EXHIBIT 10.11
EXECUTION COPY
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REVOLVING LOAN AGREEMENT
Dated as of July 31, 2003
among
WHEELING-PITTSBURGH CORPORATION,
WHEELING-PITTSBURGH STEEL CORPORATION,
as Borrower,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
ROYAL BANK OF CANADA,
as Administrative Agent,
GENERAL ELECTRIC CAPITAL CORPORATION,
as Inventory and Receivables Security Agent and Documentation Agent,
and
THE CIT GROUP/BUSINESS CREDIT, INC., CONGRESS FINANCIAL CORPORATION
and FLEET CAPITAL CORP.,
as Syndication Agents
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RBC Capital Markets, as Global Coordinating GECC Capital Markets Group, Inc., as
Arranger, Co-Lead Arranger and Joint Co-Lead Arranger and Joint Bookrunner
Bookrunner
TABLE OF CONTENTS
Page
----
1. AMOUNT AND TERMS OF CREDIT............................................................. 2
1.1 Credit Facilities............................................................. 2
1.2 Letters of Credit............................................................. 6
1.3 Prepayments................................................................... 6
1.4 Use of Proceeds............................................................... 9
1.5 Interest and Applicable Margins............................................... 9
1.6 Eligible Accounts............................................................. 12
1.7 Eligible Inventory............................................................ 14
1.8 Cash Management Systems....................................................... 16
1.9 Fees.......................................................................... 16
1.10 Receipt of Payments........................................................... 16
1.11 Application and Allocation of Payments........................................ 17
1.12 Loan Account and Accounting................................................... 17
1.13 Indemnity..................................................................... 18
1.14 Access........................................................................ 19
1.15 Taxes......................................................................... 19
1.16 Capital Adequacy; Increased Costs; Illegality................................. 20
1.17 Single Loan................................................................... 22
2. CONDITIONS PRECEDENT................................................................... 22
2.1 Conditions to the Initial Loans............................................... 22
2.2 Further Conditions to Each Loan............................................... 24
3. REPRESENTATIONS AND WARRANTIES......................................................... 24
3.1 Financial Condition........................................................... 25
3.2 No Change..................................................................... 26
3.3 Existence; Compliance with Law................................................ 26
3.4 Power; Authorization; Enforceable Obligations................................. 27
3.5 No Legal Bar.................................................................. 27
3.6 Litigation.................................................................... 28
3.7 No Default.................................................................... 28
3.8 Ownership of Property; Liens.................................................. 28
3.9 Intellectual Property......................................................... 28
3.10 Taxes......................................................................... 28
3.11 Federal Regulations........................................................... 29
3.12 Labor Matters................................................................. 29
3.13 ERISA......................................................................... 29
3.14 Investment Company Act; Other Regulations..................................... 30
3.15 Subsidiaries.................................................................. 30
3.16 Environmental Matters......................................................... 30
3.17 Accuracy of Information, etc.................................................. 31
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3.18 Collateral Documents.......................................................... 31
3.19 Solvency...................................................................... 32
3.20 Regulation H.................................................................. 32
3.21 Certain Documents............................................................. 32
3.22 Plan of Reorganization........................................................ 32
3.23 Senior Indebtedness........................................................... 33
3.24 Insurance..................................................................... 33
3.25 Deposit and Disbursement Accounts............................................. 33
3.26 Government Contracts.......................................................... 33
3.27 Customer and Trade Relations.................................................. 33
3.28 Bonding; Licenses............................................................. 33
3.29 Brokers....................................................................... 33
3.30 Off Balance Sheet Transactions................................................ 33
3.31 Inactive Subsidiaries......................................................... 34
4. FINANCIAL STATEMENTS AND INFORMATION................................................... 34
4.1 Reports and Notices........................................................... 34
4.2 Communication with Accountants................................................ 34
5. AFFIRMATIVE COVENANTS.................................................................. 34
5.1 Payment of Obligations........................................................ 34
5.2 Maintenance of Existence; Compliance.......................................... 34
5.3 Maintenance of Property....................................................... 35
5.4 Books and Records............................................................. 35
5.5 Notices....................................................................... 35
5.6 Environmental Laws............................................................ 36
5.7 Additional Collateral, etc.................................................... 37
5.8 Insurance..................................................................... 38
5.9 Supplemental Disclosure....................................................... 43
5.10 Intellectual Property......................................................... 44
5.11 Landlord Agreements, Mortgagee Agreements, Bailee Letters and Real
Estate Purchases.............................................................. 44
5.12 Further Assurances............................................................ 44
6. NEGATIVE COVENANTS..................................................................... 44
6.1 Financial Condition Covenants................................................. 45
6.2 Indebtedness.................................................................. 45
6.3 Liens......................................................................... 46
6.4 Fundamental Changes........................................................... 47
6.5 Disposition of Property....................................................... 47
6.6 Restricted Payments........................................................... 48
6.7 Capital Expenditures.......................................................... 48
6.8 Investments................................................................... 49
6.9 Optional Payments and Modifications of Certain Agreements..................... 50
6.10 Transactions with Affiliates.................................................. 51
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6.11 Sales and Leasebacks.......................................................... 51
6.12 Swap Agreements............................................................... 51
6.13 Changes in Fiscal Periods..................................................... 51
6.14 Clauses Restricting Subsidiary Distributions.................................. 52
6.15 Lines of Business............................................................. 52
6.16 Restrictions on WP Steel Venture.............................................. 52
6.17 Excluded Foreign Subsidiaries................................................. 52
7. TERM................................................................................... 52
7.1 Termination................................................................... 52
7.2 Survival of Obligations Upon Termination of Financing Arrangements............ 52
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES................................................. 53
8.1 Events of Default............................................................. 53
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT.................................... 56
9.1 Assignment and Participations................................................. 56
9.2 Appointment of Agents......................................................... 59
9.3 Agent's Reliance, Etc......................................................... 60
9.4 Royal Bank of Canada, GE Capital and Affiliates............................... 60
9.5 Lender Credit Decision........................................................ 61
9.6 Indemnification............................................................... 61
9.7 Successor Agent............................................................... 61
9.8 Setoff and Sharing of Payments................................................ 62
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in Concert...... 63
10. SUCCESSORS AND ASSIGNS................................................................. 65
10.1 Successors and Assigns........................................................ 65
11. MISCELLANEOUS.......................................................................... 65
11.1 Complete Agreement; Modification of Agreement................................. 65
11.2 Amendments and Waivers........................................................ 65
11.3 Fees and Expenses............................................................. 67
11.4 No Waiver..................................................................... 69
11.5 Remedies...................................................................... 69
11.6 Severability.................................................................. 69
11.7 Conflict of Terms............................................................. 69
11.8 Confidentiality............................................................... 69
11.9 GOVERNING LAW................................................................. 70
11.10 Notices....................................................................... 71
11.11 Section Titles................................................................ 71
11.12 Counterparts.................................................................. 71
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11.13 WAIVER OF JURY TRIAL.......................................................... 72
11.14 Press Releases and Related Matters............................................ 72
11.15 Reinstatement................................................................. 72
11.16 Advice of Counsel............................................................. 72
11.17 No Strict Construction........................................................ 73
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INDEX OF APPENDICES
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.8) - Cash Management System
Annex D (Section 2.1(a)) - Closing Checklist
Annex E (Section 4.1(a)) - Financial Statements and Projections -- Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.1) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice Addresses
Annex J (from Annex A-
Commitments definition) - Commitments as of Closing Date
Exhibit A - Form of Security Agreement
Exhibit B-1 - Form of Senior Current Asset Security Agreement
Exhibit B-2 - Form of Junior Current Asset Security Agreement
Exhibit B-3 - Form of Current Asset Intercreditor Agreement
Exhibit C - Form of JV Pledge Agreement
Exhibit D - Form of Guarantee Agreement
Exhibit E - Form of Closing Certificate
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule 1.1 - Administrative Agent's and Inventory and Receivables Agent's
Representatives
Schedule 1.2 - Mortgaged Properties
Schedule 1.3 - Terms of Profit Sharing Notes
Schedule 1.4 - Environmental Budget
Disclosure Schedule 3.4 - Required Consents
Disclosure Schedule 3.8 - Ownership of Property
Disclosure Schedule 3.10 - Tax Claims
Disclosure Schedule 3.13 - ERISA Matters
Disclosure Schedule 3.15 - Subsidiaries
Disclosure Schedule 3.18(a) - UCC Filing Jurisdictions
Disclosure Schedule 3.18(b)-1 - Mortgage Filing Jurisdictions
Disclosure Schedule 3.18(b)-2 - Owned and Leased Real Property
Disclosure Schedule 3.24 - Insurance
Disclosure Schedule 3.25 - Accounts
Disclosure Schedule 3.26 - Government Contracts
Disclosure Schedule 3.28 - Bonds, Patent, Trademark Licenses
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Disclosure Schedule 5.7(b) - Commercially Reasonable Efforts Leasehold Mortgages
Disclosure Schedule 6.2(d) - Existing Indebtedness
Disclosure Schedule 6.3(f) - Existing Liens
Disclosure Schedule 6.10 - Affiliate Transactions
Disclosure Schedule 6.16 - WP Steel Venture Activities
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This REVOLVING LOAN AGREEMENT (this "Agreement"), dated as of
July 31, 2003 among WHEELING-PITTSBURGH CORPORATION, a Delaware corporation
("Holdings"), WHEELING-PITTSBURGH STEEL CORPORATION, a Delaware corporation
("Borrower"), ROYAL BANK OF CANADA, a Canadian chartered bank (in its individual
capacity, "Royal Bank of Canada"), for itself, as Lender and as Administrative
Agent for the Lenders from time to time party hereto, GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation (in its individual capacity, "GE Capital"),
for itself, as Lender, and as Inventory and Receivables Security Agent and
Documentation Agent for the Lenders, and the other Lenders from time to time
party hereto.
RECITALS
WHEREAS, Borrower has requested that Lenders extend revolving
credit facilities to Borrower in the amount of two hundred twenty-five million
dollars ($225,000,000) in the aggregate to provide (a) working capital financing
for Borrower, (b) funds for repayment of certain existing indebtedness and (c)
funds for other general corporate purposes of Borrower permitted hereunder; and
for these purposes, Lenders are willing to make certain loans and other
extensions of credit to Borrower of up to such amount upon the terms and
conditions set forth herein; and
WHEREAS, pursuant to the Collateral Documents, Borrower has
agreed to secure all of its obligations under the Loan Documents by granting to
the Inventory and Receivables Security Agent, for the benefit of Agents and
Lenders, a first priority security interest in and lien on the Current Asset
Collateral (as defined below) and to the Collateral Agent, for the benefit of
the Agents and Lenders, a third priority security interest and lien on all of
its other existing and after-acquired personal property and certain real
property; and
WHEREAS, Holdings is willing to guarantee all of the
obligations of Borrower to Agents and Lenders under the Loan Documents and to
grant to the Inventory and Receivables Security Agent, for the benefit of Agents
and Lenders, a first priority security interest in and lien on its Current Asset
Collateral, if any, and to grant to Collateral Agent, for the benefit of Agents
and Lenders, a third priority security interest in and pledge of all of the
Capital Stock of Borrower and WP Steel Venture and a third priority security
interest and lien on all of its other existing and after-acquired personal
property to secure such guarantee; and
WHEREAS, capitalized terms used in this Agreement shall have
the meanings ascribed to them in Annex A and, for purposes of this Agreement and
the other Loan Documents, the rules of construction set forth in Annex A shall
govern. All Annexes, Disclosure Schedules, Exhibits and other attachments
(collectively, "Appendices") hereto, or expressly identified to this Agreement,
are incorporated herein by reference, and taken together with this Agreement,
shall constitute but a single agreement. These Recitals shall be construed as
part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, and for other good and valuable
consideration, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
(a) Revolving Credit Facility.
(i) Subject to the terms and conditions hereof,
each Lender agrees to make available to Borrower from time to time until the
Commitment Termination Date its Pro Rata Share of advances (each, a "Revolving
Credit Advance"). The Pro Rata Share of the Revolving Loan of any Lender shall
not at any time exceed its separate Revolving Loan Commitment. The obligations
of each Lender hereunder shall be several and not joint. Until the Commitment
Termination Date, Borrower may from time to time borrow, repay and reborrow
under this Section 1.1(a); provided, that the amount of any Revolving Credit
Advance to be made at any time shall not exceed the Borrowing Availability at
such time. The Borrowing Availability may be further reduced by Reserves imposed
by the Inventory and Receivables Security Agent in its reasonable credit
judgment. Borrower shall notify the representatives of the Administrative Agent
and the Inventory and Receivables Security Agent identified in Schedule 1.1 at
the address specified therein prior to each Revolving Credit Advance. Upon
receipt of such notice the Inventory and Receivables Security Agent shall, to
the extent such information has changed, promptly, and in any event on the same
day such notice is received from the Borrower, provide the Administrative Agent
with written notice of (i) the Borrowing Base then in effect and (ii) any
reserves established by the Inventory and Receivables Security Agent with
respect to the Borrowing Base or the Maximum Amount; in the event that the
Inventory and Receivables Security Agent fails to deliver such notice to the
Administrative Agent, the Administrative Agent shall be entitled to rely on the
then most recent Borrowing Base and reserve information communicated to it in
writing by the Inventory and Receivables Security Agent. Borrower must give any
such notice no later than 11:00 a.m. (New York time) on the date which is (i)
one (1) Business Day prior to the date of the proposed Revolving Credit Advance,
in the case of an Index Rate Loan or (ii) three (3) Business Days prior to the
date of the proposed Revolving Credit Advance, in the case of a LIBOR Loan.
Borrower must give each such notice (a "Notice of Revolving Credit Advance") in
writing (by telecopy or overnight courier) substantially in the form of Exhibit
1.1(a)(i), which shall include the information required in such Exhibit and be
accompanied by such other information as the Administrative Agent may require.
Each Revolving Credit Advance shall be in an amount equal to $5,000,000 or a
whole multiple of $1,000,000 in excess thereof. If Borrower desires that the
Revolving Credit Advances bear interest by reference to a LIBOR Rate, Borrower
must comply with Section 1.5(e).
(ii) Borrower shall issue a promissory note to
each Lender who delivers a written request to Borrower for such issuance. Each
promissory note issued to a Lender shall be in the principal amount of the
Revolving Loan Commitment of such Lender, dated the Closing Date and
substantially in the form of Exhibit 1.1(a)(ii) (each a "Revolving Note" and,
collectively, the "Revolving Notes"). Each Revolving Note shall represent the
obligation of Borrower to pay the amount of such Lender's Revolving Loan
Commitment or, if less, such Lender's Pro Rata Share of the aggregate unpaid
principal
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amount of all Revolving Credit Advances to Borrower together with interest
thereon as prescribed in Section 1.5. The entire unpaid balance of the Revolving
Loan and all other non-contingent Obligations shall be immediately due and
payable in full in immediately available funds on the Commitment Termination
Date.
(iii) Any provision of this Agreement to the
contrary notwithstanding, at the request of Borrower, the Administrative Agent
in its discretion may make, but shall not have any implied or express obligation
to make, Overadvances to Borrower in accordance with the provisions of this
Section 1.1(a)(iii). An "Overadvance" is a Revolving Credit Advance to Borrower
on behalf of Lenders in an amount that causes the outstanding balance of the
aggregate Revolving Loans to exceed the Borrowing Base (less the Swing Line
Loan). The making of an Overadvance shall not create any obligation of the
Administrative Agent or the Lenders to make additional Overadvances or
constitute a waiver of Administrative Agent's and Lenders' absolute right to
refuse to make additional Overadvances, Swing Line Advances or Revolving Credit
Advances, or to incur any Letter of Credit Obligations, as the case may be, at
any time when an Overadvance exists. Section 1.3(b) shall not apply to any
Overadvance for so long as Administrative Agent permits such Overadvance to
remain outstanding. The Administrative Agent may make Overadvances even if
Borrower has not met the conditions to lending set forth in Section 2. All
Overadvances shall constitute Index Rate Loans, shall bear interest at the
Default Rate and shall be payable on the earlier of demand by the Administrative
Agent or the Commitment Termination Date. Except as otherwise provided in
Section 1.11(b), the authority of the Administrative Agent to make Overadvances
(i) is limited to an aggregate amount outstanding at any time not to exceed
$7,000,000 or such lesser amount as would not cause the Revolving Loan to exceed
the Maximum Amount and (ii) with respect to any Overadvance which, after giving
effect thereto, would cause the aggregate amount of Overadvances then
outstanding to exceed $1,000,000, is subject to the prior agreement of the
Inventory and Receivables Security Agent. Lenders holding more than 50% of the
Revolving Loan Commitments may revoke, prospectively, the authority of
Administrative Agent to make Overadvances.
(b) Swing Line Facility.
(i) Subject to the terms and conditions of this
Agreement, the Swing Line Lender agrees to make advances (each a "Swing Line
Advance") to the Borrower from time to time in accordance with the provisions of
this Section 1.1(b), provided that the amount of Swing Line Advances which may
be made on any date shall equal the lesser of (i) the Swing Line Commitment less
all outstanding Swing Line Advances and (ii) the Borrowing Availability at such
time (the "Swing Line Availability"). In no event shall the aggregate
outstanding principal amount of all Swing Line Advances and the Revolving Loans
made by the Swing Line Lender exceed such Lender's Revolving Loan Commitment.
Within the limits and on the conditions herein set forth with respect to Swing
Line Advances, the Borrower may from time to time borrow, repay and reborrow
Swing Line Advances. All Swing Line Advances shall be made as Index Rate Loans
and may not be converted into LIBOR Loans. The Borrower may access Swing Line
Advances by giving the Swing Line Lender irrevocable notice prior to 1:00 p.m.
(New York time) on the date of the requested Swing Line Advance
3
specifying the amount of the requested Swing Line Advance (which amount shall be
in an aggregate principal amount of not less than $100,000 or integral multiples
of $5,000 in excess thereof). The Borrower may repay Swing Line Advances at any
time and from time to time without notice or penalty. All interest payments and
principal payments made by the Borrower in respect of Swing Line Advances shall
be made directly to the Swing Line Lender at the account designated to the
Borrower for such purpose and shall be for the sole account of the Swing Line
Lender (except as provided otherwise in Section 1.1(b)(iv)). Unless, not later
than the Business Day immediately prior to the date of a proposed Swing Line
Advance, the Swing Line Lender receives written notice from Requisite Lenders
instructing it not to make Swing Line Advances to Borrower, the Swing Line
Lender shall, notwithstanding that any condition precedent set forth in Section
2.2 shall not be satisfied, be entitled to fund the Swing Line Advance and the
Lenders shall make Revolving Credit Advances in accordance with Section
1.1(b)(iii) or purchase participating interests in accordance with Section
1.1(b)(iv). Borrower shall repay the aggregate outstanding principal amount of
the Swing Line Loan, and accrued interest thereon, on demand by Administrative
Agent (and Administrative Agent shall make such demand if requested by the Swing
Line Lender).
(ii) Borrower shall issue a promissory note to
evidence the Swing Line Commitment to the Administrative Agent for further
delivery to Swing Line Lender if the Swing Line Lender shall so request in
writing. Such note shall be in the principal amount of the Swing Line Commitment
of the Swing Line Lender, dated the Closing Date and substantially in the form
of Exhibit 1.1(b)(ii) (the "Swing Line Note"). The Swing Line Note shall
represent the obligation of Borrower to pay the amount of the Swing Line
Commitment or, if less, the aggregate unpaid principal amount of all Swing Line
Advances made to Borrower together with interest thereon as prescribed in
Section 1.5. The entire unpaid balance of the Swing Line Loan and all other
non-contingent Obligations shall be immediately due and payable in full in
immediately available funds on the Commitment Termination Date.
(iii) At any time the Swing Line Lender may, and
on the first Business Day of each week on which any Swing Line Advance is
outstanding the Swing Line Lender shall, on behalf of Borrower, deliver written
notice (the "Swing Line Refunding Notice") to Administrative Agent for further
delivery to each Lender, and Borrower hereby irrevocably authorizes the Swing
Line Lender to deliver the Swing Line Refunding Notice on Borrower's behalf to
each Lender, directing each Lender, including the Swing Line Lender, to make a
Revolving Credit Advance to Borrower (which shall be an Index Rate Loan) in an
amount equal to such Lender's Pro Rata Share of the principal amount of the
Swing Line Loan outstanding on the date of, and set forth in, the Swing Line
Refunding Notice (such principal amount, the "Refunded Swing Line Loan"). Unless
any of the events described in Section 8.1(f) has occurred (in which event the
procedures of Section 1.1(b)(iv) shall apply) and notwithstanding that the
conditions precedent set forth in this Agreement to the making of a Revolving
Credit Advance may not then be satisfied, each Lender shall disburse directly to
Administrative Agent its Pro Rata Share of the Refunded Swing Line Loan, in
immediately available funds, prior to 3:00 p.m. (New York time), on the Business
Day next succeeding the date the Swing Line Lender delivers the Swing Line
Refunding Notice to the Administrative Agent.
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Administrative Agent shall immediately pay the Refunded Swing Line Loan to the
Swing Line Lender, who shall apply it to repay the outstanding Swing Line Loan.
(iv) If one of the events described in Section
8.1(f) occurs prior to completion of the refunding of a Swing Line Loan with a
Revolving Credit Advance pursuant to Section 1.1(b)(iii), then, each Lender
shall, on the date such Revolving Credit Advance was to have been made for the
benefit of Borrower pursuant to such Swing Line Refunding Notice, purchase from
the Swing Line Lender an undivided participation interest in the Swing Line Loan
in an amount equal to its Pro Rata Share of the Refunded Swing Line Loan (the
"Swing Line Participation Amount") and shall disburse directly to Administrative
Agent the purchase price for the Swing Line Participation Amount in an amount
equal to its Pro Rata Share of the Refunded Swing Line Loan, in immediately
available funds, prior to 3:00 p.m. (New York time), on the Business Day next
succeeding the date the Swing Line Lender delivers the Swing Line Refunding
Notice to such Lender. Administrative Agent shall immediately remit such
purchase price to the Swing Line Lender. Whenever, at any time after the Swing
Line Lender has received from any Lender such Lender's Swing Line Participation
Amount, the Swing Line Lender receives any payment on account of the Swing Line
Loans, the Swing Line Lender will distribute to such Lender its Swing Line
Participation Amount (appropriately adjusted, in the case of interest payments,
to reflect the period of time during which such Lender's participating interest
was outstanding and funded and, in the case of principal and interest payments,
to reflect such Lender's pro rata portion of such payment if such payment is not
sufficient to pay the principal of and interest on all Swing Line Loans then
due); provided, however, that in the event that such payment received by the
Swing Line Lender is required to be returned, such Lender will return to the
Swing Line Lender any portion thereof previously distributed to it by the Swing
Line Lender.
(v) Each Lender's obligation to make Revolving
Credit Advances in accordance with Section 1.1(b)(iii) and to purchase
participation interests in accordance with Section 1.1(b)(iv) shall be absolute
and unconditional and shall not be affected by any circumstance, including (A)
any setoff, counterclaim, recoupment, defense or other right that such Lender
may have against the Swing Line Lender, Borrower or any other Person for any
reason whatsoever; (B) the occurrence or continuance of any Default or Event of
Default; (C) any inability of Borrower to satisfy the conditions precedent to
borrowing set forth in this Agreement at any time; or (D) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing. If any Lender does not make available to Administrative Agent or
the Swing Line Lender, as applicable, the amount required pursuant to Sections
1.1(b)(iii) or 1.1(b)(iv), as the case may be, the Swing Line Lender shall be
entitled to recover such amount on demand from such Lender, together with
interest thereon for each day from the date of non-payment until such amount is
paid in full at the Federal Funds Effective Rate for the first two Business Days
and at the Index Rate thereafter.
(c) Reliance on Notices. Administrative Agent shall be
entitled to rely on, and shall be fully protected in relying on, any Notice of
Revolving Credit Advance, Notice of Conversion/Continuation, Swing Line
Refunding Notice or similar notice believed by Administrative Agent to be
genuine. Administrative Agent may assume that each Person
5
executing and delivering any notice in accordance herewith was duly authorized
unless the responsible individual acting thereon for Administrative Agent has
actual knowledge to the contrary.
1.2 Letters of Credit. Subject to and in accordance with
the terms and conditions contained herein and in Annex B, Borrower shall have
the right to request, and Lenders agree to incur, or purchase participations in,
Letter of Credit Obligations in respect of Borrower.
1.3 Prepayments.
(a) Voluntary Prepayments; Reductions in Revolving Loan
Commitments. Borrower may prepay Revolving Credit Advances at any time and on at
least five (5) days' prior written notice to Administrative Agent permanently
reduce (but not terminate) the Revolving Loan Commitment; provided that (A) any
such reductions shall be in a minimum amount of $5,000,000 and integral
multiples of $1,000,000 in excess of such amount, (B) the Revolving Loan
Commitment shall not be reduced to an amount less than the amount of the
Revolving Loan outstanding, (C) after giving effect to such reductions, Borrower
shall comply with Section 1.3(b) and (D) in no event may Borrower reduce the
Revolving Loan Commitment to an amount less than $100,000,000 except in
connection with the permanent reduction of the Revolving Loan Commitment to $0.
Borrower may at any time on at least ten (10) days' prior written notice to
Administrative Agent terminate the Revolving Loan Commitment, provided that upon
such termination all Loans and other Obligations shall be immediately due and
payable in full and all Letter of Credit Obligations shall be cash
collateralized or otherwise satisfied in accordance with Annex B hereto. Any
voluntary prepayment and any reduction or termination of the Revolving Loan
Commitment must be accompanied by payment of the Fee set forth in Section
1.9(c), if any, plus payment of any LIBOR funding breakage costs in accordance
with Section 1.13(b). Upon any such reduction or termination of the Revolving
Loan Commitment, Borrower's right to request Revolving Credit Advances, or
request that Letter of Credit Obligations be incurred on its behalf, or request
Swing Line Advances, shall simultaneously be permanently reduced or terminated,
as the case may be; provided that (i) any permanent reduction of the Revolving
Loan Commitment shall require a corresponding pro rata reduction in the
Inventory Cap and (ii) if after giving effect to such reduction or termination
the Revolving Loan Commitment is less than $175,000,000, then the L/C Sublimit
and Swing Line Commitment shall be reduced pro rata (it being understood that
the amount of the first such reduction in the L/C Sublimit and Swing Line
Commitment shall be calculated with respect to the aggregate amount of all
reductions of the Revolving Loan Commitment since the Closing Date).
(b) Mandatory Prepayments. If on any date Borrower shall
not comply with paragraph (c) or (d) of Annex G, Borrower shall immediately
repay all or a portion of the aggregate outstanding Revolving Credit Advances so
that after giving effect to such repayment, Borrower shall comply with
paragraphs (c) and (d) of Annex G. If after repayment in full of the aggregate
outstanding Revolving Credit Advances pursuant to the immediately preceding
sentence, Borrower shall still not comply with paragraph (c) or (d) of Annex G,
Borrower shall, as provided in paragraph (c) of Annex B, deliver cash or Cash
Equivalents to Administrative Agent to hold as provided in Annex B, in an amount
equal to 105% of the amount by which
6
Letter of Credit Obligations exceed the maximum amount permitted for Borrower to
comply with paragraphs (c) and (d) of Annex G. Notwithstanding the foregoing,
any Overadvance made pursuant to Section 1.1(a)(iii) shall be repaid in
accordance with Section 1.1(a)(iii).
(c) Application of Prepayments from Asset Dispositions.
Immediately upon receipt by any Credit Party of cash proceeds in excess of
$250,000 from:
(i) any Disposition or series of related
Dispositions of assets of the Borrower other than Inventory after all
obligations under the Term Loan Agreement have been satisfied in full, or
(ii) any Disposition of Inventory;
Borrower shall prepay the Loans in an amount equal to all such proceeds, net of
(A) commissions and other reasonable and customary transaction costs, fees and
expenses properly attributable to such transaction and payable by Borrower in
connection therewith (in each case, paid to non-Affiliates), (B) transfer taxes,
(C) amounts payable to holders of senior Liens on such asset (to the extent such
Liens are permitted under Section 6.3), if any, and (D) an appropriate reserve
for income taxes in accordance with GAAP in connection therewith. Any such
prepayment shall be applied in accordance with Section 1.3(d). The following
shall not be subject to mandatory prepayment under this paragraph (c): (1)
proceeds of sales pursuant to paragraphs (a), (b), (c) or (d) of Section 6.5 and
(2) asset Disposition proceeds that are reinvested in Equipment, Fixtures or
Real Estate within one hundred and eighty (180) days following receipt thereof;
provided that Borrower notifies Administrative Agent of its intent to reinvest
at the time such proceeds are received and when such reinvestment occurs.
(d) Application of Certain Mandatory Prepayments. Any
prepayments made by Borrower pursuant to Section 1.3(c) above shall be applied
as follows: first, to Fees and reimbursable expenses of Agents then due and
payable pursuant to any of the Loan Documents; second, to interest then due and
payable on the Swing Line Loan; third, to the principal balance of the Swing
Line Loan until the same has been repaid in full; fourth, to interest then due
and payable on the Revolving Credit Advances; fifth, to the outstanding
principal balance of Revolving Credit Advances until the same has been paid in
full; and sixth, to any Letter of Credit Obligations, to provide cash collateral
therefor in the manner set forth in Annex B, until all such Letter of Credit
Obligations have been fully cash collateralized in the manner set forth in Annex
B. Neither the Revolving Loan Commitment nor the Swing Line Commitment shall be
permanently reduced by the amount of any such prepayments.
(e) Treatment of Insurance Proceeds. Borrower shall
promptly notify Agents of any loss, damage, or destruction to any Current Asset
Collateral in an aggregate amount of $500,000 or more or to any other Collateral
in an aggregate amount of $1,000,000 or more, whether or not covered by
insurance.
(i) After deducting from insurance proceeds
related to Current Asset Collateral (i) the expenses incurred by Agents in the
collection or handling thereof and (ii) amounts required to be paid to creditors
(other than Lenders) having senior encumbrances thereon permitted by Section
6.3, Administrative Agent shall apply such
7
proceeds to the reduction of the Obligations in accordance with Section 1.3(f)
(provided that in the case of insurance proceeds pertaining to any Credit Party
other than Borrower, such insurance proceeds shall be applied to the Loans owing
by Borrower).
(ii) Unless and until all Term Loan Obligations
have been satisfied in full and if such use is permitted by the Term Loan
Agreement or is consented to by the Required Term Loan Lenders, Borrower or
applicable Credit Party shall have the right to use proceeds of Collateral, or
any part thereof, other than Current Asset Collateral, to replace, repair,
restore or rebuild such Collateral in a diligent and expeditious manner with
materials and workmanship of substantially the same quality as existed before
the loss, damage or destruction.
(iii) After all Term Loan Obligations have been
satisfied in full, the Administrative Agent, may in its discretion, permit
Borrower or applicable Credit Party to use proceeds of Collateral, or any part
thereof to replace, repair, restore or rebuild such Collateral in a diligent and
expeditious manner with materials and workmanship of substantially the same
quality as existed before the loss, damage or destruction.
(iv) Notwithstanding the provisions of Section
1.3(e)(i) and (iii) to the contrary, if the casualty giving rise to such
insurance proceeds could not reasonably be expected to have a Material Adverse
Effect and such insurance proceeds do not exceed $5,000,000 in the aggregate,
Administrative Agent shall permit the applicable Credit Party to replace,
restore, repair or rebuild the property; provided that if such Credit Party has
not completed or entered into binding agreements to complete such replacement,
restoration, repair or rebuilding within 180 days of such casualty,
Administrative Agent may apply such insurance proceeds to the Obligations in
accordance with Section 1.3(f). All insurance proceeds received in respect of
Collateral (other than Current Asset Collateral) after the Term Loan Obligations
have been satisfied in full and in respect of Current Asset Collateral, in
either case, that are to be made available to Borrower to replace, repair,
restore or rebuild the Collateral shall be applied by Administrative Agent to
reduce the outstanding principal balance of the Revolving Loan (which
application shall not result in a permanent reduction of the Revolving Loan
Commitment) and upon such application, Inventory and Receivables Security Agent
shall establish a Reserve against the Borrowing Base in an amount equal to the
amount of such proceeds so applied. All insurance proceeds received in respect
of Collateral (other than Current Asset Collateral) after the Term Loan
Obligations have been satisfied in full and in respect of Current Asset
Collateral that are made available to any Credit Party that is not a Borrower to
replace, repair, restore or rebuild the Collateral shall be deposited in a cash
collateral account. Thereafter, such funds shall be made available to the
Borrower or applicable Credit Party to provide funds to replace, repair, restore
or rebuild the Collateral as follows: (i) Borrower shall request a Revolving
Credit Advance or release from the cash collateral account be made to the
Borrower or applicable Credit Party in the amount requested to be released; (ii)
so long as the conditions set forth in Section 2.2 have been met, Lenders shall
make such Revolving Credit Advance or Administrative Agent shall release funds
from the cash collateral account; and (iii) the Reserve established with respect
to such insurance proceeds by the Inventory and Receivables
8
Security Agent shall be reduced by the amount of such Revolving Credit Advance.
To the extent not used to replace, repair, restore or rebuild the Collateral,
insurance proceeds in respect of Collateral (other than Current Asset
Collateral) received after the Term Loan Obligations have been satisfied in full
and in respect of Current Asset Collateral shall be applied in accordance with
Section 1.3(f).
(f) Application of Prepayments from Insurance Proceeds
and Condemnation Proceeds. Payments from insurance or condemnation proceeds in
accordance with Section 1.3(e) and the Mortgage(s), respectively, shall be
applied as follows: insurance proceeds from casualties or losses to cash or
Inventory shall be applied first, to the Swing Line Loans and, second, to the
Revolving Credit Advances. Neither the Revolving Loan Commitment nor the Swing
Line Commitment shall be permanently reduced by the amount of any such
prepayments.
(g) No Implied Consent. Nothing in this Section 1.3 shall
be construed to constitute any Agent's or Lender's consent to any transaction
that is not permitted by other provisions of this Agreement or the other Loan
Documents.
1.4 Use of Proceeds. Borrower shall utilize the proceeds
of the Loans solely for the financing of Borrower's ordinary working capital, to
repay certain existing Indebtedness and for general corporate needs; provided,
that no more than $5,000,000 in aggregate proceeds of the Loans shall be used
for Capital Expenditures in connection with the construction of the Electric Arc
Furnace.
1.5 Interest and Applicable Margins.
(a) Borrower shall pay interest to Administrative Agent,
for the ratable benefit of Lenders in accordance with the various Loans being
made by each Lender, in arrears on each applicable Interest Payment Date, at the
following rates: (i) with respect to the Revolving Credit Advances, the Index
Rate plus the Applicable Index Margin per annum or, at the election of Borrower,
the applicable LIBOR Rate plus the Applicable LIBOR Margin per annum; and (ii)
with respect to the Swing Line Loan, the Index Rate plus the Applicable Index
Margin per annum.
As of the Closing Date, the Applicable Margins are as follows:
Applicable Index Margin 2.50%
Applicable LIBOR Margin 3.50%
Applicable L/C Margin 3.50%
Applicable Unused Line Fee Margin 0.75%
9
The Applicable Margins may be adjusted by reference to the
following grids:
-----------------------------------------------------------------
LEVEL OF
IF BORROWING AVAILABILITY IS: APPLICABLE MARGIN:
-----------------------------------------------------------------
> $100,000,000 Level I
-----------------------------------------------------------------
> $75,000,000, but < or = $100,000,000 Level II
-----------------------------------------------------------------
> $40,000,000, but < or = $75,000,000 Level III
-----------------------------------------------------------------
< or = $40,000,000 Level IV
-----------------------------------------------------------------
----------------------------------------------------------------------------------------
APPLICABLE MARGINS
----------------------------------------------------------------------------------------
LEVEL I LEVEL II LEVEL III LEVEL IV
----------------------------------------------------------------------------------------
Applicable Index Margin 2.25% 2.50% 2.75% 3.00%
-------------------------------------------------------------------------------------
Applicable LIBOR Margin 3.25% 3.50% 3.75% 4.00%
-------------------------------------------------------------------------------------
Applicable L/C Margin 3.25% 3.50% 3.75% 4.00%
-------------------------------------------------------------------------------------
Applicable Unused Line Fee Margin 1.00% 0.75% 0.50% 0.50%
-------------------------------------------------------------------------------------
Adjustments in the Applicable Margins commencing with the
Fiscal Quarter ending March 31, 2004 shall be implemented quarterly on a
prospective basis, commencing on the date which is two (2) Business Days after
the date of delivery to the Agents of the Borrowing Base Certificate dated and
accurate as of the last day of the most recently completed Fiscal Quarter
evidencing the need for an adjustment. Concurrently with the delivery of such
Borrowing Base Certificate, Borrower shall deliver to Agents and Lenders a
certificate, signed by a Responsible Officer, setting forth in reasonable detail
the basis for the continuation of, or any change in, the Applicable Margins.
Failure to timely deliver such quarter-end Borrowing Base Certificate shall, in
addition to any other remedy provided for in this Agreement, result in an
increase in the Applicable Margins to the highest level set forth in the
foregoing grid until the first day of the calendar month following the month in
which a quarter-end Borrowing Base Certificate is delivered demonstrating that
such an increase is not required. If an Event of Default has occurred and is
continuing at the time any reduction in the Applicable Margins is to be
implemented, that reduction shall be deferred until the first day of the first
calendar month following the month in which such Event of Default is waived or
cured.
(b) If any payment on any Loan becomes due and payable on
a day other than a Business Day, the maturity thereof will be extended to the
next succeeding Business Day (except as set forth in the definition of LIBOR
Period) and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum
basis and interest shall be made by Administrative Agent on the basis of a
360-day year (except that, with respect to Index Rate Loans the rate of interest
on which is calculated on the basis of the Prime Rate, the interest thereon
shall be calculated on the basis of a 365-day or 366-day year, as the case may
be), in each case for the actual number of days elapsed in the period for which
such interest and Fees are payable. The Index Rate is a floating rate determined
for each day. Each determination by Administrative Agent of interest rates and
Fees hereunder shall be presumptive evidence of the correctness of such rates
and Fees.
10
(d) So long as an Event of Default has occurred and is
continuing under Section 8.1(a) or (f), or so long as any other Event of Default
has occurred and is continuing and at the election of the Administrative Agent
or the Inventory and Receivables Security Agent (or upon the written request of
Requisite Lenders) confirmed by written notice from Administrative Agent to
Borrower, the interest rates applicable to the Loans and the Letter of Credit
Fees shall be increased by two percentage points (2%) per annum above the rates
of interest or the rate of such Fees otherwise applicable hereunder unless the
Administrative Agent, the Inventory and Receivables Security Agent or Requisite
Lenders elect to impose a smaller increase (the "Default Rate"), and all
outstanding Obligations shall bear interest at the Default Rate applicable to
such Obligations. Interest and Letter of Credit Fees at the Default Rate shall
accrue from the initial date of such Event of Default until that Event of
Default is cured or waived and shall be payable upon demand.
(e) Subject to the conditions precedent set forth in
Section 2.2, Borrower shall have the option to (i) request that any Revolving
Credit Advance be made as a LIBOR Loan, (ii) convert at any time all or any part
of outstanding Loans (other than the Swing Line Loan) from Index Rate Loans to
LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan, subject to
payment of LIBOR breakage costs in accordance with Section 1.13(b) if such
conversion is made prior to the expiration of the LIBOR Period applicable
thereto, or (iv) continue all or any portion of any Loan (other than the Swing
Line Loan) as a LIBOR Loan upon the expiration of the applicable LIBOR Period
and the succeeding LIBOR Period of that continued Loan shall commence on the
first day after the last day of the LIBOR Period of the Loan to be continued.
Any Loan or group of Loans having the same proposed LIBOR Period to be made or
continued as, or converted into, a LIBOR Loan must be in a minimum amount of
$5,000,000 and integral multiples of $1,000,000 in excess of such amount. Any
such election must be made by 11:00 a.m. (New York time) on the third Business
Day prior to (1) the date of any proposed Advance which is to bear interest at
the LIBOR Rate, (2) the end of each LIBOR Period with respect to any LIBOR Loans
to be continued as such, or (3) the date on which Borrower wishes to convert any
Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower in
such election. If no election is received with respect to a LIBOR Loan by 11:00
a.m. (New York time) on the third Business Day prior to the end of the LIBOR
Period with respect thereto (or if a Default or an Event of Default has occurred
and is continuing or the additional conditions precedent set forth in Section
2.2 shall not have been satisfied), that LIBOR Loan shall be converted to an
Index Rate Loan at the end of its LIBOR Period. Borrower must make such election
by notice to Administrative Agent in writing, by telecopy or overnight courier.
In the case of any conversion or continuation, such election must be made
pursuant to a written notice (a "Notice of Conversion/Continuation") in the form
of Exhibit 1.5(e). No Loan may be made as or converted into a LIBOR Loan other
than a LIBOR Loan having an Interest Period of 30 days until the earlier of (i)
forty-five (45) days after the Closing Date or (ii) completion of primary
syndication as determined by Agents.
(f) Notwithstanding anything to the contrary set forth in
this Section 1.5, if a court of competent jurisdiction determines in a final
order that the rate of interest payable hereunder exceeds the highest rate of
interest permissible under law (the "Maximum Lawful Rate"), then so long as the
Maximum Lawful Rate would be so exceeded, the rate of interest payable hereunder
shall be equal to the Maximum Lawful Rate; provided, however, that if at any
time thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate,
11
Borrower shall continue to pay interest hereunder at the Maximum Lawful Rate
until such time as the total interest received by Administrative Agent, on
behalf of Lenders, is equal to the total interest that would have been received
had the interest rate payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement. In no event shall the total interest received by any
Lender pursuant to the terms hereof exceed the amount that such Lender could
lawfully have received had the interest due hereunder been calculated for the
full term hereof at the Maximum Lawful Rate.
1.6 Eligible Accounts. All of the Accounts owned by
Borrower and reflected in the most recent Borrowing Base Certificate delivered
by Borrower to Agents shall be "Eligible Accounts" for purposes of this
Agreement, except any Account to which any of the exclusionary criteria set
forth below applies. Inventory and Receivables Security Agent shall have the
right to establish or modify Reserves against Eligible Accounts from time to
time in its reasonable credit judgment. In addition, Inventory and Receivables
Security Agent reserves the right, at any time and from time to time after the
Closing Date, to adjust any of the criteria set forth below and to establish new
criteria, and to adjust advance rates with respect to Eligible Accounts, in its
reasonable credit judgment, reflecting changes in the collectibility or
realization values of such Accounts arising or discovered by Inventory and
Receivables Security Agent after the Closing Date subject to the approval of (a)
Supermajority Lenders in the case of adjustments or new criteria which have the
effect of making more credit available and (b) all Lenders in the case of
increases in the advance rate applicable to Eligible Accounts. Eligible Accounts
shall not include any Account of Borrower:
(a) that does not arise from the sale of goods or the
performance of services by Borrower in the ordinary course of its business;
(b) (i) upon which Borrower's right to receive payment is
not absolute or is contingent upon the fulfillment of any condition whatsoever
or (ii) as to which Borrower is not able to bring suit or otherwise enforce its
remedies against the Account Debtor through judicial process, or (iii) if the
Account represents a progress billing consisting of an invoice for goods sold or
used or services rendered pursuant to a contract under which the Account
Debtor's obligation to pay that invoice is subject to Borrower's completion of
further performance under such contract or is subject to the equitable lien of a
surety bond issuer;
(c) to the extent that any defense, counterclaim, setoff
or dispute is asserted as to such Account;
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice, reasonably
acceptable to Inventory and Receivables Security Agent in form and substance,
has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by Borrower or (ii) is subject
to any Lien of any other Person, other than Liens in favor of Collateral Agent
on behalf of certain secured parties granted
12
pursuant to the Junior Current Asset Security Agreement and Liens in favor of
the Inventory and Receivables Security Agent on behalf of the Agents and Lenders
granted pursuant to the Senior Current Asset Security Agreement;
(g) that arises from a sale to any director, officer,
other employee or Affiliate of any Credit Party (other than arm's length sales
to Wheeling-Nisshin, Inc. or to any other Joint Venture approved in writing by
the Administrative Agent and the Inventory and Receivables Security Agent), or
to any entity that has any common officer or director with any Credit Party;
(h) that is the obligation of an Account Debtor that is
the United States government or a political subdivision thereof, or any state,
county or municipality or department, agency or instrumentality thereof unless
Inventory and Receivables Security Agent, in its sole discretion, has agreed to
the contrary in writing and Borrower, if necessary or desirable, has complied
with respect to such obligation with the Federal Assignment of Claims Act of
1940, or any applicable state, county or municipal law restricting the
assignment thereof with respect to such obligation;
(i) that is the obligation of an Account Debtor located
in a foreign country other than Canada unless payment thereof is assured by a
letter of credit assigned and delivered and satisfactory to the Inventory and
Receivables Security Agent as to form, amount and issuer;
(j) to the extent Borrower or any Subsidiary thereof is
liable for goods sold or services rendered by the applicable Account Debtor to
Borrower or any Subsidiary thereof but only to the extent of the potential
offset;
(k) that arises with respect to goods that are delivered
on a xxxx-and-hold, cash-on-delivery basis or placed on consignment, guaranteed
sale or other terms by reason of which the payment by the Account Debtor is or
may be conditional;
(l) that is in default; provided, that, without limiting
the generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
(i) the Account is not paid within the earlier
of sixty (60) days following its due date or ninety (90) days following its
original invoice date;
(ii) the Account Debtor obligated upon such
Account suspends business, makes a general assignment for the benefit of
creditors or fails to pay its debts generally as they come due; or
(iii) a petition is filed by or against any
Account Debtor obligated upon such Account under any bankruptcy law or any other
federal, state or foreign (including any provincial) receivership, insolvency
relief or other law or laws for the relief of debtors;
(m) that is the obligation of an Account Debtor if fifty
percent (50%) or more of the Dollar amount of all Accounts owing by that Account
Debtor are ineligible under the other criteria set forth in this Section 1.6;
13
(n) is not subject to a first priority Lien in favor of
Inventory and Receivables Security Agent on behalf of Agents and Lenders;
(o) as to which any of the representations or warranties
in the Loan Documents are untrue;
(p) to the extent such Account is evidenced by a
judgment, Instrument or Chattel Paper;
(q) to the extent such Account exceeds any credit limit
established by Inventory and Receivables Security Agent, in its reasonable
credit judgment, following prior notice of such limit by Inventory and
Receivables Security Agent to Borrower;
(r) to the extent that such Account, together with all
other Accounts attributable to such Account Debtor and its Affiliates as of any
date of determination exceed 15% of all Eligible Accounts; or
(s) that is payable in any currency other than Dollars.
1.7 Eligible Inventory. All of the Inventory owned by the
Borrower and reflected in the most recent Borrowing Base Certificate delivered
by Borrower to Agents shall be "Eligible Inventory" for purposes of this
Agreement, except any Inventory to which any of the exclusionary criteria set
forth below applies. Inventory and Receivables Security Agent shall have the
right to establish, modify, or eliminate Reserves against Eligible Inventory
from time to time in its reasonable credit judgment. In addition, Inventory and
Receivables Security Agent reserves the right, at any time and from time to time
after the Closing Date, to adjust any of the criteria set forth below and to
establish new criteria and to adjust Advance Rates with respect to Eligible
Inventory in its reasonable credit judgment, subject to the approval of (a)
Supermajority Lenders in the case of adjustments or new criteria which have the
effect of making more credit available and (b) all Lenders in the case of
increases in any Advance Rate, the Inventory Cap or the Liquidation Percentage.
Eligible Inventory shall not include any Inventory of Borrower that:
(a) is not owned by Borrower free and clear of all Liens
and rights of any other Person (including the rights of a purchaser that has
made progress payments and the rights of a surety that has issued a bond to
assure Borrower's performance with respect to that Inventory) other than the
Liens in favor of the Collateral Agent, on behalf of certain secured parties
granted pursuant to the Junior Current Asset Security Agreement and Liens in
favor of the Inventory and Receivables Security Agent on behalf of Agents and
Lenders granted pursuant to the Senior Current Asset Security Agreement;
(b) (i) is not located on premises owned, leased or
rented by Borrower and set forth in Schedule 1.2, (ii) is stored at a leased
location, unless (x) Inventory and Receivables Security Agent has given its
prior consent thereto or (y) a reasonably satisfactory landlord waiver has been
delivered to Inventory and Receivables Security Agent, and in each case Reserves
satisfactory to Inventory and Receivables Security Agent have been established
with respect thereto, (iii) is stored with a bailee or warehouseman unless a
reasonably satisfactory,
14
acknowledged bailee letter has been received by Inventory and Receivables
Security Agent and Reserves reasonably satisfactory to Inventory and Receivables
Security Agent have been established with respect thereto, (iv) is located at an
owned location subject to a mortgage (other than mortgages in favor of other
secured parties evidenced by the Mortgages) in favor of a party other than
Collateral Agent, unless a reasonably satisfactory mortgagee waiver has been
delivered to the Inventory and Receivables Security Agent, or (v) is located at
any site if the aggregate book value of Inventory at any such location is less
than $150,000;
(c) is placed on consignment or is in transit, except for
Inventory in transit between domestic locations as to which the Liens of the
Inventory and Receivables Security Agent have been perfected at origin and
destination;
(d) is covered by a negotiable document of title, unless
such document has been delivered to the Inventory and Receivables Security Agent
with all necessary endorsements, free and clear of all other Liens except those
in favor of Collateral Agent for the benefit of certain other secured parties
pursuant to the Junior Current Asset Security Agreement;
(e) is obsolete, slow moving (in excess of one year's
supply measured by product group on a consolidated basis), unsalable, shopworn,
seconds, damaged or unfit for sale;
(f) consists of display items or packing or shipping
materials, materials and operating supplies or replacement parts;
(g) consists of goods which have been returned by the
buyer;
(h) is not of a type held for sale in the ordinary course
of Borrower's business;
(i) is not subject to a first priority Lien in favor of
the Inventory and Receivables Security Agent on behalf of Agents and Lenders,
subject to permitted Liens set forth in Section 6.3(b) (subject to Reserves
satisfactory to Inventory and Receivables Security Agent);
(j) breaches any of the representations or warranties
pertaining to Inventory set forth in the Loan Documents;
(k) consists of any costs associated with "freight-in"
charges;
(l) consists of Materials of Environmental Concern or
goods that can be transported or sold only with licenses that are not readily
available;
(m) is not covered by casualty insurance as required by
the Loan Documents; or
(n) is subject to any patent or trademark license
requiring the payment of royalties or fees or requiring the consent of the
licensor for a sale thereof by Inventory and Receivables Security Agent.
15
1.8 Cash Management Systems. On or prior to the Closing
Date, Borrower will establish and will maintain until the Termination Date, the
cash management systems described in Annex C (the "Cash Management Systems").
1.9 Fees.
(a) Borrower shall pay to Royal Bank of Canada and GE
Capital, individually, the fees specified in the Fee Letter.
(b) As additional compensation for the Lenders, Borrower
shall pay to Administrative Agent, for the ratable benefit of the Lenders, in
arrears, on the first Business Day of each month prior to the Commitment
Termination Date and on the Commitment Termination Date, a Fee for Borrower's
non-use of available funds in an amount equal to the Applicable Unused Line Fee
Margin per annum multiplied by the difference between (x) the Maximum Amount (as
it may be reduced from time to time) and (y) the average for the period of the
daily closing balances of the Revolving Loan (in any event, excluding the
balances of the Swing Line Loan) outstanding during the period for which such
Fee is due.
(c) If prior to the first anniversary of the Closing
Date, Borrower reduces or terminates the Revolving Loan Commitment or if prior
to such date the Revolving Loan Commitments are otherwise terminated, Borrower
shall pay to Administrative Agent, for the benefit of Lenders as liquidated
damages and compensation for the costs of being prepared to make funds available
hereunder an amount equal to 2.0% multiplied by the amount of the reduction of
the Revolving Loan Commitment. The Credit Parties agree that such fee is a
reasonable calculation of Lenders' lost profits in view of the difficulties and
impracticality of determining actual damages resulting from an early reduction
or termination of the Revolving Loan Commitments. Notwithstanding the foregoing,
no prepayment fee shall be payable by Borrower upon a mandatory prepayment made
pursuant to paragraphs (b) through (f) of Section 1.3 or pursuant to Section
1.16(c); provided that Borrower does not permanently reduce or terminate the
Revolving Loan Commitment upon any such prepayment.
(d) Borrower shall pay to Administrative Agent, for the
ratable benefit of Lenders, the Letter of Credit Fee as provided in Annex B.
1.10 Receipt of Payments. Borrower shall make each payment
under this Agreement not later than 2:00 p.m. (New York time) on the day when
due in immediately available funds in Dollars to the Collection Account. For
purposes of computing interest and Fees and determining Borrowing Availability
as of any date, all payments shall be deemed received on the Business Day on
which immediately available funds therefor are received in the Collection
Account prior to 2:00 p.m. New York time. Payments received after 2:00 p.m. New
York time on any Business Day or on a day that is not a Business Day shall be
deemed to have been received on the following Business Day.
16
1.11 Application and Allocation of Payments.
(a) So long as no Event of Default has occurred and is
continuing, (i) payments consisting of proceeds of Accounts received in the
ordinary course of business shall, subject to paragraph (f) of Annex C, be
applied, first, to the Swing Line Loan and, second, to the Revolving Loan; and
(ii) mandatory prepayments shall be applied as set forth in paragraphs (b)
through (f) of Section 1.3. All payments and prepayments applied to a particular
Loan shall be applied ratably to the portion thereof held by each Lender as
determined by its Pro Rata Share. As to any other payment, and as to all
payments made when an Event of Default has occurred and is continuing or
following the Commitment Termination Date, Borrower hereby irrevocably waives
the right to direct the application of any and all payments received from or on
behalf of Borrower, and Borrower hereby irrevocably agrees that Administrative
Agent shall have the continuing exclusive right to apply any and all such
payments against the Obligations as Administrative Agent may deem advisable
notwithstanding any previous entry by Administrative Agent in the Loan Account
or any other books and records. In the absence of a specific determination by
Administrative Agent with respect thereto, payments shall be applied to amounts
then due and payable in the following order: (1) to Fees and Agents' expenses
reimbursable hereunder; (2) to interest on the Swing Line Loan; (3) to principal
payments on the Swing Line Loan; (4) to interest on the Revolving Loans, ratably
in proportion to the interest accrued as to each Loan; (5) to principal payments
on the Revolving Loans and to provide cash collateral for Letter of Credit
Obligations in the manner described in Annex B, ratably to the aggregate,
combined principal balance of the Revolving Loans and outstanding Letter of
Credit Obligations; and (6) to all other Obligations including expenses of
Lenders to the extent reimbursable under Section 11.3.
(b) Administrative Agent is authorized to, and at its
sole election may, charge to the Revolving Loan balance on behalf of Borrower
and cause to be paid all Fees, expenses, Charges, costs (including expenses
incurred in connection with payment of premiums on insurance policies referred
to in Section 5.8) and interest and principal, other than principal of the
Revolving Loan, owing by Borrower under this Agreement or any of the other Loan
Documents if and to the extent Borrower fails to pay promptly any such amounts
as and when due, even if the amount of such charges would exceed Borrowing
Availability at such time. At Administrative Agent's option and to the extent
permitted by law, any charges so made shall constitute part of the Revolving
Loan hereunder.
1.12 Loan Account and Accounting. Administrative Agent
shall maintain a loan account (the "Loan Account") on its books to record: all
Advances, all payments made by Borrower, and all other debits and credits as
provided in this Agreement with respect to the Loans or any other Obligations.
All entries in the Loan Account shall be made in accordance with Administrative
Agent's customary accounting practices as in effect from time to time. The
balance in the Loan Account, as recorded on Administrative Agent's most recent
printout or other written statement, shall, absent manifest error, be
presumptive evidence of the amounts due and owing to Agents and Lenders by
Borrower; provided that any failure to so record or any error in so recording
shall not limit or otherwise affect Borrower's duty to pay the Obligations.
Administrative Agent shall render to Borrower a monthly accounting of
transactions with respect to the Loans setting forth the balance of the Loan
Account for the immediately preceding month. Unless Borrower notifies
Administrative Agent in writing of any objection to any such
17
accounting (specifically describing the basis for such objection), within thirty
(30) days after the date thereof, each and every such accounting shall be
presumptive evidence of all matters reflected therein. Only those items
expressly objected to in such notice shall be deemed to be disputed by Borrower.
Any Lender that does not request a Revolving Note or Swing Line Note, as
applicable, may rely on the Loan Account as evidence of the amount of
Obligations from time to time owing to it.
1.13 Indemnity.
(a) Each Credit Party that is a signatory hereto shall
jointly and severally indemnify and hold harmless each of Agents, Lenders and
their respective Affiliates, and each such Person's respective officers,
directors, employees, attorneys, agents and representatives (each, an
"Indemnified Person"), from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses (including reasonable
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) that may be instituted or asserted
against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the other
Loan Documents and the administration of such credit, and in connection with or
arising out of the transactions contemplated hereunder and thereunder and any
actions or failures to act in connection therewith, including any and all
Environmental Liabilities and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Loan Documents (collectively, "Indemnified Liabilities"); provided, that no such
Credit Party shall be liable for any indemnification to an Indemnified Person to
the extent that any such suit, action, proceeding, claim, damage, loss,
liability or expense results from that Indemnified Person's gross negligence or
willful misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY
OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY
BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR
TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION
CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on
the terms provided herein, if (i) any LIBOR Loans are repaid in whole or in part
prior to the last day of any applicable LIBOR Period (whether that repayment is
made pursuant to any provision of this Agreement or any other Loan Document or
occurs as a result of acceleration, by operation of law or otherwise); (ii)
Borrower shall default in payment when due of the principal amount of or
interest on any LIBOR Loan; (iii) Borrower shall refuse to accept any borrowing
of, or shall request a termination of any borrowing, conversion into or
continuation of LIBOR Loans after Borrower has given notice requesting the same
in accordance herewith; or (iv) Borrower shall fail to make any prepayment of a
LIBOR Loan after Borrower has given a notice thereof in accordance herewith,
then Borrower shall indemnify and hold harmless each Lender from and against all
losses, costs and expenses resulting from or arising from any of the foregoing.
Such indemnification shall include any loss (including loss of margin) or
expense arising from the reemployment of funds obtained by it or from fees
payable to terminate deposits from which
18
such funds were obtained. For the purpose of calculating amounts payable to a
Lender under this subsection, each Lender shall be deemed to have actually
funded its relevant LIBOR Loan through the purchase of a deposit bearing
interest at the LIBOR Rate in an amount equal to the amount of that LIBOR Loan
and having a maturity comparable to the relevant LIBOR Period; provided, that
each Lender may fund each of its LIBOR Loans in any manner it sees fit, and the
foregoing assumption shall be utilized only for the calculation of amounts
payable under this subsection. This covenant shall survive the termination of
this Agreement and the payment of the Notes and all other amounts payable
hereunder. As promptly as practicable under the circumstances, each Lender shall
provide Borrower with its written calculation of all amounts payable pursuant to
this Section 1.13(b), and such calculation shall be binding on the parties
hereto unless Borrower shall object in writing within ten (10) Business Days of
receipt thereof, specifying the basis for such objection in detail.
1.14 Access. Each Credit Party that is a party hereto
shall, during normal business hours, from time to time upon two (2) Business
Days' prior notice as frequently as any Agent reasonably determines to be
appropriate: (a) provide such Agent and any of its officers, employees and
agents access to the properties, facilities, advisors, officers, employees and
Collateral of such Credit Party and each of its Subsidiaries, (b) permit such
Agent, and any of its officers, employees and agents, to inspect, audit and make
extracts from the books and records of such Credit Party and each of its
Subsidiaries, and (c) permit the Inventory and Receivables Security Agent, and
its officers, employees and agents, to inspect, review, evaluate and make test
verifications and counts of the Accounts, Inventory and other Collateral of such
Credit Party and each of its Subsidiaries. If an Event of Default has occurred
and is continuing, each such Credit Party shall provide such access to each
Agent and Lender at all times and without advance notice. Furthermore, so long
as any Event of Default has occurred and is continuing, Borrower shall provide
each Agent and Lender with access to its suppliers and customers. Each Credit
Party shall make available to each Agent and its counsel reasonably promptly
originals or copies of all books and records that such Agent may reasonably
request. Each Credit Party shall deliver any document or instrument necessary
for any Agent, as such Agent may from time to time request, to obtain records
from any service bureau or other Person that maintains records for such Credit
Party, and shall maintain duplicate records or supporting documentation on
media, including computer tapes and discs owned by such Credit Party. Agents
will give Lenders at least five (5) days' prior written notice of regularly
scheduled audits. Representatives of other Lenders may accompany an Agent's
representatives on regularly scheduled audits at no charge to Borrower.
1.15 Taxes.
(a) Any and all payments by Borrower hereunder or under
the Notes shall be made, in accordance with this Section 1.15, free and clear of
and without deduction for any and all present or future Taxes. If Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Notes, (i) the sum payable shall be increased as much as
shall be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 1.15) Agents
or Lenders, as applicable, receive an amount equal to the sum they would have
received had no such deductions been made, (ii) Borrower shall make such
deductions, and (iii) Borrower shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law. Within
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thirty (30) days after the date of any payment of Taxes, Borrower shall furnish
to Administrative Agent the original or a certified copy of a receipt evidencing
payment thereof.
(b) Each Credit Party that is a signatory hereto shall
indemnify and, within ten (10) days of demand therefor, pay each Agent and
Lender for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.15) paid by such Agent or
Lender, as appropriate, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted.
(c) Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") as to which payments
to be made under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower and Administrative Agent a properly completed and executed IRS Form
W-8ECI or Form W-8BEN or other applicable form, certificate or document
prescribed by the IRS or the United States certifying as to such Foreign
Lender's entitlement to such exemption (a "Certificate of Exemption"). Any
foreign Person that seeks to become a Lender under this Agreement shall provide
a Certificate of Exemption to Borrower and Administrative Agent prior to
becoming a Lender hereunder. No foreign Person may become a Lender hereunder if
such Person fails to deliver a Certificate of Exemption in advance of becoming a
Lender.
1.16 Capital Adequacy; Increased Costs; Illegality.
(a) If any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy, reserve requirements or similar requirements or compliance by any
Lender with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of law),
in each case, adopted after the Closing Date, from any central bank or other
Governmental Authority increases or would have the effect of increasing the
amount of capital, reserves or other funds required to be maintained by such
Lender and thereby reducing the rate of return on such Lender's capital as a
consequence of its obligations hereunder, then Borrower shall from time to time
upon demand by such Lender (with a copy of such demand to Administrative Agent)
pay to Administrative Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate as to the
amount of that reduction and showing the basis of the computation thereof
submitted by such Lender to Borrower and to Administrative Agent shall be
presumptive evidence of the matters set forth therein.
(b) If, due to either (i) the introduction of or any
change in any law or regulation (or any change in the interpretation thereof) or
(ii) the compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to Administrative Agent), pay to Administrative Agent for the
account of such Lender additional amounts sufficient to compensate such Lender
for such increased cost. A certificate as to the amount of such increased cost,
submitted to Borrower and to Administrative Agent by such
20
Lender, shall be presumptive evidence of the matters set forth therein. Each
Lender agrees that, as promptly as practicable after it becomes aware of any
circumstances referred to above which would result in any such increased cost,
the affected Lender shall, to the extent not inconsistent with such Lender's
internal policies of general application, use reasonable commercial efforts to
minimize costs and expenses incurred by it and payable to it by Borrower
pursuant to this Section 1.16(b).
(c) Notwithstanding anything to the contrary contained
herein, if the introduction of or any change in any law or regulation (or any
change in the interpretation thereof) shall make it unlawful, or any central
bank or other Governmental Authority shall assert that it is unlawful, for any
Lender to agree to make or to make or to continue to fund or maintain any LIBOR
Loan, then, unless that Lender is able to make or to continue to fund or to
maintain such LIBOR Loan at another branch or office of that Lender without, in
that Lender's reasonable opinion, materially adversely affecting it or its Loans
or the income obtained therefrom, on notice thereof and demand therefor by such
Lender to Borrower through Administrative Agent, (i) the obligation of such
Lender to agree to make or to make or to continue to fund or maintain LIBOR
Loans shall terminate and (ii) Borrower shall pay or convert in full all
outstanding LIBOR Loans owing to such Lender at the end of the applicable
Interest Period (provided that if such Lender reasonably believes that it would
be unlawful or that any central bank or other Governmental Authority would
assert that it is unlawful to maintain such outstanding LIBOR Loans, Borrower
shall forthwith prepay in full all outstanding LIBOR Loans owing to such Lender,
together with interest accrued thereon, unless Borrower, within five (5)
Business Days after the delivery of such notice and demand, converts all LIBOR
Loans into Index Rate Loans).
(d) Within thirty (30) days after receipt by Borrower of
written notice and demand from any Lender (an "Affected Lender") for payment of
additional amounts or increased costs as provided in Sections 1.15(a), 1.16(a)
or 1.16(b), Borrower may, at its option, notify Administrative Agent and such
Affected Lender of its intention to replace the Affected Lender. So long as no
Default or Event of Default has occurred and is continuing, Borrower, with the
consent of Administrative Agent, may obtain, at Borrower's expense, a
replacement Lender ("Replacement Lender") for the Affected Lender, which
Replacement Lender must be reasonably satisfactory to Administrative Agent. If
Borrower obtains a Replacement Lender within ninety (90) days following notice
of its intention to do so, the Affected Lender must sell and assign its Loans
and Revolving Loan Commitment to such Replacement Lender for an amount equal to
the principal balance of all Loans held by the Affected Lender and all accrued
interest and Fees with respect thereto through the date of such sale and such
assignment shall not require the payment of an assignment fee to Administrative
Agent; provided, that Borrower shall have reimbursed such Affected Lender for
the additional amounts or increased costs that it is entitled to receive under
this Agreement through the date of such sale and assignment. Notwithstanding the
foregoing, Borrower shall not have the right to obtain a Replacement Lender if
the Affected Lender rescinds its demand for increased costs or additional
amounts within 15 days following its receipt of Borrower's notice of intention
to replace such Affected Lender. Furthermore, if Borrower gives a notice of
intention to replace and does not so replace such Affected Lender within ninety
(90) days thereafter, Borrower's rights under this Section 1.16(d) shall
terminate with respect to such Affected Lender in connection with such
circumstance and Borrower shall promptly pay all increased costs or additional
amounts demanded by such Affected Lender pursuant to Sections 1.15(a), 1.16(a)
and 1.16(b).
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1.17 Single Loan. All Loans to Borrower and all of the
other Obligations of Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of Borrower secured, until the
Termination Date, by all of the Collateral.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. No Lender shall be
obligated to make any Revolving Loan or incur any Letter of Credit Obligations,
or to take, fulfill, or perform any other action hereunder, until the following
conditions have been satisfied or provided for in a manner reasonably
satisfactory to Agents, or waived in writing by Agents and Requisite Lenders:
(a) Credit Agreement; Loan Documents. The Agents shall
have received:
(i) this Agreement, executed and delivered by
the Administrative Agent, the Inventory and Receivables Security Agent,
Holdings, the Documentation Agent, the Borrower and each Lender listed on Annex
J;
(ii) the Security Agreement, executed and
delivered by Holdings, the Borrower, certain of their subsidiaries, the
Collateral Agent, the Inventory and Receivables Security Agent and the other
secured parties party thereto;
(iii) the Senior Current Asset Security Agreement,
executed and delivered by Holdings, the Borrower, certain of their subsidiaries,
and the Inventory and Receivables Security Agent;
(iv) the Junior Current Asset Security Agreement,
executed and delivered by Holdings, the Borrower, certain of their Subsidiaries,
the Collateral Agent and the other secured parties party thereto;
(v) the Current Asset Intercreditor Agreement,
executed and delivered by Holdings, the Borrower, certain of their Subsidiaries,
the Inventory and Receivables Security Agent and the Collateral Agent;
(vi) the PPE Access Agreement, executed and
delivered by Holdings, the Borrower, certain of their Subsidiaries and the other
parties party thereto;
(vii) the JV Pledge Agreements, executed and
delivered by the Borrower, the Collateral Agent, the Inventory and Receivables
Security Agent and the other secured parties party thereto;
(viii) a mortgage with respect to each Mortgaged
Property, executed and delivered by the relevant Credit Party for the benefit of
the Collateral Agent;
(ix) the Guarantee Agreement executed by each of
Holdings and WP Steel Venture; and
22
such other documents, instruments, agreements and legal opinions as Agents shall
reasonably request in connection with the transactions contemplated by this
Agreement and the other Loan Documents, including all those listed in the
Closing Checklist attached hereto as Annex D, each in form and substance
reasonably satisfactory to Agents.
(b) Term Loan Agreement. The Term Loan Agreement shall
have been executed and delivered by each of the parties thereto in form and
substance reasonably satisfactory to the Administrative Agent and the funding of
loans under the Term Loan Agreement shall have occurred concurrently with the
funding of the initial Loans to be made hereunder.
(c) Approvals. Agents shall have received (i)
satisfactory evidence that the Credit Parties have obtained all required
consents and approvals of all Persons including all requisite Governmental
Authorities, to the execution, delivery and performance of this Agreement and
the other Loan Documents and the consummation of the Related Transactions or
(ii) an officer's certificate in form and substance reasonably satisfactory to
Agents affirming that no such consents or approvals are required.
(d) Opening Availability. The Eligible Accounts and
Eligible Inventory supporting the initial Revolving Credit Advance and the
initial Letter of Credit Obligations incurred and the amount of the Reserves to
be established on the Closing Date shall be sufficient in value, as determined
by Inventory and Receivables Security Agent, to provide Borrower with Borrowing
Availability, after giving effect to the initial Revolving Credit Advance, the
incurrence of any initial Letter of Credit Obligations and the consummation of
the Related Transactions (on a pro forma basis, with trade payables being paid
currently, and expenses and liabilities being paid in the ordinary course of
business and without acceleration of sales) of at least $100,000,000.
(e) Payment of Fees. Borrower shall have paid the Fees
required to be paid on the Closing Date in the respective amounts specified in
Section 1.9 (including the Fees specified in the Fee Letter), and shall have
reimbursed Agents for all fees, costs and expenses of closing presented as of
the Closing Date.
(f) Capital Structure: Other Indebtedness. The capital
structure of each Credit Party and the terms and conditions of all Indebtedness
of each Credit Party shall be acceptable to each Agent in its sole discretion.
(g) Due Diligence. Agents shall have completed their
business and legal due diligence, including a roll forward of Inventory and
Receivables Security Agent's previous Collateral audit with results reasonably
satisfactory to Inventory and Receivables Security Agent.
(h) Confirmation Order. The Confirmation Order shall not
have been reversed, vacated, amended, supplemented, modified, remanded or stayed
and shall have become a Final Order.
(i) Plan of Reorganization. The Plan of Reorganization
shall be the same in all material respects as that approved by the Bankruptcy
Court on June 18, 2003, shall not have
23
been materially amended, supplemented or modified, and no material provision
thereof shall have been waived, in each case without the prior written consent
of the Agents, and all conditions precedent to confirmation and the
effectiveness of the Plan of Reorganization shall have been satisfied (or the
waiver thereof shall have been consented to by the Agents) and the effectiveness
of the Plan of Reorganization shall have occurred or shall be scheduled to occur
but for the initial extension of credit contemplated hereunder and under the
Term Loan Agreement and all Related Transactions shall have been or will be
consummated in compliance in all material respects with all Requirements of Law.
2.2 Further Conditions to Each Loan. Except as otherwise
expressly provided herein, no Lender shall be obligated to fund any Advance,
convert or continue any Revolving Loan as a LIBOR Loan or incur or reinstate any
Letter of Credit Obligation, if, as of the date thereof:
(a) any representation or warranty by any Credit Party
contained herein or in any other Loan Document is untrue or incorrect as of such
date as determined by Administrative Agent or Requisite Lenders, except to the
extent that such representation or warranty expressly relates to an earlier date
and except for changes therein expressly permitted or expressly contemplated by
this Agreement, and Administrative Agent or Requisite Lenders have determined
not to make such Advance, convert or continue any Revolving Loan as a LIBOR Loan
or incur such Letter of Credit Obligation as a result of the fact that such
warranty or representation is untrue or incorrect;
(b) any Default or Event of Default has occurred and is
continuing or would result after giving effect to any Advance (or the incurrence
of any Letter of Credit Obligation), and Administrative Agent or Requisite
Lenders shall have determined not to make any Advance, convert or continue any
Revolving Loan as a LIBOR Loan or incur any Letter of Credit Obligation as a
result of that Default or Event of Default; or
(c) after giving effect to any Advance (or the incurrence
of any Letter of Credit Obligations), Borrower would not be in compliance with
the Borrowing Availability requirements contained in paragraphs (c) and (d) of
Annex G.
The request and acceptance by Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Revolving Loan into, or as, a LIBOR Loan shall be deemed to constitute,
as of the date thereof, (i) a representation and warranty by Borrower that the
conditions in this Section 2.2 have been satisfied and (ii) a reaffirmation by
Borrower of the granting and continuance of the Liens of the Collateral Agent or
the Inventory and Receivables Security Agent, as applicable, in favor of the
Agents and Lenders.
3. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this
Agreement and to make the Loans and perform their obligations hereunder, the
Credit Parties hereby jointly and severally represent and warrant to the
Administrative Agent and each Lender that:
24
3.1 Financial Condition.
(a) The estimated unaudited pro forma consolidated
balance sheet of Holdings and its consolidated Subsidiaries as at June 30, 2003
(including the notes thereto) (the "Pro Forma Balance Sheet"), copies of which
have heretofore been furnished to each Lender, has been prepared giving effect
(as if such events had occurred on such date) to (i) the consummation of the
Plan of Reorganization, (ii) the Indebtedness to be issued or incurred on the
Closing Date (including Indebtedness with respect to the Loans) and the use of
proceeds thereof and (iii) the payment of fees and expenses in connection with
the foregoing. The Pro Forma Balance Sheet has been prepared based on the best
information available to Holdings as of the date of delivery thereof, and
presents fairly on a pro forma basis the estimated financial position of
Holdings and its consolidated Subsidiaries as at June 30, 2003, assuming that
the events specified in the preceding sentence had actually occurred at such
date.
(b) The audited consolidated balance sheets of Holdings
as at December 31, 2000, December 31, 2001 and December 31, 2002, and the
related consolidated statements of income and of cash flows for the Fiscal Years
ended on such dates, reported on by and accompanied by an unqualified report
from PricewaterhouseCoopers LLP, present fairly the consolidated financial
condition of Holdings as at such date, and the consolidated results of its
operations and consolidated cash flows for the respective Fiscal Years then
ended. The unaudited consolidated balance sheet of Holdings as at June 30, 2003,
and the related unaudited consolidated statements of income and cash flows for
the six-month period ended on such date, present fairly the consolidated
financial condition of Holdings as at such date, and the consolidated results of
its operations and its consolidated cash flows for the six-month period then
ended (subject to normal year end audit adjustments). All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by the aforementioned firm of accountants and
disclosed therein). None of Holdings, Borrower nor any of their consolidated
Subsidiaries has any material Guarantee Obligations, contingent liabilities and
liabilities for taxes, or any long term leases or unusual forward or long term
commitments, including any interest rate or foreign currency swap or exchange
transaction or other obligation in respect of derivatives, in each case that
would be required to be disclosed in accordance with GAAP, that are not
reflected in the most recent financial statements referred to in this paragraph.
During the period from December 31, 2002 to and including the date hereof there
has been no Disposition by Holdings or Borrower or any of their consolidated
Subsidiaries of any material part of their business or property except
Dispositions between Group Members contemplated by the Plan of Reorganization.
(c) In the case of each Joint Venture, to the best of the
Borrower's knowledge (it being understood that the Borrower has made no
independent investigation thereof) the audited consolidated balance sheets of
such Joint Venture as at December 31, 2000, December 31, 2001 and December 31,
2002, and the related consolidated statements of income and of cash flows for
the Fiscal Years ended on such dates, reported on by and accompanied by an
unqualified report from an independent certified public accountant, present
fairly the consolidated financial condition of such Joint Venture as at such
date, and the consolidated results of its operations and its consolidated cash
flows for the respective Fiscal Years then ended. To the best of the Borrower's
knowledge (it being understood that the Borrower has
25
made no independent investigation thereof), the unaudited consolidated balance
sheet of such Joint Venture as at March 31, 2003, and the related unaudited
consolidated statements of income and cash flows for the three-month period
ended on such date, present fairly the consolidated financial condition of such
Joint Venture as at such date, and the consolidated results of its operations
and its consolidated cash flows for the three-month period then ended (subject
to normal year end audit adjustments). To the best of the Borrower's knowledge
(it being understood that the Borrower has made no independent investigation
thereof) all such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by the aforementioned firm
of accountants and disclosed therein). To the best of the Borrower's knowledge
(it being understood that the Borrower has made no independent investigation
thereof), as of the Closing Date no Joint Venture has any material Guarantee
Obligations, contingent liabilities and liabilities for taxes, or any long term
leases or unusual forward or long term commitments, including any interest rate
or foreign currency swap or exchange transaction or other obligation in respect
of derivatives, in each case that would be required to be disclosed in
accordance with GAAP and that are not reflected in the most recent financial
statements referred to in this paragraph. To the best of the Borrower's
knowledge (it being understood that the Borrower has made no independent
investigation thereof), during the period from December 31, 2002 to and
including the date hereof there has been no Disposition by a Joint Venture of
any material part of its business or property.
(d) Holdings and its Subsidiaries maintain, in accordance
with sound business practices and applicable law and rules and regulations
issued by any Governmental Authority (i) a system of accounting, which includes
maintenance of proper books and records, that permits preparation of financial
statements in conformity with GAAP and provides reasonable assurances that (A)
transactions are executed in accordance with management's general or specific
authorization; (B) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain accountability
for assets; (C) access to assets is permitted only in accordance with
management's general or specific authorization; and (D) the recorded
accountability for material assets is compared with the existing material assets
at reasonable intervals and appropriate action is taken with respect to any
differences; and (ii) effective disclosure controls and procedures designed to
ensure that material information relating to Holdings and its Subsidiaries is
made known to Responsible Officers of Holdings in a timely manner.
3.2 No Change. There has been no development or event
that has had or could reasonably be expected to have a Material Adverse Effect
since December 31, 2002. As of the Closing Date, there has been no development
or event that has had a material adverse effect on the aggregate value of the
"Collateral" as defined in the Security Agreement or in the aggregate value of
the "Collateral" as defined in the JV Pledge Agreements relating to Ohio
Coatings Company and Wheeling-Nisshin, Inc. (but in any case excluding Current
Asset Collateral) since the appraisals dated September 2002 and May 2003
received from Asset Recovery & Valuation and Xxxxxx del Genio, respectively.
3.3 Existence; Compliance with Law. Each Group Member (a)
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its
26
organization, (b) has the power and authority, and the legal right, to own and
operate its property, to lease the property it operates as lessee and to conduct
the business in which it is currently engaged, (c) is duly qualified as a
foreign corporation and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification except to the extent that the failure to be
so qualified could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect, (d) is in compliance with all Requirements of Law
except to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect and (e)
possesses all necessary certificates, franchises, licenses, permits, rights and
concessions and consents which are material to the conduct of its business and
operations as currently conducted.
3.4 Power; Authorization; Enforceable Obligations. Each
Credit Party has the power and authority, and the legal right, to make, deliver
and perform the Loan Documents to which it is a party and, in the case of the
Borrower, to obtain extensions of credit hereunder. Each Credit Party has taken
all necessary organizational action to authorize the execution, delivery and
performance of the Loan Documents to which it is a party and, in the case of the
Borrower, to authorize the extensions of credit on the terms and conditions of
this Agreement. No consent or authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or any other Person is
required in connection with the Related Transactions and the extensions of
credit hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the Loan Documents, except (i)
consents, authorizations, filings and notices described in Disclosure Schedule
3.4, which consents, authorizations, filings and notices have been obtained or
made and are in full force and effect and (ii) the filings referred to in
Section 3.18. Each Loan Document has been duly executed and delivered on behalf
of each Credit Party party thereto. This Agreement constitutes, and each other
Loan Document upon execution will constitute, a legal, valid and binding
obligation of each Credit Party party thereto, enforceable against each such
Credit Party in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
3.5 No Legal Bar.
(a) The execution, delivery and performance of this
Agreement and the other Loan Documents, the borrowings hereunder and the use of
the proceeds thereof will not violate any Requirement of Law or any Contractual
Obligation of any Group Member and will not result in, or require, the creation
or imposition of any Lien on any of their respective properties or revenues
pursuant to any Requirement of Law or any such Contractual Obligation (other
than the imposition of the Liens created by the Collateral Documents and the
Junior Current Asset Security Agreement).
(b) No Group Member is a party to or is otherwise subject
to any agreements or instruments or any charter or other internal restrictions
which, individually or in the aggregate,
27
could reasonably be expected to impair the ability of the Group Members, taken
as a whole, to perform their payment or other material obligation under the Loan
Documents.
3.6 Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority (collectively,
"Litigation") is pending or, to the knowledge of Holdings or the Borrower,
threatened by or against any Group Member or against any of their respective
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby, or (b) that could reasonably be
expected to have a Material Adverse Effect. No Group Member is subject to any
final judgments, writs, injunctions or decrees of any Governmental Authority,
compliance with which could be reasonably expected to have a Material Adverse
Effect, or is in default with respect to any such judgment, writ, injunction or
decree, which default could be reasonably expected to have a Material Adverse
Effect.
3.7 No Default. No Group Member is in default under or
with respect to any of its material Contractual Obligations. No Default or Event
of Default has occurred and is continuing.
3.8 Ownership of Property; Liens. Except as provided in
Disclosure Schedule 3.8, each Group Member has title in fee simple to, or a
valid leasehold interest in, all its real property, and good title to, or a
valid leasehold interest in, all its other property, and none of such property
is subject to any Lien except as permitted by Section 6.3.
3.9 Intellectual Property. Each Group Member owns, or is
licensed to use, all Intellectual Property reasonably necessary for the conduct
of its business as currently conducted. No material claim has been asserted and
is pending by any Person challenging or questioning the use of any Intellectual
Property or the validity or effectiveness of any Intellectual Property, nor does
Holdings or the Borrower know of any valid basis for any such claim. The use of
Intellectual Property by each Group Member does not infringe on the rights of
any Person in any material respect.
3.10 Taxes. Each Group Member has filed or caused to be
filed all Federal, state and other material tax returns that are required to be
filed and has paid all taxes shown to be due and payable on said returns or on
any assessments made against it or any of its property and all other material
taxes, fees or other Charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the relevant Group Member); no tax Lien has been filed, and, to the
knowledge of Holdings or the Borrower, no claim is being asserted, with respect
to any such tax, fee or other Charge. Other than tax indemnity agreements in
leasing transactions entered into in the ordinary course of business, no Group
Member is a party to any tax sharing agreement with any Person other than
another Group Member. Disclosure Schedule 3.10 is a true and complete list of
each claim of a governmental unit of the kind entitled to priority in payment as
specified in Section 502(1) and 507(a)(8) of the Bankruptcy Code,
28
that Group Members will or expect to pay or to be required to pay during the six
years immediately following the Closing Date.
3.11 Federal Regulations. No part of the proceeds of any
Loans, and no other extensions of credit hereunder, will be used for "buying" or
"carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U as now and from time to time hereafter in effect
or for any purpose that violates the provisions of the Regulations of the Board.
If requested by any Lender or the Administrative Agent, the Borrower will
furnish to the Administrative Agent and each Lender a statement to the foregoing
effect in conformity with the requirements of FR Form G-3 or FR Form U 1, as
applicable, referred to in Regulation U.
3.12 Labor Matters. Other than ordinary course employee
grievances which are not material, in the aggregate: (a) there are no strikes,
boycotts, work stoppages, walkouts or other labor disputes against any Group
Member pending or, to the knowledge of Holdings or the Borrower, threatened; (b)
hours worked by and payment made to employees of each Group Member have not been
in violation of the Fair Labor Standards Act or any other applicable Requirement
of Law dealing with such matters; and (c) all payments due from any Group Member
on account of employee health and welfare insurance have been paid or accrued as
a liability on the books of the relevant Group Member.
3.13 ERISA. Except as set forth in Disclosure Schedule
3.13, no Reportable Event (within the meaning of Section 412 of the IRC or
Section 302 of ERISA) has occurred during the five-year period prior to the date
on which this representation is made or deemed made with respect to any Plan
(other than a Multiemployer Plan). No "accumulated funding deficiency" (within
the meaning of Section 412 of the IRC or Section 302 of ERISA) has occurred
during the five-year period prior to the date on which this representation is
made or deemed made with respect to any Plan. Each Plan has complied in all
material respects with the applicable provisions of ERISA and the IRC except for
such instances of noncompliance which, individually or in the aggregate, would
not reasonably be expected to result in a material liability. Except as set
forth on Disclosure Schedule 3.13 hereto, no termination of a Single Employer
Plan has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during
such five-year period. The present value of all accrued benefits under each
Single Employer Plan (based on those assumptions used to fund such Plans) did
not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits by a material amount. Neither the
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan that has resulted or could reasonably be
expected to result in a material liability under ERISA, and neither the Borrower
nor any Commonly Controlled Entity would become subject to any material
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. Neither the Borrower nor any Commonly Controlled Entity has been
notified or is aware that any Multiemployer Plan is in Reorganization or
Insolvent.
29
3.14 Investment Company Act; Other Regulations. No Credit
Party is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
No Credit Party is subject to regulation under any Requirement of Law (other
than Regulation X of the Board) that limits its ability to incur Indebtedness.
3.15 Subsidiaries. Except as disclosed to the Agents by
the Borrower in writing from time to time after the Closing Date, (a) Disclosure
Schedule 3.15 sets forth the name and jurisdiction of incorporation of each
direct or indirect Subsidiary of Holdings and, as to each such Subsidiary, the
percentage of each class of Capital Stock owned by any Credit Party and (b)
there are no outstanding subscriptions, options, warrants, calls, rights or
other agreements or commitments (other than stock options granted to employees
or directors and directors' qualifying shares) of any nature relating to any
Capital Stock of any Subsidiary of Holdings, including the Borrower, except as
created by the Loan Documents.
3.16 Environmental Matters. Except as could not reasonably
be expected to result in a Material Environmental Loss:
(a) each Group Member: (i) is, and within the period of
all applicable statutes of limitation has been, in compliance with all
applicable Environmental Laws; (ii) holds all Environmental Permits (each of
which is in full force and effect) required for any of its current or intended
operations or for any property owned, leased, or otherwise operated by it; (iii)
is, and within the period of all applicable statutes of limitation has been, in
compliance with all of its Environmental Permits; and (iv) reasonably believes
that: each of its Environmental Permits will be timely renewed and complied
with, without expense; any additional Environmental Permits that could
reasonably be expected to be required of it will be timely obtained and complied
with, without expense; and compliance with any Environmental Law that is or
could reasonably be expected to become applicable to it will be timely attained
and maintained, without expense.
(b) to the knowledge of Holdings or the Borrower,
Materials of Environmental Concern are not present at, on, under, in, or about
any real property now or formerly owned, leased or operated by any Group Member
or at any other location (including, without limitation, any location to which
Materials of Environmental Concern have been sent for re-use or recycling or for
treatment, storage, or disposal) which could reasonably be expected to (i) give
rise to liability of any Group Member under any applicable Environmental Law or
otherwise result in costs (other than ordinary and routine operating and
maintenance costs consistent with historical expenditures) to any Group Member,
or (ii) interfere with any Group Member's continued operations, or (iii) impair
the fair market value, based on current use, of any real property owned by any
Group Member.
(c) there is no judicial, administrative, or arbitral
proceeding (including any notice of violation or alleged violation) under or
relating to any Environmental Law to which any Group Member is, or to the
knowledge of any Group Member will be, named as a party that is pending or, to
the knowledge of the Borrower, threatened in writing.
30
(d) no Group Member has received any written request for
information, or been notified that it is a potentially responsible party under
or relating to the federal Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, or any similar Environmental Law, or with
respect to any Materials of Environmental Concern.
(e) no Group Member has entered into or agreed to any
consent decree, order, or settlement or other agreement, nor is subject to any
judgment, decree, or order or other agreement, in any judicial, administrative,
arbitral, or other forum, relating to compliance with or liability under any
Environmental Law.
(f) no Group Member has assumed or retained, by contract
or operation of law, any liabilities of any kind, fixed or contingent, under any
Environmental Laws or with respect to any Materials of Environmental Concern.
For purposes of Section 8 of this Agreement (Events of Default), each of the
foregoing representations and warranties contained in this Section 3.16 that are
qualified by the knowledge of Holdings or the Borrower shall be deemed not to be
so qualified.
3.17 Accuracy of Information, etc. No statement or
information contained in this Agreement, any other Loan Document or the
Confidential Information Memorandum contains any untrue statement of material
fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading. No statement or information
contained in any other document, certificate or statement furnished by or on
behalf of any Credit Party to the Agents or the Lenders, or any of them, for use
in connection with the transactions contemplated by this Agreement or the other
Loan Documents contained as of the date such statement, information, document or
certificate was so furnished, when taken in the aggregate, any untrue statement
of a material fact or omitted to state a material fact necessary to make the
statements contained therein not misleading. The projections and pro forma
financial information contained in the materials referenced above are based upon
good faith estimates and assumptions believed by management of Holdings and the
Borrower to be reasonable at the time made, it being recognized by the Lenders
that such financial information as it relates to future events is not to be
viewed as fact and that actual results during the period or periods covered by
such financial information may differ from the projected results set forth
therein by a material amount. There is no fact known to any Credit Party on the
date hereof that could reasonably be expected to have a Material Adverse Effect
that has not been expressly disclosed herein, in the other Loan Documents, in
the Confidential Information Memorandum or in any other documents, certificates
and statements furnished to the Agents and the Lenders for use in connection
with the transactions contemplated hereby and by the other Loan Documents.
3.18 Collateral Documents.
(a) The Collateral Documents are effective to create in
favor of the Collateral Agent or Inventory and Receivables Security Agent, as
applicable, for the benefit of the Agents and Lenders, a legal, valid and
enforceable security interest in the Collateral described therein and proceeds
thereof. In the case of the pledged Capital Stock described in the Collateral
31
Documents, when stock certificates representing such pledged Capital Stock are
delivered to the Collateral Agent, and in the case of the other Collateral
described in the Collateral Documents, when financing statements and other
filings specified on Disclosure Schedule 3.18(a) in appropriate form are filed
in the offices specified on Disclosure Schedule 3.18(a), the Collateral
Documents shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Credit Parties in such Collateral and the
proceeds thereof that can be perfected by filing, as security for the
Obligations (as defined in each Collateral Document), in each case prior and
superior in right to any other Person (except Liens permitted by Section 6.3).
(b) Each of the Mortgages is effective to create in favor
of the Collateral Agent, for the benefit of the Agents and Lenders and the other
secured parties party to the Security Agreement, a legal, valid and enforceable
Lien on the Mortgaged Properties described therein and proceeds thereof, and
when the Mortgages are filed in the offices specified on Disclosure Schedule
3.18(b)-1, each such Mortgage shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Credit Parties in the
Mortgaged Properties and the proceeds thereof, as security for the Obligations
(as defined in the relevant Mortgage), in each case prior and superior in right
to any other Person (except Liens permitted by Section 6.3). Disclosure Schedule
3.18(b)-2 lists, as of the Closing Date, each parcel of owned real property and
each leasehold interest in real property located in the United States and held
by the Borrower or any of its Subsidiaries.
3.19 Solvency. Immediately after giving effect to the
consummation of the Related Transactions and the incurrence of all Indebtedness
and obligations being incurred in connection herewith and therewith, each Credit
Party will be Solvent (giving effect to undisputed rights of contribution from
each Group Member which, following payment of such contribution would itself
continue to be Solvent).
3.20 Regulation H. No Mortgage encumbers improved real
property that is located in an area that has been identified by the Secretary of
Housing and Urban Development as an area having special flood hazards and in
which flood insurance has been made available under the National Flood Insurance
Act of 1968 except where flood insurance has been obtained in compliance with
such Act.
3.21 Certain Documents. The Borrower has delivered to
Agents complete and correct copies of the Related Transactions Documents,
including any amendments, supplements or modifications with respect thereto.
3.22 Plan of Reorganization. The Plan of Reorganization
has been confirmed by the Final Order of the Bankruptcy Court. All conditions
precedent to the consummation of the Plan of Reorganization have been satisfied
except for the making of the Loans and the loans to be borrowed under the Term
Loan Agreement and the application of the proceeds thereof. All transactions
which have been or will be undertaken in connection with the consummation of the
Plan of Reorganization comply in all material respects with the Final Order, the
Plan of Reorganization and all Requirements of Law.
32
3.23 Senior Indebtedness. The Obligations constitute
senior indebtedness for purposes of, and are entitled to the subordination
provisions contained in, the WHX Subordinated Note and the West Virginia Note.
3.24 Insurance. Disclosure Schedule 3.24 lists all
insurance policies of any nature maintained, as of the Closing Date, for current
occurrences by each Credit Party, as well as a summary of the terms of each such
policy. Such policies are in full force and effect and in such amounts, with
such deductibles and covering such risks as are insured against and carried in
accordance with applicable law and prudent industry practice by U.S. steel
companies similarly situated with the Borrower and owning or operating similar
properties.
3.25 Deposit and Disbursement Accounts. Disclosure
Schedule 3.25 lists all banks and other financial institutions at which any
Credit Party maintains deposit or other accounts as of the Closing Date,
including any Disbursement Accounts, and such Schedule correctly identifies the
name, address and telephone number of each depository, the name in which the
account is held, a description of the purpose of the account, and the complete
account number therefor.
3.26 Government Contracts. Except as set forth in
Disclosure Schedule 3.26, as of the Closing Date, no Credit Party is a party to
any contract or agreement with any Governmental Authority and no Credit Party's
Accounts are subject to the Federal Assignment of Claims Act (31 U.S.C. Section
3727) or any similar state or local law.
3.27 Customer and Trade Relations. As of the Closing Date,
there exists no actual or, to the knowledge of any Credit Party, threatened
termination or cancellation of, or any material adverse modification or change
in: the business relationship of any Credit Party with any customer or group of
customers whose purchases during the preceding 12 months caused them to be
ranked among the ten largest customers of such Credit Party; or the business
relationship of any Credit Party with any supplier essential to its operations.
3.28 Bonding; Licenses. Except as set forth on Disclosure
Schedule 3.28, as of the Closing Date, no Credit Party is a party to or bound by
any surety bond agreement or bonding requirement with respect to products or
services sold by it or any trademark or patent license agreement with respect to
products sold by it.
3.29 Brokers. No broker or finder acting on behalf of any
Credit Party or Affiliate thereof brought about the obtaining, making or closing
of the Loans or the Related Transactions, and no Credit Party or Affiliate
thereof has any obligation to any Person in respect of any finder's or brokerage
fees in connection therewith.
3.30 Off Balance Sheet Transactions. None of the Credit
Parties is a party to any "off-balance sheet arrangement" (within the meaning of
Item 303(a)(4) of Regulation S-K under the Securities Act and the Exchange Act,
as amended by SEC Release No. 33-8182 (January 28, 2003)) except as permitted
pursuant to Section 6.12.
33
3.31 Inactive Subsidiaries. As of the Closing Date, each
of Consumers Mining, Monessen Southwestern Railway and WP Coal is an Inactive
Subsidiary.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices.
(a) Each Credit Party executing this Agreement hereby
agrees that from and after the Closing Date and until the Termination Date, it
shall deliver to Agents or to Agents and Lenders, as required, the Financial
Statements, notices, projections and other information at the times, to the
Persons and in the manner set forth in Annex E.
(b) Each Credit Party executing this Agreement hereby
agrees that from and after the Closing Date and until the Termination Date, it
shall deliver to Agents or to Agents and Lenders, as required, the various
Collateral Reports (including Borrowing Base Certificates in the form of Exhibit
4.1(b)) at the times, to the Persons and in the manner set forth in Annex F.
4.2 Communication with Accountants. Each Credit Party
executing this Agreement authorizes (a) each Agent and (b) so long as an Event
of Default has occurred and is continuing, each Lender, to communicate directly
with its independent certified public accountants, including
PricewaterhouseCoopers, and authorizes and shall instruct those accountants and
advisors to communicate to each Agent and Lender information relating to any
Credit Party with respect to the business, results of operations and financial
condition of any Credit Party.
5. AFFIRMATIVE COVENANTS
The Credit Parties hereby jointly and severally agree that, so
long as any Loan or other amount is owing to any Lender or Agent hereunder, each
of the Credit Parties shall and shall cause each of their Subsidiaries to:
5.1 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its material obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the relevant Group Member.
5.2 Maintenance of Existence; Compliance. (a) (i)
Preserve, renew and keep in full force and effect its organizational existence
and (ii) take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business, except,
in each case, as otherwise permitted by Section 6.4 and except, in the case of
clause (ii) above, to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (b) comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
34
5.3 Maintenance of Property. Keep all property useful and
necessary in its business in good working order and condition.
5.4 Books and Records. (a) Keep proper books of records
and account in which full, true and correct entries in conformity with GAAP and
all Requirements of Law shall be made of all dealings and transactions in
relation to its business and activities and (b) permit representatives of any
Lender to visit and inspect any of its properties and examine, copy and make
abstracts from any of its books and records at any reasonable time and as often
as may reasonably be desired and to discuss the business, operations, properties
and financial and other condition of the Credit Parties with officers and
employees of the Credit Parties.
5.5 Notices. Promptly give notice to each Agent and
Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any
Contractual Obligation of any Group Member or (ii) litigation, investigation or
proceeding that may exist at any time between any Group Member and any
Governmental Authority, that in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a Material
Adverse Effect;
(c) as soon as possible, and in any event within two (2)
Business Days after Borrower knows or has reason to know thereof, notice of any
matured or unmatured defaults with respect to any Indebtedness or leases
relating to locations at which Collateral is located;
(d) any Litigation commenced or threatened against any
Group Member that (i) seeks damages in excess of $250,000, (ii) seeks injunctive
relief in connection with any Plan, (iii) alleges criminal misconduct by any
Credit Party, (iv) alleges the violation of any law regarding, or seeks remedies
in connection with, any Environmental Liabilities; (v) involves any product
recall; or (vi) relates to any Loan Document;
(e) the following events, as soon as possible and in any
event within 30 days after the Borrower knows thereof: (i) the occurrence of any
Reportable Event not set forth on Disclosure Schedule 3.13 with respect to any
Plan (other than a Multiemployer Plan), a failure to make any required
contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan
or any withdrawal from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the taking of any
other action by the PBGC or the Borrower or any Commonly Controlled Entity or
any Multiemployer Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan; or (iii) any judicial or regulatory
determination that the WHX Pension Plan is not a Single Employer Plan;
(f) any development or event that has had or could
reasonably be expected to have a Material Adverse Effect;
(g) (i) any adverse change in any credit rating assigned
by S&P, Xxxxx'x or nationally recognized rating agency to Holdings, any
Subsidiary of Holdings or any obligations
35
thereof or (ii) any pending or threatened strike, boycott, work stoppage or
other material labor dispute against any Group Member;
(h) the following events, as soon as possible and in any
event within ten (10) days after any Group Member knows or has reason to know
thereof: (i) any development, event, or condition that, individually or in the
aggregate with other related developments, events or conditions, could
reasonably be expected to result in a Material Environmental Loss; (ii) any
written notice that any Governmental Authority may deny any application for a
material Environmental Permit sought by, or revoke or refuse to renew any
material Environmental Permit held by any Group Member; and (iii) any
Governmental Authority has identified any Group Member as a potentially
responsible party under any Environmental Law for the cleanup of Materials of
Environmental Concern at any location, whether or not owned, leased or operated
by any Group Member, which could result in a Material Environmental Loss; and
(i) such other notices required pursuant to Annex E.
Excluding notices given in accordance with paragraph (i), each notice pursuant
to this Section 5.5 shall be accompanied by a statement of a Responsible Officer
setting forth details of the occurrence referred to therein and stating what
action the relevant Group Member proposes to take with respect thereto.
5.6 Environmental Laws.
(a) Comply in all material respects with, and undertake
reasonable efforts ensure compliance in all material respects by all tenants and
subtenants, if any, with, all applicable Environmental Laws, and obtain and
comply in all material respects with and maintain, and undertake reasonable
efforts ensure that all tenants and subtenants obtain and comply in all material
respects with and maintain, any and all Environmental Permits necessary for
their respective operations. For the avoidance of doubt, such compliance shall
include, without limitation, with respect to the Borrower's facility in Xxxxx
Junction, Ohio: (i) diligently seeking to obtain from the Ohio Environmental
Protection Agency a final major source operating permit under Title V of the
federal Clean Air Act Amendments of 1990; (ii) diligently seeking to obtain from
the Ohio Environmental Protection Agency a final permit to install with respect
to air emissions for the Electric Arc Furnace; and (iii) diligently seeking to
obtain from the Ohio Environmental Protection Agency a National Pollution
Discharge Elimination System Permit under the federal Clean Water Act that
addresses wastewater discharges associated with the Electric Arc Furnace.
(b) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all orders and directives of all
Governmental Authorities regarding Environmental Laws provided, however, that
Holdings and the Borrower shall not be deemed in violation of this Covenant if
Holdings or the Borrower promptly challenges in good faith any such order or
directive of any Governmental Authorities in a manner consistent with all
applicable Environmental Laws and any applicable Requirement of Law, and pursues
such challenge or challenges diligently, and the outcome of such challenges, in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
36
(c) Generate, use, treat, store, release, dispose of, and
otherwise manage Materials of Environmental Concern in a manner that would not
reasonably be expected to result in a material liability to the Borrower or any
of its Subsidiaries or to materially affect any real property owned or leased by
any of them; and take reasonable efforts to prevent any other Person from
generating, using, treating, storing, releasing, disposing of, or otherwise
managing Materials of Environmental Concern in a manner that could reasonably be
expected to result in a material liability to, or materially affect any real
property owned or operated by, the Borrower or any of its Subsidiaries;
provided, however, that Holdings and Borrower shall be deemed not to be in
violation of this 5.6(c) if Holdings and the Borrower effect a prompt response
that is diligently pursued, consistent with principles of prudent environmental
management and all applicable Environmental Laws, to any condition resulting
from what would otherwise be a breach of this covenant, and such conditions
(including such response) could not reasonably be expected to result in a
Material Environmental Loss.
5.7 Additional Collateral, etc.
(a) With respect to any property acquired after the
Closing Date by any Group Member and not subject to the Senior Current Asset
Security Agreement (other than (x) any property described in paragraph (b) or
(c) below and (y) any property subject to a Lien expressly permitted by Section
6.3(g)) as to which the Inventory and Receivables Security Agent, for the
benefit of the Agents and Lenders, does not have a perfected Lien, promptly (i)
execute and deliver to the Inventory and Receivables Security Agent such
amendments to the Collateral Documents or such other documents as the Inventory
and Receivables Security Agent deems necessary or advisable to grant to the
Collateral Agent, for the benefit of the Agents and Lenders, a third priority
security interest in such property (ranking after the security interest granted
in such property to the Collateral Agent for the benefit of the Term Loan
Lenders and the holders of Series A Notes) and (ii) take all actions necessary
or advisable to grant to the Collateral Agent, for the benefit of the Agents and
Lenders, a perfected third priority security interest in such property,
including the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Collateral Documents or by law or as may
be requested by the Inventory and Receivables Security Agent.
(b) With respect to any (i) of the leasehold interests in
real property set forth on Disclosure Schedule 5.7(b) (the "Leasehold Mortgaged
Properties") hereto where the landlord under the applicable lease consents to
the imposition of a mortgage Lien on such leasehold interests, or (ii) fee
interest in any real property having a value (together with improvements
thereof) of at least $250,000 acquired after the Closing Date by any Group
Member (other than any such real property subject to a Lien expressly permitted
by Section 6.3(g)), promptly (i) execute and deliver a third priority Mortgage
(ranking after any mortgage securing the obligations of any Group Member in
respect of Term Loan Obligations and obligations owed by the Company with
respect to the Series A Notes), in favor of the Collateral Agent, for the
benefit of the Agents and Lenders, covering such real property, (ii) if
requested by the Inventory and Receivables Security Agent, provide the
Collateral Agent for the benefit of the Agents and Lenders (x) title and
extended coverage insurance covering such real property in an amount at least
equal to the purchase price of such real property (or such other amount as shall
be reasonably specified by the Inventory and Receivables Security Agent) as well
as a current ALTA survey thereof, together with a surveyor's certificate and (y)
any consents or estoppels
37
reasonably deemed necessary or advisable by the Inventory and Receivables
Security Agent in connection with such Mortgage, each of the foregoing in form
and substance reasonably satisfactory to the Inventory and Receivables Security
Agent and (iii) if requested by the Inventory and Receivables Security Agent,
deliver to the Collateral Agent for the benefit of the Agents and Lenders legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the Inventory
and Receivables Security Agent. With respect to each of the Leasehold Mortgaged
Properties, the Borrower shall use commercially reasonable efforts to obtain the
consent of the applicable landlord to the Lien of a Mortgage within 30 days
following the Closing Date.
(c) With respect to any new Subsidiary created or
acquired after the Closing Date by any Group Member and any of Consumers Mining,
Monessen Southwestern Railway or WP Coal which ceases after the Closing Date to
be an Inactive Subsidiary, promptly (i) execute and deliver to the Collateral
Agent, such amendments to the Collateral Documents as the Inventory and
Receivables Security Agent deems necessary or advisable to grant to the
Collateral Agent, for the benefit of the Agents and Lenders, a perfected third
priority security interest in the Capital Stock of such Subsidiary that is owned
by any Group Member (ranking after any security interest in such Capital Stock
securing the obligations of any Group Member in respect of Term Loan Obligations
and obligations owed by the Company with respect to the Series A Notes), (ii)
deliver to the Collateral Agent, the certificates representing such Capital
Stock, together with undated stock powers, in blank, executed and delivered by a
duly authorized officer of the relevant Group Member, (iii) cause such
Subsidiary (A) to execute a Guarantee Agreement with respect to the Obligations
and to become a party to such other Collateral Documents as the Inventory and
Receivables Security Agent deems appropriate, (B) to take such actions necessary
or advisable to grant to the Collateral Agent or the Inventory and Receivables
Security Agent, for the benefit of the Agents and Lenders a perfected security
interest in the Collateral described in the Collateral Documents with respect to
such Subsidiary, including the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Collateral Documents
or by law or as may be reasonably requested by the Collateral Agent and (C) to
deliver to the Inventory and Receivables Security Agent a certificate of such
Subsidiary, substantially in the form of Exhibit E, with appropriate insertions
and attachments, and (iv) if requested by the Inventory and Receivables Security
Agent, deliver to the Collateral Agent for the benefit of the Agents and Lenders
legal opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Inventory and Receivables Security Agent.
5.8 Insurance.
(a) Required Insurance. The Borrower shall at all times
maintain with insurance companies rated "A-" or better by AM Best's Rating
Service, or another reputable industry equivalent the following minimum
insurance policies:
(i) From and after the Closing Date until the
physical completion date has occurred with respect to the Electric Arc Furnace,
Construction All Risk Insurance subject to customary "all risk" forms including
flood, earth movement, hazardous waste, transit, comprehensive boiler, turbine
and machinery and operational testing insurance covering physical loss or damage
with respect to the Electric Arc
38
Furnace including (A) coverage for the buildings, structures, furnace, boiler
and machinery, equipment facilities, fixtures and other properties constituting
a part of the Electric Arc Furnace (including equipment in which the Borrower
has an insurable interest), (B) coverage for removal of debris, (C) transit
coverage, including ocean marine coverage, if applicable (unless insured by the
supplier), and (D) off-site coverage.
Such policy shall at all times insure an amount not
less than the full replacement cost of the Electric Arc Furnace and shall be in
such form as shall be reasonably satisfactory to the Administrative Agent;
provided, however, that flood and earthquake coverage each may be subject to an
annual aggregate limit of at least $100,000,000 to the extent reasonably
available, but in no event less than $25,000,000, and transit and off-site
coverage shall be in an amount equal to full replacement cost. Deductibles for
flood and quake not to exceed 2.0%.
These policies shall be written on a no coinsurance
basis and (as available on a commercially reasonable basis) shall provide from
and after the Physical Completion Date for "single interest excess of loss" or
"stipulated loss" insurance in an amount equal to the negative difference (if
any) between the then outstanding EAF Loan Amount and the replacement cost of
the Electric Arc Furnace.
These policies shall also be endorsed to provide that
(A) losses shall be adjusted as provided in Section 5.8(b), (B) the
Administrative Agent is included as an additional insured, as its interests may
appear, but shall not be liable for the payment of any premiums, and (C) any
payment thereunder for loss or damage shall be made to the Collateral Agent, as
sole loss payee. The policies may provide for deductible amounts of up to
$500,000 per occurrence with $1,000,000 for testing and commissioning (as
available on a commercially reasonable basis), unless otherwise agreed by the
Administrative Agent.
(ii) From and after the Closing Date until the
physical completion date has occurred with respect to the Electric Arc Furnace,
a Pollution Legal Liability policy with limits of no less than $10,000,000 per
occurrence and in the aggregate with a deductible of no more than $1,000,000.
(iii) From and after the Closing Date until the
date on which all Loans have been paid in full and all Revolving Loan
Commitments have terminated, "all risk" property insurance (to the extent not
duplicative of the construction all risk insurance obtained pursuant to clause
(i) above), such "all risk" property insurance to be subject to customary "all
risk" forms including, in each case, flood, earth movement, transit,
comprehensive boiler, turbine and machinery and operational testing insurance
covering physical loss or damage with respect to properties of the Borrower and
its Subsidiaries, including (A) coverage for the buildings, structures, furnace,
boiler and machinery, equipment facilities, fixtures and other properties of the
Borrower and its Subsidiaries (including equipment in which the Borrower or any
of its Subsidiaries has an insurable interest), (B) coverage for Inventory, (C)
coverage for removal of debris, (D) transit coverage, including ocean marine
coverage, if applicable (unless insured by the supplier), and (E) off-site
coverage. Insurance will be carried in such amounts, against
39
such risks and with such terms (including co-insurance, deductibles, limits of
liability and loss payment provisions) consistent with reasonable and prudent
industry practice but in any event from 11/01/03 such policies shall at all
times insure an amount not less than the greater of the Probable Maximum Loss
(as calculated by an independent third party and subject to the approval of the
Administrative Agent and the Inventory and Receivables Security Agent) or
$250,000,000, and carry replacement cost values, and shall be in such form as
shall be reasonably satisfactory to the Administrative Agent; provided, however,
that (A) flood and earthquake coverage each may be subject to an annual
aggregate limit of at least $100,000,000 to the extent reasonably available, but
in no event less than $25,000,000, and (B) transit and off-site coverage shall
be in an amount equal to full replacement cost.
The policy shall be written on a no coinsurance basis and
shall provide from and after the physical completion date with respect to the
Electric Arc Furnace, the Electric Arc Furnace must be covered under the
Property Insurance Program described in this section at full replacement cost
value. The policy shall also be endorsed to provide that (A) losses shall be
adjusted as provided in Section 5.8(b), (B) the Collateral Agent and Inventory
and Receivables Security Agents are included as additional insureds, as their
interests may appear, but shall not be liable for the payment of any premiums,
and (C) any payment thereunder for loss or damage shall be made to the
Collateral Agent, as sole loss payee, except for payments thereunder for loss or
damage with respect to Inventory which shall be made to the Inventory and
Receivables Security Agent, as sole loss payee. The policies may provide for
deductible amounts of up to $2,000,000 per occurrence, unless otherwise agreed
by the Administrative Agent.
(iv) From and after the Closing Date until the
date on which all Loans have been paid in full and all Revolving Loan
Commitments have terminated, business interruption insurance, in such form as
shall be reasonably satisfactory to the Administrative Agent and with limits in
amounts sufficient to cover scheduled payments on all Indebtedness and
continuing expenses of the Borrower and its Subsidiaries during a period of at
least twelve months; provided that the applicable policy may provide that the
insurance proceeds will not be payable with respect to up to the first 30 days
of each business interruption with the Collateral Agent and the Inventory and
Receivables Security Agent as loss payees as their interests may appear.
(v) During construction and for operations,
comprehensive or commercial general liability insurance on an "occurrence" basis
or a "claims made" basis, against claims for "bodily injury" and "property
damage" occurring on, in or about the properties of the Borrower and its
Subsidiaries and the adjoining streets, sidewalks and passageways, in a minimum
amount of $2,000,000 coverage per occurrence with respect to personal injury or
death to any one or more persons or damage to property; $2,000,000
products/completed operations aggregate; and $4,000,000 general aggregate, which
insurance shall (i) be in such form as shall be reasonably satisfactory to the
Administrative Agent, (ii) contain "broad form" and other endorsements covering,
among other things, products and completed operations, contractual liability,
broad form property damage, explosion, collapse and underground hazards, and
(iii) be endorsed to include the Administrative Agent as additional insured, as
its interests may appear.
40
(vi) From and after the Closing Date until the
date on which all Loans have been paid in full and all Revolving Loan
Commitments have terminated, business automobile liability insurance against
claims for bodily injury, death or property damage arising out of the use of all
owned, non owned and hired vehicles by the Borrower and its Subsidiaries and
their its agents and employees, including loading and unloading, such insurance
to be in the amount of at least $1,000,000 coverage per occurrence with respect
to bodily injury or death to one or more persons or damage to property and to be
in such form as shall be reasonably satisfactory to the Administrative Agent.
(vii) From and after the Closing Date until the
date on which all Loans have been paid in full and all Revolving Loan
Commitments have terminated, workers' compensation insurance as required by
local law, or if allowed under local law the Borrower shall have the option to
become a "qualified" self-insurer, approved by the appropriate regulatory
authorities in the relevant jurisdiction with a maximum self-insured retention
of $1,000,000 per occurrence. If Borrower becomes a "qualified" self-insurer
then supplementary workers' compensation coverage providing full statutory
limits over the self-insured retention shall be purchased (where required by
state statute). Employers liability insurance with a minimum limit of $1,000,000
per occurrence shall be carried.
(viii) From and after the Closing Date until the
date on which all Loans have been paid in full and all Revolving Loan
Commitments have terminated, excess "umbrella" liability insurance on an
"occurrence" basis or, subject to the proviso to this paragraph (viii), a
"claims made" basis against risks of the types described in clauses (iv) and (v)
above and in excess of the employers liability insurance (but excluding workers
compensation) described in clause (vii) above, in an amount which results in a
combined amount of primary and excess insurance required hereby of not less than
$50,000,000 for any occurrence and not less than $50,000,000 in the aggregate on
an annual basis and in such form as shall be satisfactory to the Administrative
Agent; provided that if such insurance is written on a "claims made" basis and
the policy is not renewed, the Borrower shall obtain for such policy an extended
reporting period coverage or "tail" of at least three years past the final day
of coverage of such policy and shall provide the Administrative Agent with
evidence that such extended reporting period coverage or "tail" has been
obtained.
Insurance required in clauses (v), (vi), (vii) and (viii) may
be provided with a combination of primary and excess policies as long as the
combined limits equal the per occurrence and aggregate limit required herein.
Notwithstanding the requirements stated above, in the event
any insurance (including the limits or deductible thereof) required to be
maintained pursuant to clause (viii) above shall not be available and
commercially feasible in the commercial insurance markets (taking into account
in determining "commercial feasibility" the Borrower's obligations under the
Loan Documents and its ability to self-insure without impairing its ability to
make scheduled payments on its Indebtedness), the Required Lenders agree to
waive such requirement to the extent the maintenance thereof is not so
available, provided, however, that (i) the Borrower shall
41
first request any such waiver in writing, which request shall be accompanied by
written reports prepared by two independent insurance advisors of recognized
national standing (one of which may be the Borrower's insurance advisor and one
of which may be the Lenders' insurance consultant) certifying that such
insurance is not reasonably available and commercially feasible in the
commercial insurance market for similar steel mill projects (and, in any case
where the required amount is not so available, certifying as to the maximum
amount which is so available) and explaining in detail the basis for such
conclusions, the form and substance of such reports to be reasonably
satisfactory to the Required Lenders; (ii) at any time after the granting of any
such waiver (but not more than twice in each calendar year), the Administrative
Agent may request, and the Borrower shall furnish to the Administrative Agent
within 30 days after such request, supplemental reports reasonably acceptable to
the Required Lenders from such insurance advisors updating their prior reports
and reaffirming such conclusion; and (iii) any such waiver shall be effective
only so long as such insurance shall not be available and commercially feasible
in the commercial insurance market, it being understood that the failure of the
Borrower to timely furnish any such supplemental report shall be conclusive
evidence that such waiver is no longer effective because such condition no
longer exists, but that such failure is not the only way to establish such
non-existence.
(b) Policy Provisions. All insurance policies maintained
in accordance with clauses (i), (ii) or (iii) of paragraph (a) of this Section
5.8 (i) shall contain either the New York standard mortgagee clause or 438 BFU
and (ii) shall provide that so long as no Event of Default shall have occurred
and be continuing, property losses, if any, shall be adjusted with the Borrower
and shall be made payable to the Borrower or its order, except that as to any
insured loss in excess of $1,000,000, such loss shall be adjusted with the
Borrower but final settlement will be made with the concurrence of the
Collateral Agent or, with respect to payments on account of coverage described
in paragraph (a)(iii)(B) above, the Inventory and Receivables Security Agent,
which concurrence shall not be unreasonably withheld, and shall be payable
solely to the Collateral Agent or the Inventory and Receivables Security Agent,
as applicable. All insurance policies maintained in accordance with this Section
5.8 (i) shall provide that no cancellation, termination or material change in
such insurance shall be effective until at least 30 days (10 days in the case of
non-payment of premium) after the insurer shall have given written notice
thereof to the Collateral Agent and, with respect to policies maintained in
accordance with paragraph (a)(iii)(B) above, the Inventory and Receivables
Security Agent, (ii) except for the insurance referred to in clause (vi) of
paragraph (a) above, shall contain a waiver of any rights of subrogation of the
insurer against the Collateral Agent or, with respect to payments on account of
coverage described in paragraph (a)(iii)(B) above, the Inventory and Receivables
Security Agent, and a waiver of any rights of the insurer to any setoff or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of the Collateral Agent or the Inventory and
Receivables Security Agent, as applicable, (iii) in the case of the insurance
referred to in clauses (iv) and (vii) of paragraph (a) above, shall provide that
all the provisions thereof, except the limits of liability (which shall be
applicable to all insureds as a group) and liability for premiums (which shall
be solely a liability of the Borrower) shall operate in the same manner as if
there were a separate policy covering each such insured, without right of
contribution from any other insurance which may be carried by any insured
covering a loss which is also covered under the insurance policies maintained by
the Borrower pursuant to this Section 5.8, and (iv) shall provide that the
Collateral Agent and the Inventory and Receivables Security Agent, as
applicable, as additional insureds and loss payees shall have no obligation or
42
liability for premiums, commissions, assessments or calls in connection with
such insurance. The Borrower shall be solely responsible for any deductibles,
coinsurance, retained risk or risk sharing under all insurance policies.
(c) Reports, Etc. The Borrower will advise the
Administrative Agent and the Lenders in writing promptly of any default in the
payment of any premium and of any other act or omission on the part of the
Borrower which may invalidate or render unenforceable, in whole or in part, any
insurance being maintained by the Borrower pursuant to this Section 5.8. The
Borrower will also deliver to the Administrative Agent, promptly upon request
and in any event within 30 days after the end of each Fiscal Year, a certificate
signed by an authorized officer of an independent insurance broker of recognized
national standing (x) attaching certificates of all insurance policies relating
to the Borrower and stating that all premiums then due thereon have been paid
and that the same are in full force and effect and (y) stating that such
insurance policies comply with the requirements of this Section 5.8. If
requested by the Administrative Agent, the Borrower will either (i) deliver
copies of such insurance policies to the Administrative Agent or (ii) make such
policies available for examination by the Administrative Agent at the offices of
the Borrower.
(d) Other Insurance. (i) Nothing in this Section 5.8
shall prohibit the Borrower from maintaining, at its expense, insurance on or
with respect to the Electric Arc Furnace or its properties or business, naming
the Borrower as insured and/or loss payee, unless such insurance would conflict
with or otherwise limit the availability of insurance required to be maintained
under Section 5.8(a); provided that such insurance shall not reduce the amount
of insurance proceeds that would be payable to the beneficiaries pursuant to
policies of insurance maintained under Section 5.8(a) and the Borrower shall
have obtained and delivered evidence satisfactory to the Administrative Agent to
such effect.
(e) Additional Insurance. The Inventory and Receivables
Security Agent reserves the right to require the provision of additional
insurance over the terms of this Agreement, subject to insurance being available
on a commercially reasonable basis, as may be required from time to time for
insurable risks which may arise in the course of business operations.
5.9 Supplemental Disclosure. From time to time as may be
reasonably requested by Administrative Agent (which request will not be made
more frequently than once each year absent the occurrence and continuance of an
Event of Default) or at Credit Parties' election, supplement each Disclosure
Schedule hereto, or any representation herein or in any other Loan Document,
with respect to any matter hereafter arising that, if existing or occurring at
the date of this Agreement, would have been required to be set forth or
described in such Disclosure Schedule or as an exception to such representation
or that is necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Disclosure Schedule, such Disclosure Schedule shall be
appropriately marked to show the changes made therein); provided that (a) except
for updates to Disclosure Schedule 1.2 from time to time for purposes of Section
1.7(b), no such supplement to any such Disclosure Schedule or representation
shall amend, supplement or otherwise modify any Disclosure Schedule or
representation, or be or be deemed a waiver of any Default or Event of Default
resulting from the matters disclosed therein, except as consented
43
to by Agents and Requisite Lenders in writing, and (b) no supplement shall be
required or permitted as to representations and warranties that relate solely to
the Closing Date.
5.10 Intellectual Property. Conduct its business and
affairs without infringement of or interference with any Intellectual Property
of any other Person in any material respect and shall comply in all material
respects with the terms of its Licenses.
5.11 Landlord Agreements, Mortgagee Agreements, Bailee
Letters and Real Estate Purchases. Use commercially reasonable efforts to obtain
a landlord's agreement, mortgagee agreement or bailee letter, as applicable,
from the lessor of each leased property, mortgagee of owned property or bailee
with respect to any warehouse, processor or converter facility or other location
where Current Asset Collateral is stored or located, which agreement or letter
shall contain a waiver or subordination of all Liens or claims that the
landlord, mortgagee or bailee may assert against the Current Asset Collateral at
that location, and shall otherwise be reasonably satisfactory in form and
substance to Inventory and Receivables Security Agent. With respect to such
locations or warehouse space leased or owned as of the Closing Date and
thereafter, if Inventory and Receivables Security Agent has not received a
landlord or mortgagee agreement or bailee letter as of the Closing Date (or, if
later, as of the date such location is acquired or leased), Borrower's Eligible
Inventory at that location shall, in Inventory and Receivables Security Agent's
discretion, be excluded from the Borrowing Base or be subject to such Reserves
as may be established by Inventory and Receivables Security Agent in its
reasonable credit judgment. After the Closing Date, no real property or
warehouse space shall be leased by any Credit Party and no Inventory shall be
shipped to processors, converters or warehousemen in an aggregate amount at any
one time exceeding $50,000 for any single processor, converter or warehouseman
or $250,000 in the aggregate for all such processors, converters or warehousemen
under arrangements established after the Closing Date without the prior written
consent of Inventory and Receivables Security Agent (which consent, in Inventory
and Receivables Security Agent's discretion, may be conditioned upon the
exclusion from the Borrowing Base of Eligible Inventory at that location or the
establishment of Reserves acceptable to Inventory and Receivables Security
Agent) or, unless and until a satisfactory landlord agreement or bailee letter,
as appropriate, shall first have been obtained with respect to such location.
Each Credit Party shall timely and fully pay and perform its obligations under
all leases and other agreements with respect to each leased location or public
warehouse where any Current Asset Collateral is or may be located.
5.12 Further Assurances. Upon the reasonable request of
any Agent, duly execute and deliver, or cause to be duly executed and delivered,
to such Agent such further instruments and do and cause to be done such further
acts as may be necessary or proper in the reasonable opinion of such Agent to
carry out more effectively the provisions and purposes of this Agreement and
each Loan Document.
6. NEGATIVE COVENANTS
The Credit Parties hereby jointly and severally agree that, so
long as any Loan or other amount is owing to any Lender or Agent hereunder, each
of the Credit Parties shall not, and shall not permit any of their Subsidiaries
to, directly or indirectly:
44
6.1 Financial Condition Covenants. Breach or fail to
comply with any of the Financial Covenants.
6.2 Indebtedness. Create, issue, incur, assume, become
liable in respect of or suffer to exist any Indebtedness, except:
(a) Indebtedness of any Credit Party pursuant to any Loan
Document;
(b) Indebtedness of the Borrower to any Wholly Owned
Subsidiary Guarantor and of any Wholly Owned Subsidiary Guarantor to the
Borrower or any other Wholly Owned Subsidiary Guarantor; provided, that prior to
the making of the first such intercompany loan (i) Borrower shall have executed
and delivered to each such Wholly Owned Subsidiary Guarantor, and each such
Wholly Owned Subsidiary Guarantor shall have executed and delivered to Borrower
or each other Wholly Owned Subsidiary Guarantor a demand note (collectively, the
"Intercompany Notes") to evidence any such intercompany Indebtedness owing at
any time by Borrower to such Wholly Owned Subsidiary Guarantor or by such Wholly
Owned Subsidiary Guarantor to Borrower or such other Wholly Owned Subsidiary
Guarantor, which Intercompany Notes shall be in form and substance reasonably
satisfactory to the Administrative Agent and shall be pledged and delivered to
the Collateral Agent pursuant to the Security Agreement as additional collateral
security for the Obligations and the other obligations referred to therein; (ii)
Borrower shall record all intercompany transactions on its books and records in
a manner reasonably satisfactory to the Administrative Agent; (iii) the
obligations of Borrower under any such Intercompany Notes shall be subordinated
to the Obligations of Borrower hereunder in a manner reasonably satisfactory to
the Administrative Agent; (iv) at the time any such intercompany loan or advance
is made by Borrower, and after giving effect thereto, Borrower shall be Solvent;
(v) no Default or Event of Default would occur and be continuing after giving
effect to any such proposed intercompany loan; (vi) the aggregate amount of such
intercompany loans owing by Borrower to all such Wholly Owned Subsidiary
Guarantors and between Wholly Owned Subsidiary Guarantors shall not exceed
$5,000,000 at any one time outstanding; and (vii) the aggregate balance of all
such intercompany loans owing to Borrower shall not exceed $1,000,000 at any
time.
(c) Guarantee Obligations incurred in the ordinary course
of business by the Borrower or any of its Subsidiaries of obligations of any
Wholly Owned Subsidiary Guarantor permitted by this Agreement;
(d) Indebtedness outstanding on the date hereof and
listed on Disclosure Schedule 6.2(d) and any refinancings, refundings, renewals
or extensions thereof (without increasing the committed amount or shortening the
maturity thereof);
(e) Indebtedness (including, without limitation, Capital
Lease Obligations) secured by Liens permitted by Section 6.3(g) in an aggregate
principal amount not to exceed $10,000,000 at any one time outstanding;
(f) Indebtedness of the Borrower in respect of any Profit
Sharing Notes;
45
(g) Indebtedness of the Borrower or any of its
Subsidiaries in connection with Swap Agreements permitted pursuant to Section
6.12;
(h) Indebtedness of any Credit Party in respect of the
Term Loan Agreement;
(i) Indebtedness of any Credit Party in respect of the
EAF Supplemental Loan Agreement;
(j) the Plan of Reorganization Indebtedness and any
refinancings, refundings, renewals or extensions thereof (without increasing the
committed amount or shortening the maturity amount thereof); and
(k) additional Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount (for the Borrower and all
Subsidiaries) not to exceed $10,000,000 at any one time outstanding.
6.3 Liens. Create, incur, assume or suffer to exist any
Lien upon any of its property, whether now owned or hereafter acquired, except:
(a) Liens for taxes not yet due or that are being
contested in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business that
are not overdue for a period of more than 30 days or that are being contested in
good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business that, in the
aggregate, are not substantial in amount and that do not in any case materially
detract from the value of the property subject thereto or materially interfere
with the ordinary conduct of the business of the Borrower or any of its
Subsidiaries;
(f) Liens in existence on the date hereof listed on
Disclosure Schedule 6.3(f), securing Indebtedness permitted by Section 6.2(d),
provided that no such Lien is spread to cover any additional property after the
Closing Date and that the amount of Indebtedness secured thereby is not
increased;
(g) Liens securing Indebtedness of the Borrower or any
other Subsidiary incurred pursuant to Section 6.2(e) to finance the acquisition
of fixed or capital assets, provided that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed
46
or capital assets, (ii) such Liens do not at any time encumber any property
other than the property financed by such Indebtedness and (iii) the amount of
Indebtedness secured thereby is not increased;
(h) Liens securing Indebtedness and other obligations
incurred under this Agreement, the Loan Documents, the Term Loan Agreement, the
Series A Notes, the Series B Notes and the RDL Obligations and granted pursuant
to the Collateral Documents and the Junior Current Asset Security Agreement;
(i) Liens granted with respect to the EAF Cash Collateral
Account and securing Indebtedness and other obligations incurred under the Term
Loan Agreement;
(j) any interest or title of a lessor under any lease
entered into by the Borrower or any other Subsidiary in the ordinary course of
its business and covering only the assets so leased; and
(k) Liens not otherwise permitted by this Section so long
as neither (i) the aggregate outstanding principal amount of the obligations
secured thereby nor (ii) the aggregate fair market value (determined as of the
date such Lien is incurred) of the assets subject thereto exceeds (as to the
Borrower and all Subsidiaries) $10,000,000 at any one time.
6.4 Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its property or business, except that:
(a) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with or into any Wholly Owned Subsidiary
Guarantor other than WP Steel Venture (provided that the Wholly Owned Subsidiary
Guarantor shall be the continuing or surviving corporation);
(b) any Subsidiary of the Borrower may Dispose of any or
all of its assets (i) to the Borrower or any Wholly Owned Subsidiary Guarantor
other than WP Steel Venture (upon voluntary liquidation or otherwise) or (ii)
pursuant to a Disposition permitted by Section 6.5; and
(c) any Investment expressly permitted by Section 6.7 may
be structured as a merger, consolidation or amalgamation.
6.5 Disposition of Property. Dispose of any of its
property, whether now owned or hereafter acquired, or, in the case of any
Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any
Person, except:
(a) the Disposition of obsolete or worn out property in
the ordinary course of business;
(b) the sale of Inventory in the ordinary course of
business;
(c) Dispositions permitted by clause (i) of Section
6.4(b);
47
(d) the sale or issuance of any Subsidiary's Capital
Stock to the Borrower or any Wholly Owned Subsidiary Guarantor other than WP
Steel Venture; and
(e) the Disposition of other property having a fair
market value not to exceed $15,000,000 in the aggregate during the term of this
Agreement.
6.6 Restricted Payments. Declare or pay any dividend
(other than dividends payable solely in common stock of the Person making such
dividend) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any Capital Stock of any Group Member,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of any Group Member (collectively, "Restricted Payments"), except
that:
(a) any Subsidiary may make Restricted Payments to the
Borrower or any Wholly Owned Subsidiary Guarantor;
(b) Holdings may purchase or otherwise acquire from any
qualified participant in (i) the WHX employee stock ownership plan ("WHX ESOP"),
Capital Stock of WHX received by such individual in a distribution from such WHX
ESOP, provided that such purchase is made pursuant to a put option contained in
the governing documents for the WHX ESOP, and further provided that the
aggregate amount of all the Restricted Payments made under this clause (i) shall
not exceed $3,000,000 in the aggregate during the term of this Agreement and
(ii) any other Holdings employee stock ownership plan, Capital Stock of Holdings
and Profit Sharing Notes received by such individual in a distribution from such
employee stock ownership plan provided that the aggregate amount of all
Restricted Payments made under this clause (ii) shall not exceed $500,000 in any
Fiscal Year;
(c) WP Steel Venture may make Restricted Payments to
Holdings; and
(d) the Borrower may make Restricted Payments to Holdings
to permit Holdings to (i) pay corporate overhead expenses incurred in the
ordinary course of business (including expenses incurred in connection with
insurance, director compensation and legal and accounting services) not to
exceed $2,500,000 in any Fiscal Year and (ii) pay any taxes that are due and
payable by Holdings and the Borrower as part of a consolidated group.
6.7 Capital Expenditures. Make or commit to make any
Capital Expenditure, except:
(a) Capital Expenditures relating to the construction of
the Automatic Roll Changer System in an aggregate amount not to exceed (i) prior
to April 1, 2004, $7,475,000 or (ii) from and after April 1, 2004 and together
with any expenditures prior to April 1, 2004, $20,000,000; provided that the
Borrower may not make any Capital Expenditures pursuant to clause (ii) unless
and until such time as the Administrative Agent is reasonably satisfied that the
performance of the Borrower is generally consistent with the projected
performance of the Borrower for a period of three consecutive Fiscal Quarters
(or such shorter period as has elapsed since the Closing Date) as set forth in
the Confidential Information Memorandum or, with
48
respect to Fiscal Quarters subsequent to that ended December 31, 2004, as set
forth in the projections delivered to the Agents pursuant to paragraph (c) of
Annex E which are consistent with the related annual projections contained in
the Confidential Information Memorandum;
(b) Capital Expenditures relating to the construction of
the Allenport Cold Mill Improvements in an aggregate amount not to exceed
$12,000,000;
(c) Capital Expenditures relating to the construction of
the Electric Arc Furnace in an aggregate amount not to exceed Available
Construction Funds (as defined in the Term Loan Agreement as in effect on the
date hereof); and
(d) Capital Expenditures of the Borrower and its
Subsidiaries in the ordinary course of business not relating to the construction
of the Automatic Roll Changer System, the Allenport Cold Mill Improvements or
the Electric Arc Furnace and not exceeding for any Fiscal Year the amount set
forth for such Fiscal Year below:
PERMITTED CAPITAL
FISCAL YEAR EXPENDITURE AMOUNT
--------------------------------------- ------------------
2003................................... $ 20,700,000
2004................................... $ 33,900,000
2005................................... $ 44,000,000
2006................................... $ 37,100,000
provided, that (i) up to 50% of any such amount referred to in Schedule 6.7, if
not so expended in the Fiscal Year for which it is permitted, may be carried
over for expenditure in the next succeeding Fiscal Year (but not further), (ii)
Capital Expenditures made pursuant to this Section during any Fiscal Year shall
be deemed made, first, in respect of amounts permitted for such Fiscal Year as
provided above and, second, in respect of amounts carried over from the prior
Fiscal Year pursuant to clause (i) above and (iii) Capital Expenditures made
with the proceeds of any asset dispositions or casualty events in accordance
with Sections 1.3(c) and (e) shall not be counted in determining compliance with
this Section 6.7.
6.8 Investments. Make any advance, loan, extension of
credit (by way of guaranty or otherwise) or capital contribution to, or purchase
any Capital Stock, bonds, notes, debentures or other debt securities of, or any
assets constituting a business unit of, or make any other investment in, any
Person (all of the foregoing, "Investments"), except:
(a) extensions of trade credit in the ordinary course of
business in a manner consistent with the Existing Credit Policies;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 6.2;
49
(d) loans and advances to employees of any Group Member
in the ordinary course of business (including for travel, entertainment and
relocation expenses) in an aggregate amount for all Group Members not to exceed
$1,000,000 at any one time outstanding;
(e) Investments in assets useful in the business of the
Borrower and its Subsidiaries made by the Borrower or any of its Subsidiaries
with the proceeds of any asset dispositions or casualty events in accordance
with Sections 1.3(c) and (e);
(f) intercompany Investments by any Group Member in the
Borrower or any Person other than WP Steel Venture that, prior to such
investment, is a Wholly Owned Subsidiary Guarantor;
(g) Investments made in accordance with Section 6.6(b);
and
(h) in addition to Investments otherwise expressly
permitted by this Section, Investments by the Borrower or any of its
Subsidiaries in an aggregate amount (valued at cost) not to exceed (i)
$5,000,000 in any Fiscal Year or (ii) $25,000,000 in the aggregate during the
term of this Agreement; provided, that immediately after giving effect to any
such Investment (including any Indebtedness incurred or assumed in connection
therewith), (A) the Borrower shall be in pro forma compliance with the covenants
set forth in Section 6.1 as of the end of the most recently completed period of
four Fiscal Quarters for which financial statements have been delivered pursuant
to Section 4.1 as if such Investment had been made (and such Indebtedness
incurred) at the beginning of such period and (B) in the case of an Investment
in an amount equal to or greater than $5,000,000, either (I) the business
operations to be acquired shall have had positive EBITDA (calculated in the same
manner set forth in the definition "Consolidated EBITDA") for the period of 12
months immediately prior to the consummation of the Investment or (II) after
giving effect to the Investment (and any Indebtedness incurred therewith) and
any costs savings to be achieved or other adjustments to Consolidated EBITDA to
be made in connection therewith (in each case which are approved by an
independent third party reasonably satisfactory to the Administrative Agent),
the pro forma Consolidated EBITDA of Holdings as of the end of the most recently
completed period of four Fiscal Quarters for which financial statements have
been delivered pursuant to Section 4.1 shall be greater than or equal to the
actual Consolidated EBITDA of Holdings as reported to the Administrative Agent
and Lenders in accordance with Section 4.1; provided further, that,
notwithstanding clause (i) above but subject to the conditions set forth in
clause (ii) above and the preceding proviso, the Borrower may make Investments
in any Fiscal Year in an aggregate amount up to $10,000,000 (or, with the
consent of the Agents, $20,000,000) if (i) after giving effect to any Investment
which would cause the aggregate Investments for such Fiscal Year to exceed
$5,000,000, Borrowing Availability shall exceed $75,000,000 and (ii) the
Consolidated Fixed Charge Coverage Ratio for the most recently completed period
of four consecutive Fiscal Quarters for which financial statements and a Ratio
and Compliance Certificate have been delivered is at least 1.00 to 1.0.
6.9 Optional Payments and Modifications of Certain
Agreements. (a) Directly or indirectly, voluntarily purchase, redeem, defease or
prepay any principal of, premium, if any, interest or other amount payable in
respect of any Plan of Reorganization Indebtedness or Profit Sharing Note
(except as permitted in accordance with Section 6.6(b)) prior to the stated
maturity thereof, provided that, if no Default or
50
Event of Default shall then exist and be continuing, Borrower may apply 50% of
cash distributions received from the Joint Ventures (excluding Feralloy-Wheeling
Specialty Processing Co.) during the first five years following the Closing Date
and 100% thereafter to pay accrued and unpaid interest on the Series A Notes
and, to the extent of any excess after payment of such interest, to prepay
principal thereon; (b) make cash payments on account of accrued and unpaid
interest on (i) the Series A Notes or Series B Notes at a rate per annum in
excess of 2% per annum of the principal amount thereof while any Default or
Event of Default shall exist and be continuing or (ii) the WHX Subordinated Note
or the West Virginia Note except from Excess Cash Flow (as defined in the Term
Loan Agreement as in effect on the date hereof) which is not required to be
applied to the prepayment of Term Loans and provided that no Default or Event of
Default shall have occurred and be continuing; or (c) amend, modify, waive or
otherwise change, or consent or agree to any amendment, modification, waiver or
other change to, any of the terms of any of the Plan of Reorganization
Indebtedness, the RDL Deferred Payment Agreement, the Master Labor Agreement or
the Constitutive Documents in any manner which could reasonably be considered to
be adverse to the interests of the Lenders.
6.10 Transactions with Affiliates. Enter into any
transaction, including any purchase, sale, investment, lease or exchange of
property, the rendering of any service or the payment of any management,
advisory or similar fees, with any Affiliate unless such transaction is (a)
otherwise permitted under this Agreement, (b) in the ordinary course of business
of the relevant Group Member, and (c) upon fair and reasonable terms no less
favorable to the relevant Group Member than it would obtain in a comparable
arm's length transaction with a Person that is not an Affiliate. Excluding
receipts in connection with any JV Supply Agreement, if any affiliate
transaction or series of related affiliate transactions involves payments or
receipts in excess of $5,000,000 in the aggregate, the terms of these
transactions must be disclosed in advance to the Agents. All such affiliate
transactions existing as of the date hereof are described in Disclosure Schedule
6.10.
6.11 Sales and Leasebacks. Enter into any arrangement with
any Person providing for the leasing by any Group Member of real or personal
property that has been or is to be sold or transferred by such Group Member to
such Person or to any other Person to whom funds have been or are to be advanced
by such Person on the security of such property or rental obligations of such
Group Member; provided, that to the extent permitted by Section 6.2, the
Borrower and any Subsidiary Guarantor may enter into such a transaction to
finance the acquisition of fixed or capital assets.
6.12 Swap Agreements. Enter into any Swap Agreement,
except (a) Swap Agreements (i) entered into to hedge or mitigate commodity,
energy or currency risks to which the Borrower or any Subsidiary has actual
exposure and (ii) not for speculative purposes and (b) Swap Agreements entered
into in order to effectively cap, collar or exchange interest rates (from
floating to fixed rates, from one floating rate to another floating rate or
otherwise) with respect to any interest-bearing liability or investment of the
Borrower or any Subsidiary in a notional amount of not more than $300,000,000.
51
6.13 Changes in Fiscal Periods. Permit the Fiscal Year of
Holdings or the Borrower to end on a day other than December 31 or change
Holdings' or the Borrower's method of determining Fiscal Quarters.
6.14 Clauses Restricting Subsidiary Distributions. Enter
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary of the Borrower to (a) make
Restricted Payments in respect of any Capital Stock of such Subsidiary held by,
or pay any Indebtedness owed to, the Borrower or any other Subsidiary of the
Borrower, (b) make loans or advances to, or other Investments in, the Borrower
or any other Subsidiary of the Borrower or (c) transfer any of its assets to the
Borrower or any other Subsidiary of the Borrower, in each case except for such
encumbrances or restrictions (i) existing under or by reason of the Loan
Documents, the Term Loan Agreement or the EAF Supplemental Loan Agreement as in
effect on the date hereof and (ii) with respect to any Subsidiary, imposed
pursuant to an agreement that has been entered into in connection with the
Disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary.
6.15 Lines of Business. Enter into any business, either
directly or through any Subsidiary, except for those businesses in which the
Borrower and its Subsidiaries are engaged on the date of this Agreement or that
are reasonably related thereto.
6.16 Restrictions on WP Steel Venture. Allow WP Steel
Venture to (i) create or acquire any Subsidiary, (ii) engage in any Material
Acquisition or (iii) enter into any business or activity except for those
businesses and activities in which WP Steel Venture is engaged on the Closing
Date and are disclosed in Disclosure Schedule 6.16.
6.17 Excluded Foreign Subsidiaries. Create, acquire or
allow to exist any Excluded Foreign Subsidiary.
7. TERM
7.1 Termination. The financing arrangements contemplated
hereby shall be in effect until the Commitment Termination Date, and the Loans
and all other Obligations shall be automatically due and payable in full on such
date.
7.2 Survival of Obligations Upon Termination of Financing
Arrangements. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of
Agents and Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of each
Agent and Lender, all as contained in the Loan Documents, shall not terminate or
expire, but rather
52
shall survive any such termination or cancellation and shall continue in full
force and effect until the Termination Date; provided, that the provisions of
Section 11, the payment obligations under Sections 1.15 and 1.16 and the
indemnities contained in the Loan Documents shall survive the Termination Date.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. If any of the following events
shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any
Loan when due (whether at stated maturity, by acceleration, by mandatory
prepayment or otherwise) or fail to pay any reimbursement obligation with
respect to any Letter of Credit when due in accordance with the terms hereof; or
the Borrower shall fail to pay any interest on any Loan, or any other amount
payable hereunder or under any other Loan Document, within two Business Days
after any such interest or other amount becomes due in accordance with the terms
hereof; or
(b) any representation or warranty made or deemed made by
any Credit Party herein or in any other Loan Document or that is contained in
any certificate, document or financial or other statement furnished by it at any
time under or in connection with this Agreement or any such other document shall
prove to have been inaccurate in any material respect on or as of the date made
or deemed made; or
(c) (i) any Credit Party shall default in the observance
or performance of any agreement contained in Section 1.4, Section 1.8, clause
(i) or (ii) of Section 5.2(a) (with respect to Holdings and the Borrower only),
Section 5.5(a), Section 5.8, Section 6 or any of the provisions set forth in
Annexes C or G of this Agreement or Sections 5.4 and 5.6(b) of the Senior
Current Asset Security Agreement or (ii) an "Event of Default" under and as
defined in any Mortgage shall have occurred and be continuing; or
(d) (i) Borrower shall default in the performance of any
agreement set forth in (A) Annex F or paragraphs (a), (b), (c), (d), (i) or (j)
of Annex E, and such default shall continue unremedied for a period of three (3)
days or (B) any other agreement set forth in Section 4 or in Annex E, and such
default shall continue unremedied for a period of seven (7) Business Days; or
(ii) any Credit Party shall default in the observance or performance of any
other agreement contained in this Agreement or any other Loan Document (other
than as provided in paragraphs (a) through (c) of this Section or clause (i) of
this paragraph (d)), and such default shall continue unremedied for a period of
30 days after (i) notice to the Borrower from the Administrative Agent or the
Requisite Lenders or (ii) knowledge of the Borrower, whichever is earlier; or
(e) any Group Member shall (i) default in making any
payment of any principal of any Indebtedness (including any Guarantee
Obligation, but excluding the Loans) on the scheduled or original due date with
respect thereto; or (ii) default in making any payment of any interest on any
such Indebtedness beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created; or (iii) default in the
observance or performance of any other agreement or condition relating to any
such Indebtedness or contained in any instrument or agreement evidencing,
securing or relating
53
thereto, or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder or
beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder
or beneficiary) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or (in the case of any
such Indebtedness constituting a Guarantee Obligation) to become payable;
provided, that a default, event or condition described in clause (i), (ii) or
(iii) of this paragraph (e) shall not at any time constitute an Event of Default
unless, at such time, one or more defaults, events or conditions of the type
described in clauses (i), (ii) and (iii) of this paragraph (e) shall have
occurred and be continuing with respect to Indebtedness the outstanding
principal amount of which exceeds in the aggregate $5,000,000; or
(f) (i) any Group Member shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or any
Group Member shall make a general assignment for the benefit of its creditors;
or (ii) there shall be commenced against any Group Member any case, proceeding
or other action of a nature referred to in clause (i) above that (A) results in
the entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against any Group Member any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets that results
in the entry of an order for any such relief that shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) any Group Member shall take any action indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) any Group Member shall generally not, or shall be
unable to, or shall admit publicly or in writing its inability to, pay its debts
as they become due; or (vi) any Group Member shall not be Solvent; or
(g) (i) any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the IRC)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of any
Group Member or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required Lenders,
likely to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) any Group Member or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Lenders is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or exist
with respect to a Plan; and in each case in clauses (i) through (vi) above, such
54
event or condition, together with all other such events or conditions, if any,
would, in the judgment of the Required Lenders, reasonably be expected to have a
Material Adverse Effect; or
(h) one or more judgments or decrees shall be entered
against any Group Member involving in the aggregate a liability (in excess of
amounts paid or insured as to which the relevant insurance company has
acknowledged coverage) of $5,000,000 or more, and all such judgments or decrees
shall not have been vacated, discharged, stayed or bonded pending appeal within
30 days from the entry thereof; or
(i) any of the Collateral Documents shall cease, for any
reason, to be in full force and effect, or any Credit Party or any Affiliate of
any Credit Party shall so assert, or any Lien created or purported to be created
by any of the Collateral Documents shall cease to be enforceable and of the same
effect and priority purported to be created thereby with respect to any material
amount of the Collateral; or
(j) the guarantee of any Credit Party contained in the
Guarantee Agreement or any similar agreement entered into guaranteeing payment
of the Obligations shall cease, for any reason, to be in full force and effect
(except as a result of a disposition, liquidation or merger of a Credit Party
permitted by Section 6.4) or any Credit Party or any Affiliate of any Credit
Party shall so assert; or
(k) (i) (A) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) other than United Steelworkers of America
(together with any trustee or entity appointed thereby to hold common stock of
Holdings on its behalf, including the VEBA Trust, the "Union") shall become, or
obtain rights (whether by means or warrants, options or otherwise) to become,
the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d) 5 under the
Exchange Act), directly or indirectly, of more than 30% of the outstanding
common stock of Holdings or (B) the Union shall (I) vote or have the ability to
vote more than 27% of the outstanding common stock of Holdings in any election
of one or more directors of Holdings or (II) become, or obtain rights (whether
by means or warrants, options or otherwise) to become, the beneficial owner,
directly or indirectly, of more than 40% of the outstanding common stock of
Holdings, provided that it shall not be an Event of Default hereunder if the
Union shall become, or obtain rights (whether by means or warrants, options or
otherwise) to become, the beneficial owner, directly or indirectly, of more than
40% of the outstanding common stock of Holdings so long as (I) the acquisition
of Holdings common stock (or rights to acquire Holdings common stock) which
causes the Union's beneficial ownership to exceed 40% (and each acquisition of
Holdings common stock by the Union thereafter) is made directly from Holdings
and (II) the Union's beneficial ownership does not at any time equal or exceed
50% of the outstanding common stock of Holdings; (ii) the board of directors of
Borrower shall cease to consist of a majority of Continuing Directors; or (iii)
Holdings shall cease to own and control, of record and beneficially, directly,
100% of each class of outstanding Capital Stock of the Borrower free and clear
of all Liens (except Liens created by the Security Agreement); or
(l) Holdings shall (i) conduct, transact or otherwise
engage in, or commit to conduct, transact or otherwise engage in, any business
or operations other than those incidental to its ownership of the Capital Stock
of the Borrower and WP Steel Venture, (ii) incur, create,
55
assume or suffer to exist any Indebtedness or other liabilities or financial
obligations, except (x) nonconsensual obligations imposed by operation of law,
(y) obligations pursuant to the Loan Documents, the loan documents relating to
the Term Loan Agreement and the EAF Supplemental Loan Agreement to which it is a
party, the Series A Notes, the Series B Notes and the RDL Obligations and (z)
obligations with respect to its Capital Stock, or (iii) own, lease, manage or
otherwise operate any properties or assets (including cash (other than cash
received in connection with dividends made by the Borrower or WP Steel Venture
in accordance with Section 6.6 pending application in the manner contemplated by
said Section) and cash equivalents) other than the ownership of shares of
Capital Stock of the Borrower or WP Steel Venture; or
(m) any information contained in any Borrowing Base
Certificate is untrue or incorrect in any respect, or any representation or
warranty herein or in any Loan Document or in any written statement, report,
financial statement or certificate (other than a Borrowing Base Certificate)
made or delivered to Agent or any Lender by any Credit Party is untrue or
incorrect in any material respect as of the date when made or deemed made; or
(n) any event occurs, whether or not insured or
insurable, as a result of which revenue-producing activities cease or are
substantially curtailed at facilities (whether as a result of strike, boycott,
an event of force majeure or otherwise) of any Group Member generating more than
10% of Holdings' revenues for the Fiscal Year preceding such event and such
cessation or curtailment continues for more than thirty (30) days; or
(o) assets of any Credit Party with a fair market value
of $500,000 or more are attached, seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Credit Party and such
condition continues for thirty (30) days or more;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to Holdings or the
Borrower, automatically the Loans (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents shall
immediately become due and payable, and (B) if such event is any other Event of
Default, with the consent of the Requisite Lenders, the Administrative Agent
may, or upon the request of the Requisite Lenders, the Administrative Agent
shall, by notice to the Borrower declare the Loans (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents to be due and payable forthwith, whereupon the same shall immediately
become due and payable. Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived by the Borrower.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations.
(a) Subject to the terms of this Section 9.1, any Lender
may make an assignment to a Qualified Assignee of, or sale of participations in,
at any time or times, the Loan Documents, Loans, Letter of Credit Obligations
and any Revolving Loan Commitment or any
56
portion thereof or interest therein, including any Lender's rights, title,
interests, remedies, powers or duties thereunder. Any assignment by a Lender
shall: (i) require the consent of Administrative Agent (which consent shall not
be unreasonably withheld or delayed with respect to a Qualified Assignee) and
the execution of an assignment agreement (an "Assignment Agreement")
substantially in the form attached hereto as Exhibit 9.1(a) and otherwise in
form and substance reasonably satisfactory to, and acknowledged by,
Administrative Agent; (ii) be conditioned on such assignee Lender representing
to the assigning Lender and Administrative Agent that it is purchasing the
applicable Loans to be assigned to it for its own account, for investment
purposes and not with a view to the distribution thereof; (iii) after giving
effect to any such partial assignment, the assignee Lender shall have
Commitments in an amount at least equal to $1,000,000 and the assigning Lender
shall have retained Commitments in an amount at least equal to $5,000,000; (iv)
include a payment to Administrative Agent of an assignment fee of $3,500 and (v)
so long as no Event of Default has occurred and is continuing, require the
consent of Borrower, which shall not be unreasonably withheld or delayed;
provided that in no event shall the consent of the Borrower or the
Administrative Agent be required for an assignment to a Lender or to an
affiliate of a Lender. In the case of an assignment by a Lender under this
Section 9.1, the assignee shall have, to the extent of such assignment, the same
rights, benefits and obligations as all other Lenders hereunder. The assigning
Lender shall be relieved of its obligations hereunder with respect to its
Revolving Loan Commitments or assigned portion thereof from and after the date
of such assignment. Borrower hereby acknowledges and agrees that any assignment
shall give rise to a direct obligation of Borrower to the assignee and that the
assignee shall be considered to be a "Lender". In all instances, each Lender's
liability to make Loans hereunder shall be several and not joint and shall be
limited to such Lender's Pro Rata Share of the applicable Revolving Loan
Commitment. In the event Administrative Agent or any Lender assigns or otherwise
transfers all or any part of the Obligations, Administrative Agent or any such
Lender shall so notify Borrower and Borrower shall, upon the request of
Administrative Agent or such Lender, execute new Notes in exchange for the
Notes, if any, being assigned. Notwithstanding the foregoing provisions of this
Section 9.1(a), any Lender may at any time pledge the Obligations held by it and
such Lender's rights under this Agreement and the other Loan Documents to a
Federal Reserve Bank, and any Lender that is an investment fund may assign the
Obligations held by it and such Lender's rights under this Agreement and the
other Loan Documents to another investment fund managed by the same investment
advisor; provided, that no such pledge to a Federal Reserve Bank shall release
such Lender from such Lender's obligations hereunder or under any other Loan
Document.
(b) Any participation by a Lender of all or any part of
its Revolving Loan Commitments shall be made with the understanding that all
amounts payable by Borrower hereunder shall be determined as if that Lender had
not sold such participation, and that the holder of any such participation shall
not be entitled to require such Lender to take or omit to take any action
hereunder except actions directly affecting (i) any reduction in the principal
amount of, or interest rate or Fees payable with respect to, any Loan in which
such holder participates, (ii) any extension of the scheduled amortization of
the principal amount of any Loan in which such holder participates or the final
maturity date thereof, and (iii) any release of all or substantially all of the
Collateral (other than in accordance with the terms of this Agreement, the
Collateral Documents or the other Loan Documents). Solely for purposes of
Sections 1.13, 1.15, 1.16 and 9.8, Borrower acknowledges and agrees that a
participation shall give rise to a direct obligation of Borrower to the
participant and the participant shall be considered to be a "Lender".
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Except as set forth in the preceding sentence neither Borrower nor any other
Credit Party shall have any obligation or duty to any participant. Neither
Administrative Agent nor any Lender (other than the Lender selling a
participation) shall have any duty to any participant and may continue to deal
solely with the Lender selling a participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no
Lender shall, as between Borrower and that Lender, or Administrative Agent and
that Lender, be relieved of any of its obligations hereunder as a result of any
sale, assignment, transfer or negotiation of, or granting of participation in,
all or any part of the Loans, the Notes or other Obligations owed to such
Lender.
(d) Each Credit Party executing this Agreement shall
assist any Lender permitted to sell assignments or participations under this
Section 9.1 as reasonably required to enable the assigning or selling Lender to
effect any such assignment or participation, including the execution and
delivery of any and all agreements, notes and other documents and instruments as
shall be requested and the preparation of informational materials for, and the
participation of management in meetings with, potential assignees or
participants. Each Credit Party executing this Agreement shall certify the
correctness, completeness and accuracy of all descriptions of the Credit Parties
and their respective affairs contained in any selling materials provided by it
and all other information provided by it and included in such materials, except
that any projections delivered by Borrower shall only be certified by Borrower
as having been prepared by Borrower in compliance with the representations
contained in Section 3.17.
(e) A Lender may furnish any information concerning
Credit Parties in the possession of such Lender from time to time to assignees
and participants (including prospective assignees and participants); provided
that such Lender shall obtain from assignees or participants confidentiality
covenants substantially equivalent to those contained in Section 11.8.
(f) So long as no Event of Default has occurred and is
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Revolving Loan Commitments to a potential Lender or participant, if, as
of the date of the proposed assignment or sale, the assignee Lender or
participant would be subject to capital adequacy or similar requirements under
Section 1.16(a), increased costs under Section 1.16(b), an inability to fund
LIBOR Loans under Section 1.16(c), or withholding taxes in accordance with
Section 1.15(a).
(g) Notwithstanding anything to the contrary contained
herein, any Lender (a "Granting Lender"), may grant to a special purpose funding
vehicle (an "SPC"), identified as such in writing by the Granting Lender to
Administrative Agent and Borrower, the option to provide to Borrower all or any
part of any Loans that such Granting Lender would otherwise be obligated to make
to Borrower pursuant to this Agreement; provided that (i) nothing herein shall
constitute a commitment by any SPC to make any Loan; and (ii) if an SPC elects
not to exercise such option or otherwise fails to provide all or any part of
such Loan, the Granting Lender shall be obligated to make such Loan pursuant to
the terms hereof. The making of a Loan by an SPC hereunder shall utilize the
Revolving Loan Commitment of the Granting Lender to the same extent, and as if
such Loan were made by such Granting Lender. No SPC shall be liable for any
indemnity or similar payment obligation under this Agreement (all liability for
which shall remain with the Granting Lender). Any SPC may (i) with notice to,
but without the prior written
58
consent of, Borrower and Administrative Agent and without paying any processing
fee therefor assign all or a portion of its interests in any Loans to the
Granting Lender or to any financial institutions (consented to by Borrower and
Agent) providing liquidity and/or credit support to or for the account of such
SPC to support the funding or maintenance of Loans and (ii) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPC. This Section 9.1(g) may not be
amended without the prior written consent of each Granting Lender, all or any of
whose Loans are being funded by an SPC at the time of such amendment. For the
avoidance of doubt, the Granting Lender shall for all purposes, including
without limitation, the approval of any amendment or waiver of any provision of
any Loan Document or the obligation to pay any amount otherwise payable by the
Granting Lender under the Loan Documents, continue to be the Lender of record
hereunder.
9.2 Appointment of Agents. Royal Bank of Canada and GE
Capital are hereby appointed to act on behalf of all Lenders as Administrative
Agent and Inventory and Receivables Security Agent, respectively, under this
Agreement and the other Loan Documents. The provisions of this Section 9.2 are
solely for the benefit of Administrative Agent, the Inventory and Receivables
Security Agent and Lenders and no Credit Party nor any other Person shall have
any rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement and the other Loan
Documents, each Agent shall act solely as an agent of Lenders and does not
assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any Credit Party or any other
Person. No Agent shall have any duties or responsibilities except for those
expressly set forth in this Agreement and the other Loan Documents. The duties
of Agents shall be mechanical and administrative in nature and no Agent shall
have, or be deemed to have, by reason of this Agreement, any other Loan Document
or otherwise a fiduciary relationship in respect of any Lender. Except as
expressly set forth in this Agreement and the other Loan Documents, no Agent
shall have any duty to disclose, and shall not be liable for failure to
disclose, any information relating to any Credit Party or any of their
respective Subsidiaries or any Account Debtor that is communicated to or
obtained by Royal Bank of Canada or GE Capital or any of their Affiliates in any
capacity. No Agent nor any of its Affiliates nor any of their respective
officers, directors, employees, agents or representatives shall be liable to any
Lender for any action taken or omitted to be taken by it hereunder or under any
other Loan Document, or in connection herewith or therewith, except for damages
caused by its or their own gross negligence or willful misconduct.
If any Agent shall request instructions from Requisite
Lenders, Supermajority Lenders or all affected Lenders with respect to any act
or action (including failure to act) in connection with this Agreement or any
other Loan Document, then such Agent shall be entitled to refrain from such act
or taking such action unless and until such Agent shall have received
instructions from Requisite Lenders, Supermajority Lenders, or all affected
Lenders, as the case may be, and such Agent shall not incur liability to any
Person by reason of so refraining. Each Agent shall be fully justified in
failing or refusing to take any action hereunder or under any other Loan
Document (a) if such action would, in the
59
opinion of such Agent, be contrary to law or the terms of this Agreement or any
other Loan Document, (b) if such action would, in the opinion of such Agent,
expose such Agent to Environmental Liabilities or (c) if such Agent shall not
first be indemnified to its satisfaction against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. Without limiting the foregoing, no Lender shall have any right
of action whatsoever against an Agent as a result of such Agent acting or
refraining from acting hereunder or under any other Loan Document in accordance
with the instructions of Requisite Lenders, Supermajority Lenders or all
affected Lenders, as applicable.
No Documentation Agent or Syndication Agent shall have any
duties or responsibilities or incur any liabilities hereunder in its capacity as
such.
9.3 Agent's Reliance, Etc. No Agent nor any of their
Affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or the other Loan Documents, except for
damages caused by its own gross negligence or willful misconduct. Without
limiting the generality of the foregoing, each Agent: (a) may treat the payee of
any Note as the holder thereof until such Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form reasonably
satisfactory to such Agent; (b) may consult with legal counsel, independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (d) 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 or the other Loan Documents on the part of any
Credit Party or to inspect the Collateral (including the books and records) of
any Credit Party; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (f) shall incur no liability
under or in respect of this Agreement or the other Loan Documents by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
9.4 Royal Bank of Canada, GE Capital and Affiliates. With
respect to its Revolving Loan Commitments hereunder, each of Royal Bank of
Canada and GE Capital shall have the same rights and powers under this Agreement
and the other Loan Documents as any other Lender and each may exercise the same
as though it were not an Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include each of Royal Bank of Canada and GE
Capital in its individual capacity. Royal Bank of Canada, GE Capital and their
Affiliates may lend money to, invest in, and generally engage in any kind of
business with, any Credit Party, any of their Affiliates and any Person who may
do business with or own securities of any Credit Party or any such Affiliate,
all as if Royal Bank of Canada or GE Capital, as appropriate, were not an Agent
and without any duty to account therefor to Lenders. Royal Bank of Canada, GE
Capital and their Affiliates may accept fees and other consideration from any
Credit Party for services in connection with this Agreement or otherwise without
having to
60
account for the same to Lenders. Each Lender acknowledges the potential conflict
of interest between each of Royal Bank of Canada and GE Capital as a Lender
holding disproportionate interests in the Loans and each of Royal Bank of Canada
and GE Capital as an Agent.
9.5 Lender Credit Decision. Each Lender acknowledges that
it has, independently and without reliance upon any Agent or any other Lender
and based on the Financial Statements referred to in Section 3.1 and such other
documents and information as it has deemed appropriate, made its own credit and
financial analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon any Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.
9.6 Indemnification. Lenders agree to indemnify each
Agent (to the extent not reimbursed by Credit Parties and without limiting the
obligations of Credit Parties hereunder), ratably according to the Lenders'
respective Pro Rata Shares, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against any Agent in any way relating to or arising
out of this Agreement or any other Loan Document or any action taken or omitted
to be taken by any Agent in connection therewith; provided, that no Lender shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from an Agent's gross negligence or willful misconduct. Without limiting the
foregoing, each Lender agrees to reimburse each Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including reasonable counsel
fees) incurred by such Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement and each other Loan
Document, to the extent that such Agent is not reimbursed for such expenses by
Credit Parties.
9.7 Successor Agent. Any Agent may resign at any time by
giving not less than thirty (30) days' prior written notice thereof to Lenders
and Borrower. Upon any such resignation, the Requisite Lenders shall have the
right to appoint a successor Administrative Agent or Inventory and Receivables
Security Agent, as the case may be. If no such successor Agent shall have been
so appointed by the Requisite Lenders and shall have accepted such appointment
within thirty (30) days after the resigning Agent's giving notice of
resignation, then the resigning Agent may, on behalf of Lenders, appoint a
successor Agent, which shall be a Lender, if a Lender is willing to accept such
appointment, or otherwise shall be a commercial bank or financial institution or
a subsidiary of a commercial bank or financial institution if such commercial
bank or financial institution is organized under the laws of the United States
of America or of any State thereof and has a combined capital and surplus of at
least $300,000,000. If no successor Agent has been appointed pursuant to the
foregoing, within thirty (30) days after the date such notice of resignation was
given by the resigning Agent, such resignation shall become effective and the
Requisite Lenders shall thereafter perform all the duties of the
61
resigning Agent hereunder until such time, if any, as the Requisite Lenders
appoint a successor Agent as provided above. Any successor Agent appointed by
Requisite Lenders hereunder shall be subject to the approval of Borrower, such
approval not to be unreasonably withheld or delayed; provided that such approval
shall not be required if a Default or an Event of Default has occurred and is
continuing. Upon the acceptance of any appointment as an Agent hereunder by a
successor Agent, such successor Agent shall succeed to and become vested with
all the rights, powers, privileges and duties of the resigning Agent. Upon the
earlier of the acceptance of any appointment as an Agent hereunder by a
successor Agent or the effective date of the resigning Agent's resignation, the
resigning Agent shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents, except that any indemnity rights or
other rights in favor of such resigning Agent shall continue. After any
resigning Agent's resignation hereunder, the provisions of this Section 9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was acting as an Agent under this Agreement and the other Loan Documents.
9.8 Setoff and Sharing of Payments. In addition to any
rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
any Event of Default and subject to Section 9.9(f), each Lender is hereby
authorized at any time or from time to time, without prior notice to any Credit
Party or to any Person other than Administrative Agent, any such notice being
hereby expressly waived, to offset and to appropriate and to apply any and all
balances held by it at any of its offices for the account of Borrower or any
Guarantor (regardless of whether such balances are then due to Borrower or any
Guarantor) and any other properties or assets at any time held or owing by that
Lender or that holder to or for the credit or for the account of Borrower or any
Guarantor against and on account of any of the Obligations that are not paid
when due; provided that the Lender exercising such offset rights shall give
notice thereof to the affected Credit Party promptly after exercising such
rights. Any Lender exercising a right of setoff or otherwise receiving any
payment on account of the Obligations in excess of its Pro Rata Share thereof
shall purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender's or holder's Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
offset or otherwise received with each other Lender or holder in accordance with
their respective Pro Rata Shares, (other than offset rights exercised by any
Lender with respect to Sections 1.13, 1.15 or 1.16). Each Lender's obligation
under this Section 9.8 shall be in addition to and not in limitation of its
obligations to purchase a participation in an amount equal to its Pro Rata Share
of the Swing Line Loans under Section 1.1. Borrower and each Guarantor agrees,
to the fullest extent permitted by law, that (a) any Lender may exercise its
right to offset with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amounts so offset to other
Lenders and holders and (b) any Lender so purchasing a participation in the
Loans made or other Obligations held by other Lenders or holders may exercise
all rights of offset, bankers' lien, counterclaim or similar rights with respect
to such participation as fully as if such Lender or holder were a direct holder
of the Loans and the other Obligations in the amount of such participation.
Notwithstanding the foregoing, if all or any portion of the offset amount or
payment otherwise received is thereafter recovered from the Lender that has
exercised the right of offset, the purchase of participations by that Lender
shall be rescinded and the purchase price restored without interest.
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9.9 Advances; Payments; Non-Funding Lenders; Information;
Actions in Concert.
(a) Advances; Payments.
(i) Administrative Agent shall notify Lenders,
promptly after receipt of a Notice of Revolving Advance and in any event prior
to 1:00 p.m. (New York time) on the date such Notice of Revolving Advance is
received, by telecopy, telephone or other similar form of transmission. Each
Lender shall make the amount of such Lender's Pro Rata Share of such Revolving
Credit Advance available to Administrative Agent in same day funds by wire
transfer to Administrative Agent's account as set forth in Annex H not later
than 3:00 p.m. (New York time) on the requested funding date in the case of an
Index Rate Loan and not later than 11:00 a.m. (New York time) on the requested
funding date in the case of a LIBOR Loan. After receipt of such wire transfers
(or, in the Administrative Agent's sole discretion, before receipt of such wire
transfers), subject to the terms hereof, Administrative Agent shall make the
requested Revolving Credit Advance to Borrower. All payments by each Lender
shall be made without setoff, counterclaim or deduction of any kind.
(ii) Not less than once during each calendar week
or more frequently at Administrative Agent's election (each, a "Settlement
Date"), Administrative Agent shall advise each Lender by telephone, or telecopy
of the amount of such Lender's Pro Rata Share of principal, interest and Fees
paid for the benefit of Lenders with respect to each applicable Loan. Provided
that each Lender has funded all payments and Advances required to be made by it
and purchased all participations required to be purchased by it under this
Agreement and the other Loan Documents as of such Settlement Date,
Administrative Agent shall pay to each Lender such Lender's Pro Rata Share of
principal, interest and Fees paid by Borrower since the previous Settlement Date
for the benefit of such Lender on the Loans held by it. To the extent that any
Lender (a "Non-Funding Lender") has failed to fund all such payments and
Advances or failed to fund the purchase of all such participations,
Administrative Agent shall be entitled to set off the funding short-fall against
that Non-Funding Lender's Pro Rata Share of all payments received from Borrower.
Such payments shall be made by wire transfer to such Lender's account (as
specified by such Lender in Annex H or the applicable Assignment Agreement) not
later than 2:00 p.m. (New York time) on the next Business Day following each
Settlement Date.
(b) Availability of Lender's Pro Rata Share.
Administrative Agent may assume that each Lender will make its Pro Rata Share of
each Revolving Credit Advance available to Administrative Agent on each funding
date. If such Pro Rata Share is not, in fact, paid to Administrative Agent by
such Lender when due, Administrative Agent will be entitled to recover such
amount on demand from such Lender without setoff, counterclaim or deduction of
any kind. If any Lender fails to pay the amount of its Pro Rata Share forthwith
upon Administrative Agent's demand, Administrative Agent shall promptly notify
Borrower and Borrower shall immediately repay such amount to Administrative
Agent. Nothing in this Section 9.9(b) or elsewhere in this Agreement or the
other Loan Documents shall be deemed to require Administrative Agent to advance
funds on behalf of any Lender or to relieve any Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Borrower may
have against any Lender as a result of any default by such Lender hereunder. To
the extent that Administrative Agent advances funds to Borrower on behalf of any
Lender and is not reimbursed
63
therefor on the same Business Day as such Advance is made, Administrative Agent
shall be entitled to retain for its account all interest accrued on such Advance
until reimbursed by the applicable Lender.
(c) Return of Payments.
(i) If Administrative Agent pays an amount to a
Lender under this Agreement in the belief or expectation that a related
payment has been or will be received by Administrative Agent from Borrower and
such related payment is not received by Administrative Agent, then
Administrative Agent will be entitled to recover such amount from such Lender on
demand without setoff, counterclaim or deduction of any kind.
(ii) If Administrative Agent determines at any
time that any amount received by Administrative Agent under this Agreement must
be returned to Borrower or paid to any other Person pursuant to any insolvency
law or otherwise, then, notwithstanding any other term or condition of this
Agreement or any other Loan Document, Administrative Agent will not be required
to distribute any portion thereof to any Lender. In addition, each Lender will
repay to Administrative Agent on demand any portion of such amount that
Administrative Agent has distributed to such Lender, together with interest at
such rate, if any, as Administrative Agent is required to pay to Borrower or
such other Person, without setoff, counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Non-Funding
Lender to make any Revolving Credit Advance or any payment required by it
hereunder, or to purchase any participation in any Swing Line Loan to be made or
purchased by it on the date specified therefor shall not relieve any other
Lender (each such other Lender, an "Other Lender") of its obligations to make
such Advance or purchase such participation on such date, but neither any Other
Lender nor Administrative Agent shall be responsible for the failure of any
Non-Funding Lender to make an Advance, purchase a participation or make any
other payment required hereunder. Notwithstanding anything set forth herein to
the contrary, a Non-Funding Lender shall not have any voting or consent rights
under or with respect to any Loan Document or constitute a "Lender" (or be
included in the calculation of "Requisite Lenders" or "Supermajority Lenders"
hereunder) for any voting or consent rights under or with respect to any Loan
Document. At Borrower's request, Administrative Agent or a Person acceptable to
Administrative Agent shall have the right with Administrative Agent's consent
and in Administrative Agent's sole discretion (but shall have no obligation) to
purchase from any Non-Funding Lender, and each Non-Funding Lender agrees that it
shall, at Administrative Agent's request, sell and assign to Administrative
Agent or such Person, all of the Revolving Loan Commitments of that Non-Funding
Lender for an amount equal to the principal balance of all Loans held by such
Non-Funding Lender and all accrued interest and fees with respect thereto
through the date of sale, such purchase and sale to be consummated pursuant to
an executed Assignment Agreement.
(e) Dissemination of Information. Administrative Agent
shall use reasonable efforts to provide Lenders with any notice of Default or
Event of Default received by Administrative Agent from, or delivered by
Administrative Agent to, any Credit Party, with notice of any Event of Default
of which Administrative Agent has actually become aware and with notice of any
action taken by Administrative Agent following any Event of Default;
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provided, that Administrative Agent shall not be liable to any Lender for any
failure to do so, except to the extent that such failure is attributable to
Administrative Agent's gross negligence or willful misconduct. Lenders
acknowledge that Borrower is required to provide Financial Statements and
Collateral Reports to Lenders in accordance with Annexes E and F hereto and
agree that Administrative Agent shall have no duty to provide the same to
Lenders.
(f) Actions in Concert. Anything in this Agreement to the
contrary notwithstanding, each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Notes (including exercising any rights of setoff) without
first obtaining the prior written consent of Administrative Agent and Requisite
Lenders, it being the intent of Lenders that any such action to protect or
enforce rights under this Agreement and the Notes shall be taken in concert and
at the direction or with the consent of Administrative Agent or Requisite
Lenders.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other
Loan Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agents, Lenders and their respective successors and assigns (including,
in the case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of Agents and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
without the prior express written consent of Agents and Lenders shall be void.
The terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of each Credit Party, Agents and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The
Loan Documents constitute the complete agreement between the parties with
respect to the subject matter thereof and may not be modified, altered or
amended except as set forth in Section 11.2. Any letter of interest, commitment
letter, fee letter or confidentiality agreement, if any, between any Credit
Party and Agent or any Lender or any of their respective Affiliates, predating
this Agreement and relating to a financing of substantially similar form,
purpose or effect shall be superseded by this Agreement. Notwithstanding the
foregoing, the Fee Letter shall survive the execution and delivery of this
Agreement and shall continue to be binding obligations of the parties.
11.2 Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by
an Agent, no amendment, modification, termination or waiver of any provision of
this Agreement or any other Loan Document, or any consent to any departure by
any Credit Party therefrom, shall in any
65
event be effective unless the same shall be in writing and signed by
Administrative Agent and Borrower, and by Requisite Lenders, Supermajority
Lenders or all affected Lenders, as applicable. Except as set forth in clauses
(b) and (c) below, all such amendments, modifications, terminations or waivers
requiring the consent of any Lenders shall require the written consent of
Requisite Lenders.
(b) No amendment, modification, termination or waiver of
or consent with respect to any provision of this Agreement that increases the
percentage advance rates, Inventory Cap or Liquidation Percentage set forth in
the definition of the Borrowing Base, or that makes less restrictive the
nondiscretionary criteria for exclusion from Eligible Accounts and Eligible
Inventory set forth in Sections 1.6 and 1.7, shall be effective unless the same
shall be made in accordance with Sections 1.6 and 1.7. No amendment,
modification, termination or waiver of or consent with respect to any provision
of this Agreement that waives compliance with the conditions precedent set forth
in Section 2.2 to the making of any Loan or the incurrence of any Letter of
Credit Obligations shall be effective unless the same shall be in writing and
signed by the Administrative Agent, Requisite Lenders and Borrower.
Notwithstanding anything contained in this Agreement to the contrary, no waiver
or consent with respect to any Default or any Event of Default shall be
effective for purposes of the conditions precedent to the making of Loans or the
incurrence of Letter of Credit Obligations set forth in Section 2.2 unless the
same shall be in writing and signed by the Administrative Agent, the Borrower
and the Lenders which would otherwise be required to agree to such waiver or
consent in accordance with the applicable provisions of this Section 11.2.
(c) No amendment, modification, termination or waiver
shall, unless in writing and signed by Administrative Agent and each Lender
directly affected thereby: (i) increase the principal amount of any Lender's
Revolving Loan Commitment; (ii) reduce the principal of, rate of interest on or
Fees payable with respect to any Loan or Letter of Credit Obligations of any
affected Lender; (iii) extend any scheduled payment date (other than payment
dates of mandatory prepayments under Section 1.3(b)-(f)) or final maturity date
of the principal amount of any Loan of any affected Lender; (iv) waive, forgive,
defer, extend or postpone any payment of interest or Fees as to any affected
Lender; (v) release any material portion of the Guarantors from their guarantee
obligations under the Collateral Documents or release any material portion of
the Collateral (which action shall be deemed to directly affect all Lenders),
except as otherwise permitted herein or in the other Loan Documents; (vi) change
the percentage of the Revolving Loan Commitments or of the aggregate unpaid
principal amount of the Loans that shall be required for Lenders or any of them
to take any action hereunder; (vii) reduce the minimum Borrowing Availability
required by paragraph (d) of Annex G (which action shall be deemed to directly
affect all Lenders); (viii) increase the aggregate amount of Revolving Loan
Commitments (which action shall be deemed to directly affect all Lenders); and
(ix) amend or waive this Section 11.2 or the definitions of the terms "Requisite
Lenders" or "Supermajority Lenders" insofar as such definitions affect the
substance of this Section 11.2. Furthermore, no amendment, modification,
termination or waiver affecting the rights or duties of any Agent or the L/C
Issuer under this Agreement or any other Loan Document shall be effective unless
in writing and signed by such Agent or the L/C Issuer, as the case may be, in
addition to Lenders required hereinabove to take such action. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for Inventory and
Receivables
66
Security Agent to direct Collateral Agent to take additional Collateral pursuant
to any Loan Document. No amendment, modification, termination or waiver of any
provision of any Note shall be effective without the written concurrence of the
holder of that Note. No notice to or demand on any Credit Party in any case
shall entitle such Credit Party or any other Credit Party to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
Section 11.2 shall be binding upon each holder of the Notes at the time
outstanding and each future holder of the Notes.
(d) If, in connection with any proposed amendment,
modification, waiver or termination (a "Proposed Change"):
(i) requiring the consent of all affected
Lenders, the consent of Requisite Lenders is obtained, but the consent of other
Lenders whose consent is required is not obtained (any such Lender whose consent
is not obtained as described in this clause (i) and in clauses (ii), (iii) and
(iv) below being referred to as "Non Consenting Lender");
(ii) requiring the consent of Supermajority
Revolving Lenders, the consent of Requisite Lenders is obtained, but the consent
of Supermajority Lenders is not obtained; or
(iii) requiring the consent of Requisite Lenders,
the consent of Lenders holding 51% or more of the aggregate Revolving Loan
Commitments is obtained, but the consent of Requisite Lenders is not obtained;
then, so long as neither the Administrative Agent nor the Inventory and
Receivables Security Agent is a Non Consenting Lender, at Borrower's request
Administrative Agent, or a Person reasonably acceptable to Administrative Agent,
shall have the right with Administrative Agent's consent and in Administrative
Agent's sole discretion (but shall have no obligation) to purchase from such Non
Consenting Lenders, and such Non Consenting Lenders agree that they shall, upon
Administrative Agent's request, sell and assign to Administrative Agent or such
Person, all of the Revolving Loan Commitments of such Non Consenting Lenders for
an amount equal to the principal balance of all Loans held by the Non Consenting
Lenders and all accrued interest and Fees with respect thereto through the date
of sale, such purchase and sale to be consummated pursuant to an executed
Assignment Agreement.
(e) Upon payment in full in cash and performance of all
of the Obligations (other than indemnification Obligations), termination of the
Revolving Loan Commitments and a release of all claims against Agents and
Lenders, and so long as no suits, actions, proceedings, or claims are pending or
threatened against any Indemnified Person asserting any damages, losses or
liabilities that are Indemnified Liabilities, Inventory and Receivables Security
Agent shall so inform Collateral Agent after which date the Agents and the
Lenders shall no longer have any interest in the Collateral Documents.
11.3 Fees and Expenses. Borrower shall reimburse (i)
Agents for all fees, costs and expenses (including the reasonable fees and
expenses of all of its counsel, advisors, consultants and auditors) and (ii)
Agents (and, with respect to clauses (c) and (d)
67
below, all Lenders) for all fees, costs and expenses, including the reasonable
fees, costs and expenses of counsel or other advisors (including environmental
and management consultants and appraisers) incurred in connection with the
negotiation, preparation and filing and/or recordation of the Loan Documents and
incurred in connection with:
(a) any amendment, modification or waiver of, or consent
with respect to, or termination of, any of the Loan Documents or Related
Transactions Documents or advice in connection with the syndication and
administration of the Loans made pursuant hereto or its rights hereunder or
thereunder;
(b) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by any Agent, any Lender, any Credit Party or any
other Person and whether as a party, witness or otherwise) in any way relating
to the Collateral, any of the Loan Documents or any other agreement to be
executed or delivered in connection herewith or therewith, including any
litigation, contest, dispute, suit, case, proceeding or action, and any appeal
or review thereof, in connection with a case commenced by or against any or all
of the Credit Parties or any other Person that may be obligated to any Agent by
virtue of the Loan Documents, including any such litigation, contest, dispute,
suit, proceeding or action arising in connection with any work-out or
restructuring of the Loans during the pendency of one or more Events of Default;
provided that in the case of reimbursement of counsel for Lenders other than any
Agent, such reimbursement shall be limited to one counsel for all such Lenders;
provided, further, that no Person shall be entitled to reimbursement under this
clause (c) in respect of any litigation, contest, dispute, suit, proceeding or
action to the extent any of the foregoing results from such Person's gross
negligence or willful misconduct;
(c) any attempt to enforce any remedies of any Agent or
any Lender against any or all of the Credit Parties or any other Person that may
be obligated to any Agent or any Lender by virtue of any of the Loan Documents,
including any such attempt to enforce any such remedies in the course of any
work-out or restructuring of the Loans during the pendency of one or more Events
of Default; provided, that in the case of reimbursement of counsel for Lenders
other than Agent, such reimbursement shall be limited to one counsel for all
such Lenders;
(d) any workout or restructuring of the Loans during the
pendency of one or more Events of Default; and
(e) efforts to (i) monitor the Loans or any of the other
Obligations, (ii) evaluate, observe or assess any of the Credit Parties or their
respective affairs, and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (e) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in connection with or
relating to any of the events or actions described in this Section 11.3, all of
which shall be payable, on demand, by Borrower to Administrative Agent. Without
limiting the generality of the foregoing, such expenses, costs, charges and fees
may include: fees, costs and expenses of
68
accountants, environmental advisors, appraisers, investment bankers, management
and other consultants and paralegals; court costs and expenses; photocopying and
duplication expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram or telecopy charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other advisory
services.
11.4 No Waiver. Any Agent's or Lender's failure, at any
time or times, to require strict performance by the Credit Parties of any
provision of this Agreement or any other Loan Document shall not waive, affect
or diminish any right of such Agent or Lender thereafter to demand strict
compliance and performance herewith or therewith. Any suspension or waiver of an
Event of Default shall not suspend, waive or affect any other Event of Default
whether the same is prior or subsequent thereto and whether the same or of a
different type. Subject to the provisions of Section 11.2, none of the
undertakings, agreements, warranties, covenants and representations of any
Credit Party contained in this Agreement or any of the other Loan Documents and
no Default or Event of Default by any Credit Party shall be deemed to have been
suspended or waived by any Agent or Lender, unless such waiver or suspension is
by an instrument in writing signed by an officer of or other authorized employee
of Administrative Agent, Inventory and Receivables Security Agent and the
applicable required Lenders and directed to Borrower specifying such suspension
or waiver.
11.5 Remedies. Agents' and Lenders' rights and remedies
under this Agreement shall be cumulative and nonexclusive of any other rights
and remedies that any Agent or Lender may have under any other agreement,
including the other Loan Documents, by operation of law or otherwise. Recourse
to the Collateral shall not be required.
11.6 Severability. Wherever possible, each provision of
this Agreement and the other Loan Documents shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision
of this Agreement or any other Loan Document shall be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement or such other Loan
Document.
11.7 Conflict of Terms. Except as otherwise provided in
this Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement conflicts with any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
11.8 Confidentiality. Each Agent and Lender agree to use
commercially reasonable efforts (equivalent to the efforts such Agent or Lender
applies to maintain the confidentiality of its own confidential information) to
maintain as confidential all confidential information provided to them by the
Credit Parties and designated as confidential for a period of two (2) years
following receipt thereof, except that each Agent and Lender may disclose such
information (a) to Persons employed or engaged by such Agent or Lender; (b) to
any other Lender or any affiliate of a Lender; (c) to any bona fide assignee or
participant or potential assignee or participant that has agreed to comply with
the covenant contained in this
69
Section 11.8 (and any such bona fide assignee or participant or potential
assignee or participant may disclose such information to Persons employed or
engaged by them as described in clause (a) above); (d) as required or requested
by any Governmental Authority or reasonably believed by such Agent or Lender to
be compelled by any court decree, subpoena or legal or administrative order or
process; (e) as, on the advice of such Agent's or Lender's counsel, is required
by law; (f) in connection with the exercise of any right or remedy under the
Loan Documents or in connection with any Litigation to which such Agent or
Lender is a party; or (g) that ceases to be confidential through no fault of any
Agent or Lender. Notwithstanding anything to the contrary set forth herein or in
any other Loan Document, the obligations of confidentiality contained herein and
therein, as they relate to the transactions provided for or contemplated herein
(collectively, the "Transaction"), shall not apply to the tax structure or tax
treatment of the Transaction, and each party hereto (and any employee,
representative, or agent of any party hereto) may disclose to any and all
persons, without limitation of any kind, the tax structure and tax treatment of
the Transaction. The preceding sentence is intended to cause the Transaction not
to be treated as having been offered under conditions of confidentiality for
purposes of Section 1.6011-4(b)(3) (or any successor provision) of the Treasury
regulations promulgated under Section 6011 of the Internal Revenue Code of 1986,
as amended, and shall be construed in a manner consistent with such purpose. In
addition, each party hereto acknowledges that it has no proprietary or exclusive
rights to any tax concept, tax matter or tax idea related to the Transaction.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
EACH CREDIT PARTY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS
LOCATED IN XXX XXXX XXXXXX, XXXX XX XXX XXXX, XXX XXXX SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT
PARTIES, AGENTS AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT AGENTS, LENDERS AND THE CREDIT
PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A
COURT LOCATED OUTSIDE OF NEW YORK COUNTY AND; PROVIDED, FURTHER THAT NOTHING IN
THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT
OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF ANY AGENT; PROVIDED, FURTHER THAT IF FOR ANY
REASON THE STATE AND FEDERAL COURTS SITTING IN NEW YORK COUNTY, CITY OF NEW
YORK, NEW YORK CANNOT OR WILL NOT ACCEPT JURISDICTION OVER ANY SUCH SUIT, ACTION
OR PROCEEDING,
70
THEN THE EXCLUSIVITY OF JURISDICTION IN SUCH NEW YORK COURTS SHALL NOT APPLY.
EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY HEREBY
WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN
ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS
AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.
11.10 Notices. Except as otherwise provided herein,
whenever it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or served
upon any of the parties by any other parties, or whenever any of the parties
desires to give or serve upon any other parties any communication with respect
to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be deemed to
have been validly served, given or delivered (a) upon the earlier of actual
receipt and three (3) Business Days after deposit in the United States Mail,
registered or certified mail, return receipt requested, with proper postage
prepaid, (b) upon transmission, when sent by telecopy or other similar facsimile
transmission (with such telecopy or facsimile promptly confirmed by delivery of
a copy by personal delivery or United States Mail as otherwise provided in this
Section 11.10); (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address or facsimile number indicated in Annex I or to
such other address (or facsimile number) as may be substituted by notice given
as herein provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Failure or delay in
delivering copies of any notice, demand, request, consent, approval, declaration
or other communication to any Person (other than Borrower or any Agent)
designated in Annex I to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
11.11 Section Titles. The Section titles and Table of
Contents contained in this Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
between the parties hereto.
11.12 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which shall collectively and separately
constitute one agreement.
71
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENTS, LENDERS AND ANY CREDIT
PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14 Press Releases and Related Matters. Each Credit Party
executing this Agreement agrees that neither it nor its Affiliates will in the
future issue any press releases or other public disclosure using the name of
Royal Bank of Canada, GE Capital or any of their affiliates or referring to this
Agreement, the other Loan Documents or the Related Transactions Documents
without at least two (2) Business Days' prior notice to such party and without
the prior written consent of such party unless (and only to the extent that)
such Credit Party or Affiliate is required to do so under law and then, in any
event, such Credit Party or Affiliate will consult with Royal Bank of Canada or
GE Capital, as applicable, before issuing such press release or other public
disclosure. Each Credit Party consents to the publication by any Agent or Lender
of advertising material relating to the financing transactions contemplated by
this Agreement using Borrower's name, product photographs, logo or trademark.
Such Agent or Lender shall provide a draft of any advertising material to each
Credit Party for review and comment prior to the publication thereof. Agent
reserves the right to provide to industry trade organizations information
necessary and customary for inclusion in league table measurements.
11.15 Reinstatement. This Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against any Credit Party for liquidation or reorganization, should any Credit
Party become insolvent or make an assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of any Credit Party's assets, and shall continue to be
effective or to be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned
by any obligee of the Obligations, whether as a "voidable preference,"
"fraudulent conveyance," or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
11.16 Advice of Counsel. Each of the parties represents to
each other party hereto that it has discussed this Agreement and, specifically,
the provisions of Sections 11.9 and 11.13, with its counsel.
72
11.17 No Strict Construction.
The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
73
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
WHEELING-PITTSBURGH CORPORATION
By: /s/ Xxxx X. Xxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxx
Title: EVP and CFO
WHEELING-PITTSBURGH STEEL
CORPORATION, as Borrower
By: /s/ Xxxx X. Xxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxx
Title: EVP and CFO
ROYAL BANK OF CANADA, as Administrative
Agent
By: /s/ Xxxx Xxxxxx
----------------------------------------
Name: Xxxx Xxxxxx
Title: Manager, Agency
ROYAL BANK OF CANADA
Name of Lender
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION, as Inventory and Receivables
Security Agent and Documentation Agent
By: /s/ Xxxx Xxx
----------------------------------------
Name: Xxxx Xxx
Title: Duly Authorized Signatory
CIT GROUP/BUSINESS CREDIT, INC.
Name of Lender
74
By: /s/ Xxxx Xxxxxxx
------------------------------------------------
Name: Xxxx Xxxxxxx
Title: Vice President
FLEET CAPITAL CORPORATION
Name of Lender
By: /s/ Xxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President
CONGRESS FINANCIAL CORPORATION
Name of Lender
By: /s/ Xxxxxx X. Xxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
BANK ONE, N.A. (WITH ITS MAIN OFFICE IN CHICAGO, IL)
Name of Lender
By: /s/ Xxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: VP/Associate Director
ORIX FINANCIAL SERVICES, INC.
Name of Lender
By: /s/ Xxxxxxx X. Xxx
------------------------------------------------
Name: Xxxxxxx X. Xxx
Title: SVP Chief Credit Officer
75
ANNEX A (RECITALS)
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have
(unless otherwise provided elsewhere in the Loan Documents) the following
respective meanings and all references to Sections, Exhibits, Schedules or
Annexes in the following definitions shall refer to Sections, Exhibits,
Schedules or Annexes of or to the Agreement:
"Account Debtor" means any Person who may become obligated to
any Credit Party under, with respect to, or on account of, an Account, Chattel
Paper or General Intangibles (including a payment intangible).
"Accounting Changes" has the meaning ascribed thereto in
Annex G.
"Accounts" means all "accounts," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, including (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper or
Instruments), (including any such obligations that may be characterized as an
account or contract right under the Code), (b) all of each Credit Party's rights
in, to and under all purchase orders or receipts for goods or services, (c) all
of each Credit Party's rights to any goods represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed goods), (d)
all rights to payment due to any Credit Party for property sold, leased,
licensed, assigned or otherwise disposed of, for a policy of insurance issued or
to be issued, for a secondary obligation incurred or to be incurred, for energy
provided or to be provided, for the use or hire of a vessel under a charter or
other contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Credit Party or in connection with
any other transaction (whether or not yet earned by performance on the part of
such Credit Party), (e) all healthcare insurance receivables, and (f) all
collateral security of any kind, now or hereafter in existence, given by any
Account Debtor or other Person with respect to any of the foregoing.
"Administrative Agent" means Royal Bank of Canada in its
capacity as Administrative Agent for Lenders or its successor appointed pursuant
to Section 9.7.
"Advance" means any Revolving Credit Advance or Swing Line
Advance, as the context may require.
"Advance Rates" has the meaning ascribed thereto in the
definition "Borrowing Base".
"Affiliate" means, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary,
A-1
10% or more of the Capital Stock having ordinary voting power in the election of
directors of such Person, (b) each Person that controls, is controlled by or is
under common control with such Person, (c) each of such Person's officers,
directors, joint venturers and partners and (d) in the case of Borrower, the
immediate family members, spouses and lineal descendants of individuals who are
Affiliates of Borrower. For the purposes of this definition, "control" of a
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise; provided, however,
that the term "Affiliate" shall specifically exclude Agent and each Lender.
"Agents" means the collective reference to the Administrative
Agent and the Inventory and Receivables Security Agent.
"Agreement" means this Revolving Loan Agreement by and among
Holdings, Borrower, GE Capital, as Inventory and Receivables Security Agent and
Lender, Royal Bank of Canada, as Administrative Agent and Lender and the other
Lenders from time to time party hereto, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"Allenport Cold Mill Improvements" means improvements relating
to the stand-alone inspection line, the planned coil handling upgrade on the
temper mill and the addition of wet tempering to the temper mill and a shape
sensor to the exit end of the temper mill.
"Appendices" has the meaning ascribed to it in the recitals to
the Agreement.
"Applicable Index Margin" means the per annum interest rate
margin from time to time in effect and payable in addition to the Index Rate
applicable to the Revolving Loan, as determined by reference to Section 1.5(a).
"Applicable L/C Margin" means the per annum fee, from time to
time in effect, payable with respect to outstanding Letter of Credit Obligations
as determined by reference to Section 1.5(a).
"Applicable LIBOR Margin" means the per annum interest rate
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Revolving Loan, as determined by reference to Section 1.5(a).
"Applicable Margins" means collectively the Applicable L/C
Margin, the Applicable Unused Line Fee Margin, the Applicable Index Margin and
the Applicable LIBOR Margin.
"Applicable Unused Line Fee Margin" means the per annum fee,
from time to time in effect, payable in respect of Borrower's non-use of
committed funds pursuant to Section 1.9(b), which fee is determined by reference
to Section 1.5(a).
"Assignment Agreement" has the meaning ascribed to it in
Section 9.1(a).
A-2
"Automatic Roll Changer System" means the automatic change
system to be constructed by Danieli Corporation for the replacement of finishing
rollers on the hot strip mill.
"Bankruptcy Court" means the United States Bankruptcy Court
for the Northern District of Ohio.
"Blocked Accounts" has the meaning ascribed to it in Annex C.
"Borrower" has the meaning ascribed thereto in the preamble to
the Agreement.
"Borrowing Availability" means as of any date of determination
the lesser of (i) the Maximum Amount and (ii) the Borrowing Base, in each case,
less the sum of the Revolving Loan and Swing Line Loan then outstanding and,
without duplication, any reserves established by the Inventory and Receivables
Security Agent.
"Borrowing Base" means, as of any time of determination by
Inventory and Receivables Security Agent, an amount equal to the sum at such
time of:
(a) up to 85% of the book value of Eligible Accounts at
such time; and
(b) the lesser of:
(i) the sum of:
(A) the lesser of (I) 50% (the "Raw Material
Advance Rate") of the book value of Eligible
Inventory consisting of raw materials valued
at the lower of cost (determined on a
first-in, first-out basis) or market and
(II) the product of 85% (the "Liquidation
Percentage") times the net recovery rate
most recently determined to apply to raw
materials by an independent appraiser
acceptable to the Inventory and Receivables
Security Agent in consultation with the
Administrative Agent (for purposes of this
definition, the "Appraiser") times the book
value of Borrower's eligible raw materials
valued at the lower of cost (determined on a
first-in, first-out basis) or market;
(B) the lesser of (I) 60% (the
"Work-In-Progress Advance Rate") of the book
value of Eligible Inventory consisting of
work-in-progress valued at the lower of cost
(determined on a first-in, first-out basis)
or market and (II) the product of the
Liquidation Percentage times the net
recovery rate most recently determined by
the Appraiser to apply to work-in-progress
times the book value of Borrower's eligible
work-in-progress valued at the lower of cost
(determined on a first-in, first-out basis)
or market; and
(C) the lesser of (I) 65% (the "Finished
Goods Advance Rate" and, together with the
Accounts Receivable Advance Rate, the
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Raw Material Advance Rate and the
Work-In-Progress Advance Rate, the "Advance
Rates") of the book value of Eligible
Inventory consisting of finished goods
valued at the lower of cost (determined on a
first-in, first-out basis) or market and
(II) the product of the Liquidation
Percentage times the net recovery rate most
recently determined by the Appraiser to
apply to finished goods times the book value
of Borrower's eligible finished goods valued
at the lower of cost (determined on a
first-in, first-out basis) or market; and
(ii) $125,000,000 (the "Inventory Cap");
in each case, less any Reserves established by Inventory and Receivables
Security Agent at such time.
"Borrowing Base Certificate" means a certificate to be
executed and delivered from time to time by Borrower in the form attached to the
Agreement as Exhibit 4.1(b).
"Business Day" means any day that is not a Saturday, a Sunday
or a day on which banks are required or permitted to be closed in the State of
New York and in reference to LIBOR Loans shall mean any such day that is also a
LIBOR Business Day.
"Capital Expenditures" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP.
"Capital Lease" means, with respect to any Person, any lease
of any property (whether real, personal or mixed) by such Person as lessee that,
in accordance with GAAP, would be required to be classified and accounted for as
a capital lease on a balance sheet of such Person.
"Capital Lease Obligation" means, with respect to any Capital
Lease of any Person, the amount of the obligation of the lessee thereunder that,
in accordance with GAAP, would appear on a balance sheet of such lessee in
respect of such Capital Lease.
"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, rights or options to purchase any of
the foregoing.
"Cash Collateral Account" has the meaning ascribed to it in
Annex B.
"Cash Equivalents" means (a) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one
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year from the date of acquisition; (b) certificates of deposit, time deposits,
eurodollar time deposits or overnight bank deposits having maturities of six
months or less from the date of acquisition issued by any Lender or by any
commercial bank organized under the laws of the United States or any state
thereof having combined capital and surplus of not less than $500,000,000; (c)
commercial paper of an issuer rated at least A-1 by Standard & Poor's Ratings
Services ("S&P") or P-1 by Xxxxx'x Investors Service, Inc. ("Moody's"), or
carrying an equivalent rating by a nationally recognized rating agency, if both
of the two named rating agencies cease publishing ratings of commercial paper
issuers generally, and maturing within six months from the date of acquisition;
(d) repurchase obligations of any Lender or of any commercial bank satisfying
the requirements of clause (b) of this definition, having a term of not more
than 30 days, with respect to securities issued or fully guaranteed or insured
by the United States government; (e) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody's; (f) securities with maturities of six
months or less from the date of acquisition backed by standby letters of credit
issued by any Lender or any commercial bank satisfying the requirements of
clause (b) of this definition; (g) money market mutual or similar funds that
invest exclusively in assets satisfying the requirements of clauses (a) through
(f) of this definition; or (h) money market funds that (i) comply with the
criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as
amended, (ii) are rated AAA by S&P and Aaa by Moody's and (iii) have portfolio
assets of at least $5,000,000,000.
"Cash Management Systems" has the meaning ascribed to it in
Section 1.8.
"Charges" means all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including taxes owed to the PBGC at
the time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" means any "chattel paper," as such term is
defined in the Code, including electronic chattel paper, now owned or hereafter
acquired by any Credit Party, wherever located.
"Closing Date" means the date on which the conditions
precedent set forth in Section 2.1 shall have been satisfied, which date is
August 1, 2003.
"Closing Checklist" means the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Annex D.
"Code" means the Uniform Commercial Code as the same may, from
time to time, be enacted and in effect in the State of New York; provided, that
to the extent that the Code
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is used to define any term herein or in any Loan Document and such term is
defined differently in different Articles or Divisions of the Code, the
definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection or priority of, or remedies with
respect to, the Lien of the Collateral Agent or Inventory and Receivables
Security Agent, as applicable, on any Collateral is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other than the State
of New York, the term "Code" shall mean the Uniform Commercial Code as enacted
and in effect in such other jurisdiction solely for purposes of the provisions
thereof relating to such attachment, perfection, priority or remedies and for
purposes of definitions related to such provisions.
"Collateral" means the Current Asset Collateral, the
Non-Current Asset Collateral, the JV Collateral and the Mortgaged Properties and
any other property, real or personal, tangible or intangible, now existing or
hereafter acquired, that may at any time be or become subject to a security
interest or Lien in favor of the Inventory and Receivables Security Agent or the
Collateral Agent, for the benefit of the Agents and Lenders, to secure the
Obligations.
"Collateral Agent" means Wilmington Trust Company in its
capacity as Collateral Agent under the Security Agreement, the JV Pledge
Agreements, the Junior Current Asset Security Agreement and the Current Asset
Intercreditor Agreement, or its successor appointed in accordance with the terms
thereof.
"Collateral Documents" means the Security Agreement, the
Senior Current Asset Security Agreement, the JV Pledge Agreements, the
Mortgages, and all similar agreements entered into granting a Lien upon property
as security for payment of the Obligations.
"Collateral Reports" means the reports with respect to the
Collateral referred to in Annex F.
"Collection Account" means that certain account of
Administrative Agent, account number 920-0000000 in the name of Administrative
Agent at JPMorgan Chase Bank in New York, New York ABA No. 021-000021, or such
other account as may be specified in writing by Administrative Agent as the
"Collection Account."
"Commitment Termination Date" means the earliest of (a) Xxxxxx
0, 0000, (x) the date of termination of Lenders' obligations to make Advances
and to incur Letter of Credit Obligations or permit existing Loans to remain
outstanding pursuant to Section 8.1, and (c) the date of indefeasible prepayment
in full by Borrower of the Loans and the cancellation and return (or stand-by
guarantee) of all Letters of Credit or the cash collateralization of all Letter
of Credit Obligations pursuant to Annex B, and the permanent reduction of the
Revolving Loan Commitments to zero dollars ($0).
"Commonly Controlled Entity" means an entity, whether or not
incorporated, that after the effective date of the Plan of Reorganization is
under common control with the Borrower within the meaning of Section 4001 of
ERISA or is part of a group that includes the Borrower and that is treated as a
single employer under Section 414 of the Code.
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"Compliance Certificate" has the meaning ascribed to it in
Annex E.
"Concentration Account" has the meaning ascribed to it in
Annex C.
"Confidential Information Memorandum" means the Confidential
Information Memorandum dated June 23, 2003 and furnished to the Lenders, as
amended, supplemented or modified from time to time prior to the Closing Date.
"Confirmation Order" means the order of the Bankruptcy Court
dated June 18, 2003 confirming the Plan of Reorganization.
"Consolidated EBITDA" means, for any period, Consolidated Net
Income for such period plus, without duplication and to the extent reflected as
a charge in the statement of such Consolidated Net Income for such period, the
sum of (a) income tax expense, (b) interest expense, amortization or writeoff of
debt discount and debt issuance costs and commissions, discounts and other fees
and charges associated with Indebtedness (including the Loans), (c) depreciation
and amortization expense, (d) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (e) non-cash deferred compensation
(provided, that any cash payment made in future periods on account of such
deferred compensation expense shall be deducted from Consolidated Net Income for
such future periods), (f) any extraordinary unusual or nonrecurring expenses or
losses, and losses on sales outside of the ordinary course of business, (g)
non-cash charges in connection with buyout payments and profit sharing payments
made to employees, (h) compensation paid in Capital Stock of Holdings or any of
its Subsidiaries, (i) contributions by the Borrower to the VEBA Trust of Capital
Stock of Holdings (including amounts contributed on the Closing Date) and (j)
any non-cash charges in connection with other post-retirement employee benefits
(OPEB) and minus, (a) to the extent included in the statement of such
Consolidated Net Income for such period, the sum of (i) interest income, (ii)
any extraordinary, unusual or non-recurring income or gains (including, whether
or not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, gains on the sales of assets outside of
the ordinary course of business) and (iii) any other non-cash income (it being
understood that non-cash income representing equity in the earnings of a joint
venture shall be calculated to be net of cash dividends received by Holdings and
its Subsidiaries on account of ownership interests in such joint venture), (b)
any cash payments made during such period in respect of items described in
clause (e) above subsequent to the Fiscal Quarter in which the relevant non-cash
expenses or losses were reflected as a charge in the statement of Consolidated
Net Income, (c) cash pension expenses in excess of those included in the
statement of Consolidated Net Income for such period and (d) cash expenses
relating to other post-retirement employee benefits (OPEB) to the extent not
included in the statement of Consolidated Net Income, all as determined on a
consolidated basis. For the purposes of calculating Consolidated EBITDA for any
period of four consecutive Fiscal Quarters (each, a "Reference Period") pursuant
to any determination of the Consolidated Leverage Ratio, (i) if at any time
during such Reference Period Holdings or any of its Subsidiaries shall have made
any Material Disposition, the Consolidated EBITDA for such Reference Period
shall be reduced by an amount equal to the Consolidated EBITDA (if positive)
attributable to the property that is the subject of such Material Disposition
for such Reference Period or increased by an amount equal to the Consolidated
EBITDA (if negative) attributable thereto for such Reference Period and (ii)
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if during such Reference Period Holdings or any of its Subsidiaries shall have
made a Material Acquisition, Consolidated EBITDA for such Reference Period shall
be calculated after giving pro forma effect thereto as if such Material
Acquisition occurred on the first day of such Reference Period. In connection
with any Material Acquisition, Holdings shall provide the Administrative Agent
with (i) a certificate of a responsible officer of the selling Person, in form
and substance reasonably satisfactory to the Administrative Agent, certifying as
to the Consolidated EBITDA attributable to the property being sold by such
Person during each of the previous two Fiscal Years and any interim fiscal
period and (ii) any other information reasonably requested by the Administrative
Agent in connection with the Material Acquisition.
"Consolidated Fixed Charge Coverage Ratio" means, for any
period, the ratio of (a) (i) the sum (without duplication) of Consolidated
EBITDA for such period and Consolidated Lease Expense for such period less (ii)
the aggregate amount actually paid by Holdings and its Subsidiaries during such
period on account of Capital Expenditures not funded from or reimbursed by
amounts on deposit in the EAF Cash Collateral Account to (b) Consolidated Fixed
Charges for such period.
"Consolidated Fixed Charges" means, for any period, the sum
(without duplication) of (a) Consolidated Interest Expense for such period, (b)
Consolidated Lease Expense for such period, (c) scheduled payments made during
such period on account of principal of Indebtedness of Holdings or any of its
Subsidiaries (including scheduled principal payments in respect of the Loans),
(d) income taxes paid or payable in cash with respect to such period, (e)
Restricted Payments made during such period and (f) payments of Term Loans with
Excess Cash Flow (as defined in the Term Loan Agreement) made during such
period.
"Consolidated Interest Coverage Ratio" means, for any period,
the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated
Interest Expense for such period.
"Consolidated Interest Expense" means, for any period, total
cash interest expense (including that attributable to Capital Lease Obligations)
of Holdings and its Subsidiaries for such period with respect to all outstanding
Indebtedness of Holdings and its Subsidiaries (including all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and net costs and benefits under Swap Agreements
in respect of interest rates to the extent such net costs and benefits are
allocable to such period in accordance with GAAP).
"Consolidated Lease Expense" means, for any period, the
aggregate amount of fixed and contingent rentals payable by Holdings and its
Subsidiaries for such period with respect to leases of real and personal
property, determined on a consolidated basis in accordance with GAAP.
"Consolidated Leverage Ratio" means, as at the last day of any
period of four consecutive Fiscal Quarters, the ratio of (a) Consolidated Test
Debt on such day to (b) Consolidated EBITDA for such period of four consecutive
Fiscal Quarters.
"Consolidated Net Income" means, for any period, the
consolidated net income (or loss) of Holdings and its Subsidiaries, determined
on a consolidated basis in accordance with
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GAAP; provided that there shall be excluded (a) the income (or deficit) of any
Person accrued prior to the date it becomes a Subsidiary of Holdings or is
merged into or consolidated with Holdings or any of its Subsidiaries, (b) the
income (or deficit) of any Person (other than a Subsidiary of Holdings) in which
Holdings or any of its Subsidiaries has an ownership interest, except to the
extent that any such income is actually received by Holdings or such Subsidiary
in the form of dividends or similar distributions and (c) the undistributed
earnings of any Subsidiary of Holdings to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary is not at the
time permitted by the terms of any Contractual Obligation (other than under any
Loan Document) or Requirement of Law applicable to such Subsidiary.
"Consolidated Test Debt" means, at any date, the aggregate
principal amount of all Indebtedness of Holdings and its Subsidiaries at such
date, determined on a consolidated basis in accordance with GAAP, minus the sum
of (i) the aggregate principal amount of their Indebtedness attributable to
documentary letters of credit which support trade obligations, (ii) proceeds of
Term Loans on deposit in the EAF Cash Collateral Account and (iii) the aggregate
principal amount of all Profit Sharing Notes.
"Constitutive Documents" has the meaning ascribed to it in
Annex D.
"Consumers Mining" means Consumers Mining Company, a
Pennsylvania corporation.
"Continuing Directors" means the directors of Holdings on the
Closing Date, after giving effect to the transactions contemplated hereby, and
each other director, if, in each case, such other director's nomination for
election to the board of directors of Holdings is recommended by at least a
majority of the then Continuing Directors.
"Contractual Obligation" 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.
"Control Letter" means a letter agreement between Inventory
and Receivables Security Agent or Collateral Agent and (i) the issuer of
uncertificated securities with respect to uncertificated securities in the name
of any Credit Party, (ii) a securities intermediary with respect to securities,
whether certificated or uncertificated, securities entitlements and other
financial assets held in a securities account in the name of any Credit Party,
(iii) a futures commission merchant or clearing house, as applicable, with
respect to commodity accounts and commodity contracts held by any Credit Party,
whereby, among other things, the issuer, securities intermediary or futures
commission merchant limits any security interest in the applicable financial
assets in a manner reasonably satisfactory to Inventory and Receivables Security
Agent, acknowledges the Lien of Inventory and Receivables Security Agent or
Collateral Agent, on behalf of the Agents and Lenders, on such financial assets,
and agrees to follow the instructions or entitlement orders of Inventory and
Receivables Security Agent or Collateral Agent without further consent by the
affected Credit Party.
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"Copyright License" means any and all rights now owned or
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Copyright or Copyright registration.
"Copyrights" means all of the following now owned or hereafter
adopted or acquired by any Credit Party: (a) all copyrights and General
Intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any similar office or agency of the United
States, any state or territory thereof, or any other country or any political
subdivision thereof, and (b) all reissues, extensions or renewals thereof.
"Credit Parties" means Holdings, Borrower, and each of their
respective Subsidiaries.
"Current Asset Collateral" has the meaning ascribed to the
term "Collateral" in the Senior Current Asset Security Agreement.
"Current Asset Intercreditor Agreement" means the Current
Asset Intercreditor Agreement to be entered into by and among Holdings,
Borrower, certain of their Subsidiaries, the Inventory and Receivables Security
Agent and the Collateral Agent, substantially in the form of Exhibit B-3.
"Danieli Note" has the meaning ascribed to it in Annex D.
"Default" means any event that, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" has the meaning ascribed to it in Section
1.5(d).
"Disbursement Accounts" has the meaning ascribed to it in
Annex C.
"Disclosure Schedules" means the Schedules prepared by
Borrower and denominated as Disclosure Schedules 3.4 through 6.3(f) in the Index
to the Agreement.
"Disposition" with respect to any property, any sale, lease,
sale and leaseback, assignment, conveyance, transfer or other disposition
thereof. The terms "Dispose" and "Disposed of" shall have correlative meanings.
"Dollars" or "$" means lawful currency of the United States of
America.
"EAF Cash Collateral Account" means the cash collateral
account established pursuant to the Term Loan Agreement into which $112,000,000
of the proceeds of the Term Loans are to be deposited and held for the exclusive
benefit of the Term Loan Lenders.
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"EAF Supplemental Loan Agreement" means the $2,000,000 EAF
Loan Agreement, dated as of July 31, 2003, among Holdings, the Borrower, certain
of its subsidiaries, Royal Bank of Canada, as lender, and the Emergency Steel
Loan Guarantee Board.
"Electric Arc Furnace" means the electric arc furnace to be
constructed with the proceeds of Term Loans made under the Term Loan Agreement.
"Eligible Accounts" has the meaning ascribed to it in Section
1.6 of the Agreement.
"Eligible Inventory" has the meaning ascribed to it in Section
1.7 of the Agreement.
"Environmental Laws" means any and all laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, guidelines, agreements with
or requirements of any Governmental Authority or other Requirements of Law
(including principles of common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of the environment,
natural resources or of human health or employee health and safety, as has been,
is now or may at any time hereafter be, in effect.
"Environmental Liabilities" means, with respect to any Person,
all liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Material of
Environmental Concern whether on, at, in, under, from or about or in the
vicinity of any real or personal property.
"Environmental Permits" means any and all permits, licenses,
approvals, registrations, notifications, exemptions, and any other authorization
pursuant to any Environmental Law.
"Equipment" means all "equipment," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located
and, in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
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instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any regulations promulgated thereunder.
"Event of Default" means any of the events specified in
Section 8.1, provided that any requirement for the giving of notice, the lapse
of time, or both, has been satisfied.
"Excluded Foreign Subsidiary" means any Foreign Subsidiary in
respect of which either (a) the pledge of all of the Capital Stock of such
Subsidiary as Collateral or (b) the guaranteeing by such Subsidiary of the
Obligations, would, in the good faith judgment of the Borrower, result in
adverse tax consequences to the Borrower.
"Existing Credit Policies" has the meaning ascribed thereto in
paragraph Z of Annex D.
"Fair Labor Standards Act" means the Fair Labor Standards Act,
29 U.S.C. Section 201 et seq.
"Federal Funds Effective Rate" means, for any day, 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 on the next succeeding 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 the day of such transactions received by Royal
Bank of Canada from three federal funds brokers of recognized standing selected
by it.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System.
"Fee Letter" means that certain letter, dated as of June 20,
2003, between Royal Bank of Canada, GE Capital and the Borrower with respect to
certain fees to be paid on the Closing Date and from time to time by the
Borrower to the Agents.
"Fees" means any and all fees payable to any Agent or Lender
pursuant to the Agreement or any of the other Loan Documents.
"Final Order" means an order or judgment of the Bankruptcy
Court, or other court of competent jurisdiction, as entered on the docket in any
pending chapter 11 case or the docket of any other court of competent
jurisdiction, with respect to which 10 days have elapsed since the entry of such
order and which has not been reversed, stayed, modified or amended and is in
full force and effect.
"Financial Covenants" means the financial covenants set forth
in Annex G.
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"Financial Statements" means the consolidated income
statements, statements of cash flows and balance sheets of Holdings delivered in
accordance with Section 3.1 and Annex E.
"Fiscal Month" means any of the monthly accounting periods of
Holdings.
"Fiscal Quarter" means any of the quarterly accounting periods
of Holdings, ending on March 31, June 30, September 30 and December 31 of each
year.
"Fiscal Year" means any of the annual accounting periods of
Holdings ending on December 31 of each year.
"GAAP" means generally accepted accounting principles in the
United States of America consistently applied, as such term is further defined
in Annex G to the Agreement.
"GE Capital" means General Electric Capital Corporation, a
Delaware corporation.
"General Intangibles" means "general intangibles," as such
term is defined in the Code, now owned or hereafter acquired by any Credit
Party, including all right, title and interest that such Credit Party may now or
hereafter have in or under any contract, all payment intangibles, customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights to
receive dividends, distributions, cash, Instruments and other property in
respect of or in exchange for pledged Capital Stock and Investment Property,
rights of indemnification, all books and records, correspondence, credit files,
invoices and other papers, including without limitation all tapes, cards,
computer runs and other papers and documents in the possession or under the
control of such Credit Party or any computer bureau or service company from time
to time acting for such Credit Party.
"Governmental Authority" any nation or government, any state
or other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory, supervisory or administrative
functions of or pertaining to government, any securities exchange and any
self-regulatory organization (including the National Association of Insurance
Commissioners).
"Group Members" means the collective reference to Holdings,
the Borrower and their respective Subsidiaries.
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"Guarantee Agreements" means the collective reference to each
of the guarantee agreements executed by Holdings, WP Steel Venture and each
other Subsidiary Guarantor, substantially in the form of Exhibit D.
"Guarantee Obligation" means as to any Person (the
"guaranteeing person"), any obligation of (a) the guaranteeing person or (b)
another Person (including any bank under any letter of credit) to induce the
creation of which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(ii) to advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum amount
for which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary obligation
and the maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good faith.
"Guarantors" means the collective reference to Holdings, WP
Steel Venture and the Subsidiary Guarantors.
"Holdings" has the meaning ascribed thereto in the recitals to
the Agreement.
"Inactive Subsidiary" means a Subsidiary which (i) owns no
assets, (ii) engages in no business and (iii) has no Indebtedness.
"Indebtedness" of any Person at any date means, without
duplication, (a) all indebtedness of such Person for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property or
services (other than current trade payables incurred in the ordinary course of
such Person's business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), (e) all Capital Lease Obligations of
such Person and the present value (discounted at the Index Rate as in effect on
the
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Closing Date) of future rental payments on all synthetic leases, (f) all
obligations of such Person, contingent or otherwise, as an account party or
applicant under or in respect of acceptances, letters of credit, surety bonds or
similar arrangements, (g) the liquidation value of all redeemable preferred
Capital Stock of such Person, (h) all Guarantee Obligations of such Person in
respect of obligations of the kind referred to in clauses (a) through (g) above,
(i) all obligations of the kind referred to in clauses (a) through (h) above
secured by (or for which the holder of such obligation has an existing right,
contingent or otherwise, to be secured by) any Lien on property (including
accounts and contract rights) owned by such Person, whether or not such Person
has assumed or become liable for the payment of such obligation, and (j) for the
purposes of Section 8.1(e) only, all obligations of such Person in respect of
Swap Agreements. The Indebtedness of any Person shall include the Indebtedness
of any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness expressly provide that such Person is
not liable therefor.
"Indemnified Liabilities" has the meaning ascribed to it in
Section 1.13.
"Indemnified Person" has the meaning ascribed to it in Section
1.13.
"Index Rate" 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
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate" shall mean,
for any day, the rate of interest per annum determined from time to time by
Royal Bank of Canada as its prime commercial lending rate for United States
dollar loans in the United States for such day (the Prime Rate not being
intended to be the lowest rate of interest charged by Royal Bank of Canada in
connection with extensions of credit to debtors). Any change in the Index Rate
due to a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective as of the opening of business on the effective day of such change in
the Prime Rate or the Federal Funds Effective Rate, respectively.
"Index Rate Loan" means a Loan or portion thereof bearing
interest by reference to the Index Rate.
"Intellectual Property" means the collective reference to all
rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including copyrights, copyright licenses, patents, patent licenses, trademarks,
trademark licenses, technology, know-how and processes, and all rights to xxx at
law or in equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.
"Interest Payment Date" means (a) as to any Index Rate Loan,
the first Business Day of each month to occur while such Loan is outstanding
(the interest payable on such date on account of any Index Rate Loan to be
calculated on the basis of the number of calendar days of the preceding month
for which such Index Rate Loan was outstanding), and (b) as to any LIBOR Loan,
the last day of the applicable LIBOR Period; provided, that in the case of any
LIBOR Period greater than one month in duration, interest shall be payable at
one month intervals and on the last day of such LIBOR Period; and provided
further that, in addition to the foregoing, each
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of (x) the date upon which all of the Revolving Loan Commitments have been
terminated and the Loans have been paid in full and (y) the Commitment
Termination Date shall be deemed to be an "Interest Payment Date" with respect
to any interest that has then accrued under the Agreement.
"Inventory" means any "inventory," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located,
and in any event including inventory, merchandise, goods and other personal
property that are held by or on behalf of any Credit Party for sale or lease or
are furnished or are to be furnished under a contract of service, or that
constitute raw materials, work in process, finished goods, returned goods,
supplies or materials of any kind, nature or description used or consumed or to
be used or consumed in such Credit Party's business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
all supplies and embedded software.
"Inventory and Receivables Security Agent" means GE Capital in
its capacity as Inventory and Receivables Security Agent for Lenders or its
successor appointed pursuant to Section 9.7.
"Inventory Cap" has the meaning ascribed to it in the
definition of "Borrowing Base".
"Investment Property" means all "investment property" as such
term is defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of such Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Credit Party;
(iv) all commodity contracts of any Credit Party; and (v) all commodity accounts
held by any Credit Party.
"IRC" means the Internal Revenue Code of 1986, as amended, and
all regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"Joint Ventures" means Ohio Coatings Company, an Ohio
corporation, Wheeling-Nisshin, Inc., a Delaware corporation, and
Feralloy-Wheeling Speciality Processing Company, a Delaware partnership.
"Junction Note" has the meaning ascribed to it in Annex D.
"Junior Current Asset Security Agreement" means the Junior
Current Asset Security Agreement to be entered into by and among Holdings,
Borrower, certain of their Subsidiaries, the Collateral Agent and the other
secured parties party thereto, substantially in the form of Exhibit B-2.
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"JV Collateral" means the Borrower's equity interest in the
Joint Ventures and all proceeds thereof.
"JV Pledge Agreements" means the collective reference to the
JV Pledge Agreements to be entered into by and among Borrower, the Collateral
Agent and the other secured parties party thereto, for the benefit of Agents,
Lenders and the other secured parties party thereto with respect to the
Borrower's interests in each of the Joint Ventures, substantially in the form of
Exhibit C.
"JV Supply Agreements" means collectively, (i) the Raw
Materials Supply Agreement, dated as of March 25, 1994, between the Borrower and
Ohio Coatings Company, (ii) the Amended and Restated Supply Agreement, dated as
of March 29, 1993, between the Borrower and Wheeling-Nisshin, Inc. and (iii) the
Processing Agreement, dated as of March 15, 1999, between the Borrower and
Wheeling-Nisshin, Inc.
"L/C Issuer" has the meaning ascribed to it in Annex B.
"L/C Sublimit" has the meaning ascribed to in it Annex B.
"Lenders" means Royal Bank of Canada, GE Capital, the other
Lenders named on the signature pages of the Agreement, and, if any such Lender
shall decide to assign all or any portion of the Obligations, such term shall
include any assignee of such Lender.
"Letter of Credit Fee" has the meaning ascribed to it in
Annex B.
"Letter of Credit Obligations" means all outstanding
obligations incurred by Agents and Lenders at the request of Borrower, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance of Letters of Credit by Administrative Agent or another L/C Issuer
or the purchase of a participation as set forth in Annex B with respect to any
Letter of Credit. The amount of such Letter of Credit Obligations shall equal
the maximum amount that may be payable by Agents or Lenders thereupon or
pursuant thereto.
"Letters of Credit" means documentary or standby letters of
credit issued for the account of Borrower by any L/C Issuer, and bankers'
acceptances issued by Borrower, for which Agents and Lenders have incurred
Letter of Credit Obligations.
"LIBOR Business Day" means a Business Day on which banks in
the City of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loan" means a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.
"LIBOR Period" means, with respect to any LIBOR Loan, each
period commencing on a LIBOR Business Day selected by Borrower pursuant to the
Agreement and ending one, two, three or six or (if available to all Lenders)
twelve months thereafter, as selected by Borrower's irrevocable notice to
Administrative Agent as set forth in Section 1.5(e); provided, that the
foregoing provision relating to LIBOR Periods is subject to the following:
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(a) if any LIBOR Period would otherwise end on a day that
is not a LIBOR Business Day, such LIBOR Period shall be extended to the
next succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding
LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond
the Commitment Termination Date shall end two (2) LIBOR Business Days
prior to such date;
(c) any LIBOR Period that begins on the last LIBOR
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
LIBOR Period) shall end on the last LIBOR Business Day of a calendar
month;
(d) Borrower shall select LIBOR Periods so as not to
require a payment or prepayment of any LIBOR Loan during a LIBOR Period
for such Loan; and
(e) Borrower shall select LIBOR Periods so that there
shall be no more than 10 separate LIBOR Loans in existence at any one
time.
"LIBOR Rate" means for each LIBOR Period, a rate of interest
determined by Administrative Agent equal to:
(a) the offered rate for deposits in United States
Dollars for the applicable LIBOR Period that appears on Telerate Page
3750 as of 11:00 a.m. (London time), on the second full LIBOR Business
Day next preceding the first day of such LIBOR Period (unless such date
is not a Business Day, in which event the next succeeding Business Day
will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but
without duplication) of the rates (expressed as a decimal fraction) of
reserve requirements in effect on the day that is two (2) LIBOR
Business Days prior to the beginning of such LIBOR Period (including
basic, supplemental, marginal and emergency reserves under any
regulations of the Federal Reserve Board or other Governmental
Authority having jurisdiction with respect thereto, as now and from
time to time in effect) for Eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of the Federal Reserve
Board that are required to be maintained by a member bank of the
Federal Reserve System.
If such interest rates shall cease to be available from
Telerate News Service, the LIBOR Rate shall be determined by reference
to such other comparable publicly available service for displaying
eurodollar rates as may be selected by the Administrative Agent
(including Page LIBO 01) or, in the absence of such availability, by
reference to the rate at which the Administrative Agent is offered
Dollar deposits at or about 11:00 A.M., New York City time, two
Business Days prior to the beginning of such LIBOR Period in the
interbank eurodollar market where its eurodollar and foreign currency
and exchange operations are then being conducted for delivery on the
first day of such LIBOR Period for the number of days comprised
therein.
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"License" means any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Credit Party.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement and any capital lease having
substantially the same economic effect as any of the foregoing).
"Liquidation Percentage" has the meaning ascribed to it in the
definition of "Borrowing Base".
"Litigation" has the meaning ascribed to it in Section 3.6.
"Loan Account" has the meaning ascribed to it in Section 1.12.
"Loan Documents" means the Agreement, the Notes, the
Collateral Documents, the PPE Access Agreement and all other agreements,
instruments, documents and certificates identified in the Closing Checklist
executed and delivered to, or in favor of, any Agent or Lender and including all
other pledges, powers of attorney, consents, assignments, contracts, notices,
letter of credit agreements and all other written matter whether heretofore, now
or hereafter executed by or on behalf of any Credit Party, or any employee of
any Credit Party, and delivered to any Agent or Lender in connection with the
Agreement or the transactions contemplated thereby. Any reference in the
Agreement or any other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to the Agreement or
such Loan Document as the same may be in effect at any and all times such
reference becomes operative.
"Loans" means the Revolving Loan and the Swing Line Loan.
"Lock Boxes" has the meaning ascribed to it in Annex C.
"Master Documentary Agreement" means the Master Agreement for
documentary Letters of Credit dated as of the Closing Date between the Borrower,
as applicant, and GE Capital, as Issuer.
"Master Labor Agreement" has the meaning ascribed to it in
Annex D.
"Master Standby Agreement" means the Master Agreement for
standby Letters of Credit dated as of the Closing Date between Borrower, as
applicant, and GE Capital, as Issuer.
"Material Acquisition" means any acquisition of property or
series of related acquisitions of property that (a) constitutes assets
comprising all or substantially all of an operating unit of a business or
constitutes all or substantially all of the common stock of a Person and (b)
involves the payment of consideration by Holdings and its Subsidiaries in excess
of $1,000,000.
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"Material Adverse Effect" means a material adverse effect on
(a) the business, property, performance, prospects, operations, assets,
liabilities or condition (financial or otherwise) of the Borrower and its
Subsidiaries taken as a whole, (b) the validity or enforceability of this
Agreement, any of the other Loan Documents, or any of the material rights or
remedies of the Agents or the Lenders hereunder or thereunder or (c) the ability
of the Borrower to repay the Obligations or of the Credit Parties to perform
their obligations under the Loan Documents.
"Material Disposition" means any Disposition of property or
series of related Dispositions of property that (a) constitutes assets
comprising all or substantially all of an operating unit of a business or
constitutes all or substantially all of the common stock of a Person and (b)
yields gross proceeds to Holdings or any of its Subsidiaries in excess of
$1,000,000.
"Material Environmental Loss" means the collective reference
to the items set forth in (a) and (b) below, to the extent arising out of any
Environmental Law with respect to any Materials of Environmental Concern that
either (i) exceed $2,500,000 individually, or $5,000,000 in the aggregate, or
(ii) would have a Material Adverse Effect: (a) any costs to any Group Member
relating to investigative, removal, remedial or other response activities,
compliance costs, compensatory damages, natural resource damages, punitive
damages, fines, penalties and any associated engineering, legal and other
professional fees (including without limitation, costs of defending or asserting
any claim) in connection with any of the foregoing and (b) any other losses to
any Group Member; provided that any costs expended for the environmental issues
set forth on the Environmental Reserves Table and Capital Expenditure Table
attached as Attachment B of the React Report up to the amounts set forth in such
tables, and, to the extent not included in such amounts, any costs incurred in
any fiscal year up to the budgeted amount set forth in Schedule 1.3 for such
fiscal year, shall be excluded from the calculation of any Material
Environmental Loss.
"Materials of Environmental Concern" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum products,
asbestos, polychlorinated biphenyls, urea-formaldehyde insulation, molds,
pollutants, contaminants, radioactive substances, or other substances, whether
or not defined as hazardous or toxic under any Environmental Law, that is
regulated pursuant to or could reasonably be expected to give rise to liability
under any Environmental Law.
"Maximum Amount" means, as of any date of determination, an
amount equal to the Revolving Loan Commitment of all Lenders as of that date.
"Monessen Southwestern Railway" means Monessen Southwestern
Railway, a Pennsylvania corporation.
"Mortgaged Properties" means the real properties listed on
Schedule 1.2, as to which the Collateral Agent, for the benefit of the Agents
and Lenders shall be granted a Lien pursuant to the Mortgages.
"Mortgages" means each of the mortgages, deeds of trust,
leasehold mortgages, leasehold deeds of trust, collateral assignments of leases
or other real estate documents delivered
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by any Credit Party to Collateral Agent for the benefit of the Agents and
Lenders with respect to the Mortgaged Properties, all in form and substance
reasonably satisfactory to Agents.
"Multiemployer Plan" means a Plan that is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Nevada IRB Supplemental Indenture" means the Supplemental
Indenture of Trust, dated as of August 1, 2003, by and between the Director of
the State of Nevada Department of Business and Industry and Crestar Bank.
"Non-Current Asset Collateral" means, to the extent not
included in Current Asset Collateral or the JV Collateral, all the following
property, whether now existing or hereafter arising, of each Credit Party: all
accounts, chattel paper, contracts, deposit accounts (subject to customary
exceptions), documents (other than title documents with respect to vehicles),
equipment, general intangibles, goods, instruments, intellectual property,
investment property, real property, letter-of-credit rights, money, cash or cash
equivalents, commercial tort claims and all other property not described above
now owned or at any time hereafter acquired by such Credit Party or in which
such Credit Party now has or at any time in the future may acquire any right,
title and interest, all books and records pertaining to the foregoing and to the
extent not otherwise included in the foregoing, all proceeds, all supporting
obligations and all products of any and all of the foregoing and all security
and guarantees given by any person with respect to any of the foregoing.
"Non-Funding Lender" has the meaning ascribed to it in Section
9.9(a)(ii).
"Notes" means, collectively, the Revolving Notes and the Swing
Line Note.
"Notice of Conversion/Continuation" has the meaning ascribed
to it in Section 1.5(e).
"Notice of Revolving Credit Advance" has the meaning ascribed
to it in Section 1.1(a).
"Obligations" means all loans, advances, debts, liabilities
and obligations, for the performance of covenants, tasks or duties or for
payment of monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to any Agent or Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement, letter of credit agreement or other instrument, arising
under the Agreement or any of the other Loan Documents. This term includes all
principal, interest (including all interest that accrues after the commencement
of any case or proceeding by or against any Credit Party in bankruptcy, whether
or not allowed in such case or proceeding), Fees, hedging obligations under
swaps, caps and collar arrangements provided by any Lender, expenses, attorneys'
fees and any other sum chargeable to any Credit Party under the Agreement or any
of the other Loan Documents.
"Ohio Note" has the meaning ascribed to it in Annex D.
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"Overadvance" has the meaning ascribed to it in Section
1.1(a)(iii).
"Patent License" means rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right with respect
to any invention on which a Patent is in existence.
"Patents" means all of the following in which any Credit Party
now holds or hereafter acquires any interest: (a) all letters patent of the
United States or any other country, all registrations and recordings thereof,
and all applications for letters patent of the United States or of any other
country, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency,
body or department thereof).
"Plan" means, at a particular time after the effective date of
the Plan of Reorganization, any employee benefit plan that is covered by ERISA
and in respect of which the Borrower 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.
"Plan of Reorganization" means the Plan of Reorganization of
the Borrower approved by the Bankruptcy Court on June 18, 2003.
"Plan of Reorganization Indebtedness" means the collective
reference to the Series A Notes, the Series B Notes, the WHX Subordinated Note,
the Junction Note, the Danieli Note, the Ohio Note, the West Virginia Note, the
RDL Obligations and the obligations of the Borrower with respect to the Nevada
IRB Supplemental Indenture and the Virginia IRB Supplemental Indenture.
"PPE Access" means the right of the Inventory and Receivables
Security Agent or any of its agents or designees to use any and all Non-Current
Asset Collateral of any Credit Party to take possession of or fully process
Inventory in any manner necessary or desirable for the Inventory and Receivables
Security Agent to realize the full value of such Inventory in connection with
the sale or other Disposition thereof.
"PPE Access Agreement" means the PPE Collateral Access
Agreement, dated as of July 31, 2003, by and among Royal Bank of Canada, as
administrative agent under the Term Loan Agreement, Bank One, N.A., as trustee
under the Series A Indenture and Series B
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Indenture, Rio Doce Limited, the Collateral Agent, Holdings, Borrower, WP Steel
Venture and the Inventory and Receivables Security Agent regarding PPE Access.
"Pro Forma Balance Sheet" has the meaning ascribed to it in
Section 3.1.
"Pro Rata Share" means with respect to all matters relating to
any Lender (a) with respect to the Revolving Loan, the percentage obtained by
dividing the Revolving Loan Commitment of that Lender by the aggregate Revolving
Loan Commitments of all Lenders, and (b) with respect to all Revolving Loans on
and after the Commitment Termination Date, the percentage obtained by dividing
(i) the aggregate outstanding principal balance of the Revolving Loans held by
that Lender, by (ii) the outstanding principal balance of the Revolving Loans
held by all Lenders.
"Profit Sharing Notes" means the 6% profit sharing notes due
2011 to be issued after the Closing Date to the United Steelworkers of America
in payment of obligations incurred from time to time by Holdings and the
Borrower under the Master Labor Agreement and having the terms set forth in
Schedule 1.3 and such other terms as are acceptable to the Agents.
"Qualified Assignee" means (a) any Lender, any Affiliate of
any Lender and, with respect to any Lender that is an investment fund that
invests in commercial loans, any other investment fund that invests in
commercial loans and that is managed or advised by the same investment advisor
as such Lender or by an Affiliate of such investment advisor, and (b) any
commercial bank, savings and loan association or savings bank or any other
entity which is an "accredited investor" (as defined in Regulation D under the
Securities Act) which extends credit or buys loans as one of its businesses,
including insurance companies, mutual funds, lease financing companies and
commercial finance companies, in each case, which has a rating of BBB or higher
from S&P and a rating of Baa2 or higher from Xxxxx'x at the date that it becomes
a Lender and which, through its applicable lending office, is capable of lending
to Borrower without the imposition of any withholding or similar taxes; provided
that no Person proposed to become a Lender after the Closing Date and determined
by Administrative Agent to be acting in the capacity of a vulture fund or
distressed debt purchaser shall be a Qualified Assignee, and no Person or
Affiliate of such Person proposed to become a Lender after the Closing Date and
that holds WHX Subordinated Notes or Capital Stock issued by any Credit Party
shall be a Qualified Assignee.
"RDL Deferred Payment Agreement" means the RDL Deferred
Payment Agreement, dated as of July 31, 2003, among Rio Doce Limited, Itabira
Rio Doce Company, Ltd., Holdings, the Borrower and WP Steel Venture.
"RDL Obligations" means the obligation of the Borrower to make
a deferred payment to Rio Doce Limited on account of previously delivered iron
ore pellets in the aggregate outstanding principal amount of $4,229,440, such
amount to be paid by Borrower in fifteen consecutive monthly installments of
$281,963 each beginning August 2003 pursuant to the RDL Deferred Payment
Agreement.
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"React Report" means the Phase I Environmental Site
Assessment: Wheeling-Pittsburgh Steel Corporation prepared for the
Administrative Agent by React Environmental Services, Inc. and dated June 18,
2003.
"Refunded Swing Line Loan" has the meaning ascribed to it in
Section 1.1(b)(iii).
"Related Transactions" means the initial borrowing under the
Agreement and under the Term Loan Agreement on the Closing Date, the issuance of
the Plan of Reorganization Indebtedness, the consummation of the Plan of
Reorganization, the payment of all fees, costs and expenses associated with all
of the foregoing and the execution and delivery of all of the Related
Transactions Documents.
"Related Transactions Documents" means the Loan Documents, the
Term Loan Agreement, the EAF Supplemental Loan Agreement, the Plan of
Reorganization Indebtedness and the Master Labor Agreement.
"Release" means any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Material of Environmental Concern in the indoor or outdoor environment,
including the movement of Material of Environmental Concern through or in the
air, soil, surface water, ground water or property.
"Reorganization" means with respect to any Multiemployer Plan,
the condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or
..35 of PBGC Reg. Section 4043.
"Required Term Loan Lenders" has the meaning ascribed to the
term "Required Lenders" in the Term Loan Agreement.
"Requirement of Law" means as to any Person, the certificate
of incorporation and by-laws or other organizational or governing documents of
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.
"Requisite Lenders" means Lenders having (a) more than 66-2/3%
of the Revolving Loan Commitments of all Lenders, or (b) if the Revolving Loan
Commitments have been terminated, more than 66-2/3% of the aggregate outstanding
amount of the Revolving Loan.
"Reserves" means, with respect to the Borrowing Base of
Borrower (a) reserves established by Inventory and Receivables Security Agent
from time to time against Eligible Inventory pursuant to Section 5.11, (b)
reserves established pursuant to Section 1.3(e), and (c) such other reserves
against Eligible Accounts, Eligible Inventory or Borrowing Availability of
A-24
Borrower that Inventory and Receivables Security Agent may, in its reasonable
credit judgment, establish from time to time.
"Responsible Officer" means the chief executive officer,
president, chief financial officer or treasurer; provided that (i) with respect
to the information and reports required by paragraph J of Annex D or paragraphs
(b), (c) or (d) of Annex E, Responsible Officer shall mean the chief financial
officer and (ii) with respect to the report required by paragraph (l) of Annex
E, Responsible Officer shall mean Vice President, Engineering, Technology and
Metallurgy.
"Restricted Payment" has the meaning ascribed to it in Section
6.6.
"Revolving Credit Advance" has the meaning ascribed to it in
Section 1.1(a)(i).
"Revolving Loan" means, at any time, the sum of (i) the
aggregate amount of Revolving Credit Advances outstanding to Borrower plus (ii)
the aggregate Letter of Credit Obligations incurred on behalf of Borrower.
Unless the context otherwise requires, references to the outstanding principal
balance of the Revolving Loan shall include the outstanding balance of Letter of
Credit Obligations.
"Revolving Loan Commitment" means (a) as to any Lender, the
aggregate commitment of such Lender to make Revolving Credit Advances or incur
Letter of Credit Obligations as set forth on Annex J to the Agreement or in the
most recent Assignment Agreement executed by such Lender and (b) as to all
Lenders, the aggregate commitment of all Lenders to make Revolving Credit
Advances or incur Letter of Credit Obligations, which aggregate commitment shall
be two hundred twenty-five million Dollars ($225,000,000) on the Closing Date,
as such amount may be adjusted, if at all, from time to time in accordance with
the Agreement.
"Revolving Note" has the meaning ascribed to it in Section
1.1(a)(ii).
"Royal Bank of Canada" means Royal Bank of Canada, a Canadian
chartered bank.
"Security Agreement" means the Security Agreement to be
entered into by and among Borrower, the Collateral Agent and the other secured
parties party thereto, for the benefit of Agents, Lenders and the other secured
parties party thereto, substantially in the form of Exhibit A.
"Senior Current Asset Security Agreement" means the Senior
Current Asset Security Agreement to be entered into by and among Holdings,
Borrower, certain of their Subsidiaries and the Inventory and Receivables
Security Agent for the benefit of the Agents and the Lenders, substantially in
the form of Exhibit B-1.
"Series A Indenture" means the Indenture, dated as of August
1, 2003, among the Borrower, the guarantors named therein and Bank One N.A., as
trustee, governing the terms of the Series A Notes.
A-25
"Series A Notes" means the Series A Notes due 2011 in the
aggregate principal amount of $40,000,000 secured by a Lien on substantially all
of the property of the Credit Parties pursuant to the Security Agreement, the
Junior Current Asset Security Agreement, the JV Pledge Agreements and the
Mortgages.
"Series B Indenture" means the Indenture, dated as of August
1, 2003, among the Borrower, the guarantors named therein and Bank One N.A., as
trustee, governing the terms of the Series B Notes.
"Series B Notes" means the Series B Notes due 2010 in the
aggregate principal amount of $20,000,000 secured by a Lien on substantially all
of the property of the Credit Parties pursuant to the Security Agreement, the
Junior Current Asset Security Agreement, the JV Pledge Agreements and the
Mortgages.
"Single Employer Plan" means any Plan that is covered by Title
IV of ERISA, but that is not a Multiemployer Plan. As of the date of this
Agreement, the WHX Pension Plan is deemed to be a Single Employer Plan.
"Solvent" when used with respect to any Person, means that, as
of any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the amount of
all "liabilities of such Person, contingent or otherwise", as of such date, as
such quoted terms are determined in accordance with applicable federal and state
laws governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liabilities of such Person on
its debts as such debts become absolute and matured, (c) such Person will not
have, as of such date, an unreasonably small amount of capital with which to
conduct its business if operated in the ordinary course as of such date, and (d)
such Person will be able to pay its debts as they mature. For purposes of this
definition, (i) "debt" means liability on a "claim", and (ii) "claim" means any
(x) 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 (y) right to an equitable
remedy for breach of performance if such breach gives rise to a right to
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured.
"Specified Swap Agreement" means any Swap Agreement entered
into by the Borrower and any Lender or Affiliate thereof in respect of interest
rates.
"Subsidiary" means, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Capital
Stock having ordinary voting power to elect a majority of the board of directors
of such corporation (irrespective of whether, at the time, Capital Stock of any
other class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person or one or more
Subsidiaries of such Person, or with respect to which any such Person has the
right to vote or designate the vote of 50% or more of such Capital Stock whether
by proxy, agreement, operation of law or otherwise, and (b) any partnership or
limited liability company in which such Person and/or one or more Subsidiaries
of
A-26
such Person shall have an interest (whether in the form of voting or
participation in profits or capital contribution) of more than 50% or of which
any such Person is a general partner or may exercise the powers of a general
partner. Unless the context otherwise requires, each reference to a Subsidiary
shall be a reference to a Subsidiary of the Borrower.
"Subsidiary Guarantors" means the collective reference to all
Subsidiaries of Holdings other than the Borrower.
"Supermajority Lenders" means Lenders having (a) 80% or more
of the Revolving Loan Commitments of all Lenders, or (b) if the Revolving Loan
Commitments have been terminated, 80% or more of the aggregate outstanding
amount of the Revolving Loan (with the Swing Line Loan being attributed to the
Lender making such Loan) and Letter of Credit Obligations.
"Swap Agreement" means any agreement with respect to any swap,
forward, future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions; provided that
no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Borrower or any of its Subsidiaries shall be a "Swap
Agreement".
"Swing Line Advance" has the meaning ascribed to it in Section
1.1(b)(i).
"Swing Line Availability" has the meaning ascribed to it in
Section 1.1(b)(i).
"Swing Line Commitment" means, as to the Swing Line Lender,
the agreement of the Swing Line Lender to make Swing Line Advances in its
discretion in accordance with Section 1.1(b) and up to the amount set forth on
Annex J to the Agreement, which agreement constitutes a subfacility of the
Revolving Loan Commitment of the Swing Line Lender.
"Swing Line Lender" means Royal Bank of Canada.
"Swing Line Loan" means at any time, the aggregate amount of
Swing Line Advances outstanding to Borrower.
"Swing Line Note" has the meaning ascribed to it in Section
1.1(b)(ii).
"Taxes" means taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of an Agent or Lender by the jurisdictions
under the laws of which Agents and Lenders are organized or conduct business or
any political subdivision thereof.
"Term Loan" means "Loans" as defined in the Term Loan
Agreement.
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"Term Loan Agreement" means the $250,000,000 Term Loan
Agreement, dated as of the date hereof, among Holdings, the Borrower, the banks
and other financial institutions from time to time party thereto, Royal Bank of
Canada, as administrative agent, and the other agents named therein, as amended,
restated, supplemented or otherwise modified from time to time or as refinanced
with the consent of the Required Lenders.
"Term Loan Lenders" means "Lenders" as defined in the Term
Loan Agreement.
"Term Loan Obligations" means "Obligations" as defined in the
Term Loan Agreement.
"Termination Date" means the date on which (a) the Loans have
been indefeasibly repaid in full, (b) all other Obligations under the Agreement
and the other Loan Documents have been completely discharged, (c) all Letter of
Credit Obligations have been cash collateralized, cancelled or backed by standby
letters of credit in accordance with Annex B, and (d) Borrower shall not have
any further right to borrow any monies under the Agreement.
"Trademark License" means rights under any written agreement
now owned or hereafter acquired by any Credit Party granting any right to use
any Trademark.
"Trademarks" means all of the following now owned or hereafter
adopted or acquired by any Credit Party: (a) all trademarks, trade names,
corporate names, business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.
"VEBA Trust" means the "USWA-Wheeling-Pittsburgh Steel
Corporation Retiree Welfare Benefits Plan Trust", established by Borrower
pursuant to its collective bargaining agreement with the United Steelworkers of
America, AFL-CIO-CLC, for the purpose of funding welfare benefits for retired
employees of Borrower
"Virginia IRB Supplemental Indenture" means the Supplemental
Indenture of Trust, dated as of August 1, 2003, by and between the Industrial
Development Authority of Greenville County, Virginia and First Union National
Bank.
"West Virginia Note" has the meaning ascribed to it in
Annex D.
"Wheeling-Nisshin" means Wheeling-Nisshin, Inc., a Delaware
corporation.
"Wholly Owned Subsidiary" means, as to any Person, any other
Person all of the Capital Stock of which (other than directors' qualifying
shares required by law) is owned by such Person directly and/or through other
Wholly Owned Subsidiaries.
A-28
"Wholly Owned Subsidiary Guarantor" means any Subsidiary
Guarantor that is a Wholly Owned Subsidiary of Holdings.
"WHX" means WHX Corporation, a Delaware corporation.
"WHX Subordinated Note" has the meaning ascribed to it in
Annex D.
"WP Coal" means WP Coal Company, a West Virginia corporation.
"WP Steel Venture" means WP Steel Venture Corporation, a
Delaware corporation.
Rules of construction with respect to accounting terms used in
the Agreement or the other Loan Documents shall be as set forth in Annex G. All
other undefined terms contained in any of the Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code to the
extent the same are used or defined therein; in the event that any term is
defined differently in different Articles or Divisions of the Code, the
definition contained in Article or Division 9 shall control. Unless otherwise
specified, references in the Agreement or any of the Appendices to a Section,
subsection or clause refer to such Section, subsection or clause as contained in
the Agreement. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to the Agreement as a whole, including all Annexes,
Exhibits and Schedules, as the same may from time to time be amended, restated,
modified or supplemented, and not to any particular section, subsection or
clause contained in the Agreement or any such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; the word "or" is not exclusive; references to Persons include their
respective successors and assigns (to the extent and only to the extent
permitted by the Loan Documents) or, in the case of governmental Persons,
Persons succeeding to the relevant functions of such Persons; and all references
to statutes and related regulations shall include any amendments of the same and
any successor statutes and regulations. Whenever any provision in any Loan
Document refers to the knowledge (or an analogous phrase) of any Credit Party,
such words are intended to signify that such Credit Party has actual knowledge
or awareness of a particular fact or circumstance or that such Credit Party, if
it had exercised reasonable diligence, would have known or been aware of such
fact or circumstance.
A-29
ANNEX B (SECTION 1.2)
TO
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of the
Agreement, Agents and Revolving Lenders agree to incur, from time to time prior
to the Commitment Termination Date, upon the request of Borrower and for
Borrower's account, Letter of Credit Obligations by causing Letters of Credit to
be issued by GE Capital or a Subsidiary thereof or a Lender (any such issuer, a
"L/C Issuer"); provided, that each Lender shall, subject to the terms and
conditions hereinafter set forth, purchase (or be deemed to have purchased) risk
participations in all such Letters of Credit issued with the written consent of
Administrative Agent, as more fully described in paragraph (b)(ii) below. The
aggregate amount of all such Letter of Credit Obligations shall not at any time
exceed the least of (i) twenty-five million Dollars ($25,000,000) (the "L/C
Sublimit"), and (ii) the Maximum Amount less the aggregate outstanding principal
balance of the Revolving Credit Advances and the Swing Line Loan, and (iii) the
Borrowing Base less the aggregate outstanding principal balance of the Revolving
Credit Advances and the Swing Line Loan. No such Letter of Credit shall have an
expiry date that is (a) more than one year following the date of issuance
thereof, unless otherwise determined by Administrative Agent in its sole
discretion (including with respect to customary evergreen provisions) or (b)
less than five Business Days prior to the Commitment Termination Date (provided
that the interest reserve Letter of Credit to be issued on the Closing Date for
the benefit of certain Term Loan Lenders in the face amount of $7,500,000 shall
expire on August 1, 2006).
(b)(i) Advances Automatic; Participations. In the event that
L/C Issuer shall make any payment on or pursuant to any Letter of Credit
Obligation, the Borrower shall reimburse the L/C Issuer for the amount of (a)
the draft so paid and (b) any taxes, fees, charges or other costs or expenses
incurred by the L/C Issuer in connection with such payment, not later than 12:00
Noon, New York City time, on (i) the Business Day that the Borrower receives
notice of such draft, if such notice is received on such day prior to 10:00
A.M., New York City time, or (ii) if clause (i) above does not apply, the
Business Day immediately following the day that the Borrower receives such
notice. Each such payment shall be made to the L/C Issuer in Dollars and in
immediately available funds. Interest shall be payable on any such amounts from
the date on which the relevant draft is paid until payment in full at the rate
set forth in (x) until the Business Day next succeeding the date of the relevant
notice, Section 1.5(a) (with respect to Index Rate Loans) and (y) thereafter,
Section 1.5(d) (with respect to Index Rate Loans).
(ii) The L/C Issuer irrevocably agrees to grant and hereby
grants to each Lender, and, to induce the L/C Issuer to issue Letters of Credit,
each Lender irrevocably agrees to accept and purchase and hereby accepts and
purchases from the L/C Issuer, on the terms and conditions set forth below, for
such Lender's own account and risk an undivided interest equal to such Lender's
Pro Rata Share in the L/C Issuer's obligations and rights under and in respect
of each Letter of Credit and the amount of each draft paid by the L/C Issuer
thereunder. Each Lender agrees with the L/C Issuer that, if a draft is paid
under any Letter of Credit for which the L/C Issuer is not reimbursed in full by
the Borrower in accordance with the terms of this Agreement,
B-1
such Lender shall pay to the L/C Issuer upon demand at the L/C Issuer's address
for notices specified herein an amount equal to such Lender's Pro Rata Share of
the amount of such draft, or any part thereof, that is not so reimbursed. Each
Lender's obligation to pay such amount shall be absolute and unconditional and
shall not be affected by any circumstance, including (i) any setoff,
counterclaim, recoupment, defense or other right that such Lender may have
against the L/C Issuer, the Borrower or any other Person for any reason
whatsoever, (ii) the occurrence or continuance of a Default or an Event of
Default or the failure to satisfy any of the other conditions specified in
Section 2, (iii) any adverse change in the condition (financial or otherwise) of
the Borrower, (iv) any breach of this Agreement or any other Loan Document by
the Borrower, any other Credit Party or any other Lender or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing; provided, that no L/C Issuer shall be deemed to have granted, and
no Lender shall be deemed to have accepted, any interest in any Letter of Credit
which on its date of issuance exceeded (i) together with all other Letter of
Credit Obligations then outstanding, $25,000,000 or (ii) together with the
aggregate outstanding principal balance of all Revolving Credit Advances and
Swing Line Loans, the Maximum Amount or the Borrowing Base (in each case, less
applicable reserves).
(iii) If any amount required to be paid by any Lender to the
L/C Issuer pursuant to paragraph (b)(ii) above in respect of any unreimbursed
portion of any payment made by the L/C Issuer under any Letter of Credit is paid
to the L/C Issuer within three Business Days after the date such payment is due,
such Lender shall pay to the L/C Issuer on demand an amount equal to the product
of (i) such amount, times (ii) the daily average Federal Funds Effective Rate
during the period from and including the date such payment is required to the
date on which such payment is immediately available to the L/C Issuer, times
(iii) a fraction the numerator of which is the number of days that elapse during
such period and the denominator of which is 360. If any such amount required to
be paid by any Lender pursuant to paragraph (b)(ii) above is not made available
to the L/C Issuer by such Lender within three Business Days after the date such
payment is due, the L/C Issuer shall be entitled to recover from such Lender, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to Index Rate Loans. A certificate of the L/C Issuer
submitted to any Lender with respect to any amounts owing under this paragraph
(b) shall be conclusive in the absence of manifest error.
(iv) Whenever, at any time after the L/C Issuer has made
payment under any Letter of Credit and has received from any Lender its pro rata
share of such payment in accordance with clause (b)(ii) above, the L/C Issuer
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
L/C Issuer), or any payment of interest on account thereof, the L/C Issuer will
distribute to such Lender its pro rata share thereof; provided, however, that in
the event that any such payment received by the L/C Issuer shall be required to
be returned by the L/C Issuer, such Lender shall return to the L/C Issuer the
portion thereof previously distributed by the L/C Issuer to it.
(c) Cash Collateral. (i) If Borrower is required to
provide cash collateral for any Letter of Credit Obligations pursuant to the
Agreement, including Section 8 of the Agreement, prior to the Commitment
Termination Date, Borrower will pay to Administrative Agent for the ratable
benefit of itself and Lenders cash or Cash Equivalents acceptable to
Administrative Agent in an amount equal to 105% (or in the case of the interest
reserve Letter of
B-2
Credit to be issued for the benefit of certain lenders party to the Term Loan
Agreement, in an amount acceptable to the L/C Issuer) of the maximum amount then
available to be drawn under each applicable Letter of Credit outstanding. Such
funds or Cash Equivalents shall be held by Administrative Agent in a cash
collateral account (the "Cash Collateral Account") maintained at a bank or
financial institution acceptable to Administrative Agent. The Cash Collateral
Account shall be in the name of Borrower and shall be pledged to, and subject to
the control of, Administrative Agent, for the benefit of Agents and Lenders, in
a manner satisfactory to Administrative Agent. Borrower hereby pledges and
grants to Administrative Agent, on behalf of itself and Lenders, a security
interest in all such funds and Cash Equivalents held in the Cash Collateral
Account from time to time and all proceeds thereof, as security for the payment
of all amounts due in respect of the Letter of Credit Obligations and other
Obligations, whether or not then due. The Agreement, including this Annex B,
shall constitute a security agreement under applicable law.
(ii) If any Letter of Credit Obligations, whether or not
then due and payable, shall for any reason be outstanding on the Commitment
Termination Date, Borrower shall either (A) provide cash collateral therefor in
the manner described above, or (B) cause all such Letters of Credit and
guaranties thereof, if any, to be canceled and returned, or (C) deliver a
stand-by letter (or letters) of credit in guarantee of such Letter of Credit
Obligations, which stand-by letter (or letters) of credit shall be of like tenor
and duration (plus thirty (30) additional days) as, and in an amount equal to
105% of the aggregate maximum amount then available to be drawn under, the
Letters of Credit to which such outstanding Letter of Credit Obligations relate
and shall be issued by a Person, and shall be subject to such terms and
conditions, as are satisfactory to Administrative Agent in its sole discretion.
(iii) From time to time after funds are deposited in the
Cash Collateral Account by Borrower, whether before or after the Commitment
Termination Date, Administrative Agent may apply such funds or Cash Equivalents
then held in the Cash Collateral Account to the payment of any amounts, and in
such order as Administrative Agent may elect, as shall be or shall become due
and payable by Borrower to Agents and Lenders with respect to such Letter of
Credit Obligations of Borrower and, upon the satisfaction in full of all Letter
of Credit Obligations of Borrower, to any other Obligations then due and
payable.
(iv) Neither Borrower nor any Person claiming on behalf of
or through Borrower shall have any right to withdraw any of the funds or Cash
Equivalents held in the Cash Collateral Account, except that upon the
termination of all Letter of Credit Obligations and the payment of all amounts
payable by Borrower to Agents and Lenders in respect thereof, any funds
remaining in the Cash Collateral Account shall be applied to other Obligations
then due and owing and upon payment in full of such Obligations any remaining
amount shall be paid to Borrower or as otherwise required by law. Interest
earned on deposits in the Cash Collateral Account shall be held as additional
collateral.
(d) Fees and Expenses. Borrower agrees to pay to
Administrative Agent for the benefit of Lenders, as compensation to Lenders for
Letter of Credit Obligations incurred hereunder, (i) all costs and expenses
incurred by Administrative Agent or any Lender on account of such Letter of
Credit Obligations, and (ii) for each month during which any Letter of Credit
Obligation shall remain outstanding, a fee (the "Letter of Credit Fee") in an
amount equal to the
B-3
Applicable L/C Margin from time to time in effect multiplied by the maximum
amount available from time to time to be drawn under the applicable Letter of
Credit. Such fee shall be paid to Administrative Agent for the benefit of the
Lenders in arrears, on the first day of each month and on the Commitment
Termination Date. In addition, Borrower shall pay to any L/C Issuer, on demand,
such fees (including all per annum fees), charges and expenses of such L/C
Issuer in respect of the issuance, negotiation, acceptance, amendment, transfer
and payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued.
(e) Request for Incurrence of Letter of Credit
Obligations. Borrower shall give Administrative Agent and L/C Issuer at least
two (2) Business Days' prior written notice requesting the incurrence of any
Letter of Credit Obligation. The notice shall be accompanied by the form of the
Letter of Credit (which shall be acceptable to the L/C Issuer). Notwithstanding
anything contained herein to the contrary, Letter of Credit applications by
Borrower and approvals by Administrative Agent and the L/C Issuer may be made
and transmitted pursuant to electronic codes and security measures mutually
agreed upon and established by and among Borrower, Administrative Agent and the
L/C Issuer.
(f) Obligation Absolute. The obligation of Borrower to
reimburse Administrative Agent, L/C Issuer and Lenders for payments made with
respect to any Letter of Credit Obligation shall be absolute, unconditional and
irrevocable, without necessity of presentment, demand, protest or other
formalities, and the obligations of each Lender to make payments to
Administrative Agent and the L/C Issuer with respect to Letters of Credit shall
be unconditional and irrevocable. Such obligations of Borrower and Lenders shall
be paid strictly in accordance with the terms hereof under all circumstances
including the following:
(i) any lack of validity or enforceability of any Letter
of Credit or the Agreement or the other Loan Documents or any other
agreement;
(ii) the existence of any claim, setoff, defense or other
right that Borrower or any of its Affiliates or any Lender may at any
time have against a beneficiary or any transferee of any Letter of
Credit (or any Persons or entities for whom any such transferee may be
acting), Administrative Agent, any Lender, or any other Person, whether
in connection with the Agreement, the Letter of Credit, the
transactions contemplated herein or therein or any unrelated
transaction (including any underlying transaction between Borrower or
any of its Affiliates and the beneficiary for which the Letter of
Credit was procured);
(iii) any draft, demand, certificate or any other document
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) payment by Administrative Agent (except as otherwise
expressly provided in paragraph (g)(ii)(C) below) or any L/C Issuer
under any Letter of Credit or guaranty thereof against presentation of
a demand, draft or certificate or other document that does not comply
with the terms of such Letter of Credit or such guaranty;
B-4
(v) any other circumstance or event whatsoever, that is
similar to any of the foregoing; or
(vi) the fact that a Default or an Event of Default has
occurred and is continuing.
(g) Indemnification; Nature of Lenders' Duties.
(i) In addition to amounts payable as elsewhere provided
in the Agreement, Borrower hereby agrees to pay and to protect, indemnify, and
save harmless each Agent and Lender from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees and allocated costs of internal counsel) that any
Agent or Lender may incur or be subject to as a consequence, direct or indirect,
of (A) the issuance of any Letter of Credit or guaranty thereof, or (B) the
failure of any Agent or Lender seeking indemnification or of any L/C Issuer to
honor a demand for payment under any Letter of Credit or guaranty thereof as a
result of any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or Governmental Authority, in each case
other than to the extent as a result of the gross negligence or willful
misconduct of such Agent or Lender (as finally determined by a court of
competent jurisdiction).
(ii) As between Agents and any Lender and Borrower,
Borrower assumes all risks of the acts and omissions of, or misuse of any Letter
of Credit by beneficiaries of any Letter of Credit. In furtherance and not in
limitation of the foregoing, to the fullest extent permitted by law neither
Agents nor any Lender shall be responsible for: (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document issued by any
party in connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, that may prove to be invalid or ineffective for any reason;
(C) failure of the beneficiary of any Letter of Credit to comply fully with
conditions required in order to demand payment under such Letter of Credit;
provided, that in the case of any payment by L/C Issuer under any Letter of
Credit, L/C Issuer shall be liable to the extent such payment was made solely as
a result of its gross negligence or willful misconduct (as finally determined by
a court of competent jurisdiction) in determining that the demand for payment
under such Letter of Credit or guaranty thereof complies on its face with any
applicable requirements for a demand for payment under such Letter of Credit or
guaranty thereof; (D) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they may be in cipher; (E) errors in interpretation of technical
terms; (F) any loss or delay in the transmission or otherwise of any document
required in order to make a payment under any Letter of Credit or guaranty
thereof or of the proceeds thereof; (G) the credit of the proceeds of any
drawing under any Letter of Credit or guaranty thereof; and (H) any consequences
arising from causes beyond the control of any Agent or Lender. None of the above
shall affect, impair, or prevent the vesting of any of any Agent's or Lender's
rights or powers hereunder or under the Agreement.
(iii) Nothing contained herein shall be deemed to limit or
to expand any waivers, covenants or indemnities made by Borrower in favor of any
L/C Issuer in any letter of credit application, reimbursement agreement or
similar document, instrument or agreement between Borrower and such L/C Issuer.
B-5
ANNEX C (SECTION 1.8)
TO
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEM
Borrower shall, and shall cause its Subsidiaries to, establish
and maintain the Cash Management Systems described below:
(a) On or before the Closing Date and until the
Termination Date, Borrower shall (i) establish lock boxes ("Lock Boxes") or, at
Administrative Agent's discretion, blocked accounts ("Blocked Accounts") at one
or more of the banks set forth in Disclosure Schedule 3.25, and shall request in
writing and otherwise take such reasonable steps to ensure that all Account
Debtors forward payment directly to such Lock Boxes, and (ii) deposit and cause
its Subsidiaries to deposit or cause to be deposited promptly, and in any event
no later than the first Business Day after the date of receipt thereof, all
cash, checks, drafts or other similar items of payment relating to or
constituting payments made in respect of any and all Current Asset Collateral
(whether or not otherwise delivered to a Lock Box) into one or more Blocked
Accounts in Borrower's name or any such Subsidiary's name and at a bank
identified in Disclosure Schedule 3.25 (each, a "Relationship Bank"). On or
before the Closing Date, Borrower shall have established a concentration account
in its name (the "Concentration Account") at the bank that shall be designated
as the Concentration Account bank for Borrower in Disclosure Schedule 3.25 (the
"Concentration Account Bank") which bank shall be reasonably satisfactory to the
Agents.
(b) Borrower may maintain, in its name, an account (each
a "Disbursement Account" and collectively, the "Disbursement Accounts") at a
bank acceptable to Administrative Agent into which Administrative Agent shall,
from time to time, deposit proceeds of Revolving Credit Advances and Swing Line
Advances made to Borrower pursuant to Section 1.1 for use by Borrower in
accordance with the provisions of Section 1.4.
(c) On or before the Closing Date (or such later date as
Administrative Agent shall consent to in writing), the Concentration Account
Bank, each bank where a Disbursement Account is maintained and all other
Relationship Banks (other than the Relationship Bank that holds the EAF Cash
Collateral Account and the Collateral Agent with respect to the collateral
account established by the Collateral Agent pursuant to Section 8.1 of the
Security Agreement and Section 8.1 of the JV Pledge Agreements or any similar
account established by the Collateral Agent pursuant to any Mortgage), shall
have entered into tri-party blocked account agreements with Administrative
Agent, for the benefit of itself and Lenders, and Borrower and Subsidiaries
thereof, as applicable, in form and substance reasonably acceptable to
Administrative Agent, which shall become operative on or prior to the Closing
Date. Each such blocked account agreement shall provide, among other things,
that (i) all items of payment deposited in such account and proceeds thereof
deposited in the Concentration Account are held by such bank as agent or
bailee-in-possession for Administrative Agent, on behalf of itself and Lenders,
(ii) the bank executing such agreement has no rights of setoff or recoupment or
any other claim against such account, as the case may be, other than for payment
of its service fees and other charges
C-1
directly related to the administration of such account and for returned checks
or other items of payment, and (iii) from and after the Closing Date (A) with
respect to banks at which a Blocked Account is maintained, such bank agrees to
forward immediately all amounts in each Blocked Account to the Concentration
Account Bank and to commence the process of daily sweeps from such Blocked
Account into the Concentration Account and (B) with respect to the Concentration
Account Bank, from and after receipt of a notice (an "Activation Notice") from
the Administrative Agent (which Activation Notice shall be given by the
Administrative Agent at such time as (1) an Event of Default has occurred and is
continuing or (2) (i) prior to delivery of financial statements as of and for
the period ended December 31, 2003, Borrowing Availability falls below
$75,000,000 or (ii) from and after delivery of financial statements as of and
for period ended December 31, 2003, either (A) Borrowing Availability falls
below $75,000,000 and the Consolidated Fixed Charge Coverage Ratio indicated in
the most recently delivered Compliance Statement is less than 1.00 to 1.0 or (B)
Borrowing Availability falls below $50,000,000), such bank agrees to immediately
forward all amounts received in the Concentration Account to the Collection
Account through daily sweeps from such Concentration Account into the Collection
Account. Borrower shall not, and shall not cause or permit any Subsidiary
thereof to, accumulate or maintain cash in Disbursement Accounts or payroll
accounts as of any date of determination in excess of checks outstanding against
such accounts as of that date and amounts necessary to meet minimum balance
requirements.
(d) So long as no Event of Default has occurred and is
continuing, Borrower may amend Disclosure Schedule 3.25 to add or replace a
Relationship Bank, Lock Box or Blocked Account or to replace any Concentration
Account or any Disbursement Account; provided, that (i) Administrative Agent
shall have consented in writing in advance to the opening of such account or
Lock Box with the relevant bank and (ii) prior to the time of the opening of
such account or Lock Box, Borrower or its Subsidiaries, as applicable, and such
bank shall have executed and delivered to Administrative Agent a tri-party
blocked account agreement, in form and substance reasonably satisfactory to
Administrative Agent. Borrower shall close any of its accounts (and establish
replacement accounts in accordance with the foregoing sentence) promptly and in
any event within thirty (30) days following notice from Administrative Agent
that the creditworthiness of any bank holding an account is no longer acceptable
in Administrative Agent's reasonable judgment, or as promptly as practicable and
in any event within sixty (60) days following notice from Administrative Agent
that the operating performance, funds transfer or availability procedures or
performance with respect to accounts or Lock Boxes of the bank holding such
accounts or Administrative Agent's liability under any tri-party blocked account
agreement with such bank is no longer acceptable in Administrative Agent's
reasonable judgment.
(e) The Lock Boxes, Blocked Accounts, Disbursement
Accounts and the Concentration Account shall be cash collateral accounts, with
all cash, checks and other similar items of payment in such accounts securing
payment of the Loans and all other Obligations, and in which Borrower and each
Subsidiary thereof shall have granted a Lien to Inventory and Receivables
Security Agent, on behalf of the Agents and Lenders.
(f) All amounts deposited in the Collection Account shall
be deemed received by Administrative Agent in accordance with Section 1.10. The
Administrative Agent shall allocate funds applied to the Collection Account in
accordance with Section 1.11. In no event
C-2
shall any amount be so applied unless and until such amount shall have been
credited in immediately available funds to the Collection Account.
(g) Borrower shall and shall cause its Affiliates,
officers, employees, agents, directors or other Persons acting for or in concert
with Borrower (each a "Related Person") to (i) hold in trust for Inventory and
Receivables Security Agent, for the benefit of itself and Lenders, all checks,
cash and other items of payment received by Borrower or any such Related Person,
and (ii) within one (1) Business Day after receipt by Borrower or any such
Related Person of any checks, cash or other items of payment, deposit the same
into a Blocked Account. Borrower on behalf of itself and each Related Person
acknowledges and agrees that all cash, checks or other items of payment
constituting proceeds of Collateral (as defined in the Senior Current Asset
Security Agreement) are part of the Collateral (as defined in the Senior Current
Asset Security Agreement). All proceeds of the sale or other disposition of any
Collateral (as defined in the Senior Current Asset Security Agreement), shall be
deposited directly into Blocked Accounts.
(h) Notwithstanding anything to the contrary contained in
the foregoing paragraphs of this Annex C, the provisions of this Annex C shall
not apply to (i) the EAF Cash Collateral Account, (ii) the collateral accounts
established by the Collateral Agent pursuant to Section 8.1 of the Security
Agreement and Section 8.1 of the JV Pledge Agreements or any similar account
established by the Collateral Agent pursuant to any Mortgage or (iii) any
deposit account opened for the sole purpose of holding proceeds of Non-Current
Asset Collateral in accordance with Section 2.6(b) of the Term Loan Agreement.
C-3
ANNEX D (SECTION 2.1(a))
TO
CREDIT AGREEMENT
CLOSING CHECKLIST
In addition to, and not in limitation of, the conditions
described in Section 2.1 of the Agreement, pursuant to Section 2.1(a), the
following items must be received by Administrative Agent in form and substance
satisfactory to Administrative Agent on or prior to the Closing Date (each
capitalized term used but not otherwise defined herein shall have the meaning
ascribed thereto in Annex A to the Agreement):
A. Appendices. All Appendices to the Agreement, in form
and substance satisfactory to Agent.
B. Revolving Notes and Swing Line Note. Duly executed
originals of a Revolving Note and Swing Line Note for each requesting Lender,
dated the Closing Date.
C. Insurance. Satisfactory evidence that the insurance
policies described in Disclosure Schedule 3.24 and required by Section 5.8 are
in full force and effect, together with appropriate evidence showing loss
payable and/or additional insured clauses or endorsements, as reasonably
requested by any Agent, in favor of Collateral Agent, on behalf of Agents and
Lenders.
D. Security Interests and Code Filings. (a) Evidence
satisfactory to Administrative Agent that Inventory and Receivables Security
Agent (for the benefit of Agents and Lenders) has a valid and perfected first
priority security interest in the Current Asset Collateral, including (i) such
documents duly executed by each Credit Party (including financing statements
under the Code and other applicable documents under the laws of any jurisdiction
with respect to the perfection of Liens) as Inventory and Receivables Security
Agent may request in order to perfect the Inventory and Receivables Security
Agent's security interests in the Current Asset Collateral and (ii) copies of
Code search reports listing all effective financing statements that name any
Credit Party as debtor, together with copies of such financing statements, none
of which shall cover the Current Asset Collateral, except for those terminated
in connection with the consummation of the Plan of Reorganization and those
permitted by Section 6.3.
(b) Control Letters from (i) all issuers of
uncertificated securities and financial assets held by Borrower, (ii) all
securities intermediaries with respect to all securities accounts and securities
entitlements of Borrower, and (iii) all futures commission agents and clearing
houses with respect to all commodities contracts and commodities accounts held
by Borrower.
E. Initial Borrowing Base Certificate. Duly executed
originals of an initial Borrowing Base Certificate from Borrower, dated the
Closing Date, reflecting information concerning Eligible Accounts and Eligible
Inventory of Borrower as of a date not more than five (5) days prior to the
Closing Date.
D-1
F. Initial Notice of Revolving Credit Advance. Duly
executed originals of a Notice of Revolving Credit Advance, dated the Closing
Date, with respect to the initial Revolving Credit Advance to be requested by
Borrower on the Closing Date.
G. Letter of Direction. Duly executed originals of a
letter of direction from Borrower addressed to Administrative Agent, on behalf
of itself and Lenders, with respect to the disbursement on the Closing Date of
the proceeds of the initial Revolving Credit Advance.
H. Cash Management System; Blocked Account Agreements.
Evidence satisfactory to Agents that, as of the Closing Date, Cash Management
Systems complying with Annex C to the Agreement have been established and are
currently being maintained in the manner set forth in such Annex C, together
with copies of duly executed tri-party blocked account and lock box agreements,
reasonably satisfactory to Agents, with the banks as required by Annex C.
I. Closing Certificate; Certified Certificate of
Incorporation; Good Standing Certificates. The Administrative Agent shall have
received (i) a certificate of each Credit Party, dated the Closing Date,
substantially in the form of Exhibit E, with appropriate insertion and
attachments, including the certificate of incorporation of each Credit Party
that is a corporation certified by the relevant authority of the jurisdiction of
organization of such Credit Party, and (ii) a long form good standing
certificate for each Credit Party from its jurisdiction of organization.
J. Officer's Certificate. Agents shall have received
duly executed originals of a certificate of a Responsible Officer of Borrower,
dated the Closing Date, stating that (a) since December 31, 2002, no event or
condition has occurred or is existing which could reasonably be expected to have
a Material Adverse Effect; (b) there has been no development or event that has
had a material adverse effect on the aggregate value of the "Collateral" as
defined in the Security Agreement or in the aggregate value of the "Collateral"
as defined in the JV Pledge Agreements relating to Ohio Coatings Company and
Wheeling-Nisshin, Inc. (but in any case excluding Current Asset Collateral)
since the appraisals dated September 2002 and May 2003 received from Asset
Recovery & Valuation and Xxxxxx del Genio, respectively; (c) since December 31,
2002, no Litigation has been commenced which, if successful, would have a
Material Adverse Effect or could challenge any of the transactions contemplated
by the Agreement and the other Loan Documents; and (d) since December 31, 2002,
there has been no material increase in liabilities, liquidated or contingent,
and no material decrease in assets of Borrower or any of its Subsidiaries.
K. Opinions of Counsel. Duly executed originals of
opinions of Xxxxxxx XxXxxxxxx LLP, counsel for the Credit Parties, together with
any local counsel opinions reasonably requested by Administrative Agent, each in
form and substance reasonably satisfactory to Administrative Agent and its
counsel, dated the Closing Date, and each accompanied by a letter addressed to
such counsel from the Credit Parties, authorizing and directing such counsel to
address its opinion to Administrative Agent, on behalf of Lenders, and to
include in such opinion an express statement to the effect that Administrative
Agent and Lenders are authorized to rely on such opinion.
D-2
M. Fee Letter. Duly executed originals of the Fee
Letter.
N. Waivers. Inventory and Receivables Security Agent,
for the benefit of the Agents and Lenders and the other secured parties party to
the Collateral Documents, shall have received landlord waivers and consents,
bailee letters and mortgagee agreements in form and substance satisfactory to
Agents, in each case as required pursuant to Section 5.11.
O. Mortgages. Mortgages covering all of the Mortgaged
Properties together with: (a) title insurance policies, current as-built
surveys, zoning letters and certificates of occupancy, in each case reasonably
satisfactory in form and substance to Agents; (b) evidence that counterparts of
the Mortgages have been recorded in all places to the extent necessary or
desirable, in the judgment of Inventory and Receivables Security Agent, to
create a valid and enforceable third priority lien ranking after the
encumbrances granted to secure the Term Loan Obligations (and subject to the
encumbrances permitted by Section 6.3) and the Series A Notes on each Mortgaged
Property in favor of Collateral Agent (or in favor of such other trustee as may
be required or desired under local law) for the benefit of the Agents and
Lenders; and (c) an opinion of counsel in each state in which any Mortgaged
Property is located in form and substance and from counsel reasonably
satisfactory to Inventory and Receivables Security Agent.
P. Environmental Reports. The Agents shall have received
the React Report, which in form, scope and substance is satisfactory to the
Agents.
Q. Audited Financials; Financial Condition; Solvency
Certificate. Agent shall have received the Financial Statements, Projections and
other materials set forth in Section 3.1, certified by Holdings' Chief Financial
Officer, in each case in form and substance satisfactory to each Agent, and each
Agent shall be satisfied, in its sole discretion, with all of the foregoing.
Agents shall have further received a certificate of the Chief Executive Officer
and/or the Chief Financial Officer of Holdings, based on such Pro Forma and
projections, to the effect that (a) Holdings and Borrower will be Solvent upon
the consummation of the transactions contemplated herein; (b) the Pro Forma
Balance Sheet has been prepared on the best information available to Holdings as
of the date hereof and presents fairly on a pro forma basis the estimated
financial position of Holdings and its consolidated Subsidiaries at June 30,
2003, assuming that the Plan of Reorganization had been consummated, and the
Indebtedness relating thereto (including the Loans) had been incurred, on such
date; (c) the projections are based upon estimates and assumptions stated
therein, all of which Holdings believes to be reasonable and fair in light of
current conditions and current facts known to Borrower and, as of the Closing
Date, reflect Holdings' good faith and reasonable estimates of its future
financial performance and of the other information projected therein for the
period set forth therein; and (d) containing such other statements with respect
to the solvency of Borrower and matters related thereto as Agents shall request.
R. Pension Plan. The Administrative Agent shall have
received satisfactory evidence of (i) the termination of Holdings' and the
Borrower's participation in the benefit plans of WHX, (ii) the release from past
and future liabilities relating to the WHX benefit plans, (iii) the inclusion of
Holdings and the Borrower in the Steelworker Pension Trust and (iv) resolution
of all outstanding matters regarding Holdings and the Borrower with the PBGC.
D-3
S. WHX Capital Contributions. The Administrative Agent
shall have received satisfactory evidence of (i) the forgiveness by WHX of
approximately $39,000,000 in Indebtedness and other amounts owing to WHX and
(ii) the receipt by the Borrower from WHX of $10,000,000 in cash in the form of
a capital contribution and $10,000,000 in cash in exchange for the WHX
Subordinated Note.
T. Labor Agreement. The Borrower shall have entered into
a master labor agreement (the "Master Labor Agreement") with the United
Steelworkers of America in form and substance reasonably satisfactory to the
Administrative Agent.
U. Constitutive Documents. The Administrative Agent
shall have received copies of the certificate of incorporation and by-laws of
Holdings and the Borrower (collectively, the "Constitutive Documents"), each
certified by the secretary or assistant secretary of Holdings or the Borrower,
as applicable, and each in form and substance satisfactory to the Administrative
Agent.
V. Indebtedness Documents. The Administrative Agent
shall have received duly executed copies of the following, each in form and
substance reasonably satisfactory to it:
(i) the Series A Indenture;
(ii) the Series B Indenture;
(iii) the subordinated note due 2011 in the aggregate
principal amount of $10,000,000 issued to WHX Corporation (the "WHX Subordinated
Note");
(iv) the 7% Note in the aggregate principal amount of
$3,000,000 issued to Junction Industries, Inc. and due in ten consecutive
semi-annual payments of $300,000 each beginning on the date which is six months
after the date of physical completion of the Electric Arc Furnace (the "Junction
Note");
(v) the Note due 2007 in the aggregate principal amount of
$1,210,526 issued to Danieli Corporation (the "Danieli Note");
(vi) the 3% Note due 2005 in the original aggregate principal
amount of $6,985,000 issued to the State of Ohio (the "Ohio Note");
(vii) the Note due 2008 in the aggregate principal amount of
$6,539,473.68 issued to the State of West Virginia Economic Development Agency
(the "West Virginia Note");
(viii) the Nevada IRB Supplemental Indenture (or in lieu of
such delivery, the claims of the Director of the State of Nevada Department of
Business and Industry against Borrower to be evidenced by the Nevada IRB
Supplemental Indenture, shall have been modified as set forth in, and pursuant
to, Section 5.3 of the Plan of Reorganization, to the reasonable satisfaction of
the Administrative Agent);
(ix) the Virginia IRB Supplemental Indenture (or in lieu of
such delivery, the claims of the Industrial Development Authority of Greensville
County, Virginia against
D-4
Borrower to be evidenced by the Virginia IRB Supplemental Indenture, shall have
been modified as set forth in, and pursuant to, Section 5.3 of the Plan of
Reorganization, to the reasonable satisfaction of the Administrative Agent); and
(x) the RDL Deferred Payment Agreement.
W. Master Standby Agreement. A Master Agreement for
Standby Letters of Credit between Borrower and GE Capital.
X. Master Documentary Agreement. A Master Agreement for
Documentary Letters of Credit between Borrower and GE Capital.
Y. PPE Access Agreement. The PPE Access Agreement duly
executed by the parties thereto.
Z. Existing Credit Policies. The Agents shall have
received a copy of the credit policies and procedures of the Borrower as in
effect on the Closing Date in form and substance satisfactory to each of them
(the "Existing Credit Policies").
AA. Accountants' Letter. A letter from the Credit Parties
to their independent auditors authorizing the independent certified public
accountants of the Credit Parties to communicate with Agents and Lenders in
accordance with Section 4.2.
BB. Other Documents. Such other certificates, documents
and agreements respecting any Credit Party as Administrative Agent may
reasonably request.
D-5
ANNEX E (SECTION 4.1(a))
TO
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
Holdings shall deliver or cause to be delivered to
Administrative Agent or to Administrative Agent and Lenders, as indicated, the
following:
(a) Monthly Financials. To Administrative Agent and
Lenders, within thirty (30) days after the end of each Fiscal Month, financial
information regarding Holdings and its Subsidiaries, certified by a Responsible
Officer of Holdings, consisting of consolidated and consolidating (i) unaudited
balance sheets as of the close of such Fiscal Month and the related statements
of income and cash flows for that portion of the Fiscal Year ending as of the
close of such Fiscal Month; (ii) unaudited statements of income and cash flows
for such Fiscal Month, setting forth in comparative form the figures for the
corresponding period in the prior year, all prepared in accordance with GAAP
(subject to normal year-end adjustments); and (iii) a summary of the outstanding
balance of all Intercompany Notes as of the last day of that Fiscal Month. Such
financial information shall be accompanied by the certification of a Responsible
Officer of Holdings that (i) such financial information presents fairly in
accordance with GAAP (subject to normal year-end adjustments) the financial
position and results of operations of Borrower and its Subsidiaries, on a
consolidated and consolidating basis, in each case as at the end of such Fiscal
Month and for that portion of the Fiscal Year then ended and (ii) any other
information presented is true, correct and complete in all material respects and
that there was no Default or Event of Default in existence as of such time or,
if a Default or Event of Default shall have occurred and be continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default.
(b) Quarterly Financials. To Administrative Agent and
Lenders, within forty-five (45) days after the end of each of the first three
Fiscal Quarters of each Fiscal Year, consolidated and consolidating financial
information regarding Holdings and its Subsidiaries, certified by a Responsible
Officer of Holdings, including (i) unaudited balance sheets as of the close of
such Fiscal Quarter and the related statements of income and cash flow for that
portion of the Fiscal Year ending as of the close of such Fiscal Quarter and
(ii) unaudited statements of income and cash flows for such Fiscal Quarter, in
each case setting forth in comparative form the figures for the corresponding
period in the prior year and the figures contained in the Projections for such
Fiscal Year, all prepared in accordance with GAAP (subject to normal year-end
adjustments). Such financial information shall be accompanied by (A) a statement
in reasonable detail (each, a "Compliance Certificate") showing the calculations
used in determining the Consolidated Leverage Ratio, Consolidated Interest
Coverage Ratio and Consolidated Fixed Charge Coverage Ratio for the four
consecutive Fiscal Quarters then ended (regardless of whether Financial
Covenants are applicable with respect to such calculations during such period)
and (B) the certification of a Responsible Officer of Holdings that (i) such
financial information presents fairly in accordance with GAAP (subject to normal
year-end adjustments) the financial position, results of operations and
statements of cash flows of Holdings and its Subsidiaries on a consolidated and
consolidating basis as at the end of such Fiscal Quarter and for that portion of
E-1
the Fiscal Year then ended, (ii) any other information presented is true,
correct and complete in all material respects and that there was no Default or
Event of Default in existence as of such time or, if a Default or Event of
Default has occurred and is continuing, describing the nature thereof and all
efforts undertaken to cure such Default or Event of Default. In addition,
Holdings shall deliver to Administrative Agent and Lenders, within forty-five
(45) days after the end of each Fiscal Quarter, a management discussion and
analysis that includes a comparison to budget for that Fiscal Quarter and a
comparison of performance for that Fiscal Quarter to the corresponding period in
the prior year.
(c) Operating Plan. To the Administrative Agent and each
Lender, as soon as available, and in any event no later than the start of each
Fiscal Year of Holdings, a detailed consolidated budget for each Fiscal Year
(including a projected consolidated and consolidating balance sheet of Holdings
and its Subsidiaries as of the end of such Fiscal Year, the related consolidated
and consolidating statements of projected cash flow, projected changes in
financial position and projected income and a description of the underlying
assumptions applicable thereto), and, as soon as available, significant
revisions, if any, of such budget and projections with respect to such Fiscal
Year (collectively, the "Projections"), which Projections shall in each case be
accompanied by a certificate of a Responsible Officer stating that such
Projections are based on reasonable estimates, information and assumptions and
that as of such date such Responsible Officer has no reason to believe that such
Projections are incorrect or misleading in any material respect.
(d) Annual Audited Financials. To Administrative Agent
and Lenders, within forty-five (45) days after the end of each Fiscal Year, (i)
a Compliance Statement prepared in reasonable detail showing the calculations
used in determining the Consolidated Leverage Ratio, Consolidated Interest
Coverage Ratio and Consolidated Fixed Charge Coverage Ratio for the Fiscal Year
then ended (regardless of whether Financial Covenants are applicable with
respect to such calculations during such period) (subject to normal year-end
adjustments) and (ii) the certification of a Responsible Officer of Holdings
that as at the end of such Fiscal Year there was no Default or Event of Default
in existence or, if a Default or Event of Default has occurred and is
continuing, describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default.
To Administrative Agent and Lenders, within ninety (90) days
after the end of each Fiscal Year, audited Financial Statements for Holdings and
its Subsidiaries on a consolidated and consolidating basis, consisting of
balance sheets and statements of income and retained earnings and cash flows,
setting forth in comparative form in each case the figures for the previous
Fiscal Year, which Financial Statements shall be prepared in accordance with
GAAP and, with respect to the consolidated Financial Statements, certified
without qualification (except for qualifications relating to changes in
accounting principles with which such accountants concur), by an independent
certified public accounting firm of national standing or otherwise acceptable to
Administrative Agent. Such Financial Statements shall be accompanied by (i) a
Compliance Statement prepared in reasonable detail showing the calculations used
in determining the Consolidated Leverage Ratio, Consolidated Interest Coverage
Ratio and Consolidated Fixed Charge Coverage Ratio for the four consecutive
Fiscal Quarters then ended (regardless of whether Financial Covenants are
applicable with respect to such calculations during such period), (ii) a report
from such accounting firm to the effect that, in connection with
E-2
their audit examination, nothing has come to their attention to cause them to
believe that a Default or Event of Default has occurred with respect to the
Financial Covenants (or specifying those Defaults and Events of Default that
they became aware of), it being understood that such audit examination extended
only to accounting matters and that no special investigation was made with
respect to the existence of Defaults or Events of Default, (iii) the annual
letters to such accountants in connection with their audit examination detailing
contingent liabilities and material litigation matters, and (iv) the
certification of a Responsible Officer of Holdings that all such Financial
Statements present fairly in accordance with GAAP the financial position,
results of operations and statements of cash flows of Borrower and its
Subsidiaries on a consolidated and consolidating basis, as at the end of such
Fiscal Year and for the period then ended, and that there was no Default or
Event of Default in existence as of such time or, if a Default or Event of
Default has occurred and is continuing, describing the nature thereof and all
efforts undertaken to cure such Default or Event of Default.
(e) Joint Venture Financial Statements. Borrower shall
also furnish to the Administrative Agent and Lenders, as soon as available but
in any event no later than fifteen (15) days after receipt thereof, a copy of
all annual and quarterly financial statements received with respect to the Joint
Ventures.
(f) Management Letters. To Administrative Agent and
Lenders, within five (5) Business Days after receipt thereof by any Credit
Party, copies of all management letters, exception reports or similar letters or
reports received by such Credit Party from its independent certified public
accountants.
(g) SEC Filings and Press Releases. To Administrative
Agent and Lenders, promptly upon their becoming available, but in no event later
than five (5) days thereafter, copies of: (i) all Financial Statements, reports,
notices and proxy statements made publicly available by any Credit Party to its
security holders; (ii) all regular and periodic reports and all registration
statements and prospectuses, if any, filed by any Credit Party with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority; and (iii) all press releases and
other statements made available by any Credit Party to the public concerning
material changes or developments in the business of any such Person.
(h) Debt and Equity Notices. To Administrative Agent, as
soon as practicable, copies of all material written notices given or received by
any Credit Party with respect to the Term Loan Agreement, any Plan of
Reorganization Indebtedness or any Capital Stock of such Person.
(i) Supplemental Schedules. To each Agent, supplemental
disclosures, if any, required by Section 5.9.
(j) Insurance Notices. To each Agent, disclosure of
losses or casualties required by Section 1.3(e).
(k) Amendment of Indebtedness, Certain Agreements. To
Administrative Agent, (i) 15 days prior to the effectiveness of any proposed
amendment, supplement, waiver or other modification with respect to any Plan of
Reorganization Indebtedness, the RDL Deferred
E-3
Payment Agreement, the Master Labor Agreement or the Constitutive Documents,
notice and a description of such proposed amendment, supplement, waiver or
modification and (ii) 5 days prior to the effectiveness thereof, a copy of a
substantially final draft of such proposed amendment, supplement, waiver or
other modification.
(l) Annual Environmental Report. To Administrative Agent,
no later than 30 days after the end of each Fiscal Year, a certificate of a
Responsible Officer of the Borrower, with such supporting information as may be
reasonably requested by the Administrative Agent, certifying whether the
Borrower is in compliance with Section 5.6 (and, if the Borrower is not in
compliance with Section 5.6 at such time, such certificate shall include a
statement as to the nature of such non-compliance and the steps being taken by
the Borrower to remedy the same).
(m) Evidence of Lease Payments. To each Agent, (i)
monthly within three (3) Business Days after payment thereof, evidence of
payment of lease or rental payments as to each leased or rented location for
which (A) a landlord or bailee waiver has not been obtained and (B) the value of
the Current Asset Collateral located thereat exceeds $50,000 and (ii) such other
notices or documents as any Agent may reasonably request.
(n) Hedging Agreements. To Administrative Agent within
two (2) Business Days after entering into such agreement or amendment, copies of
all interest rate, commodity or currency hedging agreements or amendments
thereto.
(o) Other Documents. To Agents and Lenders, such other
financial and other information respecting any Credit Party's business or
financial condition as any Agent or Lender shall, from time to time, reasonably
request.
E-4
ANNEX F (SECTION 4.1(b))
TO
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrower shall deliver or cause to be delivered the following:
(a) To each Agent, upon the request of either Agent, and
in any event no less frequently than five (5) Business Days after the end of
each Fiscal Month (together with a copy of all or any part of the following
reports requested by any Lender in writing after the Closing Date), each of the
following reports, each of which shall be prepared by the Borrower as of the
last day of the immediately preceding fiscal month or the date two (2) days
prior to the date of any such request:
(i) a Borrowing Base Certificate with respect to
Borrower, accompanied by such supporting detail and documentation as
shall be requested by any Agent in its reasonable discretion;
(ii) with respect to Borrower, a summary of Inventory by
location and type with a supporting perpetual Inventory report, in each
case accompanied by such supporting detail and documentation as shall
be requested by any Agent in its reasonable discretion; and
(iii) with respect to Borrower, a monthly trial balance
showing Accounts outstanding aged from due date as follows: 1 to 30
days, 31 to 60 days, 61 to 90 days and 91 days or more, accompanied by
such supporting detail and documentation as shall be requested by any
Agent in its reasonable discretion.
Notwithstanding the foregoing, Borrower shall deliver a Borrowing Base
Certificate to each Agent (i) by noon New York time on Wednesday of each week
during any period when (A) prior to delivery of Financial Statements for the
Fiscal Year ended December 31, 2003, Borrowing Availability is less than
$75,000,000 or (B) from and after delivery of Financial Statements for the
Fiscal Year ended December 31, 2003, either (I) Borrowing Availability is less
than $75,000,000 and the Consolidated Fixed Charge Coverage Ratio indicated in
the most recently delivered Compliance Statement is less than 1.00 to 1.0 or
(II) Borrowing Availability is less than $50,000,000, and (ii) at such other
times as any Agent shall request. Borrowing Base Certificates delivered pursuant
to clause (i) of the preceding sentence shall include updated valuations of
Eligible Inventory and Eligible Accounts, provided that the value of Eligible
Inventory consisting of raw materials shall only be required to be updated in
connection with the month-end Borrowing Base Certificate referred to above.
(b) To each Agent, on a weekly basis or at such more
frequent intervals as any Agent may request from time to time (together with a
copy of all or any part of such delivery requested by any Lender in writing
after the Closing Date), collateral reports as at such date with respect to
Borrower, including all additions and reductions (cash and non-cash) with
respect to Accounts of Borrower, in each case accompanied by such supporting
detail and documentation
F-1
as shall be requested by any Agent in its reasonable discretion each of which
shall be prepared by the Borrower as of the last day of the immediately
preceding week or the date two (2) days prior to the date of any request;
(c) To each Agent, at the time of delivery of each of the
monthly Financial Statements delivered pursuant to Annex E:
(i) a reconciliation of the most recent
Borrowing Base, general ledger and month-end Inventory reports of
Borrower to Borrower's general ledger and monthly Financial Statements
delivered pursuant to such Annex E, in each case accompanied by such
supporting detail and documentation as shall be requested by Agent in
its reasonable discretion;
(ii) a reconciliation of the perpetual inventory
by location to Borrower's most recent Borrowing Base Certificate,
general ledger and monthly Financial Statements delivered pursuant to
Annex E, in each case accompanied by such supporting detail and
documentation as shall be requested by any Agent in its reasonable
discretion;
(iii) an aging of accounts payable by due date and
a reconciliation of that accounts payable aging to Borrower's general
ledger and monthly Financial Statements delivered pursuant to Annex E,
in each case accompanied by such supporting detail and documentation as
shall be requested by any Agent in its reasonable discretion;
(iv) a reconciliation of the outstanding Loans as
set forth in the monthly Loan Account statement provided by
Administrative Agent to Borrower's general ledger and monthly Financial
Statements delivered pursuant to Annex E, in each case accompanied by
such supporting detail and documentation as shall be requested by Agent
in its reasonable discretion;
(d) To each Agent, at the time of delivery of each of the
quarterly Financial Statements delivered pursuant to Annex E, (i) a listing of
government contracts of Borrower subject to the Federal Assignment of Claims Act
of 1940; and (ii) a list of any applications for the registration of any Patent,
Trademark or Copyright filed by any Credit Party with the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in the prior Fiscal Quarter;
(e) Borrower, at its own expense, shall deliver to each
Agent the results of each physical verification, if any, that Borrower or any of
its Subsidiaries may in their discretion have made, or caused any other Person
to have made on their behalf, of all or any portion of their Inventory (and, if
a Default or an Event of Default has occurred and be continuing, Borrower shall,
upon the request of any Agent, conduct, and deliver the results of, such
physical verifications as such Agent may require);
(f) Borrower, at its own expense, shall deliver to each
Agent such appraisals of its assets as any Agent may request at any time after
the occurrence and during the
F-2
continuance of a Default or an Event of Default, such appraisals to be conducted
by an appraiser, and in form and substance reasonably satisfactory to the
requesting Agent; and
(g) Borrower, at its own expense, shall deliver to each
Agent semi-annual audits of the accounts receivable and appraisals of the
inventory, in each case performed by parties acceptable to the Agents, provided
that audits and appraisals shall be conducted for each Fiscal Quarter in which,
at any time during such Fiscal Quarter, (i) prior to delivery of Financial
Statements for the Fiscal Year ended December 31, 2003, Borrowing Availability
is less than $75,000,000 or (ii) from and after delivery of Financial Statements
for the Fiscal Year ended December 31, 2003, either (A) Borrowing Availability
is less than $75,000,000 and the Consolidated Fixed Charge Coverage Ratio
indicated in the most recently delivered Compliance Certificate is less than
1.00 to 1.0 or (B) Borrowing Availability is less than $50,000,000.
(h) Such other reports, statements and reconciliations
with respect to the Borrowing Base or Collateral or Obligations of any or all
Credit Parties as any Agent shall from time to time request in its reasonable
discretion.
F-3
ANNEX G (SECTION 6.1)
TO
CREDIT AGREEMENT
FINANCIAL COVENANTS
The Credit Parties hereby jointly and severally agree that, so
long as any Loan or other amount is owing to any Lender or Agent hereunder, each
of the Credit Parties shall not:
(a) Consolidated Leverage Ratio. Permit the Consolidated
Leverage Ratio as at the last day of any period of four consecutive Fiscal
Quarters of Holdings ending with any Fiscal Quarter set forth below to exceed
the ratio set forth below opposite such Fiscal Quarter:
Fiscal Quarter Consolidated Leverage Ratio
-------------- ---------------------------
March 31, 2005 and June 30, 2005 4.00 to 1.0
September 30, 2005 and thereafter 3.50 to 1.0.
(b) Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio for any period of four consecutive Fiscal
Quarters of Holdings ending with any Fiscal Quarter ended on or after March 31,
2005 to be less than 3.00 to 1.0.
(c) Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
Fiscal Quarters of Holdings ending with any Fiscal Quarter set forth below to be
less than the ratio set forth below opposite such Fiscal Quarter:
Fiscal Quarter Consolidated Fixed Charge Coverage Ratio
-------------- ----------------------------------------
March 31, 2005 through December 31, 2005 1.20 to 1.0
March 31, 2006 and thereafter 1.30 to 1.0
; provided that if on any date prior to January 1, 2005 the Borrowing
Availability shall be less than $50,000,000, then the Consolidated Fixed Charge
Coverage Ratio for the period of the four most recently completed Fiscal
Quarters (or, if less, the number of full consecutive Fiscal Quarters subsequent
to the Closing Date) shall be at least 1.00 to 1.0 as set forth in the most
recently delivered Compliance Certificate.
(d) Minimum Borrowing Availability. Permit Borrowing
Availability on any date to be less than $25,000,000.
(e) Accounting Terms. Unless otherwise specifically
provided herein, any accounting term used in the Agreement shall have the
meaning customarily given such term in accordance with GAAP, and all financial
computations hereunder shall be computed in accordance with GAAP consistently
applied. That certain items or computations are explicitly modified by the
phrase "in accordance with GAAP" shall in no way be construed to limit the
G-1
foregoing. If any "Accounting Changes" (as defined below) occur and such changes
result in a change in the calculation of the financial covenants, standards or
terms used in the Agreement or any other Loan Document, then Holdings, Agents
and Lenders agree to enter into negotiations in order to amend such provisions
of the Agreement so as to equitably reflect such Accounting Changes with the
desired result that the criteria for evaluating Holdings' and its Subsidiaries'
financial condition shall be the same after such Accounting Changes as if such
Accounting Changes had not been made; provided, however, that the agreement of
Requisite Lenders to any required amendments of such provisions shall be
sufficient to bind all Lenders. "Accounting Changes" means (i) changes in
accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants (or successor thereto or any
agency with similar functions), (ii) changes in accounting principles concurred
in by Holdings' certified public accountants; (iii) purchase accounting
adjustments under A.P.B. 16 or 17 and EITF 88-16, and the application of the
accounting principles set forth in FASB 109, including the establishment of
reserves pursuant thereto and any subsequent reversal (in whole or in part) of
such reserves; and (iv) the reversal of any reserves established as a result of
purchase accounting adjustments. All such adjustments resulting from
expenditures made subsequent to the Closing Date (including capitalization of
costs and expenses or payment of pre-Closing Date liabilities) shall be treated
as expenses in the period the expenditures are made and deducted as part of the
calculation of EBITDA in such period. If Agents, Holdings and Requisite Lenders
agree upon the required amendments, then after appropriate amendments have been
executed and the underlying Accounting Change with respect thereto has been
implemented, any reference to GAAP contained in the Agreement or in any other
Loan Document shall, only to the extent of such Accounting Change, refer to
GAAP, consistently applied after giving effect to the implementation of such
Accounting Change. If Agents, Holdings and Requisite Lenders cannot agree upon
the required amendments within thirty (30) days following the date of
implementation of any Accounting Change, then all Financial Statements delivered
and all calculations of financial covenants and other standards and terms in
accordance with the Agreement and the other Loan Documents shall be prepared,
delivered and made without regard to the underlying Accounting Change. For
purposes of Section 8.1, a breach of a Financial Covenant contained in this
Annex G shall be deemed to have occurred as of any date of determination by
Administrative Agent or as of the last day of any specified measurement period,
regardless of when the Financial Statements reflecting such breach are delivered
to Administrative Agent.
G-2
ANNEX H (SECTION 9.9(a))
TO
CREDIT AGREEMENT
LENDERS' WIRE TRANSFER INFORMATION
Name: Royal Bank of Canada
Bank: JPMorgan Chase Bank
New York, New York
ABA #: 021-000021
Account #: 920-1033363
For further credit to: Account #: 0000000, Transit 1269
RBC Loan Syndications New York
Ref: Wheeling
Name: General Electric Capital Corporation
Bank: DeutscheBank Trust Company Americas
New York, New York
ABA #: 000000000
Account #: 00000000
Ref: Wheeling-Pittsburgh POR-ATTN: CFN5230
Name: The CIT Group/Business Credit, Inc.
Bank: XX Xxxxxx Xxxxx
Tampa, Florida
ABA #: 00000000
Account #: 000-0-00000
Ref: Wheeling-Pittsburgh Steel Corporation
Name: Fleet Capital Corp.
Bank: Fleet National Bank
Hartford, Connecticut
ABA #: 000000000
Account #: 936-033-7579
Ref: Wheeling-Pittsburgh Steel Corporation
Name: Congress Financial Corp.
Bank: First Union National Bank
Charlotte, North Carolina
ABA #: 000000000
Account #: 5000000030279
Ref: RBC-Wheeling Pittsburgh
H-1
Name: Bank One, N.A.
Bank: Bank One, N.A.
Chicago, Illinois
ABA #: 000000000
Ref: Wheeling-Pittsburgh Steel Corp.
Name: Orix Financial Services
Bank: Mellon Bank, N.A.
Pittsburgh, Pennsylvania
ABA #: 000000000
Account #: 050-2481
Ref: Wheeling Xxxxxxxxxx
X-0
ANNEX I (SECTION 11.10)
TO
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Administrative Agent, at
Royal Bank of Canada
Agency Services Group
Xxxxx Xxxx Xxxxx
X.X. Xxx 00, 200 Bay Street
00xx Xxxxx, Xxxxx Xxxxx
Xxxxxxx Xxxxxxx X0X 0X0
Attention: Manager
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
(B) If to Inventory and Receivables Security Agent or GE Capital, at
General Electric Capital Corporation
000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Wheeling-Pittsburgh Steel Corporation, Account Manager
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Corporate Counsel-Commercial Finance
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
(C) If to Borrower, at
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxx Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
I-1
With copies to:
Xxxxxxx XxXxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
I-2
ANNEX J (FROM ANNEX A - COMMITMENTS DEFINITION)
TO
CREDIT AGREEMENT
Lender(s): Revolving Loan Commitment
---------- -------------------------
Royal Bank of Canada $ 25,000,000.00 (including a Swing Line
Commitment of $20,000,000)
General Electric Capital Corporation $70,000,000.00
The CIT Group/Business Credit, Inc. $30,000,000.00
Fleet Capital Corp. $30,000,000.00
Congress Financial Group $30,000,000.00
Bank One, NA $ 25,000,000
Orix Financial Services, Inc. $15,000,000.00
TOTAL $ 225,000,000
J-1
