$200,000,000
INVENTORY CREDIT AGREEMENT
dated as of
September 12, 1995
among
BETHLEHEM STEEL CORPORATION,
THE LENDERS LISTED HEREIN,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
and
J.P. MORGAN DELAWARE,
as Structuring and Collateral Agent
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
1.1. Definitions .............................................. 1
1.2. UCC Terms ................................................ 21
1.3. Accounting Terms and Determinations ...................... 21
ARTICLE 2
THE CREDITS
2.1. Commitments to Lend ...................................... 22
2.2. Letters of Credit ........................................ 23
2.3. Method of Borrowing ...................................... 33
2.4. Notes .................................................... 35
2.5. Maturity of Loans ........................................ 35
2.6. Method of Electing Interest Rates ........................ 35
2.7. Interest Rates ........................................... 37
2.8. Fees ..................................................... 42
2.9. Optional Termination or Reduction of Commitments ......... 43
2.10. Mandatory Termination of Commitments .................... 43
2.11. Optional Prepayments .................................... 44
2.12. Mandatory Prepayments ................................... 44
2.13. General Provisions as to Payments ....................... 46
2.14. Funding Losses .......................................... 47
2.15. Computation of Interest and Fees ........................ 47
ARTICLE 3
CONDITIONS TO BORROWINGS AND ISSUANCES
3.1. Closing .................................................. 48
3.2. All Borrowings and Issuances ............................. 50
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1. Corporate Existence and Power ............................ 51
4.2. Corporate and Governmental Authorization; No Contravention 51
4.3. Binding Effect ........................................... 52
4.4. Financial Information .................................... 52
4.5. Litigation ............................................... 53
i
4.6. Compliance with ERISA .................................... 53
4.7. Taxes .................................................... 53
4.8. Environmental Compliance ................................. 54
4.9. Full Disclosure .......................................... 55
ARTICLE 5
COVENANTS
5.1. Information .............................................. 56
5.2. Maintenance of Property; Insurance ....................... 60
5.3. Compliance with Laws ..................................... 61
5.4. Inspection of Property, Books and Records ................ 62
5.5. Compliance with Certain Covenants in the Indenture ....... 62
5.6. Minimum Adjusted Consolidated Tangible Net Worth ......... 63
5.7. Sale of Borrower's Collateral ............................ 63
5.8. Use of Proceeds .......................................... 64
5.9. Mergers and Sales of Assets .............................. 64
5.10. Environmental Matters ................................... 64
ARTICLE 6
DEFAULTS
6.1. Events of Default ........................................ 65
6.2. Notice of Default ........................................ 69
ARTICLE 7
THE ADMINISTRATIVE AGENT
7.1. Appointment and Authorization ............................ 69
7.2. Administrative Agent and Affiliates ...................... 70
7.3. Action by Administrative Agent ........................... 70
7.4. Consultation with Experts ................................ 70
7.5. Liability of Administrative Agent ........................ 70
7.6. Indemnification .......................................... 71
7.7. Credit Decision .......................................... 71
7.8. Successor Administrative Agent ........................... 71
ARTICLE 8
CHANGE IN CIRCUMSTANCES
8.1. Basis for Determining Interest Rate Inadequate or Unfair . 72
8.2. Illegality ............................................... 73
8.3. Increased Cost and Reduced Return ........................ 74
8.4. Taxes .................................................... 77
8.5. Base Rate Loans Substituted for Affected Fixed Rate Loans. 81
ARTICLE 9
ii
MISCELLANEOUS
9.1. Notices .................................................. 82
9.2. No Waivers ............................................... 82
9.3. Expenses; Indemnification ................................ 83
9.4. Sharing of Set-Offs ...................................... 85
9.5. Amendments and Waivers ................................... 85
9.6. Successors and Assigns ................................... 86
9.7. Margin Stock Collateral .................................. 89
9.8. Confidentiality .......................................... 89
9.9. Governing Law; Submission to Jurisdiction ................ 89
9.10. Counterparts; Integration; Effectiveness ................ 90
9.11. Termination of Existing Credit Agreement................. 90
9.12. WAIVER OF JURY TRIAL .................................... 91
1
AGREEMENT dated as of September 12, 1995 among BETHLEHEM
STEEL CORPORATION, the LENDERS listed on the signature pages hereof,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent and
J.P. MORGAN DELAWARE, as Structuring and Collateral Agent.
RECITALS
WHEREAS, subject to the terms and conditions of this
Agreement, the Borrower desires to borrow Loans and to have Letters of
Credit issued for its account, all in an aggregate amount not to
exceed $200,000,000;
WHEREAS, the obligations of the Borrower with respect to such
Borrowings and such Letters of Credit will be secured by a security
interest in substantially all of the Borrower's Inventories, the
Pledged Securities and the Pledged Interests (as defined in the
Inventory Security Agreement);
WHEREAS, the Lenders are willing to make Loans to the
Borrower and to issue Letters of Credit and participate in Letters of
Credit issued for the account of the Borrower or any Subsidiary, all
on the terms and conditions set forth herein; and
WHEREAS, Morgan Guaranty has been requested and is willing to
act as the Administrative Agent and J.P. Morgan Delaware has been
requested and is willing to act as the Structuring and Collateral
Agent;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used
herein, have the following meanings:
"Adjusted CD Rate" has the meaning set forth in Section.
"Adjusted Consolidated Tangible Net Worth" means, at any date
of determination, Consolidated Tangible Net Worth adjusted upward by
the amount of any material non-recurring charges to income (without
deduction for any related income tax effect) resulting from
discontinuance of operations after December 31, 1994, all determined
as of such date of determination.
2
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section .
"Administrative Agent" means Morgan Guaranty in its capacity
as administrative agent for the Lenders, and its successors and
assigns in such capacity.
"Administrative Questionnaire" means, with respect to each
Lender or L/C Issuing Bank, an administrative questionnaire in the
form prepared by the Administrative Agent and submitted to the
Administrative Agent (with a copy to the Borrower) duly completed by
such Lender or L/C Issuing Bank.
"Affiliate" means (i) any Person that directly, or indirectly
through one or more intermediaries, controls the Borrower (a
"Controlling Person") or (ii) any Person (other than the Borrower or a
Subsidiary) which is controlled by or is under common control with a
Controlling Person. As used herein, the term "control" means
possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" means the Administrative Agent or the Collateral
Agent and "Agents" means the Administrative Agent and the Collateral
Agent.
"Aggregate Letter of Credit Amount" means, at any time, the
sum of (i) the then aggregate outstanding face amount of the Letters
of Credit issued pursuant to Section 2.2 hereof and (ii) the then
aggregate outstanding face amount of letters of credit issued pursuant
to Section 2.9 of the Receivables Purchase Agreement.
"Agreement" means this Inventory Credit Agreement, as amended
from time to time.
"Applicable Lending Office" means, with respect to any
Lender, (i) in the case of its Domestic Loans, its Domestic Lending
Office and (ii) in the case of its Euro-Dollar Loans, its Euro-Dollar
Lending Office.
"Applicable Percentage" means (i) 100%, if no Increased
Coverage Event has occurred, or (ii) 105%, if an Increased Coverage
Event has occurred; provided that if the Secured Principal Amount does
not exceed 85% of the Borrowing Base for a period of six consecutive
months beginning at any time after the occurrence of the most recent
Increased Coverage Event, the Applicable Percentage shall be decreased
at the end of such six month period to 100% (unless and until another
Increased Coverage Event occurs).
"Assessment Rate" has the meaning set forth in Section.
"Assignee" has the meaning set forth in Section.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of
1% plus the Federal Funds Rate for such day.
3
"Base Rate Loan" means a loan which bears interest at the
Base Rate pursuant to the applicable Notice of Borrowing or Notice of
Interest Rate Election or the provisions of Section 2.6(c) or Article
8".
"Base Rate Margin" means a rate per annum determined in
accordance with the Pricing Schedule.
"Benefit Arrangement" means at any time an "employee benefit
plan" within the meaning of Section 3(3) of ERISA which is not a Plan
or a Multiemployer Plan and which is maintained, or otherwise
contributed to, by any member of the ERISA Group.
"Borrower" means Bethlehem Steel Corporation, a Delaware
corporation, and its successors.
"Borrower's 1994 Form 10-K" means the Borrower's annual
report on Form 10-K for 1994, as filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934.
"Borrowers Latest Form 10-Q" means the Borrower's quarterly
report on Form 10-Q for the quarter ended June 30, 1995, as filed with
the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934.
"Borrowing" means a borrowing hereunder consisting of Loans
made to the Borrower on the same day pursuant to Article 2, all of
which Loans are of the same type (subject to Article 8") and, except
in the case of Base Rate Loans, have the same initial Interest Period.
A Borrowing is a "Domestic Borrowing" if such Loans are Domestic Loans
or a "Euro-Dollar Borrowing" if such Loans are Euro-Dollar Loans. A
Domestic Borrowing is a "CD Borrowing" if such Domestic Loans are CD
Loans or a "Base Rate Borrowing" if such Domestic Loans are Base Rate
Loans.
"Borrowing Base" means, at any date, an amount equal to the
sum of (i) 55% of the aggregate amount of Eligible Inventories which
are Finished and Semifinished Inventories at such date, and (ii) 25%
of the aggregate amount of Eligible Inventories which are Raw
Materials Inventories at such date; provided that (x) the Borrowing
Base shall at no time exceed the Receivables Maximum Purchase Price at
such time and (y) if an Event of Default specified in clause (l) of
Section 6.1 shall have been waived pursuant to Section 9.5, the
Borrowing Base shall be reduced by the aggregate amount of claims
secured by Federal Liens (or by such lesser amount as the Required
Lenders may agree).
"Borrowing Base Certificate" means a certificate duly
executed by the Chief Financial Officer, the Treasurer or the
Controller of the Borrower, appropriately completed and substantially
in the form of Exhibit F hereto.
"BSF" means Bethlehem Steel Funding, LLC, a Maryland limited
liability company.
"CD Base Rate" has the meaning set forth in Section.
4
"CD Loan" means a loan which bears interest at a CD Rate
pursuant to the applicable Notice of Borrowing or Notice of Interest
Rate Election.
"CD Margin" means a rate per annum determined in accordance
with the Pricing Schedule.
"CD Rate" means a rate of interest determined pursuant to
Section on the basis of an Adjusted CD Rate.
"CD Reference Banks" means Chemical Bank, The Long-Term
Credit Bank of Japan, Ltd. and Morgan Guaranty and each such other
bank as may be appointed pursuant to Section 9.6(d).
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and regulations
promulgated thereunder.
"Closing Date" means the date on or after the Effective Date
on which the conditions set forth in Section 3.1 shall have been
satisfied.
"Collateral" has the meaning set forth in Section 1 of the
Inventory Security Agreement.
"Collateral Agent" means J.P. Morgan Delaware as Structuring
and Collateral Agent for the Lenders, and its successors and assigns
in such capacity.
"Collateral Report" means a report of the Collateral Agent
with respect to the Inventories included in the Borrowing Base
calculation by the Borrower referred to in such report. Such report
will state that it is based upon a review (but not an audit) by the
Collateral Agent of information supplied by the Borrower relating to
the Inventories (including information as to the cost, market price,
location and respective categories thereof).
"Commitment" means (i) with respect to each Lender, the
amount set forth opposite the name of such Lender on the signature
pages hereof, or (ii) with respect to any Assignee, the amount of the
transferor Lenders's Commitment assigned to such Assignee pursuant to
Section 9.6(c), in each case as such amount may be reduced from time
to time pursuant to Section 2.9! or changed as a result of an
assignment pursuant to Section 9.6(c).
"Commitment Fee" has the meaning set forth in Section 2.8.
"Consolidated Subsidiary" means, at any date, any Subsidiary
or other entity the accounts of which would be consolidated with those
of the Borrower in its consolidated financial statements if its
consolidated financial statements were prepared as of such date.
"Consolidated Tangible Net Worth" means, at any date, the
consolidated stockholders' equity of the Borrower and its Consolidated
Subsidiaries less their consolidated Intangible Assets, all determined
as of such date. For purposes of this definition "Intangible Assets"
means the amount (to the extent reflected in
5
determining such consolidated stockholders' equity) of (i) all
write-ups (other than write-ups resulting from foreign currency
translations and write-ups of assets of a going concern business made
within twelve months after the acquisition of such business)
subsequent to December 31, 1994 in the book value of any asset owned
by the Borrower or a Consolidated Subsidiary, and (ii) all unamortized
debt discount and expense, unamortized deferred charges, goodwill,
patents, trademarks, service marks, trade names, copyrights,
organization or developmental expenses and other intangible assets
(but not including any deferred income tax asset or any pension
asset).
"Debt" of any Person means, at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person to pay
the deferred purchase price of property or services, except trade
accounts payable arising in the ordinary course of business, (iv) all
obligations of such Person as lessee which are capitalized in
accordance with generally accepted accounting principles, (v) all
non-contingent obligations of such Person to reimburse or repay any
lender or other Person in respect of amounts paid under a letter of
credit, banker's acceptance or similar instrument, and (vi) all Debt
secured by a Lien on any asset of such Person, whether or not such
Debt is otherwise an obligation of such Person.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or passage of time
or both would, unless cured or waived, become an Event of Default.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York City are
authorized by law to close.
"Domestic Lending Office" means, as to each Lender, its
office located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as
its Domestic Lending Office) or such other office as such Lender may
hereafter designate as its Domestic Lending Office by notice to the
Borrower and the Administrative Agent; provided that any Lender may so
designate separate Domestic Lending Offices for its Base Rate Loans,
on the one hand, and its CD Loans, on the other hand, in which case
all references herein to the Domestic Lending Office of such Lender
shall be deemed to refer to either or both of such offices, as the
context may require.
"Dollar" and "$" means lawful currency of the United States.
"Domestic Loan" means a CD Loan or a Base Rate Loan and
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in Section .
"EDS" means Electronic Data Systems Corporation, a Texas
corporation, and its successors and assigns.
6
"Effective Date" means the date on which this Agreement
becomes effective in accordance with Section 9.10(.
"Eligible Inventories" means, at any date, the value
(determined at the lower of cost or market on a basis consistent with
the balance sheet as at December 31, 1994 referred to in Section
4.4(a)) at such date of all Inventories which are
(a) owned by the Borrower free of all Liens, other than
Permitted Liens (as defined in the Inventory Security
Agreement),
(b) in the possession of the Borrower (i) on premises owned
(or, in the case of the premises leased from Twincast
Property Leasing, Inc. at Burns Harbor and Sparrows Point,
leased) by the Borrower at its Burns Harbor, Sparrows Point,
Bethlehem, Steelton and Lackawanna facilities; provided that
in the case of leased premises the Collateral Agent has
received evidence satisfactory to it (including landlord
waivers satisfactory to it) that it may enter such leased
premises for the purposes specified in Section 8(C) of the
Inventory Security Agreement, (ii) on premises leased by the
Borrower at any of the locations listed on Exhibit B hereto;
provided that the Collateral Agent has received evidence
satisfactory to it (including landlord waivers satisfactory
to it) that it may enter such premises for the purposes
specified in Section 8(C) of the Inventory Security
Agreement, (iii) at such other premises, owned or leased by
the Borrower, as the Required Lenders may approve, or (iv) at
such other premises listed on Exhibit C-1 hereto and
maintained by processors or warehouses (the "Bailees") or as
the Required Lenders may approve; provided that (i) the
Inventories at such premises are (x) reflected on the
Borrower's books and records, (y) audited by the Borrower or
the Borrower's external auditors on a basis approved by the
Collateral Agent, and (z) appropriately identified and
monitored by the Borrower's Outside Processing Inventory
Control System or any successor system satisfactory to the
Collateral Agent, (ii) upon transfer or sale of such
Inventory, such Inventory is delivered on behalf of and for
the account of the Borrower, (iii) the form of the Inventory
is not fundamentally altered, and (iv) the Bailee has entered
into a Collateral Access Agreement substantially in the form
of Exhibit C-2 hereto;
(c) as to which appropriate UCC financing statements have
been filed naming the Borrower as "debtor" and the Collateral
Agent as "secured party";
provided that Eligible Inventories shall not include (i) any
Inventories which have been shipped to a customer of the Borrower,
even on a consignment basis; (ii) any Inventories which are not Raw
Materials Inventories or Finished and Semifinished Inventories; (iii)
any Inventories held by the Borrower for sale,
7
lease or other disposition, or to be furnished by the Borrower under a
contract for services, or to be used or consumed by the Borrower, in
the Borrower's marine construction business; (iv) all Finished and
Semifinished Inventories in any product account at a facility of the
Borrower (a "Facility Product Account") included in any category or
subcategory of Finished and Semifinished Inventories set forth on
Exhibit D if such Facility Product Account has an Inventory Turnover
Rate lower than the rate for such category or subcategory set forth on
Exhibit D; and (v) any Inventories which the Required Lenders
reasonably determine in good faith to be unmarketable. For purposes
of this definition, "Inventory Turnover Rate" means, with respect to
any category or subcategory of Finished and Semifinished Inventories
and at any date, the quotient obtained by dividing (a) the average of
the amount of Eligible Inventories in such category or subcategory
sold or consumed by the Borrower during each of the three calendar
months ending immediately prior to such date, expressed on an
annualized basis, by (b) the average of the amount of Eligible
Inventories in such category or subcategory at the end of each of the
three calendar months ending immediately prior to such date. The
amount of Eligible Inventories in any such category or subcategory
shall be determined on the basis of the tonnage of such Eligible
Inventories.
"Environmental Laws" means any and all federal, state and
local statutes, laws (including case law), regulations, ordinances,
rules, judgments, orders, decrees, codes, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and governmental
restrictions, whether now or hereafter in effect, relating to the
environment, to the effect of the environment on human health or the
Release of pollutants, contaminants, Hazardous Substances, wastes or
any other materials into the environment or the clean-up or other
remediation thereof.
"Environmental Liabilities" means all liabilities of the
Borrower and any of its Subsidiaries, whether vested or unvested,
contingent or fixed, actual or potential, known or unknown, which
arise under or relate to matters covered by Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means the Borrower and all members of a
controlled group of corporations and all trades or businesses (whether
or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414 of the
Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including
dealings in Dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Lender, its
office, branch or affiliate located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative
Questionnaire as its Euro-Dollar Lending Office) or such other office,
branch or affiliate of such Lender as it may hereafter designate as
its Euro-Dollar Lending Office by notice to the Borrower and the
Administrative Agent.
8
"Euro-Dollar Loan" means a loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Borrowing or
Notice of Interest Rate Election.
"Euro-Dollar Margin" means a rate per annum determined in
accordance with the Pricing Schedule.
"Euro-Dollar Rate" means a rate of interest determined
pursuant to Section on the basis of an Adjusted London Interbank
Offered Rate.
"Euro-Dollar Reference Banks" means the principal London
offices of Chemical Bank, The Long-Term Credit Bank of Japan, Ltd.
and Morgan Guaranty and each such other bank as may be appointed
pursuant to Section 9.6(d).
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section.
"Event of Default" has the meaning set forth in Section 6.1.
"Existing Credit Agreement" means the Credit Agreement dated as of
December 15, 1987 among the Borrower, the lenders party thereto and Morgan
Guaranty, as agent, as amended to the date hereof.
"Existing Letters of Credit" means the letters of credit issued before
the Closing Date and listed on Schedule 1 hereto.
"Existing Security Agreement" means the Security Agreement dated as of
December 15, 1987 among the Borrower, J.P. Morgan Delaware, as security agent
and Morgan Guaranty, as concentration bank and loan agent, as amended to the
date hereof.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day; provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Morgan Guaranty on such day on such
transactions as determined by the Administrative Agent.
"Federal Lien" has the meaning set forth in Section 6.1(l).
"Fees" means the Commitment Fee and the Letter of Credit Fees.
"Financing Documents" means this Agreement (including the Schedules
and Exhibits hereto), the Notes and the Inventory Security Agreement.
9
"Finished and Semifinished Inventories" means, at any date,
all assets of the Borrower which were or would have been classified as
finished and semifinished products (including contract work in
progress less billings), in the Borrower's consolidated balance sheets
referred to in Section 4.4(a), except for tool steel, foundry products
and bolts, nuts, rivets and spikes.
"Fixed Rate Borrowing" means a CD Borrowing or a Euro-Dollar
Borrowing.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or
both.
"Group of Loans" means at any time a group of Loans
consisting of (i) all Loans which are Base Rate Loans at such time,
(ii) all Euro-Dollar Loans having the same Interest Period at such
time or (iii) all CD Loans having the same Interest Period at such
time; provided that, if a Loan of any particular Lender is converted
to or made as a Base Rate Loan pursuant to Article 8", such Loan shall
be included in the same Group or Groups of Loans from time to time as
it would have been in if it had not been so converted or made.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt
of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii) entered
into for the purpose of assuring in any other manner the holder of
such Debt of the payment thereof or to protect such holder against
loss in respect thereof (in whole or in part); provided that the term
Guarantee shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic
or otherwise hazardous substance, including petroleum, its
derivatives, by-products and other hydrocarbons, or any substance
having any constituent elements displaying any of the foregoing
characteristics, whether or not regulated under Environmental Laws.
"Increased Coverage Event" means any one of the following
three events or conditions:
(i) the maturity of Debt of the Borrower and its
Subsidiaries exceeding $10,000,000 in aggregate principal
amount is accelerated,
(ii) the maturity of Debt Guaranteed by the Borrower or
any Subsidiary is accelerated and the aggregate principal
amount which the Borrower and its Subsidiaries become
obligated to pay under their Guarantees of such Debt by
reason of such acceleration exceeds $10,000,000 in any twelve
month period or an aggregate of $30,000,000 at any time prior
to the Termination Date, or
10
(iii) one or more defaults occur under any agreement or
agreements in respect of Debt Guaranteed by the Borrower or
any Subsidiary and the aggregate principal amount of such
Guaranteed Debt exceeds $10,000,000 and as a consequence of
such default or defaults the Borrower or any of its
Subsidiaries shall make any payment or give or agree to give
any consideration or benefit of any kind (including, without
limitation, any increased compensation, prepayment,
shortening of maturities, security or other credit support)
to the holders of such Guaranteed Debt and such payment,
consideration or benefit is determined by the Required
Lenders, after taking into account any payment, consideration
or benefit paid, given or agreed to be given by such holders
to the Borrower or any of its Subsidiaries (other than a
waiver of such default), to be a material benefit to the
holders of such Guaranteed Debt.
"Indemnitee" has the meaning set forth in Section 9.3(c).
"Initial Commitment" means, with respect to any Lender, such
Lender's initial commitment under this Agreement, as reflected in such
Lender's commitment letter delivered to the Borrower, with a copy to
the Administrative Agent.
"Interest Period" means: (i) with respect to each
Euro-Dollar Loan, the period commencing on the date of borrowing
specified in the applicable Notice of Borrowing or on the date
specified in the applicable Notice of Interest Rate Election and
ending one, two, three or six months thereafter, as the Borrower may
elect in the applicable notice; provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended
to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in
which case such Interest Period shall end on the next
preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall,
subject to clause (c) below, end on the last Euro-Dollar
Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after
the Termination Date shall end on the Termination Date;
(ii) with respect to each CD Loan, the period commencing on
the date of borrowing specified in the applicable Notice of Borrowing
or on the date specified in the applicable Notice of Interest Rate
Election and ending 30, 60 or 90 days thereafter, as the Borrower may
elect in the applicable notice; provided that:
11
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would
otherwise end on a day which is not a Euro-Dollar
Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor statute.
"Inventories" means, whether now owned or hereafter acquired
by the Borrower, all "inventory" (as defined in the UCC), wherever
located, and shall also mean and include, without limitation, all raw
materials and other materials and supplies, work-in-process and
finished goods and any products made or processed therefrom and all
substances, if any, commingled therewith or added thereto, or which,
in accordance with generally accepted accounting principles, would be
included in inventories on the Borrower's balance sheets, (excluding,
however, any of the foregoing which (i) is located outside the United
States, (ii) is held at the Borrower's marine construction facilities
at Sparrows Point, Maryland or Port Arthur, Texas for sale or other
disposition, or to be furnished by the Borrower under a contract for
services, or to be used or consumed by the Borrower, in the Borrower's
marine construction business or (iii) has been returned to or
repossessed by the Borrower or stopped in transit (including all
additions and accessions thereto and replacements thereof)).
"Inventory Information Memorandum" means the Bethlehem Steel
Corporation Inventory Financing Facility Overview of Structure and
Collateral dated as of July 1995.
"Inventory Security Agreement" means the Inventory Security
and Pledge Agreement dated as of September 12, 1995 among the
Borrower, the Special Purpose Members, the Collateral Agent and the
Administrative Agent, substantially in the form of Exhibit E hereto,
as amended from time to time.
"Issuance" means the issuance of a Letter of Credit pursuant
to Section 2.2.
"L/C Fee Rate" means a rate per annum determined in
accordance with the Pricing Schedule.
"L/C Issuing Bank" means each of Morgan Guaranty, Chemical
Bank and The Long-Term Credit Bank of Japan, Ltd., each in its
capacity as issuing bank for the Letters of Credit hereunder, or all
of them, as the context may require, and their respective successors
and each such other bank as may be appointed pursuant to Section
2.2(j); provided that when used with respect to any Syndicated Letter
of Credit, "L/C Issuing Bank" shall mean Morgan Guaranty, and when
used with respect to any Participated Letter of Credit, "L/C Issuing
Bank" shall mean whichever of Morgan Guaranty, Chemical Bank, The
Long-
12
Term Credit Bank of Japan, Ltd. and such other Lender as may be
appointed pursuant to Section 2.2 (j) shall have issued such
Participated Letter of Credit.
"L/C Issuing Bank Letter of Credit Fee" has the meaning set
forth in Section 2.2(g).
"Lender" means each lender listed on the signature pages
hereof, each Assignee which becomes a Lender pursuant to Section , and
their respective successors.
"Letter of Credit Fees" means the Letter of Credit
Participation Fee and the L/C Issuing Bank Letter of Credit Fee.
"Letter of Credit Participation Fee" has the meaning set
forth in Section 2.2(g).
"Letters of Credit" has the meaning set forth in Section
2.2(a)!.
"Lien" means, with respect to any asset, any mortgage,
pledge, lien, security interest, charge or other encumbrance or
security arrangement of any nature whatsoever, including, without
limitation, any conditional sale, capital lease or title retention
arrangement in respect of such asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan and
"Loans" means Domestic Loans or Euro-Dollar Loans or both.
"London Interbank Offered Rate" has the meaning set forth in
Section .
"Maximum Letter of Credit Amount" means at any time
$150,000,000.
"Morgan Guaranty" means Morgan Guaranty Trust Company of New
York, a New York State banking corporation.
"Multiemployer Plan" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to
which any member of the ERISA Group is then making or accruing an
obligation to make contributions or has within the preceding five plan
years made contributions, including for these purposes any Person
which ceased to be a member of the ERISA Group during such five year
period.
"Notes" means promissory notes of the Borrower, substantially
in the form of Exhibit A hereto, evidencing the obligation of the
Borrower to repay the Loans, and "Note" means any one of such
promissory notes issued hereunder.
"Notice of Borrowing" has the meaning set forth in Section
2.3(a)#.
"Notice of Interest Rate Election" has the meaning set forth
in Section 2.6(a)".
13
"Notice of Issuance" has the meaning set forth in Section
2.2(b).
"Parent" means, with respect to any Lender, any Person
controlling such Lender.
"Participant" has the meaning set forth in Section .
"Participated Letter of Credit" has the meaning set forth in
Section 2.2(a)(ii).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership,
an association, a trust or any other entity or organization, including
a government or political subdivision or an agency or instrumentality
thereof.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of
the Internal Revenue Code and either (i) is maintained, or contributed
to, by any member of the ERISA Group for employees of any member of
the ERISA Group or (ii) for purposes of Section 6.1(j) only, has at
any time within the preceding five years been maintained, or
contributed to, by any Person which was at such time a member of the
ERISA Group for employees of any Person which was at such time a
member of the ERISA Group, if any member of the ERISA Group would be
subject to liability pursuant to Section 4069(a) of ERISA or any other
provision of Title IV of ERISA relating to treatment of transactions
to evade liability with respect to such plan.
"Pricing Schedule" means the Schedule attached hereto
identified as such.
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty in New York City from time to time as its prime rate.
"Quarterly Date" means each March 31, June 30, September 30
and December 31.
"Raw Materials Inventories" means, at any date, all assets of
the Borrower which were or would have been classified by the Borrower
as raw materials and supplies in the Borrower's consolidated financial
statements referred to in Section 4.4(a), except for stores supplies,
foundry products and supplies, initial complement of maintenance spare
parts, brick, lubrication oils and greases, paint, cleaning mixture
(including acids), bolts, nuts, rivets and tool steel.
"Receivables Commitment" means at any time with respect to
each financial institution which is a party to the Receivables
Purchase Agreement, the
14
commitment of such financial institution under the Receivables
Purchase Agreement.
"Receivables Documents" means the Receivables Purchase
Agreement and such other agreements, documents or instruments entered
into and delivered by BSF or the Borrower in connection with the
transactions contemplated by the Receivables Purchase Agreement.
"Receivables Facility" means the receivables facility
established pursuant to the Receivables Documents.
"Receivables Maximum Purchase Price" means, at any date, the
level of the Adjusted Aggregate Net Investment (as defined in the
Receivables Purchase Agreement) under the Receivables Facility which
would give rise at such date to an Adjusted Buyers' Interest of 100%
under the Receivables Facility.
"Receivables Purchase Agreement" means the Receivables
Purchase Agreement dated as of September 12, 1995 among BSF, the
Special Purpose Members, the Borrower, as servicer, the financial
institutions party thereto, Morgan Guaranty, as administrative agent
and J.P. Morgan Delaware, as structuring and collateral agent,
substantially in the form delivered to the Lenders prior to the date
hereof, and as amended from time to time.
"Reference Banks" means the CD Reference Banks or the
Euro-Dollar Reference Banks, as the context may require, and
"Reference Bank" means any one of such Reference Banks.
"Regulated Activity" means any generation, treatment,
storage, recycling, transportation or disposal of any Hazardous
Substance.
"Regulation U" means Regulation U of the Board of Governors
of the Federal Reserve System, as in effect from time to time.
"Reimbursement Obligation" means an obligation of the
Borrower to reimburse the L/C Issuing Banks or the Lenders, as the
case may be, pursuant to Section 2.2 for the amount of a drawing under
a Letter of Credit.
"Release" means any discharge, emission or release, including
a Release as defined in CERCLA at 42 U.S.C. Section 9601(22). The
term "Released" has a corresponding meaning.
"Required Lenders" means, at any time, Lenders having at
least 66 2/3% of the aggregate amount of the Commitments or, if the
Commitments shall have been terminated, having at least 66 2/3% of the
aggregate Total Exposure of all the Lenders.
"Revolving Credit Period" means the period from and including
the Closing Date to but not including the Termination
Date.
15
"S&P" means Standard & Poor's Ratings Group, together with
its successors.
"Secured Principal Amount" means, at any time, the sum of (i)
the aggregate principal amount of the Loans then outstanding, (ii) the
aggregate undrawn amount which is then, or may thereafter become,
available for drawing under outstanding Letters of Credit, (iii) the
aggregate amount of all unpaid Reimbursement Obligations for drawings
theretofore made under Letters of Credit and (iv) the aggregate
principal amount of Secured Tax Exempt Debt then outstanding.
"Secured Tax Exempt Debt" means all obligations (whether
contingent or non-contingent) of the Borrower arising under the
Reimbursement Agreement dated as of October 1, 1994 between the
Borrower and NBD Bank and the Tender Agent Agreement dated as of
October 1, 1994 between the Borrower and NBD Bank and all documents
and instruments executed in connection with the foregoing and all
renewals, extensions and amendments thereof; provided that the
aggregate principal amount of such Secured Tax Exempt Debt shall not
at any time exceed $3,000,000.
"Security Interests" means the security interests in the
Collateral granted under the Inventory Security Agreement to secure
the Secured Obligations and Guaranties (as defined therein).
"Significant Subsidiary" means at any time any Subsidiary,
except Subsidiaries which at such time have been designated by the
Borrower (by notice to the Administrative Agent, which may be amended
from time to time) as nonmaterial and which, if aggregated and
considered as a single subsidiary, would not meet the definition of a
"significant subsidiary" contained as of the date hereof in Regulation
S-X of the Securities and Exchange Commission.
"Special Purpose Member" means Bethlehem Steel Credit
Affiliate One, Inc., a Maryland corporation, or Bethlehem Steel Credit
Affiliate Two, Inc., a Maryland corporation, and "Special Purpose
Members" means both Bethlehem Steel Credit Affiliate One, Inc., a
Maryland corporation and Bethlehem Steel Credit Affiliate Two, Inc., a
Maryland corporation.
"Subsidiary" means, as to any Person, any corporation or
other entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person; unless otherwise specified,
"Subsidiary" means a Subsidiary of the Borrower.
"Syndicated Letter of Credit" has the meaning set forth in
Section 2.2(a)!(i).
"Termination Date" means September 12, 2000, or, if such day
is not a Euro-Dollar Business Day, the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case the Termination Date shall be the next
preceding Euro-Dollar Business Day.
16
"Total Exposure" means, with respect to any Lender at any
time, the sum of (i) the aggregate principal amount of its Loans then
outstanding, (ii) its share of the undrawn amount which is then, or
may thereafter become, available for drawing under each outstanding
Letter of Credit and (iii) its share of the amount of each unpaid
Reimbursement Obligation for drawings theretofore made under any
Letter of Credit.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of New York; provided that if, by reason of
mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the Security Interests in any
Collateral is governed by the Uniform Commercial Code as in effect in
a jurisdiction other than New York, "UCC" means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection
or non-perfection.
"Undrawn L/C Amount" shall mean, with respect to each Letter
of Credit at any date of determination thereof, the undrawn amount of
such Letter of Credit on such date.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all
benefits under such Plan exceeds (ii) the fair market value of all
Plan assets allocable to such benefits (excluding any accrued but
unpaid contributions), all determined as of the then most recent
valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including
the States and the District of Columbia, but excluding its territories
and possessions.
SECTION 1.2. UCC Terms. With respect to the Security
Interests, terms not otherwise defined herein which are defined in the
UCC shall, unless the context otherwise requires, have the meanings
set forth therein.
SECTION 1.3. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made,
and all financial statements required to be delivered hereunder shall
be prepared in accordance with generally accepted accounting
principles as in effect from time to time, applied on a basis
consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Lenders; provided that, if any change in
generally accepted accounting principles after June 30, 1995 in itself
materially affects Adjusted Consolidated Tangible Net Worth, the
Borrower may by notice to the Administrative Agent, or the
Administrative Agent (at the request of the Required Lenders) may by
notice to the Borrower, require that Adjusted Consolidated Tangible
Net Worth thereafter be calculated in accordance with generally
accepted accounting principles as in effect, and applied by the
Borrower, immediately before such change in generally accepted
accounting principles occurs. If such notice is given,
17
the compliance certificates delivered pursuant to Section 5.1(c) after
such change occurs shall be accompanied by reconciliations of the
difference between the calculation set forth therein and a calculation
made in accordance with generally accepted accounting principles as in
effect from time to time after such change occurs.
ARTICLE 2
THE CREDITS
SECTION 2.1. Commitments to Lend. During the Revolving
Credit Period, each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make Loans to the Borrower
from time to time; provided that, immediately after each such Loan is
made, such Lender's Total Exposure shall not exceed the amount of its
Commitment. Each Borrowing under this Section shall be in an
aggregate principal amount of $20,000,000 or any larger multiple of
$1,000,000 (except that any such Borrowing may be in the aggregate
amount of the unused Commitments) and shall be made from the several
Lenders ratably in proportion to their respective Commitments. Within
the foregoing limits, the Borrower may borrow under this Section,
prepay Loans to the extent permitted by Section 2.11" and reborrow at
any time during the Revolving Credit Period under this Section.
SECTION 2.2. Letters of Credit.
(a) Commitment to Issue Letters of Credit.
-------------------------------------
(i) The Borrower may from time to time request that (A) the
Lenders, acting through the L/C Issuing Bank in accordance with
subsection (iii) below, issue a letter of credit (a "Syndicated Letter
of Credit") pursuant to which the Lenders shall be severally obligated
to the beneficiary to pay any drawings made thereunder ratably in
proportion to their respective Commitments or (B) an L/C Issuing Bank
issue a letter of credit (a "Participated Letter of Credit") pursuant
to which such L/C Issuing Bank shall be obligated to the beneficiary
to pay any drawings made thereunder and the Lenders shall be obligated
to the L/C Issuing Bank to participate ratably in such drawings in
proportion to their respective Commitments as hereinafter provided.
Syndicated Letters of Credit and Participated Letters of Credit are
collectively referred to herein as "Letters of Credit".
(ii) On the Closing Date, each L/C Issuing Bank that has
issued an Existing Letter of Credit shall be deemed, without further
action by any party hereto, to have issued a Participated Letter of
Credit hereunder, and each Lender
18
shall be deemed, without further action by any party hereto, to have
agreed to participate ratably in proportion to its Commitment in any
drawings made under such Existing Letter of Credit. The Borrower and
the Lenders party hereto that are also party to the Existing Credit
Agreement agree that, concurrently with such issuance hereunder, the
participations in the Existing Letters of Credit under the Existing
Credit Agreement shall be automatically canceled without further
action by any of the parties thereto. On and after the Closing Date
each Existing Letter of Credit shall be deemed issued hereunder and
shall thereupon be a Letter of Credit hereunder.
(iii) Subject to subsection (v) below, and in accordance with
its customary procedures (to the extent such procedures are not
inconsistent with the terms of this Agreement), the L/C Issuing Bank
agrees, on the terms and conditions set forth in this Agreement and at
the request of the Borrower, to execute and deliver Syndicated Letters
of Credit on behalf of each of the Lenders (and not as sole issuer)
for the account of the Borrower or any Subsidiary from time to time
from and including the Effective Date to but excluding the Termination
Date; provided that no Syndicated Letter of Credit shall be issued,
extended or renewed if such L/C Issuing Bank has been notified in
writing by the Borrower, the Administrative Agent or the Required
Lenders that any condition set forth in Section 3.2 is not satisfied
on the date such Syndicated Letter of Credit is to be issued, extended
or renewed; provided further that if any Syndicated Letter of Credit
contains a provision pursuant to which it is deemed extended unless
notice of termination is given by the L/C Issuing Bank, the L/C
Issuing Bank shall give such notice of termination on behalf of each
of the Lenders if it has been notified as provided in the immediately
preceding proviso. The terms of each such Syndicated Letter of Credit
shall provide that each Lender is obligated, severally and not
jointly, to pay any drawings under such Letter of Credit ratably in
proportion to such Lender's Commitment as in effect when such Letter
of Credit is issued. Upon receipt of a Notice of Issuance pursuant to
subsection (b) of this Section with respect to a Syndicated Letter of
Credit, the L/C Issuing Bank shall prepare such Letter of Credit in a
form customarily issued by it for its own account as issuing bank, but
with such changes as the L/C Issuing Bank deems necessary or
appropriate to reflect the fact that such Letter of Credit is a
Syndicated Letter of Credit. Each Lender authorizes the L/C Issuing
Bank to execute and issue such Syndicated Letter of Credit on its
behalf as its attorney in fact; provided that such Syndicated Letter
of Credit is issued in compliance with the provisions of this Section
and within the limitations set forth in subsection (v) below.
Promptly after issuance of any Syndicated Letter of Credit, the L/C
Issuing Bank will send to each of the Lenders a copy of such Letter of
Credit in the form in which it was issued.
(iv) Subject to subsection (v) below, and in accordance with
its customary procedures (to the extent such procedures are not
inconsistent with the terms of this Agreement), the L/C Issuing Bank
agrees, on the terms and conditions set forth in this Agreement and at
the request of the Borrower, to issue Participated Letters of Credit
as sole issuing bank for the account of the Borrower or any Subsidiary
from time to time from and including the Effective Date to but
excluding the Termination Date; provided that no Participated Letter
of Credit shall be issued, extended or renewed if such L/C Issuing
Bank has been notified in writing by the Borrower, the Administrative
Agent or the Required Lenders that any condition set forth in Section
3.2 is not satisfied on the date such Participated.
19
Letter of Credit is to be issued, extended or renewed; provided
further that if any Participated Letter of Credit contains a provision
pursuant to which it is deemed extended unless notice of termination
is given by the L/C Issuing Bank, the L/C Issuing Bank shall give such
notice of termination if it has been notified as provided in the
immediately preceding proviso. Each Lender agrees to participate
ratably in proportion to its Commitment in any drawings made under
each Participated Letter of Credit.
(v) The obligations of the Lenders and the L/C Issuing Banks
to issue Letters of Credit pursuant to clauses (iii) and (iv) above
are subject to the following additional conditions:
(A) no Letter of Credit shall be issued (or extended or
renewed) if, immediately after the issuance thereof, any
Lender's Total Exposure would exceed the amount of its
Commitment;
(B) no Letter of Credit shall be issued (or extended or
renewed) if, immediately after the issuance thereof, the
Aggregate Letter of Credit Amount would exceed the Maximum
Letter of Credit Amount;
(C) no Letter of Credit shall expire more than 18 months
after its date of issuance; provided that a Letter of Credit
may contain a provision pursuant to which it is deemed to be
extended on an annual basis unless notice of termination is
given by the L/C Issuing Bank; provided further that no
Letter of Credit shall have an expiry date later than seven
Domestic Business Days prior to the Termination Date;
(D) without the approval of the Required Lenders (and in
the case of Participated Letters of Credit, the L/C Issuing
Bank), no Letter of Credit shall be issued (x) to support the
obligations of the Borrower or any Subsidiary with respect to
any Debt or Guarantee, or (y) to finance the export or import
of weapons;
(E) the Borrower shall have used its reasonable best
efforts to cause, to the extent practicable, the aggregate
face amount of all outstanding Participated Letters of Credit
issued by each L/C Issuing Bank to be equal to the aggregate
face amount of all outstanding Participated Letters of Credit
issued by each other L/C Issuing Bank; and
(F) the aggregate face amount of all outstanding
Participated Letters of Credit issued by any one L/C Issuing
Bank shall not exceed $80,000,000.
(vi) The L/C Issuing Banks and the Lenders shall not be
obligated to issue any Letter of Credit in connection with the
financing of imports into or exports from the United States if the L/C
Issuing Bank believes that the issuance of such Letter of Credit would
not meet the criteria (with regard to goods shipped, nationality of
beneficiary, country of origin, or other similar considerations)
customarily applied by it when considering a request to issue such
letters of credit.
20
(b) Notice of Issuance. The Borrower shall give, at least
------------------
three Domestic Business Days before each Letter of Credit is to be
issued, notice (a "Notice of Issuance") to (x) the Administrative
Agent and (y) to the L/C Issuing Bank issuing such Letter of Credit
(which, in the case of a Participated Letter of Credit, shall, subject
to Section 2.2(a), be the L/C Issuing Bank selected by the Borrower)
specifying: (A) the date of issuance and expiry date of such Letter
of Credit, (B) if Morgan Guaranty is the L/C Issuing Bank, whether
such Letter of Credit is to be a Syndicated Letter of Credit or a
Participated Letter of Credit, (C) the proposed terms of such Letter
of Credit, including the face amount thereof, and (D) the transaction
that is to be supported or financed by such Letter of Credit. The
Administrative Agent shall, upon receipt of a Notice of Issuance,
promptly notify each Lender of the contents thereof and of the amount
of such Lender's ratable share of or participation in such Letter of
Credit and such Notice of Issuance shall not thereafter be revocable
by the Borrower.
(c) Undrawn L/C Amounts. Any increase in the Undrawn L/C
-------------------
Amount with respect to any outstanding Letter of Credit may be by
amendment or replacement of such Letter of Credit, but in either event
such increase shall be deemed to constitute the issuance of a new
Letters of Credit and, therefore, subject to the satisfaction of the
conditions set forth in Section 3.2. Reductions in the Undrawn L/C
Amounts of outstanding Letters of Credit (other than by drawings
thereunder) may occur by the terms thereof or by amendment or
replacement of such Letters of Credit, in which event such reduction
shall be effective at the time of such amendment or exchange.
(d) Drawings under Letters of Credit.
--------------------------------
(i) Upon receipt from the beneficiary of any Letter of
Credit of demand for payment under such Letter of Credit, the
L/C Issuing Bank shall promptly notify the Borrower and the
Administrative Agent of such request for payment and shall
determine in accordance with the terms of such Letter of
Credit whether such request for payment should be honored.
(ii) If the L/C Issuing Bank determines that a demand
for payment by the beneficiary of a Syndicated Letter of
Credit should be honored, the L/C Issuing Bank shall promptly
notify the Borrower, the Administrative Agent and each Lender
of the aggregate amount to be paid as a result of such demand
and shall notify each Lender of its share of such amount.
Each Lender shall make available its share of the amount so
demanded in accordance with the terms of such Syndicated
Letter of Credit, in Federal or other funds immediately
available in New York City, to the L/C Issuing Bank at the
L/C Issuing Bank's address specified in or pursuant to
Section 9.1. The L/C Issuing Bank will make the funds so
received from the Lenders available to the beneficiary at the
L/C Issuing Bank's aforesaid address in accordance with the
terms of such Syndicated Letter of Credit.
(iii) If the L/C Issuing Bank determines that a demand
for payment by the beneficiary of a Participated Letter of
Credit should be honored, the L/C Issuing Bank shall make
available to the beneficiary in
21
accordance with the terms of such Participated Letter of
Credit the amount of the drawing under such Participated
Letter of Credit. The L/C Issuing Bank shall thereupon
notify the Borrower, the Administrative Agent and each Lender
of the amount of such drawing paid by it and the amount of
each Lender's participation therein.
(e) Reimbursement and Other Payments by the Borrower.
------------------------------------------------
(i) If any amount is drawn under any Letter of Credit, the
Borrower agrees to reimburse (A) the Administrative Agent for the
account of each Lender, in the case of a Syndicated Letter of Credit,
and (B) the L/C Issuing Bank, in the case of a Participated Letter of
Credit, for all amounts paid by such Lender or the L/C Issuing Bank
(as the case may be) upon such drawing, together with any and all
reasonable charges and expenses which any Lender or the L/C Issuing
Bank may pay or incur relative to such drawing and (x) interest on the
amount drawn at the average rate charged to the L/C Issuing Bank on
overnight Federal funds transactions for each day from and including
the date such amount is drawn to but excluding the date such
reimbursement payment is due and payable and (y) interest on any and
all amounts unpaid by the Borrower when due hereunder with respect to
a Letter of Credit from the date when due until such amount is paid in
full, whether before or after judgment, payable on demand, at a rate
per annum equal to the sum of 2% plus the Base Rate. Such
reimbursement payment shall be due and payable (x) on the date the L/C
Issuing Bank notifies the Borrower of such drawing, if such notice is
given at or before 12:00 Noon (New York City time), or (y) if such
notice is given after 12:00 Noon (New York City time), then not later
than 10:00 A.M. (New York City time) on the first Domestic Business
Day succeeding the date such notice is given. Promptly upon receipt
of a reimbursement payment with respect to a Syndicated Letter of
Credit, the Administrative Agent shall distribute to each Lender its
pro rata share thereof, including interest, to the extent received by
the Administrative Agent.
(ii) In addition, the Borrower agrees to pay to each Lender
(in the case of a Syndicated Letter of Credit) and the L/C Issuing
Bank (in the case of a Participated Letter of Credit) upon each
transfer of any Letter of Credit in accordance with its terms, a sum
equal to such amount as shall be necessary to cover the reasonable
costs and expenses of such Lender or the L/C Issuing Bank (as the case
may be) incurred in connection with such transfer.
(f) Payments by Lenders with Respect to Participated Letters
--------------------------------------------------------
of Credit.
---------
(i) Each Lender shall make available an amount equal to its
ratable share of any drawing under a Participated Letter of Credit, in
Federal or other funds immediately available in New York City, to the
L/C Issuing Bank by 3:00 P.M. (New York City time) on the Domestic
Business Day following such drawing, together with interest on such
amount at the average rate charged to the L/C Issuing Bank on
overnight Federal funds transactions on the date of such drawing as
determined by the L/C Issuing Bank, at the L/C Issuing Bank's address
specified in or pursuant to Section 9.1; provided that each Lender's
obligation shall be reduced by its pro rata share of any reimbursement
by the Borrower in respect of such drawing pursuant to Section
2.2(e)(i); provided further that no Lender shall be obligated to make
any payment under this Section with respect to.
22
any Participat ed Letter of Credit issued, extended or renewed if such
L/C Issuing Bank had been notified in writing by the Borrower, the
Administra tive Agent or the Required Lenders that any condition set
forth in Section 3.2 was not satisfied on the date such Participat ed
Letter of Credit was issued, extended or renewed. The L/C Issuing
Bank shall notify each Lender and the Administra tive Agent of the
amount of such Lender's obligation in respect of any drawing under a
Participat ed Letter of Credit not later than 10:00 A.M. (New York
City time) on the day such payment by such Lender is due. Each Lender
shall be subrogated to the rights of the L/C Issuing Bank against the
Borrower to the extent of all amounts paid by such Lender to the L/C
Issuing Bank, plus interest thereon, from and including the day such
amount is paid by such Lender to the L/C Issuing Bank to but excluding
the day the Borrower makes payment to the L/C Issuing Bank pursuant to
subsection (d) above, whether before or after judgment, at a rate per
annum equal to the sum of 2% plus the Base Rate.
(ii) If any Lender fails to pay any amount required pursuant
to clause (i) of this subsection on the date on which such payment is
due, interest shall accrue on such Lender's obligation to make such
payment from and including the date such payment is due to but
excluding the day such Lender makes such payment, whether before or
after judgment, at a rate per annum equal to (A) in the case of the
day such payment is due to and including the first succeeding Domestic
Business Day (and any intervening days) following the day on which
notice of such Lender's obligation in respect of any drawing was
given, the average rate charged to the L/C Issuing Bank on overnight
Federal funds transactions for each such day as determined by the L/C
Issuing Bank and (B) thereafter, the sum of 2% plus the Base Rate.
Any payment made by any Lender after 3:00 P.M., New York City time, on
any Domestic Business Day shall be deemed for purposes of the
preceding sentence to have been made on the next succeeding Domestic
Business Day.
(iii) The obligation of each Lender to pay to the L/C Issuing
Bank its proportionate share of each drawing under a Participated
Letter of Credit and the obligation of the Borrower to reimburse the
Lenders or the L/C Issuing Banks for payments pursuant to this
Section, shall be irrevocable, shall not be subject to any
qualification or exception whatsoever and shall be binding in
accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, the following
circumstances:
(A) any lack of validity or enforceability of this Agreement;
(B) the existence of any claim, set-off, defense or other
right which the Borrower or any Lender may have at any time
against a beneficiary of any Letter of Credit or any
transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), any L/C Issuing Bank, any
Lender or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions;
(C) any draft, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient.
23
in any respect or any statement therein being untrue or
inaccurate in any respect;
(D) the surrender or impairment of any security for the
performance or observance of any of the terms of this
Agreement; or
(E) the occurrence or continuance of any Default or Event of
Default.
(g) Letter of Credit Fees. The Borrower agrees to pay to the
---------------------
Administrative Agent for the account of each Lender a letter of credit
fee (the "Letter of Credit Participation Fee") with respect to each
Letter of Credit, computed for each day from and including the date of
issuance of such Letter of Credit until the last day a drawing is
available under such Letter of Credit, at the L/C Fee Rate on the
Undrawn L/C Amount. The Borrower also agrees to pay to each L/C
Issuing Bank, for its own account, a fee (the "L/C Issuing Bank Letter
of Credit Fee"), computed with respect to the Undrawn L/C Amount of
each Participated Letter of Credit issued by such L/C Issuing Bank as
set forth in the preceding sentence, at a rate per annum equal to 1/4
of 1%. Such Letter of Credit Fees shall be payable quarterly in
arrears on each Quarterly Date and on the Termination Date.
(h) Payment upon Acceleration. If the Commitments shall be
-------------------------
terminated or the principal of the Notes shall become immediately due
and payable pursuant to Section 2.10 or 6.1, but the Administrative
Agent shall not have given an Enforcement Notice (as defined in the
Inventory Security Agreement) as provided in Section 6.1, the Borrower
shall pay to the L/C Issuing Bank for application to drawings under
any then outstanding Letters of Credit an amount equal to the
aggregate amount which is then, or may thereafter become, available
for drawing under such Letters of Credit. The L/C Issuing Bank shall
invest such amount in Liquid Investments (as defined in the Inventory
Security Agreement) at the direction of the Administrative Agent. If
the Administrative Agent subsequently gives an Enforcement Notice or
an event specified in clause (h) or (i) of Section 6.1 shall have
occurred and be continuing with respect to the Borrower, the L/C
Issuing Bank shall pay all amounts held by it pursuant to this
subsection to the Collateral Agent for application pursuant to the
Inventory Security Agreement. If an Enforcement Notice is not then in
effect and no event specified in clause (h) or (i) of Section 6.1
shall have occurred and be continuing with respect to the Borrower,
any amount so paid by the Borrower to the L/C Issuing Bank with
respect to a Letter of Credit and not applied to a drawing thereunder
shall be repaid to the Borrower, with interest or other income (to the
extent received by the L/C Issuing Bank on the related Liquid
Investments), as promptly as practicable after such Letter of Credit
expires or is fully drawn.
(i) Limited Liability of the L/C Issuing Bank. The Borrower
-----------------------------------------
assumes all risks of the acts or omissions of any beneficiary and any
transferee of any Letter of Credit with respect to its use of such
Letter of Credit. The Lenders, the L/C Issuing Banks and their
respective officers and directors shall not be liable or responsible
for: (i) the use which may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection
therewith; (ii) the validity, sufficiency or genuineness of documents
presented under any Letter of Credit, or of any endorsements thereon,
even if such documents should in fact.
24
prove to be in any or all respects invalid, insufficient, fraudulent
or forged; (iii) payment by the L/C Issuing Bank or, in the case of a
Syndicated Letter of Credit, any Lender against presentation of
documents to the L/C Issuing Bank which do not comply with the terms
of any Letter of Credit, including failure of any documents to bear
any reference or adequate reference to the Letter of Credit; or (iv)
any other circumstances whatsoever in making or failing to make or
notifying or failing to notify any Lender that it is required to make
any payment under any Letter of Credit. Notwithstanding the
foregoing, the Borrower shall have a claim against the L/C Issuing
Bank and, in the case of clause (ii)(B) of this sentence, against any
Lender, and the L/C Issuing Bank or a Lender, as the case may be,
shall be liable to the Borrower, to the extent, but only to the
extent, of any direct, as opposed to consequential, damages suffered
by the Borrower which were caused by (i) the L/C Issuing Bank's
willful misconduct or gross negligence in determining whether
documents presented under any Letter of Credit comply with the terms
thereof or (ii) (A) the L/C Issuing Bank's willful failure to pay, or
to notify any Lender that it is required to pay, or, (B) in the case
of Syndicated Letters of Credit, a Lender's willful failure to pay,
after receipt of notice from the L/C Issuing Bank pursuant to Section
2.2(d)(ii) , under any Letter of Credit after the presentation to the
L/C Issuing Bank by any beneficiary (or a successor beneficiary to
whom such Letter of Credit has been transferred in accordance with
its terms) of documents strictly complying with the terms and
conditions of such Letter of Credit; provided that this clause (ii)
shall not apply to any failure by the L/C Issuing Bank or Lender to
pay under any Letter of Credit to the extent that such payment is
prevented by injunction or other similar court order. Subject to the
preceding sentence, the L/C Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to
the contrary unless any beneficiary (or a successor beneficiary to
whom such Letter of Credit has been transferred in accordance with
its terms) and the Borrower shall have notified the L/C Issuing Bank
that such documents do not comply with the terms and conditions of
such Letter of Credit. Each Lender shall, ratably in accordance with
its Commitment , indemnify the L/C Issuing Bank (to the extent not
reimbursed by the Borrower) against any cost, expense (including
counsel fees and disbursements), claim, demand, action, loss or
liability (except such as result from the L/C Issuing Bank's gross
negligence or willful misconduct ) that the L/C Issuing Bank may
suffer or incur in connection with this Agreement or any action taken
or omitted by the L/C Issuing Bank hereunder.
(j) Appointment of L/C Issuing Bank. The Borrower and the
-------------------------------
Administrative Agent may, by one or more written instruments
acceptable to and executed by each of them, appoint one or more
Lenders to perform all or any portion of the functions of an L/C
Issuing Bank with respect to Participated Letters of Credit under this
Agreement.
SECTION 2.3. Method of Borrowing. (a) The Borrower shall
-------------------
give the Administrative Agent notice (a "Notice of Borrowing") not
later than (x) 10:30 A.M. (New York City time) on the date of each
Base Rate Borrowing, (y) 12:00 Noon (New York City time) on the second
Domestic Business Day before each CD Borrowing and (z) 12:00 Noon (New
York City time) on the third Euro-Dollar Business Day before each
Euro-Dollar Borrowing, specifying:
25
(i) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Domestic Borrowing or
a Euro-Dollar Business Day in the case of a Euro-Dollar
Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether the Loans comprising such Borrowing are to
bear interest initially at the Base Rate, a CD Rate or a
Euro-Dollar Rate; and
(iv) in the case of a Fixed Rate Borrowing, the duration
of the initial Interest Period applicable thereto, subject to
the provisions of the definition of Interest Period.
A Notice of Borrowing shall not be required in connection
with a conversion pursuant to the second sentence of Section 2.6(c) or
a borrowing of Base Rate Loans pursuant to Section 8.1 or Section 8.2.
(b) Upon receipt of a Notice of Borrowing, the Administrative
Agent shall promptly notify each Lender of the contents thereof and of
such Lender's ratable share of such Borrowing and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
(c) Not later than 12:00 Noon (New York City time) on the
date of each Borrowing, each Lender shall make available its ratable
share of such Borrowing, in Federal or other funds immediately
available in New York City, to the Administrative Agent at its address
referred to in Section 9.1. Unless the Administrative Agent
determines that any applicable condition specified in Article 3 has
not been satisfied, the Administrative Agent will make the funds so
received from the Lenders available to the Borrower at the
Administrative Agent's aforesaid address.
(d) Unless the Administrative Agent shall have received
notice from a Lender prior to the date of any Borrowing that such
Lender will not make available to the Administrative Agent such
Lender's share of such Borrowing, the Administrative Agent may assume
that such Lender has made such share available to the Administrative
Agent on the date of such Borrowing in accordance with subsection (c)
of this Section and the Administrative Agent may, in reliance upon
such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not
have so made such share available to the Administrative Agent, such
Lender and the Borrower severally agree to repay to the Administrative
Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent, at (i) in the case of the Borrower, a rate per
annum equal to the higher of the Federal Funds Rate and the interest
rate applicable thereto pursuant to Section 2.7 and (ii) in the case
of such Lender, the Federal Funds Rate. If such Lender shall repay to
the Administrative Agent such corresponding amount, such amount so
repaid shall constitute such Lender's Loan included in such Borrowing
for purposes of this Agreement.
26
SECTION 2.4. Notes. (a) The Loans of each Lender shall be
-----
evidenced by a single Note payable to the order of such Lender for the
account of its Applicable Lending Office in an amount equal to the
aggregate unpaid principal amount of such Lender's Loans.
(b) Each Lender may, by notice to the Borrower and the
Administrative Agent, request that its Loans of a particular type be
evidenced by a separate Note in an amount equal to the aggregate
unpaid principal amount of such Loans. Each such Note shall be in
substantially the form of Exhibit A hereto with appropriate
modifications to reflect the fact that it evidences solely Loans of
the relevant type. Each reference in this Agreement to the "Note" of
such Lender shall be deemed to refer to and include any or all of such
Notes, as the context may require.
(c) Upon receipt of each Lender's Note pursuant to Section ,
the Administrative Agent shall forward such Note to such Lender. Each
Lender shall record the date, amount and type of each Loan made by it
and the date and amount of each payment of principal made by the
Borrower with respect thereto, and may, if such Lender so elects in
connection with any transfer or enforcement of its Note, endorse on
the schedule forming a part thereof appropriate notations to evidence
the foregoing information with respect to each such Loan then
outstanding; provided that the failure of any Lender to make any such
recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under the Notes. Each Lender is hereby
irrevocably authorized by the Borrower so to endorse its Note and to
attach to and make a part of its Note a continuation of any such
schedule as and when required.
SECTION 2.5. Maturity of Loans. Each Loan shall mature, and
-----------------
the principal amount thereof shall be due and payable, on the
Termination Date.
SECTION 2.6. Method of Electing Interest Rates. (a) The
---------------------------------
Loans included in each Borrowing shall bear interest initially at the
type of rate specified by the Borrower in the applicable Notice of
Borrowing. Thereafter, the Borrower may from time to time elect to
change or continue the type of interest rate borne by each Group of
Loans (subject in each case to the provisions of Article 8"), as
follows:
(i) if such Loans are Base Rate Loans, the Borrower may
elect to convert such Loans to CD Loans or Euro-Dollar Loans;
(ii) if such Loans are CD Loans, the Borrower may elect
to convert such Loans to Base Rate Loans or Euro-Dollar Loans
or elect to continue such Loans as CD Loans for an additional
Interest Period, subject to Section 2.14 in the case of any
such conversion or continuation effective on any day other
than the last day of the then current Interest Period
applicable to such Loans; and
(iii) if such Loans are Euro-Dollar Loans, the Borrower
may elect to convert such Loans to Base Rate Loans or CD
Loans or elect to continue such Loans as Euro-Dollar Loans
for an additional Interest Period, subject to Section 2.14 in
the case of any such conversion or
27
continuation effective on any day other than the last day of
the then current Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a
"Notice of Interest Rate Election") to the Administrative
Agent not later than 10:00 A.M. (New York City time) on the
third Euro-Dollar Business Day before the conversion or
continuation selected in such notice is to be effective
(unless the relevant Loans are Domestic Loans to be converted
to Domestic Loans of the other type or are CD Rate Loans to
be continued as CD Rate Loans for an additional Interest
Period, in which case such notice shall be delivered to the
Administrative Agent not later than 10:00 A.M. (New York
City time) on the second Domestic Business Day before such
conversion or continuation is to be effective). A Notice of
Interest Rate Election may, if it so specifies, apply to only
a portion of the aggregate principal amount of the relevant
Group of Loans; provided that (i) such portion is allocated
ratably among the Loans comprising such Group and (ii) the
portion to which such Notice applies, and the remaining
portion to which it does not apply, are each $20,000,000 or
any larger multiple of $1,000,000.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which
such notice applies;
(ii) the date on which the conversion or continuation
selected in such notice is to be effective, which shall
comply with the applicable clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be
converted, the new type of Loans and, if the Loans being
converted are to be Fixed Rate Loans, the duration of the
next succeeding Interest Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or
Euro-Dollar Loans for an additional Interest Period, the
duration of such additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate
Election shall comply with the provisions of the definition of
Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from
the Borrower pursuant to subsection (a) above, the Administrative
Agent shall promptly notify each Lender of the contents thereof and
such notice shall not thereafter be revocable by the Borrower. If the
Administrative Agent does not receive a Notice of Interest Period
Election for Fixed Rate Loans pursuant to subsection (a) of this
Section within the applicable time limit specified therein prior to
the last day of the current Interest Period applicable to such Loans,
and the Borrower has not
28
delivered a notice of prepayment relating to such Loans, then the
Borrower shall be deemed to have elected that such Loans be converted
to Base Rate Loans on the last day of such Interest Period.
(d) An election by the Borrower to change or continue the
rate of interest applicable to any Group of Loans pursuant to this
Section shall not constitute a "Borrowing" subject to the provisions
of Section 3.2.
SECTION 2.7. Interest Rates. (a) Each Base Rate Loan shall
--------------
bear interest on the outstanding principal amount thereof, for each
day from the date such Loan is made until it becomes due, at a rate
per annum equal to the sum of the Base Rate Margin for such day plus
the Base Rate for such day. Such interest shall be payable quarterly
on each Quarterly Date and on the Termination Date, commencing on the
first such date after such Base Rate Loan is made and, with respect to
the principal amount of any Base Rate Loan converted to a CD Loan or a
Euro-Dollar Loan, on each date a Base Rate Loan is so converted. Any
overdue principal of or interest on any Base Rate Loan shall bear
interest, payable on demand, for each day until paid at a rate per
annum equal to the sum of 2% plus the rate otherwise applicable to
Base Rate Loans for such day.
(b) Each CD Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period
applicable thereto, at a rate per annum equal to the sum of the CD
Margin for such day plus the Adjusted CD Rate applicable to such
Interest Period; provided that if any CD Loan shall, as a result of
clause (ii)(b) of the definition of Interest Period, have an Interest
Period of less than 30 days, such CD Loan shall bear interest during
such Interest Period at the rate applicable to Base Rate Loans during
such period. Such interest shall be payable for each Interest Period
on the last day thereof and, with respect to the principal amount of
any CD Loan converted or continued pursuant to Section 2.6 on a day
other than the last day of the Interest Period applicable thereto, on
the date of such conversion or continuation. Any overdue principal of
or interest on any CD Loan shall bear interest, payable on demand, for
each day until paid at a rate per annum equal to the sum of 2% plus
the higher of (i) the rate applicable to Base Rate Loans for such day
and (ii) the sum of the CD Margin plus the Adjusted CD Rate applicable
to such Loan at the date such payment was due.
The "Adjusted CD Rate" applicable to any Interest Period
means a rate per annum determined pursuant to the following formula:
[ CDBR ] 1
ACDR = [ ------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
---------------------
1 The amount in brackets being rounded upward, if necessary, to the
next higher 1/100 of 1%.
29
DRP = Domestic Reserve Percentage
AR = Assessment Rate.
The "CD Base Rate" applicable to any Interest Period is the
rate of interest determined by the Administrative Agent to be the
average (rounded upward, if necessary, to the next higher 1/100 of 1%)
of the prevailing rates per annum bid at 10:00 A.M. (New York City
time) (or as soon thereafter as practicable) on the first day of such
Interest Period by two or more New York certificate of deposit dealers
of recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable
to the principal amount of the CD Loan of such CD Reference Bank to
which such Interest Period applies and having a maturity comparable to
such Interest Period.
"Domestic Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency
reserves) for a member bank of the Federal Reserve System in New York
City with deposits exceeding five billion dollars in respect of new
non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of
$100,000 or more. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change in the
Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment
rate in effect on such day which is payable by a member of the Bank
Insurance Fund classified as adequately capitalized and within
supervisory subgroup "A" (or a comparable successor assessment risk
classification) within the meaning of 12 C.F.R. Sec 327.4(a) (or any
successor provision) to the Federal Deposit Insurance Corporation (or
any successor) for such Corporation's (or such successor's) insuring
time deposits at offices of such institution in the United States.
The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for each day during each
Interest Period applicable thereto, at a rate per annum equal to the
sum of the Euro-Dollar Margin for such day plus the Adjusted London
Interbank Offered Rate applicable to such Interest Period; provided
that, if any Euro-Dollar Loan shall, as a result of clause (i)(c) of
the definition of Interest Period, have an Interest Period of less
than one month, such Euro-Dollar Loan shall bear interest during such
Interest Period at the rate applicable to Base Rate Loans during such
period. Such interest shall be payable for each Interest Period on
the last day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof and,
with respect to the principal amount of any Euro-Dollar Loan converted
or continued pursuant to Section 2.6 on a day other than the last day
of the Interest Period applicable thereto, on the date of such
conversion or continuation.
30
The "Adjusted London Interbank Offered Rate" applicable to
any Interest Period means a rate per annum equal to the quotient
obtained (rounded upward, if necessary, to the next higher 1/100 of
1%) by dividing (i) the applicable London Interbank Offered Rate by
(ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any
Interest Period means the average (rounded upward, if necessary, to
the next higher 1/16 of 1%) of the respective rates per annum at which
deposits in Dollars are offered to each of the Euro-Dollar Reference
Banks in the London interbank market at approximately 11:00 A.M.
(London time) two Euro-Dollar Business Days before the first day of
such Interest Period in an amount approximately equal to the principal
amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to
which such Interest Period is to apply and for a period of time
comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement for a
member bank of the Federal Reserve System in New York City with
deposits exceeding five billion dollars in respect of "Eurocurrency
liabilities" (or in respect of any other category of liabilities which
includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of
credit or other assets which includes loans by a non-United States
office of any Lender to United States residents). The Adjusted London
Interbank Offered Rate shall be adjusted automatically on and as of
the effective date of any change in the Euro-Dollar Reserve
Percentage.
(d) Any overdue principal of or interest on any Euro-Dollar
Loan shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to the higher of (i) the sum of 2% plus the
Euro-Dollar Margin for such day plus the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing (x)
the average (rounded upward, if necessary, to the next higher 1/16 of
1%) of the respective rates per annum at which one day (or, if such
amount due remains unpaid more than three Euro-Dollar Business Days,
then for such other period of time not longer than three months as the
Administrative Agent may select) deposits in dollars in an amount
approximately equal to such overdue payment due to each of the
Euro-Dollar Reference Banks are offered to such Euro-Dollar Reference
Bank in the London interbank market for the applicable period
determined as provided above by (y) 1.00 minus the Euro-Dollar Reserve
Percentage (or, if the circumstances described in clause (a) or (b) of
Section 8.1" shall exist, at a rate per annum equal to the sum of 2%
plus the rate applicable to Base Rate Loans for such day) and (ii) the
sum of 2% plus the Euro-Dollar Margin for such day plus the Adjusted
London Interbank Offered Rate applicable to such Loan at the date such
payment was due.
(e) The Administrative Agent shall determine each interest
rate applicable to the Loans hereunder. The Administrative Agent
shall give prompt notice to the Borrower and the participating Lenders
of each rate of interest so determined, and its determination thereof
shall be conclusive in the absence of manifest error.
31
(f) Each Reference Bank agrees to use its best efforts to
furnish quotations to the Administrative Agent as contemplated by this
Section. If any Reference Bank does not furnish a timely quotation,
the Administrative Agent shall determine the relevant interest rate on
the basis of the quotation or quotations furnished by the remaining
Reference Bank or Banks or, if none of such quotations is available on
a timely basis, the provisions of Section 8.1" shall apply.
SECTION 2.8. Fees. (a) Subject to subsection (b) below, the
Borrower shall pay to the Administrative Agent for the account of each
Lender a commitment fee (the "Commitment Fee") calculated at the
Commitment Fee Rate (determined daily in accordance with the Pricing
Schedule) on the excess of such Lender's Commitment over such Lender's
Total Exposure.
(b) Commitment Fees shall accrue from and including the
Closing Date to but excluding the date of termination of the
Commitments in their entirety and shall be payable on each Quarterly
Date prior to the Termination Date with respect to the three month
period ending one month prior to such Quarterly Date, and on the
Termination Date. Commitment Fees which are payable on the
Termination Date or on any other date on which the termination of the
Commitments in their entirety is effective (the "Final Fee Payment
Date") shall be calculated with respect to the period from the most
recent date with respect to which such fees have been paid pursuant to
this Section to the Final Fee Payment Date. The aggregate amount of
Commitment Fees payable to the Administrative Agent for the account of
each Lender on each Quarterly Date shall be reduced by an amount
determined by the Borrower and such Lender to be equal to the product
of (i) the amount of Net Free Balances (if any) maintained by the
Borrower and its Subsidiaries with such Lender during the three month
period ending two months prior to such Quarterly Date and (ii) the
Average Credit Balance Rate for the three month period ending two
months prior to such Quarterly Date; provided that the portion of any
payment of Commitment Fees due on the Final Fee Payment Date that
relates to a period that is more recent than two months prior to such
date shall not be reduced on account of any Net Free Balances. Upon
making each payment of such Commitment Fees to the Administrative
Agent, the Borrower shall advise the Administrative Agent as to the
portion thereof to be paid for the account of each Lender, and the
Administrative Agent shall distribute such payment in accordance with
such advice. For purposes of this Section 2.8, "Net Free Balances"
for any Lender during any period means the daily average amount of
collected balances maintained by the Borrower and its Subsidiaries in
non-interest bearing accounts with such Lender during such period that
the Borrower and such Lender have agreed do not support credit or
operational services performed by such Lender (other than pursuant to
this Agreement) for the Borrower and its Subsidiaries, and "Average
Credit Balance Rate" means for any period the average of the 90-day
U.S. Treasury Bill rate as of the end of each week or portion thereof
during such period as calculated by the Administrative Agent, such
calculation to be conclusive in the absence of manifest error.
(c) On the Closing Date, the Borrower shall pay to the
Agents, for their own accounts, such fees and compensation in such
amounts as are set forth in the letter dated July 24, 1995.
32
(d) On the Closing Date, the Borrower shall pay to the
Administrative Agent for the account of each Lender, a fee equal to
(w) 5/8 of 1% of such Lender's Commitment, if such Lender's Initial
Commitment was at least $30,000,000, (x) 1/2 of 1% of such Lender's
Commitment, if such Lender's Initial Commitment was at least
$20,000,000 but less than $30,000,000, (y) G of 1% of such Lender's
Commitment, if such Lender's Initial Commitment was at least
$10,000,000 but less than $20,000,000, and (z) 1/4 of 1% of such
Lender's Commitment, if such Lender's Initial Commitment was at least
$6,000,000 but less than $10,000,000.
SECTION 2.9. Optional Termination or Reduction of
------------------------------------
Commitments. During the Revolving Credit Period, the Borrower may,
-----------
upon at least three Domestic Business Days' notice to the
Administrative Agent, (i) terminate the Commitments at any time, if no
Loans, Letters of Credit or Reimbursement Obligations are then
outstanding or (ii) reduce the Commitments from time to time by an
aggregate amount of $25,000,000 or any multiple of $5,000,000 in
excess thereof; provided that, in connection with each such reduction
of the Commitments, (x) the amounts by which the Commitments of the
several Lenders are reduced shall be in proportion to the amounts
shown on the signature pages hereof as their respective Commitments
and (y) after giving effect to such reduction, the Total Exposure of
each Lender shall not exceed the amount of its Commitment as so
reduced. If the Commitments are reduced, any accrued Commitment Fees
applicable to the amount by which the Commitments were so reduced
shall be due and payable one month after the effective date of such
reduction. If the Commitments are terminated in their entirety, all
accrued Commitment Fees shall be payable on the effective date of such
termination.
SECTION 2.10. Mandatory Termination of Commitments. The
------------------------------------
Commitments shall terminate on the earliest of (i) the Termination
Date, (ii) the date on which commitments are terminated under the
Receivables Purchase Agreement, and (iii) the date on which
Commitments are terminated in accordance with this Agreement, and, in
any case, any Loans then outstanding (together with accrued interest
thereon) shall be due and payable on such date and any Letters of
Credit then outstanding shall be cash collateralized on such date in
accordance with Section 2.2(h).
SECTION 2.11. Optional Prepayments. (a) Subject in the case
--------------------
of any Fixed Rate Borrowing to Section 2.14, the Borrower may, (i)
upon notice delivered to the Administrative Agent not later than 10:00
A.M. (New York City time) on the day of any prepayment, prepay the
Group of Base Rate Loans, (ii) upon notice delivered to the
Administrative Agent not later than 12:00 Noon (New York City time) on
the second Domestic Business Day before the day of prepayment, prepay
any Group of CD Loans, and (iii) upon notice delivered to the
Administrative Agent not later than 12:00 Noon (New York City time) on
the third Euro-Dollar Business Day before the day of prepayment,
prepay any Group of Euro-Dollar Loans, in each case, in whole at any
time, or from time to time in part in amounts aggregating $20,000,000
or any larger multiple of $1,000,000, by paying the principal amount
to be prepaid together with interest accrued thereon to the date of
prepayment. Each such optional prepayment shall be applied to prepay
ratably the Loans of the several Lenders included in such Group.
33
(b) Upon receipt of a notice of prepayment pursuant to this
Section, the Administrative Agent shall promptly notify each Lender of
the contents thereof and of such Lender's ratable share of such
prepayment and such notice shall not thereafter be revocable by the
Borrower.
SECTION 2.12. Mandatory Prepayments. (a) If on the date of
---------------------
delivery of any Borrowing Base Certificate pursuant to Section
5.1(e)(ii), 5.1(f), 5.1(g) or 5.1(k) or on the date of any closing
referred to in any certificate delivered pursuant to Section 5.7(ii),
the Applicable Percentage of the Secured Principal Amount shall exceed
the Borrowing Base reflected in the applicable certificate, the
Borrower shall prepay the Loans (together with interest accrued
thereon) to the extent required so that the Applicable Percentage of
the Secured Principal Amount on such date does not exceed the
Borrowing Base so reflected.
(b) Each prepayment of Loans required by subsection (a) of
this Section shall be made with respect to such Group or Groups of
Loans as the Borrower may specify by notice to the Administrative
Agent at or before the time of such prepayment and shall be applied to
prepay the Loans comprising each such Group pro rata; provided that,
if no such timely specification is given by the Borrower, such payment
shall be allocated to such Group or Groups as the Administrative Agent
may determine.
(c) If after all Loans have been repaid pursuant to
subsection (a) of this Section the Total Exposure of any Lender still
exceeds the amount of such Lender's Commitment or the Applicable
Percentage of the Secured Principal Amount still exceeds the Borrowing
Base, the Borrower shall pay to the L/C Issuing Bank for application
to future drawings under any then outstanding Letters of Credit an
amount equal to such excess (or such lesser amount as the Lenders
agree is sufficient to cover such future drawings). Any amounts paid
to Morgan Guaranty in its capacity as L/C Issuing Bank with respect to
any Syndicated Letter of Credit shall be held and invested by Morgan
Guaranty on behalf of each of the Lenders. The L/C Issuing Bank shall
invest such amount in Liquid Investments (as defined in the Inventory
Security Agreement) at the direction of the Administrative Agent, and
shall apply such amount to drawings in the order in which such
drawings are made. To the extent not applied to drawings under any
Letter of Credit, such amount shall be repaid to the Borrower with
interest in the manner provided in Section 2.2(h) as promptly as
practicable after the earlier of (i) the date on which all outstanding
Letters of Credit have expired or been fully drawn and (ii) the date
("Delivery Date") the Collateral Agent delivers a Collateral Report,
if the Borrowing Base on each date for which the Borrower has been
required to calculate the Borrowing Base pursuant to Section 5.1(e)
since the date of payment by the Borrower of such amount and on any
other date for which an estimate has been made during the thirty-day
period preceding the Delivery Date exceeds the Applicable Percentage
of the Secured Principal Amount on such date. If the Administrative
Agent gives an Enforcement Notice (as defined in the Inventory
Security Agreement), the L/C Issuing Bank shall pay all amounts held
by it pursuant to this subsection to the Collateral Agent for
application pursuant to the Inventory Security Agreement.
(d) At any time the Borrower is required to make a payment to
the L/C Issuing Banks pursuant to subsection (c), the Collateral
Agent, if requested by the
34
Required Lenders, shall prepare and deliver a Collateral Report to the
Lenders, the L/C Issuing Banks, the Administrative Agent and the
Borrower. The Borrower will, promptly upon notice of such request,
provide to the Collateral Agent all information and evidence
reasonably requested concerning the Inventory to enable the Collateral
Agent to prepare the Collateral Report.
SECTION 2.13. General Provisions as to Payments. (a) The
---------------------------------
Borrower shall make each payment of principal of, and interest on, the
Loans and of Fees and other amounts payable hereunder, not later than
12:00 Noon (New York City time) on the date when due, in Federal or
other funds immediately available in New York City, to the
Administrative Agent at its address referred to in Section 9.1. The
Administrative Agent shall promptly distribute to each Lender its
ratable share of each such payment received by the Administrative
Agent for the account of the Lenders. Whenever any payment of
principal of, or interest on, the Domestic Loans or of Fees or other
amounts payable hereunder shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended
to the next succeeding Domestic Business Day. Whenever any payment of
principal of, or interest on, the Euro-Dollar Loans shall be due on a
day which is not a Euro-Dollar Business Day, the date for payment
thereof shall be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar
month, in which case the date for payment thereof shall be the next
preceding Euro-Dollar Business Day. If the date for any payment of
principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Administrative Agent shall have received
notice from the Borrower prior to the date on which any payment is due
to the Lenders hereunder that the Borrower will not make such payment
in full, the Administrative Agent may assume that the Borrower has
made such payment in full to the Administrative Agent on such date and
the Administrative Agent may, in reliance upon such assumption, cause
to be distributed to each Lender on such due date an amount equal to
the amount then due such Lender. If and to the extent that the
Borrower shall not have so made such payment, each Lender shall repay
to the Administrative Agent forthwith on demand such amount
distributed to such Lender together with interest thereon, for each
day from the date such amount is distributed to such Lender until the
date such Lender repays such amount to the Administrative Agent, at
the Federal Funds Rate.
SECTION 2.14. Funding Losses. If the Borrower makes any
--------------
payment of principal with respect to any Fixed Rate Loan or any Fixed
Rate Loan is converted or continued (pursuant to Article 2, 6, 8" or
otherwise) on any day other than the last day of an Interest Period
applicable thereto, or the last day of an applicable period fixed
pursuant to Section , or if the Borrower fails to borrow, prepay,
convert or continue any Fixed Rate Loans after notice has been given
to any Lender in accordance with Section , 2.6 or the Borrower shall
reimburse each Lender within 15 days after demand for any resulting
loss or expense incurred by it (or by any existing or prospective
Participant in the related Loan), including (without limitation) any
loss incurred in obtaining, liquidating or employing deposits from
third parties, but excluding loss of margin for the period after any
such payment, conversion or continuation or failure to borrow, prepay,
convert or continue; provided that such Lender shall have delivered to
the Borrower a
35
certificate as to the amount of such loss or expense, which
certificate shall be conclusive in the absence of manifest error.
SECTION 2.15. Computation of Interest and Fees. Interest
--------------------------------
based on the Prime Rate hereunder shall be computed on the basis of a
year of 365 days (or 366 days in a leap year) and paid for the actual
number of days elapsed (including the first day but excluding the last
day). All other interest and Commitment Fees shall be computed on the
basis of a year of 360 days and paid for the actual number of days
elapsed (including the first day but excluding the last day). Letter
of Credit Fees shall be computed on the basis of a year of 360 days
and paid for the actual number of days elapsed, calculated for the
relevant period (including the first day and including the last day).
ARTICLE 3
CONDITIONS TO BORROWINGS AND ISSUANCES
SECTION 3.1. Closing. The closing hereunder shall occur
-------
upon receipt by the Agents of the following, all of which shall be in
form and substance acceptable to the Agents:
(a) a duly executed Note for the account of each Lender dated
on or before the Closing Date complying with the provisions of Section
2.4;
(b) an opinion dated the Closing Date of the Assistant
General Counsel of the Borrower in substantially the form of Exhibit G
hereto and covering such other matters as the Administrative Agent may
reasonably request;
(c) an opinion dated the Closing Date of Davis Polk & Wardwell, special counsel for the Agents in substantially the form of
Exhibit H hereto and covering such other matters as the Administrative
Agent may reasonably request;
(d) evidence satisfactory to the Administrative Agent that
the commitments under the Existing Credit Agreement have terminated,
all loans thereunder have been repaid in full (all Lenders hereunder
which are also lenders under the Existing Credit Agreement hereby
agreeing that such repayment may be made, whether at the end of
interest periods under the Existing Credit Agreement or not), all
accrued fees and other amounts payable thereunder (including, without
limitation, any funding costs payable pursuant to the Existing Credit
Agreement) have been paid in full and that all letters of credit
issued thereunder (other than those listed on Schedule 1 and those
deemed to be issued under the Receivables Purchase Agreement) have
been returned to the issuers thereof (or to the Administrative Agent)
for cancellation;
36
(e) a Borrowing Base Certificate dated the Closing Date
setting forth the Borrowing Base as of August 31, 1995;
(f) a duly executed copy of the Inventory Security Agreement,
a duly executed copy of the Perfection Certificate (as defined in the
Inventory Security Agreement); all Pledged Instruments (as defined in
the Inventory Security Agreement) delivered to the Collateral Agent
and endorsed to the order of the Collateral Agent; and all
certificates representing Pledged Stock or Pledged Interests (in each
case as defined in the Inventory Security Agreement), accompanied by
duly executed instruments of transfer or assignment in blank,
delivered to the Collateral Agent;
(g) acknowledgement copies of proper financing statements
(Form UCC-1) naming the Borrower as the debtor and the Collateral
Agent, on behalf of the Lenders, as the secured party, or other
similar instruments or documents as may be necessary or, in the
opinion of the Collateral Agent or its counsel, desirable under the
UCC of all appropriate jurisdictions to evidence and perfect the
Lenders' Security Interests in the Borrower's Collateral (as defined
in the Inventory Security Agreement);
(h) acknowledgement copies of proper financing statements
(Form UCC-1) naming the Special Purpose Members as the debtors and the
Collateral Agent, on behalf of the Lenders, as the secured party, or
other similar instruments or documents as may be necessary or, in the
opinion of the Collateral Agent or its counsel, desirable under the
UCC of all appropriate jurisdictions to evidence and perfect the
Lenders' Security Interests in the Special Purpose Members' Collateral
(as defined in the Inventory Security Agreement);
(i) executed financing statements (Form UCC-3) necessary to
release all security interests and other rights of any Person
previously granted by the Borrower in the Borrower's Collateral;
(j) (i) requests for information or copies (Form UCC-11) (or
a similar search report certified by parties acceptable to the
Collateral Agent or its counsel) dated a date reasonably near the
Closing Date listing all effective financing statements which name the
Borrower (under its present name and any previous name) as debtor,
together with copies of such financing statements (none of which,
unless subject to a release referred to in clause (h) above, shall
cover any Collateral) and (ii) requests for information dated a date
reasonably near the Closing Date regarding tax liens against the
Borrower in the relevant offices in the States of Indiana, Maryland,
New York and Pennsylvania;
(k) from NBD Bank a certificate of an authorized officer of
NBD Bank attaching a true and correct copy of the instrument or
instruments evidencing the Secured Tax Exempt Debt;
(l) a certificate as to insurance coverage as required by
Section 5.2(b);
(m) a certificate signed by the Chief Financial Officer,
Treasurer or Controller of the Borrower that the representations and
warranties of the Borrower contained in this Agreement shall be true
on and as of the Closing Date;
37
(n) the fees described in Section 2.8(c) and (d);
(o) evidence satisfactory to the Administrative Agent of the
satisfaction of all the conditions to the closing of the Receivables
Facility on the Closing Date, and that all transactions contemplated
by the Receivables Documents to be consummated on the Closing Date
will take place prior to or contemporaneously with the closing
contemplated hereunder; and
(p) all documents the Agents may reasonably request relating
to the existence of the Borrower, the corporate authority for and the
validity of the Financing Documents, and any other matters relevant
hereto, all in form and substance satisfactory to the Agents.
The Administrative Agent shall promptly notify the Borrower
and the Lenders of the date on which the foregoing conditions have
been satisfied, and such notice shall be conclusive and binding on all
parties hereto.
SECTION 3.2. All Borrowings and Issuances. The obligation
----------------------------
of each Lender to make a Loan on the occasion of each Borrowing and
the obligation of the L/C Issuing Bank to issue each Letter of Credit
are subject to the satisfaction of the following conditions:
(a) (i) receipt by the Administrative Agent of a Notice of
Borrowing as required by Section 2.3(a)# or (ii) receipt by the L/C
Issuing Bank of a Notice of Issuance as required by Section 2.2, as
the case may be;
(b) receipt by the Administrative Agent of a certificate
dated the date of such Borrowing or Issuance and signed by the Chief
Financial Officer, the Treasurer or the Controller of the Borrower
certifying that:
(i) immediately before and after such Borrowing or
Issuance, no Default or Potential Termination Event or
Termination Event (as such terms are defined in the
Receivables Purchase Agreement) shall have occurred and be
continuing; and
(ii) the representations and warranties of the Borrower
contained in this Agreement (other than the representation
and warranty set forth in Section 4.4(c)) and the other
Financing Documents shall be true on and as of the date of
such Borrowing;
(c) the fact that immediately after such Borrowing or
Issuance the Applicable Percentage of the Secured Principal Amount
shall not exceed the lesser of (i) the Borrowing Base reflected in the
most recent Borrowing Base Certificate delivered to the Administrative
Agent and (ii) the Receivables Maximum Purchase Price; and
38
(d) the fact that no Federal Lien shall have been filed
against the Borrower which covers or may cover any Collateral (as
defined in the Inventory Security Agreement) and such Federal Lien
remains undischarged.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.1. Corporate Existence and Power. The Borrower is
-----------------------------
a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware, and has all corporate powers
and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
SECTION 4.2. Corporate and Governmental Authorization; No
--------------------------------------------
Contravention. The execution, delivery and performance by the
-------------
Borrower of the Financing Documents are within the Borrower's
corporate powers, have been duly authorized by all necessary corporate
action, require no action by or in respect of, or filing with, any
governmental body, agency or official (except as contemplated by the
Inventory Security Agreement) and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of the Borrower or of any
agreement, judgment, injunction, order, decree or other instrument
binding upon the Borrower or result in the creation or imposition of
any Lien on any asset of the Borrower or any of its Subsidiaries
(except the Security Interests).
SECTION 4.3. Binding Effect. This Agreement and the
--------------
Inventory Security Agreement constitute valid and binding agreements
of the Borrower and each Note, when executed and delivered in
accordance with this Agreement, will constitute a valid and binding
obligation of the Borrower, in each case enforceable in accordance
with their respective terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization or moratorium or
other similar laws relating to the enforcement of creditors' rights
generally and by general equitable principles.
SECTION 4.4. Financial Information. (a) The consolidated
---------------------
balance sheets of the Borrower and its Consolidated Subsidiaries as of
December 31, 1994 and the related consolidated statements of income
and cash flows for the fiscal year then ended, reported on by Price
Waterhouse LLP and set forth in the Borrower's 1994 Form 10-K, a copy
of which has been delivered to each of the Lenders, fairly present, in
conformity with generally accepted accounting principles, the
consolidated financial position of the Borrower and its
39
Consolidated Subsidiaries as of such date and their consolidated
results of operations and cash flows for such fiscal year.
(b) The unaudited consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as of June 30, 1995 and the related
unaudited consolidated statements of income and cash flows for the six
months then ended, set forth in the Borrower's quarterly report for
the fiscal quarter ended June 30, 1995 as filed with the Securities
and Exchange Commission on the Borrower's Latest Form 10-Q, a copy of
which has been delivered to each of the Lenders, fairly present, in
conformity with generally accepted accounting principles applied on a
basis consistent with the financial statements referred to in
paragraph (a) of this Section 4.4 (except that the notes to such
quarterly financial statements are abbreviated as permitted by the
Securities and Exchange Commission in its regulations relating to
interim financial statements), the consolidated financial position of
the Borrower and its Consolidated Subsidiaries as of such date and
their consolidated results of operations and cash flows for such six
month period (subject to normal year-end adjustments).
(c) Since June 30, 1995, there has been no material adverse
change in the business or financial position of the Borrower and its
Consolidated Subsidiaries, considered as a whole.
SECTION 4.5. Litigation. There is no action, suit or
----------
proceeding pending against, or to the knowledge of the Borrower
threatened against or affecting, the Borrower or any of its
Subsidiaries before any court or arbitrator or any governmental body,
agency or official in which there is a reasonable possibility of an
adverse decision (i) which could materially adversely affect the
ability of the Borrower to perform its obligations under any of the
Financing Documents, or (ii) which would in any material respect draw
into question the validity of any of the Financing Documents.
SECTION 4.6. Compliance with ERISA. Each member of the
---------------------
ERISA Group has fulfilled its obligations under the minimum funding
standards of ERISA and the Internal Revenue Code with respect to each
Plan and is in compliance in all material respects with the presently
applicable provisions of ERISA and the Internal Revenue Code with
respect to each Plan, and has not incurred any liability under Title
IV of ERISA (i) to the PBGC other than a liability to the PBGC for
premiums under Section 4007 of ERISA or (ii) in respect of a
Multiemployer Plan which has not been discharged in full when due.
SECTION 4.7. Taxes. United States Federal income tax
-----
returns of the Borrower and the members of its "affiliated group" (as
defined in Section 1504(a) of the Internal Revenue Code) have been
examined through the taxable year ended December 31, 1987 and are
closed through the taxable year ended December 31, 1986. The Borrower
and the members of its "affiliated group" (as so defined) have filed
all United States Federal income tax returns and all other material
tax returns which are required to be filed by them and have paid all
taxes stated to be due in such returns or pursuant to any assessment
received by them, except for taxes the amount, applicability or
validity of which is being contested in good faith by appropriate
proceedings. The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of taxes or other similar
40
governmental charges, additions to taxes and any penalties and
interest thereon are, in the opinion of the Borrower, adequate.
SECTION 4.8. Environmental Compliance.
(a) Except as disclosed on Schedule 4.8,
(i) the Borrower and its Subsidiaries have obtained, or
made timely application for, all permits, certificates,
licenses, approvals, registrations and other authorizations
(collectively "Permits") which are required under all
applicable Environmental Laws and are necessary for their
operations and are in compliance with the terms and
conditions of all such Permits, except where the failure to
obtain such Permits or to comply with their terms would not
have, individually or in the aggregate, a material adverse
effect on the Borrower and its Consolidated Subsidiaries,
considered as a whole;
(ii) no notice, notification, demand, request for
information, citation, summons, complaint or order has been
issued, no complaint has been filed, no penalty has been
assessed and no investigation or review is pending, or to the
Borrower's knowledge, threatened by any governmental entity
or other Person with respect to any (A) alleged violation by
the Borrower or any Subsidiary of any Environmental Law,
(B) alleged failure by the Borrower or any Subsidiary to
have any Permits required in connection with the conduct of
its business or to comply with the terms and conditions
thereof, (C) Regulated Activity or (D) Release of Hazardous
Substances, except where such event or events would not have,
individually or in the aggregate, a material adverse effect
on the Borrower and its Consolidated Subsidiaries, considered
as a whole;
(iii) to the knowledge of the Borrower, all oral or
written notifications of a Release of a Hazardous Substance
required to be filed under any applicable Environmental Law
have been filed or are in the process of being filed by or on
behalf of the Borrower or any Subsidiary;
(iv) no property now owned or coal mining operation or
steel facility which is now leased by the Borrower or any
Subsidiary and, to the knowledge of the Borrower, no such
property previously owned or leased or any property to which
the Borrower or any Subsidiary has, directly or indirectly,
transported or arranged for the transportation of any
Hazardous Substances is listed or, to the Borrower's
knowledge, proposed for listing, on the National Priorities
List promulgated pursuant to CERCLA, on CERCLIS (as defined
in CERCLA) or any similar state list or is the subject of
federal, state or local enforcement actions or, to the
knowledge of the Borrower, other investigations which may
lead to claims against the Borrower or any Subsidiary for
clean-up costs, remedial work, damage to natural resources or
personal injury claims, including, but not limited to, claims
under CERCLA, except where such listings or investigations
would not have,
41
individually or in the aggregate, a material adverse effect
on the Borrower and its Consolidated Subsidiaries, considered
as a whole; and
(v) there are no Liens under or pursuant to any
applicable Environmental Laws on any real property or other
assets owned or leased by the Borrower or any Subsidiary, and
no government actions have been taken or, to the knowledge of
the Borrower, are in process which could subject any of such
properties or assets to such Liens.
(b) For purposes of this Section, the terms "Borrower" and
"Subsidiary" shall include any business or business entity (including
a corporation) which is a predecessor, in whole or in part, of the
Borrower or any Subsidiary.
SECTION 4.9. Full Disclosure. All information, including
---------------
the Inventory Information Memorandum, furnished by the Borrower to the
Agents or any Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, taken as whole
and in light of the circumstances under which such information is
furnished, true and accurate in all material respects on the date as
of which such information is stated or certified. It is understood
that the foregoing is limited to the extent that (i) information
relating to the steel industry generally is to the best of the
Borrower's knowledge, (ii) projections have been made in good faith by
the management of the Borrower and in the view of the Borrower's
management are reasonable in light of all information known to
management as of the Closing Date, and (iii) no representation or
warranty is made as to whether the projected results will be realized.
The Borrower has disclosed to the Lenders in writing any and all facts
which materially and adversely affect or may so affect (to the extent
that the Borrower can now reasonably foresee), the business,
operations or financial condition of the Borrower and its Consolidated
Subsidiaries, taken as a whole, or the ability of the Borrower to
perform its obligations under any of the Financing Documents.
ARTICLE 5
COVENANTS
The Borrower agrees that, as long as any Lender has any
Commitment hereunder or any Letter of Credit remains outstanding or
any amount payable under any Note or any Reimbursement Obligation
remains unpaid:
SECTION 5.1. Information. The Borrower will deliver to each
-----------
of the Lenders:
42
(a) as soon as available and in any event within 95 days
after the end of each fiscal year of the Borrower, a consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of
the end of such fiscal year and the related consolidated statements of
income and cash flows for such fiscal year, setting forth in each case
in comparative form the figures for the previous fiscal year, all
reported on in a manner acceptable to the Securities and Exchange
Commission by Price Waterhouse LLP or other independent public
accountants of nationally recognized standing (the Borrower being
permitted to satisfy the requirements of this clause (a) by delivery
of its annual report on Form 10-K (or any successor form), and all
supplements or amendments thereto, as filed with the Securities and
Exchange Commission);
(b) as soon as available and in any event within 60 days
after the end of each of the first three quarters of each fiscal year
of the Borrower, consolidated balance sheets of the Borrower and its
Consolidated Subsidiaries as of the end of such quarter and the
related consolidated statements of income for such quarter and for the
portion of the Borrower's fiscal year ended at the end of such quarter
and statements of cash flow for the portion of the Borrower's fiscal
year ended at the end of such quarter, setting forth in each case, in
comparative form the figures for the corresponding quarter and the
corresponding portion of the Borrower's previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency
(except for the notes to such quarterly statements, which may be
abbreviated as permitted by the Securities and Exchange Commission in
its regulations relating to interim financial statements) by the Chief
Financial Officer, the Treasurer or the Controller of the Borrower
(the Borrower being permitted to satisfy the requirements of this
clause (b) by delivery of its quarterly report on Form 10-Q (or any
successor form), and all supplements or amendments thereto, as filed
with the Securities and Exchange Commission);
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of
the Chief Financial Officer, the Treasurer or the Controller of the
Borrower (i) setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance with the
requirements of Section 5.6 on the date of such financial statements
and (ii) stating whether any Default or Increased Coverage Event
exists on the date of such certificate and, if any Default or
Increased Coverage Event then exists, setting forth the details
thereof and the action which the Borrower is taking or proposes to
take with respect thereto and (iii) in the case of the certificate
delivered simultaneously with each set of financial statements
referred to in clause (a) above, showing in reasonable detail the
amount of insurance coverage for the Borrower and its Subsidiaries
then in effect;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i)
whether anything has come to their attention relating to accounting
matters in the course of their audit to cause them to believe that any
Default or Increased Coverage Event existed on the date of such
statements and (ii) confirming the calculations required by clause
(c)(i) above and set forth in the officer's certificate delivered
simultaneously therewith pursuant to clause (c)
above;
43
(e) within 20 days after the end of each month, (i) a
Borrowing Base Certificate (the "Monthly Borrowing Base Certificate")
setting forth a calculation of the Borrowing Base as of the end of
such month and (ii) if the Applicable Percentage of the Secured
Principal Amount at the time of the delivery of the Monthly Borrowing
Base Certificate exceeds the Borrowing Base as set forth in such
certificate, simultaneously with the delivery of such certificate a
certificate of the Chief Financial Officer, the Treasurer or the
Controller of the Borrower dated as of one Domestic Business Day prior
to the delivery of the Monthly Borrowing Base Certificate setting
forth in the form of the Borrowing Base Certificate the Borrowing Base
as of the close of business on such date and specifying whether the
Borrower is required to take any action to comply with Section 2.12;
(f) if on any date any officer of the Borrower becomes aware
that the Applicable Percentage of the Secured Principal Amount exceeds
the Borrowing Base on such date, a Borrowing Base Certificate, to be
dated as of and delivered to the Administrative Agent one Domestic
Business Day after such date, setting forth the Borrower's good faith
estimate as to the calculation of the Borrowing Base as of the close
of business on such date;
(g) promptly, but in no event later than five Domestic
Business Days after any officer of the Borrower becomes aware of any
occurrence which such officer knows to constitute a Default or an
Increased Coverage Event, a certificate of the Chief Financial
Officer, the Treasurer or the Controller of the Borrower setting forth
the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto and, in the case of an Increased
Coverage Event, setting forth in the form of the Borrowing Base
Certificate the Borrower's good faith estimate as to the calculation
of the Borrowing Base as of the close of business on the Domestic
Business Day prior to the date of delivery of such certificate;
(h) promptly upon the mailing thereof to the shareholders of
the Borrower generally, copies of all financial statements, reports
and proxy statements so mailed;
(i) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) which the Borrower
shall have filed with the Securities and Exchange Commission;
(j) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows that the plan administrator of any Plan has given or
is required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability
under Title IV of ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate, impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for a waiver
of the
44
minimum funding standard under Section 412 of the Internal Revenue
Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice
under Section 4063(a) of ERISA of withdrawal from any Plan as
described in Section 4063 of ERISA, a copy of such notice; (vii) fails
to make any payment or contribution to any Plan which results in the
imposition of a Lien, notice of such failure; or (viii) makes any
amendment to any Plan which requires posting a bond or other security
under Section 307 of ERISA, a copy of the notice required under
Section 307(e) of ERISA; and
(k) from time to time such additional information regarding
the Borrowing Base or the financial position or business of the
Borrower as the Required Lenders may reasonably request, which may
include a Borrowing Base Certificate, to be dated as of and delivered
to the Administrative Agent one Domestic Business Day after the date
on which such request is effective, setting forth the Borrower's good
faith estimate as to the calculation of the Borrowing Base as of the
close of business on the date of such request.
SECTION 5.2. Maintenance of Property; Insurance. (a) The
----------------------------------
Borrower will keep, and will cause each Significant Subsidiary to
keep, all property useful and necessary in its business as then
conducted in good working order and condition, ordinary wear and tear
excepted.
(b) The Borrower will maintain, to the extent commercially
available, (i) physical damage insurance on substantially all its real
and personal property in the United States (including all Inventories
and books and records relating to any proceeds of Inventories) on an
"All Risks" form subject to normal exclusions (including the perils of
flood and quake) on a repair and replacement cost basis (or, in the
case of idle properties, actual cash value basis) for all such
property in an amount not less than $90,000,000 (subject to a
deductible amount or retention not to exceed $10,000,000) and
consequential loss coverage for extra expense, (ii) public liability
insurance (including products liability coverage) in an amount not
less than $50,000,000 (subject to a deductible amount or retention not
to exceed $10,000,000), and (iii) such other insurance coverage in
such amounts and with respect to such risks relating to the Borrower's
Collateral as the Required Lenders may reasonably request. All such
insurance shall be provided by insurers having an A.M. Best
policyholders rating of not less than A- or by the insurers set forth
in Exhibit I hereto, as such exhibit may be modified from time to time
by the Administrative Agent (with the consent of the Required
Lenders). Prior to the Closing Date, the Borrower will cause the
Collateral Agent to be named as an insured party and loss payee, on
behalf of the Secured Parties, on each insurance policy covering risks
relating to any of its Inventories and books and records relating to
any proceeds of Inventories. Each such insurance policy in effect
during the term of this Agreement shall include effective waivers by
the insurer of all claims for insurance premiums against the
Collateral Agent or any other Secured Party, provide that all
insurance proceeds in excess of deductible amounts or retentions which
are payable in respect of losses relating to Inventories and books and
records shall be adjusted with and payable to the Collateral Agent,
and provide that no cancellation or termination thereof shall be
effective until at least 30 days (or, if such cancellation or
termination is for non-payment of premiums, 10 days) after receipt by
the Collateral Agent of written notice thereof. The
45
Collateral Agent will consult with the Borrower before agreeing to any
adjustment of insurance proceeds covered by the preceding sentence.
If, in the opinion of the Borrower, commercially available insurance
is not available on reasonable terms, the Borrower shall so notify the
Agents and the Lenders and, with the consent of the Required Lenders
(which consent shall not be unreasonably withheld), may elect not to
purchase such insurance; provided that if the Borrower shall not have
received notice of disapproval from the Required Lenders within 60
days of receipt by the Lenders of such notice from the Borrower, the
Lenders shall be deemed to have consented, for purposes of this
Section 5.2(b), to the election not to purchase such insurance. The
Borrower will deliver to the Lenders (i) on the date of the first
Borrowing or Issuance hereunder and within 95 days after the end of
each fiscal year of the Borrower, a certificate dated such date
showing the total amount of insurance coverage as of such date, (ii)
from time to time true and complete copies of such insurance policies
of the Borrower (or, if the Borrower does not have such insurance
policies in its possession, evidence thereof) relating to such
insurance coverage as the Required Lenders through the Administrative
Agent may request, (iii) within 15 days of receipt of notice from any
insurer, a copy of any notice of cancellation or material adverse
change in coverage from that existing on the date of this Agreement
and (iv) within 15 days of any cancellation or nonrenewal of coverage
by the Borrower, notice of such cancellation or nonrenewal.
SECTION 5.3. Compliance with Laws. The Borrower will
--------------------
comply, and cause each Significant Subsidiary to comply, with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental
Laws and ERISA and the rules and regulations thereunder) except where
failure to comply would not have a material adverse effect on the
Borrower and its Significant Subsidiaries, considered as a whole, or
where the necessity of compliance therewith is being contested in good
faith by appropriate proceedings.
SECTION 5.4. Inspection of Property, Books and Records. The
-----------------------------------------
Borrower will keep, and will cause each Subsidiary to keep, proper
books of record and account reflecting its business and activities;
and will permit, and will cause each Subsidiary to permit,
representatives of any Lender at such Lender's expense to visit and
inspect any of their respective properties, to examine and make
abstracts from any of their respective books and records (including
those books and records, whether or not located on its property, which
are under the control of or in the possession of EDS) and to discuss
their respective affairs, finances and accounts with their respective
officers, employees, independent public accountants and with EDS, all
during normal business hours and as often as may reasonably be
desired; provided that the Borrower may, at its option, have one or
more employees or representatives present at any such inspection,
examination or discussion.
SECTION 5.5. Compliance with Certain Covenants in the
----------------------------------------
Indenture. The Borrower will fully comply with the terms and
---------
provisions of Sections 5.04, 5.05 and 5.07 of the Indenture dated
March 1, 1976 between the Borrower and Chemical Bank, as Trustee,
relating to the Borrower's 8 3/8% Debentures due March 1, 2001, as in
effect on the date hereof (the "Indenture"). The definitions
contained in the Indenture of any and all terms or words employed.
46
in the above enumerated provisions of the Indenture shall be fully
applicable for purposes of this Section 5.5 except that:
(i) the reference to the "Corporation" in Sections 5.04,
5.05 and 5.07 shall be read as the "Borrower";
(ii) the reference to the "Indenture" in Section 5.04
shall be read as "Agreement"; and
(iii) the references to "Debentures" in Sections 5.04
and 5.07 shall be read as "Secured Obligations (as defined in
the Inventory Security Agreement)".
The foregoing covenant shall continue in full force and
effect as though the above-enumerated provisions of the Indenture were
set forth in full herein notwithstanding any waiver of performance
thereof pursuant to the Indenture or any modification, amendment or
termination of such provisions or the redemption, retirement or
repayment in full of the 8 3/8% Debentures issued under the Indenture
or the satisfaction and discharge of the Indenture pursuant to Article
Ten thereof or otherwise.
SECTION 5.6. Minimum Adjusted Consolidated Tangible Net
------------------------------------------
Worth. Adjusted Consolidated Tangible Net Worth will not be, at the
-----
end of any calendar quarter, less than the sum of (i) $600,000,000 and
(ii) 50% of consolidated net income (if positive) of the Borrower and
its Consolidated Subsidiaries for each fiscal quarter of the Borrower,
commencing with the fiscal quarter ended June 30, 1995.
SECTION 5.7. Sale of Borrower's Collateral. From and after
-----------------------------
the date of the first Borrowing, the Borrower will not sell or
otherwise transfer any Borrower's Collateral without the consent of
all of the Lenders, which consent shall not be unreasonably withheld,
unless
(i) no Enforcement Notice or Automatic Release
Termination (as defined in the Inventory Security Agreement)
is in effect and no event specified in clause (h) or (i) of
Section 6.1 has occurred and is continuing with respect to
the Borrower;
(ii) (A) such sale or transfer is of Inventories in the
ordinary course of business or
(B) if such sale occurs in connection with the
disposition by the Borrower of all or any significant portion
of a facility at which, or a business in connection with
which, Inventories are held, such sale is of such
Inventories, and the Borrower has delivered to the
Administrative Agent prior to, but no more than three
Domestic Business Days before, the date of closing of such
sale or transfer a
47
certificate signed by the Chief Financial Officer, the
Treasurer or the Controller of the Borrower certifying:
(x) that immediately after such closing the
Applicable Percentage of the Secured Principal Amount
will not exceed the attached good faith projection of
the Borrowing Base (set forth in the form of the
Borrowing Base Certificate) on the date of such closing,
adjusted to exclude the Borrower's Collateral being sold
or transferred,
(y) the amount, if any, by which the Secured
Principal Amount will have to be reduced in order for
such certificate to be true and correct and the
arrangements that have been made for such reduction, and
(z) that attached is a true and correct copy of the
portion of the contract of sale or transfer which
contains as a condition to closing a condition that the
Borrower shall have complied with this Section; and
(iii) in the case of a sale or transfer described in
clause (ii)(B) above, immediately after the closing referred
to therein the Applicable Percentage of the Secured Principal
Amount will not exceed the Borrowing Base.
SECTION 5.8. Use of Proceeds. The proceeds of the Loans
---------------
made under this Agreement will be used by the Borrower for general
corporate purposes. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any "margin stock" within the meaning
of Regulation U.
SECTION 5.9. Mergers and Sales of Assets. The Borrower will
---------------------------
not (i) consolidate or merge with or into any other Person or (ii)
except as permitted by Section 5.7, sell, lease or otherwise transfer,
directly or indirectly, all or substantially all of the assets of the
Borrower and its Subsidiaries, taken as a whole, to any other Person;
provided that the Borrower may merge with another Person (other than
the Special Purpose Members) if the Borrower is the corporation
surviving such merger and after giving effect to such merger, no
Default shall have occurred and be continuing.
SECTION 5.10. Environmental Matters. The Borrower will
---------------------
promptly give to the Lenders notice in writing of any complaint,
order, citation or notice of violation with respect to, or if the
Borrower becomes aware of, (i) the existence or alleged existence of a
violation of any applicable Environmental Law, (ii) any Release into
the environment, (iii) the commencement of any cleanup pursuant to or
in accordance with any applicable Environmental Law of any Hazardous
Substances, (iv) any pending legislative or threatened proceeding for
the termination, suspension or non-renewal of any permit required
under any applicable Environmental Law, (v) any property of the
Borrower or any
48
Subsidiary that is or will be subject to a Lien imposed pursuant to
any Environmental Law, (vi) any pending legislative changes to
existing Environmental Laws, and (vii) any proposed acquisitions or
leasing of property, which, in each of cases (i) through (vii) above,
individually or in the aggregate, could have a material adverse effect
on the Borrower and its Consolidated Subsidiaries, considered as a
whole.
ARTICLE 6
DEFAULTS
SECTION 6.1. Events of Default. If one or more of the
-----------------
following events ("Events of Default") shall have occurred and be
continuing: (a) the Borrower shall fail to pay (i) any principal of
any Loan or any Reimbursement Obligation when due, (ii) any interest
on any Loan or Reimbursement Obligation or any Letter of Credit Fees
within two Domestic Business Days after the due date thereof, (iii)
any Commitment Fees within five Domestic Business Days after the due
date thereof or (iv) any other amount payable hereunder within five
Domestic Business Days after the later of the due date thereof and the
date on which the Borrower is notified of the amount thereof; or
(b) the Borrower shall fail to observe or perform any
covenant contained in Section 5.1(e), 5.1(f), 5.6, 5.7 or 5.9, or
shall fail to deliver a Borrowing Base Certificate pursuant to Section
5.1(g) or 5.1(k); or
(c) the Borrower shall fail to observe or perform any
covenant contained in Section 5.5 for 60 days after written notice
thereof has been given to the Borrower by the Administrative Agent at
the request of any Lender; or
(d) the Borrower shall fail to observe or perform any
covenant or agreement contained in any of the Financing Documents
(other than those covered by clause (a), (b) or (c) above) for 30 days
after written notice thereof has been given to the Borrower by the
Administrative Agent at the request of any Lender; or
(e) any representation, warranty, certification or statement
made by the Borrower in any of the Financing Documents or in any
certificate, financial statement or other document delivered pursuant
to the Financing Documents shall prove to have been incorrect in any
material respect when made; or
49
(f) the Borrower and its Subsidiaries shall fail to pay when
due, or within any applicable grace period, (i) any payment in respect
of Secured Tax Exempt Debt or (ii) payments aggregating more than
$1,000,000 in respect of Debt of the Borrower or any of its
Subsidiaries (other than the Loans, the Reimbursement Obligations and
Secured Tax Exempt Debt) and Guarantees by the Borrower or any of its
Subsidiaries; or
(g) one or more events or conditions shall occur which result
in a default under any agreement or agreements in respect of Debt of
the Borrower or any Subsidiary and the aggregate principal amount of
such Debt exceeds $10,000,000 and as a consequence of such default or
defaults the Borrower or any of its Subsidiaries shall make any
payment or give or agree to give any consideration or benefit of any
kind (including, without limitation, any increased compensation,
prepayment, shortening of maturities, security or other credit
support) to the holders of such Debt and such payment, consideration
or benefit is determined by the Required Lenders, after taking into
account any payment, consideration or benefit made, given or agreed to
be given by such holders to the Borrower or any of its Subsidiaries
(other than a waiver of such default), to be a material benefit to the
holders of such Debt; or
(h) the Borrower or any Significant Subsidiary shall commence
a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing; or
(i) an involuntary case or other proceeding shall be
commenced against the Borrower or any Significant Subsidiary seeking
liquidation, reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the Borrower or
any Significant Subsidiary under the federal bankruptcy laws as now or
hereafter in effect; or
(j) any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $5,000,000 which it
shall have become liable to pay under Title IV of ERISA; or notice of
intent to terminate a Plan or Plans having aggregate Unfunded
Liabilities in excess of $10,000,000 (collectively, a "Material Plan")
shall be filed under Title IV of ERISA by any member of the ERISA
Group, any plan administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to administer any
Material Plan; or a "default", within the meaning of Section
4219(c)(5) of ERISA, shall occur with respect to one or more
Multiemployer Plans which could cause one or more members of the
50
ERISA Group to incur an immediate payment obligation under Title IV of
ERISA for an amount or amounts aggregating in excess of $5,000,000; or
any applicable law, rule or regulation is adopted, changed or
interpreted, or the interpretation or administration thereof is
changed, in each case after the date hereof, by any governmental
authority or agency or by any court (a "Change in Law"), or, as a
result of a Change in Law, an event occurs following a Change in Law,
with respect to or otherwise affecting one or more Plans,
Multiemployer Plans or Benefit Arrangements, which in the reasonable
opinion of the Required Lenders, would have a material adverse effect
on the priority of the Security Interests; or
(k) a judgment or order for the payment of money in excess of
$5,000,000 shall be entered by a court of record against the Borrower
or any Subsidiary and such judgment or order shall continue
unsatisfied and unstayed for a period of 10 days (or such other period
of time as may be provided under applicable state law for obtaining a
stay of judgment); or
(l) a federal tax lien under Section 6321 of the Internal
Revenue Code or a Lien under Title I or Title IV of ERISA or Section
412 of the Internal Revenue Code shall have arisen against any member
of the ERISA Group (a "Federal Lien") and the aggregate amount secured
by Federal Liens exceeds $500,000; or
(m) the Lien created by the Inventory Security Agreement
shall at any time and for any reason not constitute a valid and
perfected Lien subject to no prior or equal Lien (other than Permitted
Liens) or the Borrower shall so assert in writing;
then, and in every such event, the Administrative Agent shall
(i) if requested by Lenders having more than 66 2/3% in aggregate
amount of the Commitments, by notice to the Borrower terminate the
Commitments and they shall thereupon terminate and (ii) if requested
by Lenders holding Notes evidencing more than 66 2/3% in aggregate
principal amount of the Loans, by notice to the Borrower declare the
Notes (and any Reimbursement Obligations together with accrued
interest thereon and all Fees and other amounts payable by the
Borrower hereunder) to be, and the same shall thereupon become,
immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the
Borrower; provided that in the case of any of the Events of Default
specified in clause (h) or (i) above with respect to the Borrower,
without any notice to the Borrower or any other act by the
Administrative Agent or the Lenders, the Commitments shall thereupon
terminate and the Notes (together with accrued interest thereon and
all Fees and other amounts payable by the Borrower hereunder) shall
become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by
the Borrower. If any Event of Default shall occur and be continuing
or Commitments are terminated pursuant to Section 2.10(ii) and, in
each case, any Loans, Letters of Credit or Reimbursement Obligations
are then outstanding, the Administrative Agent shall, upon written
request of the Required Lenders, give an Enforcement Notice (as
defined in the Inventory Security
51
Agreement) pursuant to the Inventory Security Agreement. The Borrower
shall comply with Section 2.2(h) with respect to Letters of Credit.
Whether or not Commitments are terminated, the Administrative Agent
shall, upon written request of the Required Lenders, instruct the L/C
Issuing Banks to timely give notice that outstanding Letters of Credit
having automatic renewal provisions will not be renewed. The
Administrative Agent shall promptly advise the Borrower, each Lender,
Morgan Guaranty, as administrative agent and J.P. Morgan Delaware, as
structuring and collateral agent under the Receivable Purchase
Agreement of the giving of such Enforcement Notice.
SECTION 6.2. Notice of Default. The Administrative Agent
-----------------
shall give notice to the Borrower under Section 6.1(c) or (d) promptly
upon being requested to do so by any Lender and shall thereupon notify
all the Lenders thereof.
ARTICLE 7
THE ADMINISTRATIVE AGENT
SECTION 7.1. Appointment and Authorization. Each Lender
-----------------------------
irrevocably appoints and authorizes the Agents to take such action as
agent on its behalf and to exercise such powers under the Financing
Documents as are delegated to the Agents by the terms hereof or
thereof, together with all such powers as are reasonably incidental
thereto. Each Lender hereby irrevocably grants the Collateral Agent
or its designated agent, if any, an irrevocable power of attorney,
with full power of substitution, coupled with an interest, at any time
and from time to time, to take in the name of such Lender all actions
with respect to any Collateral which the Collateral Agent may deem
necessary or advisable to realize upon the Security Interest in any
Collateral. Each Lender hereby agrees to be bound by the provisions
of the Inventory Security Agreement.
SECTION 7.2. Administrative Agent and Affiliates. Morgan
-----------------------------------
Guaranty shall have the same rights and powers under this Agreement as
any other Lender and may exercise or refrain from exercising the same
as though it were not the Administrative Agent, and Morgan Guaranty
and its affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or any
Subsidiary or Affiliate of the Borrower as if it were not the
Administrative Agent.
SECTION 7.3. Action by Administrative Agent. The
------------------------------
obligations of the Administrative Agent hereunder are only those
expressly set forth herein. Without limiting the generality of the
foregoing, the Administrative Agent shall
52
not be required to take any action with respect to any Default, except
as expressly provided in Article 6.
SECTION 7.4. Consultation with Experts. The Administrative
-------------------------
Agent may consult with legal counsel (who may be counsel for the
Borrower), 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.
SECTION 7.5. Liability of Administrative Agent. Neither the
---------------------------------
Administrative Agent nor any of its affiliates nor any of their
respective directors, officers, agents or employees shall be liable
for any action taken or not taken by it in connection herewith (i)
with the consent or at the request of the Required Lenders (or, where
required by the terms hereof, the Lenders) or (ii) in the absence of
its own gross negligence or willful misconduct. Neither the
Administrative Agent nor any of its affiliates nor any of their
respective directors, officers, agents, affiliates or employees shall
be responsible for or have any duty to ascertain, inquire into or
verify (i) any statement, warranty or representation made in
connection with this Agreement or any Borrowing hereunder or in
connection with any of the other Financing Documents; (ii) the
performance or observance of any of the covenants or agreements of the
Borrower herein or in any of the other Financing Documents; (iii) the
satisfaction of any condition specified in Article 3 or in any of the
other Financing Documents, except receipt of items required to be
delivered to the Administrative Agent; (iv) the validity,
effectiveness or genuineness of any of the Financing Documents or any
other instrument or writing furnished in connection herewith; or (v)
the existence, genuineness or value of any of the Collateral or the
validity, perfection, priority or enforceability of the Security
Interests. The Administrative Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement,
or other writing (which may be a bank wire, telecopy or similar
writing) believed by it to be genuine or to be signed by the proper
party or parties.
SECTION 7.6. Indemnification. Each Lender shall, ratably in
---------------
accordance with its Commitment, indemnify the Administrative Agent,
its affiliates and their respective directors, officers, agents and
employees (to the extent not reimbursed by the Borrower) against any
cost, expense (including counsel fees and disbursements), claim,
demand, action, loss or liability (except such as result from such
indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with the Financing
Documents or any action taken or omitted by such indemnitees
hereunder.
SECTION 7.7. Credit Decision. Each Lender acknowledges that
---------------
it has, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges
that it will, independently and without reliance upon the
Administrative 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 any action under
any of the Financing Documents.
53
SECTION 7.8. Successor Administrative Agent. The
------------------------------
Administrative Agent may resign at any time by giving written notice
thereof to the Lenders and the Borrower. Upon any such resignation,
the Required Lenders shall have the right, after consultation with the
Borrower, to appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30
days after the retiring Administrative Agent gives notice of
resignation, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent, which shall be
a commercial bank organized or licensed under the laws of the United
States of America or of any State thereof and having a combined
capital and surplus of at least $100,000,000. Upon the acceptance of
its appointment as Administrative Agent hereunder by a successor
Administrative Agent and not before, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of this
Article shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.1. Basis for Determining Interest Rate Inadequate
or Unfair. If on or prior to the first day of any Interest Period for
any CD Loan or Euro-Dollar Loan:
(a) the Administrative Agent is advised by the Reference
Lenders that deposits in Dollars (in the applicable amounts)
are not being offered to the Reference Banks in the relevant
market for such Interest Period, or
(b) Lenders having 50% or more of the aggregate
principal amount of the affected Loans advise the
Administrative Agent that the Adjusted CD Rate or the
Adjusted London Interbank Offered Rate, as the case may be,
as determined by the Administrative Agent will not adequately
and fairly reflect the cost to such Lenders of funding their
CD Loans or Euro-Dollar Loans, as the case may be, for such
Interest Period,
54
the Administrative Agent shall forthwith give notice thereof
to the Borrower and the Lenders, whereupon until the Administrative
Agent notifies the Borrower that the circumstances giving rise to such
suspension no longer exist, (i) the obligations of the Lenders to make
CD Loans or Euro-Dollar Loans, as the case may be, or to continue or
convert outstanding Loans as or into CD Loans or Euro-Dollar Loans, as
the case may be, shall be suspended and (ii) the Borrower shall repay
in full the then outstanding principal amount of each CD Loan or
Euro-Dollar Loan, as the case may be, together with accrued interest
thereon, on the last day of the then current Interest Period
applicable to such Loan. Concurrently with repaying each such Fixed
Rate Loan of each Lender pursuant to this Section, the Borrower shall
borrow a Base Rate Loan in an equal principal amount from such Lender,
and such Lender shall make such a Base Rate Loan, unless the Borrower
notifies the Administrative Agent at least two Domestic Business Days
before the date of such repayment that it elects not to borrow any
Base Rate Loans on such date. Unless the Borrower notifies the
Administrative Agent at least two Domestic Business Days before the
date of any Fixed Rate Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such date, such
Borrowing shall instead be made as a Base Rate Borrowing.
SECTION 8.2. Illegality. If, after the date of this
----------
Agreement, the adoption of any applicable law, rule or regulation, or
any change in any applicable law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender
(or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible
for any Lender (or its Euro-Dollar Lending Office) to make, maintain
or fund its Euro-Dollar Loans and such Lender shall so notify the
Administrative Agent, the Administrative Agent shall forthwith give
notice thereof to the other Lenders and the Borrower, whereupon until
such Lender notifies the Borrower and the Administrative Agent that
the circumstances giving rise to such suspension no longer exist, the
obligation of such Lender to make Euro-Dollar Loans, or to convert
outstanding Loans into Euro-Dollar Loans, shall be suspended. Before
giving any notice to the Administrative Agent pursuant to this
Section, such Lender shall designate a different Euro-Dollar Lending
Office if such designation will avoid the need for giving such notice
and will not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender. If such Lender shall determine that
it may not lawfully continue to maintain and fund any of its
outstanding Euro-Dollar Loans to maturity and shall so specify in such
notice, the Borrower shall immediately repay in full the then
outstanding principal amount of each such Euro-Dollar Loan, together
with accrued interest thereon. Concurrently with repaying each such
Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in an
equal principal amount from such Lender (on which interest and
principal shall be payable contemporaneously with the related
Euro-Dollar Loans of the other Lenders), and such Lender shall make
such a Base Rate Loan.
SECTION 8.3. Increased Cost and Reduced Return. (a) If
---------------------------------
after the date hereof, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation,
or any change in the interpretation or
55
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its Applicable Lending
Office) with any request or directive (whether or not having the force
of law) of any such authority, central bank or comparable agency shall
impose, modify or deem applicable any reserve (including, without
limitation, any such requirement imposed by the Board of Governors of
the Federal Reserve System, but excluding (i) with respect to any CD
Loan any such requirement included in the applicable Domestic Reserve
Percentage and (ii) with respect to any Euro-Dollar Loan any such
requirement included in the applicable Euro-Dollar Reserve
Percentage), special deposit, insurance assessment (excluding, with
respect to any CD Loan, any such requirement reflected in the
applicable Assessment Rate) or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender
(or its Applicable Lending Office) or shall impose on any Lender (or
its Applicable Lending Office) or on the United States market for
certificates of deposit or the London interbank market any other
condition affecting its Fixed Rate Loans, its Note or its obligation
to make Fixed Rate Loans and the result of any of the foregoing is to
increase the cost to such Lender (or its Applicable Lending Office) of
making or maintaining any Fixed Rate Loan, or to reduce the amount of
any sum received or receivable by such Lender (or its Applicable
Lending Office) under this Agreement or under its Note with respect
thereto, by an amount deemed by such Lender to be material, then,
within 15 days after demand by such Lender (with a copy to the
Administrative Agent), the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such
increased cost or reduction.
(b) If, after the date hereof, the adoption of any applicable
law, rule or regulation, or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or
compliance by the L/C Issuing Bank or any Lender with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall either (i) impose,
modify or deem applicable any reserve, special deposit or similar
requirement (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System)
against letters of credit issued by the L/C Issuing Bank or any
Lender, or participations in letters of credit by any Lender or (ii)
impose on the L/C Issuing Bank or any Lender any other condition
(including, without limitation, any assessment for Federal deposit
insurance) regarding any Letter of Credit or the L/C Issuing Bank's or
any Lender's obligation to issue, maintain or fund any Letter of
Credit, and the result of any event referred to in clause (i) or (ii)
of this subsection (b) is to increase the cost to the L/C Issuing Bank
or such Lender of issuing, maintaining, participating in or funding
any Letter of Credit (which increase in cost shall be determined on
the basis of the L/C Issuing Bank's or such Lender's reasonable
allocation of the aggregate of such cost increases resulting from such
events), then, within 15 days after demand by the L/C Issuing Bank or
such Lender (with a copy to the Administrative Agent), the Borrower
shall pay to the L/C Issuing Bank or such Lender such additional
amount or amounts as will compensate the L/C Issuing Bank or such
Lender for such increased cost.
56
(c) If any Lender or L/C Issuing Bank shall have determined
that, after the date hereof, the adoption of any applicable law, rule
or regulation regarding capital adequacy, or any change in any such
law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender or L/C Issuing Bank (or its
Applicable Lending Office) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on capital of such Lender or L/C
Issuing Bank (or its Parent) as a consequence of such Lender's or L/C
Issuing Bank's obligations hereunder to a level below that which such
Lender or L/C Issuing Bank (or its Parent) could have achieved but for
such adoption, change, request or directive (taking into consideration
its policies with respect to capital adequacy) by an amount deemed by
such Lender or L/C Issuing Bank to be material, then from time to
time, within 15 days after demand by such Lender or L/C Issuing Bank
(with a copy to the Administrative Agent), the Borrower shall pay to
such Lender or L/C Issuing Bank such additional amount or amounts as
will compensate such Lender or L/C Issuing Bank (or its Parent) for
such reduction.
(d) Each L/C Issuing Bank and each Lender will promptly
notify the Borrower and the Administrative Agent of any event of which
it has knowledge, occurring after the date hereof, which will entitle
such Lender or L/C Issuing Bank to compensation pursuant to this
Section and will designate a different Lending Office if such
designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of such Lender, be
otherwise disadvantageous to such Lender. A certificate of an L/C
Issuing Bank or a Lender claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error. In
determining such amount, such L/C Issuing Bank or Lender may use any
reasonable averaging and attribution methods. (e) If any Lender
demands compensation under this Section with respect to a Fixed Rate
Loan, the Borrower may at any time, upon at least five Euro-Dollar
Business Days' prior notice to such Lender through the Administrative
Agent, repay in full, without premium (other than as provided in
Section 2.14) or penalty, the then outstanding CD Loans or Euro-Dollar
Loans, as the case may be, of such Lender, together with interest
accrued thereon to the date of repayment. Concurrently with repaying
such Fixed Rate Loans of such Lender, the Borrower shall borrow from
such Lender a Base Rate Loan in an amount equal to the aggregate
principal amount of such Fixed Rate Loans, and such Lender shall make
such a Base Rate Loan.
SECTION 8.4. Taxes. (a) For the purposes of this Section ,
-----
the following terms have the following meanings:
"Taxes" means any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings
imposed with respect to or imposed on any payment by the
Borrower pursuant to this Agreement or under any Note, any
penalties, fines, additions to tax or interest thereon, and
the reasonable costs of defending against the same
57
excluding (i) in the case of each Lender, each L/C Issuing
Bank and the Agents, taxes imposed on its net income, and
franchise, capital or doing business taxes (other than taxes
imposed by a jurisdiction solely as a result of the
Borrower's connection with such jurisdiction), (ii) in the
case of each Lender or L/C Issuing Bank, any United States
withholding tax imposed on such payments except to the extent
of any United States withholding tax imposed as a result of a
change of law (including a change in any tax treaty to which
the United States is a party) after the later of the date of
this Agreement and the date such person shall become a Lender
or L/C Issuing Bank and (iii) in the case of each Lender,
each L/C Issuing Bank and the Agents, any taxes imposed by a
jurisdiction under the laws of which such Lender, L/C Issuing
Bank or the Agents (as the case may be) is organized or in
which its principal executive office is located or, in the
case of each Lender or L/C Issuing Bank, in which its
Applicable Lending Office is located.
"Other Taxes" means any present or future stamp or
documentary taxes and any other excise or property taxes, or
similar charges or levies, which arise from any payment made
pursuant to this Agreement or from the execution or delivery
of, or otherwise with respect to, this Agreement, the other
Financing Documents, and any penalties, fines, additions to
tax or interest thereon, and the reasonable costs and
expenses in defending against the same, whether arising by
reason of the acts to be performed by the Borrower hereunder
or imposed against the Borrower, any Affiliate of the
Borrower, the property involved or otherwise.
(b) Any and all payments by the Borrower to or for the
account of any Lender, any L/C Issuing Bank or the Agents hereunder or
under any Note shall be made without deduction for any Taxes or Other
Taxes; provided that, if the Borrower shall be required by law to
withhold or deduct any Taxes or Other Taxes from any such payments,
(i) the sum payable shall be increased as necessary so that after
making all required withholdings or deductions (including withholdings
or deductions applicable to additional sums payable under this
Section) such Lender, L/C Issuing Bank or the Agents (as the case may
be) receives an amount equal to the sum it would have received had no
such withholdings or deductions been made, (ii) the Borrower shall
make such withholdings or deductions, (iii) the Borrower shall pay the
full amount withheld or deducted to the relevant taxation authority or
other authority in accordance with applicable law and (iv) the
Borrower shall furnish to the Administrative Agent, at its address
referred to in Section 9.1, the original or a certified copy of a
receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Lender, each L/C
Issuing Bank and each Agent for the full amount of Taxes or Other
Taxes (including, without limitation, any Taxes or Other Taxes imposed
or asserted by any jurisdiction on amounts payable under this Section
8.4) paid by such Lender, L/C Issuing Bank or such Agent (as the case
may be). This indemnification shall be paid within 15 days after such
Lender, L/C Issuing Bank or such Agent (as the case may be) makes
written demand therefor; provided that the Borrower shall not
58
be required to make any payment pursuant to this Section 8.4(c) more
than five days prior to the due date of the Taxes or Other Taxes
indemnified against hereunder. If a Lender, L/C Issuing Bank or Agent
(as the case may be) shall become aware that it is entitled to claim a
refund (or refund in the form of a credit) (each a "Refund") from a
taxing authority of such Taxes or Other Taxes for which it has been
indemnified by the Borrower or with respect to which the Borrower has
paid additional amounts, pursuant to this Section 8.4, it shall
promptly notify the Borrower of the availability of such Refund and
shall, or if it shall be furnished by the Borrower with an opinion of
counsel selected by the Borrower and reasonably acceptable to it to
the effect that there is a strong likelihood such a Refund is
obtainable it shall, within 15 days after receipt of a written request
by the Borrower, make a claim to such taxing authority for such Refund
at the Borrower's expense if the expected financial costs to such
Lender, L/C Issuing Bank or Agent (as the case may be) of making such
claim will not be substantial taking into account any reimbursement of
such costs by the Borrower; provided that nothing in this subsection
(c) shall be construed to require any Lender, L/C Issuing Bank or
Agent to institute any administrative proceeding (other than the
filing of a claim for any such Refund) or judicial proceeding to
obtain any such Refund. If a Lender, L/C Issuing Bank or Agent (as
the case may be) receives a Refund from a taxing authority of any such
Taxes or Other Taxes for which it has been indemnified by the Borrower
or with respect to which the Borrower has paid additional amounts,
pursuant to this Section 8.4, it shall promptly pay to the Borrower
the amount so received (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section
8.4 with respect to the Taxes or Other Taxes giving rise to such
Refund), net of all reasonable out-of-pocket expenses (including the
net amount of taxes, if any, imposed on such Lender, L/C Issuing Bank
or such Agent with respect to such Refund and the making of such
payment) of such Lender, L/C Issuing Bank or such Agent, and without
interest (other than interest paid by the relevant taxing authority
with respect to such Refund); provided that the Borrower upon the
request of such Lender, L/C Issuing Bank or such Agent, agrees to
repay the amount paid over to the Borrower (plus penalties, interest
or other charges) to such Lender, L/C Issuing Bank or such Agent in
the event such Lender, L/C Issuing Bank or such Agent is required to
repay such Refund to such taxing authority. Nothing contained in this
Section 8.4 shall require any Lender, L/C Issuing Bank or Agent to
make available any of its tax returns (or any other information that
it deems to be confidential or proprietary).
(d) Each Lender or L/C Issuing Bank organized under the laws
of a jurisdiction outside the United States, on or prior to the date
of its execution and delivery of this Agreement in the case of each
Lender or L/C Issuing Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender or L/C Issuing Bank
in the case of each other Lender or L/C Issuing Bank, and from time to
time thereafter if requested in writing by the Borrower (but only so
long as such Lender or L/C Issuing Bank remains lawfully able to do
so), shall provide the Borrower and the Administrative Agent with
Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying
that such Lender or L/C Issuing Bank is entitled to benefits under an
income tax treaty to which the United States is a party which exempts
the Lender or the L/C Issuing Bank from United States withholding tax
or reduces the rate of withholding tax on payments of interest for
59
the account of such Lender or L/C Issuing Bank or certifying that the
income receivable pursuant to this Agreement is effectively connected
with the conduct of a trade or business in the United States.
(e) For any period with respect to which a Lender or L/C
Issuing Bank has failed to provide the Borrower or the Administrative
Agent with the appropriate form pursuant to Section 8.4(d) (unless
such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which such form originally was required to
be provided), such Lender or L/C Issuing Bank shall not be entitled to
indemnification under Section 8.4(b) or (c) with respect to Taxes
imposed by the United States; provided that if a Lender or L/C Issuing
Bank, which is otherwise exempt from or subject to a reduced rate of
withholding tax, becomes subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps
as such Lender or L/C Issuing Bank shall reasonably request to assist
such Lender or L/C Issuing Bank to recover such Taxes.
(f) Notwithstanding anything to the contrary in this Section
8.4, if the Internal Revenue Service determines that any Lender, L/C
Issuing Bank or Agent is a conduit entity participating in a conduit
financing arrangement as defined in Section 7701(1) of the Internal
Revenue Code and any current or future regulation thereunder (a
"Conduit Financing Arrangement") with respect to the Loans or the
Letters of Credit, without the involvement of the Borrower or any of
its Affiliates, then the Borrower shall have no obligation under this
Section 8.4 to pay additional amounts or indemnify any Lender, L/C
Issuing Bank or Agent for any Taxes or Other Taxes to the extent the
amount of such additional amounts, Taxes or Other Taxes exceeds the
amount that would otherwise have been payable, withheld or deducted
had the Internal Revenue Service not made such a determination. Each
Lender, L/C Issuing Bank and Agent hereby represents that it is not a
conduit entity participating in a Conduit Financing Arrangement with
respect to the Loans or the Letters of Credit.
(g) If the Borrower is required to pay any indemnification or
additional amounts to, with respect to or for the account of any
Lender, L/C Issuing Bank or Agent pursuant to this Article, then such
Borrower, L/C Issuing Bank or Agent will change the jurisdiction of
its Applicable Lending office or take other appropriate steps if, in
the judgment of such Lender, L/C Issuing Bank or Agent, such change or
steps (i) will eliminate or reduce any such indemnification or
additional payment which may thereafter accrue and (ii) is not
otherwise disadvantageous to such Lender, L/C Issuing Bank or Agent.
If such Lender, L/C Issuing Bank or Agent does not change its
Applicable Lending Office or take other appropriate steps, the
Borrower may replace such Lender, L/C Issuing Bank or Agent; provided
that the Borrower has paid to such Lender, L/C Issuing Bank or Agent
any amounts accrued under this Section 8.4.
SECTION 8.5. Base Rate Loans Substituted for Affected Fixed
----------------------------------------------
Rate Loans. If (i) the obligation of any Lender to make, or convert
----------
outstanding Loans to, Euro-Dollar Loans has been suspended pursuant to
Section 8.2 or (ii) any Lender has demanded compensation under Section
8.3 or 8.4 with respect to its CD Loans or Euro-Dollar Loans and the
Borrower shall, by at least five Euro-Dollar Business Days' prior
notice to such Lender through the
60
Administrative Agent, have elected that the provisions of this Section
shall apply to such Lender, then, unless and until such Lender
notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer exist:
(a) all Loans which would otherwise be made by such Lender as
(or continued as or converted into) CD Loans or Euro-Dollar Loans, as
the case may be, shall instead be Base Rate Loans (on which interest
and principal shall be payable contemporaneously with the related
Fixed Rate Loans of the other Lenders); and
(b) after each of its CD Loans or Euro-Dollar Loans, as the
case may be, has been repaid (or converted to a Base Rate Loan), all
payments of principal which would otherwise be applied to repay such
Fixed Rate Loans shall be applied to repay its Base Rate Loans
instead.
If such Lender notifies the Borrower that the circumstances
giving rise to such notice no longer apply, the Borrower shall have
the option to borrow a CD Loan or a Euro-Dollar Loan, as the case may
be, from such Lender on the first day of the next succeeding Interest
Period applicable to each related Borrowing in the amount of the Fixed
Rate Loan which would have been outstanding from such Lender as part
of such Borrowing if the provisions of Section 8.2, 8.3 or 8.4 had
never applied, and concurrently with each such Borrowing shall repay
an equal principal amount of such Lender's outstanding Base Rate
Loans.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1. Notices. All notices, requests and other
-------
communications to any party hereunder shall be in writing (including
bank wire, facsimile transmission or similar writing) and shall be
given to such party: (a) in the case of the Borrower or either Agent,
at its address or facsimile number set forth on the signature pages
hereof, (b) in the case of any L/C Issuing Bank or any Lender, at its
address or facsimile number set forth in its Administrative
Questionnaire or (c) in the case of any party, such other address or
facsimile number as such party may hereafter specify for the purpose
by notice to the Administrative Agent and the Borrower. Each such
notice, request or other communication shall be effective (i) if given
by facsimile transmission, when transmitted to the facsimile number
specified in this Section and confirmation of receipt is received,
(ii) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid
or
61
(iii) if given by any other means, when delivered at the address
specified in this Section; provided that notices to the Administrative
Agent under Article 2 or Article 8" shall not be effective until
received.
SECTION 9.2. No Waivers. No failure or delay by either
----------
Agent, any L/C Issuing Bank or any Lender in exercising any right,
power or privilege hereunder or under any other Financing Document
shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and
remedies of the Agents, the L/C Issuing Banks and the Lenders under
the Financing Documents are cumulative and not exclusive of any rights
or remedies which the Agents, the L/C Issuing Bank and the Lenders
would otherwise have.
SECTION 9.3. Expenses; Indemnification. (a) The Borrower
-------------------------
shall pay (i) all reasonable out-of-pocket expenses of the Agents,
including fees and disbursements of special counsel for the Agents, in
connection with the preparation and interpretation of this Agreement
and the other Financing Documents, any waiver or consent hereunder or
thereunder or any amendment hereof or thereof, any Default or alleged
Default hereunder or any Increased Coverage Event or alleged Increased
Coverage Event and (ii) if an Event of Default occurs, all reasonable
out-of-pocket expenses incurred by the Agents, each L/C Issuing Bank
and each Lender, including (without duplication) the fees and
disbursements of outside counsel and the allocated cost of inside
counsel, in connection with such Event of Default and collection,
bankruptcy, insolvency and other enforcement proceedings resulting
therefrom, including out-of-pocket expenses incurred in enforcing any
of the Financing Documents.
(b) The Borrower shall pay the Collateral Agent upon demand
for all amounts arising out of (i) the preparation of Collateral
Reports, if any, and (ii) the preparation of analyses, if any, of the
current market value of the Inventories included in the Borrowing Base
as of the end of each quarter of the Borrower's fiscal year.
(c) The Borrower agrees to indemnify and hold harmless, the
Agents, the L/C Issuing Banks and each Lender and each of their
respective directors, officers, affiliates, shareholders, employees,
agents and each legal entity, if any, who controls any such Person
(each, an "Indemnitee") forthwith on demand, from and against any and
all losses, claims, damages, liabilities, costs and expenses
(including, without limitation, all reasonable fees and disbursements
of counsel, expenses incurred by their respective credit recovery
groups, expenses of settlement or litigation or preparation therefor
and the reasonable expenses of investigation by engineers,
environmental consultants and similar technical personnel) which any
Indemnitee may incur or which may be asserted against any Indemnitee
by any Person in connection with any investigative, administrative or
judicial notice or proceeding (whether or not such Indemnitee shall be
a designated party thereto) relating to, arising out of or in
connection with (i) any of the Financing Documents or any actual or
proposed use of Letters of Credit issued pursuant hereto or of
proceeds of Loans hereunder or (ii) any and all Environmental
Liabilities; provided that no Indemnitee shall have the right to be
indemnified hereunder for (x) its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction, (y) any
breach of its obligations
62
hereunder or (z) any liabilities or expenses for which the Borrower is
obligated to make any payment to such Indemnitee under any other
provision of this Agreement or any of the other Financing Documents;
and provided further that the Borrower shall not be liable for any
settlements entered into by any Indemnitee without its consent.
Without limiting the generality of the foregoing, the Borrower hereby
waives all rights for contribution or any other rights of recovery
with respect to liabilities, losses, damages, costs and expenses
arising under or related to Environmental Laws that it might have by
statute or otherwise against any Lender by reason of its being a
signatory Lender under this Agreement.
Promptly after receipt by an Indemnitee of notice of the
commencement of any action, such Indemnitee shall, if a claim in
respect thereof is to be made against the Borrower under this
subsection (c), notify the Borrower of the commencement thereof. In
case any such action is brought against any Indemnitee and it notifies
the Borrower of the commencement thereof, the Borrower shall be
entitled to participate therein and, to the extent that it may wish,
to assume the defense thereof, with counsel reasonably satisfactory to
such Indemnitee, and after notice from the Borrower to such Indemnitee
of its election so to assume the defense thereof, the Borrower shall
not be liable to such Indemnitee under this subsection (c) for any
legal or other expenses subsequently incurred by such Indemnitee in
connection with the defense thereof other than reasonable costs of
investigation; provided that if the named parties in any such action
include both the Borrower and any Indemnitee and representation of
both parties by the same counsel would be inappropriate due to actual
or potential differing interests between them then the Indemnitees
shall have the right to separate counsel (the fees and expenses of
which shall be at the expense of the Borrower) and the Borrower shall
not have the right to assume the defense of any such action. It is
understood that the Borrower shall not in connection with any action
or related actions be liable for the fees and expenses of more than
one separate firm for all Indemnitees.
SECTION 9.4. Sharing of Set-Offs. Each Lender agrees that
-------------------
if it shall, by exercising any right of set-off or counterclaim or
otherwise, receive payment of a proportion of the aggregate amount
then due to it with respect to the principal of and interest on the
Notes held by it and its participation in the Reimbursement
Obligations and interest (if any) thereon or Commitment or Letter of
Credit Participation Fees (collectively, its "Relevant Obligations")
which is greater than the proportion received by any other Lender in
respect of the Relevant Obligations of such other Lender, the Lender
receiving such proportionately greater payment shall purchase such
participations in the Relevant Obligations held by or owing to the
other Lenders, and such other adjustments shall be made, as may be
required so that all such payments with respect to the Relevant
Obligations of the Lenders shall be shared by the Lenders pro rata;
provided that nothing in this Section shall impair the right of any
Lender to exercise any right of set-off or counterclaim it may have
and to apply the amount subject to such exercise to the payment of
indebtedness of the Borrower other than its Relevant Obligations. The
Borrower agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in a Note or Letter
of Credit, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and other
rights with respect to such
63
participation as fully as if such holder of a participation were a
direct creditor of the Borrower in the amount of such participation.
SECTION 9.5. Amendments and Waivers. Any provision of this
----------------------
Agreement or the Notes may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and
the Required Lenders (and, if the rights or duties of either Agent or
any L/C Issuing Bank are affected thereby, by such Person); provided
that no such amendment or waiver shall, unless signed by all the
Lenders, (i) increase or decrease the Commitment of any Lender (except
for a ratable decrease in the Commitments of all Lenders) or subject
any Lender to any additional obligation, except as provided in Section
9.6, (ii) reduce the principal of or rate of interest on any Loan or
any Fees hereunder, (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any Fees hereunder, (iv)
change the definition of "Borrowing Base", "Eligible Inventories",
"Finished and Semifinished Inventories", "Inventories", "Raw Materials
Inventories", "Applicable Percentage", "Secured Principal Amount" or
change Section 2.12, (v) extend the Termination Date or (vi) change
the percentage of the Commitments or of the aggregate unpaid principal
amount of the Notes, or the number of Lenders, which shall be required
for the Lenders or any of them to take any action under this Section
or any other provision of this Agreement.
SECTION 9.6. Successors and Assigns. (a) The provisions of
----------------------
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except
that the Borrower may not assign or otherwise transfer any of its
rights under this Agreement without the prior written consent of all
Lenders. (b) Any Lender may at any time grant to one or more lenders
or other institutions (each a "Participant") participating interests
in its Commitment or any or all of its Loans. In the event of any
such grant by a Lender of a participating interest to a Participant,
whether or not upon notice to the Borrower and the Administrative
Agent, such Lender shall remain responsible for the performance of its
obligations hereunder, and the Borrower and the Administrative Agent
shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement. Any agreement pursuant to which any Lender may grant such
a participating interest shall provide that such Lender shall retain
the sole right and responsibility to enforce the obligations of the
Borrower hereunder including, without limitation, the right to approve
any amendment, modification or waiver of any provision of this
Agreement; provided that such participation agreement may provide that
such Lender will not agree to any modification, amendment or waiver of
this Agreement described in clause (i), (ii), (iii) or (v) of Section
9.5# without the consent of the Participant. The Borrower agrees that
each Participant shall, to the extent provided in its participation
agreement, be entitled to the benefits of Article 8" with respect to
its participating interest. An assignment or other transfer which is
not permitted by subsection (c) or (e) below shall be given effect for
purposes of this Agreement only to the extent of a participating
interest granted in accordance with this subsection (b). In the event
of any such grant by a Lender of a participating interest to a
Participant, the Lender shall give notice of such participation to the
Borrower and the Administrative Agent.
64
(c) Any Lender may at any time assign to one or more lenders,
institutions or Persons (each an "Assignee") all, or a proportionate
part of all (such portion to comprise a Commitment and Receivables
Commitment of not less than $5,000,000 and to be for an equal
percentage of such Lender's Commitment hereunder and its Receivables
Commitment under the Receivables Purchase Agreement and after giving
effect to such assignment, the aggregate Commitment and Receivables
Commitment retained by the assigning Lender shall be in an aggregate
amount of not less than $5,000,000) of its rights and obligations
under this Agreement and the Receivables Purchase Agreement and such
Assignee shall assume such rights and obligations, pursuant to an
Assignment and Assumption Agreement in substantially the form of
Exhibit J hereto executed by such Assignee and such transferor Lender,
with (and subject to) the subscribed consent of the Borrower, which
shall not be unreasonably withheld, the Administrative Agent and the
L/C Issuing Banks; provided that if (i) an Assignee is a creditworthy
affiliate of such transferor Lender or was a Lender immediately prior
to such assignment, or (ii) an Event of Default has occurred and is
continuing and the Commitments have been terminated in their entirety,
and, such Assignee is not substantially engaged in the manufacture or
sale of steel or steel products, either directly or through a
Subsidiary or Affiliate then, in each such case, no consent of the
Borrower shall be required. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Lender of
an amount equal to the purchase price agreed between such transferor
Lender and such Assignee, such Assignee shall be a Lender party to
this Agreement and shall have all the rights and obligations of a
Lender with a Commitment as set forth in such instrument of
assumption, and the transferor Lender shall be released from its
obligations hereunder to a corresponding extent, and no further
consent or action by any party shall be required; provided that, if at
the time of such assignment, any Syndicated Letter of Credit is then
outstanding, then the transferor Lender, Morgan Guaranty, in its
capacity as L/C Issuing Bank, the Administrative Agent and the
Borrower shall make appropriate arrangements so that (i) a new
Syndicated Letter of Credit (a "Replacement Letter of Credit") is
issued by Morgan Guaranty, in its capacity as L/C Issuing Bank,
providing that the Assignee and the transferor Lender, to the extent
of its retained Commitment hereunder, if any, are severally obligated
to the beneficiary to pay any drawings thereunder ratably in
proportion to their respective Commitments (their respective
"Percentages"), or (ii) in the event that a Replacement Letter of
Credit is not issued, the Assignee shall agree in writing with the
transferor Lender and the Borrower that, upon any draw under a
Syndicated Letter of Credit, the Assignee shall pay to the transferor
Lender the Assignee's Percentage of such draw. Upon the consummation
of any assignment pursuant to this subsection (c), the transferor
Lender, the Administrative Agent and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to
the Assignee. In connection with any such assignment, the transferor
Lender shall pay to the Administrative Agent an administrative fee for
processing such assignment in the amount of $2,500. If the Assignee
is not incorporated under the laws of the United States or a state
thereof, it shall deliver to the Borrower and the Administrative Agent
certification as to exemption from deduction or withholding of any
United States Federal income taxes in accordance with Section 8.4.
Each Lender may furnish any confidential information concerning the
Borrower in the possession of such Lender from time to time to
Assignees and Participants (including prospective Assignees and
Participants)
65
which have agreed in a writing delivered to the Borrower to be bound
by the provisions of Section 9.8 hereof.
(d) If any Reference Bank assigns its Notes to an
unaffiliated institution, the Administrative Agent shall in
consultation with the Borrower and with the consent of the Required
Lenders, appoint another bank to act as a Reference Bank hereunder.
(e) Any Lender may at any time assign all or any portion of
its rights under this Agreement and its Note to a Federal Reserve
Bank. No such assignment shall release the transferor Lender from its
obligations hereunder.
(f) No Assignee, Participant or other transferee of any
Lender's rights shall be entitled to receive any greater payment under
Section 8.3 or 8.4 than such Lender would have been entitled to
receive with respect to the rights transferred, unless such transfer
is made with the Borrower's prior written consent or by reason of the
provisions of Section 8.2, 8.3 or 8.4 requiring such Lender to
designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
SECTION 9.7. Margin Stock Collateral. Each of the Lenders
-----------------------
represents to the Administrative Agent and each of the other Lenders
that it in good faith is not relying upon any "margin stock" (as
defined in Regulation U) as collateral in the extension or maintenance
of the credit provided for in this Agreement.
SECTION 9.8. Confidentiality. The Agents and each Lender
---------------
agree for the benefit of the Borrower to keep confidential any
proprietary or financial information obtained by the Agents or such
Lender, as the case may be, based on a review of the books and records
of the Borrower or any Subsidiary pursuant to Section 5.4 and any
other information to the extent such information has been stated by
the Borrower to be confidential; provided that nothing herein shall
prevent the Agents or any Lender from disclosing such information (i)
to the Agents or any other Lender in connection with the transactions
contemplated by the Financing Documents, (ii) to its officers,
directors, employees, agents, attorneys and accountants who have a
need to know such information in accordance with customary banking
practices and to any of its Affiliates who need to know such
information in connection with administering the transactions
contemplated by the Financing Documents and, in any case, who receive
such information having been made aware of the restrictions set forth
in this Section, (iii) upon the order of any court or administrative
agency, (iv) upon the request or demand of any regulatory agency or
authority having jurisdiction over such party, (v) which has been
publicly disclosed, (vi) which has been obtained from any Person other
than the Borrower and its Affiliates; provided that such Person is not
known to it to be bound by a confidentiality agreement with the
Borrower or its Affiliates or known to it to be otherwise prohibited
from transmitting the information to it by a contractual, legal or
fiduciary obligation, (vii) in connection with the exercise of any
remedy hereunder or under any of the other Financing Documents, (viii)
to S&P or (ix) to any prospective Assignee or Participant which has
agreed in a writing delivered to the Borrower to be bound by this
Section.
66
SECTION 9.9. Governing Law; Submission to Jurisdiction.
-----------------------------------------
This Agreement, each Note and each Letter of Credit (except Letters of
Credit to the extent therein stated to be governed by the Uniform
Customs and Practice for Documentary Credits issued by the
International Chamber of Commerce) shall be governed by and construed
in accordance with the laws of the State of New York. The Borrower
hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New
York State court sitting in New York City for purposes of all legal
proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Borrower irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought
in such a court has been brought in an inconvenient forum.
SECTION 9.10. Counterparts; Integration; Effectiveness.
----------------------------------------
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement
constitutes the entire agreement and understanding among the parties
hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof. This
Agreement shall become effective upon receipt by the Administrative
Agent of counterparts hereof signed by each of the parties hereto (or,
in the case of any party as to which an executed counterpart shall not
have been received, receipt by the Administrative Agent in form
satisfactory to it of telegraphic, facsimile or other written
confirmation from such party of execution of a counterpart hereof by
such party).
SECTION 9.11. Termination of Existing Credit Agreement.
----------------------------------------
Each party hereto agrees that effective as of the Closing Date the
Existing Credit Agreement and Existing Security Agreement shall
terminate (and hereby waives any requirement of separate notice of
such termination) and the security interests created by the Existing
Security Agreement shall be released; provided that expense and
indemnity provisions (but not letter of credit reimbursement
obligations) contained in the Existing Credit Agreement shall survive
in respect of periods prior to the Closing Date. The Lenders party
hereto expressly instruct Morgan Guaranty and/or J.P. Morgan Delaware
to take all actions necessary to release the security interests under
the Existing Credit Agreement effective as of the Closing Date.
SECTION 9.12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES
--------------------
HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
67
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers
as of the day and year first above written.
BETHLEHEM STEEL CORPORATION
By /s/ Gary L. Millenbruch
---------------------------------
Title: Executive Vice President,
Chief Financial Officer and
Treasurer
1170 Eighth Avenue
Bethlehem, PA 18016
Telephone: 610-694-4581
Facsimile: 610-694-3356
Attention: Edmund P. Reybitz
68
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Administrative Agent
By /s/ Laura Reim
---------------------------------
Title: Vice President
60 Wall Street
New York, NY 10260
Telephone: 212-648-6793
Facsimile: 212-648-5336
Attention: Laura E. Reim
J. P. MORGAN DELAWARE,
as Structuring and Collateral
Agent
By /s/ Robert S. Jones
---------------------------------
Title: Associate
902 Market Street
Wilmington, DE 19801
Telephone: 302-651-2402
Facsimile: 302-652-7416
Attention: Robert J. Henchey
69
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as L/C Issuing Bank
By /s/ Laura Reim
---------------------------------
Title: Vice President
CHEMICAL BANK,
as L/C Issuing Bank
By /s/ James H. Ramage
---------------------------------
Title: Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.,
as L/C Issuing Bank
By /s/ Noboru Kubota
---------------------------------
Title: Deputy General Manager
70
LENDERS:
Commitment: $34,000,000 J.P. MORGAN DELAWARE
By /s/ Robert S. Jones
---------------------------------
Title: Associate
Commitment: $26,000,000 CHEMICAL BANK
By /s/ James H. Ramage
---------------------------------
Title: Vice President
Commitment: $26,000,000 THE LONG-TERM CREDIT BANK
OF JAPAN, LTD.
By /s/ Noboru Kubota
---------------------------------
Title: Deputy General Manager
Commitment: $16,000,000 THE BANK OF NEW YORK
By /s/ Peter H. Abdill
---------------------------------
Title: Vice President
71
Commitment: $16,000,000 NATIONSBANK, N.A.
(CAROLINAS)
By /s/ Michael D. Monte
---------------------------------
Title: Vice President
72
Commitment: $14,000,000 BANK OF AMERICA ILLINOIS
By /s/ Donald J. Chin
---------------------------------
Title: Authorized Officer
Commitment: $8,000,000 BANK AUSTRIA
AKTIENGESELLSCHAFT
By /s/ Robert Tenhave
---------------------------------
Title: Senior Vice President
By /s/ Amy Rick
---------------------------------
Title: Vice President
Commitment: $8,000,000 CORESTATES BANK, N.A.
By /s/ Joseph M. Finley
---------------------------------
Title: Vice President
Commitment: $8,000,000 THE FIRST NATIONAL BANK OF
CHICAGO
By /s/ Amy R. Howatt
---------------------------------
Title: Vice President
73
Commitment: $8,000,000 THE FUJI BANK, LIMITED
By /s/ Yoshihiko Shiotsugu
---------------------------------
Title: Vice President & Manager
Commitment: $8,000,000 THE INDUSTRIAL BANK OF
JAPAN, LIMITED
By /s/ Robert W. Ramage, Jr.
---------------------------------
Title: Senior Vice President
Commitment: $8,000,000 MERIDIAN BANK
By /s/ Barbara T. Lampe
---------------------------------
Title: Vice President
Corporate Banking
Commitment: $8,000,000 THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By /s/ Yoshinori Kawamura
---------------------------------
Title: Joint General Manager
74
Commitment: $6,000,000 FIRST VALLEY BANK
By /s/ David B. Kennedy
---------------------------------
Title: Regional Vice President
75
Commitment: $6,000,000 NBD BANK
By /s/ Nancy L. Russell
---------------------------------
Title: Vice President
TOTAL COMMITMENTS: $200,000,000
76
PRICING SCHEDULE
Each of "Euro-Dollar Margin", "CD Margin", "Base Rate
Margin", "Commitment Fee Rate" and "L/C Fee Rate" means, for any date,
the rates set forth below in the row opposite such term and in the
column corresponding to the "Pricing Level" that applies at such date:
Level I Level II Level III Level IV Level V
CD Margin 1.2 1.52 1.825 2.12 2
25% 5% % 5% .625%
Euro-Dollar 1.1 1.40 1.70% 2.0% 2
Margin 0% % .5%
Base Rate .10 .40% .70% 1.0% 1
Margin % .5%
Commitment .31 .375 .3750 .50%
Fee Rate 25% 0% % 6250%
L/C Fee 1.1 1.40 1.70% 2.0% 2
Rate 0% % %
For purposes of this Schedule, the following terms have the
following meanings:
"Level I Pricing" applies at any date if, at such date, the
Borrower's long-term debt is rated BB+ or higher by S&P and Ba1 or
higher by Moody's.
"Level II Pricing" applies at any date if, at such date, (i)
the Borrower's long-term debt is rated BB or higher by S&P and Ba2 or
higher by Moody's and (ii) Level I Pricing does not apply.
"Level III Pricing" applies at any date if, at such date, (i)
the Borrower's long-term debt is rated BB- or higher by S&P and Ba3 or
higher by Moody's and (ii) neither Level I Pricing nor Level II
Pricing applies.
"Level IV Pricing" applies at any date if, at such date, (i)
the Borrower's long-term debt is rated B+ or higher by S&P and B1 or
higher by Moody's and (ii) none of Level I Pricing, Level II Pricing
and Level III Pricing applies.
77
"Level V Pricing" applies at any date if, at such date, no
other Pricing Level applies.
"Pricing Level" refers to the determination of which of Level
I, Level II, Level III, Level IV or Level V applies at any date.
The credit ratings to be utilized for purposes of this
Schedule are those assigned to the senior unsecured long-term debt
securities of the Borrower without third-party credit enhancement, and
any rating assigned to any other debt security of the Borrower shall
be disregarded. The rating in effect at any date is that in effect at
the close of business on such date.
78
Schedule 1
Existing Letter of Credit
Beneficiary Amount
None
79
Schedule 4.8
Environmental Matters
None
80
EXHIBIT A
NOTE
New York, New York
September 12, 1995
For value received, Bethlehem Steel Corporation, a Delaware
corporation (the "Borrower"), promises to pay to the order of
______________________ (the " Lender"), for the account of its
Applicable Lending Office, the unpaid principal amount of each Loan
made by the Lender to the Borrower pursuant to the Inventory Credit
Agreement referred to below on the maturity date provided for in the
Inventory Credit Agreement and at the other times provided in the
Inventory Credit Agreement. The Borrower promises to pay interest on
the unpaid principal amount of each such Loan on the dates and at the
rate or rates provided for in the Inventory Credit Agreement. All
such payments of principal and interest shall be made in lawful money
of the United States in Federal or other immediately available funds
at the office of Morgan Guaranty Trust Company of New York, 60 Wall
Street, New York, New York.
All Loans made by the Lender, the respective types thereof
and all repayments of the principal thereof shall be recorded by the
Lender and, if the Lender so elects in connection with any transfer or
enforcement hereof, appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding may be
endorsed by the Lender on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof;
provided that the failure of the Lender to make any such recordation
or endorsement shall not affect the obligations of the Borrower
hereunder or under the Inventory Credit Agreement.
1
The Loans evidenced hereby are secured as provided in the
Inventory Security and Pledge Agreement dated as of September 12, 1995
among the Borrower, the Special Purpose Members, J.P. Morgan
Delaware, as Structuring and Collateral Agent and Morgan Guaranty
Trust Company of New York, as Administrative Agent.
This note is one of the Notes referred to in the Inventory
Credit Agreement dated as of September 12, 1995 among the Borrower,
the lenders listed on the signature pages thereof, Morgan Guaranty
Trust Company of New York, as Administrative Agent and J.P. Morgan
Delaware, as Structuring and Collateral Agent (as the same may be
amended from time to time, the "Inventory Credit Agreement"). Terms
defined in the Inventory Credit Agreement are used herein with the
same meanings. Reference is made to the Inventory Credit Agreement
for provisions for the prepayment hereof and the acceleration of the
maturity hereof.
Bethlehem Steel Corporation
By ________________________________
Name:
Title:
2
LOANS AND PAYMENTS OF PRINCIPAL
____________________________________________________________________
Amount Amount of
of Principal Notation
Date Loan Repaid Made By
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
3
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
4
_______________________________________________________________________
_______________________________________________________________________
6
EXHIBIT B
Leased Premises
None
6
EXHIBIT C-1
Approved Sites
Name Location
---- --------
Double G. Coatings, L.P. Jackson, Mississippi
Walbridge Coatings,
an Illinois Partnership Walbridge, Ohio
Indiana Pickling and
Processing Portage, Indiana
HS Processing LP Baltimore, Maryland
Metal Coaters of
Georgia, Inc. Marietta, Georgia
DoubleCote, L.L.C. Jackson, Mississippi
Metro Metals Corporation Portage, Indiana
7
Roll & Hold Warehouse
& Distribution Corp. Indianapolis, Indiana
8
EXHIBIT C-2
[Form of Collateral Access Agreement]
This Collateral Access Agreement (the " Agreement") is made
by and between [Name of Warehouse/Processor] (the "Bailee") and J.P.
Morgan Delaware, as Structuring and Collateral Agent (the "Collateral
Agent");
R E C I T A L S
WHEREAS, the Bailee presently holds Inventory (as defined
below) of the Company (as defined below) and may in the future hold
Inventory, in each case, at the facility located at the address set
forth below (the " Facility");
WHEREAS, the Company has entered into an Inventory Credit
Agreement (the "Inventory Credit Agreement") dated as of September 12,
1995 among Bethlehem Steel Corporation (the "Company"), the lenders
listed on the signature pages thereof (the "Lenders"), Morgan Guaranty
Trust Company of New York, as Administrative Agent and J.P. Morgan
Delaware, as Collateral Agent, and, as a condition to the loans and
other financial accommodations to the Company, the Lenders require,
among other things, liens on the Company's present and future
inventory (the "Inventory"), including all inventory held by the
Bailee and all inventory which may be shipped to and handled by the
Bailee from time to time in the future; and
WHEREAS, the Collateral Agent, on behalf of the Lenders, and
the Bailee desire to enter into an agreement in order to establish the
rights and obligations respecting the Inventory as between the
Collateral Agent and the Bailee, in order to assure mutual cooperation
and protection of their respective interests;
9
NOW, THEREFORE, in consideration of the premises hereof and
mutual promises and agreements herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Representations and Warranties. The Bailee represents
and warrants that:
(i) its correct legal name and address are set forth on
the signature page hereof;
(ii) it does not have title to any of the Company's
Inventory, nor does it have any claim to or lien upon any of
the Company's Inventory (other than for customary
[warehousing] [processing] charges);
(iii) none of the Company's Inventory is reflected on
its books and records as an asset; and
(iv) the only receivables of the Bailee from the Company
relating to the Company's Inventory have been or will be
originated solely as a result of the services provided by the
Bailee with respect to the Inventory.
2. Covenants. The Bailee agrees that:
(i) in the future, if it changes the legal form in which
it does business (for example, changes from a sole
proprietorship to a partnership, a partnership to a
corporation, or forms a new corporation) or changes its
business name, the Bailee will give the Collateral Agent
prompt written notice of the change so that the Collateral
Agent can update its records and, if necessary, correct and
refile any security documents;
(ii) it will allow the Collateral Agent, its auditors
and its other designees, access to the Facility, upon
reasonable prior notice, during ordinary business hours in
order to inspect the Company's Inventory and verify the
amount. In addition, if the Collateral Agent elects to
remove the Company's Inventory from the Facility itself, the
Bailee will grant the Collateral Agent access to the
Facility, upon reasonable prior notice, during ordinary
business hours to do so and will not hinder the Collateral
Agent's actions in removing the Inventory, but the Collateral
Agent shall have no
10
obligation to remove any Inventory from the Facility or,
having commenced such removal, to complete such removal. The
Collateral Agent will not interfere with the Bailee's
business operations and all costs of inspection, verification
and removal shall be for the account of the Lenders;
(iii) if the Collateral Agent notifies the Bailee in
writing that an event of default has occurred under the
Inventory Credit Agreement, then, without any responsibility
on the Bailee's part to verify the existence of such default,
it will release the Inventory to the Collateral Agent on
demand; provided that the Collateral Agent tenders payment of
any unpaid [warehousing] [processing] charges on the
Inventory being released;
(iv) if the Company defaults under any agreement it has
with the Bailee, the Bailee agrees not to exercise any remedy
under such agreement or applicable law or in equity, unless
it shall have provided the Collateral Agent written notice of
such default and given the Collateral Agent 20 business days
to cure a monetary default and 60 business days to cure a
non-monetary default and during such time, the Bailee will
allow the Collateral Agent to enter the Facility and remove
the Inventory as set forth in Section 2(ii) above. If any
default is cured during the applicable period, the Bailee
agrees to rescind the notice of default, but the Collateral
Agent shall have no obligation to cure any default of the
Company or, having commenced such cure, to complete such
cure. Notwithstanding the foregoing, the Bailee's failure to
provide such notice shall not render the Bailee liable to the
Collateral Agent in any manner or diminish or otherwise
affect the Bailee's rights under any such agreement with the
Company or with respect to the Inventory; and
(v) the Collateral Agent, on behalf of the secured
parties, has a perfected security interest in the Company's
Inventory now or in the future located at the Facility.
3. Notices. All notices, requests and other communications to either
party hereunder shall be in writing (including bank wire, telex, facsimile
transmission or similar writing) and shall be given to such party at its
address, facsimile number or telex number set forth on the signature pages
hereof. Each such notice, request or other communication shall be effective
(i) if given by telex, when
11
such telex is transmitted to the telex number specified in this
Section and the appropriate answerback is received, (ii) if given by
facsimile transmission, when transmitted to the facsimile number
specified in this Section and confirmation of receipt is received,
(iii) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid
or (iv) if given by any other means, when delivered at the address
specified in this Section.
4. Amendments. The agreements contained herein may not be
----------
modified or terminated orally and shall be binding upon and inure to
the benefit of parties and their respective successors or assigns.
5. Term of Agreement. This Agreement shall continue in full
-----------------
force and effect until the date on which the Collateral Agent has
confirmed in writing that all of the Company's obligations and
liabilities to the secured parties are paid and satisfied in full and
all financing arrangements between the secured parties and the Company
have been terminated.
6. Company's Obligations. All of the Bailee's charges to
---------------------
the Company of any nature whatsoever shall continue to be charged to
and paid by the Company in accordance with the agreements under which
such charges arose. The Collateral Agent shall not be directly or
indirectly liable or responsible for any of said charges whether due
or to become due.
The arrangement and instructions outlined herein shall
continue without any change or modification until the Collateral Agent
has given written notification to the contrary to the Bailee at the
address set forth below, which notification need only be signed by the
Collateral Agent. Upon delivery of any such written notification, the
Bailee agrees to take the Collateral Agent's instructions as to any
processing, holding or delivery of the Inventory.
7. Agreement of the Company. The Company has signed below
------------------------
to indicate its confirmation of and agreement with the foregoing.
12
Executed and delivered as of the ____ day of _____, 199_.
[NAME OF BAILEE]
By____________________________
Name:
Title:
Address:
Telex:
Facsimile:
J.P. MORGAN DELAWARE,
as Structuring and Collateral Agent
By____________________________
Name:
Title:
Address:
Telex:
Facsimile:
Acknowledged and Agreed to:
BETHLEHEM STEEL CORPORATION
13
By____________________________
Name:
14
EXHIBIT D
INVENTORY TURNOVER RATES FOR
FINISHED AND SEMIFINISHED INVENTORIES
CATEGORY OR
SUBCATEGORY DESCRIPTION INVENTORY TURNOVER RATE*
----------- ----------- --------- --------------
Group#30 Ingots 4.0 31
Slabs, Blooms & Billets 2.0 32
Structural 2.0 33
Plates 2.0 34
Bars
Subcategories:
Alloy Bars 3.0
Carbon Bars 2.5 36
Rails & Accessories 2.0 38
Pipe 2.0 39
Sheet & Strip
Subcategories:
Hot Rolled Sheet 2.0
15
Cold Rolled Sheet 2.5
Coated Sheet 2.0 40
Tin Coated Sheet and Strip1 .5
__________
*The Inventory Turnover Rate applicable to each category and
subcategory of Finished and Semifinished Inventories set forth above
shall be the rate set forth opposite such category and subcategory or
such other rate as the Borrower and the Administrative Agent (with the
consent of the Required Lenders) may agree. The Borrower may request
that the rate be adjusted or that its application be waived in the
event of a strike or fire or other event beyond the Borrower's control
or while a facility is closed for periodic maintenance work such as
the relining of a blast furnace or for any other
reason..27009/075/CA/agt.inventory.conf
16
EXHIBIT E
INVENTORY SECURITY AND PLEDGE AGREEMENT
dated as of
September 12, 1995
among
BETHLEHEM STEEL CORPORATION,
BETHLEHEM STEEL CREDIT AFFILIATE ONE, INC.,
BETHLEHEM STEEL CREDIT AFFILIATE TWO, INC.
J.P. MORGAN DELAWARE,
as Structuring and Collateral Agent
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
2
INVENTORY SECURITY AND PLEDGE AGREEMENT
AGREEMENT dated as of September 12, 1995 among BETHLEHEM
STEEL CORPORATION (with its successors, the "Borrower"), BETHLEHEM
STEEL CREDIT AFFILIATE ONE, INC., BETHLEHEM STEEL CREDIT AFFILIATE
TWO, INC., J.P. MORGAN DELAWARE, as Structuring and Collateral Agent,
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative
Agent.
W I T N E S E T H :
- - - - - - - - -
WHEREAS, the Borrower, certain lenders (with their successors
and assigns, the "Lenders"), Morgan Guaranty Trust Company of New
York, as administrative agent for such lenders (with its successors
and assigns in such capacity, the "Administrative Agent") and J.P.
Morgan Delaware, as structuring and collateral agent (with its
successors and assigns in such capacity, the "Collateral Agent") are
parties to an Inventory Credit Agreement of even date herewith (as the
same may be amended from time to time, the "Inventory Credit
Agreement"), pursuant to which the Borrower may incur obligations with
respect to Borrowings and Letters of Credit; and
WHEREAS, in order to induce the Lenders, the Agents and the
L/C Issuing Banks to enter into the Inventory Credit Agreement, (i)
the Borrower has agreed to grant a continuing security interest in and
to the Borrower's Collateral (as hereafter defined) to secure (x) its
obligations under the Inventory Credit Agreement, the Notes issued
pursuant thereto and any Reimbursement Obligations and (y) certain
other obligations as described herein and in the Inventory Credit
Agreement; and (ii) the Special Purpose Members have agreed to grant a
continuing security interest in and to the Special Purpose Members'
Collateral to secure their obligations under the Guaranties;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
3
SECTION 1. Definitions
-----------
Terms defined in the Inventory Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings
provided for therein. The following additional terms, as used herein,
have the following respective meanings:
"Agreement" means this Inventory Security and Pledge
Agreement as amended from time to time.
"Automatic Release Termination" has the meaning set forth in
Section 5(C).
"Borrower's Collateral" means the collateral described in
Section 3(A).
"BSF" means Bethlehem Steel Funding, LLC, a Maryland limited
liability company.
"BSF Note" means the note of BSF payable to the Borrower in
connection with the Receivables Facility.
"Collateral" means the Borrower's Collateral and the Special
Purpose Members' Collateral.
"Documents" means all "documents" (as defined in the UCC) or
other receipts covering, evidencing or representing Inventories, now
owned or hereafter acquired by the Borrower.
"Enforcement Notice" means a written notice delivered by the
Administrative Agent to the Collateral Agent stating that it is an
Enforcement Notice (as defined in this Agreement) and that the
Required Lenders have instructed the Administrative Agent to deliver
such notice.
"Grantors" means the Borrower and the Special Purpose
Members.
"Guaranties" has the meaning set forth in Section 15.
"Instruments" means all "instruments", "chattel paper" or
"letters of credit" (each as defined in the UCC) evidencing,
representing, arising from or existing in respect of, relating to,
securing or otherwise supporting
4
the payment of, any accounts receivable, including (but not limited
to) promissory notes, drafts, bills of exchange and trade acceptances,
now owned or hereafter acquired by the Borrower.
"Letter of Credit Obligation" means at any time any
Reimbursement Obligation or other obligation of the Borrower to make a
payment in connection with a Letter of Credit, including contingent
obligations with respect to amounts which are then, or may thereafter
become, available for drawing under Letters of Credit then
outstanding.
"Liquid Investment" means (i) direct obligations of the
United States or any agency thereof, or obligations guaranteed by the
United States or any agency thereof, (ii) commercial paper rated in
the highest grade by a nationally recognized credit rating agency or
(iii) time deposits with, including certificates of deposit issued by,
any Lender or any other bank or trust company which is organized under
the laws of the United States or any state thereof, which bank or
trust company has, or the holding company of which bank or trust
company together with its consolidated subsidiaries has, (A) capital,
surplus and undivided profits aggregating at least $500,000,000 and
(B) publicly traded debt securities outstanding which are rated in one
of the four highest rating categories by a nationally recognized
credit rating agency; provided in each case that (x) such Liquid
Investment matures within 90 days from the date of acquisition thereof
and (y) in order to provide the Collateral Agent, for the benefit of
the Secured Parties, with a perfected security interest therein, such
Liquid Investment is either:
(1) evidenced by a certificate or instrument which is
negotiable, or if non-negotiable is issued in the name of the
Collateral Agent, and which (together with any appropriate instruments
of transfer) is delivered to, and held by, the Collateral Agent or an
agent thereof (which shall not be the Borrower or any of its
Affiliates) in the State of New York; or
(2) in book-entry form and issued by the United States and
subject to pledge under applicable state law and Treasury regulations
and as to which (in the written opinion of counsel to the Borrower,
which counsel shall be satisfactory to the Collateral Agent)
appropriate measures shall have been taken to perfect the Security
Interests.
5
"Operating Agreement" means the Operating Agreement of BSF.
"Perfection Certificate" means a certificate substantially in
the form of Annex A, completed and supplemented with the schedules and
attachments contemplated thereby to the satisfaction of the Collateral
Agent, and duly executed by the chief financial officer and the chief
accounting officer of the Borrower.
"Permitted Liens" means the Security Interests and Liens
(including mechanics' and warehousemens' liens) which (i) arise by
operation of law in the ordinary course of the conduct of the
Borrower's business or the ownership of its assets, (ii) do not secure
Debt and (iii) either (x) secure amounts not yet due and payable or
(y) secure amounts being contested in good faith by appropriate
proceedings so long as enforcement thereof is effectively stayed and
reserves therefor are maintained in accordance with generally accepted
accounting principles (it being understood that Permitted Liens do not
include Federal Liens to the extent such Federal Liens give rise to an
Event of Default (as defined in the Inventory Credit Agreement)).
"Pledged Interest" means, with respect to each Grantor, such
Grantor's (i) interest in BSF, (ii) right to inspect the books and
records of BSF, (iii) right to participate in the management of and
vote on matters coming before BSF, and (iv) unless otherwise provided,
right to act for BSF in accordance with Section 5.1 of the Operating
Agreement.
"Pledged Instruments" means (i) the BSF Note and (ii) any
Instrument required to be pledged to the Collateral Agent pursuant to
Section 4(B).
"Pledged Securities" means the Pledged Instruments and the
Pledged Stock.
"Pledged Stock" means (i) the Subsidiary Shares and (ii) any
other interests required to be pledged to the Collateral Agent
pursuant to Section 4(B).
6
"Proceeds" means all cash and other proceeds of, and all
other profits, rentals or receipts, in whatever form, arising from the
collection, sale, lease, exchange, assignment, licensing or other
disposition of, or other realization upon, Collateral, including
without limitation all claims of the Borrower or either Special
Purpose Member against third parties for loss of, damage to or
destruction of, or for proceeds payable under, or unearned premiums
with respect to, policies of insurance in respect of, any Collateral,
and any condemnation or requisition payments with respect to any
Collateral, in each case whether now existing or hereafter arising.
"Required Secured Parties" means the Required Lenders;
provided that, at any time when an Automatic Release Termination is in
effect, "Required Secured Parties" shall mean Persons holding
obligations which represent at least 66 2/3% of the Secured Principal
Amount.
"Secured Obligations" means, whether now outstanding or
hereafter arising, (i) all principal of and interest on any Loan made
under, or any Note issued pursuant to, the Inventory Credit Agreement,
(ii) all Letter of Credit Obligations, (iii) all other amounts payable
by the Borrower hereunder or under the Inventory Credit Agreement,
(iv) all amounts payable by the Borrower under or in respect of
Secured Tax Exempt Debt and (v) any renewals or extensions of the
foregoing. The Secured Obligations shall include, without limitation,
any interest, costs, fees and expenses which accrue on or with respect
to any of the foregoing, whether before or after the commencement of
any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Borrower; provided that, for the
purposes of payments and allocations pursuant to Section 10 after the
commencement of any case, action or other proceeding relating to the
bankruptcy, insolvency or reorganization of the Borrower, each Secured
Obligation shall be deemed to include interest accrued thereon after
the commencement of such proceeding only to the extent that such
interest is allowed in such proceeding (pursuant to Section 506(b) of
the United States Bankruptcy Code or otherwise).
"Secured Parties" means the Lenders, the L/C Issuing Banks,
the Administrative Agent, the Collateral Agent and the holder of the
Secured Tax Exempt Debt.
"Special Purpose Members' Collateral" means the collateral
described in Section 3(B).
7
"Subsidiary Shares" means the shares of capital stock of the
Special Purpose Members owned by the Borrower.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of New York; provided that if by reason of
mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the Security Interests in any
Collateral is governed by the Uniform Commercial Code as in effect in
a jurisdiction other than New York, "UCC" means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection
or non-perfection.
SECTION 2. Representations and Warranties
------------------------------
(A) The Borrower represents and warrants as follows:
(i) The Borrower has good and marketable title to all of the
Borrower's Collateral, free and clear of any Liens other than
Permitted Liens.
(ii) Neither the Borrower nor any of its Subsidiaries has
performed or will perform any acts which might prevent the Collateral
Agent from enforcing any of the terms of this Agreement or which would
limit the Collateral Agent in any such enforcement. Other than (x)
financing statements on file with respect to the Existing Credit
Agreement (which will be terminated in accordance with the provisions
of Section 3.1 of the Inventory Credit Agreement) and (y) financing
statements or other similar or equivalent documents or instruments
with respect to the Security Interests and Permitted Liens, no
financing statement, mortgage, security agreement or similar or
equivalent document or instrument covering all or any part of the
Collateral is on file or of record in any jurisdiction in which such
filing or recording would be effective to perfect a Lien on such
Collateral. None of the Borrower's Collateral is in the possession of
any Person (other than the Borrower) asserting any claim thereto or
security interest therein, except that the Collateral Agent or its
designee may have possession of Collateral as contemplated hereby and
warehousemen, carriers or other bailees may from time to time assert
claims to or security interests in Inventory in their possession.
(iii) Not less than five Domestic Business Days prior to the
Closing Date under the Inventory Credit Agreement, the Borrower shall
deliver the Perfection Certificate to the
8
Collateral Agent. The information set forth therein shall be correct
and complete. Not later than 60 days following the Closing Date, the
Borrower shall furnish to the Collateral Agent certified file search
reports on file in each UCC filing office set forth in Schedule 7 to
the Perfection Certificate confirming the filing information set forth
in such Schedule.
(iv) The Security Interests constitute valid security
interests under the UCC securing the Secured Obligations. When UCC
financing statements in the form specified in the Perfection
Certificate or pursuant to Section 4(F) shall have been filed in the
offices specified in the Perfection Certificate or pursuant to Section
4(F), the Security Interests shall constitute perfected security
interests in the Collateral (except Inventory in transit) to the
extent that a security interest therein may be perfected by filing
pursuant to the UCC, prior to all other Liens and rights of others
therein except for Permitted Liens.
(v) The Inventory is insured in accordance with the
requirements of the Inventory Credit Agreement. (vi) All Inventories
produced by the Borrower have or will have been produced in compliance
with the applicable requirements of (i) the Fair Labor Standards Act,
as amended, and (ii) where the failure to comply would subject any of
the Secured Parties to any obligation or liability or affect the
priority or existence of the Security Interests, all applicable
federal and state environmental and waste disposal laws.
(vii) The Borrower owns all of the Pledged Stock, free and
clear of any Liens other than the Security Interests. The Pledged
Stock includes all of the issued and outstanding capital stock of the
Special Purpose Members. The Pledged Stock has been duly authorized
and validly issued, and is fully paid and non-assessable, and is
subject to no options to purchase or similar rights of any Person.
(viii) Upon the delivery of the Pledged Instruments, and
certificates representing the Pledged Stock to the Collateral Agent in
accordance with Section 4(A) hereof, the Collateral Agent will have
valid and perfected security interests in the Pledged Securities
subject to no prior Lien.
9
(B) Each Grantor represents and warrants as follows:
(i)The Grantor owns all of its Pledged Interest, free and
clear of any Liens other than Permitted Liens. The Grantor is not and
will not become a party to or otherwise bound by any agreement, other
than this Agreement, which restricts in any manner the rights of any
present or future holder of any of the Pledged Interests with respect
thereto.
(ii) Upon the execution of this Agreement by the parties
hereto, the delivery to the Collateral Agent of certficates
representing the Pledged Interests and the filing of financing
statements on Form UCC-1 in substantially the form of Schedule
2(B)(ii) hereto in the jurisdiction identified in or pursuant to
Section 16, the Collateral Agent, on behalf of the Lenders, will have
valid and perfected security interests in the Pledged Interests prior
to all other Liens and rights of others therein except for Permitted
Liens. Except for the financing statements referred to above, no
registration, recordation or filing with any governmental body, agency
or official is required in connection with the execution or delivery
of this Agreement or is necessary for the validity or enforceability
hereof or for the perfection or enforcement of the Security Interests
in the Pledged Interests. The Grantor has not performed and will not
perform any acts which might prevent the Collateral Agent from
enforcing any of the terms and conditions of this Agreement or which
would limit the Collateral Agent in any such enforcement.
(iii) The chief executive office of the Grantor is located at
its address set forth in or pursuant to Section 16.
SECTION 3. The Security Interests
----------------------
(A) In order to secure the full and punctual payment of the
Secured Obligations in accordance with the terms thereof, and to
secure the performance of all of the obligations of the Borrower
hereunder, under the Inventory Credit Agreement and under the
agreements and other instruments evidencing Secured Tax Exempt Debt,
the Borrower hereby grants to the Collateral Agent for the ratable
benefit of the Secured Parties a continuing security interest in and
to all of the following property of the
10
Borrower, whether now owned or existing or hereafter acquired
or arising and regardless of where located:
(1) Inventories;
(2) Documents;
(3) all books and records (including, without limitation,
customer lists, credit files, computer programs, printouts and other
computer materials and records) of the Borrower pertaining to any of
the Borrower's Collateral;
(4) the Liquid Investments and other monies and property of
any kind of the Borrower in the possession or under the control of the
Collateral Agent;
(5)the Pledged Securities, and all of the Borrower's rights
and privileges with respect to the Pledged Securities, and all income
and profits thereon, and all interest, dividends and other payments
and distributions with respect thereto;
(6) its Pledged Interest and all of its rights and privileges
with respect thereto (including, without limitation, all rights under
the Operating Agreement) and all certificates evidencing its Pledged
Interest; and
(7) all Proceeds of all or any of the Borrower's Collateral
described in Clauses 1 through 6 hereof;
provided that Collateral shall not include any of the
Borrower's Collateral released pursuant to Section 5 hereof.
(B) In order to secure the full and punctual payment of the
Guaranties in accordance with the terms thereof, and to secure the
performance of all of the obligations of such Special Purpose Member
hereunder, each Special Purpose Member hereby grants to the Collateral
Agent for the ratable benefit of the Secured Parties a continuing
security interest in and to all of the following property of such
Special Purpose Member, whether now owned or existing or hereafter
acquired or arising and regardless of where located:
(1) its Pledged Interest and all of its rights and privileges
with respect thereto (including, without
11
limitation, all rights under the Operating Agreement) and all
certificates evidencing its Pledged Interest; and
(2) all Proceeds of all or any of the Special Purpose
Member's Collateral described in Clause 1 hereof.
(C) The Security Interests are granted as security only and
shall not subject the Collateral Agent or any other Secured Party to,
or transfer or in any way affect or modify, any obligation or
liability of the Grantors with respect to any of the Collateral or any
transaction in connection therewith.
SECTION 4. Pledged Securities and Pledged Interests
----------------------------------------
(A)All Pledged Instruments shall be delivered to the
Collateral Agent by the Borrower pursuant hereto indorsed to the order
of the Collateral Agent, and accompanied by any required transfer tax
stamps, all in form and substance satisfactory to the Collateral
Agent. All certificates representing Pledged Stock and Pledged
Interests shall be delivered to the Collateral Agent by the applicable
Grantor pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, with signatures appropriately
guaranteed, and accompanied by any required transfer tax stamps, all
in form and substance satisfactory to the Collateral Agent.
(B) In the event that either Special Purpose Member at any
time issues any additional or substitute shares of capital stock of
any class or any note, or owes any Debt, to the Borrower, the Borrower
will immediately pledge and deposit with the Collateral Agent
certificates representing all such shares and such note, or an
instrument evidencing such Debt, as additional security for the
Secured Obligations. All such shares, notes and instruments
constitute Pledged Securities and are subject to all provisions of
this Agreement. In the event that BSF at any time issues any
substitute note or owes any other Debt to the Borrower, the Borrower
will immediately pledge and deposit with the Collateral Agent such
notes or other instrument evidencing such other debt as additional
security for the Secured Obligations.
12
(C) If directed to do so by the Required Lenders, the
Collateral Agent shall cause any or all of the Pledged Stock and/or
the Pledged Interests to be transferred of record into the name of the
Collateral Agent or its nominee. The applicable Grantor will promptly
give to the Collateral Agent copies of any notices or other
communications received by it with respect to Pledged Stock and/or
Pledged Interests registered in the name of such Grantor and the
Collateral Agent will promptly give to the applicable Grantor copies
of any notices and communications received by the Collateral Agent
with respect to Pledged Stock and/or Pledged Interests registered in
the name of the Collateral Agent or its nominee.
(D) (i) Unless an Enforcement Notice is in effect, the
relevant Grantor shall be entitled to receive and retain all
dividends, interest and other payments and distributions made upon or
with respect to the Pledged Securities or Pledged Interests; provided
that
(x) dividends, interest and other distributions paid or
payable other than in cash in respect of, and instruments and other
property received, receivable or otherwise distributed in respect of,
or in exchange for, any Pledged Securities or Pledged Interests; and
(y) dividends and other distributions paid or payable in cash
in respect of any Pledged Securities or Pledged Interests in
connection with a partial or total liquidation or dissolution;
shall be received in trust for the benefit of the Secured
Parties, shall be segregated from other funds of the relevant Grantor
and shall be paid over to the Collateral Agent as Collateral in the
same form as received (with any necessary endorsement).
(ii) If an Enforcement Notice is in effect,
(x) all rights of any Grantor to receive dividends, interest
and other payments and distributions which it would otherwise be
authorized to receive and retain pursuant to subsection (D)(i) shall
cease, and all such rights shall thereupon become vested in the
Collateral Agent who shall thereupon have the sole right to receive
and hold as Collateral such dividends, interest and other payments and
distributions; and
13
(y) all dividends, interest and other payments and
distributions which are received by any Grantor shall be received in
trust for the benefit of the Secured Parties, shall be segregated from
other funds of such Grantor and shall be paid over to the Collateral
Agent as Collateral in the same form as received (with any necessary
endorsement).
After an Enforcement Notice has been canceled, the Collateral
Agent's right to retain dividends, interest and other payments and
distributions under this subsection 4(D)(ii) shall cease and the
Collateral Agent shall pay over to the relevant Grantor any such
Collateral retained by it while such Enforcement Notice was in effect.
(E) Unless an Enforcement Notice is in effect, the Borrower
shall have the right, from time to time, to vote and to give consents,
ratifications and waivers with respect to the Pledged Stock, and the
Collateral Agent shall, upon receiving a written request from the
Borrower accompanied by a certificate signed by its principal
financial officer stating that no Event of Default has occurred and is
continuing, deliver to the Borrower or as specified in such request
such proxies, powers of attorney, consents, ratifications and waivers
in respect of any of the Pledged Stock which is registered in the name
of the Collateral Agent or its nominee as shall be specified in such
request and be in form and substance satisfactory to the Collateral
Agent. If an Enforcement Notice is in effect, the Collateral Agent
shall have the right to the extent permitted by law and the Borrower
shall take all such action as may be necessary or appropriate to give
effect to such right, to vote and to give consents, ratifications and
waivers, and take any other action with respect to any or all of the
Pledged Stock with the same force and effect as if the Collateral
Agent were the absolute and sole owner thereof.
(F) Each Grantor agrees that it will, at its expense and in
such manner and form as the Collateral Agent may require, execute,
deliver, file and record any financing statement, specific assignment
or other paper and take any other action that may be necessary or
desirable, or that the Collateral Agent may reasonably request, in
order to create, preserve, perfect or validate any Security Interest
in the Pledged Interests or to enable the Collateral Agent to exercise
and enforce its rights hereunder with respect to any of the Pledged
Interests. To the extent permitted by applicable law, each Grantor
hereby authorizes the Collateral Agent to execute and file Uniform
Commercial Code
14
financing statements (which may be carbon, photographic, photostatic
or other reproductions of this Agreement or of a financing statement
relating to this Agreement) which the Collateral Agent in its sole
discretion may deem necessary or appropriate to further perfect the
Security Interests in the Pledged Interests. In furtherance of the
foregoing, each Grantor hereby constitutes and appoints the Collateral
Agent its true and lawful attorney, with full power of substitution,
in the name of such Grantor, to execute and file financing statements
and continuation statements.
(G)Each Special Purpose Member agrees that it will not change
(i) its name, identity or corporate structure in any manner or (ii)
the location of its chief executive office or chief place of business
unless it shall have given (x) the Collateral Agent not less than 30
days' prior notice thereof and (y) delivered an opinion of counsel
with respect thereto in accordance with Section 6(I).
(H)Unless an Enforcement Notice is in effect, each Grantor
shall have all rights to vote and to give consents, ratifications and
waivers with respect to the Pledged Interests as and to the extent
provided in the Operating Agreement. If an Enforcement Notice is in
effect, the Collateral Agent shall have the right to the extent
permitted by law and the Grantors shall take all such action as may be
necessary or appropriate to give effect to such right, to vote and to
give consents, ratifications and waivers, and take any other action
with respect to any or all of the Pledged Interests with the same
force and effect as if the Collateral Agent were the absolute and sole
owner thereof.
(I) In the event that BSF issues any additional or substitute
limited liability company interests of any class or type to any
Grantor, such Grantor will immediately pledge and deposit with the
Collateral Agent certificates representing all such interests, as
additional security for the Guaranties. All such interests constitute
Pledged Interests and are subject to all provisions of this Agreement.
SECTION 5. Releases of Collateral
----------------------
(A) At any time and from time to time prior to the
termination of the Security Interests pursuant to Section 14, the
Collateral Agent (i) may release any of the
15
Collateral with the prior written consent of all of the Lenders, which
consent shall not be unreasonably withheld, and (ii) shall release
Inventory which is being sold or transferred by the Borrower if the
Borrower has complied with the provisions of clauses (i), (ii) and (if
required) (iii) of Section 5.7 of the Inventory Credit Agreement with
respect to such sale or transfer. Upon any such release of
Collateral, the Collateral Agent will, at the expense of the
applicable Grantor, execute and deliver to such Grantor such documents
as such Grantor shall reasonably request to evidence the release of
the Collateral.
(B) Subject to the provisions of Section 5(C) of this
Agreement, the Proceeds of Inventory, including accounts receivable
arising from the sale thereof (and any books and records of the
Borrower pertaining to such accounts receivable), shall automatically
be released without the need for any action on the part of the
Collateral Agent, upon the sale of such Inventory by the Borrower.
(C) Upon the occurrence of either of the Events of Default
specified in clauses (h) or (i) of Section 6.1 of the Inventory Credit
Agreement with respect to the Borrower (and without any further act or
notice) or the giving by the Collateral Agent of an Enforcement Notice
to the Borrower, the automatic release set forth in Section 5(B) of
this Agreement shall terminate (an "Automatic Release Termination")
with respect to all Proceeds from (i) the sale of Inventory subsequent
to the second Domestic Business Day after the day on which the
Enforcement Notice is given or, if an Event of Default specified in
clause (h) or (i) of Section 6.1 of the Inventory Credit Agreement has
occurred, subsequent to the day after which such Event of Default
occurs, and (ii) the sale of Inventory during the period after the day
on which the Enforcement Notice is given to and including the second
Domestic Business Day after the day on which the Enforcement Notice is
given to the extent the aggregate amount of sales of Inventory during
such period are not made in the ordinary course of business of the
Borrower or exceed 10% of the Borrowing Base as of the date the
Automatic Release Termination occurs.
SECTION 6. Further Assurances; Covenants
-----------------------------
(A) The Borrower will not change (i) the location of its
chief executive office or chief place of business or (ii) the
locations where it keeps or holds any of the Borrower's Collateral,
other than Inventories or books and records relating to any Borrower's
Collateral, from the
16
applicable locations described in the Perfection Certificate unless it
shall have (a) given the Collateral Agent not less than 30 days' prior
notice thereof and (b) delivered an opinion of counsel with respect
thereto in accordance with Section 6(I). Not later than 90 days after
the Borrower changes any location where it keeps or holds Inventories
or books and records relating to any Borrower's Collateral from a
location described in the Perfection Certificate to a location not
described in the Perfection Certificate, the Borrower will (a) give
the Collateral Agent notice thereof and (b) deliver an opinion of
counsel with respect thereto in accordance with Section 6(I); provided
that if all such Inventories are sold during such 90 day period then
no such notice or opinion need be delivered with respect to such
Inventories. No Grantor shall in any event change the location of any
Collateral if such change would cause the Security Interests in such
Collateral to lapse or cease to be perfected.
(B) The Borrower will not change its name, identity or
corporate structure (as the terms "identity" and "corporate structure"
are used in Section 9-402(7) of the UCC) in any manner unless it shall
have (i) given the Collateral Agent not less than 30 days' prior
notice thereof and (ii) if the Collateral Agent so requests, delivered
an opinion of counsel with respect thereto in accordance with Section
6(I).
(C) The Borrower will, from time to time, at its expense,
execute, deliver, file and record any statement, assignment,
instrument, document, agreement or other paper and take any other
action (including, without limitation, any filings of financing or
continuation statements under the UCC) that from time to time may be
necessary or desirable, or that the Collateral Agent may request, in
order to create, preserve, perfect, confirm or validate the Security
Interests or to enable the Collateral Agent and the other Secured
Parties to obtain the full benefits of this Agreement, or to enable
the Collateral Agent to exercise and enforce any of its rights, powers
and remedies hereunder with respect to any of the Borrower's
Collateral. To the extent permitted by applicable law, the Borrower
hereby authorizes the Collateral Agent to execute and file financing
statements or continuation statements without the Borrower's signature
appearing thereon. In furtherance of the foregoing, the Borrower
hereby constitutes and appoints the Collateral Agent its true and
lawful attorney, with full power of substitution, in the name of the
Borrower, to execute and file financing statements and continuation
statements. The Borrower agrees that a carbon, photographic,
photostatic or other reproduction of this Agreement or of a
17
financing statement is sufficient as a financing statement. The
Borrower shall pay the costs of, or incidental to, any recording or
filing of any financing or continuation statements concerning the
Borrower's Collateral.
(D) If any Borrower's Collateral is at any time in the
possession or control of any warehouseman, bailee or any of the
Borrower's agents or processors, the Borrower shall, if requested to
do so by the Collateral Agent, notify such warehouseman, bailee, agent
or processor of the Security Interests created hereby and instruct
such warehouseman, bailee, agent or processor to hold all such
Borrower's Collateral for the Collateral Agent's account subject to
the Collateral Agent's instructions.
(E) The Borrower shall keep full and accurate books and
records relating to the Borrower's Collateral, and stamp or otherwise
mark such books and records in such manner as the Required Lenders may
reasonably require in order to reflect the Security Interests.
(F) (i) Without the prior written consent of the Required
Lenders, no Grantor will create, incur or suffer to exist any Lien
with respect to any Collateral, except for Permitted Liens, and (ii)
without the prior written consent of the Lenders, which consent shall
not be unreasonably withheld, no Grantor will sell, lease, exchange,
assign or otherwise dispose of, or grant any option with respect to,
any Collateral unless the Security Interests created hereby in such
Collateral have been released pursuant to Section 5 or Section 14.
(G) The Borrower will maintain insurance policies in
accordance with the terms of the Inventory Credit Agreement and all
insurance proceeds shall be paid in accordance with the terms of the
Inventory Credit Agreement.
(H) Each Grantor will, promptly upon request, provide to the
Collateral Agent all information and evidence it may reasonably
request concerning the Collateral to enable the Collateral Agent to
enforce the provisions of this Agreement and, if the Collateral Agent
has been requested to do so by the Required Lenders, to prepare a
Collateral Report. Each Grantor will permit the representatives of
the Collateral Agent to call at its places of business at any time and
from time to time during ordinary business hours, without hindrance or
delay, and will, at such Grantor's cost and expense but without undue
interference with its operations, permit such representatives to
inspect the Collateral and to inspect, audit, check and make extracts
from and copies of the books, records, journals, orders, receipts and
18
correspondence which relate to the Collateral. Each Grantor will
provide each Secured Party with such information as to the Collateral
as such Secured Party may reasonably request. Each Secured Party
shall have the right to observe the annual physical inventory of
Inventories performed by the Borrower's independent public accountants
and the semi-annual physical inventory performed by the Borrower's
audit staff at each plant location. Any proprietary or financial
information provided pursuant to this subsection shall be kept
confidential in accordance with Section 9.8 of the Inventory Credit
Agreement.
(I) (i) Not more than six months nor less than 30 days prior
to (or, in the case of any action contemplated by the second sentence
of Section 6(A), more than 90 days after) each date on which the
Borrower proposes to take any action contemplated by Section 6(A) or
(B) or a Special Purpose Member prepares to take any action
contemplated by Section 4(G) and (ii) simultaneously with the delivery
of each set of financial statements referred to in Section 5.1(a) of
the Inventory Credit Agreement and in any event within 95 days after
the end of each fiscal year of the Borrower during the term of this
Agreement, the Grantors shall, at their cost and expense, jointly and
severally, cause to be delivered to the Lenders an opinion of counsel,
satisfactory to the Collateral Agent, substantially in the form of
Annex B hereto, to the effect that all financing statements and
amendments or supplements thereto, continuation statements and other
documents required to be recorded or filed in order to perfect and
protect the Security Interests for a period, specified in such
opinion, continuing until a date not earlier than eighteen months
after the date of such opinion, have been filed in each filing office
necessary for such purpose and that all filing fees and taxes, if any,
payable in connection with such filings have been paid in full.
(J) From time to time upon request by the Collateral Agent,
the Grantors shall, at their cost and expense, jointly and severally,
cause to be delivered to the Lenders an opinion of counsel
satisfactory to the Collateral Agent as to such matters relating to
the transactions contemplated hereby as the Required Lenders may
reasonably request.
19
SECTION 7. General Authority
-----------------
Each Grantor hereby irrevocably appoints the Collateral Agent
its true and lawful attorney, with full power of substitution, in the
name of such Grantor, the other Secured Parties or otherwise, for the
sole use and benefit of the Secured Parties, but at such Grantor's
expense, to the extent permitted by law to exercise, at any time and
from time to time, but only while an Enforcement Notice or Automatic
Release Termination is in effect, all or any of the following powers
with respect to all or any of the Collateral:
(i) to demand, sue for, collect, receive and give acquittance
for any and all monies due or to become due thereon or by virtue
thereof,
(ii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(iii) subject to Section 6 of the Operating Agreement, to
sell, transfer, assign or otherwise deal in or with the same or the
proceeds or avails thereof, as fully and effectually as if the
Collateral Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and
to make any allowance and other adjustments with reference thereto;
provided that the Collateral Agent shall give each Grantor
not less than ten days' prior notice of the time and place of any sale
or other intended disposition of any of the Collateral, except any
Collateral which is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market. The
Collateral Agent and each Grantor agree that such notice constitutes
"reasonable notification" within the meaning of Section 9-504(3) of
the UCC.
SECTION 8. Remedies Relating to Giving of Enforcement
------------------------------------------
Notice
------
(A) (i) The Administrative Agent shall give an Enforcement
Notice to the Collateral Agent promptly after having been instructed
to do so in accordance with Section
20
6.1 of the Inventory Credit Agreement. An Enforcement Notice
delivered by the Administrative Agent must include a certification by
the Administrative Agent of the principal amount (or, in the case of
doubt, an estimate of such amount) of Secured Obligations outstanding
under the Inventory Credit Agreement in respect of each Secured Party,
but shall be effective notwithstanding any inaccuracies in such
certification.
(ii) Upon receipt of an Enforcement Notice pursuant to
Section 8(A)(i), the Collateral Agent shall (i) forthwith notify each
Grantor of the receipt and contents thereof and (ii) promptly
thereafter, notify each other Secured Party thereof. The Collateral
Agent's notice shall advise each Secured Party that, if it does not
notify the Collateral Agent forthwith of the amount of its Secured
Obligations (including the interest rate or rates applicable thereto),
the Collateral Agent may rely on the information or documents (if any)
supplied to it by (1) the Administrative Agent pursuant to Section
8(A)(i) and (2) the holder of Secured Tax Exempt Debt pursuant to
Section 3.1(j) of the Inventory Credit Agreement in determining the
amount of any distribution to such Secured Party with respect to the
Collateral. So long as such Enforcement Notice or Automatic Release
Termination is in effect, the Collateral Agent may exercise the rights
and remedies provided in this Section. The Collateral Agent is not
empowered to exercise any remedy under this Section unless an
Enforcement Notice or Automatic Release Termination is in effect.
(iii) An Enforcement Notice shall become effective when the
Collateral Agent shall have received such Enforcement Notice. An
Enforcement Notice, once effective, shall remain in effect unless and
until it is canceled as provided in Section 8(A)(iv).
(iv) If after an Enforcement Notice becomes effective the
Borrower establishes to the satisfaction of the Required Secured
Parties that no Event of Default is continuing, the Administrative
Agent or the Required Secured Parties shall cancel such Enforcement
Notice by delivering a written notice of cancellation to the
Collateral Agent; provided that such notice is given (i) before the
Collateral Agent takes any action to exercise any remedy with respect
to the Collateral or (ii) thereafter, if the Collateral Agent believes
that all actions it has taken to exercise any remedy or remedies with
respect to the Collateral can be reversed without undue difficulty. A
notice of cancellation shall become effective one Domestic Business
Day after such notice is given as provided in this Section 8(A)(iv),
it being understood that after receipt of a notice of
21
cancellation but before such notice becomes effective the Collateral
Agent shall not enforce any remedy for the disposition of Collateral
provided hereunder or make any distributions hereunder. The
Collateral Agent shall promptly notify each Grantor and each other
Secured Party of the cancellation of any Enforcement Notice.
(B) If an Enforcement Notice or Automatic Release Termination
is in effect, the Collateral Agent, at the request of the Required
Secured Parties, may exercise on behalf of the Secured Parties (i) all
rights of a secured party under the UCC (whether or not in effect in
the jurisdiction where such rights are exercised) and (ii) all of the
rights and remedies provided for in this Agreement. In addition, the
Collateral Agent may, without being required to give any notice,
except as herein provided or as may be required by mandatory
provisions of law, (i) withdraw all Liquid Investments and apply such
Liquid Investments and other cash, if any, then held by it as
Collateral as specified in Section 10 and (ii) if there shall be no
such monies, Liquid Investments or cash or if such monies, Liquid
Investments or cash shall be insufficient to pay all the Secured
Obligations in full, sell the Collateral or any part thereof at public
or private sale, for cash, upon credit or for future delivery, and at
such price or prices as the Collateral Agent may deem satisfactory;
provided that the Collateral Agent shall not sell the BSF Note to any
purchaser or purchasers unless the rating then assigned to the Buyers'
Certificates (as defined in the Receivables Purchase Agreement) is
reaffirmed by S&P if such Buyers' Certificates are then outstanding.
The Collateral Agent or any other Secured Party may be the purchaser
of any or all of the Collateral so sold at any public sale (or, if the
Collateral is of a type customarily sold in a recognized market or is
of a type which is the subject of widely distributed standard price
quotations, at any private sale). Subject to Section 6 of the
Operating Agreement with respect to the Pledged Interests, the
Collateral Agent is authorized in connection with any sale of the
Pledged Securities or the Pledged Interests, if it deems it advisable
so to do, (i) to restrict the prospective bidders on or purchasers of
any of the Pledged Securities or Pledged Interests to a limited number
of sophisticated investors who will represent and agree that they are
purchasing for their own account for investment and not with a view to
the distribution or sale of any of such Pledged Securities or Pledged
Interests, (ii) to cause to be placed on certificates for any or all
of the Pledged Securities or Pledged Interests or on any other
securities pledged hereunder a legend to the effect that such security
has not been registered under the Securities Act of 1933 and may not
be disposed of in violation of the
22
provision of said Act, and (iii) to impose such other limitations or
conditions in connection with any such sale as the Collateral Agent
reasonably deems necessary or advisable in order to comply with said
Act or any other law. Each Grantor will execute and deliver such
documents and take such other action as the Collateral Agent deems
necessary or advisable in order that any such sale may be made in
compliance with law. Upon any such sale the Collateral Agent shall
have the right to deliver, assign and transfer to the purchaser
thereof the Collateral so sold. Each purchaser at any such sale shall
hold the Collateral so sold to it absolutely free from any claim or
right of whatsoever kind created by or through any Grantor, including
any equity or right of redemption of any Grantor which may be waived,
and each Grantor, to the extent permitted by law, hereby specifically
waives all rights of redemption, stay or appraisal which it has or may
have under any law now existing or hereafter adopted. The notice (if
any) of such sale required by Section 7 shall (1) in case of a public
sale, state the time and place fixed for such sale, (2) in the case of
a private sale, state the day after which such sale may be consummated
and (3) in the case of a sale at a broker's board or on a securities
exchange, state the board or exchange at which such sale is to be made
and the day on which the Collateral, or the portion thereof so being
sold, will first be offered for sale at such board or exchange. Any
such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Collateral Agent may
fix in the notice of such sale. At any such sale the Collateral may
be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may determine. The Collateral Agent shall not be
obligated to make any such sale pursuant to any such notice. The
Collateral Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to
time by announcement at the time and place fixed for the sale, and
such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral
on credit or for future delivery, the Collateral so sold may be
retained by the Collateral Agent until the selling price is paid by
the purchaser thereof, but the Collateral Agent shall not incur any
liability in case of the failure of such purchaser to take up and pay
for the Collateral so sold and, in case of any such failure, such
Collateral may again be sold upon like notice. The Collateral Agent,
instead of exercising the power of sale herein conferred upon it, may
proceed by a suit or suits at law or in equity to foreclose the
Security Interests and sell the Collateral, or any portion thereof,
under a judgment or decree of a court or courts of competent
jurisdiction.
23
(C) For the purpose of enforcing any and all rights and
remedies under this Agreement, the Collateral Agent may (i) require
the Borrower to, and the Borrower agrees that it will, at its expense
and upon the request of the Collateral Agent, forthwith assemble all
or any part of the Collateral as directed by the Collateral Agent and
make it available at a place designated by the Collateral Agent which
is, in its opinion, reasonably convenient to the Collateral Agent and
the Borrower, whether at the premises of the Borrower or otherwise,
(ii) to the extent permitted by applicable law, enter, with or without
process of law and without breach of the peace, any premises where any
of the Collateral is or may be located, and without charge or
liability to it seize and remove such Collateral from such premises,
(iii) have access to and use such Grantor's books and records relating
to the Collateral and (iv) prior to the disposition of the Collateral,
store or transfer it without charge in or by means of any storage or
transportation facility owned or, to the extent the Borrower is
permitted to use a leased facility, leased by the Borrower, process,
repair or recondition it or otherwise prepare it for disposition in
any manner and to the extent the Collateral Agent deems appropriate
and, in connection with such preparation and disposition, use without
charge any trademark, trade name, copyright, patent or technical
process used by the Borrower, but only to the extent the Borrower is
permitted to use such trademark, trade name, copyright, patent or
technical process.
SECTION 9. Limitation on Duty of Collateral Agent in
-----------------------------------------
Respect of Collateral
---------------------
Beyond the exercise of reasonable care in the custody
thereof, the Collateral Agent shall have no duty as to any Collateral
in its possession or control or in the possession or control of any
agent or bailee or any income thereon or as to the preservation of
rights against prior parties or any other rights pertaining thereto.
The Collateral Agent shall be deemed to have exercised reasonable care
in the custody of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which it accords its
own property, and shall not be liable or responsible for any loss or
damage to any of the Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any warehouseman,
carrier, forwarding agency, consignee or other agent or bailee
selected by the Collateral Agent in good faith.
24
SECTION 10. Application of Proceeds
-----------------------
(A) If an Enforcement Notice or an Automatic Release
Termination is in effect, the proceeds of any sale of, or other
realization upon, all or any part of the Collateral and any cash
otherwise held by the Collateral Agent pursuant to this Agreement
shall be applied by the Collateral Agent in the following order of
priorities:
first, to payment of the expenses of such sale or other
-----
realization, including reasonable compensation to agents and counsel
for the Collateral Agent, and all expenses, liabilities and advances
incurred or made by the Collateral Agent in connection therewith, and
any other unreimbursed expenses for which the Collateral Agent, the
Administrative Agent, or any Lender is to be reimbursed pursuant to
Section 13 hereof and unpaid fees owing to the Collateral Agent under
Section 13 hereof;
second, to the ratable payment of accrued but unpaid
------
interest, calculated from the interest payment date immediately
preceding the giving of the Enforcement Notice or the effectiveness of
the Automatic Release Termination, or such other date as shall have
been notified to the Collateral Agent, on all amounts included in the
Secured Principal Amount;
third, subject to the next to the last sentence of this
-----
subsection (A), to the ratable payment of all amounts included in the
Secured Principal Amount; fourth, to the ratable payment of all other
Secured Obligations, until all Secured Obligations shall have been
paid in full; and
finally, to payment to the relevant Grantor or Grantors or
-------
such Grantor's successors or assigns, or as a court of competent
jurisdiction may direct, of any surplus then remaining from such
proceeds.
The Collateral Agent may make distributions hereunder in cash
or in kind or, on a ratable basis, in any combination thereof. If at
any time any monies collected or received by the Collateral Agent are
distributable pursuant to this Section in respect of a Letter of
Credit Obligation or Secured Tax Exempt Debt, and if the
Administrative Agent or the holder of such Secured Tax Exempt Debt
shall notify the Collateral Agent that no provision is made under the
relevant agreement or other instrument for the application
25
of such moneys (whether because such Letter of Credit Obligation is
contingent or such Secured Tax Exempt Debt has not become due and
payable or otherwise), then the Collateral Agent shall invest such
amounts in Liquid Investments at the direction of the Administrative
Agent or such holder and shall hold all such amounts so distributable
and all such investments and the net proceeds thereof in trust until
such time as the Administrative Agent or such holder shall request the
delivery thereof by the Collateral Agent for application to amounts
payable with respect to such Letter of Credit Obligation or Secured
Tax Exempt Debt. If the Collateral Agent holds any amounts which were
distributable in respect of a Letter of Credit Obligation or any
Secured Tax Exempt Debt after the relevant obligation has terminated
or matured and all amounts payable with respect thereto have been
paid, such amounts shall be applied by the Collateral Agent in the
order of priorities set forth in this subsection (A).
(B) In making the determinations and allocations required by
this Section, the Collateral Agent shall have no liability to any of
the Secured Parties for actions taken in reliance on information
supplied by the Secured Parties as to the amounts of the Secured
Obligations held by them. All distributions made by the Collateral
Agent pursuant to this Section shall be final and the Collateral Agent
shall have no duty to inquire as to the application by the Secured
Parties of any amount distributed to them. However, if at any time
the Collateral Agent determines that an allocation or distribution
previously made pursuant to this Section was based on a mistake of
fact (including, without limiting the generality of the foregoing,
mistakes based on an assumption that principal or interest has been
paid by payments which are subsequently recovered from the recipient
thereof through the operation of any bankruptcy, reorganization,
insolvency or other laws or otherwise), the Collateral Agent may in
its discretion, but shall not be obligated to, adjust subsequent
allocations and distributions hereunder so that, on a cumulative
basis, the Secured Parties receive the distributions to which they
would have been entitled if such mistake of fact had not been made.
SECTION 11. Concerning the Collateral Agent
-------------------------------
(A) The Collateral Agent is authorized to take all such
action as is provided to be taken by it as Collateral Agent hereunder
and all other action reasonably incidental thereto. As to any matters
not expressly provided for herein (including, without limitation, the
timing and
26
methods of realization upon the Collateral) the Collateral Agent shall
act or refrain from acting in accordance with written instructions
from the Required Secured Parties or, in the absence of such
instructions, in accordance with its discretion; provided that the
Collateral Agent shall not be required to act (i) if upon advice of
counsel the Collateral Agent concludes that any such action creates
potential liability on its part or constitutes a violation of law or
(ii) the Collateral Agent shall not be indemnified to its satisfaction
in advance in respect of its costs and expenses in connection
therewith.
(B) J.P. Morgan Delaware and its Affiliates may accept
deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any Subsidiary or Affiliate of the
Borrower as if it were not the Collateral Agent hereunder.
(C) The obligations of the Collateral Agent hereunder are
only those expressly set forth herein. Without limiting the
generality of the foregoing, the Collateral Agent shall not be
required to take any action with respect to any Enforcement Notice or
Automatic Release Termination, except as expressly provided herein.
(D) The Collateral Agent may consult with legal counsel (who
may be counsel for the Borrower), 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.
(E) Neither the Collateral Agent nor any director, officer,
agent, or employee of the Collateral Agent shall be liable for any
action taken or not taken by it in connection herewith (i) with the
consent or at the request of the Required Secured Parties (or, where
required by the terms hereof, the Lenders) or (ii) in the absence of
its own gross negligence or willful misconduct. Neither the
Collateral Agent nor any director, officer, agent or employee of the
Collateral Agent shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with this Agreement; (ii) the
performance or observance of any of the covenants or agreements of any
Grantor herein; or (iii) the validity, effectiveness or genuineness of
this Agreement or any instrument or writing furnished in connection
herewith. The Collateral Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement,
or other writing (which may be a bank wire, facsimile or similar
writing) believed by it to be genuine
27
or to be signed by the proper party or parties. The Collateral Agent
shall not be responsible for the existence, genuineness or value of
any of the Collateral or for the validity, perfection, priority or
enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or
omission to act on its part hereunder. The Collateral Agent shall
have no duty to ascertain or inquire as to the performance or
observance of any of the terms of this Agreement by any Grantor.
(F) The Lenders shall, ratably in accordance with their
respective shares of the Secured Principal Amount on the relevant
Determination Date (as defined below), indemnify the Collateral Agent
(to the extent not reimbursed by the Borrower) against any cost,
expense (including counsel fees and disbursements), claim, demand,
action, loss or liability (except such as result from the Collateral
Agent's gross negligence or willful misconduct) that the Collateral
Agent may suffer or incur in connection with this Agreement or any
action taken or omitted by the Collateral Agent hereunder or
thereunder. The Determination Date for any such indemnification shall
be the earliest date (as determined by the Collateral Agent) on which
any of the acts, omissions or other events giving rise to the relevant
cost, expense, claim, demand, action, loss or liability occurred.
(G) The Collateral Agent may resign at any time (and, if so
requested by the Required Lenders after refusing to act on behalf of
the relevant Grantor pursuant to the first sentence of Section 13(B),
shall resign) by giving written notice thereof to the other Secured
Parties and the Borrower. Upon any such resignation, the Required
Lenders shall have the right, after consultation with the Borrower, to
appoint a successor Collateral Agent. If no successor Collateral
Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring
Collateral Agent gives such notice of resignation, then the retiring
Collateral Agent may, on behalf of the other Secured Parties, appoint
a successor Collateral Agent, which shall be a bank organized under
the laws of the United States or of any State thereof and having a
combined capital and surplus of at least $200,000,000. Upon the
acceptance of its appointment as Collateral Agent hereunder by a
successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights and duties
of the retiring Collateral Agent, and the retiring Collateral Agent
shall be discharged from its duties and obligations hereunder. After
any retiring Collateral Agent's
28
resignation hereunder as Collateral Agent, the provisions of this
Section shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Collateral Agent.
SECTION 12. Appointment of Co-Agents
------------------------
At any time or times, in order to comply with any legal
requirement in any jurisdiction or, with the consent of the Borrower,
for any other reason, the Collateral Agent may appoint another bank or
trust company or one or more other persons, either to act as co-agent
or co-agents, jointly with the Collateral Agent, or to act as separate
agent or agents on behalf of the Secured Parties with such power and
authority as may be necessary for the effectual operation of the
provisions hereof and may be specified in the instrument of
appointment (which may, in the discretion of the Collateral Agent,
include provisions for the protection of such co-agent or separate
agent similar to the provisions of Sections 11 and 13).
SECTION 13. Collateral Agent's Fee; Expenses
--------------------------------
(A) The Borrower shall pay to the Collateral Agent, as
compensation for its services hereunder, from time to time a fee in
the amount previously agreed between the Borrower and the Collateral
Agent.
(B) If any Grantor fails to comply with the provisions of the
Inventory Credit Agreement or this Agreement, such that the value of
any Collateral or the validity, perfection, rank or value of any
Security Interest is thereby diminished or potentially diminished or
put at risk, the Collateral Agent, if requested by the Required
Lenders, may, but shall not be required to, effect such compliance on
behalf of such Grantor, and such Grantor shall reimburse the
Collateral Agent for the costs thereof on demand. All insurance
expenses and all expenses of protecting, storing, warehousing,
appraising, insuring, handling, maintaining and shipping the
Collateral and any and all excise, property, sales and use taxes
imposed by any state, federal, or local authority on any of the
Collateral, or in respect of periodic appraisals (if an Enforcement
Notice or Automatic Release Termination is in effect) and inspections
of the Collateral to the extent the same may be reasonably requested
by the Required Lenders from time to time, or in respect of the sale
or other disposition thereof, shall be
29
borne and paid by such Grantor; and if such Grantor fails to promptly
pay any portion thereof when due, the Collateral Agent or any other
Secured Party may, at its option, but shall not be required to, pay
the same and charge such Grantor's account therefor, and such Grantor
agrees to reimburse the Collateral Agent or such other Secured Party
therefor on demand. All sums so paid or incurred by the Collateral
Agent or any other Secured Party for any of the foregoing and any and
all other sums for which such Grantor may become liable hereunder and
all costs and expenses (including attorneys' fees, legal expenses and
court costs) reasonably incurred by the Collateral Agent or any other
Secured Party in enforcing or protecting the Security Interests or any
of their rights or remedies under this Agreement, shall, together with
interest thereon until paid at the rate applicable to Base Rate Loans
under the Inventory Credit Agreement, be additional Secured
Obligations hereunder.
SECTION 14. Termination of Security Interests; Release
------------------------------------------
of Collateral
-------------
The Security Interests shall terminate upon (i) the repayment
in full of (x) all principal of and interest on any Loan made under,
or any Note issued pursuant to, the Inventory Credit Agreement, (y)
all Reimbursement Obligations and (z) all other amounts payable by the
Borrower hereunder or under the Inventory Credit Agreement, (ii) the
expiration of all Letters of Credit and (iii) the termination of the
Commitments under the Inventory Credit Agreement; provided that, if
any Secured Tax Exempt Debt is outstanding on the date of such
termination, the Borrower shall grant to the holders of such Secured
Tax Exempt Debt a first priority security interest (x) in Liquid
Investments (or caused to be issued by a bank acceptable to such
holders a letter of credit naming such holders as beneficiaries) in an
amount exceeding 115% of the amount of Secured Tax Exempt Debt
outstanding on the date of such termination, or (y) in other
collateral, with a fair market value (as determined by such holders)
exceeding 125% of the amount of Secured Tax Exempt Debt outstanding on
the date of such termination, in each case on the terms and conditions
and pursuant to documentation reasonably satisfactory to such holders.
When the Security Interests terminate, all rights to any remaining
Collateral shall revert to the relevant Grantor. Prior to such
termination of the Security Interests, Collateral may be released
pursuant to Section 5. Upon any such termination of the Security
Interests, the Collateral Agent will, at the expense of the relevant
Grantor, execute
30
and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence the termination of the Security
Interests.
SECTION 15. Guaranties
----------
(A)The Special Purpose Members, jointly and severally,
unconditionally guarantee the full and punctual payment (whether at
stated maturity, upon acceleration or otherwise) of the Secured
Obligations (the "Guaranties"). Upon failure by the Borrower to pay
punctually any such amount, the Grantors shall forthwith on demand pay
the amount not so paid at the place and in the manner specified in
this Agreement.
(B) The obligations of the Special Purpose Members hereunder
shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or
otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower under this
Agreement, the Inventory Credit Agreement or any Secured Obligation,
by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement, the Inventory Credit Agreement or any Secured Obligation;
(iii) any release, impairment, non-perfection or invalidity
of any direct or indirect security for any obligation of the Borrower
under this Agreement, the Inventory Credit Agreement or any Secured
Obligation;
(iv) any change in the corporate existence, structure or
ownership of the Borrower, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower or
its assets or any resulting release or discharge of any obligation of
the Borrower contained in this Agreement, the Inventory Credit
Agreement or any Secured Obligation;
(v) the existence of any claim, set-off or other rights which
the Special Purpose Member may have at any time against the Borrower,
the Agents, the L/C Issuing Banks or any Lender or any other
corporation or person, whether in
31
connection herewith or any unrelated transactions, provided that
nothing herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim; (vi) any invalidity or
unenforceability relating to or against the Borrower for any reason of
this Agreement, the Inventory Credit Agreement or any Secured
Obligation, or any provision of applicable law or regulation
purporting to prohibit the payment by the Borrower of any Secured
Obligation; or
(vii) any other act or omission to act or delay of any kind
by the Borrower, the Agents, the L/C Issuing Banks or any Lender or
any other Person or any other circumstance whatsoever which might, but
for the provisions of this paragraph, constitute a legal or equitable
discharge of or defense to the Special Purpose Members' obligations
hereunder.
(C) The Special Purpose Members' obligations hereunder shall
remain in full force and effect until the Commitments shall have
terminated and all Secured Obligations have been paid in full. If at
any time any payment of any Secured Obligation is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Borrower or otherwise, the Special Purpose
Members' obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such
time.
(D) The Special Purpose Members irrevocably waive acceptance
hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be
taken by any Person against any Borrower or any other person.
(E) Upon making any payment with respect to the Borrower
hereunder, each Special Purpose Member shall be subrogated to the
rights of the payee against the Borrower with respect to such payment;
provided that such Special Purpose Member shall not enforce any
payment by way of subrogation until all Secured Obligations have been
paid in full.
(F) If acceleration of the time for payment of any amount
payable by the Borrower under this Agreement, the Inventory Credit
Agreement or the Secured Obligations is stayed upon the insolvency,
bankruptcy or reorganization of the Borrower, all such amounts
otherwise subject to acceleration under the terms of the Inventory
Credit Agreement shall nonetheless be payable by the Special
32
Purpose Member hereunder forthwith on demand by the Administrative
Agent made at the request of the Required Lenders.
(G) Notwithstanding any other provision of this Section 15,
recourse against the Special Purpose Members in respect of the
Guaranties shall be limited to the Special Purpose Members'
Collateral.
SECTION 16. Notices
-------
All notices, communications and distributions hereunder shall
be given (i) in the case of the Borrower, the Agents, the L/C Issuing
Banks and the Lenders, in accordance with Section 9.1 of the Inventory
Credit Agreement, and (ii) in the case of each Special Purpose Member,
at its address or facsimile number set forth on the signature pages
hereof.
SECTION 17. Waivers, Non-Exclusive Remedies
-------------------------------
No failure on the part of the Collateral Agent to exercise,
and no delay in exercising and no course of dealing with respect to,
any right under this Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise by the Collateral Agent of any
right under this Agreement preclude any other or further exercise
thereof or the exercise of any other right. The rights and remedies
in this Agreement shall be cumulative and are not exclusive of any
other remedies provided by law.
SECTION 18. Successors and Assigns
----------------------
This Agreement is for the benefit of the Secured Parties and
their successors and assigns, and in the event of an assignment of all
or any of the Secured Obligations, the rights of the assignor
hereunder, to the extent applicable to the indebtedness so assigned,
shall automatically be transferred with such indebtedness. This
Agreement shall be binding on each Grantor and its successors and
assigns.
33
SECTION 19. Changes in Writing
------------------
Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only by one or
more writings signed by each Grantor and by the Collateral Agent with
the consent of the Required Lenders (and, if the rights or duties of
the Administrative Agent are affected thereby, by the Administrative
Agent); provided that (i) the allocations and priorities set forth in
Section 10 may only be changed with the consent of each Secured Party
adversely affected thereby, and (ii) the definition of "Secured
Obligations", Section 5, Section 14, Section 15 and the percentage of
the Commitments or the aggregate unpaid principal amount of the Notes
or the Secured Principal Amount which shall be required for the
Lenders or any of them to take any action under this Section or any
other provision of this Agreement may only be changed with the consent
of all the Lenders.
SECTION 20. New York Law
------------
This Agreement shall be construed in accordance with and
governed by the laws of the State of New York, except as otherwise
required by mandatory provisions of law and except to the extent that
remedies provided by the laws of any jurisdiction other than New York
are governed by the laws of such jurisdiction.
SECTION 21. Severability
------------
If any provision hereof is invalid or unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the
other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Secured
Parties in order to carry out the intentions of the parties hereto as
nearly as may be possible; and (ii) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the
validity or enforceability of such provision in any other
jurisdiction.
34
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers
as of the day and year first above written.
BETHLEHEM STEEL CORPORATION
By___________________________
Name:
Title:
BETHLEHEM STEEL CREDITAFFILIATE ONE, INC.
By___________________________
Name:
Title:
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
Telephone: 410-388-7781
Facsimile: 410-388-7783
Attention: Edmund P. Reybitz
BETHLEHEM STEEL CREDITAFFILIATE TWO, INC.
By___________________________
Name:
Title:
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
Telephone: 410-388-7782
35
Facsimile: 410-388-7783
Attention: Edmund P. Reybitz
36
J.P. MORGAN DELAWARE, as
Structuring and Collateral
Agent
By___________________________
Name:
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as
Administrative Agent
By___________________________
Name:
Title:
37
Schedule 2(B)(ii)
Description of Collateral
[Bethlehem Steel Credit Affiliate One, Inc.] [Bethlehem
Steel Credit Affiliate Two, Inc.], as Debtor, J.P. Morgan
Delaware, as Structuring and Collateral Agent. All of the
debtors' right, title and interest in and to the limited
liability company interest in Bethlehem Steel Funding, LLC,
a Maryland limited liability company, and its successors,
now owned or hereafter acquired by debtor, and all of
debtor's rights and privileges with respect thereto
(including, without limitation, all rights under the
Operating Agreement of Bethlehem Steel Funding, LLC), all
certificates evidencing any limited liability company
interest, and all income and profits thereon, and all
payments and distributions with respect thereto, and all
proceeds of the foregoing, including all cash proceeds and
all accounts, chattel paper, contract rights, general
intangibles, inventory and documents constituting noncash
proceeds, in each case now owned or hereafter acquired and
wherever located.
ANNEX A
to EXHIBIT E
PERFECTION CERTIFICATE
The undersigned, the chief financial officer and chief
accounting officer of Bethlehem Steel Corporation, a Delaware
corporation (the "Borrower"), hereby certify with reference to the
Inventory Security and Pledge Agreement dated as of September 12, 1995
among the Borrower, the Special Purpose Members, J.P. Morgan
Delaware, as Structuring and Collateral Agent and Morgan Guaranty
Trust Company of New York, as Administrative Agent (terms defined
therein being used herein as therein defined), to the Structuring and
Collateral Agent, the Administrative Agent and each Lender as follows:
1. Names. (a) The exact corporate name of the Borrower as
it appears in its restated certificate of incorporation is as follows:
Bethlehem Steel Corporation
(b) The following is a list of all other names
(including trade names or similar appellations) used by the
Borrower or any of its divisions or other unincorporated
business units which produce or have produced goods which
would be included in the definition of Inventories at any
time during the past five years:
2. Current Locations. (a) The chief executive office of the
Borrower is located at the following address:
Mailing
Address County State
------- ------ -----
(b) The following are all the locations where the Borrower
maintains any Inventories in the United States not identified above:
Mailing
Address County State
------- ------ -----
(c) The following are the names and addresses of all Persons
other than the Borrower which have possession of any of the Borrower's
Inventories in the United States:
Mailing
Address County State
------- ------ -----
(d) The following are all the places of business of the
Borrower not identified above which are located in states in which the
chief executive office of the Borrower or any Inventories are located:
Mailing
Address County State
------- ------ -----
2
3. Prior Locations. (a) Set forth below is the information
required by subparagraphs (a) and (d) of paragraph 2 with respect to
each location or place ofbusiness not identified in paragraph 2 and
maintained by the Borrower at any time during the past five years in a
state in which it has maintained a location or place of business
during the past four months:
(b) Set forth below is the information required by
subparagraphs (b) and (c) of paragraph 2 with respect to each location
or bailee where or with whom Inventories have been lodged at any time
during the past four months:
4. Unusual Transactions. All Inventories of the Borrower
have been acquired by the Borrower in the ordinary course of its
business.
5. File Search Reports. Attached hereto as Schedule 5(A) is
a true copy of a file search report from the Uniform Commercial Code
filing officer in each jurisdiction identified in paragraph 2 or 3
above with respect to each name set forth in paragraph 1 above.
Attached hereto as Schedule 5(B) is a true copy of each financing
statement or other filing identified in such file search reports.
6. UCC Filings. A duly signed financing statement on Form
UCC-1 in substantially the form of Schedule 6(A) hereto has been duly
filed in the Uniform Commercial Code filing office in each
jurisdiction identified in paragraph 2 hereof. Attached hereto as
Schedule 6(B) is a true copy of each such filing duly acknowledged by
the filing officer.
7. Schedule of Filings. Attached hereto as Schedule 7 is a
schedule setting forth filing information with respect to the filings
described in paragraph 6 above.
3
8. Filing Fees. All filing fees and taxes payable in
connection with the filings described in paragraph 6 above have been
paid.
4
IN WITNESS WHEREOF, we have hereunto set our hands this ___
day of September, 1995.
_______________________________
Title:
________________________________
Title:
5
SCHEDULE 6(A)
Description of Collateral
-------------------------
All (i) Inventories and documents, books and records
pertaining to Inventories, documents and proceeds thereof, in each
case, whether now owned or hereafter acquired or arising and wherever
located, and the proceeds of the foregoing, (ii) shares of capital
stock and debt instruments issued by Bethlehem Steel Credit Affiliate
One, Inc. and Bethlehem Steel Credit Affiliate Two, Inc., and each of
their successors to the debtor, now owned or hereafter acquired, and
all rights and privileges with respect thereto, and all income and
profits thereon, and all dividends, interest and other payments and
distributions with respect thereto, and all proceeds of the foregoing,
including, without limitation, all cash proceeds and all accounts,
chattel paper, contract rights, general intangibles, inventory and
documents constituting noncash proceeds of the foregoing, in each case
now owned or hereafter acquired and wherever located, and (iii) of the
debtor's right, title and interest in and to the limited liability
company interest in, and debt instruments issued by, Bethlehem Steel
Funding, LLC, a Maryland limited liability company, and its
successors, now owned or hereafter acquired, and all rights and
privileges with respect thereto (including, without limitation, all
rights under the Operating Agreement of Bethlehem Steel Funding, LLC),
all certificates evidencing any limited liability company interest,
and all income and profits thereon, and all payments, distributions,
interest and other payments with respect to the limited liability
company interest or the debt instruments, and all proceeds of the
foregoing, including, without limitation, all cash proceeds and all
accounts, chattel paper, contract rights, general intangibles,
inventory and documents constituting noncash
1
proceeds of the foregoing, in each case now owned or hereafter
acquired and wherever located.
"Inventories" means now owned or hereafter acquired by
the debtor, all "inventory" (as defined in the UCC),
wherever located, and shall also mean and include, without
limitation, all raw materials and other materials and
supplies, work-in-process and finished goods and any
products made or processed therefrom and all substances, if
any, commingled therewith or added thereto, or which, in
accordance with generally accepted accounting principles,
would be included in inventories on the debtor's balance
sheet, (excluding, however, any of the foregoing which (i)
is located outside the United States of America, (ii) is
held at the debtor's marine construction facilities at
Sparrows Point, Maryland or Port Arthur, Texas for sale or
other disposition, or to be furnished by the debtor under a
contract for services, or to be used or consumed by the
debtor, in the debtor's marine construction business or
(iii) has been returned to or repossessed or stopped in
transit by the debtor (including all additions and
accessions thereto and replacements thereof)).
2
SCHEDULE 7
SCHEDULE OF FILINGS
Debtor Filing Officer File NumberDate of Filing*
------ -------------- -------------------------
_______________
* Indicate lapse date, if other than fifth anniversary.
ANNEX B
TO EXHIBIT E
FORM OF OPINION OF
COUNSEL FOR BORROWER
--------------------
1. The Inventory Security and Pledge Agreement creates a
valid security interest, for the benefit of the Secured Parties, in
all the Grantors' right, title and interest in all Collateral to the
extent the UCC is applicable thereto (the "Security Interest").
2. UCC financing statements and amendments thereto
(collectively, the "Financing Statements") have been filed in the
filing offices in the jurisdictions listed in Schedule 7 to the
Perfection Certificate (the " Filing Jurisdictions") and in the
jurisdiction identified in or pursuant to Section 16 of the Inventory
Security Agreement, which are all of the offices in which filings are
required to perfect the Security Interest, to the extent the Security
Interest may be perfected by filing under the UCC, and no further
filing or recording of any document or instrument or other action will
be required so to perfect the Security Interest, except that (i)
continuation statements with respect to each Financing Statement must
be filed within the respective time periods set forth on Schedule 7 to
the Perfection Certificate; (ii) additional filings may be necessary
if any Grantor changes its name, identity or corporate structure or
the jurisdiction in which its places of business, its chief executive
office or the Collateral are located; and (iii) I express no opinion
on the perfection of, or need for further filing or recording to
perfect, the Security Interest in Collateral now or hereafter located
in any jurisdiction other than the Filing Jurisdictions.
3. There are
(i) based solely on information provided to us by [Access
Information Services, Inc.] through the dates of searches in each of
the respective filing offices as set
forth in Schedule A hereto and made a part hereof, no UCC financing
statements which name the Borrower as debtor or seller and cover any
of the Collateral, other than the Financing Statements, listed in the
available records in the UCC filing offices set forth in such filing
offices, which include all of the offices prescribed under the UCC as
the offices in which filings should have been made to perfect security
interests in the Collateral; and
(ii) no notices of the filing of any federal tax lien
(arising under Section 6321 of the Internal Revenue Code) or any lien
of the Pension Benefit Guaranty Corporation (arising under ERISA)
covering any of the Collateral listed in the available records in the
offices listed in Schedule B attached hereto and made a part hereof,
which include all of the offices having files which must be searched
in order to fully determine the existence of notices of the filing of
federal tax liens (arising under Section 6321 of the Internal Revenue
Code) and liens of the Pension Benefit Guaranty Corporation (arising
under ERISA) on the Collateral.
4. The Security Interest validly secures the payment of all
future Loans made by the Lenders to the Borrower and all Reimbursement
Obligations arising in connection with Letters of Credit issued by the
L/C Issuing Banks, whether or not at the time such Loans are made or
Letters of Credit are issued an Event of Default or other event not
within the control of the Lenders or the L/C Issuing Banks has
relieved or may relieve the Lenders from their obligations to make
such Loans or the L/C Issuing Banks from their obligations to issue
Letters of Credit, and is perfected to the extent set forth in
paragraph 2 above with respect to such future Loans and Reimbursement
Obligations. Except for (i) Instruments (and money) which must be in
the possession of the Collateral Agent in order to perfect the
Security Interest therein, (ii) Liquid Investments in book-entry form,
as to which the Inventory Security Agreement requires an opinion of
counsel that appropriate measures have been taken to perfect the
Security Interest therein and (iii) Proceeds (other than Proceeds in
which the Security Interest is perfected by reason of Section 9-306 of
the UCC), I am not aware of the existence of any Collateral as to
which the Security Interest cannot be perfected by filing under the
UCC. Insofar as the priority thereof is governed by the UCC, the
Security Interest has the same priority with respect to future Loans
and Reimbursement Obligations on the date such Loans are made and such
Reimbursement Obligations are incurred as it will have on such date
with respect to Loans made and Letters of Credit issued on the date
hereof. I call to your attention that notwithstanding the priorities
2
governed by the UCC, the Security Interest may not have priority in
certain circumstances over a Federal Lien. To the extent the Security
Interest secures Loans, (i) the Security Interest in Collateral
acquired after the filing of a Federal Lien has priority over such
Federal Lien only with respect to Collateral that is commercial
financing security under Section 6323(c)(2)(C) of the Internal Revenue
Code acquired by the Borrower in the ordinary course of its trade or
business before the 46th day following such filing and (ii) the
Security Interest has priority over such Federal Lien to the extent it
secures Loans made after the date of filing of such Federal Lien only
if such future Loans are made before the earlier of the 46th day after
such Federal Lien is filed or the time that the relevant Lender or
Lenders have actual notice or knowledge, within the meaning of Section
6323(i)(1) of the Internal Revenue Code, that such Federal Lien was
filed. To the extent the Security Interest secures Reimbursement
Obligations arising in connection with Letters of Credit, (i) the
Security Interest in Collateral acquired after the filing of a Federal
Lien may have priority over such Federal Lien only with respect to
Collateral whose acquisition is directly traceable to a disbursement
under such Letters of Credit and (ii) the Security Interest may have
priority over a Federal Lien only to the extent such Security Interest
secures Reimbursement Obligations arising under irrevocable Letters of
Credit issued prior to the filing of such Federal Lien for the benefit
of a party not affiliated with the Borrower.
3
EXHIBIT F
BORROWING BASE CERTIFICATE
I, _________________, [Chief Financial
Officer/Treasurer/Controller], for Bethlehem Steel Corporation (the
"Borrower") DO HEREBY CERTIFY, in accordance with Section 5.1 of the
Inventory Credit Agreement dated as of September 12, 1995 among the
Borrower, the Lenders listed therein, Morgan Guaranty Trust Company of
New York, as Administrative Agent, and J.P. Morgan Delaware, as
Structuring and Collateral Agent (the " Credit Agreement", capitalized
terms used herein and not otherwise defined herein having the meanings
assigned to them in the Credit Agreement), that attached hereto is the
Borrower's good faith estimate as to the calculation of the Borrowing
Base as of _____________.
IN WITNESS WHEREOF, I have signed this certificate as of this
______ day of ___________.
__________________________
Name:
Title:
EXHIBIT G
Form of Opinion of Counsel to
Bethlehem Steel Corporation
[Letterhead of Bethlehem Steel Corporation]
September 12, 1995
Morgan Guaranty Trust
Company of New York, as
Administrative Agent
60 Wall Street
New York, New York 10260
J.P. Morgan Delaware, as Structuring
and Collateral Agent
902 Market Street
Wilmington, Delaware 19801
The Lenders (as defined in the
Inventory Credit Agreement
as referred to below)
Ladies and Gentlemen:
I have acted as counsel for Bethlehem Steel Corporation (the
"Borrower") in connection with (i) the Inventory Credit Agreement (the
"Inventory Credit Agreement") dated as of September 12, 1995 among the
Borrower, the lenders listed on the signature pages thereof (the
"Lenders"), Morgan Guaranty Trust Company of New York, as
Administrative Agent (the "Administrative Agent") and J.P. Morgan
Delaware as Structuring and Collateral Agent (the " Collateral
Agent"), (ii) the Notes and (iii) the Inventory Security and Pledge
Agreement (the "Inventory Security Agreement") dated as of September
12, 1995 among the Borrower, the Special Purpose Members, J.P. Morgan
Delaware, the Collateral Agent and the Administrative Agent (documents
(i) through (iii) are referred to herein as the "Financing
Documents"). Terms defined in the Inventory Credit Agreement are used
herein as therein defined. This opinion is being rendered to you
pursuant to Section 3.1 of the Inventory Credit Agreement.
I have examined originals or copies, certified or otherwise
identified to my satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have
conducted such other investigations of fact and law as I have deemed
necessary or advisable for purposes of this opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware and has all
corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted.
2. Each Special Purpose Member is a corporation duly
incorporated, validly existing and in good standing under the laws of
Maryland and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on
its business as now conducted.
3. The execution, delivery and performance by the Borrower
of the Financing Documents are within the Borrower's corporate powers,
have been duly authorized by all necessary corporate action, require
no action by or in respect of, or filing with, any governmental body,
agency or official (except for the filing of UCC financing statements
as contemplated by the Inventory Security Agreement) and do not
contravene, or constitute a default under, any provision
2
of applicable law or regulation or of the certificate of incorporation
or by-laws, as amended, of the Borrower or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the
Borrower and known to me after due inquiry, or result in the creation
or imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries (except the Security Interest as hereinafter defined).
4. The execution, delivery and performance by each Special
Purpose Member of the Inventory Security Agreement are within the such
Member's corporate powers, have been duly authorized by all necessary
corporate action, require no action by or in respect of, or filing
with, any governmental body, agency or official (except for the filing
of UCC financing statements as contemplated by the Inventory Security
Agreement) and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the articles of
incorporation or by-laws, as amended, of such Member or of any
agreement, judgment, injunction, order, decree or other instrument
binding upon such Member and known to me after due inquiry, or result
in the creation or imposition of any Lien on any asset of such Member
(except the Security Interest as hereinafter defined).
5. The Financing Documents constitute valid and binding
agreements of the Borrower, enforceable against the Borrower in
accordance with its terms, except to the extent that the (i) the
enforceability thereof may be limited by bankruptcy, reorganization,
insolvency, moratorium or other similar laws relating to the
enforcement of creditors' rights generally from time to time in effect
and by general equitable principles regardless of whether such
enforceability is considered in a proceeding in equity or at law and
(ii) certain of the remedial provisions of the Inventory Security
Agreement may be limited by applicable law, although such limitations
do not in my opinion make the remedies provided for therein (taken as
a whole) inadequate for the practical realization of the benefits
intended to be afforded thereby.
6. The Inventory Security Agreement constitutes a valid and
binding agreement of each of the Special Purpose Members, enforceable
against such Member in accordance with its terms, except to the extent
that the (i) the enforceability thereof may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws relating
to the enforcement of creditors' rights generally from time to time in
effect and by general equitable principles regardless of whether such
enforceability is considered in a proceeding in equity or at law and
(ii) certain of the remedial provisions may be limited by
3
applicable law, although such limitations do not in my opinion make
the remedies provided for therein (taken as a whole) inadequate for
the practical realization of the benefits intended to be afforded
thereby.
7. To the best of my personal knowledge after due inquiry,
there is no action, suit or proceeding pending against the Borrower or
any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official, in which there is a reasonable
possibility of an adverse decision which could materially adversely
affect the ability of the Borrower or such Subsidiary to perform its
obligations under the Financing Documents or which in any manner draws
into question the validity of the Financing Documents.
8. The Inventory Security Agreement creates a valid security
interest, for the benefit of the Secured Parties, in all the Grantors'
right, title and interest in all Collateral to the extent the UCC is
applicable to the creation of a security interest therein (the "
Security Interest").
9. UCC financing statements (collectively, the "Financing
Statements") have been filed in the filing offices in the
jurisdictions listed in Schedule 7 to the Perfection Certificate dated
as of the date hereof (the "Perfection Certificate") and delivered to
you and in the jurisdiction identified in or pursuant to Section 16 of
the Inventory Security Agreement (the "Filing Jurisdictions"), which
are all of the offices in which filings are required so to perfect the
Security Interest, to the extent the Security Interest may be
perfected by any filing under the UCC, and no further filing or
recording of any document or instrument or other action is currently
required to perfect the Security Interest, except that (i)
continuation statements with respect to each Financing Statement must
be filed within the respective time periods set forth on Schedule 7 to
the Perfection Certificate; (ii) additional filings may be necessary
if any Grantor changes its name, identity or corporate structure or
the jurisdiction in which its places of business, its chief executive
office or the Collateral are located; and (iii) I express no opinion
on the perfection of, or need for further filing or recording to
perfect, the Security Interest in Collateral now or hereafter located
in any jurisdiction other than the Filing Jurisdictions.
10.Assuming that each of the Collateral Agent and the Secured
Parties is without notice of any adverse claim (as defined in Section
8-302 of the UCC), the delivery to and
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continued possession by the Collateral Agent in the State of New York
of the certificates, related stock powers executed in blank and the
BSF Note representing the Pledged Securities (as defined in the
Inventory Security Agreement) is effective to create in favor of the
Collateral Agent for the benefit of the secured parties named therein
a perfected and first priority security interest in the Pledged
Securities under the Uniform Commercial Code as in effect in the State
of New York prior to any other security interest that must be
perfected by possession or filing under the UCC. No registration,
recordation or filing with any governmental body, agency or official
is required in connection with the execution or delivery of the
Inventory Security Agreement with respect to the Pledged Securities or
necessary for the validity or enforceability thereof or for the
perfection of the security interest in the Pledged Securities.
11.Assuming that each of the Collateral Agent and the Secured
Parties is without notice of any adverse claim (as defined in Section
8-302 of the UCC), the delivery to and continued possession by the
Collateral Agent in the State of New York of the certificates
representing the Pledged Interests (as defined in the Inventory
Security Agreement) and filing of Financing Statements in the
jurisdiction identified in or pursuant to Section 16 of the Inventory
Security Agreement is effective to create in favor of the Collateral
Agent for the benefit of the secured parties named therein a perfected
and first priority security interest in the Pledged Interests under
the Uniform Commercial Code prior to any other security interest that
must be perfected by possession or filing under the UCC.
12. There are
(i) based solely on information provided to us by Access
Information Services, Inc. through the dates of searches in each of
the respective filing offices as set forth in Schedule A hereto and
made a part hereof, other than financing statements on file with
respect to the Existing Credit Agreement (which will be terminated in
accordance with the provisions of Section 3.1 of the Inventory Credit
Agreement), no UCC financing statements which name the Borrower as
debtor or seller and cover any of the Collateral, other than the
Financing Statements, listed in the available records in the UCC
filing offices set forth in such filing offices, which include all of
the offices prescribed under the UCC as the offices in which filings
should have been made to perfect security interests in the
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Collateral to the extent Security Interests may be perfected by
filing; and
(ii) no notices of the filing of any federal tax lien
(arising under Section 6321 of the Internal Revenue Code) or any lien
of the Pension Benefit Guaranty Corporation (arising under ERISA)
covering any of the Collateral listed in the available records in the
offices listed in Schedule B attached hereto and made a part hereof,
which include all of the offices having files which must be searched
in order to fully determine the existence of notices of the filing of
federal tax liens (arising under Section 6321 of the Internal Revenue
Code) and liens of the Pension Benefit Guaranty Corporation (arising
under ERISA) on the Collateral.
13. The Security Interest validly secures the payment of all
future Loans made by the Lenders to the Borrower and all Reimbursement
Obligations arising in connection with Letters of Credit issued by the
L/C Issuing Banks, whether or not at the time such Loans are made or
Letters of Credit are issued an Event of Default or other event not
within the control of the Lenders or the L/C Issuing Banks has
relieved or may relieve the Lenders from their obligations to make
such Loans or the L/C Issuing Banks from their obligations to issue
Letters of Credit, and is perfected to the extent set forth in
paragraph 9 above with respect to such future Loans and Reimbursement
Obligations. Except for (i) Pledged Securities, Instruments (and
money) which must be in the possession of the Collateral Agent in
order to perfect the Security Interest therein, (ii) Liquid
Investments in book-entry form, as to which the Inventory Security
Agreement requires an opinion of counsel that appropriate measures
have been taken to perfect the Security Interest therein and (iii)
Proceeds (other than Proceeds in which the Security Interest is
perfected by reason of Section 9-306 of the UCC), I am not aware of
the existence of any Collateral as to which the Security Interest
cannot be perfected by filing under the UCC. Insofar as the priority
thereof is governed by the UCC, the Security Interest has the same
priority with respect to future Loans and Reimbursement Obligations on
the date such Loans are made and such Reimbursement Obligations are
incurred as it will have on such date with respect to Loans made and
Letters of Credit issued on the date hereof. I call to your attention
that notwithstanding the priorities governed by the UCC, the Security
Interest may not have priority in certain circumstances over a Federal
Lien. To the extent the Security Interest secures Loans, (i) the
Security Interest
6
in Collateral acquired after the filing of a Federal Lien has priority
over such Federal Lien only with respect to Collateral that is
commercial financing security under Section 6323(c)(2)(C) of the
Internal Revenue Code acquired by the Borrower in the ordinary course
of its trade or business before the 46th day following such filing and
(ii) the Security Interest has priority over such Federal Lien to the
extent it secures Loans made after the date of filing of such Federal
Lien only if such future Loans are made before the earlier of the 46th
day after such Federal Lien is filed or the time that the relevant
Lender or Lenders have actual notice or knowledge, within the meaning
of Section 6323(i)(1) of the Internal Revenue Code, that such Federal
Lien was filed. To the extent the Security Interest secures
Reimbursement Obligations arising in connection with Letters of
Credit, (i) the Security Interest in Collateral acquired after the
filing of a Federal Lien may have priority over such Federal Lien only
with respect to Collateral whose acquisition is directly traceable to
a disbursement under such Letters of Credit and (ii) the Security
Interest may have priority over a Federal Lien only to the extent such
Security Interest secures Reimbursement Obligations arising under
irrevocable Letters of Credit issued prior to the filing of such
Federal Lien for the benefit of a party not affiliated with the
Borrower.
I am a member of the bar of the Commonwealth of Pennsylvania
and I express no opinion as to any matters governed by any laws other
than the General Corporation Law of the State of Delaware, the laws of
the Commonwealth of Pennsylvania and the Federal laws of the United
States of America. I have made no independent examination of Indiana,
Maryland or New York law, and have retained special counsel in
Maryland, Pennsylvania and New York with respect to certain matters
relating to the Security Interest. In giving the opinions in
paragraphs 2, 4, 5, 6, 8, 9, 10, 11, 12 and 13 hereof I have relied
upon the opinions, each dated of even date herewith, of Cravath,
Swaine & Moore, Pepper, Hamilton & Scheetz, Venable, Baetjer and
Howard, LLP and Barnes & Thornburg, respectively. In giving the
opinion expressed in paragraphs 9 and 12(i) hereof with respect to
states other than Indiana, Maryland, Pennsylvania and New York, I have
relied solely upon a review of Part 4 (or the equivalent provisions)
of the Uniform Commercial Code in effect in each such state.
Very truly yours,
EXHIBIT H
Form of Opinion of Davis Polk & Wardwell,
Special Counsel for the Agents
[Letterhead of Davis Polk & Wardwell]
September 12, 1995
Morgan Guaranty Trust
Company of New York, as
Administrative Agent
60 Wall Street
New York, New York 10260
J.P. Morgan Delaware, as Structuring
and Collateral Agent
902 Market Street
Wilmington, Delaware 19801
The Lenders (as defined in the
Inventory Credit Agreement
as referred to below)
Ladies and Gentlemen:
We have participated in the preparation of the Inventory
Credit Agreement (the "Inventory Credit Agreement") dated as of
September 12, 1995 among Bethlehem Steel Corporation (the "Borrower"),
the lenders listed on the signature pages thereof, as Lenders, Morgan
Guaranty Trust Company of New York, as Administrative Agent and J.P.
Morgan Delaware, as Structuring and Collateral Agent. Terms defined
in the Agreement and not otherwise defined herein are used in this
opinion with the meanings so defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have
conducted such other investigations of fact and law as we have deemed
necessary or advisable for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower
of the Inventory Credit Agreement and the Notes are within the
Borrower's corporate powers and have been duly authorized by all
necessary corporate action.
2. The Inventory Credit Agreement constitutes a valid and
binding agreement of the Borrower and each Note constitutes a valid
and binding obligation of the Borrower, in each case enforceable in
accordance with its terms except as the same may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by general principles of equity.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the
federal laws of the United States of America and the General
Corporation Law of the State of Delaware. In giving the foregoing
opinion, we express no opinion as to the effect (if any) of any law of
any jurisdiction (except the State of New York) in which any Lender is
located which limits the rate of interest that such Lender may charge
or collect.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any
other purpose or relied upon by any other person without our prior
written consent.
Very truly yours,
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EXHIBIT I
ACCEPTABLE INSURERS
X.L. Insurance Company, Ltd.
EXHIBIT J
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [NAME OF
ASSIGNOR] (the "Assignor"), [NAME OF ASSIGNEE] (the "Assignee"),
BETHLEHEM STEEL CORPORATION (the " Borrower") and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Administrative Agent (the
"Administrative Agent").
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the Inventory Credit Agreement dated as of
September 12, 1995 among the Borrower, the Assignor and the other
Lenders party thereto, as Lenders, the Administrative Agent and J.P.
Morgan Delaware, as Structuring and Collateral Agent (the " Inventory
Credit Agreement");
WHEREAS, as provided under the Inventory Credit Agreement,
the Assignor has a Commitment to make Loans to the Borrower in an
aggregate principal amount at any time outstanding not to exceed
$__________;
WHEREAS, Loans made to the Borrower by the Assignor under the
Inventory Credit Agreement in the aggregate principal amount of
$__________ are outstanding at the date hereof;
WHEREAS, the Assignor proposes to assign to the Assignee all
of the rights of the Assignor under the Inventory Credit Agreement in
respect of a portion of its Commitment thereunder in an amount equal
to $__________ (the "Assigned Amount"), together with a corresponding
portion of its outstanding Loans, and the Assignee proposes to accept
assignment of such rights and assume the corresponding obligations
from the Assignor on such terms; and
WHEREAS, the Assignor concurrently proposes to assign all of
the rights of the Assignor under the Receivables Purchase Agreement in
respect of a portion of its Commitment thereunder, together with a
corresponding portion of its pro rata share of the Aggregate Net
Investment.
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as
follows:
SECTION 1. Definitions. All capitalized terms not otherwise
-----------
defined herein shall have the respective meanings set forth in the
Inventory Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and
----------
sells to the Assignee all of the rights of the Assignor under the
Inventory Credit Agreement to the extent of the Assigned Amount, and
the Assignee hereby accepts such assignment from the Assignor and
assumes all of the obligations of the Assignor under the Inventory
Credit Agreement to the extent of the Assigned Amount, including the
purchase from the Assignor of the corresponding portion of the
principal amount of the Loans made by the Assignor outstanding at the
date hereof. Upon the execution and delivery hereof by the Assignor,
the Assignee, and if required pursuant to Section 4, the Borrower and
the Administrative Agent, and the payment of the amounts specified in
Section 3 required to be paid on the date hereof (i) the Assignee
shall, as of the date hereof, succeed to the rights and be obligated
to perform the obligations of a Lender under the Inventory Credit
Agreement with a Commitment in an amount equal to the Assigned Amount,
and (ii) the Commitment of the Assignor shall, as of the date hereof,
be reduced by a like amount and the Assignor released from its
obligations under the Inventory Credit Agreement to the extent such
obligations have been assumed by the Assignee. The assignment
provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment
--------
and sale contemplated in Section 2 hereof, the Assignee shall pay to
the Assignor on the date hereof in
2
Federal funds the amount heretofore agreed between them.(1) It is
understood that commitment and/or facility fees accrued to the date
hereof are for the account of the Assignor and such fees accruing from
and including the date hereof are for the account of the Assignee.
Each of the Assignor and the Assignee hereby agrees that if it
receives any amount under the Inventory Credit Agreement which is for
the account of the other party hereto, it shall receive the same for
the account of such other party to the extent of such other party's
interest therein and shall promptly pay the same to such other party.
SECTION 4. Consent of the Borrower and the Administrative
Agent. This Agreement is conditioned upon the consent of the Borrower
and the Administrative Agent pursuant to Section 9.6(c) of the
Inventory Credit Agreement. The execution of this Agreement by the
Borrower and the Administrative Agent is evidence of this consent.
Pursuant to Section 9.6(c), the Borrower agrees to execute and deliver
a Note payable to the order of the Assignee to evidence the assignment
and assumption provided for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no
responsibility with respect to, the solvency, financial condition, or
statements of the Borrower, or the validity and enforceability of the
obligations of the Borrower in respect of the Inventory Credit
Agreement or any Note. The Assignee acknowledges that it has,
independently and without reliance on the Assignor, and based on such
documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and will
continue to be responsible for making its own independent appraisal of
the business, affairs and financial condition of the Borrower.
SECTION 5. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York.
---------------
(1) Amount should combine principal together with accrued
interest and breakage compensation, if any, to be paid by the
Assignee, net of any portion of any upfront fee to be paid by the
Assignor to the Assignee. It may be preferable in an appropriate case
to specify these amounts generically or by formula rather than as a
fixed sum.
3
SECTION 6. Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the
same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their duly authorized officers as of the
date first above written.
[NAME OF ASSIGNOR]
By_________________________
Name:
Title:
[NAME OF ASSIGNEE]
By__________________________
Name:
Title:
[BETHLEHEM STEEL CORPORATION
By__________________________
Name:
Title:]
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
as Administrative Agent
By__________________________
Name:
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Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as
L/C Issuing Bank
By___________________________
Name:
Title:
CHEMICAL BANK, as L/C Issuing
Bank
By___________________________
Name:
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., as L/C
Issuing Bank
By___________________________
Name:
Title:
$200,000,000 Inventory Credit Agreement - Bethlehem Steel, Lenders, Morgan Guaranty Trust Co. of New York and J.P. Morgan Delaware.
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