<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997.
OR
/ / TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from __________ to __________
Commission file number 1-2394
WHX CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-3768097
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 EAST 59TH STREET 10022
NEW YORK, NEW YORK (ZIP CODE)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 212-355-5200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
Name of each exchange on
Title of each class which registered
<S> <C>
Common Stock, $.01 par value New York Stock Exchange
Series A Convertible Preferred Stock, $.10 par value New York Stock Exchange
Series B Convertible Preferred Stock, $.10 par value New York Stock Exchange
</TABLE>
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/
Aggregate market value of Common Stock held by non-affiliates of the
Registrant as of March 2, 1998 was $273.4 million, which value, solely for the
purposes of this calculation excludes shares held by Registrant's officers,
directors, and their affiliates. Such exclusion should not be deemed a
determination by Registrant that all such individuals are, in fact, affiliates
of the Registrant. The number of shares of Common Stock issued and outstanding
as of March 2, 1998 was 18,669,175, including 340,649 shares of redeemable
Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE:
Definitive proxy statement to be filed pursuant to Regulation 14 A in connection
with the 1998 annual meeting of stockholders Part III.
<PAGE> 2
PART I
ITEM 1. BUSINESS
OVERVIEW
WHX Corporation ("WHX"), (together with its consolidated subsidiaries,
the "Company"), indirectly through Wheeling-Pittsburgh Corporation ("WPC"), a
wholly owned subsidiary, and Wheeling-Pittsburgh Steel Corporation ("WPSC"), a
wholly owned subsidiary of WPC, is the ninth largest domestic integrated steel
manufacturer.
The Company and its subsidiaries were reorganized into a new holding
company structure on July 26, 1994. The steel-related businesses of the Company
(including WPSC) other than Unimast, Inc. ("Unimast") continue to be owned by
WPC, and the other businesses and assets of the Company including Unimast are
owned by WHX. Pursuant to the reorganization, WPC became a wholly owned
subsidiary of WHX. WHX, the new holding company, became the publicly held issuer
for all Common Stock, Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock of the Company. The transactions were accounted for
as a reorganization of entities under common control. On the merger date, WHX
had the same consolidated net worth as WPC and its subsidiaries prior to the
reorganization.
The Company, through two operating units of WPC, the Steel Division and
Wheeling Corrugating Company ("Wheeling Corrugating"), and Unimast, shipped 1.1
million tons of steel products in 1997. In 1997, the Company reported sales of
$642.1 million and a net loss of $199.8 million (before preferred stock
dividends of $20.7 million). Results for 1997 reflect a strike by the United
Steelworkers of America ("USWA") which began October 1, 1996 and ended August
12, 1997. No steel products were produced or shipped at eight of the Company's
plants located in Ohio, Pennsylvania and West Virginia during the strike,
representing approximately 80% of the tons shipped by the Company on an annual
basis. None of the Wheeling Corrugating facilities outside the Ohio Valley, or
Unimast and Pittsburgh Canfield facilities, were involved in the work stoppage;
however, the work stoppage at the eight plants adversely affected the Company's
ability to supply steel to these downstream operations, which acquired their
steel supply from external sources. The new five-year labor agreement with the
USWA provides for a defined benefit pension plan, a retirement enhancement
program, bonus and special assistance payments and $1.50 in hourly wage
increases over five years. It also provides for the reduction of 850 jobs,
mandatory multicrafting and the modification of certain work practices. All of
WPSC's raw steel producing facilities were restarted as of September 30, 1997,
and the Company expects to be producing and shipping at pre-strike production
levels and shipping its historical mix of products by June 30, 1998.
WPC is a vertically integrated manufacturer of predominantly
value-added flat rolled steel products. WPC sells a broad array of value-added
products, including cold rolled steel, tin- and zinc-coated steels and
fabricated steel products. WPC's products are sold to the construction industry,
steel service centers, converters, processors, and the container, automotive and
appliance industries.
WPSC believes it has a low cost structure as the result of: (i) the
restructuring of its work rules and manning requirements under its new five-year
labor agreement with the USWA, which settled the ten-month strike in August
1997; (ii) the strategic balance between its basic steel operations and its
finishing and fabricating facilities; and (iii) its efficient production of low
cost, high quality metallurgical coke.
The new work rule package affords WPSC substantially greater
flexibility in down-sizing its overall workforce, and assigning and scheduling
work, thereby reducing costs and increasing efficiency. Furthermore, WPSC
expects to maintain pre-strike steel production levels with 850 fewer employees
(a reduction of approximately 20% in its hourly workforce).
WPSC has structured its operations so that its hot strip mill and
downstream operations have greater capacity than its raw steel making
operations. WPSC therefore can purchase slabs, if available at competitive
prices, and ship at greater than 100% of its internal production capacity in
periods of high demand, while maintaining the ability to curtail such purchases
and still operate its basic steel facilities at or near capacity
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during periods of lower demand. WPSC believes this flexibility results in
enhanced profitability throughout an economic cycle. WPSC also believes that it
produces metallurgical coke at a substantially lower cost than do other coke
manufacturers because of its proximity to high quality coal reserves and its
efficient coke producing plant. This reduces WPSC's costs and, if coke demand
remains high, allows it to sell excess coke profitably in the spot and contract
markets.
WPC conducts its operations primarily through two operating units, the
Steel Division and Wheeling Corrugating. The Steel Division sells flat rolled
steel products such as hot rolled, cold rolled, coated and tin mill steel.
Wheeling Corrugating, it's primary downstream operation, is a fabricator of
roll-formed products primarily for the construction and agricultural industries.
As part of it's strategy to expand downstream operations, WPC has acquired
several fabricating facilities to enhance profit margins and reduce exposure to
downturns in steel demand. Other important examples of WPC's downstream
operations are its joint venture interests in Wheeling-Nisshin, Inc.
("Wheeling-Nisshin") and Ohio Coatings Company ("OCC"). Wheeling-Nisshin, in
which it owns a 35.7% interest, produces and ships from its state-of-the-art
production facility a diverse line of galvanized, galvannealed, galvalume and
aluminized products, principally to steel service centers and the construction
and automotive industries. OCC, in which WPC owns a 50% interest, operates a new
tin coating facility that commenced commercial production in January 1997. WPC
has long-term contracts to supply up to 75% of Wheeling-Nisshin's steel
requirements and approximately 90% of OCC's. These downstream operations and
joint ventures are integral to the WPC strategy of increasing shipments of
higher value-added steel products while decreasing dependence on hot rolled
coils, a lower-margin commodity steel product.
In March 1995 the Company acquired Unimast, a leading manufacturer of
steel framing and related accessories for residential and commercial building
construction with shipments of approximately 219,000 tons in 1997. Unimast uses
galvanized steel to manufacture steel framing components for wall, floor and
roofing systems, in addition to other roll formed expanded metal construction
accessories. In January 1998 Unimast expanded its business through the
acquisition of Clinch-on Products, Inc. ("Clinch-on"), a manufacturer of steel
cornerbead and trims for both the non-residential and residential construction
markets with approximately 14,000 tons annual capacity.
BUSINESS STRATEGY
The Company's business strategy includes the following initiatives:
IMPROVE COST STRUCTURE. The new labor agreement has allowed WPSC to
eliminate 850 hourly positions (approximately 20% of its pre-strike hourly
workforce). The Company believes that these reductions, combined with the
significantly more flexible work rules under the new labor agreement, will allow
WPSC to operate at pre-strike levels with 850 fewer employees. As a result, the
Company anticipates substantial cost savings and productivity improvements once
pre-strike production levels are reached. In addition, WPSC has directed its
capital expenditures towards upgrading and modernizing its steelmaking
facilities, with a goal toward increasing productivity. These expenditures
include modernization of its hot and cold rolling facilities and a major reline
in 1995 of its No. 5 blast furnace located in Steubenville, Ohio. This reline
increased productivity and provided WPSC with the ability to produce 100% of the
hot metal necessary to satisfy caster production requirements from two rather
than three blast furnaces. WPSC's ability to produce low cost, high quality
metallurgical coke, in excess of its own requirements, helps it maintain its own
low cost and benefits the Company through sale of the excess coke.
2
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The following table lists operating statistics for the Company and the
steel industry (as reported by the American Iron and Steel Institute) for the
five-year period ending December 31, 1997.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1994 1995 1996(1) 1997(1)
----- ----- ----- ----- -----
(TONS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
COMPANY RAW STEEL PRODUCTION ... 2.26 2.27 2.20 1.78 .66
CAPABILITY ............... 2.40 2.40 2.40 2.40 2.40
UTILIZATION .............. 94% 95% 92% 98.9% 90%
SHIPMENTS ................ 2.3 2.4 2.5 2.3 1.1
INDUSTRY RAW STEEL PRODUCTION(2) 97.9 100.6 104.9 105.3 107.5
CAPABILITY ............... 109.9 108.2 112.4 116.1 121.4
UTILIZATION .............. 89% 93% 93% 91% 89%
SHIPMENTS ................ 89.0 95.1 97.5 100.9 105.5
</TABLE>
(1) RESULTS FOR 1996 AND 1997 WERE AFFECTED BY A TEN-MONTH WORK STOPPAGE AT
THE COMPANY'S PRIMARY STEEL-MAKING FACILITIES BEGINNING OCTOBER 1,
1996. THE UTILIZATION RATE FOR THE NINE MONTHS PRIOR TO THE WORK
STOPPAGE WAS 98.9%. THE UTILIZATION RATE FOR THE FOURTH QUARTER OF 1997
WAS 90%.
(2) PRELIMINARY ESTIMATES REGARDING 1997.
EXPAND PRODUCTION OF VALUE-ADDED PRODUCTS. The Company intends to
continue to expand its sale of value-added products such as coated and
fabricated steels in order to improve profit margins and reduce its exposure to
commodity steel market volatility. This strategy is evidenced by the Company's
expansion of Wheeling Corrugating, its purchase of Unimast and its emphasis on
joint ventures, such as Wheeling-Nisshin and OCC, which give the Company access
to downstream markets through long-term supply contracts. WPSC and Unimast will
continue to target strategic acquisitions and joint ventures that support its
sales of value-added products.
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<PAGE> 5
Product Mix. The tables below reflect the historical product mix of the
Company's shipments, expressed as a percentage of tons shipped. Increases in the
percentage of higher value products have been realized during the 1990's as (i)
the operations of Wheeling Corrugating were expanded, (ii) Wheeling-Nisshin's
second coating line increased its requirements of cold-rolled coils from WPSC,
and (iii) the Company acquired Unimast in March 1995. In addition, the OCC Joint
Venture should enable the Company to increase tin mill product shipments up to
an additional 91,000 tons compared to 1996 levels.
<TABLE>
<CAPTION>
HISTORICAL PRODUCT MIX
YEAR ENDED DECEMBER 31
1993 1994 1995 1996(1) 1997(1)
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PRODUCT CATEGORY:
Higher Value-Added Products:
Cold Rolled Products-Trade 11.1% 10.5% 7.5% 7.6% 4.5%
Cold Rolled Products -
Wheeling-Nisshin ...... 15.6 17.3 17.9 15.6 6.2
Coated Products(2) ........ 20.4 21.7 20.3 18.7 9.0
Tin Mill Products ......... 8.8 7.2 6.7 7.0 2.6
Fabricated Products
Wheeling Corrugating and
Unimast(2) ............ 12.0 11.9 19.3 25.0 52.0
Higher Value-Added Products as a 9% 68. 3%
percentage of total shipments .. 67. 6% 71.7% 73.9% 74.
Hot Rolled Products ............ 31.2% 31.4% 28.3% 26.1% 16.0%
Semi-Finished .................. 0.9 -- -- -- 9.7
------ ------ ------ ------ ------
Total .......................... 100.0% 100.0% 100.0% 100.0% 100.0%
====== ====== ====== ====== ======
AVERAGE NET SALES PER TON $ 465 $ 498 $ 543 $ 544 $ 606
</TABLE>
(1) The allocation among product categories was affected by the ten-month
strike.
(2) Reclassified for comparability.
STEEL DIVISION
The Steel Division is WPC's primary steelmaking operation. Products
produced by the Steel Division are described below. These products are
transferred to Wheeling Corrugating for further processing and are sold directly
to third party customers and Unimast, and to Wheeling-Nisshin and OCC pursuant
to long-term supply agreements.
COLD ROLLED PRODUCTS. Cold rolled coils are manufactured from hot
rolled coils by employing a variety of processing techniques, including
pickling, cold reduction, annealing and temper rolling. Cold rolled processing
is designed to reduce the thickness and improve the surface characteristics and
formability of the product. In its finished form, the product may be sold to
service centers and to a variety of end users such as appliance or automotive
manufacturers. In recent years, WPC has increased its cold rolled production to
support increased sales to Wheeling-Nisshin, which is labeled as a separate
product category above.
COATED PRODUCTS. WPC manufactures a number of corrosion-resistant,
zinc-coated products including hot dipped galvanized and electrogalvanized
sheets for resale to trade accounts. The coated products are manufactured from a
steel substrate of cold rolled or hot rolled pickled coils by applying zinc to
the surface of the material to enhance its corrosion protection. WPC's trade
sales of galvanized products are heavily
4
<PAGE> 6
oriented to unexposed applications, principally in the appliance, construction,
service center and automotive markets. Typical industry applications include
auto underbody parts, culvert pipe, refrigerator backs and heating/air
conditioning ducts. WPC sells electrogalvanized products for application in the
appliance and construction markets.
TIN MILL PRODUCTS. Tin mill products consist of blackplate and
tinplate. Blackplate is a cold rolled substrate (uncoated), the thickness of
which is less than .0142 inches, and is utilized in the manufacture of pails,
shelving and sold to OCC for the manufacture of tinplate products. Tinplate is
produced by the electro-deposition of tin to a blackplate substrate and is
utilized principally in the manufacture of food, beverage, general line and
aerosol containers. While the majority of WPC's sales of these products is
concentrated in a variety of container markets, WPC also markets products for
automotive applications, such as oil filters and gaskets. WPC has phased out its
existing tin mill facilities and will produce all of its tin coated products
through OCC. WPC expects that its participation in OCC will enable it to expand
WPC's presence in the tin plate market. OCC's $69 million tin coating mill,
which commenced commercial operations in January 1997, has a nominal annual
capacity of 250,000 net tons. WPC will supply up to 230,000 tons of the
substrate requirements of the joint venture subject to quality requirements and
competitive pricing. WPC and Nittetsu Shoji America, a major Japanese trading
company's U.S. based operation, will act as the distributors of the joint
venture's product, with WPC selling between 81% and 85% of production based on
volume.
HOT ROLLED PRODUCTS. Hot rolled coils represent the least processed of
WPC's finished goods. Hot rolled black or pickled (acid cleaned) coils are sold
to a variety of consumers such as converters/processors, steel service centers
and the appliance industries. The converters/processors transform the hot rolled
coil into a finished product such as pipe and tubing, while the service centers
typically slit or cut the material to size for resale to the end user.
FABRICATED PRODUCTS
(WHEELING CORRUGATING AND UNIMAST)
Fabricated products represented 65.7% or $422.1 million of the
Company's net sales in 1997 and 34.0% or $418.7 million of the Company's net
sales in 1996. Fabricated products consist of cold rolled or coated products
further processed mainly via roll forming. The Company intends to increase sales
of fabricated products through expansion, selective acquisitions of fabricating
facilities and new product development. Wheeling Corrugating and Unimast market
exclusively value-added products.
Wheeling Corrugating is a fabricator of roll-formed products for the
construction, highway, and agricultural products industries. In conjunction with
the Company's business strategy of expanding its sales of higher value-added
products, Wheeling Corrugating has increased its shipments of fabricated
products by approximately 23% since 1993. Following the establishment of its
Lenexa, Kansas and Minneapolis, Minnesota locations, Wheeling Corrugating
expanded its regional operations, through acquisitions, in Wilmington, North
Carolina (1993), Gary, Indiana, Warren, Ohio (1994) and Brooks, Medford and
Klamath Falls, Oregon (1996). The regional presence of certain of these
facilities has enabled Wheeling Corrugating to take advantage of low-cost barge
freight from the Company's Ohio Valley plants and to provide customers in the
outlying areas with competitive services through "just-in-time delivery." In
some of its product lines, Wheeling Corrugating has substantial market share and
therefore has increased opportunity to pursue higher profit margins. The Company
believes that it would be difficult for a competitor to replicate Wheeling
Corrugating's geographical breadth.
In March 1995 the Company acquired Unimast, a leading manufacturer of
steel framing and related accessories for residential and commercial building
construction with shipments of approximately 191,000 tons of steel products in
1996 and 219,000 tons in 1997. Unimast uses galvanized steel to manufacture
steel framing components for wall, floor and roofing systems, in addition to
other roll formed expanded metal construction accessories. Unimast also uses
non-prime galvanized substrate for a material portion of its requirements,
providing the Company an additional outlet for some portion of its non-prime
products.
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Unimast has facilities in Franklin Park, Illinois; Warren; Ohio; Morrow,
Georgia; Baytown, Texas and Boonton, New Jersey.
In January 1998 Unimast expanded its business through the acquisition
of Clinch-on, a manufacturer of steel cornerbead and trims for both the
non-residential and residential construction markets with approximately 14,000
tons annual capacity.
The following table sets forth certain shipment information relating to
Wheeling Corrugating and Unimast major product categories:
NET TONS SHIPPED BY WHEELING CORRUGATING AND UNIMAST
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1994 1995 1996 1997
----- ----- ----- ----- -----
(TONS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Construction Products 146.2 151.7 335.4 404.3 417.1
Agricultural Products 100.7 113.6 125.7 142.8 122.4
Highway Products .... 19.5 16.4 20.0 16.8 11.4
Other ............... 4.0 4.0 3.9 3.6 --
----- ----- ----- ----- -----
Total Net Tons Shipped 270.4 285.7 485.0 567.5 550.9
===== ===== ===== ===== =====
</TABLE>
CONSTRUCTION PRODUCTS. Construction products consist of roll-formed
sheets, which are utilized in sectors of the non-residential building market
such as commercial, institutional and manufacturing and steel framing, roofing
systems and expanded metal accessories for the residential market. They are
classified into three basic categories: roof deck; form deck; and composite
floor deck. Roof deck is a formed steel sheet, painted or galvanized, which
provides structural support in non-residential roofing systems. Form deck is a
formed steel sheet, painted, galvanized or uncoated, that provides structural
form support for structural or insulating concrete slabs in non-residential
floor or roofing systems. Composite floor deck is a formed steel sheet, painted,
galvanized or uncoated, that provides structural form support and positive
reinforcement for structural concrete slabs in non-residential floor systems.
AGRICULTURAL PRODUCTS. Agricultural products consist of roll-formed,
corrugated sheets which are used as roofing and siding in the construction of
barns, farm machinery enclosures and light commercial buildings and certain
residential roofing applications. These products can be manufactured from hot
dipped or painted hot dipped galvanized coils. Historically, these products have
been sold primarily in rural areas. In recent years, however, such products have
found increasing acceptance in light commercial buildings.
HIGHWAY PRODUCTS. Highway products consist of bridge form, which is
roll-formed corrugated sheets utilized as concrete support forms in the
construction of highway bridges.
WHEELING-NISSHIN
The Company owns a 35.7% equity interest in Wheeling-Nisshin, which is
a joint venture between the Company and Nisshin Holding, Incorporated, a
wholly-owned subsidiary of Nisshin Steel Co., LTD., ("Nisshin").
Wheeling-Nisshin is a state-of-the-art processing facility located in
Follansbee, West Virginia which produces among the lightest gauge galvanized
steel products available in the United States. Shipments by Wheeling-Nisshin of
hot dipped galvanized, galvanneal, galvalume and aluminized products,
principally to the construction industry, have increased from 158,600 tons in
1988 to 686,100 tons in 1997. Wheeling-Nisshin products are marketed through
trading companies, and its shipments are not consolidated into the Company's
shipments.
WPSC's amended and restated supply agreement with Wheeling-Nisshin
expires in 2013. Pursuant to the amended supply agreement, WPSC will provide not
less than 75% of Wheeling-Nisshin's steel substrate
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<PAGE> 8
requirements, up to an aggregate maximum of 9,000 tons per week subject to
product quality requirements. Pricing under the supply agreement is negotiated
quarterly based on a formula which gives effect to competitive market prices.
Shipments of cold rolled steel by WPSC to Wheeling-Nisshin were approximately
66,000 tons, or 6.2% of the Company's total tons shipped in 1997 and
approximately 354,300 tons, or 15.6%, in 1996. Shipments to Wheeling Nisshin in
1997 and 1996 were negatively affected by the ten-month strike. Shipments to
Wheeling Nisshin in 1995 totaled approximately 450,000 tons, or 17.9%.
OHIO COATINGS COMPANY
WPC has a 50% equity interest in OCC, which is a joint venture between
the Company and Dong Yang, a leading South Korea-based tin plate producer.
Nittetsu Shoji America ("Nittetsu"), a U.S. based tin plate importer, holds
non-voting preferred stock in OCC and will act, together with WPC, as a
distributor of OCC's products. OCC completed construction of a $69 million
state-of-the-art tin coating mill in 1996 and commenced commercial operations in
January 1997. The OCC tin-coating facility is the only domestic electro-tin
plating facility constructed in the past 30 years and is positioned to become a
premier supplier of tin plate to the container and automotive industries. The
OCC tin coating line is anticipated to have a nominal annual capacity of 250,000
net tons, and shipped approximately 71,000 tons in 1997. WPC has phased out its
existing tin coating facilities and will produce all of its tin coated products
through OCC. As part of the joint venture agreement, WPC has the right to supply
up to 230,000 tons of the substrate requirements of OCC through the year 2012,
subject to quality requirements and competitive pricing. WPC will market between
81% and 85% of OCC's products. In 1997 OCC had operating losses of $14.3
million, which reflected OCC's start-up, inability to source substrate during
the strike and competitive market conditions for tinplate.
OTHER STEEL RELATED OPERATIONS OF THE COMPANY
The Company is the owner of coal reserves that have generated an average of $.7
million in annual royalties from 1993 to 1997. The Company is also a 12 1/2%
equity partner in an iron ore mining partnership.
NON-STEEL RELATED INVESTMENTS OF THE COMPANY
In October 1994, WHX Entertainment Corp., a wholly owned subsidiary of
WHX, purchased a 50 percent interest in the operations of Wheeling-Downs Racing
Association ("Wheeling-Downs") from Sportsystems Corporation for $12.5 million.
Wheeling-Downs operates a racetrack and video lottery facility located in
Wheeling, West Virginia.
CUSTOMERS
The Company markets an extensive mix of products to a wide range of
manufacturers, converters and processors. The Company's 10 largest customers
(including Wheeling-Nisshin) accounted for approximately 33.3% of its net sales
in 1995, 30.6% in 1996, and 25.9% in 1997. Wheeling-Nisshin was the only
customer to account for more than 10% of net sales. Wheeling-Nisshin accounted
for 13.8% and 11.5% of net sales in 1995 and 1996, respectively. No single
customer accounted for more than 10% of net sales in 1997. Geographically, the
majority of the Company's customers are located within a 350-mile radius of the
Ohio Valley. However, the Company has taken advantage of its river-oriented
production facilities to market via barge into more distant locations such as
the Houston, Texas and St. Louis, Missouri areas. As discussed above, Wheeling
Corrugating has acquired regional facilities to service an even broader
geographical area. The acquisition of Unimast in March 1995 increased the
Company's shipments to the construction industry and its ability to market its
products to broad geographic areas. Unimast has facilities located in Franklin
Park, Illinois; Warren, Ohio; Morrow, Georgia; Baytown, Texas and Boonton, New
Jersey.
The Company's shipments historically have been concentrated within
seven major market segments: construction industry, steel service centers,
converters/processors, agriculture, container, automotive, and appliances. The
Company's overall participation in the construction and the
converters/processors markets substantially exceeds the industry average and its
reliance on automotive shipments as a percentage of total shipments is
substantially less than the industry average.
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<PAGE> 9
PERCENT OF TOTAL NET TONS SHIPPED
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
MAJOR CUSTOMER CATEGORY: 1993 1994 1995 1996(1) 1997(1)
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Construction ............ 17% 18% 22% 28% 44%
Steel Service Centers ... 33 32 27 24 26
Converters/Processors ... 26 28 26 23 13
Agriculture ............. 5 5 6 7 11
Containers .............. 7 6 6 6 2
Automotive .............. 6 6 5 5 2
Appliances .............. 3 3 4 4 1
Exports ................. 1 -- 1 -- --
Other ................... 2 2 3 3 1
---- ---- ---- ---- ----
Total .............. 100% 100% 100% 100% 100%
==== ==== ==== ==== ====
</TABLE>
(1) The allocation among customer categories was affected by the ten-month
strike.
CONSTRUCTION. The Company's shipments to the construction industry are
heavily influenced by the sales of Wheeling Corrugating and Unimast. Wheeling
Corrugating services the non-residential and agricultural building and highway
industries, principally through shipments of hot dipped galvanized and painted
cold rolled products. With its acquisitions during the 1980's and early 1990's
of regional facilities, Wheeling Corrugating has doubled its shipments and has
been able to market its products into broad geographical areas. Unimast is a
leading manufacturer of steel framing and related accessories for residential
and commercial building construction. In January 1998 Unimast expanded its
business through the acquisition of Clinch-on, a manufacturer of steel
cornerbead and trims for both the non-residential and residential construction
markets with approximately 14,000 tons annual capacity.
STEEL SERVICE CENTERS. The Company's shipments to steel service centers
are heavily concentrated in the areas of hot rolled and hot dipped galvanized
coils. Due to increased in-house costs to steel companies during the 1980's for
processing services such as slitting, shearing and blanking, steel service
centers have become a major factor in the distribution of hot rolled products to
ultimate end users. In addition, steel service centers have become a significant
factor in the sale of hot dipped galvanized products to a variety of small
consumers such as mechanical contractors, who desire not to be burdened with
large steel inventories.
CONVERTERS/PROCESSORS. The growth of the Company's shipments to the
converters/processors market is principally attributable to the increase in
shipments of cold rolled products to Wheeling-Nisshin, which uses cold rolled
coils as a substrate to manufacture a variety of coated products, including hot
dipped galvanized and aluminized coils for the automotive, appliance and
construction markets. As a result of the second line expansion, the Company's
shipments to Wheeling-Nisshin increased significantly beginning in 1993. The
converters/processors industry also represents a major outlet for the Company's
hot rolled products, which are converted into finished commodities such as pipe,
tubing and cold rolled strip.
AGRICULTURE. The Company's shipments to the agricultural market are
principally sales of Wheeling Corrugating roll-formed, corrugated sheets which
are used as roofing and siding in the construction of barns, farm machinery
enclosures and light commercial buildings.
CONTAINERS. The vast majority of the Company's shipments to the
container market are concentrated in tin mill products, which are utilized
extensively in the manufacture of food, aerosol, beverage and general line cans.
The container industry has represented a stable market. The balance of the
Company's shipments to this market consists of cold rolled products for pails
and drums. As a result of the OCC joint venture, the Company has begun to
distribute products produced by OCC.
8
<PAGE> 10
AUTOMOTIVE. Unlike the majority of its competitors, the Company is not
heavily dependent on shipments to the automotive industry. However, the Company
has established higher value-added niches in this market, particularly in the
area of hot dipped galvanized products for deep drawn automotive underbody
parts. In addition, the Company has been a supplier of tin mill products for
automotive applications, such as oil filters and gaskets. As a result of the
strike, the Company was unable to secure automotive contracts for 1998. The
Company anticipates it will be in a favorable position to compete for automotive
contracts in future periods.
APPLIANCE. The Company's shipments to the appliance market are
concentrated in hot dipped galvanized, electrogalvanized and hot rolled coils.
These products are furnished directly to appliance manufacturers as well as to
blanking, drawing and stamping companies that supply OEMs. The Company has
concentrated on niche product applications primarily used in washer/dryer,
refrigerator/freezer and range appliances. The Company anticipates that it will
retain a portion of its appliance contracts for 1998. However, due to the
strike, the Company will not be able to secure a full level of shipments
comparable to those achieved in 1996. The Company expects to be in a favorable
position to compete for contracts to supply appliance manufacturers in 1999.
MANUFACTURING PROCESS
In the Company's primary steelmaking process, iron ore pellets, coke,
limestone, sinter and other raw materials are consumed in two blast furnaces to
produce hot metal. Hot metal is further converted into liquid steel through its
basic oxygen furnace ("BOF") process where impurities are removed, recycled
scrap is added and metallurgical properties for end use are determined on a
batch-by-batch (heat) basis. The Company's BOF has two vessels, each with a
steelmaking capacity of 285 tons per heat. From the BOF, the heats of steel are
sent to the ladle metallurgy facility ("LMF"), where the temperature and
chemistry of the steel are adjusted to precise tolerances. All of the liquid
steel from the LMF then is formed into slabs through the process of continuous
casting. After continuous casting, slabs are reheated, reduced and finished by
extensive rolling, shaping, tempering and, in certain cases, by the application
of coatings at the Company's downstream operations. Finished products are
normally shipped to customers in the form of coils or fabricated products. The
Company has linked its steelmaking and rolling equipment with a computer based
integrated manufacturing control system to coordinate production tracking and
sales activities.
RAW MATERIALS
WPC has a 12.5% ownership interest in Empire Iron Mining Partnership
("Empire") which operates a mine located in Palmer, Michigan. WPC is obligated
to purchase approximately 12.5% or 1.0 million gross tons per year (at current
production levels) of the mine's annual ore output. Interest in related ore
reserves as of December 31, 1997, is estimated to be 21.1 million gross tons.
WPC generally consumes approximately 2.4 million gross tons of iron ore pellets
in its blast furnaces. WPC obtains approximately half of its iron ore from spot
and medium-term purchase agreements at prevailing world market prices. It has
commitments for the majority of its blast furnace iron ore pellet needs through
1999 from suppliers in North America.
In November 1993, WPC sold the operating assets of its coal company to
an unrelated third party. WPC also entered into a long-term supply agreement
with such third party to provide WPC with a substantial portion of WPC's
metallurgical coal requirements at competitive prices. WPC's coking operations
require a substantial amount of metallurgical coal.
WPC currently produces in excess of its coke requirements and typically
consumes generally all of the resultant by-product coke oven gas. In 1997,
approximately .9 million tons of coking coal were consumed in the production of
blast furnace coke by WPC. WPC may continue to sell its excess coke and coke
oven by-products to third-party trade customers. During the strike, WPC
continued to produce coke at its Follansbee facility. WPC has entered into a
contract with a major domestic integrated steel producer for the sale of coke
produced by WPC during the strike.
WPC's operations require material amounts of other raw materials,
including limestone, oxygen, natural gas and electricity. These raw materials
are readily available and are purchased on the open market. WPC is presently
dependent on external steel scrap for approximately 8% of its steel melt. The
cost of these
9
<PAGE> 11
materials has been susceptible in the past to price fluctuations, but worldwide
competition in the steel industry has frequently limited the ability of steel
producers to raise finished product prices to recover higher material costs.
Certain of WPC's raw material supply contracts provide for price adjustments in
the event of increased commodity or energy prices.
BACKLOG
Order backlog was 368,025 net tons at December 31, 1997, compared to
158,751 net tons at December 31, 1996 and 400,624 tons at December 31, 1995. The
Company believes that the December 31, 1997 order backlog will be shipped by
June 30, 1998. The Company is vigorously pursuing customers lost to competitors
during the strike and anticipates rebuilding its order backlog to historic
levels.
CAPITAL INVESTMENTS
The Company believes that it must continuously strive to improve
productivity, product quality and control manufacturing costs in order to remain
competitive. Accordingly, the Company is committed to continuing to make
necessary capital investments with the objective of reducing manufacturing costs
per ton, improving the quality of steel produced and broadening the array of
products offered to the Company's served markets. The Company's capital
expenditures (including capitalized interest) for 1997 were approximately $36.8
million, including $12.4 million on environmental projects. Capital expenditures
in 1996 and 1997 were lower than in recent years due to the strike. From 1993 to
1997, such expenditures aggregated approximately $311.2 million. This level of
capital expenditures was needed to maintain productive capacity, improve
productivity and upgrade selected facilities to meet competitive requirements
and maintain compliance with environmental laws and regulations. The capital
expenditure program has included improvements to WPC's infrastructure, blast
furnaces, steel-making facilities, 80-inch hot strip mill and finishing
operations, and has resulted in improved shape, gauge, surface and physical
characteristics for its products. Continuous and substantial capital and
maintenance expenditures will be required to maintain operating facilities,
modernize finishing facilities to remain competitive and to comply with
environmental control requirements. The Company anticipates funding its capital
expenditures in 1998 from cash on hand and funds generated by operations, sale
of receivables under the Receivables Facility (as hereafter defined) and funds
available under the Revolving Credit Facility (as hereafter defined). During the
strike, the Company had delayed substantially all capital expenditures at the
strike-affected plants. The Company anticipates that capital expenditures will
approximate depreciation on average, over the next few years.
ENERGY REQUIREMENTS
During 1997 coal constituted approximately 76% of the Company's total
energy consumption, natural gas 20% and electricity 4%. Many of the Company's
major facilities that use natural gas have been equipped to use alternative
fuels. The Company continually monitors its operations regarding potential
equipment conversion and fuel substitution to reduce energy costs. In 1998, a
third party will commission a cogeneration facility capable of supplying
approximately 15% of WPSC's electrical needs.
10
<PAGE> 12
EMPLOYMENT
Total active employment of the Company at December 31, 1997 totaled
4,581 employees, of which 2,928 were represented by the USWA, and 114 by other
unions. The remainder consisted of 1,042 salaried employees and 497 non-union
operating employees.
COMPETITION
The steel industry is cyclical in nature and has been marked
historically by overcapacity, resulting in intense competition.
The Company faces increasing competitive pressures from other domestic
integrated producers, minimills and processors. Processors compete with the
Company in the areas of slitting, cold rolling and coating. Minimills are
generally smaller volume steel producers that use ferrous scrap metals as their
basic raw material. Compared to integrated producers, minimills, which rely on
less capital intensive steel production methods, have certain advantages. Since
minimills typically are not unionized, they have more flexible work rules that
have resulted in lower employment costs per net ton shipped. Since 1989,
significant flat rolled minimill capacity has been constructed and these
minimills now compete with integrated producers in product areas that
traditionally have not faced significant competition from minimills. In
addition, there is significant additional flat rolled minimill capacity under
construction or announced with various planned commissioning dates. Near term,
these minimills and processors are expected to compete with the Company
primarily in the commodity flat rolled steel market. In the long-term, such
minimills and processors may also compete with the Company in producing
value-added products. In addition, the increased competition in commodity
product markets influence certain integrated producers to increase product
offerings to compete with the Company's custom products.
As the single largest steel consuming country in the western world, the
United States has long been a favorite market of steel producers in Europe and
Japan. In addition, steel producers from Korea, Taiwan, and Brazil, and
non-market economies such as Russia and China, have also recognized the United
States as a target market.
Total annual steel consumption in the United States has fluctuated
between 88 million and slightly over 117 million tons since 1991. A number of
steel substitutes, including plastics, aluminum, composites and glass, have
reduced the growth of domestic steel consumption.
Steel imports of flat rolled products as a percentage of domestic
apparent consumption, excluding semi-finished steel, have been approximately 18%
in 1995, 19% in 1996 and 20.4% in 1997. World steel demand, world export prices,
U.S. dollar exchange rates and the international competitiveness of the domestic
steel industry have all been factors in these import levels.
ITEM 2. PROPERTIES
WPC has one raw steel producing plant and various other finishing and
fabricating facilities. The Steubenville complex is an integrated steel
producing facility located at Steubenville and Mingo Junction, Ohio and
Follansbee, West Virginia. The Steubenville complex includes a sinter plant,
coke oven batteries that produce all coke requirements, two operating blast
furnaces, two basic oxygen furnaces, a two-strand continuous slab caster with an
annual slab production capacity of approximately 2.4 million tons, an 80-inch
hot strip mill and pickling and coil finishing facilities. The Ohio and West
Virginia locations, which are separated by the Ohio River, are connected by a
railroad bridge owned by WPC. A pipeline is maintained for the transfer of coke
oven gas for use as fuel from the coke plant to several other portions of the
Steubenville complex. The Steubenville complex primarily produces hot rolled
products, which are either sold to third parties or shipped to other of the
Company's facilities for further processing into value-added products.
11
<PAGE> 13
The following table lists the other principal plants of WPC and the
annual capacity of the major products produced at each facility:
<TABLE>
<CAPTION>
OTHER MAJOR FACILITIES
LOCATION AND OPERATIONS CAPACITY TONS/YEAR MAJOR PRODUCTS
<S> <C> <C>
Allenport, Pennsylvania:
Continuous pickler, tandem mill, temper
mill and annealing 950,000 Cold rolled sheets
Beech Bottom, West Virginia:
Paint line 120,000 Painted steel in coil form
Canfield, Ohio:
Electrogalvanizing line, paint line, ribbon 65,000 Electrolytic galvanized sheet
and oscillating rewind slitters and strip
Martins Ferry, Ohio:
Temper mill, zinc coating lines 750,000 Hot dipped galvanized sheets
and coilsd galvanized sheets
Yorkville, Ohio:
Continuous pickler, tandem mill, temper mills 660,000 Black plate and cold rolled
and annealing lines sheets
</TABLE>
Wheeling Corrugating fabricates products at Fort Payne, Alabama;
Houston, Texas; Lenexa, Kansas; Louisville, Kentucky; Minneapolis, Minnesota;
Warren, Ohio; Gary, Indiana; Wilmington, North Carolina and Klamath Falls,
Medford and Brooks, Oregon. The Fort Payne, Houston and Wilmington facilities
were acquired in 1986, 1989 and 1993, respectively. The Gary facility was
acquired in 1994. The Oregon facilities were acquired in 1996.
WPC maintains five regional sales offices for flat-rolled and tin mill
products and nine sales offices and/or warehouses for Wheeling Corrugating
products.
Unimast has facilities located at Franklin Park, Illinois; Warren,
Ohio; Morrow, Georgia; Baytown, Texas and Boonton, New Jersey.
All of the above facilities currently owned by the Company are
regularly maintained in good operating condition. However, continuous and
substantial capital and maintenance expenditures are required to maintain the
operating facilities, to modernize finishing facilities in order to remain
competitive and to meet environmental control requirements.
All of the above facilities and substantially all of the other real
property of the Company are owned in fee by the Company (exclusive of coal lands
held by subsidiaries or corporations in which the Company has an interest) and
are subject to the first lien that secures the $9.2 million face amount (as of
December 31, 1997) of Tax Benefit Transfer Letters of Credit issued to support
the sale of tax benefits associated with the construction of the slab caster
located at the Company's Steubenville complex.
ITEM 3. LEGAL PROCEEDINGS
ENVIRONMENTAL MATTERS
The Company, as are other industrial manufacturers, is subject to
increasingly stringent standards relating to the protection of the environment.
In order to facilitate compliance with these environmental standards, the
Company has incurred capital expenditures for environmental control projects
aggregating $5.9 million, $6.8 million and $12.4 million for 1995, 1996 and
1997, respectively. The Company anticipates spending approximately $41.3 million
in the aggregate on major environmental compliance projects through the year
12
<PAGE> 14
2000, estimated to be spent as follows: $13.4 million in 1998, $15.9 million in
1999 and $12.0 million in 2000. Due to the possibility of unanticipated factual
or regulatory developments, the amount and timing of future expenditures may
vary substantially from such estimates.
The Company has been identified as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and Liability Act
("Superfund") or similar state statutes at several waste sites. The Company is
subject to strict, joint and several liability imposed by Superfund on
potentially responsible parties. Due to the technical and regulatory complexity
of remedial activities and the difficulties attendant to identifying potentially
responsible parties and allocating or determining liability among them, the
Company is unable to reasonably estimate the ultimate cost of liability under
Superfund. The Company believes, based upon information currently available,
that it's liability for remediation costs in connection with the Buckeye
Reclamation site will be between $3.0 and $4.0 million. At six other sites (MIDC
Glassport, United Scrap Lead, Tex-Tin, Breslube Penn, Four County Landfill and
Beazor) the Company estimates the liability to aggregate up to $700,000. The
Company is currently funding its share of remediation costs.
The Clean Air Act Amendments of 1990 (the "Clean Air Act") directly
affect the operations of many of the Company's facilities, including coke ovens.
Under the Clean Air Act, coke ovens generally will be required to comply with
progressively more stringent standards which will result in an increase in
environmental capital expenditures and costs for environmental compliance. Most
of the forecasted environmental expenditures will be spent on projects relating
to compliance with these standards. Upon completion of the capital projects, the
Company anticipates that its facilities will meet the applicable Clean Air Act
standards.
In March 1993 the United States Environmental Protection Agency ("EPA")
notified the Company of Clean Air Act violations, alleging particulate matter
and hydrogen sulfide emissions in excess of allowable concentrations, at the
Company's Follansbee Coke Plant. The parties have entered into a consent decree
settling the civil penalties related to this matter for $700,000 and the Company
completed payment of all civil penalties in January 1997.
In an action brought in 1985 in the U.S. District Court for the
Northern District of West Virginia, the EPA claimed violations of the Solid
Waste Disposal Act at a surface impoundment area at the Follansbee facility. The
Company and the EPA entered into a consent decree in October 1989 whereby soil
and groundwater testing and monitoring have been implemented and the Company is
currently working with the EPA to close the surface impoundment.
In September 1996 the EPA issued an initial administrative order under
the Resource Conservation and Recovery Act ("RCRA") affecting other areas of the
Follansbee facility. The EPA is seeking to require the Company to perform a site
investigation of the Follansbee plant. The Company has actively contested the
EPA's jurisdiction to require a site investigation. One of two appeals was
dismissed by the court, but the Company is continuing with the second appeal.
On December 20, 1995 the Department of Justice notified the Company of
its intention to bring proceedings seeking civil penalties for alleged
violations of the Clean Water Act (1991-94) and RCRA (1990-91) at the Company's
Follansbee facility. Suit was filed February 5, 1996 in the U.S. District Court,
Eastern District of West Virginia (Civil Action #5-96CV20). A consent decree has
been entered and the matter has been settled for $200,000.
In addition, the West Virginia Department of Environmental Protection
("WVDEP") sought civil penalties for violations of a National Pollutant
Discharge Elimination System permit at the Company's Follansbee plant. A
settlement has been proposed by the WVDEP in which the Company would pay
approximately $100,000 in settlement of this matter.
By letter dated March 15, 1994 the Ohio Attorney General advised the
Company of its intention to file suit on behalf of the Ohio EPA for alleged
hazardous waste violations at the Company's Steubenville, Mingo Junction,
Martins Ferry and Yorkville facilities. In subsequent correspondence the State
of Ohio demanded a civil penalty of approximately $300,000 in addition to
injunctive relief. The demand for injunctive relief consists of remedial
activities at each facility aggregating less than $125,000, the initiation of a
waste minimization program at the affected facilities and a company wide
compliance assessment. The Company is in the process of conducting
13
<PAGE> 15
settlement negotiations with the Ohio EPA.
In January 1998 the Ohio Attorney General notified the Company of a
draft consent order and initial civil penalties in the amount of $1 million for
various air violations at the Company's Steubenville and Mingo Junction
facilities occurring from 1992 through 1996. The Company anticipates entering
into discussions with the Ohio Environmental Enforcement Section to resolve
these issues.
The Company is currently operating in substantial compliance with three
consent decrees (two with the EPA and one with the Pennsylvania Department of
Environmental Resources) with respect to wastewater discharges at Allenport,
Pennsylvania and Mingo Junction, Steubenville, and Yorkville, Ohio. The Company
has completed all of the technical requirements of the consent decrees and is
evaluating filing petitions to terminate them.
As the Company becomes aware of potential environmental liabilities
resulting from its operations, such situations are being assessed and remediated
in accordance with regulatory requirements.
Non-current accrued environmental liabilities totaled $7.8 million at
December 31, 1996 and $10.6 million at December 31, 1997. These accruals were
initially determined by the Company in January 1991, based on all then available
information. As new information becomes available, including information
provided by third parties, and changing laws and regulation, the liabilities are
reviewed and the accruals adjusted quarterly. Management believes, based on its
best estimate, that the Company has adequately provided for remediation costs
that might be incurred or penalties that might be imposed under present
environmental laws and regulations.
Based upon information currently available, including the Company's
prior capital expenditures, anticipated capital expenditures, consent agreements
negotiated with Federal and state agencies and information available to the
Company on pending judicial and administrative proceedings, the Company does not
expect its environmental compliance and liability costs, including the
incurrence of additional fines and penalties, if any, relating to the operation
of its facilities, to have a material adverse effect on the financial condition
or results of operations of the Company. However, as further information comes
into the Company's possession, it will continue to reassess such evaluations.
SEC ENFORCEMENT ACTION
On March 31, 1997, the Company through SB Acquisition, a wholly-owned
subsidiary of the Company, commenced a tender offer for shares of Dynamics
Corporation of America ("DCA"), a NYSE-listed company. On April 14, 1997, DCA
commenced the DCA Action against the Company in the United States District Court
for the District of Connecticut, alleging, among other things, that the
Company's tender offer violated Section 14(d) of the Exchange Act and the rules
thereunder. The Company denied all allegations and contested the action. On
April 29, 1997, Judge Gerard L. Goettel of the United States District Court,
District of Connecticut, issued an order granting a motion for a preliminary
injunction filed by DCA against the Company and SB Acquisition. The District
Court found that the disclosure contained in the Company's tender offer
materials to DCA shareholders was improper because (i) it stated that under
certain circumstances the Company "may be required" to comply with Section
912(b) of the New York Business Corporation Law and a provision in DCA's
charter, instead of disclosing that the Company "will be required" to do so and
(ii) it failed to disclose the Company's future plans in the event that it was
prohibited from merging with DCA for five years. The Court (i) directed the
Company and SB Acquisition to make "further and complete disclosures" pertaining
to those subjects described above and (ii) specified that such tender offer be
extended for an additional twenty days. This order was promptly complied with in
all respects by WHX and SB Acquisition. The DCA Action was later discontinued by
stipulation between the parties.
On April 8, 1997, the SEC entered an Order Directing Private
Investigation concerning possible violations of Sections 14(d) and 14(e) of the
Exchange Act and Rules 14d-10(a)(1) and 14e-1(b) thereunder in connection with
the Company's tender offer for DCA. The Company fully cooperated with this
investigation. The SEC Enforcement Staff has advised the Company's counsel that
the SEC has authorized the initiation of administrative proceedings seeking a
cease and desist order pertaining to alleged violations of Section 14(d)(4) of
the Exchange Act and Rule 14d-10(a)(1) based on the Company's inclusion of a
"record holder
14
<PAGE> 16
condition" in the DCA tender offer. This condition was removed by the Company
shortly after the tender offer began and after the SEC had granted authority to
the SEC Enforcement Staff to seek injunctive relief. The SEC Enforcement Staff
also has advised the Company's counsel that the SEC has authorized the
initiation of administrative proceedings seeking a cease and desist order and
disgorgement of profits, pertaining to alleged violations of Section 14(d)(4) of
the Exchange Act and Rules 14d-6(d) and 14d-4(c) in connection with the
Company's closing of the DCA tender offer on June 13, 1997. The SEC Enforcement
Staff has asserted that the decision to close the DCA tender offer and purchase
approximately 10% of DCA's outstanding shares was a material change in the
conditions of such offer, including its "poison pill condition," "New York
Business Corporation Law condition" (NYBCL Section 912(b)) and "interfering
transaction condition," each of which was effected without adequate notice to
DCA shareholders. According to the SEC Enforcement Staff, the tender offer's
conditions precluded the Company from closing as long as (i) DCA's "poison pill"
remained in place, even if the Company acquired shares insufficient to trigger
the "poison pill," (ii) the New York Business Corporation Law condition could
affect the intended merger with DCA and (iii) DCA's merger agreement with
another company, CTS Corporation, remained in place. To date, no order
commencing an administrative proceeding has been filed. There can be no
assurance that such a proceeding will not be brought. If such a proceeding is
brought, there can be no assurance that an adverse decision will not be
rendered, including imposition of a cease and desist order and a disgorgement of
profits.
GENERAL LITIGATION
The Company is a party to various litigation matters including general
liability claims covered by insurance.
In the opinion of management, the litigation described above is not
expected to have a material adverse effect on the financial condition or results
of operations of the Company.
15
<PAGE> 17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The 1997 annual meeting of stockholders was held on December
1, 1997.
(b) All of the Company's nominees, as set forth below, were
elected. There was no solicitation in opposition to the
Company's nominees. The other members of the Company's Board
of Directors are Neil D. Arnold, Paul W. Bucha, Robert A.
Davidow, Ronald LaBow, Marvin L. Olshan and Raymond S. Troubh.
(c) Matters voted on at the meeting and the number of votes cast.
<TABLE>
<CAPTION>
Votes
Voted Against or Broker
(1) Directors For Withheld Abstentions Non-Votes
--------- ----- -------- ----------- ---------
<S> <C> <C> <C> <C>
William Goldsmith 17,857,703 308,133 -- --
John R. Scheessele 17,926,847 238,989 -- --
(2) Approval of the 1997 12,579,523 938,023 429,461 4,218,829
Directors Stock Option
Plan
(3) Approval of the grant 11,189,197 1,873,849 883,961 4,218,829
of an option to WPN Corp.
to purchase shares of the
Company's Common Stock
(4) Ratification of 17,826,108 237,964 101,764 --
Price Waterhouse LLP
as the Company's
Independent Public
Accountants for the
fiscal year ending
December 31, 1997.
</TABLE>
16
<PAGE> 18
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
The number of shares of Common Stock issued and outstanding as of March
2, 1998 was 18,669,175, including 340,649, shares of Redeemable Common Stock. In
1996 and 1997, the Company purchased 2.9 million shares and 5.5 million shares,
respectively of Common Stock in open market purchases. The repurchased shares
have been retired except for 205,100 shares being held as Treasury shares at
December 31, 1997.
The prices set forth in the following table represent the high and low
sales prices for the Company's Common Stock:
<TABLE>
<CAPTION>
Common Stock
High Low
------- -------
<S> <C> <C>
1996
First Quarter $14.000 $10.375
Second Quarter 12.250 8.875
Third Quarter 10.875 8.500
Fourth Quarter 10.000 7.375
1997
First Quarter 9.250 6.750
Second Quarter 8.250 5.250
Third Quarter 15.250 7.625
Fourth Quarter 14.250 10.375
</TABLE>
As of March 2, 1998, there were approximately 12,200 holders of record
of WHX's Common Stock.
The Company intends to retain any future earnings for working capital
needs and to finance capital improvements and presently does not intend to pay
cash dividends on its Common Stock for the foreseeable future.
17
<PAGE> 19
ITEM 6 SELECTED FINANCIAL DATA
FIVE-YEAR STATISTICAL (THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PROFIT AND LOSS:
Net sales $ 1,046,795 $ 1,193,878 $ 1,364,614 $ 1,232,695 $ 642,096
Cost of products sold (excluding
depreciation and profit sharing) 876,814 979,277 1,147,899 1,096,228 720,722
Depreciation 57,069 61,514 67,700 68,956 49,445
Profit sharing 4,819 9,257 6,718 -- --
Selling, administrative and general expense 58,564 64,540 66,531 70,971 68,190
Special charge -- -- -- -- 92,701
----------- ----------- ----------- ----------- -----------
Operating income (loss) 49,529 79,290 75,766 (3,460) (288,962)
Interest expense on debt 21,373 22,581 22,830 25,963 29,047
Other income 11,965 17,925 47,139 25,974 50,668
B & LE settlement -- 36,091 -- -- --
----------- ----------- ----------- ----------- -----------
Income (loss) before taxes
and extraordinary items 40,121 110,725 100,075 (3,449) (267,341)
Tax provision (benefit) 9,400 24,360 19,014 (4,107) (93,569)
----------- ----------- ----------- ----------- -----------
Income (loss) before extraordinary items 30,721 86,365 81,061 658 (173,772)
Extraordinary items (36,953) (9,984) (3,043) -- (25,990)
----------- ----------- ----------- ----------- -----------
Net income (loss) (6,232) 76,381 78,018 658 (199,762)
Preferred stock dividends 4,713 13,177 22,875 22,313 20,657
----------- ----------- ----------- ----------- -----------
Net income (loss) available to common stock $ (10,945) $ 63,204 $ 55,143 $ (21,655) $ (220,419)
=========== =========== =========== =========== ===========
Basic income (loss) per share
Operations $ 1.08 $ 2.72 $ 2.25 $ (.83) $ (8.83)
Extraordinary (1.54) (.37) (.12) -- (1.18)
----------- ----------- ----------- ----------- -----------
Net $ (.46) $ 2.35 $ 2.13 $ (.83) $ (10.01)
=========== =========== =========== =========== ===========
Average number of common shares
outstanding (in thousands) 24,041 26,957 25,850 26,176 22,028
=========== =========== =========== =========== ===========
FINANCIAL POSITION:
Cash, cash equivalent and short term investments $ 279,856 $ 401,606 $ 439,493 $ 482,582 $ 582,552
Working capital 398,051 524,051 541,045 491,956 329,372
Property, plant and equipment - net 748,673 768,284 793,319 755,412 738,660
Plant additions and improvements 73,652 82,020 83,282 35,436 36,779
Total assets 1,491,600 1,729,908 1,796,467 1,718,779 2,070,403
=========== =========== =========== =========== ===========
Long-term debt 346,823 289,500 285,676 268,198 350,453
Stockholders' equity 432,283 692,254 768,405 714,437 461,876
=========== =========== =========== =========== ===========
NUMBER OF STOCKHOLDERS OF RECORD:
Common 8,648 8,729 13,408 12,697 12,273
Series A Convertible Preferred 30 27 28 42 42
Series B Convertible Preferred -- 22 48 62 79
=========== =========== =========== =========== ===========
EMPLOYMENT
Employment costs $ 322,985 $ 328,584 $ 343,416 $ 321,347 $ 204,004
Average number of employees 5,381 5,481 5,996 5,706 4,420
=========== =========== =========== =========== ===========
PRODUCTION AND SHIPMENTS:
Raw steel production - tons 2,258,000 2,270,000 2,199,000 1,782,000 663,000
Shipments of steel products - tons 2,251,000 2,397,000 2,515,000 2,267,000 1,060,000
=========== =========== =========== =========== ===========
</TABLE>
WHX CORPORATION
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<PAGE> 20
NOTES TO FIVE-YEAR STATISTICAL SUMMARY
In 1993 the Company recorded extraordinary charges of $37.0 million,
net of taxes, for premiums paid on early debt retirement and to provide for coal
retiree medical benefits.
The Company adopted Statement of Financial Accounting Standard No. 112,
"Accounting for Postemployment Benefits" ("SFAS 112") as of January 1, 1994.
SFAS 112 establishes accounting standards for employers who provide benefits to
former or inactive employees after employment but before retirement. Those
benefits include, among others, disability, severance and workers' compensation.
The Company recorded a charge of $12.2 million ($10.0 million net of tax) in the
1994 first quarter as a result of the cumulative effect on prior years of
adoption of the change in accounting method.
The Company and its subsidiaries were reorganized into a new holding
company structure on July 26, 1994. The transactions were accounted for as a
reorganization of entities under common control. On the merger date, WHX had the
same consolidated net worth as WPC and its subsidiaries prior to the
reorganization.
In 1995 the Company recorded an extraordinary charge of $3.0 million,
net of taxes, to reflect the coal retiree medical benefits for additional
retirees assigned to the Company by the Social Security Administration and the
effect of recording the liability at its net present value.
In 1996 the Company experienced a work stoppage which began October 1,
1996 and continued through August 12, 1997 at eight of its plants in Ohio,
Pennsylvania and West Virginia. No steel products were produced or shipped from
these facilities during the strike. These facilities account for approximately
80% of the tons shipped by the Company on an annual basis.
In 1997 the Company recorded a special charge of $92.7 million related
to a new labor agreement which ended the ten-month strike. The special charge
included $66.7 million for enhanced retirement benefits, $15.5 million for
signing and retention bonuses, $3.8 million for special assistance and other
employee benefits payments and $6.7 million for a grant of 1 million stock
options to WPN Corp.
In 1997 the Company also recorded an extraordinary charge of $26.0
million, net of tax, related to premium and interest charges required to defease
its 93/8% Senior Unsecured Notes of $24.3 million and coal miner retiree medical
benefits of $1.7 million.
19
<PAGE> 21
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Overview
In August 1997 the Company and the USWA entered into a new five-year
labor agreement which settled a ten-month strike. The strike directly affected
facilities accounting for approximately 80% of the Company's steel shipments.
The strike materially affected the financial performance of WPC in the fourth
quarter of 1996 and for all of 1997, and will be the primary reason for
differences in year to year comparisons.
All of WPC's production facilities resumed operations as of September
30, 1997. Raw steel production achieved 90% of capacity in the fourth quarter of
1997. By June 30, 1998, WPC expects to be producing at its pre-strike production
levels and shipping at its historical mix of products.
The Company believes the five year term of the new labor agreement
provides WPC with a significant competitive advantage since a majority of WPC's
integrated steel competitors have labor contracts that expire in 1999. The new
labor agreement provides for a restructuring of work rules and manning
requirements and a reduction in the expense associated with retiree healthcare
costs. The improved work rules allow WPC to eliminate 850 hourly jobs
(approximately 20% of the work force) which the Company believes will materially
reduce its labor costs. Partially offsetting these savings are wage increases
and the costs of the DB Plan, which includes a retirement incentive.
1997 COMPARED TO 1996
Net sales for 1997 decreased to $642.1 million from $1,232.7 million in
1996. Shipments of steel products decreased to 1.1 million tons in 1997 from 2.3
million tons in 1996. The decrease in sales and tons shipped is primarily
attributable to the work stoppage at eight plants located in Ohio, Pennsylvania
and West Virginia. Production and shipment of steel products at these plants
ceased on October 1, 1996 and the strike continued to August 12, 1997. Average
net sales per ton increased to $606 in 1997 from $544 per ton in 1996 because
higher value added products continued to be shipped during the strike from other
locations.
Cost of goods sold increased to $680 per ton shipped in 1997 from $484
in 1996. This increase reflects the effect of high fixed cost and low capacity
utilization and higher levels of external steel purchases due to the strike,
higher costs for natural gas and a higher value-added product mix. In addition,
costs were adversely affected by a door rehabilitation program at WPSC's number
8 coke battery. The operating rate for the fourth quarter was 90.0%, but for the
year of 1997 declined to 27.6%. The operating rate for the nine months prior to
the work stoppage was 98.9%, but declined to 74.0% for the full year of 1996.
Raw steel production is 100% continuous cast.
Depreciation expense decreased to $49.4 million in 1997 from $69.0
million in 1996. Decreased depreciation is due to lower levels of raw steel
production during the strike and its effect on units of production depreciation
method. Raw steel production decreased by 62.8%.
Selling, administrative and general expense decreased 3.9% to $68.2
million in 1997 from $71.0 million in 1996. The decrease is due to the reduced
level of operations.
In 1997 the Company recorded a special charge of $92.7 million related
to the new labor agreement. The special charge included $66.7 million for
enhanced retirement benefits, $15.5 million for signing and retention bonuses,
special assistance payments and other employee benefits totaling $3.8 million
and $6.7 million for a grant of 1 million stock options to WPN Corp.
Interest expense increased to $29.0 million in 1997 from $26.0 million
in 1996 due primarily to
20
<PAGE> 22
higher levels of borrowings under the Revolving Credit Facility.
Other income increased to $50.7 million in 1997 from $26.0 million in
1996. The increase reflects a $32.4 million increase in interest and investment
income, including unrealized income of $17.4 million under mark to market rules.
Equity income decreased from $9.5 million in 1996 to a loss of $1.6 million in
1997 due to start-up losses in the OCC Joint Venture.
The tax benefits for 1997 and 1996 were $93.6 million and $4.1 million,
respectively, before recording a tax benefit related to extraordinary charges in
1997.
Loss before extraordinary charges in 1997 totaled $173.8 million, or
$8.83 per share of Common Stock. The 1997 extraordinary charge of $40.0 million
($26.0 million net of tax) reflects the premium and interest of $37.4 million on
the legal defeasance of long term debt, and $2.6 million for coal miner retiree
medical expense attributable to the allocation of additional retirees to the
Company by the Social Security Administration.
Net loss in 1997 totaled $199.8, or a loss of $10.01 per share of
Common Stock. Net income in 1996 totaled $.7 million, or a loss of$.83 per share
of Common Stock after deduction of preferred stock dividends.
1996 COMPARED TO 1995
Net sales for 1996 decreased to $1,232.7 million from $1,364.6 million
in 1995. Net tons shipped decreased to 2.3 million tons in 1996 from 2.5 million
tons in 1995. The decrease in sales and tons shipped is primarily attributable
to the work stoppage at eight plants located in Ohio, Pennsylvania and West
Virginia. Production and shipment of steel products at these plants ceased on
October 1, 1996 and the strike continued to August 12, 1997. Shipments in the
fourth quarter decreased to 253,302 tons compared to 622,822 tons shipped in the
fourth quarter of 1995. Also, steel prices declined 3.7% in 1996 compared to the
prior year, but were partially offset by a higher value-added product mix.
Cost of goods sold increased from $456 per ton shipped in 1995 to $484
in 1996. This increase reflects the volume effect of lower production on fixed
cost absorption and higher levels of external steel purchases due to the work
stoppage, higher costs for coal, ore and natural gas and a higher value-added
product mix. The operating rate for the nine months prior to the work stoppage
was 98.9%, but dropped to 74.0% for the full year of 1996 compared to 91.6% in
1995. Raw steel production is 100% continuous cast.
Depreciation expense increased to $69.0 million in 1996 from $67.7
million in 1995. Increased depreciation attributable to higher amounts of
depreciable property were partially offset by lower levels of raw steel
production and its effect on units of production depreciation method.
No profit sharing was earned in 1996 as a result of the strike and its
impact on pre-tax income. Profit sharing expense totaled $6.7 million in 1995.
Selling, administrative and general expense increased 6.7% to $71.0
million in 1996 from $66.5 million in 1995. The increase is due to inclusion of
Unimast for a full year in 1996, compared to nine months in 1995 and a favorable
local tax settlement recorded in 1995.
Interest expense increased to $26.0 million in 1996 from $22.8 million
in 1995 due to a reduction in capitalized interest from $6.4 million in 1995 to
$2.5 million in 1996. The reduction in capitalized interest reflects lower
amounts of capital expenditures and shorter construction periods in 1996.
Other income decreased to $26.0 million in 1996 from $47.1 million in
1995. The decrease reflects a $12.8 million decrease in interest and investment
income. The 1995 other income also included a gain on
21
<PAGE> 23
the sale of common stock of an unrelated company and a gain on the sale of the
assets of its former WP Radio division.
The tax provision (benefit) for 1996 and 1995 were a $4.1 million
benefit and $19.0 million provision, respectively, before recording a tax
benefit related to extraordinary charges in 1995. The tax provision was
calculated on an alternative minimum tax basis. The 1995 provision includes the
effect of recognizing $58.0 million of deferred tax assets, but excludes the
benefit of applying $42.1 million of prereorganization tax benefits, which are
direct additions to paid-in-capital. There were no prereorganization tax
benefits applied in 1996.
Income before extraordinary charges in 1995 totaled $81.1 million, or
$2.25 per share of Common Stock. The 1995 extraordinary charge of $4.7 million
($3.0 million net of tax) reflects additional liability for coal miner retiree
medical expense attributable to the allocation of additional retirees to the
Company by the Social Security Administration.
Net income in 1996 totaled $658,000, or a loss of $0.83 per share of
Common Stock (after deduction of preferred stock dividends). Net income in 1995
totaled $78.0 million, or $2.13 per share of Common Stock.
LIQUIDITY AND CAPITAL RESOURCES
Net cash flow used by operating activities for 1997 totaled $12.9
million. Short term trading investments and related short term borrowings are
reported as cash flow from operating activities. Working capital accounts
(excluding cash, short term investments, short term borrowings and current
maturities of long-term debt) used $34.3 million of funds, principally due to
the prolonged work stoppage and related startup cost resulting from its labor
settlement on August 12, 1997. Accounts receivable increased $43.2 million
(excluding a $24.0 million sale of trade receivables under the Receivables
Facility) due to increased sales reflecting resolution of the labor dispute.
Inventories valued principally by the LIFO method for financial reporting
purposes, totaled $284.8 million at December 31, 1997, an increase of $69.4
million from the prior year end. The increase in inventories is due to increases
in furnace coke and contractual commitments for iron ore pellets. Trade payables
increased $64.4 million due to higher operating levels. Net cash flow used in
investing activities for 1997 totaled $79.7 million including capital
expenditures of $36.8 million. Net cash flow from financing activities totaled
$58.6 million including borrowings under the Revolving Credit Facility of $89.8
million, $39.1 million of additional long term debt, offset by $65.4 million
utilized for Common Stock and Series A and Series B Preferred Stock repurchases
in the open market.
For the year ended December 31, 1997, the Company spent $36.8 million
(including capitalized interest) on capital improvements, including $12.4
million on environmental control projects. Capital expenditures were lower than
in recent years due to the strike. Additionally, the Company invested $16.5
million in 1996 and $7.2 million in 1997 in its Ohio Coatings Company joint
venture.
Continuous and substantial capital and maintenance expenditures will be
required to maintain and, where necessary, upgrade operating facilities to
remain competitive, and to comply with environmental control requirements. The
Clean Air Act Amendment of 1990 is expected to increase the Company's costs
related to environmental compliance; however, such an increase in cost is not
reasonably estimable, but is not anticipated to have a material adverse effect
on the consolidated financial condition of the Company. It is anticipated that
necessary capital expenditures including required environmental expenditures in
future years will approximate depreciation expense and represent a material use
of operating funds. The Company anticipates funding its capital expenditures in
1998 from cash on hand and funds generated from operations.
Non-current accrued environmental liabilities totaled $7.8 million at
December 31, 1996 and $10.6 million at December 31, 1997. These accruals were
initially determined by the Company in January 1991, based on all then available
information. As new information becomes available, including information
provided by third parties, and changing laws and regulation, the liabilities are
reviewed and the accruals adjusted
22
<PAGE> 24
quarterly. Management believes, based on its best estimate, that the Company has
adequately provided for remediation costs that might be incurred or penalties
that might be imposed under present environmental laws and regulations.
In August 1994 the Company entered into an agreement to sell, up to
$75.0 million on a revolving basis, an undivided percentage ownership in a
designated pool of trade receivables (the "Receivables Facility"). In July 1995,
WPC amended such Receivables Facility to sell an additional $20.0 million on
similar terms and conditions. The Receivables Facility expires in August 1999.
Accounts receivable at December 31, 1997, exclude $69 million representing
accounts receivable sold with recourse limited to the extent of uncollectible
balances. Fees paid by the Company under this Receivables Facility were based
upon variable rates that range from 5.76% to 8.50%. Based on the Company's
collection history, the Company believes that credit risk associated with the
above arrangement is immaterial.
On December 28, 1995, WPSC entered into a new Revolving Credit Facility
("the Revolving Credit Facility") with Citibank, N.A. as agent. The Revolving
Credit Facility, as amended, provides for borrowing for general corporate
purposes of up to $150 million. The Revolving Credit Facility expires May 3,
1999. Interest is calculated at a Citibank prime rate plus 1.0% and/or a
Eurodollar rate plus 2.25%. Borrowings under the Revolving Credit Facility are
secured primarily by 100% of WPSC's eligible inventory and requires that WPSC
maintain a specified level of tangible net worth. The Revolving Credit Facility
has certain financial covenants restricting indebtedness, liens and
distributions. Borrowings under the Revolving Credit Facility at December 31,
1997 totaled $89.8 million.
In November 1997 WPC issued $275.0 million principal amount of 9 1/4%
Senior Unsecured Notes (the "9 1/4% Senior Notes") to qualified institutional
buyers pursuant to Rule 144A under The Securities Act of 1933. WPC has agreed,
subject to certain conditions, to file a registration statement relating to an
exchange offer for the notes under the Securities Act of 1993 (The "Securities
Act"), for the benefit of the holders of the notes.
In November 1997 WPC also entered into a Term Loan Agreement with DLJ
Capital Funding, Inc., as syndication agent, pursuant to which the Company
borrowed $75 million. The Term Loan Agreement matures on November 15, 2006.
Amounts outstanding under the Term Loan Agreement bear interest at either (i)
the Alternate Base Rate (as defined therein) plus 2.25% or (ii) the LIBO Rate
(as defined therein) plus 3.25%, determined at the Company's option. WPC's
obligations under the Term Loan Agreement will be guaranteed by the WPC's then
outstanding present and future operating subsidiaries.
The proceeds from the 9 1/4% Senior Notes and the Term Loan Agreement
were used to defease $266.2 million of 93/8% Senior Secured Notes due 2003 and
to pay down borrowings under the Revolving Credit Facility.
The Company recorded an extraordinary charge of $40.0 million ($26.0
million net of tax) to cover the premium and interest of $37.4 million on the
legal defeasance of the 93/8% Senior Notes and $2.6 million for coal miner
retiree medical benefits.
Under the terms of the new labor agreement, WPSC established a DB Plan
covering its hourly employees. As of December 31, 1997, WPSC had an unfunded
accumulated pension benefit obligation for the DB Plan of approximately $167.3
million, of which approximately 75% must be funded over the next five years. In
accordance with ERISA regulations, the Company does not anticipate having to
make significant contributions to fund the obligations of the new plan in 1998,
but will fund approximately $85.1 million in 1999 ($31.4 million in the first
quarter).
The Company has a commitment to fund the working capital requirements
of each of OCC and Wheeling-Nisshin in proportion to its ownership interest if
cash requirements of such joint ventures are in excess of internally-generated
and available borrowed funds. The Company anticipates that Wheeling-Nisshin will
not have such funding requirements for the foreseeable future. As of December
31, 1997, the Company's investment in OCC is $20.8 million, $7.2 million of
which was invested in 1997. The Company
23
<PAGE> 25
anticipates that through December 31, 1998 additional funding requirements from
the Company will be between $5.0 million and $10.0 million. OCC may also require
future working capital contributions from its equity partners; however, the
Company does not believe that any such required funding will be material to the
Company's liquidity.
The Company began a Year 2000 compliance project in July 1995. This
project encompasses business systems, mainframe processor systems, plant
operating systems, end-user computing systems, wide-area and voice networks, and
building and plant environmental systems. Included in the project plan is a
review and Year 2000 compliance assurance program with customers, suppliers, and
other constituents. System inventories for all affected systems are being
reviewed and work is in progress to ensure that such systems are Year 2000
compliant. Management believes, based on a current review and the ongoing
effort, that all relevant computer systems will be Year 2000 compliant by the
second quarter of 1999. Management believes that the cost of this project will
not be material to the Company's financial condition of results of operations.
On March 1, 1998, the Company entered into a definitive merger
agreement (the "Merger Agreement") with Handy & Harman ("Handy & Harman"), a New
York Stock Exchange listed company which is a diversified industrial
manufacturing company. Pursuant to the Merger Agreement, HN Acquisition Corp., a
wholly-owned subsidiary of the Company, will commence a cash tender offer (the
"Tender Offer") to acquire all of the outstanding common shares of Handy &
Harman at $35.25 per share. The Tender Offer is conditioned upon, among other
things, the valid tender of such number of shares of Handy & Harman common
stock, which, when added to the 13.6% of outstanding shares of Handy & Harman
already owned by the Company, would represent at least a majority of Handy &
Harman's outstanding shares on a fully diluted basis. Upon the successful
completion of the Tender Offer, the parties will, subject to stockholder
approval, complete a second-step cash merger at $35.25 per share as promptly as
practicable. Upon completion of the merger, Handy & Harman will become a
wholly-owned subsidiary of the Company. The transaction has a total value of
approximately $645 million, including the assumption of approximately $190
million in debt. The Company anticipates financing the transaction through cash
on hand and a private placement of debt securities of the Company. The Company
currently anticipates an offering, however, the exact terms and conditions of
such proposed financing, including the sources thereof, have not been determined
and could vary substantially from the anticipated form thereof.
Short-term liquidity is dependent, in large part, on cash on hand,
investments, general economic conditions and their effect on steel demand and
prices. Long-term liquidity is dependent upon the Company's ability to sustain
profitable operations and control costs during periods of low demand or pricing
in order to sustain positive cash flow. The Company satisfies its working
capital requirements through cash on hand, investments, the Receivable Facility,
borrowing availability under the Revolving Credit Facility and funds generated
from operations. The Company believes that such sources will provide the Company
for the next twelve months with the funds required to satisfy working capital
and capital expenditure requirements. External factors, such as worldwide steel
production and demand and currency exchange rates could materially affect the
Company's results of operations. During 1997 the Company had minimal activity
with respect to futures contracts, and the impact of such activity was not
material to the Company's financial condition or results of operations.
When used in the Management's Discussion and Analysis, the words
"anticipate", "estimate" and similar expressions are intended to identify
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act, which are intended to be covered by the
safe harbors created thereby. Investors are cautioned that all forward-looking
statements involve risks and uncertainty, including without limitation, the
ability of the Company to develop market and sell its products, the effects of
competition and pricing and Company and industry shipment levels. Although the
Company believes that the assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could be inaccurate, and therefore, there
can be no assurance that the forward-looking statements included herein will
prove to be accurate.
24
<PAGE> 26
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of WHX Corporation
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and of cash flows present fairly,
in all material respects, the financial position of WHX Corporation and its
subsidiaries (the "Company") at December 31, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and the significant
estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE LLP
Pittsburgh, Pennsylvania
February 10, 1998, except as to Note R
which is as of March 1, 1998
25
<PAGE> 27
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS EXCEPT PER SHARE)
<TABLE>
<CAPTION>
Year ended December 31, 1995 1996 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Net sales $ 1,364,614 $ 1,232,695 $ 642,096
COST AND EXPENSES:
Cost of products sold, excluding depreciation and profit sharing 1,147,899 1,096,228 720,722
Depreciation 67,700 68,956 49,445
Profit sharing 6,718 -- --
Selling, administrative and general expense 66,531 70,971 68,190
Special charge -- -- 92,701
- -------------------------------------------------------------------------------------------------------------------------
1,288,848 1,236,155 931,058
- -------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 75,766 (3,460) (288,962)
Interest expense on debt 22,830 25,963 29,047
Other income 47,139 25,974 50,668
- -------------------------------------------------------------------------------------------------------------------------
Income (loss) before taxes
and extraordinary item 100,075 (3,449) (267,341)
Tax provision (benefit) 19,014 (4,107) (93,569)
- -------------------------------------------------------------------------------------------------------------------------
Income (loss) before
extraordinary item 81,061 658 (173,772)
Extraordinary charge - net of tax (3,043) -- (25,990)
- -------------------------------------------------------------------------------------------------------------------------
Net income (loss) 78,018 658 (199,762)
Dividend requirement for preferred stock 22,875 22,313 20,657
Net income (loss) available to common stock $ 55,143 $ (21,655) $(220,419)
=========================================================================================================================
BASIC INCOME (LOSS) PER SHARE OF COMMON STOCK
Income (loss) before extraordinary item $ 2.25 $ (.83) $ (8.83)
Extraordinary charge - net of tax (.12) -- (1.18)
- -------------------------------------------------------------------------------------------------------------------------
Net income (loss) per share $ 2.13 $ (.83) $ (10.01)
=========================================================================================================================
INCOME (LOSS) PER SHARE OF COMMON STOCK-ASSUMING DILUTION
Income (loss) before extraordinary item $ 1.79 $ (.83) $ (8.83)
Extraordinary charge - net of tax (.07) -- (1.18)
- -------------------------------------------------------------------------------------------------------------------------
Net income (loss) per share-- assuming dilution $ 1.72 $ (.83) $ (10.01)
=========================================================================================================================
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
WHX CORPORATION
26
<PAGE> 28
CONSOLIDATED BALANCE SHEET (IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, 1996 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 35,020 $ 1,002
Short term investments 447,562 581,550
Trade receivables, less allowances for doubtful
accounts of $1,149 and $1,108 25,805 44,993
Inventories 215,402 284,757
Prepaid expenses and deferred charges 13,942 26,581
- -----------------------------------------------------------------------------------------------------------
Total current assets 737,731 938,883
Investment in associated companies 77,403 80,409
Property, plant and equipment, at cost less
accumulated depreciation and amortization 755,412 738,660
Deferred income taxes 100,157 196,966
Intangible asset - pensions -- 76,714
Deferred charges and other assets 48,076 38,771
- -----------------------------------------------------------------------------------------------------------
$ 1,718,779 $ 2,070,403
===========================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade payables $ 59,477 $ 123,872
Short term debt 70,223 366,418
Payroll and employee benefits 57,094 56,212
Federal, state and local taxes 9,120 12,059
Deferred income taxes - current 30,649 32,196
Interest and other 16,876 18,288
Long-term debt due in one year 2,336 466
- -----------------------------------------------------------------------------------------------------------
Total current liabilities 245,775 609,511
Long-term debt 268,198 350,453
Pension liability -- 166,652
Other employee benefit liabilities 435,502 427,124
Other liabilities 49,096 49,979
- -----------------------------------------------------------------------------------------------------------
998,571 1,603,719
- -----------------------------------------------------------------------------------------------------------
Redeemable common stock - 411 shares and 360 shares 5,771 4,808
- -----------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Preferred stock - $.10 par value; authorized 10,000 shares;
issued and outstanding: 6,137 shares and 5,883 shares 614 589
Common stock $.01 par value; authorized 60,000 shares;
issued and outstanding: 24,328 and 19,074 shares 245 193
Unrealized gain on securities - available for sale -- 24,237
Additional paid-in capital 658,123 602,657
Treasury stock-157 shares and 205 shares (1,382) (2,218)
Accumulated earnings (deficit) 56,837 (163,582)
- -----------------------------------------------------------------------------------------------------------
714,437 461,876
- -----------------------------------------------------------------------------------------------------------
$ 1,718,779 $ 2,070,403
===========================================================================================================
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
WHX CORPORATION
27
<PAGE> 29
CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended December 31, 1995 1996 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 78,018 $ 658 $(199,762)
Items not affecting cash from operating activities:
Depreciation and amortization 67,912 69,287 49,776
Other postretirement benefits 5,522 3,505 2,322
Coal retirees' medical benefits, net of tax 3,043 -- 1,700
Premium on early debt retirement, net of tax -- -- 24,290
Income taxes 6,416 (6,572) (94,029)
(Gain) loss on asset dispositions (7,507) 1,541 2,335
Special charges, net of current portion -- -- 69,137
Pension expense -- -- 9,327
Equity loss (income) in affiliated companies (4,845) (9,496) 1,644
Decrease (increase) in working capital elements:
Trade receivables 47,725 50,290 (43,188)
Trade receivables sold 22,000 (22,000) 24,000
Inventories (1,336) 70,469 (69,355)
Short term investments-trading (20,443) (60,125) (70,239)
Investment account borrowings -- 68,841 206,649
Other current assets (5,585) 4,248 (12,639)
Other current liabilities (23,557) (70,467) 69,411
Other items - net (10,519) 4,629 15,705
- --------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 156,844 104,808 (12,916)
- --------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Plant additions and improvements (83,282) (35,436) (36,779)
Short term investments - available for sale 10,190 7,920 (39,512)
Unimast acquisition (27,500) -- --
Other investments (7,353) (17,240) (7,150)
Proceeds from sales of assets 44,762 2,785 1,217
Dividends from affiliated companies 2,500 2,500 2,500
- --------------------------------------------------------------------------------------------------------
Net cash used in investing activities (60,683) (39,471) (79,724)
- --------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt proceeds, net of issuance cost 1,079 400 340,455
Long-term debt retirement (24,508) (15,246) (268,766)
Premium on early debt retirement -- -- (32,600)
Letter of credit collateralization 1,094 384 16,984
Short-term borrowings (payments) (510) 1,382 89,546
Proceeds from warrants exercised 2,173 5,170 --
Common stock purchases (22,594) (27,556) (55,604)
Preferred stock purchases -- (15,002) (9,839)
Preferred stock dividends (22,875) (22,313) (20,657)
Redemption of equity issues (438) (542) (897)
- --------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (66,579) (73,323) 58,622
- --------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 29,582 (7,986) (34,018)
Cash and cash equivalents at beginning of year 13,424 43,006 35,020
- --------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 43,006 $ 35,020 $ 1,002
========================================================================================================
</TABLE>
28
<PAGE> 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES
The accounting policies presented below have been followed in preparing
the accompanying consolidated financial statements.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of all
subsidiary companies. All significant intercompany accounts and transactions are
eliminated in consolidation. The Company uses the equity method of accounting
for investments in unconsolidated companies owned 20% or more.
BUSINESS SEGMENT
The Company is primarily engaged in one line of business and has one
industry segment, which is the making, processing and fabricating of steel and
steel products. The Company's products include hot rolled and cold rolled sheet,
and coated products such as galvanized, prepainted and tin mill sheet. The
Company also manufactures a variety of fabricated steel products including roll
formed corrugated roofing, roof deck, form deck, floor deck, bridge form, steel
framing and related accessories and other products used primarily by the
construction, highway and agricultural markets.
Through an extensive mix of products, the Company markets to a wide
range of manufacturers, converters and processors. The Company's 10 largest
customers (including Wheeling-Nisshin) accounted for approximately 33.3% of its
net sales in 1995, 30.6% in 1996 and 25.9% in 1997. Wheeling-Nisshin was the
only customer to account for more than 10% of net sales. Wheeling-Nisshin
accounted for 13.8%, 11.5% and 3.9% of net sales in 1995, 1996, and 1997,
respectively. Geographically, the majority of the Company's customers are
located within a 350-mile radius of the Ohio Valley.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand and on deposit and
highly liquid debt instruments with original maturities of three months or less.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The recorded amount of cash and cash equivalents approximates fair
value because of the short maturity of those instruments. Short term investments
are recorded at fair market value based on trading in the public market.
Redeemable common stock is recorded at the redemption amount which is considered
to approximate fair value. See Note H for a description of fair value of debt
instruments. Unrealized investment gains and losses are recognized based on
specific identification of securities.
INVENTORIES
Inventories are stated at cost which is lower than market. Cost is
determined by the last-in first-out ("LIFO") method for substantially all
inventories.
29
<PAGE> 31
PROPERTY, PLANT AND EQUIPMENT
Depreciation is computed on the straight line and the modified units of
production methods for financial statement purposes and accelerated methods for
income tax purposes. The modified units of production method adjusts the
straight line method based on an activity factor for operating assets. Adjusted
annual depreciation is not less than 60% nor more than 110% of straight line
depreciation. Accumulated depreciation after adjustment is not less than 75% nor
more than 110% of straight line depreciation. Interest cost is capitalized for
qualifying assets during the assets' acquisition period. Capitalized interest
cost is amortized over the life of the asset.
Maintenance and repairs are charged to income. Renewals and betterments
made through replacements are capitalized. Profit or loss on property
dispositions is credited or charged to income.
PENSIONS, OTHER POSTRETIREMENT AND POSTEMPLOYMENT PLANS
The Company has a tax qualified defined benefit pension plan covering
USWA - represented hourly employees and tax qualified defined contribution
pension plans covering other hourly employees and substantially all salaried
employees. The defined benefit plan provides for a defined monthly benefit based
on years of service. The defined contribution plans provide for contributions
based on a percentage of compensation for salaried employees and a rate per hour
worked for hourly employees. Costs for the defined contribution plans are being
funded currently. Unfunded accumulated benefit obligations under the defined
benefit plan are subject to annual minimum cash funding requirements under the
Employees Retirement Income Security Act ("ERISA").
The Company sponsors medical and life insurance programs for
substantially all employees. Similar group medical programs extend to pensioners
and dependents. The management plan provides basic medical and major medical
benefits on a non-contributory basis through age 65.
STOCK-BASED COMPENSATION
Pursuant to the provisions of Statement of Financial Accounting
Standards No. 123 ("SFAS 123") "Accounting for Stock-Based Compensation", the
Company accounts for employee stock-based compensation under Accounting
Principle Board No. 25, "Accounting for Stock Issued to Employees."
ENVIRONMENTAL MATTERS
The Company accrues for losses associated with environmental
remediation obligations when such losses are probable and reasonably estimable.
Accruals for estimated losses from environmental remediation obligations
generally are recognized no later than completion of the remedial feasibility
study.
Such accruals are adjusted as further information develops or
circumstances change. Costs of future expenditures for environmental remediation
obligations are not discounted to their present value. Recoveries of
environmental remediation costs from other parties are recorded as assets when
their receipt is deemed probable.
EARNINGS PER SHARE
In 1997, the Company adopted Statement of Financial Accounting
Standards No. 128 ("SFAS128") "Earnings per Share." Pursuant to SFAS 128, basic
earnings per share is based on the weighted average number of shares of Common
Stock outstanding during each year, excluding redeemable common shares. Diluted
earnings per share gives effect to dilutive potential common shares outstanding
during the period.
30
<PAGE> 32
NOTE A -- COLLECTIVE BARGAINING AGREEMENT
The Company's prior labor agreement with the USWA expired on October 1,
1996. On August 1, 1997 the Company and the USWA announced that they had reached
a tentative agreement on the terms of a new collective bargaining agreement. The
tentative agreement was ratified on August 12, 1997 by USWA- represented
employees, ending a ten month strike. The new collective bargaining agreement
provides for a defined benefit pension plan, a retirement enhancement program,
short-term bonuses and special assistance payments for employees not immediately
recalled to work and $1.50 in hourly wage increases over its term of not less
than five years. It also provides for the reduction of 850 jobs, mandatory
multicrafting as well as modification of certain work practices.
NOTE B -- SPECIAL CHARGE - NEW LABOR AGREEMENT
The Company recorded a special charge of $92.7 million in 1997. The
special charge is primarily related to certain benefits included in its new
collective bargaining agreement .
The special charges included enhanced retirement benefits to be paid
under the defined benefit pension program which totaled $66.7 million and were
recorded under the provisions of Statement of Financial Accounting Standard
No.88, "Employers' Accounting For Settlements and Curtailments of Defined
Benefit Pension Plans and for Termination Benefits" ("SFAS No. 88"), and various
other charges which totaled $26.0 million. These charges include $15.5 million
for signing and retention bonuses, $3.8 million for special assistance payments
to laid-off employees and other employee benefits and $6.7 million for the fair
value of a stock option grant to WPN Corp. for its performance in negotiating a
new labor agreement.
NOTE C -- PENSIONS, OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
PENSION PROGRAMS
The Company provides defined contribution pension programs for both
hourly and salaried employees and prior to August 12, 1997 also provided a
defined contribution pension program for USWA represented employees. Tax
qualified defined contribution plans provide, in the case of hourly employees,
an increasing company contribution per hour worked based on the age of its
employees. A similar tax qualified plan for salaried employees provides defined
company contributions based on a percentage of compensation.
On August 12, 1997 the Company established a defined benefit pension
plan for USWA represented employees pursuant to a new labor agreement. The plan
includes individual participant accounts of USWA represented employees from the
hourly defined contribution plan and merges the assets of those accounts into
the defined benefit plan.
As of December 31, 1997, $127.0 million of fully vested funds are held
in trust for benefits earned under the hourly defined contribution pension plan.
Approximately 59% of the trust assets are invested in equities and 41% in fixed
income investments.
As of December 31, 1997, $35.0 million of fully vested funds are held
in trust for benefits earned under the salaried employees defined contribution
plan. Approximately 57% of the assets are invested in equities and 43% are in
fixed income investments. All plan assets are invested by professional
investment managers.
All pension provisions charged against income totaled $10.8 million,
$9.3 million and $12.6 million in 1995, 1996 and 1997, respectively. In 1997,
the Company also recorded a $66.7 million charge for enhanced retirement
benefits paid under the defined benefit pension plan, pursuant to a new labor
agreement.
THE DEFINED BENEFIT PLAN
31
<PAGE> 33
The plan was established pursuant to a collective bargaining agreement
ratified on August 12, 1997. Prior to that date, benefits were provided through
a defined contribution plan, the Wheeling-Pittsburgh Steel Corporation
Retirement Security Plan ("Retirement Security Plan").
The defined benefit pension plan covers employees represented by the
USWA. The plan also includes individual participant accounts from the Retirement
Security Plan. The assets of the Retirement Security Plan were merged into the
defined benefit pension plan as of December 1, 1997.
Since the plan includes the account balances from the Retirement
Security Plan, the plan includes both defined benefit and defined contribution
features. The gross benefit, before offsets, is calculated based on years of
service and the current benefit multiplier under the plan. This gross amount is
then offset for benefits payable from the Retirement Security Plan and benefits
payable by the Pension Benefit Guaranty Corporation from previously terminated
plans. Individual employee accounts established under the Retirement Security
Plan are maintained until retirement. Upon retirement, the account balances are
converted into monthly benefits that serve as an offset to the gross benefit, as
described above. Aggregate account balances held in trust in individual employee
accounts, which will be available upon retirement to offset the gross benefit,
totaled $121.3 million at December 31, 1997.
As part of the new labor agreement, the Company offered a limited
program of Retirement Enhancements. The Retirement Enhancement program provides
for unreduced retirement benefits to the first 850 employees who retire after
October 1, 1996. In addition, each retiring participant can elect a lump sum
payment of $25,000 or a $400 monthly supplement payable until age 62. More than
850 employees applied for retirement under this program by December 31, 1997.
The Retirement Enhancement program represented a Curtailment and
Special Termination Benefits under SFAS No. 88. The Company recorded a charge of
$66.7 million in 1997 to cover the retirement enhancement program.
The Company's funding policy is to contribute annually an amount that
satisfies the minimum funding standards of ERISA.
32
<PAGE> 34
The following table sets forth the reconciliation of the projected
benefit obligation ("PBO") to the accrued obligation included in the Company's
consolidated balance sheet at December 31, 1997.
<TABLE>
<CAPTION>
December 31,
1997
----
(Dollars in Thousands)
<S> <C>
Vested benefit obligation $ (127,457)
Non-vested benefit (44,974)
------------
Projected benefit obligation (172,431)
Plan assets at fair value 5,179
-----------
Obligations in excess of plan assets (167,252)
Unrecognized prior service cost 76,714
-----------
Accrued pension costs (90,538)
Additional minimum pension liability (76,714)
------------
Total pension liability $ (167,252)
============
Net periodic pension cost:
Service cost $2,278
Interest cost 4,172
Return on assets --
Amortization of prior service cost 2,877
-----------
Net periodic pension cost 9,327
Recognition of retirement enhancement program 66,676
-----------
Total pension cost $ 76,003
===========
Assumptions and methods
Discount rate: 7%
Long term rate of return on plan assets: 8%
Assets: Market Value
Participant census: Projected from January 1, 1997
</TABLE>
401-K PLAN
Effective January 1, 1994 the Company began matching salaried employee
contributions to the 401(K) plan with shares of the Company's Common Stock. The
Company matches 50% of the employees contributions. The employer contribution is
limited to a maximum of 3% of an employee's salary. At December 31, 1995, 1996
and 1997, the 401(K) plan held 115,151 shares, 190,111 shares and 275,537 shares
of the Company's Common Stock, respectively.
POSTEMPLOYMENT BENEFITS
The Company provides benefits to former or inactive employees after
employment but before retirement. Those benefits include, among others,
disability, severance and workers' compensation. The assumed discount rate used
to measure the benefit liability was 7.5% at December 31, 1995 and 1996 and 7.0%
at December 31, 1997.
OTHER POSTRETIREMENT BENEFITS
The Company sponsors postretirement benefit plans that cover both
management and hourly retirees and dependents. The plans provide medical
benefits including hospital, physicians' services and major medical expense
benefits and a life insurance benefit. The hourly employees' plans provide
non-contributory basic medical and a supplement to Medicare benefits, and major
medical coverage to which the Company contributes 50% of the insurance premium
cost. The management plan has provided basic medical and major medical benefits
on a non-contributory basis through age 65.
The Company accounts for these benefits in accordance with SFAS No.
106. The cost of
33
<PAGE> 35
postretirement medical and life benefits for eligible employees are accrued
during the employee's service period through the date the employee reaches full
benefit eligibility. The Company defers and amortizes recognition of changes to
the unfunded obligation that arise from the effects of current actuarial gains
and losses and the effects of changes in assumptions. The Company funds the
plans as current benefit obligations are paid. Additionally, in 1994 the Company
began funding a qualified trust in accordance with its collective bargaining
agreement. The new collective bargaining agreement provides for the use of those
funds to pay current benefit obligations and suspends additional funding until
2002. The following table sets forth the reconciliation of the Accumulated
Postretirement Benefit Obligation ("APBO") to the accrued obligation included in
the Company's consolidated balance sheet at December 31, 1996 and 1997.
<TABLE>
<CAPTION>
December 31,
1996 1997
---- ----
(Dollars in Thousands)
<S> <C> <C>
Active employees not eligible for retirement $ 85,030 $ 54,443
Active employees eligible to retire 68,300 51,841
Retirees and beneficiaries 208,011 202,528
-------- --------
Accumulated postretirement benefit obligation 361,341 308,812
Plan assets at fair market value 13,010 7,795
-------- --------
Obligations in excess of plan assets 348,331 301,017
Unamortized reduction in prior service cost 1,806 40,486
Unamortized gain 64,303 71,942
-------- --------
Accrued postretirement benefit obligation $414,440 $413,445
======== ========
</TABLE>
At December 31, 1997 plan assets consisted primarily of short term
corporate notes.
The following table sets forth the components of the recorded net
periodic postretirement benefit costs.
<TABLE>
<CAPTION>
December 31,
1995 1996 1997
---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C>
Net periodic postretirement benefit cost:
Service cost $ 3,563 $ 3,953 $ 2,488
Interest cost 26,757 23,982 20,950
Other (3,570) (3,888) (7,490)
-------- -------- --------
Total $ 26,750 $ 24,047 $ 15,948
======== ======== ========
Assumptions:
Discount rate 7.0% 7.0% 7.0%
Health care cost trend rate 10.0% 9.5% 9.0%
Return on assets 8.0% 8.0% 8.0%
</TABLE>
For measurement purposes, medical costs are assumed to increase at
annual rates as stated above and declining gradually to 4.5% in 2004 and beyond.
The health care cost trend rate assumption has significant effect on the costs
and obligation reported. A 1% increase in the health care cost trend rate in
each year would result in approximate increases in the accumulated
postretirement benefit obligation of $25.1 million, and net periodic benefit
cost of $4.3 million.
COAL INDUSTRY RETIREE HEALTH BENEFIT ACT
The Coal Industry Retiree Health Benefit Act of 1992 (the "Act")
created a new United Mine Workers of America postretirement medical and death
benefit plan to replace two existing plans which had developed significant
deficits. The Act assigns companies the remaining benefit obligations for former
employees and beneficiaries, and a pro rata allocation of benefits related to
unassigned beneficiaries ("orphans"). The
34
<PAGE> 36
Company's obligation under the Act relates to its previous ownership of coal
mining operations.
In 1995 the Social Security Administration (SSA) assigned additional
retirees and orphans to the Company. Based on the information obtained over the
past several years the Company believed the liability had been reasonably
determined and valued the liability at its net present value using a 7.5%
discount rate. After discounting the liability to present value, the net charge
to income in 1995 totaled $3.0 million. At December 31, 1997 the actuarially
determined accrued liability, discounted at 7%, covering 532 assigned retirees
and dependents and 133 orphans, totaled $10.8 million. The Company recorded an
extraordinary charge of $1.7 million (net of tax) in 1997 related to assignment
of additional orphans.
NOTE D -- INCOME TAXES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1996 1997
---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C>
INCOME TAXES BEFORE EXTRAORDINARY ITEMS
Current
Federal tax provision $ 11,600 $ 2,065 $ --
State tax provision 998 400 460
-------- ------- ---------
Total income taxes current 12,598 2,465 460
-------- ------- ---------
Deferred
Federal tax provision (benefit) (35,684) (6,572) (94,029)
Pre-reorganization tax benefits
recorded directly to equity 42,100 -- --
-------- ------- ---------
Income tax provision (benefit) $ 19,014 $(4,107) $ (93,569)
======== ======= =========
TOTAL INCOME TAXES
Current
Federal tax provision $ 11,600 $ 2,065 $ --
State tax provision 998 400 460
-------- ------- ---------
Total income taxes current 12,598 2,465 460
-------- ------- ---------
Deferred
Federal tax provision (benefit) (37,322) (6,572) (108,024)
Pre-reorganization tax benefits
recorded directly to equity 42,100 -- --
-------- ------- ---------
Income tax provision (benefit) $ 17,376 $(4,107) $(107,564)
======== ======= =========
COMPONENTS OF TOTAL INCOME TAXES
Operations $ 19,014 $(4,107) $ (93,569)
Extraordinary items (1,638) -- (13,995)
-------- ------- ---------
Income tax provision (benefit) $ 17,376 $(4,107) $(107,564)
======== ======= =========
</TABLE>
35
<PAGE> 37
Deferred income taxes result from temporary differences in the
financial basis and tax basis of assets and liabilities. The type of differences
that give rise to deferred income tax liabilities or assets are shown in the
following table:
DEFERRED INCOME TAX SOURCES
<TABLE>
<CAPTION>
1996 1997
---- ----
(Dollars in Millions)
<S> <C> <C>
ASSETS
Postretirement and postemployment employee benefits $ 147.1 $ 147.7
Operating loss carryforward (expiring in 2005 to 2012) 8.0 76.7
Minimum tax credit carryforwards (indefinite carryforward) 49.5 49.5
Provision for expenses and losses 43.3 87.0
Leasing activities 25.2 23.8
State income taxes 6.0 1.4
Miscellaneous other 10.5 7.5
-------- --------
DEFERRED TAX ASSETS $ 289.6 $ 393.6
-------- --------
LIABILITIES
Property plant and equipment $ (158.8) $ (166.1)
Inventory (35.5) (34.9)
State income taxes (4.9) (1.0)
Miscellaneous other (.9) (6.8)
-------- --------
DEFERRED TAX LIABILITY $ (200.1) $ (208.8)
Valuation allowance (20.0) (20.0)
-------- --------
DEFERRED INCOME TAX ASSET - NET $ 69.5 $ 164.8
======== ========
</TABLE>
As of December 31, 1997, for financial statement reporting purposes a
balance of approximately $29.0 million of prereorganization tax benefits exist.
These benefits will be reported as a direct addition to equity as they are
recognized. In 1995 tax benefits of $42.1 million were recognized as a direct
addition to equity. The decrease in the valuation allowance in 1995 reflects the
recognition of these tax benefits. No prereorganization tax benefits were
recognized in 1996 and 1997.
During 1994, the Company experienced an ownership change as defined by
Section 382 of the Internal Revenue Code. As the result of this event,
pre-change of control net operating losses that can be used to offset
post-change of control pretax income will be limited to approximately $32
million per year. Post-change of control net operating losses do not have an
annual offset limitation.
Total federal and state income taxes paid in 1995, 1996 and 1997 were
$18.0 million, $3.5 million and $0.7 million, respectively.
Federal tax returns have been examined by the Internal Revenue Service
("IRS") through 1987. The statute of limitations has expired for years through
1993, however, the IRS can review prior years to adjust any NOL's incurred in
such years and carried forward to offset income in subsequent open years.
Management believes it has adequately provided for all taxes on income.
36
<PAGE> 38
The provision for income taxes differs from the amount of income tax
determined by applying the applicable U.S. statutory federal income tax rate to
pretax income as follows:
<TABLE>
<CAPTION>
1995 1996 1997
(Dollars in Thousands)
<S> <C> <C> <C>
Income (loss) before taxes and
extraordinary item $ 100,075 $(3,449) $(267,341)
========= ======= =========
Tax provision (benefit) at statutory rate $ 35,026 $(1,207) $ (93,569)
Increase (reduction) in tax due to:
Percentage depletion (973) (1,027) (1,092)
Equity earnings (1,288) (2,408) 338
State income tax net of federal effect 1,624 260 299
Reduction in valuation allowance net of equity adjustment (16,300) -- --
Other miscellaneous 925 275 455
--------- ------- ---------
Tax provision (benefit) $ 19,014 $(4,107) $ (93,569)
========= ======= =========
</TABLE>
NOTE E--SHORT TERM INVESTMENTS
The composition of the Company's short term investments are as follows:
<TABLE>
<CAPTION>
1996 1997
---- ----
Trading Securities: (Dollars in Thousands)
<S> <C> <C>
U. S. Treasury Securities $402,125 $513,906
U. S. Government Agency Mortgage Backed Obligations 40,013 --
Other 5,424 3,890
Available-for-sale securities:
Equities -- 63,754
-------- --------
$447,562 $581,550
======== ========
</TABLE>
These investments are subject to price volatility associated with any
interest bearing instrument. Fluctuations in general interest rates affect the
value of these investments.
The Company recognizes gains and losses based on specific
identification of the securities which comprise the investment balance. No
available-for-sale securities were held at December 31, 1996. At December 31,
1997 unrealized holding gains on available-for-sale securities of $24.2 million
were reported as a separate component of stockholder's equity. Net unrealized
holding gains and losses on trading securities included in net income for 1996
and 1997 were $10.0 million loss and $17.4 million gain, respectively. At
December 31, 1996 and 1997 the Company had short term margin borrowings of $68.8
million and $275.5 million, respectively, related to the short term investments.
37
<PAGE> 39
NOTE F -- INVENTORIES
<TABLE>
<CAPTION>
December 31,
1996 1997
---- ----
(Dollars in Thousands)
<S> <C> <C>
Finished products $ 66,694 $ 71,710
In-process 59,984 106,740
Raw materials 80,147 103,735
Other materials and supplies 19,476 19,811
--------- ---------
226,301 301,996
LIFO reserve (10,899) (17,239)
--------- ---------
$ 215,402 $ 284,757
========= =========
</TABLE>
During 1996 and 1997, certain inventory quantities were reduced, resulting
in liquidations of LIFO inventories, the effect of which decreased income by
approximately $1.2 million in 1996 and increased income by approximately $0.6
million in 1997.
NOTE G -- PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
December 31,
1996 1997
---- ----
(Dollars in Thousands)
<S> <C> <C>
Land and mineral properties $ 26,380 $ 26,424
Buildings, machinery and equipment 1,053,237 1,069,215
Construction in progress 18,839 22,603
---------- ----------
1,098,456 1,118,242
Accumulated depreciation and amortization 343,044 379,582
---------- ----------
$ 755,412 $ 738,660
========== ==========
</TABLE>
The Company utilizes the modified units of production method of
depreciation which recognizes that the depreciation of steelmaking machinery is
related to the physical wear of the equipment as well as a time factor. The
modified units of production method provides for straight line depreciation
charges modified (adjusted) by the level of raw steel production. In 1996 and
1997 depreciation under the modified units of production method was $7.6 million
or 13.4% and $21.6 million or 40% respectively, less than straight line
depreciation. The 1996 and 1997 reductions in depreciation primarily reflect the
ten month strike which began October 1, 1996.
NOTE H -- LONG-TERM DEBT
<TABLE>
<CAPTION>
December 31,
1996 1997
---- ----
(Dollars in Thousands)
<S> <C> <C>
Senior Unsecured Notes due 2007, 9 1/4% $ -- $273,966
Term Loan Agreement due 2006, floating rate -- 75,000
Senior Unsecured Notes due 2003, 93/8%: 266,155 --
IRS pension tax note due 1997, 8% 1,833 --
Other 2,546 1,953
-------- --------
270,534 350,919
Less portion due within one year 2,336 466
-------- --------
Total Long-Term Debt (1) $268,198 $350,453
======== ========
</TABLE>
38
<PAGE> 40
(1) The fair value of long-term debt at December 31, 1996 and December 31,
1997 was $270.2 million and $350.9 million, respectively. Fair value of
long-term debt is estimated based on trading in the public market.
Long-term debt maturing in each of the next five years is as follows:
1998, $466; 1999, $474; 2000, $472; 2001, $272 and 2002, $259.
A summary of the financial agreements at December 31, 1997 follows:
REVOLVING CREDIT FACILITY
On December 28, 1995, WPSC entered into a Second Amended and Restated
Revolving Credit Facility ("RCF") with Citibank, N.A. as agent. The RCF, as
amended, provides for borrowings for general corporate purposes up to $150
million and a $35 million sub-limit for Letters of Credit.
The RCF expires May 3, 1999. Interest rates are based on the Citibank
prime rate plus 1.0% and/or a Eurodollar rate plus 2.25%, but the margin over
the prime rate and the Eurodollar rate can fluctuate based upon performance. A
commitment fee of .5% is charged on the unused portion. The letter of credit fee
is 2.25% and is also performance based.
Borrowings are secured primarily by 100% of the eligible inventory of
WPSC, Pittsburgh-Canfield Corporation ("PCC"), Wheeling Construction Products,
Inc. (WCPI") and Unimast, Inc. ("Unimast") and the terms of the RCF contain
various restrictive covenants, limiting among other things dividend payments or
other distribution of assets, as defined in the RCF. Certain financial covenants
associated with leverage, net worth, capital spending, cash flow and interest
coverage must be maintained. WPC, PCC, WCPI and Unimast have each guaranteed all
of the obligations of WPSC under the RCF. Borrowings outstanding against the RCF
at December 31, 1997 totaled $89.8 million. No letters of credit were
outstanding under the RCF.
In August 1994 WPSC entered into a separate facility for letters of
credit up to $50 million. At December 31, 1997 letters of credit totaling $9.3
million were outstanding under this facility. The letters of credit are
collateralized at 105% with U.S. Government securities owned by the Company, and
are subject to an administrative charge of .4% per annum on the amount of
outstanding letters of credit.
93/8% SENIOR NOTES DUE 2003
On November 23, 1993 WPC issued $325 million of 93/8% Senior Notes.
Interest on the 93/8% Senior Notes is payable semi-annually on May 15 and
November 15 of each year, commencing May 15, 1994. The 93/8% Senior Notes mature
on November 15, 2003. During 1994, the Company repurchased $54.3 million of its
outstanding 93/8% Senior Notes at an average price of 94% of the related
outstanding principal amount.
During 1996, $4.2 million of the Senior Notes were retired via the
issuance by WHX Corporation shares of its Common Stock pursuant to the terms of
the Warrants Agreement allowing holders to tender lawful debt of the Company at
face value to pay for exercise of warrants.
On November 26, 1997, WPC, under the terms of the indenture, defeased
the remaining $266.2 million 93/8% Senior Notes outstanding at a total cost of
$298.8 million. The 93/8% Senior Notes were placed into trusteeship where they
will be held until redemption on November 15, 2000.
9 1/4% SENIOR NOTES DUE 2007
On November 26, 1997 WPC issued $275 million principal amount of 9 1/4%
Senior Notes. Interest on the 9 1/4% Senior Notes is payable semi-annually on
May 15 and November 15 of each year, commencing May 15, 1998. The 9 1/4% Senior
Notes mature on November 15, 2007.
The 9 1/4% Senior Notes are redeemable at the option of WPC, in whole
or in part, on or after
39
<PAGE> 41
November 15, 2002 at specified redemption prices, plus accrued interest and
liquidated damages, if any, thereon to the date of redemption.
Upon the occurrence of a Change of Control (as defined), WPC will be
required to make an offer to repurchase all or any part of each holder's 9 1/4%
Senior Notes at 101% of the principal amount thereof, plus accrued and unpaid
interest and liquidated damages, if any, thereon to the date of repurchase.
The 9 1/4% Senior Notes are unsecured obligations of WPC, ranking
senior in right of payment to all existing and future subordinated indebtedness
of WPC, and pari passu with all existing and future senior unsecured
indebtedness of WPC, including borrowings under the Term Loan Agreement.
The 9 1/4% Senior Notes indenture contains certain covenants,
including, but not limited to, covenants with respect to: (i) limitations on
indebtedness; (ii) limitations on restricted payments; (iii) limitations on
transactions with affiliates; (iv) limitations on liens; (v) limitations on sale
of assets; (vi) limitations on issuance and sale of capital stock of
subsidiaries; (vii) limitations on dividends and other payment restrictions
affecting subsidiaries; and (vii) restrictions on consolidations, mergers and
sales of assets.
WPC has agreed to file a registration statement relating to an exchange
offer for the Senior Notes under the Securities Act of 1933. The Senior Notes
are eligible for trading in the Private Offerings, Resales and Trading through
Automated Linkages ("PORTAL") market.
TERM LOAN AGREEMENT
On November 26, 1997 WPC entered into the Term Loan Agreement with DLJ
Capital Funding Inc., as syndication agent, pursuant to which it borrowed $75
million.
Interest on the Term Loan Agreement is payable on March 15, June 15,
September 15 and December 15 as to Base Rate Loans, and with respect to LIBOR
loans on the last day of each applicable interest period, and if such interest
period shall exceed three months, at intervals of three months after the first
day of such interest period. Amounts outstanding under the Term Loan Agreement
bear interest at the Base Rate (as defined therein) plus 2.25% or the LIBO Rate
(as defined therein) plus 3.25%
WPC's obligations under the Term Loan Agreement are guaranteed by its
present and future operating subsidiaries. WPC may prepay the obligations under
the Term Loan Agreement beginning on November 15, 1998, subject to a premium of
2.0% of the principal amount thereof. Such premium declines to 1.0% on November
15, 1999 with no premium on or after November 15, 2000.
40
<PAGE> 42
INTEREST COST
Aggregate interest costs on long-term debt and amounts capitalized
during the three years ended December 31, 1997, are as follows:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C>
Aggregate interest expense on long-term debt $29,192 $28,463 $31,274
Less: Capitalized interest 6,362 2,500 2,227
------- ------- -------
Interest expense $22,830 $25,963 $29,047
======= ======= =======
Interest paid $27,873 $27,660 $29,589
======= ======= =======
</TABLE>
NOTE I -- STOCKHOLDERS' EQUITY
The authorized capital stock of WHX consists of 60,000,000 shares of
Common Stock, $.01 par value, of which 19,433,614 shares (including redeemable
Common Stock, but excluding 205,100 shares of Common Stock held in treasury),
were outstanding as of December 31, 1997 and 10,000,000 shares of Preferred
Stock, $0.10 par value, of which 2,907,880 shares of Series A Convertible
Preferred Stock and 2,975,100 shares of Series B Convertible Preferred Stock
were outstanding as of December 31, 1997. In 1996 and 1997, the Company
purchased 2,940,316 shares and 5,537,552 shares, respectively, of Common Stock
in open market purchases.
SERIES A CONVERTIBLE PREFERRED STOCK
In July 1993 the Company issued 3,000,000 shares of Series A
Convertible Preferred Stock for net proceeds of $145.0 million. Dividends on the
shares of the Series A Convertible Preferred Stock are cumulative, are payable
quarterly in arrears on January 1, April 1, July 1 and October 1 of each year,
in an amount equal to $3.25 per share per annum.
Each share of the Series A Convertible Preferred Stock is convertible
at the option of the holder thereof at any time into shares of Common Stock of
the Company, par value $.01 per share, at a conversion price of $15.78 per share
of Common Stock (equivalent to a conversion rate of approximately 3.1686 shares
of Common Stock for each share of Series A Convertible Preferred Stock), subject
to adjustment under certain conditions.
The Series A Convertible Preferred Stock was not redeemable prior to
July 1, 1996. On and after such date, the Series A Convertible Preferred Stock
is redeemable at the option of the Company, in whole or in part, for cash,
initially at $52.275 per share and thereafter at prices declining ratably to
$50.00 per share on and after July 1, 2003, plus in each case accrued and unpaid
dividends to the redemption date. The Series A Convertible Preferred Stock is
not entitled to the benefit of any sinking fund. In 1996 and 1997 the Company
purchased and retired 92,000 shares of Series A Convertible Preferred Stock on
the open market. An additional 120 shares were converted into Common Stock.
SERIES B CONVERTIBLE PREFERRED STOCK
The Company completed a shelf registration in the amount of $550
million of debt securities or preferred stock in August 1994. Pursuant to this
shelf registration the Company issued 3,500,000 shares of Series B Convertible
Preferred Stock in September 1994 for net proceeds of $169.8 million. Dividends
on the shares of the Series B Convertible Preferred Stock, are cumulative, are
payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each
year, in an amount equal to $3.75 per share per annum.
Each share of the Series B Convertible Preferred Stock is convertible
at the option of the holder thereof at any time into shares of Common Stock of
the Company, par value $.01 per share, at a conversion price of $20.40 per share
of Common Stock (equivalent to a conversion rate of approximately 2.4510 shares
of Common Stock for each share of Series B Convertible Preferred Stock), subject
to adjustment under certain conditions.
41
<PAGE> 43
The Series B Convertible Preferred Stock was not redeemable prior to
October 1, 1997. On and after such date, the Series B Convertible Preferred
Stock is redeemable at the option of the Company, in whole or in part, for cash,
initially at $52.625 per share and thereafter at prices declining ratably to
$50.00 per share on and after October 1, 2004, plus in each case accrued and
unpaid dividends to the redemption date. The Series B Convertible Preferred
Stock is not entitled to the benefit of any sinking fund. In 1996 and 1997 the
Company purchased and retired 524,900 shares of Series B Convertible Preferred
Stock in open market purchases.
REDEEMABLE COMMON STOCK
Certain present and former employees of the Company were issued
preferred shares of the Company prior to the Chapter 11 proceeding of the
Company's predecessor in exchange for wage and salary concessions. Such
preferred shares were exchanged for 1,279,935 shares of Common Stock under the
Chapter 11 Plan of Reorganization, these shares were issued to an Employee Stock
Ownership Plan ("ESOP") on such employees' behalf. Beneficial owners of such
shares who were active employees on August 15, 1990 and who have either retired,
died or become disabled, or who reach 30 years of service, may sell their Common
Stock to the Company at a price of $15 or, upon qualified retirement, $20 per
share. These contingent obligations are expected to extend over many years, as
participants in the ESOP satisfy the criteria for selling shares to the Company.
In addition, each beneficiary can direct the ESOP to sell any or all of its
Common Stock into the public markets at any time; provided, however, that the
ESOP will not on any day sell in the public markets more than 20% of the number
of shares of Common Stock traded during the previous day. As of December 31,
1997, 359,739 shares of redeemable Common Stock remained outstanding.
Changes in capital accounts are as follows: (Dollars and shares in
thousands)
<TABLE>
<CAPTION>
Convertible Treasury Accumulated Capital in
Common Stock Preferred Stock Earnings Excess of
Shares Amount Shares Amount Shares Amount Deficit Par Value
------ ------ ------ ------ ------ ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance January 1, 1995 27,229 $272 6,500 $650 -- -- $23,349 $664,905
EIP shares sold 4 -- -- -- -- -- -- 57
Stock options exercised 24 -- -- -- -- -- -- 191
Warrants exercised 64 1 -- -- -- -- -- 406
401K contribution 84 1 -- -- -- -- -- 952
Purchase of treasury stock (2,025) (20) -- -- 2,025 (22,594) -- --
Acquisition of Namasco assets 188 2 -- -- -- -- -- 1,998
Financing costs -- -- -- -- -- -- -- (138)
Pre-reorg. tax benefits -- -- -- -- -- -- -- 42,100
Preferred dividends -- -- -- -- -- -- (22,875) --
Net Income -- -- -- -- -- -- 78,018 --
------ ---- ----- --- ----- ------- ------ -------
Balance December 31, 1995 25,568 256 6,500 650 2,025 (22,594) 78,492 710,471
------ ---- ----- --- ----- ------- ------ -------
EIP shares sold 5 -- -- -- -- -- -- 75
Stock options exercised 124 1 -- -- -- -- -- 947
Warrants exercised 1,477 15 -- -- -- -- -- 9,377
401K contribution 94 1 -- -- -- -- -- 960
Purchase of treasury stock (2,940) (19) -- -- 2,940 (27,537) -- --
Retirement of treasury stock -- (9) -- -- (4,808) 48,749 -- (48,741)
Retirement of preferred stock -- -- (363) (36) -- -- -- (14,966)
Preferred dividends -- -- -- -- -- -- (22,313) --
Net Income -- -- -- -- -- -- 658 --
------ ---- ----- ---- ----- ------- --------- --------
Balance December 31, 1996 24,328 245 6,137 614 157 (1,382) 56,837 658,123
------ ---- ----- ---- ----- ------- --------- --------
EIP shares sold 4 -- -- -- -- -- -- 67
Stock options exercised 173 2 -- -- -- -- -- 1,388
WPN stock option -- -- -- -- -- -- -- 6,678
401K contribution 107 1 -- -- -- -- -- 927
Purchase of treasury stock (5,538) -- -- -- 5,537 (55,602) -- --
Retirement of treasury stock -- (55) -- -- (5,489) 54,766 -- (54,712)
</TABLE>
42
<PAGE> 44
<TABLE>
<CAPTION>
Convertible Treasury Accumulated Capital in
Common Stock Preferred Stock Earnings Excess of
Shares Amount Shares Amount Shares Amount Deficit Par Value
------ ------ ------ ------ ------ ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Retirement of preferred stock -- -- (254) (25) -- -- -- (9,814)
Preferred dividends -- -- -- -- -- -- (20,657) --
Net loss -- -- -- -- -- -- (199,762) --
------ ---- ----- ---- ----- ------- --------- --------
Balance December 31, 1997 19,074 $193 5,883 $589 205 $(2,218) $(163,582) $602,657
====== ==== ===== ==== ===== ======= ========== ========
</TABLE>
STOCK OPTION PLAN
The Wheeling-Pittsburgh Corporation Stock Option Plan ("1991 Plan") is
intended to assist the Company in securing and retaining key employees by
allowing them to participate in the ownership and growth of the Company through
the grant of incentive and non-qualified options (collectively, the "Options")
to full-time employees of the Company and its subsidiaries. Incentive stock
options granted under the Option Plan are intended to be "Incentive Stock
Options" as defined by Section 422 of the Code.
An aggregate of 2,500,000 shares of Common Stock has been reserved for
issuance upon exercise of Options under the 1991 Plan. The 1991 Plan is
administered by a committee (the "Committee") consisting of not less than three
nonemployee members appointed by the Board of Directors. The term of Options
granted under the 1991 Plan may not exceed 10 years (five years in the case of
an incentive Option granted to an optionee owning more than 10% of the voting
stock of the Company (a "10% Holder")). The Option price for Options shall not
be less than 100% of the "fair market value" of the shares of Common Stock at
the time the Option is granted; provided, however, that with respect to an
incentive option, in the case of a 10% Holder, the purchase price per share
shall be at least 110% of such fair market value. The aggregate fair market
value of the shares of Common Stock as to which an optionee may first exercise
incentive stock options in any calendar year may not exceed $100,000. Payment
for shares purchased upon exercise of Options is to be made in cash, but, at the
discretion of the Committee, may be made by delivery of other shares of Common
Stock of comparable value. The 1991 Plan will terminate on September 24, 2001
and may be terminated at any time by the Board of Directors prior to that date.
DIRECTORS OPTION PLANS
The 1993 Directors D&O Plan (the "1993 D&O Plan") is authorized to
issue shares of Common Stock pursuant to the exercise of options with respect to
a maximum of 400,000 shares of Common Stock. The options vest over three years
from the date of grant. The 1997 Directors Stock Option Plan ("1997 D&O Plan")
is authorized to issue an additional 400,000 shares of Common Stock.
OPTION GRANTS TO WPN CORP.
On July 29, 1993 (the "Approval Date"), the Board of Directors
approved the grant of options to WPN Corp. to purchase 1,000,000 shares of
Common Stock (the "Option Grants"). The Option Grants were approved by the
stockholders on March 31, 1994.
On August 4, 1997 the compensation committee of the Board of Directors
granted an option to purchase 1,000,000 shares of Common Stock to WPN Corp, at
the then market price per share, subject to stockholder approval. The Board of
Directors approved such grant on September 25, 1997, and the stockholders
approved it on December 1, 1997 (measurement date).
The options under each plan are exercisable with respect to one-third
of the shares of Common Stock issuable upon the exercise thereunder at any time
on or after the date of stockholder approval of the Option Grants. The options
with respect to an additional one-third of the shares of Common Stock may be
exercised on the first and second anniversaries of the Approval Date,
respectively. The options, to the extent not previously exercised, will expire
on April 29, 2003 and August 4, 2007, respectively.
The Company is required to record a charge for the fair value of the
1997 option grants under SFAS
43
<PAGE> 45
123. The fair value of the option grant is estimated on the measurement date
using the Black--Scholes option-pricing model. The following assumptions were
used in the Black--Scholes calculation: expected volatility of 48.3%, risk-free
interest rate of 5.83%, an expected life of 5 years and a dividend yield of
zero. The resulting estimated fair value of the shares granted in 1997 was $6.7
million which was recorded as part of the special charge related to the new
labor agreement.
44
<PAGE> 46
A Summary of the Option Plans:
<TABLE>
<CAPTION>
NUMBER OF OPTIONS
1991 D & O WPN OPTION PRICE WEIGHTED AVERAGE
PLAN PLAN GRANTS OR RANGE OPTION PRICE
---- ---- ------ -------- ------------
<S> <C> <C> <C> <C> <C>
Balance 12/31/94 1,225,919 224,000 1,000,000 $10.897
Granted -- 68,000 -- 11.00 11.000
Cancelled (43,328) -- -- 6.125-14.625 9.733
Exercised (24,174) -- -- 6.125-8.750 7.913
--------- --------- ------------
Balance 12/31/95 1,158,417 292,000 1,000,000 10.949
Granted 23,000 34,000 -- 9.875-13.50 11.226
Cancelled (8,423) -- -- 8.75-14.625 14.317
Exercised (123,664) -- -- 6.125-8.750 7.667
---------- - --------- ------------
Balance 12/31/96 1,049,330 326,000 1,000,000 11.054
Granted 982,500 166,000 1,000,000 6.875-13.8125 11.641
Cancelled (222,802) (5,334) -- 8.75-14.625 13.648
Exercised (172,639) -- -- 6.125-8.75 8.048
---------- - --------- ------------
Balance 12/31/97 1,636,389 486,666 2,000,000 11.342
--------- -------- ---------
</TABLE>
Options outstanding at December 31, 1997 which are exercisable totaled 2,341,221
and have a weighted average option price of $10.918.
In 1996 the Company adopted SFAS No. 123, and elected to continue to
account for such compensation under the provisions of APB 25. Therefore, no
compensation costs have been recognized for the stock option plans in 1996 or
1997. Had the Company elected to account for stock-based compensation under the
provisions of SFAS No. 123 during 1996 and 1997, the effect on net income and
earnings per share would not be material.
EARNINGS PER SHARE
In 1997 the Company adopted SFAS No. 128, Earnings per Share. The
computation of basic earnings per common share is based upon the average shares
of Common Stock outstanding. The computation of earnings per common
share--assuming dilution in 1995 assumes conversion of preferred stock and
redeemable common stock and exercise of outstanding stock options and warrants.
In 1996 and 1997, the conversion of preferred shares and redeemable common stock
and exercise of options and warrants would have had an anti-dilutive effect.
Previously reported EPS has been restated. A reconciliation of the income and
shares used in the computation follows:
45
<PAGE> 47
RECONCILIATION OF INCOME AND SHARES IN EPS CALCULATION
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ------
(DOLLARS AND SHARES IN THOUSANDS)
<S> <C> <C> <C>
Income (loss) before extraordinary item $(173,772)
Less: Preferred stock dividends 20,657
BASIC EPS AND DILUTED EPS
----------
Income (loss) available to common stockholders $(194,429) 22,028 $(8.83)
========== ====== ======
</TABLE>
The assumed conversion of stock options, preferred stock and redeemable common
stock would have an anti-dilutive effect on earnings per share.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ------
(DOLLARS AND SHARES IN THOUSANDS)
<S> <C> <C> <C>
Income before extraordinary item $ 658
Less: Preferred stock dividends 22,313
BASIC EPS AND DILUTED EPS
---------
Income (loss) available to common stockholders $(21,655) 26,176 $(0.83)
========= ====== ======
</TABLE>
The assumed conversion of stock options, preferred stock and redeemable common
stock would have an anti-dilutive effect on earnings per share.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1995
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ------
(DOLLARS AND SHARES IN THOUSANDS)
<S> <C> <C> <C>
Income before extraordinary item $81,061
Less: Preferred stock dividends 22,875
-------
BASIC EPS
Income available to common stockholders $58,186 25,850 $2.25
EFFECT OF DILUTIVE SECURITIES
Options and warrants -- 821
Convertible preferred stock 22,875 18,084
Redeemable common stock -- 444
DILUTED EPS
Income available to common
------- ------
stockholders plus assumed conversions $81,061 45,199 $1.79
======= ====== =====
</TABLE>
NOTE J -- COMMITMENTS AND CONTINGENCIES
ENVIRONMENTAL MATTERS
The Company has been identified as a potentially responsible party under
the Comprehensive Environmental Response, Compensation and Liability Act
("Superfund") or similar state statutes at several waste sites. The Company is
subject to joint and several liability imposed by Superfund on potentially
responsible parties. Due to the technical and regulatory complexity of remedial
activities and the difficulties attendant to identifying potentially responsible
parties and allocating or determining liability among them, the Company is
unable to reasonably estimate the ultimate cost of compliance with Superfund
laws. The Company believes, based upon information currently available, that the
Company's liability for clean up and remediation costs in connection with the
Buckeye reclamation will be between $3.0 and $4.0 million. At six other sites
(MIDC Glassport, United Scrap Lead, Tex-Tin, Breslube Penn, Four County Landfill
and Beazor) the Company estimates costs to aggregate up to $700,000. The Company
is currently funding its share of
46
<PAGE> 48
remediation costs.
The Company, as are other industrial manufacturers, is subject to
increasingly stringent standards relating to the protection of the environment.
In order to facilitate compliance with these environmental standards, the
Company has incurred capital expenditures for environmental control projects
aggregating $5.9 million, $6.8 million and $12.4 million for 1995, 1996 and
1997, respectively. The Company anticipates spending approximately $41.3 million
in the aggregate on major environmental compliance projects through the year
2000, estimated to be spent as follows: $13.4 million in 1998, $15.9 million in
1999 and $12.0 million in 2000. Due to the possibility of unanticipated factual
or regulatory developments, the amount of future expenditures may vary
substantially from such estimates.
Non-current accrued environmental liabilities totaled $7.8 million at
December 31, 1996 and $10.6 million at December 31, 1997. These accruals were
initially determined by the Company in January 1991, based on all then available
information. As new information becomes available, including information
provided by third parties, and changing laws and regulation, the liabilities are
reviewed and the accruals adjusted quarterly. Management believes, based on its
best estimate, that the Company has adequately provided for remediation costs
that might be incurred or penalties that might be imposed under present
environmental laws and regulations.
Based upon information currently available, including the Company's prior
capital expenditures, anticipated capital expenditures, consent agreements
negotiated with Federal and state agencies and information available to the
Company on pending judicial and administrative proceedings, the Company does not
expect its environmental compliance and liability costs, including the
incurrence of additional fines and penalties, if any, relating to the operation
of its facilities, to have a material adverse effect on the financial condition
or results of operations of the Company. However, as further information comes
into the Company's possession, it will continue to reassess such evaluations.
NOTE K -- RELATED PARTY TRANSACTION
The Chairman of the Board of the Company is the president and sole
shareholder of WPN Corp. Pursuant to a management agreement effective as of
January 3, 1991, as amended January 1, 1993 and April 11, 1994, approved by a
majority of the disinterested directors of the Company, WPN Corp. provides
certain financial, management advisory and consulting services to the Company.
Such services include, among others, identification, evaluation and negotiation
of acquisitions, responsibility for financing matters for the Company and its
subsidiaries, review of annual and quarterly budgets, supervision and
administration, as appropriate, of all the Company's accounting and financial
functions and review and supervision of reporting obligations under Federal and
state securities laws. In exchange for such services, WPN Corp. received a fixed
monthly fee of $458,333 in 1996 and 1997. In addition to the fixed monthly fee,
the Company paid a $300,000 bonus to WPN Corp. for its services in obtaining a
new five-year labor contract with significant job reductions. The management
agreement has a two year term and is renewable automatically for successive one
year periods, unless terminated by either party upon 60 days' prior written
notice.
The stockholders approved a grant of an option to purchase 1,000,000
shares of Common Stock to WPN Corp. for their performance in obtaining a new
labor agreement. The options were valued using the Black--Scholes formula at
$6.7 million and recorded as a special charge related to the labor contract.
47
<PAGE> 49
NOTE L --- OTHER INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1995 1996 1997
-------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C>
Interest and investment income $ 37,571 $ 19,660 $ 52,092
Equity income (loss) 4,845 9,496 (1,644)
Sale of WP Radio assets 6,718 -- --
Receivables securitization fees (4,283) (4,934) (3,826)
Other, net 2,288 1,752 4,046
-------- -------- --------
$ 47,139 $ 25,974 $ 50,668
======== ======== ========
</TABLE>
NOTE M -- SALE OF RECEIVABLES
In 1994, a special purpose wholly-owned subsidiary of WPSC entered into an
agreement to sell (up to $75 million on a revolving basis) an undivided
percentage ownership in a designated pool of accounts receivable generated by
WPSC, WCPI and PCC. The agreement expires in August 1999. In July 1995 WPSC
amended such agreement to sell an additional $20 million on similar terms and
conditions. In October 1995 WPSC entered into an agreement to include the
receivable generated by Unimast in the pool of accounts receivable sold.
Accounts receivable at December 31, 1996 and 1997 exclude $45 million and $69
million, respectively, representing uncollected accounts receivable sold with
recourse limited to the extent of uncollectible balances. Fees paid by the
Company under such agreement range from 5.76% to 8.50%of the outstanding amount
of receivables sold. Based on the Company's collection history, the Company
believes that credit risk associated with the above arrangement is immaterial.
The Company adopted SFAS No. 125 Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities, effective January 1, 1997.
The adoption of SFAS 125 did not have a material effect on the Company's
financial condition or results of operations for the year ended December 31,
1997.
NOTE N -- SEPARATE FINANCIAL STATEMENTS OF SUBSIDIARIES NOT CONSOLIDATED AND 50
PERCENT OR LESS OWNED PERSONS
The Company owns 35.7% of Wheeling-Nisshin. Wheeling-Nisshin had total
debt outstanding at December 31, 1996 and 1997 of approximately $25.3 million
and $18.5 million, respectively. The Company derived approximately 3.9% of its
1997 revenues from sale of steel to Wheeling-Nisshin, down from 11.5% in 1996.
The decrease in revenue reflects the effect of the strike on the Company's
shipments to Wheeling- Nisshin, Inc. The Company received dividends of $2.5
million annually from Wheeling-Nisshin from 1995 through 1997. Audited financial
statements of Wheeling-Nisshin are presented under Item 14 because it is
considered a significant subsidiary of the Company under SEC regulations.
NOTE O -- EXTRAORDINARY CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1996 1997
-------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C>
Premium on early debt retirement $ -- $ -- $ 32,600
Unamortized debt issuance cost -- -- 4,770
Coal retiree medical benefits 4,681 -- 2,615
Income tax effect (1,638) -- (13,995)
-------- -------- --------
$ 3,043 $ -- $ 25,990
======== ======== ========
</TABLE>
In November 1997 the Company paid a premium of $32.6 million to defease
the remaining $266.2 million of the 93/8 Senior Notes at a total cost of $298.8
million.
In 1997 a 7% discount rate was used to calculate the actuarially
determined coal retiree medical benefit liability. In 1996 and 1995 the discount
rate was 7.5%. In 1997 the Company also incurred higher premiums for additional
retirees and orphans assigned in 1995. See Note C.
48
<PAGE> 50
NOTE P -- SUPPLEMENTAL SUBSIDIARY COMPANY SUMMARIZED FINANCIAL INFORMATION
The following are summarized consolidated financial information of the Company's
major operating subsidiary, WPC.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1996 1997
----------- ----------- -----------
(Dollars in Thousands)
<S> <C> <C> <C>
INCOME DATA
Net sales $ 1,267,869 $ 1,110,684 $ 489,662
Cost of products sold, excluding depreciation 1,059,622 988,161 585,609
Depreciation 65,760 66,125 46,203
Selling, general and administrative expense 61,741 54,903 52,222
Special charge -- -- 92,701
----------- ----------- -----------
Operating income(loss) 80,746 1,495 (287,073)
Interest expense 22,431 23,763 27,204
Other income(loss) 3,234 9,476 (221)
----------- ----------- -----------
Income (loss) before tax and
extraordinary item 61,549 (12,792) (314,498)
Tax provision (benefit) 3,030 (7,509) (110,035)
----------- ----------- -----------
Income (loss) before extraordinary item 58,519 (5,283) (204,463)
Extraordinary charge (net of tax) (3,043) -- (25,990)
----------- ----------- -----------
Net Income (Loss) $ 55,476 $ (5,283) $ (230,453)
=========== =========== ===========
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1996 1997
----------- ----------- -----------
Dollars in Thousands)
<S> <C> <C> <C>
BALANCE SHEET DATA
Assets
Current assets $ 379,651 $ 267,434 $ 325,364
Non-current assets 960,384 978,458 1,099,204
----------- ----------- -----------
Total Assets $ 1,340,035 $ 1,245,892 $ 1,424,568
=========== =========== ===========
Liabilities and Stockholder's Equity
Current liabilities $ 231,852 $ 158,412 $ 316,195
Non-current liabilities 764,412 748,993 993,661
Stockholder's equity 343,771 338,487 114,712
----------- ----------- -----------
Total Liabilities and Stockholder's Equity $ 1,340,035 $ 1,245,892 $ 1,424,568
=========== =========== ===========
</TABLE>
49
<PAGE> 51
NOTE Q -- QUARTERLY INFORMATION (UNAUDITED)
Financial results by quarter for the two fiscal years ended December 31,
1996 and 1997 are as follows:
<TABLE>
<CAPTION>
Basic Basic Diluted
Earnings (Loss) Earnings Earnings
Per Share (Loss) (Loss)
Gross Extra- Net Before Per Share Per Share
Net Profit ordinary Income Extraordinary On Net On Net
Sales (Loss) Charge (Loss) Charge Income Income
----- ------ ------ ------ ------ ------ ------
(Dollars, Except Per Share, in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
1996
1st Quarter $315,493 $41,713 -- $1,159 $(.17) $(.17) $(.17)
2nd Quarter 357,815 59,266 -- 16,830 .42 .42 .37
3rd Quarter 391,925 61,597 -- 17,317 .45 .45 .40
4th Quarter(1) 167,462 (26,109) -- (34,648) (1.60) (1.60) (1.60)
1997:(1)
1st Quarter 113,632 (27,520) -- (40,724) (1.92) (1.92) (1.92)
2nd Quarter 128,472 (17,043) -- (31,107) (1.58) (1.58) (1.58)
3rd Quarter 144,612 (28,314) -- (91,387) (4.49) (4.49) (4.49)
4th Quarter 255,380 (5,749) (25,990) (36,544) (.79) (2.11) (2.11)
</TABLE>
Diluted loss per share would be the same as basic loss per share in loss
quarters because conversion of stock options, convertible Series A and Series B
Preferred Stock or redeemable Common Stock would be anti-dilutive.
(1) The financial results of the Company for the fourth quarter of 1996 and
all four quarters of 1997 were adversely affected by the strike.
Negative impacts of the strike included the volume effect of lower
production on fixed cost absorption, higher levels of external steel
purchases, start-up costs and a higher-cost mix of products shipped.
NOTE R - SUBSEQUENT EVENT
On March 1, 1998, the Company entered into a definitive merger
agreement (the "Merger Agreement") with Handy & Harman ("Handy & Harman"), a New
York Stock Exchange listed company which is a diversified industrial
manufacturing company. Pursuant to the Merger Agreement, HN Acquisition Corp., a
wholly-owned subsidiary of the Company, will commence a cash tender offer (the
"Tender Offer") to acquire all of the outstanding common shares of Handy &
Harman at $35.25 per share. The Tender Offer is conditioned upon, among other
things, the valid tender of such number of shares of Handy & Harman common
stock, which, when added to the 13.6% of outstanding shares of Handy & Harman
already owned by the Company, would represent at least a majority of Handy &
Harman's outstanding shares on a fully diluted basis. Upon the successful
completion of the Tender Offer, the parties will, subject to stockholder
approval, complete a second-step cash merger at $35.25 per share as promptly as
practicable. Upon completion of the merger, Handy & Harman will become a
wholly-owned subsidiary of the Company. The transaction has a total value of
approximately $645 million, including the assumption of approximately $190
million in debt. The Company anticipates financing the transaction through cash
on hand and a private placement of debt securities of the Company. The Company
currently anticipates an offering, however, the exact terms and conditions of
such proposed financing, including the sources thereof, have not been determined
and could vary substantially from the anticipated form thereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.
NOT APPLICABLE.
50
<PAGE> 52
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference to the information appearing under the
heading "Election of Directors" in the Company's definitive proxy statement for
the 1998 Annual Meeting of Stockholders.
ITEM 11. MANAGEMENT REMUNERATION
Incorporated by reference to the information appearing under the
heading "Executive Compensation" in the Company's definitive proxy statement for
the 1998 Annual Meeting of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference to the information appearing under the
heading "Security Ownership" in the Company's definitive proxy statement for the
1998 Annual Meeting of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference to the information appearing under the
heading "Certain Relationships and Related Transactions" in the Company's
definitive proxy statement for the 1998 Annual Meeting of Stockholders.
51
<PAGE> 53
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 2. Audited Financial Statements of Wheeling-Nisshin, Inc.
The following audited Financial Statements of Wheeling-Nisshin, Inc.
are presented because Wheeling- Nisshin is considered a significant
subsidiary as defined under SEC Regulations.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Wheeling-Nisshin, Inc.:
We have audited the accompanying balance sheets of Wheeling-Nisshin, Inc. (the
Company) as of December 31, 1997 and 1996, and the related statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wheeling-Nisshin, Inc. as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Pittsburgh, Pennsylvania
February 12, 1998
52
<PAGE> 54
WHEELING-NISSHIN, INC.
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................ $ 22,313 $ 19,017
Investments .......................................... 28,500 19,900
Trade accounts receivable, net of allowance for
bad debts of $250 in 1997 and 1996 ................. 16,364 19,765
Inventories (Note 3) ................................. 16,793 22,233
Prepaid income taxes ................................. 139 --
Deferred income taxes (Note 6) ....................... 2,342 2,337
-------- --------
Other current assets ................................. 622 819
Total current assets ........................... 87,073 84,071
Property, plant and equipment, net (Note 4) ............ 124,787 134,174
Debt issuance costs, net of accumulated amortization
of $1,704 in 1997 and $1,617 in 1996 ................. 197 284
-------- --------
Other assets ........................................... 719 851
-------- --------
Total assets ................................... $212,776 $219,380
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ..................................... $ 10,684 $ 21,226
Due to affiliates (Note 8) ........................... 3,356 --
Accrued interest ..................................... 367 497
Accrued income taxes ................................. -- 3,183
Other accrued liabilities ............................ 3,260 3,388
Accrued profit sharing ............................... 4,644 6,505
-------- --------
Current portion of long-term debt (Note 5) ........... 6,835 6,828
Total current liabilities ...................... 29,146 41,627
Long-term debt, less current portion (Note 5) .......... 11,645 18,487
Deferred income taxes (Note 6) ......................... 25,262 24,116
-------- --------
Other long-term liabilities (Note 9) ................... 2,500 --
-------- --------
Total liabilities .............................. 68,553 84,230
Contingencies (Note 9)
Shareholders' equity:
Common stock, no par value; authorized, issued
and outstanding, 7,000 shares ...................... 71,588 71,588
-------- --------
Retained earnings .................................... 72,635 63,562
-------- --------
Total shareholders' equity ......................... 144,223 135,150
-------- --------
Total liabilities and shareholders' equity ..... $212,776 $219,380
</TABLE>
The accompanying notes are an integral part of the financial statements.
53
<PAGE> 55
WHEELING-NISSHIN, INC.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Net Sales .................................. $ 396,278 $ 375,658 $ 389,704
--------- --------- ---------
Cost of goods sold (Note 8) ................ 365,967 335,071 349,429
Gross profit ........................... 30,311 40,587 40,275
--------- --------- ---------
Selling, general and administrative expenses 5,608 6,546 8,676
--------- --------- ---------
Operating profit ....................... 24,703 34,041 31,599
Other income (expense):
Interest and other income ................ 2,203 2,539 1,717
--------- --------- ---------
Interest expense ......................... (1,398) (1,909) (3,729)
--------- --------- ---------
805 630 (2,012)
Income before income taxes ............. 25,508 34,671 29,587
Provision for income taxes (Note 6) ........ 9,435 13,110 11,538
--------- --------- ---------
Net income ............................. $ 16,073 $ 21,561 $ 18,049
Earnings per share (Note 2) ................ $ 2.30 $ 3.08 $ 2.58
</TABLE>
The accompanying notes are a integral part of the financial statements.
54
<PAGE> 56
WHEELING-NISSHIN, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON RETAINED
STOCK EARNINGS TOTAL
--------- --------- ---------
<S> <C> <C> <C>
Balance at December 31, 1994 ....... $ 71,588 $ 37,952 $ 109,540
Net income ......................... -- 18,049 18,049
--------- --------- ---------
Cash dividends ($1 per share) ...... -- (7,000) (7,000)
Balance at December 31, 1995 ....... 71,588 49,001 120,589
Net income ......................... -- 21,561 21,561
--------- --------- ---------
Cash dividends ($1 per share) ...... -- (7,000) (7,000)
Balance at December 31, 1996 ....... 71,588 63,562 135,150
Net income ......................... -- 16,073 16,073
--------- --------- ---------
Cash dividends ($1 per share) ...... -- (7,000) (7,000)
Balance at December 31, 1997 ....... $ 71,588 $ 72,635 $ 144,223
</TABLE>
The accompanying notes are a integral part of the financial statements.
55
<PAGE> 57
WHEELING-NISSHIN, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income ....................................................... $ 16,073 $ 21,561 $ 18,049
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization .................................. 13,065 12,952 16,210
Deferred income taxes .......................................... 1,141 5,330 5,449
Net change in operating assets and liabilities:
Decrease (increase) in trade accounts receivable ............. 3,401 (730) (602)
Decrease (increase) in inventories ........................... 5,440 (3,467) 5,161
(Increase) decrease in prepaid and accrued
income taxes ............................................... (3,322) (51) 1,368
Decrease (increase) in other assets .......................... 197 (636) 42
(Decrease) Increase in accounts payable ...................... (10,542) 12,846 179
Increase (decrease) in due to affiliates ..................... 3,356 (6,036) (25,233)
Decrease in accrued interest ................................. (130) (173) (312)
-------- -------- --------
(Decrease) increase in other accrued liabilities ............. (1,989) 945 4,843
-------- -------- --------
Net cash provided by operating activities .................. 26,690 42,541 25,154
Cash flows from investing activities:
Capital expenditures, net ........................................ (959) (1,173) (1,029)
Purchase of investments .......................................... (43,700) (19,900) --
-------- -------- --------
Sale of investments .............................................. 35,100 -- --
-------- -------- --------
Net cash used in investing activities ...................... (9,559) (21,073) (1,029)
Cash flows from financing activities:
Payments on long-term debt ....................................... (6,835) (11,361) (32,145)
-------- -------- --------
Payment of dividends ............................................. (7,000) (7,000) (7,000)
-------- -------- --------
Net cash used in financing activities ...................... (13,835) (18,361) (39,145)
Net increase (decrease) in cash and
cash equivalents ................................................. 3,296 3,107 (15,020)
-------- -------- --------
Cash and cash equivalents:
Beginning of the year ............................................ 19,017 15,910 30,930
-------- -------- --------
End of the year .................................................. $ 22,313 $ 19,017 $ 15,910
-------- -------- --------
Supplemental cash flow disclosures:
Cash paid during the year for:
Interest ....................................................... $ 1,528 $ 2,082 $ 4,041
-------- -------- --------
Income taxes ................................................... $ 11,616 $ 7,831 $ 4,968
-------- -------- --------
Supplemental schedule of noncash investing
and financing activities:
Acquisition of property, plant and equipment
included in other long-term liabilities (Note 9) ............... $ 2,500 $ -- $ 290
</TABLE>
The accompanying notes are an integral part of the financial statements.
56
<PAGE> 58
WHEELING-NISSHIN, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. DESCRIPTION OF BUSINESS
Wheeling-Nisshin, Inc. (the Company) is engaged in the production and
marketing of galvanized and aluminized steel products at a manufacturing
facility in Follansbee, West Virginia. Principally all of the Company's sales
are to ten trading companies located primarily in the United States. At December
31, 1997, Nisshin Holding Incorporated, a wholly-owned subsidiary of Nisshin
Steel Co., Ltd.,(Nisshin) and Wheeling-Pittsburgh Corporation
(Wheeling-Pittsburgh) owned 64.3% and 35.7% of the outstanding common stock of
the Company, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. Estimates also affect the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS:
Cash and cash equivalents consist of general cash accounts and highly
liquid debt instruments with maturities of three months or less when purchased.
Substantially all of the Company's cash and cash equivalents are maintained at
one financial institution. No collateral or other security is provided on these
deposits, other than $100 of deposits insured by the Federal Deposit Insurance
Corporation.
INVESTMENTS:
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt
and Equity Securities." This statement requires that securities be classified as
trading, held-to-maturity, or available-for-sale. The Company's investments,
which consist of certificates of deposit and commercial paper, are classified as
held-to-maturity and are recorded at cost. The certificates of deposit amounted
to $28,500 and $15,000 at December 31, 1997 and 1996, respectively, and are
maintained at one financial institution. Commercial paper amounted to $4,900 at
December 31, 1996.
INVENTORIES:
Inventories are stated at the lower of cost or market. Cost is
determined by the last-in, first-out (LIFO) method.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment is stated at cost less accumulated
depreciation and amortization.
Major renewals and improvements are charged to the property accounts,
while replacements, maintenance and repairs which do not improve or extend the
useful lives of the respective assets are expensed. Upon disposition or
retirement of property, plant and equipment, the cost and the related
accumulated depreciation or amortization are removed from the accounts. Gains or
losses on sales are reflected in other income.
Depreciation and amortization are provided using the straight-line
method over the estimated useful lives of the assets.
DEFERRED PRE-OPERATING COSTS:
57
<PAGE> 59
Certain costs directly related and incremental to the Company's second
production line were deferred until commencement of commercial operations in
March 1993. These costs, which were an integral part of the process of bringing
the new line into commercial production and, therefore, benefited future
periods, were being amortized using the straight-line method over a three-year
period. In 1995, management determined that they had fully recovered the
deferred pre-operating costs related to the new production line. Accordingly,
the remaining unamortized cost at December 31, 1995 of $390 was charged to
operations in 1995.
DEBT ISSUANCE COSTS:
Debt issuance costs associated with long-term debt secured to finance
the construction of the Company's original manufacturing facility and the second
production line were capitalized and are being amortized using the effective
interest method over the term of the related debt.
INCOME TAXES:
The Company uses SFAS 109, "Accounting for Income Taxes" to recognize
deferred tax liabilities and assets for the difference between the financial
statement carrying amounts and the tax basis of assets and liabilities using
enacted tax rates in effect in the years in which the differences are expected
to reverse. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized.
EARNINGS PER SHARE:
The Company has adopted SFAS No. 128, "Earnings Per Share" issued in
February 1997. This statement requires the disclosure of basic and diluted
earnings per share and revises the method required to calculate these amounts.
The adoption of this standard did not impact previously reported earnings per
share amounts.
Earnings per share is calculated by dividing net income by the weighted
average number of shares of common stock outstanding during each period.
RECLASSIFICATION:
In 1997, the Company reclassified cash discounts previously reported
within selling, general and administrative expense to net sales. Previous years
financial statements have been restated to conform to 1997 presentation. Cash
discounts were approximately, $1,917, $1,842, and $1,873 in 1997, 1996 and 1995,
respectively.
3. INVENTORIES
Inventories consist of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Raw materials .......................... $ 6,089 $10,645
------- -------
Finished goods ......................... 10,704 11,588
------- -------
$16,793 $22,233
</TABLE>
Had the Company used the first-in, first-out (FIFO) method to value
inventories, the cost of inventories would have been $1,343 lower than the LIFO
value at December 31, 1997 and $12 lower than the LIFO value at December 31,
1996. During 1997, certain inventory quantities were reduced, resulting in
liquidation of LIFO inventories, the effect of which increased net income by
approximately $839.
58
<PAGE> 60
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Buildings ........................................ $ 34,665 $ 34,665
Land improvements ................................ 3,097 3,097
Machinery and equipment .......................... 164,893 161,723
--------- ---------
Office equipment ................................. 3,725 3,436
206,380 202,921
--------- ---------
Less accumulated depreciation and amortization ... (82,625) (69,779)
123,755 133,142
--------- ---------
Land ............................................. 1,032 1,032
--------- ---------
$ 124,787 $ 134,174
</TABLE>
Depreciation expense was $12,846, $12,715 and $13,651 in 1997, 1996,
and 1995, respectively.
5. LONG-TERM DEBT
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Industrial revenue bonds for the second production line accruing interest at
.625% over the LIBOR rate, as adjusted for periods ranging from three months
to one year, as elected by the Company. The interest rate on the bonds at
December 31, 1997 was 6.53%. The bonds are payable in 17 equal semi-annual
installments of $3,353 plus interest through March 2000 ..................... $18,235 $24,941
West Virginia Economic Development Authority (WVEDA) loan accruing interest at
4%, payable in monthly installments of $2 including interest
through January 2001 ........................................................ 67 90
------- -------
Capital lease obligations accruing interest at rates ranging from 10% to 13.8%,
payable in monthly
installments through January 2000 ........................................... 178 284
18,480 25,315
------- -------
Less current portion .......................................................... 6,835 6,828
$11,645 $18,487
</TABLE>
The industrial revenue bonds are collateralized by substantially all
property, plant and equipment and are guaranteed by Nisshin. In addition, the
industrial revenue bonds provide that dividends may not be declared or paid
without the prior written consent of the lender. Such approval was obtained for
the dividends paid in years 1997, 1996 and 1995.
The annual maturities on all long-term debt for each of the five years
ending December 31 are: $6,835 in 1998; $6,784 in 1999; $4,848 in 2000; $13 in
2001 and $0 in 2002.
59
<PAGE> 61
6. INCOME TAXES
The provision for income taxes for the years ended December 31 consist
of:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Current:
U.S. Federal .............. $ 7,771 $ 7,366 $ 5,838
State ..................... 523 414 251
------- ------- -------
Deferred .................... 1,141 5,330 5,449
------- ------- -------
$ 9,435 $13,110 $11,538
</TABLE>
Reconciliation of the federal statutory and effective tax rates for
1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Federal statutory rate ............. 35.0% 35.0% 35.0%
State income taxes ................. 1.5 1.2 0.8
Other, net ......................... 0.5 1.6 3.2
------- ------- -------
37.0% 37.8% 39.0%
</TABLE>
The deferred tax assets and liabilities recorded on the balance sheets
as of December 31 are as follows:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Deferred tax assets:
Accrued expenses ........................... $ 1,120 $ 1,376
------- -------
Other ...................................... 1,222 961
------- -------
2,342 2,337
Deferred tax liabilities:
Depreciation and amortization .............. 23,781 22,491
------- -------
Other ...................................... 1,481 1,625
------- -------
25,262 24,116
------- -------
$22,920 $21,779
</TABLE>
60
<PAGE> 62
The Company has available tax credit carryforwards of approximately
$60,000 which may be used to offset up to 80% of future West Virginia state
income tax liabilities through 2003. A valuation allowance for the entire amount
of the credit has been recognized in the accompanying financial statements.
Accordingly, as the credit is utilized, a benefit is recognized through a
reduction of the current state income tax provision. Such benefit amounted to
approximately $864 in 1997, $998 in 1996 and $640 in 1995.
7. EMPLOYEE BENEFIT PLANS
Retirement Plan:
The Company has a noncontributory, defined contribution plan which
covers eligible employees. The plan provides for Company contributions ranging
from 2% to 6% of the participant's annual compensation based on their years of
service. The Company's contribution to the plan was $415 in 1997, $336 in 1996
and $266 in 1995.
Profit-Sharing Plan:
The Company has a nonqualified profit-sharing plan for eligible
employees, providing for cash distributions to the participants in years when
income before income taxes is in excess of $500. These contributions are based
on an escalating scale from 5% to 15% of income before income taxes.
Profit-sharing expense was $4,644 in 1997, $6,505 in 1996 and $5,546 in 1995.
Postretirement Benefits:
In December 1996, the Company adopted a defined benefit postretirement
plan which covers eligible employees. Generally, the plan calls for a stated
percentage of medical expenses reduced by deductibles and other coverages. The
plan is currently unfunded. The postretirement benefit expense was $68 for 1997
and 1996. Accrued postretirement benefits was approximately $144 and $68 at
December 31, 1997 and 1996, respectively.
8. RELATED PARTY TRANSACTIONS
The Company has an agreement with Wheeling-Pittsburgh under which the
Company has agreed to purchase a specified portion of its required raw materials
through the year 2013. The Company purchased $24,533, $161,380 and $187,548 of
raw materials and processing services from Wheeling-Pittsburgh in 1997, 1996 and
1995, respectively. The amounts due Wheeling-Pittsburgh for such purchases are
included in due to affiliates in the accompanying balance sheets.
The Company sells products to Wheeling-Pittsburgh. Such sales totaled
$6,408, $6,511, and $5,693 in 1997, 1996, and 1995, respectively, of which $880
and $901 remained unpaid at December 31, 1997 and 1996, respectively, and are
included in trade accounts receivable in the accompanying balance sheets. The
Company also sells product to Unimast, Inc., an affiliate of
Wheeling-Pittsburgh. Such sales totaled $435, $1,537 and $1,389 in 1997, 1996
and 1995, respectively, of which $10 and $358 remained unpaid at December 31,
1997 and 1996, respectively, and were included in trade accounts receivable in
the accompanying balance sheets.
9. LEGAL MATTERS
The Company is a party to a dispute for final settlement of charges
related to the construction of its second production line. The Company had
claims asserted against it in the amount of approximately $6,900 emerging from
civil actions alleging delays on the project. In connection with the dispute,
the Company filed a separate claim for alleged damages that it had sustained in
the amount of approximately $400.
The claims were litigated in the Court of Common Pleas of Allegheny
County, Pennsylvania in a jury trial, which commenced on January 5, 1996. A
verdict in the amount of $6,700 plus interest of $1,900 was entered against the
Company on October 2, 1996. After the verdict, the plaintiffs requested the
trial court to award counsel fees in the amount of $2,422 against the Company.
The motions for counsel fees plus interest were
61
<PAGE> 63
granted by the court to the plaintiffs in June 1997.
The Company filed appeals from the judgments to the Superior Court of
Pennsylvania in 1997. Post- judgment interest will accrue during the appeal
period. Additionally, the Company has posted a bond in the amount approximating
$12,000 that will be held by the court pending the appeals. Although the Company
has been advised by its Special Counsel that it has various legal bases for
relief, litigation is subject to many uncertainties and, as such, the Company is
presently unable to predict the outcome of its appeals. The Company has recorded
a liability in the amount of $2,500 at December 31, 1997 related to these
matters, which has been capitalized in property, plant and equipment as cost
overruns in the accompanying 1997 balance sheet. If the Company is unsuccessful
in these appeals, it is at least reasonably possible that the ultimate
resolution of these matters may have a material effect on the Company's results
of operations or cash flows in the year of final determination. Any portion of
the ultimate resolution for interest, penalties and counsel fees will be charged
to results of operations.
62
<PAGE> 64
10. FAIR VALUE OF FINANCIAL INVESTMENTS
The estimated fair values and the methods used to estimate those values
are disclosed below:
Investments:
The fair values of commercial paper and certificates of deposit were
$28,890 and $20,145 at December 31, 1997 and 1996, respectively. These amounts
were determined based on the investment cost plus interest receivable at
December 31, 1997 and 1996.
Long-Term Debt:
Based on borrowing rates currently available to the Company for bank
loans with similar terms and maturities, fair value approximates the carrying
value.
63
<PAGE> 65
(a) 3. EXHIBITS
2.1 Confirmation Order of the United States Bankruptcy Court for
the Western District of Pennsylvania, dated December 18, 1990,
containing the Amended Joint Plan of Reorganization of
Wheeling-Pittsburgh Steel Corporation, dated October 18, 1990,
as modified and approved -- Incorporated herein by reference
to Exhibit 2.1 to WPC's Form 8-K filed December 28, 1990.
2.2 Form of Plan and Agreement of Merger, dated as of July 26,
1994 among WPC, WHX and WHEELING-PITTSBURGH STEEL CORPORATION
Merger Co. -- Incorporated herein by reference to Exhibit 2.2.
to Company's Form S-4 Registration Statement (No. 33-53591).
3.1 Certificate of Incorporation of the Company--Incorporated
herein by reference to Exhibit 3.2 to the Company's Form S-4
Registration Statement (No. 33-53591).
*3.2 Amended and Restated By-laws of the Company
4.1 Indenture ("Senior Note Indenture"), between WPC and Bank One,
Columbus, NA, as Trustee -- Incorporated herein by reference
to Exhibit 4.1 to WPC's Form S-4 Registration Statement (No.
333-43867).
*4.2 Term Loan Agreement dated as of November 26, 1997 between
Wheeling-Pittsburgh Corporation and DLJ Capital Funding, Inc.,
as syndication agent, and the lenders party thereto.
*4.3 Amendment No. 1 to Term Loan Agreement dated as of December
31, 1997 between Wheeling-Pittsburgh Corporation and DLJ
Capital Funding, Inc., as syndication agent, and the Lenders
party thereto.
4.4 Second Amended and Restated Credit Agreement dated December
28, 1995, among WPSC, the lenders party thereto, and Citibank,
N.A., as Agent.
4.5 Amendment No. 1 to the Second Amended and Restated Credit
Agreement dated as of December 30, 1996 among WPSC, the
lenders party thereto and Citibank, N.A. as
Agent--Incorporated herein by reference to Exhibit 10.13 to
the 1996 Form 10-K.
*4.6 Amendment No. 2 to the Second Amended and Restated Credit
Agreement dated as of June 30, 1997 among WPSC, the lenders
party thereto and Citibank, N.A., as Agent.
*4.7 Amendment No. 3 to the Second Amended and Restated Credit
Agreement dated as of September 30, 1997 among WPSC, the
lenders party thereto and Citibank, N.A., as Agent.
*4.8 Amendment No. 4 to the Second Amended and Restated Credit
Agreement dated as of November 19, 1997 among WPSC, the
lenders party thereto and Citibank, N.A., as Agent.
*4.9 Amendment No. 5 to the Second Amended and Restated Credit
Agreement dated as of November 28, 1997 among WPSC, the
lenders party thereto and Citibank, N.A., as Agent.
10.1 Form of Key Employee Deferred Compensation
Agreement--Incorporated herein by reference to Exhibit 10.1 to
the 1990 10-K.
10.2 Cooperation Agreement dated February 7, 1984 between the
Company and Nisshin Steel Co., Ltd.--Incorporated herein by
reference to Exhibit 10.24 to the Company's Form S-1
Registration Statement No. 2-89295 as filed with the
Securities and Exchange Commission on February 7, 1984.
*10.3 Close Corporation and Shareholder's Agreement effective as of
March 24, 1994, by and among Dong Yang Tinplate America Corp.,
WPC, Nittetsu Shoji American, Inc. and Ohio Coatings Company.
10.4 Second Amended and Restated Shareholders Agreement dated as of
November 12, 1990 between the Company and Nisshin Steel Co.
Ltd.--Incorporated herein by reference to Exhibit 10.9 to the
1990 10-K.
10.5 Management Agreement dated as of January 3, 1991 between the
Company and WPN Corp.--Incorporated herein by reference to
Exhibit 10.11 to the 1990 10-K.
10.6 Amendment No. 1 to Management Agreement dated as of January 1,
1993 between the Company and WPN Corp.-Incorporated herein by
reference to Exhibit 10.8 to the Company's Form S-2
Registration Statement filed February 23, 1993 (the "February
Form S-2").
64
<PAGE> 66
10.7 Amendment No. 2 to Management Agreement dated as of April 11,
1994 between the Company and WPN Corp.--Incorporated herein
by reference to Exhibit 10.9 to the 1994 Form 10-K.
10.8 Amendment No. 3 to Management Agreement dated as of April 1,
1996 between the Company and WPN Corporation--Incorporated
herein by reference to Exhibit 10.9 to the 1996 Form 10-K.
10.9 1991 Incentive and Nonqualified Stock Option Plan of the
Company--Incorporated herein by reference to Exhibit 10.13 to
the Company's Form S-2 Registration Statement (No. 33-43139).
10.10 1993 Directors and Non-Employee Officers Stock Option Plan
--Incorporated herein by reference to Exhibit 4.D to WPC's
Form S-8 filed April 8, 1994.
*10.11 1997 Directors Stock Option Plan.
*10.12 WPN Corp. Stock Option Grant Letter dated August 4, 1997.
10.13 Agreement dated as of February 7, 1997 by and between the
Company and John R. Scheessele-- Incorporated herein by
reference to Exhibit 10.14 to the 1996 10-K.
10.14 Agreement by and between the Company and Paul J. Mooney
effective as of October 17, 1997 -- Incorporated herein by
reference to Exhibit 10.1 to the Form 10-Q for the quarter
ended September 30, 1997.
10.15 Pooling and Servicing Agreement dated as of August 1, 1994,
among Wheeling-Pittsburgh Funding, Inc., WPSC and Bank One,
Columbus, NA -- Incorporated herein by reference to Exhibit
4.13 to the WPC's Form S-1 Registration Statement dated
February 24, 1995.
*21.1 Subsidiaries of Registrant.
*23.1 Consent of Price Waterhouse LLP
*23.2 Consent of Coopers & Lybrand L.L.P.
*27. Financial Data Sheet
* - filed herewith.
(b) REPORTS ON FORM 8-K.
NONE
65
<PAGE> 67
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has signed this report by the undersigned,
thereunto duly authorized in the City of New York, State of New York on March
17, 1998.
WHX CORPORATION
<TABLE>
<S> <C>
By /s/ John R. Scheessele March 17, 1998
John R. Scheessele, President & Chief Executive Officer --------------
(Principal Executive Officer) Date
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
By /s/ Paul J. Mooney March 17, 1998
Paul J. Mooney, Executive Vice President and --------------
Chief Financial Officer (Principal Accounting Officer) Date
By /s/ Ronald LaBow March 17, 1998
Ronald LaBow, Chairman of the Board --------------
Date
By /s/ Neil D. Arnold March 17, 1998
Neil D. Arnold, Director --------------
Date
By
Paul W. Bucha, Director --------------
Date
By /s/ Robert A. Davidow March 17, 1998
Robert A. Davidow, Vice Chairman --------------
Date
By /s/ William Goldsmith March 17, 1998
William Goldsmith, Director --------------
Date
By /s/ Marvin L. Olshan March 17, 1998
Marvin L. Olshan, Director --------------
Date
By /s/ John R. Scheessele March 17, 1998
John R. Scheessele, Director --------------
Date
By /s/ Raymond S. Troubh March 17, 1998
Raymond S. Troubh, Director --------------
Date
</TABLE>
66
<PAGE> 68
EXHIBIT INDEX
-------------
EXHIBITS DESCRIPTION
-------- -----------
2.1 Confirmation Order of the United States Bankruptcy Court for
the Western District of Pennsylvania, dated December 18, 1990,
containing the Amended Joint Plan of Reorganization of
Wheeling-Pittsburgh Steel Corporation, dated October 18, 1990,
as modified and approved -- Incorporated herein by reference
to Exhibit 2.1 to WPC's Form 8-K filed December 28, 1990.
2.2 Form of Plan and Agreement of Merger, dated as of July 26,
1994 among WPC, WHX and WHEELING-PITTSBURGH STEEL CORPORATION
Merger Co. -- Incorporated herein by reference to Exhibit 2.2.
to Company's Form S-4 Registration Statement (No. 33-53591).
3.1 Certificate of Incorporation of the Company--Incorporated
herein by reference to Exhibit 3.2 to the Company's Form S-4
Registration Statement (No. 33-53591).
*3.2 Amended and Restated By-laws of the Company
4.1 Indenture ("Senior Note Indenture"), between WPC and Bank One,
Columbus, NA, as Trustee -- Incorporated herein by reference
to Exhibit 4.1 to WPC's Form S-4 Registration Statement (No.
333-43867).
*4.2 Term Loan Agreement dated as of November 26, 1997 between
Wheeling-Pittsburgh Corporation and DLJ Capital Funding, Inc.,
as syndication agent, and the lenders party thereto.
*4.3 Amendment No. 1 to Term Loan Agreement dated as of December
31, 1997 between Wheeling-Pittsburgh Corporation and DLJ
Capital Funding, Inc., as syndication agent, and the Lenders
party thereto.
4.4 Second Amended and Restated Credit Agreement dated December
28, 1995, among WPSC, the lenders party thereto, and Citibank,
N.A., as Agent.
4.5 Amendment No. 1 to the Second Amended and Restated Credit
Agreement dated as of December 30, 1996 among WPSC, the
lenders party thereto and Citibank, N.A. as
Agent--Incorporated herein by reference to Exhibit 10.13 to
the 1996 Form 10-K.
*4.6 Amendment No. 2 to the Second Amended and Restated Credit
Agreement dated as of June 30, 1997 among WPSC, the lenders
party thereto and Citibank, N.A., as Agent.
*4.7 Amendment No. 3 to the Second Amended and Restated Credit
Agreement dated as of September 30, 1997 among WPSC, the
lenders party thereto and Citibank, N.A., as Agent.
*4.8 Amendment No. 4 to the Second Amended and Restated Credit
Agreement dated as of November 19, 1997 among WPSC, the
lenders party thereto and Citibank, N.A., as Agent.
*4.9 Amendment No. 5 to the Second Amended and Restated Credit
Agreement dated as of November 28, 1997 among WPSC, the
lenders party thereto and Citibank, N.A., as Agent.
10.1 Form of Key Employee Deferred Compensation
Agreement--Incorporated herein by reference to Exhibit 10.1 to
the 1990 10-K.
10.2 Cooperation Agreement dated February 7, 1984 between the
Company and Nisshin Steel Co., Ltd.--Incorporated herein by
reference to Exhibit 10.24 to the Company's Form S-1
Registration Statement No. 2-89295 as filed with the
Securities and Exchange Commission on February 7, 1984.
*10.3 Close Corporation and Shareholder's Agreement effective as of
March 24, 1994, by and among Dong Yang Tinplate America Corp.,
WPC, Nittetsu Shoji American, Inc. and Ohio Coatings Company.
10.4 Second Amended and Restated Shareholders Agreement dated as of
November 12, 1990 between the Company and Nisshin Steel Co.
Ltd.--Incorporated herein by reference to Exhibit 10.9 to the
1990 10-K.
10.5 Management Agreement dated as of January 3, 1991 between the
Company and WPN Corp.--Incorporated herein by reference to
Exhibit 10.11 to the 1990 10-K.
10.6 Amendment No. 1 to Management Agreement dated as of January 1,
1993 between the Company and WPN Corp.-Incorporated herein by
reference to Exhibit 10.8 to the Company's Form S-2
Registration Statement filed February 23, 1993 (the "February
Form S-2").
<PAGE> 69
10.7 Amendment No. 2 to Management Agreement dated as of April 11,
1994 between the Company and WPN Corp.--Incorporated herein
by reference to Exhibit 10.9 to the 1994 Form 10-K.
10.8 Amendment No. 3 to Management Agreement dated as of April 1,
1996 between the Company and WPN Corporation--Incorporated
herein by reference to Exhibit 10.9 to the 1996 Form 10-K.
10.9 1991 Incentive and Nonqualified Stock Option Plan of the
Company--Incorporated herein by reference to Exhibit 10.13 to
the Company's Form S-2 Registration Statement (No. 33-43139).
10.10 1993 Directors and Non-Employee Officers Stock Option Plan
--Incorporated herein by reference to Exhibit 4.D to WPC's
Form S-8 filed April 8, 1994.
*10.11 1997 Directors Stock Option Plan.
*10.12 WPN Corp. Stock Option Grant Letter dated August 4, 1997.
10.13 Agreement dated as of February 7, 1997 by and between the
Company and John R. Scheessele-- Incorporated herein by
reference to Exhibit 10.14 to the 1996 10-K.
10.14 Agreement by and between the Company and Paul J. Mooney
effective as of October 17, 1997 -- Incorporated herein by
reference to Exhibit 10.1 to the Form 10-Q for the quarter
ended September 30, 1997.
10.15 Pooling and Servicing Agreement dated as of August 1, 1994,
among Wheeling-Pittsburgh Funding, Inc., WPSC and Bank One,
Columbus, NA -- Incorporated herein by reference to Exhibit
4.13 to the WPC's Form S-1 Registration Statement dated
February 24, 1995.
*21.1 Subsidiaries of Registrant.
*23.1 Consent of Price Waterhouse LLP
*23.2 Consent of Coopers & Lybrand L.L.P.
*27. Financial Data Sheet
* - filed herewith.
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED
BY-LAWS
OF
WHX CORPORATION
AS OF JANUARY 26, 1998
Incorporated under the Laws of the State of Delaware
ARTICLE I
OFFICES AND RECORDS
SECTION 1.1 Delaware Office. The principal office of the Corporation in
the State of Delaware shall be located in the City of Wilmington, County of New
Castle, and the name and address of its registered agent is The Prentice-Hall
Corporation System, Inc., 32 Loockerman Square, Suite L-100, Dover, Delaware.
SECTION 1.2 Other Offices. The Corporation may have such other offices,
either within or without the State of Delaware, as the Board of Directors may
designate or as the business of the Corporation may from time to time require.
SECTION 1.3 Books and Records. The books and records of the Corporation
may be kept inside or outside the State of Delaware at such place or places as
may from time to time be designated by the Board of Directors.
ARTICLE II
STOCKHOLDERS
SECTION 2.1 Annual Meeting. The annual meeting of the stockholders of the
Corporation shall be held on the last Friday in April of each year, if not a
legal holiday, and if a legal holiday then on the next succeeding business day,
at 10:00 A.M., local time, at the principal executive offices of the
Corporation, or at such other date, place and/or time as may be fixed by
resolution of the Board of Directors adopted at least ten (10) days prior to the
date so fixed for the purpose of electing directors and for the transaction of
such other business as may properly come before the meeting.
SECTION 2.2 Special Meeting. Subject to the rights of the holders of any
class of Preferred Stock, special meetings of the stockholders may be called by
the Chairman of the Board, by the Board of Directors pursuant to a resolution
adopted by a
<PAGE> 2
majority of the total number of directors which the Corporation would have if
there were no vacancies (the "Whole Board") and shall be called by the Secretary
at the request of the holders of a majority of the voting power of all of the
then outstanding shares of the Voting Stock (as defined in Article FOURTH of the
Certificate of Incorporation), voting together as a single class.
SECTION 2.3 Place of Meeting. The Board of Directors may designate the
place of meeting for any annual meeting or for any special meeting of the
stockholders called by the Board of Directors. If no designation is made by the
Board of Directors, or if a special meeting be otherwise called, the place of
meeting shall be the principal office of the Corporation.
SECTION 2.4 Notices of Meeting. Written or printed notice, stating the
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) days nor more than
sixty (60) days before the date of the meeting, either personally or by mail, to
each stockholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
the postage thereon prepaid, addressed to the stockholder at his address as it
appears on the stock transfer books of the Corporation. Such further notice
shall be given as may be required by law. Business transacted at any special
meeting shall be confined to the purpose or purposes stated in the notice of
such special meeting. Meetings may be held without notice if all stockholders
entitled to vote are present, of if notice is waived by those not present.
SECTION 2.5 Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation, a majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders, except that when specified
business is to be voted on by a class or series voting as a class, the holders
of a majority of the shares of such class or series shall constitute a quorum of
such class or series for the transaction of such business. The chairman of the
meeting or a majority of the shares so represented may adjourn the meeting from
time to time, whether or not there is such a quorum. No notice of time and place
of adjourned meetings need be given except as required by law. The stockholders
present at a duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave less
than a quorum.
SECTION 2.6 Proxies. At all meetings of stockholders, a stockholder may
vote by proxy executed in writing by the stockholder, or by his duly authorized
attorney-in-fact. Such proxy must be filed with the Secretary of the Corporation
or his
-2-
<PAGE> 3
representative at or before the time of the meeting. No proxy shall be valid
after eleven (11) months from the date of its execution, unless the proxy shall
otherwise provide.
SECTION 2.7 Judge(s) of Election. The Board of Directors shall, in advance
of each meeting of stockholders, elect up to three (3) judges, but no less than
one (1) judge, of election to serve with respect to such meeting of
stockholders, and if any judge so elected shall refuse to serve or shall not be
present at such stockholders' meeting, he shall be replaced by the Board of
Directors in advance of such meeting or by the Chairman of such meeting in
advance of any voting at such meeting. All voting at stockholders' meetings
shall be conducted solely under the direction of the judges, and the decision of
a majority of the judges as to the outcome of all voting at such meetings shall
be binding upon the Corporation and its stockholders in the absence of actual
fraud in the decision of a majority of the judges. Any competent person over the
age of twenty-one (21) may be appointed as a judge of election, other than any
director or candidate for the office of director.
SECTION 2.8 Procedure for Election of Directors. Election of directors at
all meetings of the stockholders at which directors are to be elected shall be
by ballot, and, except as otherwise set forth in any Preferred Stock Designation
(as defined in Article FOURTH of the Certificate of Incorporation) with respect
to the right of the holders of any class or series of Preferred Stock to elect
additional directors under specified circumstances, a plurality of the votes
cast thereat shall elect. Except as otherwise provided by law, the Certificate
of Incorporation, any Preferred Stock Designation, the By-Laws of the
Corporation or resolution adopted by the Whole Board, all matters other than the
election of directors submitted to the stockholders at any meeting shall be
decided by a majority of the votes cast with respect thereto.
SECTION 2.9 Action By Written Consent. Whenever the vote of stockholders
at a meeting thereof is required or permitted to be taken for or in connection
with any corporate action, the meeting and vote of stockholders may be dispensed
with if all of the stockholders who would have been entitled to vote upon the
action if such meeting were held shall consent in writing to such corporate
action being taken; or if the Certificate of Incorporation authorizes the action
to be taken with the written consent of the holders of less than all of the
Voting Stock who would have been entitled to vote upon the action if a meeting
were held, then on the written consent of the stockholders having not less than
such percentage of the total number of votes as may be authorized in the
Certificate of Incorporation; provided that in no case shall the written consent
be by the holders of stock having less than the minimum percentage of the total
required by statute for the proposed corporate action, and provided that
-3-
<PAGE> 4
prompt notice must be given to all stockholders of the taking of corporate
action without a meeting and by less than unanimous written consent.
SECTION 2.10 Alien Stockholders. Except as otherwise provided by law, not
more than twenty-five percent, or such other amount as provided under the
Communications Act of 1934, and the rules and regulations promulgated
thereunder, as the same may be amended from time to time (the "Act"), of the
aggregate number of shares of capital stock of the Corporation outstanding in
any class or series of the Corporation shall at any time be held or voted by or
for the account of any Alien (as defined in Article TWELFTH of the Certificate
of Incorporation). The Board of Directors may make such rules and regulations as
it shall deem necessary or appropriate to enforce or waive the foregoing
provisions of this Section 2.10.
SECTION 2.11 Ineligible Investors. No Ineligible Investor shall acquire or
continue to hold or have the right to vote Common Stock. As used herein the term
"Ineligible Investor" shall mean any person whose ownership or right to vote
Common Stock would constitute a violation of the Act, or would be likely to
prevent the Corporation from making any intended acquisition or undertaking any
intended activity, in the opinion of counsel to the Corporation.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1 General Powers. The business and affairs of the Corporation
shall be managed by or under the direction of its Board of Directors. In
addition to the powers and authorities by these By-Laws expressly conferred upon
them, the Board of Directors may exercise all such powers of the Corporation and
do all such lawful acts and things as are not by the statute or by the
Certificate of Incorporation or by these By-Laws required to be exercised or
done by the stockholders.
SECTION 3.2 Number, Tenure and Qualifications. Subject to the rights of
the holders of any class or series of Preferred Stock to elect directors under
specified circumstances, the number of directors shall be fixed from time to
time exclusively pursuant to a resolution adopted by a majority of the Whole
Board. Subsequent to the election by the incorporator of the initial Board of
Directors, directors shall be elected at each annual meeting of stockholders by
a plurality of votes cast and shall hold office until the next annual meeting of
stockholders and until the election and qualification of their respective
successors, subject to the provisions of Section C and Section D of Article
SIXTH of the Certificate of Incorporation.
-4-
<PAGE> 5
SECTION 3.3 Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this By-Law immediately after, and the
same place as, the Annual Meeting of Stockholders. The Board of Directors may,
by resolution, provide the time and place for the holding of additional regular
meetings without other notice than such resolution.
SECTION 3.4 Special Meetings. Special meetings of the Board of Directors
shall be called at the request of the Chairman of the Board or a majority of the
Board of Directors. The person or persons authorized to call special meetings of
the Board of Directors may fix the place and time of the meetings.
SECTION 3.5 Notice. Notice of any special meeting shall be given to each
director at his business or residence in writing, by telegram, by facsimile or
by telephone communication. If mailed, such notice shall be deemed adequately
delivered when deposited in the United States mails so addressed, with postage
thereon prepaid, at least five (5) days before such meeting. If by telegram or
facsimile, such notice shall be deemed adequately delivered when such notice is
sent at least twenty-four (24) hours before such meeting. If by telephone, the
notice shall be given at least twelve (12) hours prior to the time set for the
meeting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice of such meeting, except for amendments to these By-Laws, as provided
under Article VII, Section 7.1. A meeting may be held at any time without notice
if all the directors are present or if those not present waive notice of the
meeting in writing, either before or after such meeting.
SECTION 3.6 Quorum. A whole number of directors equal to at least a
majority of the Whole Board shall constitute a quorum for the transaction of
business, but if at any meeting of the Board of Directors there shall be less
than a quorum present, a majority of the directors present may adjourn the
meeting from time to time without further notice. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. The directors present at a duly organized meeting may
continue to transact business until adjournment notwithstanding the withdrawal
of enough directors to leave less than a quorum.
SECTION 3.7 Vacancies. Subject to the rights of the holders of any class
or series of Preferred Stock, vacancies resulting from death, resignation,
retirement, disqualification, removal from office or other cause (other than a
vacancy resulting from removal by the stockholders which shall be filled by the
stockholders), and newly created directorships resulting from any increase in
the authorized number of directors may be
-5-
<PAGE> 6
filled only by the affirmative vote of a majority of the remaining directors,
though less than a quorum of the Board of Directors, and directors so chosen
shall hold office for a term expiring at the next annual meeting of stockholders
and until such director's successor shall have been duly elected and qualified.
No decrease in the number of authorized directors constituting the Whole Board
shall shorten the term of any incumbent director.
SECTION 3.8 Executive Committee. The Board of Directors may establish at
such times as it shall determine, including immediately following each annual
meeting of stockholders or a special meeting of the same held for the election
of a majority of directors, shall meet and shall appoint from its number by a
majority vote of the Whole Board an Executive Committee of such number of
members as from time to time may be selected by the Board, to serve until the
next annual or special meeting at which a class of directors is elected or until
the respective successor of each is duly appointed. The Executive Committee
shall possess and may exercise all the powers and authority of the Board of
Directors in the management and direction of the business and affairs of the
Corporation, except as limited by law and except for the power to change the
membership or to fill vacancies in the Board or said Committee. The Board shall
have the power at any time to change the membership of said Committee, to fill
vacancies in it, to make rules for the conduct of its business, or to dissolve
it.
SECTION 3.9 Removal. Subject to the rights of the holders of any class or
series of Preferred Stock, any director, or the entire Board of Directors, may
be removed from office at any time, with or without cause by the affirmative
vote of the holders of at least a majority of the voting power of all of the
then-outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (the "Voting Stock"), voting together as
a single class.
SECTION 3.10 Chairman of the Board. The Board of Directors shall elect a
Chairman of the Board. The Chairman of the Board shall preside at all meetings
of the stockholders and of the Board of Directors. The Chairman of the Board or
such officer as he shall designate shall have responsibility for overseeing the
affairs of the Corporation and shall perform all duties incidental to his office
which may be required by law and all such other duties as are properly required
of him by the Board of Directors. Except where by law the signature of the
President (if any) is required, the Chairman of the Board shall possess the same
power as the President to sign all certificates, contracts, and other
instruments of the Corporation which may be authorized by the Board of
Directors. He shall make reports to the Board of Directors and the stockholders,
and shall perform all such other duties as are properly required of him by the
-6-
<PAGE> 7
Board of Directors. He shall see that all orders and resolutions of the Board of
Directors and of any committee thereof are carried into effect.
SECTION 3.11 Vice-Chairman of the Board. The Board of Directors may elect
a Vice-Chairman of the Board. The Vice-Chairman of the Board (if any) shall
have such powers and duties as the Board of Directors may determine. If the
Chairman of the Board is absent or unable to act, the Vice-Chairman of the Board
shall, when present, preside at all meetings of the Board of Directors and the
stockholders. In the event of the death or incapacity of the Chairman of the
Board, the Vice-Chairman of the Board shall assume all powers and
responsibilities held by the Chairman of the Board until such time as the Board
of Directors shall elect a new Chairman of the Board.
ARTICLE IV
OFFICERS
SECTION 4.1 Elected Officers. The elected officers of the Corporation
shall be a President, a Secretary, a Treasurer, and such other officers
(including, without limitation, a Chief Executive Officer, a Chief Operating
Officer, and Vice-Presidents) as the Board of Directors from time to time may
deem proper. All officers chosen by the Board of Directors shall each have such
powers and duties as generally pertain to their respective offices, subject to
the specific provisions of this ARTICLE IV. Such officers shall also have such
powers and duties as from time to time may be conferred by the Board of
Directors or by any Committee thereof.
SECTION 4.2 Election and Term of Office. The elected officers of the
Corporation shall be elected annually by the Board of Directors at the regular
meeting of the Board of Directors held after each annual meeting of the
stockholders. If the election of officers shall not be held at such meeting such
election shall be held as soon thereafter as convenient. Each officer shall hold
office until his successor shall have been duly elected and shall have qualified
or until his death or until he shall resign, but any officer may be removed from
office at any time by the affirmative vote of a majority of the members of the
Whole Board.
SECTION 4.3 President. The President (if one shall have been chosen by the
Board of Directors) shall act in a general executive capacity and shall oversee
the general management of and assist the Chairman of the Board in the operations
of the Corporation's business and general supervision of its policies and
affairs. The President shall, in the absence of or because of the inability to
act of the Chairman of the Board, perform all duties of the Chairman of the
Board and preside at all meetings
-7-
<PAGE> 8
of stockholders and of the Board of Directors. The President may sign with the
Secretary, or an Assistant Secretary, or any other proper officer of the
Corporation authorized by the Board of Directors, certificates, contracts, and
other instruments of the Corporation as authorized by the Board of Directors. In
the event of the death, inability or refusal to act of the President, the Board
of Directors shall promptly meet for the purpose of electing his successor.
SECTION 4.4 Removal. Any officer elected by the Board of Directors may be
removed by a majority of the members of the Whole Board whenever, in their
judgment, the best interests of the Corporation would be served thereby. No
elected officer shall have any contractual rights against the Corporation for
compensation by virtue of such election beyond the date of the election of his
successor, his death, his resignation or his removal, whichever event shall
first occur, except as otherwise provided in an employment contract or under an
employee deferred compensation plan.
SECTION 4.5 Vacancies. A newly created office and a vacancy in any office
because of death, resignation, or removal may be filled by the Board of
Directors for the unexpired portion of the term at any meeting of the Board of
Directors.
ARTICLE V
STOCK CERTIFICATES AND TRANSFERS
SECTION 5.1 Stock Certificates and Transfers. The interest of each
stockholder of the Corporation shall be evidenced by certificates for shares of
stock in such form as the appropriate officers of the Corporation may from time
to time prescribe. The shares of stock of the Corporation shall be transferred
on the books of the Corporation by the holder thereof in person or by his
attorney, upon surrender for cancellation of certificates for the same number of
shares, with an assignment and power of transfer endorsed thereon or attached
thereto, duly executed, with such proof of the authenticity of the signature as
the Corporation or its agents may reasonably require.
The certificates of stock shall be signed, countersigned and registered in
such manner as the Board of Directors may by resolution prescribe, which
resolution may permit all or any of the signatures on such certificates to be in
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate has ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
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SECTION 5.2 Legend. Every certificate of stock shall have a restriction
noted conspicuously on the certificate and shall set forth on either the face or
back of the certificate a legend informing the holder of the certificate that
the shares of stock represented by the certificate shall not be transferred to
any Alien if, as a result of such transfer, in excess of twenty-five percent
(25%) of the total number of outstanding shares of capital stock of the
Corporation, or such other amount as provided under the Act, would be held by
Aliens.
SECTION 5.3 Record of Alien and Ineligible Investor Ownership. The Board
of Directors may make such additional rules and regulations as it shall deem
necessary or appropriate so that accurate records may be kept of the shares of
stock of the Corporation owned of record and/or voted by or for the account of
Aliens and/or Ineligible Investors.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1 Fiscal Year. The fiscal year of the Corporation shall begin on
the first day of January and end on the last day of December of each year, or
shall begin and end on such other days as shall be fixed by resolution of the
Board of Directors.
SECTION 6.2 Dividends. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law.
SECTION 6.3 Seal. The corporate seal may bear in the center the emblem of
some object, and shall have inscribed thereunder the words "Corporate Seal" and
around the margin thereof the words "WP Corporation - Delaware 1994."
SECTION 6.4 Waiver of Notice. Whenever any notice is required to be given
to any stockholder or director of the Corporation under the provisions of the
General Corporation Law of the State of Delaware, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such
notice. Neither the business to be transacted at, nor the purpose of, any annual
or special meeting of the stockholders or the Board of Directors need be
specified in any waiver of notice of such meeting.
SECTION 6.5 Audits. The accounts, books and records of the Corporation
shall be audited upon the conclusion of each fiscal year by an independent
certified public accountant
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selected by the Board of Directors, and it shall be the duty of the Board of
Directors to cause such audit to be made annually.
SECTION 6.6 Resignations. Any director or any officer, whether elected or
appointed, may resign at any time by serving written notice of such resignation
on the Chairman of the Board, the President, or the Secretary, and such
resignation shall be deemed to be effective as of the close of business on the
date said notice is received by the Chairman of the Board, the President, or the
Secretary. No formal action shall be required of the Board of Directors or the
stockholders to make any such resignation effective.
SECTION 6.7 Indemnification of Directors, Officers, Employees and Agents.
The Corporation shall provide indemnification as set forth in Article NINTH of
the Certificate of Incorporation.
ARTICLE VII
AMENDMENTS
SECTION 7.1 Amendments. These By-Laws may be amended, added to, rescinded
or repealed at any meeting of the Board of Directors or of the stockholders,
provided notice of the proposed change was given in the notice of the meeting
and, in the case of a meeting of the Board of Directors, in a notice given not
less than two days prior to the meeting.
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Exhibit 4.2
TERM LOAN AGREEMENT,
dated as of November 26, 1997,
among
WHEELING-PITTSBURGH CORPORATION,
as the Borrower,
VARIOUS FINANCIAL INSTITUTIONS,
as the Lenders,
DLJ CAPITAL FUNDING, INC.,
as the Syndication Agent and
the Administrative Agent for the Lenders,
and
CITICORP USA, INC.,
as the Documentation Agent for the Lenders,
ARRANGED BY
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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SECTION PAGE||
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms.......................................................................................1
1.2. Use of Defined Terms...............................................................................22
1.3. Cross-References...................................................................................22
1.4. Accounting and Financial Determinations............................................................22
1.5. Officers' Certificates and Opinions................................................................23
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND TERM NOTES
2.1. Commitments........................................................................................23
2.1.1. Term Loan Commitments..............................................................................23
2.1.2. Lenders Not Permitted or Required to Make the Term Loans...........................................23
2.2. Borrowing Procedures and Funding Maintenance.......................................................24
2.3. Continuation and Conversion Elections..............................................................24
2.4. Funding............................................................................................24
2.5. Term Notes.........................................................................................24
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1. Repayments and Prepayments; Application............................................................25
3.1.1. Repayments and Prepayments.........................................................................25
3.1.2. Application........................................................................................26
3.2. Interest Provisions................................................................................27
3.2.1. Rates..............................................................................................27
3.2.2. Post-Maturity Rates................................................................................27
3.2.3. Payment Dates......................................................................................27
3.3. Fees...............................................................................................28
3.3.1. Arrangement, Structuring and Commitment Fees.......................................................28
3.3.2. Administrative Agent Fee...........................................................................28
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ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
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4.1. LIBO Rate Lending Unlawful.........................................................................28
4.2. Deposits Unavailable...............................................................................28
4.3. Increased LIBO Rate Loan Costs, etc................................................................29
4.4. Funding Losses.....................................................................................29
4.5. Increased Capital Costs............................................................................29
4.6. Taxes..............................................................................................30
4.7. Payments, Computations, etc........................................................................30
4.8. Sharing of Payments................................................................................31
4.9. Setoff.............................................................................................31
ARTICLE V
CONDITIONS TO TERM LOANS
5.1. Resolutions, etc...................................................................................32
5.2. Delivery of Term Note..............................................................................32
5.3. Subsidiary Guaranty................................................................................32
5.4. Closing Date Certificate; Transaction Documents....................................................32
5.5. Existing Senior Note Defeasance....................................................................32
5.6. Issuance of the 1997 Senior Notes..................................................................33
5.7. Litigation.........................................................................................33
5.8. Material Adverse Change............................................................................33
5.9. Opinions of Counsel................................................................................33
5.10. Closing Fees, Expenses, etc........................................................................33
5.11. Satisfactory Legal Form............................................................................33
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Organization; Due Authorization, etc...............................................................33
6.2. Capital Stock of the Borrower......................................................................34
6.3. Subsidiaries.......................................................................................34
6.4. No Conflicts.......................................................................................34
6.5. Validity and Binding Effect........................................................................35
6.6. Tax Sharing Agreement, etc.........................................................................35
6.7. Litigation.........................................................................................35
Environmental Laws and ERISA.......................................................................35
6.9. Financial Statements...............................................................................36
6.10. Investment Company Act.............................................................................37
6.11. Regulations G, T, U and X..........................................................................37
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6.12. Material Adverse Change............................................................................37
6.13. Property, etc......................................................................................37
6.14. Taxes..............................................................................................37
6.15. Solvency...........................................................................................37
6.16. Accuracy of Information............................................................................38
ARTICLE VII
COVENANTS
7.1. Affirmative Covenants..............................................................................38
7.1.1. Financial Information, Reports, Notices, etc.......................................................38
7.1.2. Corporate Existence................................................................................39
7.1.3. Stay, Extension and Usury Laws.....................................................................39
7.1.4. Insurance..........................................................................................40
7.1.5. Taxes..............................................................................................40
7.1.6. Books and Records..................................................................................40
7.1.7. Use of Proceeds, etc...............................................................................40
7.1.8. Additional Subsidiary Guarantors...................................................................40
7.2. Negative Covenants.................................................................................40
7.2.1. Incurrence of Indebtedness and Issuance of Preferred Stock.........................................40
7.2.2. Liens..............................................................................................42
7.2.3. Restricted Payments................................................................................43
7.2.4. Dividend and Other Payment Restrictions Affecting Subsidiaries.....................................45
7.2.5. Merger, Consolidation, or Sale of Assets...........................................................46
7.2.6. Asset Sales........................................................................................46
7.2.7. Modification of Certain Agreements.................................................................47
7.2.8. Transactions with Affiliates. .....................................................................47
7.2.9. Issuances and Sales of Capital Stock of Subsidiaries...............................................48
7.2.10. Sale and Leaseback Transactions....................................................................48
ARTICLE VIII
EVENTS OF DEFAULT
8.1. Listing of Events of Default.......................................................................48
8.1.2. Breach of Warranty.................................................................................49
8.2. Acceleration.......................................................................................50
ARTICLE IX
THE AGENTS
9.1. Appointment of Agents..............................................................................51
9.2. Nature of Duties of the Agents.....................................................................51
9.3. General Immunity...................................................................................51
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9.4. Successor..........................................................................................52
9.5. Agents in their Capacity as Lenders................................................................52
9.6. Actions by Each Agent..............................................................................53
9.7. Right to Indemnity.................................................................................53
9.8. Credit Decisions...................................................................................53
9.9. Copies, etc........................................................................................54
9.10. The Syndication Agent, the Documentation Agent and the Administrative Agent........................54
9.11. Agreement to Cooperate.............................................................................54
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1. Waivers, Amendments, etc...........................................................................54
10.2. Notices............................................................................................55
10.3. Payment of Costs and Expenses......................................................................55
10.4. Indemnification....................................................................................56
10.5. Survival...........................................................................................57
10.6. Severability.......................................................................................57
10.7. Headings...........................................................................................57
10.8. Execution in Counterparts, Effectiveness, etc......................................................57
10.9. Governing Law; Entire Agreement....................................................................57
10.10. Successors and Assigns.............................................................................58
10.11. Sale and Transfer of Term Loans and Term Notes; Participations in Term
Loans and Term Notes...............................................................................58
10.11.1. Assignments........................................................................................58
10.11.3. Assignments to Federal Reserve Banks...............................................................59
10.11.5. Representations of Lenders.........................................................................60
10.12. Other Transactions.................................................................................60
10.13. Forum Selection and Consent to Jurisdiction........................................................60
10.14. Waiver of Jury Trial...............................................................................61
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SCHEDULE I - Disclosure Schedule
SCHEDULE II - Percentages and Administrative Information
EXHIBIT A - Form of Term Note
EXHIBIT B - Form of Borrowing Request
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Subsidiary Guaranty
EXHIBIT E - Form of Closing Date Certificate
EXHIBIT F - Form of Lender Assignment Agreement
EXHIBIT G-1 - Form of Opinion of New York Counsel to the Obligors
EXHIBIT G-2 - Form of Opinion of Pennsylvania Counsel to the
Obligors
EXHIBIT G-3 - Form of Opinion of Ohio Counsel to the Obligors
v
<PAGE> 7
TERM LOAN AGREEMENT
This TERM LOAN AGREEMENT, dated as of November 26, 1997, is among
WHEELING-PITTSBURGH CORPORATION, a Delaware corporation (the "Borrower"), the
various financial institutions as are or may become parties hereto as provided
herein (collectively, the "Lenders"), DLJ CAPITAL FUNDING, INC. ("DLJ"), as
syndication agent (the "Syndication Agent"), and as administrative agent (the
"Administrative Agent") for the Lenders, and CITICORP USA, INC., as
documentation agent (the "Documentation Agent") for the Lenders.
W I T N E S S E T H:
WHEREAS, the Borrower is engaged directly and through its various
Subsidiaries (such capitalized term, and other capitalized terms used herein, to
have the meanings provided in Section 1.1) in the manufacture and sale of flat
rolled steel products;
WHEREAS, the Borrower desires to obtain from the Lenders a Commitment
to provide $75,000,000 in Term Loans, the proceeds of which will be used to
defease the Existing Senior Notes, reduce existing Indebtedness under the
Revolving Credit Facility and to pay the costs and expenses associated with this
transaction and issuance of the 1997 Senior Notes (the "1997 Senior Note
Offering"); and
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article V), to extend the
Commitments and make the Term Loans described herein to the Borrower;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Acquired Indebtedness" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
including Indebtedness incurred in connection with, or in contemplation of, such
other Person merging with or into or becoming a Restricted Subsidiary of such
specified Person, and (ii) Indebtedness secured by a Lien encumbering an asset
acquired by such specified Person at the time such asset is acquired by such
specified Person.
<PAGE> 8
"Administrative Agent" is defined in the preamble and includes each
other Person as shall have subsequently been appointed as the successor
Administrative Agent pursuant to Section 9.4.
"Affiliate" of any specified Person means any other Person which,
directly or indirectly, controls, is controlled by or is under direct or
indirect common control with, such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
provided that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agents" means, collectively, the Administrative Agent, the Syndication
Agent and the Documentation Agent.
"Agreement" means, on any date, this Term Loan Agreement as originally
in effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"Alternate Base Rate" means, for any day and with respect to all Base
Rate Loans, a fluctuating rate of interest per annum equal to the higher of: (a)
0.50% per annum above the Federal Funds Rate most recently determined by the
Administrative Agent; and (b) the rate of interest in effect for such day as
most recently publicly announced or established by the Administrative Agent at
its Domestic Office as its "reference rate." (The "reference rate" is a rate set
by the Administrative Agent based upon various factors including the
Administrative Agent's costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above or below such announced rate.) Any change in the
reference rate announced by the Administrative Agent shall take effect at the
opening of business on the day of such establishment or announcement.
"Applicable Margin" means (i) with respect to the unpaid principal
amount of each Term Loan maintained as a Base Rate Loan, 2.25% per annum and
(ii) with respect to the unpaid principal amount of each Term Loan maintained as
a LIBO Rate Loan, 3.25% per annum.
"Arranger" means Donaldson, Lufkin & Jenrette Securities Corporation, a
Delaware corporation.
"Asset Sale" means the sale, lease, conveyance, disposition or other
transfer (a "disposition") of any properties, assets or rights (including a sale
and leaseback transaction or the issuance, sale or transfer by the Borrower of
Equity Interests of a Restricted Subsidiary) whether in a single transaction or
a series of related transactions; provided, however, that the following
transactions will be deemed not to be Asset Sales: (a) sales of inventory in the
ordinary course of business; (b) a disposition of assets by the Borrower to a
Wholly Owned Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary of
the Borrower to the Borrower or to another Wholly Owned Restricted Subsidiary of
the Borrower; (c) a disposition of Equity Interests by a Wholly Owned Restricted
Subsidiary of the Borrower to the Borrower or to another Wholly Owned Restricted
Subsidiary of the Borrower; (d) a Permitted Investment or Restricted Payment
that is permitted by this Agreement; (e) the issuance by the Borrower of Equity
Interests; (f) the disposition of properties, assets or rights in any fiscal
year the aggregate
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<PAGE> 9
Net Proceeds of which are less than $1,000,000; and (g) the sale of accounts
receivable pursuant to the Receivables Facility. The fair market value of any
non-cash proceeds of a sale of assets shall be determined by the Board of
Directors of the Borrower, whose resolution with respect thereto shall be
delivered to the Administrative Agent.
"Asset Sale Amount" means, on any date in respect of any Term Loan, an
amount which is the product of (a) a fraction (expressed as a percentage), the
numerator of which is the aggregate outstanding principal amount of Term Loans
and the denominator of which is the sum of the aggregate outstanding principal
amount of Term Loans plus the aggregate outstanding principal amount of 1997
Senior Notes multiplied by (b) the aggregate amount of Excess Proceeds from
Asset Sales required to be applied pursuant to Section 7.2.6 to prepay Term
Loans.
"Asset Sale Prepayment Date" means a date that is within 30 days
following delivery by the Borrower of a notice to the Administrative Agent and
each Lender of the prepayment of Term Loans from Excess Proceeds from Asset
Sales pursuant to Section 7.2.6.
"Assignee Lender" is defined in Section 10.11.1.
"Attributable Indebtedness" in respect of a sale and leaseback
transaction means, at the time of determination, the present value (discounted
at the rate of interest implicit in such transaction, determined in accordance
with GAAP) of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended).
"Authorized Officer" means, relative to any Obligor, those of its
officers whose signatures and incumbency shall have been certified to the
Administrative Agent and the Lenders pursuant to Section 5.1.1.
"Bankruptcy Law" means Title 11, United States Code, or any similar
federal or state law for the relief of debtors.
"Base Rate Loan" means a Term Loan bearing interest at a fluctuating
rate determined by reference to the Alternate Base Rate.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person, or any authorized committee of the Board of Directors
of such Person.
"Borrower" is defined in the preamble.
"Borrowing" means Term Loans of the same type and, in the case of LIBO
Rate Loans, having the same Interest Period made by all Lenders on the same
Business Day.
"Borrowing Request" means a loan request and certificate duly executed
by an Authorized Officer of the Borrower, substantially in the form of Exhibit B
hereto.
"Business Day" means any day which is neither a Saturday or Sunday nor
a legal holiday on which banks are authorized or required to be closed in New
York City and, with respect to
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Borrowings of, Interest Periods with respect to, payments of principal and
interest in respect of, continuations or conversions of Base Rate Loans into,
LIBO Rate Loans, on which dealings in Dollars are carried on in the London
interbank market.
"Capital Expenditure Indebtedness" means Indebtedness incurred by any
Person to finance the purchase or construction of any property or assets
acquired or constructed by such Person which have a useful life of more than one
year so long as (a) the purchase or construction price for such property or
assets is included in "addition to property, plant or equipment" in accordance
with GAAP, (b) the acquisition or construction of such property or assets is not
part of any acquisition of a Person or line of business and (c) such
Indebtedness is incurred within 90 days of the acquisition or completion of
construction of such property or assets.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (a) in the case of a corporation, corporate
stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (d) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.
"Cash Equivalents" means (a) United States dollars, (b) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (c) certificates of deposit
and eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any domestic commercial bank
having capital and surplus in excess of $500,000,000, (d) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clauses (b) and (c) above entered into with any financial
institution meeting the qualifications specified in clause (c) above, (d)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Rating Service and in each case maturing
within six months after the date of acquisition and (e) money market mutual
funds substantially all of the assets of which are of the type described in the
foregoing clauses (a) through (d).
"Change of Control" means any of the following: (a) the sale, lease,
transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Borrower and its Restricted Subsidiaries,
taken as a whole, to any Person (as such term in used in Section 13(d)(3) of the
Exchange Act), (b) the adoption of a plan relating to the liquidation or
dissolution of the Borrower, (c) the consummation of any transaction (including
any merger or consolidation) the result of which is that (i) any "Person" or
"group" (as such terms are used in Section 13(d)(3) of the Exchange Act) other
than the Parent or an underwriter or group of underwriters in an underwritten
public offering becomes the "beneficial owner" (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one
or more intermediaries, of at least 50% of the voting power of the outstanding
voting stock of the Borrower, (d) the merger or consolidation of the Borrower
with or into another corporation with
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<PAGE> 11
the effect that the existing stockholders of the Borrower hold less than 50% of
the combined voting power of the then outstanding voting securities of the
surviving corporation of such merger or the corporation resulting from such
consolidation or (e) the first day on which more than a majority of the members
of the Board of Directors of the Borrower are not Continuing Directors.
"Change of Control Prepayment Date" means a date that is within 37 days
following the occurrence of any Change of Control.
"Change of Control Prepayment Event" is defined in clause (b) of
Section 3.1.2.
"Change of Control Prepayment Notice" means a notice delivered to the
Administrative Agent and each Lender in connection with a Change of Control
Prepayment Event stating that (i) a Change of Control has occurred and that each
Lender is entitled to have its Term Loans prepaid, (ii) the Change of Control
Prepayment Price and the Change of Control Prepayment Date, (iii) any Term Loan
not prepaid shall remain outstanding, (iv) unless the Borrower defaults in the
payment of the Change of Control Prepayment Price, all Term Loans prepaid in
full pursuant to the Change of Control Prepayment Event shall cease to be
outstanding after the Change of Control Prepayment Date, (v) Lenders electing to
have their Term Loans prepaid in full pursuant to a Change of Control Prepayment
Event shall surrender their Term Notes marked "Canceled" to the Administrative
Agent at the address specified in the Change of Control Prepayment Notice prior
to the close of business on the third Business Day preceding the Change of
Control Prepayment Date, (vi) any Lender shall be entitled to withdraw its
prepayment election if the Administrative Agent receives, not later than the
close of business on the second Business Day preceding the Change of Control
Prepayment Date, a telegram, telex, facsimile transmission or letter from such
Lender setting forth the name of such Lender, the outstanding principal amount
of such Lender's Term Loans and a statement that such Lender is withdrawing its
prepayment election and (vii) any Lender electing to have its Term Loans
partially prepaid shall be issued new Term Notes in a principal amount equal to
the amount of Term Loans not prepaid.
"Change of Control Prepayment Price" is defined in clause (b) of
Section 3.1.2.
"Citicorp" is defined in this preamble.
"Closing Date" means the date of the initial Borrowing, not to be later
than November 26, 1997.
"Closing Date Certificate" means a certificate of an Authorized Officer
of the Borrower substantially in the form of Exhibit E hereto, delivered
pursuant to Section 5.4.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified.
"Commitment Termination Event" means (i) the occurrence of any Event of
Default described in Section 8.1.8, or (ii) the occurrence and continuance of
any other Event of Default and either (x) the declaration of the Term Loans to
be due and payable pursuant to Section 8.2, or (y) in the absence of such
declaration, the giving of notice to the Borrower by the Administrative
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Agent, acting at the direction of the Required Lenders, that the Term Loan
Commitments have been terminated.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (a)
provision for taxes based on income or profits of such Person and its Restricted
Subsidiaries, to the extent that such provision for taxes was included in
computing Consolidated Net Income, plus (b) Consolidated Interest Expense of
such Person and its Restricted Subsidiaries for such period, whether paid or
accrued and whether or not capitalized (including amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, commissions discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations), to the extent that any such expense was deducted in computing
Consolidated Net Income, plus (c) depreciation and amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) and other non-cash
charges of such Person and its Restricted Subsidiaries for such period, to the
extent that such depreciation, amortization and other non-cash charges were
deducted in computing Consolidated Net Income, minus (d) non-cash items
increasing consolidated revenues in determining Consolidated Net Income for such
period to the extent not already reflected as an expense in computing
Consolidated Net Income, minus (e) all cash payments during such period relating
to non-cash charges and other non-cash items that were or would have been added
back in determining Consolidated Cash Flow for any prior period, in each case,
on a consolidated basis and determined in accordance with GAAP.
"Consolidated Interest Coverage Ratio" means with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Consolidated Interest Expense of such Person for such period;
provided, however, that the Consolidated Interest Coverage Ratio shall be
calculated giving pro forma effect to each of the following transactions as if
each such transaction had occurred at the beginning of the applicable
four-quarter reference period: (a) any incurrence, assumption, guarantee or
redemption by the Borrower or any of its Restricted Subsidiaries of any
Indebtedness (including revolving credit borrowings based on the average daily
balance outstanding during the relevant period) subsequent to the commencement
of the period for which the Consolidated Interest Coverage Ratio is being
calculated but prior to the date on which the event for which the calculation of
the Consolidated Interest Coverage Ratio is made (the "Calculation Date"); (b)
any acquisition that has been made by the Borrower or any of its Restricted
Subsidiaries, or approved and expected to be consummated within 30 days of the
Calculation Date, including, in each case, through a merger or consolidation,
and including any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior to the
Calculation Date (in which case Consolidated Cash Flow for such reference period
shall be calculated to include the Consolidated Cash Flow of the acquired
entities and without giving effect to clause (c) of the proviso set forth in the
definition of Consolidated Net Income); and (c) any other transaction that may
be given pro forma effect in accordance with Article 11 of Regulation S-X as in
effect from time to time; and provided, further, that (i) the Consolidated Cash
Flow attributable to discontinued operations, as determined in accordance with
GAAP, and operations or businesses disposed of prior to the Calculation Date,
shall be excluded and (ii) the Consolidated Interest Expense attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to
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the extent that the obligations giving rise to such Consolidated Interest
Expense will not be obligations of the referent Person or any of its Restricted
Subsidiaries following the Calculation Date.
"Consolidated Interest Expense" means, with respect to any Person for
any period, the sum, without duplication, of (a) the consolidated interest
expense of such Person and its Restricted Subsidiaries for such period, whether
paid or accrued (including amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments associated
with Capital Lease Obligations, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations), (b) any
interest expense on Indebtedness of another Person that is guaranteed by such
Person or one of its Subsidiaries or secured by a Lien on assets of such Person
or one of its Restricted Subsidiaries (whether or not such guarantee of Lien is
called upon), (c) the consolidated interest expense of such Person and its
Restricted Subsidiaries that was capitalized during such period and (d) the
product of (i) all cash dividend payments on any series of preferred stock of
such Person, times (ii) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rates of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided, that (a) the Net Income (but not loss) of any Person that
is not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof, (b) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Restricted Subsidiary or its
stockholders, (c) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded and (d) the cumulative effect of a change in accounting principles
shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (a) the consolidated equity of the common stockholders of such
Person and its consolidated Restricted Subsidiaries as of such date plus (b) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (i) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of this Agreement in the book value of
any asset owned by such Person or a consolidated Restricted Subsidiary of such
Person, (ii) all investments as of such date in unconsolidated Restricted
Subsidiaries and in Persons that are not Subsidiaries and
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(iii) all unamortized debt discount and expense and unamortized deferred charges
as of such date, in each case determined in accordance with GAAP; provided,
however, that any changes after the date of this Agreement in the liabilities of
such Person and its Restricted Subsidiaries in respect of other post-retirement
employee benefits or pension benefits that would be reflected on a consolidated
balance sheet of such Person and its Restricted Subsidiaries in accordance with
GAAP shall be excluded.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit C hereto.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Borrower who (a) was a member of the
Board of Directors of the Borrower on the Closing Date or (b) was nominated for
election to the Board of Directors of the Borrower with the approval of, or
whose election to the Board of Directors of the Borrower was ratified by, at
least two-thirds of the Continuing Directors who were members of the Board of
Directors of the Borrower at the time of such nomination or election or by the
Parent so long as the Parent owns a majority of the Capital Stock of the
Borrower.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would, unless cured or
waived, constitute an Event of Default.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Agents and the Required
Lenders.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures (excluding any
maturity as a result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or prior
to the date that is 91 days after the Final Maturity Date or the Obligations are
otherwise paid in full; provided, that any Capital Stock that would constitute
Disqualified Stock solely because the holders thereof (or of any security into
which it is convertible or for which it is exchangeable) have the right to
require the issuer to repurchase such Capital Stock (or such security into which
it is convertible or for which it is exchangeable) upon the occurrence of an
Asset Sale or a Change of Control shall not constitute Disqualified Stock if
such Capital Stock (and all such securities into which it is convertible or for
which it is exchangeable) provides that the issuer thereof will not repurchase
or redeem any such Capital Stock (or any such security into which it is
convertible or for which it is exchangeable) pursuant to such provisions prior
to compliance by the Borrower with Section 7.2.6, as the case may be.
"DLJ" is defined in the preamble.
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"Documentation Agent" is defined in the preamble and includes each
other Person as shall have subsequently been appointed as the successor
Documentation Agent pursuant to Section 9.4.
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means, relative to any Lender, the office of such
Lender designated as such in Schedule II hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by notice from such Lender, as the case may be, to each other Person
party hereto. A Lender may have separate Domestic Offices for purposes of
making, maintaining or continuing, as the case may be, Base Rate Loans.
"Effective Date" means the date this Agreement becomes effective
pursuant to Section 10.8.
"Environmental Laws" is defined in Section 6.7.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ERISA"is defined in Section 6.7 .
"ERISA Affiliate" means any corporation, partnership, or other trade or
business (whether or not incorporated) that is, along with the Borrower, a
member of a controlled group of corporations or a controlled group of trades or
businesses, as described in Section 414(b) and 414(c), respectively, of the Code
or Section 4001 of ERISA, or a member of the same affiliated service group
within the meaning of Section 414(m) of the Code.
"Event of Default" is defined in Section 8.1.
"Excess Proceeds" is defined in clause (b) of Section 7.2.6.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Indebtedness" means Indebtedness of the Borrower and its
Subsidiaries in existence on the date of this Agreement including the
Obligations of the Borrower and its Restricted Subsidiaries under (i) the Close
Corporation and Shareholders Agreement of Ohio Coatings Company as existing on
the date of this Agreement and the guarantee by the Borrower or any Restricted
Subsidiary of up to $20,000,000 of Indebtedness of Ohio Coatings Company under
the Credit Agreement between Ohio Coatings Company and National City Bank,
Northeast, or (ii) the Keepwell Agreement, dated December 28, 1995, between the
Borrower, WPSC, the Parent and the lenders party thereto as existing on the date
of this Agreement to the extent permitted by the WHX Agreements, until such
amounts are repaid.
"Existing Senior Note Defeasance" means the discharge of all of the
Borrower's obligations (monetary and otherwise) with respect to the outstanding
Existing Senior Notes and
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release of the Borrower with respect to the covenants that are described in the
Existing Senior Note Indenture, pursuant to the terms of the Existing Senior
Note Indenture.
"Existing Senior Note Indenture" means the Indenture dated November 15,
1993, among the Borrower and Bank One, Columbus N.A., as trustee, as the same
may be amended, restated, amended and restated or otherwise modified from time
to time in accordance with the terms hereof and thereof.
"Existing Senior Notes" means the 93/8% Senior Notes due 2003 of the
Borrower issued pursuant to the Senior Note Indenture, including any senior
secured notes of the Borrower with substantially identical terms exchanged
therefor pursuant to a registration statement under the Securities Act of 1933,
as amended.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to (i) the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or (ii) if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it.
"Fee Letter" means the confidential fee letter, dated as of November
20, 1997, among the Borrower, the Arranger and the Syndication Agent.
"Final Maturity Date" means November 15, 2006.
"Fiscal Year" means any period of twelve consecutive months ending on
December 31; references to a Fiscal Year with a numbering corresponding to any
calendar year refer to the fiscal year ending on the 31st of December during
such calender year.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any party of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under interest rate swap agreements, interest rate
cap agreements, interest rate collar agreements and other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
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"herein", "hereof", "hereto", "hereunder" and similar terms contained
in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of ejusdem generis
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"incur" has the meaning ascribed in Section 7.2.1. The term
"incurrence" has a corresponding meaning.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as Indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
Indebtedness is assumed by such Person) and, to the extent not otherwise
included, the guarantee by such Person of any Indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be (a) the
accreted value thereof, in the case of any Indebtedness that does not require
current payments of interest and (b) the principal amount thereof, in the case
of any other Indebtedness.
"Indemnified Liabilities" is defined in Section 10.4.
"Indemnified Parties" is defined in Section 10.4.
"Intercreditor Agreement" means the Intercreditor, Indemnification and
Subordination Agreement, dated as of November 26, 1997, among the Borrower, the
Parent, WPSC and Unimast as in effect on the Closing Date.
"Interest Period" means, as to any LIBO Rate Loan, the period
commencing on the Borrowing date of such Term Loan or on the date on which any
Term Loan is converted into or continued as a LIBO Rate Loan, and ending on the
date one, two, three, six or, if available, in the Administrative Agent's
reasonable determination, nine or twelve months thereafter as selected by the
Borrower in its Borrowing Request or its Conversion/Continuation Notice;
provided however that:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
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(ii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period;
(iii) no Interest Period for any Term Loan shall extend beyond
the Final Maturity Date for such Term Loan;
(iv) no Interest Period applicable to a Term Loan or portion
thereof shall extend beyond any date upon which is due any scheduled
principal payment in respect of the Term Loans unless the aggregate
principal amount of Term Loans represented by Base Rate Loans, or by
LIBO Rate Loans having Interest Periods that will expire on or before
such date, equals or exceeds the amount of such principal payment; and
(v) there shall be no more than five Interest Periods in
effect at any one time.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees by the referent Person of, and Liens on any
assets of the referent Person securing, Indebtedness or other obligations of
other Persons), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP. If the Borrower or any Restricted Subsidiary of the Borrower sells or
otherwise disposes of any Equity Interests of any direct or indirect Restricted
Subsidiary of the Borrower such that, after giving effect to any such sale or
disposition, such Person is no longer a Restricted Subsidiary of the Borrower,
the Borrower shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Equity Interests of
such Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the final paragraph of Section 7.2.3.
"Keepwell Agreement" means the Keepwell Agreement, dated December 28,
1995, between the Borrower, WPSC, the Parent and the lenders party thereto.
"Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit F hereto.
"Lenders" is defined in the preamble.
"Letter of Credit Facility" means the Letter of Credit Agreement, dated
as of August 22, 1994, among WPSC and Citibank, N.A., as the same may be
amended, supplemented or otherwise modified including any refinancing,
refunding, replacement or extension thereof and whether by the same or any other
lender or group of lenders, provided, that the aggregate amount of letters of
credit available thereunder may not exceed $50,000,000.
"Letter of Undertaking" means that certain letter of undertaking dated
July 21, 1997 from the Parent to The Sanwa Bank, Limited, as existing on the
date of this Agreement.
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"LIBO Rate" means, relative to any Interest Period for LIBO Rate Loans,
the rate of interest per annum determined by the Administrative Agent to be the
arithmetic mean (rounded upward to the next 1/16th of 1%) of the rates of
interest per annum at which Dollar deposits in the approximate amount of the
Term Loan to be made or continued as, or converted into, a LIBO Rate Loan by the
Administrative Agent and having a maturity comparable to such Interest Period
would be offered to the Administrative Agent in the London interbank market at
its request at approximately 11:00 a.m. (London time) two Business Days prior to
the commencement of such Interest Period.
"LIBO Rate Loan" means a Term Loan bearing interest, at all times
during an Interest Period applicable to such Term Loan, at a fixed rate of
interest determined by reference to the LIBO Rate (Reserve Adjusted).
"LIBO Rate (Reserve Adjusted)" means, relative to any Term Loan to be
made, continued or maintained as, or converted into, a LIBO Rate Loan for any
Interest Period, the rate of interest per annum (rounded upwards to the next
1/100th of 1%) determined by the Administrative Agent as follows:
LIBO Rate = LIBO Rate
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate
Loans will be adjusted automatically as to all LIBO Rate Loans then outstanding
as of the effective date of any change in the LIBOR Reserve Percentage.
"LIBOR Office" means, relative to any Lender, the office of such Lender
designated as such in Schedule II hereto or designated in the Lender Assignment
Agreement or such other office of a Lender as shall be so designated from time
to time by notice from such Lender to the Borrower and the Administrative Agent,
whether or not outside the United States, which shall be making or maintaining
LIBO Rate Loans of such Lender hereunder.
"LIBOR Reserve Percentage" means, relative to any Interest Period for
LIBO Rate Loans, the reserve percentage (expressed as a decimal) equal to the
maximum aggregate reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
specified under regulations issued from time to time by the F.R.S. Board and
then applicable to assets or liabilities consisting of and including
"Eurocurrency Liabilities", as currently defined in Regulation D of the F.R.S.
Board, having a term approximately equal or comparable to such Interest Period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Loan Document" means this Agreement, the Term Notes, the Subsidiary
Guaranty, each Borrowing Request, the Fee Letter, and each other agreement,
document or instrument delivered
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in connection with this Agreement or any other Loan Document, whether or not
specifically mentioned herein or therein.
"Management Agreement" means the Management Agreement between the
Parent and WPN Corp., as in effect on the Closing Date.
"Margin Stock" has the meaning ascribed to such term in Regulation U of
the Federal Reserve Board or any regulation substituted therefor, as in effect
from time to time.
"Material Adverse Effect" means a material adverse effect on the
business, prospects, financial condition or results of operations of the
Borrower and its Subsidiaries, taken as a whole.
"Moody's" means Moody's Investors Service, Inc.
"Net Cash Proceeds" means with respect to any issuance or sale of
common stock of the Borrower, the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' fees, broker's commissions and
consultant and any other fees actually incurred in connection with such issuance
or sale.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (a) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (i) any Asset Sale (including dispositions
pursuant to sale and leaseback transactions) or (ii) the disposition of any
securities by such Person or any of its Restricted Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Restricted
Subsidiaries and (b) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Borrower or any of its Restricted Subsidiaries in respect of any Asset Sale
(including any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of (without duplication) (a) the
direct costs relating to such Asset Sale (including legal, accounting and
investment banking fees, sales commissions, recording fees, title transfer fees,
title insurance premiums, appraiser fees and costs incurred in connection with
preparing such asset for sale) and any relocation expenses incurred as a result
thereof, (b) taxes paid or estimated to be payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), (c) amounts required to be applied to the repayment of
Indebtedness (other than Permitted Working Capital Indebtedness) secured by a
Lien on the asset or assets that were the subject of such Asset Sale and (d) any
reserve established in accordance with GAAP or any amount placed in escrow, in
either case for adjustment in respect of the sale price of such asset or assets,
until such time as such reserve is reversed or such escrow arrangement is
terminated, in which case Net Proceeds shall include only the amount of the
reserve so reversed or the amount returned to the Borrower or its Restricted
Subsidiaries from such escrow arrangement, as the case may be.
"1997 Senior Note Indenture" means the Indenture, dated as of November
26, 1997, among the Borrower, the Subsidiary Guarantors, and Bank One, N.A., as
trustee, as the same
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may be amended, restated, amended and restated or otherwise modified form time
to time in accordance with the terms hereof and thereof.
"1997 Senior Note Offering" is defined in the second recital.
"1997 Senior Notes" means, collectively, the 9 1/4% Series A Senior
Notes due 2007 and the 9 1/4% Series B Senior Notes due 2007 of the Borrower
issued pursuant to the 1997 Senior Note Indenture, including any senior notes of
the Borrower with substantially identical terms exchanged therefor pursuant to a
registration statement under the Securities Act of 1933.
Non-Recourse Debt" means Indebtedness (i) as to which neither the
Borrower nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise) or (c) constitutes the lender, and (ii) with respect to which no
default (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Borrower or any of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity.
"Non-U.S. Lender" means any Lender (including each Assignee Lender)
that is not (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any state thereof, or (iii) an estate or trust that is subject
to U.S. Federal income taxation regardless of the source of its income.
"Obligations" means all obligations (monetary or otherwise) of the
Borrower and each other Obligor arising under or in connection with this
Agreement, the Term Notes, and each other Loan Document.
"Obligor" means the Borrower or any other Person (other than any Agent,
the Arranger, or any Lender) obligated under any Loan Document.
"OCC" means Ohio Coatings Company, a Ohio corporation, and its
successors and permitted assigns.
"Offering Memorandum" means the offering memorandum of the Borrower,
dated November 20, 1997, in connection with the offer and sale of the 1997
Senior Notes.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officer's Certificate" means a certificate signed on behalf of the
Borrower by the principal executive officer, the principal financial officer,
the treasurer or the principal accounting officer of the Borrower, that meets
the requirements of Section 5.1.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Administrative Agent that meets the requirements of
Section 5.9. The counsel may be an
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employee of or counsel to the Borrower, any Restricted Subsidiary of the
Borrower or the Administrative Agent.
"Organic Document" means, relative to any Obligor, its certificate of
incorporation, its by-laws and all shareholder agreements, voting trusts and
similar arrangements to which such Obligor is a party applicable to any of its
authorized shares of Capital Stock.
"Parent" means WHX Corporation, a Delaware corporation, and its
successors and permitted assigns.
"Participant" is defined in Section 10.11.2.
"PCC" means Pittsburgh-Canfield Corporation, a Pennsylvania
corporation, and its successors and permitted assigns.
"Percentage" means, relative to any Lender, the applicable percentage
relating to Term Loans, as set forth in Schedule II hereto or set forth in the
Lender Assignment Agreement as such percentage may be adjusted from time to time
pursuant to Lender Assignment Agreement(s) executed by such Lender and its
Assignee Lender(s) and delivered pursuant to Section 10.11.
"Permitted Investments" means (a) any Investment in the Borrower or in
a Wholly Owned Restricted Subsidiary of the Borrower, (b) any Investment in Cash
Equivalents, (c) any Investment by the Borrower or any Restricted Subsidiary of
the Borrower in a Person that is engaged in the same line of business as the
Borrower and its Restricted Subsidiaries were engaged in on the date of this
Agreement or a line of business or manufacturing or fabricating operation
reasonably related thereto (including any downstream steel manufacturing or
processing operation or manufacturing or fabricating operation in the
construction products business) if as a result of such Investment (i) such
Person becomes a Wholly Owned Restricted Subsidiary of the Borrower and a
Guarantor or (ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Borrower or a Wholly Owned Restricted Subsidiary of the
Borrower, (d) any Investment made as a result of the receipt of non-cash
consideration from (i) an Asset Sale that was made pursuant to and in compliance
with Section 7.2.6 or (ii) a disposition of assets that does not constitute an
Asset Sale, (e) any Investment acquired solely in exchange for Equity Interests
(other than Disqualified Stock) of the Borrower, (f) Investments existing as of
the date of this Agreement and (g) other Investments in any Person that is
engaged in the same line of business as the Borrower and its Restricted
Subsidiaries were engaged in on the date of this Agreement or a line of business
or manufacturing or fabricating operation reasonably related thereto (including
any downstream steel manufacturing or processing operation or manufacturing or
fabricating operation in the construction products business) which Investment
has a fair market value (as determined by a resolution of the Board of Directors
of the Borrower and set forth in an officer's certificate delivered to the
Administrative Agent), when taken together with all other investments made
pursuant to this clause (g) that are at the time outstanding, not to exceed
$10,000,000.
"Permitted Liens" means (a) Liens existing as of the date of this
Agreement; (b) Liens in favor of the Borrower and its Subsidiaries; (c) Liens on
property of a Person existing at the time such Person is merged into or
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consolidated with the Borrower or any Subsidiary of the Borrower, provided that
such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Borrower or any of its Restricted
Subsidiaries; (d) Liens on property existing at the time of acquisition thereof
by the Borrower or any Restricted Subsidiary of the Borrower, provided that such
Liens were in existence prior to the contemplation of such acquisition; (e)
pledges or deposits under workmen's compensation laws, unemployment insurance
laws or similar legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of Indebtedness) or leases to
which such Person is a party, or deposits to secure public statutory obligations
of such Person or deposits of cash or United States Government bonds to secure
surety or appeal bonds to which such Person is a party, or deposits as security
for contested taxes or import duties or for the payment of rent in each case
incurred in the ordinary course of business (f) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently pursued, provided that any reserve or other appropriate provision as
shall be required in conformity with GAAP shall have been made therefor, (g)
Liens incurred in the ordinary course of business of the Borrower or any
Restricted Subsidiary of the Borrower with respect to obligations that do not
exceed $10,000,000 at any one time outstanding and that (1) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (2) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Borrower or such
Restricted Subsidiary; (h) Liens securing Permitted Refinancing Indebtedness,
provided that the Borrower was permitted to incur such Liens with respect to the
Indebtedness so refinanced; and (i) minor encroachments, encumbrances, easements
or reservations of, or rights of others for, rights-of-way, sewers, electric
lines, telegraph and telephone lines and other similar purposes, or zoning or
other restrictions as to the use of real properties all of which do not
materially impair the value or utility for its intended purposes of the real
property to which they relate or Liens incidental to the conduct of the business
of such Person or to the ownership of its properties.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Borrower or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness (other than Indebtedness under the Revolving Credit
Facility) of the Borrower or any of its Restricted Subsidiaries; provided that
(a) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or accreted
value, if applicable), plus premium, if any, and accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith); (b)
such Permitted Refinancing Indebtedness has a final maturity date no earlier
than the final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (c) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Term Loans, such
Permitted Refinancing Indebtedness is subordinated in right of payment to the
Term Loans, on terms at least as favorable, taken as a whole, to the Lenders as
those contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded and such Indebtedness shall
not have any scheduled principal payment prior to the 91st day after the Final
Maturity Date and (d) such Indebtedness is incurred either by the Borrower or by
the Restricted Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; provided, however, that a
Restricted Subsidiary may guarantee Permitted Refinancing Indebtedness incurred
by the Borrower, whether or not such Restricted Subsidiary was an obligor or
guarantor
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of the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and provided, further, that if such Permitted Refinancing Indebtedness
is subordinated to the Term Loans, such guarantee shall be subordinated to such
Restricted Subsidiary's Subsidiary Guaranty to at least the same extent.
"Permitted Working Capital Indebtedness" means Indebtedness of the
Borrower and its Restricted Subsidiaries under the Revolving Credit Facility and
under any other agreement, instrument, facility or arrangement that is intended
to provide working capital financing or financing for general corporate purposes
(including any asset securitization facility involving the sale of accounts
receivable); provided that the aggregate outstanding amount of such Indebtedness
of the Borrower and its Restricted Subsidiaries, at the time of incurrence,
shall not exceed greater of (a) the sum of (i) 50% of the net aggregate book
value of all inventory of the Borrower and its Restricted Subsidiaries at such
time and (ii) 80% of the net aggregate book value of all accounts receivable
(net of bad debt expense) of the Borrower and its Restricted Subsidiaries at
such time and (b) $175,000,000.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Preferred Stock" means, as applied to the Equity Interests of any
corporation, stock of any class or classes (however designated) which is
preferred over shares of stock of any other class of such corporation as to the
distribution of assets on any voluntary or involuntary liquidation or
dissolution of such corporation or as to dividends.
"Public Equity Offering" means an underwritten offering of common stock
of the Borrower registered under of the Securities Act.
"Quarterly Payment Date" means the fifteenth day of each March, June,
September and December, or, if such day is not a Business Day, the next
succeeding Business Day, commencing with December 15, 1997.
"Receivables Facility" means the program for the issuance and placement
from time to time of trade receivable-backed adjustable rate securities, all as
contemplated by that certain Pooling and Servicing Agreement, dated as of August
1, 1994, between Wheeling-Pittsburgh Funding, Inc., WPSC, Bank One, Columbus,
N.A. and Wheeling-Pittsburgh Trade Receivable Master Trust and that certain
Receivables Purchase Agreement, dated as of August 1, 1994, between WPSC and
Wheeling-Pittsburgh Funding, Inc., as each may be amended, supplemented or
otherwise modified including any refunding, replacement or extension thereof.
"Replacement Assets" means (x) properties and assets (other than cash
or any Capital Stock or other security) that will be used in a business of the
Borrower and its Subsidiaries conducted on the date of this Agreement or in a
line of business or manufacturing or fabricating operation reasonably related
thereto (including any downstream steel processing or manufacturing operation or
manufacturing or fabricating operation in the construction products business) or
(y) Capital Stock of any Person that will become on the date of the acquisition
thereof a Wholly Owned Restricted Subsidiary of the Borrower as a result of such
acquisition.
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"Required Lenders" means, at any time, (i) prior to the Closing Date
hereunder, Lenders having at least 51% of the sum of the Term Loan Commitments
and (ii) on and after the Closing Date, Lenders holding at least 51% of the
principal amount of the Term Loans.
"Restricted Payment" is defined in Section 7.2.3.
"Restricted Subsidiary" of a Person means any Subsidiary of such Person
that is not an Unrestricted Subsidiary.
"Revolving Credit Facility" means the Second Amended and Restated
Credit Agreement, dated as of December 28, 1995, among WPSC, the lenders party
thereto and Citibank, N.A. as agent, as the same may be amended, supplemented or
otherwise modified including any refinancing, refunding, replacement or
extension thereof and whether by the same or any other lender or groups of
lenders.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Strike" is defined in Section 5.8.
"Subsidiary" means, with respect to any Person, (a) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (b) any partnership (i) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (ii)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantors" means, collectively, WPSC, PCC, WCP, Consumers
Mining Company, Wheeling-Empire Company, Mingo Oxygen Company, WP Steel Venture
Corporation, Champion Metal Products, Inc., and each other Subsidiary that
becomes (or is required pursuant to the terms of this Agreement to become) a
guarantor under the Subsidiary Guaranty.
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"Subsidiary Guaranty" means the Guaranty executed and delivered by an
Authorized Officer of each Subsidiary Guarantor pursuant to Section 5.3,
substantially in the form of Exhibit D attached hereto, as amended,
supplemented, amended and restated or otherwise modified from time to time.
"Syndication Agent" is defined in the preamble and includes each other
Person as shall have subsequently been appointed as the successor Syndication
Agent pursuant to Section 9.4.
"Tax Sharing Agreement" means the Tax Sharing Agreement between the
Borrower and the Parent as in effect on the Closing Date.
"Taxes" is defined in Section 4.6.
"Term Facility" is defined in the fourth recital.
"Term Loan" is defined in Section 2.1.1.
"Term Loan Commitment" is defined in Section 2.1.1.
"Term Loan Commitment Amount" means $75,000,000.
"Term Loan Commitment Termination Date" means the earliest of (i)
November 30, 1997, if the Term Loans have not been made on or prior to such
date, (ii) the Closing Date (immediately after the making of the Term Loans on
such date), and (iii) the date on which any Commitment Termination Event occurs.
"Term Note" means a promissory note of the Borrower payable to the
order of any Lender, in the form of Exhibit A hereto (as such promissory note
may be amended, endorsed or otherwise modified from time to time), evidencing
the aggregate Indebtedness of the Borrower to such Lender resulting from
outstanding Term Loans, and also means all other promissory notes accepted from
time to time in substitution therefor or renewal thereof.
"Transaction Documents" means the Revolving Credit Facility, the
Keepwell Agreement, the Management Agreement, each WHX Agreement, each agreement
pertaining to the Receivables Facility and the Letter of Credit Facility, the
Letter of Undertaking, the 1997 Senior Note Indenture, the 1997 Senior Notes and
all other agreements, documents, instruments, certificates, filings, consents,
approvals, board of directors resolutions and opinions furnished pursuant to or
in connection with the Existing Senior Note Defeasance and the transactions
contemplated hereby or thereby, each as amended, supplemented, amended and
restated or otherwise modified from time to time as permitted in accordance with
the terms hereof or of any other Loan Document.
"type" means, relative to any Term Loan, the portion thereof, if any,
being maintained as a Base Rate Loan or a LIBO Rate Loan.
"Unimast" means Unimast Incorporated, an Ohio corporation and its
successors and permitted assigns.
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"United States" or "U.S." means the United States of America, its fifty
states and the District of Columbia.
"Unrestricted Subsidiary" means any Subsidiary that is designated by
the Board of Directors of the Borrower as an Unrestricted Subsidiary pursuant to
a resolution of the Board of Directors of the Borrower, but only to the extent
that such Subsidiary (a) has no Indebtedness other than Non-Recourse Debt, (b)
is not party to any agreement, contract, arrangement or understanding with the
Borrower or any Restricted Subsidiary of the Borrower unless such agreement,
contract, arrangement or understanding does not violate the terms of Section
7.2.8, (c) is a Person with respect to which neither the Borrower nor any of its
Restricted Subsidiaries has any direct or indirect obligation (i) to subscribe
for additional Equity Interests or (ii) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results, in each case, except to the extent otherwise permitted by
this Agreement. Any such designation by the Board of Directors of the Borrower
shall be evidenced to the Administrative Agent by filing with the Administrative
Agent a certified copy of the resolution giving effect to such designation and
an officers' certificate certifying that such designation complied with the
foregoing conditions and was permitted under Section 7.2.3. If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Agreement and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Borrower as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 7.2.1, the Borrower shall be in default
of such covenant). The Board of Directors of the Borrower may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Borrower of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (A) such Indebtedness is permitted under the covenant described
under Section 7.2.1, hereof, calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period,
and (B) no Default or Event of Default would be in existence following such
designation.
"U.S. Government Obligations" means direct, fixed-rate obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged, which are not callable and which mature (or may be put to the issuer
by the holder at no less than par) no later than the Final Maturity Date of the
Term Loans.
"WCP" means Wheeling Construction Products, Inc., a Delaware
corporation and its successors and permitted assigns.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
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"Wheeling-Nisshin" means Wheeling-Nisshin, Inc., a Delaware corporation
and its successors and permitted assigns..
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person.
"WPSC" means Wheeling-Pittsburgh Steel Corporation, a Delaware
corporation.
"WHX Agreements" mean (i) the Intercreditor Agreement and (ii) the Tax
Sharing Agreement, in each case as in effect on the date of this Agreement.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each other Loan Document, notice and other communication delivered from time to
time in connection with this Agreement or any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified, references
in this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder shall be made, and all financial statements required to be delivered
hereunder or thereunder shall be prepared in accordance with, GAAP and, unless
otherwise expressly provided herein, shall be computed or determined on a
consolidated basis and without duplication.
SECTION 1.5. Officers' Certificates and Opinions. Every Officers'
Certificate or Opinion of Counsel with respect to compliance with a condition or
covenant provided for in this Agreement or any other Loan Document shall be
addressed to the Administrative Agent and each of the Lenders and shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinion
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
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(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Absent any actual knowledge to the contrary, the Administrative Agent may rely
on any such certificate without further inquiry.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND TERM NOTES
SECTION 2.1. Commitments. On the terms and subject to the conditions of
this Agreement (including Article V), each Lender severally agrees to make Term
Loans pursuant to the Term Loan Commitments described in this Section.
SECTION 2.1.1. Term Loan Commitments. In a single Borrowing on the
Closing Date, which shall be a Business Day occurring prior to the Term Loan
Commitment Termination Date, each Lender will make loans (relative to such
Lender, its "Term Loans") to the Borrower equal to such Lender's Percentage of
the aggregate amount of the Borrowing of Term Loans requested by the Borrower to
be made on such day with the commitment of each such Lender to make the Term
Loans described in this Section referred to as its "Term Loan Commitment". No
amounts paid or prepaid with respect to any Term Loans may be reborrowed.
SECTION 2.1.2. Lenders Not Permitted or Required to Make the Term
Loans. No Lender shall be permitted or required to, and the Borrower shall not
request any Lender to, make any Term Loan on the Closing Date if, after giving
effect thereto, the aggregate original principal amount of all the Term Loans
(a) of all Lenders would exceed the Term Loan Commitment
Amount; or
(b) of such Lender would exceed such Lender's Percentage of
the Term Loan Commitment Amount.
SECTION 2.2. Borrowing Procedures and Funding Maintenance. By
delivering a Borrowing Request to the Administrative Agent on or before 10:00
a.m. (New York City time) on a Business Day, the Borrower may request, on not
less than one Business Day's notice (in the case of Base Rate Loans) or three
Business Days' notice (in the case of LIBO Rate Loans), that a Borrowing be made
on the Closing Date. On the terms and subject to the conditions of this
Agreement, each Borrowing shall be comprised of the type of Term Loans, and
shall be made on the Business Day, specified in such Borrowing Request. On or
before 11:00 a.m. (New York City time) on such Business Day each Lender shall
deposit with the Administrative Agent same day funds in an amount equal to such
Lender's Percentage of the requested Borrowing. Such deposit will be made to an
account which the Administrative Agent shall specify from time to time by notice
to the Lenders. To the extent funds are received from the Lenders, the
Administrative Agent shall make such funds available to the Borrower by wire
transfer to the accounts the Borrower shall have specified in its Borrowing
Request. No Lender's obligation to make any Term Loan shall be affected by any
other Lender's failure to make any Term Loan.
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SECTION 2.3. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Administrative Agent on or before 10:00
a.m. (New York City time) on a Business Day, the Borrower may from time to time
irrevocably elect, on not less than one Business Day's notice (in the case of a
conversion of LIBO Rate Loans to Base Rate Loans) or three Business Days' notice
(in the case of a continuation of LIBO Rate Loans or a conversion of Base Rate
Loans into LIBO Rate Loans) nor more than five Business Days' notice that all,
or any portion in a minimum amount of $5,000,000 or any larger integral multiple
of $1,000,000, be, in the case of Base Rate Loans, converted into LIBO Rate
Loans or a minimum amount of $5,000,000 or any larger integral multiple of
$1,000,000, in the case of LIBO Rate Loans, converted into Base Rate Loans or
continued as LIBO Rate Loans (in the absence of delivery of a
Continuation/Conversion Notice with respect to any LIBO Rate Loan at least three
Business Days before the last day of the then current Interest Period with
respect thereto, such LIBO Rate Loan shall, on such last day, automatically
convert to a Base Rate Loan); provided, however, that (x) each such conversion
or continuation shall be pro rated among the applicable outstanding Term Loans
of all Lenders, and (y) no portion of the outstanding principal amount of any
Term Loans may be continued as, or be converted into, LIBO Rate Loans when any
Default has occurred and is continuing.
SECTION 2.4. Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing one
of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan; provided,
however, that such LIBO Rate Loan shall nonetheless be deemed to have been made
and to be held by such Lender, and the obligation of the Borrower to repay such
LIBO Rate Loan shall nevertheless be to such Lender for the account of such
foreign branch, Affiliate or international banking facility. In addition, the
Borrower hereby consents and agrees that, for purposes of any determination to
be made for purposes of Section 4.1, 4.2, 4.3 or 4.4, it shall be conclusively
assumed that each Lender elected to fund all LIBO Rate Loans by purchasing
Dollar deposits in its LIBOR Office's interbank eurodollar market.
SECTION 2.5. Term Notes. Each Lender's Term Loans under its Term Loan
Commitment shall be evidenced by a Term Note payable to the order of such Lender
in a maximum principal amount equal to such Lender's Percentage of the original
Term Loan Commitment Amount. The Borrower hereby irrevocably authorizes each
Lender to make (or cause to be made) appropriate notations on the grid attached
to such Lender's Term Note (or on any continuation of such grid), which
notations, if made, shall evidence, inter alia, the date of, the outstanding
principal amount of, and the interest rate and Interest Period applicable to the
Term Loans evidenced thereby. Such notations shall be conclusive and binding on
the Borrower absent manifest error; provided, however, that the failure of any
Lender to make any such notations shall not limit or otherwise affect any
Obligations of the Borrower or any other Obligor.
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ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments; Application.
SECTION 3.1.1. Repayments and Prepayments. The Borrower shall repay in
full the unpaid principal amount of each Term Loan upon the Final Maturity Date
therefor. Prior thereto, the Borrower that:
(a) may, from time to time on any Business Day occurring after
November 15, 1998 (it being acknowledged and agreed that the Borrower
shall not have the right, directly or indirectly, to voluntarily prepay
the Term Loans prior to November 15, 1998), make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of
any Term Loans; provided, however, that
(i) any such prepayment shall be made pro rata among
Term Loans of the same type and, if applicable, having the
same Interest Period of all Lenders;
(ii) the Borrower shall comply with Section 4.4 in
the event that any LIBO Rate Loan is prepaid on any day other
than the last day of the Interest Period for such Term Loan;
(iii) all such voluntary prepayments shall require at
least one Business Day's notice in the case of Base Rate Loans
and three Business Days' notice in the case of LIBO Rate
Loans, but no more than five Business Days' notice, in each
case in writing to the Administrative Agent;
(iv) all such voluntary partial prepayments shall be,
in the case of LIBO Rate Loans, in an aggregate minimum amount
of $5,000,000 or any larger integral multiple of $1,000,000
and, in the case of Base Rate Loans, in an aggregate minimum
amount of $5,000,000 or any larger integral multiple of
$1,000,000 or in the aggregate principal amount of all Term
Loans of the type then outstanding; and
(v) any voluntary prepayment of Term Loans made prior
to November 15, 2000 shall be subject to the payment of a
premium, as set forth below:
(A) 2.0% of the principal amount of Term
Loans prepaid pursuant to this clause (a) of this
Section on and subsequent to November 15, 1998 and
prior to November 15, 1999; and
(B) 1.0% of the principal amount of Term
Loans prepaid pursuant to this clause (a) of this
Section on and subsequent to November 15, 1999 and
prior to November 15, 2000;
(b) may, notwithstanding the provisions of clause (a) of this
Section, from time to time on any Business Day prior to or on November
15, 1998, make a voluntary prepayment of up to 35% of the outstanding
principal amount of all Term Loans with net
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cash proceeds of one or more Public Equity Offerings at 109.25% of the
principal amount thereof, plus accrued and unpaid interest and
prepayment premium, if any, thereon to the date of such prepayment;
provided, however, that (i) immediately after giving effect to such
prepayment, at least 65% of the aggregate original principal amount of
Term Loans shall remain outstanding and (ii) such prepayment shall
occur no later than 30 days following the date of the consummation of
such Public Equity Offering;
(c) shall, no later than 30 days from any date on which the
aggregate amount of Excess Proceeds from Asset Sales not used to reduce
Indebtedness or acquire Replacement Assets pursuant to Section 7.2.6
exceeds $20,000,000, apply (subject to Section 3.1.2), the Asset Sale
Amount to prepay the Term Loans;
(d) shall, subject to Section 3.1.2, on each Change of Control
Prepayment Date, make a mandatory prepayment of the Term Loans in
connection with the occurrence of any Change of Control Prepayment
Event in the principal amount required to be prepaid in respect of such
Change of Control Prepayment Event; and
(e) shall, immediately upon the acceleration of the Final
Maturity Date of any Term Loans pursuant to Section 8.2, repay all
outstanding Term Loans, unless, pursuant to Section 8.2, only a portion
of all Term Loans are so accelerated (in which case the portion so
accelerated shall be so prepaid).
Each prepayment of any Term Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by clauses (a)(v), (b) and (d) of
this Section and/or Section 4.4.
SECTION 3.1.2. Application. Amounts prepaid and repaid shall be applied
as set forth in this Section.
(a) Each prepayment or repayment of principal of the Term
Loans shall be applied, to the extent of such prepayment or repayment,
first, to the principal amount thereof being maintained as Base Rate
Loans, and second, to the principal amount thereof being maintained as
LIBO Rate Loans.
(b) Each prepayment of Term Loans made pursuant to clause (d)
of Section 3.1.1 (a "Change of Control Prepayment Event") shall be
applied to all or any portion (in an integral multiple of $1,000,000)
of such Lender's Term Loans at a cash price equal to 101% of the
principal amount of such Lender's Term Loans, plus accrued and unpaid
interest and prepayment premium, if any, thereon to the date of
prepayment (the "Change of Control Prepayment Price").
(c) Each Lender will have the right to refuse any prepayment
of Term Loans made pursuant to clauses (c) or (d) of Section 3.1.1 by
giving written notice of such refusal to the Administrative Agent
(which the Administrative Agent shall promptly deliver to the Borrower)
no later than the close of business on the second Business Day
preceding the Asset Sale Prepayment Date or Change of Control
Prepayment Date, as the case may be (and unless such notice is received
by the Administrative Agent, each Lender will be required to have its
Term Loans prepaid, and the Borrower's obligation to prepay
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such Lender's Term Loans shall be discharged with the
Administrative Agent's delivery of such notice to the Borrower).
SECTION 3.2. Interest Provisions. Interest on the outstanding principal
amount of the Term Loans shall accrue and be payable in accordance with this
Section.
SECTION 3.2.1. Rates. Each Base Rate Loan shall accrue interest on the
unpaid principal amount thereof for each day from and including the day upon
which such was made or converted to a Base Rate Loan to but excluding the date
such Term Loan is repaid or converted to a LIBO Rate Loan at a rate per annum
equal to the sum of the Alternate Base Rate for such day plus the Applicable
Margin for such Term Loan on such day. Each LIBO Rate Loan shall accrue interest
on the unpaid principal amount thereof for each day during each Interest Period
applicable thereto at a rate per annum equal to the sum of the LIBO Rate
(Reserve Adjusted) for such Interest Period plus the Applicable Margin for such
Term Loan on such day. All LIBO Rate Loans shall bear interest from and
including the first day of the applicable Interest Period to (but not including)
the last day of such Interest Period at the interest rate determined as
applicable to such LIBO Rate Loan.
SECTION 3.2.2. Post-Maturity Rates. After the date any principal amount
of any Term Loan is due and payable (whether on the Final Maturity Date, upon
acceleration or otherwise), or after any other monetary Obligation of the
Borrower shall have become due and payable, the Borrower shall pay, but only to
the extent permitted by law, interest (after as well as before judgment) on such
amounts at a rate per annum equal to the rate that would otherwise have been
applicable to Base Rate Loans plus 2%.
SECTION 3.2.3. Payment Dates. Interest accrued on each Term Loan shall
be payable, without duplication:
(a) on the Final Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole or in
part, of principal outstanding on such Term Loan;
(c) with respect to Base Rate Loans, on each Quarterly Payment
Date occurring after the Closing Date;
(d) with respect to LIBO Rate Loans, on the last day of each
applicable Interest Period (and, if such Interest Period shall exceed
three months, at intervals of three months after the first day of such
Interest Period);
(e) with respect to the principal amount of any Base Rate
Loans converted into LIBO Rate Loans on a day when interest would not
otherwise have been payable pursuant to clause (c), on the date of such
conversion; and
(f) on that portion of any Term Loans the Final Maturity Date
of which is accelerated pursuant to Section 8.2, immediately upon such
acceleration.
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Interest accrued on Term Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Final Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.3. Fees. The Borrower agrees to pay the fees set forth in
this Section. All such fees shall be non-refundable.
SECTION 3.3.1. Arrangement, Structuring and Commitment Fees. In
accordance with the Fee Letter, the Borrower shall pay on the Effective Date to
each of the Arranger and the Syndication Agent and the Documentation Agent for
its account their applicable portion of the arrangement and structuring fee
referred to therein and, for the account of the Arranger, the commitment fee
referred to therein.
SECTION 3.3.2. Administrative Agent Fee. The Borrower agrees to pay an
annual administration fee to the Administrative Agent, for its own account, in
the amounts mutually agreed to between the Borrower and the Administrative
Agent, payable in advance on the Closing Date and annually thereafter.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. LIBO Rate Lending Unlawful. If any Lender shall determine
(which determination shall, upon notice thereof to the Borrower and the Lenders,
be conclusive and binding on the Borrower) that the introduction of or any
change in or in the interpretation of any law makes it unlawful, or any central
bank or other governmental authority asserts that it is unlawful, for such
Lender to make, continue or maintain any Term Loan as, or to convert any Term
Loan into, a LIBO Rate Loan of a certain type, the obligations of all Lenders to
make, continue, maintain or convert any such Term Loans shall, upon such
determination, forthwith be suspended until such Lender shall notify the
Administrative Agent that the circumstances causing such suspension no longer
exist, and all LIBO Rate Loans of such type shall automatically convert into
Base Rate Loans at the end of the then current Interest Periods with respect
thereto or sooner, if required by such law or assertion.
SECTION 4.2. Deposits Unavailable. If the Administrative Agent shall
have determined that (i) Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to the Administrative Agent in its
relevant market, or (ii) by reason of circumstances affecting the Administrative
Agent's relevant market, adequate means do not exist for ascertaining the
interest rate applicable hereunder to LIBO Rate Loans, then, upon notice from
the Administrative Agent to the Borrower and the Lenders, the obligations of all
Lenders under Section 2.3 and Section 2.4 to make or continue any Term Loans as,
or to convert any Term Loans into, LIBO Rate Loans shall forthwith be suspended
until the Administrative Agent shall notify the Borrower and the Lenders that
the circumstances causing such suspension no longer exist.
SECTION 4.3. Increased LIBO Rate Loan Costs, etc. The Borrower agrees
to reimburse each Lender for any actual increase to such Lender in the cost to
such Lender of, or any reduction in the amount of any sum receivable by such
Lender in respect of, making, continuing or
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maintaining (or of its obligation to make, continue or maintain) any Term Loans
as, or of converting (or of its obligation to convert) any Term Loans into, LIBO
Rate Loans. Such Lender shall promptly notify the Administrative Agent and the
Borrower in writing of the occurrence of any such event, such notice to state,
in reasonable detail, the reasons therefor and the additional amount required
fully to compensate such Lender for such increased cost or reduced amount. Such
additional amounts shall be payable by the Borrower directly to such Lender
within five days of its receipt of such notice, and such notice shall, in the
absence of manifest error, be conclusive and binding on the Borrower.
SECTION 4.4. Funding Losses. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Term
Loan as, or to convert any portion of the principal amount of any Term Loan
into, a LIBO Rate Loan) as a result of (i) any conversion or repayment or
prepayment of the principal amount of any LIBO Rate Loans on a date other than
the scheduled last day of the Interest Period applicable thereto, whether
pursuant to Section 3.1 or otherwise, (ii) Borrower's failure to borrow any Term
Loans as LIBO Rate Loans in accordance with the Borrowing Request therefor, or
(iii) Borrower's failure to continue, or to convert Base Rate Loans into LIBO
Rate Loans in accordance with the Continuation/Conversion Notice therefor, then,
upon the written notice of such Lender to the Borrower (with a copy to the
Administrative Agent), the Borrower shall, within five days of its receipt
thereof, pay directly to such Lender such amount as will (in the reasonable
determination of such Lender) reimburse such Lender for such loss or expense.
Such written notice (which shall include calculations in reasonable detail)
shall, in the absence of manifest error, be conclusive and binding on the
Borrower.
SECTION 4.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects or would affect the amount of capital
required or expected to be maintained by any Lender or any Person controlling
such Lender, and such Lender determines (in its sole and absolute discretion)
that the rate of return on its or such controlling Person's capital as a
consequence of its Term Loan Commitment or the Term Loans made by such Lender is
reduced to a level below that which such Lender or such controlling Person could
have achieved but for the occurrence of any such circumstance, then, in any such
case upon notice from time to time by such Lender to the Borrower, the Borrower
shall immediately pay directly to such Lender additional amounts sufficient to
compensate such Lender or such controlling Person for such reduction in rate of
return. A certificate of such Lender as to any such additional amount or amounts
(including calculations thereof in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on the Borrower. In determining such
amount, such Lender may use any method of averaging and attribution that it (in
its sole and absolute discretion) shall deem applicable.
SECTION 4.6. Taxes. All payments by the Borrower of principal of, and
interest on, the Term Loans and all other amounts payable hereunder shall be
made free and clear of and without deduction for any present or future income,
excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding franchise taxes and taxes imposed on or measured by any Lender's net
income or receipts (such non-excluded items being called "Taxes"). In the event
that any withholding or
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deduction from any payment to be made by the Borrower hereunder is required in
respect of any Taxes pursuant to any applicable law, rule or regulation, then
the Borrower will
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Administrative Agent an official
receipt or other documentation satisfactory to the Administrative Agent
evidencing such payment to such authority; and
(c) pay to the Administrative Agent for the account of the
Lenders such additional amount or amounts as is necessary to ensure
that the net amount actually received by each Lender will equal the
full amount such Lender would have received had no such withholding or
deduction been required.
Moreover, if any Taxes are directly asserted against the Administrative Agent or
any Lender with respect to any payment received by the Administrative Agent or
such Lender hereunder, the Administrative Agent or such Lender may pay such
Taxes and the Borrower will promptly pay such additional amounts (including any
penalties, interest or expenses) as is necessary in order that the net amount
received by such person after the payment of such Taxes (including any Taxes on
such additional amount) shall equal the amount such person would have received
had not such Taxes been asserted.
If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent, for the account
of the respective Lenders, the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result of any
such failure. For purposes of this Section, a distribution hereunder by the
Administrative Agent or any Lender to or for the account of any Lender shall be
deemed a payment by the Borrower.
Upon the request of the Borrower or the Administrative Agent, each
Lender that is organized under the laws of a jurisdiction other than the United
States shall, prior to the due date of any payments under the Term Notes,
execute and deliver to the Borrower and the Administrative Agent, on or about
the first scheduled payment date in each Fiscal Year, one or more (as the
Borrower or the Administrative Agent may reasonably request) United States
Internal Revenue Service Forms 4224 or Forms 1001 or such other forms or
documents (or successor forms or documents), appropriately completed, as may be
applicable to establish the extent, if any, to which a payment to such Lender is
exempt from withholding or deduction of Taxes.
SECTION 4.7. Payments, Computations, etc. Unless otherwise expressly
provided, all payments by or on behalf of the Borrower pursuant to this
Agreement, the Term Notes or any other Loan Document shall be made by the
Borrower to the Administrative Agent for the pro rata account of the Lenders,
Agents or Arranger, as applicable, entitled to receive such payment. All such
payments required to be made to the Administrative Agent shall be made, without
setoff, deduction or counterclaim, not later than 11:00 a.m. (New York City
time) on the date due, in same day or immediately available funds, to such
account as the Administrative Agent shall specify from time to time by notice to
the Borrower. Funds received after that time shall be
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deemed to have been received by the Administrative Agent on the next succeeding
Business Day. The Administrative Agent shall promptly remit in same day funds to
each Lender, Agent or Arranger, as the case may be, its share, if any, of such
payments received by the Administrative Agent for the account of such Lender,
Agent or Arranger, as the case may be. All interest and fees shall be computed
on the basis of the actual number of days (including the first day but excluding
the last day) occurring during the period for which such interest or fee is
payable over a year comprised of 360 days (or, in the case of interest on a Base
Rate Loan that is not calculated at the Federal Funds Rate, 365 days or, if
appropriate, 366 days). Whenever any payment to be made shall otherwise be due
on a day which is not a Business Day, such payment shall (except as otherwise
required by clause (i) of the definition of the term "Interest Period" with
respect to LIBO Rate Loans) be made on the next succeeding Business Day and such
extension of time shall be included in computing interest and fees, if any, in
connection with such payment.
SECTION 4.8. Sharing of Payments. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Term Loan (other than pursuant to the
terms of Sections 4.3, 4.4 and 4.5) in excess of its pro rata share of payments
then or therewith obtained by all Lenders entitled thereto, such Lender shall
purchase from the other Lenders such participations in the Term Loans made by
them as shall be necessary to cause such purchasing Lender to share the excess
payment or other recovery ratably with each of them; provided, however, that if
all or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing Lender, the purchase shall be rescinded and each
Lender which has sold a participation to the purchasing Lender shall repay to
the purchasing Lender the purchase price to the ratable extent of such recovery
together with an amount equal to such selling Lender's ratable share (according
to the proportion of (i) the amount of such selling Lender's required repayment
to the purchasing Lender in respect of such recovery, to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section may, to the fullest extent permitted by law,
exercise all its rights of payment (including pursuant to Section 4.9) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section applies, such Lender
shall, to the extent practicable, exercise its rights in respect of such secured
claim in a manner consistent with the rights of the Lenders entitled under this
Section to share in the benefits of any recovery on such secured claim.
SECTION 4.9. Setoff. Each Lender shall, upon the occurrence of any
Event of Default described in Section 8.1.8 or, with the consent of the Required
Lenders, upon the occurrence of any other Event of Default, to the fullest
extent permitted by law, have the right to appropriate and apply to the payment
of the Obligations then owing to it (whether or not then due), and (as security
for such Obligations) the Borrower hereby grants to each Lender a continuing
security interest in, any and all balances, credits, deposits, accounts or
moneys of the Borrower then or thereafter maintained with or otherwise held by
such Lender; provided, however, that any such appropriation and application
shall be subject to the provisions of Section 4.8. Each Lender agrees promptly
to notify the Borrower and the Administrative Agent after any such setoff and
application made by such Lender; provided, however, that the failure to give
such notice shall not affect the validity of such setoff and application. The
rights of each Lender under this
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Section are in addition to other rights and remedies (including other rights of
setoff under applicable law or otherwise) which such Lender may have.
ARTICLE V
CONDITIONS TO TERM LOANS
The obligation of each Lender to fund its Term Loans shall be subject
to the prior or concurrent satisfaction of each of the conditions precedent set
forth in this Article V.
SECTION 5.1. Resolutions, etc. The Arranger, the Syndication Agent and
the Administrative Agent shall have received from each Obligor a certificate,
dated the Closing Date, of its Secretary or Assistant Secretary as to (i)
resolutions of its Board of Directors then in full force and effect authorizing
the execution, delivery and performance of each Loan Document to be executed by
it, and (ii) the incumbency and signatures of those of its officers authorized
to act with respect to each Loan Document executed by it, upon which certificate
each Agent and each Lender may conclusively rely until it shall have received a
further certificate of the Secretary or Assistant Secretary of such Obligor
canceling or amending such prior certificate.
SECTION 5.2. Delivery of Term Note. Each Lender shall have received its
Term Note duly executed and delivered by the Borrower.
SECTION 5.3. Subsidiary Guaranty. The Syndication Agent shall have
received the Subsidiary Guaranty, dated the date hereof, duly executed by each
Subsidiary Guarantor.
SECTION 5.4. Closing Date Certificate; Transaction Documents. The
Arranger, the Syndication Agent and the Documentation Agent shall have received,
with counterparts for each Lender, the Closing Date Certificate, substantially
in the form of Exhibit E hereto, dated the date hereof and duly executed and
delivered by the chief executive or financial (or equivalent) Authorized Officer
of the Borrower, in which certificate the Borrower shall agree and acknowledge
that the statements made therein shall be deemed to be true and correct
representations and warranties of the Borrower made as of such date under this
Agreement, and, at the time such certificate is delivered, such statements shall
in fact be true and correct, and which shall have attached thereto fully
executed versions of all other Transaction Documents, certified to be true and
complete copies thereof by an Authorized Officer of the Borrower, and the Agents
shall be satisfied with the terms of all such agreements and documents.
SECTION 5.5. Existing Senior Note Defeasance. The Arranger, the
Syndication Agent and the Documentation Agent shall have received evidence
satisfactory to each of them that the Existing Senior Note Defeasance has
occurred (or contemporaneously with the initial Borrowing, will occur) in
accordance with the terms of the Existing Senior Note Indenture.
SECTION 5.6. Issuance of the 1997 Senior Notes. The Arranger, the
Syndication Agent and the Documentation Agent shall have received evidence
satisfactory to each of them that the Borrower shall have received (or
contemporaneously with the initial Borrowing, will receive) gross proceeds from
the issuance of the 1997 Senior Notes which, when added to the aggregate
principal amount of Term Loans to be borrowed hereunder, does not exceed
$350,000,000, and
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the Arranger, the Syndication Agent and the Documentation Agent shall be
satisfied with all terms and provisions of all documentation relating to such
1997 Senior Notes.
SECTION 5.7. Litigation. There shall exist no pending or threatened
material litigation, proceedings or investigations which could reasonably be
expected to have a Material Adverse Effect.
SECTION 5.8. Material Adverse Change. Other than the ten-month strike
against the Borrower which commenced October 1, 1996 and was settled August 12,
1997 (the "Strike") and losses relating to the resumption of operations at
pre-Strike levels as disclosed in the Offering Memorandum, since December 31,
1996, there shall not have occurred or arisen any event or condition which has
had or is reasonably likely to have a Material Adverse Effect.
SECTION 5.9. Opinions of Counsel. The Syndication Agent, the
Administrative Agent and the Documentation Agent shall have received opinions,
dated the Closing Date and addressed to the Agents and all Lenders, from (i)
Olshan Grundman Frome & Rosenzweig, LLP, special New York counsel for the
Obligors, in substantially the form of Exhibit G-1, (ii) Kirkpatrick & Lockhart,
special Pennsylvania counsel to the Obligors, in substantially the form of
Exhibit G-2 and (iii) Vorys, Sater, Seymour and Pease, special Ohio counsel to
the Obligors, in substantially the form of Exhibit G-3.
SECTION 5.10. Closing Fees, Expenses, etc. The Agents and the Arranger
shall have received, each for their own respective accounts (including in their
capacity as a Lender), as the case may be, all fees, costs and expenses due and
payable pursuant to Section 3.3).
SECTION 5.11. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any of the
Subsidiaries or any other Obligors shall be reasonably satisfactory in form and
substance to the Arranger, the Syndication Agent and the Documentation Agent and
their counsel; the Arranger, the Syndication Agent and the Documentation Agent
and their counsel shall have received all information, approvals, opinions,
documents or instruments as the Arranger, the Syndication Agent and the
Documentation Agent or their counsel may reasonably request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agents to enter into this
Agreement and to make the Term Loans hereunder, the Borrower represents and
warrants unto the Agents and each Lender as set forth in this Article VI.
SECTION 6.1. Organization; Due Authorization, etc.
(a) Each of the Borrower and its Subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation and has the corporate power and
authority to carry on its business as conducted on the Closing Date and to own,
lease and operate its properties, and each is duly qualified or licensed and is
in good standing as a foreign corporation authorized to do business in each
jurisdiction in which the
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nature of its business or its ownership or leasing of property requires such
qualification or license, except where the failure to be so qualified or
licensed would not have a Material Adverse Effect.
(b) The execution, delivery and performance by the Borrower of this
Agreement and each other Loan Document executed or to be executed by it, the
execution, delivery and performance by each other Obligor of each Loan Document
executed or to be executed by it, the Borrower's and each such other Obligor's
participation in the consummation of all aspects of the transactions
contemplated hereby and thereby, and the execution, delivery and performance by
the Borrower of the agreements executed and delivered in connection with such
transactions are in each case within each such Person's corporate powers and
have been duly authorized by all necessary corporate action.
(c) This Agreement and each other Loan Document has been duly executed
and delivered by the Borrower and each other Obligor, as applicable.
SECTION 6.2. Capital Stock of the Borrower. All outstanding shares of
Capital Stock of the Borrower have been duly authorized and validly issued and
are fully paid, non-assessable and not subject to any preemptive or similar
rights.
SECTION 6.3. Subsidiaries. The entities listed in Item 6.3(a)
("Subsidiaries") of the Disclosure Schedule are the only Subsidiaries of the
Borrower as of the Closing Date. All of the outstanding shares of capital stock
of each of the Borrower's Subsidiaries have been duly authorized and validly
issued and are fully paid and non-assessable, and are owned by the Borrower,
directly or indirectly through one or more Subsidiaries, free and clear of any
Lien, except as set forth in a footnote to Item 6.3(a) ("Subsidiaries") of the
Disclosure Schedule. The entities listed in such Item 6.3(a) are the only other
entities in which the Borrower has a direct or indirect equity interest as of
the Closing Date. The number of shares or other equity interests owned by the
Borrower representing the percentage interests each as listed across from each
entity on the Disclosure Schedule have been duly authorized and validly issued
and are fully paid and non-assessable, and are owned by the Borrower, directly
or indirectly, through one or more Subsidiaries free and clear of any Liens.
SECTION 6.4. No Conflicts.
(a) Neither the Borrower nor any of its Subsidiaries is in violation of
its respective charter or bylaws or in default in the performance of any
obligation, agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Borrower and its Subsidiaries, taken as a whole, (i) to which the Borrower
or any of its subsidiaries is a party or (ii) by which the Borrower or any of
its Subsidiaries or their respective property is bound.
(b) The execution, delivery and performance by the Borrower of this
Agreement, the Term Notes and each other Loan Document to which it is a party
and by each Subsidiary Guarantor of the Subsidiary Guaranty and each other Loan
Document to which it is a party , and the consummation of the transactions
contemplated herein and therein, do not and will not (i) require any consent,
approval, authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states), (ii) conflict with or constitute a
breach of any of the terms or
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provisions of, or a default under, the charter or bylaws of the Borrower or any
of its Subsidiaries or any indenture, loan agreement, mortgage, lease or other
agreement or instrument that is material to the Borrower and its Subsidiaries,
taken as a whole, to which the Borrower or any of its Subsidiaries is a party or
by which the Borrower or any of its Subsidiaries or their respective property is
bound, (iii) violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental body or
agency having jurisdiction over the Borrower, any of its Subsidiaries or their
respective property, (iv) result in the imposition or creation of (or the
obligation to create or impose) a Lien under, any agreement or instrument to
which the Borrower or any of its Subsidiaries is a party or by which the
Borrower or any of its Subsidiaries or their respective property is bound, or
(v) result in the termination, suspension or revocation of any Authorization (as
defined below) of the Borrower or any of its Subsidiaries or result in any other
impairment of the rights of the holder of any such Authorization.
SECTION 6.5. Validity and Binding Effect. This Agreement, the Term
Notes and each other Loan Document, when duly executed and delivered, will be
legal, valid and binding obligations of the Borrower and each Subsidiary party
thereto, as applicable, enforceable against the Borrower and each such
Subsidiary in accordance with their respective terms except as (i) the
enforceability thereof may be limited by the effect of applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) rights
of acceleration, if applicable, and the availability of equitable or other
remedies may be limited by equitable principles of general applicability.
SECTION 6.6. Tax Sharing Agreement, etc. The Tax Sharing Agreement has
been duly authorized by the Borrower and has been duly executed and delivered by
the Borrower. The Tax Sharing Agreement is a valid and binding agreement of the
Borrower, enforceable against the Borrower in accordance with its terms except
as (i) the enforceability thereof may be limited by the effect of applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration, if applicable, and the availability of equitable or
other remedies may be limited by equitable principles of general applicability.
The Intercreditor Agreement has been duly authorized by the Borrower and WPSC
and has been duly executed and delivered by the Borrower and WPSC. The
Intercreditor Agreement is a valid and binding agreement of the Borrower and
WPSC, enforceable against the Borrower and WPSC in accordance with its terms
except as (i) the enforceability thereof may be limited by the effect of
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration, if applicable, and the availability
of equitable or other remedies may be limited by equitable principles of general
applicability.
SECTION 6.7. Litigation. As of the date hereof, except as disclosed in
the Offering Memorandum, there are no legal or governmental proceedings pending
or to the best of the Borrower's knowledge, threatened to which the Borrower or
any of its Subsidiaries is or could be a party or to which any of their
respective property is or could be subject, which might result, singly or in the
aggregate, in a Material Adverse Effect.
SECTION 6.8. Environmental Laws and ERISA.
(a) Except as disclosed in the Offering Memorandum, neither the
Borrower nor any of its Subsidiaries has violated any foreign, federal, state or
local law or regulation relating to the protection of human health and safety,
the environment or hazardous or toxic substances or
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wastes, pollutants or contaminants ("Environmental Laws") or any provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
the rules and regulations promulgated thereunder, except for such violations
which would not have a Material Adverse Effect.
(b) Except as disclosed in the Offering Memorandum, there are no costs
or liabilities associated with Environmental Laws (including any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any Authorization, any related constraints
on operating activities and any potential liabilities to third parties) which
would, singly or in the aggregate, have a Material Adverse Effect.
(c) Each of the Borrower and its Restricted Subsidiaries has such
permits, licenses, consents, exemptions, franchises, authorizations and other
approvals (each, an "Authorization") of, and has made all filings with and
notices to, all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including without limitation,
under any applicable Environmental Laws, as are necessary to own, lease, license
and operate its respective properties and to conduct its business, except where
the failure to have any such Authorization or to make any such filing or notice
would not, singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and each of the Borrower and
its Subsidiaries is in compliance with all the terms and conditions thereof and
with the rules and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; and no event has occurred (including the
receipt of any notice from any authority or governing body) which allows or,
after notice or lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or lapse of
time or both, would result in any other impairment of the rights of the holder
of any such Authorization; and such Authorizations contain no restrictions that
are burdensome to the Borrower or any of its Subsidiaries; except where such
failure to be valid and in full force and effect or to be in compliance, the
occurrence of any such event or the presence of any such restriction would not,
singly or in the aggregate, have a Material Adverse Effect.
SECTION 6.9. Financial Statements.
(a) The historical financial statements, together with related
schedules and notes referred to in the Offering Memorandum, present fairly the
consolidated financial position, results of operations and changes in financial
position of the Borrower and its Subsidiaries on the basis stated in the
Offering Memorandum at the respective dates or for the respective periods to
which they apply, but do not contain year-end adjustments or notes to quarterly
financial statements; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data referred
to in the Offering Memorandum are, in all material respects, accurately
presented and prepared on a basis consistent with such financial statements and
the books and records of the Borrower.
(b) The "as adjusted" financial information and data referred to in the
Offering Memorandum are, in all material respects, accurately presented and
prepared on a basis consistent with the historical financial statements.
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SECTION 6.10. Investment Company Act. Each of the Borrower and its
Subsidiaries is not and, after giving effect to the making of the Term Loans and
the application of the proceeds thereof as described herein, will not be, an
"investment company," as such term is defined in the Investment Company Act of
1940, as amended.
SECTION 6.11. Regulations G, T, U and X. Neither the Borrower nor any
of its Subsidiaries nor any agent thereof acting on the behalf of them has
taken, and none of them will take, any action that might cause this Agreement or
the making of the Term Loans to violate Regulation G (12 C.F.R. Part 207),
Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System.
SECTION 6.12. Material Adverse Change. Other than the Strike and losses
incurred through the Closing Date relating to resumption of operations at
pre-Strike levels as disclosed in the Offering Memorandum, since December 31,
1996, (i) there has not occurred any material adverse change or any development
involving a prospective material adverse change in the condition, financial or
otherwise, or the earnings, business, management or operations of the Borrower
and its Subsidiaries, taken as a whole, (ii) there has not been any material
adverse change or any development involving a prospective material adverse
change in the capital stock or in the long-term debt of the Borrower or any of
its Subsidiaries and (iii) neither the Borrower nor any of its Subsidiaries has
incurred any material liability or obligation, direct or contingent.
SECTION 6.13. Property, etc. The Borrower and its Restricted
Subsidiaries have good and marketable title in fee simple to all real property
and good and marketable title to all personal property owned by them which is
material to the business of the Borrower and its Subsidiaries, in each case free
and clear of all Liens and defects, except such as are described in the Offering
Memorandum or such as do not materially affect the value of such property and do
not interfere in any material respect with the use made and proposed to be made
of such property by the Borrower and its Subsidiaries; and any material real
property and buildings held under lease by the Borrower and its Subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere in any material respect with the use
made and proposed to be made of such property and buildings by the Borrower and
its Restricted Subsidiaries, in each case except as described in the Offering
Memorandum.
SECTION 6.14. Taxes. All material tax returns required to be filed by
the Borrower and each of its Subsidiaries in any jurisdiction have been filed,
other than those filings being contested in good faith, and all material taxes,
including withholding taxes, penalties and interest, assessments, fees and other
charges due pursuant to such returns or pursuant to any assessment received by
the Borrower or any of its Subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.
SECTION 6.15. Solvency. Each of the Borrower and the Subsidiary
Guarantors, immediately after giving effect to the Borrowings on the Closing
Date, will be Solvent. As used herein, the term "Solvent" means, with respect to
any such entity on a particular date (i) the fair value of the property of such
entity is greater than the total amount of liabilities (including contingent
liabilities) of such entity, (ii) the present fair saleable value of the assets
of such entity is greater than the probable liability of such entity on its
total existing debts (including contingent liabilities) as they become absolute
and matured, (iii) such entity will be able to pay its debts and liabilities as
they mature and (iv) such entity will not have unreasonably small capital for
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the business in which it is engaged, as now conducted and as proposed to be
conducted following the consummation of the transactions contemplated in this
Agreement (including the making of the Term Loans on the Closing Date.)
SECTION 6.16. Accuracy of Information. All factual information set
forth in the Offering Memorandum is, and all other such factual information
hereafter furnished by or on behalf of the Borrower to the Agents, the Arrangers
or any Lender will be, taken as a whole, true and accurate in every material
respect on the date as of which such information is dated or certified and as of
the date of execution and delivery of this Agreement by the Agents and each such
Lender, and such information is not, or shall not be, as the case may be, taken
as a whole, incomplete by omitting to state any material fact necessary to make
such information not misleading.
ARTICLE VII
COVENANTS
SECTION 7.1. Affirmative Covenants. The Borrower agrees with the Agents
and each Lender that, until all Term Loan Commitments have terminated and all
Obligations have been paid and performed in full, the Borrower will perform the
obligations set forth in this Section.
SECTION 7.1.1. Financial Information, Reports, Notices, etc. The
Borrower will furnish, or will cause to be furnished, to each Lender and each
Agent copies of the following financial statements, reports, notices and
information (except to the extent any such Lender shall have provided written
notice to the Borrower and the Administrative Agent that it is not to receive
any of the following statements, reports, notices and information):
(a) Whether or not the Borrower is required to do so by the
rules and regulations of the SEC, the Borrower will file with the SEC
(unless the SEC will not accept such a filing) and, within 15 days of
filing, or attempting to file, the same with the SEC, furnish to the
Lenders (i) all quarterly and annual financial and other information
with respect to the Borrower and its Subsidiaries that would be
required to be contained in a filing with the SEC on Forms 10-Q and
10-K if the Borrower were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information
only, a report thereon by the Borrower's certified independent
accountants, and (ii) all current reports that would be required to be
filed with the SEC on Form 8-K if the Borrower were required to file
such reports.
(b) The Borrower shall deliver to the Administrative Agent,
within 90 days after the end of each fiscal year, an Officer's
Certificate stating that a review of the activities of the Borrower and
its Subsidiaries during the preceding fiscal year has been made under
the supervision of the signing Officers with a view to determining
whether the Borrower has kept, observed, performed and fulfilled its
obligations under this Agreement, and further stating, as to each such
Officer signing such certificate, that to the best of his or her
knowledge the Borrower has kept, observed, performed and fulfilled each
and every covenant contained in this Agreement and is not in default in
the performance or observance of any of the terms, provisions and
conditions of this
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Agreement (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she
may have knowledge and what action the Borrower is taking or proposes
to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of
which payments on account of the principal of or interest, if any, on
the Term Loans is prohibited or if such event has occurred, a
description of the event and what action the Borrower is taking or
proposes to take with respect thereto.
(c) So long as not contrary to the then current
recommendations of the American Institute of Certified Public
Accountants, the year-end financial statements delivered pursuant to
clause (b) above shall be accompanied by a written statement of the
Borrower's independent public accountants (who shall be a firm of
established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has
come to their attention that would lead them to believe that the
Borrower has violated any provisions of Article VII hereof or, if any
such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not
be liable directly or indirectly to any Person for any failure to
obtain knowledge of any such violation.
(d) The Borrower shall, so long as any of the Term Loans are
outstanding, deliver to the Administrative Agent, forthwith upon any
Officer becoming aware of any Default or Event of Default, an Officer's
Certificate specifying such Default or Event of Default and what action
the Borrower is taking or proposes to take with respect thereto.
(e) The Borrower shall so long as any of the Term Loans are
outstanding, promptly notify the Administrative Agent and each Lender
of the occurrence of any Change of Control and, within 30 days of any
Change of Control, deliver to the Administrative Agent and each Lender
a Change of Control Prepayment Notice.
(f) Any information required to be provided pursuant to other
provisions of this Agreement, and such other reports or information
from time to time reasonably requested by the Agents on behalf of
itself or any Lender.
SECTION 7.1.2. Corporate Existence. Subject to Section 7.2.5, hereof,
the Borrower shall do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence, and the corporate,
partnership or other existence of each of its Restricted Subsidiaries, in
accordance with the respective organizational documents (as the same may be
amended from time to time) of the Borrower or any such Restricted Subsidiary;
provided, however, that the Borrower shall not be required to preserve the
existence of any of its Restricted Subsidiaries, if the Board of Directors of
the Borrower shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Borrower and its Restricted
Subsidiaries, taken as a whole.
SECTION 7.1.3. Stay, Extension and Usury Laws. The Borrower covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Agreement; and the Borrower (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any
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such law, hinder, delay or impede the execution of any power herein granted to
the Agents or the Lenders, but shall suffer and permit the execution of every
such power as though no such law has been enacted.
SECTION 7.1.4. Insurance. The Borrower shall, and shall cause the
Restricted Subsidiaries to, maintain liability, casualty and other insurance
(subject to the customary deductibles and retentions) with responsible insurance
companies in such amounts and against such risks as it customarily carried by
responsible companies engaged in similar businesses and owning similar assets in
the general areas in which the Borrower and the Restricted Subsidiaries operate
(which may include self-insurance in comparable form to that maintained by such
responsible companies).
SECTION 7.1.5. Taxes. The Borrower shall pay, and shall cause each of
its Subsidiaries to pay, prior to delinquency, all material taxes, assessments,
and governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Lenders or Agents.
SECTION 7.1.6. Books and Records. The Borrower will, and will cause
each of its Subsidiaries to, keep books and records which accurately reflect in
all material respects all of its business affairs and transactions and permit
the Agents and each Lender or any of their respective representatives, at
reasonable times and intervals, and upon reasonable notice, to visit all of its
offices, to discuss its financial matters with its officers and, after notice to
the Borrower and provision of an opportunity for the Borrower to participate in
such discussion, its independent public accountant (and the Borrower hereby
authorizes such independent public accountant to discuss the Borrower's
financial matters with each Lender or its representatives whether or not any
representative of the Borrower is present, so long as the Borrower has been
afforded a reasonable opportunity to be present) and to examine, and photocopy
extracts from, any of its books or other corporate records. The cost and expense
of each such visit shall be borne by the applicable Agent or Lender, except that
the Administrative Agent may make one such visit each Fiscal Year and the cost
and expense thereof shall be borne by the Borrower.
SECTION 7.1.7. Use of Proceeds, etc. The Borrower shall apply the
proceeds of the Term Loans to defease the Existing Senior Notes and reduce
existing Indebtedness under the Revolving Credit Facility and to pay the costs
and expenses associated with this transaction and the 1997 Senior Note Offering.
SECTION 7.1.8. Additional Subsidiary Guarantors. If the Borrower or any
of its Restricted Subsidiaries shall, after the date of this Agreement, acquire,
create or designate another Restricted Subsidiary, then such newly acquired,
created or designated Restricted Subsidiary shall execute a Subsidiary Guaranty
or supplement to the Subsidiary Guaranty delivered on the Effective Date in form
satisfactory to the Administrative Agent and deliver an opinion of counsel
reasonably satisfactory to the Administrative Agent.
SECTION 7.2. Negative Covenants. The Borrower agrees with the Agents
and each Lender that, until the Term Loan Commitments have terminated, and all
Obligations have been paid and performed in full, the Borrower will perform the
obligations set forth in this Section.
SECTION 7.2.1. Incurrence of Indebtedness and Issuance of Preferred
Stock. The Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or
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indirectly, create, incur, issue, assume, guarantee or otherwise become directly
or indirectly liable, contingently or otherwise, with respect to (collectively,
"incur") any Indebtedness (including Acquired Indebtedness) and that the
Borrower will not permit any of its Restricted Subsidiaries to issue any shares
of preferred stock; provided, however, that the Borrower may incur Indebtedness
if the Consolidated Interest Coverage Ratio for the Borrower's most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional Indebtedness
is incurred would have been at least 2.0 to 1.0 on a pro forma basis (including
a pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred at the beginning of such four-quarter period.
Notwithstanding the foregoing, the Borrower and, to the extent set
forth below, its Restricted Subsidiaries may incur the following (each of which
shall be given independent effect):
(a) Indebtedness of the Borrower and its Subsidiaries in
respect of the Term Loans and the Subsidiary Guaranty and all other
Obligations;
(b) Permitted Working Capital Indebtedness of the Borrower and
its Restricted Subsidiaries;
(c) Existing Indebtedness (other than Permitted Working
Capital Indebtedness or Indebtedness under the Letter of Credit
Facility);
(d) Indebtedness of the Borrower and its Restricted
Subsidiaries under the Letter of Credit Facility;
(e) Capital Expenditure Indebtedness, Capital Lease
Obligations and purchase money Indebtedness of the Borrower and its
Restricted Subsidiaries in an aggregate principal amount not to exceed
$50,000,000 at any time outstanding;
(f) (i) Hedging Obligations of the Borrower and its Restricted
Subsidiaries covering Indebtedness of the Borrower or such Restricted
Subsidiary (which Indebtedness is otherwise permitted to be incurred
under this covenant) to the extent the notional principal amount of any
such Hedging Obligation does not exceed the principal amount of the
Indebtedness to which such Hedging Obligation relates; or (ii)
repurchase agreements, reverse repurchase agreements or similar
agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by
any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition; provided that the terms of such agreements comply with the
guidelines set forth in Federal-Financial Agreements of Depository
Institutions with Securities and Others (or any successor guidelines),
as adopted by the Comptroller of the Currency;
(g) Indebtedness of the Borrower and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $30,000,000
at any time outstanding;
(h) Indebtedness of the Borrower representing guarantees of
Indebtedness incurred by one of its Restricted Subsidiaries pursuant
to, and in compliance with, another provision of this covenant;
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(i) Indebtedness of the Borrower or any of its Restricted
Subsidiaries representing guarantees of a portion of the Indebtedness
of Wheeling-Nisshin which is not greater than the Borrower's or such
Restricted Subsidiary's pro rata ownership of the outstanding Equity
Interests in Wheeling-Nisshin; provided, however, that (i) such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all Obligations with respect to the Term Loans and (ii) at the
time of incurrence and after giving effect to the Indebtedness of
Wheeling-Nisshin which is being guaranteed, the Consolidated Interest
Coverage Ratio of Wheeling-Nisshin for its most recently ended four
full fiscal quarters for which internal financial statements are
available would have been at least 2.0 to 1.0, determined on a pro
forma basis as if any additional Indebtedness had been incurred at the
beginning of such four-quarter period;
(j) Indebtedness of the Borrower or its Restricted
Subsidiaries representing guarantees of Indebtedness of
Wheeling-Nisshin required to be made pursuant to the Letter of
Undertaking not to exceed $10,000,000;
(k) the incurrence by the Borrower or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Borrower
and any of its Wholly Owned Restricted Subsidiaries; provided, however,
that (i) if the Borrower is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all Obligations and (ii) (A) any subsequent issuance or
transfer of Equity Interests that results in any such Indebtedness
being held by a Person other than the Borrower or a Wholly Owned
Restricted Subsidiary and (B) any sale or other transfer of any such
Indebtedness to a Person that is not either the Borrower or a Wholly
Owned Restricted Subsidiary shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Borrower or such
Restricted Subsidiary, as the case may be;
(l) Indebtedness of the Borrower evidenced by the 1997 Senior
Notes and the Indebtedness of the Subsidiary Guarantors in respect of
guarantees of such 1997 Senior Notes; and . (m) any Permitted
Refinancing Indebtedness representing a replacement, renewal,
refinancing or extension of Indebtedness permitted under the first
sentence of this Section and clauses (c) and (l) of this Section.
In the event that the incurrence of any Indebtedness would be permitted by this
Section, the Borrower may designate (in the form of an officer's certificate
delivered to the Administrative Agent) the particular clause of this Section
pursuant to which it is incurring such Indebtedness.
SECTION 7.2.2. Liens. The Borrower shall not, and shall not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Lien on any asset now owned or hereafter acquired, or any
income or profits therefrom or assign or convey any right to receive income
therefrom, without making effective provision for all payments due under this
Agreement and the Term Notes and the Subsidiary Guaranty to be directly secured
on an equal and ratable basis with the obligations so secured or, in the event
such Indebtedness is subordinate in right of payment to the Term Notes or the
Subsidiary Guaranty, prior to such Indebtedness, in each case until such time as
such obligations are no longer secured by a Lien. Notwithstanding the foregoing,
the Borrower and its Restricted Subsidiaries may create, incur, assume or suffer
to exist (each of which shall be given independent effect):
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(a) Permitted Liens;
(b) Liens to secure the payment of Capital Expenditure
Indebtedness and Capital Lease Obligations, provided that (i) the
aggregate principal amount of Indebtedness secured by such Liens shall
not exceed the lesser of cost or Fair Market Value of the assets or
property acquired, constructed or improved with the proceeds of such
Indebtedness and (ii) such Liens shall not encumber any other assets or
property of the Borrower and its Subsidiaries;
(c) Liens secured by the Capital Stock or assets of
Wheeling-Nisshin or OCC to the extent required under agreements as
existing on the date of this Agreement; and
(d) Liens on accounts receivable, inventory, intangibles
necessary or useful for the sale of such inventory and other current
assets of the Borrower or any Restricted Subsidiary or on Capital Stock
Subsidiaries, in each case incurred to secure Permitted Working Capital
Indebtedness.
SECTION 7.2.3. Restricted Payments. The Borrower shall not, and shall
not permit any of its Restricted Subsidiaries to, directly or indirectly, (a)
declare or pay any dividend or make any other payment or distribution on account
of the Borrower's or any of its Restricted Subsidiaries' Equity Interests
(including any payment in connection with any merger or consolidation involving
the Borrower) or to the direct or indirect holders of the Borrower's Equity
Interests in their capacity as such (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Borrower);
(b) purchase, redeem or otherwise acquire or retire for value (including in
connection with any merger or consolidation involving the Borrower) any Equity
Interests of the Borrower (other than any such Equity Interests owned by the
Borrower or any Wholly Owned Restricted Subsidiary of the Borrower); (c) make
any payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value, any Indebtedness that is subordinated in right of
payment to the Term Loans, except a payment of interest or principal at Stated
Maturity; or (d) make any Restricted Investment (all such payments and other
actions set forth in clauses (a) through (d) above being collectively referred
to as "Restricted Payments"), unless, at the time of and after giving effect to
such Restricted Payment:
(i) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(ii) the Borrower would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such Restricted
Payment had been made at the beginning of the applicable four-quarter
period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Interest Coverage Ratio test
set forth in the first paragraph of Section 7.2.1 hereof; and
(iii) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Borrower and its
Restricted Subsidiaries after the date of this Agreement, is less than
the sum of (A) 50% of the Consolidated Net Income of the Borrower for
the period (taken as one accounting period) commencing April 1, 1998 to
the end of the Borrower's most recently ended fiscal quarter for which
internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated
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Net Income for such period is a deficit, less 100% of such deficit),
plus (B) 100% of the aggregate Net Cash Proceeds received by the
Borrower from the issue or sale since the date of this Agreement of
Equity Interests of the Borrower (other than Disqualified Stock) or of
Disqualified Stock or debt securities of the Borrower that have been
converted into such Equity Interests (other than any such Equity
Interests, Disqualified Stock or convertible debt securities sold to a
Restricted Subsidiary of the Borrower and other than Disqualified Stock
or convertible debt securities that have been converted into
Disqualified Stock), plus (C) to the extent that any Restricted
Investment that was made after the date of this Agreement is sold for
cash or otherwise liquidated or repaid for cash, the sum of (x) the
initial amount of such Restricted Investment and (y) 50% of the
aggregate Net Proceeds received by the Borrower or any Restricted
Subsidiary in excess of the initial amount of such Restricted
Investment, plus (D) $10,000,000.
The foregoing provisions will not prohibit (a) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Agreement; (b) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Borrower
in exchange for, or out of the Net Cash Proceeds of the substantially concurrent
sale (other than to a Restricted Subsidiary of the Borrower) of, other Equity
Interests of the Borrower (other than any Disqualified Stock); provided that the
amount of any such Net Cash Proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition shall be excluded from
clause (iii) (B) of the preceding paragraph; (c) the defeasance, redemption,
repurchase, retirement or other acquisition of subordinated Indebtedness with
the net cash proceeds from an incurrence of, or in exchange for, Permitted
Refinancing Indebtedness; (d) the payment of any dividend by a Restricted
Subsidiary of the Borrower to the holders of its Equity Interests on a pro rata
basis; (e) so long as no Default or Event of Default shall have occurred and be
continuing, the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Borrower held by any member of the
Borrower's or any of its Restricted Subsidiaries' management upon the death,
disability or termination of employment of such member of management; provided
that the aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests shall not exceed $500,000 in any calendar year and
$2,500,000 in the aggregate; (f) loans or advances to Unimast by the Borrower or
WPSC prior to the first anniversary of the date of this Agreement of amounts
borrowed by WPSC under the Revolving Credit Facility provided (i) such loans or
advances do not exceed $40,000,000 at any time outstanding, (ii) Unimast pays
interest to the Borrower or WPSC on such loans or advances in an amount equal to
the interest payable by WPSC on such amounts pursuant to the Revolving Credit
Facility and (iii) such loans and advances are repaid in full on or prior to the
first anniversary of the date of this Agreement; (g) the payment by the Borrower
of management fees to the Parent not to exceed $2,500,000 in any calendar year,
in exchange for services provided to it by WPN Corp. pursuant to the management
agreement between the Parent and WPN Corp.; and (h) payments permitted under the
WHX Agreements.
In determining the amount of Restricted Payments permissible under
clause (iii) of the first paragraph of this Section, amounts expended pursuant
to clauses (a) and (e) of the immediately preceding paragraph shall be included
as Restricted Payments for purposes of such clause (iii).
The Board of Directors of the Borrower may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not cause
a Default. For purposes of making
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such determination, all outstanding Investments by the Borrower and its
Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary
so designated will be deemed to be Restricted Payments at the time of such
designation. All such outstanding Investments will be deemed to constitute
Investments in an amount equal to the greater of (a) the net book value of such
Investments at the time of such designation and (b) the fair market value of
such Investments at the time of such designation. Such designation will be
permitted only if such Restricted Payment would be permitted at such time and if
such Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Borrower or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined by
the Board of Directors of the Borrower whose resolution with respect thereto
shall be delivered to the Administrative Agent. Not later than the date of
making any Restricted Payment, the Borrower shall deliver to the Administrative
Agent an officer's certificate stating that such Restricted Payment is permitted
and setting forth the basis upon which the calculations required by this Section
were computed.
SECTION 7.2.4. Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) (i) pay dividends or make any other distributions
to the Borrower or any of its Restricted Subsidiaries on its Capital Stock or
with respect to any other interest or participation in, or measured by, its
profits, or (ii) pay any indebtedness owed to the Borrower or any of its
Restricted Subsidiaries, (b) make loans or advances to the Borrower or any of
its Restricted Subsidiaries or (c) transfer any of its properties or assets to
the Borrower or any of its Restricted Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (1) Existing Indebtedness as in
effect on the date hereof, including restrictions under the Revolving Credit
Facility, as in effect on the date hereof and any refinancings, amendments,
restatements, renewals or replacements thereof; provided, however, that the
agreements governing such contain restrictions that are not more restrictive,
taken as a whole, than those contained in the agreement governing the
Indebtedness being so refinanced, amended, restated, renewed or replaced, (2)
this Agreement, the Term Notes and the Subsidiary Guaranty, (3) applicable law,
(4) any instrument governing Indebtedness or Capital Stock of a Person acquired
by the Borrower or any of its Restricted Subsidiaries as in effect at the time
of such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Agreement to be incurred, (5) customary
non-assignment provisions in leases entered into in the ordinary course of
business and consistent with past practices, (6) purchase money obligations for
property acquired in the ordinary course of business that impose restrictions of
the nature described in clause (c) above on the property so acquired, (7)
customary provisions in bona fide contracts for the sale of property or assets,
or (8) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing Indebtedness
are not more restrictive, taken as a whole, than those contained in the
agreements governing the Indebtedness being refinanced.
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SECTION 7.2.5. Merger, Consolidation, or Sale of Assets. The Borrower
shall not consolidate or merge with or into (whether or not the Borrower is the
surviving corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or more
related transactions, to another corporation, Person or entity unless (a) the
Borrower is the surviving corporation or the entity or the Person formed by or
surviving any such consolidation or merger (if other than the Borrower) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia, (b) the entity
or Person formed by or surviving any such consolidation or merger (if other than
the Borrower) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Borrower under the Term Loans, the Term Notes, this Agreement
and each other Loan Document to which it is a party pursuant to an assumption
agreement in a form reasonably satisfactory to the Administrative Agent, (c)
immediately after such transaction no Default or Event of Default exists and (d)
except in the case of a merger of the Borrower with or into a Wholly Owned
Restricted Subsidiary of the Borrower, the Borrower or the entity or Person
formed by or surviving any such consolidation or merger (if other than the
Borrower), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (A) will have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated Net
Worth of the Borrower immediately preceding the transaction and (B) will, at the
time of such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Interest Coverage Ratio test set forth in the first sentence of
Section 7.2.1 hereof.
SECTION 7.2.6. Asset Sales.
(a) The Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Borrower or such
Restricted Subsidiary, as the case may be, receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors of the Borrower set forth in an officer's
certificate delivered to the Administrative Agent) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 80% of the
consideration therefor received by the Borrower or such Restricted Subsidiary is
in the form of cash; provided, however, that the amount of (A) any liabilities
(as shown on the Borrower's or such Restricted Subsidiary's most recent balance
sheet) of the Borrower or such Restricted Subsidiary (other than contingent
liabilities and liabilities that are by their terms subordinated to the Term
Loans or any guarantee thereof) that are assumed by the transferee of any such
assets pursuant to a customary novation agreement that releases the Borrower or
such Restricted Subsidiary from further liability and (B) any securities, notes
or other obligations received by the Borrower or such Restricted Subsidiary from
such transferee that are converted by the Borrower or such Restricted Subsidiary
within 30 days of receipt into cash (to the extent of the cash received) shall
be deemed to be cash for purposes of this provision.
(b) Within 270 days after the receipt of any Net Proceeds from an Asset
Sale, the Borrower or any such Restricted Subsidiary may apply such Net Proceeds
to reduce Indebtedness under the Revolving Credit Facility or other pari passu
Indebtedness (and in the case of such pari passu Indebtedness, to
correspondingly reduce commitments with respect thereto). To the extent such Net
Proceeds are not utilized as contemplated in the preceding sentence, such Net
Proceeds
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may, within 270 days after receipt thereof, be utilized to acquire Replacement
Assets. Pending the final application of any such Net Proceeds, the Borrower or
any Restricted Subsidiary may otherwise invest such Net Proceeds in any manner
that is not prohibited by this Agreement. Any Net Proceeds from Asset Sales that
are not applied or invested as provided in the first two sentences of this
clause will be deemed to constitute "Excess Proceeds" and shall be applied as
set forth in Section 3.1.1. To the extent that the aggregate amount of Term
Loans prepaid pursuant to an Asset Sale Offer is less than the amount that the
Borrower is required to prepay (as a result of a Lender declining to have its
Term Loans prepaid pursuant to Section 3.1.1), the Borrower may use any
remaining Excess Proceeds for general corporate purposes. Upon completion of the
prepayment of all Term Loans in connection with a particular Asset Sale,
pursuant to the terms of this Agreement, the amount of Excess Proceeds shall be
reset at zero.
SECTION 7.2.7. [Intentionally Omitted].
SECTION 7.2.8. Transactions with Affiliates. The Borrower shall not,
and shall not permit any of its Restricted Subsidiaries to, make any payment to,
or sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (a) such Affiliate Transaction is on terms that are no
less favorable to the Borrower or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by the Borrower or
such Restricted Subsidiary with an unrelated Person or, if there is no such
comparable transaction, on terms that are fair and reasonable to the Borrower,
and (b) the Borrower delivers to the Administrative Agent (i) with respect to
any Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $2,000,000, either (A) a resolution of the
Board of Directors of the Borrower set forth in an Officer's Certificate
certifying that such Affiliate Transaction complies with clause (a) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors of the Borrower or (B) if there
are no disinterested members of the Board of Directors of the Borrower, an
opinion as to the fairness to the Borrower of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment banking
firm of national standing and (ii) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate consideration in
excess of $5,000,000, an opinion as to the fairness to the Borrower of such
Affiliate Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing; provided, however,
that the following shall be deemed not to be Affiliate Transactions: (v)
customary directors' fees, indemnification or similar arrangements or any
employment agreement or other compensation plan or arrangement entered into by
the Borrower or any of its Restricted Subsidiaries in the ordinary course of
business and consistent with the past practice of the Borrower or such
Restricted Subsidiary; (w) transactions between or among the Borrower and/or its
Wholly Owned Restricted Subsidiaries; (x) transactions pursuant to the WHX
Agreements or agreements with or applicable to any of Wheeling-Nisshin, OCC, the
Empire-Iron Mining Partnership or W-P Coal Company, in each case as in effect on
the date hereof; (y) the purchase of accounts receivable from Unimast for
immediate resale on the same terms pursuant to the Receivables Facility; and (z)
Restricted Payments that are permitted pursuant to clauses (e), (f) and (g) of
the second paragraph of Section 7.2.3 and Indebtedness permitted to be incurred
pursuant to clauses (i) and (j) the second paragraph of Section 7.2.1.
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SECTION 7.2.9. Issuances and Sales of Capital Stock of Subsidiaries.
The Borrower (a) shall not permit any Wholly Owned Restricted Subsidiary of the
Borrower to issue any of its Equity Interests to any Person other than to the
Borrower or a Wholly Owned Restricted Subsidiary of the Borrower, and (b) shall
not, and shall not permit any Wholly Owned Restricted Subsidiary of the Borrower
to, transfer, convey, sell, lease or otherwise dispose of any Capital Stock of
any Wholly Owned Restricted Subsidiary of the Borrower to any Person (other than
the Borrower or any Wholly Owned Restricted Subsidiary of the Borrower) unless
(i) such transfer, conveyance, sale, lease or other disposition is of all of the
Capital Stock of such Wholly Owned Restricted Subsidiary and (ii) the Net
Proceeds from such transfer, conveyance, sale, lease or other disposition are
applied in accordance with Section 7.2.6, provided that this clause (b) shall
not apply to any pledge of Capital Stock of any Wholly Owned Restricted
Subsidiary of the Borrower permitted pursuant to clause (d) of Section 7.2.2.
The Borrower shall not, and shall not permit any of its Subsidiaries to, engage,
directly or indirectly, in any business other than a business of the Borrower or
its Subsidiaries conducted on the date of the Agreement or in a line of business
or manufacturing or processing operation reasonably related thereto (including
any downstream steel manufacturing or processing operation or manufacturing or
fabricating operation in the construction products business).
SECTION 7.2.10. Sale and Leaseback Transactions. The Borrower shall
not, and will not permit any of its Restricted Subsidiaries to, enter into any
sale and leaseback transaction; provided, however, that the Borrower may enter
into a sale and leaseback transaction if (a) the Borrower could have (i)
incurred Indebtedness in an amount equal to the Attributable Indebtedness
relating to such sale and leaseback transaction pursuant to the Consolidated
Interest Coverage Ratio test set forth in the first sentence of Section 7.2.1
and (ii) incurred a Lien to secure such Indebtedness pursuant to Section 7.2.2,
(b) the gross cash proceeds of such sale and leaseback transaction are at least
equal to the fair market value (as determined in good faith by the Board of
Directors of the Borrower and set forth in an Officer's Certificate delivered to
the Administrative Agent) of the property that is the subject of such sale and
leaseback transaction and (c) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Borrower applies the Net Cash Proceeds of
such transaction in compliance with, Section 7.2.6.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. Each of the following events
or occurrences described in this Section shall constitute an "Event of Default".
SECTION 8.1.1. Non-Payment of Obligations. (a) The Borrower shall
default in the payment when due of interest with respect to the Term Loans or
other monetary Obligations, and such default continues for a period of 30 days,
or (b) the Borrower shall default in the payment or prepayment when due of any
principal of or premium, if any, on any Term Loan when the same becomes due and
payable at maturity, upon acceleration (including in connection with a Change of
Control Prepayment Event) or otherwise.
SECTION 8.1.2. Breach of Warranty. Any representation or warranty of
the Borrower, any other Obligor or the Parent made or deemed to be made
hereunder or in any other Loan Document executed by it or any other writing or
certificate (including the Closing Date
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Certificate) furnished by or on behalf of the Borrower, any other Obligor or
Parent to any Agent, the Arranger or any Lender for the purposes of or in
connection with this Agreement or any such other Loan Document (including any
certificates delivered pursuant to Article V) is or shall be incorrect when made
in any material respect.
SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations.
The Borrower shall fail to comply with any of the provisions of Sections
7.1.1(e), 7.2.1, 7.2.3, 7.2.5 or 7.2.6.
SECTION 8.1.4. Non-Performance of Other Covenants and Obligations. The
Borrower shall fail to observe or perform any other covenant or other agreement
in this Agreement or in any other Loan Document executed by it, and such default
shall continue unremedied for a period of 30 days after notice thereof shall
have been given to the Borrower by the Administrative Agent at the direction of
the Required Lenders.
SECTION 8.1.5. Default on Other Indebtedness. A default shall occur
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Borrower or any of its Restricted Subsidiaries (or the payment of which
is guaranteed by the Borrower or any of its Restricted Subsidiaries), whether
such Indebtedness or guarantee now exists, or is created after the date of this
Agreement, which default (i) is caused by a failure to pay principal of or
premium or interest on such Indebtedness prior to the expiration of any grace
period provided in such Indebtedness (a "Payment Default") or (ii) results in
the acceleration of such Indebtedness prior to its express maturity and, in each
case, the principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $10,000,000
or more.
SECTION 8.1.6. Judgments. A final judgment or final judgments for the
payment of money are entered by a court or courts of competent jurisdiction
against the Borrower or any of its Subsidiaries and such judgment or judgments
are not paid or discharged for a period (during which execution shall not be
effectively stayed by reason of pending appeal or otherwise) of 60 days,
provided that the aggregate of all such undischarged judgments exceeds
$10,000,000.
SECTION 8.1.7. Non-Performance and Enforceability of Subsidiary
Guaranty. The failure of any Guarantor to perform any covenant set forth in the
Subsidiary Guaranty or the repudiation by any Guarantor of its obligations under
the Subsidiary Guaranty or the unenforceability of the Subsidiary Guaranty
against a Guarantor for any reason, unless, in each such case, such Guarantor
and its Subsidiaries have no Indebtedness outstanding at such time or at any
time thereafter.
SECTION 8.1.8. Bankruptcy, Insolvency, etc.
(a) The Borrower or any of its Restricted Subsidiaries pursuant to or
within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
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(iii) consents to the appointment of a custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(b) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Borrower or any of its
Restricted Subsidiaries in an involuntary case;
(ii) appoints a Custodian of the Borrower or any of its
Restricted Subsidiaries or for all or substantially all of the property
of the Borrower or any of its Restricted Subsidiaries; or
(iii) orders the liquidation of the Borrower or any of its
Restricted Subsidiaries;
and the order or decree remains unstayed and in effect for 60 consecutive days;
provided, however, that if the entry of such order or decree is appealed and
dismissed on appeal then the Event of Default hereunder by reason of the entry
of such order or decree shall be deemed to have been cured.
SECTION 8.2. Acceleration. If any Event of Default occurs and is
continuing, the Administrative Agent, upon the direction of the Required
Lenders, shall by notice to the Borrower declare all or any portion of the
outstanding principal amount of the Term Loans and other Obligations to be due
and payable immediately and/or the Term Loan Commitments (if not theretofore
terminated) to be terminated. Upon any such declaration, the Term Loans and
other Obligations shall become due and payable immediately, without further
notice, demand or presentment and/or, as the case may be, the Term Loan
Commitments shall terminate. Notwithstanding the foregoing, if an Event of
Default specified in Section 8.1.8 occurs with respect to the Borrower, any of
its Significant Subsidiaries or any group of Restricted Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary, all outstanding Term
Loans and all other Obligations shall be due and payable immediately without
further action or notice. If an Event of Default occurs by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Borrower with
the intention of avoiding payment of the premium that the Borrower would have
had to pay if the Borrower then had elected to prepay the Term Loans pursuant to
Section 3.1.1, then, upon acceleration of the Term Loans, an equivalent premium
shall also become and be immediately due and payable, to the extent permitted by
law, anything in this Agreement or any other Loan Document to the contrary
notwithstanding.
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ARTICLE IX
THE AGENTS
SECTION 9.1. Appointment of Agents. Each Lender hereby irrevocably
appoints DLJ as Syndication Agent and Administrative Agent and Citicorp as
Documentation Agent under and for purposes of this Agreement, the Term Notes and
each other Loan Document. Each Lender authorizes the Administrative Agent to act
on behalf of such Lender under this Agreement, the Term Notes and each other
Loan Document and, in the absence of other written instructions from the
Required Lenders received from time to time by the Administrative Agent (with
respect to which the Administrative Agent agrees that it will comply, except as
otherwise provided in this Section or as otherwise advised by counsel), to
exercise such powers hereunder and thereunder as are specifically delegated to
or required of the Administrative Agent by the terms hereof and thereof,
together with such powers as may be reasonably incidental thereto. The
provisions of this Article are solely for the benefit of the Agents and Lenders,
and neither the Borrower nor any other Obligor shall have any rights as a
third-party beneficiary of any of the provisions hereof other than with respect
to an Agent's resignation. In performing their functions and duties under this
Agreement and each other Loan Document, the Agents shall act solely as agents of
the Lenders and do not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for the Borrower or
any other Obligor.
SECTION 9.2. Nature of Duties of the Agents. The Agents shall have no
duties, obligations or responsibilities except those expressly set forth in this
Agreement and each other Loan Document. Neither the Agents nor any of their
officers, directors, employees or agents shall be liable for any action taken or
omitted by it as such hereunder or under each other Loan Document or in
connection herewith or therewith, unless caused by its or their gross negligence
or willful misconduct. The duties of the Agents shall be mechanical and
administrative in nature; the Agents shall not have by reason of this Agreement
or any other Loan Document a fiduciary relationship in respect of any Lender;
and nothing in this Agreement or any other Loan Document, expressed or implied,
is intended to or shall be so construed as to impose upon the Agents any
obligations in respect of this Agreement or any other Loan Document except as
expressly set forth herein or therein. No duty to act, or refrain from acting,
and no other obligation whatsoever, shall be implied on the basis of or imputed
in respect of any right, power or authority granted to any Agent or shall become
effective in the event of any temporary or partial exercise of such rights,
power or authority.
SECTION 9.3. General Immunity. Neither the Agents, the Arranger nor any of
their directors, officers, agents, attorneys or employees shall be liable to any
Lender for any action taken or omitted to be taken by it or them under this
Agreement or any other Loan Document or in connection herewith or therewith
except for its or their own willful misconduct or gross negligence. Without
limiting the generality of the foregoing, the Agents and the Arranger: (i) shall
not be responsible to the Lenders for any recitals, statements, warranties or
representations under this Agreement or any other Loan Document or any agreement
or document relative hereto or thereto or for the financial or other condition
of any Obligor, (ii) shall not be responsible for the authenticity, accuracy,
completeness, value, validity, effectiveness, due execution, legality,
genuineness, enforceability, collectibility or sufficiency of this Agreement or
any other Loan Document or any other agreements or any assignments,
certificates, requests, financial statements, projections, notices, schedules or
opinions of counsel executed and delivered pursuant hereto or thereto, (iii)
shall not be bound to ascertain or inquire as to the performance or
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observance of any of the terms, covenants or conditions of this Agreement or any
other Loan Document on the part of Obligors or of any of the terms of any such
agreement by any party hereto or thereto and shall have no duty to inspect the
property (including the books and records) of any Obligor and (iv) shall incur
no liability under or in respect of this Agreement or any other Loan Document or
any other document by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, cable, telex, telecopier or
similar form of facsimile transmission) believed by the Agents to be genuine and
signed or sent by the proper party. The Agents may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by the Agents and shall not be liable for any action taken or
omitted to be taken in good faith in accordance with the advice of such counsel,
accountants or experts.
SECTION 9.4. Successor. Each of the Syndication Agent and the
Documentation Agent may resign as such upon one Business Day's notice to the
Borrower and the Administrative Agent. The Administrative Agent may resign as
such at any time upon at least 30 days' prior notice to the Borrower and all
Lenders. If the Administrative Agent at any time shall resign, the Required
Lenders may, with the prior consent of the Borrower (which consent shall not be
unreasonably withheld), appoint another Lender as a successor Administrative
Agent which shall thereupon become the Administrative Agent hereunder. If no
successor Administrative Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 20 days after the
retiring Administrative Agent's giving notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be one of the Lenders or a commercial banking
institution organized under the laws of the United States or a United States
branch or agency of a commercial banking institution, and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall be entitled to receive from the
retiring Administrative Agent such documents of transfer and assignment as such
successor Administrative Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations under this Agreement. After any
retiring Administrative Agent's resignation hereunder as the Administrative
Agent, the provisions of (i) this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Administrative Agent
under this Agreement, and (ii) Section 10.3 and Section 10.4 shall continue to
inure to its benefit.
SECTION 9.5. Agents in their Capacity as Lenders. With respect to their
obligation (if any) to lend under this Agreement and each other Loan Document,
the Agents shall have the same rights and powers under this Agreement and each
other Loan Document as any Lender and may exercise the same as though it were
not an Agent. "Lender" or "Lenders" shall, unless the context otherwise
indicates, include each Agent in its capacity as a Lender hereunder. The Agents,
any Lender and their respective affiliates may accept deposits from, lend money
to, and generally engage in any kind of banking or trust business with the
Borrower or any other Obligor, as if it were not an Agent or as if it or they
were not a Lender hereunder and without any duty to account therefor to the
other parties to this Agreement.
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SECTION 9.6. Actions by Each Agent.
(a) Each Agent may assume that no Event of Default has occurred and is
continuing, unless such Agent has actual knowledge of the Event of Default, has
received notice from the Borrower or the Borrower's independent certified public
accountants stating the nature of the Event of Default, or has received notice
from a Lender stating the nature of the Event of Default and that such Lender
considers the Event of Default to have occurred and to be continuing.
(b) Each Agent shall have the right to request instructions from the
Required Lenders by notice to each Lender. If such Agent shall request
instructions from the Required Lenders with respect to any act or action
(including the failure to act) in connection with this Agreement or any other
Loan Document, such Agent shall be entitled to refrain from such act or taking
such action unless and until it shall have received instructions from the
Required Lenders, and such Agent shall not incur liability to any Person by
reason of so refraining. Without limiting the foregoing, no Lender shall have
any right of action whatsoever against any Agent as a result of such Agent
acting or refraining from acting hereunder or under any other Loan Document in
accordance with the instructions of the Required Lenders. Each Agent may give
any notice required under Article VIII hereof without the consent of any of the
Lenders unless otherwise directed by the Required Lenders in writing and will,
at the direction of the Required Lenders, give any such notice required under
Article VIII. Except for any obligation expressly set forth in this Agreement or
any other Loan Document, each Agent may, but shall not be required to, exercise
its discretion to act or not act, except that such Agent shall be required to
act or not act upon the instructions of the Required Lenders (unless all of the
Lenders are required to provide such instructions as provided in Section 10.1)
and those instructions shall be binding upon each Agent and all Lenders;
provided, however, that each Agent shall not be required to act or not act if to
do so would expose such Agent to liability or would be contrary to this
Agreement or any other Loan Document or to applicable law.
SECTION 9.7. Right to Indemnity. Each Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document or in relation hereto or thereto unless it shall first be indemnified
(upon requesting such indemnification) to its satisfaction by the Lenders
against any and all liability and expense which it may incur by reason of taking
or continuing to take any such action. The Lenders further agree to indemnify
each Agent ratably in accordance with their Percentages for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against such Agent in any way relating to or
arising out of this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby, or the enforcement of any of the terms hereof or
thereof or of any other documents, and either not indemnified by the Borrower
pursuant to Section 10.4 or with respect to which the Borrower has failed to
fully honor its indemnification obligations under Section 10.4; provided,
however, that no such liability, obligation, loss, damage, penalty, action,
judgment, suit, cost, expense or disbursement results from such Agent's gross
negligence or willful misconduct. Each Lender agrees to reimburse each Agent in
the amount of its pro rata share of any out-of-pocket expenses for which such
Agent is entitled to receive, but has not received, reimbursement pursuant to
this Agreement. The agreements in this Section shall survive the payment and
fulfillment of the Obligations and termination of this Agreement.
SECTION 9.8. Credit Decisions. Each Lender acknowledges that it has,
independently of and without reliance upon each Agent, the Arranger and each
other Lender, and based on such
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Lender's review of the financial information of the Borrower and each other
Obligor, this Agreement, the other Loan Documents (the terms and provisions of
which being satisfactory to such Lender) and such other documents, information
and investigations as such Lender has deemed appropriate, made its own credit
decision to extend its . Each Lender also acknowledges that it will,
independently of and without reliance upon each Agent, the Arranger and each
other Lender, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under this Agreement or any other Loan Document.
Except as otherwise expressly provided for herein, the Agents shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition, litigation, liabilities
or business of the Parent, the Borrower or any other Obligor.
SECTION 9.9. Copies, etc. The Administrative Agent shall give prompt
notice to each Lender of each notice or request required or permitted to be
given to the Administrative Agent by the Borrower pursuant to the terms of this
Agreement (unless concurrently delivered to the Lenders by the Borrower). The
Administrative Agent will distribute to each Lender each document or instrument
received for such Lender's account and copies of all other communications
received by the Administrative Agent from the Borrower for distribution to the
Lenders by the Administrative Agent in accordance with the terms of this
Agreement (except to the extent any such Lender shall have provided written
notice to the Administrative Agent that it is not to receive any such documents,
instruments or communications). In the event such information is so furnished by
any Agent, such Agent shall have no duty to confirm or verify its accuracy or
completeness and shall have no liability whatsoever with respect thereto.
SECTION 9.10. The Syndication Agent, the Documentation Agent and the
Administrative Agent. Notwithstanding anything else to the contrary contained in
this Agreement or any other Loan Document, the Agents, in their respective
capacities as such, each in such capacity, shall have no duties or
responsibilities under this Agreement or any other Loan Document nor any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Syndication Agent, the Documentation
Agent or the Administrative Agent, as applicable, in such capacity except as are
explicitly set forth herein or in the other Loan Documents.
SECTION 9.11. Agreement to Cooperate. Each Lender agrees to cooperate to
the end that the terms and provisions of this Agreement may be promptly and
fully carried out. The Lenders also agree, from time to time, at the request of
the Agents, to execute and deliver any and all other agreements, documents or
instruments and to take such other actions, all as may be reasonably necessary
or desirable to effectuate the terms, provisions and intent of this Agreement
and the other Loan Documents.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Waivers, Amendments, etc. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Required Lenders; provided, however, that no such
amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular action be
taken by all the Lenders or by the Required Lenders shall be effective
unless consented to by each Lender;
(b) modify this Section, or clause (a) of Section 10.10, change the
definition of "Required Lenders", increase the Term Loan Commitment Amount
or the Percentage of any Lender, reduce any fees described in Section 3.3,
release any Subsidiary Guarantor from its obligations under the Subsidiary
Guaranty (except in each case as otherwise specifically provided in this
Agreement or such Subsidiary Guaranty) or extend the Term Loan Commitment
Termination Date shall be made without the consent of each Lender
adversely affected thereby;
(c) extend the due date for, or reduce the amount of, any scheduled
repayment or prepayment of principal of or premium (if any) or interest on
or fees payable in respect of any Term Loan or reduce the principal amount
of or rate of interest on any Term Loan shall be made without the consent
of the holder of the Term Note evidencing such Term Loan; or
(d) affect adversely the interests, rights or obligations of any
Agent or Arranger (in its capacity as Agent or Arranger), unless consented
to by such Agent or Arranger, as the case may be.
No failure or delay on the part of any Agent, any Lender or the holder of any
Term Note in exercising any power or right under this Agreement or any other
Loan Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by any Agent, any Lender or the
holder of any Term Note under this Agreement or any other Loan Document shall,
except as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 10.2. Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address or facsimile number set forth in Schedule II hereto or, in the case
of a Lender that becomes a party hereto after the date hereof, as set forth in
the Lender Assignment Agreement pursuant to which such Lender becomes a Lender
hereunder or at such other address or facsimile number as may be designated by
such party in a
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notice to the other parties. Any notice, if mailed and properly addressed with
postage prepaid or if properly addressed and sent by pre-paid courier service,
shall be deemed given when received; any notice, if transmitted by facsimile,
shall be deemed given when transmitted (and electronic confirmation of receipt
thereof has been received).
SECTION 10.3. Payment of Costs and Expenses. The Borrower agrees to pay,
and to save the Agents and the Lenders harmless from all liability for, any
stamp or other similar taxes which may be payable in connection with the
execution or delivery of this Agreement, the Term Loans made hereunder or the
issuance of the Term Notes or any other Loan Documents.
SECTION 10.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Term Loan
Commitments, the Borrower hereby, to the fullest extent permitted under
applicable law, indemnifies, exonerates and holds each Agent, the Arranger and
each Lender and each of their respective Affiliates, and each of their
respective partners, officers, directors, employees and agents, and each other
Person controlling any of the foregoing within the meaning of either Section 15
of the Securities Act of 1933, as amended, or Section 20 of the Securities
Exchange Act of 1934, as amended (collectively, the "Indemnified Parties"), free
and harmless from and against any and all actions, causes of action, suits,
losses, costs, liabilities and damages, and expenses incurred in connection
therewith (irrespective of whether any such Indemnified Party is a party to the
action for which indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements (including those of internal counsel)
(collectively, the "Indemnified Liabilities"), incurred by the Indemnified
Parties or any of them as a result of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Term Loan;
(b) the entering into and performance of this Agreement and any
other Loan Document by any of the Indemnified Parties (including any
action brought by or on behalf of the Borrower as the result of any
determination by the Required Lenders pursuant to Article V not to fund
any Borrowing); or
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower or any of its
Subsidiaries of all or any portion of the stock or assets of any Person,
whether or not such Agent, such Arranger or such Lender is party thereto;
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or willful misconduct If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
SECTION 10.5. Survival. The obligations of the Borrower under Sections
4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders under
Section 9.1, shall in each case survive any termination of this Agreement, the
payment in full of all Obligations and the termination of all Term Loan
Commitments. The representations and warranties made by the Borrower and each
other Obligor in this Agreement and in each other Loan Document shall survive
the execution and delivery of this Agreement and each such other Loan Document.
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SECTION 10.6. Severability. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such other Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 10.7. Headings. The various headings of this Agreement and of each
other Loan Document are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or such other Loan Document or any
provisions hereof or thereof.
SECTION 10.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SECTION 10.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE TERM
NOTES AND, EXCEPT TO THE EXTENT OTHERWISE EXPRESSLY PROVIDED THEREIN, EACH OTHER
LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement, the Term Notes and
the other Loan Documents constitute the entire understanding among the parties
hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto. Upon the execution and
delivery of this Agreement by the parties hereto, all obligations and
liabilities of the Arranger under or relating or with respect to the Commitment
Letter shall be terminated and of no further force or effect.
SECTION 10.10. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that (i) the Borrower may not assign
or transfer its rights or obligations hereunder without the prior written
consent of each of the Agents and all Lenders, and (ii) the rights of sale,
assignment and transfer of the Lenders are subject to Section 10.11.
SECTION 10.11. Sale and Transfer of Term Loans and Term Notes;
Participations in Term Loans and Term Notes. Subject to Section 10.11.1, each
Lender shall have the right at any time to (i) sell, assign or transfer to any
of its Affiliates or to any other Lender or to any Person (each such Person to
whom such sale, assignment or transfer is to be made being hereinafter referred
to as an "Assignee Lender"), or (ii) sell participations to any Person in, all
or any part of its Term Loan Commitment or the Term Loan made by it or any other
interest herein or in any other Obligations owed to it; provided that no such
sale, assignment, transfer or participation shall, without the consent of the
Borrower, require the Borrower to file a registration statement with the SEC or
apply to qualify such sale, assignment, transfer or participation under the
securities laws of any state; and provided further that no such sale, assignment
or transfer described in clause (i) above shall be effective unless and until a
Lender Assignment Agreement effecting such sale, assignment or transfer shall
have been delivered to the Administrative Agent and the Borrower and recorded as
provided in clause (b) of Section 10.11.1. Except as otherwise expressly
provided in this Section, no Lender shall, as between the Borrower and such
Lender, be relieved of any of its obligations hereunder as a result of any sale,
assignment or transfer of, or any granting of participations in, all or any part
of its Term Loan Commitment or the Term Loan or other Obligations owed to such
Lender.
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SECTION 10.11.1. Assignments.
(a) Amounts and Terms of Assignments. With notice to the Borrower and the
Administrative Agent, each Term Loan Commitment, Term Loan or other Obligation
may be assigned in any amount to another Lender, an Affiliate of the assigning
Lender or another Lender, any other Person or to any other Assignee Lender
(treating any two or more investment funds that invest in commercial loans and
that are managed or advised by the same investment advisor or by an Affiliate of
such investment advisor as a single Assignee Lender). To the extent of any such
assignment, the assigning Lender shall be relieved of its obligations with
respect to its Term Loan Commitment, Term Loan or other Obligations or the
portion thereof so assigned. The parties to each such assignment shall execute
and deliver to the Administrative Agent, for its acceptance and recording and
delivery to the Borrower, a Lender Assignment Agreement and such forms,
certificates or other evidence, if any, with respect to United States federal
income tax withholding matters as the assignee under such Lender Assignment
Agreement may be required to deliver to the Administrative Agent pursuant to
Section 4.6. Upon such execution, delivery, acceptance and recordation, from and
after the effective date specified in such Lender Assignment Agreement, (y) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Lender
Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and (z) the assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Lender Assignment Agreement relinquish its rights (other than any rights which
survive the termination of this Agreement under Section 10.4) and be released
from its obligations under this Agreement (and, in the case of a Lender
Assignment Agreement covering all or the remaining portion of an assigning
Lenders' rights and obligations under this Agreement, such Lender shall cease to
be a party hereto). The Term Loan Commitments hereunder shall be modified to
reflect the Term Loan Commitment of such assignee and any remaining Term Loan
Commitment of such assigning Lender and, if any such assignment occurs after the
issuance of the Term Notes hereunder, the assigning Lender shall, upon the
effectiveness of such assignment or as promptly thereafter as practicable,
surrender its Term Note to the Administrative Agent for cancellation, and
thereupon new Term Notes shall be issued to the assignee and to the assigning
Lender, with appropriate insertions, to reflect the outstanding Term Loans of
the assignee and/or the assigning Lender.
(b) Acceptance by Administrative Agent; Recordation in Register. Upon its
receipt of a Lender Assignment Agreement executed by an assigning Lender and an
assignee representing that it is an Assignee Lender, together with any forms,
certificates or other evidence with respect to United States federal income tax
withholding matters that such assignee may be required to deliver to the
Administrative Agent pursuant to Section 4.6, the Administrative Agent shall (i)
accept such Lender Assignment Agreement by executing a counterpart thereof as
provided therein, (ii) record the information contained therein in the records
maintained by the Administrative Agent relating to this Agreement, and (iii)
give prompt notice thereof to the Borrower. The Administrative Agent shall
maintain a copy of each Lender Assignment Agreement delivered to any accepted by
it as provided in this clause(b)(ii).
SECTION 10.11.2. Participations. The holder of any participation, other
than an Affiliate of the Lender granting such participation, shall not be
entitled to require such Lender to take or omit to take any action hereunder
except action directly affecting (i) the extension of the regularly scheduled
maturity of any portion of the principal amount of or interest on any Term
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Loan allocated to such participation or (ii) a reduction of the principal amount
of or the rate of interest payable on any Term Loan allocated to such
participation, and all amounts payable by the Borrower hereunder shall be
determined as if such Lender had not sold such participation. The Borrower and
each Lender hereby acknowledge and agree that, solely for purposes of Section
10.4, (a) any participation will give rise to a direct obligation of the
Borrower to the participant and (b) the participant shall be considered to be a
"Lender".
SECTION 10.11.3. Assignments to Federal Reserve Banks. In addition to the
assignments and participations permitted under the foregoing provisions of this
Section, any Lender may assign and pledge all or any portion of its Term Loan,
the other Obligations owed to such Lender, and its Term Note to any Federal
Reserve Bank as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any operating circular issued by
such Federal Reserve Bank, and with the consent of the Borrower and the
Administrative Agent, any Lender which is an investment fund may pledge all or
any portion of its Term Notes or Term Loans to its trustee in support of its
obligations to such trustee; provided that (i) no Lender shall, as between the
Borrower and such Lender, be relieved of any of its obligations hereunder as a
result of any such assignment and pledge and (ii) in no event shall such Federal
Reserve Bank or trustee be considered to be a "Lender" or be entitled to require
the assigning Lender to take or omit to take any action hereunder.
SECTION 10.11.4. Information. Each Lender may furnish any information
concerning the Borrower and its Subsidiaries in the possession of that Lender
from time to time to assignees and participants (including prospective assignees
and participants).
SECTION 10.11.5. Representations of Lenders. Each Lender listed on the
signature pages hereof hereby represents and warrants that (i) it is a
commercial lender, other financial institution or other "accredited investor"
(as defined in Regulation D of the Securities Act), (ii) it has experience and
expertise in the making of loans such as the Term Loans and (iii) it will make
its Term Loan for its own account in the ordinary course of its business and
without a view to distribution of such Term Loan within the meaning of the
Securities Act of 1933 or the Exchange Act or other federal securities laws (it
being understood that, subject to the provisions of this Section, the
disposition of such Term Loan or any interests therein shall at all times remain
within its exclusive control). Each Lender that becomes a party herein pursuant
to a Lender Assignment Agreement shall be deemed to agree that the
representations and warranties of such Lender contained in such Lender
Assignment Agreement are incorporated herein by this Agreement.
SECTION 10.12. Other Transactions. Nothing contained herein shall preclude
any Agent or any other Lender from engaging in any transaction, in addition to
those contemplated by this Agreement or any other Loan Document, with the
Borrower or any of its Affiliates in which the Borrower or such Affiliate is not
restricted hereby from engaging with any other Person.
SECTION 10.13. Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENTS, THE LENDERS OR THE
BORROWER RELATING THERETO SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY (TO THE
EXTENT PERMITTED UNDER APPLICABLE LAW) IN THE COURTS OF
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THE STATE OF NEW YORK, NEW YORK COUNTY, OR IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK. THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK,
NEW YORK COUNTY, AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION. THE BORROWER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF NEW YORK. THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE
BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES (TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW) SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 10.14. Waiver of Jury Trial. THE AGENTS, THE LENDERS AND THE
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF THE AGENTS, THE LENDERS OR THE BORROWER RELATING
THERETO. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE AGENTS AND THE LENDERS ENTERING INTO THIS AGREEMENT
AND EACH SUCH OTHER LOAN DOCUMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
WHEELING-PITTSBURGH
CORPORATION
By:____________________________________
Title:
DLJ CAPITAL FUNDING, INC., as
Syndication Agent, as Administrative
Agent and as a Lender
By:____________________________________
Title:
CITICORP USA, INC.
as Documentation Agent and as a Lender
By:____________________________________
Title:
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SCHEDULE I
DISCLOSURE SCHEDULE
SUBSIDIARIES
Wheeling-Pittsburgh Corporation Subsidiaries:
Wheeling-Pittsburgh Steel Corporation
Consumers Mining Company
Wheeling-Empire Company
Monessen Southwestern Railway Company
Mingo Oxygen Company
Pittsburgh-Canfield Corporation
Wheeling Construction Products, Inc.
Wheeling-Pittsburgh Steel Corporation Subsidiaries:
Wheeling Pittsburgh Funding, Inc.
WP Steel Venture Corp.
Consumers Mining Company Subsidiary:
W-P Coal Company
Wheeling-Construction Products, Inc. Subsidiary:
Champion Metal Products, Inc.
I-1
<PAGE> 69
SCHEDULE II
to Credit Agreement
PERCENTAGES
||
TERM LOAN
DLJ Capital Funding, Inc. 80%
Citicorp USA, Inc. 20%
||
ADMINISTRATIVE INFORMATION
Notice Information
Wheeling-Pittsburgh
Corporation Wheeling-Pittsburgh Corporation
1134 Market Street
Wheeling, West Virginia 26003
Fax:
Attention: Chief Financial Officer
Wheeling-Pittsburgh Corporation
110 East 59th Street
New York, New York 10022
Attention: Secretary
With copies to:
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
Fax: (212) 755-1467
Attention: Steven Wolosky, Esq.
DLJ Capital Funding, Inc.,
as Syndication Agent 277 Park Avenue
and Administrative Agent New York, New York 10172
Contact: Sheila O'Sullivan
Fax: 212-892-5286
Citicorp USA, Inc., 2 Penn's Way
as Documentation Agent Suite 200
Newcastle, Delaware 19721
Contact: Daniel Krauss
Fax: 302-894-6120
II-1
<PAGE> 70
Lenders' Domestic and LIBOR Offices
DLJ Capital Funding, Inc. 525 Washington Blvd.
Jersey City, New Jersey 07310
Contact: Ed Vowinkel
Fax: 201-610-1965
Citicorp USA, INC. 2 Penn's Way
Suite 200
Newcastle, Delaware 19721
Contact: Daniel Krauss
Fax: 302-894-6120
II-2
<PAGE> 1
EXHIBIT 4.3
AMENDMENT NO. 1 TO TERM LOAN AGREEMENT
THIS AMENDMENT NO. 1 TO TERM LOAN AGREEMENT (this "Amendment No. 1"),
dated as of December 31, 1997, among Wheeling-Pittsburgh Corporation, a Delaware
corporation (the "Borrower"), the various financial institutions from time to
time parties thereto (collectively, the "Lenders"), DLJ Capital Funding, Inc.,
as syndication agent (the "Syndication Agent") and administrative agent (the
"Administrative Agent") for the Lenders, and Citicorp USA, Inc., as
documentation agent (the "Documentation Agent") for the Lenders.
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, the Syndication Agent, the
Administrative Agent and the Documentation Agent are parties to a Term Loan
Agreement, dated as of November 26, 1997 (as heretofore modified and
supplemented and in effect from time to time, the "Term Loan Agreement"); and
WHEREAS, the Borrower has requested the Lenders to amend the Term Loan
Agreement to appoint a successor Administrative Agent; and
WHEREAS, the Borrower desires, and the Lenders are willing, upon the terms
and conditions hereinafter set forth, to amend the Term Loan Agreement as set
forth herein;
NOW, THEREFORE, in consideration of the agreements herein contained, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment No. 1, including its
preamble and recitals, have the following meanings (such meanings to be equally
applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Amendment No. 1" is defined in the preamble.
"Amendment Effective Date" is defined in Subpart 3.1.
<PAGE> 2
"Borrower" is defined in the preamble.
"Documentation Agent" is defined in the preamble.
"Lenders" is defined in the preamble.
"Syndication Agent" is defined in the preamble.
"Term Loan Agreement" is defined in the first recital.
SUBPART 1.2. Other Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment No. 1, including its
preamble and recitals, have the meanings ascribed thereto in the Term Loan
Agreement.
PART II
AMENDMENTS TO TERM LOAN AGREEMENT
Effective on (and subject to the occurrence of) the Amendment Effective
Date, the Term Loan Agreement is hereby amended in accordance with this Part II.
Except to the extent amended by this Amendment No. 1, the Term Loan Agreement is
and shall continue to be in full force and effect and is hereby
ratified and confirmed in all respects.
SUBPART 2.1. Amendment to Cover Page. The cover page of the Term Loan
Agreement is hereby amended to (i) delete the words "and the Administrative
Agent" from the caption for "DLJ CAPITAL FUNDING, INC." and (ii) insert
immediately after such caption a new caption entitled "NATIONAL CITY BANK, as
the Administrative Agent for t e Lenders,".
SUBPART 2.2. Amendment to Preamble. The preamble of the Term Loan
Agreement is hereby amended to (i) delete the word "and" immediately following
the underscored parenthetical reference to Syndication Agent appearing in the
fifth line thereof and (ii) insert in lieu thereof the following words:
"NATIONAL CITY BANK, acting through its Corporate Trust Department ("National
City"),".
SUBPART 2.3. Amendment to Section 1.1. Section 1.1 of the Term Loan
Agreement is amended to add the following new definition thereto in its
appropriate alphabetical order:
"National City" is defined in the preamble.
<PAGE> 3
SUBPART 2.4. Amendment to Section 9.1. Section 9.1 of the Term Loan Agreement is
hereby amended to (i) delete the word "and" immediately following the words
"Syndication Agent" appearing in the second line of such Section and (ii) insert
immediately thereafter the following words: ", National City as".
SUBPART 2.5. Amendment to Administrative Agent References. References to
DLJ in its capacity as "the Administrative Agent" contained in each other Loan
Document shall in each instance be replaced with a reference to "National City".
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Effective Date. This Amendment No. 1 shall be and become
effective upon the prior or concurrent satisfaction of each of the conditions
precedent set forth in this Subpart 3.1 (the "Amendment Effective Date").
SUBPART 3.1.1. Execution of Counterparts. The Agents shall have received
counterparts of this Amendment No. 1 duly executed by the Borrower, the
Syndication Agent, the Administrative Agent and the Lenders (or evidence thereof
satisfactory to the Agents).
SUBPART 3.2. Limitation. Except as expressly provided hereby, all of the
representations, warranties, terms, covenants and conditions of the Term Loan
Agreement and each other Loan Document shall remain unamended and unwaived and
shall continue to be, and shall remain, in full force and effect in accordance
with their respective terms. The amendments, modifications and consents set
forth herein shall be limited precisely as provided for herein, and shall not be
deemed to be a waiver of, amendment of, consent to or modification of any other
term or provision of the Term Loan Agreement or of any term or provision of any
other Loan Document or other instrument referred to therein or herein, or of any
transaction or further or future action on the part of the Borrower or any other
Person which would require the consent of the Agents or any of the Lenders under
the Term Loan Agreement or any such other Loan Document or instrument.
<PAGE> 4
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendment No. 1 to any
Part or Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment No. 1. References in this Amendment No. 1 to any Article or Section
are, unless otherwise specified, to such Article or Section of the Term Loan
Agreement.
SUBPART 4.2. Loan Document Pursuant to Term Loan Agreement. This Amendment
No. 1 is a Loan Document executed pursuant to the Term Loan Agreement and shall
(unless otherwise expressly indicated therein) be construed, administered and
applied in accordance with the terms and provisions of he Term Loan Agreement,
as amended hereby, including Article X thereof.
SUBPART 4.3. Counterparts, etc. This Amendment No. 1 may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
Agreement.
SUBPART 4.4. Governing Law. THIS AMENDMENT NO. 1 SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SUBPART 4.5. Successors and Assigns. This Amendment No. 1 shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to
be executed by their respective officers hereunto duly authorized as of the day
and year first above written.
WHEELING-PITTSBURGH
CORPORATION
By_______________________________
Title:
<PAGE> 6
DLJ CAPITAL FUNDING, INC.,
as the Syndication Agent and
as Lender
By_______________________________
Title:
<PAGE> 7
NATIONAL CITY BANK, acting
through its Corporate Trust
Department, as the
Administrative Agent
By_______________________________
Title:
<PAGE> 8
BANK OF MONTREAL
By_______________________________
Title:
<PAGE> 9
ING BARING (U.S.) CAPITAL
CORPORATION
By_______________________________
Title:
<PAGE> 10
MERRILL LYNCH DEBT STRATEGIES
PORTFOLIO
By: Merrill Lynch Asset
Management, L.P., as
Investment Advisor
By_______________________________
Title:
<PAGE> 11
SENIOR HIGH INCOME PORTFOLIO,
INC.
By_______________________________
Title:
<PAGE> 12
AMERICAN LIFE & CASUALTY
INSURANCE
By_______________________________
Title:
<PAGE> 13
CONSECO LIFE INSURANCE COMPANY
By_______________________________
Title:
<PAGE> 14
KZH HOLDING CORPORATION III
By_______________________________
Title:
<PAGE> 15
FRANKLIN PRINCIPAL MATURITY
TRUST
By_______________________________
Title:
<PAGE> 16
PAMCO CAYMAN LTD.
By_______________________________
Title:
<PAGE> 17
THE CHASE MANHATTAN BANK
By_______________________________
Title:
<PAGE> 18
ML CBO IV (CAYMAN LTD.)
By_______________________________
Title:
<PAGE> 19
TCW LEVERAGED INCOME TRUST
By_______________________________
Title:
<PAGE> 1
EXHIBIT 4.6
Execution Copy
AMENDMENT NO. 2 TO THE
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of June 30, 1997
AMENDMENT NO. 2 TO THE SECOND AMENDED AND RESTATED CREDIT AGREEMENT
among WHEELING-PITTSBURGH STEEL COMPANY, a Delaware corporation (the
"Borrower"), the banks, financial institutions and other institutional lenders
parties to the Credit Agreement referred to below (collectively, the "Lenders")
and CITIBANK, N.A., as agent (the "Agent"), and as issuing agent (the "Issuing
Agent").
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders, the Agent and the Issuing Agent have
entered into a Second Amended and Restated Credit Agreement dated as of December
28, 1995 (as amended, supplemented or otherwise modified through the date
hereof, the "Credit Agreement"). Capitalized terms not otherwise defined in this
Amendment have the meanings specified in the Credit Agreement.
(2) The Borrower and the Lenders have agreed to amend the Credit
Agreement as hereinafter set forth.
SECTION 1. Amendments to Credit Agreement. The Credit Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 2, hereby amended as follows:
(a) Section 1.01 is amended by adding the following defined terms in
appropriate alphabetical order:
"Amendment Termination Date" means the earlier of (a) the date
that is 30 days after the Plant Restart Date and (b) October 30,
1997.
"Plant Restart Date" means 60 days after hourly workers
formerly covered by the labor agreement with the USWA which expired
on October 1, 1996 return to work.
<PAGE> 2
2
(b) Section 3.3 is amended by adding a new subsection (e) to read as
follows:
(e) For any Loan made or Letter of Credit issued during the
period starting June 30, 1997 and ending on the Amendment
Termination Date, WHX shall have made Parent Loans to the Borrower
during such period in an amount not less than the requested Loan or
the stated amount of the requested Letter of Credit, provided that
the aggregate amount of such Parent Loans required to be made during
such period shall not exceed the cumulative amount set forth below
for each of the months set forth:
Period from
June 30, 1997 Through Cumulative Amount
--------------------- -----------------
July 31, 1997 $ 6,000,000
August 31, 1997 11,000,000
September 30,1997 16,000,000
October 31, 1997 22,000,000
(c) Section 5.1 is amended (i) by deleting the words "shall maintain
for" and substituting therefor the words "shall maintain as of the last
day of" and (ii) by adding after the amount set opposite the date
September 30, 1997 the words "or, if the Amendment Termination Date has
not occurred, $285,000,000".
(d) Section 5.2 is amended (i) by deleting the words "shall maintain
for" and substituting therefor the words "shall maintain as of the last
day of"and (ii) by adding after the ratio set opposite the date September
30, 1997 the words "or, if the Amendment Termination Date has not
occurred, 4.20: 1.00".
(e) Section 5.3 is amended (i) by deleting the words "shall maintain
for" and substituting therefor the words "shall maintain as of the last
day of" and (ii) by adding after the amount set opposite the date
September 30, 1997 the words "or, if the Amendment Termination Date has
not occurred, none".
(f) Section 5.4 is amended (i) by deleting the words "shall maintain
for" and substituting therefor the words "shall maintain as of the last
day of" and (ii) by adding after the amount set opposite the date
September 30, 1997 the words "or, if the Amendment Termination Date has
not occurred, $(115,000,000)".
SECTION 2. Conditions of Effectiveness. This Amendment shall become
effective as of the date first above written on the Business Day when, and only
when, the following conditions shall have been satisfied:
<PAGE> 3
3
(a) The Agent shall have received counterparts of this Amendment
executed by the Borrower, each other Loan Party and the Majority Lenders
or, as to any of the Lenders, advice satisfactory to the Agent that such
Lenders have executed this Amendment.
(b) The Agent shall have received a certificate signed by a duly
authorized officer of the Borrower stating that:
(i) The representations and warranties contained in the Credit
Agreement and each Loan Document are correct on and as of the date
of such certificate as though made on and as of the date hereof
other than any such representations or warranties that, by their
terms, refer to a date other than the date of such certificate; and
(ii) No event has occurred and is continuing that constitutes
a Default or an Event of Default.
The effectiveness of this Amendment is conditioned upon the accuracy of the
factual matters described herein. This Amendment is subject to the provisions of
Section 10.1 of the Credit Agreement.
SECTION 3. Reference to and Effect on the Credit Agreement and the
Notes. (a) On and after the effectiveness of this Amendment, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Credit Agreement, and each reference in each of the Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement, as amended by this Amendment.
(b) The Credit Agreement and each of the Loan Documents, as
specifically amended by this Amendment, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any Lender, the Agent, or the Issuing Agent under the
Credit Agreement or any Loan Document, nor constitute a waiver of any provision
of the Credit Agreement or any Loan Document.
SECTION 4. Costs and Expenses. The Borrower agrees to pay on demand
all costs and expenses of the Agent and the Issuing Agent in connection with the
preparation, execution, delivery and administration, modification and amendment
of this Amendment and the other instruments and documents to be delivered
hereunder (including, without limitation,
<PAGE> 4
4
the reasonable fees and expenses of counsel for the Agent and the Issuing Agent)
in accordance with the terms of Section 10.4(a) of the Credit Agreement.
SECTION 5. Execution in Counterparts. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.
Delivery of an executed counterpart of a signature page to this Amendment by
telecopier shall be effective as delivery of a manually executed counterpart of
this Amendment.
SECTION 6. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
BORROWER
WHEELING-PITTSBURGH STEEL
CORPORATION
By:_______________________________
Name:
Title:
AGENT
CITIBANK, N.A., as Agent
By:_______________________________
Name:
Title:
<PAGE> 5
5
LENDERS
CITICORP USA, INC.
By:_______________________________
Name:
Title:
CORESTATES BANK, N.A.
By:_______________________________
Name:
Title:
BANKAMERICA BUSINESS CREDIT, INC.
By:_______________________________
Name:
Title:
STAR BANK, N.A.
By:_______________________________
Name:
Title:
<PAGE> 6
6
NATIONSBANK, N.A.
By:_______________________________
Name:
Title:
NATIONAL CITY COMMERCIAL
FINANCE, INC.
By:_______________________________
Name:
Title:
ISSUER (AND NOT LENDER)
CITIBANK, N.A.
By:_______________________________
Name:
Title:
<PAGE> 7
7
CONSENTED TO AND ACKNOWLEDGED:
WHEELING-PITTSBURGH CORPORATION
By:_____________________________________________________________________________
________________________________Title:
WHEELING CONSTRUCTION PRODUCTS, INC.
By:_____________________________________________________________________________
________________________________Title:
PITTSBURGH-CANFIELD CORPORATION
By:_____________________________________________________________________________
________________________________Title:
UNIMAST INCORPORATED
By:_____________________________________________________________________________
________________________________Title:
<PAGE> 1
EXHIBIT 4.7
EXECUTION COPY
WAIVER, CONSENT AND
AMENDMENT NO. 3 TO THE
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of September 30, 1997
WAIVER, CONSENT AND AMENDMENT NO. 3 TO THE SECOND AMENDED AND
RESTATED CREDIT AGREEMENT (this "Amendment") is entered into by
WHEELING-PITTSBURGH STEEL COMPANY, a Delaware corporation (the "Borrower"), the
banks, financial institutions and other institutional lenders parties to the
Credit Agreement referred to below (collectively, the "Lenders") and CITIBANK,
N.A., as agent (the "Agent").
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders, Agent and Issuing Bank have entered
into a Second Amended and Restated Credit Agreement dated as of December 28,
1995 (as amended, supplemented or otherwise modified through the date hereof,
the "Credit Agreement"). Capitalized terms not otherwise defined in this
Amendment have the meanings specified in the Credit Agreement.
(2) Wheeling-Pittsburgh Corporation, a Delaware corporation
("Holdings"), has entered into negotiations to refund and replace the Permanent
Financing Notes as more particularly described in Exhibit A hereto (the
"Replacement Transaction").
(3) The Borrower and the Lenders have agreed to amend the Credit
Agreement as hereinafter set forth to, among other things, permit the
Replacement Transaction, as hereinafter set forth.
SECTION 1. Amendments to Credit Agreement. The Credit Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 2, hereby amended as follows:
(a) Section 1.1 is amended by (i) amending the definition of
"EBITDA" in full to read as follows:
"EBITDA" means, for any Person for any period, the
EBITDA for such Person for such period plus (a) any increase in the
long term liability in respect of other post-employment benefit or
pension benefit that would be
<PAGE> 2
2
reflected on a consolidated balance sheet of such Person and its
Subsidiaries (the "Employee Liability") for such period and (b) any
decrease in pension asset that would be reflected on a consolidated
balance sheet of such Person and its Subsidiaries (the "Pension
Asset") for such period less (a) any decrease in the Employee
Liability for such period and (b) any increase in the Pension Asset
for such period.
(ii) amending the definition of "Indentures" in full to read
as follows:
"Indentures" means the Replacement Indenture.
(iii) adding the following definitions in proper alphabetical
sequence:
"Replacement Indenture" means the indenture
incorporating terms and conditions no less favorable to Holdings
than those terms and conditions set forth in Exhibit S hereto to be
entered into to refinance the Permanent Financing Notes, between
Holdings and the trustee thereunder, pursuant to which the
Replacement Notes are issued, as the same may be amended,
supplemented or modified from time to time.
"Replacement Notes" means Holding's market rate senior
notes with a term of not less than five years, issued pursuant to
the Replacement Indenture.
(b) Section 3.3(e) is amended by deleting the date October 31, 1997
and the amount set opposite such date.
(c) Section 4.11 is amended in full to read as follows:
4.11. Replacement Notes. The Replacement Indenture has
not been amended or modified since its effective date in any respect
that imposes terms and conditions less favorable to Holdings that
the description of the terms and conditions set forth on Exhibit S
hereto and no provision therein has been waived and no event has
occurred or condition exists under the Replacement Notes, the effect
of such event or condition is to accelerate or permit the
acceleration of the maturity of the Replacement Notes.
(d) Section 4.12 (a) is amended by deleting the parenthetical phrase
in clause (iii) thereof and replacing it with the following:
<PAGE> 3
3
(except a non-payment default on any of the Replacement Notes, the
effect of which is not to accelerate or permit the acceleration of
the maturity of the Replacement Notes)
(e) Section 5.1 is amended by deleting the amounts set opposite the
following dates and substituting therefor the amount set forth below
opposite each such date:
September 30, 1997 315,000,000
December 31, 1997 320,000,000
March 31, 1998 320,000,000
June 30, 1998 325,000,000
September 30, 1998 330,000,000
December 31, 1998 330,000,000
(f) Section 5.2 is amended by deleting the ratios set opposite the
following dates and substituting therefor the ratio set forth below
opposite each such date:
September 30, 1997 4.00:1.00
December 31, 1997 4.00:1.00
March 31, 1998 3.90:1.00
June 30, 1998 3.90:1.00
September 30, 1998 3.80:1.00
December 31, 1998 3.80:1.00
(g) Section 5.3 is amended by deleting the ratios set opposite the
following dates and substituting therefor the word or ratio set forth
below opposite each such date:
September 30, 1997 none
December 31, 1997 none
March 31, 1998 none
June 30, 1998 0.05:1.00
September 30, 1998 1.70:1.00
December 31, 1998 1.40:1.00
<PAGE> 4
4
(h) Section 5.4 is amended by deleting the amounts set opposite the
following dates and substituting therefor the amount set forth below
opposite each such date:
September 30, 1997 (125,000,000)
December 31, 1997 (130,000,000)
March 31, 1998 (120,000,000)
June 30, 1998 (115,000,000)
September 30, 1998 (100,000,000)
December 31, 1998 (100,000,000)
(i) Section 5.5 is amended by deleting the amounts set opposite the
following dates and substituting therefor the amount set forth below
opposite each such date:
September 30, 1997 75,000,000
December 31, 1997 85,000,000
March 31, 1998 95,000,000
June 30, 1998 105,000,000
September 30, 1998 130,000,000
December 31, 1998 150,000,000
(j) Section 6.11(h) is amended in full to read as follows:
(h) promptly after the sending or filing thereof, copies
of all notices, certificates or report delivered by Holdings
pursuant to the Indentures or to holders of the Replacement Notes;
(k) Section 7.1(c) is amended in full to read as follows:
(c) Liens on the Collateral (as defined in each of the
Indentures) securing the guaranty, if any, by any Loan Party under
the Replacement Notes;
(l) Section 7.2 is amended by (i) amending clause (l) in full to
read as follows:
(l) Indebtedness constituting a renewal, extension,
refinancing or refunding of Indebtedness described in Sections
7.2(d), (g) and (n), (i) for a principal amount not in excess of the
principal amount of such
<PAGE> 5
5
Indebtedness, (ii) in the case of Indebtedness described in Sections
7.2(d) and 7.2(g), on other terms and conditions as or more
favorable to the Borrower, any Guarantor and their Subsidiaries than
the terms of the indebtedness being renewed, extended or refunded
and (iii) in the case of Indebtedness described in Section 7.2(n),
on other terms and conditions as or more favorable to the Borrower,
any Guarantor and their Subsidiaries than those set forth in Exhibit
S hereto; provided, however, that the aggregate principal amount of
all such Indebtedness incurred by Holdings shall not exceed
$350,000,000; and
(ii) inserting immediately after clause (m) a new clause
(n) to read "(n) Indebtedness of Holdings arising under the
Replacement Notes".
(m) Section 7.10(b) is amended in full to read as follows:
(b) the guaranty, if any, by any Loan Party of the
Replacement Notes or any renewal, extension, refinancing or
refunding thereof for a principal amount not in excess of the
Replacement Notes outstanding at such time and on the terms and
conditions as or more favorable to Holdings, the Borrowers and it
Subsidiaries;
(n) Section 8.1(o) is amended by (i) deleting from clause (i)
thereof the words "the First Mortgage Notes, the Permanent Financing
Notes" and substituting therefor the words "the Replacement Notes" and
(ii) deleting from clause (iii) thereof the words "any First Mortgage
Note, any Permanent Financing Note" and substituting therefor the words
"any Replacement Note".
(o) Schedule II to the Credit Agreement is amended by deleting the
amounts set opposite the following Lenders and substituting therefor the
commitment amounts set forth below opposite each such Lender:
<TABLE>
<CAPTION>
Name of Lender Commitment
-------------- ----------
<S> <C>
Citicorp USA, Inc. $29,000,000
BankAmerica Business Credit, Inc. $29,000,000
CoreStates Bank, N.A. $29,000,000
Star Bank, N.A. $20,000,000
NationsBank, N.A. $25,000,000
National City Commercial Finance, Inc. $18,000,000
</TABLE>
<PAGE> 6
6
(p) A new Exhibit S is added to the Credit Agreement to read as set
forth as Exhibit B to this Amendment.
SECTION 2. Waiver and Consent. Subject to the satisfaction of the
conditions precedent set forth in Section 3, the Majority Lenders hereby consent
to the repayment of the Holdings Note and other intercompany Indebtedness in an
aggregate amount not to exceed the excess of the net cash proceeds of the
Replacement Notes over the aggregate amount of Indebtedness outstanding under
the Permanent Financing Notes and, in furtherance thereof, agree to waive
Section 2 of the Holdings Intercreditor Agreement and Section 7.11 of the Credit
Agreement, in each case to the extent required to permit such repayments.
SECTION 3. Conditions of Effectiveness. This Amendment shall become
effective as of the date first above written on the Business Day when, and only
when, the following conditions shall have been satisfied:
(a) The Agent shall have received counterparts of this Amendment
executed by the Borrower, each other Loan Party, each Lender with an
increased commitment as set forth in Section 1(o) above and the Majority
Lenders or, as to any of the Lenders, advice satisfactory to the Agent
that such Lenders have executed this Amendment.
(b) The Agent shall have received a certificate signed by a duly
authorized officer of the Borrower stating that:
(i) The representations and warranties contained in the Credit
Agreement and each Loan Document are correct on and as of the date
of such certificate as though made on and as of the date hereof
other than any such representations or warranties that, by their
terms, refer to a date other than the date of such certificate; and
(ii) No event has occurred and is continuing that constitutes
a Default or an Event of Default.
(c) The Borrower shall have paid to the Agent for the ratable
benefit of the Lenders an amendment fee equal to 0.125% of the aggregate
Revolving Credit Commitments of all Lenders, calculated without giving
effect to Section 1(h) of this Amendment.
The effectiveness of this Amendment is conditioned upon the accuracy of the
factual matters described herein. This Amendment is subject to the provisions of
Section 10.1 of the Credit Agreement.
<PAGE> 7
7
SECTION 4. Reference to and Effect on the Loan Documents. (a) On and
after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in each of the Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement shall mean and be a reference to the
Credit Agreement, as amended by this Amendment.
(b) The Credit Agreement and each of the Loan Documents, as
specifically amended by this Amendment, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any Lender, the Agent, or the Issuing Bank under the
Credit Agreement or any Loan Document, nor constitute a waiver of any provision
of the Credit Agreement or any Loan Document.
SECTION 5. Costs and Expenses. The Borrower agrees to pay on demand
all costs and expenses of the Agent in connection with the preparation,
execution, delivery and administration, modification and amendment of this
Amendment and the other instruments and documents to be delivered hereunder
(including, without limitation, the reasonable fees and expenses of counsel for
the Agent) in accordance with the terms of Section 10.4(a) of the Credit
Agreement.
SECTION 6. Execution in Counterparts. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.
Delivery of an executed counterpart of a signature page to this Amendment by
telecopier shall be effective as delivery of a manually executed counterpart of
this Amendment.
SECTION 7. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
<PAGE> 8
8
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
BORROWER
WHEELING-PITTSBURGH STEEL
CORPORATION
By:_______________________________
Name:
Title:
AGENT
CITIBANK, N.A., as Agent
By:_______________________________
Name:
Title:
LENDERS
CITICORP USA, INC.
By:_______________________________
Name:
Title:
<PAGE> 9
9
CORESTATES BANK, N.A.
By:_______________________________
Name:
Title:
BANKAMERICA BUSINESS CREDIT, INC.
By:_______________________________
Name:
Title:
STAR BANK, N.A.
By:_______________________________
Name:
Title:
NATIONSBANK, N.A.
By:_______________________________
Name:
Title:
NATIONAL CITY COMMERCIAL
FINANCE, INC.
By:_______________________________
Name:
Title:
<PAGE> 10
10
CONSENTED TO AND ACKNOWLEDGED:
WHEELING-PITTSBURGH CORPORATION
By:_______________________________
Name:
Title:
WHEELING CONSTRUCTION PRODUCTS,
INC.
By:_______________________________
Name:
Title:
PITTSBURGH-CANFIELD CORPORATION
By:_______________________________
Name:
Title:
UNIMAST INCORPORATED
By:_______________________________
Name:
Title:
<PAGE> 1
EXHIBIT 4.8
EXECUTION COPY
AMENDMENT NO. 4 TO THE
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of November 19, 1997
AMENDMENT NO. 4 TO THE SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(this "Amendment") is entered into by WHEELING-PITTSBURGH STEEL COMPANY, a
Delaware corporation (the "Borrower"), the banks, financial institutions and
other institutional lenders parties to the Credit Agreement referred to below
(collectively, the "Lenders") and CITIBANK, N.A., as agent (the "Agent").
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders, Agent and Issuing Bank have entered
into a Second Amended and Restated Credit Agreement dated as of December 28,
1995 (as amended, supplemented or otherwise modified through the date hereof,
the "Credit Agreement"). Capitalized terms not otherwise defined in this
Amendment have the meanings specified in the Credit Agreement.
(2) Pursuant to a waiver, consent and amendment to the Credit
Agreement dated as of September 30, 1997 ("Amendment No. 3"), the Lenders
agreed, among other things, to amend certain provisions of the Credit Agreement
to permit the Replacement Transaction (as defined in Amendment No. 3).
(3) The Borrower has requested that the Lenders agree to an increase
in the aggregate principal amount of the Replacement Notes and to correct a
drafting error in Amendment No. 3.
(4) The Lenders have agreed to amend Amendment No. 3 to the Credit
Agreement as hereinafter set forth.
SECTION 1. Amendments to Amendment No. 3. Amendment No. 3 is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 3, hereby amended as follows:
(a) Section 1(a)(i) is deleted in full, resulting in a definition of
"EBITDA" that is unchanged from such definition as in effect prior to the
effectiveness of Amendment No. 3.
<PAGE> 2
2
(b) Exhibit A to Amendment No. 3 is amended by deleting the figure
"$350 million" and substituting therefor the figure "$450 million".
(c) Section 1(l) is amended by deleting the figure "$350 million" and
substituting therefor the figure "$450 million".
SECTION 2. Amendments to Credit Agreement. The Credit Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 3, hereby amended as follows:
(a) by amending the definition of "Adjusted EBITDA" in Section 1.1
in full to read as follows:
"Adjusted EBITDA" means, for any Person for any period, the
EBITDA for such Person for such period plus (a) any increase in the
long term liability in respect of other post-employment benefit or
pension benefit that would be reflected on a consolidated balance
sheet of such Person and its Subsidiaries (the "Employee Liability")
for such period and (b) any decrease in pension asset that would be
reflected on a consolidated balance sheet of such Person and its
Subsidiaries (the "Pension Asset") for such period less (a) any
decrease in the Employee Liability for such period and (b) any
increase in the Pension Asset for such period.
(b) by amending the definition of "Indentures" in Section 1.1 in full
to read as follows:
"Indentures" means, (a) until the issuance of the
Replacement Notes, collectively, (i) the Permanent Financing Indenture
and (ii) the First Mortgage Indenture, and (b) after the issuance of
the Replacement Notes, (i) the Replacement Indenture and (ii) the Term
Loan Agreement, if any.
(c) by amending the definition of "Replacement Indenture" in Section
1.1 in full to read as follows:
"Replacement Indenture" means the indenture incorporating
terms and conditions no less favorable to Holdings than those terms
and conditions set forth in Exhibit S hereto to be entered into to
refinance the Permanent Financing Notes, between Holdings and the
trustee thereunder, pursuant to which the Replacement Notes are
issued, as the same may be amended, supplemented or modified from time
to time; provided, however, that the aggregate principal amount of
Replacement Notes that may be issued
<PAGE> 3
3
pursuant to the Replacement Indenture and the Term Loan Agreement shall not
exceed in the aggregate $450,000,000.
(d) by amending the definition of "Replacement Notes" in Section 1.1 in
full to read as follows:
"Replacement Notes" means Holdings market rate senior notes, whether
fixed rate or floating, issued in one or more series, with a term of not
less than five years, issued pursuant to the Replacement Indenture, the
Term Loan Agreement, or a combination thereof.
(e) by adding the following definition to Section 1.1:
"Term Loan Agreement" means the term loan agreement, if any,
incorporating terms and conditions no less favorable to Holdings than those
terms and conditions set forth in Exhibit S hereto (other than a floating
interest rate and an optional call provision one year from issuance) to be
entered into to refinance the Permanent Financing Notes, between Holdings
and the purchasers under the foregoing term loan agreement, pursuant to
which the Replacement Notes are issued, as the same may be amended,
supplemented or otherwise modified from time to time; provided, however,
that the aggregate principal amount of Replacement Notes that may be issued
pursuant to the Replacement Indenture and the Term Loan Agreement shall not
exceed in the aggregate $450,000,000.
(f) by amending Section 4.11 in full to read as follows:
4.11. Replacement Notes. Neither the Replacement Indenture nor the
Term Loan Agreement has been amended or modified since its effective date
in any respect that imposes terms and conditions less favorable to Holdings
that the description of the terms and conditions set forth on Exhibit S
hereto (other than (a) a floating interest rate and an optional call
provision one year from issuance for Replacement Notes issued pursuant to
the Term Loan Agreement and (b) that the aggregate principal amount of the
Replacement Notes shall not exceed $450,000,000) and no provision therein
has been waived and no event has occurred or condition exists under any of
the Replacement Notes, the effect of such event or condition is to
accelerate or permit the acceleration of the maturity of any of the
Replacement Notes.
(g) by amending Section 4.12(a) by deleting the parenthetical phrase in
clause (iii) thereof and replacing it with the following:
<PAGE> 4
4
(except a non-payment default on any of the Replacement Notes, the
effect of which is not to accelerate or permit the acceleration of the
maturity of any of the Replacement Notes)
SECTION 3. Conditions of Effectiveness. This Amendment shall become
effective as of the date first above written on the Business Day when, and
only when, the following conditions shall have been satisfied:
(a) the Agent shall have received counterparts of this Amendment
executed by the Borrower, each other Loan Party and the Majority Lenders
or, as to any of the Lenders, advice satisfactory to the Agent that such
Lenders have executed this Amendment; and
(b) the Agent shall have received a certificate signed by a duly
authorized officer of the Borrower stating that:
(i) The representations and warranties contained in the Credit
Agreement and each Loan Document are correct on and as of the date of
such certificate as though made on and as of the date hereof other
than any such representations or warranties that, by their terms,
refer to a date other than the date of such certificate; and
(ii) No event has occurred and is continuing that constitutes a
Default or an Event of Default.
The effectiveness of this Amendment is conditioned upon the accuracy of the
factual matters described herein. This Amendment is subject to the provisions
of Section 10.1 of the Credit Agreement.
SECTION 4. Reference to and Effect on the Loan Documents. (a) On and
after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in each of the Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement shall mean and be a reference to the
Credit Agreement, as amended by this Amendment.
(b) The Credit Agreement and each of the Loan Documents, as
specifically amended by this Amendment, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
<PAGE> 5
5
(c) The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any Lender, the Agent, or the Issuing Bank under the
Credit Agreement or any Loan Document, nor constitute a waiver of any provision
of the Credit Agreement or any Loan Document.
SECTION 5. Costs and Expenses. The Borrower agrees to pay on demand
all costs and expenses of the Agent in connection with the preparation,
execution, delivery and administration, modification and amendment of this
Amendment and the other instruments and documents to be delivered hereunder
(including, without limitation, the reasonable fees and expenses of counsel for
the Agent) in accordance with the terms of Section 10.4(a) of the Credit
Agreement.
SECTION 6. Execution in Counterparts. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.
SECTION 7. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto dully authorized, as of the
date first above written.
BORROWER
WHEELING-PITTSBURGH STEEL
CORPORATION
By:_______________________
Name:
Title:
AGENT
CITIBANK, N.A., as Agent
<PAGE> 6
6
By:_________________________
Name:
Title:
LENDERS
CITICORP USA, INC.
By:_________________________
Name:
Title:
CORESTATES BANK, N.A.
By:_________________________
Name:
Title:
BANKAMERICA BUSINESS CREDIT, INC.
By:_________________________
Name:
Title:
STAR BANK, N.A.
By:_________________________
Name:
Title:
<PAGE> 7
7
NATIONSBANK, N.A.
By:
--------------------------
Name:
Title:
NATIONAL CITY COMMERCIAL
FINANCE, INC.
By:
--------------------------
Name:
Title:
<PAGE> 8
8
CONSENTED TO AND ACKNOWLEDGED:
WHEELING-PITTSBURGH CORPORATION
By:
--------------------------
Name:
Title:
WHEELING CONSTRUCTION PRODUCTS, INC.
By:
--------------------------
Name:
Title:
PITTSBURGH-CANFIELD CORPORATION
By:
--------------------------
Name:
Title:
UNIMAST INCORPORATED
By:
--------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.9
EXECUTION COPY
AMENDMENT NO. 5 TO THE
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of November 28, 1997
AMENDMENT NO. 5 TO THE SECOND AMENDED AND RESTATED CREDIT
AGREEMENT (this "Amendment") is entered into by WHEELING-PITTSBURGH STEEL
CORPORATION, a Delaware corporation (the "Borrower"), the banks, financial
institutions and other institutional lenders parties to the Credit Agreement
referred to below (collectively, the "Lenders") and CITIBANK, N.A., as agent
(the "Agent").
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders, Agent and Issuing Bank have
entered into a Second Amended and Restated Credit Agreement dated as of December
28, 1995 (as amended, supplemented or otherwise modified through the date
hereof, the "Credit Agreement"). Capitalized terms not otherwise defined in this
Amendment have the meanings specified in the Credit Agreement.
(2) The Borrower and the Lenders have agreed to amend the
Credit Agreement as hereinafter set forth.
SECTION 1. Amendments to Credit Agreement. The Credit
Agreement is, effective as of the date hereof and subject to the satisfaction of
the conditions precedent set forth in Section 2, hereby amended as follows:
(a) Section 1.1 is amended by amending the definition of
"Cumulative Cash Flow" in full to read as follows:
"Cumulative Cash Flow" means "net cash flow from
operations" (as such term is construed in accordance with GAAP and as
such term is included in the Projections) of the Loan Party
Consolidated Group plus (a) advances made to any Loan Party by WHX, (b)
increases in the aggregate "Trust Invested Amount" (under and as
defined in the Securitization Documents) (in each case, to the extent
that such amounts have not been included in the calculation of "net
cash flow from operations") and (c) $41,500,000 minus (a) "net cash
flow from investing activities" (as such term is construed in
accordance with GAAP and as such term is included in the Projections)
of the Loan Party Consolidated Group, (b) payments made by any Loan
Party to WHX in
<PAGE> 2
2
respect of Keepwell Payments or otherwise, (c) reductions in the
aggregate "Trust Invested Amount" (under and as defined in the
Securitization Documents) and (d) repayments of the principal amount of
any Debt of the Loan Party Consolidated Group other than Debt under the
Loan Documents (in each case, to the extent that such amounts have not
been included in the calculation of "net cash flow from operations").
(b) Section 1.1 is amended by adding the following defined
term in appropriate alphabetical order:
"Fiscal Month" means one calendar month.
(c) Section 5.1 is amended by deleting the amounts set
opposite the following dates and substituting therefor the amount set
forth below opposite each such date:
December 31, 1997 250,000,000
March 31, 1998 245,000,000
June 30, 1998 245,000,000
September 30, 1998 245,000,000
December 31, 1998 245,000,000
March 31, 1999 210,000,000
(d) Section 5.2 is amended by deleting the ratios set opposite
the following dates and substituting therefor the ratio set forth below
opposite each such date:
December 31, 1997 5.25:1.00
March 31, 1998 5.5:1.00
June 30, 1998 5.6:1.00
September 30, 1998 5.5:1.00
December 31, 1998 5.5:1.00
March 31, 1999 6.6:1.00
<PAGE> 3
3
(e) Section 5.3 is amended by deleting the ratios set opposite
the following dates and substituting therefor the word or ratio set
forth below opposite each such date:
December 31, 1997 N/A
March 31, 1998 N/A
June 30, 1998 N/A
September 30, 1998 N/A
December 31, 1998 N/A
March 31, 1999 0.5:1.00
(f) Section 5.4 is amended by (i) by deleting the words
"Fiscal Quarter" and substituting therefor the words "Fiscal Month" and
(ii) by substituting for the dates "December 31, 1997" through "March
31, 1999" the amount set forth below opposite each such date:
November 30, 1997 (110,000,000)
December 31, 1997 (110,000,000)
January 31, 1998 (120,000,000)
February 28, 1998 (145,000,000)
March 31, 1998 (145,000,000)
April 30, 1998 (145,000,000)
May 31, 1998 (145,000,000)
June 30, 1998 (145,000,000)
July 31, 1998 (140,000,000)
August 31, 1998 (140,000,000)
September 30, 1998 (130,000,000)
October 31, 1998 (130,000,000)
November 30, 1998 (120,000,000)
December 31, 1998 (115,000,000)
January 31, 1999 (120,000,000)
February 28, 1999 (120,000,000)
March 31, 1999 (125,000,000)
(g) Section 5.5 is amended by deleting the amounts set
opposite the following dates and substituting therefor the amount set
forth below opposite each such date:
<PAGE> 4
4
December 31, 1997 85,000,000
March 31, 1998 95,000,000
June 30, 1998 115,000,000
September 30, 1998 130,000,000
December 31, 1998 145,000,000
March 31, 1999 155,000,000
(h) Section 7.6 is amended by (i) deleting clause (ii) from
subsection (f) and substituting therefor the phrase "Intentionally
omitted"
(ii) deleting the word "and" after the semicolon in subsection
(h);
(iii) deleting the period at the end of subsection (i) and
inserting in place thereof a semicolon followed by the word "and"; and
(iv) adding as subsection (j) the following language:
"(j) (i) Investments in or advances to Ohio Coating Company
made through December 31, 1997 and (ii) Investments or advances from
and after December 31, 1997; provided that no Default or Event of
Default has occurred and is continuing or would result therefrom and
the amount of such Investments or advances permitted pursuant to this
subsection (j) made from and after December 31, 1997 shall not exceed
in the aggregate $10,000,000."
SECTION 2. Conditions of Effectiveness. This Amendment shall
become effective as of the date first above written on the Business Day when,
and only when, the following conditions shall have been satisfied:
(a) The Agent shall have received counterparts of this
Amendment executed by the Borrower, each other Loan Party and the
Majority Lenders or, as to any of the Lenders, advice satisfactory to
the Agent that such Lenders have executed this Amendment.
(b) The Agent shall have received a certificate signed by a
duly authorized officer of the Borrower stating that:
(i) The representations and warranties contained in
the Credit Agreement and each Loan Document are correct on and
as of the date of such certificate as though made on and as of
the date hereof other than any such
<PAGE> 5
5
representations or warranties that, by their terms, refer to a
date other than the date of such certificate; and
(ii) No event has occurred and is continuing that
constitutes a Default or an Event of Default.
The effectiveness of this Amendment is conditioned upon the accuracy of the
factual matters described herein. This Amendment is subject to the provisions of
Section 10.1 of the Credit Agreement.
SECTION 3. Reference to and Effect on the Loan Documents. (a)
On and after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in each of the Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement shall mean and be a reference to the
Credit Agreement, as amended by this Amendment.
(b) The Credit Agreement and each of the Loan Documents, as
specifically amended by this Amendment, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender, the Agent, or the Issuing Bank under
the Credit Agreement or any Loan Document, nor constitute a waiver of any
provision of the Credit Agreement or any Loan Document.
SECTION 4. Costs and Expenses. The Borrower agrees to pay on
demand all costs and expenses of the Agent in connection with the preparation,
execution, delivery and administration, modification and amendment of this
Amendment and the other instruments and documents to be delivered hereunder
(including, without limitation, the reasonable fees and expenses of counsel for
the Agent) in accordance with the terms of Section 10.4(a) of the Credit
Agreement.
SECTION 5. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.
SECTION 6. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
<PAGE> 6
6
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
BORROWER
WHEELING-PITTSBURGH STEEL
CORPORATION
By:_______________________________
Name:
Title:
AGENT
CITIBANK, N.A., as Agent
By:_______________________________
Name:
Title:
<PAGE> 7
7
LENDERS
CITICORP USA, INC.
By:_______________________________
Name:
Title:
CORESTATES BANK, N.A.
By:_______________________________
Name:
Title:
BANKAMERICA BUSINESS CREDIT, INC.
By:_______________________________
Name:
Title:
STAR BANK, N.A.
By:_______________________________
Name:
Title:
<PAGE> 8
8
NATIONSBANK, N.A.
By:_______________________________
Name:
Title:
NATIONAL CITY COMMERCIAL
FINANCE, INC.
By:_______________________________
Name:
Title:
<PAGE> 9
9
CONSENTED TO AND ACKNOWLEDGED:
WHEELING-PITTSBURGH CORPORATION
By:_______________________________
Name:
Title:
WHEELING CONSTRUCTION PRODUCTS,
INC.
By:_______________________________
Name:
Title:
PITTSBURGH-CANFIELD CORPORATION
By:_______________________________
Name:
Title:
UNIMAST INCORPORATED
By:_______________________________
Name:
Title:
<PAGE> 1
EXHIBIT 10.3
CLOSE CORPORATION AND SHAREHOLDERS' AGREEMENT
This Close Corporation and Shareholder's Agreement (the
"Agreement") made to be effective as of the 24th day of March, 1994, by and
among Dong Yang Tinplate America Corp. ("Dong Yang America"), a California
corporation, Wheeling-Pittsburgh Corporation ("Wheeling-Pittsburgh"), a Delaware
corporation, Nittetsu Shoji America, Inc. ("Nittetsu"), a California
corporation, and Ohio Coatings Company ("Coating Company"), an Ohio corporation.
RECITALS:
(A) The Shareholders own all 100% of the issued and
outstanding Common and Preferred Shares of the Coating Company and are its only
Shareholders. Dong Yang America owns 600 shares of common, Wheeling-Pittsburgh
owns 600 shares of common and Nittetsu owns 300 preferred shares.
(B) The Shareholders desire to enter into an agreement
regulating certain aspects of (i) the internal affairs of the Coating Company,
(ii) the operations of the Coating Company and (iii) the relations among the
Shareholders, directors and officers of the Coating Company and each other
person who may thereafter become the holder of Shares of the Coating Company.
(C) The Shareholders and the Coating Company further desire to
enter into an agreement in respect of the issuance, sale, transfer,
distribution, encumbrance or other distribution of Shares of the Coating
Company.
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and of their
mutual covenants set forth hereinafter, and subject to the fulfillment of the
remaining terms and conditions precedent set forth in the Letter of Intent dated
June 21, 1994, the parties hereto make the following agreement, intending to be
legally bound thereby.
ARTICLE ONE
Definitions
Section 1.01. Defined Terms. Each term with the initial letter
capitalized in this Agreement shall have the meaning specified herein, when used
in this Agreement, including the exhibits and schedules hereto.
Section 1.02. Articles. "Articles" means the Articles of
Incorporation of the Coating Company as in effect from time to time.
Section 1.03. Change in Control. "Change in Control" means,
with respect to Wheeling-Pittsburgh, the transfer to persons other than a
holding company of a majority of the capital stock of Wheeling-Pittsburgh Steel
Corporation or any transfer of substantially all of the assets of
Wheeling-Pittsburgh Steel Corporation, and means, with respect to Dong Yang
America or its parent, Dong Yang Tinplate Ind. Co., Ltd. ("Dong Yang"), the
transfer to persons who are not immediate members of the Sohn family of a
majority of the capital stock of Dong Yang, any transfer of substantially all of
the assets of Dong Yang, or a change in ownership of Dong Yang America.
-2-
<PAGE> 3
Section 1.04. Code of Regulations. "Regulations" means the
Code of Regulations of the Coating Company as in effect from time to time.
Section 1.05. Impasse. "Impasse" means the inability of Dong
Yang America and Wheeling-Pittsburgh to agree on a Major Corporate Decision as
contemplated by Section 3.05(C) after the procedures set forth in this Section
1.05 have been exhausted:
A. If Wheeling-Pittsburgh and Dong Yang America disagree on a
Major Corporate Decision in the Coating Company's business, either may give
notice to the other that it believes that an Impasse is possible, whereupon
Wheeling-Pittsburgh and Dong Yang shall through their designees negotiate in
good faith, for a period of thirty (30) days from the date such notice was
given, a resolution of their disagreement.
B. If the disagreement has not been resolved within such
thirty (30) day period, then either:
(1) Wheeling-Pittsburgh and Dong Yang America shall
agree to defer the decision giving rise to the disagreement for a fixed period
of time and extend (if necessary) the Raw Materials Supply Agreement or other
long term agreements in which event no Impasse shall be deemed to have occurred;
or
(2) Wheeling-Pittsburgh and Dong Yang America shall
select an independent mediator and attempt to resolve the disagreement through
mediation. If the disagreement has not been resolved within seventy-five (75)
days after notice was given under Section 1.05(A), an Impasse shall be deemed to
have occurred.
-3-
<PAGE> 4
Section 1.06. Fair Market Value. "Fair Market Value" means a
value or price negotiated at arm's length between the affected parties. If the
parties cannot agree on a Fair Market Value for purposes of Sections 6.02 and
6.03, then it shall be determined by a certified appraiser selected by the
parties and, if the parties cannot agree, then by the Arbitrator.
Section 1.07. Shareholder. "Shareholder" means Dong Yang
America, Nittetsu and Wheeling-Pittsburgh, or their successors or assigns, but
excludes a purported transferee of any Shares of the Coating Company pursuant to
any transaction that contravenes the terms and conditions of this Agreement and
"Shareholders" means more than one Shareholder.
Section 1.08. Share. "Share" means any share of any class of
shares of the Coating Company.
Section 1.09. Common Share. "Common Share" means any of the
common Shares of the Coating Company.
Section 1.10. Preferred Share. "Preferred Share" means any
share of the non-voting (cumulative) preferred shares of the Coating Company.
Section 1.11. Substrate. "Substrate" shall mean the black
plate or cold rolled steel coils which will be converted to tin mill product by
the Coating Company.
Section 1.12. Toll Processing. "Toll Processing" means the
process of coating steel or other metal coils of another for a service charge.
-4-
<PAGE> 5
Section 1.13. Raw Materials Supply Agreement. "Raw Materials
Supply Agreement" refers to a long term agreement by the Coating Company to
purchase a substantial amount of its substrate requirements from
Wheeling-Pittsburgh Steel Corporation.
Section 1.14. Start-Up Date. The Start-Up Date shall mean the
date on which the line is first in service, producing commercially acceptable
product.
Section 1.15. Wheeling-Pittsburgh. "Wheeling-Pittsburgh" means
Wheeling-Pittsburgh Corporation, its subsidiaries, affiliates and related
entities.
Section 1.16. Out-of-Pocket Expenses. For purposes of Section
4.04, the term "Out-of-Pocket Expenses" shall mean the ordinary and necessary
business expenses incurred by personnel incident to their performance of
services, but shall not include normal living expenses.
ARTICLE TWO
Close Corporation Agreement
Section 2.01. Close Corporation Agreement. This Agreement is
to be a close corporation instrument governed by Section 1701.591 of the Ohio
Revised Code, and is a close corporation agreement as that term is defined in
Section 1701.01(X) of the Ohio Revised Code. This Agreement shall regulate
aspects of the internal affairs of the Coating Company and the relations of the
Shareholders, Directors and Officers of the Coating Company between themselves
to the extent set forth herein and, if the Articles or Regulations of Coating
Company shall be inconsistent
-5-
<PAGE> 6
with this Agreement, such inconsistent provision of the Articles and the
Regulations shall be suspended during the term of this Agreement and the
provisions of this Agreement shall be controlling. To the extent not
inconsistent with the provisions of this Agreement, the Articles and Regulations
of the Coating Company, as amended from time to time, shall regulate aspects of
the internal affairs of the Coating Company and the relations of the
Shareholders and Directors of the Coating Company among themselves.
ARTICLE THREE
Corporate Governance
Section 3.01. Shareholders' Authority. The Shareholders and
the Coating Company agree that there shall be one (1) regular meeting of the
Shareholders of the Coating Company to be held within three (3) months of the
end of the Coating Company's fiscal year. The parties to this Agreement agree to
hold other Shareholders meetings only when requested in writing by one of the
Common Shareholders or only when required by the Ohio Revised Code.
Section 3.02. Directors' Authority. The parties agree that
there shall be two (2) regular meetings of the board of directors ("Board") of
the Coating Company held semi-annually. Other meetings shall be held only upon
the written request of four or more directors ("Directors") of the Coating
Company. All actions of the Board shall require the affirmative vote of five (5)
-6-
<PAGE> 7
members in order for the action to be effective. The Directors of the Coating
Company shall exercise the authority of Coating Company as provided in the Ohio
Revised Code, subject to the terms and conditions of this Agreement, including,
but not limited to, the requirement that all actions require five (5)
affirmative votes of the members of the Board.
If any action proposed by any member of the Board concerning
the operations of the Coating Company, other than the Major Corporate Decisions
described in Section 3.05(C) hereof, does not receive five (5) affirmative
votes, any four (4) directors may request arbitration of this action as provided
in Section 11.16 hereof.
Section 3.03. Election and Number of Directors. The Board of
the Coating Company shall be comprised of eight (8) Directors. No action shall
be taken by the Board of the Coating Company except at a meeting of the
Directors at which a quorum of the Directors are present, or, alternatively,
pursuant to a unanimous action in writing as provided in the Ohio Revised Code.
Dong Yang America shall have the right to elect four (4) Directors of the
Coating Company and Wheeling-Pittsburgh shall have the right to elect four (4)
Directors of the Coating Company. Any Director appointed or selected by a
Shareholder(s) may be removed by that Shareholder at any time with or without
cause. Any vacancy on the Board shall be filled within thirty (30) days after it
occurs, by the Shareholder(s) who originally designated the Director whose seat
on the Board is vacant.
-7-
<PAGE> 8
Section 3.04. Selection of Officers and Authority of Officers.
Notwithstanding any provision of the Ohio Revised Code to the contrary, the
officers of the Coating Company and their duties, responsibilities and authority
shall be as follows:
A. The Chairman of the Board shall be elected by Dong
Yang America and shall chair the meetings of the
Board.
B. The President and Chief Executive Officer shall be
elected by Wheeling-Pittsburgh and shall have the
authority to conduct the day-to-day operations of the
business as is consistent with the normal authority
of a President of a corporation.
C. An Executive Vice President elected by Dong Yang
America to whom the Vice President of Administration
and Treasurer and Secretary will report. D. A Vice
President of Administration and Treasurer shall be
elected by Wheeling-Pittsburgh and shall have such
authority and responsibility for the administrative,
human resources, accounting and financial affairs of
the Coating Company as the President shall prescribe
through the Executive Vice President. E. A Secretary
and Assistant Secretary shall be elected by
Wheeling-Pittsburgh and Dong Yang America
respectively and shall be responsible for
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maintaining the business and corporate records of the
Coating Company and shall report to the Executive
Vice President.
Section 3.05. Director Authority and Major Corporate
Decisions.
A. Limitation on Officers. No officer shall have the
authority to exercise any Director's Authority
(hereinafter defined) including but not limited to
any activity outside the ordinary course of the
business of the Coating Company which has not been
previously approved by the Directors of the Coating
Company.
B. Action by a Majority of the Directors. Except as
provided in Section 3.05(C) hereof, the Board by the
affirmative vote of five (5) members may authorize
the taking of any Director Authority or any action of
the Coating Company not specifically prohibited by
subparagraph (C) of Section 3.05 hereof. Director
Authority shall mean all authority of the Board as
provided in the Ohio Revised Code except for the
actions described in subparagraph (C) of Section 3.05
hereof.
C. Major Corporate Decisions. (a) All major corporate
decisions (as hereinafter defined) shall require the
affirmative vote of Common Shareholders owning
sixty-six and two-thirds percent (66 2/3%) of the
voting power of the Common Shares.
(b) For the purposes of this Agreement,
"Major Corporate Decisions" shall be the following:
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i. A decision to engage in any business other
than the manufacture for sale or Toll
Processing of tin mill products for
customers, including, but not limited to,
the decision to add additional coating lines
or engage in a different line of product or
business;
ii. Selling, leasing, assigning, exchanging,
disposing or transferring all or
substantially all of the assets, with or
without goodwill, of the Coating Company;
iii. Acquiring all or substantially all of the
assets or stock of another corporation or
business entity, merging or consolidating
with another corporation or business entity,
or entering into any other business
combination with another corporation or
business entity;
iv. Dissolving or liquidating the Coating
Company;
v. Selling or issuance by the Coating Company
of any of its Shares or other securities,
including treasury Shares, or creating or
issuing new classes of Shares or other
securities;
vi. Amending the Coating Company's Articles or
Regulations, provided, however, that no
amendment to Article 4 purporting to change
the rights of Preferred Shareholders shall
be
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made without the consent of the preferred
shareholders;
vii. Assigning, transferring, settling,
compromising, cancelling or releasing any
claim of, or debt owed to, the Coating
Company in excess of Two Hundred Fifty
Thousand Dollars ($250,000) (in the
aggregate in any one calendar year) or any
customer debt in excess of five percent (5%)
of the Coating Company's gross revenues for
any one calendar year without receiving full
payment by the Coating Company;
viii. Making,executing or delivering any general
assignment for the benefit of creditors or
any bond,guaranty, indemnity bond, or
surety bond, or filing any petition for
bankruptcy or similar proceeding under any
state law or deciding not to contest any
involuntary petition in bankruptcy;
ix. Confessing a judgment;
x. Providing for or changing the compensation,
including bonuses, of any officer or
Director of the Coating Company;
xi. Authorizing any stock split, including any
reverse stock split;
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xii. Authorizing, approving or entering into any
agreement or agreements with or for the
benefit of any Shareholder, Director or
officer of the Coating Company, or any
person who is related to or affiliated,
directly or indirectly, with any
Shareholder, Director or officer of the
Coating Company;
xiii. Creating, continuing or contributing to any
pension or profit sharing plan;
xiv. Incurring or modifying the terms of any
bank, governmental or other debt;
xv. Agreeing to cease doing business or dissolve
the Coating Company;
xvi. Purchasing any Shares of the Coating Company
from any Shareholder;
xvii. Entering into any agreement that provides
for any of the matters described in
Paragraphs (i) through (xvi) above.
Section 3.06. Effect of Bankruptcy.
Notwithstanding anything to the contrary stated hereinabove,
in the event that a party files a petition of bankruptcy, Chapter 7 or 11, or
insolvency or similar process and consequently thereafter rejects its
obligations hereunder and fails to perform, then the other party shall have the
power to appoint any and all directors and officers of the corporation.
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ARTICLE FOUR
Agreements Concerning Construction, Development,
Operation and Funding of the Coating Company
Section 4.01. Funding and Contribution of Land Equipment, etc.
A. Wheeling-Pittsburgh Contributions. Depending upon the best
tax consequences, Wheeling-Pittsburgh shall either contribute or lease to the
Coating Company the land necessary to develop the Coating Company and the
processing equipment it currently owns. The land and equipment are described on
Exhibit 4.01 hereof and shall be contributed at their fair market value as
determined by an arms-length appraisal. The land and equipment described on
Exhibit 4.01 shall be part of Wheeling- Pittsburgh's capital contribution to the
Coating Company and Wheeling-Pittsburgh shall contribute the difference between
the fair market value of the land and equipment and Six Million Dollars
($6,000,000) in cash as its additional share of the capital of the Coating
Company. These contributions of assets and cash shall be Wheeling-Pittsburgh's
total equity contribution to the Coating Company and shall entitle
Wheeling-Pittsburgh to fifty percent (50%) of the 1200 Common Shares of the
Coating Company.
B. Dong Yang America's Contributions. Dong Yang America shall
contribute Six Million Dollars ($6,000,000) in cash to the Coating Company as
its share of the capital of the Coating Company and shall be entitled to fifty
percent (50%) of the 1200 Common Shares of the Coating Company.
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<PAGE> 14
C. Nittetsu's Contributions. Nittetsu shall contribute Three
Million Dollars ($3,000,000) in cash to the Coating Company as its share of
capital and shall be entitled to 100% of the 300 non-voting cumulative Preferred
Shares of the Coating Company.
Section 4.02. Guaranty and Other Securitization of Loans and
Financing. The parties acknowledge and agree that the development of the
tinplating line by the Coating Company shall cost approximately Sixty-Eight
Million Dollars ($68,000,000). In addition to the capital contributions
described in Section 4.01 hereof, the parties acknowledge and agree that they
will attempt to obtain a Ten Million Dollar ($10,000,000) loan from the State of
Ohio (secured by a lien on the land and building of the Coating Company), a
Sixteen Million Five Hundred Thousand Dollar ($16,500,000) loan provided by or
through Dong Yang America, and an additional Sixteen Million Five Hundred
Thousand Dollar ($16,500,000) loan provided by or through Wheeling-Pittsburgh.
Both Dong Yang America and Wheeling-Pittsburgh shall be responsible for securing
or guaranteeing their respective loans described in the preceding sentence if
required. Additional financing in approximately the amount of Ten Million
Dollars ($10,000,000) secured, if necessary, by liens on the Coating Company's
equipment will be sought from other sources.
In addition to the capital contributions described above,
Wheeling-Pittsburgh and Dong Yang America agree to contribute any additional
funds (to cover cost overruns) and working capital (by capital contribution or
loan) that the Coating Company is unable to
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secure independently from third parties. Such additional contributions or loans
shall be made in proportion to their ownership of Common Shares.
Section 4.03. Design of Line, Provision of Expertise, Purchase
of Equipment, Etc.. Dong Yang America and Wheeling- Pittsburgh agree (i) to be
responsible for designing the tin mill line (the "Line") to be constructed by
the Coating Company and (ii) to provide whatever additional expertise is
required to design the Line, purchase the equipment and materials to develop the
Line, and install and operate the Line.
The Line shall be designed to produce tin mill products within
the ranges specified in Exhibit 4.03.
Section 4.04. Construction of the Facility. Dong Yang America
and Wheeling-Pittsburgh agree to designate a project manager for the development
of the building, the Line and the improvements necessary to develop the Line
(the "Facility) and he will have responsibility and authority to develop the
Facility. Both Dong Yang America and Wheeling-Pittsburgh agree to provide,
during the construction phase, management and technical assistance to the
Coating Company by contributing qualified personnel at no charge. Only the
actual Out-of-Pocket Expenses incurred by the personnel so contributed shall be
reimbursed by the Coating Company. All Out-of-Pocket Expenses will be subject to
audit by the Coating Company.
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ARTICLE FIVE
Restrictions on Transfer, Issuance
or Repurchase of Shares
Section 5.01. Shareholder Transfer Restrictions. In addition
to the requirements of Article NINE, no Shareholder shall, except as otherwise
expressly provided elsewhere in this Agreement, pledge, hypothecate, otherwise
encumber, give, sell, transfer or otherwise distribute (hereinafter collectively
"Transfer"), any Shares of the Coating Company unless such Transfer shall have
been previously approved by the holders of Shares entitling them to exercise not
less than sixty-six and two-thirds percent (66 2/3%) of the voting power of the
Common Shares of the Coating Company.
Section 5.02. Issuance Restriction on the Coating Company. The
Coating Company shall not issue, sell or otherwise distribute ("Issuance") any
of its Shares (whether authorized but unissued Shares or treasury Shares) to any
person, firm, corporation, partnership, trust or other entity unless (i) such
Issuance shall have been previously approved by the holders of not less than
sixty-six and two-thirds percent (66 2/3%) of the issued and outstanding Common
Shares of the Coating Company and (ii) such person shall simultaneously become
bound by the terms and conditions of this Agreement by executing an amendment to
this Agreement satisfactory to all of the Common Shareholders.
Section 5.03. Repurchase Restrictions. The Coating Company
shall not purchase, and no Shareholder shall sell to the Coating Company, any of
Coating Company's own Shares, whether pursuant to the exercise by the Coating
Company of a purchase right
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<PAGE> 17
or otherwise, if immediately thereafter, its assets would be less than its
liabilities plus its stated (paid in) capital, if any, or if it is insolvent, or
if there is a reasonable ground to believe by such persons it would be rendered
insolvent. For the purposes of this Section 5.03, the term "Insolvent" means
that the Coating Company is unable to pay its obligations as they become due in
the usual course of its business.
Section 5.04. Reasonable Restriction. Each Shareholder and the
Coating Company agree and acknowledge that the restrictions on Transfer and
Issuance imposed by this Agreement are imposed to accomplish legitimate purposes
of the Coating Company, and that such restrictions are not more restrictive than
necessary to accomplish those purposes.
Section 5.05. Unauthorized Transfers are Null and Void. If any
Shareholder shall make a purported Transfer of all or any part of the Shares of
the Coating Company held by it in a transaction that contravenes this Agreement
(hereinafter called the "Breach Shares"), such purported Transfer ("Breach")
shall be void and of no effect whatsoever.
ARTICLE SIX
Share Purchase Option After a Change in Control,
Buyout Offer After an Impasse, and Preferred Share Buyback
Section 6.01. Notice of Change in Control. Promptly after a
Change in Control has occurred with respect to Wheeling-Pittsburgh,
Wheeling-Pittsburgh shall notify Dong Yang America in writing of such
occurrence. Promptly after a Change in Control has
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<PAGE> 18
occurred with respect to Dong Yang America or its parent company, Dong Yang
America shall notify Wheeling-Pittsburgh in writing of such occurrence.
Section 6.02. Purchase Option After a Change in Control. For
forty-five (45) days after a party receives notice from the other party pursuant
to Section 6.01 hereof that a Change in Control of the other party has occurred,
the party receiving the notice shall have the right and option to purchase all,
but not less than all, of the Shares owned by the other party at a price equal
to the original Purchase Price of $10,000 per share plus (a) 10% interest
compounded from the date of original issuance of the Shares to be purchased, or
(b) Fair Market Value, whichever is greater. The holder of the option shall
exercise it by providing to the other party written notice, as provided in this
Agreement, of such exercise within such forty-five (45) day period.
Section 6.03. Buyout Offer After an Impasse. If an Impasse
shall be deemed to have occurred, then Dong Yang America and Wheeling-Pittsburgh
shall each have the right to negotiate a buyout of the other's Shares on terms
that are mutually acceptable to both. Both Dong Yang America and
Wheeling-Pittsburgh recognize that any buyout offer made pursuant to this
Section 6.03 must be based on a Purchase Price of $10,000 per share plus (a) 10%
interest compounded from the date of original issuance of the Common Shares to
be purchased, or (b) Fair Market Value, whichever is greater.
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<PAGE> 19
Section 6.04. Buyback of Preferred Shares. If (a) Nittetsu, in
its capacity as distributor, terminates its Distribution Agreement with Coating
Company pursuant to Section 4(a) thereof, or (b) the Coating Company elects not
to renew Nittetsu's Distribution Agreement after the expiration of the original
term or any renewal term, or (c) Nittetsu elects not to renew the Distribution
Agreement after the expiration of the original term or any renewal term, then,
in any event, Coating Company shall buy back Nittetsu's Preferred Shares. The
obligation to repurchase under parts (a) and (b) of this Section becomes
effective when the event of termination or expiration becomes effective. The
obligation to repurchase under part (c) of this Section becomes effective two
(2) years after the placement of the last purchase order. The buyback price
shall be equal to the initial purchase price plus accumulated dividends payable
in accordance with Article 4 of Coating Company's Articles of Incorporation.
Once effective, the buyback shall be carried out within 90 days of the
qualifying event.
Section 6.05. Payment Term. The payment terms for the purchase
of Shares pursuant to Article Six shall be as provided in Article Eight of this
Agreement.
Section 6.06. Closing. The closing of the purchase of Shares
pursuant to Article Six shall be held in Martins Ferry, Ohio on or before sixty
(60) days after the date written notice of exercise of the option or impasse is
given.
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ARTICLE SEVEN
Purchase Price
Section 7.01. Purchase Price. The initial purchase price to be
paid for each Common Share of the Coating Company pursuant to this Agreement
shall be Ten Thousand Dollars ($10,000.00) per Share. The initial purchase price
to be paid for each Preferred Share shall be Ten Thousand Dollars ($10,000) per
Preferred Share.
Section 7.02. Books and Records. The Coating Company shall
maintain its books and records of account in accordance with generally accepted
accounting principles, consistently applied, subject to the continuation of any
such accounting practices as are approved by all (100%) of the Common
Shareholders.
ARTICLE EIGHT
Payment for Shares
Section 8.01. Payment Terms. The initial share purchases shall
be made in accordance with Schedule A attached hereto. Unless otherwise agreed
by the purchaser and the seller, payment for all Shares subsequently purchased
pursuant to this Agreement shall be made in full at the closing in either cash
or other immediately available funds.
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ARTICLE NINE
Securities Law Restrictions and Provisions
Section 9.01. Restrictive Legend. Except as provided in
Section 9.02 of this Agreement, each certificate representing (a) the Shares and
(b) any other securities issued in respect of the Shares upon any stock split,
stock dividend, merger, recapitalization, consolidation or similar event shall
bear a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR
UNDER THE SECURITIES LAW OF ANY STATE AND MAY NOT BE SOLD,
ASSIGNED, CONVEYED, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED EXCEPT: (1) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT REGISTERING THE SHARES UNDER APPLICABLE SECURITIES
LAWS; OR (2) PURSUANT TO AN OPINION OF COUNSEL, WHICH HAS BEEN
OBTAINED BY THE HOLDER AND WHICH IS IN ALL RESPECTS
SATISFACTORY TO THE COATING COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED FROM SUCH HOLDER TO LAWFULLY EFFECT SUCH SALE,
ASSIGNMENT, CONVEYANCE, PLEDGE, HYPOTHECATION OR OTHER
TRANSFER.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS, PROVISIONS AND RESTRICTIONS (INCLUDING RESTRICTIONS ON
TRANSFER) CONTAINED IN THE AMENDED AND RESTATED CLOSE
CORPORATION AND SHAREHOLDER'S AGREEMENT DATED AS OF MARCH 24,
1994 AS THE SAME MAY BE AMENDED FROM TIME TO TIME WHICH WAS
DULY ASSENTED TO BY ALL THE SHAREHOLDERS OF THE CORPORATION AS
PROVIDED IN SECTION 1701.591 OF THE OHIO REVISED CODE.
THE CORPORATION WILL MAIL TO THE HOLDER OF THE SHARES
REPRESENTED BY THIS CERTIFICATE A COPY OF THE CLOSE
CORPORATION AND SHAREHOLDER'S AGREEMENT AND OF THE EXPRESS
TERMS OF THE SHARES REPRESENTED BY THE CERTIFICATE AND OF THE
OTHER CLASS OR CLASSES AND OF SERIES SHARES, IF ANY, WHICH THE
COATING COMPANY IS AUTHORIZED TO ISSUE, WITHIN FIVE (5) DAYS
AFTER RECEIPT OF WRITTEN REQUEST THEREFOR.
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS
AGREEMENT HAS NO BEEN QUALIFIED WITH THE
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COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND
THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF
ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH
QUALIFICATION IS LAWFUL, UNLESS THE SALE OF SECURITIES IS
EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105
OF THE CALIFORNIA SECURITIES ACT. THE RIGHTS OF ALL PARTIES TO
THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH
QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE
NOT BEEN REGISTERED UNDER THE DELAWARE SECURITIES ACT AND MAY
NOT BE SUBSEQUENTLY TRANSFERRED OR SOLD UNLESS SUCH TRANSFER
OR SALE IS PROPERLY REGISTERED OR EXEMPTED UNDER THE DELAWARE
SECURITIES ACT.
Each Shareholder consents to the Coating Company making a notation on its
records and giving instructions to any transfer agent of the Shares in order to
implement the restrictions on transfer established in this Agreement.
Section 9.02. Exception to Legend Requirement. A certificate
representing Shares shall not be required to bear the portion of the restrictive
legend relating to the securities law as set forth in Section 9.01 if, in the
opinion of counsel for the Coating Company, such legend is not required in order
to establish compliance with the Securities Act of 1933, as amended (the
"Securities Act") and applicable state securities law.
Section 9.03. Notice of Proposed Transfer. Unless there is in
effect a registration statement under the Securities Act or under the applicable
state securities law, prior to making any transfer of Shares bearing the legend
specified in 9.01, the Shareholder shall at its expense provide the Coating
Company: (i) an unqualified written opinion of legal counsel (which shall be,
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reasonably satisfactory to the Coating Company) addressed to the Coating Company
and to the effect that such Transfer may be effected without registration under
the Securities Act and under applicable state securities laws; and (ii) such
other information as the Coating Company may reasonably request regarding the
proposed Transfer.
ARTICLE TEN
Voting of Shares Subject to Purchase Rights
Section 10.01. Voting of Shares Subject to Purchase Rights.
Any Shareholder or its legal representative whose Shares are being purchased
pursuant to the exercise of one or more of the purchase rights provided for in
this Agreement shall promptly cause each Share certificate evidencing any such
Shares to be appropriately endorsed and delivered to the purchaser thereof.
During the period commencing on the exercise of one or more of such purchase
rights and ending upon the delivery of the Share certificate or certificates
and/or upon delivery of the documents required by the regulations for a lost or
destroyed certificate, each of such Shares evidenced by a certificate which
shall not have been so endorsed and delivered shall be voted by the purchaser
thereof as if he had received the certificates. In connection with such
determination any resulting fractional Share votes shall be counted and given
effect rather than rounded.
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ARTICLE ELEVEN
Miscellaneous
Section 11.01. Financial Information. Upon the request of any
Shareholder, the Coating Company will deliver the following reports to such
Shareholder, provided, however, that no Shareholder shall be provided with any
confidential or proprietary commercial information such as customer lists or
marketing plans:
(a) As soon as practicable after the end of each fiscal year
but, in any event, within 90 days thereafter, consolidated balance sheets of the
Coating Company and its subsidiaries, if any, as of the end of such fiscal year,
and consolidated statements of income, consolidated statements of shareholders'
equity and consolidated statements of cash flow of the Coating Company and its
subsidiaries, if any, for such year, prepared in accordance with the accrual
method of accounting and setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail. These statements
shall be audited by independent, certified public accountants.
(b) As soon as practicable after the end of the first, second
and third quarterly accounting periods in each fiscal year of the Coating
Company but, in any event, within forty-five (45) days thereafter, consolidated
statements of income and consolidated statements of cash flows, of the Coating
Company and its subsidiaries, if any, for such period and for the current fiscal
year to date, prepared in accordance with the accrual method of accounting and
setting forth in each case in comparative form the
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figures for the corresponding period during the previous fiscal year, all in
reasonable detail.
(c) Within thirty (30) days prior to the beginning of each
fiscal year, an annual plan approved by the Directors of the Coating Company as
provided in Section 3.02 hereof, setting forth full and complete forecasted
consolidated balance sheets, consolidated statements of income, and consolidated
statements of cash flow for such fiscal year and for each quarter within that
year and summarizing the marketing, production, research and development,
organization and staffing, and financial strategies which support the annual
plan's forecasted figures.
Section 11.02. Additional Information. Upon the request of any
Shareholder, the Coating Company will deliver or provide to such Shareholder:
(a) With reasonable promptness, such other information and
data with respect to the Coating Company and its subsidiaries, if any, as any
such Shareholder may from time to time reasonably request, provided, however,
that no Shareholder shall be provided with any confidential or proprietary
commercial information such as customer lists or marketing plans.
(b) The right, at its expense, no more often than one time per
calendar quarter, to visit and inspect any of the property of the Coating
Company, to examine and copy its books of account and records, and to discuss
its affairs, finances and accounts with the Coating Company officers, all at
such reasonable times with reasonable notice.
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Section 11.03. Notices. Any notices, demands or other
communications (collectively, "Notices") required or permitted to be given by
any party to another under this Agreement shall be in writing, either delivered
by hand to the other party at that party's address set forth below, or sent by
postage prepaid certified mail, return receipt requested, or sent via facsimile
transmission, or by courier to the other party at that party's address set forth
below. A Notice delivered by hand shall be deemed to have been given when it is
received by the party to whom it is being given. A Notice sent by certified mail
or courier shall be deemed to have been given upon the signing of the notice of
receipt or refusal after such Notice has been mailed/sent to the Notice address
of the recipient. The facsimile copy shall be deemed received when acknowledged
by the receiver. The Notice addresses of the parties are as follows:
If to the Coating Company:
Ohio Coatings Company
P. O. Box 339
Martins Ferry, Ohio 43935
If to Dong Yang America:
Dong Yang Tinplate America Corp.
880 West First Street, Suite 525
Los Angeles, CA 90012
If to Wheeling-Pittsburgh:
Attn: President
Wheeling-Pittsburgh Corporation
110 East 59th Street, 30th Floor
New York, New York 10022
with a copy to:
Attn: James T. Gibbons
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Wheeling-Pittsburgh Steel Corporation
1134 Market Street
Wheeling, West Virginia 26003
If to Nittetsu:
Nittetsu Shoji America, Inc.
Citicorp Plaza, Suite 1860
725 S. Figueroa Street
Los Angeles, CA 90017
Any change in the Notice address of a party for the purpose of Notice under this
Section 11.03 may be effected only by Notice given to all of the other parties.
Section 11.04. Successors, Assigns, etc. The terms and
provisions hereof shall bind and inure to the benefit of the parties and their
respective heirs, successors and permitted assigns (including successive, as
well as immediate, successors and assigns).
Section 11.05. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Ohio.
Section 11.06. Waiver. The failure of any party hereto to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way affect the
validity of this Agreement or any part hereof or the right of such party
thereafter to enforce each and every such provision. No waiver of any breach of
or non-compliance with this Agreement shall be held to be a waiver of any other
or subsequent breach or non-compliance.
Section 11.07. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed
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to be an original, but all of which together shall constitute one and the same
agreement.
Section 11.08. Tolling of Time. The running of any period of
time during which, under this Agreement, any right may be exercised or any
obligation must be performed shall be tolled for as long as the order of any
court shall prohibit the exercise of any such right or the performance of any
such obligation.
Section 11.09. Amendment or Termination of this Agreement;
Action by Shareholders. Without the written consent of Shareholders owning at
least eighty percent (80%) of the Shares then outstanding, (i) this Agreement
may not be amended or terminated, provided, however, that no section of this
Agreement describing the rights and/or obligations of Preferred Shareholders
shall be amended or terminated without the consent of such Preferred
Shareholder. Neither the Coating Company nor any shareholder shall do or cause
to be done anything that would result in the invalidation of this Agreement,
including causing the Coating Company to become a public company.
Section 11.10. Entire Agreement. This Agreement along with the
Letter of Intent dated June 21, 1994, which refers to the Raw Materials Supply
Agreement, Equipment Supply Agreement, the loan agreements provided for in
Section 4.02 and Distribution Agreement(s) are the entire and exclusive
statement of the parties' agreement and they supersede all prior agreements,
understandings, negotiations and discussions among the parties, whether oral or
written, including, without limitation, prior letters of intent.
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Section 11.11. Provisions Severable. If any provision of this
Agreement or the application of any such provision to any person or any
circumstance shall be determined to be invalid or unenforceable, then such
determination shall not affect any other provisions of this Agreement or the
application of such provisions to any other person or circumstance, all of which
other provisions shall remain in full force and effect; and, if any provision of
this Agreement is capable of two constructions, one of which would render the
provision invalid, then such provision shall have the meaning which renders it
valid.
Section 11.12. Effect of Invalidation and Termination. If all
of the terms and conditions precedent set forth in the Letter of Intent dated
June 21, 1994 have not been satisfied or waived prior to the expiration date set
forth therein, or any extensions thereof, then this Shareholder's Agreement
shall terminate and the Coating Company shall unwind all prior transactions and
return all equity contributions to their respective contributors.
In the event of any invalidation of this Agreement pursuant to
the provisions of Section 1701.591 of the Ohio Revised Code or the termination
of this Agreement pursuant to any provision set forth herein, the entire
Agreement shall be of no further effect and all aspects of the internal affairs
of the Coating Company and the regulations of the holders of the Common Shares
and Preferred Shares among themselves shall be governed by the Articles and
Regulations of the Corporation as then in effect.
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Section 11.13. Pronouns. When used in this Agreement, each
pronoun and the term "Person" shall be deemed to mean one or more individuals,
firms, corporations (non-profit or for profit), trusts, partnerships,
unincorporated societies or associations, governmental bodies or any agency or
subdivision thereof, or any other entities, as the context or circumstances may
indicate.
Section 11.14. Captions. The captions contained in this
Agreement were included only for convenience or reference and do not define,
limit, explain or modify this Agreement or its interpretation, construction or
meaning and are in no way to be construed as a part of this Agreement.
Section 11.15. Exhibits Incorporated by Reference. All
exhibits attached hereto are incorporated by reference as if fully rewritten
herein.
Section 11.16. Mandatory Arbitration. Any dispute that may
arise regarding the rights or duties of the parties established pursuant to the
provisions of this Agreement, except pursuant to the provisions of Section
3.05(C)(b)(1), or regarding the enforcement of such provisions, shall be subject
to the provisions of this Section 11.16. In the event that any such dispute
shall arise, the parties shall in good faith attempt to amicably resolve said
dispute. In the event that a resolution cannot be reached within fifteen (15)
days, any party to the dispute may submit such dispute to arbitration in
Pittsburgh, Pennsylvania or in another mutually acceptable location in
accordance with the rules of the American Arbitration Association then
prevailing; provided,
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<PAGE> 31
however, such dispute shall be arbitrated and a decision rendered within a sixty
(60) day period. The arbitrator may issue any order or provide any remedy
existing in law or equity and his or her decision shall be final and binding.
Each party to the arbitration shall be responsible for its pro rata share of the
arbitration costs, including the fee of the arbitrator.
Section 11.17. Approval of Agreement. The effectiveness of
this agreement is subject to the approval of the respective Boards of Directors
of each of Dong Yang, Wheeling-Pittsburgh, Nittetsu Shoji and the Coating
Company on or before September 21, 1994.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by its duly authorized officer to be effective as of
the date first above written.
WITNESSETH: DONG YANG TINPLATE AMERICA CORP.
______________________ By:________________________________
Its:
Date: February 21, 1995
WHEELING-PITTSBURGH CORPORATION
______________________ By:________________________________
James L. Wareham
Its: President
Date: February 21, 1995
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<PAGE> 32
NITTETSU SHOJI AMERICA, INC.
______________________ By:________________________________
Its:
Date: February 21, 1995
OHIO COATINGS COMPANY
______________________ By:________________________________
Its: President & CEO
Date: February 21, 1995
STATE OF WEST VIRGINIA,
COUNTY OF OHIO:
I, Diane Y. Duncan, Notary of said County and State, do
certify that _________________________, who signed the writing hereto annexed
bearing date the _______ day of ________________, 1995, for DONG YANG TINPLATE
AMERICA CORP., has this day acknowledged the said writing to be the act and deed
of said corporation.
Given under my hand and official seal this _______ day of
________________, 1995.
__________________________________
Notary Public
My Commission Expires:
October 28, 1997
STATE OF WEST VIRGINIA,
COUNTY OF OHIO:
I, Diane Y. Duncan, Notary of said County and State, do
certify that James L. Wareham, who signed the writing hereto
annexed bearing date the _______ day of ________________, 1995, for
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<PAGE> 33
WHEELING-PITTSBURGH CORPORATION has this day acknowledged the said writing to be
the act and deed of said corporation.
Given under my hand and official seal this _______ day of
________________, 1995.
____________________________________
Notary Public
My Commission Expires:
October 28, 1997
STATE OF WEST VIRGINIA,
COUNTY OF OHIO:
I, Diane Y. Duncan, Notary of said County and State, do
certify that , who signed the writing hereto annexed bearing date the _______
day of ________________, 1995, for NITTETSU SHOJI AMERICA, INC., has this day
acknowledged the said writing to be the act and deed of said corporation.
Given under my hand and official seal this _______ day of
________________, 1995.
___________________________________
Notary Public
My Commission Expires:
October 28, 1997
STATE OF WEST VIRGINIA,
COUNTY OF OHIO:
I, Diane Y. Duncan, Notary of said County and State, do
certify that ____________________________, who signed the writing hereto annexed
bearing date the _______ day of ________________, 1995, for OHIO COATINGS
COMPANY, has this day acknowledged the said writing to be the act and deed of
said corporation.
Given under my hand and official seal this _______ day of
________________, 1995.
___________________________________
Notary Public
My Commission Expires:
October 28, 1997
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<PAGE> 34
INDEX
Page
----
ARTICLE ONE Definitions.......................................... 2
Section 1.01 Defined Terms........................................ 2
Section 1.02 Articles............................................. 2
Section 1.03 Change in Control.................................... 2
Section 1.04 Code of Regulations.................................. 3
Section 1.05 Impasse.............................................. 3
Section 1.06 Fair Market Value.................................... 4
Section 1.07 Shareholder.......................................... 4
Section 1.08 Share................................................ 4
Section 1.09 Common Share......................................... 4
Section 1.10 Preferred Share...................................... 4
Section 1.11 Substrate............................................ 4
Section 1.12 Toll Processing...................................... 4
Section 1.13 Raw Materials Supply Agreement....................... 5
Section 1.14 Start-Up Date........................................ 5
Section 1.15 Wheeling-Pittsburgh.................................. 5
Section 1.16 Out-of-Pocket Expenses............................... 5
ARTICLE TWO Close Corporation Agreement.......................... 5
Section 2.01 Close Corporation Agreement.......................... 5
ARTICLE THREE Corporate Governance................................. 6
Section 3.01 Shareholders' Authority.............................. 6
Section 3.02 Directors' Authority................................. 6
Section 3.03 Election and Number of
Directors............................................ 7
Section 3.04 Selection of Officers and
Authority of Officers................................ 8
Section 3.05 Director Authority and Major
Corporate Decisions.................................. 9
Section 3.06 Effect of Bankruptcy.................................12
ARTICLE FOUR Agreements Concerning Construction,
Development, Operation and Funding
of the Coating Company...............................13
Section 4.01 Funding and Contribution of
Land Equipment, etc.................................13
Section 4.02 Guaranty and Other Securi-
tization of Loans and
Financing...........................................14
Section 4.03 Design of Line, Provision of
Expertise, Purchase of
Equipment, Etc......................................15
Section 4.04 Construction of the Facility.........................15
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<PAGE> 35
Page
----
ARTICLE FIVE Restrictions on Transfer, Issuance
or Repurchase of Shares..............................16
Section 5.01 Shareholder Transfer
Restrictions........................................16
Section 5.02 Issuance Restriction on the
Coating Company.....................................17
Section 5.03 Repurchase Restrictions..............................17
Section 5.04 Reasonable Restriction...............................18
Section 5.05 Unauthorized Transfers are Null
and Void............................................18
ARTICLE SIX Share Purchase Option After a Change
in Control and Buyout Offer After an
Impasse..............................................18
Section 6.01 Notice of Change in Control..........................18
Section 6.02 Purchase Option After a
Change in Control...................................18
Section 6.03 Buyout Offer After an
Impasse.............................................19
Section 6.04 Buyback of Preferred Shares..........................19
Section 6.05 Payment Term.........................................20
Section 6.06 Closing..............................................20
ARTICLE SEVEN Purchase Price.......................................20
Section 7.01 Purchase Price.......................................20
Section 7.02 Books and Records....................................20
ARTICLE EIGHT Payment for Shares...................................21
Section 8.01 Payment Terms........................................21
ARTICLE NINE Securities Law Restrictions and
Provisions..........................................21
Section 9.01 Restrictive Legend...................................21
Section 9.02 Exception to Legend Requirement......................23
Section 9.03 Notice of Proposed Transfer..........................23
ARTICLE TEN Voting of Shares Subject to Purchase
Rights...............................................23
Section 10.01 Voting of Shares Subject to
Purchase Rights.....................................23
ARTICLE ELEVEN Miscellaneous........................................24
Section 11.01 Financial Information................................24
Section 11.02 Additional Information...............................25
Section 11.03 Notices..............................................26
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<PAGE> 36
Section 11.04 Successors, Assigns, etc.............................28
Section 11.05 Governing Law........................................28
Section 11.06 Waiver...............................................28
Section 11.07 Counterparts.........................................28
Section 11.08 Tolling of Time......................................28
Section 11.09 Amendment or Termination of
this Agreement; Action by
Shareholders.........................................29
Section 11.10 Entire Agreement.....................................29
Section 11.11 Provisions Severable.................................29
Section 11.12 Effect of Invalidation and
Termination.........................................30
Section 11.13 Pronouns.............................................30
Section 11.14 Captions.............................................30
Section 11.15 Exhibits Incorporated by
Reference...........................................31
Section 11.16 Mandatory Arbitration................................31
Section 11.17 Approval of Agreement................................31
EXHIBITS
4.01 Description of Non-Cash Contributions
4.03 Description of Product Ranges
SCHEDULES
A. Initial Equity Contributions
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<PAGE> 37
CLOSE CORPORATION
AND SHAREHOLDERS' AGREEMENT
between
Dong Yang Tinplate America Corp.
and
Nittetsu Shoji America, Inc.
and
Wheeling-Pittsburgh Corporation
and
Ohio Coatings Company
<PAGE> 38
DESCRIPTION OF NON-CASH CONTRIBUTIONS
Exhibit 4.01
to the
CLOSE CORPORATION
AND SHAREHOLDERS' AGREEMENT
between
Dong Yang Tinplate America Corp.
and
Nittetsu Shoji America, Inc.
and
Wheeling-Pittsburgh Corporation
and
Ohio Coatings Company
<PAGE> 39
DESCRIPTION OF PRODUCT RANGES
Exhibit 4.03
to the
CLOSE CORPORATION
AND SHAREHOLDERS' AGREEMENT
between
Dong Yang Tinplate America Corp.
and
Nittetsu Shoji America, Inc.
and
Wheeling-Pittsburgh Corporation
and
Ohio Coatings Company
<PAGE> 40
EQUITY CONTRIBUTION SCHEDULE
Schedule A
to the
CLOSE CORPORATION
AND SHAREHOLDERS' AGREEMENT
between
Dong Yang Tinplate America Corp.
and
Nittetsu Shoji America, Inc.
and
Wheeling-Pittsburgh Corporation
and
Ohio Coatings Company
<PAGE> 1
EXHIBIT 10.11
WHX CORPORATION
1997 DIRECTORS STOCK OPTION PLAN
ARTICLE I
PURPOSE
The purpose of the WHX Corporation 1997 Directors Stock Option Plan
(the "Plan") is to secure for WHX Corporation and its stockholders the benefits
arising from stock ownership by its directors. The Plan will provide a means
whereby such directors may purchase shares of the common stock, $.01 par value,
of WHX Corporation pursuant to options granted in accordance with the Plan.
ARTICLE II
DEFINITIONS
The following capitalized terms used in the Plan shall have the
respective meanings set forth in this Article:
2.1 "Board" shall mean the Board of Directors of WHX Corporation.
2.2 "Chairman" shall mean the duly appointed Chairman of any standing
Committee of the Board.
2.3 "Committee" shall mean a duly appointed standing committee of the
Board.
2.4 "Company" shall mean WHX Corporation.
2.5 "Director" shall mean any person who is a member of the Board of
Directors of the Company.
2.6 "Eligible Person" shall be any Director who is not a full or
part-time Employee of the Company, except the Chairman of the Board shall not be
an Eligible Person.
2.7 "Exercise Price" shall mean the price per Share at which an Option
may be exercised.
2.8 "Fair Market Value" shall mean the closing sale price of a Share as
reported on the New York Stock Exchange Composite Tape on the day preceding the
Grant Date or on the preceding such date if no Shares were traded on such Grant
Date. If the Shares are not reported on the New York Stock Exchange or
<PAGE> 2
on another national securities exchange, Fair Market Value shall be deemed to be
the average of the high bid and asked prices of the Shares on the
over-the-counter market on the Grant Date, or the next preceding date on which
the last prices were recorded.
2.9 "Grant Date" shall mean the Initial Grant Date or any other date
that an Option shall be granted pursuant to the Plan as appropriate.
2.10 "Initial Grant Date" shall mean the date of the 1997 Annual
Meeting of Stockholders.
2.11 "Option" shall mean an Option to purchase Shares granted pursuant
to the Plan.
2.12 "Option Agreement" shall mean the written agreement described in
Article VI herein.
2.13 "Permanent Disability" shall mean the condition of an Eligible
Person who is unable to participate as a member of the Board by reason of any
medically determined physical or mental impairment which can be expected to
result in death or which can be expected to last for a continuous period of not
less than twelve (12) months.
2.14 "Purchase Price" shall be the Exercise Price multiplied by the
number of whole Shares with respect to which an Option may be exercised.
2.15 "Shares" shall mean shares of common stock $.01 par value of the
Company.
2.16 "Subsequent Grant Date" shall mean the date of each annual meeting
of the stockholders of the Company following the Initial Grant Date, provided
that the Eligible Person served as a Director during the period between the
Initial Grant Date and Subsequent Grant Date and between Subsequent Grant Dates,
as the case may be.
ARTICLE III
ADMINISTRATION
3.1 General. This Plan shall be administered by the Board in accordance
with the express provisions of this Plan.
3.2 Powers of the Board. The Board shall have full and complete
authority to adopt such rules and regulations and to make all such other
determinations not inconsistent with the Plan as may be necessary for the
administration of the Plan.
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<PAGE> 3
ARTICLE IV
SHARES SUBJECT TO PLAN
Subject to adjustment in accordance with Article IX an aggregate of
400,000 Shares is reserved for issuance under this Plan. Shares sold under this
Plan may be either authorized, but unissued Shares or reacquired Shares. If an
Option, or any portion thereof, shall expire or terminate for any reason without
having been exercised in full, the unpurchased Shares covered by such Option
shall be available for future grants of Options.
ARTICLE V
GRANTS
5.1 Initial Grants. On the Initial Grant Date, each Eligible Person
shall receive the grant of an Option to purchase 25,000 Shares.
5.2 Subsequent Grants to Directors. On each Subsequent Grant Date, each
Eligible Person shall receive the grant of an Option to purchase 5,000 Shares,
provided that the grant of Options hereunder to an Eligible Person who is a
Director shall not exceed 40,000 Shares.
5.3 Compliance With Rule 16b-3. The terms for the grant of Options to
an Eligible Person may only be changed if permitted under Rule 16b-3 of the
Securities Exchange Act of 1934, as amended, and accordingly the formula for the
grant of Options may not be changed or otherwise modified more than once in any
six month period.
ARTICLE VI
TERMS OF OPTION
Each Option shall be evidenced by a written Option Agreement executed
by the Company and the Eligible Person which shall specify the Grant Date, the
number of Shares subject to the Option, the Exercise Price which shall be the
Fair Market Value on the day preceding the Grant Date and shall also include or
incorporate by reference the substance of all of the following provisions and
such other provisions consistent with this Plan as the Board may determine.
6.1 Term. The term of the Option shall be ten (10) years from the Grant
Date of each Option, subject to earlier termination in accordance with Articles
VI and X.
6.2 Restriction on Exercise. Options shall be exercisable at such time
or times and subject to such terms and
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<PAGE> 4
conditions as shall be determined by the Board at grant, provided, however, that
except in the case of the Eligible Person's death, Permanent Disability or
removal as a Director without cause, or failure to stand for reelection, upon
which events the Option will become immediately exercisable, unless a longer
vesting period is otherwise determined by the Board at grant; Options shall be
exercisable as follows: up to one-third of the aggregate Shares purchasable
under an Option shall be exercisable commencing one year after the Grant Date,
an additional one-third of the Shares purchasable under an Option shall be
exercisable commencing two years after the Grant Date and the balance commencing
on the third anniversary from the Grant Date. The Board may waive such
installment exercise provision at any time in whole or in part based on
performance and/or such other factors as the Board may determine in its sole
discretion, provided, however, that no Option shall be exercisable until more
than six months have elapsed from the Grant Date.
6.3 Exercise Price. The Exercise Price for each Share subject to an
Option shall be the Fair Market Value of the Share as determined in Section 2.8
herein.
6.4 Manner of Exercise. An Option shall be exercised in accordance with
its terms, by delivery of a written notice of exercise to the Company and
payment of the full purchase price of the Shares being purchased. An Eligible
Person may exercise an Option with respect to all or less than all of the Shares
for which the Option may then be exercised, but an Eligible Person must exercise
the Option in full Shares.
6.5 Payment. The Purchase Price of Shares purchased pursuant to an
Option or portion thereof, may be paid:
(a) in United States Dollars, in cash or by check, bank draft
or money order payable to the Company;
(b) by delivery of Shares already owned by an Eligible Person
with an aggregate Fair Market Value on the date of exercise equal to the
Purchase Price, subject to the provisions of Section 16(b) of the Securities
Exchange Act of 1934;
(c) through the written election of the Eligible Person to
have Shares withheld by the Company from the Shares otherwise to be received
with such withheld Shares having an aggregate Fair Market Value on the date of
exercise equal to the Purchase Price.
6.6 Transferability. No Option shall be transferable otherwise than by
will or the laws of descent and distribution; provided however, that to the
extent the option agreement
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<PAGE> 5
provisions do not disqualify such option for exemption under Rule 16b-3 under
the Securities Exchange Act of 1934, as amended, Options may be transferable
during an Optionee's lifetime to immediate family members of an Optionee,
partnerships in which the only partners are members of the Optionee's immediate
family, and trusts established solely for the benefit of such immediate family
members. An Option shall be exercisable during the Eligible Person's lifetime
only by the Eligible Person, his guardian, legal representative or permitted
transferee.
6.7 Termination of Service. If an Eligible Person's service as a
Director terminates for any reason, an Option held on the date of termination
may be exercised in whole or in part at any time within one (1) year after the
date of such termination (but in no event after the term of the Option expires)
and shall thereafter terminate.
ARTICLE VII
GOVERNMENT AND OTHER REGULATIONS
7.1 Delivery of Shares. The obligation of the Company to issue or
transfer and deliver Shares for exercised Options under the Plan shall be
subject to all applicable laws, regulations, rules, orders and approvals which
shall then be in effect.
7.2 Holding of Stock After Exercise of Option. The Option Agreement
shall provide that the Eligible Person, by accepting such Option, represents and
agrees, for the Eligible Person and his permitted transferees hereunder that
none of the Shares purchased upon exercise of the Option shall be acquired with
a view to any sale, transfer or distribution of the Shares in violation of the
Securities Act of 1933, as amended (the "Act") and the person exercising an
Option shall furnish evidence satisfactory to that Company to that effect,
including an indemnification of the Company in the event of any violation of the
Act by such person. Notwithstanding the foregoing, the Company in its sole
discretion may register under the Act the Shares issuable upon exercise of the
Options under the Plan.
ARTICLE VIII
WITHHOLDING TAX
The Company may in its discretion, require an Eligible Person to pay to
the Company, at the time of exercise of an Option an amount that the Company
deems necessary to satisfy its obligations to withhold federal, state or local
income or other taxes (which for purposes of this Article includes an Eligible
Person's FICA obligation) incurred by reason of such exercise. When the exercise
of an Option does not give rise to the
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<PAGE> 6
obligation to withhold federal income taxes on the date of exercise, the Company
may, in its discretion, require an Eligible Person to place Shares purchased
under the Option in escrow for the benefit of the Company until such time as
federal income tax withholding is required on amounts included in the Eligible
Person's gross income as a result of the exercise of an Option. At such time,
the Company, in its discretion, may require an Eligible Person to pay to the
Company an amount that the Company deems necessary to satisfy its obligation to
withhold federal, state or local taxes incurred by reason of the exercise of the
Option, in which case the Shares will be released from escrow upon such payment
by an Eligible Person.
ARTICLE IX
ADJUSTMENTS
9.1 Proportionate Adjustments. If the outstanding Shares are increased,
decreased, changed into or exchanged into a different number or kind of Shares
or securities of the Company through reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar transaction, an appropriate and proportionate adjustment shall be made
to the maximum number and kind of Shares as to which Options may be granted
under this Plan. A corresponding adjustment changing the number or kind of
Shares allocated to unexercised Options or portions thereof, which shall have
been granted prior to any such change, shall likewise be made. Any such
adjustment in the outstanding Options shall be made without change in the
Purchase Price applicable to the unexercised portion of the Option with a
corresponding adjustment in the Exercise Price of the Shares covered by the
Option. Notwithstanding the foregoing, there shall be no adjustment for the
issuance of Shares on conversion of notes, preferred stock or exercise of
warrants or Shares issued by the Board for such consideration as the Board deems
appropriate.
9.2 Dissolution or Liquidation. Upon the dissolution or liquidation of
the Company, or upon a reorganization, merger or consolidation of the Company
with one or more corporations as a result of which the Company is not the
surviving corporation, or upon a sale of substantially all of the property or
more than 80% of the then outstanding Shares of the Company to another
corporation, the Company shall give to each Eligible Person at the time of
adoption of the plan for liquidation, dissolution, merger or sale either (1) a
reasonable time thereafter within which to exercise the Option prior to the
effective date of such liquidation or dissolution, merger or sale, or (2) the
right to exercise the Option as to an equivalent number of Shares of stock of
the corporation succeeding the Company or acquiring its
-6-
<PAGE> 7
business by reason of such liquidation, dissolution, merger, consolidation or
reorganization.
ARTICLE X
AMENDMENT OR TERMINATION OF PLAN
10.1 Amendments. The Board may at any time amend or revise the terms of
the Plan, provided no such amendment or revision shall, unless appropriate
stockholder approval of such amendment or revision is obtained:
(a) increase the maximum number of Shares which may be sold
pursuant to Options granted under the Plan, except as permitted under the
provisions of Article IX;
(b) change the minimum Exercise Price set forth in Article VI;
(c) increase the maximum term of Options provided for in
Article VI; or
(d) permit the granting of Options to any one other than as
provided in Article V.
10.2 Termination. The Board at any time may suspend or terminate this
Plan. This Plan, unless sooner terminated, shall terminate on the tenth (10th)
anniversary of its adoption by the Board. No Option may be granted under this
Plan while this Plan is suspended or after it is terminated.
10.3 Holder of Consent. No amendment, suspension or termination of the
Plan shall, without the consent of the holder of Options, alter or impair any
rights or obligations under any Option theretofore granted under the Plan.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Privilege of Stock Ownership. No Eligible Person entitled to
exercise any Option granted under the Plan shall have any of the rights or
privileges of a stockholder of the Company with respect to any Shares issuable
upon exercise of an Option until certificates representing the Shares shall have
been issued and delivered.
11.2 Plan Expenses. Any expenses incurred in the administration of the
Plan shall be borne by the Company.
-7-
<PAGE> 8
11.3 Use of Proceeds. Payments received from an Eligible Person upon
the exercise of Options shall be used for general corporate purposes of the
Company.
11.4 Governing Law. The Plan has been adopted under the laws of the
State of Delaware. The Plan and all Options which may be granted hereunder and
all matters related thereto, shall be governed by and construed and enforceable
in accordance with the laws of the State of Delaware as it then exists.
ARTICLE XII
STOCKHOLDER APPROVAL
This Plan is subject to approval, at a duly held stockholders' meeting
within twelve (12) months after the date the Board approves this Plan, by the
affirmative vote of holders of a majority of the voting Shares of the Company
represented in person or by proxy and entitled to vote at the meeting. Options
may be granted, but not exercised, before such stockholder approval. If the
shareholders fail to approve the Plan within the required time period, any
Options granted under this Plan shall be void, and no additional Options may
thereafter be granted.
-8-
<PAGE> 1
EXHIBIT 10.12
WHX CORPORATION
110 East 59th Street
New York, New York 10022
August 4, 1997
To: WPN Corp.
126 Lower Broadford Road
Bellevue, Idaho 83313
We are pleased to inform you that on August 4, 1997 the Compensation
Committee of the Board of Directors of WHX Corporation (the "Company") granted
you, subject to stockholder approval of the grant within one (1) year of August
4, 1997, non-qualified stock options, to purchase 1,000,000 shares (the
"Shares") of Common Stock, par value $.01 per share, of the Company, at a price
of $9.625 per Share.
No part of the option is currently exercisable. The option may first be
exercised with respect to 33.33% of the Shares at any time on or after the date
of shareholder approval of this option grant which is expected to be no later
than the next annual meeting of stockholders to be held in 1997 (the "Approval
Date"). The option may be exercised with respect to an additional 33.33% of the
Shares at any time on or after the first anniversary of the Approval Date. The
option may be exercised with respect to the remaining 33.34% of the Shares at
any time on or after the second anniversary of the Approval Date. You must
purchase a minimum of 50 Shares or more (but not fractional shares) each time
you choose to purchase Shares, except to purchase the remaining Shares available
to you.
This option, to the extent not previously exercised, will expire on
August 4, 2007.
Unless at the time of the exercise of this option a registration
statement under the Securities Act of 1933, as amended (the "Act"), is in effect
as to such Shares, any Shares purchased by you upon the exercise of this option
shall be acquired for investment and not for sale or distribution, and if the
Company so requests, upon any exercise of this option, in whole or in part, you
will execute and deliver to the Company a certificate to such effect. The
Company shall not be obligated to issue any Shares pursuant to this option if,
in the opinion of counsel to the Company, the Shares to be so issued are
required to be registered or otherwise qualified under the Act or under any
other applicable statute, regulation or ordinance affecting the sale of
securities, unless and until such Shares have been so registered or otherwise
qualified.
<PAGE> 2
You understand and acknowledge that, under existing law, unless at the
time of the exercise of this option a registration statement under the Act is in
effect as to such Shares (i) any Shares purchased by you upon exercise of this
option may be required to be held indefinitely unless such Shares are
subsequently registered under the Act or an exemption from such registration is
available; (ii) any sales of such Shares made in reliance upon Rule 144
promulgated under the Act may be made only in accordance with the terms and
conditions of that Rule (which, under certain circumstances, restrict the number
of shares which may be sold and the manner in which shares may be sold); (iii)
in the case of securities to which Rule 144 is not applicable, compliance with
Regulation A promulgated under the Act or some other disclosure exemption will
be required; (iv) certificates for Shares to be issued to you hereunder shall
bear a legend to the effect that the Shares have not been registered under the
Act and that the Shares may not be sold, hypothecated or otherwise transferred
in the absence of an effective registration statement under the Act relating
thereto or an opinion of counsel satisfactory to the Company that such
registration is not required; (v) the Company will place an appropriate "stop
transfer" order with its transfer agent with respect to such Shares; and (vi)
the Company has undertaken no obligation to register the Shares or to include
the Shares in any registration statement which may be filed by it subsequent to
the issuance of the shares to you. In addition, you understand and acknowledge
that the Company has no obligation to you to furnish information necessary to
enable you to make sales under Rule 144.
This option (or installment thereof) is to be exercised by delivering
to the Company a written notice of exercise in the form attached hereto as
Exhibit A, specifying the number of Shares to be purchased, together with
payment of the purchase price of the Shares to be purchased. The purchase price
is to be paid in cash or, at the discretion of the Stock Option Committee, by
delivering shares of the Company's stock already owned by you and having a fair
market value on the date of exercise equal to the exercise price of the option,
or a combination of such shares and cash, or otherwise in accordance with the
Plan.
Would you kindly evidence your acceptance of this option and your
agreement to comply with the provisions hereof
-2-
<PAGE> 3
by executing this letter under the words "Agreed To and Accepted."
Very truly yours,
WHX CORPORATION
By:________________________________
AGREED TO AND ACCEPTED:
WPN CORP.
___________________________________
Ronald LaBow
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<PAGE> 4
Exhibit A
WHX Corporation
110 East 59th Street
New York, New York 10022
Gentlemen:
Notice is hereby given of my election to purchase ______ shares of
Common Stock, $.01 par value (the "Shares"), of WHX Corporation at a price of
$________ per Share, pursuant to the provisions of the option granted to me on
August 4, 1997. Enclosed in payment for the Shares is:
/ / my check in the amount of $________.
*/ / __________________ Shares having a total value
$______________, such value being based on the
closing price(s) of the Shares on the date hereof.
The following information is supplied for use in issuing and
registering the Shares purchased hereby:
Number of Certificates
and Denominations ___________________
Name ___________________
Address ___________________
___________________
___________________
Social Security Number ___________________
Dated: _______________, ____
Very truly yours,
__________________________
*Subject to the approval of the
Stock Option Committee
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<PAGE> 1
EXHIBIT 21.1
WHX CORPORATION SUBSIDIARIES
- ----------------------------
CONSUMERS MINING COMPANY, a Pennsylvania corporation
CHAMPION METAL PRODUCTS, INC., a Delaware corporation
MINGO OXYGEN COMPANY, an Ohio corporation
PITTSBURGH-CANFIELD CORPORATION, a Pennsylvania corporation
UNIMAST INCORPORATED, an Ohio corporation
WHX ENTERTAINMENT CORPORATION, a Delaware corporation
WHEELING-PITTSBURGH CAPITAL CORPORATION, a Delaware corporation
WPC LAND CORPORATION, an Ohio corporation
WHEELING-PITTSBURGH CORPORATION, a Delaware corporation
WHEELING-PITTSBURGH STEEL CORPORATION, a Delaware corporation
WHEELING CONSTRUCTION PRODUCTS, INC., a Delaware corporation
WHEELING-EMPIRE COMPANY, a Delaware corporation
WP STEEL VENTURE CORPORATION, a Delaware corporation
WHEELING-PITTSBURGH FUNDING, INC., a Delaware corporation
W-P COAL COMPANY, a West Virginia corporation
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No.33-54831) of WHX
Corporation of our report dated February 10, 1998 appearing on page 25 of this
Form 10-K.
Price Waterhouse LLP
Pittsburgh, Pennsylvania
March 17, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
WHX Corporation on Form S-3 (File No.33-54831) of our report dated February 12,
1998, on our audits of the consolidated financial statements of
Wheeling-Nisshin, Inc. as of December 31, 1997 and 1996, and for the years ended
December 31, 1997, 1996, and 1995, appearing on page 52 of this Form 10-K.
Coopers & Lybrand L.L.P.
Pittsburgh, Pennsylvania
March 17, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contians summary financial information extracted from the WHX
Corporation Consolidated Financial Statements as of December 31, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,002
<SECURITIES> 581,550
<RECEIVABLES> 44,993
<ALLOWANCES> 1,108
<INVENTORY> 284,757
<CURRENT-ASSETS> 938,883
<PP&E> 1,118,242
<DEPRECIATION> 379,582
<TOTAL-ASSETS> 2,070,403
<CURRENT-LIABILITIES> 609,511
<BONDS> 350,453
0
589
<COMMON> 193
<OTHER-SE> 602,657
<TOTAL-LIABILITY-AND-EQUITY> 2,070,403
<SALES> 642,096
<TOTAL-REVENUES> 642,096
<CGS> 720,722
<TOTAL-COSTS> 931,058
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,047
<INCOME-PRETAX> (267,341)
<INCOME-TAX> (93,569)
<INCOME-CONTINUING> (173,772)
<DISCONTINUED> 0
<EXTRAORDINARY> (25,990)
<CHANGES> 0
<NET-INCOME> (199,762)
<EPS-PRIMARY> (10.01)
<EPS-DILUTED> (10.01)
</TABLE>
