however, no borrowings were
outstanding and letters of credit outstanding amounted to $36 million under this
facility.
The Company's wholly owned subsidiary, VP Buildings, has a Secured
Demand Facility that expires August 1998 and is secured by the accounts
receivable of VP Buildings. The facility permits borrowings of up to $20 million
for working capital and general corporate purposes and for letters of credit. At
March 31, 1998, $20 million was permitted to be borrowed, with borrowings of $8
million outstanding under this facility at an interest rate of 6.4%.
The Company's Senior Notes, long-term debt and credit facilities'
agreements contain various covenants that require the Company to maintain
certain financial ratios and amounts. These agreements, as well as the Company's
agreement with the Pension Benefit Guaranty Corporation (the "PBGC Agreement"),
place certain restrictions on payments of dividends, share repurchases, capital
expenditures, investments in subsidiaries and borrowings. Under the terms of the
most restrictive debt covenant, approximately $109 million of retained earnings
are available for common stock dividend payments at March, 1998. Substantially
all of the Company's receivables and inventories are pledged as collateral under
these debt agreements. The Company does not believe that the restrictions
contained in these financial and operating covenants will cause significant
limitations on its financial flexibility.
Domestic steel producers face significant competition from foreign
producers. Foreign competition is intense and has adversely affected product
prices in the United States and tonnage sold by domestic producers. The
intensity of foreign competition is substantially affected by the relative
strength of foreign economies and fluctuations in the value of the United States
dollar against foreign currencies.
LTV also competes with other domestic integrated producers, some of
which have greater resources than the Company, and with minimills, which are
relatively efficient, low-cost producers that generally produce steel from scrap
in electric furnaces, have lower employment and environmental costs and
generally target regional markets. Recently developed thin slab casting
technologies have allowed some minimill producers to enter certain sectors of
the flat rolled market that have traditionally been supplied by integrated
producers, and other producers have announced their intention to do the same.
Industry experts estimate that current domestic raw steel production capacity
will be increased by more than 5% by the end of 2000 as new minimills, now under
construction, engage in start-up operations or begin operation.
I-10
<PAGE> 12
Many steel products face substantial competition from manufacturers of
other products, including plastics, aluminum, ceramics, glass, wood and
concrete.
Joint ventures have in the past been one of the Company's primary means
for expanding its operations, and the Company expects to continue to make
investments in joint ventures. Many of the joint venture opportunities that the
Company is pursuing are start-up operations and require significant investments
before becoming operational. The development, construction and start-up of such
operations are themselves subject to numerous risks. After start-up, further
investments may be required and significant losses could be incurred before any
profits are realized.
On February 28, 1998, the Company ceased operations at the
Pittsburgh coke plant and began the closure process. LTV established reserves
for the cost of the closure and clean-up in the third quarter of 1997.
ENVIRONMENTAL LIABILITIES AND OTHER
LTV is subject to changing and increasingly stringent environmental
laws and regulations concerning air emissions, water discharges and waste
disposal, as well as remediation activities that involve the clean-up of
environmental media such as soils and groundwater ("remediation liabilities").
As a consequence, the Company has incurred, and will continue to incur,
substantial capital expenditures and operating and maintenance expenses in order
to comply with such requirements. Additionally, if any of the Company's
facilities are unable to meet required environmental standards or laws, those
operations could be temporarily or permanently closed.
The Company spent $3 million during the first three months of 1998 for
environmental clean-up and related matters at operating and idled facilities,
and at March 31, 1998, has a recorded liability of $153 million for known and
identifiable environmental and related matters, including costs related to the
closure and demolition of the Pittsburgh coke plant. As the Company becomes
aware of additional matters or obtains more information, it may be required to
record additional liabilities for environmental remediation. The Company also
spent $3 million in the first three months of 1998 for environmental
compliance-related capital expenditures and expects it will be required to spend
an average of approximately $30 million annually in capital expenditures during
the next five years to meet environmental standards.
As is the case with most other companies using computers in their
operations, the Company is faced with the task of addressing the Year 2000. The
Company is currently engaged in a comprehensive project to upgrade its computer
software in its information technology, manufacturing and facilities systems to
programs that will be Year 2000 compliant. Failure by the Company and/or vendors
working on this project to complete the Year 2000 compliance work in a timely
manner could have a material adverse effect on the Company's operations. LTV
expects to spend approximately $47 million in 1998 to be Year 2000 compliant in
early 1999.
I-11
<PAGE> 13
OUTLOOK
Through the end of the first quarter of 1998, the Company has continued
to experience a high demand for its product and a strong rate of incoming
orders. Foreign competition may increase further with the rise in the value of
the U.S. dollar against certain foreign currencies. Recent economic volatility
and currency devaluations in Asia may also result in further increases in the
levels of imports of steel product into the U.S. These factors could affect
future market prices and domestic shipments. LTV began its planned 85-day outage
of a blast furnace at the Indiana Harbor Works on April 4, 1998, which will
reduce the Company's steelmaking capacity. Customer shipments will be maintained
during this outage and careful planning by the maintenance departments should
minimize the impact on shipments. The blast furnace reline will result in
increased operating costs of approximately $40 million.
This report includes forward-looking statements. Our use of the words
"outlook," "anticipates," "believes," "estimate," "expect" and similar words are
intended to identify these statements as forward-looking. These statements
represent our current judgment on what the future holds. While we believe them
to be reasonable, a number of important factors could cause actual results to
differ materially from those projected. These factors include relatively small
changes in market price or market demand; changes in domestic capacity; changes
in raw material costs; increased operating costs; loss of business from major
customers, especially for high value-added product; unanticipated expenses;
substantial changes in financial markets; labor unrest; unfair foreign
competition; major equipment failure; unanticipated results in pending legal
proceedings; or difficulties in implementing information technology, including
Year 2000 compliant systems. In this regard, we also direct your attention to
factors discussed above in the Management's Discussion and Analysis.
I-12
<PAGE> 14
PART II
ITEM 1. LEGAL PROCEEDINGS.
In March 1998, the U.S. Department of Justice filed a civil action on
behalf of the U.S. EPA in the United States District Court for the Western
District of Pennsylvania alleging LTV Steel violated applicable pushing and
combustion stack opacity emission standards in connection with the operation of
its Pittsburgh coke plant in and after October 1996. The complaint seeks civil
penalties not to exceed $25,000 per day per violation for alleged violations
occurring on or before January 30, 1997 and $27,500 per day per violation for
alleged violations that occurred after January 30, 1997. In April 1998, the
Allegheny County Health Department filed a motion to intervene and a separate
complaint in the case. The complaint seeks penalties for alleged violations in
the amount of $25,000 per day. The Group Against Smog and Pollution has also
filed a motion to intervene and a separate complaint in the action. Operations
at the coke plant ceased February 28, 1998.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of stockholders was held April 24, 1998. In connection
with the meeting, proxies were solicited pursuant to the Securities Exchange
Act. The following are the voting results on proposals considered and voted upon
at the meeting, all of which were described in the proxy statement relating to
such meeting.
1. All four nominees for director listed in the proxy statement were elected.
<TABLE>
<CAPTION>
Name Votes For Votes Withheld
---- --------- --------------
<S> <C> <C>
Colin C. Blaydon 91,914,810 1,229,668
William H. Bricker 91,884,885 1,259,593
M. Thomas Moore 91,910,044 1,234,434
Vincent A. Sarni 91,909,225 1,235,253
</TABLE>
2. The proposal to ratify the selection of Ernst &Young LLP as LTV's
outside auditors for 1998 passed. (For - 91,835,341; against - 881,980;
abstained - 427,157)
3. The stockholders' proposal to terminate LTV's Amended Management
Incentive Program did not pass. (For - 5,263,996; against - 73,709,047;
abstained - 2,432,651; broker non-votes - 11,738,784)
ITEM 5. OTHER INFORMATION
BY-LAW AMENDMENTS:
ADVANCE STOCKHOLDER NOTICE REQUIREMENTS AND OTHER PROVISIONS
LTV has provisions in its By-Laws intended to promote the efficient
functioning of its annual meetings. The provisions describe LTV's right to
determine the time, place and conduct of stockholder meetings, require advance
notice by mail or delivery to LTV of stockholder proposals or
II-1
<PAGE> 15
director nominations for annual meetings and require persons wishing to conduct
a solicitation of written consents of stockholders or to call a special meeting
of stockholders to apply to the Board of Directors to set a record date for the
consent solicitation or to determine whether the requisite number of
stockholders desire to call a special meeting.
Under the By-Laws, stockholders must provide LTV with at least 60 days, but
no more than 90 days, notice prior to the announced Tentative Meeting Date of
(i) business the stockholder is proposing for consideration at that meeting and
(ii) persons the stockholder intends to nominate for election as directors at
that meeting.
The LTV Board of Directors has selected April 23, 1999 as the Tentative
Meeting Date for the next Annual Meeting of Stockholders. Accordingly,
stockholders who intend to propose business for consideration, or to nominate
persons for election as directors at the 1999 Annual Meeting, must provide
notice and the required information to the Company no earlier than January 23,
1999 and no later than February 22, 1999.
REQUIRED APPROVAL FOR CERTAIN PURCHASES OF
COMMON STOCK AND SERIES A WARRANTS
For the purpose of preserving LTV's ability to utilize certain favorable
tax attributes, Article Ninth of LTV's Restated Certificate of Incorporation
prohibits, with certain limited exceptions, any unapproved acquisition of Common
Stock or Series A Warrants that would cause the ownership interest percentage of
the acquirer or any other person to increase to 4.5% or above. A person's
ownership interest percentage for purposes of Article Ninth is determined by
reference to specified federal income tax principles, including attribution of
shares from certain related parties, deemed exercise of rights to acquire stock
(such as the Company's Series A Warrants) and aggregation of shares purchased by
persons acting in concert. PURCHASES OF COMMON STOCK OR SERIES A WARRANTS FROM
ANY PERSON OTHER THAN THE COMPANY ARE SUBJECT TO THE LIMITATIONS IMPOSED BY
ARTICLE NINTH, AND ANY UNAPPROVED PURCHASE IN EXCESS OF THE AMOUNTS PERMITTED BY
ARTICLE NINTH WILL BE VOID AB INITIO. A PROSPECTIVE PURCHASER OF COMMON STOCK OR
SERIES A WARRANTS WHO BELIEVES THAT IT MAY BE SUBJECT TO THE LIMITATIONS IMPOSED
BY ARTICLE NINTH SHOULD CONSULT WITH THEIR ADVISORS OR LTV IN ADVANCE OF
ACQUIRING SUCH SECURITIES TO DETERMINE IF ADVANCE APPROVAL MUST BE OBTAINED FROM
LTV'S BOARD OF DIRECTORS.
LTV's Board of Directors was required by Article Ninth of LTV's Restated
Certificate of Incorporation to consider during 1996 whether to waive the
transfer restrictions in Article Ninth with respect to all future transfers of
securities. At its October 1996 meeting, the Board of Directors, after
considering all relevant factors, determined not to waive Article Ninth at that
time.
ITEM 6. EXHIBITS AND REPORTS ON 8-K
(a) Exhibits
Certain of the exhibits to this Report are hereby incorporated by
reference, as specified below, to other documents filed with the Commission by
LTV. Exhibit designations below correspond to the numbers assigned to exhibit
classifications in Regulation S-K.
II-2
<PAGE> 16
(2)-(1) - The LTV Second Modified Joint Plan of
Reorganization (incorporated herein by
reference to Exhibit (28)(a)-(3) to LTV's
Annual Report on Form 10-K for the Fiscal
Year ended December 31, 1992, filed with the
Commission (File No. 1-4368) on March 31,
1993)
(2)-(2) - Confirmation Order of the United States
Bankruptcy Court for the Southern District
of New York entered on May 27, 1993,
confirming the LTV Second Modified Joint
Plan of Reorganization (which includes, as
Exhibit C to the Confirmation Order,
amendments to the LTV Second Modified Joint
Plan of Reorganization) (incorporated herein
by reference to Exhibit 2(2) to LTV's
Current Report on Form 8-K, filed with the
Commission (File No. 1-4368) on June 7,
1993)
(3)-(1) - Restated Certificate of Incorporation of LTV
dated June 28, 1993 (incorporated herein by
reference to Exhibit 3.1 to LTV's
Registration Statement on Form S-1
[Registration No. 33-50217])
(3)-(2) - Certificate of Designations for Series B
Preferred Stock (incorporated herein by
reference to Exhibit 4 to SMI America,
Inc.'s 13D Filing)
(3)-(3) - Amendments to LTV's By-Laws adopted on
October 25, 1996 (incorporated herein by
reference to Exhibit (3)-(1) to LTV's Report
on Form 10-Q for the quarter ended September
30, 1996)
(10)-(1) - LTV Executive Benefit Plan as amended and
restated effective January 1, 1985
(incorporated herein by reference to Exhibit
(10)(c)-(2) to LTV's Report on Form 10-K for
the year ended December 31, 1985)
(10)-(2) - Amendment to LTV Executive Benefit Plan
adopted November 20, 1987 (incorporated
herein by reference to Exhibit (10)(c)-(3)
to LTV's Report on Form 10-K for the year
ended December 31, 1987)
(10)-(3) - LTV Excess Benefit Plan dated as of
January 1, 1985 (incorporated herein by
reference to Exhibit (10)(c)-(5) to LTV's
Report on Form 10-K for the year ended
December 31, 1984)
(10)-(4) - Settlement Agreement dated as of June 28,
1993 between LTV, the PBGC, the Initial LTV
Group (as defined in the Settlement
Agreement) and LTV, as Administrator of the
Restored Plans (incorporated herein by
reference to Exhibit 10.10 to LTV's Report
on Form 10-Q for the quarter ended June 30,
1993)
II-3
<PAGE> 17
(10)-(5) - Assignment, Pledge and Security Agreement
dated as of June 28, 1993 between LTV Steel
Company, Inc. and the PBGC (incorporated
herein by reference to Exhibit 10.11 to
LTV's Report on Form 10-Q for the quarter
ended June 30, 1993)
(10)-(6) - Securities Purchase Agreement dated as of
May 26, 1993 by and among LTV, LTV Steel
Company, Inc. and SMI America, Inc.
(incorporated herein by reference to Exhibit
2 to SMI America, Inc.'s 13D Filing)
(10)-(7) - Common Stock Registration Rights Agreement
dated as of June 28, 1993 by and between LTV
and SMI America, Inc. (incorporated herein
by reference to Exhibit 5 to SMI America,
Inc.'s 13D Filing)
(10)-(8) - Consultation and Management Participation
Agreement dated as of June 28, 1993 between
LTV and Sumitomo Metal Industries, Ltd.
(incorporated herein by reference to Exhibit
6 to SMI America, Inc.'s 13D Filing)
(10)-(9) - L-S Exchange Right and Security Agreement
dated as of June 28, 1993 by and among
LTV/EGL Holding Company, Sumikin EGL Corp.,
LTV, SMI America Inc., and Sumitomo Metal
USA Corporation (incorporated herein by
reference to Exhibit 7 to SMI America,
Inc.'s 13D Filing)
(10)-(10) - Amendments Nos. 1 and 2 to the Securities
Purchase Agreement dated as of May 26, 1993
among LTV, LTV Steel Company, Inc. and SMI
America, Inc. (incorporated herein by
reference to Exhibit (10)-(20) to LTV's
Report on Form 10-Q for the quarter ended
September 30, 1994)
(10)-(11) - Amendments Nos. 1 through 4 to the
Settlement Agreement dated as of June 28,
1993 by and among the PBGC, LTV, the Initial
LTV Group (as defined in the Settlement
Agreement) and LTV, as Administrator of the
Restored Plans (incorporated herein by
reference to Exhibit (10)-(21) to LTV's
Report on Form 10-Q for the quarter ended
September 30, 1994)
(10)-(12) - Revolving Credit Agreement dated as of
October 12, 1994 among LTV Sales Finance
Company, the financial institutions parties
thereto as banks, the issuing banks, the
facility agent and collateral agent
(incorporated herein by reference to Exhibit
(10)-(22) to LTV's Report on Form 10-Q for
the quarter ended September 30, 1994)
II-4
<PAGE> 18
(10)-(13) - Receivables Purchase and Sale Agreement
dated as of October 12, 1994 among LTV, LTV
Steel Company, Inc., Continental Emsco
Company, LTV Steel Tubular Products Company,
Georgia Tubing Corporation and LTV Sales
Finance Company (incorporated herein by
reference to Exhibit (10)-(23) to LTV's
Report on Form 10-Q for the quarter ended
September 30, 1994)
(10)-(14) - Accession Agreement dated as of October 12,
1994 among LTV Sales Finance Company, the
financial institutions listed on the
signature pages thereof, the issuing bank
named thereon, and Bankers Trust Company as
facility agent and collateral agent
(incorporated herein by reference to Exhibit
(10)-(24) to LTV's Report on Form 10-Q for
the quarter ended September 30, 1994)
(10)-(15) - Trust Termination Acknowledgment and
Agreement, dated October 12, 1994, between
LTV Sales Finance Company and Wilmington
Trust Company (incorporated herein by
reference to Exhibit (10)-(25) to LTV's
Report on Form 10-Q for the quarter ended
September 30, 1994)
(10)-(16) - Assignment and Transfer Agreement, dated as
of October 12, 1994, by and between LTV
Master Receivables Trust and LTV Sales
Finance Company (incorporated herein by
reference to Exhibit (10)-(26) to LTV's
Report on Form 10-Q for the quarter ended
September 30, 1994)
(10)-(17) - Collateral Trust Agreement dated as of
May 25, 1993 among LTV, LTV Steel Company,
Inc., United Steelworkers of America and
Bank One Ohio Trust Company, NA, as
Collateral Trustee (incorporated herein by
reference to Exhibit 10.33 to LTV's Report
on Form 10-Q for the quarter ended June 30,
1993)
(10)-(18) - Open-End Mortgage, Security Agreement and
Fixture Filing dated as of June 28, 1993 by
LTV Steel Company, Inc. to Bank One Ohio
Trust Company, N.A. (incorporated herein by
reference to Exhibit 10.34 to LTV's Report
on Form 10-Q for the quarter ended June 30,
1993)
(10)-(19) - License Agreement dated as of June 28, 1993
between LTV Steel Company, Inc. and Bank One
Ohio Trust Company, N.A. (incorporated
herein by reference to Exhibit 10.35 to
LTV's Report on Form 10-Q for the quarter
ended June 30, 1993)
(10)-(20) - Warrant Agreement dated as of June 28, 1993
between LTV and Society National Bank, as
Warrant Agent (incorporated herein by
reference to Exhibit 10.37 to LTV's Report
on Form 10-Q for the quarter ended June 30,
1993)
II-5
<PAGE> 19
(10)-(21) - Settlement Agreement and Stipulated Order on
behalf of the United States of America on
behalf of the United States Environmental
Protection Agency approved by the United
States Bankruptcy Court Southern District of
New York (the "Court") on April 15, 1993 and
supplemented by Exhibit 10.38 below
(incorporated herein by reference to Exhibit
10.38 to LTV's Report on Form 10-Q for the
quarter ended June 30, 1993)
(10)-(22) - Second Settlement Agreement and Stipulated
Order supplementing 10.36 above and approved
by the Court on May 19, 1993 (incorporated
by reference to Exhibit 10.39 to LTV's
Registration Statement on Form S-1
[Registration No. 33-50217])
(10)-(23) - Settlement Agreement and Stipulated Order on
behalf of the State of Minnesota approved by
the Court on May 19, 1993 (incorporated
herein by reference to Exhibit 10.39 to
LTV's Report on Form 10-Q for the quarter
ended June 30, 1993)
(10)-(24) - Settlement Agreement and Stipulated Order on
behalf of the State of Indiana on behalf of
the Indiana Department of Environmental
Management approved by the Court on May 24,
1993 (incorporated herein by reference to
Exhibit 10.40 to LTV's Report on Form 10-Q
for the quarter ended June 30, 1993)
(10)-(25) - Settlement Agreement and Stipulated Order on
behalf of the State of New York and approved
by the Court on May 24, 1993 (incorporated
herein by reference to Exhibit 10.42 to
LTV's Report on Form 10-Q for the quarter
ended June 30, 1993)
(10)-(26) - Settlement Agreement and Stipulated Order on
behalf of the State of Connecticut and
approved by the Court on May 19, 1993
(incorporated herein by reference to Exhibit
10.43 to LTV's Report on Form 10-Q for the
quarter ended June 30, 1993)
(10)-(27) - Settlement Agreement and Stipulated Order on
behalf of the Commonwealth of Pennsylvania
and approved by the Court on May 24, 1993
(incorporated herein by reference to Exhibit
10.44 to LTV's Report on Form 10-Q for the
quarter ended June 30, 1993)
(10)-(28) - Settlement Agreement and Stipulated Order on
behalf of the State of Ohio on behalf of the
Ohio Environmental Protection Agency and
approved by the Court on May 24, 1993
(incorporated herein by reference to Exhibit
10.45 to LTV's Report on Form 10-Q for the
quarter ended June 30, 1993)
(10)-(29) - Settlement Agreement and Stipulated Order on
behalf of the State of Georgia and approved
by the Court on May 24, 1993 (incorporated
herein by reference to Exhibit 10.46 to
LTV's Report on Form 10-Q for the quarter
ended June 30, 1993)
II-6
<PAGE> 20
(10)-(30) - Closing Agreement Between LTV, its
subsidiaries and the Commissioner of
Internal Revenue as filed with the United
States Bankruptcy Court for the Southern
District of New York on May 14, 1993
(incorporated herein by reference to Exhibit
10.47 to LTV's Report on Form 10-Q for the
quarter ended June 30, 1993)
(10)-(31) - The LTV Corporation Non-Employee Directors
Stock Option Plan adopted on October 22,
1993 (incorporated herein by reference to
Exhibit 10.49 to Amendment No. 2 to LTV's
Registration Statement on Form S-1
[Registration No. 33-50217])
(10)-(32) - Amendment to LTV Executive Benefit Plan
adopted October 22, 1993 (incorporated
herein by reference to Exhibit 10.50 to
Amendment No. 2 to LTV's Registration
Statement on Form S-1 [Registration No.
33-50217])
(10)-(33) - LTV Executive Benefit Trust Agreement
approved on October 22, 1993 (incorporated
herein by reference to Exhibit 10.51 to
Amendment No. 2 to LTV's Registration
Statement on Form S-1 [Registration No.
33-50217])
(10)-(34) - The LTV Corporation Supplemental Management
Retirement Plan adopted on October 22, 1993
(incorporated herein by reference to Exhibit
10.52 to Amendment No. 2 to LTV's
Registration Statement on Form S-1
[Registration No. 33-50217])
(10)-(35) - The LTV Corporation Supplemental Management
Retirement Trust Agreement approved on
October 22, 1993 (incorporated herein by
reference to Exhibit 10.53 to Amendment No.
2 to LTV's Registration Statement on Form
S-1 [Registration No. 33-50217])
(10)-(36) - The LTV Corporation Management Incentive
Program as amended on January 28, 1994
(incorporated by reference to Exhibit
(10)-(53) to LTV's Report on Form 10-K for
the year ended December 31, 1993)
(10)-(37) - Amendment to The LTV Corporation
Supplemental Management Retirement Plan
adopted on January 28, 1994 (incorporated by
reference to Exhibit (10)-(54) to LTV's
Report on Form 10-K for the year ended
December 31, 1993)
(10)-(38) - Amendment to LTV Executive Benefit Plan
adopted October 28, 1994 (incorporated
herein by reference to Exhibit (10)-(48) to
LTV's Report on Form 10-Q for the quarter
ended September 30, 1994)
II-7
<PAGE> 21
(10)-(39) - Amendment to The LTV Corporation Management
Incentive Program adopted October 28, 1994
(incorporated herein by reference to Exhibit
(10)-(49) to LTV's Report on Form 10-Q for
the quarter ended September 30, 1994)
(10)-(40) - Amendment to The LTV Corporation
Supplemental Management Retirement Plan
adopted on October 28, 1994 (incorporated
herein by reference to Exhibit (10)-(51) to
LTV's Report on Form 10-Q for the quarter
ended September 30, 1994)
(10)-(41) - Amendment No. 5 to the Settlement Agreement
dated as of June 28, 1993 by and among the
PBGC, LTV, the Initial LTV Group and LTV, as
Administrator of the Restored Plans
(incorporated herein by reference to Exhibit
(10)-(55) to LTV's Report on Form 10-K for
the year ended December 31, 1994)
(10)-(42) - The Hourly Employee Stock Payment
Alternative Plan (incorporated herein by
reference to Exhibit 4.3 to LTV's
Registration Statement on Form S-8
[Registration No. 33-56861])
(10)-(43) - Amendment No. 1 to the Receivables Purchase
and Sale Agreement dated as of October 12,
1994 among LTV, LTV Steel Company, Inc.,
Continental Emsco Company, LTV Steel Tubular
Products Company, Georgia Tubing Corporation
and LTV Sales Finance Company (incorporated
herein by reference to Exhibit (10)-(57) to
LTV's Report on Form 10-Q for the quarter
ended September 30, 1995)
(10)-(44) - Amendments Nos. 6 and 7 to the Settlement
Agreement dated as of June 28, 1993 by and
among the PBGC, LTV, the Initial LTV Group
(as defined in the Settlement Agreement) and
LTV, as Administrator of the Restored Plans
(incorporated herein by reference to Exhibit
(10)-(58) to LTV's Report on Form 10-Q for
the quarter ended September 30, 1995)
(10)-(45) - Amendment No. 8 to the Settlement Agreement
dated as of June 28, 1993 by and among the
PBGC, LTV, the Initial LTV Group (as defined
in the Settlement Agreement) and LTV as
Administrator of the Restated Plans
(incorporated herein by reference to Exhibit
(10)-(59) to LTV's Report on Form 10-K for
the year ended December 31, 1995)
(10)-(46) - The LTV Corporation Amended and Restated
Non-Employee Directors' Equity Compensation
Plan adopted on November 22, 1996
(incorporated herein by reference to Exhibit
(10)-(58) to LTV's Report on Form 10-K for
the year ended December 31, 1996)
II-8
<PAGE> 22
(10)-(47) - The LTV Corporation Amended and Restated
Non-Employee Directors' Deferred
Compensation Plan adopted on November 22,
1996 (incorporated herein by reference to
Exhibit (10)-(59) to LTV's Report on Form
10-K for the year ended December 31, 1996)
(10)-(48) - The LTV Corporation Amended and Restated
Executive Deferred Compensation Plan adopted
on October 25, 1996 (incorporated herein by
reference to Exhibit (10)-(60) to LTV's
Report on Form 10-K for the year ended
December 31, 1996)
(10)-(49) - Amendment No. 9 to the Settlement Agreement
dated as of June 28, 1993 by and among the
PBGC, LTV, the Initial LTV Group (as defined
in the Settlement Agreement) and LTV as
Administrator of the Restated Plans
(incorporated herein by reference to Exhibit
(10)-(61) to LTV's Report on Form 10-K for
the year ended December 31, 1996)
(10)-(50) - Amendment No. 10 to the Settlement Agreement
dated as of June 28, 1993 by and among the
PBGC, LTV, the Initial LTV Group (as defined
in the Settlement Agreement) and LTV as
Administrator of the Restated Plans
(incorporated herein by reference to Exhibit
(10)-(62) to LTV's Report on Form 10-Q for
the quarter ended March 31, 1997)
(10)-(51) - The LTV Change in Control and Severance Pay
Plan I (filed as Exhibit 10.1 to Amendment
No. 1 to LTV's Registration Statement on
Form S-4 [Registration No. 333-40425])
(10)-(52) - Note Purchase and Letter of Credit Agreement
dated as of February 26, 1998 among LTV
Steel Company, Inc., various financial
institutions (as defined therein), Chase
Securities, Inc., as placement agent, The
Chase Manhattan Bank, as administrative
agent and The Chase Manhattan Bank, as
collateral agent (filed herewith)
(10)-(53) - Guaranty made as of February 26, 1998 by LTV
Steel Products, LLC given in connection with
the Note Purchase and Letter of Credit
Agreement dated as of February 26, 1998
among LTV Steel Company, Inc., various
financial institutions (as defined therein),
Chase Securities, Inc., as placement agent,
The Chase Manhattan Bank, as administrative
agent and The Chase Manhattan Bank, as
collateral agent (filed herewith)
(10)-(54) - Contribution and Sale Agreement dated as of
February 26, 1998 among LTV Steel Products,
LLC, as purchaser, LTV Steel Company, Inc.,
as servicer, and LTV Steel Company, Inc. and
Georgia Tubing Corporation, as initial
sellers (filed herewith)
II-9
<PAGE> 23
(10)-(55) - Inventory Processing and Servicing Agreement
dated as of February 26, 1998 by and among
LTV Steel Products, LLC, LTV Steel Company,
Inc., as processor and servicer, and The
Chase Manhattan Bank, as collateral agent
(filed herewith)
(10)-(56) - Trust Agreement dated as of February 26,
1998 among LTV Steel Products, LLC, as
issuer, and The Chase Manhattan Bank as
collateral agent (filed herewith)
(10)-(57) - Amendment No. 2 dated as of March 1, 1998 to
the Receivables Purchase and Sale Agreement
dated as of October 12, 1994 among LTV, LTV
Steel Company, Inc., Continental Emsco
Company, LTV Steel Tubular Products Company,
Georgia Tubing Corporation and LTV Sales
Finance Company and Amendment No. 1, dated
as of March 1, 1998 to Revolving Credit
Agreement dated as of October 12, 1994 among
LTV Sales Finance Company, the financial
institutions parties thereto as banks, the
issuing banks, the facility agent and
collateral agent (filed herewith)
(10)-(58) - Amendment No. 11 to the Settlement Agreement
dated as of June 28, 1993 by and among the
PBGC, LTV, the Initial LTV Group (as defined
in the Settlement Agreement) and LTV as
Administrator of the Restated Plans (filed
herewith)
(11) - Statement re Computation of Per Share
Earnings (filed herewith)
(27)-(1) - Financial Data Schedule (filed herewith)
(27)-(2) - Restated Financial Data Schedules for prior
periods pursuant to Regulation S-K Item
601(c)(2)(iii)
(b) Reports on Form 8-K
No report on Form 8-K was filed by the registrant for the
relevant period.
II-10
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE LTV CORPORATION
--------------------------------
(Registrant)
By /s/ Arthur W. Huge
--------------------------------
Arthur W. Huge
Senior Vice President
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: , 1998
-------------------------------
II-11
<PAGE> 1
Exhibit 10.52
================================================================================
NOTE PURCHASE AND LETTER OF CREDIT AGREEMENT
among
LTV STEEL COMPANY, INC.,
As a Party and as Agent for certain Affiliates
VARIOUS FINANCIAL INSTITUTIONS,
CHASE SECURITIES INC.,
as Placement Agent,
THE CHASE MANHATTAN BANK,
as Administrative Agent
and
THE CHASE MANHATTAN BANK,
as Collateral Agent
------------------------------
DATED AS OF FEBRUARY 26, 1998
------------------------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I.
DEFINITIONS..............................................................................................1
Section 1.1. Definitions............................................................................1
ARTICLE II.
CLASS A-1 NOTE PURCHASES AND SALES.......................................................................1
Section 2.1. Facility...............................................................................1
Section 2.2. Repurchases............................................................................3
Section 2.3. Repurchases at other than the end of an Interest Period................................3
Section 2.4. Establishment of Interest Rates and Periods............................................4
ARTICLE III.
LETTERS OF CREDIT........................................................................................4
Section 3.1. Assumption and Issuance of Letters of Credit...........................................4
Section 3.2. Terms of Letters of Credit.............................................................6
Section 3.3. Lender's Participation.................................................................6
Section 3.4. Request for Issuance...................................................................7
Section 3.5. Payment of Amounts Drawn Under Letters of Credit.......................................7
Section 3.6. Payment by Lenders; Defaulting Lenders.................................................7
Section 3.7. Nature of Issuing Lender's Duties......................................................8
Section 3.8. Obligations Absolute...................................................................9
Section 3.9. Collateralization.....................................................................10
Section 3.10. Amendments to Letter of Credit........................................................11
Section 3.11. The Register..........................................................................12
Section 3.12. Commitment Reductions.................................................................12
Section 3.13. Indemnification of Issuing Lenders....................................................13
ARTICLE IV
INTEREST, FEES, EXPENSES AND PAYMENTS...................................................................13
Section 4.1. Payment of Interest...................................................................13
Section 4.2. Reimbursement of Expenses; Other Fees.................................................13
Section 4.3. Fees in Respect of Letters of Credit..................................................13
Section 4.4. Unused Line Fee.......................................................................14
Section 4.5. Indemnification in Certain Events.....................................................14
Section 4.6. Calculations..........................................................................16
Section 4.7. Taxes.................................................................................16
Section 4.8 Sharing of Payments...................................................................21
ARTICLE V.
CONDITIONS PRECEDENT....................................................................................21
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 5.1. Conditions to Effective Date, Initial Issuance of Letters of Credit
and Obligation to Purchase Class A-1 Notes............................................21
Section 5.2. Conditions to Each Letter of Credit...................................................24
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES..........................................................................25
Section 6.1. Corporate Status......................................................................25
Section 6.2. Corporate Power and Authority.........................................................25
Section 6.3. No Violation..........................................................................25
Section 6.4. Litigation............................................................................26
Section 6.5. Governmental Approvals................................................................26
Section 6.6. Investment Company Act................................................................26
Section 6.7. Public Utility Holding Company Act....................................................26
Section 6.8. True and Complete Disclosure..........................................................26
Section 6.9 Financial Condition; Financial Statements.............................................27
Section 6.10. Business Names........................................................................27
Section 6.11. Tax Returns and Payments..............................................................28
Section 6.12. Compliance with ERISA.................................................................28
Section 6.13 Compliance with Statutes, etc.........................................................28
Section 6.14. Performance of Agreements.............................................................28
Section 6.15 Margin Regulations....................................................................28
Section 6.16 Class A-1 Notes.......................................................................28
ARTICLE VII.
AFFIRMATIVE COVENANTS...................................................................................29
Section 7.1. Financial Information.................................................................29
Section 7.2. Corporate Franchises..................................................................30
Section 7.3 Compliance with Statutes, etc.........................................................31
Section 7.4 Maintenance of Properties;............................................................31
Section 7.5 Taxes.................................................................................31
Section 7.6 Notices in case of Default............................................................31
Section 7.7 Loss of Perfection Event..............................................................31
ARTICLE VIII.
NEGATIVE COVENANTS......................................................................................32
Section 8.1. Consolidation, Merger, Sale of Assets, etc............................................32
Section 8.2. Exercise of Remedies..................................................................32
ARTICLE IX.
EVENTS OF DEFAULT AND REMEDIES..........................................................................32
Section 9.1. Events of Default..........................................................................32
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE X.
THE AGENTS..............................................................................................34
Section 10.1. Appointment of the A.gents...............................................................34
Section 10.2. Resignation of the Agents................................................................38
Section 10.3. Obligations Several......................................................................38
ARTICLE XI.
MISCELLANEOUS...........................................................................................39
Section 11.1. Submission to Jurisdiction; Waiver........................................................39
Section 11.2. Jury Trial................................................................................40
Section 11.3 Governing Law.............................................................................40
Section 11.4. Delays; Partial Exercise of Remedies......................................................40
Section 11.5. Notices...................................................................................40
Section 11.6. Benefit of Agreement......................................................................40
Section 11.7. Confidentiality...........................................................................43
Section 11.8. Indemnification...........................................................................44
Section 11.9. Headings Descriptive......................................................................45
Section 11.10. Amendment or Waiver......................................................................45
Section 11.11. Nonliability of Placement Agent, the Administrative Agent and
Financing Parties........................................................................46
Section 11.12. Counterparts.............................................................................46
Section 11.13. Effectiveness............................................................................46
Section 11.14. Maximum Rate.............................................................................46
Section 11.15. Right of Setoff..........................................................................47
Section 11.16 Extension of Facility....................................................................47
Section 11.17 Inspection of Inventory..................................................................48
SCHEDULES AND EXHIBITS
----------------------
Schedule I Listing of Commitments and Financing Parties
Schedule II Listing of Assumed Letters of Credit
Schedule III Listing of TBT Lease Agreements
Schedule IV Affiliates of LTV Steel
EXHIBITS
--------
Exhibit A Form of Letter of Credit Request
Exhibit B Form of Opinion from Counsel to LTV Steel
Exhibit C Form of Opinion from Counsel to the Note Purchasers and Lenders
Exhibit D Form of Secretary's Certificate
Exhibit E Form of Assignment and Assumption Agreement
Exhibit F Form of Confidentiality Agreement
</TABLE>
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<PAGE> 5
THIS NOTE PURCHASE AND LETTER OF CREDIT AGREEMENT is entered into as of
February 26, 1998, among LTV Steel Company, Inc., a New Jersey corporation, as a
party and as agent (in such capacities, "LTV Steel") for its Affiliates
indicated on Schedule IV hereto (LTV Steel and such Affiliates herein, the
"Members"), each of those financial institutions listed from time to time on
Schedule I hereto (each a "Note Purchaser" or a "Lender" or a "Financing Party"
as the context requires and collectively the "Note Purchasers" or the "Lenders"
or the "Financing Parties"), Chase Securities Inc. ("CSI"), acting as Placement
Agent (the "Placement Agent"), The Chase Manhattan Bank, acting as
Administrative Agent (the "Administrative Agent") in the manner and to the
extent described in Article X hereof and The Chase Manhattan Bank acting as
Collateral Agent (the "Collateral Agent") under the Trust Agreement, as defined
below.
WITNESSETH:
WHEREAS, LTV Steel, in its own capacity or as agent on behalf of the
other Members which are from time to time Sellers pursuant to the Contribution
and Sale Agreement, from time to time may desire to sell or purchase Class A-1
Notes to or from the Note Purchasers;
WHEREAS, LTV Steel has requested the Lenders to provide certain letters
of credit on behalf of itself and the other Members and, in certain cases, its
other Affiliates;
WHEREAS, subject to the terms of conditions of this Agreement, the Note
Purchasers and the Lenders are willing to provide such facilities hereunder;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. DEFINITIONS. For all purposes of this Agreement, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms used herein shall have the meanings assigned to such terms in
Annex X attached hereto, which is incorporated by reference herein.
ARTICLE II.
CLASS A-1 NOTE PURCHASES AND SALES
Section 2.1. FACILITY. (a) From time to time LTV Steel and the other
Members may own Class A-1 Notes which LTV Steel wishes to sell to the Note
Purchasers, subject to a right to repurchase such Class A-1 Notes from the Note
Purchasers as provided in SECTION 2.2. Subject to the terms and conditions of
this Agreement, each Note Purchaser agrees to purchase from LTV Steel (without
recourse except as expressly contemplated hereby) its Pro Rata Portion of Class
A-1 Notes that LTV Steel may request be purchased by the Note Purchasers. The
obligation of the Note Purchasers to purchase such Class A-1 Notes is subject to
the following conditions:
<PAGE> 6
On the Note Purchase Date:
(i) there shall not be in existence a Trust
Agreement Event of Default;
(ii) the representations and warranties of LTV
Steel and its Affiliates contained in this
Agreement and each other Transaction
Document are true and correct in all
material respects on and as of such date as
though made on such date, except to the
extent that such representations and
warranties expressly relate solely to an
earlier date (in which case such
representations and warranties shall have
been true and correct on and as of such
earlier date);
(iii) the Amortization Date shall not have
occurred;
(iv) there shall not be in existence a Note
Purchase Agreement Event of Default;
(v) the purchase price for each such Class A-1
Note to be purchased shall be equal to the
principal amount thereof (individually the
"Note Purchase Price"; and in the aggregate,
the "Aggregate Note Purchase Price");
(vi) no Financing Party shall be required to
purchase Class A-1 Notes in a principal
amount in excess of its Pro Rata Portion of
the Class A-1 Notes being sold under this
Section nor at any time shall a Financing
Party be required to purchase Class A-1
Notes if such purchase would cause the sum
of the aggregate outstanding principal
amount of Class A-1 Notes owned by it plus
its Pro Rata Portion of the Letter of Credit
Usage to exceed its Commitment;
(vii) the Class A-1 Notes to be purchased shall
not be Term Notes and the Note Purchase Date
specified shall be the first day of an
Interest Period with respect to each Class
A-1 Note to be purchased on such date;
(viii) as indicated on the most recent Sales and
Valuation Report, the Company shall be in
compliance with the Note Collateral Value
Requirement; and
(ix) no change or development shall have occurred
since the Effective Date which has in any
case, has had or is reasonably expected to
have a Material Adverse Collateral Effect,
and shall be continuing.
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<PAGE> 7
(b) LTV Steel may utilize the Note Purchase Facility by
providing a written notice ("Note Purchase Notice") to the Placement
Agent on or before 12:00 Noon (New York City time) on any Business Day
as to the principal amount of Class A-1 Notes to be purchased and the
date on which such Notes are to be purchased (the "Note Purchase
Date"), which shall be a Business Day not sooner than the third
Business Day next following the date of delivery of the related Note
Purchase Notice, except that in the case of Class A-1 Notes to be
purchased which shall bear interest at an ABR Interest Rate, such Note
Purchase Notice may be delivered on the Business Day immediately
preceding the Business Day on which such Notes are to be purchased. By
11:00 A.M. (New York City time) on the Note Purchase Date each Note
Purchaser shall deliver to the Placement Agent its Pro Rata Portion of
the Aggregate Note Purchase Price in immediately available funds for
redelivery by the Placement Agent to LTV Steel by 12:00 Noon (New York
City time) on the Note Purchase Date.
Delivery of the Class A-1 Notes to the Note Purchasers may be
made by notation in the Note Register by the Note Registrar of the
respective ownership of such Class A-1 Notes by each Note Purchaser.
Section 2.2. REPURCHASES. (a) From time to time LTV Steel may
repurchase Class A-1 Notes from the Note Purchasers. Subject to the terms and
conditions of this Agreement, each Note Purchaser agrees to sell to LTV Steel
its Pro Rata Portion of Class A-1 Notes that LTV Steel may request to repurchase
from the Note Purchasers. The obligation of the Note Purchasers to sell such
Class A-1 Notes to LTV Steel is subject to the condition that on the Note
Repurchase Date LTV Steel shall have paid an amount equal to the principal
amount of such Notes to be repurchased plus any other amounts due under SECTION
2.3 of this Agreement in payment therefor (the "Note Repurchase Price") for such
repurchased Class A-1 Notes.
(b) LTV Steel may repurchase Class A-1 Notes from the Note
Purchasers by providing a written notice ("Note Repurchase Notice") to
the Placement Agent on or before 12:00 Noon (New York City time) on any
Business Day as to the principal amount of Class A-1 Notes to be
repurchased and the date on which such Notes are to be repurchased (the
"Note Repurchase Date"), which shall be a Business Day not sooner than
the third Business Day next following the date of delivery of the
related Note Repurchase Notice. LTV Steel shall deliver the aggregate
Note Repurchase Price to the Placement Agent by 11:00 A.M. (New York
City time) on the Note Repurchase Date for redelivery to the respective
Note Purchasers selling such Notes to LTV Steel.
Section 2.3. REPURCHASES AT OTHER THAN THE END OF AN INTEREST PERIOD.
LTV Steel agrees that if the Note Repurchase Date of any Note bearing interest
at a LIBOR based Interest Rate does not correspond with the last day of the
Interest Period applicable thereto, the Note Repurchase Price with respect to
each such Note will include the following amounts:
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<PAGE> 8
a. accrued and unpaid interest on such Note
through the Note Repurchase Date; and
b. a breakage fee ("Breakage Fee") which shall
be the actual losses, costs and damages
incurred by the Note Purchasers as a result
of the repurchase occurring prior to the
last day of the Interest Period for such
Notes, but will not include any lost
"profits" including interest rate margin for
the period after the Notes are repurchased.
A certificate of the Placement Agent setting
forth any amount or amounts that the Note
Purchasers are entitled to receive pursuant
to this Section shall be delivered to LTV
Steel and shall be conclusive absent
manifest error.
Section 2.4. ESTABLISHMENT OF INTEREST RATES AND PERIODS. The Financing
Parties hereby appoint LTV Steel as their agent for the purposes of the
establishment of any Interest Rate Period or Interest Rate on any Class A-1 Note
as to which the Financing Parties (or the Placement Agent or the Administrative
Agent on their behalf) are the Holders (including as pledgees) of such Notes.
The Financing Parties agree that LTV Steel may provide all notices to the Issuer
with respect thereto and, subject to the provisions hereof, establish any
Interest Rate Period or Interest Rate on such Notes as LTV Steel may select.
Delivery of the Class A-1 Notes to LTV Steel may be made by
notation in the Note Registrar by the Collateral Agent of such transfers from
the Note Purchasers to LTV Steel.
ARTICLE III.
LETTERS OF CREDIT
Section 3.1. ASSUMPTION AND ISSUANCE OF LETTERS OF CREDIT.
(a) ASSUMED LETTERS OF CREDIT. As of the Effective Date, each
of the Assumed Letters of Credit, descriptions of which are set forth
on Schedule II hereto, shall be deemed to be a Letter of Credit issued
hereunder by one or more of the Issuing Lenders for the account of LTV
Steel or its Affiliate for whose account the Assumed Letter of Credit
was originally issued and shall be subject to all of the terms and
provisions of this Agreement.
(b) ISSUANCE OF LETTERS OF CREDIT. LTV Steel may request, in
accordance with the provisions of this SECTION 3.1(B), from time to
time during the period from the Effective Date to but excluding the
date which is five Business Days prior to the Expiration Date
applicable to the Commitment of the relevant Issuing Lender, that one
or more Issuing Lenders issue a Letter of Credit (x) in replacement
(through exchange or issuance
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<PAGE> 9
of a backing Letter of Credit) of any Assumed Letter of Credit or any
Letter of Credit previously issued in replacement thereof, for the
account of LTV Steel or one of its Affiliates, so long as (A) such
Letter of Credit shall be issued to support the same obligations as the
Assumed Letter of Credit (or Letter of Credit previously issued in
replacement thereof) being replaced and (B) the requested Letter of
Credit may not have a Stated Amount greater than the current Stated
Amount of the Assumed Letter of Credit (or Letter of Credit previously
issued in replacement thereof) which is being replaced or a scheduled
amortization which extends the date for, or reduces the amount of, any
scheduled reduction in the Stated Amount of the Assumed Letter of
Credit (or Letter of Credit previously issued in replacement thereof)
being replaced or (y) in support of obligations, other than obligations
described in clause (x) above, of LTV Steel or its Affiliates incurred
in the ordinary course of their respective businesses, or otherwise
satisfactory to the Administrative Agent and such Issuing Lender.
Subject to the terms and conditions of this Agreement and in reliance
upon the representations and warranties of LTV Steel set forth herein,
upon the request of LTV Steel pursuant to SECTION 3.4, one or more
Issuing Lenders selected by LTV Steel shall issue Letters of Credit
hereunder and for the account of LTV Steel or one of its Affiliates, as
more specifically described below. No Issuing Lender shall be obligated
to issue any Letter of Credit for the account of LTV Steel or one of
its Affiliates:
(i) if, after giving effect to such issuance, the
aggregate of Letter of Credit Usage together with the
aggregate principal amount of Class A-1 Notes then held by the
Note Purchasers under Article II of this Agreement would
exceed the Aggregate Commitment Amount then in effect;
(ii) if, after giving effect to such issuance, the
sum of (i) such Financing Party's Pro Rata Portion of the
aggregate Letter of Credit Usage and (ii) the aggregate
principal amount of Class A-1 Notes held by such Financing
Party as a Note Purchaser would exceed such Financing Party's
Commitment;
(iii) if, after giving effect to such issuance, the
Letter of Credit Usage in respect of Letters of Credit assumed
under SECTION 3.1(a) or issued under SECTION 3.1(b)(x) in
respect of obligations relating to TBT Lease Agreements (the
"TBT Letters of Credit") would exceed the aggregate Letter of
Credit Usage in respect of all such Letters of Credit on the
Effective Date;
(iv) unless otherwise agreed to by the relevant
Financing Party in its capacity as an Issuing Lender, having a
stated expiration date later than the date which is five
Business Days prior to the Expiration Date applicable to the
Commitment of such Financing Party;
(v) denominated in a currency other than Dollars;
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<PAGE> 10
(vi) if any order, judgment or decree of any
Governmental Authority or arbitrator shall purport by its
terms to enjoin or restrain such Issuing Lender from issuing
such Letter of Credit or any Requirement of Law applicable to
such Issuing Lender or any request or directive (whether or
not having the force of law) from any Governmental Authority
with jurisdiction over such Issuing Lender shall prohibit, or
request such Issuing Lender to refrain from, the issuance of
letters of credit generally or such Letter of Credit in
particular;
(vii) if such Issuing Lender shall have received
written notice from the Administrative Agent or the Required
Financing Parties that any applicable condition set forth in
SECTIONS 5.1 and 5.2 is not then satisfied;
(viii) if the requirement of SECTION 3.9 of this
Agreement is not then satisfied;
(ix) if the Amortization Date shall have occurred;
(x) if, as indicated on the most recent Sales and
Valuation Report, the Company is not in compliance with the
Note Collateral Value Requirement; or
(xi) if after giving effect to such issuance, the
aggregate Letter of Credit Usage would exceed the aggregate
Letter of Credit Limit of all Financing Parties.
Section 3.2. TERMS OF LETTERS OF CREDIT. The Letters of Credit shall be
in a form customarily issued by the respective Issuing Lender or in such other
form as has been approved by such Issuing Lender. At the time of issuance, the
amount and the terms and conditions of each Letter of Credit, and the form of
any drafts or acceptances thereunder, shall be subject to approval by the Agent
and LTV Steel. In no event may the term of any Letters of Credit issued
hereunder exceed 12 months (except that such Letters of Credit may provide for
annual renewal) and, unless otherwise agreed to by the relevant Financing Party
in its capacity as Issuing Lender, all Letters of Credit issued by any Issuing
Lender hereunder shall expire no later than the date which is five Business Days
prior to the Expiration Date applicable to the Commitment of such Financing
Party. Any Letter of Credit containing an automatic renewal provision shall,
unless otherwise agreed to by the relevant Financing Party in its capacity as
Issuing Lender, also contain a provision pursuant to which, notwithstanding any
other provisions thereof, it shall expire no later than the date that is five
Business Days prior to the Expiration Date applicable to the Commitment of such
Financing Party.
Section 3.3. LENDER'S PARTICIPATION. Immediately upon the issuance or
assumption by any Issuing Lender of any Letter of Credit, each Lender shall be
deemed to have irrevocably and unconditionally purchased and received from such
Issuing Lender, without recourse or warranty, an undivided interest and
participation to the extent of such Lender's Pro Rata Portion of the liability
with respect to such Letter of Credit (including, without limitation, all
obligations of LTV
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<PAGE> 11
Steel with respect thereto, other than amounts owing to such Issuing Lender
consisting of Fronting Fees or LC Administration Fees) and any security therefor
or guaranty pertaining thereto.
Section 3.4. REQUEST FOR ISSUANCE. Whenever LTV Steel desires the
issuance of a Letter of Credit, LTV Steel shall deliver to the Administrative
Agent and the respective Issuing Lenders a written notice no later than 1:00
P.M. (New York City time) at least three Business Days (or such shorter periods
as may be agreed to by such Issuing Lenders) in advance of the proposed date of
issuance of a letter of credit request in substantially the form of Exhibit A (a
"Letter of Credit Request"). The Administrative Agent shall promptly transmit
copies of each Letter of Credit Request to each Lender. The transmittal by LTV
Steel of each Letter of Credit Request shall be deemed to be a representation
and warranty that the Letter of Credit may be issued in accordance with and will
not violate any of the requirements of SECTION 3.1 or SECTION 5.2. A Letter of
Credit Request may be given in writing or electronically with prompt
confirmation in writing.
Section 3.5. PAYMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. In the
event of any request for drawing under any Letter of Credit by the beneficiary
thereof, the respective Issuing Lender shall notify the Administrative Agent,
which shall notify LTV Steel of such request, not later than 11:00 A.M. (New
York City time) on the Business Day immediately prior to the date on which such
Issuing Lender intends to honor such drawing. LTV Steel shall reimburse such
Issuing Lender not later than the close of business (New York City time) on the
day on which such drawing is honored in an amount in same day funds equal to the
amount of such drawing. If for any reason, reimbursement is not received by such
Issuing Lender on such date in an amount equal to the amount of such drawing,
LTV Steel shall be obligated to and shall reimburse such Issuing Lender, on the
Business Day immediately following the date of such drawing, in an amount in
same day funds equal to the amount of such drawing plus accrued interest on such
amount at the rate set forth in SECTION 4.1.
Section 3.6. PAYMENT BY LENDERS; DEFAULTING LENDERS. (a) In the event
that LTV Steel does not reimburse an Issuing Lender for the amount of any
drawing pursuant to SECTION 3.5, the Administrative Agent shall promptly notify
each Lender of the unreimbursed amount and of such Lender's participation
therein based on such Lender's Pro Rata Portion thereof. Each Lender shall make
available to such Issuing Lender an amount equal to its respective participation
in same day funds, at the office of such Issuing Lender specified in such
notice, not later than 1:00 P.M. (New York City time) on the Business Day after
the date notified by the Administrative Agent. In the event that any Lender
fails to make available to such Issuing Lender the amount of such Lender's
participation in such Letters of Credit as provided in this SECTION 3.6(a), such
Issuing Lender shall be entitled to recover such amount on demand from such
Lender, together with interest at the Federal Funds Rate.
(b) The Administrative Agent or the respective Issuing Lender,
as the case may be, shall distribute to each Lender which has paid all
amounts payable by it under SECTION 3.6(a) with respect to any Letter
of Credit such Lender's Pro Rata Portion of all payments subsequently
received by the Administrative Agent or the Issuing Lender, as the case
may
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<PAGE> 12
be, from LTV Steel or from the realization on the Class A-1 Notes
pledged to secure LTV Steel's reimbursement obligation in reimbursement
of drawings honored under such Letters of Credit or from the Guaranty
when such amounts are received.
(c) Notwithstanding anything contained in this Agreement to
the contrary, so long as any Lender shall be in default in its
obligation to fund its Pro Rata Portion of any unreimbursed drawing
under a Letter of Credit or shall have rejected or disavowed its
Commitment as a Financing Party (each such Lender, a "Defaulting
Lender"), then such Defaulting Lender shall not be entitled to receive
any Reimbursement Payments or any Unused Line Fee or any interest on
unreimbursed drawings or its participation in any drawing or its share
of any Fees payable hereunder, and shall not be entitled to share in
payments pursuant to SECTION 4.8, and for purpose of voting or
consenting to matters with respect to the Transaction Documents, such
Defaulting Lender shall be deemed not to be a "Lender" or "Financing
Party" hereunder and such Financing Party's Commitment shall be deemed
to be zero, unless and until (i) all Commitments have been terminated
and all Obligations payable to Financing Parties which are not
Defaulting Lenders have been fully paid, (ii) such failure to fulfill
its obligation to fund is cured and such Defaulting Lender shall have
paid, as and to the extent provided in this SECTION 3.6, to the
applicable party, if any, interest on the amount of funds that such
Defaulting Lender failed to timely fund and such Defaulting Lender
shall no longer reject or disavow its Commitment as a Financing Party
or (iii) the Obligations shall have been declared or shall have become
immediately due and payable. No Commitment of any Financing Party shall
be increased or otherwise affected by any such failure or rejection or
disavowment by any Defaulting Lender. Nothing herein shall be deemed to
relieve any Financing Party from its duty to fulfill its Commitment and
other obligations hereunder or to prejudice any rights which LTV Steel
or any of its Affiliates or any Issuing Lender may have against any
Financing Party as a result of any default by such Financing Party
hereunder. Any reimbursement payments or interest payments which would,
but for this paragraph, be paid to any Lender, shall be paid to the
Lenders who are not Defaulting Lenders, for application to the
unreimbursed drawings or to provide cash collateral in such manner and
order as shall be determined by the Administrative Agent. The
provisions of this clause (c) are intended merely to bind Lenders and,
except as provided in the second preceding sentence, are not intended
to benefit LTV Steel or any of its Affiliates, do not grant LTV Steel
or any of its Affiliates any rights and may be waived by the
Administrative Agent and the Required Financing Parties without the
consent of LTV Steel or any of its Affiliates.
Section 3.7. NATURE OF ISSUING LENDER'S DUTIES. In determining whether
to pay under any Letter of Credit, each Issuing Lender shall be responsible only
to determine that the documents and certificates required to be delivered under
such Letter of Credit have been delivered and that they comply on their face
with the requirements of such Letter of Credit. As between LTV Steel, any
Issuing Lender and each other Lender, LTV Steel assumes all risks of the acts
and omission of, or misuse of the Letter of Credit issued by each Issuing Lender
by, the beneficiaries of such Letter of Credit. In furtherance and not in
limitation of the foregoing, no Issuing Lender nor any
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<PAGE> 13
of the other Lenders shall be responsible (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effects of any document submitted by
any party in connection with the application for and issuance of or any drawing
honored under such Letter of Credit even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged, (ii)
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign such Letter of Credit, or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason, (iii) for failure of the beneficiary
of such Letter of Credit to comply fully with conditions required in order to
draw upon such Letter of Credit, (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex, telecopy or otherwise, whether or not they be in cipher, (v) for errors
in interpretation of technical terms, (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit, or of the proceeds thereof, (vii) for the
misapplication by the beneficiary of such Letter of Credit of the proceeds of
any drawing honored under such Letter of Credit and (viii) for any consequences
arising from actions or omissions taken or omitted in good faith or from causes
beyond the control of such Issuing Lender or the other Lenders; PROVIDED,
HOWEVER, that nothing in this sentence shall relieve any Issuing Lender of
liability for its own gross negligence or willful misconduct.
Section 3.8. OBLIGATIONS ABSOLUTE. The obligation of LTV Steel to
reimburse an Issuing Lender for drawings honored under a Letter of Credit issued
by it, and the obligations of the Lenders under SECTION 3.6, shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances including, without limitation,
the following circumstances:
(i) any lack of validity or enforceability of any
Letters of Credit;
(ii) the existence of any claim, set-off, defense or
other right which LTV Steel or any of its Affiliates may have
at any time against a beneficiary or any transferee of any
Letter of Credit (or any Persons or entities for whom any such
beneficiary or transferee may be acting), such Issuing Lender,
any Lender or any other Person, whether in connection with
this Agreement, the transactions contemplated herein or any
unrelated transaction; provided that nothing herein shall
prevent the assertion of any such claim, set-off, defense or
other right by separate suit or compulsory counterclaims;
(iii) any draft, demand, certificate or any other
documents presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for
the performance or observance of any of the terms of any of
the Transaction Documents;
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<PAGE> 14
(v) payment by such Issuing Lender under any Letters
of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the
terms of such Letters of Credit;
(vi) failure of any drawing under a Letter of Credit
or any non-application or misapplication by the beneficiary of
the proceeds of any drawing;
(vii) the fact that a Note Purchase Agreement Default
or Note Purchase Agreement Event of Default shall have
occurred and be continuing; or
(viii) any adverse change in the business,
operations, properties, assets, condition (financial or
otherwise) or prospects of LTV Steel or any of its Affiliates;
provided, however, that LTV Steel shall have no obligation to reimburse an
Issuing Lender and the Lenders shall have no obligation under SECTION 3.6, in
the event of such Issuing Lender's willful misconduct or gross negligence in
determining whether documents presented under the Letter of Credit comply with
the terms of such Letter of Credit or with respect to any other express
obligation such Issuing Lender may have under this Agreement in making any
payment pursuant to any Letter of Credit.
Section 3.9. COLLATERALIZATION. (a) To secure the obligations of LTV
Steel to the Issuing Lenders for reimbursement of drawings under the Letters of
Credit, interest due thereon and to the Issuing Lenders and the Lenders for the
payment of fees under SECTION 4.3 of this Agreement, LTV Steel grants to the
Collateral Agent on behalf of the Issuing Lenders and Lenders a first priority
security interest in a principal amount of Class A-1 Notes bearing interest at
the Pledge Rate equal to or in excess of the Stated Amount of such Letter of
Credit and shall cause the Collateral Agent to make appropriate notation in the
Note Register to reflect the interest of the Issuing Lenders and the Lenders
with respect to such Class A-1 Notes. At any time that any reimbursement
obligations of LTV Steel with respect to a Letter of Credit are due but unpaid,
all amounts payable on such pledged Class A-1 Notes shall be payable to the
Collateral Agent on behalf of the Issuing Lenders and Lenders as a Reimbursement
Payment. The Collateral Agent shall release from such lien Notes or Note
Portions as and to the extent the Stated Amount of any Letter of Credit is
reduced or any Letter of Credit is terminated. During the period that such Class
A-1 Notes are so pledged to Issuing Lenders, LTV Steel hereby grants to such
Issuing Lenders the right to vote such Class A-1 Notes for all purposes under
the Trust Agreement.
(b) LTV Steel shall take all actions necessary to obtain and
maintain, for the benefit of the Collateral Agent on behalf of the
Issuing Lenders and Lenders, a first lien on and a first priority,
perfected security interest in such pledged Class A-1 Notes. LTV Steel
will from time to time execute and deliver all such supplements and
amendments hereto and all such financing statements, continuation
statements, instruments of further assurance and other instruments, and
will take such other action necessary or advisable
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under Articles 8 and 9 of the Uniform Commercial Code as in effect in
all relevant jurisdictions to:
(i) grant more effectively the Lien contemplated
herein on all or any portion of the pledged Class A-1 Notes;
(ii) maintain or preserve the lien and security
interest (and the priority thereof) created by this Agreement
or carry out more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the
validity of any pledge made or to be made by this Agreement;
(iv) enforce any of the pledged Class A-1 Notes; and
(v) preserve and defend the rights of the Collateral
Agent and the Issuing Lenders or Lenders in such pledged Class
A-1 Notes against the claims of all persons and parties.
LTV Steel hereby designates the Collateral Agent its agent and attorney-in-fact
to execute all financing statements, continuation statements or other
instruments required to be executed pursuant to this Section.
(c) LTV Steel represents and warrants to the Collateral Agent,
the Issuing Lenders and the Lenders that (i) all action necessary to
create, protect and perfect the Collateral Agent's security interest in
such pledged Class A-1 Notes, as contemplated by this Agreement, has
been duly and effectively taken (or will be taken within ten days of
the Effective Date), and (ii) all action necessary or desirable
(including, without limitation, the filing of appropriately completed
UCC financing statements in each appropriate office in each applicable
jurisdiction) has been duly taken (or will be taken within ten days of
the Effective Date) to perfect the liens created by this Agreement to
the effect that a valid and continuing perfected security interest has
been created in such pledged Class A-1 Notes, in favor of the
Collateral Agent for the benefit of the Issuing Lenders and Lenders,
prior to all other liens, claims and rights of others.
Section 3.10. AMENDMENTS TO LETTER OF CREDIT. LTV Steel may request
that the Issuing Lender that issued a Letter of Credit enter into one or more
amendments of such Letter of Credit by delivering to the Administrative Agent
and such Issuing Lender a written notice specifying (i) the Issuing Lender, (ii)
the proposed date of the amendment and (iii) the requested amendment. Any
Issuing Lender shall be entitled to enter into amendments with respect to
Letters of Credit; PROVIDED, HOWEVER, that unless otherwise agreed by the
relevant Financing Party in its capacity as Issuing Lender, no such amendment
may extend the stated expiration date of any Letter of
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Credit issued by such Issuing Lender beyond the date which is five Business Days
prior to the Expiration Date applicable to the Commitment of such Financing
Party.
Section 3.11. THE REGISTER. (a) The Administrative Agent shall
maintain, at its Notice Address, a register for the recordation of the names and
addresses of Financing Parties and the Commitments and Letters of Credit (and
participations therein) of each Financing Party from time to time (the "Lender
Register"). LTV Steel, the Administrative Agent, the Collateral Agent and the
Lenders may treat each Person whose name is recorded in the Lender Register as a
Lender hereunder for all purposes of this Agreement and the other Transaction
Documents. The Lender Register shall be available for inspection by LTV Steel,
the Agent, or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(b) The Administrative Agent shall record in the Lender
Register the Commitment and the participations in Letters of Credit
from time to time of each Financing Party and reimbursement payment in
respect of a Letter of Credit. Any such recordation shall be conclusive
and binding on LTV Steel and each Lender, absent manifest error;
provided that failure to make any such recordation, or any error in
such recordation, shall not affect the Obligations of LTV Steel.
Section 3.12. COMMITMENT REDUCTIONS. (a) On the Expiration Date
applicable to the Commitment of any Financing Party, the Commitment of such
Financing Party shall automatically reduce to zero.
(b) On any Business Day, upon two days prior written notice to
the Administrative Agent and the Financing Parties, LTV Steel may
reduce the Aggregate Commitment Amount hereunder to zero or such other
amount as LTV Steel shall specify in such notice, provided that if the
Aggregate Commitment Amount is reduced to an amount that is less than
the total of the aggregate Letter of Credit Usage at such time together
with the principal amount of Class A-1 Notes as to which the Note
Purchasers are the Holders, LTV Steel shall deliver such notice at
least three Business Days before the proposed effective date of such
reduction and shall, first, repurchase such principal amount of Class
A-1 Notes as to which the Note Purchasers are the Holders and second,
reduce the aggregate Letter of Credit Usage (in which event LTV Steel
shall specify in such notice the Letters of Credit whose face amount is
to be reduced or are to be terminated in connection therewith; provided
that such reduction or termination may be made in accordance with the
terms of the applicable Letter of Credit) to the extent necessary such
that the Aggregate Commitment Amount, as reduced, shall not be less
than the total of the aggregate Letter of Credit Usage plus the
principal amount of Class A-1 Notes as to which the Note Purchasers are
the Holders, in each case after giving effect to all repurchases of
Class A-1 Notes and reductions of the aggregate Letter of Credit Usage
to be made in connection with such reduction of the Aggregate
Commitment Amount.
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(c) All reductions to the Aggregate Commitment Amount under
this SECTION 3.12 shall reduce the Commitments of the Financing Parties
on a PRO RATA basis.
Section 3.13. INDEMNIFICATION OF ISSUING LENDERS. To the extent any
Issuing Lender is not reimbursed and indemnified by LTV Steel, each Lender will
reimburse and indemnify such Issuing Lender, with respect to each Letter of
Credit issued by it, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever (including all Expenses) which may be imposed on, incurred by
or asserted against such Issuing Lender in performing its duties hereunder, in
any way relating to or arising out of this Agreement; provided, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
in excess of such Lender's Pro Rata Portion or resulting from such Issuing
Lender's gross negligence or willful misconduct.
ARTICLE IV
INTEREST, FEES, EXPENSES AND PAYMENTS
Section 4.1. PAYMENT OF INTEREST. LTV Steel agrees to pay to each
Issuing Lender, with respect to drawings made under any Letters of Credit issued
by it, interest on the amount paid by such Issuing Lender in respect of each
such drawing from the date of such drawing through the date such amount is
reimbursed at a rate per annum equal to the ABR (plus 2% from and after the
second Business Day following such drawing), as in effect from time to time.
Each determination by the Administrative Agent of an interest rate hereunder
shall be conclusive and binding for all purposes, absent manifest error.
Section 4.2. REIMBURSEMENT OF EXPENSES; OTHER FEES. (a) From and after
the Effective Date, LTV Steel shall promptly reimburse the Placement Agent and
the Administrative Agent for all Expenses of such Agents as the same are
incurred and upon receipt of invoices therefor.
(b) LTV Steel shall pay to the Placement Agent and the
Administrative Agent such fees and other amounts as may be agreed among
LTV Steel and such Agents from time to time.
Section 4.3. FEES IN RESPECT OF LETTERS OF CREDIT. (a) Subject to the
provisions of SECTION 4.3(b), LTV Steel agrees to pay to the Administrative
Agent for distribution to each of the Lenders (other than a Defaulting Lender
for so long as such Lender is a Defaulting Lender) a fee in respect of each
Letter of Credit issued hereunder (the "Letter of Credit Fee"), for the period
from and including the date of issuance of such Letter of Credit to and
including the termination of such Letter of Credit, computed at a rate per annum
equal to the Utilized Portion Rate on such Lender's Pro Rata Portion of the
daily average Stated Amount of such Letter of Credit. Accrued Letter of Credit
Fees in respect of Letters of Credit shall be due and payable quarterly in
arrears on the second Business Day following the last Business Day of each
March, June, September and
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December, and upon the Expiration Date applicable to the Commitment of the
relevant Financing Party, or if earlier, the first day on or after the
termination of the Aggregate Commitment Amount upon which no Letters of Credit
remain outstanding.
(b) Letter of Credit Fees shall be, as of the date a Note
Purchase Agreement Event of Default occurs and at all times thereafter
until the earlier of the date upon which (x) all Obligations have been
paid and satisfied in full and all Letters of Credit have been
terminated and (y) such Note Purchase Agreement Event of Default shall
have been cured or waived in accordance with this Agreement, payable at
a rate per annum equal to the rate at which the Letter of Credit Fees
are charged pursuant to clause (a) above plus 2%.
(c) LTV Steel agrees to pay to each Issuing Lender, for its
own account, a fronting fee in respect of each Letter of Credit issued
by it hereunder (the "Fronting Fee") for the period from and including
the date of issuance of such Letter of Credit to and including the
termination of such Letter of Credit, computed at a rate equal to
0.125% per annum on the daily average Stated Amount of such Letter of
Credit. Accrued Fronting Fees shall be due and payable quarterly in
arrears on the date which is the second Business Day following the last
Business Day of each March, June, September and December, and upon the
Expiration Date applicable to the Commitment of the relevant Financing
Party, or if earlier, the first day on or after the termination of the
Aggregate Commitment Amount upon which no Letter of Credit remains
outstanding.
(d) LTV Steel shall pay, upon each drawing under, issuance of,
or amendment to, any Letter of Credit, such amount as shall at the time
of such event be identified to LTV Steel as the administrative charge
which the respective Issuing Lender is generally imposing in connection
with such occurrence with respect to letters of credit (the "LC
Administration Fees").
Section 4.4. UNUSED LINE FEE. LTV Steel shall pay to the Administrative
Agent for the benefit of each of the Financing Parties (other than a Defaulting
Lender for so long as such Financing Party is a Defaulting Lender) a
non-refundable fee (the "Unused Line Fee") equal to the Unused Line Fee Rate on
the Unused Portion of such Financing Party's Commitment (such "Unused Portion"
to refer to the excess, if any, of such Financing Party's Commitment over the
sum of the Pro Rata Portion of such Financing Party of (i) the aggregate Letter
of Credit Usage plus (ii) the aggregate principal amount of Notes as to which
the Note Purchasers are Holders at such time), which fee shall (i) accrue from
the Effective Date until the Expiration Date applicable to the Commitment of
such Financing Party (or such earlier date as the Aggregate Commitment Amount is
terminated) and (ii) be due and payable quarterly in arrears on the second
Business Day following the last Business Day of March, June, September and
December, and on the Expiration Date applicable to such Financing Party's
Commitment (or such earlier date as the Aggregate Commitment Amount is
terminated).
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Section 4.5. INDEMNIFICATION IN CERTAIN EVENTS. (a) If after the
Effective Date, either (i) any change in or in the interpretation of any law or
regulation is introduced, including, without limitation, with respect to reserve
requirements, applicable to the Placement Agent, the Administrative Agent, any
Financing Party (whether in its capacity as Note Purchaser, Issuing Lender or
Lender) (or, in the case of a Financing Party which is not a banking
institution, any affiliate of such Financing Party funding such Financing Party
(a "Funding Affiliate") (each an "Article IV Party")), (ii) any Article IV Party
complies with any future guideline or request from any central bank or other
Governmental Authority or (iii) any Article IV Party reasonably determines that
the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof after the
Effective Date has or would have the effect described below, or an Article IV
Party complies with any future request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, and in the case of any event set forth in this clause (iii),
such adoption, change or compliance has or would have the direct or indirect
effect of reducing the rate of return on such Article IV Party's capital as a
consequence of its obligations hereunder to a level below that which such
Article IV Party could have achieved but for such adoption, change or compliance
(taking into consideration such Article IV Party's policies with respect to
capital adequacy) by an amount deemed by such Article IV Party to be material,
and any of the foregoing events described in clauses (i), (ii) or (iii)
increases the cost to an Article IV Party for (a) funding or maintaining its
Commitment or (b) purchasing or maintaining any participation therein, or
reduces the amount receivable in respect thereof by such Article IV Party, then
LTV Steel shall within 10 days after demand by the respective Agent pay such
Article IV Party additional amounts sufficient to indemnify such Article IV
Party on an after-tax basis against such increase in cost or reduction in
amounts receivable allocable to such Article IV Party's funding or maintaining
its Commitment or issuing, making or maintaining any Letter of Credit or
purchasing or maintaining any participation therein. A certificate as to the
amount of such increased cost and setting forth in reasonable detail the
calculation thereof shall be submitted to LTV Steel by an Article IV Party and
shall be conclusive absent manifest error.
(b) Each Article IV Party will notify LTV Steel and the
Placement Agent or the Agent (or the Placement Agent or the
Administrative Agent shall notify LTV Steel) of any event occurring
after the Effective Date which will entitle such party to payment
pursuant to SECTION 4.5(a) as promptly as practicable after it obtains
knowledge thereof, specifying the event giving rise to such claim and
setting out in reasonable detail an estimate of the basis and
computation of such claim. Upon receipt of such notice, LTV Steel shall
compensate such Article IV Party in accordance with SECTION 4.5(a) from
the date such costs are incurred (including, without limitation, where
such costs are retroactively applied).
(c) Each Article IV Party agrees that upon the occurrence of
any event giving rise to the operation of this SECTION 4.5 with respect
to such party, it will, if requested by
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LTV Steel, use reasonable efforts (subject to overall policy
considerations of such party) to designate another lending office of
such Article IV Party, PROVIDED that such designation is made on such
terms that such party and its lending office suffer no economic, legal
or regulatory disadvantage, with the object of avoiding the consequence
of the event giving rise to the operation of this Section. Nothing in
this clause (c) shall affect or postpone any of the obligations of LTV
Steel or the rights of any Article IV Party provided in this SECTION
4.5.
(d) Notwithstanding the above or SECTION 11.8, SECTION 4.7
hereof shall govern all indemnifications with respect to events
affecting taxes and interest and penalties related thereto.
Section 4.6. CALCULATIONS. All calculations of (i) interest hereunder
and (ii) Fees, including, without limitation, Unused Line Fees, Letter of Credit
Fees and Fronting Fees, shall be made by the Administrative Agent on the basis
of a year of 360 days, or, if such computation would cause the interest and fees
chargeable hereunder to exceed the Highest Lawful Rate, 365/366 days, in each
case for the actual number of days elapsed (including the first day but
excluding the last day) occurring in the period for which such interest or fees
are payable. Each determination by the Administrative Agent of an interest rate
or payment hereunder shall be conclusive and binding for all purposes, absent
manifest error.
Section 4.7. TAXES. (i) Any and all payments by LTV Steel hereunder and
under the other Transaction Documents which are made to or for the benefit of
any Financing Party (whether in its capacity as Note Purchaser, Lender or
Issuing Lender), the Placement Agent or the Administrative Agent (each a
"SECTION 4.7 Party") shall be made, free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions, charges or
withholdings and penalties, interests and all other liabilities with respect
thereto imposed by any jurisdiction from or through which payments originate or
are made ("Taxes"), excluding, (a) in the case of each such party, taxes imposed
on its net income or net profits (including, without limitation, any taxes
imposed on branch profits) and franchise or similar taxes imposed on it by the
jurisdiction under the laws of which it is organized or in which its principal
executive office is located or, in each case, any political subdivision thereof,
(b) in the case of each SECTION 4.7 Party, taxes imposed on its net income or
net profits (including, without limitation, any taxes imposed on branch
profits), and franchise or similar taxes imposed on it, by the jurisdiction of
such Person's applicable lending office or any political subdivision thereof,
(c) in the case of each SECTION 4.7 Party any Taxes that are in effect and that
would apply to a payment to such party, as of the Effective Date, (d) in the
case of each Section 4.7 Party, taxes imposed by reason of doing business in the
jurisdiction imposing such tax, other than as a result of this Agreement or any
Note or any transaction contemplated hereby, and (e) if any Person acquires any
interest in this Agreement or any Obligations pursuant to the provisions hereof,
or any Financing Party organized in a jurisdiction outside the United States of
America (each a "Foreign Financing Party") changes the office in which any
purchase of a Note or Letter of Credit is issued, accounted for or booked (any
such Person or such Foreign Financing Party in that event being referred to as a
"Tax
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Transferee"), any Taxes to the extent that they are in effect and would apply to
a payment to such Tax Transferee as of the date of the acquisition of such
interest or change in office, as the case may be (all such nonexcluded Taxes
being hereinafter referred to as "Covered Taxes"). If LTV Steel shall be
required by law to deduct any Covered Taxes from or in respect of any sum
payable hereunder to or for the benefit of any SECTION 4.7 Party or Tax
Transferee (A) the sum payable shall be increased as may be necessary so that
after making all required deductions of Covered Taxes (including deductions of
Covered Taxes applicable to additional sums payable under this SECTION 4.7) such
Financing Party, Tax Transferee, the Placement Agent or the Administrative
Agent, as the case may be, receives an amount equal to the sum it would have
received had no such deductions been made, (b) LTV Steel shall make such
deductions and (C) LTV Steel shall pay the full amount so deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(ii) In addition, LTV Steel agrees to pay any present
or future stamp, documentary, excise, privilege, or similar
levies that arise at any time or from time to time from any
payment made under any and all Transaction Documents, or from
the execution or delivery by LTV Steel of, or from the filing
or recording or maintenance of, or otherwise with respect to
the exercise by the SECTION 4.7 Parties of their rights under,
any and all Transaction Documents (hereinafter referred to as
"Other Taxes").
(iii) LTV Steel will indemnify each SECTION 4.7 Party
and Tax Transferee for the full amount of Covered Taxes
imposed on or with respect to amounts payable hereunder and
Other Taxes. Payment of this indemnification shall be made
within 30 days from the date such SECTION 4.7 Party or Tax
Transferee delivers a certificate to LTV Steel certifying and
setting forth in reasonable detail the calculation thereof as
to the amount and type of such Taxes provided, however, that
the LTV Steel shall not be obligated to make payment to such
Section 4.7 Party or Tax Transferee (as the case may be)
pursuant to this Section in respect of penalties, interest and
other liabilities attributable to any Covered Taxes or Other
Taxes, if (i) written demand therefor has not been made by
such Section 4.7 Party or Tax Transferee within 60 days from
the date on which such Section 4.7 Party or Tax Transferee
knew or should have known of the imposition of Covered Taxes
or Other Taxes by the relevant taxing or governmental
authority, (ii) such penalties, interest and other liabilities
have accrued after LTV Steel has indemnified or paid any
additional amount pursuant to this Section or (iii) such
penalties, interest and other liabilities are attributable to
the gross negligence or wilful misconduct of the Section 4.7
Party or Tax Transferee. After the Section 4.7 Party or Tax
Transferee (as the case may be) learns of the imposition of
Tax or Other Taxes, such Section 4.7 Party or Tax Transferee
will act in good faith to promptly notify LTV Steel of its
obligations hereunder. Any such certificate submitted by such
SECTION 4.7 Party or Tax Transferee in good faith to LTV Steel
shall, absent manifest error, be final, conclusive and binding
on all parties.
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(iv) If a Section 4.7 Party or Tax Transferee shall
become aware that it is entitled to receive a refund or credit
from a relevant taxing or governmental authority in respect of
Covered Taxes or Other Taxes as to which it has been
indemnified by LTV Steel pursuant to this Section, it shall
promptly notify LTV Steel of the availability of such refund
or credit and shall, within 30 days after receipt of a request
by LTV Steel (whether as a result of notification that it has
made to LTV Steel or otherwise), make a claim to such taxing
or governmental authority for such refund or credit at LTV
Steel's expense. If such Section 4.7 Party or Tax Transferee
receives a refund or credit in respect of any Covered Taxes or
Other Taxes as to which it has been indemnified by LTV Steel
pursuant to this Section, or with respect to which LTV Steel
has paid additional amounts pursuant to this Section, it shall
promptly notify LTV Steel of such refund or credit and shall
within 30 days from the date of receipt of such refund or
benefit of such credit pay over the amount of such refund or
benefit of such credit (including any interest paid or
credited by the relevant taxing or governmental authority with
respect to such refund or credit) to LTV Steel (but only to
the extent of indemnification payments made, or additional
amounts paid, by LTV Steel under this Section with respect to
the Covered Taxes or Other Taxes giving rise to such refund or
credit), net of all out-of-pocket expenses of such Section 4.7
Party or Tax Transferee and without interest; PROVIDED,
HOWEVER, that LTV Steel, upon the request of such Section 4.7
Party or Tax Transferee, agrees to repay the amount paid over
to LTV Steel (plus penalties, interest or other charges due to
the appropriate authorities in connection therewith) to such
Section 4.7 Party or Tax Transferee in the event such Section
4.7 Party or Tax Transferee is required to repay such refund
or credit to such relevant authority.
(v) Within 30 days after having received a receipt
for Covered Taxes or Other Taxes, LTV Steel will furnish to
the Placement Agent or the Administrative Agent, at its Notice
Address, the original or a certified copy of such receipt or
any other document evidencing payment thereof to the extent
such receipt is legally available.
(vi) On or before the Effective Date, each Foreign
Financing Party shall deliver to the Agents and LTV Steel (i)
two valid, duly completed copies of IRS Form 1001 or 4224 or
successor applicable form, as the case may be, and any other
required form, certifying in each case that such Foreign
Financing Party is entitled to receive payments under this
Agreement payable to it without deduction or withholding of
any United States federal income taxes or with such
withholding imposed at a reduced rate (the "Reduced Rate"),
and (ii) to the extent required in order to establish an
exemption from United States backup withholding tax, a valid,
duly completed IRS Form W-8 or W-9 or successor applicable
form, as the case may be. Each such Foreign Financing Party
shall also deliver to the Agents and LTV Steel two further
copies of said Form 1001 or 4224 and W-8 or W-9, or
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successor applicable forms, or other manner of required
certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or otherwise is
required to be resubmitted as a condition to obtaining an
exemption from a required withholding of United States federal
income tax or entitlement to having such withholding imposed
at the Reduced Rate or after the occurrence of any event
requiring a change in the most recent form previously
delivered by it to LTV Steel and the Agents, and such
extensions or renewals thereof as may reasonably be requested
by LTV Steel or any Agent, (a) certifying in the case of a
Form 1001 or 4224 that such Foreign Financing Party is
entitled to receive payments under this Agreement payable to
it without deduction or withholding of any United States
federal income taxes, unless in any such case any change in a
tax treaty to which the United States is a party, or any
change in law or regulation of the United States or official
interpretation thereof has occurred after the Effective Date
and prior to the date on which any such delivery would
otherwise be required that renders all such forms inapplicable
or that would prevent such Foreign Financing Party from duly
completing and delivering any such form with respect to it,
and such Foreign Financing Party advises LTV Steel and the
Agents that it is not capable of receiving payments without
any deduction or withholding at the Reduced Rate and (b) in
the case of a Form W-8 or W-9, establishing an exemption from
United States backup withholding tax.
(vii) If a Tax Transferee that is organized under the
laws of a jurisdiction outside of the United States acquires
an interest in this Agreement or any Obligation or a Foreign
Financing Party changes the office through which any purchase
of a Note or Letters of Credit are made, accounted for or
booked, the transferor, or the applicable Foreign Financing
Party in the case of a change of office, shall cause such Tax
Transferee to agree that, on or prior to the effective date of
such acquisition or change, as the case may be, it will
deliver to LTV Steel and the Agents (i) two valid, duly
completed copies of IRS Form 1001 or 4224 or successor
applicable form, as the case may be, and any other required
form, certifying in each case that such Tax Transferee is
entitled to receive payments under this Agreement payable to
it without deduction or withholding of United States federal
income tax or with such withholding imposed at a reduced rate;
and (ii) a valid, duly completed IRS Form W- 8 or W-9 or
successor applicable form, as the case may be, to establish an
exemption from United States backup withholding tax. Each Tax
Transferee that delivers to LTV Steel and the Agents a Form
1001 or 4224, and form W-8 or W-9 and any other required form,
pursuant to the next preceding sentence, further undertakes to
deliver two further copies of the said Form 1001 or 4224 and
Form W-8 or W-9, or successor applicable forms, or other
manner of required certification, as the case may be, on or
before the date that any such form expires or becomes obsolete
or otherwise is required to be resubmitted as a condition to
obtaining an exemption from a required withholding of United
States federal income tax or entitlement to having such
withholding
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imposed at the Reduced Rate or after the occurrence of any
event requiring a change in the most recent form previously
delivered by it to LTV Steel and the Agents, and such
extensions or renewals thereof as may reasonably be requested
by LTV Steel or any Agent, (a) certifying in the case of a
Form 1001 or 4224 that such Tax Transferee is entitled to
receive payments under this Agreement without deduction or
withholding of any United States federal income taxes or with
such withholding imposed at the Reduced Rate, unless any
change in treaty, law or regulation or official interpretation
thereof has occurred after the effective date of such
acquisition or change and prior to the date on which any such
delivery would otherwise be required that renders all such
forms inapplicable or that would prevent such Tax Transferee
from duly completing and delivering any such form with respect
to it, and such Tax Transferee advises LTV Steel and the
Agents that it is not capable of receiving payment (1) without
any deduction or withholding of United States federal income
tax or (2) with such withholding at the Reduced Rate, as the
case may be, and (b) in the case of a Form W-8 or W-9,
establishing an exemption from United States backup
withholding tax.
(viii) If a Foreign Financing Party or Tax Transferee
is entitled to an exemption from withholding with respect to
payments to be made to such Foreign Financing Party or Tax
Transferee under this Agreement and does not provide the
applicable certificate demonstrating its right to such
exemption to LTV Steel and the Agents within the time periods
set forth in the two preceding paragraphs, LTV Steel shall
withhold taxes from payments to such Foreign Financing Party
or Tax Transferee at the applicable statutory rates and LTV
Steel shall not be required to pay any additional amounts as a
result of such withholding as provided in this SECTION 4.7;
provided, however, that all such withholding and associated
limitations in payment shall cease upon delivery by such
Foreign Financing Party of such certificate to LTV Steel and
the Agents.
(ix) If any taxes for which LTV Steel would be
required to make payment under this SECTION 4.7 are imposed,
the applicable Financing Party, Placement Agent or
Administrative Agent, as the case may be, at LTV Steel's
request, shall use its reasonable efforts (at LTV Steel's
expense) to avoid or reduce such taxes by taking any
appropriate action, including changing the location of its
applicable lending office to another existing office of such
entity, consistent with its internal policies (including,
without limitation, assigning its rights hereunder to a
related entity or a different office) which would not in the
sole opinion of such Financing Party, Placement Agent or
Administrative Agent be unreasonable or otherwise
disadvantageous to such Financing Party, Placement Agent or
Administrative Agent, as the case may be; provided that the
mere existence of fees, charges, costs or expenses that LTV
Steel has offered and agreed to pay on behalf of such
Financing Party, Placement Agent or Administrative Agent shall
not be deemed to be disadvantageous to such party.
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(x) Each of the Financing Parties, the Placement
Agent, the Administrative Agent and Tax Transferee agrees that
it will (i) take all reasonable actions reasonably requested
by LTV Steel that are without risk or material cost to such
Financing Party, Placement Agent, the Administrative Agent or
Tax Transferee (as the case may be) to maintain all
exemptions, if any, available to it from withholding taxes
(whether available by treaty or existing administrative
waiver), and (ii) to the extent reasonable and without
material cost to it, otherwise cooperate with LTV Steel to
minimize any amounts payable by LTV Steel under this Section.
(xi) Without prejudice to the survival of any other
agreement of LTV Steel hereunder, the agreements and
obligations of LTV Steel contained in this SECTION 4.7 shall
survive the payment in full of the Obligations.
Section 4.8 SHARING OF PAYMENTS. If any Financing Party shall obtain
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off or otherwise) on account of its Notes or its participation in Letters
of Credit in excess of its Pro Rata Portion of payments on account of the Notes
or Letters of Credit obtained by all the Financing Parties (other than any
Financing Party that has waived its Pro Rata Portion thereof in writing), such
Financing Party shall forthwith purchase from the other Financing Parties (other
than any Defaulting Lender) such Notes or participations in Letters of Credit as
shall be necessary to cause such purchasing Financing Party to share the excess
payment ratably with each of them; PROVIDED, HOWEVER, that if all or any portion
of such excess payment is thereafter recovered from such purchasing Financing
Party, such purchase from each other Financing Party shall be rescinded and each
such other Financing Party shall repay to the purchasing Financing Party the
purchase price to the extent of such recovery together with an amount equal to
such other Financing Party's ratable share (according to the proportion of (i)
the amount of such other Financing Party's required repayment to (ii) the total
amount so recovered from the purchasing Financing Party) of any interest or
other amount paid or payable by the purchasing Financing Party in respect to the
total amount so recovered. LTV Steel agrees that any Financing Party so
purchasing a participation from another Financing Party pursuant to this SECTION
4.8 may, to the fullest extent permitted by law, exercise all of its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Financing Party were the direct creditor of LTV Steel in the
amount of such participation.
ARTICLE V.
CONDITIONS PRECEDENT
Section 5.1. CONDITIONS TO EFFECTIVE DATE, INITIAL ISSUANCE OF LETTERS
OF CREDIT AND OBLIGATION TO PURCHASE CLASS A-1 NOTES. The obligation of the Note
Purchasers to purchase Class A-1 Notes and each Issuing Lender to issue Letters
of Credit hereunder on the Effective Date are, in addition to the conditions
precedent specified in SECTION 2.1(a) with respect to the purchase of
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Class A-1 Notes and SECTION 5.2 with respect to the issuance of Letters of
Credit, subject to the satisfaction of the following conditions precedent:
(a) EXECUTION OF AGREEMENT. On or prior to the Effective Date,
this Agreement shall have become effective as provided in SECTION
11.13.
(b) OFFICER'S CERTIFICATE. On the Effective Date, the Agents
shall have received an Officer's Certificate dated such date of LTV
Steel stating (except to the extent satisfaction of such conditions is
subject to the approval of any Agent or the Collateral Agent) that all
of the applicable conditions set forth in SECTIONS 5.1(f) and (g) and
5.2 exist as of such date.
(c) OPINIONS OF COUNSEL. On the Effective Date, the Agents
shall have received opinions, addressed to the Placement Agent and the
Agent and each of the Financing Parties and dated the Effective Date,
(i) from Davis Polk & Wardwell, special counsel to LTV Steel (or in the
case of matters of local law, applicable local counsel), and as to
certain matters, from the general counsel of LTV Steel, which opinion
or opinions shall cover the matters contained in Exhibit B and (ii)
from Winston & Strawn, special counsel to the Financing Parties, which
opinion shall cover the matters contained in Exhibit C.
(d) CORPORATE PROCEEDINGS. (i) On the Effective Date, the
Agents shall have received from LTV Steel a certificate, dated the
Effective Date, signed by the secretary or any assistant secretary of
LTV Steel, in the form of Exhibit D, with appropriate insertions,
together with copies of the Organizational Documents of LTV Steel and
the resolutions of LTV Steel referred to in such certificate and all of
the foregoing shall be satisfactory to the Placement Agent and the
Administrative Agent.
(ii) On the Effective Date, all corporate
and legal proceedings and all instruments and
agreements in connection with the transactions
contemplated by this Agreement and the other
Transaction Documents shall be reasonably
satisfactory in form and substance to the Placement
Agent and the Administrative Agent, and the Agents
shall have received all information and copies of all
certificates and any other records of corporate
proceedings and governmental approvals, if any, which
the Placement Agent and the Administrative Agent
reasonably may have requested in connection
therewith, such documents and papers, where
appropriate, to be certified by proper corporate or
governmental authorities.
(e) TRANSACTION DOCUMENTS. On the Effective Date, the Agents
shall have received true, correct and complete copies of each of the
Transaction Documents, including all exhibits and schedules thereto,
and the Transaction Documents shall be in the form previously approved
by the Agents and distributed to the Financing Parties prior to the
date hereof. Each of the Transaction Documents shall be in full force
and effect, and
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all conditions precedent shall have been satisfied and not waived
(unless waived by the Placement Agent and the Administrative Agent).
The Agents shall have received copies of all certificates and opinions
delivered in connection with the Transaction Documents.
(f) EXISTING TBT LETTER OF CREDIT AGREEMENT.
(i) On the Effective Date and concurrently
with the issuance of any Letters of Credit, the
commitments under the Existing TBT Letter of Credit
Agreement shall have been terminated, all letters of
credit issued thereunder shall have been terminated,
assumed or replaced, or LTV Steel and its Affiliates
shall be otherwise released from all obligations
thereunder, and all other amounts owing pursuant to
the Existing TBT Letter of Credit Agreement shall
have been repaid in full, and the Agents shall have
received evidence in form, scope and substance
satisfactory to them that the matters set forth in
this SECTION 5.1(f)(i) have been satisfied at such
time.
(ii) On the Effective Date and concurrently
with the issuance of any Letters of Credit, the
creditors under the Existing TBT Letter of Credit
Agreement shall have released or assigned to LTV
Steel Products and the Collateral Agent all security
interests in and Liens on the Inventory of LTV Steel
and Georgia Tubing, and shall have released all
security interests in and Liens on all other assets
of LTV Steel, its Affiliates and their Subsidiaries,
which releases or assignments shall be in form and
substance satisfactory to the Collateral Agent.
(g) APPROVALS. On the Effective Date, all necessary
governmental and third party approvals in connection with the
transactions contemplated by the Transaction Documents shall have been
obtained and remain in effect and evidence thereof shall have been
provided to the Agents, and all applicable waiting periods shall have
expired without any action being taken by any competent authority which
restrains, prevents or imposes, in the judgment of the Required Lenders
or the Agents, materially adverse conditions upon the consummation of
such transactions.
(h) PAYMENT OF FEES. On the Effective Date, all costs, fees
and Expenses, and all other compensation contemplated by this
Agreement, due to the Placement Agent, the Administrative Agent and the
Financing Parties (including, without limitation, legal fees and
expenses) shall have been paid to the extent due.
(i) SECURITY INTERESTS. On the Effective Date, the Placement
Agent and the Administrative Agent shall have received from the
Servicer (i) UCC-11 reports and other lien searches with respect to the
Collateral and the pledged Class A-1 Notes reflecting the absence of
Liens thereon, except, with respect to the Collateral, Liens in favor
of the
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Purchaser or the Collateral Agent created in connection with the sale
by the Sellers of an interest in the Purchased Inventory, Liens on
Ineligible Inventory that would be reasonably expected not to have a
Material Adverse Collateral Effect, Permitted Liens, Receivables
Facility Liens and Liens as to which the Servicer has received UCC
termination or assignment statements to be filed on or prior to the
Effective Date, and (ii) evidence reasonably acceptable to the Agents
that UCC-1 financing statements have been or will be filed in each
jurisdiction reasonably requested by the Agents to perfect the security
interest granted to the Collateral Agent in the Collateral and with
respect to the pledged Class A-1 Notes.
(j) On the Effective Date, the Placement Agent and the
Administrative Agent shall have received a copy of a rating letter from
Fitch indicating that the Class A-1 Notes are rated by Fitch at a
rating not lower than "BBB".
Section 5.2. CONDITIONS TO EACH LETTER OF CREDIT. On each Letter of
Credit Issuance Date, both immediately before and after giving effect thereto
and to the application of the proceeds therefrom and from any concurrent sale of
Class A-1 Notes, the following statements shall be true to the satisfaction of
the Agent (and each delivery of a Letter of Credit Request, and the acceptance
by LTV Steel of the benefits of the requested Letter of Credit, shall constitute
a representation and warranty by LTV Steel that on such date immediately before
and after giving effect thereto and to the application of the proceeds therefrom
and from any concurrent sale of Class A-1 Notes, such statements are true):
(a) The representations and warranties of LTV Steel and its
Affiliates contained in this Agreement and in each other Transaction
Document are true and correct in all material respects on and as of
such date as though made on and as of such date, except to the extent
that such representations and warranties expressly relate solely to an
earlier date (in which case such representations and warranties shall
have been true and correct on and as of such earlier date);
(b) No event has occurred and is continuing, or would result
from the proposed use of these facilities or the application of the
proceeds thereof, which would constitute a Note Purchase Agreement
Default or a Note Purchase Agreement Event of Default;
(c) No change or development shall have occurred since the
Effective Date which in any such case, has had or is reasonably
expected to have a Material Adverse Collateral Effect, and shall be
continuing;
(d) As indicated on the most recent Sales and Valuation
Report, the Company shall be in compliance with the Note Collateral
Value Requirement;
(e) The issuance of such Letter of Credit would not violate
SECTION 3.1; and
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(f) The Administrative Agent and the respective Issuing Lender
shall have received a Letter of Credit Request meeting the requirements
of SECTION 3.4.
The acceptance of the benefits of the issuance of each Letter
of Credit shall constitute a representation and warranty by LTV Steel to each of
the Lenders that all of the applicable conditions specified above exist as of
the date of such issuance. All of the certificates, legal opinions and other
documents and papers referred to in this SECTION 5, unless otherwise specified
shall be delivered to the Administrative Agent at its Notice Address and in
sufficient counterparts or copies for each of the Lenders and shall be in form
and substance as specified herein or otherwise satisfactory to the
Administrative Agent.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
To induce the Financing Parties to enter into this Agreement and to
provide the facilities provided for herein, LTV Steel makes the following
representations and warranties to the Financing Parties, all of which shall
survive the execution and delivery of this Agreement and the purchase of Class
A-1 Notes and the issuance of the Letters of Credit (with the acceptance of the
benefits of such facilities being deemed to constitute a representation and
warranty that the matters specified in this Article VI are true and correct in
all material respects on and as of each Note Purchase Date or Letter of Credit
Issuance Date, unless stated to relate to a specific earlier date (in which case
such representations and warranties shall have been true and correct on and as
of such earlier date)):
Section 6.1. CORPORATE STATUS. LTV Steel (i) is a duly organized and
validly existing corporation in good standing under the laws of the jurisdiction
of its organization and has the corporate power and authority to own its
property and assets and to transact the business in which its is engaged and
(ii) has duly qualified and is authorized to do business and is in good standing
in all jurisdictions where it is required to be so qualified and where the
failure to be so qualified would be reasonably likely to have a Material Adverse
Collateral Effect.
Section 6.2. CORPORATE POWER AND AUTHORITY. LTV Steel has the corporate
power and authority to execute, deliver and carry out the terms and provisions
of the Transaction Documents and has taken all necessary corporate action to
authorize the execution, delivery and performance of the Transaction Documents
to which it is a party. LTV Steel has duly executed and delivered each
Transaction Document to which it is a party and each such Transaction Document
constitutes the legal, valid and binding obligation of LTV Steel enforceable in
accordance with its terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
of general application relating to or affecting the rights and remedies of
creditors and by general principles of equity.
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Section 6.3. NO VIOLATION. Neither the execution, delivery and
performance by LTV Steel of the Transaction Documents to which it is a party nor
compliance with the terms and provisions thereof, nor the consummation of the
transactions contemplated therein (i) contravenes any applicable provision of
any law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality, (ii) conflicts or is inconsistent with or
results in any breach of any of the terms, covenants, conditions or provisions
of, or constitutes a default under, or (other than as contemplated by the
Transaction Documents) results in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets of
LTV Steel or any of its Affiliates pursuant to the terms of, any material
indenture, mortgage, deed of trust, material agreement or other material
instrument to which LTV Steel or any of its Affiliates is a party or by which it
or any of its property or assets are bound or to which it may be subject or
(iii) violates any provision of any Organizational Documents of LTV Steel,
unless, in each case, such contravention, conflict, breach, default, imposition
or violation would not, either individually or in the aggregate, be reasonably
expected to have a Material Adverse Collateral Effect.
Section 6.4. LITIGATION. There are no actions, suits or proceedings
pending or to LTV Steel's knowledge threatened with respect to (i) any
Transaction Document or (ii) LTV Steel, except as disclosed as material
litigation in the Quarterly Report on Form 10-Q of LTV for the quarter ended
September 30, 1997, a copy of which has been previously delivered to the
Financing Parties, in which there is a reasonable possibility of an adverse
decision that, after giving effect to expected insurance proceeds and indemnity
payments, is reasonably likely to have a Material Adverse Collateral Effect.
Section 6.5. GOVERNMENTAL APPROVALS. Except for the filing of financing
statements (which if this representation is being made later than 10 days after
the Effective Date, have been filed) and continuation statements as required
under the Transaction Documents, no order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any foreign or domestic governmental or public body or authority,
or any subdivision thereof, is required to authorize or is required in
connection with (i) the execution, delivery and performance by LTV Steel of any
Transaction Document or (ii) the legality, validity, binding effect or
enforceability of any Transaction Document as against LTV Steel, except for any
order, consent, approval, license, authorization, or validation of, or filing,
recording, registration or exemption which, if not obtained, would not, either
individually or in the aggregate, be reasonably expected to have a Material
Adverse Collateral Effect .
Section 6.6. INVESTMENT COMPANY ACT. LTV Steel is not an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
Section 6.7. PUBLIC UTILITY HOLDING COMPANY ACT. LTV Steel is not a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
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Section 6.8. TRUE AND COMPLETE DISCLOSURE. (a) All factual information
(taken as a whole) set forth in the Confidential Information Memorandum dated
January, 1998 relating to the transactions contemplated by the Transaction
Documents furnished in writing by or on behalf of LTV Steel and its Affiliates
does not, and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of LTV Steel and its Affiliates in writing to the
Placement Agent, the Administrative Agent or any Financing Party pursuant to or
in connection with the Transaction Documents will not, as of the date as of
which such information is dated or certified, contain any untrue statement of a
material fact or omit to state any material fact necessary to make such
information (taken as a whole) not misleading as of such time, in each case in
light of the circumstances under which such information was provided, it being
understood and agreed that for the purposes of this SECTION 6.8, the reference
to "factual information" shall not include projections and PRO FORMA financial
information.
(b) As of the Effective Date, there is no fact known to LTV
Steel which has not been disclosed herein or in such other documents,
certificates and statements furnished to the Placement Agent,
Administrative Agent or the Financing Parties for use in connection
with the transactions contemplated hereby which is reasonably likely to
have a Material Adverse Collateral Effect.
Section 6.9 FINANCIAL CONDITION; FINANCIAL STATEMENTS. (a) On and as of
the Effective Date on a pro forma basis after giving effect to the transactions
contemplated by the Transaction Documents and all Indebtedness incurred, and to
be incurred, and Liens created and to be created, by LTV Steel and the other
Members in connection therewith (assuming the full utilization of the Aggregate
Commitment Amount under this Agreement), (x) the sum of the assets, at a fair
valuation of LTV Steel and the other Members taken as a whole will exceed their
debts, (y) LTV Steel and the other Members taken as a whole will not have
incurred nor intended to, or believe that they will, incur debts beyond their
ability to pay such debts as such debts mature and (z) LTV Steel and the other
Members taken as a whole do not have unreasonably small capital with which to
conduct their respective businesses. For purposes of this SECTION 6.9(a), "debt"
means any reasonably expected liability on a claim, and "claim" means (i) right
to payment whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured; or (ii) right to an equitable remedy for
breach of performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.
(b) LTV Steel has furnished to the Financing Parties the
following financial statements, which have been prepared in accordance
with GAAP (except, in the case of the unaudited financial statements
referred to below, for the omission of footnotes and ordinary year end
adjustments) consistently applied through the periods involved: (i)
LTV's audited consolidated balance sheet as of, and consolidated
statements of operations, shareholders' equity and cash flows for the
fiscal year ended, December 31, 1996 and (ii) LTV's unaudited
consolidated balance sheet as of, and consolidated statements of
operations, shareholders' equity and cash flows for the period ending,
September 30, 1997. Since the date of the
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financial statements referred to in clause (ii) above, nothing has
occurred which would be reasonably likely to result in a Material
Adverse Collateral Effect.
Section 6.10. BUSINESS NAMES. During the five years preceding the date
hereof (i) LTV Steel has not been known by any legal name or trade name other
than its corporate name and such other names as listed on Schedule 2 to the
Contribution and Sale Agreement, (ii) nor has LTV Steel been the subject of any
merger or other corporate reorganization within the last five years, EXCEPT that
effective December 31, 1997, LTV Steel Tubular Products Company was merged into
LTV Steel.
Section 6.11. TAX RETURNS AND PAYMENTS. Except as permitted by SECTION
7.5 and taxes settled pursuant to the IRS Settlement Agreement, all material tax
returns and reports of LTV Steel and its Affiliates required to be filed by any
of them have been timely filed, and all material taxes, assessments, fees and
other governmental charges upon LTV Steel and its Affiliates and upon their
respective properties, assets, income, businesses and franchises which are due
and payable have been paid when due and payable. LTV Steel is not aware of any
proposed tax assessment against LTV Steel or any of its Affiliates which is not
being actively contested by LTV Steel or such Affiliate in good faith and by
appropriate proceedings; PROVIDED that such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor.
Section 6.12. COMPLIANCE WITH ERISA. LTV Steel is in material
compliance with all applicable provisions and requirements of ERISA.
Section 6.13 COMPLIANCE WITH STATUTES, ETC. LTV Steel is in compliance
with all applicable statutes, regulations and orders of, and all applicable
restrictions imposed by, all governmental bodies, domestic or foreign, in
respect of the conduct of its business and the ownership of its property, except
such noncompliance as are not reasonably likely to, in the aggregate, have a
Material Adverse Collateral Effect.
Section 6.14. PERFORMANCE OF AGREEMENTS. (a) LTV Steel is not in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any of its Contractual Obligations, and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a default, except where the consequences, direct or
indirect, of such default or defaults, if any, would not be reasonably expected
to have a Material Adverse Collateral Effect.
(b) LTV Steel is not a party to or otherwise subject to any
agreement or instrument or any charter or other internal restriction
which has had, or could reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Collateral Effect.
Section 6.15 MARGIN REGULATIONS. Neither LTV Steel nor any of the other
Members is engaged principally, or as one of its important activities, in the
business of extending credit for the
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purpose of purchasing or carrying any Margin Stock. Neither the issuance of any
Letter of Credit or the use thereof will violate or be inconsistent with the
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System.
Section 6.16 CLASS A-1 NOTES. With respect to each Class A-1 Note and
Note Portion sold to Note Purchasers or pledged to the Collateral Agent for the
benefit of the Issuing Lenders and Lenders under the terms of this Agreement,
each such Class A-1 Note is free of any adverse claim by any Person and with
respect to such Class A-1 Notes and Note Portions so pledged to the Collateral
Agent, LTV Steel has granted to the Collateral Agent for the benefit of the
Issuing Lenders and Lenders a first priority perfected lien on such pledged
Notes.
ARTICLE VII.
AFFIRMATIVE COVENANTS
LTV Steel hereby covenants and agrees that on the Effective
Date and thereafter, for so long as this Agreement is in effect and until the
Aggregate Commitment Amount has terminated, no Letters of Credit are outstanding
and all reimbursement obligations, together with interest, Fees, Expenses and
all other Obligations incurred hereunder, are paid in full:
Section 7.1. FINANCIAL INFORMATION. LTV Steel shall furnish to the
Financing Parties the following information within the following time periods:
(i) FINANCIALS: as soon as available and in any event
within ten Business Days of filing with the SEC, a copy of
each report on Form 10K, Form 10Q or Form 8K filed with the
SEC by LTV Steel, LTV or any of the other Members and within
ninety days of the end of each calendar year, annual audited
financial statements of LTV Steel Products and within
forty-five days after each March 31, June 30 and September 30
of each calendar year, quarterly unaudited financial
statements of LTV Steel Products for the calendar quarter then
ended;
(ii) OFFICER'S AND COMPLIANCE CERTIFICATES: together
with each delivery of financial statements of LTV Steel
pursuant to clause (i) above, (a) an officer's certificate of
LTV Steel stating that the signer has reviewed the terms of
this Agreement and has made, or caused to be made under his
supervision, a review in reasonable detail of the transactions
conducted under the Transaction Documents and condition of LTV
Steel during the accounting period covered by such financial
statements and that such review has not disclosed the
existence during or at the end of such accounting period, and
that the signer does not have knowledge of the existence as at
the date of such officer's certificate, of any condition or
event that constitutes a Note Purchase Agreement Default or
Note Purchase Agreement Event of Default, or, if any such
condition or event existed or exists, specifying the nature
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and period of existence thereof and what action LTV Steel or
any of its Affiliates has taken, is taking and proposes to
take with respect thereto;
(iii) SEC FILINGS AND PRESS RELEASES: to the extent
not previously delivered pursuant to clause (i) above,
promptly upon their becoming available, copies of (a) all
financial statements, reports, notices and proxy statements
sent or made available generally by LTV Steel to its security
holders or by LTV or any other Member to its security holders
other than LTV Steel or other Affiliates of LTV Steel, (b) all
regular and periodic reports and all registration statements
(other than on Form S-8 or a similar form) and prospectuses,
if any, filed by LTV, LTV Steel or any other Member with any
securities exchange or with the SEC and (c) all press releases
and other statements made available generally by LTV, LTV
Steel or any other Member to the public concerning material
developments in the business of LTV, LTV Steel or such other
Member;
(iv) EVENTS OF DEFAULT, ETC.: promptly upon any
officer of LTV Steel obtaining knowledge (a) of any condition
or event that constitutes the occurrence of an Amortization
Date, or becoming aware that an Agent or any Note Purchaser or
Lender has given any notice or taken any other action with
respect to a claimed Amortization Date, or (b) that any Person
has given any notice to LTV Steel or any of its Affiliates or
taken any other action with respect to a claimed Amortization
Date, an officer's certificate specifying the nature and
period of existence of such condition, event or change, or
specifying the notice given or action taken by any such Person
and the nature of such claimed occurrence of an Amortization
Date and what action (if any) LTV Steel has taken, is taking
and proposes to take with respect thereto;
(v) LITIGATION: promptly upon any officer of LTV
Steel obtaining knowledge of (X) the institution of, or
non-frivolous threat of, any action, suit, proceeding,
governmental investigation or arbitration against or affecting
LTV Steel or any of its Affiliates or any property of LTV
Steel or any of its Affiliates (collectively, "Proceedings")
not previously disclosed in writing by LTV Steel to each Agent
and the Financing Parties or (Y) any material development in
any Proceeding:
(1) in which there is a material possibility
of an adverse decision and which, if adversely
determined, could reasonably be expected to cause a
Material Adverse Collateral Effect; or
(2) that seeks to enjoin or otherwise
prevent the consummation of, or to recover any
damages or obtain relief directly as a result of, the
transactions contemplated hereby and by the other
Transaction Documents;
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written notice thereof with such other information as may be reasonably made
available by LTV Steel or any of its Affiliates to enable the Agents and the
Financing Parties and their counsel to evaluate such matters.
Section 7.2. CORPORATE FRANCHISES. LTV Steel will do all things
necessary to preserve and keep in full force and effect its existence, material
rights and authority to do business, provided that any transaction not
prohibited by SECTION 8.1 will not constitute a breach of this SECTION 7.2, and
provided further, that LTV Steel shall not be required to preserve any material
right or authority to do business if LTV Steel shall reasonably determine that
such preservation is no longer desirable in the ordinary course of business, and
the loss thereof shall not be reasonably likely to have a Material Adverse
Collateral Effect.
Section 7.3 COMPLIANCE WITH STATUTES, ETC. LTV Steel will comply with
all applicable statutes, regulations and orders of, and all applicable
restrictions imposed by, all governmental bodies, domestic or foreign, in
respect of the conduct of its business and the ownership of its property other
than those the non-compliance with which (individually or in the aggregate)
would not be reasonably expected to have a Material Adverse Collateral Effect.
Section 7.4 MAINTENANCE OF PROPERTIES; LTV Steel will maintain or cause
to be maintained in good repair, working order and condition, as it shall, in
its reasonable judgment, deem prudent, all material properties used or useful in
the business of LTV Steel and from time to time will make or cause to be made
all appropriate repairs, renewals and replacements thereof as it shall, in its
reasonable judgment, deem prudent, except to the extent that such failure would
not be reasonably expected to have a Material Adverse Collateral Effect; and
provided further, that the foregoing shall not prevent LTV Steel from
abandoning, demolishing and/or removing any buildings, structures, other
improvements or fixtures that are unserviceable or no longer required in the
conduct of its business.
Section 7.5 TAXES. LTV Steel will, and will cause each of its
Affiliates to, pay all taxes, assessments and other governmental charges imposed
upon it or any of its properties or assets or in respect of any of its income,
businesses or franchises before any penalty accrues thereon, and all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums that have become due and payable and that by law have or may
become a lien upon any of the Collateral or the Notes prior to the time when any
penalty or fine shall be incurred with respect thereto; provided that no such
charge or claim need be paid if being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and if such reserve or
other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefor or if the failure to pay such charges or
claims, either individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Collateral Effect; provided further
that no such property tax need be paid if such property tax is nonrecourse to
LTV Steel and its Affiliates or is recourse to LTV Steel and its Affiliates only
for a de minimis amount.
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Section 7.6 NOTICES IN CASE OF DEFAULT. To the extent that any notice
from LTV Steel or any of its Affiliates is required in connection with any Trust
Agreement Event of Default, Purchase Termination Event or Servicer Termination
Event, LTV Steel agrees to provide such notice within one Business Day after
receiving any written direction or request from the Required Financing Parties
that such notice be provided.
Section 7.7 LOSS OF PERFECTION EVENT. In the event there shall occur
and be in existence a Loss of Perfection Event, LTV Steel shall use its best
efforts to cure such event so that the Loss of Perfection Event shall no longer
be in existence. If LTV Steel shall have not so cured such Loss of Perfection
Event within five (5) Business Days after an Authorized Officer of LTV Steel
becoming aware of such occurrence, LTV Steel agrees (a) to contribute additional
Collateral to LTV Steel Products and/or (b) cause LTV Steel Products to redeem
Class A-1 Notes with the result that the Note Collateral Value Requirement is
then satisfied. On the fifth Business Day after the occurrence of a Loss
Perfection Event, and on each fifth Business Day thereafter until there shall no
longer be in existence such Loss of Perfection Event, LTV Steel shall provide to
the Collateral Agent and the Agents a Sales and Valuation Report as of such
date.
Section 7.8. RECEIVABLES INTERCREDITOR AGREEMENT. LTV Steel shall use
its best efforts to cause a Receivables Intercreditor Agreement to be executed
and in effect within ninety (90) days of the Effective Date.
ARTICLE VIII.
NEGATIVE COVENANTS
LTV Steel hereby covenants and agrees that as of the Effective
Date, and thereafter, for so long as this Agreement is in effect and until the
Aggregate Commitment Amount has terminated, no Letter of Credit is outstanding
and all reimbursement obligations, together with interest, Fees, Expenses and
all other Obligations incurred hereunder, are paid in full:
Section 8.1. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.. LTV Steel
will not wind up, liquidate or dissolve its affairs.
Section 8.2. EXERCISE OF REMEDIES. LTV Steel will not, nor will it
permit any of its Subsidiaries to, exercise any of the remedies under the
Transaction Documents to which such Persons are party without the prior written
consent of the Required Financing Parties.
ARTICLE IX.
EVENTS OF DEFAULT AND REMEDIES
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Section 9.1. EVENTS OF DEFAULT. Upon the occurrence of any of the
following specified events (each a "Note Purchase Agreement Event of Default"):
(a) PAYMENTS. LTV Steel shall (i) default, and such default
shall continue for two or more Business Days, in the payment when due
of any drawings (and related interest) under Letters of Credit or (ii)
default, and such default shall continue for five or more days
following written notice thereof to LTV Steel by any Agent, in the
payment when due of any Fees, Expenses or any other amounts owing by
LTV Steel hereunder;
(b) REPRESENTATIONS, ETC. Any representation, warranty or
statement made by LTV Steel in this Agreement or in any other
Transaction Document or in any statement or certificate delivered or
required to be delivered pursuant hereto or thereto shall prove to be
untrue in any material respect on the date as of which made or deemed
made; provided that if such untruth can be cured and LTV Steel is
diligently pursuing such cure and there shall not then be in existence
a Cure Period Cut-off Event, then such event shall not constitute a
Note Purchase Agreement Event of Default for a period of thirty (30)
days after an Authorized Officer of LTV Steel is aware of such untruth;
or
(c) COVENANTS. LTV Steel shall (i) default in the due
performance or observance by it of any term, covenant or agreement
contained in SECTION 3.9 or (ii) default in the due performance or
observance by it of any term, covenant or agreement under this
Agreement and such default shall continue unremedied for a period of at
least 30 days after the earlier to occur of (i) an Authorized Officer
of LTV Steel becoming aware of such default or (ii) notice to LTV Steel
by the respective Agent or the Required Financing Parties; provided
that if such default can be cured and LTV Steel is diligently pursuing
such cure and there shall not then be in existence a Cure Period
Cut-off Event, then such event shall not constitute a Note Purchase
Agreement Event of Default for a period of an additional thirty (30)
days after such notice; or
(d) DEFAULT UNDER OTHER AGREEMENTS. There shall occur or exist
any of the following events or conditions:
(i) a Trust Agreement Event of Default;
(ii) a Purchase Termination Event under the
Contribution and Sale Agreement;
(iii) a Servicer Termination Event under the
Inventory Processing and Servicing Agreement;
(iv) a Receivables Default Event; or
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(v) the Collateral Agent shall cease to have
a first priority perfected security interest in the
Class A-1 Notes pledged for the benefit of the
Issuing Lenders or the Lenders or the Collateral
Agent shall cease to have the perfected interest in
the Collateral in the priority contemplated by the
Transaction Documents, in each case, for a period of
five Business Days following the earlier to occur of
(x) an Authorized Officer of LTV Steel becoming aware
of such loss of priority or perfection, and (y)
notice to LTV Steel by the respective Agent or the
Required Financing Parties; or
(e) INSOLVENCY. There shall occur an Insolvency Proceeding
with respect to LTV Steel; or
(f) CERTAIN LIENS. Either the IRS or the PBGC shall have filed
one or more Liens against the Collateral in an aggregate amount
exceeding $3,500,000 unless (i) such amounts are adequately bonded to
the satisfaction of the Required Financing Parties or (ii) such amounts
relate to taxes which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves are being
maintained under GAAP;
(g) TRANSACTION DOCUMENTS. Any Transaction Document shall
cease to be in full force and effect, or shall cease to give the
Collateral Agent on behalf of the Secured Parties, rights, powers and
privileges purported to be created thereby with respect to the
Collateral;
then, and in any such event, and at any time thereafter, if any Note Purchase
Agreement Event of Default shall then be continuing, each Agent shall, upon the
written request of the Required Financing Parties, by written notice to LTV
Steel take any or all of the following actions, without prejudice to the rights
of the Agents or any Financing Party to enforce its claims against LTV Steel,
except as otherwise specifically provided for in this Agreement (provided that,
if a Note Purchase Agreement Event of Default specified in SECTION 9.1(e) shall
occur, the result which would occur upon the giving of written notice by the
Agents as specified in clauses (i) and (ii) below shall occur automatically
without the giving of any such notice): (i) declare the Aggregate Commitment
Amount terminated, whereupon the Commitment of each Financing Party shall
forthwith terminate immediately; (ii) declare the principal of and any accrued
interest in respect of all Obligations owing hereunder to be, whereupon the same
shall become, forthwith due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by LTV Steel; (iii)
terminate any Letter of Credit which may be terminated in accordance with its
terms; (iv) direct LTV Steel to pay (and LTV Steel hereby agrees upon receipt of
such notice, or upon the occurrence of any Note Purchase Agreement Event of
Default specified in SECTION 9.1(e), it will pay) to the Administrative Agent
such additional amounts, if any, as the Administrative Agent shall reasonably
request to be held by it as additional security for LTV Steel's reimbursement
obligations in respect of the Letters of Credit; and/or (v) take possession of,
collect on, sell or otherwise take such actions as directed by the Required
Financing Parties with respect to its Class A-1 Notes pledged to the Collateral
Agent for the benefit of the Issuing Lenders and the Lenders.
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ARTICLE X.
THE AGENTS
Section 10.1. APPOINTMENT OF THE AGENTS. Each Lender hereby irrevocably
appoints The Chase Manhattan Bank as its Administrative Agent hereunder and each
Note Purchaser hereby irrevocably appoints Chase Securities Inc. as the
Placement Agent and hereby authorizes the Agents to take such action on its
behalf to execute, deliver and perform such documents on its behalf, and to
exercise such rights, remedies, powers and privileges hereunder as are
specifically authorized to be exercised by the Agents by the terms hereof,
together with such rights, remedies, powers and privileges as are reasonably
incidental thereto. The Agents may execute any of their duties hereunder by or
through agents or employees, and the Agents shall not be responsible for the
negligence or misconduct of any such agents or employees selected by them with
reasonable care. The relationship between the Administrative Agent and each
Lender and the Placement Agent and each Note Purchaser is that of agent and
principal only, and nothing herein shall be deemed to constitute or appoint the
Administrative Agent a trustee or fiduciary for any Lender or the Placement
Agent a trustee or fiduciary for any Note Purchaser or impose on the Agents any
obligations other than those for which express provision is made herein. Upon
receipt, the Agents, as applicable, will forward (a) to each Financing Party an
executed copy of the Transaction Documents and a copy of each officer's
certificate specified in SECTION 5.1 hereof, (b) to each Lender, a copy of each
Letter of Credit Request, and (c) to each Note Purchaser, a copy of each Note
Repurchase Notice.
Except as required by the specific terms of this Agreement, the Agents
shall not have any duty to exercise any right, power, remedy or privilege
granted to them hereby, or to take any affirmative action or exercise any
discretion hereunder, unless directed to do so by the Required Financing Parties
or all the Financing Parties, as applicable (and shall be fully protected in
acting or refraining from acting pursuant to such directions which shall be
binding upon the Financing Parties), and shall not, without the prior approval
of the Required Financing Parties or all the Financing Parties, as applicable,
consent to any material departure by LTV Steel from the terms hereof, waive any
default on the part of LTV Steel hereunder or amend, modify, supplement or
terminate, or agree to any surrender of, this Agreement; provided, that the
foregoing limitation on the authority of the Agents is for the benefit of the
Financing Parties and shall not impose any obligation on LTV Steel to
investigate or inquire into the authority of the Agents in any circumstances,
and LTV Steel shall be fully protected in carrying out any request, direction or
instruction made or given to LTV Steel by the Agents in the exercise of any
right, power, remedy or privilege granted to the Agents hereby or by the terms
of any other Transaction Document, receiving or acting upon any consent or
waiver granted to LTV Steel hereunder by the Agents, or entering into any
amendment or modification of, or supplement to, this Agreement or any other
Transaction Document, and LTV Steel shall not be subject to the claims of any
Financing Parties by reason of the lack of authority of the Agents to take any
such action nor shall the lack of authority on the part of the Agents in any
circumstance give rise to any claim on the part of LTV Steel against any
Financing Party; and provided, further, that the Agents shall not be required to
take any action
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which exposes the Agents to personal liability or which is contrary to this
Agreement, or applicable law.
Neither the Administrative Agent nor the Placement Agent, or any of
their respective directors, officers, agents or employees, shall be liable to
any person or entity, including without limitation, the Administrative Agent,
the Placement Agent or any Financing Party, as the case may be, for any action
taken or omitted to be taken by it or them hereunder, under any other
Transaction Document, or in connection herewith or therewith, except for any
liability determined, in a final judgment of a court of competent jurisdiction,
to have resulted from the Administrative Agent's or Placement Agent's own gross
negligence or willful misconduct; nor shall the Administrative Agent or the
Placement Agent be responsible to the Administrative Agent, the Placement Agent
or any Financing Party, as the case may be, for the validity, effectiveness,
value, sufficiency or enforceability against LTV Steel of any Transaction
Document or other document furnished pursuant hereto or thereto or in connection
herewith or therewith. The Agents shall not be liable under this Agreement to
LTV Steel or its directors, officers, agents, employees or members for indirect,
special, punitive, incidental or consequential loss or damage of any kind
whatsoever, including, without limitation, lost profits. Without limitation of
the generality of the foregoing, each of the Administrative Agent and the
Placement Agent: (i) may consult with legal counsel (including counsel for LTV
Steel), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with or reliance upon the advice of such counsel, accountants
or experts; (ii) makes no warranty or representation to any Financing Party, and
shall not be responsible to any Financing Party for any statements, warranties
or representations made in or in connection with this Agreement, any other
Transaction Document or any other document furnished pursuant hereto or thereto
or in connection herewith or therewith; (iii) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement, any other Transaction Document or any
other document furnished pursuant hereto or thereto or in connection herewith or
therewith, on the part of any party hereto or thereto or to inspect the property
(including the Books and Records) of LTV Steel; (iv) shall not be responsible to
the Administrative Agent, the Placement Agent or any Financing Party for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, any other Transaction Document or any other instrument or
document furnished pursuant hereto or thereto and (v) shall incur no liability
under or in respect of this Agreement, any other Transaction Document or any
other document furnished pursuant hereto or thereto or in connection herewith or
therewith, by acting upon or relying upon any notice, consent, certificate or
other instrument or writing or telephonic instruction, or notices to the extent
authorized herein or therein believed by it to be genuine and sent by the proper
party or parties.
Each Financing Party hereby represents that it has, independently and
without reliance on the Administrative Agent, any other Financing Party or the
Placement Agent and based on such documents and information as it has deemed
appropriate, made its own appraisal of the financial risks and other risks
involved in the transactions contemplated hereunder and under the Transaction
Documents and of the financial condition and affairs of LTV Steel, the other
Members and LTV Steel Products and the adequacy of the security granted to the
Collateral Agent under the Trust
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Agreement and its own decision to enter into this Agreement and the transactions
contemplated hereby and agrees that it will, independently and without reliance
upon the Administrative Agent, any other Financing Party or the Placement Agent,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own appraisals and decisions in taking or not taking
action under this Agreement. The Agents shall not be required to keep themselves
informed as to the performance or observance by LTV Steel, the other Members and
LTV Steel Products of this Agreement, the other Transaction Documents or any
other document referred to or provided for herein or therein or to make inquiry
of, or to inspect the properties or books of LTV Steel, the other Members and
LTV Steel Products. Except for notices, reports and other documents and
information expressly required to be furnished to the Financing Parties by the
Agent or by the Placement Agent hereunder, the Administrative Agents shall not
have any duty or responsibility to provide any Financing Party with any credit
or other information concerning LTV Steel, the other Members and LTV Steel
Products which may come into the possession of the Agents.
Neither the Administrative Agent nor the Placement Agent shall be
deemed to have knowledge or notice of the occurrence of a Note Purchase
Agreement Default or Note Purchase Agreement Event of Default unless the
Administrative Agent or the Placement Agent, as applicable, has received written
notice from a Lender, a Note Purchaser, the Servicer or LTV Steel referring to
this Agreement, describing such Note Purchase Agreement Default or Note Purchase
Agreement Event of Default and stating that such notice is a "Notice of Note
Purchase Agreement Default" or "Notice of Note Purchase Agreement Event of
Default," as the case may be. In the event that either the Administrative Agent
or the Placement Agent receives such a notice of the occurrence of a Note
Purchase Agreement Default or Note Purchase Agreement Event of Default, the
Administrative Agent or the Placement Agent, as applicable, shall promptly give
notice thereof to the Financing Parties. The Agents shall take such action with
respect to such Note Purchase Agreement Default or Note Purchase Agreement Event
of Default as shall be reasonably directed by the Required Financing Parties;
provided that, if neither the Administrative Agent nor the Placement Agent have
received such directions from the Required Financing Parties after using
reasonable efforts to receive such directions, the Administrative Agent or
Placement Agent may (but shall not be obligated to) take such action or refrain
from taking such action, with respect to such Note Purchase Agreement Default or
Note Purchase Agreement Event of Default as it shall deem advisable in the best
interests of the Financing Parties.
Each Financing Party hereby agrees, in the ratio that such Financing
Party's Commitment hereunder bears to the Aggregate Commitment Amount to
indemnify and hold harmless the Administrative Agent and the Placement Agent,
respectively, and its directors, officers, agents and employees, from and
against any and all losses, liabilities (including liabilities for penalties),
actions, suits, judgments, demands, damages, settlements, costs and expenses of
any kind whatsoever (including, without limitation, reasonable fees and expenses
of attorneys, accountants and experts) incurred or suffered by the
Administrative Agent or the Placement Agent, as applicable, in its capacity as
Administrative Agent or Placement Agent hereunder as a result of any action
taken or omitted to be taken by the Administrative Agent or Placement Agent in
such capacity or otherwise incurred or suffered by, made upon, or assessed
against the Administrative Agent or Placement
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Agent in such capacity; provided, that no Financing Party shall be liable for
any portion of any such losses, liabilities (including liabilities for
penalties), actions, suits, judgments, demands, damages, settlements, costs or
expenses determined, in the final judgment of a court of competent jurisdiction,
to be attributable primarily to gross negligence or willful misconduct on the
part of the Administrative Agent or Placement Agent. Without limiting the
generality of the foregoing, each Financing Party hereby agrees, in the ratio
aforesaid, to reimburse the Administrative Agent and Placement Agent,
respectively, promptly following its demand for any out-of-pocket expenses
(including, without limitation, attorneys' fees and expenses) incurred by the
Administrative Agent, the Placement Agent or their directors, officers, agents
and employees hereunder or under the other Transaction Documents, and not
promptly reimbursed to the Administrative Agent or the Placement Agent by LTV
Steel. Each Financing Party's obligations under this paragraph shall survive the
termination of this Agreement and the discharge of LTV Steel's obligations
hereunder.
The Financing Parties agree that with respect to their obligation to
lend under this Agreement, the Letters of Credit issued by them and the Notes
held by them, The Chase Manhattan Bank and Chase Securities Inc., as applicable,
shall have the same rights and powers hereunder as any other Financing Party and
may exercise the same as though it were not performing the duties specified
herein; and the terms "Lender", "Required Financing Parties," "Note Purchaser,"
or any similar terms shall, unless the context clearly otherwise indicates,
include The Chase Manhattan Bank or Chase Securities Inc., as applicable, in its
individual capacity. The Chase Manhattan Bank and Chase Securities Inc. may
accept deposits from, lend money to, and generally engage in any kind of
banking, trust or other business with LTV Steel or any of its Affiliates as if
it were not performing the duties specified herein, and may accept fees and
other consideration from LTV Steel or any of its Affiliates for services in
connection with any Transaction Document and otherwise without having to account
for the same to any Financing Party.
The Agents shall be entitled to rely on any communication, instrument,
paper or other document believed by it to be genuine and correct and to have
been signed or sent by the proper Person or Persons. With respect to its share
of liability under this Agreement, The Chase Manhattan Bank and Chase Securities
Inc. or any successor agent, if a Lender or Note Purchaser, shall have the same
rights, power, remedies and privileges as any other Lender or Note Purchaser and
may exercise the same as though it were not the administrative agent of the
Financing Parties hereunder.
Section 10.2. RESIGNATION OF THE AGENTS. The Administrative Agent and
the Placement Agent may resign as such at any time upon at least forty-five (45)
days' prior written notice to LTV Steel, the Collateral Agent and the Financing
Parties; provided, however, that the resignation of the Administrative Agent
shall not be effective until the Required Financing Parties shall have agreed to
the appointment of another Lender to perform the duties of the Agent hereunder,
and such replacement shall have accepted such appointment, and the resignation
of the Placement Agent shall not be effective until the Required Financing
Parties shall have agreed to the appointment of another Note Purchaser to
perform the duties of the Placement Agent hereunder. In the event of such
resignation, the Required Financing Parties shall as promptly as practicable
appoint a successor agent to replace the Administrative Agent or Placement Agent
with the approval of LTV Steel. If
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the Required Financing Parties have not appointed a successor agent within
forty-five (45) days of the Administrative Agent's resignation notice, the
resigning Administrative Agent shall appoint a successor with the approval of
LTV Steel. Similarly, if the Required Financing Parties have not appointed a
successor agent within forty-five (45) days of the Placement Agent's resignation
notice, the resigning Placement Agent shall appoint a successor with the
approval of LTV Steel. Notwithstanding the resignation of the Administrative
Agent or Placement Agent hereunder, the provisions of SECTION 10.1 hereof shall
continue to inure to the benefit of the Agent or Placement Agent in respect of
any action taken or omitted to be taken by the Administrative Agent or Placement
Agent in its capacity as such while it was such under this Agreement. The
Administrative Agent and the Placement Agent hereunder shall at all times be a
financial institution organized and doing business under the laws of the United
States of America or any state, authorized under such laws to exercise corporate
trust powers, whose long term unsecured debt is rated at least "A" by each
Rating Agency and shall have a combined capital and surplus of at least
$50,000,000 or shall be a member of a bank holding system the aggregate combined
capital and surplus of which is $50,000,000 and subject to supervision or
examination by federal or state authority. If such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of a
supervising or examining authority, then for the purposes of this SECTION 10.2,
the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. In case at any time the Administrative Agent or the Placement
Agent shall cease to be eligible in accordance with the provisions of this
Section, the Administrative Agent or the Placement Agent, as the case may be,
shall resign in the manner and with the effect specified herein.
Section 10.3. OBLIGATIONS SEVERAL. The obligations of the Lenders
hereunder are several, and neither the Administrative Agent nor any Lender shall
be responsible for the obligation of any other Lender hereunder, nor will the
failure of any Lender to perform any of its obligations hereunder relieve the
Administrative Agent or any other Lender from the performance of its obligations
hereunder. Nothing contained in this Agreement, and no actions taken by the
Lenders or the Administrative Agent pursuant hereto or in connection with the
Aggregate Commitment Amount shall be deemed to constitute the Lenders, together
or with the Administrative Agent, a partnership, association, joint venture or
other entity.
Similarly, the obligations of the Note Purchasers hereunder are
several, and neither the Placement Agent nor any Note Purchaser shall be
responsible for the obligation of any other Note Purchaser hereunder, nor will
the failure of any Note Purchaser to perform any of its obligations hereunder
relieve the Placement Agent or any other Note Purchaser from the performance of
its obligations hereunder. Nothing contained in this Agreement, and no actions
taken by the Note Purchasers or the Placement Agent pursuant hereto or in
connection with the Aggregate Commitment Amount shall be deemed to constitute
the Note Purchasers, together or with the Placement Agent, a partnership,
association, joint venture or other entity.
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ARTICLE XI.
MISCELLANEOUS
Section 11.1. SUBMISSION TO JURISDICTION; WAIVER. LTV Steel hereby
irrevocably and unconditionally:
(a) Submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Transaction
Documents, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York located in New York City, the Courts of
the United States of America for the Southern District of New York and
appellate courts from any thereof;
(b) Consents that any such action or proceeding may be brought
in such courts and waives, to the extent permitted by applicable law,
any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead
or claim the same;
(c) Designates, appoints and empowers CT Corporation System
with offices on the date hereof at 1633 Broadway, New York, New York
10019 as its designee, appointee and agent to receive, accept and
acknowledge for and on its behalf, and in respect of its property,
service of any and all legal process, summons, notices and documents
which may be served in any such action or proceeding. If for any reason
such designee, appointee and agent shall cease to be available to act
as such, LTV Steel agrees to designate a new designee, appointee and
agent in New York City on the terms and for the purposes of this
provision satisfactory to the Agents under this Agreement.
(d) Agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to LTV Steel at its Notice Address;
(e) Agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction;
(f) To the extent permitted by law, waives the right to assert
any setoff, counterclaim or cross-claim in respect of, and all statutes
of limitations which may be relevant to, such action or proceeding
(other than compulsory counterclaims), provided that nothing in this
clause (f) shall preclude a separate action asserting any such claims;
and
(g) Waives due diligence, demand, presentment and protest and
any notices thereof as well as notice of nonpayment.
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Section 11.2. JURY TRIAL. LTV Steel, the Placement Agent and the
Financing Parties each hereby waives any right to a trial by jury in any action
or proceeding arising out of this Agreement or the Transaction Documents or any
other agreements or transactions related hereto or thereto.
Section 11.3 GOVERNING LAW. The validity, interpretation and
enforcement of this Agreement shall be governed by the laws of the State of New
York without regard to conflicts of laws principles.
Section 11.4. DELAYS; PARTIAL EXERCISE OF REMEDIES. No delay or
omission of the Placement Agent, the Administrative Agent or any Financing Party
to exercise any right or remedy hereunder, whether before or after the happening
of any Note Purchase Agreement Event of Default, shall impair any such right or
shall operate as a waiver thereof or as a waiver of any such Note Purchase
Agreement Event of Default. No single or partial exercise by the Placement
Agent, the Administrative Agent or any Financing Party of any right or remedy
shall preclude any other or further exercise thereof, or preclude any other
right or remedy.
Section 11.5. NOTICES. Except as otherwise provided herein, all notices
and correspondences hereunder shall be in writing and sent by certified or
registered mail, return receipt requested, or by overnight delivery service,
with all charges prepaid to each party at its respective Notice Address.
Section 11.6. BENEFIT OF AGREEMENT. (a) This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereof, provided that LTV Steel may not assign or
transfer any of its interests hereunder, without the prior written consent of
the Required Financing Parties and provided further that the rights of each
Financing Party to transfer, assign or grant participations in its rights and/or
obligations hereunder shall be limited as set forth below in this SECTION 11.6,
provided that nothing in this SECTION 11.6 shall prevent or prohibit any
Financing Party from pledging its rights under this Agreement hereunder to a
Federal Reserve Bank in support of borrowings made by such Financing Party from
such Federal Reserve Bank.
(b) Each Financing Party shall have the right to transfer,
assign or grant participations in all or any part of its remaining
rights and obligations hereunder on the basis set forth below in this
clause (b).
(1) ASSIGNMENTS. Each Financing Party may
assign pursuant to an Assignment and Assumption
Agreement substantially in the form of Exhibit E to
this Agreement all or an undivided ratable portion of
its rights and obligations hereunder (including its
Pro Rata Portion of any Notes as to which the Note
Purchasers are the Holders) pursuant to this clause
(b)(1) to (x) one or more Financing Parties or (y)
one or more other Eligible Transferees, provided that
(i) any such assignment pursuant to clause (y) above
shall be in the aggregate amount of at least
$5,000,000, unless any Financing Party shall assign
to an Eligible Transferee all of its Commitment,
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Pro Rata Portion of Letters of Credit, Pro Rata
Portion of the Class A-1 Notes and other obligations
under this Agreement. Any assignment to another
Financing Party pursuant to this clause (b)(1) will
become effective upon the payment to the
Administrative Agent by either the assigning or the
assignee of a nonrefundable assignment fee of $1250
and the recording by the Administrative Agent of such
assignment, and the resultant effects thereof on the
Commitments of the assigning Financing Party and the
assignee Financing Party, in the Lender Register and
the Note Register, the Administrative Agent and the
Collateral Agent hereby agreeing to effect such
recordation no later than five Business Days after
their receipt of a written notification by the
assigning Financing Party and the assignee Financing
Party of the proposed assignment, provided that the
Administrative Agent and Collateral Agent shall not
be required to, and shall not, so record any
assignment in the Lender Register or the Note
Register on or after the date on which any proposed
amendment, modification or supplement in respect of
this Agreement has been circulated to the Financing
Parties for approval until the earlier of (x) the
effectiveness of such amendment, modification or
supplement in accordance with SECTION 11.10 or (y) 30
days following the date on which such proposed
amendment, modification or supplement was circulated
to the Financing Parties. Assignments pursuant to
sub-clause (y) of the first sentence of this clause
(b)(1) will only be effective if the Administrative
Agent shall have received a written notice in the
form provided in Exhibit E to this Note Purchase
Agreement from the assigning Financing Party and the
assignee and payment of a non-refundable assignment
fee of $1250 to the Administrative Agent by either
the assigning Financing Party or the assignee. No
later than five Business Days after its receipt of
such written notice, the Administrative Agent and the
Collateral Agent will record such assignment, and the
resultant effects thereof on the Commitment of the
assigning Financing Party, in the respective
Registers, at which time such assignment shall become
effective, provided that the Administrative Agent and
the Collateral Agent shall not be required to, and
shall not, so record any assignment in the Note
Register or Lender Register on or after the date on
which any proposed amendment, modification or
supplement in respect of this Agreement has been
circulated to the Financing Parties for approval
until the earlier of (x) the effectiveness of such
amendment, modification or supplement in accordance
with SECTION 11.10 or (y) 30 days following the date
on which such proposed amendment, modification or
supplement was circulated to the Financing Parties.
Upon the effectiveness of any assignment pursuant to
sub-clause (y) of the first sentence of this clause
(b)(1), the assignee will become a "Lender", "Note
Purchaser" and "Financing Party" for all purposes of
this Agreement and the other Transaction Documents
with a Commitment as so recorded by the
Administrative Agent and the Collateral Agent in the
respective Register, and
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to the extent of such assignment, the assigning
Financing Party shall be relieved of its obligations
hereunder with respect to the portion of its
Commitment being assigned. The Administrative Agent
will (x) notify each Issuing Lender with respect to
outstanding Letters of Credit within 5 Business Days
of the effectiveness of any assignment hereunder and
(y) prepare as of the day on which an assignment has
become effective pursuant to this clause (b)(1) a new
Schedule I giving effect to all such assignments
effected on such day and will promptly provide the
same to LTV Steel and each of the Financing Parties.
(2) PARTICIPATION. Each Financing Party may
transfer, grant or assign participations in all or
any part of such Financing Party's interest and
obligations hereunder pursuant to this clause (b)(2)
to any Eligible Transferee, provided that (i) such
Financing Party shall remain a "Lender" and "Note
Purchaser" for all purposes of this Agreement and the
transferee of such participation shall not constitute
a Financing Party hereunder and (ii) no participant
under any such participation shall have rights to
approve any amendment to or waiver of this Agreement
or any other Transaction Document except to the
extent such amendment or waiver would (x) unless
otherwise agreed by the relevant Financing Party in
its capacity as Issuing Lender, extend the stated
expiration date of any Letter of Credit beyond the
Expiration Date applicable to the Commitment of such
Financing Party, or extend the Expiration Date
applicable to the Commitment of such Financing Party,
(y) reduce the interest rate (other than as a result
of waiving the applicability of any post-default
increases in interest rates) or Fees in which such
participant is sharing and applicable to the
Commitment or Letters of Credit or postpone the
payment or reduce the amount thereof or (z) release
all or substantially all of the Collateral (except as
expressly provided in the Transaction Documents). In
the case of any such participation, the participant
shall not have any rights under this Agreement or any
of the other Transaction Documents (the participant's
rights against the granting Financing Party in
respect of such participation to be those set forth
in the agreement with such Financing Party creating
such participation) and all amounts payable by LTV
Steel hereunder shall be determined as if such
Financing Party had not sold such participation,
provided that such participant shall be entitled to
receive additional amounts under SECTIONS 4.5 and 4.7
on the same basis as if it were a Financing Party;
provided, further, however, that no participant of
the rights of a Financing Party shall be entitled to
receive any greater payment under Sections 4.5 and
4.7 than such Financing Party would have been
entitled to receive with respect to the rights
subject to such participation, unless LTV Steel has
consented to such participation. In addition, each
agreement creating any participation must include an
agreement by the participant to be bound by the
provisions of
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SECTION 11.7 of this Agreement and such participant
shall have executed a confidentiality agreement in
the form of Exhibit F hereto.
(c) Notwithstanding any other provisions of this SECTION 11.6,
no transfer or assignment of the interests or obligations of any
Financing Party hereunder or any grant of participation therein shall
be permitted if such transfer, assignment or grant would require LTV
Steel to file a registration statement with the SEC or to qualify the
extensions of credit under the "Blue Sky" laws of any State.
(d) If any Financing Party defaults in its obligations as a
Note Purchaser under this Agreement or if any Financing Party becomes a
Defaulting Lender, or upon the occurrence of any event giving rise to
the option of SECTION 4.5 and 4.7 with respect to such Financing Party
or if any Financing Party declines to extend the Expiration Date under
SECTION 11.16, LTV Steel shall have the right, if no Note Purchase
Agreement Default or Note Purchase Agreement Event of Default then
exists, to then replace such Financing Party (the "Replaced Financing
Party") with one or more Eligible Transferees (collectively, the
"Replacement Financing Party"), provided that (i) at the time of any
replacement pursuant to this SECTION 11.6(d), the Replacement Financing
Party shall enter into one or more Assignment and Assumption Agreements
pursuant to SECTION 11.6 (and with all fees payable pursuant to said
SECTION 11.6(b)(1) to be paid by the Replacement Financing Party)
pursuant to which the Replacement Financing Party shall acquire the
Commitment, Class A-1 Notes and participation in Letters of Credit of
the Replaced Financing Party and, in connection therewith, shall pay to
(x) the Replaced Financing Party in respect thereof an amount equal to
the sum of (A) the principal of such Class A-1 Notes and interest
thereon, (B) an amount equal to all drawings under Letters of Credit
that have been funded by (and not reimbursed to) such Replaced
Financing Party, together with all then unpaid interest with respect
thereto at such time, (C) if applicable, an amount equal to the
increased costs incurred by LTV Steel and owing to the Replaced
Financing Party pursuant to SECTIONS 4.5 and 4.7 and (D) an amount
equal to all accrued, but theretofore unpaid, Fees owing to the
Replaced Financing Party pursuant to Article IV and (y) any Financing
Party the amount of all unreimbursed drawings under Letter of Credit
attributable to such Replaced Financing Party and (ii) all obligations
of LTV Steel owing to the Replaced Financing Party (other than those
specifically described in clause (i) above in respect of which the
assignment purchase price has been, or is concurrently being paid)
shall be paid in full by LTV Steel to such Replaced Financing Party
concurrently with such replacement. Upon the execution of the
respective Assignment and Assumption Agreement and the payment of
amounts referred to in clauses (i) and (ii), above the Replacement
Financing Party shall become a Financing Party hereunder and the
Replaced Financing Party shall cease to constitute a Financing Party
hereunder, except with respect to indemnification provisions under this
Agreement, which shall survive as to such Replaced Financing Party.
Section 11.7. CONFIDENTIALITY. (a) Each Financing Party agrees that it
will use its reasonable best efforts not to disclose without the prior consent
of LTV Steel (other than to its employees,
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auditor, or counsel or to another Financing Party if the disclosing Financing
Party or such disclosing Financing Party's holding or parent company in its sole
discretion determines that any such party should have access to such
information) any information with respect to LTV Steel or any of its Affiliates,
which is furnished pursuant to the Transaction Documents and which is designated
by LTV Steel in writing as confidential; provided, that any Financing Party may
disclose any such information (a) as has become generally available to the
public, (b) as may be required or appropriate in any report, statement or
testimony submitted to any Governmental Authority having or claiming to have
jurisdiction over such Financing Party, (c) as may be required or appropriate in
response to any summons or subpoena or in connection with any litigation, (d) in
order to comply with any Requirement of Law, and (e) to any prospective or
actual transferee or participant in connection with any contemplated transfer or
participation of any commitments or any interest therein by such Financing Party
which prospective transferee or participant shall have agreed in writing to be
subject to the confidentiality provisions of this SECTION 11.7; provided,
however, that in the case of any disclosure pursuant to the foregoing clauses
(c) or (d), such Financing Party will use its reasonable efforts to notify LTV
Steel, to the extent permitted as advised by counsel, in advance (or, in the
case of clause (d), if advance notice is not possible, promptly thereafter) of
such disclosure so as to afford LTV Steel the opportunity to protect the
confidentiality of the information proposed to be so disclosed.
(b) Each Financing Party may share confidential information
with its Affiliates including information relating to the
creditworthiness of LTV Steel and its Affiliates) so long as such
Affiliate is bound by SECTION 11.7(a).
Section 11.8. INDEMNIFICATION. (a) LTV Steel shall and hereby agrees to
indemnify, defend and hold harmless the Placement Agent, the Administrative
Agent and each Financing Party and their respective directors, officers, agents
and employees (the "Indemnitee) from and against (x) any and all losses, claims,
damages, liability, deficiencies, judgments or expenses incurred by any of them
(except to the extent that it is finally judicially determined to have resulted
from either (x) their own gross negligence or willful misconduct or (y) the
failure of the Issuer of the Class A-1 Notes to pay any sums due and owing
thereunder to the Holders thereof) arising out of or by reason of any
litigation, investigations, claims or proceedings which arise out of or are in
any way related to (i) this Agreement or the transaction contemplated hereby,
(ii) the issuance of the Letters of Credit, (iii) the failure of an Issuing
Lender to honor a drawing under any Letter of Credit, as a result of any act or
omission, whether right or wrong, of any present or future DE JURE or DE FACTO
government or Governmental Authority, (iv) the Placement Agent's, the
Administrative Agent's or the Financing Party's entering into this Agreement, or
any other agreements and documents relating hereto, including, without
limitation, amounts paid in any settlement agreed to by LTV Steel, court costs
and the reasonable fees and disbursements of counsel incurred in connection with
any such litigation, investigation, claim or proceeding or any advice rendered
in connection with any of the foregoing and (y) any such losses, claims,
damages, liabilities, deficiencies, judgments or expenses incurred in connection
with any remedial or other action taken by LTV Steel or any of the Financing
Parties in connection with compliance by LTV Steel or any of its Affiliates, or
any of their respective
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properties, with any environmental laws or any other federal, state or local
acts, rules, regulations, orders, directions, ordinances, criteria or guidelines
or arising from any environmental claim.
(b) If and to the extent that the Obligations of LTV Steel
under this SECTION 11.8 are unenforceable for any reason, LTV Steel
hereby agrees to make the maximum contribution to the payment and
satisfaction of such Obligations which is permissible under applicable
law. LTV Steel's Obligations under this SECTION 11.8 shall survive any
termination of this Agreement and the other Transaction Documents and
the payment in full of the Obligations in respect of Letters of Credit,
interest and Fees, and are in addition to, and not in substitution of,
any other of its Obligations set forth in this Agreement.
(c) In addition, LTV Steel shall, upon demand, pay to the
Placement Agent, the Administrative Agent and the Financing Parties all
costs and expenses (including the reasonable fees and disbursements of
counsel and other professionals) paid or incurred by the Placement
Agent or the Administrative Agent at any time or by such Financing
Party after the occurrence and during the continuance of a Note
Purchase Agreement Event of Default, in (i) enforcing or defending its
rights under or in respect of this Agreement or any other document or
instrument now or hereafter executed and delivered in connection
herewith, (ii) in foreclosing or otherwise collecting upon the
Collateral or the pledged Notes or any part thereof and (iii) obtaining
any legal, accounting or other advice in connection with any of the
foregoing.
Section 11.9. HEADINGS DESCRIPTIVE. The headings of the several
sections and subsections of this Agreement, and the Table of Contents, are
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
Section 11.10. AMENDMENT OR WAIVER. Neither this Agreement nor any
other Transaction Document nor any terms hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination (i) is not material, (ii) relates to the Price and Fees Agreement or
(iii) is in writing signed by LTV Steel and the Required Financing Parties,
provided that no change, waiver, discharge or termination shall (1) without the
consent of the relevant Financing Party in its capacity as an Issuing Lender,
extend the expiration date of any Letter of Credit beyond the Expiration Date
applicable to the Commitment of such Financing Party or (B) without the consent
of each of the Financing Parties affected thereby, (1) extend the stated
Expiration Date, reduce the rate or extend the time of payment of interest or
Fees thereon (other than the waiver of post-default rates of interest or Fees),
or reduce the amount thereof, or increase the Commitment of any Financing Party
over the amount thereof then in effect (it being understood that a waiver of any
Note Purchase Agreement Default or Note Purchase Agreement Event of Default, or
mandatory prepayment, shall not constitute an increase in any Commitment of any
Financing Party), (2) release all or substantially all of the Collateral (except
as expressly provided in the Transaction Documents), (3) amend, modify or waive
any provisions of this Section, (4) reduce the percentage specified in the
definition of Required Financing Parties or (5) consent to the assignment or
transfer by LTV Steel of any of its rights and obligations under any Transaction
Documents. No
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provision of Article 3, 10 or 11 may be amended without the consent of each
Issuing Lender, and the Agents.
Section 11.11. NONLIABILITY OF PLACEMENT AGENT, THE ADMINISTRATIVE
AGENT AND FINANCING PARTIES. The relationship between LTV Steel and the
Financing Parties, the Placement Agent and the Administrative Agent shall be
solely that of borrower and lender. None of the Placement Agent, the
Administrative Agent, or any Financing Party shall have any fiduciary
responsibilities to LTV Steel. None of the Placement Agent, the Administrative
Agent or any Financing Party undertakes any responsibility to LTV Steel or any
of its Affiliates to review or inform LTV Steel or any of its Affiliates of any
matter in connection with any purchase of the business or operations of LTV
Steel or any of its Affiliates.
Section 11.12. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
Section 11.13. EFFECTIVENESS. This Agreement shall become effective on
the Effective Date.
Section 11.14. MAXIMUM RATE. Notwithstanding anything to the contrary
contained elsewhere in this Agreement or in any other Transaction Document, LTV
Steel, the Placement Agent, the Administrative Agent and the Financing Parties
hereby agree that all agreements among them under this Agreement and the other
Transaction Documents, whether now existing or hereafter arising and whether
written or oral, are expressly limited so that in no contingency or event
whatsoever shall the amount paid, or to be paid, to the Placement Agent, the
Administrative Agent or any Financing Party for the use, forbearance, or
detention of the money loaned to LTV Steel and evidenced hereby or thereby or
for the performance or payment of any covenant or obligation contained herein or
therein, exceed the Highest Lawful Rate. If due to any circumstances whatsoever,
fulfillment of any provision of this Agreement or any of the other Transaction
Documents at the time performance of such provision shall be due shall exceed
the Highest Lawful Rate, then, automatically, the obligation to be fulfilled
shall be modified or reduced to the extent necessary to limit such interest to
the Highest Lawful Rate, and if from any such circumstance any Financing Party
shall ever receive anything of value deemed interest by applicable law which
would exceed the Highest Lawful Rate, such excessive interest shall be applied
to the reduction of the principal amount then outstanding hereunder or on
account of any other then outstanding Obligations and not to the payment of
interest, or if such excessive interest exceeds the principal unpaid balance
then outstanding hereunder and such other then outstanding Obligations, such
excess shall be refunded to LTV Steel. All sums paid or agreed to be paid to the
Placement Agent, the Agent or any Financing Party for the use, forbearance, or
detention of the Obligations and other Indebtedness of LTV Steel to any such
party shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such Indebtedness until payment
in full so that the actual rate of interest on account of all such Indebtedness
does not exceed the Highest Lawful Rate throughout the entire term of such
Indebtedness. The terms and provisions of this Section shall
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control every other provision of this Agreement and all agreements among LTV
Steel, the Placement Agent, the Administrative Agent and the Financing Parties.
Section 11.15. RIGHT OF SETOFF. In addition to and not in limitation of
all rights of offset that any Financing Party or any Issuing Lender may have
under applicable law, each Financing Party shall, upon the failure of any
account party under any Letter of Credit to promptly reimburse the Issuing
Lender pursuant to the terms of this Agreement, have the right, upon prior
notice to such account party, to appropriate and apply to the payment of such
reimbursement obligations of such account party all debts (general or special,
time or demand, provisional or final) then or thereafter held by and other
indebtedness then or thereafter owing to such account party by such Financing
Party. Each Financing Party exercising such rights shall notify the respective
Agent thereof and any amount received as a result of the exercise of such rights
shall be reallocated among the Financing Parties as set forth in SECTION 4.8
hereof; provided, however, that failure of such account party to receive such
notice shall not impair any Financing Party's rights hereunder.
Section 11.16 Extension of Facility.
----------------------
(a) EXTENSION REQUEST. Within thirty Business Days of
each anniversary of the Effective Date, LTV Steel may
provide a written request to the Administrative Agent
and the Placement Agent with respect to the extension
of the Expiration Date (such notice, an "Extension
Request"). Each Extension Request shall indicate the
aggregate Commitment being requested and the date to
which it is requested that the Expiration Date be
extended, which shall be not less than one year from
the then effective Expiration Date applicable to such
Commitments nor more than five years from the date of
such Extension Request.
(b) ACCEPTANCE. Each Financing Party shall have the
independent right to accept or decline the proposed
extension of the Expiration Date by providing a
written notice of its decision within fifteen
Business Days of notice from the Agents that LTV
Steel has submitted an Extension Request; provided
that the failure of a Financing Party to provide
written notice of its decision during such time
period shall constitute a decline of the proposed
extension. If one or more Financing Parties declines
to accept such extension, the remaining Financing
Parties may, but shall have no obligation to, assume
the Commitments of the declining Financing Parties.
If the remaining Financing Parties decline to assume
such Commitments, LTV Steel may identify other
institutions willing to assume such Commitments, and
if acceptable to the Agents, such institutions shall
become Financing Parties and assume such Commitments
in accordance with SECTION 11.6(b)(1) hereof.
Promptly after receipt of notice from each Financing
Party as to its decision whether to extend the
Expiration Date, but in any event on or before the
twelfth Business
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Day after receipt of an Extension Request, the
Administrative Agent shall provide notice to LTV
Steel as to the identity and Commitment amount of
each Financing Party electing to extend the
Expiration Date. Each Financing Party's agreement to
extend the Expiration Date shall constitute such
Person's agreement to extend the Expiration Date with
respect to any Note held or to be held by it for
purposes of the Trust Agreement.
(c) EFFECTIVENESS. If less than the Commitment amount
specified by LTV Steel is represented by the
aggregate Commitments of extending Financing Parties,
LTV Steel may accept such lesser amount of
Commitments, provided that the aggregate Commitments
accepted (and consequent size of the Facility) may
not be less than $100,000,000 (the "Minimum Amount").
If Financing Parties holding aggregate Commitments at
least equal to the Minimum Amount agree to such
extension, the Expiration Date with respect to such
Commitments shall be so extended.
Each extension of the Expiration Date shall be
effective from and after the Expiration Date as in
effect prior to such extension up until the
Expiration Date as so extended. No extension of the
Expiration Date under this Section 11.16 shall affect
the rights and obligations of LTV Steel or the
Financing Parties prior to the date of effectiveness
of such extension. Commitments of Financing Parties
declining to extend the Expiration Date shall remain
in effect until the Expiration Date applicable
thereto. Letters of Credit issued by any Financing
Party in its capacity as Issuing Lender declining to
extend the Expiration Date shall expire not later
than the Expiration Date applicable to the Commitment
of such Financing Party, unless such Letter of Credit
is assumed by another Issuing Lender which has agreed
to the extended Expiration Date. No Letter of Credit
shall be issued, renewed or extended if, after giving
effect to such issuance, renewal or extension, the
aggregate face amount of Letters of Credit expiring
after any Expiration Date applicable to any Lender's
Commitment would exceed the Aggregate Commitment
Amount that will be in effect immediately after such
Expiration Date, unless arrangements reasonably
satisfactory to each relevant Issuing Lender and the
Administrative Agent shall have been made by LTV
Steel to provide cash or other collateral to the
extent of any excess.
Section 11.17 INSPECTION OF INVENTORY. In its capacity as Servicer, LTV
Steel agrees to allow the Administrative Agent, the Placement Agent and their
duly appointed representatives to make such inspection or review of the
Purchased Inventory as the Administrative Agent or Placement Agent shall deem
appropriate on behalf of the Financing Parties. In such regard the Servicer
shall allow any such Persons access to the sites where Purchased Inventory is
held or processed and access to the Books and Records of the Servicer relating
to the Purchased Inventory. Any such inspection or review shall be limited to
the normal business hours of the Servicer and shall
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be conducted only after reasonable notice to the Servicer. Any such inspection
or review shall be at the expense of LTV Steel Products, provided that prior to
the occurrence of an Amortization Date without its written consent, LTV Steel
Products shall not be responsible for an aggregate of more than $40,000 in such
expenses during any calendar year.
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<PAGE> 55
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their proper and duly authorized officers as of the
date first date set forth above.
LTV STEEL COMPANY, INC.
a New Jersey corporation, individually
and as agent for the Affiliates listed
on Schedule IV
By
-------------------------------------
Printed Name: John C. Skurek
Title: Vice President and Treasurer
CHASE SECURITIES INC., as Placement
Agent
By
-------------------------------------
Printed Name:
------------------------
Title:
--------------------------------
THE CHASE MANHATTAN BANK,
a New York banking corporation, as
Administrative Agent
By
-------------------------------------
Printed Name:
------------------------
Title:
--------------------------------
THE CHASE MANHATTAN BANK,
a New York banking corporation, as
Collateral Agent
By
-------------------------------------
Printed Name:
------------------------
Title:
--------------------------------
<PAGE> 56
Schedule I
Financing Party Commitment Amount Letter of Credit Limit
--------------- ----------------- ----------------------
[60% OF COMMITMENT
AMOUNT]
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<PAGE> 1
Exhibit 10.53
GUARANTY
This guaranty (the "GUARANTY") is made as of the 26th day of February, 1998
by LTV Steel Products, LLC (together with any successors or assigns permitted
hereunder being hereinafter referred to as the "GUARANTOR"), to the
Administrative Agent and the Placement Agent, for the benefit of the Financing
Parties (as defined in Annex X referred to below).
WITNESSETH:
WHEREAS, LTV Steel Company, Inc. ("LTV STEEL"), the various financial
institutions listed therein, Chase Securities Inc., as Placement Agent, and The
Chase Manhattan Bank, as Administrative Agent and Collateral Agent, have entered
into a Note Purchase and Letter of Credit Agreement dated as of February 26,
1998 (as amended from time to time, the "NOTE PURCHASE AGREEMENT"); and
WHEREAS, the transactions contemplated by the Contribution and Sale
Agreement, the Inventory Processing and Servicing Agreement and the other
Transaction Documents (each as defined in Annex X referred to below) are of
substantial benefit to the Guarantor; and
WHEREAS, the execution and delivery of this Guaranty is a condition
precedent to the execution of the Note Purchase Agreement and the other
Transaction Documents, and to the issuance or deemed issuance of the Letters of
Credit;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereby agree as follows:
Section 1. Definitions. For all purposes of this Guaranty, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms used herein shall have the meanings assigned to such terms in
Annex X attached hereto, which is incorporated by reference herein.
Section 2. Guaranty. The Guarantor hereby guarantees the punctual
payment in full of all amounts payable by LTV Steel to the Financing Parties
(including any Financing Party in its capacity as an Issuing Lender) and the
Agents under the Note Purchase Agreement (the "GUARANTY OBLIGATIONS").
Section 3. Guaranty Absolute. The Guarantor guarantees that the
Guaranty Obligations will be paid, regardless of any applicable law, regulation
or order now or hereinafter in effect in any jurisdiction affecting any of such
terms or the rights of any Financing Party or any Agent or the Collateral Agent
with respect thereto. The liability of the Guarantor under this Guaranty shall
be absolute and unconditional irrespective of:
<PAGE> 2
(a) Any lack of validity or enforceability of or defect or
deficiency in the Note Purchase Agreement, any other Transaction
Document (other than this Guaranty) or any other agreement or
instrument executed in connection with or pursuant thereto;
(b) Any change in the time, manner, terms or place of payment
of, or in any other term of, all or any of the Guaranty Obligations, or
any other amendment or waiver of or any consent to departure from the
Note Purchase Agreement, any other Transaction Document or any other
agreement or instrument relating thereto or executed in connection
therewith or pursuant thereto;
(c) Any sale, exchange or non-perfection of any property
standing as security for the liabilities hereby guaranteed or any
liabilities incurred directly or indirectly hereunder or any setoff
against any of said liabilities, or any release or amendment or waiver
of or consent to departure from any other guaranty, for all or any of
the Guaranty Obligations;
(d) The failure of any Financing Party or any Agent or the
Collateral Agent to assert any claim or demand or to enforce any right
or remedy against LTV Steel or any other Person hereunder or under the
other Transaction Documents;
(e) Any failure by LTV Steel or any other Person in the
performance of any obligation with respect to the Note Purchase
Agreement or any other Transaction Document;
(f) Any bankruptcy of LTV Steel or any other Person; or
(g) Any other circumstance which might otherwise constitute a
defense available to, or a discharge of, LTV Steel or any other Person
(including any guarantor) that is a party to any document or instrument
executed in respect of the Guaranty Obligations.
The obligations of the Guarantor under this Guaranty shall not be
affected by the amount of credit extended to LTV Steel, any payment by LTV Steel
(other than the full and final payment of all of the Guaranty Obligations),
allocation by any Financing Party or any Agent of any repayment in accordance
with the Note Purchase Agreement, any compromise or discharge of the Guaranty
Obligations, any application, release or substitution of collateral or other
security therefor, release of any guarantor, surety or other person obligated in
connection with any document or instrument executed in respect of the Guaranty
Obligations, or any further advances to LTV Steel.
Section 4. Waiver. The Guarantor hereby waives (a) promptness,
diligence, notice of acceptance, presentment, demand, protest, notice of protest
and dishonor, notice of intent to accelerate, notice of acceleration and any
other notice with respect to any of the Guaranty Obligations and this Guaranty,
and (b) any requirement that any Financing Party, any Agent or the Collateral
Agent protect, secure, perfect or insure any security interest or Lien on any
property subject thereto or exhaust any right or take any action against LTV
Steel or any other Person or entity or any collateral or that LTV Steel or any
other Person or entity be joined in any action hereunder. Should
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<PAGE> 3
the Agents seek to enforce the obligations of the Guarantor hereunder by action
in any court, the Guarantor waives any necessity, substantive or procedural,
that a judgment previously be rendered against LTV Steel or any other Person, or
that any action be brought against LTV Steel or any other Person, or that LTV
Steel or any other Person should be joined in such cause. Such waiver shall be
without prejudice to the Financing Parties or the Agents at their option to
proceed against LTV Steel or any other Person, whether by separate action or by
joinder. The Guarantor further expressly waives each and every right to which it
may be entitled by virtue of the suretyship law of the State of New York or any
other applicable jurisdiction.
Section 5. Several Obligations. The obligations of the Guarantor
hereunder are separate and apart from LTV Steel or any other Person, and are
primary obligations concerning which the Guarantor is the principal obligor. The
Guarantor agrees that this Guaranty shall not be discharged except by payment in
full of the Guaranty Obligations and complete performance of the obligations of
the Guarantor hereunder.
Section 6. Subrogation Rights. If any amount shall be paid to the
Guarantor on account of subrogation rights at any time when all the Guaranty
Obligations shall not have been paid in full, such amount shall be held in trust
for the benefit of the Financing Parties or the Agents in accordance with their
respective interests therein and shall forthwith be paid to the Financing
Parties or the Agents to be applied to the Guaranty Obligations. If (a) the
Guarantor shall make payment of all or any part of the Guaranty Obligations and
(b) all the Guaranty Obligations shall be paid in full, each of the Financing
Parties and the Agents will, at the Guarantor's request, execute and deliver to
the Guarantor appropriate documents, without recourse and without representation
or warranty, necessary to evidence the transfer by subrogation to the Guarantor
of any interest in the Guaranty Obligations resulting from such payment by the
Guarantor. Upon making payment with respect to any Guaranty Obligation, the
Guarantor shall be subrogated to the rights of the payee against LTV Steel with
respect to such Guaranty Obligation, provided that the Guarantor hereby agrees
that it shall not enforce any payment by way of subrogation with respect to
amounts due to the Financing Parties or the Agents until such time as all
obligations of LTV Steel to the Financing Parties and the Agents have been paid
in full and the Commitments have been terminated.
Section 7. Representations and Warranties. The Guarantor hereby
represents and warrants as follows:
(a) The Guarantor is a limited liability company duly
organized, validly existing in good standing under the laws of
Delaware.
(b) The Guarantor has received, or will receive, direct or
indirect benefit from the making of this Guaranty.
(c) This Guaranty is a legal, valid and binding obligation of
the Guarantor, enforceable against the Guarantor in accordance with its
terms, except as such enforceability may be (i) limited by the effect
of any applicable bankruptcy, insolvency, reorganization,
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<PAGE> 4
moratorium or other similar laws relating to or affecting the
enforcement of creditors' rights generally as they apply to the
Guarantor and (ii) subject to the effect of general principles of
equity.
(d) The Guarantor's execution, delivery and performance of
this Guaranty do not require the consent or approval of any other
Person.
Section 8. Amendments. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by the Guarantor therefrom shall in any
event be effective unless such amendment or waiver shall be in writing and
signed by the Agents after receiving consent thereto from the Required Financing
Parties. Such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
Section 9. Notices, Etc. All notices, demands, instructions and other
communications required or permitted to be given to or made upon any Person
pursuant hereto shall be in writing and shall be personally delivered or sent by
registered, certified or express mail, postage prepaid, return receipt
requested, or by facsimile transmission, and shall be deemed to be given for
purposes of this Guaranty, in the case of a notice sent by registered, certified
or express mail, on the date that such writing is actually delivered to the
intended recipient thereof in accordance with the provisions of this Section 9,
or in the case of facsimile transmission, when received and telephonically
confirmed. Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this Section 9, notices, demands,
instructions and other communications in writing shall be given to or made upon
the Guarantor, any Financing Party or any Agent, as the case may be, at their
respective Notice Addresses.
Section 10. No Waiver; Remedies. No failure on the part of any
Financing Party or any Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
Section 11. Costs and Expenses. The Guarantor agrees to pay, and cause
to be paid, on demand all reasonable costs and expenses actually incurred by the
Financing Parties and the Agents in connection with the enforcement of this
Guaranty including, without limitation, the reasonable fees and out-of-pocket
expenses of outside counsel to any such Person with respect thereto. The
agreements of the Guarantor contained in this Section 11 shall survive the
payment of all other amounts owing hereunder or under any of the other Guaranty
Obligations.
Section 12. Separability. Should any clause, sentence, paragraph,
subsection or Section of this Guaranty be judicially declared to be invalid,
unenforceable or void, such decision will not have the effect of invalidating or
voiding the remainder of this Guaranty, and the parties hereto agree that the
part or parts of this Guaranty so held to be invalid, unenforceable or void will
be deemed to have
-4-
<PAGE> 5
been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein.
Section 13. Captions. The captions in this Guaranty have been inserted
for convenience only and shall be given no substantive meaning or significance
whatever in construing the terms and provisions of this Guaranty.
Section 14. Successors and Assigns. This Guaranty shall (a) be binding
upon the Guarantor, its successors and assigns and (b) inure to the benefit of
and be enforceable by the Financing Parties and the Agents and their respective
successors, transferees and assigns; provided, however, that any assignment by
the Guarantor of its obligations hereunder to any Person other than a successor
to the Guarantor permitted by Section 3.09(a) of the Trust Agreement shall (i)
be subject to the prior written consent of the Financing Parties and the Agents
at their complete discretion, and (ii) only be made to a one hundred percent
(100%) owned affiliate of the Guarantor.
Section 15. Limitation by Law. All rights, remedies and powers provided
in this Guaranty may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this
Guaranty are intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent necessary so that
they will not render this Guaranty invalid, unenforceable, in whole or in part,
or not entitled to be recorded, registered or filed under the provisions of any
applicable law.
Section 16. Limit of Liability. Notwithstanding anything to the
contrary in this Guaranty, the obligations of the Guarantor hereunder shall be
limited to an aggregate amount equal to the largest amount that would not render
its obligations hereunder subject to avoidance under Section 548 of the United
States Bankruptcy Code or any comparable provisions of any applicable state law.
SECTION 17. GOVERNING LAW; TERMS. (A) THIS GUARANTY SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK AND NOT THE CONFLICTS OF LAWS
PRINCIPLES THEREOF.
(b) All judicial proceedings brought against the Guarantor with respect
to this Guaranty, may be brought in any state or federal court of competent
jurisdiction in the City of New York and by execution and delivery of this
Guaranty, the Guarantor accepts for itself and in connection with its
properties, generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid Courts, and irrevocably agrees to be bound by any final judgment
rendered thereby in connection with such documents from which no appeal has been
taken or is available. The Guarantor irrevocably waives any objection, including
without limitation, any objection of the laying of venue or based on the grounds
of forum non conveniens which it may now or hereafter have to the bringing of
any such action or proceeding in any such jurisdiction. The Guarantor further
irrevocably consents to the service of process out of any of such courts in any
such suit, action or proceeding by the mailing of copies thereof by certified
mail, return receipt requested, postage prepaid, or as prescribed by the
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<PAGE> 6
applicable law, to any party at its Notice Address as provided in this Guaranty.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of the Financing Parties or any Agent
to bring proceedings against the Guarantor in the courts of any other
jurisdiction.
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<PAGE> 7
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to
be duly executed by its manager thereunto duly authorized, as of the date first
written above.
GUARANTOR:
LTV STEEL PRODUCTS, LLC
a Delaware limited liability company
By:
-------------------------------------
Name: John C. Skurek
Title: Manager
-7-
<PAGE> 1
Exhibit 10.54
WINSTON & STRAWN
================================================================================
CONTRIBUTION AND SALE AGREEMENT
LTV STEEL PRODUCTS, LLC,
as Purchaser
LTV STEEL COMPANY, INC.,
as Servicer
and
LTV STEEL COMPANY, INC.
and
GEORGIA TUBING CORPORATION,
as initial Sellers
Dated as of February 26, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
DEFINITIONS............................................................................................-1-
1.1 Defined Terms.................................................................................-1-
1.2 Other Definitional Provisions.................................................................-1-
ARTICLE II
PURCHASE AND SALE OF INVENTORY.........................................................................-2-
2.1 Purchase and Sale of Inventory................................................................-2-
2.2 Purchase Price................................................................................-2-
2.3 Payment of Purchase Price.....................................................................-3-
2.4 No Repurchase.................................................................................-4-
2.5 Obligations Unaffected........................................................................-4-
2.6 Certain Charges...............................................................................-4-
ARTICLE III
CONDITIONS TO PURCHASE AND SALE.................................... ..................................-4-
3.1 Conditions Precedent to the Purchaser's Initial Purchase of Inventory.........................-4-
3.2 Conditions Precedent to All The Purchaser's Purchases of Inventory............................-5-
3.3 Conditions Precedent to each Seller's Obligations.............................................-5-
3.4 Conditions Precedent to the Addition of a Seller..............................................-6-
3.5 Suspension of Purchases.......................................................................-7-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES................................... .....................................-7-
4.1 Representations and Warranties of the Servicer................................................-7-
4.2 Representations and Warranties of each Seller.................................................-8-
ARTICLE V
AFFIRMATIVE COVENANTS.................................................................................-13-
5.1 Certificates; Other Information..............................................................-13-
5.2 Compliance with Laws, etc....................................................................-14-
5.3 Preservation of Corporate Existence..........................................................-14-
5.4 Visitation Rights............................................................................-14-
</TABLE>
-i-
<PAGE> 3
<TABLE>
PAGE
----
<S> <C> <C>
5.5 Location of Records..........................................................................-14-
5.6 Furnishing Copies, etc.......................................................................-14-
5.7 Obligations with Respect to Obligors and Inventory...........................................-15-
5.8 Further Action...............................................................................-15-
5.9 Certain Agreements Regarding Inventory.......................................................-17-
ARTICLE VI
NEGATIVE COVENANTS....................................................................................-18-
6.1 Liens........................................................................................-18-
6.2 Change in Name...............................................................................-18-
6.3 Accounting of Purchases......................................................................-18-
6.4 Ineligible Inventory.........................................................................-19-
ARTICLE VII
PURCHASE TERMINATION EVENTS...........................................................................-19-
7.1 Purchase Termination Events..................................................................-19-
7.2 Additional Remedies..........................................................................-21-
ARTICLE VIII
MISCELLANEOUS.........................................................................................-21-
8.1 Payment......................................................................................-21-
8.2 Costs and Expenses...........................................................................-21-
8.3 Successors and Assigns.......................................................................-22-
8.4 GOVERNING LAW................................................................................-23-
8.5 No Waiver; Cumulative Remedies...............................................................-23-
8.6 Amendments and Waivers.......................................................................-23-
8.7 Severability.................................................................................-23-
8.8 Notices......................................................................................-23-
8.9 Counterparts.................................................................................-23-
8.10 Construction of Agreement as Security Agreement..............................................-23-
8.11 WAIVERS OF JURY TRIAL........................................................................-24-
8.12 Submission to Jurisdiction; Waivers..........................................................-24-
8.13 Addition of Sellers..........................................................................-25-
8.14 Optional Termination of Seller...............................................................-25-
8.15 No Bankruptcy Petition.......................................................................-25-
8.16 Termination..................................................................................-25-
8.17 Confidentiality..............................................................................-25-
8.18 Effectiveness................................................................................-26-
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
ANNEX X Definitions
SCHEDULES
- ---------
1 Locations of Chief Executive Offices;
Locations of Books and Records
2 Legal and Corporate Names of Sellers
3 Form of Collateral Access Agreement
4 Listing of Applicable Bulk Sales Provisions
EXHIBITS
- --------
A-1 Form of Sales and Valuation Report (Monthly)
A-2 Form of Sales and Valuation Report (Weekly)
A-3 Form of Sales and Valuation Report (Daily)
B Form of Price and Fees Agreement
</TABLE>
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<PAGE> 5
CONTRIBUTION AND SALE AGREEMENT, dated as of February 26, 1998, among
LTV STEEL COMPANY, INC., a corporation organized under the laws of the State of
New Jersey ("LTV Steel", and in its role as Servicer of the Purchased Inventory,
the "Servicer") and GEORGIA TUBING CORPORATION, a corporation organized under
the laws of the state of Delaware ("Georgia Tubing"), and such other sellers as
may become parties hereto under the terms of this Agreement (each individually
referred to herein as a "Seller" and collectively as "Sellers") and LTV STEEL
PRODUCTS, LLC, a limited liability company organized under the laws of the State
of Delaware (the "Company" or the "Purchaser").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, in the ordinary course of business, the Sellers
maintain Inventory;
WHEREAS, the Sellers desire to sell to the Purchaser, and the
Purchaser desires to purchase from the Sellers, all the Sellers' right, title
and interest in, to and under the Inventory (as hereinafter defined) now
existing or hereafter maintained;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. Capitalized terms used in this Agreement
shall have the respective meanings assigned to such terms in Annex X hereto
unless otherwise defined herein.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof",
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and section, subsection, schedule and exhibit references are to
this Agreement unless otherwise specified.
(b) As used herein and in any certificate or other document
made or delivered pursuant hereto, accounting terms relating to the Sellers and
the Purchaser, unless otherwise defined herein, shall have the respective
meanings given to them under GAAP.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
<PAGE> 6
ARTICLE II
PURCHASE AND SALE OF INVENTORY
2.1 PURCHASE AND SALE OF INVENTORY. (a) Subject to the terms
and conditions of this Agreement, each Seller hereby sells, assigns, transfers
and conveys to the Purchaser, on the Effective Date and from time to time
thereafter, all its respective right, title and interest, in, to and under all
Inventory existing as of March 1, 1998 and thereafter maintained from time to
time, as provided in paragraph (b) below, and all related rights (but none of
the obligations) of each such Seller with respect to Inventory.
(b) On the Effective Date and on each subsequent date, as the
case may be (each, an "Inventory Purchase Date"), all of each Seller's right,
title and interest in and to (i) in the case of the Effective Date, all
Inventory existing as of March 1, 1998 and (ii) in the case of each such
subsequent date of purchase, all Inventory (if any) acquired by a Seller on such
date and then owned by such Seller shall be immediately and automatically sold,
assigned, transferred and conveyed to the Purchaser pursuant to paragraph (a)
above without any further action by the related Seller or any other Person.
(c) All sales of Inventory by each Seller hereunder shall be
without recourse to, or representation or warranty of any kind (express or
implied) by, the related Seller, except as otherwise specifically provided
herein and except as the provisions of Section 10.1 of the Inventory Processing
and Servicing Agreement may be applicable to a Seller in its capacity as
Servicer. The foregoing sale, assignment, transfer and conveyance does not
constitute and is not intended to result in a creation or assumption by the
Purchaser of any obligation of the related Seller or any other Person in
connection with the Inventory or any agreement or instrument relating thereto,
including any obligation to any Person from which such Inventory was acquired.
(d) In connection with the foregoing conveyances, each Seller
agrees at its own expense, (i) to indicate on the computer files and other
physical records relating to its Inventory that all Inventory included in such
list or print-out has been sold to the Purchaser in accordance with this
Agreement and (ii) in the case of LTV Steel and Georgia Tubing, to deliver to
the Purchaser a Sales and Valuation Report prepared as of a date no earlier than
thirty Business Days prior to the Effective Date.
2.2 PURCHASE PRICE. The amount payable by the Purchaser to
each Seller (the "Purchase Price") for Inventory to be purchased on any
Inventory Purchase Date under this Agreement shall be determined in accordance
with the letter agreement dated as of February 26, 1998 among LTV Steel, Georgia
Tubing and the Company, substantially in the form of Exhibit B hereto and as
amended from time to time (the "Price and Fees Agreement").
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<PAGE> 7
2.3 PAYMENT OF PURCHASE PRICE (a) Upon the fulfillment of the
conditions set forth in Article III, the Purchase Price for Inventory shall be
paid or provided for in the manner provided below. Each Seller hereby appoints
the Servicer as its agent to receive payment of the Purchase Price for Inventory
sold by it to the Purchaser and hereby authorizes the Purchaser to make all
payments due to each Seller directly to, or as directed by, the Servicer. The
Servicer hereby accepts and agrees to such appointment.
(b) The Purchase Price for Inventory purchased on the
Effective Date from each Seller shall be paid by the Purchaser as follows:
(i) to the extent the Purchaser has available cash for such
purpose, in cash;
(ii) by the delivery of Class A-1 Notes;
(iii) by the delivery of Subordinated Notes.
(c) The Purchase Price for Inventory purchased after the
Effective Date shall be paid by the Purchaser in accordance with the Price and
Fees Agreement as follows:
(i) in cash to the extent the Purchaser has cash available for
such purpose;
(ii) to the extent permitted by the Trust Agreement, by
delivery, or increase in the aggregate principal amount, of Class A-1
Notes; and
(iii) to the extent of any deficiency, by an increase in the
aggregate outstanding principal amount of Subordinated Notes.
(d) The Purchaser shall be entitled to pay all cash amounts in
respect of the Purchase Price of Inventory to an account of the Servicer for
further payment by the Servicer to the Sellers. To the extent that the Purchase
Price of Inventory is paid by delivery of Class A-1 Notes, such payment shall be
deemed made by entry on the records maintained by the Collateral Agent for such
purpose. All cash payments under this Agreement shall be made not later than
3:00 p.m. (New York City time) on the date specified therefor in Dollars in same
day funds or by check, as the Servicer shall elect and (i) if to the related
Seller, to the bank account designated in writing by the related Seller to the
Purchaser and the Servicer and (ii) if to the Servicer, to the bank account
designated in writing by the Servicer to the Purchaser.
(e) Whenever any payment to be made under this Agreement shall
be stated to be due on a day other than a Business Day, such payment need not be
made on such day, but may be made on the next succeeding Business Day with the
same force and effect as if made on the day
-3-
<PAGE> 8
on which such payment is stated to be due. Amounts not paid when due shall bear
interest at a rate equal at all times to ABR plus 2%, payable on demand.
2.4 NO REPURCHASE. Except to the extent expressly set forth
herein, the Sellers shall not have any right or obligation under this Agreement,
by implication or otherwise, to repurchase from the Purchaser any Purchased
Inventory or to rescind or otherwise retroactively affect any purchase of any
Purchased Inventory after the Inventory Purchase Date relating thereto.
2.5 OBLIGATIONS UNAFFECTED. The obligations of each Seller to
the Purchaser under this Agreement shall not be affected by reason of any
irregularity of any Inventory or any sale of Inventory.
2.6 CERTAIN CHARGES. The Sellers and the Purchaser agree that
discounts from vendors and reversals or reductions of other fees and charges and
other similar items, whenever created, accrued in respect of Purchased Inventory
shall be the property of the Purchaser and shall be paid to the Purchaser by the
Sellers by adjustment to the Purchase Price of Inventory subsequently sold
hereunder notwithstanding the occurrence of an Early Termination.
ARTICLE III
CONDITIONS TO PURCHASE AND SALE
3.1 CONDITIONS PRECEDENT TO THE PURCHASER'S INITIAL PURCHASE
OF INVENTORY. (a) The obligation of the Purchaser to purchase Inventory
hereunder on the Effective Date from the Sellers is subject to the conditions
precedent, which may be waived by the Purchaser, that the conditions set forth
below shall have been satisfied on or before the Effective Date:
(i) the Purchaser shall have received copies of duly
adopted resolutions of the Board of Directors of each Seller as in
effect on the Effective Date and in form and substance reasonably
satisfactory to the Purchaser, authorizing this Agreement, the
documents to be delivered by each such Seller hereunder and the
transactions contemplated hereby, certified by the Secretary or
Assistant Secretary of such Seller;
(ii) the Purchaser shall have received duly executed
certificates of the Secretary or an Assistant Secretary of each Seller,
dated the Effective Date and in form and substance reasonably
satisfactory to the Purchaser, certifying the names and true signatures
of the officers authorized on behalf of such Seller to sign this
Agreement or any instruments or documents in connection with this
Agreement;
(iii) the Purchaser shall have received reports of UCC-1
and other searches of the Sellers with respect to the Inventory
reflecting the absence of Liens thereon, except
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<PAGE> 9
Liens in favor of the Purchaser or the Collateral Agent created in
connection with the sale by the Seller of an interest in the Purchased
Inventory, Liens on Ineligible Inventory that would be reasonably
expected not to have a Material Adverse Collateral Effect, Permitted
Liens and Liens as to which the Purchaser has received UCC termination
statements to be filed on or prior to the Effective Date.
(iv) the Purchaser shall have received a cash equity
contribution of at least $50,000,000 which will be deposited into the
Cash Received Account.
3.2 CONDITIONS PRECEDENT TO ALL THE PURCHASER'S PURCHASES OF
INVENTORY. The obligation of the Purchaser to purchase any Inventory on each
Inventory Purchase Date (including the Effective Date) shall be subject to the
further conditions precedent, which may be waived by the Purchaser, that on such
Inventory Purchase Date:
(a) the following statements shall be true:
(i) no Early Termination, Purchase Termination
Event or Incipient Purchase Termination Event with respect to
such Seller shall have occurred and be continuing; and
(ii) no Trust Agreement Event of Default shall
have occurred and be continuing.
(b) with respect to the Effective Date, the Purchaser shall
have received such other approvals, opinions or documents as the
Purchaser may reasonably request; and
(c) with respect to any Inventory Purchase Date other than the
Effective Date, the Equity Interest in the Purchaser equaled or
exceeded $10,000,000;
PROVIDED, HOWEVER, that the failure of any Seller to satisfy any of the
foregoing conditions shall not prevent such Seller from subsequently selling
Inventory upon satisfaction of all such conditions and PROVIDED FURTHER that the
acceptance by each Seller of the Purchase Price for any item of Inventory on any
Inventory Purchase Date shall constitute a representation and warranty by such
Seller that on such Inventory Purchase Date such statements are true and that
the representations and warranties of such Seller contained in SECTION 4.2 and,
in the case of LTV Steel, its representations and warranties contained in
SECTION 4.1, as applicable, shall be true and correct in all material respects
on and as of such Inventory Purchase Date as though made on and as of such date,
except insofar as such representations and warranties are expressly made only as
of another date.
-5-
<PAGE> 10
3.3 CONDITIONS PRECEDENT TO EACH SELLER'S OBLIGATIONS. (a) The
obligations of each Seller on the Effective Date shall be subject to the
conditions precedent that such Seller shall have received on or before the
Effective Date the following, each dated the Effective Date and in form and
substance satisfactory to such Seller:
(i) a copy of duly adopted resolutions of the managers
of the Purchaser authorizing this Agreement, the documents to be
delivered by the Purchaser hereunder and the transactions contemplated
hereby, certified by the Secretary or Assistant Secretary of the
Purchaser; and
(ii) a duly executed certificate of the Secretary or
Assistant Secretary of the Purchaser certifying the names and true
signatures of the officers authorized on its behalf to sign this
Agreement and the other documents to be delivered by it hereunder.
(b) The obligations of the Sellers on each Inventory Purchase
Date shall be subject to the condition precedent that no Trust Agreement Event
of Default shall have occurred and be continuing.
3.4 CONDITIONS PRECEDENT TO THE ADDITION OF A SELLER. No
Affiliate of LTV approved by the Purchaser as an additional Seller pursuant to
subsection 8.13 shall be added as a Seller hereunder unless the conditions set
forth below shall have been satisfied on or before the date designated for the
addition of such Seller (the "Seller Addition Date"):
(i) the Purchaser shall have received a written request
to such effect duly executed and delivered by such Seller;
(ii) the Purchaser shall have received copies of duly
adopted resolutions of the Board of Directors or equivalent governing
body of such Seller as in effect on the related Seller Addition Date
and in form and substance reasonably satisfactory to the Purchaser,
authorizing the execution of a supplement to this Agreement making such
Affiliate a Seller hereunder, the documents to be delivered by such
Seller hereunder and the transactions contemplated hereby, certified by
the Secretary or Assistant Secretary of such Seller;
(iii) the Purchaser shall have received duly executed
certificates of the Secretary or an Assistant Secretary of such Seller,
dated the related Seller Addition Date and in form and substance
reasonably satisfactory to the Purchaser, certifying the names and true
signatures of the officers authorized on behalf of such Seller to
execute the instruments and documents executed in connection with the
addition of such Affiliate as a Seller under this Agreement;
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<PAGE> 11
(iv) LTV must own (directly or indirectly) at least 80%
of the issued and outstanding capital stock or other ownership
interests of such Seller;
(v) the representations and warranties made by each
Seller as of the Effective Date shall be made by such additional Seller
as of the initial Inventory Purchase Date with respect to such
additional Seller and shall be true and correct as to such additional
Seller in all respects as of such date;
(vi) the Purchaser shall have received secretary's
certificates, UCC lien search reports, UCC financing statements, legal
opinions and similar documentation required of the Sellers on or prior
to the Effective Date and such other documentation as may be reasonably
required by the Purchaser, the Administrative Agent or Collateral
Agent; and
(vii) if, after giving effect to such addition, such
Seller would be a Significant Seller, the Required Financing Parties
shall have approved such addition in writing.
3.5 SUSPENSION OF PURCHASES. The Purchaser and the Sellers
hereby agree that if on any Sales and Valuation Date the Equity Interest in the
Purchaser is less than $10,000,000 no further purchases of Inventory shall occur
under this Agreement until such time as the Equity Interest in the Purchaser
shall exceed $20,000,000.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF THE SERVICER. The
Servicer hereby represents and warrants to the Purchaser on the date hereof, on
the Effective Date and on each Inventory Purchase Date that:
(a) It (i) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation, and is duly qualified as a foreign corporation and is in
good standing in each jurisdiction in which the failure to so qualify
would have a Material Adverse Collateral Effect, and (ii) has the
requisite corporate power and authority to effect the transactions
contemplated hereby.
(b) The execution, delivery and performance by it of this
Agreement and all instruments and documents to be delivered hereunder
by it, and the transactions contemplated hereby and thereby, (i) are
within its corporate powers, have been duly authorized by all necessary
corporate action, including the consent of shareholders where
-7-
<PAGE> 12
required and do not (A) contravene its charter or by-laws, (B) violate
any law or regulation or any order or decree of any court or
governmental instrumentality or (C) conflict with or result in the
breach of, or constitute a default under, any material indenture,
mortgage or deed of trust or any material lease, agreement or other
instrument binding on or affecting it or any of its subsidiaries or any
of its properties, unless such violation, conflict, breach or default
would not, either individually or in the aggregate, have a Material
Adverse Collateral Effect. This Agreement has been duly executed and
delivered by the Servicer and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms except
(A) as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general, and (B) as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in
equity).
4.2 REPRESENTATIONS AND WARRANTIES OF EACH SELLER. Each Seller
hereby represents and warrants (and with respect to SECTION 4.2(n) below LTV
Steel represents and warrants as to itself and each other Seller) for the
benefit of the Purchaser and its assigns (including the Collateral Agent) on the
Effective Date and on each Inventory Purchase Date as follows:
(a) ORGANIZATION AND GOOD STANDING. Such Seller is a
corporation duly organized and validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation
and has full corporate power to execute, deliver and perform its
obligations under this Agreement.
(b) DUE QUALIFICATION. Such Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which the
conduct of its business requires such qualification, licenses or
approvals and where the failure to preserve and maintain such
qualification, licenses or approvals is reasonably likely to have a
Material Adverse Collateral Effect.
(c) DUE AUTHORIZATION. The execution and delivery of this
Agreement and the other Transaction Documents to which it is a party
and the consummation of the transactions provided for therein have been
duly authorized by such Seller by all necessary corporate action on its
part.
(d) NO PURCHASE TERMINATION EVENT. No (i) Early Termination,
(ii) Purchase Termination Event or (iii) Incipient Purchase Termination
Event with respect to such Seller has occurred and is continuing.
(e) VALID SALE; BINDING OBLIGATIONS. Each transfer of
Inventory made pursuant to this Agreement shall constitute a valid
sale, transfer and assignment of the Inventory to the Purchaser which
is enforceable against creditors of, and purchasers from, the Seller;
and
-8-
<PAGE> 13
this Agreement constitutes and each other Transaction Document to be
signed by such Seller when duly executed and delivered will constitute,
an enforceable obligation of such Seller in accordance with its terms,
except (A) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect affecting the enforcement of creditors'
rights in general, and (B) as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in
equity).
(f) NO VIOLATION. The execution, delivery and performance by
it of this Agreement and the other Transaction Documents to which it is
a party, and the transactions contemplated hereby and thereby, do not
(i) conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time
or both) a default under the Organizational Documents of such Seller or
any contract, indenture, loan agreement, mortgage, deed of trust, or
other agreement or instrument to which such Seller is a party or by
which such Seller or any of its properties is bound, (ii) result in the
creation or imposition of any Lien upon any of its properties pursuant
to the terms of any such contract, indenture, loan agreement, mortgage,
deed of trust, or other agreement or instrument, other than this
Agreement and the other Transaction Documents or (iii) violate any law
or any order, rule, or regulation of any court or of any federal,
state, local or other regulatory body, administrative agency, or other
governmental instrumentality of the United States of America having
jurisdiction over such Seller or any of its properties, except, in the
case of each of (i), (ii) and (iii) above, as shall not be reasonably
expected, either individually or in the aggregate, to have a Material
Adverse Collateral Effect.
(g) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the knowledge of such Seller, threatened against such
Seller before any court, regulatory body, administrative agency, or
other tribunal or governmental instrumentality in which there is a
reasonable possibility of an adverse determination or ruling that, in
the reasonable judgment of such Seller, (i) would invalidate this
Agreement or any other Transaction Document, (ii) would prevent the
consummation of any of the transactions contemplated by this Agreement
or any other Transaction Document, (iii) would materially and adversely
affect the performance by such Seller of its obligations under this
Agreement or any other Transaction Document or (iv) would materially
and adversely affect the validity or enforceability of this Agreement
or any other Transaction Document.
(h) BULK SALES ACT. Except as indicated on Schedule 4 hereto,
no transaction contemplated by this Agreement or any other Transaction
Document with respect to such Seller requires compliance with, or will
be subject to avoidance under, any bulk sales laws.
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(i) GOVERNMENT APPROVALS. No authorization or approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body in the United States of America is
required for the due execution, delivery and performance by such Seller
of this Agreement or any other Transaction Document to which it is a
party except for (x) the filing of the UCC financing statements and
continuation statements referred to in Article III, all of which, at
the time required in Article III, shall have been duly made and shall
be in full force and effect, or (y) any authorization, approval,
notice, or filing which, if not obtained, would not, either
individually or in the aggregate, be reasonably likely to have a
Material Adverse Collateral Effect .
(j) BONA FIDE INVENTORY. Each item of Inventory of such Seller
is, or will be, either a raw material purchased by such Seller for use
in manufacturing processes undertaken by it in the ordinary course of
its business or a product manufactured or in the process of manufacture
by or for the account of such Seller in the ordinary course of its
business for the purposes of sale to customers of such Seller or such
Seller's Affiliates. Such Seller has no knowledge of any fact which
should have led it to expect as of the date of its classification of
any Inventory as Eligible Inventory hereunder that either (i) such
Inventory for any reason would not constitute Eligible Inventory or
(ii) that its Collateral Value, if any, would not be fully realizable
upon its liquidation, sale or other disposition.
(k) OFFICE. The principal place of business and the chief
executive office of such Seller are as indicated on Schedule 1 hereto
or at such other locations permitted pursuant to and in accordance with
Section 5.5, and the offices where such Seller keeps its records
concerning its Inventory (and, to the extent in such Seller's
possession, records concerning any such Inventory which becomes
Purchased Inventory) and related contracts and all purchase orders and
other agreements related to such Inventory (and, to the extent in such
Seller's possession, related contracts, purchase orders and agreements
related to any such Inventory which becomes Purchased Inventory) are as
indicated on Schedule 1 hereto or at such other locations permitted
pursuant to Section 5.5.
(l) MARGIN REGULATIONS. No use of any funds obtained by such
Seller under this Agreement or the other Transaction Documents will
conflict with or contravene any of Regulations G, T, U and X
promulgated by the Board from time to time.
(m) QUALITY OF TITLE. Each item of Inventory which is to be
transferred to the Purchaser by such Seller shall be transferred by
such Seller free and clear of any Lien (other than any Permitted Lien
or any Lien on Ineligible Inventory that would be reasonably expected
not to have a Material Adverse
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Collateral Effect); immediately prior to such transfer such Seller
shall have had good and indefeasible title to, and was the sole owner
of, such Inventory free and clear of any Lien (other than any Permitted
Lien or any Lien on Ineligible Inventory that would be reasonably
expected not to have a Material Adverse Collateral Effect); and no
effective financing statement or other instrument similar in effect
covering any such Inventory, or any interest therein, is on file in any
recording office except such as may be filed in connection with any
Permitted Lien or any Lien on Ineligible Inventory that would be
reasonably expected not to have a Material Adverse Collateral Effect or
in favor of the Purchaser pursuant to this Agreement, and in favor of
the Collateral Agent.
(n) ACCURACY OF INFORMATION. All factual written information
set forth in the Confidential Information Memorandum dated January,
1998 relating to the transactions contemplated by the Transaction
Documents furnished by such Seller or its Affiliates (other than the
Purchaser) to the Purchaser, the Collateral Agent or the Financing
Parties is, and all other such factual, written information hereafter
furnished (if prepared by such Seller or any such Affiliate or, if not
prepared by such Seller or any such Affiliate, to the extent that
information contained therein was supplied by such Seller or any such
Affiliate) by such Seller or any such Affiliate to the Purchaser or the
Collateral Agent pursuant to or in connection with any Transaction
Document shall be, true and accurate in every material respect on the
date as of which such information is or will be furnished (unless such
information relates to another date), and such information is not, and
shall not be (as the case may be) incomplete by omitting to state a
material fact or any fact necessary to make the statements contained
therein not misleading as of such date, in each case in light of the
circumstances under which such information was provided, it being
understood and agreed that for purposes of this Section 4.2(n) the
reference to "factual information" shall not include projections and
pro forma financial information. All Inventory sold by each Seller
hereunder and designated on a Sales and Valuation Report as Eligible
Inventory will be, to the best knowledge of such Seller at its
respective Inventory Purchase Date, an item of Eligible Inventory.
(o) VALID TRANSFERS. No transfer of any Inventory to the
Purchaser by such Seller constitutes a fraudulent transfer or
fraudulent conveyance or is otherwise void or voidable under similar
laws or principles, the doctrine of equitable subordination or for any
other reason. The transfer of Inventory by such Seller to the Purchaser
pursuant to this Agreement, and all other transactions between such
Seller and the Purchaser, have been and will be made in good faith and
without intent to hinder, dely or defraud creditors of such Seller, and
such Seller acknowledges that it has received and will receive fair
consideration and reasonably equivalent value for the purchases by the
Purchaser of Inventory hereunder.
(p) TRADE NAMES. Such Seller uses no trade name in the
furnishing of its products or services which generate Inventory other
than its actual corporate name or other designations, each of which
begin with the phrase, "LTV". During the five years preceding the date
hereof (i) such Seller has not been known by any legal name or trade
name other than its corporate name and such other names as listed on
Schedule 2 hereto, (ii) nor has such Seller been the subject of any
merger or other corporate reorganization within the last five
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years, EXCEPT that (x) effective December 31, 1997, LTV Steel Tubular
Products Company was merged into LTV Steel and (y) on and prior to June
27, 1993, Georgia Tubing was known as "LTV Aerospace and Defense
Company".
(q) COMPLIANCE WITH APPLICABLE LAWS. Such Seller is in
compliance with the requirements of all applicable laws, rules,
regulations, and orders of all governmental authorities (federal,
state, local or foreign, and including, without limitation,
environmental laws), except for breaches which, individually or in the
aggregate, would not be reasonably likely to have a Material Adverse
Collateral Effect.
(r) TAXES. All material tax returns and reports of each Seller
and its Affiliates required to be filed by any of them have been timely
filed, and all material taxes, assessments, fees and other governmental
charges upon each Seller and its Affiliates and upon their respective
properties, assets, income, businesses and franchises which are due and
payable have been paid. Each Seller is not aware of any proposed tax
assessment against such Seller or any of its Affiliates which is not
being actively contested by such Seller or such Affiliate in good faith
and by appropriate proceedings; PROVIDED that such reserves or other
appropriate provisions, if any, as shall be required in conformity with
GAAP shall have been made or provided therefor.
(s) ERISA MATTERS. Such Seller and each of its ERISA
Affiliates is in compliance in all material respects with the
applicable provisions of ERISA and the regulations and published
interpretations thereunder, except for such noncompliance which could
not reasonably be expected to have a Material Adverse Collateral Effect
with respect to such Seller or Inventory transferred by it.
(t) SOLVENCY. Both prior to and after giving effect to the
transactions contemplated by the Transaction Documents, (i) the
combined assets of the Sellers, at fair valuation, will exceed their
combined liabilities (including contingent liabilities), (ii) the
combined capital of the Sellers will not be unreasonably small to
conduct their combined business, and (iii) the Sellers will not have
incurred debts, and do not intend to incur debts, beyond their ability
to pay such debts as they mature.
(u) INVESTMENT COMPANY ACT. Neither such Seller nor any of
such Seller's Subsidiaries is (i) an "investment company" registered or
required to be registered under the Investment Company Act of 1940, as
amended, or (ii) a "holding company", or a "subsidiary company" or an
"affiliate" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(v) OWNERSHIP. All of the issued and outstanding Capital Stock
of such Seller is owned, directly or indirectly, by LTV.
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(w) INDEBTEDNESS TO PURCHASER. Immediately prior to
consummation of the transactions contemplated hereby on the Effective
Date, such Seller had no outstanding Indebtedness to the Purchaser
other than amounts permitted by this Agreement.
(x) INVENTORY SCHEDULES. The Sales and Valuation Report dated
as of January 31, 1998 sets forth in all material respects an accurate
and complete listing as of the date or dates indicated thereon of all
Inventory as of such date and the information contained therein with
respect to the identity and Inventory Value and Collateral Value of
such Inventory is true and correct in all material respects as of the
dates indicated. As of the Effective Date, there has been no material
adverse change in the aggregate Collateral Value of the Inventory to be
transferred to the Purchaser on the Effective Date.
(y) FAIR LABOR STANDARDS ACT. All Inventory has or will have
been produced in compliance with the applicable requirements of the
Fair Labor Standards Act, as amended.
(z) SEPARATE LEGAL ENTITY. Each Seller acknowledges that the
Purchaser entered into this Agreement as a separate legal entity.
The representations and warranties set forth in this SECTION
4.2 shall survive the transfer and assignment of the respective Inventory to the
Purchaser pursuant to this Agreement. Each Seller hereby represents and warrants
to the Purchaser, as of the Effective Date and each Inventory Purchase Date,
that the representations and warranties of such Seller set forth in SECTION 4.2
are true and correct as of such date. Upon discovery by such Seller or the
Purchaser of a breach of any of the foregoing representations and warranties,
the party discovering such breach shall give prompt written notice to the other.
ARTICLE V
AFFIRMATIVE COVENANTS
Each Seller hereby agrees that, so long as there are any
amounts outstanding with respect to Purchased Inventory previously sold by any
Seller to the Purchaser or until an Early Termination with respect to such
Seller shall occur, whichever is later, such Seller shall:
5.1 CERTIFICATES; OTHER INFORMATION. Furnish to the
Purchaser:
(a) not later than 120 days after the end of each fiscal year
and not later than 60 days after the end of each of the first three
fiscal quarters of each fiscal year, a certificate of an Authorized
Officer of such Seller stating that, to the best of such Authorized
Officer's knowledge after due investigation, (A) such Seller during
such period has observed or performed in all material respects all of
its covenants and other agreements, and satisfied in
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all material respects every condition, contained in this Agreement to
be observed, performed or satisfied by it and that such Authorized
Officer has obtained no knowledge of any Purchase Termination Event or
Incipient Purchase Termination Event except as specified in such
certificate, or (B) if a Purchase Termination Event or Incipient
Purchase Termination Event shall have occurred and be continuing or
there shall have occurred any material noncompliance with any such
obligations, specifying the facts relating to each such Purchase
Termination Event, Incipient Purchase Termination Event or other
material noncompliance known to such officer and the nature and status
thereof and the actions, if any, being taken to cure such Purchase
Termination Event, Incipient Purchase Termination Event or other
material noncompliance; and
(b) promptly, such additional information with respect to the
Purchased Inventory as the Purchaser or the Collateral Agent may from
time to time reasonably request.
5.2 COMPLIANCE WITH LAWS, ETC. Comply in all material respects
with all Requirements of Law applicable to the Purchased Inventory; PROVIDED,
HOWEVER, that such Seller may contest any act, regulation, order, decree or
direction in any reasonable manner which shall not materially adversely affect
the rights of the Purchaser in the Purchased Inventory. Such Seller will comply,
in all material respects, with its obligations under contracts with its
suppliers relating to the Purchased Inventory except to the extent such
compliance would result in a violation of a Requirement of Law.
5.3 PRESERVATION OF CORPORATE EXISTENCE. Do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence and maintain such legal existence separate from that of the
Purchaser.
5.4 VISITATION RIGHTS. At any reasonable time upon reasonable
prior notice during normal business hours and from time to time permit the
Purchaser, or any of its agents or representatives, (i) to examine and make
copies of and abstracts from the records, books of account and documents
(including computer tapes and disks) of such Seller relating to the Purchased
Inventory hereunder and (ii) to visit the properties of such Seller for the
purpose of examining such records, books of account and documents, and to
discuss the affairs of such Seller relating to the Purchased Inventory or such
Seller's performance hereunder with any of its officers or directors and with
its independent certified public accountants.
5.5 LOCATION OF RECORDS. Keep its chief place of business and
chief executive office, and the offices where it keeps the records concerning
the Purchased Inventory (and all original documents relating thereto), at the
locations referred to for it on Schedule 1 hereto or, upon 30 days' prior
written notice to the Purchaser, at such other locations in a jurisdiction where
all action required by SECTION 5.8(a) shall have been taken and completed and be
in full force and effect.
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5.6 FURNISHING COPIES, ETC. Furnish to the Purchaser and the
Collateral Agent:
(a) within five Business Days of the Purchaser's request, a
certificate of the chief financial officer of such Seller certifying,
as of the date thereof, to the best knowledge of such officer, that no
Purchase Termination Event has occurred and is continuing and setting
forth the computations used by the chief financial officer of such
Seller in making such determination;
(b) promptly upon obtaining knowledge of the occurrence of any
Purchase Termination Event or Incipient Purchase Termination Event,
written notice thereof;
(c) promptly upon the chief legal officer of such Seller
obtaining knowledge of (a) the institution of any action, suit,
proceeding, governmental investigation or arbitration against or
affecting such Seller or (b) any material development in any such
action, suit, proceeding, governmental investigation or arbitration, in
which, in either case, there is a reasonable likelihood of an adverse
decision which, in the reasonable judgment of such Seller, would have a
Material Adverse Collateral Effect, written notice thereof;
(d) written notice of any other development that has resulted
in, or would be reasonably likely to have, a Material Adverse
Collateral Effect; and
(e) promptly upon determining that (i) any Purchased Inventory
designated as Eligible Inventory on the applicable Sales and Valuation
Report was not Eligible Inventory as of the date provided therefor or
(ii) (A) any Purchased Inventory is not Eligible Inventory at any other
subsequent date (other than by reason of the sale of such Purchased
Inventory to third parties, including Affiliates of such Seller) and
(B) the ineligibility of such Purchased Inventory would be reasonably
likely to have a Material Adverse Collateral Effect, written notice of
such determination.
5.7 OBLIGATIONS WITH RESPECT TO OBLIGORS AND INVENTORY. Take
all actions on its part reasonably necessary to maintain in full force and
effect its material rights under all contracts relating to the Purchased
Inventory.
5.8 FURTHER ACTION. In addition to the foregoing:
(a) Such Seller agrees that from time to time, at its expense,
it will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or
desirable in such Seller's reasonable judgment or that the Purchaser or
the Collateral Agent may reasonably request, in order to protect,
defend, or more fully evidence the Purchaser's right, title and
interest in the Purchased Inventory (or a perfected security interest
therein, with the priority contemplated by the Transaction Documents,
in
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the event that the transactions contemplated hereby were characterized
as a financing notwithstanding the intent of the parties hereto to
consummate a sale), or to enable the Purchaser to exercise or enforce
any of its rights in respect thereof. Without limiting the generality
of the foregoing, such Seller will upon the request of the Purchaser or
the Collateral Agent (A) execute and file such financing or
continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or, in the opinion of the
Purchaser, advisable, (B) indicate on its books and records that the
Purchased Inventory has been purchased by the Purchaser, and provide to
the Purchaser, upon request, copies of any such records, (C) obtain the
agreement of any Person having a Lien on any Inventory owned by such
Seller (other than any Permitted Lien or any Lien on Ineligible
Inventory that would be reasonably expected not to have a Material
Adverse Collateral Effect) to release such Lien upon the purchase of
any such Inventory by the Purchaser and (D) defend the Purchaser's
right, title and interest in Inventory against any third party claims
(other than any such claims in respect of Permitted Liens and Liens on
Ineligible Inventory that would reasonably be expected not to have a
Material Adverse Collateral Effect) that exist against such Inventory
at the time of purchase by the Purchaser.
(b) Such Seller hereby irrevocably authorizes the Purchaser to
file one or more financing or continuation statements, and amendments
thereto, relative to all or any part of the Purchased Inventory sold or
to be sold by such Seller without the signature of such Seller.
(c) If such Seller fails to perform any of its agreements or
obligations under this Agreement, the Purchaser or the Collateral Agent
may (but shall not be required to) perform, or cause performance of,
such agreements or obligations, and the expenses of the Purchaser
incurred in connection therewith shall be payable by such Seller as
provided in SECTION 8.3.
(d) Such Seller agrees that, whether or not a Purchase
Termination Event has occurred:
(1) the Purchaser (and its assignees) shall have the
right to sell any Purchased Inventory to any Person for a
price that is acceptable to the Purchaser. If required by the
terms of SECTION 9-504 or 9-505 of the UCC, the Purchaser (and
its assignees) may offer to sell any item of Purchased
Inventory to any Person;
(2) such Seller shall, upon the Purchaser's request
and at such Seller's expense, (x) assemble all such Seller's
documents, instruments and other records (including credit
files and computer tapes or disks) that (1) evidence or will
evidence or record Inventory sold by such Seller and (2) are
otherwise necessary or desirable to permit liquidation and/or
sale of such Purchased Inventory (collectively, the "Sale
Documents") and (y) deliver the Sale Documents to the
Purchaser or its designee at
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a place designated by the Purchaser. In recognition of such
Seller's need to have access to any Sale Documents which may
be transferred to the Purchaser hereunder, the Purchaser
hereby grants to such Seller a license to access the Sale
Documents transferred by such Seller to the Purchaser and to
access any such transferred computer software in connection
with any activity arising in the ordinary course of such
Seller's business, provided that such Seller shall not disrupt
or otherwise interfere with the Purchaser's use of and access
to the Sale Documents and its computer software during such
license period; and
(3) such Seller hereby irrevocably authorizes the
Purchaser or its designee to take any and all steps in the
Seller's name necessary or desirable to enforce all rights and
remedies of such Seller in respect of the Purchased Inventory.
5.9 CERTAIN AGREEMENTS REGARDING INVENTORY. In connection with
the conveyances provided for in SECTION 2.1 hereof, each Seller agrees from time
to time:
(a) to record and file, at its own expense, financing
statements (and continuation statements with respect to such financing
statements when applicable) with respect to the Purchased Inventory now
existing and hereafter acquired by the Purchaser from each Seller
meeting the requirements of applicable state law in such manner and in
such jurisdictions as are necessary to perfect the security interest of
the Purchaser in the Purchased Inventory under the UCC in the event the
transactions contemplated hereby were characterized as a financing
notwithstanding the intent of the parties hereto to effect a sale, and
to deliver evidence of such filings to the Purchaser on or prior to the
Effective Date (or, in the case of the filing of any such continuation
statements, at or before the time required);
(b) to cause the owner and operator of each Leased
Premises, Third-Party Warehouseman and Outside Processor and any other
Person in possession of Off-Site Inventory constituting Eligible
Inventory to execute and deliver to the related Seller an agreement
substantially in the form of Schedule 3A or 3B hereto (a "Collateral
Access Agreement") relating to access to such Off-Site Inventory that
is to be classified as Eligible Inventory now existing or hereafter
produced or acquired by the Purchaser which is at any time located at,
or in transit to, the premises owned or operated by such Person, and to
deliver to the Purchaser evidence of the execution and delivery of
Collateral Access Agreements with respect to all then existing Eligible
Inventory on or prior to the Effective Date (or the applicable Seller
Addition Date) along with an assignment in favor of the Purchaser
irrevocably assigning all right, title and interest of such Seller in
such Collateral Access Agreement to the Purchaser;
(c) to deliver to the Purchaser or its designee, at
its own expense, any Negotiable Documents of Title evidencing ownership
of Inventory acquired or to be acquired
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by the Purchaser and to be classified as Eligible Inventory, such
Negotiable Documents of Title to contain a full chain of endorsement
from the original "to order" party thereof to such Seller and with an
endorsement from such Seller in blank;
(d) to enforce on behalf of the Purchaser all
warranties made to such Seller by third parties with respect to the
Purchased Inventory; and
(e) to not, by an act or omission to act, create any
Lien, claim or right in, to or on the interest of LTV Steel Products
and the Collateral Agent in the Collateral or any proceeds thereof,
other than Permitted Liens, Receivables Facility Liens and the Liens
created by the Trust Agreement, nor will the Sellers permit or suffer
to exist, and shall take such actions as are necessary to remove, any
Lien, claim or right in, to or on the interest of LTV Steel Products
and the Collateral Agent in the Collateral or any proceeds thereof,
other than Permitted Liens, the Liens created by the Trust Agreement,
Receivables Facility Liens and Liens on Ineligible Inventory that would
be reasonably expected not to have a Material Adverse Collateral Effect
and will defend the right, title and interest of LTV Steel Products and
the Collateral Agent in and to the Collateral against the claims and
demands of all Persons arising from any act or omission to act of the
Sellers in respect of any Lien other than the Liens created by the
Trust Agreement, Permitted Liens, Receivables Facility Liens and Liens
on Ineligible Inventory that would be reasonably expected not to have a
Material Adverse Collateral Effect.
ARTICLE VI
NEGATIVE COVENANTS
Each Seller hereby agrees that, so long as there are any
amounts owed to such Seller with respect to Purchased Inventory previously sold
by such Seller to the Purchaser or until an Early Termination with respect to
such Seller shall occur, whichever is later, such Seller shall not, directly or
indirectly:
6.1 LIENS. Except as otherwise provided herein and in the
other Transaction Documents, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Lien upon or with respect
to, any Inventory, or assign any right to receive proceeds in respect thereof
EXCEPT for Permitted Liens, Receivables Facility Liens and Liens on Ineligible
Inventory that are reasonably expected not to result in a Material Adverse
Collateral Effect.
6.2 CHANGE IN NAME. Change its name, identity or corporate
structure in any manner which would or might make any financing statement or
continuation statement relating to this Agreement seriously misleading within
the meaning of SECTION 9-402(7) of the UCC without 30 days' prior written notice
to the Purchaser.
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6.3 ACCOUNTING OF PURCHASES. Prepare any financial statements
which shall account for the transactions contemplated hereby (other than capital
contributions contemplated hereby) in any manner other than as sales of the
Purchased Inventory by such Seller to the Purchaser or in any other respect
account for or treat the transactions contemplated hereby (including for
accounting purposes and, where taxes are not consolidated, for tax reporting
purposes, except as required by law), other than capital contributions, in any
manner other than as sales of the Purchased Inventory by such Seller to the
Purchaser.
6.4 INELIGIBLE INVENTORY. Without the prior written approval
of the Purchaser, take any action to cause, or which would permit, any item of
Eligible Inventory to cease to be Eligible Inventory, except (a) as otherwise
expressly provided by this Agreement or (b) unless the ineligibility of such
Purchased Inventory will be reasonably expected not to have a Material Adverse
Collateral Effect.
ARTICLE VII
PURCHASE TERMINATION EVENTS
7.1 PURCHASE TERMINATION EVENTS. If, with respect to any
Seller, any of the following events (herein called "Purchase Termination
Events") shall have occurred and be continuing:
(a) Such Seller shall fail to make any payment or deposit to
be made by it hereunder when due and such failure shall remain
unremedied for thirty days after the date such Seller becomes aware of
such failure; or
(b) A Trust Agreement Event of Default shall have occurred; or
(c) Any representation or warranty made or deemed to be made
by such Seller or any of its officers under or in connection with any
Transaction Document, Sales and Valuation Report or other information,
statement, record, certificate, document or report delivered pursuant
to a Transaction Document shall prove to have been false or incorrect
in any material respect when made or deemed made (including in each
case by omission of material information necessary to make such
representation, warranty, certificate or statement not misleading) and
such misrepresentation or breach of warranty shall continue unremedied
for a period of 30 days from the earlier of (A) the date any Authorized
Officer of such Seller obtains knowledge thereof and (B) the date such
Seller receives notice of the incorrectness of such representation or
warranty from the Purchaser; provided, further, that if such
misrepresentation or breach of warranty can be remedied and such Seller
is diligently pursuing such remedy and there shall not be in existence
a Cure Period Cut-off Event, then
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such misrepresentation or breach of warranty shall not constitute a
Purchase Termination Event for a period of an additional thirty (30)
days; or
(d) Such Seller shall fail to perform or observe any other
term, covenant or agreement contained in SECTION 5.2, 5.6 or 5.7 or
Article VI of this Agreement on its part to be performed or observed
and any such failure shall remain unremedied for a period of 30 days
from the earlier of (A) the date any Authorized Officer of such Seller
obtains knowledge of such failure and (B) the date such Seller receives
notice of such failure from the Purchaser; provided, further, that if
any Seller's failure to observe or perform any other term, covenant or
agreement contained in SECTION 5.2, 5.6 or 5.7 or Article VI of this
Agreement can be cured and such Seller is diligently pursuing such cure
and there shall not be in existence a Cure Period Cut-off Event, then
such failure shall not constitute a Purchase Termination Event for a
period of an additional thirty (30) days; or
(e) Such Seller shall fail to perform or observe any other
term, covenant or agreement contained in any Transaction Document on
its part to be performed or observed and any such failure shall remain
unremedied for a period of 30 days from the earlier of (A) the date any
Authorized Officer of such Seller obtains knowledge of such failure and
(B) the date such Seller receives notice thereof from the Purchaser,
the Servicer, or the Collateral Agent; provided, however, that if such
failure may be cured and if such Seller has commenced and is diligently
pursuing a cure to such failure and there shall not be in existence a
Cure Period Cut-off Event, then such failure shall not constitute a
Purchase Termination Event for a period of an additional thirty (30)
days; or
(f) Any Transaction Document to which such Seller is a party
shall cease, for any reason, to be in full force and effect, or such
Seller shall so assert in writing, or any event shall occur or act be
taken or be omitted to be taken such that would cause the Purchaser to
fail to have a valid and perfected first priority security interest in
the Purchased Inventory under the UCC (subject to Permitted Liens and
Liens on Ineligible Inventory that would be reasonably expected not to
have a Material Adverse Collateral Effect) in the event the
transactions contemplated hereby were characterized as a financing
notwithstanding the intent of the parties hereto to effect a sale; or
(g) There shall occur an Insolvency Proceeding with respect to
such Seller and such Seller is a Significant Seller;
(h) There shall occur an Unmatured Involuntary Insolvency
Proceeding with respect to a Seller that has not been released or fully
vacated within five Business Days after commencement, filing or levy,
as the case may be; provided that such event shall not constitute a
Purchase Termination Event if within five Business Days of such
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<PAGE> 25
commencement, filing or levy, the Required Financing Parties have
waived such event by a writing provided to the Servicer and the
Collateral Agent;
(i) There shall occur an Unmatured Involuntary Insolvency
Proceeding with respect to the Purchaser that has not been released or
fully vacated within five Business Days after commencement, filing or
levy, as the case may be; provided that such event shall not constitute
a Purchase Termination Event if within five Business Days of such
commencement, filing or levy, the Required Financing Parties have
waived such event by a writing provided to the Servicer and the
Collateral Agent; or
(j) LTV Steel has been terminated as Servicer following a
Servicer Termination Event;
then, (x) in the case of any Purchase Termination Event described in paragraph
(b), (g), and (i) above or in paragraph (h) above with respect to a Significant
Seller, the obligation of the Purchaser to purchase Inventory shall thereupon
automatically terminate without further notice of any kind, which is hereby
waived by the Sellers, and (y) in the case of any other Purchase Termination
Event with respect to any Seller, so long as such Purchase Termination Event
shall be continuing, the Purchaser may, and at the direction of the Required
Financing Parties must, terminate its obligation to purchase Inventory from such
Seller by written notice to the Sellers (any termination with respect to one or
more of the Sellers but not all Sellers pursuant to this Article VII is herein
called an "Early Termination" with respect to the affected Seller or Sellers) .
7.2 ADDITIONAL REMEDIES. Upon the occurrence of any Purchase
Termination Event, the Purchaser shall have, in addition to all other rights and
remedies under this Agreement or otherwise, all other rights and remedies
provided under the UCC of each applicable jurisdiction in the event the
transactions contemplated hereby are characterized as a financing
notwithstanding the intent of the parties hereto to effect a sale and all other
rights and remedies provided under other applicable laws, which rights shall be
cumulative. Without limiting the foregoing, the occurrence of a Purchase
Termination Event shall not deny to the Purchaser any remedy (in addition to
termination of the Purchaser's obligation to purchase Inventory from the
affected Seller) to which the Purchaser may be otherwise appropriately entitled,
whether by statute or other applicable law, at law or in equity.
ARTICLE VIII
MISCELLANEOUS
8.1 PAYMENT. Each cash payment to be made by the Purchaser
shall be made as provided in Sections 2.3(d) and 2.3(e) of this Agreement.
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8.2 COSTS AND EXPENSES. The Sellers, jointly and severally,
agree (a) to pay or reimburse the Purchaser and its assigns for all its
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement, the other Transaction Documents and any other documents prepared
in connection herewith and therewith, the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, all
fees and disbursements of counsel, (b) to pay or reimburse the Purchaser and its
assigns for all its costs and expenses incurred in connection with the
enforcement or preservation of any rights as against the Sellers under this
Agreement and any of the other Transaction Documents, including, without
limitation, the reasonable fees and disbursements of counsel to the Purchaser,
(c) to pay, indemnify, and hold the Purchaser and its assigns harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other similar taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement and any such
other documents and (d) to pay, indemnify, and hold the Purchaser harmless from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever (i) which may at any time be imposed on, incurred by
or asserted against the Purchaser in any way relating to or arising out of this
Agreement or the transactions contemplated hereby or in connection herewith or
any action taken or omitted by the Purchaser under or in connection with any of
the foregoing (all such other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements being
herein called "Indemnified Liabilities") or (ii) which would not have been
imposed on, incurred by or asserted against the Purchaser but for its having
purchased the Purchased Inventory hereunder (other than losses or other damages
caused by a change in commodity prices relating to Purchased Inventory,
PROVIDED, that the Sellers shall have no obligation under this subsection 8.2
hereunder to the Purchaser with respect to Indemnified Liabilities arising from
(x) the gross negligence or willful misconduct of the Purchaser, its agents
(excluding LTV Steel) or assignees or (y) any action taken, or omitted to be
taken, by a Servicer which is not an Affiliate of the Sellers. The agreements in
this subsection shall survive the sale and/or other liquidation of all Eligible
Inventory, the termination of this Agreement and the payment of all amounts
payable hereunder.
8.2 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the Sellers, the Purchaser and the Servicer and
their respective successors (whether by merger, consolidation or otherwise) and
assigns. Each Seller agrees that it will not assign or transfer all or any
portion of its rights or obligations hereunder without the prior written consent
of the Purchaser and the Collateral Agent. Each Seller acknowledges that the
Purchaser shall assign all of its rights hereunder to the Collateral Agent and
acknowledges that pursuant to the Trust Agreement, the Collateral Agent shall
have certain rights to transfer certain of its rights upon a Trust Agreement
Event of Default to the holders of the related Notes (each, a "Subsequent
Party"). Each Seller
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<PAGE> 27
consents to such assignment and agrees that the Collateral Agent and each
Subsequent Party, each to the extent provided in the Trust Agreement, shall be
entitled to enforce the terms of this Agreement and the rights (including,
without limitation, the right to grant or withhold any consent or waiver) of the
Purchaser directly against such Seller, whether or not a Purchase Termination
Event or a Servicer Termination Event has occurred. Each Seller further agrees
that, in respect of its obligations hereunder, it will act at the direction of
and in accordance with all proper requests and instructions from the Collateral
Agent or such Subsequent Party, as the case may be, until all amounts due to the
Collateral Agent or such Subsequent Party are paid in full; provided that if
instructions received from the Collateral Agent and such Subsequent Party are
inconsistent, such Seller shall comply with the instructions received from the
Collateral Agent. The Collateral Agent and each such Subsequent Party shall have
the rights of third-party beneficiaries under this Agreement.
8.4 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
8.5 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and
no delay in exercising, on the part of the Purchaser any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.
8.6 AMENDMENTS AND WAIVERS. Neither this Agreement, nor the
form of Subordinated Notes nor any terms thereof may be amended, supplemented or
modified except in a writing signed by the Purchaser, the Sellers, the Servicer
and the Collateral Agent.
8.7 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.8 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing delivered by hand
delivery or mail or transmitted via telecopy, and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered
by hand or three days after being deposited in the mail, first class postage
prepaid, to a domestic destination from the point where mailed or seven days
after being deposited in the mail, air mail postage prepaid, to an international
destination from the point where mailed, or,
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in the case of telecopy notice, when received as evidenced by the confirmation
of receipt, addressed to such party at its Notice Address.
8.9 COUNTERPARTS. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Purchaser.
8.10 CONSTRUCTION OF AGREEMENT AS SECURITY AGREEMENT. (a) The
parties to this Agreement intend that the transactions contemplated hereby shall
be, and shall be treated as, a purchase by the Purchaser and a sale by the
Sellers of the Purchased Inventory with respect thereto and not as a lending
transaction. If, however, notwithstanding the intent of the parties, such
transactions are deemed to be loans, each Seller hereby grants to the Purchaser
a first priority security interest in all of such Seller's right, title and
interest in and to the Inventory now existing and hereafter created, all monies
due or to become due and all amounts received with respect thereto, including,
without limitation, all amounts received upon disposition of Inventory to secure
all such Seller's obligations hereunder.
(b) This Agreement shall constitute a security agreement under
applicable law.
8.11 WAIVERS OF JURY TRIAL. THE SELLERS, THE SERVICER AND THE
PURCHASER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
8.12 SUBMISSION TO JURISDICTION; WAIVERS. To the maximum
extent permitted by applicable law, the Sellers, the Servicer and the Purchaser
each hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Transaction
Documents and Sale Documents to which it is a party, or for recognition
and enforcement of any judgement in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New
York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or
that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
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<PAGE> 29
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Person at its address set forth in SECTION 8.8 or at
such other address of which the Purchaser shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
8.13 ADDITION OF SELLERS. Subject to the terms and conditions
hereof, from time to time one or more Affiliates of LTV may become additional
Sellers party hereto. If any such Affiliate wishes to become an additional
Seller, it shall submit a written request to such effect to the Purchaser. The
Purchaser, in its sole and absolute discretion, may agree to or deny any such
request, PROVIDED that, if the Purchaser shall have failed to respond to any
such request within 30 days after receipt thereof, such request shall be deemed
to have been denied. If the Purchaser shall have agreed to any such request,
such Affiliate shall become an additional Seller party hereto on the related
Seller Addition Date upon satisfaction of the conditions set forth in subsection
3.4.
8.14 OPTIONAL TERMINATION OF SELLER. (a) One or more Sellers
may from time to time be terminated as a Seller hereunder on the date they cease
to be Affiliates of LTV, PROVIDED that the aggregate outstanding Inventory Value
of Purchased Inventory sold by all Sellers which so cease to be Affiliates at
such time (together with the aggregate outstanding Inventory Value of Purchased
Inventory sold by all Sellers which have been terminated pursuant to this
subsection within the preceding 90 days) shall not exceed 10% of the aggregate
outstanding Inventory Value of all Purchased Inventory at such time and
PROVIDED, FURTHER that no Purchase Termination Event or Incipient Purchase
Termination Event has occurred and is continuing, or would result as a result
thereof. From and after the date any such Seller ceases to be an Affiliate of
LTV, the Purchaser shall cease buying Inventory from such Seller. Each such
Seller shall be released as a Seller party hereto for all other purposes and
shall cease to be a party hereto on such date.
(b) A terminated Seller shall have no obligation to repurchase
Inventory previously sold by it to the Purchaser.
8.15 NO BANKRUPTCY PETITION. The Sellers and the Servicer
each covenant and agree that, prior to the date which is one year and one day
after all obligations payable to the Financing Parties under the Transaction
Documents have been paid in full, they will not institute against, or join any
other Person in instituting against, the Purchaser any Involuntary Insolvency
Proceeding. This SECTION 8.15 shall not be construed to limit the right of the
Servicer or any Seller to file any
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<PAGE> 30
claim in or otherwise take any action with respect to any such Involuntary
Insolvency Proceeding that was instituted against or with respect to the
Purchaser by any Person other than a Seller, the Servicer or any of their
respective Affiliates.
8.16 TERMINATION. This Agreement will terminate at such time
as (a) the Termination Date has occurred, and (b) all amounts owing to or by the
Purchaser hereunder shall have been paid in full; PROVIDED, HOWEVER, that the
indemnities of the Sellers to the Purchaser set forth in this Agreement shall
survive such termination.
8.17 CONFIDENTIALITY. The Purchaser agrees to keep
confidential all non-public information provided to it by the Sellers pursuant
to this Agreement; PROVIDED that nothing herein shall prevent the Purchaser from
disclosing any such information (i) to the Collateral Agent or the Financing
Parties, (ii) to its employees, directors, agents, attorneys, accountants and
other professional advisors, (iii) upon the request or demand of any
Governmental Authority having jurisdiction over the Purchaser, the Collateral
Agent or the Financing Parties (provided that notice of such request or demand
shall be furnished to the Sellers unless such notice is legally prohibited or
such Governmental Authority requests that such notice not be furnished to the
Sellers), (iv) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any Requirement of Law
(provided that notice of such order or requirement shall be furnished to the
Sellers unless such notice is legally prohibited or such court or Governmental
Authority requests that such notice or requirement not be furnished to the
Sellers), (vi) which has been publicly disclosed other than in breach of this
Agreement, or (vii) in connection with the exercise of any remedy hereunder or
under the Transaction Documents.
8.18 EFFECTIVENESS. This Agreement shall become effective on
the Effective Date.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
all as of the day and year first above written.
LTV STEEL PRODUCTS, LLC
By:________________________________
Printed Name: John C. Skurek
Title: Manager
LTV STEEL COMPANY, INC., as a Seller
By:________________________________
Printed Name: John C. Skurek
Title: Vice President and Treasurer
GEORGIA TUBING CORPORATION, as a Seller
By:________________________________
Printed Name: John C. Skurek
Title: Vice President and Treasurer
LTV STEEL COMPANY, INC., as Servicer
By:________________________________
Printed Name: John C. Skurek
Title: Vice President and Treasurer
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SCHEDULE 1
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LOCATIONS OF CHIEF EXECUTIVE OFFICES;
LOCATIONS OF BOOKS AND RECORDS
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<TABLE>
<CAPTION>
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State of Location of Offices Where
Seller Incorporation Chief Executive Office Records are Kept
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<S> <C> <C> <C>
LTV Steel Company, Inc. New Jersey 200 Public Square 200 Public Square
Cleveland, Ohio 44114 Cleveland, Ohio 44114
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Georgia Tubing Corporation Delaware Highway 370 Highway 370
Cedar Springs, Georgia 31732 Cedar Springs, GA 31732
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</TABLE>
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SCHEDULE 2
----------
LEGAL AND CORPORATE NAMES OF SELLER
-----------------------------------
<PAGE> 1
Exhibit 10.55
WINSTON & STRAWN
================================================================================
INVENTORY PROCESSING AND SERVICING AGREEMENT
AMONG
LTV STEEL PRODUCTS, LLC,
LTV STEEL COMPANY, INC.
AS PROCESSOR AND SERVICER
AND
THE CHASE MANHATTAN BANK,
AS COLLATERAL AGENT
DATED AS OF FEBRUARY 26, 1998
================================================================================
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I.
DEFINITIONS..............................................................................................1
Section 1.1. Definitions............................................................................1
ARTICLE II.
INVENTORY PROCESSING.....................................................................................1
Section 2.1. Inventory Processing Services to Be Performed by the Servicer..........................1
Section 2.2. Processing Purchased Inventory.........................................................2
ARTICLE III.
ACCOUNTS, COLLECTIONS, PURCHASES OF INVENTORY AND OTHER OB .............................................2
Section 3.1. Establishment of Servicer Accounts.....................................................2
Section 3.2. Collection Procedures..................................................................3
Section 3.3. Inventory Purchase Account.............................................................5
ARTICLE IV
INVENTORY STORAGE, SAFEKEEPING, MARKETING,SALES AND RELATED ACTIVITIES...................................5
Section 4.1. Storage and Safekeeping................................................................5
Section 4.2. Marketing and Sales Support............................................................6
Section 4.3. Maintenance of Records.................................................................6
Section 4.4. Sales and Valuation Reports............................................................6
Section 4.5. Appointment of Sub-Servicers...........................................................7
ARTICLE V
SERVICER AS AGENT........................................................................................7
Section 5.1. Appointment of the Servicer; Servicing.................................................7
ARTICLE VI.
COMPENSATION.............................................................................................9
Section 6.1. Compensation...........................................................................9
Section 6.2. Payment of Amounts Due to the Servicer.................................................9
Section 6.3. Survival...............................................................................9
ARTICLE VII.
REPRESENTATIONS, WARRANTIES AND COVENANTS................................................................9
Section 7.1. Representations and Warranties of the Servicer.........................................9
Section 7.2. Covenants of the Servicer.............................................................11
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
Section 7.3. Representations and Warranties of LTV Steel Products..................................15
Section 7.4. Covenants of LTV Steel Products.......................................................16
ARTICLE VIII.
THE SERVICER............................................................................................17
Section 8.1. Merger or Consolidation of the Servicer; Resignation..................................17
Section 8.2. Annual Statement as to Compliance.....................................................17
ARTICLE IX.
SERVICER TERMINATION EVENTS; SERVICING TERMINATION......................................................18
Section 9.1. Servicer Termination Events...........................................................18
Section 9.2. Remedies..............................................................................18
Section 9.3. Collateral Agent to Act; Appointment of Successor.....................................19
Section 9.4. Servicer Transfer to Successor Servicer, etc..........................................20
ARTICLE X.
LIABILITIES; INDEMNIFICATION............................................................................21
Section 10.1. Liabilities; Indemnification of LTV Steel Products....................................21
Section 10.2. Indemnification of the Servicer.......................................................21
ARTICLE XI.
MISCELLANEOUS...........................................................................................21
Section 11.1. Notices, etc..........................................................................21
SECTION 11.2. CHOICE OF LAW AND VENUE...................................................................22
Section 11.3. Effectiveness of the Agreement........................................................22
Section 11.4. Successors and Assigns................................................................22
Section 11.5. Headings..............................................................................23
Section 11.6. Interpretation of Agreement...........................................................23
Section 11.7. Severability of Provisions............................................................23
Section 11.8. Merger of Prior Agreements............................................................23
Section 11.9. Good Faith and Reasonableness.........................................................23
Section 11.10. Counterparts.............................................................................23
Section 11.11. Amendment................................................................................23
Section 11.12. No Insolvency Proceeding Against LTV Steel Products......................................24
Section 11.13. Exercise of Rights.......................................................................24
Section 11.14. No Recourse..............................................................................24
Section 11.15. Payment on Non-Business Days.............................................................24
SCHEDULES
Schedule I Processing Services
</TABLE>
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<PAGE> 4
INVENTORY PROCESSING AND SERVICING AGREEMENT
THIS INVENTORY PROCESSING AND SERVICING AGREEMENT (as from time to time
amended, supplemented or otherwise modified in accordance with the terms hereof,
this "Agreement"), dated as of February 26, 1998, is entered into by and among
LTV STEEL PRODUCTS, LLC, a Delaware limited liability company (together with its
successors and assigns, "LTV Steel Products"), LTV STEEL COMPANY, INC., a New
Jersey corporation, in its capacity as agent for LTV Steel Products (together
with its successors and assigns in such capacity, the "Servicer"), and THE CHASE
MANHATTAN BANK, in its capacity as Collateral Agent (together with its
successors and assigns in such capacity, the "Collateral Agent").
WITNESSETH:
WHEREAS, LTV Steel Products has acquired and will continue to acquire
certain raw materials and other inventory;
WHEREAS, LTV Steel Products intends to process such raw material and
other inventory into goods for sale and to sell such goods;
WHEREAS, LTV Steel Products has requested and the Servicer has agreed
(i) to provide it with processing services with respect to raw materials and
other inventory owned by LTV Steel Products, (ii) to provide it with storage,
safekeeping and related services with respect to such raw materials and other
inventory, and (iii) to provide certain marketing, collection, sales and
servicing responsibilities in respect of the operations of LTV Steel Products;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. DEFINITIONS. For all purposes of this Agreement, except as
otherwise expressly provided herein or unless the context otherwise requires,
capitalized terms used herein shall have the meanings assigned to such terms in
Annex X attached hereto, which is incorporated by reference herein.
ARTICLE II.
INVENTORY PROCESSING
Section 2.1. INVENTORY PROCESSING SERVICES TO BE PERFORMED BY THE
SERVICER. (a) The Servicer shall provide inventory processing services to LTV
Steel Products subject to and in accordance with the terms of this Agreement,
provided, however, that notwithstanding the foregoing, the parties hereto
acknowledge and agree that (x) title to the Purchased Inventory subject to this
Agreement shall be retained by LTV Steel Products and (y) the Servicer shall
hold,
<PAGE> 5
as bailee and consignee, the Collateral in its possession or maintained by it
solely for the benefit of LTV Steel Products and its permitted assigns pursuant
to this Agreement and the Trust Agreement. The Servicer agrees to perform and
observe the duties, responsibilities and obligations which are to be performed
and observed by the Servicer pursuant to this Agreement, as amended or
supplemented. Without in any way limiting the foregoing, the Servicer agrees to
use all reasonable effort to process the raw materials and other inventory of
LTV Steel Products so as to advance the business interests of LTV Steel Products
by creating materials and goods for sale.
Section 2.2. PROCESSING PURCHASED INVENTORY.
(a) The Servicer agrees to perform on behalf of LTV Steel
Products the processing services as described on Schedule I to this
Agreement, as such Schedule may be amended or supplemented from time to
time. In performing such processing, the Servicer shall utilize the
expertise, procedures and care as it would in processing similar
materials for its own account. LTV Steel Products and the Servicer
understand and agree that the accomplishment of the processing tasks
require the use of judgment and discretion.
(b) LTV Steel Products and the Servicer agree and understand
that certain of the raw materials and other inventory subject to this
agreement is consumed or otherwise used merely to facilitate the
processing of other inventory into products for sale. LTV Steel
Products hereby authorizes the Servicer to utilize such inventory in a
commercially reasonable manner to produce the products for sale within
the intention of this Agreement.
ARTICLE III.
ACCOUNTS, COLLECTIONS, PURCHASES
OF INVENTORY AND OTHER OBLIGATIONS
Section 3.1. ESTABLISHMENT OF SERVICER ACCOUNTS. (a) Contemporaneously
with the execution and delivery of this Agreement and for the purposes of this
Agreement and the Trust Agreement, the Servicer shall establish special purpose
noninterest bearing accounts in the name of the Collateral Agent for the benefit
of the Secured Parties (the "Cash Received Account" and the "Inventory Purchase
Account") (collectively, the "Servicer Accounts"). The Servicer Accounts shall
be within the sole dominion and control of the Collateral Agent for the benefit
of the Secured Parties. To the extent permitted by law, the Servicer shall give
LTV Steel Products and the Collateral Agent immediate notice if at any time the
Servicer Accounts shall be subject to any writ, judgment, warrant, consent,
execution or similar process. All funds from time to time held in the Servicer
Accounts shall be held in trust for payment and application in accordance with
the terms of this Agreement and the Trust Agreement (the Trust Agreement
provisions to control in the event of any inconsistencies with this Agreement).
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<PAGE> 6
(b) Each of the Servicer and LTV Steel Products acknowledges
and agrees that LTV Steel Products has granted in favor of the
Collateral Agent for the benefit of the Secured Parties, Liens on LTV
Steel Products's properties and assets to the extent described in the
Trust Agreement, including without limitation, all right, title and
interest of LTV Steel Products, if any, in and to the Servicer Accounts
and the funds on deposit in the Servicer Accounts. The Servicer hereby
acknowledges the appointment of the Servicer as agent for the
Collateral Agent for purposes of holding the Cash Received Account and
funds deposited therein for the benefit of the Secured Parties under
the terms and conditions of the Trust Agreement, and hereby accepts
such appointment and agrees to hold the Cash Received Account funds at
any time and from time to time on deposit in the Cash Received Account,
and all Transaction Documents from time to time in the possession of
the Servicer, as agent for the Collateral Agent for the benefit of the
Secured Parties (without any obligation on the part of the Servicer to
hold or dispose of the Servicer Accounts or funds deposited therein in
any manner except as provided herein and the Trust Agreement).
(c) The Servicer hereby agrees that it will and hereby does
waive any right to exercise any right of setoff, counterclaim or any
other right in respect of any Lien, statutory or otherwise, in respect
of the Servicer Accounts or the funds deposited therein or the other
Collateral, against any indebtedness owed to it in its capacity as
Servicer or otherwise, whether now or hereafter arising, by the
Collateral Agent, any other Secured Party or LTV Steel Products, and
the Servicer hereby waives all such rights which the Servicer may have
to proceed against the Servicer Accounts, or the funds deposited
therein.
(d) LTV Steel Products shall have no right to effect
withdrawals from the Cash Received Account and shall have only the
rights to receive funds out of the Inventory Purchase Account as
provided in SECTION 3.3 of this Agreement. The Servicer agrees (and
each of the Collateral Agent and LTV Steel Products hereby irrevocably
authorizes and instructs the Servicer subject to Article IX hereof),
upon receipt of notice that the Amortization Date with respect to any
Note has occurred, to take the following actions upon receipt of a
notice to such effect from the Collateral Agent: (i) to cease honoring
all instructions for transfers of funds hereunder or demands or other
requests and instructions as permitted hereunder by or on behalf of LTV
Steel Products, and (ii) to transfer immediately all funds on deposit
at such time in the Servicer Accounts to the Collateral Agent for
application by the Collateral Agent in accordance with the Trust
Agreement.
(e) The Servicer hereby agrees that it will perform and
observe all of its obligations and agreements contained in this
Agreement and the other Transaction Documents notwithstanding any
breach by LTV Steel Products of its obligations to the Servicer under
the Transaction Documents or any claim made by LTV Steel Products
against the Servicer.
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Section 3.2. COLLECTION PROCEDURES. The Servicer shall deposit all
Collections received in connection with the sale or other disposition of
Purchased Inventory, including any sale of Receivables arising therefrom, on the
date of receipt thereof by the Servicer into the Cash Received Account.
The funds deposited into the Cash Received Account shall be applied by
the Servicer as follows:
(a) If there shall be in existence a Trust Agreement Event of
Default, all funds in the Cash Received Account shall be remitted by
the Servicer on a daily basis to the Collateral Agent or otherwise paid
as the Collateral Agent may in writing direct;
(b) Subject to the provisions of SECTION 3.2(a) above, if LTV
Steel or an Affiliate of LTV Steel is not then the Servicer, to the
payment of all amounts then due and owing to the Servicer;
(c) Subject to the provisions of SECTION 3.2(e) below, on each
date on which there shall be in existence a Liquidity Shortfall Amount,
the Servicer shall, upon receipt of a Liquidity Shortfall Notice,
transfer all amounts on deposit in the Cash Received Account to the
Collateral Agent for deposit in the Liquidity Account until the
Collateral Agent has notified the Servicer that there shall no longer
be in existence a Liquidity Shortfall Amount;
(d) If the Amortization Date with respect to any Note shall
have occurred, on each of the first fifteen Business Days following
such Amortization Date, the Servicer shall remit to the Collateral
Agent an amount equal to 1/15th of the Amortization Amount as last
indicated by the Collateral Agent to the Servicer as required by
SECTION 8.02(b) of the Trust Agreement. If on any such Business Day
there shall not be sufficient funds in the Cash Received Account to
make such transfer to the Collateral Agent, the Servicer shall on each
subsequent Business Day transfer the entire balance in the Cash
Received Account to the Collateral Agent until such time as the
aggregate amount so transferred equals the amount required to have been
transferred under the operation of the first sentence of this
subparagraph (d).
(e) Notwithstanding any other provisions of this Agreement or
any other Transaction Document, if the Servicer receives a Debt Service
Shortfall Notice from the Collateral Agent, the Servicer shall transfer
all amounts in the Cash Received Account to the Collateral Agent on
each Business Day for deposit in the Note Account until such time as
the Collateral Agent has notified the Servicer that no Debt Service
Shortfall Amount exists.
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(f) On each Business Day, after making the transfers required
above, the Servicer shall transfer the balance of funds in the Cash
Received Account to the Inventory Purchase Account.
Section 3.3. INVENTORY PURCHASE ACCOUNT.
The Servicer shall deposit into the Inventory Purchase Account
all amounts required to be transferred therein under SECTION 3.2 of
this Agreement. On each Business Day, prior to the occurrence of an
Amortization Date with respect to any Note, the Servicer, on behalf of
LTV Steel Products, may withdraw from the Inventory Purchase Account
any or all of the funds remaining in the Inventory Purchase Account by
submitting a request to such effect (which may be in the form of a
standing instruction) to the Collateral Agent, for application to the
purchase of additional Purchased Inventory, payment of the Servicing
Fee or such other purposes as LTV Steel Products may direct. On each
Business Day following the occurrence of the Amortization Date with
respect to any Note, the Servicer shall remit to the Collateral Agent
such amount, if any, as may be necessary to cause the Collateral Agent
to receive the amount required to be transferred under Section 3.2(d)
of this Agreement. If, following the occurrence of the Amortization
Date with respect to any Note, the applicable Amortization Amount has
been paid in full and there are other Outstanding Notes as to which the
Amortization Date has not occurred, the Servicer, on behalf of LTV
Steel Products, may continue to withdraw funds from the Inventory
Purchase Account in accordance with the second sentence of this Section
3.3 as if such Amortization Date had not occurred, until the
Amortization Date with respect to any or all of such other Outstanding
Notes shall have occurred. Upon the occurrence of a Trust Agreement
Event of Default, the Servicer shall remit to the Collateral Agent the
remaining balance in the Inventory Purchase Account.
ARTICLE IV
INVENTORY STORAGE, SAFEKEEPING, MARKETING,
SALES AND RELATED ACTIVITIES
Section 4.1. STORAGE AND SAFEKEEPING. (a) The Servicer agrees to
provide or arrange for facilities for the storage and safekeeping of the
Purchased Inventory. All sites at which Purchased Inventory shall be held or
processed shall meet industry standards for the function or purpose of their use
with respect to property subject to this Agreement. The Servicer shall arrange
for the transportation of all items of Purchased Inventory as may be necessary
to accomplish the purposes of this Agreement.
(b) To the extent that Purchased Inventory shall be moved from
the possession of the Servicer to Leased Premises, a Third-Party
Warehouseman, Outside Processor or other facility not in the possession
of the Servicer or an Affiliate of the Servicer, the
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Servicer agrees to take the actions required to be taken by Sellers
under SECTION 5.9 of the Contribution and Sale Agreement to the extent
necessary to preserve the rights of LTV Steel Products and the
Collateral Agent in the Collateral.
Section 4.2. MARKETING AND SALES SUPPORT. The Servicer agrees to market
the Purchased Inventory for sale to customers (including without limitation to
Affiliates of LTV) of LTV Steel and its Affiliates in the same manner as it
would do so with respect to such goods for its own account. Subject to the
Servicer's obligations to comply with its contracts for the sale of Purchased
Inventory, in providing such services the Servicer shall use its reasonable best
efforts to maximize the return to LTV Steel Products with respect to the
Purchased Inventory.
Section 4.3. MAINTENANCE OF RECORDS. (a) As part of the Books and
Records, the Servicer shall maintain, implement and keep accounting, management
and administrative information, systems, procedures and records which are
adequate to generate accurate, complete and reliable statistical information
regarding the Purchased Inventory and other Collateral. These records and
systems shall include an ability to recreate records in the event of their
destruction.
(b) In relation to the Purchased Inventory, the Servicer shall also:
(i) maintain accurate and complete records of the
particulars of the places where such Purchased Inventory is
stored;
(ii) arrange for the safe-keeping of all documents of
title, receipts and insurance policies relating to such
Purchased Inventory which are not delivered to the Collateral
Agent;
(iii) maintain accurate and complete records of the
type, nature, quantity, quality and other specifications of
such Purchased Inventory in order that the Purchased Inventory
can be accurately described and identified;
(iv) maintain accurate and complete records of all
hedge contracts entered into in respect of the Purchased
Inventory; and
(v) maintain accurate and complete records of the
expenses incurred by or on behalf of LTV Steel Products in
respect of the Purchased Inventory.
Section 4.4. SALES AND VALUATION REPORTS.
On each Sales and Valuation Date the Servicer shall submit to LTV Steel
Products and the Collateral Agent a Sales and Valuation Report substantially in
the form of Exhibit F to the Trust Agreement which shall include the information
prescribed by the appropriate form of such Report. Each Sales and Valuation
Report shall also identify the Purchased Inventory which constitutes Eligible
Inventory and indicate the Collateral Value of such Eligible Inventory and shall
provide
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certain information regarding the aggregate outstanding principal amount of
Subordinated Notes, the Equity Interest in the Purchaser and the Servicing Fee.
The Servicer shall also prepare and deliver Sales and Valuation Reports as the
Collateral Agent may direct after the occurrence of a Trust Agreement Event of
Default.
Section 4.5. APPOINTMENT OF SUB-SERVICERS. (a) The Servicer may appoint
any Affiliate of LTV as a sub-Servicer for purposes of carrying out its
obligations under this Agreement. Further, the Servicer may engage third parties
to process and administer the Purchased Inventory. In such event, each
sub-Servicer or third party shall be an agent of the Servicer and no such
appointment shall relieve the Servicer of its primary obligation to provide or
arrange for the provision of services under this Agreement, and LTV Steel
Products and the Collateral Agent shall not be required to deal with any
sub-Servicers with respect to the obligations and duties of the Servicer.
(b) The Servicer shall provide notice to LTV Steel Products,
the Collateral Agent and the Placement Agent with respect to any such
sub-Servicing arrangement.
ARTICLE V
SERVICER AS AGENT
Section 5.1. APPOINTMENT OF THE SERVICER; SERVICING. (a) LTV Steel
Products hereby appoints the Servicer as its agent to perform the various
services as provided in this Agreement. In connection with and in consideration
of the Servicing Fee and the other fees provided in this Agreement, the Servicer
agrees to act as processor and servicer under this Agreement and agrees to
perform and carry out the duties, responsibilities and obligations which are to
be performed and carried out by the Servicer pursuant to this Agreement. In
contemplation of the foregoing, LTV Steel Products hereby appoints the Servicer
its attorney-in-fact with full power of substitution for the purpose of taking
such action and executing such agreements, instruments and other documents in
the name of LTV Steel Products, to the extent, and solely to the extent,
necessary to accomplish the purposes hereof. The relationship between the
Servicer and LTV Steel Products is that of agent and principal only and nothing
herein shall be construed to impose on the Servicer any obligations other than
those for which express provision is made herein.
(b) The Collateral Agent hereby appoints the Servicer as its
agent to service the Purchased Inventory and to maintain the Servicer
Accounts in accordance with this Agreement. LTV Steel Products agrees
that at any time following the termination of the release under the
Trust Agreement of the Collateral Agent's Lien on the Receivables, and
so long as such Lien has not been subsequently released, the Collateral
Agent shall have the right to notify the purchasers of Purchased
Inventory giving rise to such Receivables of the assignment of the
Collateral to the Collateral Agent and to direct such purchasers to
make payment of all amounts due or to become due to LTV Steel Products
directly to the Servicer on behalf of the Collateral Agent and, upon
such notification and at the expense of LTV Steel Products, to enforce
collection of any such Collateral, and to adjust,
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settle or compromise the amount or payment thereof, in the same manner
and to the same extent as LTV Steel Products might have done. In
contemplation of the foregoing, the Collateral Agent hereby appoints
the Servicer its attorney-in-fact (which appointment is revocable at
the discretion of the Collateral Agent) with full power of substitution
for the purpose of taking such action and executing such agreements,
instruments and other documents (including the endorsement of checks or
other instruments or orders in connection therewith) in the name of LTV
Steel Products, to the extent and solely to the extent, necessary to
accomplish the purposes hereof and the Trust Agreement. The
relationship between the Servicer and the Collateral Agent is that of
agent and principal only and nothing herein shall be construed to
impose on the Servicer any obligations other than those for which
express provision is made herein.
(c) The Servicer agrees to act as agent and bailee of the
Collateral Agent for the purposes of perfecting the Collateral Agent's
security interest in that portion of the Collateral held by the
Servicer which can be perfected by a secured party, or its agent and
bailee.
(d) The Servicer shall have full power and authority to do any
and all things which it may deem necessary or desirable in connection
with the advertising, solicitation, processing and servicing of the
Purchased Inventory, so long as such things are consistent with the
terms and conditions of this Agreement and its appointment as special
agent of LTV Steel Products or the Collateral Agent, as the case may
be, under this Agreement. Notwithstanding any other provision in this
Agreement, upon and after receipt by the Servicer of notice that the
Amortization Date with respect to any Note has occurred and until all
interest and principal amounts payable on all Notes as to which the
Amortization Date has occurred have been paid in full and any other
amounts payable in connection with such Amortization Date have been
paid, the Servicer shall act solely at the instruction of the
Collateral Agent in accordance with the terms hereof. The Servicer
shall have no liability to LTV Steel Products, the Collateral Agent or
any other Person for any action taken or omitted to be taken by it in
accordance with this Agreement, in accordance with a written
instruction from the Person entitled to give such instruction pursuant
to the terms of this Agreement, or in accordance with policies and
resolutions adopted by the Servicer's Board of Directors, other than an
act or omission to act which constitutes gross negligence or willful
misconduct on the part of the Servicer. Without limiting the generality
of the foregoing and subject to the occurrence of any Servicer
Termination Event, the Servicer is hereby authorized and empowered to
execute and deliver, on behalf of LTV Steel Products or the Collateral
Agent, as the case may be, any and all instruments, documents and other
writings (including the endorsement of checks or other instruments or
orders in connection therewith) necessary or desirable to fulfill its
duties and responsibilities hereunder with respect to the Collateral.
LTV Steel Products and the Collateral Agent shall furnish the Servicer
with any powers of attorney, revocable at the discretion of the
Collateral Agent, and other documents necessary or appropriate to
enable the Servicer to carry out its duties hereunder.
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(e) The Servicer shall not be liable for any action taken or
omitted to be taken by it as Servicer under or in connection with or
related to this Agreement, except for its own gross negligence or
willful misconduct and for breaches of the express terms and conditions
of this Agreement.
ARTICLE VI.
COMPENSATION
Section 6.1. COMPENSATION. For each Calendar Month the Servicer shall
be entitled to such fees, commissions and other amounts (the "Servicing Fee") as
set forth in the Price and Fees Agreement for performing its services as
servicer hereunder and for processing Purchased Inventory under this Agreement,
which Servicing Fee shall be payable by LTV Steel Products.
Section 6.2. PAYMENT OF AMOUNTS DUE TO THE SERVICER. The sole source of
funds to pay the amounts due to the Servicer hereunder and under the Price and
Fees Agreement shall be such funds as are related to LTV Steel Products under
the provisions of SECTIONS 3.2 and 3.3 of this Agreement.
Section 6.3. SURVIVAL. The obligation of LTV Steel Products to pay to
the Servicer all accrued and unpaid amounts in respect of this Article VI shall
survive the occurrence of a Servicer Termination Event or any other removal or
resignation of the Servicer pursuant to any other provision of this Agreement.
ARTICLE VII.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.1. REPRESENTATIONS AND WARRANTIES OF THE SERVICER. The
Servicer hereby represents and warrants to LTV Steel Products and the Collateral
Agent as follows:
(a) ORGANIZATION AND GOOD STANDING. The Servicer is a
corporation, duly organized, validly existing and in good standing
under the laws of the State of New Jersey, and is duly qualified to do
business in the State of New Jersey, with full corporate power and
authority to own its properties and assets and to conduct its business
as currently conducted and to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby.
(b) DUE AUTHORIZATION AND NO CONFLICT. The execution, delivery
and performance of this Agreement by the Servicer have been duly
authorized by all requisite corporate action and will not conflict with
or result in a breach of any of the terms or provisions of, or
constitute a default under, any material agreement or instrument to
which it is bound or to which any of its property or assets is subject,
nor will such action result in any violation of the Organizational
Documents of the Servicer, or of any law, rule or
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regulation, foreign or domestic, applicable to the Servicer where such
conflict, breach or default would be reasonably expected to have a
material adverse effect on the ability of the Servicer to perform its
obligations under this Agreement.
(c) NO CONSENT. No consent, approval, authorization, order,
registration, filing, qualification, license or permit from, of or with
any Person, including without limitation, any court or governmental
agency or body of any governmental jurisdiction, any state or any
political subdivision of either having jurisdiction over the Servicer
or any of its properties or assets is required to be obtained by or
with respect to the Servicer in connection with the execution, delivery
and performance by the Servicer of this Agreement and the consummation
of the transactions contemplated hereby, other than such as have been
obtained or with respect to which the failure to so obtain are not
reasonably foreseeable to have a Material Adverse Collateral Effect.
(d) BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by the Servicer and constitutes the
valid and legally binding obligation of the Servicer, enforceable
against the Servicer in accordance with its terms except as
enforceability may be limited by applicable bankruptcy, reorganization,
receivership, insolvency, moratorium or other similar laws affecting
the enforcement of creditors' rights and remedies and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(e) NO PROCEEDING. As at the date of this Agreement, there are
no actions, proceedings or investigations pending or to the knowledge
of the Servicer, threatened, against the Servicer before any court,
administrative agency or other tribunal:
(i) in which there is a reasonable possibility of an
adverse decision which could materially and adversely affect
the validity or enforceability of this Agreement or any other
Transaction Document;
(ii) in which there is a reasonable possibility of an
adverse decision which could question the consummation by the
Servicer of any of the transactions contemplated by this
Agreement or any other Transaction Document; or
(iii) in which there is a reasonable possibility of an
adverse decision which could materially and adversely affect
the ability of the Servicer to perform its obligations under
this Agreement or any other Transaction Document.
(f) NO FINANCING STATEMENT. There is no effective financing
statement (or similar statement, mortgage or instrument of registration
under the law of any jurisdiction) now on file or registered in any
public office filed or purporting to be filed by the Servicer covering
an interest of any kind in the Collateral or the Transaction Documents
or intended so to be, other than those required to perfect Liens in
favor of the Secured Parties,
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Permitted Liens, Receivables Facility Liens and Liens on Ineligible
Inventory that would be reasonably expected not to have a Material
Adverse Collateral Effect.
Section 7.2. COVENANTS OF THE SERVICER. The Servicer covenants to LTV
Steel Products and the Collateral Agent that so long as this Agreement shall
remain in effect:
(a) ORGANIZATION AND GOOD STANDING. The Servicer will preserve
and maintain its existence as a corporation in good standing under the
laws of New Jersey and remain qualified to perform its duties and
obligations hereunder under the laws of each jurisdiction where the
failure to preserve and maintain such qualification would be reasonably
expected to materially adversely affect the ability of the Servicer to
perform its obligations under this Agreement.
(b) BOOKS AND RECORDS. The Servicer will maintain and
implement administrative operating procedures and keep and maintain all
Books and Records reasonably necessary or advisable in accordance with
the terms hereof and of the Transaction Documents.
(c) INSPECTION. The Servicer will upon reasonable prior notice
permit LTV Steel Products and its representatives and the Collateral
Agent (upon its request or upon the direction of the Required Financing
Parties) and the Placement Agent and any officer or employee of, or
agent designated by, the foregoing to have access during normal
business hours to the Books and Records of the Servicer in order to
examine such Books and Records with respect to the transactions
contemplated by the Transaction Documents.
(d) FILING AND RECORDING. The Servicer will prepare and, upon
execution thereof by the Purchaser or the Collateral Agent (if
required), file UCC financing statements and other documents required
by the terms of the Transaction Documents to be filed or recorded.
(e) COMPLIANCE WITH LAWS. The Servicer will comply, in all
material respects, with all material laws, rules, regulations, orders,
decrees and directions of any governmental authority applicable to its
obligations under this Agreement and the other Transaction Documents.
(f) NO LIENS. The Servicer will not, by any act or omission to
act, create any Lien, claim or right in, to or on the interest of LTV
Steel Products and the Collateral Agent in the Collateral or any
proceeds thereof, other than Permitted Liens, Receivables Facility
Liens and the Liens created by the Trust Agreement, nor will the
Servicer permit or suffer to exist, and shall take such actions as are
necessary to remove, any Lien, claim or right in, to or on the interest
of LTV Steel Products and the Collateral Agent in the Collateral or any
proceeds thereof, other than Permitted Liens, the Liens created by the
Trust Agreement, Receivables Facility Liens and Liens on Ineligible
Inventory that would
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be reasonably expected not to have a Material Adverse Collateral Effect
and will defend the right, title and interest of LTV Steel Products and
the Collateral Agent in and to the Collateral against the claims and
demands of all Persons in respect of any Lien other than the Liens
created by the Trust Agreement, Permitted Liens, Receivables Facility
Liens and Liens on Ineligible Inventory that would be reasonably
expected not to have a Material Adverse Collateral Effect.
(g) NOTICE OF LIENS. The Servicer will advise LTV Steel
Products and the Collateral Agent in reasonable detail, promptly after
the Servicer has obtained actual knowledge (i) of any Lien asserted or
claim made against any of the Collateral or any proceeds thereof, other
than the Liens created by the Trust Agreement, Receivable Facility
Liens, Liens on Ineligible Inventory that would not reasonably be
expected to have a Material Adverse Collateral Effect and Permitted
Liens, and (ii) of the occurrence of any breach by the Servicer of any
of its representations, warranties and covenants contained herein or in
any other Transaction Document.
(h) CONTINUATION STATEMENTS. The Servicer shall file
continuation statements in the offices in which UCC financing
statements were filed in connection with the acquisition of Purchased
Inventory by LTV Steel Products in a manner and at times as shall be
required to preserve the priority of the security interest therein
contemplated by the Transaction Documents as well as the bailment and
consignment contemplated hereby; the Servicer shall file and refile
continuation statements in such offices and at such times as shall be
reasonably requested by LTV Steel Products, or the Collateral Agent, to
perfect and preserve, and continue the perfection (and priority
contemplated by the Trust Agreement) of, the Liens and other rights and
interests granted to the Collateral Agent for the benefit of the
Secured Parties under the Trust Agreement.
(i) INFORMATION. All factual information furnished by the
Servicer in writing to LTV Steel Products, the Collateral Agent or any
Secured Party on or before the Effective Date and from time to time
under the Transaction Documents shall be true and correct in all
material respects as of the date thereof, in light of the circumstances
under which such information was provided, it being understood and
agreed that for purposes of this SECTION 7.2(i), the reference to
"factual information" shall not include projections and pro forma
financial information.
(j) REPORTS. The Servicer shall provide, on an annual basis,
to the Placement Agent, the Collateral Agent and LTV Steel Products, a
report prepared by the Servicer with respect to such information as the
Placement Agent, the Collateral Agent, the Required Financing Parties
or LTV Steel Products may reasonably request regarding performance by
the Servicer of its duties hereunder.
(k) NON-CONSOLIDATION WITH SERVICER. LTV Steel shall be
operated in such a way that LTV Steel Products would not be
substantively consolidated into the bankruptcy estate
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of LTV Steel, and the separate existence of LTV Steel Products would
not be disregarded in the event of LTV Steel's bankruptcy, and LTV
Steel and LTV Steel Products hereby acknowledge that each of them is
entering into the transactions contemplated by this Agreement in
reliance upon the identity of LTV Steel Products as a legal entity
separate from LTV Steel. Therefore, from and after the date hereof, LTV
Steel and LTV Steel Products shall take all reasonable steps to
continue the identity of LTV Steel Products as a separate legal entity
and to make it apparent to third Persons that LTV Steel Products is an
entity with assets and liabilities distinct from those of LTV Steel and
any other Person, and is not a division of LTV Steel or any other
Person; provided that it is understood that LTV Steel Products may be
treated for tax purposes as a branch or division of LTV Steel. Without
limiting the generality of the foregoing, LTV Steel and LTV Steel
Products shall take such actions as shall be required in order that:
(i) LTV Steel Products is a limited purpose Delaware
limited liability company whose primary activities are
restricted to those set forth in its certificate of formation,
as amended;
(ii) At least one of the managers of LTV Steel
Products shall be an "Independent Manager" (as defined in its
certificate of formation, as amended). The managers of LTV
Steel Products shall not approve, or take any other action to
cause, the commencement of a voluntary case or other
proceeding with respect to LTV Steel Products under any
applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law, or the
appointment of or taking possession by, a receiver,
liquidator, assignee, trustee, custodian, or other similar
official for LTV Steel Products unless the Independent Manager
of LTV Steel Products shall approve the taking of such action
in writing prior to the taking of such action. In the event
the Independent Manager resigns or otherwise ceases to be a
manager, there shall be selected a replacement Independent
Manager for LTV Steel Products;
(iii) No Independent Manager shall at any time serve
as a trustee in bankruptcy for LTV Steel, LTV Steel Products
or any of their Affiliates;
(iv) All employees, consultants and agents of LTV
Steel Products will be compensated by it from its own funds
for services provided to it except as provided in the
Transaction Documents. Except for incidental purposes and for
consideration that is not material, LTV Steel Products will
not engage any agents other than the Servicer (and the other
Sellers as sub-agents of the Servicer), which will be fully
compensated for its services to LTV Steel Products by payment
of the fees and other amounts payable to the Servicer under
the Price and Fees Agreement;
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(v) LTV Steel Products will not incur any material
indirect or overhead expenses for items shared between it and
LTV Steel and any of its Affiliates which are not reflected in
the fees payable or expenses or costs reimbursable to the
Servicer as provided in the Price and Fees Agreement. To the
extent, if any, that LTV Steel Products, on the one hand, and
LTV Steel or any of its Affiliates, on the other hand, share
items of expenses not reflected in the fees and other amounts
payable to the Servicer under the Price and Fees Agreement,
such as legal, auditing, other professional services, and
expenses of due diligence and other expenses attributable to
the transactions contemplated by the Transaction Documents,
such expenses will be allocated to the extent practical on the
basis of actual use or the value of services rendered, and
otherwise on a basis reasonably related to the actual use or
the value of services rendered;
(vi) The operating expenses of LTV Steel Products
will be paid by it from its own assets;
(vii) The Books and Records of LTV Steel Products
will be maintained separately from those of LTV Steel and each
of its Affiliates;
(viii) LTV Steel Products will have its own financial
statements prepared and any financial statements of LTV Steel
or any of its Affiliates which are consolidated to include LTV
Steel Products will contain notes stating that (A) the assets
of LTV Steel Products are owned by it and are not available to
creditors of LTV Steel or any other Seller and (B) LTV Steel
Products is a separate legal entity with creditors who have
received security interests in its assets;
(ix) The assets and liabilities of LTV Steel Products
will be maintained in a manner that facilitates their
identification and segregation from those of LTV Steel or any
of its Affiliates;
(x) LTV Steel Products will strictly observe
appropriate formalities in its dealings with the Servicer and
each of its Affiliates, and funds or other assets of LTV Steel
Products will not be commingled with those of the Servicer or
any of its Affiliates except as permitted under the
Transaction Documents. LTV Steel Products shall not maintain
joint bank accounts or other depository accounts to which LTV
Steel or any of its Affiliates has independent access (other
than the Servicer, in its capacity as such);
(xi) LTV Steel Products will maintain an arm's length
relationship with LTV Steel and each of its Affiliates. If LTV
Steel or any of its Affiliates renders or otherwise furnishes
services to LTV Steel Products (other than pursuant to the
Transaction Documents), LTV Steel Products will pay fair and
adequate compensation to such Person for such services;
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(xii) Except as provided in the Guaranty and as
contemplated by the PBGC Settlement Agreement or as required
by applicable law, neither LTV Steel Products, on the one
hand, nor LTV Steel or any of its Affiliates, on the other
hand will be or will hold itself out to be responsible for the
debts of the other or the decisions or actions respecting the
daily business and affairs of the other; and
(xiii) Each of LTV Steel Products and LTV Steel will
hold themselves out to the public as separate entities and
conduct business in its own name, except that LTV Steel will
conduct business as agent on behalf of LTV Steel Products;
notwithstanding any other provisions of the Transaction
Documents, it is understood that LTV Steel Products is
permitted to participate in the cash management programs of
the LTV Steel Group..
Section 7.3. REPRESENTATIONS AND WARRANTIES OF LTV STEEL PRODUCTS. LTV
Steel Products represents and warrants to the Servicer that:
(a) ORGANIZATION AND GOOD STANDING. LTV Steel Products is a
limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware and is duly qualified
as a foreign organization and in good standing under the laws of each
jurisdiction in which its business or activities require such
qualification, except for such jurisdictions where the failure to
obtain such qualification would not be reasonably likely to have a
Material Adverse Collateral Effect, and has full company power and
authority to own its assets and to transact the business in which it is
now engaged, and to execute, deliver and perform this Agreement.
(b) DUE AUTHORIZATION AND NO CONFLICT. The execution, delivery
and performance of this Agreement have been duly authorized by LTV
Steel Products by all requisite company action and will not in any
material respects conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, or result in the
creation or imposition of any Lien (other than Permitted Liens) upon
any of its property or assets pursuant to the terms of, any material
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument by which it is bound or to which any of its
property or assets is subject, nor will such action result in any
violation of the limited liability company agreement of LTV Steel
Products, or of any material order, judgment, award or decree of any
court, arbitrator or governmental authority applicable to LTV Steel
Products, or of any existing material law, rule or regulation
applicable to LTV Steel Products.
(c) NO CONSENT. No material consent, approval, authorization,
order, license, registration, filing, qualification or permit from, of
or with any Person, including without limitation, any court or
governmental agency or body of the United States, any state or any
political subdivision of either having jurisdiction over LTV Steel
Products or any of its properties or assets is required to be obtained
by or with respect to LTV Steel Products in
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connection with the execution, delivery and performance by LTV Steel
Products of this Agreement or the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby, other
than such as have been obtained or will be obtained by LTV Steel
Products as required and the filing of UCC financing statements and
continuation statements.
(d) BINDING OBLIGATION. This Agreement constitutes the valid
and legally binding obligation of LTV Steel Products, enforceable
against LTV Steel Products in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, reorganization,
receivership, insolvency, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity
or at law).
(e) INVESTMENT COMPANY ACT. LTV Steel Products is not an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
(f) NO LITIGATION. No litigation, investigation or
administrative proceeding of or on behalf of any court, arbitrator or
governmental authority is pending or, to LTV Steel Products's
knowledge, threatened against LTV Steel Products or any of its assets
(i) with respect to the Transaction Documents, or (ii) in which there
is a reasonable possibility of an adverse decision that would have a
material adverse effect on the ability of LTV Steel Products to perform
its obligations under the Transaction Documents.
(g) MISCELLANEOUS. LTV Steel Products has paid all of its
taxes except those taxes the liability for which LTV Steel Products has
contested in good faith. Other than its liabilities as an ERISA
Affiliate of the Sellers, LTV Steel Products has no ERISA plan
liability and is not subject to the requirements of ERISA.
Section 7.4. COVENANTS OF LTV STEEL PRODUCTS. LTV Steel Products
covenants and agrees that, so long as this Agreement shall remain in effect:
(a) AMENDMENTS. LTV Steel Products agrees to furnish the
Servicer with copies of all waivers or amendments to the Transaction
Documents and LTV Steel Products shall not agree to any material
amendment to any Transaction Document if such amendment would adversely
affect the rights and obligations of the Servicer without first
receiving the express written consent of the Servicer.
(b) NO OTHER BUSINESS. LTV Steel Products will not engage in
any business or enterprise or enter into any material transaction other
than as contemplated by the Transaction Documents.
(c) NO LIENS. LTV Steel Products will not sell, pledge, assign
or transfer to any Person other than to the Collateral Agent or as
permitted under (or not prohibited by)
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the terms of the Transaction Documents, or grant, create or incur any
Lien on, any Collateral, other than the Liens created by the Trust
Agreement, Receivables Facility Liens and Permitted Liens, nor will LTV
Steel Products suffer to exist any Lien on any Collateral, other than
the Liens created by the Trust Agreement, Permitted Liens, Receivables
Facility Liens and Liens on Ineligible Inventory that would be
reasonably expected not to have a Material Adverse Collateral Effect.
ARTICLE VIII.
THE SERVICER
Section 8.1. MERGER OR CONSOLIDATION OF THE SERVICER; RESIGNATION.
(a) Any Person into which the Servicer may be merged or
converted or with which it may be consolidated, or any Person resulting
from any merger, conversion or consolidation to which the Servicer
shall be a party, or any Person succeeding to the business of the
Servicer, shall be deemed to have assumed and be the successor to all
of the Servicer's duties and obligations hereunder without the
execution or filing of any paper or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding;
provided that (A) (i) LTV Steel shall be the surviving entity following
such merger, conversion or consolidation, or (ii) such Person shall
satisfy the requirements set forth in SECTION 9.3(a) of this Agreement
and (b) if applicable, such Person shall execute such agreements,
documents and instruments as may be requested by LTV Steel Products or
the Collateral Agent to evidence such Person's assumption of the
obligations of the Servicer hereunder.
(b) The Servicer may resign its duties and obligations
hereunder at any time (i) upon one hundred eighty (180) days' prior
written notice to LTV Steel Products and the Collateral Agent or (ii)
upon appointment by LTV Steel Products and the Collateral Agent (and
after a Trust Agreement Event of Default, by the Collateral Agent
alone) of a Successor Servicer which has been approved in writing by
the Required Financing Parties. Upon such resignation, the Servicer
shall agree to pay LTV Steel Products the reasonable costs of LTV Steel
Products in securing a Successor Servicer and the Servicer shall
deliver all Books and Records and correspondence relating to the
Collateral in its possession to the Successor Servicer, or as otherwise
instructed by LTV Steel Products and the Collateral Agent.
Section 8.2. ANNUAL STATEMENT AS TO COMPLIANCE. The Servicer will
deliver to LTV Steel Products, the Placement Agent, each Rating Agency and the
Collateral Agent on or before the date ninety (90) days after the end of each
calendar year, beginning with the calendar year 1998, a certificate signed by an
Authorized Officer of the Servicer and stating that (i) a review of the
activities of the Servicer relating to the processing and servicing of the
Collateral during the preceding calendar year (or since the Effective Date in
the case of the first such certificate which is required to be delivered) and of
the Servicer's performance under this Agreement has been made
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under such officer's supervision, and (ii) to the best of such officer's
knowledge after due investigation, (A) no Amortization Date has occurred and is
continuing and (B) the Servicer during such period has observed or performed all
of its covenants and other agreements, and satisfied every condition, contained
in this Agreement to be observed, performed or satisfied by it unless such
failure of observance or compliance would not, either individually or in the
aggregate, be reasonably expected have a Material Adverse Collateral Effect or,
if (1) a Servicer Termination Event has occurred and is continuing, or (2) the
Servicer's failure to observe or perform any such covenants, agreements or
conditions would be reasonably expected to have a Material Adverse Collateral
Effect, specifying the facts relating to such Servicer Termination Event or each
such failure of observance or compliance known to such officer and the nature
and status thereof and the actions, if any, being taken to cure such Servicer
Termination Event or noncompliance.
ARTICLE IX.
SERVICER TERMINATION EVENTS; SERVICING TERMINATION
Section 9.1. SERVICER TERMINATION EVENTS. The occurrence of any one of
the following events shall be a "Servicer Termination Event" under this
Agreement:
(a) failure on the part of the Servicer to disburse when due
to the Collateral Agent the amounts as and to the extent provided for
herein and the continuation of such failure for a period of three (3)
Business Days after receipt by the Servicer of written notice thereof
from the Collateral Agent or LTV Steel Products;
(b) failure on the part of the Servicer to observe or perform
any other term, covenant, condition or agreement provided for herein,
and the continuation of such failure for a period of thirty (30) days
following the earlier of (i) knowledge of an Authorized Officer of the
Servicer as to such failure or (ii) receipt by the Servicer of written
notice thereof from the Collateral Agent or LTV Steel Products;
provided that if such failure may be cured and the Servicer is
diligently pursuing such cure and there shall not be in existence a
Cure Period Cut-off Event, then such event shall not constitute a
Servicer Termination Event for a period of an additional thirty (30)
days;
(c) an Insolvency Proceeding with respect to the Servicer is
instituted, or any receivership or conservatorship proceeding is
instituted by any authorized governmental authority against the
Servicer;
(d) LTV Steel shall have given notice pursuant to SECTION
8.1(b) of its resignation as Servicer and a Successor Servicer shall
not have been appointed by LTV Steel Products and the Collateral Agent
and approved in writing by the Required Financing Parties within 150
days following the date LTV Steel shall have given notice of
resignation; or
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(e) LTV Steel shall have been terminated as Servicer without
the consent of the Required Financing Parties.
Section 9.2. REMEDIES. The remedies provided below are cumulative and
not exclusive of any rights and remedies which LTV Steel Products or the
Collateral Agent would otherwise have pursuant to law or equity.
(a) If a Servicer Termination Event shall have occurred and be
continuing, the Collateral Agent, may, and shall upon written direction
of the Required Financing Parties, by written notice (a "Servicer
Termination Notice") to the Servicer and with notice to each Rating
Agency, elect to terminate all of the rights and obligations of the
Servicer as inventory processor and servicer under this Agreement. In
such event, all right, power and trusts of the Servicer in and to the
Servicer Accounts shall be promptly transferred by the Servicer to
either the Collateral Agent or a Successor Servicer as the Collateral
Agent shall elect.
(b) If a Servicer Termination Event shall have occurred and be
continuing, then, in addition to any other remedies that may be
available to LTV Steel Products or the Collateral Agent, as the case
may be, the Collateral Agent may request the Servicer to, and upon such
request the Servicer shall, (i) so long as the Collateral Agent's Lien
on the Collateral shall not have been released, direct that payments be
made by the Obligors directly to either the Collateral Agent or the
Successor Servicer and (ii) transfer all of its rights, powers and
trusts in and to the Servicer Accounts to the Collateral Agent or the
Successor Servicer as the case may be, together with all instruments,
books, moneys and other documents or property, including without
limitation, those in respect of the Servicer Accounts held by the
Servicer.
Section 9.3. COLLATERAL AGENT TO ACT; APPOINTMENT OF SUCCESSOR. (a) On
and after the receipt by the Servicer of a Servicer Termination Notice pursuant
to SECTION 9.2(a), the Servicer shall continue to perform all servicing
functions under this Agreement until such time as a successor has been appointed
as Servicer in accordance with this SECTION 9.3. The Collateral Agent shall as
promptly as possible after the giving of a Servicer Termination Notice appoint a
successor servicer (the "Successor Servicer"), with the identity of the
Successor Servicer to be approved in writing by the Required Financing Parties,
and with notice to the Rating Agency, and such Successor Servicer shall accept
its appointment by a written assumption in a form acceptable to LTV Steel
Products and the Placement Agent. The Collateral Agent may obtain bids from any
potential Successor Servicer. Any successor to the Servicer appointed under the
provisions of this Section in succession to the Servicer shall have its
principal office in the District of Columbia or one of the states located in the
United States, and shall have a combined capital and surplus of at least
$150,000,000 and shall have the capacity to perform the obligations hereunder.
In the event that a Successor Servicer has not been appointed and has not
accepted its appointment at the time the Servicer ceases to act as the Servicer,
the Collateral Agent without further action shall automatically be appointed the
Successor Servicer. Notwithstanding the immediately preceding
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sentence, the Collateral Agent shall, if it is legally unable so to act,
petition a court of competent jurisdiction to appoint a Successor Servicer
hereunder.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer under this Agreement and
shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions
hereof, and all references in this Agreement to the Servicer shall be
deemed to refer to the Successor Servicer, except for the references in
SECTION 10.1 which shall continue to refer to the Servicer with respect
to all acts or omissions or alleged acts or omissions occurring prior
to appointment of the Successor Servicer; provided that the Servicer
shall not indemnify LTV Steel Products or the Collateral Agent if the
acts, omissions or alleged acts or omissions upon which a claim for
indemnification arises pursuant to SECTION 10.1 were the acts,
omissions or alleged acts or omissions of a Successor Servicer.
Section 9.4. SERVICER TRANSFER TO SUCCESSOR SERVICER, ETC. (a) After
receipt by the Servicer of a Servicer Termination Notice and the appointment of
a Successor Servicer in accordance with the provisions of SECTION 9.3 hereof,
all authority and power of the Servicer under this Agreement shall pass to and
be vested in the Successor Servicer; and the Collateral Agent is hereby
authorized and empowered (upon the failure of the Servicer to cooperate) to
execute and deliver, on behalf of the Servicer as attorney-in-fact or otherwise,
all documents and other instruments upon the failure of the Servicer to execute
or deliver such documents or instruments, and to do and accomplish all other
acts or things necessary or appropriate to effect the purposes of such transfer
of servicing rights.
(b) The Servicer agrees to cooperate with LTV Steel Products,
the Collateral Agent and the Successor Servicer in effecting the
termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Successor
Servicer of all authority of the Servicer to perform the services
provided for under this Agreement, including, without limitation, all
authority over all Collections which shall on the date of transfer be
held by the Servicer for deposit, or which shall thereafter be received
with respect to the Collateral and shall cooperate in giving notice (at
the expense of LTV Steel Products) to the purchasers of Purchased
Inventory as to the Successor Servicer and, if appropriate and so long
as the Collateral Agent's Lien on the Collateral shall not have been
released, directing payments with respect to the Collateral to the
address designated by the Successor Servicer. The obligations of the
Servicer to hold all funds and documents as provided in this Agreement
in trust for the Successor Servicer, on behalf of the Secured Parties,
and to release and deliver same to the Collateral Agent upon any
termination of this Agreement shall survive the occurrence of any
Servicer Termination Event or any other removal or resignation of the
Servicer.
(c) The Servicer shall promptly transfer its Books and Records
relating to the Collateral to the Successor Servicer in such form as
the Successor Servicer may reasonably
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request and shall promptly transfer to the Successor Servicer all other
Books and Records and correspondence of the Servicer necessary for the
continued servicing of the Collateral in the manner and at such times
as the Successor Servicer shall reasonably request, all at the expense
of the Servicer in the event the Collateral Agent removes the Servicer
pursuant to SECTION 9.2 hereof. To the extent that compliance with this
SECTION 9.4 shall require the Servicer to disclose to the Successor
Servicer information of any kind which the Servicer deems to be
confidential, the Successor Servicer shall be required to enter into
such reasonable confidentiality agreements as the Servicer shall deem
necessary to protect its interest in such information.
ARTICLE X.
LIABILITIES; INDEMNIFICATION
Section 10.1. LIABILITIES; INDEMNIFICATION OF LTV STEEL PRODUCTS. The
Servicer agrees to indemnify, defend and hold harmless each of LTV Steel
Products and, for the benefit of the Secured Parties, the Collateral Agent, from
and against any and all losses, liabilities (including liabilities for
penalties), claims, demands, actions, suits, judgments, out-of-pocket costs and
expenses (including, without limitation, interest, reasonable attorneys' fees
and expenses) arising out of or based on (i) any return of Purchased Inventory
sold to a third party, (ii) any failure to timely deliver to a customer
Purchased Inventory in accordance with such customer's specifications, or if not
made to order, industry specifications with respect to such Purchased Inventory,
(iii) any breach by the Servicer of its warranty pursuant to the following
sentence, (iv) any physical damage to the Purchased Inventory, (v) any hazardous
materials associated with the ownership or servicing of the Purchased Inventory
or (vi) any gross negligence, willful misconduct or bad faith of the Servicer in
connection with the performance of its obligations hereunder or under the other
Transaction Documents. The Servicer hereby warrants to LTV Steel Products that
the Purchased Inventory sold to customers shall in all respects be suitable for
sale to such customers. Notwithstanding the above, but subject to the Servicer's
absolute liability for (i) breach of its warranty pursuant to the preceding
sentence and (ii) any return of Purchased Inventory sold to a third party, the
Servicer shall not be liable to LTV Steel Products or the Collateral Agent for
any error in judgment except for such error of judgment as shall arise from or
shall constitute the gross negligence, willful misconduct or bad faith of the
Servicer. This indemnity agreement will be in addition to any liability which
the Servicer may otherwise have and shall survive the termination of this
Agreement.
Section 10.2. INDEMNIFICATION OF THE SERVICER. LTV Steel Products
hereby agrees to indemnify the Servicer, and hold it harmless, from and against
any and all losses, liabilities (including liabilities for penalties), actions,
suits, judgments, demands, damages, costs and expenses (including without
limitation interest and reasonable attorneys' fees and expenses) (collectively,
the "Liabilities") arising out of or resulting from any act or omission to act
by LTV Steel Products pursuant to and in accordance with this Agreement or
pursuant to any instruction of LTV Steel Products or the Collateral Agent, (but
excluding actions or omissions to act which constitute gross negligence, willful
misconduct or bad faith of the Servicer) in connection with the
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performance of its obligations hereunder. Payment of indemnification obligations
by LTV Steel Products is to be made from available moneys in accordance with and
subject to the Trust Agreement. This indemnity agreement shall survive
termination of this Agreement.
ARTICLE XI.
MISCELLANEOUS
Section 11.1. NOTICES, ETC. Except where telephonic instructions or
notices are authorized herein to be given, all notices, demands, instructions
and other communications required or permitted to be given to or made upon any
Person pursuant hereto shall be in writing and shall be personally delivered or
sent by registered, certified or express mail, postage prepaid, return receipt
requested, or by facsimile transmission, and shall be deemed to be given for
purposes of this Agreement, in the case of a notice sent by registered,
certified or express mail, on the date that such writing is actually delivered
to the intended recipient thereof in accordance with the provisions of this
SECTION 11.1, or in the case of facsimile transmission, when received and
telephonically confirmed; provided that notices, demands, instructions or other
communications required to be given under this Agreement, if permitted hereunder
to be made telephonically, shall be confirmed in writing promptly thereafter in
accordance with the foregoing provisions and shall be deemed given for purposes
of this Agreement on the day when given by telephone to a Person who is the
recipient for notice hereunder (if confirmed promptly thereafter in writing in
accordance with this SECTION 11.1). Unless otherwise specified in a notice sent
or delivered in accordance with the foregoing provisions of this SECTION 11.1,
notices, demands, instructions and other communications in writing shall be
given to or made upon the parties at their respective Notice Addresses.
SECTION 11.2. CHOICE OF LAW AND VENUE. (a) THE VALIDITY OF THIS
AGREEMENT, ITS CONSTRUCTION, INTERPRETATION AND ENFORCEMENT, AND THE RIGHTS OF
THE PARTIES HEREUNDER, SHALL BE DETERMINED UNDER, GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
(b) The parties irrevocably agree that any legal proceeding in
respect of this Agreement may be brought in any state or federal court
of competent jurisdiction in the city of New York (collectively, the
"Specified Courts"). The parties hereby irrevocably waive, to the
fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding
arising out of this Agreement brought in any Specified Court, and any
claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. The parties further
irrevocably consent to the service of process out of any of the
Specified Courts in any such suit, action or proceeding by the mailing
of copies thereof by certified mail, return receipt requested, postage
prepaid, to any party at its address as provided in this Agreement or
as otherwise provided by New York law. Nothing herein shall affect the
right of any party
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to commence proceedings or otherwise proceed against any other party in
any jurisdiction or to serve process in any other manner permitted by
applicable law. The parties hereto agree that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner
provided by applicable law.
Section 11.3. EFFECTIVENESS OF THE AGREEMENT. This Agreement shall be
binding and deemed effective on the Effective Date.
Section 11.4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of each
of the parties; provided, except as provided herein with respect to
sub-Servicers and Successor Servicers, that the Servicer shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of LTV Steel Products, the Collateral Agent, the Placement Agent and the
Rating Agency.
Section 11.5. HEADINGS. Section headings used in this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
Section 11.6. INTERPRETATION OF AGREEMENT. This Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to accomplish fairly the purposes and
intentions of all parties hereto.
Section 11.7. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 11.8. MERGER OF PRIOR AGREEMENTS. This Agreement cannot be
changed or terminated orally. All prior agreements, understandings,
representations, warranties and negotiations, if any, concerning the specific
subject matter hereof are merged into this Agreement.
Section 11.9. GOOD FAITH AND REASONABLENESS. The parties intend and
agree that their respective rights, duties, powers, liabilities, obligations and
directions shall be performed, carried out, discharged and exercised reasonably
and in good faith.
Section 11.10. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, and by the different parties hereto on the same or
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original instrument and all of which
counterparts, taken together, shall constitute one and the same Agreement.
Section 11.11. AMENDMENT. Any provision to this Agreement may be
amended, waived, supplemented, restated, discharged or terminated (i) to cure
any ambiguity, (ii) to correct any defective provisions or (iii) to add any
other provisions with respect to matters or questions arising
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thereunder, which provisions shall not be inconsistent with any other provisions
thereof, in writing duly executed by LTV Steel Products, the Collateral Agent
and the Servicer. Any amendment, waiver, supplement, restatement, discharge or
termination of this Agreement shall require that written notice of any change
shall be provided to each Rating Agency. No change to any Transaction Document
will become effective without (i) prior notice to the Rating Agency and (ii)
receipt of written confirmation from the Rating Agency that such change will not
adversely affect the rating issued by the Rating Agency.
Section 11.12. NO INSOLVENCY PROCEEDING AGAINST LTV STEEL PRODUCTS. The
Servicer hereby covenants and agrees that, prior to the date which is one year
and one day after the payment in full of all Notes issued by LTV Steel Products,
it will not institute against or join with any other Person in instituting
against LTV Steel Products any Involuntary Insolvency Proceeding. This SECTION
11.12 shall not be construed to limit the right of the Servicer to file any
claim in or otherwise take any action with respect to any such Involuntary
Insolvency Proceeding that was instituted against or with respect to LTV Steel
Products by any Person other than the Servicer or any of its Affiliates. This
Section shall survive the termination of this Agreement.
Section 11.13. EXERCISE OF RIGHTS. No failure or delay on the part of
LTV Steel Products or the Collateral Agent and the Servicer, as the case may be,
to exercise any right, power or privilege under this Agreement and no course of
dealing between LTV Steel Products or the Collateral Agent, as the case may be,
and the Servicer shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under this Agreement preclude
any other right, power or privilege. The rights and remedies herein expressly
provided are cumulative and except to the extent limited under this Agreement,
not exclusive of any rights or remedies which LTV Steel Products or the
Collateral Agent or the Servicer would otherwise have pursuant to law or equity.
No notice to or demand on any party in any case shall entitle such party to any
other or further notice or demand in similar or other circumstances, or
constitute waiver of the right of the other party to any other or further action
in any circumstance without notice or demand.
Section 11.14. NO RECOURSE. The Servicer, by virtue of its rights and
obligations under this Agreement, shall not be deemed liable to LTV Steel
Products or any other Person for the liabilities of LTV Steel Products in
respect of the Obligations or, except as provided below, in respect of Business
Taxes attributable to LTV Steel Products. In no event shall the Servicer be
liable to LTV Steel Products or any other Person for indirect, special,
punitive, incidental or consequential loss or damage of any kind whatsoever,
including without limitation, lost profits, whether or not the likelihood of
such loss or damage was known to the Servicer. The obligations of LTV Steel
Products, the Collateral Agent and the Servicer under this Agreement are solely
the corporate or company obligations of LTV Steel Products, the Collateral Agent
and the Servicer, respectively. No recourse shall be had for the payment of any
amount owing hereunder or for the payment of any fee hereunder or any other
obligation or claim arising out of or based upon this Agreement against any
stockholder, member, employee, officer, director or incorporator of LTV Steel
Products, the Collateral Agent or the Servicer. Notwithstanding the foregoing,
it is
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recognized and understood that LTV Steel, in its capacity as the sole member of
LTV Steel Products may be liable for tax liabilities of LTV Steel Products.
Section 11.15. PAYMENT ON NON-BUSINESS DAYS. In any case where the date
for payment of funds hereunder, by check, wire transfer or otherwise, or the
date on which any other act required under this Agreement is to be performed
shall not be a Business Day, then such payment or such performance need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on the date of such payment or the date for
such performance, and no interest shall accrue for the period from and after
such date.
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IN WITNESS WHEREOF, the parties hereto have caused this Inventory
Processing and Servicing Agreement to be executed and delivered as of the date
first hereinabove set forth.
LTV STEEL COMPANY, INC.,
a New Jersey corporation, as Processor and
Servicer
By_____________________________
Name: John C. Skurek
Title: Vice President and Treasurer
LTV STEEL PRODUCTS, LLC, a Delaware
limited liability company
By_____________________________
Name: John C. Skurek
Title: Manager
THE CHASE MANHATTAN BANK,
a New York banking corporation, as
Collateral Agent
By_____________________________
Printed Name:__________________
Title:__________________________
<PAGE> 30
SCHEDULE I
LTV Steel agrees to process or provide for the processing of
the Purchased Inventory owned by LTV Steel Products for sale to customers in the
same manner as it would do so with respect to similar items owned for its own
account. LTV Steel Products explicitly recognizes that such activities require a
broad degree of discretion and agrees that LTV Steel shall not be liable to LTV
Steel Products for any action or inaction on its part taken in good faith and
without gross negligence or wilful misconduct on the part of LTV Steel.
With respect to such services LTV Steel shall receive such
fees, commissions and other amounts as specified in the Price and Fees
Agreement.
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ANNEX X
LTV INVENTORY
DEFINITIONS
"ABR" means, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the rate of
interest per annum publicly announced from time to time by Chase as its Prime
Rate in effect at its principal office in New York City (such Prime Rate not
being intended to be the lowest rate of interest charged by Chase in connection
with extensions of credit to debtors) or (b) the Federal Funds Rate in effect on
such day plus 1/2 of 1%. Any change in the ABR due to a change in the Prime Rate
or the Federal Funds Rate shall be effective as of the opening of business on
the effective day of such change.
"Act" of Secured Parties shall have the meaning ascribed to such term
in SECTION 12.03(a) of the Trust Agreement.
"Advance Rate" means, with respect to each category of Eligible
Inventory, the applicable advance rate as set forth on the applicable Form of
Sales and Valuation Report.
"Adjusted Collateral Value" at any time of determination shall mean the
aggregate Collateral Value of all Eligible Inventory reduced (to the extent
included therein) by the amount, if any, by which the aggregate Collateral Value
of all Eligible Inventory sold by Georgia Tubing as a Seller exceeds $6,500,000.
"Administrative Agent" means Chase in its capacity as Administrative
Agent under the Note Purchase Agreement, and any successor in such capacity.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agents" shall mean collectively the Placement Agent and the
Administrative Agent.
"Aggregate Commitment Amount" means as of any date the sum of the
Commitments of the Financing Parties as shown on Schedule I to the Note Purchase
Agreement.
"Aggregate Note Purchase Price" shall have the meaning ascribed to such
term in SECTION 2.1(a)(v) of the Note Purchase Agreement.
<PAGE> 32
"Amortization Amount" shall have the meaning ascribed to such term in
SECTION 8.02(b) of the Trust Agreement.
"Amortization Date" means, with respect to any Note, the earliest to
occur of:
1 the Expiration Date applicable to such Note;
2 A Trust Agreement Event of Default;
3 A Purchase Termination Event;
4 A Note Purchase Agreement Event of Default;
5 A Servicer Termination Event;
6 A Receivables Default Event; or
7 A Purchase Suspension Event.
provided that in the case of 3 and 4 above such events shall not cause an
Amortization Date without written confirmation from the Agents on behalf of the
Required Financing Parties that an Amortization Date shall occur as a result
thereof.
"Applicable Note Margin" shall mean the following, dependent on the
then Effective Rating of the Class A-1 Notes:
<TABLE>
<CAPTION>
Class A-1 Note Effective Rating Applicable Note Margin
------------------------------- ----------------------
<S> <C>
BBB+ or better 0.75%
BBB 1.00%
BBB- or lesser 1.50%
</TABLE>
"Applicable Receivables Advance Rate" with respect to the Receivables
Facility means, at any time, the percentage equivalent of a fraction equal to
the result of dividing (x) the sum of (i) the aggregate amount of cash proceeds
received by LTV Steel Products with respect to the sale or other financing of
Receivables under the Receivables Facility over the period covered by the three
most recent weekly settlement statements plus (ii) prior to the occurrence of an
Amortization Date with respect to any Note or at any time following the payment
in full of such Note and all other amounts then payable as part of the related
Amortization Amount, the sum of (A) the amount of any letters of credit received
plus (B) the amount of Permitted Cash Add-backs made during such period by (y)
the aggregate "Original Balance" ( as defined in the
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documents applicable to the Receivables Facility (or other term of correlative
meaning)) of all Receivables sold or financed under the Receivables Facility by
LTV Steel Products during such period.
"Article IV Party" shall have the meaning ascribed to such term in
SECTION 4.5 of the Note Purchase Agreement.
"Assumed Letters of Credit" means the Letters of Credit identified on
Schedule II to the Note Purchase Agreement.
"Authorized Officer" means, with respect to any Person, any officer or
employee of such Person, duly authorized to act, and to give and receive
instructions and notices, on behalf of such Person with respect to all matters
in connection with the Transaction Documents.
"Board" means the Board of Governors of the Federal Reserve System and
any successor thereto.
"Book-Entry Notes" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries as described in
SECTION 2.08 of the Trust Agreement.
"Books and Records" means all of the relevant Person's books and
records including, but not limited to: minute books; ledgers; records
indicating, summarizing or evidencing such Person's assets, liabilities and
accounts; all information relating to such Person's business, operations or
financial condition; and all computer programs, disc or tape files, printouts,
runs, and other computer prepared information and the equipment containing such
information.
"Breakage Fee" shall have the meaning ascribed to such term in SECTION
2.3 of the Note Purchase Agreement.
"Business Day" means any day other than a Saturday, Sunday or other day
on which banking institutions in the city of New York, New York are authorized
or obligated by law, executive order or governmental decree to be closed.
"Business Taxes" means, with respect to any Person, any federal, state
or local income taxes, property taxes, excise taxes, franchise taxes or other
similar taxes payable by such Person.
"Calendar Month" means each of the twelve calendar months in a year.
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, options or other rights to purchase or acquire any of
the foregoing.
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"Cash Received Account" means the account of such name created pursuant
to SECTION 3.1 of the Inventory Processing and Servicing Agreement.
"Chase" means The Chase Manhattan Bank.
"Class" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"Class A-1 Final Note Distribution Date" means, with respect to any
Note, the Note Distribution Date next occurring after the Expiration Date
applicable thereto.
"Class A-1 Notes" means the Adjustable Floating Rate Notes, Class A-1,
substantially in the form of Exhibit A to the Trust Agreement.
"Class A-1 Noteholders" means the Holders of the Class A-1 Notes.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" shall have the meaning ascribed thereto in the "Granting
Clause" of the Trust Agreement.
"Collateral Access Agreement" has the meaning ascribed in SECTION
5.9(b) of the Contribution and Sale Agreement.
"Collateral Agent" means The Chase Manhattan Bank, or any successor
Collateral Agent under the Trust Agreement.
"Collateral Value" means (a) with respect to each category of Eligible
Inventory, an amount equal to the product of (i) the quantity of such category
of Eligible Inventory, times (ii) the lesser of (A) the per unit cost (
excluding, to the extent included in such cost, the amount of any intercompany
profit, fresh start valuation adjustment and iron ore transportation costs) of
such category of Eligible Inventory to the Issuer or (B) the per unit Published
Value of such category of Eligible Inventory (provided that if no such Published
Value is available, the per unit Published Value of such category of Eligible
Inventory shall be deemed to be higher than the per unit cost of such category
of Eligible Inventory to the Issuer), times (iii) the Advance Rate applicable
thereto; such product shall then be reduced by sum of (A) the amount of
liabilities or other amounts payable with respect to such category of Eligible
Inventory to outside processors or outside warehousemen, (B) the amount of any
claim secured by purchase money Liens on such category of Eligible Inventory and
(C) to the extent the amount is quantifiable, the amount of any claims secured
by any Permitted Liens on such Collateral as to which an appropriate notice has
been filed, provided that, in the case of any claims secured by any such
Permitted Lien described in subparagraph (i) or (ii) of the definition of
"Permitted Lien" that is being contested in good faith by appropriate
proceedings, only the excess, if any, of the aggregate amount of such
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<PAGE> 35
contested claims over $10,000,000 shall be included in the amount of reduction
from Collateral Value under this subclause (C); and (b) with respect to amounts
held in cash in the Trust Accounts, the dollar amount of such cash.
"Collections" means all cash amounts received by or on behalf of LTV
Steel Products (a) with respect to any rights or claims LTV Steel Products has
or may have under the Transaction Documents with respect to Purchased Inventory,
(b) with respect to the sale or other encumbrance of Receivables or, if
Receivables have not been sold or otherwise encumbered under a Receivables
Facility, all amounts received in cash by or on behalf of LTV Steel Products
with respect to the sale or other disposition of Purchased Inventory and
payments made on, or as security for, such Receivables.
"Commitment" of any Financing Party shall mean the amount set forth
opposite such Financing Party's name on Schedule I to the Note Purchase
Agreement as such Schedule may be amended from time to time, under the heading
"Commitment" and as such amount may be reduced from time to time pursuant to the
terms of the Note Purchase Agreement.
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with the Purchaser or a Seller
within the meaning of Section 4001 of ERISA or is part of a group which includes
the Purchaser or a Seller and which is treated as a single employer under
Section 414 of the Code.
"Contractual Obligations" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Contribution and Sale Agreement" means that certain Contribution and
Sale Agreement, dated as of February 26, 1998, between the Servicer, the Sellers
and the Purchaser, as it may be amended by its terms from time to time.
"Corporate Trust Office" means the principal office of the Collateral
Agent at which at any particular time its corporate trust business shall be
administered, which office as of the Effective Date is located at 270 Park
Avenue, New York, New York; or at such other address as the Collateral Agent may
designate from time to time by notice to the Noteholders and the Issuer, or the
principal corporate trust office of any successor Collateral Agent (the address
of which the successor Collateral Agent will notify the Noteholders, Financing
Parties and the Issuer).
"Covered Taxes" shall have the meaning specified in SECTION 4.7(i) of
the Note Purchase Agreement.
"CSI" means Chase Securities Inc.
"Cure Period Cut-off Event" shall mean the occurrence and continuance
of any of the following:
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<PAGE> 36
1. any event which has caused or is reasonably expected to
result in a Material Adverse Collateral Effect; or
2. any event which has caused or is reasonably expected to
result in the failure of the Collateral Agent to have
the perfected security interest in the Collateral
contemplated to be so held under the Transaction
Documents; or
3. any event which has caused or is reasonably expected to
result in any of the Transaction Documents to be invalid
or any material term of a Transaction Document to be
unenforceable; or
4. a Note Collateral Shortfall; or
5. the failure of the Issuer to pay any amounts due under
the Guaranty;
provided that a Cure Period Cut-off Event shall not occur for a period of five
days after an Authorized Officer of LTV Steel becomes aware of such event and
the occurrence of a Cure Period Cut-off Event may be waived by the Required
Financing Parties.
"Debt Service Notification Day" shall mean the first Business Day of
each Calendar Month.
"Debt Service Shortfall Amount" shall have the meaning specified in
SECTION 8.02(b) of the Trust Agreement.
"Default" means as the context requires a Trust Agreement Event of
Default, a Purchase Termination Event, a Note Purchase Agreement Event of
Default, a Servicer Termination Event or a Receivables Default Event and any
occurrence that, with notice or the lapse of time or both, would become such an
event.
"Defaulting Lender" shall have the meaning ascribed to such term in
SECTION 3.6(c) of the Note Purchase Agreement.
"Definitive Notes" shall have the meaning specified in SECTION 2.08 of
the Trust Agreement.
"Dollars" means dollars in lawful currency of the United States of
America.
"Early Termination" shall have the meaning ascribed to such term in
SECTION 7.1 of the Contribution and Sale Agreement.
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<PAGE> 37
"Effective Date" means the later to occur of (a) the date upon which each of the
conditions set forth in SECTIONS 3.1, 3.2 and 3.3 of the Contribution and Sale
Agreement have been satisfied and (b) the date of the initial issuance of the
Notes pursuant to the Trust Agreement; provided that the Effective Date shall
not occur later than March 2, 1998.
"Effective Rating" of the Class A-1 Notes shall be determined as
follows: if Fitch is the only rating agency rating the Class A-1 Notes, the
Fitch rating will be used, if the rating of one additional equivalent rating
agency is obtained, the better rating will be used to make such determination.
In the event that the rating of two additional rating agencies are obtained: (i)
if one additional rating is better or equivalent and the other additional rating
is lesser, the original Fitch rating will be used to make such determination;
(ii) if one additional rating is better and the other additional rating is
equivalent to the original Fitch rating, the better rating will be used; (iii)
if both additional ratings are higher than the original Fitch rating and
equivalent to each other, such higher rating shall be used to make such
determination, (iv) if both additional ratings are better than the original
Fitch rating but not equivalent to each other, the lesser of such higher ratings
will be used to make such determination; (v) if both additional ratings are
lesser than the original Fitch rating and equivalent to each other, such lesser
rating shall be used to make such determination; and (vi) if both additional
ratings are lesser than the original Fitch rating but not equivalent to each
other, the better of such lower ratings will be used to make such determination.
"Eligible Determination Date" with respect to any Class A-1 Note or
Note Portion shall mean (i) the Interest Rate Determination Date next preceding
or coinciding with each Note Distribution Date for such Note or Note Portion,
(ii) each Note Purchase Date with respect to such Note or Note Portion, (iii)
each Note Repurchase Date with respect to such Note or Note Portion and (iv)
with respect to a Term Note, the date of establishment of the Term Rate
applicable thereto.
"Eligible Inventory" means all Purchased Inventory that is not
Ineligible Inventory.
"Eligible Investments" means book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(i) investments in money market funds having an average maturity not in
excess of 90 days and rated Am or better by S&P or MR2 or better by
Moody's;
(ii) direct or indirect obligations of the United States, including
agencies thereof, with a stated maturity not in excess of 91 days; or
(iii) any of the following which have a stated maturity not in excess
of 90 days:
(a) commercial paper notes rated at least A-1 by S&P or at
least P-1 by Moody's;
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<PAGE> 38
(b) federal funds, demand deposits, time deposits,
certificates of deposit, banker's acceptances,
eurodollar certificates of deposit, Yankee certificates
of deposit, deposit notes or repurchase agreements of
any depositary institution or trust company incorporated
under the laws of the United States or any state thereof
(or any domestic branch of a foreign bank) that has at
least an A-1 short-term and BBB long-term rating by S&P
and at least a P-1 short-term and Baa long-term rating
by Moody's.
"Eligible Transferee" shall mean (a) any Person under common ownership
with a Financing Party or (b) a Person approved by LTV Steel and the
Administrative Agent (and after a Trust Agreement Event of Default by the
Administrative Agent alone) as an Eligible Transferee.
"Empire Mines" means Empire Iron Mining Partnership.
"Equity Interest" means, with respect to the Purchaser, at any date,
the member's equity in the Purchaser as of the date of the most recent Sales and
Valuation Report delivered under the Transaction Documents.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" as applied to any Person, means (i) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Code of which that Person is a member; (ii) any trade or
business (whether or not incorporated) which is a member of a group of trades or
businesses under common control within the meaning of Section 414(c) of the Code
of which that Person is a member; and (iii) any member of an affiliated service
group within the meaning of Section 414(m) or (o) of the Code of which that
Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is, or was at the relevant time, a member. Any
former ERISA Affiliate of LTV, LTV Steel, any Seller or the Issuer shall be an
ERISA Affiliate with respect to the period such entity was an ERISA Affiliate of
LTV, LTV Steel, any Seller or the Issuer.
"Existing TBT Letter of Credit Agreement" means the Letter of Credit
Agreement dated as of October 12, 1994 among LTV, the borrowers party thereto,
the lenders party thereto and BT Commercial Corporation, as Agent, as amended.
"Existing TBT Letters of Credit" means each of the TBT Letters of
Credit listed on Schedule II to the Note Purchase Agreement.
"Expenses" shall mean all present and future expenses incurred by or on
behalf of the Placement Agent, the Administrative Agent, or the Financing
Parties in connection with the Transaction Documents in their respective
capacities under and as permitted by the Note Purchase Agreement.
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<PAGE> 39
"Expiration Date" shall mean with respect to any Commitment or any Note
March 2, 2003 or, if extended with respect to such Commitment or Note as
provided in the Transaction Documents, the date specified in the most recent
such extension.
"Extension Request" shall have the meaning ascribed to such term in
Section 11.16 of the Note Purchase Agreement.
"Facility" means any real property (including, without limitation, all
buildings, fixtures or other improvements located thereon) now or heretofore
owned, leased, operated or used by LTV or any of its Subsidiaries or any of
their respective predecessors or Affiliates.
"Facility Utilization" shall mean a percentage determined by dividing
(i) the sum of (a) the aggregate outstanding principal amount of Notes then held
by the Note Purchasers, (b) the aggregate face amount of outstanding Letters of
Credit issued by the Issuing Lenders and (c) the aggregate outstanding principal
amount of Notes held by Independent Investors by (ii) the Collateral Value of
Eligible Inventory as shown on the most recently delivered Sales and Valuation
Report.
"Federal Funds Rate" shall mean, for any period, a fluctuating interest
rate per annum equal, for each day during such period, to the weighted average
of the rates on overnight Federal Funds transactions with members of the Federal
Reserve system arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by it.
"Fees" shall mean, collectively, the Unused Line Fee, the Letter of
Credit Fees, the Fronting Fees, the LC Administration Fees and the other fees
provided for in the Note Purchase Agreement.
"Financing Parties" shall have the meaning ascribed to such term in the
recitals to the Note Purchase Agreement.
"Fitch" shall mean Fitch IBCA, Inc.
"Foreign Financing Party" shall have the meaning ascribed to such term
in SECTION 4.7(i) of the Note Purchase Agreement.
"Fronting Fees" shall have the meaning ascribed to such term in SECTION
4.3(c) of the Note Purchase Agreement.
"Funding Affiliate" shall have the meaning ascribed to such term in
SECTION 4.5(a) of the
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Note Purchase Agreement.
"GAAP" means generally accepted accounting principles in the United
States of America as set forth from time to time in the opinions and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by significant segments of
the accounting profession, in each case applied on a basis consistent (except
for changes concurred in by LTV's independent public accountants) with the most
recent audited consolidated financial statements of LTV and its consolidated
subsidiaries delivered to the Financing Parties.
"Georgia Tubing" means Georgia Tubing Corporation, a corporation
organized under the laws of the State of Delaware, together with its successors.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Governmental Authorization" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to the Trust Agreement. A Grant of the Collateral or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Collateral and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring Proceedings in the name of the granting party or otherwise and generally
to do and receive anything that the granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"Guaranty" means that certain Guaranty dated as of February 26, 1998
issued by LTV Steel Products to the Agents for the benefit of the Financing
Parties and the Agents.
"Highest Lawful Rate" shall mean, at any given time during which any
Obligations shall be outstanding under a Transaction Document, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Obligations owing
under the relevant Transaction Document, under the laws of the State of New York
(or the law of any other jurisdiction whose laws may be mandatorily applicable
notwithstanding other provisions of the Transaction Documents), or under
applicable federal laws which may presently or hereafter be in effect and which
allow a higher maximum
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<PAGE> 41
nonusurious interest rate than under New York (or such other jurisdiction's)
law, in any case after taking into account, to the extent permitted by
applicable law, any and all relevant payments or charges under relevant
Transaction Documents and any available exemptions, exceptions and exclusions.
"Holder" or "Noteholder" or "Note Owner" means the Person in whose name
a Note is registered on the Note Register; provided that the Collateral Agent
shall be deemed to be the Holder of any Note pledged to it for the benefit of
the Issuing Lenders and Lenders under the Note Purchase Agreement for purposes
of any request, demand, authorization, direction, notice, consent or waiver
required to be obtained from Holders under the Trust Agreement.
"Incipient Purchase Termination Event" means any condition or event
which, with the lapse of time or the giving of notice or both, would become a
Purchase Termination Event.
"Indebtedness" means, with respect to any Person at any time (without
duplication), (i) indebtedness or liability of such Person for borrowed money
whether or not evidenced by bonds, debentures, notes or other instruments, or
for the deferred purchase price of property or services (including trade
obligations); (ii) obligations of such Person as lessee under leases which
should have been or should be, in accordance with generally accepted accounting
principles, recorded as capital leases; (iii) obligations issued for or
liabilities incurred on the account of such Person (other than such obligations
or liabilities as to which such Person has a right of indemnification); (iv)
obligations or liabilities of such Person arising under acceptance facilities;
(v) obligations of such Person under any guaranties, endorsements (other than
for collection or deposit in the ordinary course of business) and other
contingent obligations to purchase, to provide funds for payment, to supply
funds to invest in any Person or otherwise to assure a creditor against loss;
(vi) obligations of such Person secured by any Lien (other than Permitted Liens
and Liens on Ineligible Inventory that would be reasonably expected not to have
a Material Adverse Collateral Effect) on property or assets of such Person,
whether or not the obligations have been assumed by such Person; or (viii)
obligations of such Person under any interest rate or currency exchange
agreement.
"Independent" means, when used with respect to any specified Person,
that the Person (i) is in fact independent of the Issuer, the LTV Steel Group
and any of their respective Affiliates, (ii) does not have any direct financial
interest or any material indirect financial interest in the Issuer, any Seller
or any of their respective Affiliates, and (iii) is not connected with the
Issuer, the LTV Steel Group or any Affiliate of any of the foregoing Persons as
an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
"Independent Investor" shall mean a Noteholder that is Independent and
is not a Financing Party and who acquired any Class A-1 Note at issue prior to
the occurrence of the Amortization Date.
"Ineligible Inventory" means all Purchased Inventory that:
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<PAGE> 42
(i) is not owned solely by the Purchaser, or is on consignment or
as to which the Purchaser does not have good, valid and marketable
title thereto; or
(ii) is not located at or in transit to property that is either (a)
owned or leased by a Member or the Purchaser; provided that with
respect to any Leased Premises, the Purchaser shall have delivered
(either directly or through assignment to the Collateral Agent) a
Collateral Access Agreement executed by the lessor of such property,
(b) owned or leased by a Third-Party Warehouseman holding more than
$500,000 in Purchased Inventory that has contracted with a Member or
the Purchaser to store Purchased Inventory on such Third-Party
Warehouseman's property; PROVIDED that the Purchaser shall have
delivered (either directly or through assignment) to the Collateral
Agent a Collateral Access Agreement executed by such Third-Party
Warehouseman; PROVIDED FURTHER that the aggregate number of locations
described in clauses (a) and (b) with respect to which a Collateral
Access Agreement has been executed shall not exceed 60; or (c) owned or
leased by an Outside Processor holding more than $500,000 in Purchased
Inventory, PROVIDED that the Purchaser shall have delivered (either
directly or through assignment) to the Collateral Agent a Collateral
Access Agreement executed by such Outside Processor; PROVIDED FURTHER,
that no Purchased Inventory, processed by or located at property owned
or leased by LSE or LSE II shall be Eligible Inventory; PROVIDED
FURTHER, that the aggregate number of locations described in this
clause (c) with respect to which a Collateral Access Agreement has been
executed shall not exceed 60; or
(iii) is not subject to a perfected first priority Lien in favor of
the Collateral Agent except for Permitted Liens; or
(iv) is not located in the United States; or
(v) (a) is on hand for more than 6 months since it was last processed
according to the accounting policies of the Purchaser (other than
Purchased Inventory that is raw materials that, in accordance with such
accounting policies, is not aged); PROVIDED, HOWEVER, that the scrap
value of such Purchased Inventory, as maintained at the plant level,
shall not constitute "Ineligible Inventory" by reason of this clause
(v) or (b) does not otherwise conform to the representations and
warranties contained in the Contribution and Sale Agreement; or
(vi) consists of stores and supplies as determined in accordance with
the accounting policies of the Purchaser; or
(vii) is classified under the heading "other" in accordance with the
accounting policies of the Purchaser, PROVIDED that alloys, fuel oil,
fluxes, coke by-products and scrap shall not constitute "Ineligible
Inventory" by reason of this clause (vii); or
(viii) is iron ore located at Empire Mines; or
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(ix) constitutes Raw Materials, but only to the extent the Inventory
Value of such Raw Materials exceeds 50% of the Inventory Value of all
Purchased Inventory; or
(x) is subject to a Negotiable Document of Title, unless such
Negotiable Document of Title has been delivered to the Collateral Agent
and the Collateral Agent, in its sole discretion, has determined and
confirmed in writing to the Agents that it has the security interest in
such Inventory intended to be granted under the Transaction Documents
with respect to Eligible Inventory.
"Insolvency Proceeding" means an Involuntary Insolvency Proceeding
and/or a Voluntary Insolvency Proceeding.
"Intellectual Property" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of LTV and its Subsidiaries as currently conducted that
are material to the business, operations, properties, assets, condition
(financial or otherwise) or prospects of LTV and its Subsidiaries, taken as a
whole.
"Interest Mode" with respect to Class A-1 Notes and Note Portions shall
mean from time to time all such Notes or Note Portions that (i) have the same
Interest Period terminating on the same day, (ii) bear interest at ABR or (iii)
bear interest at the Pledge Rate.
"Interest Period" with respect to any Class A-1 Note or Note Portion
shall mean the period of interest selected by the Holder of such Class A-1 Note
or Note Portion in an Interest Rate Period Notice to be applicable to such Note
or Note Portion as provided in SECTION 2.06(a) of the Trust Agreement, which in
the case of a Class A-1 Note or Note Portion bearing interest at a LIBOR-based
Interest Rate shall commence on the Eligible Determination Date applicable to
such Class A-1 Note or Note Portion and end one, two, three or six months
thereafter, as selected in such Interest Rate Period Notice; provided that (i)
any interest period for a Class A-1 Note or Note Portion bearing interest at a
LIBOR-based Interest Rate (a "LIBOR Interest Period") which would otherwise end
on a day which is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another Calendar Month, in which
case such Interest Period shall end on the next preceding Business Day; (ii)
any LIBOR Interest Period which begins on the last Business Day of a Calendar
Month (or on a day for which there is no numerically corresponding day in the
Calendar Month at the end of such Interest Period) shall, subject to clause
(iii) below, end on the last Business Day of a Calendar Month; and (iii) any
LIBOR Interest Period which would otherwise end after the Expiration Date for
such Class A-1 Note or Note Portion shall end on such Expiration Date.
"Interest Rate" from time to time with respect to a Class A-1 Note or
Note Portion shall mean, the Interest Rate as indicated in SECTION 2.06(a) of
the Trust Agreement as being applicable to the Interest Period then in effect
for such Note or Note Portion.
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"Interest Rate Determination Date" with respect to any Note or Note
Portion shall mean the last Business Day of each Interest Period applicable
thereto, or, in the case of any Note or Note Portion as to which the applicable
Interest Rate is to be converted from ABR to another Interest Rate, the proposed
date of such conversion.
"Interest Rate Period Notice" shall mean a written notice provided by
the Holder of a Class A-1 Note to the Collateral Agent on or before an Eligible
Determination Date for such Note or Note Portion specifying the Interest Period
to be next applicable to such Note or Note Portion.
"Inventory" means all inventory in all of its forms, including, but not
limited to, (i) all goods held for sale or lease or to be furnished under
contracts of service, purchase orders or otherwise or so leased, (ii) all raw
materials, work in process, semi-finished or finished goods, and materials used
or to be consumed in the manufacture, packing, shipping, advertising, selling,
leasing, furnishing or production of such inventory or otherwise used or to be
consumed in the LTV Steel Group's business, (iii) goods in which the LTV Steel
Group has an interest in mass or a joint or other interest or right of any kind,
and (iv) goods which are returned to or repossessed by the LTV Steel Group or
the Servicer and all additions and accessions thereto and replacements thereof.
"Inventory Processing and Servicing Agreement" means that certain
Inventory Processing and Servicing Agreement, dated as of February 26, 1998,
between the Issuer, LTV Steel and the Collateral Agent, as amended from time to
time.
"Inventory Purchase Account" shall mean the account of such name
created pursuant to SECTION 3.1 of the Inventory Processing and Servicing
Agreement.
"Inventory Purchase Date" shall have the meaning ascribed to such term
in SECTION 2.1(b) of the Contribution and Sale Agreement.
"Inventory Value" means with respect to any category of Purchased
Inventory, a dollar amount equal to the lesser of (i) the cost of such category
of Purchased Inventory and (ii) the Published Value for such category of
Purchased Inventory; provided that if no such Published Value is available, the
Published Value for such category of Purchased Inventory shall be deemed to be
higher than the cost thereof.
"Involuntary Insolvency Proceeding" means for any Person that an
involuntary proceeding or an involuntary petition shall be commenced or filed
against such Person under any bankruptcy, insolvency, or similar law or seeking
the dissolution or reorganization of such Person or the appointment of a
receiver, trustee, custodian or liquidator for such Person, or any writ, order,
judgment, warrant of attachment, execution or similar process shall be issued or
levied against a substantial part of the property, assets or business of such
Person, and such
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proceeding or petition shall not be dismissed, or such writ, order, judgment,
warrant of attachment, execution or similar process shall not be released,
vacated or fully bonded, within sixty (60) days after commencement, filing or
levy, as the case may be.
"IRS" means the Internal Revenue Service.
"Issuer" or "LTV Steel Products" or "Company" means LTV Steel Products,
LLC, a limited liability company organized under the laws of the State of
Delaware, and any successor in interest thereto.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Collateral Agent.
"Issuing Lender" shall mean Chase, any Lender that is the issuer of an
Assumed Letter of Credit or any other Lender that is acceptable to the
Administrative Agent which has agreed to issue a Letter of Credit for the
account of LTV Steel under the Note Purchase Agreement.
"LC Administration Fee" shall have the meaning ascribed to such term in
SECTION 4.3(d) of the Note Purchase Agreement.
"Leased Premises" means any premises on which Purchased Inventory is
located, or to which it is in transit, in which the Servicer, the applicable
Member or the Purchaser has a leasehold rather than a fee interest.
"Lender" shall have the meaning ascribed to such term in the recitals
to the Note Purchase Agreement.
"Lender Register" shall have the meaning ascribed to such term in
SECTION 3.11 of the Note Purchase Agreement.
"Letter of Credit" shall mean letters of credit deemed issued, issued
or to be issued by Issuing Lenders for the account of LTV Steel pursuant to
SECTION 3.1 (which term shall include Standby Letters of Credit and Trade
Letters of Credit) of the Note Purchase Agreement, including, without
limitation, as of the Effective Date, the Assumed Letters of Credit set forth on
Schedule II to the Note Purchase Agreement.
"Letter of Credit Exposure" shall mean, with respect to any Financing
Party in its capacity as a Lender as of any date of determination (i) prior to
the termination of the Commitment of such Financing Party, that Financing
Party's Letter of Credit Limit and (ii) after termination of the Commitments,
the sum of (a) in the event that Lender is an Issuing Lender, the aggregate
amount of all drawings under Letters of Credit honored by that Lender and not
theretofore reimbursed by LTV Steel or LTV Steel Products (in each case net of
any participations purchased by other Lenders in the applicable Letters of
Credit) PLUS (b) the aggregate amount of all participations purchased by that
Lender in any drawings under Letters of
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Credit honored by Issuing Lenders and not theretofore reimbursed by LTV Steel
or LTV Steel Products.
"Letter of Credit Fee" shall have the meaning ascribed to such term in
SECTION 4.3(a) of the Note Purchase Agreement.
"Letter of Credit Issuance Date" shall mean any day on which a Letter
of Credit is issued.
"Letter of Credit Limit" with respect to each Financing Party at any
time means an amount equal to 60% of the Commitment of such Financing Party at
such time.
"Letter of Credit Request" shall have the meaning ascribed to such term
in SECTION 3.4 of the Note Purchase Agreement.
"Letter of Credit Usage" shall mean, as at any date of determination,
the sum of (i) the aggregate Stated Amounts of all Letters of Credit then
outstanding plus (ii) the aggregate amount of all drawings under Letters of
Credit honored by Issuing Lenders and not theretofore reimbursed.
"LIBOR" shall mean with respect to the determination of an Interest
Rate for any Interest Period, the rate appearing on Page 3750 of the Telerate
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by Chase from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then "LIBOR" with respect to the Interest
Rate for such Interest Period shall be the rate at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of Chase in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
"Lien" shall mean any lien, charge, pledge, security interest, deed of
trust, mortgage, other encumbrance or other preferential arrangement of any
other kind having the practical effect of the foregoing and shall include the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement; PROVIDED that contributions to or
other amounts held in a Voluntary Employees' Beneficiary Association Trust which
contributions shall be established pursuant to Appendix R of the Settlement
Agreement dated June 1, 1994 by and among the United Steelworkers of America,
LTV Steel and LTV Steel Tubular Products Company, as amended, supplemented or
otherwise modified from time to time, or otherwise pursuant to SECTION 501(c)(9)
of the Code shall not be considered Liens hereunder.
"Liquidity Account" shall have the meaning ascribed to such term in
Section 8.02(a) of
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the Trust Agreement.
"Liquidity Shortfall Amount" shall have the meaning ascribed to such
term in Section 8.02(b) of the Trust Agreement.
"Liquidity Shortfall Notice" shall have the meaning ascribed to such
term in Section 8.02(b) of the Trust Agreement.
"Loss of Perfection Event" shall mean the occurrence and continuation
of any event such that the Collateral Agent shall no longer have a perfected
security interest in the manner contemplated by the Transaction Documents with
respect to some or all of the Collateral with the result that the Note
Collateral Value Requirement shall not be satisfied.
"LSE" means L-S Electro-Galvanizing Company.
"LSE II" means L-S II Electro-Galvanizing Company.
"LTV" means The LTV Corporation, together with its successors.
"LTV Mining" means LTV Steel Mining Company, together with its
successors.
"LTV Steel" means LTV Steel Company, Inc., a corporation organized
under the laws of the State of New Jersey, together with its successors.
"LTV Steel Group" means LTV Steel, Georgia Tubing and each additional
Seller, if any.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Collateral Effect" shall mean (i) any event or
action which causes a material adverse change in the value of Purchased
Inventory, other than changes in market prices, or in the nature of the
security interest held by the Collateral Agent in the Collateral or (ii) a
material adverse effect on (x) the ability of the Servicer, the Purchaser or
any Seller, as the case may be, to perform their respective obligations under
the Transaction Documents or (y) the validity or enforceability of any of the
Transaction Documents or the rights or remedies thereunder.
"Member" means any one or more members of the LTV Steel Group.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Multiemployer Plan" means a multiemployer plan as defined in SECTION
4001(a)(3) of ERISA and covered by Title IV thereof, and to which a Seller or
any Commonly Controlled Entity contributes or was obligated to contribute in the
immediately preceding five years.
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"Negotiable Documents of Title" means any "bill of lading", "warehouse
receipt" or other "document of title" which is in "negotiable" form, as each
such term is defined under the UCC of the applicable jurisdiction required to
perfect a security interest in any Purchased Inventory represented by such
documents and meeting all other requirements under the UCC to achieve such
perfection under such applicable law (including, without limitation, containing
all required endorsements and including a full set of documents when required.)
"Note" means a Class A-1 Note.
"Note Account" means the account of such name created pursuant to the
Trust Agreement.
"Note Collateral Shortfall" shall exist at any time that the Adjusted
Collateral Value of all Eligible Inventory is less than the Note Collateral
Value Requirement.
"Note Collateral Value Requirement" means with respect to Class A-1
Notes, the requirement to maintain Eligible Inventory with an Adjusted
Collateral Value as provided in SECTION 11.01 of the Trust Agreement.
"Note Distribution Date" means (i) with respect to any Class A-1 Note
or Note Portion with an Interest Rate based on ABR the first Business Day
occurring after the end of each Interest Period applicable thereto or (ii) with
respect to any Class A-1 Note or Note Portion with an Interest Rate based on
LIBOR, the last Business Day of the Interest Period applicable thereto, or,
(iii) with respect to any Term Note, such date as shall be specified in the form
of such Term Note; provided that after the occurrence of an Amortization Date
with respect to any Note, the first Business Day of each calendar week and the
first Business Day when the Collateral Agent has sufficient funds available to
pay all amounts due and owing to the Noteholders, the Financing Parties and
Independent Investors with respect to such Amortization Date shall be Note
Distribution Dates with respect to such Notes.
"Note Issuance Request" means a certificate substantially in the form
of Exhibit G to the Trust Agreement.
"Note Portion" means any portion of a Class A-1 Note equal to $100,000
in principal amount or any integral multiple of $100,000 in principal amount.
"Note Purchase Agreement" means that certain Note Purchase and Letter
of Credit Agreement dated as of February 26, 1998 among LTV Steel, the Placement
Agent, the Administrative Agent, the Collateral Agent and the various financial
institutions named as Financing Parties therein, as may be amended from time to
time.
"Note Purchase Agreement Default" means an event or condition which
with the giving
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of notice, the passage of time or both would be a Note Purchase Agreement Event
of Default.
"Note Purchase Agreement Event of Default" shall have the meaning
ascribed to such term in SECTION 9.1 of the Note Purchase Agreement.
"Note Purchase Date" shall have the meaning ascribed to such term in
SECTION 2.1(b) of the Note Purchase Agreement.
"Note Purchase Facility" shall mean the facility provided to LTV Steel
by the Note Purchasers for the purchase of Class A-1 Notes under the Note
Purchase Agreement.
"Note Purchase Notice" shall have the meaning ascribed to such term in
SECTION 2.1(b) of the Note Purchase Agreement.
"Note Purchase Price" shall have the meaning ascribed to such term in
SECTION 2.1(a)(v) of the Note Purchase Agreement.
"Note Purchaser" shall have the meaning ascribed to such term in the
recitals to the Note Purchase Agreement.
"Note Register" and "Note Registrar" have the respective meanings
specified in SECTION 2.03 of the Trust Agreement.
"Note Repurchase Date" shall have the meaning ascribed to such term in
SECTION 2.2(b) of the Note Purchase Agreement.
"Note Repurchase Notice" shall have the meaning ascribed to such term
in SECTION 2.2(b) of the Note Purchase Agreement.
"Note Repurchase Price" shall have the meaning ascribed to such term in
SECTION 2.2 of the Note Purchase Agreement.
"Notice Address" with respect to each party listed below shall mean:
If to the Administrative Agent (solely with respect to notices
and other communications related to the Collateral):
The Chase Manhattan Bank
Collateral Agent Services Group
270 Park Avenue
29th Floor
New York, New York 10017
Telephone: (212) 270-7130
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Fax: (212) 270-6229
Attention: Theresa Lubarski
If to the Collateral Agent or Administrative Agent:
The Chase Manhattan Bank
One Chase Plaza
New York, New York 10081
Telephone: (212) 552-7253
Fax: (212) 552-7490
Attention: Laura Rebecca
With copy to:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Telephone: (212) 946-8607
Fax: (212) 946-3638
Attention: Louise O'Hanlon
and to:
The Chase Manhattan Bank
The Global Mining and Metals Group
270 Park Avenue
23rd Floor
New York, New York 10017
Telephone: (212) 270-1373
Fax: (212) 270-4724
Attention: James H. Ramage
If to Georgia Tubing as Seller:
Georgia Tubing Corporation
c/o LTV Steel Company, Inc.
200 Public Square
Cleveland, Ohio 44114
Telephone: (216) 622-4600
Fax: (216) 622-1931
Attention: John C. Skurek
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If to the Issuer:
LTV Steel Products, LLC
200 Public Square
Cleveland, Ohio 44114
Telephone: (216) 622-4600
Fax: (216) 622-1931
Attention: John C. Skurek
If to LTV Steel as Seller or Servicer:
LTV Steel Company, Inc.
200 Public Square
Cleveland, Ohio 44114
Telephone: (216) 622-4600
Fax: (216) 622-1931
Attention: John C. Skurek
If to Chase as Financing Party:
The Chase Manhattan Bank
The Global Mining and Metals Group
270 Park Avenue
23rd Floor
New York, New York 10017
Telephone: (212) 270-1373
Fax: (212) 270-4724
Attention: James H. Ramage
If to the Placement Agent:
Chase Securities Inc.
c/o The Chase Manhattan Bank
The Global Mining and Metals Group
270 Park Avenue
23rd Floor
New York, New York 10017
Telephone: (212) 270-7665
Fax: (212) 270-0874
Attention: Rohan Paul
If to Fitch:
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Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
Telephone: (212) 908-0570
Fax: (212) 514-9879
Attention: Donald H. Powell
If to any other Financing Party, its address as specified in the
Note Register
or in each case, any other address hereafter designated in writing by any such
party by notice to the other parties at its Notice Address for purposes of the
Transaction Documents.
"Notice of Default" has the meaning specified in SECTION 5.01 of the
Trust Agreement.
"Obligations" shall mean all reimbursement obligations or indemnities
of LTV Steel on account of Letters of Credit, all obligations owed by such
Person for commissions, fees, expenses, indemnifications, principal or interest
(including interest and other claims accruing on or after the occurrence of an
Insolvency Proceeding, relating to such Person, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding), and all
other obligations and liabilities of every nature of LTV Steel from time to time
owed to the Placement Agent, the Administrative Agent and the Financing Parties
(or any of them), whether direct or indirect, absolute or contingent (and shall
in any event include the Stated Amounts of all Letters of Credit Outstanding),
due or to become due, or now existing or thereafter incurred, whether on account
of reimbursement obligations, commissions, principal, interest, fees,
indemnities, costs or expenses (including, without limitation, all fees and
disbursements of counsel) or otherwise which arise under any Transaction
Document.
"Obligor" means any Person obligated to make payments in respect of a
Receivable.
"Officer's Certificate" means, with respect to the Issuer, a
certificate signed by any Authorized Officer of the Issuer, under the
circumstances described in, and otherwise complying with, the applicable
requirements of SECTION 12.01 of the Trust Agreement, and delivered to, the
Collateral Agent, or, with respect to any other Person, a certificate executed
on behalf of such Person by its chairman of the board, its president, one of its
vice presidents, its chief financial officer, its treasurer or its controller.
"Off-site Inventory" means any Purchased Inventory located on Leased
Premises, held by a Third-Party Warehouseman, on the premises of an Outside
Processor or for any other reason held at any location not owned by the
Servicer, the applicable Member or Purchaser.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in the Trust Agreement, be employees
of or counsel to the Issuer and who shall be satisfactory to the Collateral
Agent and which shall comply with any applicable
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requirements of SECTION 12.01 of the Trust Agreement, and shall be in form and
substance satisfactory to the Collateral Agent.
"Organizational Documents" shall mean, as to any Person, the
certificate or articles of incorporation and by-laws, articles of limited
partnership, partnership agreement or other organizational or governing
documents of such Person.
"Other Taxes" shall have the meaning specified in SECTION 4.7(ii) of
the Note Purchase Agreement.
"Outside Processor" means any Person, other than the Servicer or its
Affiliates, which provides processing services with respect to raw materials or
other Purchased Inventory owned by LTV Steel Products.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under the Trust Agreement except:
(i) Notes theretofore canceled by the Collateral Agent or delivered
to the Collateral Agent for cancellation;
(ii) Notes or portions thereof for the payment of which money in the
necessary amount has been theretofore deposited with the Collateral
Agent in trust for the Holders of such Notes (PROVIDED, HOWEVER, that
if such Notes are to be redeemed, notice of such redemption has been
duly given pursuant to the Trust Agreement or provision for such
notice, satisfactory to the Collateral Agent, has been made); and
(iii) Notes as to which other Notes have been authenticated and
delivered pursuant to the Trust Agreement unless proof satisfactory to
the Collateral Agent is presented that any such Notes are held by a
bona fide purchaser;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
Outstanding Amount have given any request, demand, authorization, direction,
notice, consent or waiver under the Trust Agreement or under any other
Transaction Document, Notes owned by the Issuer, any other obligor upon the
Notes, LTV, LTV Steel or any of their respective Affiliates shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Collateral Agent shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes that the
Collateral Agent knows to be so owned shall be so disregarded. Notes so owned
that have been pledged in good faith may be regarded as Outstanding and subject
to vote by the pledgee if such pledgee establishes to the satisfaction of the
Collateral Agent the pledgee's right so to act with respect to such Notes and
that the pledgee is not the Issuer, any other obligor upon the Notes, LTV, LTV
Steel or any of their respective Affiliates. In addition, Notes owned by the
Issuer, any obligor upon the Notes, LTV, LTV Steel or any of their respective
Affiliates and Notes pledged will be regarded as Outstanding for the
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purposes of SECTION 11.01 of the Trust Agreement.
"Outstanding Amount" means the aggregate principal amount of all Notes
of one Class or of all Classes, as the case may be, Outstanding at the date of
determination.
"Payment Office" means 270 Park Avenue, New York, New York 10017 or any
other office within the continental United States designated by the
Administrative Agent to LTV Steel from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA and any Person succeeding to the functions
thereof.
"PBGC Agreement To Be Jointly and Severally Liable" shall mean that
certain Agreement to be Jointly and Severally Liable, dated as of February 26,
1998, whereby LTV Steel Products agrees with LTV and the PBGC to be jointly and
severally liable under the PBGC Settlement Agreement.
"PBGC Guaranty" shall mean that certain Guarantee Agreement, dated as
of August 2, 1995 by each of the members of the LTV Controlled Group which are
parties thereto, to and for the benefit of the PBGC, as the same may be
supplemented from time to time.
"PBGC Note" shall mean that certain promissory note, dated June 30,
1995, made by LTV Steel to the PBGC as amended, modified or supplemented from
time to time, and any additional notes issued from time to time pursuant to the
terms of such promissory note and the PBGC Settlement Agreement.
"PBGC Settlement Agreement" shall mean that certain Settlement
Agreement, dated as of June 28, 1993, by and among the PBGC, LTV and the ERISA
Affiliates of LTV named therein, as amended, supplemented or otherwise modified
from time to time.
"Permitted Cash Add-backs" shall mean with respect to any period of
determination the aggregate principal amount of voluntary payments made by or on
behalf of Sales Finance or any of its Affiliates to reduce the aggregate
principal amount of loans outstanding under the Receivables Facility during such
period.
"Permitted Liens" shall mean the following types of Liens:
(i) Liens for taxes, assessments or charges of any
governmental authority for amounts not yet due or which are being
contested in good faith by appropriate proceedings and with respect to
which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP;
(ii) statutory and contractual liens of landlords, carriers,
processors,
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warehousemen, mechanics and materialmen and other Liens imposed by law
incurred in the ordinary course of business for amounts not yet due or
which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP;
(iii) zoning laws and ordinances, easements, rights-of-way,
restrictions, minor defects, encroachments or irregularities in title
and other similar charges or encumbrances (whether or not arising by
operation of law) not interfering in any material respect with the
ordinary conduct of the business of LTV Steel Products, the Servicer or
the Members;
(iv) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payments of customs duties in connection
with the importation of goods;
(v) Liens arising pursuant to purchase money Liens securing
Indebtedness representing the purchase price or financing of the
purchase price within 180 days after the respective purchase of
Inventory purchased or otherwise acquired by any Seller; provided that
(x) any such Liens attach only to the Inventory so purchased or
acquired and (y) the Indebtedness secured by any such Liens does not
exceed the purchase price of the Inventory being purchased or acquired;
and
(vi) Liens against the Collateral filed by the IRS or PBGC
which, individually or in the aggregate, do not result in a Note
Purchase Agreement Event of Default pursuant to Section 9.1(f) of the
Note Purchase Agreement.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"Placement Agent" means CSI in its capacity as Placement Agent under
the Note Purchase Agreement, and its successors in such capacity.
"Plan" means at a particular time, any employee benefit plan which is
covered by ERISA, other than a Multiemployer Plan, and in respect of which a
Seller, the Purchaser or a Commonly Controlled Entity is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to be) an
"employer" as defined in Section 3(5) of ERISA.
"Pledge Rate" shall mean a rate of interest applicable to Class A-1
Notes equal to ABR plus 2% per annum.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and for the purpose of this definition, any Note
authenticated and delivered under SECTION 2.04 of the Trust Agreement in lieu of
a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the
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same debt as the mutilated, lost, destroyed or stolen Note.
"Presque Isle" means Presque Isle Corporation.
"Price and Fees Agreement" shall have the meaning ascribed to such term
in Section 2.2 of the Contribution and Sale Agreement.
"Prime Rate" means a variable rate of interest established from time to
time by Chase as its base lending rate for commercial loans in U.S. dollars to
domestic corporate borrowers (it being understood that such rate does not
necessarily represent the lowest or best rate actually charged to any customer
and that Chase may make commercial loans or other loans at rates of interest at,
above or below such rate). A change in the Prime Rate shall become effective as
of the day on which such change is established by Chase.
"Pro Rata Portion" with respect to a Financing Party (whether in its
capacity as Note Purchaser or Lender) under the Note Purchase Agreement as of
any date of determination means a fraction being the result of dividing (i) the
Commitment of such Financing Party by (ii) the Aggregate Commitment Amount.
"Proceeding" shall have the meaning specified in SECTION 7.1(v) of the
Note Purchase Agreement.
"Published Value" means the current price of Purchased Inventory, as
published by a recognized, third party source, which except as noted otherwise
in the Transaction Documents is Preston Publishing or, if Preston Publishing is
not available, is approved in writing by LTV Steel, the Collateral Agent and the
Required Financing Parties.
"Purchase Price" shall have the meaning set forth in SECTION 2.2 of the
Contribution and Sale Agreement.
"Purchase Suspension Event" shall mean the occurrence of a suspension
of purchases of Inventory because of the failure to satisfy the condition of
Section 3.5 of the Contribution and Sale Agreement which has not been cured
within ten consecutive Business Days from the date on which such suspension
commenced.
"Purchase Termination Event" shall have the meaning ascribed such term
in SECTION 7.1 of the Contribution and Sale Agreement.
"Purchased Inventory" means any Inventory sold to the Purchaser by the
Sellers pursuant to, and in accordance with the terms of the Contribution and
Sale Agreement and includes any such Inventory subsequently processed into goods
for sale to customers.
"Purchaser" means LTV Steel Products, LLC, as the Purchaser under the
Contribution
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and Sales Agreement.
"Rating Agency" means Fitch IBCA, Inc.
"Rating Agency Condition" means, with respect to any action, that the
Rating Agency shall have been given ten days (or such shorter period as is
acceptable to the Rating Agency) prior notice thereof and that each Rating
Agency shall have notified the Collateral Agent, the Servicer and the Issuer in
writing that such action will not result in a qualification, reduction or
withdrawal of its then-current rating of the Class A-1 Notes.
"Raw Materials" means any raw materials used or consumed in the
manufacture, packing, shipping, advertising, selling, leasing, furnishing or
production of other inventory including, without limitation, iron-bearing coarse
or pelletized ore and sinter, coke, coal and other alloys and fluxes, but
excluding steel scrap and iron scrap (it being understood that steel scrap and
iron scrap shall be included in Purchased Inventory not constituting raw
materials).
"Receivable" means all indebtedness of a Person (other than Sales
Finance, LTV Steel Products or any Member), whether constituting an account,
chattel paper or a general intangible, arising from the sale of Purchased
Inventory by or for the account of LTV Steel Products, including all interest or
finance charges and other obligations of such Person with respect thereto.
"Receivables Default Event" means (i), (ii) or (iii) below shall be in
existence:
(i) the voluntary termination of the Receivables Facility
(including any Replacement Receivables Facility)
unless either (A) or (B) below shall exist:
(A)(1) LTV and its Subsidiaries shall at
the date of such termination have an
aggregate value in cash, marketable
securities and Class A-1 Notes not
then pledged to Lenders or held by
Note Purchasers equal to or in
excess of two times the then
outstanding amount of Receivables
subject to the Receivables Facility;
and
(2) less than $100 million aggregate
principal amount of Indebtedness to
the lenders under the Receivables
Facility shall be outstanding; or
(B) a Replacement Receivables Facility
is provided and in effect prior to
the date of such termination;
(ii) the Applicable Receivables Advance Rate is less than
50%; or
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<PAGE> 58
(iii) an involuntary termination of the Receivables
Facility.
"Receivables Facility" means the facility established pursuant to the
Receivables Facility Documents or any Replacement Receivables Facility.
"Receivables Facility Documents" means the Revolving Credit Agreement
and the Receivables Sale Agreement, as the same may be amended, restated,
supplemented, modified, renewed, replaced or refinanced from time to time, and
any other instruments, agreements and documents executed pursuant thereto.
"Receivables Facility Liens" shall mean Liens on receivables (including
Receivables) and Liens on other assets of the type required under the
Receivables Facility on the Effective Date with such changes therefrom as the
Issuer and the Required Financing Parties may from time to time approve in
writing.
"Receivables Intercreditor Agreement" shall mean an agreement
acceptable to LTV Steel Products, the Placement Agent, the Administrative Agent,
the Collateral Agent and Sales Finance establishing the rights and priorities of
claims between LTV Steel Products and Sales Finance with respect to Receivables.
"Receivables Sale Agreement" means that certain Receivables Purchase
and Sale Agreement, dated as of October 12, 1994 among LTV, the Sellers named
therein, the Servicer and LTV Sales Finance Company, as amended from time to
time.
"Record Date" means, with respect to a Note Distribution Date or
Redemption Date, such Note Distribution Date or Redemption Date unless a
different Record Date has been established by the Collateral Agent as provided
by the Trust Agreement.
"Redemption Date" shall mean each date on which a Note is scheduled for
redemption.
"Redemption Notice" shall mean a notice from the Issuer to the
Collateral Agent requesting the redemption of Class A-1 Notes as provided in
SECTION 10.03 of the Trust Agreement.
"Redemption Premium" with respect to a Class A-1 Note shall mean the
amount, if any, in excess of the principal amount thereof and accrued interest
thereon stated in the form thereof as being payable upon redemption thereof
prior to its stated maturity.
"Reduced Rate" shall have the meaning set forth in SECTION 4.7(vi) of
the Note Purchase Agreement.
"Registered Holder" means the Person in whose name a Note is registered
on the Note Register on the applicable Record Date.
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<PAGE> 59
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto.
"Reimbursement Payments" shall mean all amounts received by the Agent
in reimbursement of drawings and related fees under a Letter of Credit,
including amounts realized on or in disposition of the Class A-1 Notes securing
such reimbursement obligations.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the environment (including,
without limitation, the abandonment or disposal of any barrels, containers or
other closed receptacles containing any Hazardous Materials).
"Remaining Commitment Obligation", shall mean with respect to any
Financing Party as of a date of determination, its Commitment reduced by the sum
of (i) the aggregate principal amount of Class A-1 Notes then held by such
Financing Party as a Note Purchaser, and (ii) its Pro Rata Portion of the
aggregate Letter of Credit Usage at such time.
"Replacement Receivables Facility" means either
(i) a receivables facility for the purchase or other
financing of Receivables that:
(A) has a term of at least one year from the
date it is effective;
(B) is in an amount materially equivalent to the
then-existing Receivables Facility;
(C) has an Applicable Receivables Advance Rate
(determined on a pro forma basis) in excess
of 50%; and
(D) is rated at least "A" by S&P or another
nationally recognized rating agency; or
(ii) any other facility for the purchase or other
financing of Receivables approved by the Required
Financing Parties for such purpose.
Required Financing Parties" shall mean, at any time, Financing Parties
with an aggregate of Commitments in excess of 50% of the Aggregate Commitment
Amount.
"Required Liquidity Amount" shall mean as of any date of determination
an amount equal to $5,000,000.
"Requirements of Law" shall mean, as to any Person, the Organizational
Documents of
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<PAGE> 60
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.
"Responsible Officer" means, with respect to the Collateral Agent, any
officer within the Corporate Trust Office (or any successor group of the
Collateral Agent), including any Vice President, assistant secretary or other
officer or assistant officer of the Collateral Agent customarily performing
functions similar to those performed by the people who at such time shall be
officers, respectively, or to whom any corporate trust matter is referred at the
Corporate Trust Office of the Collateral Agent because of his knowledge of and
familiarity with the particular subject.
"Revolving Credit Agreement" means the Revolving Credit Agreement dated
as of October 12, 1994 among LTV Sales Finance Company, the financial
institutions party thereto, the issuing banks and the facility agent and
collateral agent (all as identified in the Accession Agreement dated as of
October 12, 1994), as amended from time to time.
"S&P" means Standard & Poor's and its successors.
"Sale Documents" shall have the meaning ascribed to such term in
SECTION 5.8(d) of the Contribution and Sale Agreement.
"Sales and Valuation Report" shall mean a report (and all supporting
documentation delivered therewith) substantially in the form of Exhibit A-1, A-2
or A-3 to the Contribution and Sale Agreement, as applicable.
"Sales and Valuation Date" shall mean each date on which a Sales and
Valuation Report is required to be delivered to the Company, the Agents and the
Collateral Agent which shall be the 15th Business Day of each Calendar Month
unless (a) the Facility Utilization exceeds 90% or (b) the Facility Utilization
exceeds 95% in which event, at the request of the Collateral Agent, in the case
of (a) above the Sales and Valuation Date shall be the first Business Day of
each week and in the case of (b) above each Business Day shall be a Sales and
Valuation Date.
"Sales Finance" shall mean LTV Sales Finance Company as purchaser of
Receivables under the Receivables Sale Agreement, together with its successors.
"SEC" means the Securities and Exchange Commission.
"Section 4.7 Party" shall have the meaning ascribed to such term in
SECTION 4.7 of the Note Purchase Agreement.
"Secured Parties" means the Holders of the Class A-1 Notes, the
Financing Parties, the Collateral Agent, the Placement Agent and the
Administrative Agent.
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<PAGE> 61
"Security Documents" means the Trust Agreement, the Collateral Access
Agreements and all other contracts, instruments and other documents at the
Effective Date or thereafter executed and delivered in connection with the Trust
Agreement, pursuant to which liens and security interests are granted to the
Collateral Agent in the Collateral for the benefit of the Holders of the Notes.
"Sellers" means LTV Steel and Georgia Tubing, in their capacity as
Sellers under the Contribution and Sale Agreement, and any successors and
assigns, and any additional Sellers added pursuant to Section 3.4 of the
Contribution and Sale Agreement.
"Servicer" means LTV Steel in its capacity as Servicer under the
Inventory Processing and Servicing Agreement, and any Successor Servicer
thereunder.
"Servicer Accounts" shall have the meaning specified in SECTION 3.1(a)
of the Inventory Processing and Servicing Agreement.
"Servicer Default" shall mean an event or condition which with the
giving of notice, lapse of time or both would constitute a Servicer Termination
Event.
"Servicer Termination Event" shall have the meaning ascribed thereto in
Section 9.1 of the Inventory Processing and Servicing Agreement.
"Servicing Fee" shall have the meaning ascribed to such term in SECTION
6.1 of the Inventory Processing and Servicing Agreement.
"Significant Seller" shall mean, from time to time, any Seller which
has sold 10% or more of the aggregate Inventory Value of Purchased Inventory as
reflected in any Sales and Valuation Report dated any date in the prior 12
months from the date of determination.
"Standby Letter of Credit" means the Letters of Credit issued on a
standby basis in support of the obligations of LTV Steel and LTV Mining under
the TBT Lease Agreements or in support of obligations of LTV Steel, or any of
its Affiliates incurred in the ordinary course of business with respect to
worker compensation, surety and appeal bonds and other statutory or commercial
obligations.
"State" means any one of the 50 states of the United States, or the
District of Columbia or any of its territories.
"Stated Amount" of each Letter of Credit shall, at any time, mean the
maximum amount available to be drawn thereunder (in each case determined without
regard to whether any conditions to drawing could then be met).
-31-
<PAGE> 62
"Steel Mining" means LTV Steel Mining Company, a limited partnership
organized under the laws of the State of Minnesota.
"Steel Products" means flat rolled steel slabs, steel bands, hot rolled
sheet and strip steel, cold rolled sheet and strip steel, electroplate,
electro-galvanized steel, hot dip galvanized steel, steel scrap, iron scrap and
hot dip galvanneal.
"Subordinated Notes" means any Indebtedness of LTV Steel Products
issued in connection with the acquisition of Purchased Inventory, other than the
Class A-1 Notes.
"Subsidiary" means, as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.
"Successor Servicer" shall have the meaning specified in SECTION 9.3 of
the Inventory Processing and Servicing Agreement.
"Taxes" shall have the meaning specified in SECTION 4.7(i) of the Note
Purchase Agreement.
"Tax Transferee" shall have the meaning specified in SECTION 4.7(i) of
the Note Purchase Agreement.
"TBT Lease Agreements" mean the agreements listed on Schedule III to
the Note Purchase Agreement, as each such agreement may be amended, supplemented
or otherwise modified from time to time to the extent permitted by the Note
Purchase Agreement.
"TBT Letters of Credit" shall have the meaning ascribed to such term in
SECTION 3.1(b) of the Note Purchase Agreement.
"Term Interest Period" shall mean an Interest Period applicable to a
Class A-1 Note from the date of establishment thereof until such Note has been
paid in full whether at stated maturity or earlier redemption thereof.
"Term Note" shall mean any Class A-1 Note bearing interest at a Term
Rate.
"Term Rate" shall mean the interest rate established by the Issuer to
be applicable to a Class A-1 Note for a Term Interest Period and may be fixed or
floating.
"Termination Date" means the date on which the Collateral Agent shall
have received payment and performance of all amounts and obligations which the
Issuer may owe to or on
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<PAGE> 63
behalf of the Collateral Agent for the benefit of the Financing Parties under
the Trust Agreement or the Notes.
"Third-Party Warehouseman" means any premises where Purchased Inventory
is located, which premises is neither owned nor leased by the Servicer, the
applicable Member or the Purchaser.
"Tin Products" means tin bands (black plate) and finished tin products
including, without limitation, cold reduced tin mill black plate specified in
cut sizes or coils, coated with tin by electro-deposition.
"Trade Letters of Credit" means any Letter of Credit or similar
instrument issued for the account of any Member for the purpose of providing the
primary payment mechanism in connection with the purchase of any materials,
goods or services by any such Member in the ordinary course of business of such
Member.
"Transaction Documents" means the Trust Agreement, the Contribution and
Sale Agreement, the Inventory Processing and Servicing Agreement, the Note
Purchase Agreement, the Guaranty and all other agreements and documents executed
in connection with the transactions contemplated thereby.
"Trust Accounts" shall mean the Cash Received Account, the Inventory
Purchase Account, the Liquidity Account and the Note Account.
"Trust Agreement" means the Trust Agreement dated as of February 26,
1998 between the Issuer and the Collateral Agent, as amended or supplemented
from time to time.
"Trust Agreement Default" shall mean any event or condition which with
the giving of notice, lapse of time or both would constitute a Trust Agreement
Event of Default.
"Trust Agreement Event of Default" shall have the meaning specified in
SECTION 5.01 of the Trust Agreement.
"Tubular Products" means steel pipe and tubular products, electric
welded pipe and finished tubular products including, without limitation, tubing
and conduit.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
"United States" means the United States of America.
"Unmatured Involuntary Insolvency Proceeding" shall mean an Involuntary
Insolvency Proceeding without regard to the sixty (60) day release, vacation or
bonding provision contained
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<PAGE> 64
in the definition thereof.
"Unused Line Fee" shall have the meaning ascribed to such term in
SECTION 4.4 of the Note Purchase Agreement.
"Unused Line Fee Rate" means the following dependent upon the then
Effective Rating of the Class A-1 Notes:
<TABLE>
<CAPTION>
Class A-1 Note Rating Unused Line Fee Rate (Per Annum)
--------------------- --------------------------------
<S> <C>
"BBB+" or better 0.25%
"BBB" 0.25%
"BBB-" or lesser 0.50%
</TABLE>
"Utilized Portion Rate" means the following dependent upon the then
Effective Rating of the Class A-1 Notes:
<TABLE>
<CAPTION>
Class A-1 Note Rating Utilized Portion Rate (Per Annum)
--------------------- ---------------------------------
<S> <C>
"BBB+" or better 0.75%
"BBB" 1.00%
"BBB-" or lesser 1.50%
</TABLE>
"Voluntary Insolvency Proceeding" means for any Person that either: (a)
an order for relief under Title 11 of the United States Code shall be entered in
a case in which such Person is a debtor, or such Person shall become insolvent
or generally fail to pay, or admit in writing its inability to pay, its debts as
they become due, or shall voluntarily commence any proceeding or file any
petition under any bankruptcy, insolvency or similar law or shall seek
dissolution or reorganization or the appointment of a receiver, trustee,
custodian or liquidator for itself or a substantial portion of its property,
assets or business or to effect a plan or other arrangement with its creditors,
or shall file any answer admitting the jurisdiction of the court and the
material allegations of an involuntary petition filed against it in any
bankruptcy, insolvency or similar proceeding, or shall be adjudicated bankrupt,
or shall make a general assignment for the benefit of creditors, or shall
consent to, or acquiesce in the appointment of, a receiver, trustee, custodian
or liquidator for itself or a substantial portion of its property, assets or
business; or (b) corporate, partnership, company or other similar action shall
be taken by such Person for the purpose of effectuating any of the foregoing.
-34-
<PAGE> 1
Exhibit 10.56
================================================================================
LTV Steel Products, LLC,
as Issuer,
and
The Chase Manhattan Bank,
not in its individual capacity but solely in its capacity
as Collateral Agent
-----------------------------------
TRUST AGREEMENT
Dated as of February 26, 1998
-----------------------------------
$350,000,000 Adjustable Floating Rate Notes, Class A-1
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE ONE
<S> <C>
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions............................................................................2
Section 1.02. Rules of Construction..................................................................2
ARTICLE TWO
THE NOTES
Section 2.01. Form...................................................................................3
Section 2.02. Execution, Authentication and Delivery.................................................3
Section 2.03. Registration; Registration of Transfer and Exchange....................................3
Section 2.04. Mutilated, Destroyed, Lost or Stolen Notes.............................................4
Section 2.05. Persons Deemed Owner...................................................................5
Section 2.06. Payment of Principal and Interest; Defaulted Interest..................................5
Section 2.07. Cancellation...........................................................................7
Section 2.08. Book-Entry Notes.......................................................................7
Section 2.09. Definitive Notes.......................................................................8
Section 2.10. Tax Treatment..........................................................................8
ARTICLE THREE
COVENANTS
Section 3.01. Payment of Principal and Interest......................................................8
Section 3.02. Money for Payments to be Held in Trust.................................................8
Section 3.03. Existence..............................................................................9
Section 3.04. Protection of Collateral...............................................................9
Section 3.05. Evidence as to Collateral.............................................................10
Section 3.06. Performance of Obligations; Servicing of Inventory....................................10
Section 3.07. Negative Covenants....................................................................11
Section 3.08. Annual Statement as to Compliance.....................................................11
Section 3.09. Issuer May Consolidate, etc. Only on Certain Terms....................................11
Section 3.10. Successor or Transferee...............................................................12
Section 3.11. No Other Business.....................................................................13
Section 3.12. No Borrowing..........................................................................13
Section 3.13. Servicer's Obligations................................................................13
Section 3.14. Guarantees, Loans, Advances and Other Liabilities.....................................13
Section 3.15. Capital Expenditures..................................................................13
Section 3.16. Restricted Payments...................................................................13
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 3.17. Notice of Events of Default...........................................................14
Section 3.18. Further Instruments and Acts..........................................................14
Section 3.19. Compliance with Laws..................................................................14
Section 3.20. Amendments of Contribution and Sale Agreement and Inventory
Processing and Servicing Agreement....................................................14
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Agreement. ............................................14
Section 4.02. Application of Trust Money............................................................15
ARTICLE FIVE
REMEDIES
Section 5.01. Trust Agreement Events of Default.....................................................16
Section 5.02. Rights Upon Event of Default..........................................................17
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Collateral Agent;Authority of Collateral Agent........................................17
Section 5.04. Remedies..............................................................................19
Section 5.05. Priorities............................................................................20
Section 5.06. Limitation of Suits...................................................................21
Section 5.07. Unconditional Rights of Noteholders to Receive Principal and Interest.................21
Section 5.08. Restoration of Rights and Remedies....................................................22
Section 5.09. Rights and Remedies Cumulative........................................................22
Section 5.10. Delay or Omission Not a Waiver........................................................22
Section 5.11. Control by Secured Parties............................................................22
Section 5.12. Waiver of Past Defaults...............................................................23
Section 5.13. Undertaking for Costs.................................................................23
Section 5.14. Waiver of Stay or Extension Laws......................................................23
Section 5.15. Action on Notes.......................................................................23
Section 5.16. Performance and Enforcement of Certain Obligations....................................24
ARTICLE SIX
THE COLLATERAL AGENT
Section 6.01. Duties of Collateral Agent............................................................24
Section 6.02. Rights of Collateral Agent............................................................26
Section 6.03. Individual Rights of Collateral Agent.................................................27
Section 6.04. Collateral Agent's Disclaimer.........................................................27
Section 6.05. Notice of Defaults....................................................................27
Section 6.06. Reports by Collateral Agent to Holders................................................27
Section 6.07. Compensation and Indemnity............................................................27
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 6.08. Replacement of Collateral Agent.......................................................28
Section 6.09. Successor Collateral Agent by Merger..................................................29
Section 6.10. Appointment of Co-Collateral Agent or Separate Collateral Agent.......................29
Section 6.11. Eligibility...........................................................................30
ARTICLE SEVEN
SUBORDINATED NOTES
Section 7.01. Issuance of Subordinated Notes........................................................31
Section 7.02. Limitation on Amount of Subordinated Notes............................................31
Section 7.03. Payments on Subordinated Notes........................................................31
Section 7.04 Restrictions on Transfer. ............................................................31
Section 7.05. Tax Treatment.........................................................................31
ARTICLE EIGHT
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money...................................................................32
Section 8.02. Trust Accounts........................................................................32
Section 8.03. General Provisions Regarding Accounts.................................................34
Section 8.04. Release of Collateral.................................................................35
Section 8.05. Opinion of Counsel....................................................................36
ARTICLE NINE
SUPPLEMENTS TO TRUST AGREEMENT
Section 9.01. Supplements Without Consent of Secured Parties........................................36
Section 9.02. Supplements With Consent of Secured Parties...........................................37
Section 9.03. Execution of Supplements..............................................................39
Section 9.04. Effect of Supplements.................................................................39
Section 9.05. Reference in Notes to Supplements.....................................................39
ARTICLE TEN
REDEMPTION OF NOTES
Section 10.01. Redemption...............................................................................39
Section 10.02. Requirements as to Redemption............................................................39
Section 10.03. Form of Redemption Notice................................................................40
Section 10.04. Notes Payable on Redemption Date.........................................................40
ARTICLE ELEVEN
NOTE COLLATERAL VALUE REQUIREMENT
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
Section 11.01. Note Collateral Value Requirement........................................................40
Section 11.02. Evidence of Compliance...................................................................41
Section 11.03. Corrective Actions. .....................................................................41
Section 11.04. Release of Cash Collateral. .............................................................41
Section 11.05. Issuance of Additional Notes. ...........................................................42
ARTICLE TWELVE
MISCELLANEOUS
Section 12.01. Compliance Certificates and Opinions, etc................................................42
Section 12.02. Form of Documents Delivered to Collateral Agent..........................................43
Section 12.03. Acts of Secured Parties..................................................................44
Section 12.04. Notices..................................................................................44
Section 12.05. Notices to Secured Parties; Waiver.......................................................44
Section 12.06. Alternate Payment and Notice Provisions..................................................45
Section 12.07. Effect of Headings and Table of Contents.................................................45
Section 12.08. Successors and Assigns...................................................................45
Section 12.09. Separability.............................................................................45
Section 12.10. Benefits of Agreement....................................................................45
Section 12.11. Legal Holidays...........................................................................46
Section 12.12. Governing Law............................................................................46
Section 12.13. Counterparts.............................................................................46
Section 12.14. Recording of Agreement...................................................................46
Section 12.15. Trust Obligation.........................................................................46
Section 12.16. No Petition..............................................................................46
Section 12.17. Inspection...............................................................................47
Section 12.18. Extension of Expiration Date.............................................................47
Section 12.19. Effectiveness............................................................................47
</TABLE>
iv
<PAGE> 6
EXHIBITS
<TABLE>
<S> <C>
Exhibit A Form of Class A-1 Note ................................................................. A-1
Exhibit B Form of Note Assignment ................................................................. B-1
Exhibit C Form of Contribution and Sale Agreement ................................................. C-1
Exhibit D Form of Inventory Processing and Servicing Agreement ................................... D-1
Exhibit E Form of Receivables Sale Agreement ...................................................... E-1
Exhibit F Form of Sales and Valuation Report (Monthly) ............................................ F-1A
Form of Sales and Valuation Report (Weekly) ............................................. F-1B
Form of Sales and Valuation Report (Daily)............................................... F-1C
Exhibit G Form of Note Issuance Request ........................................................... G-1
Exhibit H Form of Subordinated Note ................................................................ H-1
</TABLE>
v
<PAGE> 7
Trust Agreement, dated as of February 26, 1998 (this "Agreement" or
"Trust Agreement"), between LTV Steel Products, LLC, a Delaware limited
liability company (the "Issuer"), and The Chase Manhattan Bank in its capacity
as collateral agent (the "Collateral Agent") and not in its individual capacity.
Each party agrees as follows for the benefit of the other parties, for
the benefit of the Holders of the Issuer's Adjustable Floating Rate Notes, Class
A-1 (the "Class A-1 Notes") and for the benefit of the other Secured Parties:
GRANTING CLAUSE
The Issuer hereby grants, transfers, assigns and otherwise conveys to
the Collateral Agent on the Effective Date, on behalf of and for the benefit of
the Holders of the Class A-1 Notes and the other Secured Parties, a security
interest in all of the Issuer's right, title and interest in, to and under the
Purchased Inventory, the rights of the Issuer under the Contribution and Sale
Agreement, the Inventory Processing and Servicing Agreement (including all
accounts held thereunder) and the Receivables Sale Agreement, all present and
future claims, demands, causes of and choses in action in respect of any or all
of the foregoing; and all payments on or under and all proceeds of every kind
and nature whatsoever in respect of any or all of the foregoing, including all
proceeds of the conversion, voluntary or involuntary, into cash of other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance proceeds,
condemnation awards, rights to payment of any and every kind and other forms of
obligations and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing and all accounts held under this Trust Agreement (collectively, the
"Collateral").
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Class A-1
Notes under the terms hereof, the payment of all amounts owing to the Financing
Parties and the Agents under the Guaranty, all other sums owing by the Issuer
hereunder and to secure compliance with the provisions of this Trust Agreement,
all as provided in this Trust Agreement.
The Collateral Agent, as Collateral Agent on behalf of the Holders of
the Class A-1 Notes and the other Secured Parties, acknowledges such Grant,
accepts the trust under this Agreement in accordance with the provisions of this
Trust Agreement and agrees to perform its duties required in this Agreement to
the best of its ability to the end that the interests of the Holders of the
Class A-1 Notes and the other Secured Parties may be adequately and effectively
protected.
<PAGE> 8
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
(a) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used herein have the meanings assigned to
such terms in Annex X hereto which is incorporated by reference.
Section 1.02. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the
plural include the singular;
(vi) any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to
time amended, modified or supplemented and includes (in the case of
agreements or instruments) references to all attachments thereto and
instruments incorporated therein; references to a Person are also to
its permitted successors and assigns; and
(vii) the words "hereof," "herein" and "hereunder" and words
of similar import when used in this Trust Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement; Section, subsection and Schedule references contained in
this Agreement are references to Sections, subsections and Schedules in
or to this Agreement unless otherwise specified.
2
<PAGE> 9
ARTICLE TWO
THE NOTES
Section 2.01. Form. The Class A-1 Notes together with the Collateral
Agent's certificate of authentication, shall be in substantially the form set
forth as Exhibit A to this Agreement with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Agreement and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes. Any portion of the text of any Note
may be set forth on the reverse thereof, with an appropriate reference thereto
on the face of the Note.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibit A hereto are part of the terms of this Agreement.
The Notes shall constitute a "security" under the provisions of Section
8-102(15) of the UCC and a "certificated security in registered form" under the
provisions of Section 8-106 of the UCC.
Section 2.02. Execution, Authentication and Delivery. The Notes shall
be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile. Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
On the Effective Date the Collateral Agent shall, upon receipt of an
Issuer Order, authenticate and deliver for original issue Class A-1 Notes in an
aggregate principal amount of $250,000,000. Further Class A-1 Notes may be
issued from time to time as permitted under the terms of this Agreement.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $100,000
and in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Agreement or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein by
the Collateral Agent by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
Section 2.03. Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which the
Issuer shall provide for the registration of
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Notes and the registration of transfers of Notes. The Collateral Agent shall be
the "Note Registrar" for the purpose of registering Notes and transfers of Notes
as herein provided.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.02, the Issuer
shall execute, and the Collateral Agent shall authenticate and the Noteholder
shall obtain from the Collateral Agent, in the name of the designated transferee
or transferees, one or more new Notes in any authorized denominations, of a like
aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in
any authorized denominations, of a like aggregate amount, upon surrender of the
Notes to be exchanged at such office or agency. Whenever any Notes are so
surrendered for exchange, the Issuer shall execute, and the Collateral Agent
shall authenticate and the Noteholder shall obtain from the Collateral Agent,
the Notes which the Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Trust Agreement, as the Notes
surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Collateral Agent duly executed by, the
Holder thereof.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Collateral Agent may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes.
Section 2.04. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Collateral Agent, or the Collateral Agent
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Collateral Agent such security or
indemnity as may be required by the Issuer and the Collateral Agent, then, in
the absence of notice to the Issuer or the Collateral Agent that such Note has
been acquired by a bona fide purchaser, the Issuer shall execute and upon its
request the Collateral Agent shall authenticate and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement
Note; provided, however, that if any such destroyed, lost or stolen Note, but
not a mutilated Note, shall have become or within seven days shall be due and
payable, or shall have been called for redemption, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable or upon the Redemption Date without surrender thereof. If, after
the delivery of such replacement Note or payment of a destroyed, lost or stolen
Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of
the original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer, and the Collateral Agent shall be
entitled to recover such replacement Note (or such payment) from the Person to
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whom it was delivered or any Person taking such replacement Note from such
Person to whom such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer or the Collateral Agent in connection
therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer or the Collateral Agent may require the payment by the Holder of such
Note of a sum sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Agreement equally and
proportionately with any and all other Notes duly issued hereunder.
Section 2.05. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Collateral Agent, and any
of their respective agents may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
none of the Issuer, the Collateral Agent nor any of their respective agents
shall be affected by notice to the contrary.
Section 2.06. Payment of Principal and Interest; Defaulted Interest.
(a) Each Note shall accrue interest for the period and at the related
interest rate as selected from time to time by the Holder thereof as provided
below.
The Notes shall bear interest for the periods and at the respective
interest rates as follows:
<TABLE>
<CAPTION>
Interest Period Interest Rate
--------------- -------------
<S> <C> <C>
One Month Note Rate 1, ABR or Pledge Rate
Two Months Note Rate 2
Three Months Note Rate 3
Six Months Note Rate 6
Term Term Rate
</TABLE>
Note Rate 1 shall be an annual rate of interest equal to
one-month LIBOR plus the Applicable Note Margin.
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Note Rate 2 shall be an annual rate of interest equal to
two-month LIBOR plus the Applicable Note Margin.
Note Rate 3 shall be an annual rate of interest equal to
three-month LIBOR plus the Applicable Note Margin.
Note Rate 6 shall be an annual rate of interest equal to
six-month LIBOR plus the Applicable Note Margin.
On each Eligible Determination Date with respect to a Note or
Note Portion, the Holder thereof may select the Interest Period (and, in the
case of an Interest Period of One Month, the Interest Rate applicable thereto)
to be applicable thereto by providing an Interest Rate Period Notice with
respect to such Note (or Note Portion) to the Collateral Agent; provided that if
the Holder of any Note is a Note Purchaser or Lender, LTV Steel shall act as
agent for such Holder in selecting the applicable Interest Period (and, in the
case of an Interest Period of One Month, the Interest Rate applicable thereto).
If no such Interest Rate Period Notice is provided to the Collateral Agent, the
Interest Period shall be One Month and the Interest Rate applicable to such Note
or Note Portion shall be Note Rate 1.
The Interest Rate to be applicable for each Class A-1 Note (or
Note Portion) shall be the Interest Rate corresponding to the Interest Period
(and, in the case of an Interest Period of One Month, the Interest Rate
applicable thereto) selected by the respective Holder in a duly delivered
Interest Rate Period Notice. Interest on each Class A-1 Note (or Note Portion)
shall be payable on the Note Distribution Date next occurring after the end of
the Interest Period applicable to such Note (or Note Portion) or, in the case of
a Term Note, on each Note Distribution Date as specified in the form of such
Term Note.
Any installment of interest or principal, if any, payable on
any Note (or Note Portion) which is punctually paid or duly provided for by the
Issuer on the applicable Note Distribution Date shall be paid to the Collateral
Agent, as paying agent, for payment to the Person in whose name such Note (or
Note Portion) is registered on the Record Date, by wire transfer in immediately
available funds to the account designated by such Holder.
(b) The principal of each Note shall be payable on each Note
Distribution Date to the extent provided in the form of Note set forth as
Exhibit A hereto. Notwithstanding the foregoing, the entire unpaid principal
amount of each Note shall be due and payable, if not previously paid, on the
date on which a Trust Agreement Event of Default shall have occurred and be
continuing, if the Holders of Notes representing not less than 50% of the
Outstanding Amount of Notes or the Required Financing Parties have requested
such payment in connection with such Trust Agreement Event of Default in the
manner provided in Section 5.02. Principal payments in the event of a redemption
of Notes shall be made as provided in SECTION 10.04. Notices in connection with
redemptions of Notes shall be transmitted to Noteholders as provided in Section
10.03.
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(c) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted interest to
the extent lawful) at ABR plus 2% per annum. The Issuer may pay such defaulted
interest to the Persons who are Noteholders on a subsequent special record date
established by the Collateral Agent . The Collateral Agent shall fix
or cause to be fixed any such special record date and payment date, and, at
least one Business Day before any such special record date, the Collateral Agent
shall deliver to the Issuer and each Noteholder a notice that states the special
record date, the payment date and the amount of defaulted interest to be paid.
Section 2.07. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall be delivered to the
Collateral Agent and shall be promptly cancelled by the Collateral Agent. The
Issuer may at any time deliver to the Collateral Agent for cancellation any
Notes previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
cancelled by the Collateral Agent. No Notes shall be authenticated in lieu of or
in exchange for any Notes cancelled as provided in this Section, except as
expressly permitted by this Agreement.
Section 2.08. Book-Entry Notes. The Notes, upon original issuance, will
be issued in the form of a typewritten Note or Notes representing the Book-Entry
Notes, to be delivered to the Note Registrar, by, or on behalf of, the Issuer.
The Notes shall be registered on the Note Register in the name of the respective
Note Holders and no Noteholder will receive a Definitive Note representing such
Noteholder's interest in such Note, except as provided in Section 2.09. Unless
and until definitive, fully registered Notes (the "Definitive Notes") have been
issued to Noteholders pursuant to Section 2.09:
(i) the provisions of this Section shall be in full
force and effect;
(ii) to the extent that the provisions of this Section
conflict with any other provisions of this Agreement, the provisions of
this Section shall control;
(iii) unless and until Definitive Notes are issued
pursuant to Section 2.09, the Note Registrar will make book-entry
transfers of the Notes;
(iv) for purposes of the determination of the applicable
Interest Rate, the Collateral Agent shall treat each portion of a Note
that bears interest at a different Interest Rate or for a different
Interest Period, as though it were a separate Note; and
(v) whenever this Agreement requires or permits actions
to be taken based upon instructions or directions of Noteholders
evidencing a specified percentage of the Outstanding Amount, the Note
Registrar shall be deemed to represent such percentage only to the
extent that it has received instructions to such effect from
Noteholders owning such required percentage of the beneficial interest
in the Notes and has delivered such instructions to the Collateral
Agent. With respect to any such instruction, direction or
determination,
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Notes held by LTV, LTV Steel or any of their respective Affiliates
shall not be regarded as Outstanding, unless such Notes have been
pledged to the Collateral Agent, in which case the Collateral Agent
will be entitled to deliver any such instruction or direction in
respect of such Notes, upon the instruction or direction of the Issuing
Lenders and Lenders for whose benefit such Notes are pledged.
Section 2.09. Definitive Notes. Upon the occurrence of a Trust
Agreement Event of Default, if a Noteholder requests issuance of a Definitive
Note in its name or in the name of a nominee, then the Collateral Agent shall
issue a Definitive Note or Notes pursuant to such instructions and shall notify
the Note Registrar and all Noteholders of the occurrence of any such event and
of the availability of Definitive Notes to Noteholders requesting the same. Upon
surrender to the Collateral Agent of the typewritten Note or Notes representing
the Book-Entry Notes, the Issuer shall execute and the Collateral Agent shall
authenticate the Definitive Notes in accordance with the instructions of each
Note Holder. Neither the Issuer nor the Collateral Agent shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on, such instructions. Upon the issuance of Definitive
Notes, the Collateral Agent shall recognize the Noteholders of the Definitive
Notes as Noteholders hereunder.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
Section 2.10. Tax Treatment. The Issuer has entered into this
Agreement, and the Notes will be issued, with the intention that, for federal,
state and local income, single business and franchise tax purposes, the Notes
will qualify as indebtedness of the Issuer secured by the Collateral. The
Issuer, by entering into this Agreement, and each Noteholder, by its acceptance
of its Note agree to treat the Notes for federal, state and local income, single
business and franchise tax purposes as indebtedness of the Issuer.
ARTICLE THREE
COVENANTS
Section 3.01. Payment of Principal and Interest. The Issuer will duly
and punctually pay the principal of and interest, if any, on the Notes in
accordance with the terms of the Notes and this Agreement. Amounts properly
withheld under the Code by any Person from a payment to any Noteholder of
interest and/or principal shall be considered as having been paid by the Issuer
to such Noteholder for all purposes of this Agreement.
Section 3.02. Money for Payments to be Held in Trust. As provided in
Section 8.02, all payments of amounts due and payable with respect to any Notes
that are to be made from amounts withdrawn from the Note Account pursuant to
Section 8.02(b) shall be made on behalf of the Issuer
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by the Collateral Agent and no amounts so withdrawn from the Note Account for
payments of Notes shall be paid over to the Issuer except as provided in this
Section.
On or before the Business Day immediately preceding each Note
Distribution Date and Redemption Date, the Issuer shall deposit or cause to be
deposited in the Note Account an aggregate sum sufficient to pay the amounts
then becoming due, such sum to be held in trust for the benefit
of the Persons entitled thereto, and shall promptly notify the Collateral Agent
of its action or failure so to act.
Subject to applicable laws with respect to escheat of funds, any money
held by the Collateral Agent in trust for the payment of any amount due with
respect to any Note and remaining unclaimed for two years after such amount has
become due and payable shall be discharged from such trust and upon receipt of
an Issuer Request shall be transferred to the Issuer by the Collateral Agent,
and the Holder of such Note shall thereafter, as an unsecured general creditor,
look only to the Issuer for payment thereof, and all liability of the Collateral
Agent with respect to such trust money shall thereupon cease; provided, however,
that if such money or any portion thereof had been previously deposited by the
Issuer with the Collateral Agent for the payment of principal or interest on the
Notes, the Holder of such Note may look only to the Collateral Agent for payment
of such amounts.
Section 3.03. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a limited liability company under the laws
of the State of Delaware (unless it becomes, or any successor Issuer hereunder
is or becomes, organized under the laws of any other state or of the United
States, in which case the Issuer will keep in full effect its existence, rights
and franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Notes, the Collateral and each other
instrument or agreement included in the Collateral, except where the failure to
be so qualified would reasonably be expected not to have a Material Adverse
Collateral Effect.
Section 3.04. Protection of Collateral. The Issuer intends the security
interest Granted pursuant to this Agreement in favor of the Collateral Agent on
behalf of the Secured Parties to be prior to all other Liens in respect of the
Collateral other than Permitted Liens, Receivables Facility Liens and Liens on
Ineligible Inventory that would be reasonably expected not to have a Material
Adverse Collateral Effect, and the Issuer shall take all actions necessary to
obtain and maintain, for the benefit of the Collateral Agent on behalf of the
Secured Parties, a first lien on and a first priority, perfected security
interest in the Collateral, subject to Permitted Liens, Receivables Facility
Liens and Liens on Ineligible Inventory that would be reasonably expected not to
have a Material Adverse Collateral Effect. The Issuer will from time to time
execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, all as prepared by the Servicer and delivered to the
Issuer, and will take such other action necessary or advisable to:
(i) Grant more effectively all or any portion of the
Collateral;
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(ii) maintain or preserve the lien and security interest
(and the priority thereof) created by this Trust Agreement or carry out
more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity
of any Grant made or to be made by this Agreement;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Collateral and the
rights of the Collateral Agent and the Secured Parties in such
Collateral against the claims of all persons and parties, other than
the holders of Permitted Liens, Receivables Facility Liens and Liens on
Ineligible Inventory that would be reasonably expected not to have a
Material Adverse Collateral Effect; and
(vi) pay all taxes or assessments levied or assessed
upon the Collateral when due.
The Issuer hereby designates the Collateral Agent its agent and attorney-in-fact
to execute all financing statements, continuation statements or other
instruments required to be executed pursuant to this Section.
Section 3.05. Evidence as to Collateral.
Within sixty (60) days after the Effective Date, the Issuer shall
furnish to the Collateral Agent evidence reasonably satisfactory to the
Collateral Agent to the effect that all financing statements and continuation
statements have been executed and filed in each of the jurisdictions identified
in the Opinions of Counsel required pursuant to SECTION 5.1(c)(i) of the Note
Purchase Agreement that are necessary to create and continue the Collateral
Agent's perfected security interest in the Collateral (with the priority
contemplated by this Agreement) for the benefit of the Secured Parties, and
reciting the details of such filings or referring to such prior Opinions of
Counsel in which such details are given.
Section 3.06. Performance of Obligations; Servicing of Inventory.
(a) The Issuer may contract with other Persons to assist it in
performing its duties and obligations under this Agreement, and any performance
of such duties by a Person identified to the Collateral Agent in an Officer's
Certificate shall be deemed to be action taken by the Issuer. The Collateral
Agent shall not be responsible for the action or inaction of the Servicer.
(b) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Agreement, the other Transaction
Documents and in the instruments and agreements included in the Collateral,
including but not limited to filing or causing to be filed all
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UCC financing statements and continuation statements required to be filed by the
terms of this Agreement in accordance with and within the time periods provided
for herein.
(c) Upon any termination of the Servicer's rights and powers pursuant
to the Inventory Processing and Servicing Agreement, the Issuer shall promptly
notify the Collateral Agent. As soon as a Successor Servicer is appointed, the
Issuer shall notify the Collateral Agent, the Financing Parties and each Rating
Agency of such appointment, specifying in such notice the name and address of
such Successor Servicer.
(d) The Issuer agrees that it will not waive timely performance or
observance by the Servicer of its duties under the Transaction Documents if the
effect thereof would be reasonably expected to adversely affect the Secured
Parties.
Section 3.07. Negative Covenants. Until the Termination Date, the
Issuer shall not:
(i) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code or
applicable state law); or
(ii) (A) permit the validity or effectiveness of this
Agreement to be impaired, or permit the Lien created by this Agreement
to be amended, hypothecated, subordinated, terminated or discharged,
except as may be expressly permitted hereby, (B) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance
(other than the lien of this Agreement, Receivables Facility Liens,
Permitted Liens and Liens on Ineligible Inventory that would be
reasonably expected not to have a Material Adverse Collateral Effect)
to be created on or extend to or otherwise arise upon or burden the
Collateral or any part thereof or any interest therein or the proceeds
thereof, or (C) amend, modify, waive or fail to comply with the
provisions of the Transaction Documents without the prior written
consent of the Collateral Agent, except where the Transaction Documents
allow for amendment or modification without the consent or approval of
the Collateral Agent; or
(iii) dissolve or liquidate.
Section 3.08. Annual Statement as to Compliance. The Issuer will
deliver to the Collateral Agent, on or before 120 days after the end of each
fiscal year of the Issuer (commencing with the fiscal year ended December 31,
1998), an Officer's Certificate stating, as to the Authorized Officer signing
such Officer's Certificate, that:
(i) a review of the activities of the Issuer during
such year and of performance under this Agreement has been made under
such Authorized Officer's supervision; and
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(ii) to the best of such Authorized Officer's knowledge,
no Trust Agreement Event of Default has occurred or exists or, if a
Trust Agreement Event of Default has occurred, specifying each such
default known to such Authorized Officer and the nature and status
thereof.
Section 3.09. Issuer May Consolidate, etc. Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States or any State and shall
expressly assume, by a supplement hereto, executed and delivered to the
Collateral Agent, in form and substance satisfactory to the Collateral
Agent, the due and punctual payment of the principal of and interest on
all Notes and the performance or observance of every agreement and
covenant of this Agreement and each other Transaction Document on the
part of the Issuer to be performed or observed, all as provided herein;
(ii) immediately after giving effect to such
transaction, no Trust Agreement Default or Trust Agreement Event of
Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion of
Counsel which shall be delivered to and shall be satisfactory to the
Collateral Agent to the effect that such transaction will not have any
material adverse tax consequence to any Holder or Financing Party;
(v) any action as is necessary to maintain the lien and
security interest created by this Agreement shall have been taken;
(vi) the Issuer shall have delivered to the Collateral
Agent an Officer's Certificate and an Opinion of Counsel (which shall
describe the actions taken as required by clause (v) above or that no
such actions will be taken) each stating that such consolidation or
merger complies with this Section 3.09 and that all conditions
precedent herein provided for relating to such transaction have been
complied with; and
(vii) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger has a net worth, immediately
after such consolidation or merger, that is (A) greater than zero and
(B) not less than the net worth of the Issuer immediately prior to
giving effect to such consolidation or merger.
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(b) Except as expressly permitted under the Transaction Documents,
including the sale of Purchased Inventory and Receivables, the Issuer shall not
convey or transfer all or substantially all of its properties or assets,
including those included in the Collateral, to any Person.
Section 3.10. Successor or Transferee.
Upon any consolidation or merger of the Issuer in accordance with
Section 3.09(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Agreement with same
effect as if such Person has been named as the Issuer herein.
Section 3.11. No Other Business. The Issuer shall not engage in any
business other than financing, processing, purchasing, owning, selling and
managing the Purchased Inventory in the manner contemplated by this Agreement
and the other Transaction Documents and activities incidental thereto.
Section 3.12. No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes, (ii) the Subordinated Notes as permitted
under the provisions of Article Seven of this Agreement, (iii) any other
Indebtedness permitted by or arising under the other Transaction Documents, (iv)
Indebtedness incurred in respect of the Receivables Facility, (v) any
Indebtedness permitted or arising under the Guaranty, (vi) any Indebtedness
arising under or in connection with the PBGC Settlement Agreement, (vii)
Indebtedness in respect of franchise taxes, income taxes, sales taxes and
similar liabilities incurred in the ordinary course of the LLC's business and
Indebtedness, if any, arising under ERISA by reason of the LLC's status as an
ERISA Affiliate of LTV Steel or under any applicable law of any jurisdiction
relating to the payment of Taxes by reason of the LLC's status as a member of a
consolidated group with LTV Steel for tax purposes and (viii) other Indebtedness
of the type described in clauses (i) through (vi) of the definition of
"Indebtedness" that, in the aggregate, does not exceed $100,000 outstanding at
any time. The proceeds of the Notes and the Subordinated Notes shall be used
exclusively to fund the Issuer's purchase of the Inventory and the other assets
specified in the Contribution and Sale Agreement, to pay amounts due under the
Inventory Processing and Servicing Agreement and to pay the transactional
expenses of the Issuer.
Section 3.13. Servicer's Obligations. The Issuer shall cause the
Servicer to comply with its obligations under the Inventory Processing and
Servicing Agreement.
Section 3.14. Guarantees, Loans, Advances and Other Liabilities. Except
in connection with the PBGC Settlement Agreement and the Guaranty, and as
otherwise contemplated or permitted by the Transaction Documents (including the
transactions contemplated by the Receivables Facility), the Issuer shall not
make any loan or advance or credit to, or guarantee (directly or indirectly or
by an instrument having the effect of assuming another's payment or performance
on any obligation or capability of so doing or otherwise), endorse or otherwise
become contingently liable, directly or indirectly, in connection with the
obligations, stocks or dividends of, or own, purchase, repurchase
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or acquire (or agree contingently to do so) any stock, obligations, assets or
securities of, any other interest in, or make any capital contribution to, any
other Person.
Section 3.15. Capital Expenditures. Except in connection with the
processing of Purchased Inventory under the terms of the Inventory Processing
and Servicing Agreement, the Issuer shall not make any expenditure (by long-term
or operating lease or otherwise) for capital assets (either realty or
personalty) in excess of an aggregate of $100,000 per annum.
Section 3.16. Restricted Payments. Except as permitted under Section
11.04 and the other terms of this Agreement and by the other Transaction
Documents, the Issuer shall not, directly or indirectly, (i) pay any dividend or
make any distribution (by reduction of capital or otherwise), whether in cash,
property, securities or a combination thereof, to the Servicer or any owner of a
beneficial interest in the Issuer or otherwise with respect to any ownership or
equity interest or security in or of the Issuer, (ii) redeem, purchase, retire
or otherwise acquire for value any such ownership or equity interest or security
or (iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made distributions
to the Servicer, as contemplated by, and to the extent funds are available for
such purpose under, the Contribution and Sale Agreement and the Inventory
Processing and Servicing Agreement. The Issuer will not, directly or indirectly,
make payments to or distributions from the Cash Received Account except in
accordance with this Agreement and the other Transaction Documents.
Section 3.17. Notice of Events of Default. The Issuer agrees to give
the Collateral Agent and each Rating Agency prompt written notice of each Trust
Agreement Event of Default, Purchase Termination Event, Note Purchase Agreement
Event of Default and Servicer Termination Event.
Section 3.18. Further Instruments and Acts. Upon request of the
Collateral Agent, the Issuer will execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Agreement.
Section 3.19. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, be reasonably expected to materially and
adversely affect the ability of the Issuer to perform its obligations under the
Notes, this Agreement or any other Transaction Document.
Section 3.20. Amendments of Contribution and Sale Agreement and
Inventory Processing and Servicing Agreement. The Issuer shall not agree to any
material amendment, modification or waiver to the Contribution and Sale
Agreement or the Inventory Processing and Servicing Agreement without the
consent of the Holders of more than 50% of the aggregate Outstanding Amount of
the Class A-1 Notes and the Required Financing Parties.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
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Section 4.01. Satisfaction and Discharge of Agreement. This Agreement
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.01, 3.02, 3.03, 3.04,
3.06, 3.07, 3.09, 3.11, 3.12, 3.19 and 3.20, (v) the rights, obligations and
immunities of the Collateral Agent hereunder (including the rights of the
Collateral Agent under Section 6.07 and the obligations of the Collateral Agent
under Section 4.02) and (vi) the rights of the Secured Parties as beneficiaries
hereof with respect to the property so deposited with the Collateral Agent
payable to all or any of them, and the Collateral Agent, on demand of and at the
expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Agreement with respect to the Notes, when:
(A) either
(1) all Notes therefore authenticated and delivered
(other than (i) Notes that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section
2.04 and (ii) Notes for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the
Issuer and thereafter repaid to the Issuer or discharged from
such trust, as provided in Section 3.02) have been delivered
to the Collateral Agent for cancellation; or
(2) all Notes not theretofore delivered to the
Collateral Agent for cancellation
(i) have become due and payable, or
(ii) will become due and payable at the
Class A-1 Final Note Distribution Date applicable to
such Notes within one year, or
(iii) are to be called for redemption within
one year under arrangements satisfactory to the
Collateral Agent for the giving of notice of
redemption by the Collateral Agent in the name, and
at the expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited
with the Collateral Agent cash or direct obligations of or
obligations guaranteed by the United States (which will mature
prior to the date such amounts are payable), in trust in an
account for such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such Notes not
theretofore delivered to the Collateral Agent for cancellation
when due;
(B) the Issuer has paid or caused to be paid all
non-contingent amounts which the Issuer may owe to, or on behalf of or
for the benefit of, (i) the Agents and the Financing
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Parties under this Agreement, the Notes and the Transaction Documents
and (ii) the Noteholders under this Agreement; and
(C) the Issuer has delivered to the Collateral Agent an
Officer's Certificate and an Opinion of Counsel, each meeting the
applicable requirements of Section 12.01(a) and, subject to Section
12.02, stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Agreement have been
complied with and the Rating Agency Condition has been satisfied.
Section 4.02. Application of Trust Money. All moneys deposited with the
Collateral Agent pursuant to Section 4.01 shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Agreement, to the
payment as the Collateral Agent may determine, to the Holders of the particular
Notes for the payment or redemption of which such moneys have been deposited
with the Collateral Agent, of all sums due and to become due thereon for
principal and interest; but such moneys need not be segregated from other funds
except to the extent required herein or in the Contribution and Sale Agreement
or required by law.
ARTICLE FIVE
REMEDIES
Section 5.01. Trust Agreement Events of Default. "Trust Agreement Event
of Default," wherever used herein, means any one of the following events
(whatever the reason for such Trust Agreement Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) default in the payment of any interest on any Class
A-1 Note when the same becomes due and payable, and such default shall
continue for a period of five Business Days;
(ii) the failure to pay the full principal amount of
each Note as to which the Amortization Date has occurred within thirty
(30) days immediately following the occurrence of such Amortization
Date;
(iii) the failure to pay all amounts due and payable to
the Agents and the Financing Parties under the Note Purchase Agreement
within thirty (30) days immediately following the occurrence of an
Amortization Date;
(iv) failure of the Issuer to comply with the Note
Collateral Value Requirement within ten Business Days of any Note
Collateral Shortfall;
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(v) default in the observance or performance of any
covenant or agreement of the Issuer made in the Transaction Documents
(other than a covenant or agreement, a default in the observance or
performance of which is elsewhere in this Section specifically dealt
with), or any representation or warranty of the Issuer made in this
Agreement or in any certificate or other writing delivered pursuant
hereto or in connection herewith proving to have been incorrect in any
material respect as of the time when the same shall have been made, and
such default shall continue or not be cured, or the circumstance or
condition in respect of which such misrepresentation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a
period of 30 days after there shall have been given to the Collateral
Agent by the Holders of at least 25% of the Outstanding Amount of
the Class A-1 Notes or the Required Financing Parties, a written notice
specifying such default or incorrect representation or warranty and
requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; provided, that if such default may be cured, or
such circumstance or condition may be eliminated or cured, and the
Issuer has commenced and is continuing to diligently pursue a cure or
elimination with respect thereto and there shall not be in existence a
Cure Period Cut-off Event then such default or incorrect representation
or warranty shall not constitute a Trust Agreement Event of Default for
a period of an additional thirty (30) days; or
(vi) an Insolvency Proceeding with respect to the Issuer
shall occur.
The Issuer shall deliver to the Collateral Agent within five Business
Days after obtaining knowledge of the occurrence thereof, written notice in the
form of an Officer's Certificate of any event which with the lapse of time would
become a Trust Agreement Event of Default under clause (v) above, its status and
what action the Issuer is taking or proposes to take with respect thereto.
Section 5.02. Rights Upon Event of Default
If a Trust Agreement Event of Default shall have occurred and be
continuing, the Notes shall become immediately due and payable at par, together
with accrued interest thereon, if Holders holding Notes representing at least
more than 50% of the aggregate Outstanding Amount of Class A-1 Notes or the
Required Financing Parties shall request such payment in connection with such
Trust Agreement Event of Default.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Collateral Agent; Authority of Collateral Agent.
(a) The Issuer covenants that if the Notes are accelerated following
the occurrence of a Trust Agreement Event of Default, the Issuer will, upon
demand of the Collateral Agent, pay to it, for the benefit of the Holders of the
Notes, the whole amount then due and payable on such Notes for principal and
interest, interest upon any overdue principal and, to the extent payment at such
rate of interest shall be legally enforceable, interest upon overdue
installments of interest, at the applicable Interest Rate and in addition
thereto such further amount as shall be sufficient to cover
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costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Collateral Agent and its agents and
counsel.
(b) The Collateral Agent following the occurrence of a Trust Agreement
Event of Default, shall have full right, power and authority to take, or defer
from taking, any and all acts with respect to the administration, maintenance or
disposition of the Collateral.
(c) Notwithstanding anything to the contrary contained in this
Agreement, if a Trust Agreement Event of Default shall have occurred and be
continuing, the Collateral Agent may in its discretion proceed to protect and
enforce its rights and the rights of the Secured Parties by such appropriate
proceedings as the Collateral Agent shall deem most effective to protect and
enforce any such rights, whether for specific performance of any covenant or
agreement in this Agreement or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy or legal or equitable right vested
in the Collateral Agent by this Agreement or by law, provided that the
Collateral Agent shall only be entitled to take any such actions to the extent
such actions (i) are taken only to enforce the Issuer's obligations to redeem
the principal amount of Notes, and (ii) are taken only against the Collateral,
any investments therein and any proceeds thereof.
(d) In case there shall be pending, relative to the Issuer or any
Person having or claiming an ownership interest in the Collateral, an Insolvency
Proceeding, the Collateral Agent, irrespective of whether the principal of any
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Collateral Agent shall have made any
demand pursuant to the provisions of this Section, shall be entitled and
empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole
amount of principal and interest owing and unpaid in respect of the
Notes and other obligations secured hereby and to file such other
papers or documents as may be necessary or advisable in order to have
the claims of the Collateral Agent (including any claim for reasonable
compensation to the Collateral Agent and its agents, attorneys and
counsel, and for reimbursement of all expenses and liabilities
incurred, and all advances made, by the Collateral Agent except as a
result of negligence or bad faith) and of the Secured Parties allowed
in such Proceedings;
(ii) unless prohibited by applicable law and
regulations, to vote on behalf of the Secured Parties in any election
of a trustee, a standby trustee or Person performing similar functions
in any such Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Secured Parties and of the
Collateral Agent on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Collateral Agent, the Holders of
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Notes and the other Secured Parties allowed in any judicial proceedings
relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by the Secured Parties to make payments
to the Collateral Agent, and, in the event that the Collateral Agent shall
consent to the making of payments directly to such Secured Parties, to pay to
the Collateral Agent such amounts as shall be sufficient to cover reasonable
compensation to the Collateral Agent and its agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Collateral Agent except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Collateral Agent to authorize or consent to or vote for or accept or adopt on
behalf of any Secured Party any plan of reorganization, arrangement, adjustment
or compensation affecting the Notes or the rights of any Holder thereof or of
any other Secured Party or to authorize the Collateral Agent to vote in respect
of the claim of any Secured Party in any such proceeding except, as aforesaid,
to vote for the election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Agreement
or under any of the Notes may be enforced by the Collateral Agent without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or Proceedings instituted by
the Collateral Agent shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Collateral Agent and its agents and
attorneys, shall be for the ratable benefit of the Holders of the Notes and the
other Secured Parties, subject only to the priorities set forth in Section 5.05
hereof.
(g) In any Proceedings brought by the Collateral Agent (including any
Proceedings involving the interpretation of any provision of this Agreement),
the Collateral Agent shall be held to represent all of the Holders of the Notes
and other Secured Parties, and it shall not be necessary to make any other
Secured Party a party to any such proceedings.
Section 5.04. Remedies. If a Trust Agreement Event of Default shall
have occurred and be continuing the Collateral Agent (subject to Section 5.05)
shall:
(i) institute Proceedings in its own name and as or on
behalf of a trustee of an express trust for the collection of all
amounts then payable on the Notes or the other obligations secured
hereby or under this Agreement with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer and any other obligor upon such Notes or other secured
obligations moneys adjudged due;
(ii) institute Proceedings from time to time for the
complete or partial foreclosure of this Agreement with respect to the
Collateral;
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(iii) exercise any remedies of a secured party under the
UCC and any other remedy available to the Collateral Agent and take any
other appropriate action to protect and enforce the rights and remedies
of the Collateral Agent on behalf of the Secured Parties under this
Agreement or the Notes; and
(iv) direct the Issuer to sell the Collateral or any
portion thereof or rights or interest therein, at one or more public or
private sales called and conducted in any manner permitted by law;
provided, however, that the Collateral Agent may not sell or otherwise
liquidate the Collateral following a Trust Agreement Event of Default,
other than a Trust Agreement Event of Default described in Section
5.01(i), (ii) or (iii), unless (A) all of the Financing Parties and the
Holders of 100% of the Outstanding Amount of the Class A-1
Notes consent thereto, (B) the proceeds of such sale or liquidation
distributable to the Secured Parties are reasonably expected to be
sufficient to discharge in full all amounts then due and unpaid upon
such Class A-1 Notes for principal and interest and amounts due and
unpaid under the Guaranty or (C) the Collateral Agent reasonably
determines that the Collateral will not continue to provide sufficient
funds for the payment of principal of and interest on the Notes as they
would have become due if the Notes had not been declared due and
payable, and the Collateral Agent provides prior written notice to each
Rating Agency and obtains the consent of Holders of 66-2/3% of the
Outstanding Amount of the Class A-1 Notes. In determining such
sufficiency or insufficiency with respect to clauses (B) and (C), the
Collateral Agent may, but need not, obtain and rely upon an opinion of
an Independent investment banking, accounting or appraisal firm of
national reputation as to the feasibility of such proposed action and
as to the sufficiency of the Collateral for such purpose.
Section 5.05. Priorities.
(a) If the Collateral Agent collects any money or property pursuant to
this Article Five, it shall pay out the money or property in the following order
and priority:
(i) amounts due and owing and required to be distributed to
the Collateral Agent under the terms of this Agreement;
(ii) amounts due and owing and required to be distributed to
the Servicer if the Servicer is not LTV Steel or an Affiliate of LTV
Steel;
(iii) all amounts due and owing under the Guaranty
representing amounts payable to the Agents and the Financing Parties
under the Note Purchase Agreement in respect of fees and expenses;
(iv) to the Holders of the Class A-1 Notes who are either a
Financing Party or Independent Investor with respect to such Class A-1
Notes (including for this purpose Class A-1 Notes pledged to the
Collateral Agent, but only to the extent of the amounts secured
thereby), all accrued and unpaid interest thereon;
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(v) to Holders of the Class A-1 Notes who are either a
Financing Party or Independent Investor with respect to such Class A-1
Notes (including for this purpose Class A-1 Notes pledged to the
Collateral Agent, but only to the extent of the amounts secured
thereby), all amounts due and unpaid on the Class A-1 Notes for
principal, without preference or priority of any kind between them
until the Outstanding Amount of such Class A-1 Notes is reduced to
zero;
(vi) any other amounts due and owing under the Guaranty;
(vii) all accrued and unpaid interest on all other Class A-1
Notes;
(viii) all principal amounts due and unpaid on any other Class
A-1 Notes; and
(ix) amounts due and owing to LTV Steel or any of its
Affiliates acting in the capacity as Servicer.
(b) The Collateral Agent may fix a record date and payment date for any
payment to Secured Parties pursuant to this Section.
Section 5.06. Limitation of Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Agreement, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to
the Collateral Agent of a continuing Trust Agreement Event of Default;
(ii) the Required Financing Parties or the Holders of
not less than 25% of the Outstanding Amount of the Class A-1 Notes have
made written request to the Collateral Agent to institute such
Proceeding in respect of such Trust Agreement Event of Default in its
own name as Collateral Agent hereunder;
(iii) the Financing Parties and/or such Holder or Holders
have offered to the Collateral Agent reasonable indemnity against the
costs, expenses and liabilities to be incurred in complying with such
request;
(iv) the Collateral Agent for 15 days after its receipt
of such notice, request and offer of indemnity has failed to institute
such Proceedings; and
(v) no direction inconsistent with such written request
has been given to the Collateral Agent during such 15-day period by the
Required Financing Parties or the
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Holders of a majority of the Outstanding Amount of the Class A-1 Notes,
voting together as a single class.
It is understood and intended that no one or more of the Secured Parties shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Agreement to affect, disturb or prejudice the rights of any
other Secured Party or to obtain or to seek to obtain priority or preference
over any other Secured Party or to enforce any right under this Trust Agreement,
except in the manner herein provided.
In the event the Collateral Agent shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Class
A-1 Notes, each representing less than a majority of the Outstanding Amount of
the Class A-1 Notes, the Collateral Agent in its sole discretion may determine
what action, if any, shall be taken, notwithstanding any other provisions of
this Agreement.
Section 5.07. Unconditional Rights of Noteholders to Receive Principal
and Interest. Notwithstanding any other provisions in this Trust Agreement, the
Holder of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest on such Note on or after the
respective due dates thereof expressed in such Note or in this Agreement (or, in
the case of redemption, on or after the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder.
Section 5.08. Restoration of Rights and Remedies. If the Collateral
Agent or any Secured Party has instituted any Proceeding to enforce any right or
remedy under this Agreement and such proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Collateral
Agent or to such Secured Party then and in every such case the Collateral Agent
and such Secured Parties shall, subject to any determination in such Proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Collateral Agent and the Secured
Parties shall continue as though no such Proceeding had been instituted.
Section 5.09. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Collateral Agent or to the Secured Parties is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.10. Delay or Omission Not a Waiver. No delay or omission of
the Collateral Agent or any Secured Party to exercise any right or remedy
accruing upon any Trust Agreement Event of Default shall impair any such right
or remedy or constitute a waiver of any such Trust Agreement Event of Default or
an acquiescence therein. Every right and remedy given by this
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Article Five or by law to the Collateral Agent or to the Secured Parties may be
exercised from time to time, and as often as may be deemed expedient, by the
Collateral Agent or by the Secured Parties as the case may be.
Section 5.11. Control by Secured Parties. As provided in this
Agreement, the Required Financing Parties and the Holders of more than 50% of
the Outstanding Amount of the Class A-1 Notes shall have the right to direct the
time, method and place of conducting any Proceeding for any remedy available to
the Collateral Agent with respect to the Notes and other obligations secured
hereunder or exercising any trust or power conferred on the Collateral Agent;
provided that:
(i) such direction shall not be in conflict with any
rule of law or with this Agreement;
(ii) subject to the terms of Section 5.04, any direction
to the Collateral Agent to sell or liquidate the Collateral shall be by
the Required Financing Parties and the Holders of Notes representing
not less than 100% of the Outstanding Amount of the Class A-1 Notes;
and
(iii) the Collateral Agent may take any other action
deemed proper by the Collateral Agent that is not inconsistent with
such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Collateral Agent need not take any action that it determines
might involve it in liability or might materially and adversely affect the
rights of any Class A-1 Noteholders or other Secured Parties not consenting to
such action.
Section 5.12. Waiver of Past Defaults. In the case of any waiver of a
Trust Agreement Event of Default, the Issuer, the Collateral Agent and the
Secured Parties shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Trust Agreement Event of Default or impair any right consequent thereto.
Upon any such waiver, such Trust Agreement Event of Default shall cease to exist
and be deemed to have been cured and not to have occurred, for every purpose of
this Agreement; but no such waiver shall extend to any subsequent or other Trust
Agreement Event of Default or impair any right consequent thereto.
Section 5.13. Undertaking for Costs. All parties to this Agreement and
the Secured Parties agree, and each Holder of any Note by such Holder's
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Agreement, or in any suit against the Collateral Agent for any action
taken, suffered or omitted by it as Collateral Agent, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions
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of this Section shall not apply to (i) any suit instituted by the Collateral
Agent, (ii) any suit instituted by any Noteholder, or group of Noteholders, in
each case holding in the aggregate more than 10% of the Outstanding Amount of
the Class A-1 Notes or (iii) any suit instituted by any Noteholder for the
enforcement of the payment of principal of or interest on any Note on or after
the respective due dates expressed in such Note and in this Trust Agreement (or,
in the case of redemption, on or after the Redemption Date).
Section 5.14. Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Agreement; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantages of any such law, and covenants that
it will not hinder, delay or impede the execution of any power herein granted to
the Collateral Agent, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 5.15. Action on Notes. The Collateral Agent's right to seek and
recover judgment on the Notes or under this Agreement shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Agreement. Neither the lien of this Agreement nor any rights or remedies
of the Collateral Agent or the Secured Parties shall be impaired by the recovery
of any judgment by the Collateral Agent against the Issuer or by the levy of any
execution under such judgment upon any portion of the Collateral or upon any of
the assets of the Issuer. Any money or property collected by the Collateral
Agent shall be applied in accordance with Section 5.05.
Section 5.16. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Collateral Agent to do so,
the Issuer shall take all such lawful action as the Collateral Agent may request
to compel or secure the performance and observance by the Servicer of its
obligations to the Issuer under or in connection with the Transaction Documents
in accordance with the terms thereof, and to exercise any and all rights,
remedies, powers and privileges lawfully available to the Issuer under or in
connection with the Transaction Documents to the extent and in the manner
directed by the Collateral Agent, including the transmission of notices of
default on the part of the Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Servicer of its obligations under the Transaction Documents.
(b) If a Trust Agreement Event of Default has occurred and is
continuing, the Collateral Agent may, and at the direction (which direction
shall be in writing, including facsimile) of the Required Financing Parties or
Holders of more than 50% of the Outstanding Amount of the Class A-1 Notes shall,
exercise all rights, remedies, powers, privileges and claims of the Issuer
against the Servicer or the Sellers under or in connection with the Transaction
Documents, including the right or power to take any action to compel or secure
performance or observance by the Servicer or a
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Seller of its obligations to the Issuer thereunder and to give any consent,
request, notice, direction, approval, extension or waiver under the Transaction
Documents and any right of the Issuer to take such action shall be suspended.
ARTICLE SIX
THE COLLATERAL AGENT
Section 6.01. Duties of Collateral Agent.
(a) The Collateral Agent shall exercise the rights and powers vested in
it by this Agreement and, if a Trust Agreement Event of Default has occurred and
is continuing, with the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of a Trust Agreement Event of
Default:
(i) the Collateral Agent undertakes to perform such
duties and only such duties as are specifically set forth in this
Agreement and no implied covenants or obligations shall be read into
this Agreement against the Collateral Agent; and
(ii) in the absence of bad faith on its part, the
Collateral Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Collateral Agent and
conforming to the requirements of this Agreement; however, the
Collateral Agent shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Agreement and the other Transaction Documents to which the Collateral
Agent is a party.
(c) The Collateral Agent may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(i) this paragraph does not limit the effect of
Section 6.01(b);
(ii) the Collateral Agent shall not be liable for any
error of judgment made in good faith by a Responsible Officer unless it
is proved that the Collateral Agent was negligent in ascertaining the
pertinent facts; and
(iii) the Collateral Agent shall not be liable with
respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 5.11.
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(d) Every provision of this Agreement that in any way relates to the
Collateral Agent is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Collateral Agent shall not be liable for interest on any money
received by it except as the Collateral Agent may agree in writing with the
Issuer.
(f) Money held in trust by the Collateral Agent need not be segregated
from other funds except to the extent required by law or the terms of this
Agreement or the Transaction Documents.
(g) No provision of this Agreement shall require the Collateral Agent
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayments
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) The Collateral Agent shall have no discretionary duties other than
performing those ministerial acts set forth above necessary to accomplish the
purpose of this Trust as set forth in this Agreement.
(i) Every provision of this Agreement relating to the conduct or
affecting the liability of or affording protection to the Collateral Agent shall
be subject to the provisions of this section.
Section 6.02. Rights of Collateral Agent.
(a) The Collateral Agent may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The
Collateral Agent need not investigate any fact or matter stated in the document.
(b) Before the Collateral Agent acts or refrains from acting, it may
require an Officer's Certificate (with respect to factual matters) or an Opinion
of Counsel, as applicable. The Collateral Agent shall not be liable for any
action it takes or omits to take in good faith in reliance on the Officer's
Certificate or Opinion of Counsel.
(c) The Collateral Agent may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Collateral Agent shall
not be responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Collateral Agent shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Collateral Agent's conduct does
not constitute wilful misconduct, negligence or bad faith.
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(e) The Collateral Agent may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Agreement and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
(f) The Collateral Agent shall be under no obligation to institute,
conduct or defend any litigation under this Agreement or in relation to this
Agreement, at the request, order or direction of any of the Secured Parties,
pursuant to the provisions of this Agreement, unless such Secured Parties shall
have offered to the Collateral Agent reasonable security or indemnity against
the costs, expenses and liabilities that may be incurred therein or thereby;
provided, however, that the Collateral Agent shall, upon the occurrence of a
Trust Agreement Event of Default (that has not been cured), exercise the rights
and powers vested in it by this Agreement in a manner consistent with Section
6.01.
(g) The Collateral Agent shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless so requested by the Required Financing Parties
or the Holders of Notes evidencing not less than 25% of the Outstanding Amount
of the Class A-1 Notes; provided, however, that if the payment within a
reasonable time to the Collateral Agent of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Collateral Agent, not reasonably assured to the Collateral Agent
by the security afforded to it by the terms of this Agreement or the Transaction
Documents, the Collateral Agent may require reasonable indemnity against such
cost, expense or liability as a condition to so proceeding; the reasonable
expense of every such examination shall be paid by the Person making such
request, or, if paid by the Collateral Agent, shall be reimbursed by the Person
making such request upon demand.
Section 6.03. Individual Rights of Collateral Agent. The Collateral
Agent in its individual or any other capacity may become the owner or pledgee of
Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Collateral Agent . However, the Collateral
Agent is required to comply with Section 6.11.
Section 6.04. Collateral Agent's Disclaimer. The Collateral Agent shall
not be responsible for and makes no representation as to the validity or
adequacy of this Agreement, the Collateral or the Notes, it shall not be
accountable for the Issuer's use of the proceeds from the Notes, and it shall
not be responsible for any statement of the Issuer in this Agreement or in any
document issued in connection with the sale of the Notes or in the Notes other
than the Collateral Agent's certificate of authentication.
Section 6.05. Notice of Defaults. If a Trust Agreement Event of Default
occurs and is continuing and if it is known to a Responsible Officer of the
Collateral Agent, the Collateral Agent shall mail to each Secured Party notice
of such Trust Agreement Event of Default within 5 Business Days after it occurs.
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Section 6.06. Reports by Collateral Agent to Holders. The Collateral
Agent shall deliver to each Noteholder such information, including without
limitation, IRS Form 1099, as may be required to enable such holder to prepare
its federal and state income tax returns.
Section 6.07. Compensation and Indemnity. The Issuer shall pay to the
Collateral Agent from time to time reasonable compensation for its services. The
Issuer shall reimburse the Collateral Agent for all reasonable out-of-pocket
expenses incurred or made by it, including costs of collection, in addition to
the compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Collateral Agent's
agents, counsel, accountants and experts. The Collateral Agent shall notify the
Issuer promptly of any claim for which it may seek indemnity. Failure by the
Collateral Agent to so notify the Issuer shall not relieve the Issuer of its
obligations hereunder. The Issuer shall defend any such claim, and the
Collateral Agent may have separate counsel and the Issuer shall pay the fees and
expenses of such counsel if representation of the Issuer and the Collateral
Agent by the same counsel would be impossible or inappropriate. The Issuer need
not reimburse any expense or indemnify against any loss, liability or expense
incurred by the Collateral Agent through the Collateral Agent's own willful
misconduct, negligence or bad faith.
The Issuer's payment obligations to the Collateral Agent pursuant to
this Section shall survive the discharge of this Agreement. When the Collateral
Agent incurs expenses after the occurrence of a Trust Agreement Event of Default
specified in Section 5.01(vi), the expenses are intended to constitute expenses
of administration under Title 11 of the United States Code or any other
applicable federal or state bankruptcy, insolvency or similar law.
Section 6.08. Replacement of Collateral Agent. The Collateral Agent may
resign at any time by so notifying the Issuer, the Servicer and the Secured
Parties. The Issuer may remove the Collateral Agent if:
(i) the Collateral Agent fails to comply with
Section 6.11;
(ii) a court having jurisdiction in the premises in
respect of the Collateral Agent in an Insolvency Proceeding shall have
entered a decree or order granting relief or appointing a receiver,
liquidator, assignee, custodian, trustee, conservator, sequestrator (or
similar official) for the Collateral Agent or for any substantial part
of the Collateral Agent's property, or ordering the winding-up or
liquidation of the Collateral Agent's affairs, provided any such decree
or order shall have continued unstayed and in effect for a period of 30
consecutive days;
(iii) the Collateral Agent commences a Voluntary
Insolvency Proceeding; or
(iv) the Collateral Agent otherwise becomes incapable of
acting.
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A successor Collateral Agent shall deliver a written acceptance of its
appointment to the retiring Collateral Agent and to the Issuer. Thereupon the
resignation or removal of the retiring Collateral Agent shall become effective,
and the successor Collateral Agent shall have all the rights, powers and duties
of the Collateral Agent under this Agreement. The Issuer or the successor
Collateral Agent shall mail a notice of its succession to the Secured Parties.
The retiring Collateral Agent shall promptly transfer all property held by it as
Collateral Agent to the successor Collateral Agent.
If a successor Collateral Agent does not take office within 60 days
after the retiring Collateral Agent resigns or is removed, the retiring
Collateral Agent, the Issuer or the Holders of a majority in Outstanding Amount
of the Class A-1 Notes may petition any court of competent jurisdiction for the
appointment of a successor Collateral Agent.
If the Collateral Agent fails to comply with Section 6.11, any Secured
Party may petition any court of competent jurisdiction for the removal of the
Collateral Agent and the appointment of a successor Collateral Agent.
Any resignation or removal of the Collateral Agent and appointment of a
successor Collateral Agent pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Collateral Agent pursuant to this Section, written approval of such successor
Collateral Agent by the Required Financing Parties and payment of all fees and
expenses owed to the outgoing Collateral Agent. Notwithstanding the replacement
of the Collateral Agent pursuant to this Section, the retiring Collateral Agent
shall be entitled to payment or reimbursement of such amounts as such Person is
entitled pursuant to Section 6.07.
Section 6.09. Successor Collateral Agent by Merger. If the Collateral
Agent consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Collateral Agent; provided, that
such corporation or banking association shall be otherwise qualified and
eligible under Section 6.11. The Collateral Agent shall provide the Issuer and
the Rating Agency prompt notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Collateral Agent shall succeed to the trusts created by
this Agreement any of the Notes shall have been authenticated but not delivered,
any such successor to the Collateral Agent may adopt the certificate of
authentication of any predecessor Collateral Agent, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Collateral Agent may authenticate such Notes
either in the name of any predecessor hereunder or in the name of such successor
to the Collateral Agent; and in all such cases such certificates shall have the
full force which it is anywhere in the Notes or in this Trust Agreement provided
that in the certificate of the successor Collateral Agent, the successor
Collateral Agent shall have so adopted the certificate of authentication of such
predecessor Collateral Agent.
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Section 6.10. Appointment of Co-Collateral Agent or Separate Collateral
Agent.
(a) Notwithstanding any other provision of this Agreement, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Collateral may at the time be located, the Collateral Agent
shall have the power and may execute and deliver all instruments to appoint one
or more Persons to act as a co-Collateral Agent or co-Collateral Agents jointly
with the Collateral Agent, or separate Collateral Agent or separate Collateral
Agents, of all or any part of the Trust, and to vest in such Person or Persons,
in such capacity and for the benefit of the Secured Parties, such title to the
Collateral, or any part hereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Collateral
Agent may consider necessary or desirable. No co-Collateral Agent or separate
Collateral Agent hereunder shall be required to meet the terms of eligibility of
a successor Collateral Agent under Section 6.11 and no notice to the Secured
Parties of the appointment of any co-Collateral Agent or separate Collateral
Agent shall be required under Section 6.08.
(b) Every separate Collateral Agent and co-Collateral Agent shall, to
the extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Collateral Agent shall be conferred or
imposed upon and exercised or performed by the Collateral Agent and
such separate Collateral Agent or co-Collateral Agent jointly (it being
understood that such separate Collateral Agent or co-Collateral Agent
is not authorized to act separately without the Collateral Agent
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
the Collateral Agent shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate Collateral Agent or co-Collateral Agent but
solely at the direction of the Collateral Agent;
(ii) no Collateral Agent hereunder shall be personally
liable by reason of any act or omission of any other Collateral Agent
hereunder; and
(iii) the Collateral Agent may at any time accept the
resignation of or remove any separate Collateral Agent or co-Collateral
Agent.
(c) Any notice, request or other writing given to the Collateral Agent
shall be deemed to have been given to each of the then separate Collateral
Agents and co-Collateral Agents, as effectively as if given to each of them.
Every instrument appointing any separate Collateral Agent or co-Collateral Agent
shall refer to this Agreement and the conditions of this Article. Each separate
Collateral Agent and co-Collateral Agent upon its acceptance of the trusts
conferred, shall be vested with the estates or property specified in its
instrument of co-appointment, either jointly with the Collateral Agent or
separately, as may be provided therein, subject to all the provisions of this
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Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of or affording protection to, the
Collateral Agent. Every such instrument shall be filed with the Collateral
Agent.
(d) Any separate Collateral Agent or co-Collateral Agent may at any
time constitute the Collateral Agent, its agent or attorney-in-fact with full
power and authority, to the extent not prohibited by law, to do any lawful act
under or in respect of this Agreement on its behalf and in its name. If any
separate Collateral Agent or co-Collateral Agent shall die, become incapable of
acting, resign or be removed, all of its estates, properties, rights, remedies
and trusts shall vest in and be exercised by the Collateral Agent, to the extent
permitted by law, without the appointment of a new or successor Collateral
Agent. Notwithstanding anything to the contrary in this Trust Agreement, the
appointment of any separate Collateral Agent or co-Collateral Agent shall not
relieve the Collateral Agent of its obligations and duties under this Agreement.
Section 6.11. Eligibility. The Collateral Agent hereunder shall at all
times be a financial institution organized and doing business under the laws of
the United States of America or any state, authorized under such laws to
exercise corporate trust powers, whose long term unsecured debt is rated at
least "A" by the Rating Agency and shall have a combined capital and surplus of
at least $50,000,000 or shall be a member of a bank holding system the aggregate
combined capital and surplus of at least $50,000,000 and subject to supervision
or examination by federal or state authority. If such Person publishes reports
of condition at least annually, pursuant to law or to the requirements of a
supervising or examining authority, then for the purposes of this Section 6.ll,
the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. In case at any time the Collateral Agent shall cease to be
eligible in accordance with the provisions of this Section 6.ll, the Collateral
Agent shall resign immediately in the manner and with the effect specified in
Section 6.08.
ARTICLE SEVEN
SUBORDINATED NOTES
Section 7.01. Issuance of Subordinated Notes. Subject to the
limitations of this Article Seven, the Issuer shall have the right to issue
Subordinated Notes. Any such Subordinated Notes shall be subordinate in right of
payment and in all other respects to the Class A-1 Notes and the Subordinated
Notes shall not be secured by the lien of the Collateral Agent on the
Collateral. Such Subordinated Notes may be issued only for the purpose of
financing the purchase of, or purchasing, Inventory under the Contribution and
Sale Agreement and financing amounts due under the Inventory Processing and
Servicing Agreement. Any such Subordinated Note shall be substantially in the
form of Exhibit H to this Agreement.
Section 7.02. Limitation on Amount of Subordinated Notes. The aggregate
outstanding principal amount of Subordinated Notes shall not be permitted to
exceed an amount that would cause the Equity Interest in the Issuer to be less
than $10,000,000 at any time.
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Section 7.03. Payments on Subordinated Notes.
(a) After the occurrence of a Trust Agreement Event of Default or the
Amortization Date, no funds may be applied by or on behalf of the Issuer to the
payment of Subordinated Notes until all amounts of principal and interest have
been paid on the Class A-1 Notes and no such Class A-1 Notes remain Outstanding;
(b) At any other time, the Issuer may apply any funds released to it
pursuant to the terms of this Agreement and the other Transaction Documents to
payment on or redemption of Subordinated Notes as the Issuer may elect and the
terms of such Subordinated Notes may allow.
Section 7.04 Restrictions on Transfer. No transfer of the Subordinated
Notes shall be made or shall be valid or effective unless such transfer is made
in a transaction which does not require registration or qualification under the
Securities Act of 1933, as amended, or qualification under any state securities
or "Blue Sky" laws. In addition, no transfer of the Subordinated Notes shall be
made if, following such transfer, there would be more than 100 beneficial
holders of the Subordinated Notes (each, a "Subordinated Noteholder").
Section 7.05. Tax Treatment. The Issuer has entered into this
Agreement, and the Subordinated Notes will be issued, with the intention that,
for federal, state and local income, single business and franchise tax purposes,
the Subordinated Notes will qualify as indebtedness of the Issuer. Each
Subordinated Noteholder, by acceptance of a Subordinated Note (and each
Subordinated Noteholder by acceptance of a beneficial interest in a Subordinated
Note), agrees to treat the Subordinated Notes for federal, state and local
income, single business and franchise tax purposes as indebtedness.
ARTICLE EIGHT
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money. Except as otherwise expressly
provided herein, the Collateral Agent may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Collateral Agent pursuant to this Agreement. The Collateral
Agent shall apply all such money received by it as provided in this Agreement.
Except as otherwise expressly provided in this Agreement, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Collateral, the Collateral Agent may take such action as may
be appropriate to enforce such payment or performance, including the institution
and prosecution of appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Trust Agreement Default or Trust Agreement
Event of Default and any right to proceed thereafter as provided in Article
Five.
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Section 8.02. Trust Accounts.
(a) On or prior to the Effective Date, the Issuer shall cause the
Servicer to establish and maintain, in the name of the Collateral Agent, for the
benefit of the Secured Parties, the Servicer Accounts as provided in Section 3.1
of the Inventory Processing and Servicing Agreement. The Collateral Agent shall
at all times during the term of this Agreement maintain in its corporate trust
department books and records two special purpose, non-interest bearing trust
accounts in the name of the Collateral Agent for the benefit of the Secured
Parties, the operation of which shall be governed by this Article Eight of this
Agreement, to be known as the Liquidity Account and the Note Account. The
Collateral Agent agrees to hold all monies from time to time on deposit in such
accounts in trust for the benefit of the Secured Parties. Such accounts shall be
within the sole dominion and control of the Collateral Agent for the benefit of
the Secured Parties.
On the Effective Date the Collateral Agent shall deposit from
amounts received from the Issuer an amount equal to the Required Liquidity
Amount into the Liquidity Account.
(b) All cash proceeds from the sale of Purchased Inventory and
Receivables relating thereto will be deposited in the Cash Received Account as
provided in Section 3.2 of the Inventory Processing and Servicing Agreement.
On and after the Amortization Date applicable to any Note, on
each Debt Service Notification Day the Collateral Agent shall inform the
Servicer as to the Amortization Amount for such Calendar Month. The
"Amortization Amount" for any Calendar Month shall be (x) if the Amortization
Date has occurred with respect to all of the Outstanding Notes, the sum of (i)
the aggregate principal amount of Class A-1 Notes Outstanding as of such Debt
Service Notification Day, (ii) the interest payable thereon on each Note
Distribution Date occurring in such Calendar Month and (iii) all other amounts
then payable to the Agents and the Financing Parties under the Guaranty and (y)
if the Amortization Date has occurred with respect to less than all of the
Outstanding Class A-1 Notes, the sum of (i) the aggregate principal of Class A-1
Notes Outstanding as of such Debt Service Notification Day and as to which the
Amortization Date has occurred, (ii) the interest payable thereon on each Note
Distribution Date occurring in such Calendar Month and (iii) all amounts then
payable to the Agents and the Financing Parties under the Guaranty.
On each Note Distribution Date the Collateral Agent shall
transfer from the Liquidity Account to the Note Account an amount sufficient
together with all amounts then on deposit in the Note Account, to pay the amount
of interest and principal, if any, payable on the Class A-1 Notes on such Note
Distribution Date. If there is a shortfall between the amount available for
transfer in the Liquidity Account for deposit in the Note Account and the amount
required to be so transferred for payment on the Class A-1 Notes (the amount of
such shortfall being the "Debt Service Shortfall Amount"), the Collateral Agent
shall provide notice (a "Debt Service Shortfall Notice") to the Servicer on such
Note Distribution Date as to the Debt Service Shortfall Amount. Thereafter, the
Collateral Agent shall make a similar determination, and if there is a shortfall
provide a Debt Service Shortfall Notice to the Servicer, on each Business Day
until there is no longer a Debt Service
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Shortfall Amount. All amounts received from the Servicer in response to a Debt
Service Shortfall Notice shall be deposited in the Note Account.
On each day that the amount on deposit in the Liquidity
Account is less than the Required Liquidity Amount (the amount of such
deficiency being the "Liquidity Shortfall Amount"), the Collateral Agent shall
provide notice (a "Liquidity Shortfall Notice") to the Servicer on such day as
to the Liquidity Shortfall Amount. All amounts received from the Servicer in
response to a Liquidity Shortfall Notice shall be deposited in the Liquidity
Account.
(c) Prior to the Amortization Date, on each Note Distribution Date, the
Collateral Agent shall distribute to Noteholders from the Note Account accrued
and unpaid interest then due on the outstanding principal amount of the Class
A-1 Notes at the applicable Interest Rates, first to Class A-1 Notes held by
Note Purchasers, Independent Investors and Notes pledged pursuant to Section 3.9
of the Note Purchase Agreement, and second to any remaining Class A-1 Notes.
(d) On each Note Distribution Date after the Amortization Date
applicable to any Class A-1 Note, the Collateral Agent shall distribute all
amounts on deposit in the Note Account to the Secured Parties as follows:
(i) all amounts then payable under the Guaranty
representing amounts payable to the Agents and the Financing Parties as
fees and expenses under the Note Purchase Agreement;
(ii) to the Class A-1 Noteholders who are either a
Financing Party or Independent Investor with respect to such Class A-1
Notes (including for this purpose Class A-1 Notes pledged to the
Collateral Agent for the benefit of the Issuing Lenders and the
Lenders), accrued and unpaid interest then due on the outstanding
principal amount of such Class A-1 Notes at the applicable Interest
Rates;
(iii) to the extent of amounts remaining after payment of
amounts due under (i) above, to the Holders of Class A-1 Notes as to
which the Amortization Date has occurred and who are either a Financing
Party or Independent Investor with respect to such Class A-1 Notes
(including for this purpose Class A-1 Notes pledged to the Collateral
Agent for the benefit of the Issuing Lenders and the Lenders), for the
payment of principal on such Class A-1 Notes, until all principal
amounts on such Class A-1 Notes shall have been paid in full;
(iv) all other amounts due and owing under the Guaranty;
(v) to the extent of amounts remaining after payment of
amounts due under (i), (ii) (iii) and (iv) above, accrued and unpaid
interest then due on the outstanding principal amount of all remaining
Class A-1 Notes at the applicable Interest Rates;
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(vi) to the extent of the amounts remaining after payment
of the amounts due under (i), (ii), (iii), (iv) and (v) above, to the
payment of principal of all remaining Class A-1 Notes until all
principal amounts of such Class A-1 Notes shall have been paid in full;
and
(vii) to the extent of any excess after payment of all
amounts provided under (i), (ii), (iii), (iv), (v) and (vi) above and
all other amounts payable under the terms of this Agreement shall have
been paid, then such excess shall be paid in such manner as the Issuer
shall direct.
Section 8.03. General Provisions Regarding Accounts.
(a) So long as no Trust Agreement Event of Default shall have occurred
and be continuing, all or a portion of the funds (if any) in the Trust Accounts
shall be invested in Eligible Investments and reinvested by the Servicer or the
Collateral Agent upon receipt of an Issuer Order. All income or other gain from
investments of moneys deposited in any Trust Account shall be credited to such
Trust Account, and any loss resulting from such investments shall be charged to
such Trust Account. The Issuer will not direct the Collateral Agent to make any
investment of any funds or to sell any investment held in any of the Trust
Accounts unless the security interest granted and perfected in such account will
continue to be perfected in such investment or the proceeds of such sale, in
either case without any further action by any Person, and, in connection with
any direction to the Collateral Agent to make any such investment or sale, if
requested by the Collateral Agent, the Issuer shall deliver to the Collateral
Agent an Opinion of Counsel, acceptable to the Collateral Agent, to such effect.
(b) Subject to Section 6.01(c), the Collateral Agent shall not in any
way be held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Collateral Agent's failure to make payments on such
Eligible Investments issued by the Collateral Agent, in its commercial capacity
as principal obligor and not as Collateral Agent, in accordance with their
terms.
(c) If (i) the Issuer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Collateral Agent by 11:00
a.m., New York City time (or such other time as may be agreed by the Issuer and
Collateral Agent) on any Business Day or (ii) a Trust Agreement Default or Trust
Agreement Event of Default shall have occurred and be continuing, but the Notes
shall not have been declared due and payable pursuant to Section 5.02, then the
Collateral Agent shall, to the fullest extent practicable, invest and reinvest
funds in the Trust Accounts in one or more Eligible Investments.
(d) The Collateral Agent shall provide a report to the Issuer with
respect to the investment activities in each Trust Account for each calendar
month on or before the tenth Business Day of the succeeding calendar month.
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Section 8.04. Release of Collateral.
(a) Subject to the payment of its fees and expenses pursuant to Section
6.07, the Collateral Agent may, and when required by the provisions of this
Agreement shall, execute instruments to release property from the lien of this
Agreement, or convey the Collateral Agent's interest in the same, in a manner
and under circumstances that are not inconsistent with the provisions of this
Agreement. No party relying upon an instrument executed by the Collateral Agent
as provided in this Article shall be bound to ascertain the Collateral Agent's
authority, inquire into the satisfaction of any conditions precedent or see to
the application of any moneys.
(b)(i) The Collateral Agent's security interest in any
Purchased Inventory sold by or for the account of the Issuer and, subject to
sub-section 8.04(b)(ii) below, in the Receivables arising therefrom shall
automatically be released, without the need for any action on the part of the
Collateral Agent, upon the sale of such Purchased Inventory or Receivables, as
the case may be, by or for the account of the Issuer. Such release shall not
affect the Collateral Agent's security interest with respect to the proceeds of
any sale of Receivables by the Issuer pursuant to the Receivables Facility, or,
if such Receivables have not been sold or encumbered under a Receivables
Facility, the proceeds of any such Purchased Inventory.
(ii) Upon the occurrence of a Trust Agreement Event of Default
described in Section 5.01(vi) (and without any further act or notice) or the
giving by the Collateral Agent of a written notice (a "Release Termination
Notice") to the Issuer after the occurrence and during the continuance of a
Trust Agreement Event of Default or a Receivables Default Event, the automatic
release set forth in SECTION 8.04(b)(i) shall terminate with respect to all
proceeds from (x) the sale of Collateral subsequent to the second Business Day
after the day on which the Release Termination Notice is given or, if a Trust
Agreement Event of Default described in Section 5.01(vi) has occurred,
subsequent to the day on which such Trust Agreement Event of Default occurs, and
(y) the sale of Collateral during the period after the day on which the Release
Termination Notice is given to and including the second Business Day after the
day on which the Release Termination Notice is given to the extent the aggregate
amount of sales of Collateral during such period are not made in the ordinary
course of business or exceed 5% of the Collateral Value as of the date the
Release Termination Notice is given. The Collateral Agent shall deliver a copy
of any such Release Termination Notice to the collateral agent with respect to
the Receivables Facility.
(c) The Collateral Agent shall, at such time as there are no
Notes Outstanding and all sums due the Collateral Agent pursuant to Section 6.07
have been paid and no amounts remain payable to any Secured Party under the
terms of the Transaction Documents, release any remaining portion of the
Collateral from the lien of this Agreement and release to the Issuer or any
other Person entitled thereto any funds then on deposit in the Trust Accounts.
The Collateral Agent shall release property from the lien of this Agreement
pursuant to this Section 8.04(c) only upon receipt of an Issuer Request.
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Section 8.05. Opinion of Counsel. The Collateral Agent shall receive at
least seven days notice when requested by the Issuer to take any action pursuant
to Section 8.04(a), accompanied by copies of any instruments involved, and the
Collateral Agent may also require, as a condition to such action, an Opinion of
Counsel, in form and substance satisfactory to the Collateral Agent, stating the
legal effect of any such action, outlining the steps required to complete the
same, and concluding that all conditions precedent to the taking of such action
have been complied with and such action will not materially and adversely impair
the security for the Notes or other obligations secured hereby or the rights of
the Secured Parties in contravention of the provisions for this Agreement;
provided, however, that such Opinion of Counsel shall not be required to express
an opinion as to the fair value of the Collateral. Counsel rendering any such
opinion may rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the Collateral
Agent in connection with any such action.
ARTICLE NINE
SUPPLEMENTS TO TRUST AGREEMENT
Section 9.01. Supplements Without Consent of Secured Parties.
Without the consent of the Secured Parties and with prior notice to the
Rating Agency, the Issuer and the Collateral Agent when authorized by an Issuer
Order, and the other parties hereto at any time from time to time, may enter
into one or more supplements hereto in form satisfactory to the Collateral
Agent, for any of the following purposes:
(i) to correct or amplify the description of any
property at any time subject to the lien of this Agreement, or better
to assure, convey and confirm unto the Collateral Agent any property
subject or required to be subjected to the lien created by this
Agreement, or to subject to the lien created by this Agreement
additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the
benefit of the Holders of the Notes and the other Secured Parties, or
to surrender any right or power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Collateral Agent;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplement hereto which may be inconsistent
with any other provision herein or in any supplement hereto or the
Transaction Documents or to make any other provisions with
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respect to matters or questions arising under this Agreement or in any
supplement hereto; provided that such action shall not adversely affect
the interests of the Holders of the Notes or the other Secured Parties;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor Collateral Agent with respect to
the Notes and the other obligations secured hereby and to add to or
change any of the provisions of this Agreement as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
Collateral Agent, pursuant to the requirements of Article Six.
The Collateral Agent is hereby authorized to join in the execution of
any such supplement hereto and to make any further appropriate agreements and
stipulations that may be therein contained.
Section 9.02. Supplements With Consent of Secured Parties. In addition
to the actions permitted under Section 9.01, the Issuer and the Collateral
Agent, when authorized by an Issuer Order, also may, with prior notice to Rating
Agency, and with the consent of the Required Financing Parties and the Holders
of more than 50% of the Outstanding Amount of the Class A-1 Notes, by Act of
such Secured Parties delivered to the Issuer and the Collateral Agent, enter
into one or more supplements hereto for the purpose of adding any provisions to,
or changing in any manner or eliminating any of the provisions of, this
Agreement or of modifying in any manner the rights of the Holders of the Class
A-1 Notes and other Secured Parties under this Agreement; provided, however,
that, no such supplement shall, without the consent of the Holder of each
Outstanding Note or other Secured Party affected thereby:
(i) change the date of payment of any installment of
principal of or interest on any Note, or reduce the principal amount
thereof, the interest rate thereon or the redemption amount with
respect thereto, change the provisions of this Agreement relating to
the application of collections on, or the proceeds of the sale of, the
Collateral to payment of principal of or interest on the Notes or any
other obligation secured hereby, or the coin or currency in which any
Note or the interest thereon or any other obligation secured hereby is
payable, or impair the right to institute suit for the enforcement of
the provisions of this Agreement requiring the application of funds
available therefor, as provided in Article Five, to the payment of any
such amount due on the Notes or any other obligation secured hereby on
or after the respective due dates thereof (or, in the case of
redemption of Notes, on or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of
the Notes, the consent of the Holders or other Secured Parties of which
is required for any such supplement hereto, or the consent of the
Holders or other Secured Parties of which is required for any waiver of
compliance with certain provisions of this Agreement or certain
defaults hereunder and their consequences provided for in this
Agreement;
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(iii) modify or alter the definition of the term
"Outstanding";
(iv) reduce the percentage of the Outstanding Amount of
the Notes required to direct the Collateral Agent to sell or liquidate
the Collateral pursuant to Section 5.04 or amend the provisions of this
Article which specify the percentage of the Outstanding Amount of the
Notes required to amend this Trust Agreement or the other Transaction
Documents;
(v) modify any provision of this Section except to
increase any percentage specified herein or to provide that certain
additional provisions of this Agreement or the other Transaction
Documents cannot be modified or waived without the consent of the
Holder of each Outstanding Note or other Secured Party affected
thereby;
(vi) permit the creation of any lien ranking prior to or
on a parity with the lien created by this Agreement with respect to any
part of the Collateral (other than Liens of the type permitted as of
the Effective Date to rank prior to or on a parity with the Lien
created by this Agreement) or, except as otherwise permitted or
contemplated herein, terminate the lien created by this Agreement on
any property at any time subject hereto or deprive the Holder of any
Note or any other Secured Party of the security provided by the lien
created by this Agreement;
(vii) amend Section 11.01 of this Trust Agreement;
(viii) reduce the Required Liquidity Amount; or
(ix) alter or modify the definition of "Amortization
Date."
The Collateral Agent may in its discretion determine whether or not any
Notes or any other obligation secured hereby would be affected by any supplement
hereto and any such determination shall be conclusive upon the Secured Parties,
whether theretofore or thereafter authenticated and delivered hereunder. The
Collateral Agent shall not be liable for any such determination made in good
faith.
It shall not be necessary for any Act of Secured Parties under this
Section to approve the particular form of any proposed supplement hereto, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the parties hereto of any supplement
hereto pursuant to this Section, the Collateral Agent shall mail to the Secured
Parties to which such supplement relates a notice setting forth in general terms
the substance of such supplement. Any failure of the Collateral Agent to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplement.
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Section 9.03. Execution of Supplements. In executing, or permitting the
additional trusts created by, any supplement permitted by this Article or the
modifications thereby of the trusts created by this Agreement, the Collateral
Agent shall be entitled to receive, and subject to Sections 6.01 and 6.02 shall
be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplement is authorized or permitted by this Agreement. The
Collateral Agent may, but shall not be obligated to, enter into any such
supplement that affects the Collateral Agent's own rights, duties, liabilities
or immunities under this Agreement or otherwise.
Section 9.04. Effect of Supplements. Upon the execution of any
supplement hereto pursuant to the provisions hereof, this Agreement shall be and
be deemed to be modified and amended in accordance therewith with respect to the
Notes and other secured obligations affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Agreement of the parties hereto and the Holders of the Notes shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplement shall be and be deemed to be part of the terms and
conditions of this Agreement for any and all purposes.
Section 9.05. Reference in Notes to Supplements. Notes authenticated
and delivered after the execution of any supplement hereto pursuant to this
Article may, and if required by the Collateral Agent shall, bear a notation in
form approved by the Collateral Agent as to any matter provided for in such
supplement. If the Issuer or the Collateral Agent shall so determine, new Notes
so modified as to conform, in the opinion of the Collateral Agent and the
Issuer, to any such supplement may be prepared and executed by the Issuer and
authenticated and delivered by the Collateral Agent in exchange for existing
Notes.
ARTICLE TEN
REDEMPTION OF NOTES
Section 10.01. Redemption.
On any Business Day, upon three Business Days notice to the Collateral
Agent and the Class A-1 Noteholders, the Issuer may redeem any Class A-1 Notes
Outstanding at a redemption price equal to the principal amount thereof plus the
Redemption Premium, if any, thereon, plus accrued and unpaid interest thereon,
upon satisfaction of the requirements of Section 10.02 below.
Section 10.02. Requirements as to Redemption.
No Class A-1 Note shall be redeemed unless the notice to the Collateral
Agent with respect to such redemption is accompanied by a Sales and Valuation
Report meeting the requirements of Article Eleven of this Agreement certified by
an Authorized Officer of the Issuer and indicating to the satisfaction of the
Collateral Agent that after giving effect to the redemption so requested the
Note Collateral Value Requirement of Section 11.01 would be satisfied.
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Section 10.03. Form of Redemption Notice.
Each notice of redemption submitted by or on behalf of the Issuer shall
include:
(i) the Redemption Date;
(ii) the principal amount of Notes of each Interest Mode to be
redeemed; and
(iii) shall be accompanied by a Sales and Valuation Report as
required under Section 10.02.
Section 10.04. Notes Payable on Redemption Date. The Notes or portions
thereof to be redeemed shall, on the Redemption Date become due and payable. The
Collateral Agent shall apply the amounts payable on redemption to the redemption
of Notes of the Interest Mode or Modes designated within the related Redemption
Notice as follows:
(a) to the extent that such Notes are held by LTV, LTV
Steel, any of their respective Affiliates or by the
Note Purchasers pursuant to the Note Purchase
Agreement, to the redemption of Notes of each such
Holder as the Issuer may specify in the Redemption
Notice; and
(b) to the extent that such Notes are registered in the
name of other Holders, in the manner designated for
allocation in the form of such Notes.
ARTICLE ELEVEN
NOTE COLLATERAL VALUE REQUIREMENT
Section 11.01. Note Collateral Value Requirement.
At all times that there are any Class A-1 Notes Outstanding, the Issuer
shall maintain Eligible Inventory with an Adjusted Collateral Value equal to or
in excess of: the aggregate of (a) 100% of the aggregate principal amount of the
first $250,000,000 of Class A-1 Notes Outstanding and (b) 200% of the aggregate
principal amount of any Class A-1 Notes Outstanding in excess of $250,000,000.
Section 11.02. Evidence of Compliance. On each Sales and Valuation
Date, the Issuer shall furnish or cause the Servicer to furnish to the
Collateral Agent a Sales and Valuation Report in substantially the respective
form as set forth in Exhibit F to this Agreement certified by an Authorized
Officer of the Servicer indicating the amount of each type of Collateral pledged
under this Agreement and the Adjusted Collateral Value thereof as of the end of
the calendar month, week or day to which such Report relates. To the extent that
such Sales and Valuation Report indicates
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that there is a Note Collateral Shortfall, the Issuer shall take one or more of
the corrective actions provided in Section 11.03 below.
Section 11.03. Corrective Actions. If there shall be a Note Collateral
Shortfall, within ten Business Days after the receipt by the Collateral Agent of
the Sales and Valuation Report indicating such Note Collateral Shortfall the
Issuer shall take one or more of the following corrective actions:
(a) provide additional Eligible Inventory (including causing
Ineligible Inventory to become Eligible Inventory) subject to
the lien of this Agreement;
(b) cause to be discharged or released any Lien securing amounts
which had therefore reduced the Adjusted Collateral Value of
Eligible Inventory; or
(c) redeem Class A-1 Notes under the provisions of Article Ten of
this Agreement.
After such corrective action and at or before the date on
which such corrective action is required to be completed, the Issuer shall
furnish or cause the Servicer to furnish to the Collateral Agent and each Class
A-1 Noteholder a Sales and Valuation Report meeting the requirements of Section
11.02 hereof indicating that the Issuer is then in compliance with the Note
Collateral Value Requirement.
Section 11.04. Release of Cash Collateral. At any time prior to the
Amortization Date that the Issuer is in compliance with the Note Collateral
Value Requirement, the Collateral Agent and the Servicer may and are hereby
directed to release from the lien of this Agreement and pay over to the Issuer
for any corporate purpose of the Issuer, including payment in respect of the
Subordinated Notes or payment of dividends on its capital stock, any amounts
held in the Trust Accounts in excess of the aggregate of:
(i) the Required Liquidity Amount;
(ii) amounts to be applied to or for the purchase of
Inventory under the Contribution and Sale Agreement (which amounts
shall be paid in accordance with the Inventory Processing and Servicing
Agreement); and
(iii) amounts required to pay other amounts due and
payable by the Issuer under the terms of the Transaction Documents.
The Collateral Agent or the Servicer, as applicable shall pay
over such amounts to the Issuer upon satisfaction of the above conditions and
receipt by the Collateral Agent and the Servicer of a request to such effect
from an Authorized Officer of the Issuer.
If at any time prior to the Amortization Date the Issuer is
not in compliance with the Note Collateral Value Requirement, the Collateral
Agent and the Servicer may and hereby are
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directed to use any amounts available for the purposes of Section 11.03(c)
hereof as the Issuer may in writing direct.
Section 11.05. Issuance of Additional Notes. At any time prior to the
Amortization Date, and subject to the satisfaction of the provisions of this
Section 11.05 and the other applicable provisions of this Agreement, the Issuer
may request that the Collateral Agent issue, authenticate and deliver additional
Class A-1 Notes under the terms of this Agreement. To effect such issuance the
Issuer shall deliver or cause to be delivered to the Collateral Agent on or
before the third Business Day prior to the date such Notes are to be issued, a
Note Issuance Request substantially in the form of Exhibit G to this Agreement
certified by an Authorized Officer of the Issuer.
The Collateral Agent shall not issue any such Notes to the
extent that upon issuance of such Notes:
(a) The aggregate principal amount of Class A-1 Notes outstanding would
exceed $350,000,000;
(b) As evidenced by the most recent Sales and Valuation Report received
by the Collateral Agent, the Note Collateral Value Requirement would not be
satisfied; or
(c) The Amortization Date shall have occurred.
ARTICLE TWELVE
MISCELLANEOUS
Section 12.01. Compliance Certificates and Opinions, etc.
Upon any application or request by the Issuer to the Collateral Agent
to take any action under any provision of this Agreement, the Issuer shall
furnish to the Collateral Agent (i) an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with and (ii) if required under the terms of
this Agreement, an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:
(i) a statement that each signatory of such certificate or opinion has
read or has caused to be read such covenant or condition and the definitions
herein relating thereto;
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(ii) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to enable
such signatory to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such signatory,
such condition or covenant has been complied with.
Section 12.02. Form of Documents Delivered to Collateral Agent. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Person as to other matters, and any such Person may certify or given an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer or the Issuer stating that the information with respect to such
factual matters is in the possession of the Servicer or the Issuer, unless such
officer or counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such matters
are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, opinions or other instruments
under this Agreement, they may, but need not, be consolidated and form one
instrument.
Whenever in this Agreement, in connection with any application or
certificate or report to the Collateral Agent, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Collateral Agent's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article Six.
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Section 12.03. Acts of Secured Parties.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Secured Parties may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Secured Parties in person or by
agents duly appointed in writing; and except as herein otherwise expressly
provided such action shall become effective when such instrument or instruments
are delivered to the Collateral Agent, and, where it is hereby expressly
required, to the Issuer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Secured Parties signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Agreement and (subject to Section 6.01)
conclusive in favor of the Collateral Agent and the Issuer, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Collateral Agent
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Collateral Agent or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
Section 12.04. Notices. All notices, demands, certificates, requests
and communications hereunder ("notices") shall be in writing and shall be
effective (a) upon receipt when sent through the U.S. mails, registered or
certified mail, return receipt requested, postage prepaid, with such receipt to
be effective the date of delivery indicated on the return receipt, or (b) one
Business Day after delivery to an overnight courier, or (c) on the date
personally delivered to an Authorized Officer of the party to which sent, or (d)
on the date transmitted by legible telecopier transmission with a confirmation
of receipt, in all cases addressed to the recipient to its respective Notice
Address. Each party hereto may, by notice given in accordance herewith to each
of the other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
Section 12.05. Notices to Secured Parties; Waiver. Where this Agreement
provides for notice to Secured Parties of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and transmitted by facsimile and sent by overnight delivery to each Secured
Party affected by such event, at his address as it appears on the Note Register
or in the applicable Transaction Document, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice. In
any case where notice to Secured Parties is given by delivery, neither the
failure to deliver such notice nor any defect in any notice so delivered to any
particular Secured Party shall affect the sufficiency of such notice with
respect to other Secured
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Parties, and any notice that is transmitted by facsimile and delivered in the
manner herein provided shall conclusively be presumed to have been duly given.
Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Secured Parties shall be filed with the Collateral
Agent but such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such a waiver.
In case, by reason of the suspension of delivery services as a result
of a strike, work stoppage or similar activity, it shall be impractical to
deliver notice of any event to Secured Parties when such notice is required to
be given pursuant to any provision of this Agreement, then any manner of giving
such notice as shall be satisfactory to the Collateral Agent shall be deemed to
be a sufficient giving of such notice.
Where this Agreement provides for notice to the Rating Agency, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Trust Agreement
Default or Trust Agreement Event of Default.
Section 12.06. Alternate Payment and Notice Provisions. Notwithstanding
any provisions of this Agreement or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Collateral Agent to such Holder, that is different
from the methods provided for in this Agreement for such payments or notices.
The Issuer will furnish to the Collateral Agent a copy of each such agreement
and the Collateral Agent will cause payments to be made and notices to be given
in accordance with such agreements.
Section 12.07. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 12.08. Successors and Assigns. All covenants and agreements in
this Agreement and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Collateral Agent in
this Agreement shall bind its successors, co-Collateral Agents and agents.
Section 12.09. Separability. In case any provision in this Agreement or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 12.10. Benefits of Agreement. Nothing in this Agreement or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other Person with an ownership
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interest in any part of the Collateral, any benefit or any legal or equitable
right, remedy or claim under this Agreement.
Section 12.11. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Agreement) payment need not be made on such date,
but may be made on the next succeeding Business Day (or, with respect to Class
A-1 Notes with an Interest Rate based on LIBOR, in accordance with the
definition of "Interest Period" applicable thereto) with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 12.12. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 12.13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 12.14. Recording of Agreement. If this Agreement is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Collateral Agent or any other counsel reasonably
acceptable to the Collateral Agent and the Issuer) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Collateral Agent under this Agreement.
Section 12.15. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer or the Collateral
Agent on the Notes or under this Agreement or any certificate or other writing
delivered in connection herewith or therewith, against (i) the Collateral Agent
in its individual capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director,
employee or agent of the Collateral Agent in its individual capacity, any holder
of a beneficial interest in the Issuer or the Collateral Agent or of any
successor or assign of the Collateral Agent in its individual capacity, except
as any such Person may have expressly agreed (it being understood that the
Collateral Agent has no such obligations in its individual capacity) and except
that any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Section 12.16. No Petition. The parties hereto, by entering into this
Agreement, each Noteholder, by accepting a Note or a beneficial interest in a
Note, and each other Secured Party, by entering into the Note Purchase
Agreement, hereby covenant and agree that they will not at any time institute
against the Issuer, or join in any institution against the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any
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United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, this Agreement or any of the other
Transaction Documents. This Section 12.16 shall not be construed to limit the
right of any party or Noteholder to file any claim or otherwise take any action
with respect to any such proceeding that was instituted against the Issuer other
than by a party hereto, an Affiliate of LTV, or a Noteholder.
Section 12.17. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Collateral Agent, during the
Issuer's normal business hours, to examine all the books of account, records,
reports and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees and independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Collateral
Agent must take any actions set forth in the preceding sentence at the direction
of the Required Financing Parties. The Collateral Agent shall and shall cause
its representatives to hold in confidence all such information except to the
extent disclosure may be required by law (and all reasonable applications for
confidential treatment are unavailing) and except to the extent that the
Collateral Agent may reasonably determine that such disclosure is consistent
with its obligations hereunder.
Section 12.18. Extension of Expiration Date.
(a) EXTENSION REQUEST. Within thirty Business Days of
each anniversary of the Effective Date, the Issuer
may provide a written request to the Collateral Agent
with respect to the extension of the Expiration Date
(such notice, a "Note Extension Request"). Each such
Note Extension Request shall indicate the date to
which it is requested that the Expiration Date be
extended, which shall be not less than one year nor
more than five years from the date of such Note
Extension Request.
(b) NOTICE TO NOTEHOLDERS. Upon receipt of a Note
Extension Request, the Collateral Agent shall
promptly provide notice by mail or facsimile
transmission to each Noteholder of record as to the
requested Expiration Date and the procedures by which
each Noteholder is to provide its response to the
Collateral Agent.
(c) EFFECTIVENESS. Upon acceptance of the extended
Expiration Date by one or more Noteholders and absent
notice from the Issuer that it does not desire that
the Expiration Date be so extended, the Expiration
Date shall be extended to the date as specified in
the Note Extension Request for each Note for which
such acceptance has been received. The Expiration
Date shall not be extended with respect to any Note
as to which such acceptance has not been received by
the Collateral Agent in the manner prescribed by the
Collateral Agent. No Noteholder shall have any
obligation to agree to an
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acceptance of the Expiration Date. The Collateral
Agent shall make appropriate notation in its records
of any such extension.
Section 12.19. Effectiveness. This Agreement shall become effective on
the Effective Date.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed and delivered as of the day and year first above written.
LTV STEEL PRODUCTS, LLC
By:
-----------------------------------------------
Printed Name: John C. Skurek
Title: Manager
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as Collateral Agent
By:
-----------------------------------------------
Printed Name:
------------------------------
Title:
-------------------------------------
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STATE OF __________ )
) ss
COUNTY OF__________ )
On __________________before me, _____________________________________,
[insert date] [Here insert name and title of notary]
personally appeared __________________________________________________________,
[ ] personally known to me, or
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument,
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ties), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature _______________________________ [Seal]
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STATE OF __________ )
) ss
COUNTY OF__________ )
On ________________before me, _______________________________________
[insert date] [Here insert name and title of notary]
personally appeared _________________________________________________________,
[ ] personally known to me, or
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument,
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ties), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature ____________________________________________ [Seal]
<PAGE> 1
Exhibit 10.57
[CONFORMED COPY]
AMENDMENT NO. 2 TO
RECEIVABLES PURCHASE AND SALE AGREEMENT
AND
AMENDMENT NO. 1 TO AND
CONSENT UNDER REVOLVING CREDIT AGREEMENT
AMENDMENT AND CONSENT dated as of March 1, 1998 to (i) the Receivables
Purchase and Sale Agreement dated as of October 12, 1994, as amended by
Amendment No. 1 thereto dated as of May 2, 1995 (the "Receivables Purchase
Agreement"), among The LTV Corporation ("LTV"), the Sellers named therein (the
"Sellers"), LTV Steel Company, Inc. ("LTV Steel"), as Servicer, and LTV Sales
Finance Company ("Sales Finance"), as Purchaser, and (ii) the Revolving Credit
Agreement (the "Revolving Credit Agreement," and together with the Receivables
Agreement, the "Principal Agreements") dated as of October 12, 1994 among Sales
Finance, the financial institutions parties thereto as Banks, the Issuing Banks
referred to therein and Bankers Trust Company, as Collateral Agent and Facility
Agent.
W I T N E S S E T H :
WHEREAS, LTV Steel is the sole member of LTV Steel Products, LLC, a
Delaware limited liability company ("Steel Products") formed for the purpose of
purchasing all of the inventory of LTV Steel and certain of its affiliates
pursuant to an inventory securitization facility (the "Inventory Facility") and
engaging in other activities incidental thereto;
WHEREAS, LTV desires to designate Steel Products as an additional
"Seller" under the Receivables Purchase Agreement with respect to the accounts
receivable created from the sale by or on behalf of Steel Products of its
inventory to third parties; and
WHEREAS, the parties hereto desire to (i) amend the Principal
Agreements to reflect the establishment of the Inventory Facility; (ii) amend
the Receivables Purchase Agreement to permit entities other than corporations,
including Steel Products, to be "Sellers" under the Receivables Purchase
Agreement and (iii) consent to the addition of Steel Products as a "Seller"
under the Receivables Purchase Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
<PAGE> 2
SECTION 1. Defined Terms; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Receivables
Purchase Agreement or, if not defined therein, in the Revolving Credit
Agreement, has the meaning assigned to such term in the applicable Principal
Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and
each other similar reference and each reference to "this Agreement" and each
other similar reference contained in the each of the Principal Agreements shall,
after this Amendment and Consent becomes effective, refer to such Principal
Agreement as amended hereby.
SECTION 2. Amendments to Receivables Purchase Agreement.
(a) AMENDMENT OF SECTION 2.06. The first sentence in Section 2.06 of
the Receivables Purchase Agreement is amended by (i) replacing the phrase
"incorporated in" with "organized in" and (ii) adding the phrase "or other
ownership interests" after "outstanding stock".
(b) AMENDMENTS TO SECTION 3.01. (i) Section 3.01(a) of the Receivables
Purchase Agreement is amended by replacing (x) the phrase "a corporation duly
incorporated," with "duly organized," and (y) the phrase "state of
incorporation" with "state of organization".
(ii) Section 3.01(b) of the Receivables Purchase Agreement is
amended by replacing each reference to "corporate" with
"organizational".
(iii) Section 3.01(e) of the Receivables Purchase Agreement is
amended by inserting the following phrase at the end of the last
sentence: "or filed against the proceeds of the inventory which is
subject to the Inventory Facility"
(c) AMENDMENTS TO ARTICLE IV. (i) Section 4.01(b) of the Receivables
Purchase Agreement is amended by replacing (x) each reference to "corporate"
with "organizational", (y) the word "incorporation" with "organization" and (z)
the word "corporation" with "corporation or other organization".
(ii) Section 4.01(o) of the Receivables Purchase Agreement is
amended by adding the phrase "or other ownership interests" after
"outstanding stock".
(iii) Section 4.03(e) of Receivables Purchase Agreement is
amended by (i) changing the heading to "Change in Legal Name" and (ii)
replacing the phrase "corporate name" with "legal name".
2
<PAGE> 3
(iv) Section 4.04(d) of the Receivables Purchase Agreement is amended
by adding the phrase "or other ownership interests" after "outstanding stock".
SECTION 3. Amendments to Annex I of the Principal Agreements. Annex I
of each of the Principal Agreements is amended as follows:
(i) The definitions of "Inventory Pledge Agreement" and
"Inventory Security Agreement" are deleted.
(ii) (x) Clause (p) of the definition of "Liquidation Event"
is amended and restated to read as follows:
(p) Under the terms of the Trust Agreement regarding the
release of the claims of the Collateral Agent thereunder (and
as defined therein) to proceeds of Purchased Inventory (as
defined therein), such release shall cease to be effective
with respect to any such proceeds of Purchased Inventory or
the Collateral Agent thereunder shall have given a Release
Termination Notice (as defined therein); or such release
terms, clause 8.04 (b)(i) of the Trust Agreement or the
definition of Purchased Inventory (or any related definition)
as provided therein shall be amended, modified or waived in
any respect without the prior written consent of all Banks.
(y) Clause (q) of the definition of "Liquidation Event" is
amended and restated to read as follows:
(q) Any foreclosure or similar proceedings in respect of
Permitted Liens on the Intercompany Notes shall have been
commenced; title to any Intercompany Note shall pass to the
holders of such Permitted Liens; or any Seller or LTV shall
take corporate action acquiescing in any of the foregoing.
(iii) The definition of "Permitted Liens" is amended by
deleting the phrase "and the capital stock of Sales Finance" in clause
(vii).
(iv) The following definition is added to Annex I in the
appropriate alphabetical order:
"Note Purchase and Agreement" shall mean the Note Purchase and
Letter of Credit Agreement dated as of February 26, 1998 among
LTV Steel, as a party and as agent for certain affiliates,
various financial institutions, Chase Securities Inc., as
Placement Agent,
3
<PAGE> 4
The Chase Manhattan Bank, as Administrative Agent and as
Collateral Agent.
"Trust Agreement" shall mean the Trust Agreement dated as of
March 1, 1998 among LTV Steel Products, LLC, as Issuer, and
The Chase Manhattan Bank, as Collateral Agent, as amended and
supplemented from time to time.
SECTION 4. Approval of Steel Products as a Seller. By their execution
hereof, the Required Banks shall have evidenced their approval of the proposed
addition of Steel Products as a Seller under the Receivables Purchase Agreement,
as amended hereby, subject to the satisfaction of the other conditions precedent
to such addition pursuant to Section 2.06 of the Receivables Purchase Agreement,
as amended hereby.
SECTION 5. No Petition. (a) Each of Sales Finance, the Facility Agent
and the Collateral Agent (on behalf of itself and the Banks) hereby agrees that
it will not institute against, or join any other Person (as defined in the Trust
Agreement) in instituting against, Steel Products any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding or other
proceeding under any federal or state bankruptcy or similar law (each, an
"Insolvency Proceeding"), for at least one year and one day following the
termination of the Note Purchase Agreement and payment in full of all amounts
due and owing to the Note Purchasers and Lenders thereunder.
SECTION 6. Governing Law. This Amendment and Consent shall be
governed by and construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Amendment and Consent may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 8. Effectiveness. This Amendment and Consent shall become
effective as of the date hereof when Sales Finance shall have executed this
Amendment and Consent and received from each of the Sellers and the Required
Banks a counterpart hereof signed by such party or facsimile or other written
confirmation (in form satisfactory to Sales Finance) that such party has signed
a counterpart hereof; provided Section 3 hereof shall not be effective until the
"Effective Date" under (and as defined in) the agreements relating to the
Inventory Facility. Sales Finance shall give concurrent notice of this Amendment
and Consent to the Rating Agency.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Consent to be duly executed as of the date first above written.
LTV STEEL COMPANY, INC.
By: /s/ JOHN C. SKUREK
-------------------------------------------
Title: Vice President and Treasurer
GEORGIA TUBING CORPORATION
By: /s/ JOHN C. SKUREK
-------------------------------------------
Title: Vice President and Treasurer
LTV SALES FINANCE COMPANY
By: /s/ JOHN C. SKUREK
-------------------------------------------
Title: Vice President and Treasurer
5
<PAGE> 6
CONSENTED TO:
BANKERS TRUST COMPANY
By: /s/ BRUCE W. ADDISON
-------------------------------------
Title: Vice President
ABBEY NATIONAL TREASURY
SERVICES PLC
By: /s/ SCOTT MCMUNN
-------------------------------------
Title: Asset Backed Securities
CREDIT AGRICOLE INDOSUEZ
By: /s/ KATHERINE L. ABBOTT
-------------------------------------
Title: First Vice President
By: /s/ DAVID BOUHL
-------------------------------------
Title: First Vice President
Head of Corporate Banking
Chicago
6
<PAGE> 1
Exhibit 10.58
ELEVENTH AMENDMENT TO
PBGC-LTV SETTLEMENT AGREEMENT
This Eleventh Amendment to the PBGC-LTV Settlement Agreement (this
"Amendment") is made as of November 30, 1997, by and among (1) Pension Benefit
Guaranty Corporation ("PBGC") and (2) The LTV Corporation, a corporation
organized under the laws of Delaware (in such capacity, "LTV"), and each other
member of the LTV Controlled Group (as defined in the Settlement Agreement
referred to below). Capitalized terms used without definition herein shall have
the same meanings as set forth in the Settlement Agreement.
RECITALS
WHEREAS, on June 28,1993, the PBGC, LTV, each other member of the
Initial LTV Group, and the Administrator entered into the Settlement Agreement
(as amended prior to the date hereof, the "Settlement Agreement");
WHEREAS, the Settlement Agreement imposes certain limits on the
Indebtedness that may be incurred by any member of the LTV Consolidated Group,
but excludes from those limits certain items defined in Section 12.3 as
"Permitted Indebtedness"; and
WHEREAS, Permitted Indebtedness includes, among other things, "any
Indebtedness under the Sumitomo Agreement (in the form theretofore approved by
the PBGC) or under the Working Capital Financing Facility"; and
<PAGE> 2
WHEREAS, Indebtedness under the Sumitomo Agreement included a $100
million senior secured note to SMI America, Inc. ("the Sumitomo Secured Note");
and
WHEREAS, LTV redeemed the Sumitomo Secured Note on October 15, 1997; and
WHEREAS, the principal amount of credit available under the Working
Capital Financing Facility may not exceed "an aggregate of $470,000,000
increased by the principal amount of any additional Indebtedness incurred
pursuant to clause (vi) of the definition of Permitted Indebtedness in this
Agreement"; and
WHEREAS, the amount of available credit under the Letter of Credit
Facility may not exceed $150 million; and
WHEREAS, LTV desires to amend the Settlement Agreement to increase the
limits described in the preceding two paragraphs, in part to reflect the
reduction in LTV's overall secured Indebtedness resulting from the redemption of
the Sumitomo Secured Note; and
WHEREAS, PBGC is amenable to such an amendment on the terms and
conditions stated herein; and
WHEREAS, the Settlement Agreement authorizes the amendment of that
Agreement pursuant to an agreement entered into by the PBGC and LTV evidenced by
written instrument signed by their authorized representatives.
-2-
<PAGE> 3
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENT TO DEFINITION OF "WORKING CAPITAL FINANCING FACILITY"
The definition of Working Capital Financing Facility in Section 1.1
(mmm) is hereby amended by changing the amount of "$470,000,000" in clause (i)
to "$600,000,000" and changing the amount "$150,000,000" in clause (vii) to
"$280,000,000."
SECTION 2. INVENTORY FINANCING TRANSACTIONS
Section 8.1(a) of the Settlement Agreement is hereby amended to delete
"and" after clause (v), and the period after clause (vi), and to insert the
following after clause (vi):
; and (vii) this Section 8.1(a) shall not prohibit the pledge, sale, or
transfer of senior secured notes or subordinated unsecured notes by LTV or any
member of the LTV Consolidated Group pursuant to the Working Capital Financing
Facility;
SECTION 3. EFFECTIVENESS AND MISCELLANEOUS PROVISIONS
A. EFFECTIVENESS. This Amendment shall become effective as of November
30, 1997 (the "Eleventh Amendment Effective Date") when it, or a counterpart
hereof, is executed by a duly authorized officer of each of the PBGC and LTV.
-3-
<PAGE> 4
B. REFERENCE TO AND EFFECT OF THE SETTLEMENT AGREEMENT.
(i) On and after the Eleventh Amendment Effective Date, each reference
in the Settlement Agreement to "this Agreement," "hereunder," "hereof," "herein"
or words of like import referring to the Settlement Agreement shall mean and be
a reference to the Settlement Agreement as amended by this Amendment.
(ii) Except as specifically amended by this Amendment, the Settlement
Agreement shall remain in full force and effect.
C. APPLICABLE LAW. This Amendment shall be interpreted in
accordance with and governed by the laws of the State of New York, except to
the extent preempted by federal law.
D. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties to this Amendment have caused this
-4-
<PAGE> 5
Amendment to be duly executed and delivered by their respective duly authorized
officers or representatives as of the day and year first written above.
PENSION BENEFIT GUARANTY CORPORATION
By: /s/ Joseph H. Grant
---------------------------------
Title: DED/COO
------------------------------
Date: 12/8/97
-------------------------------
THE LTV CORPORATION, on behalf of itself and
the other members of the LTV Controlled Group
By: /s/ A.W. Huge
---------------------------------
Title: Sr VP & CFO
------------------------------
Date: 11/14/97
-------------------------------
-5-
<PAGE> 1
Exhibit (11)
THE LTV CORPORATION
Calculation of Basic Earnings Per Share (EPS)
(Dollar amounts in millions except for EPS)
(Share data in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------------------------------------------
1998 1997
------------------------------- ------------------------------
Shares Amount EPS Shares Amount EPS
---------- -------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) $ 19 $ 27
Preferred stock dividend
requirements (1) (1)
----- ----
$ 18 $ 26
===== ====
Share base:
Average common
stock outstanding 99,807 105,029
BASIC EARNINGS PER SHARE $ 0.19 $ 0.25
======= ======
</TABLE>
<PAGE> 2
THE LTV CORPORATION
Calculation of Dilutive Earnings Per Share (EPS)
(Dollar amounts in millions except for EPS)
(Share data in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------------------------------
1998 1997
------------------------------ ------------------------------
Shares Amount EPS Shares Amount EPS
---------- --------- --------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Net income $ 19 $ 27
Preferred stock dividend
requirements (1) (1)
---- ---
18 26
Share base:
Average common
stock outstanding 99,807 105,029
Common Stock equivalent shares
resulting from outstanding
Series A Warrants, Stock
Options and Restricted Stock 155 102
Common Stock issuable upon
conversion of Series B
Preferred Stock (A) 2,926 1
Common Stock issuable upon
conversion of Senior
Secured Convertible Notes (B) (A)
------ ----- ------- ----
99,962 $ 18 108,057 $ 27
====== ===== ======= ====
DILUTIVE EARNINGS PER SHARE $ 0.19 $ 0.25
====== ======
</TABLE>
(A) Addition of these shares would result in antidilution in 1997.
(B) Senior Secured Convertible Notes were redeemed in September 1997.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 161
<SECURITIES> 346
<RECEIVABLES> 498
<ALLOWANCES> 19
<INVENTORY> 875
<CURRENT-ASSETS> 1,878
<PP&E> 4,162
<DEPRECIATION> 992
<TOTAL-ASSETS> 5,561
<CURRENT-LIABILITIES> 939
<BONDS> 360
0
1
<COMMON> 53
<OTHER-SE> 1,649
<TOTAL-LIABILITY-AND-EQUITY> 5,561
<SALES> 1,127
<TOTAL-REVENUES> 1,127
<CGS> 985
<TOTAL-COSTS> 1,095
<OTHER-EXPENSES> (1)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1
<INCOME-PRETAX> 32
<INCOME-TAX> 13
<INCOME-CONTINUING> 19
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.19
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1997
<PERIOD-START> JAN-01-1996 JAN-01-1996 JAN-01-1996 JAN-01-1997
<PERIOD-END> MAR-31-1996 JUN-30-1996 SEP-30-1996 MAR-31-1997
<CASH> 203 180 156 172
<SECURITIES> 529 595 533 481
<RECEIVABLES> 395 413 420 431
<ALLOWANCES> 17 17 17 18
<INVENTORY> 745 737 757 788
<CURRENT-ASSETS> 1,889 1,943 1,886 1,886
<PP&E> 3,696 3,729 3,781 3,925
<DEPRECIATION> 580 642 703 817
<TOTAL-ASSETS> 5,417 5,471 5,414 5,404
<CURRENT-LIABILITIES> 912 955 864 862
<BONDS> 150 150 151 154
0 0 0 0
1 1 1 1
<COMMON> 53 53 53 53
<OTHER-SE> 1,339 1,384 1,427 1,684
<TOTAL-LIABILITY-AND-EQUITY> 5,417 5,471 5,414 5,404
<SALES> 993 2,068 3,117 1,072
<TOTAL-REVENUES> 993 2,068 3,117 1,072
<CGS> 879 1,807 2,717 931
<TOTAL-COSTS> 981 2,014 3,028 1,036
<OTHER-EXPENSES> (11) (22) (33) (9)
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 2 4 5 0
<INCOME-PRETAX> 21 72 117 45
<INCOME-TAX> 8 27 42 18
<INCOME-CONTINUING> 13 45 75 27
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 13 45 75 27
<EPS-PRIMARY> 0.12 0.42 0.69 0.25
<EPS-DILUTED> 0.12 0.42 0.69 0.25
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 JAN-01-1997
<PERIOD-END> JUN-30-1997 SEP-30-1997
<CASH> 177 257
<SECURITIES> 499 401
<RECEIVABLES> 438 497
<ALLOWANCES> 18 18
<INVENTORY> 815 862
<CURRENT-ASSETS> 1,934 2,038
<PP&E> 3,974 4,107
<DEPRECIATION> 879 940
<TOTAL-ASSETS> 5,453 5,772
<CURRENT-LIABILITIES> 919 1,051
<BONDS> 155 354
0 0
1 1
<COMMON> 53 53
<OTHER-SE> 1,709 1,608
<TOTAL-LIABILITY-AND-EQUITY> 5,453 5,772
<SALES> 2,164 3,299
<TOTAL-REVENUES> 2,164 3,299
<CGS> 1,870 2,828
<TOTAL-COSTS> 2,082 3,295
<OTHER-EXPENSES> (8) (1)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 1
<INCOME-PRETAX> 90 4
<INCOME-TAX> 36 2
<INCOME-CONTINUING> 54 2
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 (4)
<CHANGES> 0 0
<NET-INCOME> 54 (2)
<EPS-PRIMARY> 0.50 (0.03)
<EPS-DILUTED> 0.50 (0.03)
</TABLE>
