1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
F O R M 10-K
(Mark One)
x Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
---
of 1934 For the Fiscal Year Ended December 31, 1999
Transition Report Pursuant to Section 13 or 15(d) of the Securities
---
Exchange Act of 1934
Commission file number 1-1941
B E T H L E H E M S T E E L C O R P O R A T I O N
(Exact name of registrant as specified in its charter)
DELAWARE 24-0526133
(State of Incorporation) (I.R.S. Employer Identification No.)
1170 Eighth Avenue
BETHLEHEM, PENNSYLVANIA 18016-7699
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 694-2424
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
Common Stock--$1 par value per share New York Stock Exchange
Chicago Stock Exchange
Preference Stock Purchase Rights New York Stock Exchange
Chicago Stock Exchange
Preferred Stock -- $1 par value per share
$5.00 Cumulative Convertible New York Stock Exchange
(stated value $50.00 per share)
$2.50 Cumulative Convertible New York Stock Exchange
(stated value $25.00 per share)
8-3/8% Debentures. Due March 1, 2001 New York Stock Exchange
8.45% Debentures. Due March 1, 2005 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 Voting Stock held by Non-Affiliates: $773,237,742
The amount shown is based on the closing price of Bethlehem Common Stock on
the New York Stock Exchange Composite Tape on March 3, 2000. Voting stock held
by directors and executive officers of Bethlehem is not included in the
computation. However, Bethlehem has made no determination that such
individuals are "affiliates" within the meaning of Rule 405 under the
Securities Act of 1933.
Number of Shares of Common Stock outstanding as of March 3, 2000: 131,641,347
DOCUMENTS INCORPORATED BY REFERENCE:
Selected portions of the 1999 Annual Report to Stockholders of Bethlehem
Steel Corporation are incorporated by reference into Part I and Part II of this
Report on Form 10-K.
Selected portions of the 2000 Proxy Statement of Bethlehem Steel
Corporation are incorporated by reference into Part III of this Report on Form
10-K.
<PAGE>
PART I
ITEM 1. BUSINESS.
Bethlehem(1) manufactures and sells a wide variety of steel mill
products and produces and sells coke and iron ore. The following table shows
the percentage of net sales by major classes of product:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
---- ---- ----
Steel mill products:
Hot rolled sheets.................................... 14.0% 13.3% 14.9%
Cold rolled sheets................................... 19.0 16.8 17.2
Coated sheets........................................ 30.8 28.6 31.5
Tin mill products.................................... 7.2 6.7 7.4
Plates............................................... 20.9 22.3 15.2
Rail products ....................................... 2.7 4.4 4.3
Other steel mill products ........................... 2.6 4.5 5.5
Other products and services (including raw materials).. 2.8 3.4 5.0
------ ------ ------
100.0% 100.0% 100.0%
</TABLE>
Operations
Bethlehem produces a wide variety of steel mill products including hot
rolled, cold rolled and coated sheets, tin mill products, carbon and alloy
plates, rail, specialty blooms, carbon and alloy bars and large-diameter pipe.
Bethlehem's operations include the Burns Harbor Division, the Sparrows Point
Division, Bethlehem Lukens Plate and Pennsylvania Steel Technologies, Inc.
Bethlehem also has iron ore operations (which provide raw materials to
Bethlehem's steelmaking facilities or sell such materials to trade customers),
railroad and trucking operations (which transport raw materials and
semifinished steel products within various Bethlehem operations and serve other
customers on their lines) and lake shipping operations (which primarily
transport raw materials to the Burns Harbor Division). See "ITEM 2.
PROPERTIES" of this Report for a description of the facilities of these
business units and operations.
- ----------------
1 "Bethlehem" when used in this Report means Bethlehem Steel
Corporation, a Delaware corporation, and where applicable includes its
consolidated subsidiaries. Bethlehem was incorporated in Delaware in 1919.
1
<PAGE>
The following table shows production information for Bethlehem and for
the domestic steel industry. The information regarding the domestic steel
industry is based on data from the American Iron and Steel Institute ("AISI"):
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
---- ---- ----
Domestic steel industry raw steel production
capability (million of net tons) ............. 128.1 125.3 121.4
Domestic steel industry raw steel production
(million of net tons)......................... 107.2* 108.8 108.6
Domestic steel industry average raw steel
utilization rate.............................. 84% 87% 89%
Bethlehem's raw steel production capability
(million of net tons)......................... 11.3 10.9 10.5
Bethlehem's raw steel production (million of
net tons)..................................... 9.4 10.2 9.6
Bethlehem's average raw steel utilization rate. 83% 93% 91%
Bethlehem's production as a percent of the
domestic steel industry....................... 8.8% 9.4% 8.9%
</TABLE>
- --------------
* Preliminary
Of Bethlehem's 1999 raw steel production, 86 percent was produced by
basic oxygen furnaces and 14 percent by electric furnaces.
Bethlehem's operations are subject to planned and unplanned outages
due to required maintenance, equipment malfunctions, work stoppages, various
hazards (including explosions, fires and severe weather conditions) and the
availability of raw materials, supplies, utilities and other items needed for
the production of steel. These outages could result in reduced production and
increased costs.
Markets
The following table shows the percentage of the total net tons of
steel mill products shipped by Bethlehem to each of its principal markets,
including shipments to its own manufacturing operations:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
---- ---- ----
Service Centers, Processors and
Converters 49.7% 46.9% 46.9%
Transportation (including automotive) 21.3 23.0 24.9
Construction 12.9 12.1 11.0
Containers 5.4 5.2 5.8
Machinery 4.2 4.9 4.7
Other 6.5 7.9 6.7
------ ------ ------
100.0% 100.0% 100.0%
====== ====== ======
</TABLE>
Many of the markets Bethlehem supplies, such as automotive, machinery
and construction, are highly cyclical and subject to downturns in the U.S.
economy. Also, many of Bethlehem's customers and suppliers are subject to
collective bargaining agreements, and their ability to operate could be
impacted by a strike or work stoppage.
2
<PAGE>
Bethlehem distributes steel products principally through its own sales
organization, which has sales offices at various locations in the United States
and Mexico, and through foreign sales agents. In addition to selling to
customers who consume steel products directly, Bethlehem sells steel products
to steel service centers, distributors, processors and converters. Export
sales were 3 percent of total sales in 1999, 4 percent in 1998 and 2 percent in
1997.
Trade orders on hand were about $1 billion at December 31, 1999, and
$900 million at December 31, 1998. Substantially all of the orders on hand at
December 31, 1999, are expected to be filled in 2000.
Steel Price Sensitivity
Bethlehem's financial results are significantly affected by relatively
small (on a percentage basis) variations in the realized prices for its
products. For example, Bethlehem shipped 8.4 million net tons of steel
products and recorded net sales of $3.9 billion during 1999, implying an
average realized price per ton of about $465. A one percent increase or
decrease in this implied average realized price during 1999 would, on a pro
forma basis, have resulted in an increase or decrease in net sales and pre-tax
income of about $40 million. Competitive pressures in the steel industry are
severe. These pressures could limit Bethlehem's ability to obtain price
increases or could lead to a decline in prices, which could have a material
adverse effect upon Bethlehem.
Competition
The domestic steel industry is highly competitive. This competition
affects the prices that Bethlehem can charge for its products, the utilization
of its production facilities, its ability to sell higher value products and
ultimately its profitability.
Capacity. There is excess world capacity for many of the products
--------
produced by Bethlehem. Moreover, some foreign steel producers are owned,
controlled or subsidized by foreign governments. Decisions by these foreign
producers to continue marginal facilities may be influenced to a greater degree
by political and economic policy considerations than by prevailing market
conditions. In addition, overcapacity has been perpetuated by the continued
operation, modernization and upgrading of marginal domestic facilities through
bankruptcy reorganization proceedings and by the sale of marginal domestic
facilities to new owners, which operate such facilities with a lower cost
structure. Over the next several years, construction of additional production
facilities could result in increased domestic capacity over 1999 levels. In
particular, new domestic capacity in the plate and rail markets is expected to
increase competition in these products where we now have a large domestic
market share.
Electric Furnace Producers. Domestic integrated producers, such as
--------------------------
Bethlehem, have lost market share in recent years to domestic electric furnace
producers. These companies are relatively efficient, low-cost producers that
make steel from scrap in electric furnaces (which are less expensive to build
than integrated facilities), have lower employment and environmental costs per
ton shipped and target regional markets. Through the use of various higher
quality raw materials and thin slab casting technology, electric furnace
producers are increasingly able to compete directly with producers of higher
value products, including cold rolled and coated sheets.
Imports. Domestic steel producers also face significant competition
-------
from foreign producers and have been, and may continue to be, adversely
affected by unfairly traded imports. In certain cases, foreign producers may
be pricing their products below their production costs. Imports of finished
steel products accounted for about 22 percent of the domestic market in 1999,
27 percent in 1998 and 21 percent in 1997.
3
<PAGE>
The following table, which is based on data reported by the AISI,
shows the percentage of the domestic apparent consumption of steel mill
products supplied by imports for various classes of products.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999* 1998 1997
---- ---- ----
Rail .............................. 36% 32% 26%
Plates ............................ 17 29 21
Tin mill products ................. 20 16 15
Hot rolled and cold rolled sheets.. 22 31 22
Coated sheets ..................... 11 10 11
All products** .................... 26 30 24
</TABLE>
- -------------------
* Preliminary
** Excludes steel imported in the form of manufactured goods, such as
automobiles, but includes semifinished steel.
Excluding semifinished steel, imports of steel mill products were
about 27.1 million tons in 1999, 34.7 million tons in 1998 and 24.7 million
tons in 1997.
Antidumping and countervailing duty orders covering imports of
corrosion-resistant sheet from six countries, cold rolled sheet from three
countries and plates from 11 countries, which resulted from unfair trade cases
filed by Bethlehem and 11 other companies in 1992, remain in place. Suspension
agreements are also in place limiting the volume of cut-to-length plate from
Russia, the Ukraine and the People's Republic of China and setting a price
floor for South Africa for a five-year period from 1998. In July, 1999, the
Commerce Department entered into five-year suspension agreements limiting the
volume and setting a price floor for hot rolled sheet from Brazil and Russia.
Russia also entered into a comprehensive agreement to limit the volume of
exports of other steel products from Russia to essentially 1997 levels. In
addition, an antidumping order covering hot rolled sheet from Japan went into
effect in July, 1999, and antidumping and countervailing duty orders covering
cut-to-length carbon steel plate from six additional countries went into effect
in January, 2000. In January, 2000, the Department of Commerce announced
substantial final antidumping margins in investigations covering cold rolled
sheet from 12 countries. An antidumping investigation is also pending on tin
mill products from Japan.
For further information on trade-related matters, see "International
Steel Trade" under the "Year in Review" in Bethlehem's 1999 Annual Report to
Stockholders.
The major restructuring of the domestic steel industry, which began in
the late 1970s and early 1980s, has removed the steelmaking capacity that once
existed to meet market demand during peak periods. During the last few years,
domestic producers have met a portion of the demand that exceeded steelmaking
capacity by importing semifinished slabs for rolling into finished products in
their own mills.
Substitute Materials. For many steel products, there is substantial
--------------------
competition from manufacturers of products other than steel, including
aluminum, ceramics, concrete, glass, plastic and wood. Changes to the relative
competitiveness of these substitute materials and the emergence of additional
substitute materials could adversely affect future prices and demand for
Bethlehem's products.
4
<PAGE>
Capital Expenditures
Capital expenditures were $557 million in 1999 compared with $328
million in 1998 and $228 million in 1997. Capital expenditures for 2000 are
currently estimated to be about $250 million. During 1998, Bethlehem started
construction of Sparrows Point's new continuous cold rolling mill complex.
This complex, which is scheduled to begin production early in 2000, is expected
to lower costs, improve quality and enhance capabilities.
About $350 million of capital expenditures were authorized in 1999.
At December 31, 1999, the estimated cost of completing authorized capital
expenditures was about $410 million compared with $610 million at December 31,
1998. Bethlehem expects to complete these authorized capital expenditures
during 2000 to 2002.
The domestic integrated steel industry is very capital intensive. As
discussed under "ITEM 2. PROPERTIES -- General" of this Report, Bethlehem's
principal operations and facilities are of varying ages, technologies and
operating efficiencies. Bethlehem will need to continue to make significant
capital expenditures in the future to maintain and improve the competitiveness
of its operations and facilities.
Environment
Bethlehem is subject to various federal, state and local environmental
laws and regulations concerning, among other things, air emissions, waste water
discharges and solid and hazardous waste disposal. During the five years ended
December 31, 1999, Bethlehem spent about $100 million for environmental control
equipment. Expenditures for new environmental control equipment totaled
approximately $11 million in 1999, $13 million in 1998 and $15 million in 1997.
The costs incurred in 1999 to operate and maintain existing environmental
control equipment were approximately $115 million (excluding interest costs but
including depreciation charges of $14 million) compared with $114 million in
1998 and $112 million in 1997. In addition, Bethlehem has been required to pay
various fines and penalties relating to violations or alleged violations of
laws and regulations in the environmental control area. Bethlehem paid about
$74,000 in 1999, $910,000 in 1998 and $830,000 in 1997 for such fines and
penalties.
Under the Clean Air Act, as amended, coke-making facilities will have
to meet progressively more stringent standards over the next 25 years.
Bethlehem currently operates coke-making facilities in Burns Harbor, Indiana
and Lackawanna, New York. Bethlehem will continue to evaluate the impact of
future emission control regulations on its Burns Harbor and Lackawanna
operations but believes that these operations will be able to comply.
Bethlehem and federal and state regulatory agencies conduct
negotiations to resolve differences in interpretation of environmental control
requirements. In some instances, those negotiations are held in connection
with the resolution of pending environmental proceedings. Bethlehem believes
there will not be any significant curtailment or interruptions of any of its
important operations as a result of these proceedings and negotiations.
Bethlehem cannot predict the future specific environmental control
requirements. Based on existing and anticipated regulations under current
legislation, Bethlehem estimates that capital expenditures for new
environmental control equipment will average about $15 million per year over
the next two years. However, estimates of future capital expenditures and
operating costs required for environmental compliance are subject to numerous
uncertainties, including the evolving nature of regulations, possible
imposition of more stringent requirements, availability of new technologies and
the timing of expenditures.
5
<PAGE>
Under the Resource Conservation and Recovery Act, as amended ("RCRA"),
the owners of certain facilities that managed hazardous waste after 1980 are
required to investigate and, if appropriate, remediate certain historic
environmental contamination found at the facility. All of Bethlehem's major
facilities may be subject to this "Corrective Action Program", and Bethlehem
has implemented or is currently implementing this program at its facilities
located in Steelton, Pennsylvania; Lackawanna, New York; Burns Harbor, Indiana;
and Sparrows Point, Maryland. At Steelton, Bethlehem completed a RCRA Facility
Investigation ("RFI"), a Corrective Measures Study ("CMS") and a remediation
program approved by the United States Environmental Protection Agency (the
"EPA") and completed the remediation in 1994. At Lackawanna, Bethlehem is
conducting an RFI. At Burns Harbor, Bethlehem is conducting an RFI in
accordance with an EPA approved work plan that will require several years to
complete. At Sparrows Point, Bethlehem, the EPA and the Maryland Department of
the Environment have agreed to a phased RFI as part of a comprehensive
multimedia pollution prevention agreement which was entered by the U. S.
District Court for Maryland on October 8, 1997. The potential costs for
possible remediation activities, if any, at Lackawanna, Burns Harbor and
Sparrows Point and the timeframe for implementation of these activities cannot
be reasonably estimated until the RFIs, and possibly the CMSs, have been
completed and approved.
At its former plant in Bethlehem, Pennsylvania, Bethlehem is
conducting remedial investigations pursuant to the Pennsylvania Land Recycling
("Brownfields") Program in conjunction with comprehensive redevelopment plans.
These investigations are being performed with input and oversight from both the
Pennsylvania Department of Environmental Protection and the EPA Region III
corrective action staff to ensure that the actions taken are acceptable to both
state and federal regulatory authorities.
Bethlehem does not believe that the operations it acquired as part of
the Lukens merger in 1998 are subject to the RCRA Corrective Action Program
and, therefore, any remediation associated with those facilities will be
addressed as appropriate in the ongoing course of business. Bethlehem may have
some residual liability for remediation associated with historic Lukens
facilities or those that have been sold or shut down since the merger, but any
such liabilities are not anticipated to be material. For example, the electric
arc furnace flue dust disposal site at the Coatesville, Pennsylvania, facility
that was discussed by Lukens in its 1997 Form 10-K is continuing to be
investigated by Bethlehem for remediation pursuant to the Pennsylvania
Brownfields program. Bethlehem does not have any information at this time
suggesting that the $3 million liability that had been recognized by Lukens for
that site is not appropriate.
Under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA", also known as "Superfund"), the
EPA can impose liability for site remediation on generators and transporters of
waste, as well as past and present owners and operators of the sites where the
waste was disposed of, regardless of fault or the legality of the disposal
activities. Bethlehem is actively involved at 24 sites where it has been
advised that it may be considered a potentially responsible party under CERCLA
or corresponding State Superfund legislation. Based on its experience
regarding site remediation and its knowledge of and extent of involvement in
such sites, Bethlehem expects that its share of the costs for remediation of
these sites will not be material.
In its 1997 Form 10-K, Lukens discussed a CERCLA site (Douglassville)
in which it was involved. Subsequent to that discussion, Lukens and Bethlehem
were identified as separate de-minimis potentially responsible parties and were
signatories to a consent decree which was entered by the U.S. District Court
for the Eastern District of Pennsylvania on July 8, 1999. Within 60 days
following entry of the consent decree, Bethlehem paid approximately $204,000 on
behalf of Lukens and $125,000 on behalf of Bethlehem in full resolution of
those liabilities.
6
<PAGE>
Although it is possible that Bethlehem's future quarterly or annual
results of operations could be materially affected by the future costs of
environmental compliance, Bethlehem believes that the future costs of
environmental compliance will not have a material adverse effect on its
consolidated financial position or on its competitive position with respect to
other integrated domestic steelmakers that are subject to the same
environmental requirements. To the extent that competitors are not required to
undertake equivalent costs, Bethlehem's competitive position could be adversely
affected.
Purchased Materials and Services
Bethlehem purchases about $3 billion per year of raw materials,
energy, equipment, goods and services from commercial sources in about 40
countries. Bethlehem's profitability could be affected by difficulties in
obtaining these items and the prices paid for them. These difficulties could
include such things as labor strikes, political instability and natural
disasters. Bethlehem made significant progress in 1999 through its Strategic
Sourcing initiatives and expects further progress in 2000. See "ITEM 2.
PROPERTIES - Raw Material Properties and Interests" of this Report for a
further description of the sources of raw materials essential to Bethlehem's
steelmaking business.
Technology
Research and Development. Bethlehem performs research to improve
------------------------
existing products, develop new products and make operating processes more
efficient. During 1999, 1998 and 1997, Bethlehem spent about $21 million, $23
million and $22 million, respectively, for research and development. Bethlehem
owns a number of U.S. and foreign patents that relate to a wide variety of
products and processes, has pending patent applications and is licensed under a
number of patents. During 1999, seven U.S. patents covering a variety of new
developments were awarded to Bethlehem. However, Bethlehem believes that no
single patent or license or group of patents or licenses is of material
importance to its overall business. Bethlehem also owns registered trademarks
for certain of its products and service marks for certain of its services
which, unlike patents and licenses, are renewable so long as they are continued
in use and properly protected.
Year 2000 Computer Issue. During the last five years, Bethlehem
------------------------
focused on potential problems associated with the once common programming
practice of storing data information using only the last two digits to indicate
the year. The scope of Bethlehem's year 2000 Program involved many areas
including its business and manufacturing computing systems, the associated
personal computing, communications and infrastructure elements and the year
2000 readiness of key suppliers and customers. The major elements of the
program were inventory, risk assessment, remediation, testing and contingency
planning.
As a result of its well-planned approach, Bethlehem experienced a
smooth transition to the year 2000. During 1999, Bethlehem completed the final
phases of its year 2000 Program and established command centers at each
business unit and its corporate office to monitor all of its computer systems.
Bethlehem's employees in information technology and at the operations worked
effectively with various providers to ensure that Bethlehem was prepared for
the changeover. During the transition period, Bethlehem performed a thorough
validation of all manufacturing and business systems. Following this
systematic review, all facilities resumed operations as scheduled. Also, no
material problems were encountered with Bethlehem's key suppliers and
customers. The costs associated with this effort were approximately $7 million
and were charged to normal operating expenses. Bethlehem achieved its
objectives and continued to operate its business and manufacturing systems and
to serve its customers with no adverse year 2000 impact.
7
<PAGE>
Employment
At the end of 1999, Bethlehem had about 15,500 employees,
three-quarters of whom are covered by agreements with the United Steelworkers
of America ("USWA"). On August 1, 1999, Bethlehem and the USWA entered into
new five-year labor agreements covering USWA represented employees at
Bethlehem's facilities in Burns Harbor, Indiana; Lackawanna, New York; Sparrows
Point, Maryland; Coatesville, Pennsylvania; and Steelton, Pennsylvania. The
Burns Harbor and Sparrows Point divisions continue to be covered by one
agreement, while separate agreements were continued for PST and BLP's
Coatesville facility. A strike or work stoppage could impact Bethlehem's
ability to operate if it is unable to negotiate new agreements with its
represented employees when the existing agreements expire. Also, Bethlehem's
profitability could be adversely affected if increased costs associated with
any future contract are not recoverable through productivity improvements or
price increases.
For further information on Bethlehem's employment-related matters, see
"Employees and Employment Costs" under "Financial Review and Operating
Analysis" in Bethlehem's 1999 Annual Report to Stockholders.
Employee Postretirement Obligations
At December 31, 1999, Bethlehem had recorded a liability of $410
million for pensions. For further discussion of Bethlehem's pension funding
and obligations, see "Liquidity and Capital Structure" under "Financial Review
and Operating Analysis" in Bethlehem's 1999 Annual Report to Stockholders.
Bethlehem provides health care and life insurance benefits to most
retirees and their dependents. Most of these future benefits have not been
funded and, therefore, Bethlehem has substantial financial obligations on its
balance sheet. At December 31, 1999, Bethlehem had recorded a liability of
$1,820 million for postretirement benefits other than pensions. To the extent
competitors do not have similar obligations, Bethlehem could be placed at a
competitive disadvantage. Also, increases in health care costs could adversely
affect Bethlehem's profitability.
Joint Ventures, Partnerships, Facility Sharing Arrangements and Mergers
Bethlehem has considered, and discussed with others, various
opportunities for joint ventures, partnerships, facility sharing arrangements
and mergers of all or part of Bethlehem. Bethlehem will continue to explore
such opportunities. See "ITEM 2. PROPERTIES." of this Report for a
description of joint ventures in which Bethlehem participates.
Businesses Exited
In recent years, Bethlehem has shut down or sold several facilities
and operations. Since 1996, Bethlehem recorded net charges of $365 million in
connection with these actions. On December 22, 1999, Bethlehem completed the
sale of its Washington Steel Division facility in Washington, Pennsylvania, and
on January 14, 2000, Bethlehem completed the sale of its stainless sheet
operations in Massillon, Ohio. As a result, Bethlehem has now completed its
planned divestiture of all of the stainless and distribution assets that were
acquired as part of the Lukens acquisition.
If it becomes necessary for Bethlehem to exit or reduce employment at
additional businesses and operations in the future, it could incur substantial
additional charges in the process. The charges for employees terminated as a
result of facility shutdowns or sales vary depending upon the demographics of
the workforce but could be $100,000 per employee. The
8
<PAGE>
recording of these charges could have a material adverse impact on Bethlehem's
financial condition because of the increase in recorded liabilities, decrease
in stockholders' equity and possible increases in required contributions to the
pension fund and retiree health care payments. Except as discussed above or
previously announced, Bethlehem does not currently anticipate any additional
facility shutdowns.
Capital Structure
Bethlehem's capital structure is highly leveraged. Although Bethlehem
believes it has sufficient access to funds for the operation of its business,
its existing obligations and below investment grade credit ratings may limit
its ability to raise capital at reasonable cost and terms in the future.
Forward-Looking Statements
Bethlehem and its representatives may from time to time make
forward-looking statements in reports filed with the Securities and Exchange
Commission, reports to stockholders, press releases, other written documents
and oral presentations. These forward-looking statements may include, among
others, statements concerning projected levels of sales, shipments and income,
pricing trends, cost-reduction strategies, product mix, anticipated capital
expenditures and other future plans and strategies.
As permitted by the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, Bethlehem is identifying in this Report
important factors that could cause Bethlehem's actual results to differ
materially from those projected in these forward-looking statements. These
factors include, but are not necessarily limited to:
- the effect of planned and unplanned outages on Bethlehem's operations;
- the potential impact of strikes or work stoppages at facilities of
Bethlehem's customers and suppliers;
- the sensitivity of Bethlehem's results to relatively small changes in
the prices obtained by Bethlehem for its products;
- intense competition due to world steel overcapacity, new domestic
capacity over the next several years, low- cost electric furnace
facilities, imports (especially unfairly traded imports) and
substitute materials;
- the high capital requirements associated with integrated steel
facilities;
- the significant costs associated with environmental controls and
remediation expenditures and the uncertainty of future environmental
control requirements;
- availability and prices associated with raw materials, supplies,
utilities and other services and items required by Bethlehem's
operations;
- employment matters, including costs and uncertainties associated with
Bethlehem's collective bargaining agreements, and employee
postretirement obligations;
- the effect of possible future closure or exit of businesses;
- Bethlehem's highly leveraged capital structure;
9
<PAGE>
- the effect of existing and possible future lawsuits filed against
Bethlehem.
"ITEM 1. BUSINESS" and "ITEM 3. LEGAL PROCEEDINGS" of this Report
discuss these factors in more detail and are incorporated by reference into
this section. Bethlehem does not undertake to update any forward-looking
statements that may be made from time to time by Bethlehem or its
representatives.
ITEM 2. PROPERTIES.
Burns Harbor Division
Location: In Indiana, on Lake Michigan, about 50 miles southeast of
--------
Chicago, Illinois.
Principal products and markets: Hot rolled, cold rolled,
------------------------------
electrogalvanized, hot-dip galvanized and galvannealed sheet, coke and
semifinished steel to Bethlehem Lukens Plate. Its principal markets include
automotive, service centers, construction, machinery and appliance.
Principal facilities: A sintering plant, a coke oven battery (Burns
--------------------
Harbor operates a second coke oven battery for the battery's owner), two blast
furnaces, including coal injection facilities, three basic oxygen furnaces with
a combined annual raw steel production capability of about 5.6 million tons, a
vacuum degassing facility, two continuous slab casters with a combined annual
production capability of about 4 million tons, an 80-inch hot-strip mill, two
continuous pickling lines, an 80- inch five-stand cold reducing mill, sheet
finishing mills, a continuous heat treating line, batch annealing facilities
and a 72-inch hot-dip galvanizing line. Burns Harbor operates a cold reducing
mill, a continuous pickling line, a galvanizing line and two coke oven
batteries in Lackawanna, New York.
Burns Harbor continuously casts about 88 percent of its total
production volume, with the remaining 12 percent being ingot cast. Ingot cast
slabs are used primarily by Bethlehem to make steel plates. Burns Harbor's
utilization of raw steel production capability was 95 percent during 1999.
Sparrows Point Division
Location: On the Chesapeake Bay, near Baltimore, Maryland.
--------
Principal products and markets: Hot rolled, cold rolled, hot-dip
------------------------------
galvanized and Galvalume(R) sheet and tin mill products. Its principal
markets include construction, containers and service centers.
Principal facilities: A sintering plant, a large blast furnace, two
--------------------
basic oxygen furnaces with an annual raw steel production capability of about
3.7 million tons, a two-strand continuous slab caster, a 68-inch hot-strip
mill, three continuous pickling lines, three cold reducing mills (66-inch,
56-inch and 48-inch), continuous and batch annealing facilities, two
galvanizing lines, a Galvalume(R) line, a 48-inch hot-dip galvanizing/
Galvalume(R) line and tin mill facilities that include tin and chrome plating
lines.
Sparrows Point continuously casts essentially 100 percent of its total
production volume. Sparrows Point's utilization of raw steel production
capability was 76 percent during 1999. Utilization was lower than in previous
years because of the reline of the "L" Blast Furnace.
10
<PAGE>
Bethlehem Lukens Plate ("BLP")
Location: In Coatesville and Conshohocken, Pennsylvania; Burns
--------
Harbor, Indiana.
Principal products and markets: Carbon plate, high-strength, low
------------------------------
alloy plate, commercial alloy plate, military alloy plate, coiled and cut plate
and clad plate. Its principal markets include service centers, transportation,
infrastructure, machinery, equipment, environmental and engineering.
Principal facilities: Coatesville: an electric arc furnace with an
--------------------
annual raw steel production capability of about 900,000 tons, two plate mills
(140-inch and 206-inch) and heat treating facilities. Conshohocken: a
110-inch Steckel mill, two reheat furnaces, a roughing mill, an in-line cooling
and cut-to-length line, a quench and temper line and a batch heat-treating
system. Burns Harbor: a 50 x 90-inch slabbing mill, a 110-inch sheared plate
mill including two continuous reheat furnaces, a roughing mill, a finishing
mill and a normalizing furnace, and a 160-inch sheared plate mill including two
continuous reheat furnaces, four batch reheat furnaces, a roughing mill, a
finishing mill, an in-line accelerated cooling facility, a quench and temper
line and a batch normalizing furnace.
Bethlehem Lukens Plates' utilization of raw steel production
capability was 91 percent during 1999.
During 2000, Bethlehem intends to consolidate Burns Harbor, Sparrows
Point and BLP into two divisions. BLP's operations in Coatesville and
Conshohocken will become part of Sparrows Point and BLP's facilities located at
Burns Harbor will become part of that Division. Bethlehem will continue to
market its plate products under the name Bethlehem Lukens Plate.
Pennsylvania Steel Technologies, Inc. ("PST")
Location: In Steelton, Pennsylvania, south of Harrisburg,
--------
Pennsylvania.
Principal products and markets: Railroad rails, specialty blooms and
------------------------------
flat bars. PST also produces large-diameter pipe for the oil and gas
industries.
Principal facilities: A DC electric arc furnace with an annual raw
--------------------
steel production capability of about 1.1 million tons, a ladle furnace, a
vacuum degassing facility, a continuous bloom caster, a 44-inch blooming mill,
a 28-inch rail mill, in-line rail head-hardening facilities, finishing and
shipping facilities for long-length (80-foot) rails, a 20-inch bar mill and an
electric fusion welded pipe mill.
PST's utilization of raw steel production capability was 42 percent
during 1999.
Joint Ventures
Bethlehem participates in the following joint ventures:
- Double G Coatings Company, L.P. (located near Jackson, Mississippi)
-- operates a 270,000 ton per year sheet coating line that produces
galvanized and Galvalume(R) coated sheets primarily for the construction
market. Sparrows Point provides cold rolled coils for about half of
Double G's annual capability and is responsible for marketing its
share of the finished product.
11
<PAGE>
- Columbus Coatings Company -- (located in Columbus, Ohio) -- a joint
venture with The LTV Corporation. The coating facility is expected to
begin operation by fourth quarter 2000 and will produce quality
corrosion resistant steel sheets primarily for the automotive market.
- Columbus Processing Company LLC. (located in Columbus, Ohio) -- Steel
slitting and warehousing operation.
- Steel Construction Systems (located in Orlando, Florida) -- a joint
venture with CSR Rinker, the largest building materials company in
Florida. Steel Construction Systems manufactures steel studs and
joists for residential and light commercial buildings.
- Walbridge Coatings (located in Walbridge, Ohio) -- owns and operates a
400,000 ton per year electrogalvanizing line. This facility produces
corrosion-resistant sheet steel primarily for the automobile industry
and other consumer durables markets. Burns Harbor provides cold
rolled coils for 85 percent of Walbridge's annual capability and is
responsible for marketing its share of the finished product.
- Indiana Pickling and Processing Company (located in northern Indiana)
-- operates a pickling line.
- Chicago Cold Rolling, L.L.C. (located in northern Indiana) --
processes hot rolled sheet into cold rolled sheet products.
- TWB Company (located in Michigan) -- operates the largest plant in
North America producing laser-welded blanks for the automotive
industry.
- MetalSite (www.metalsite.net) -- Bethlehem is an equity partner in
MetalSite, an internet metals marketplace where companies can buy or
sell metal products or services.
- Bethlehem Roll Technologies LLC (located in Sparrows Point, Maryland)
-- operates a facility for grinding steel mill rolls for Bethlehem and
others.
- BethNova Tube, LLC (site location not yet determined) -- will produce
tubes for use in hydroforming automobile and truck parts. Tube
production is expected to begin in the first quarter of 2001.
Bethlehem also has indirect equity interests in various iron ore
properties. See "Raw Material Properties and Interests" below.
Raw Material Properties and Interests
Iron Ore. Bethlehem has indirect equity interests in various iron ore
--------
operating properties, which (excluding tonnages applicable to interests owned
by others) it estimates contained recoverable reserves at December 31, 1999,
sufficient to produce at least 16 million tons of direct shipping iron ore from
properties located in Brazil and 186 million tons of iron ore pellets from
properties located in Minnesota. During 1997, Bethlehem sold its equity
interest in Iron Ore Company of Canada ("IOC"). Bethlehem continues as a
customer of IOC and purchases iron ore at prices which approximate market. In
addition to the estimated reserves at operating properties, Bethlehem also has
indirect equity interests in undeveloped or nonoperating iron ore properties,
which (excluding tonnages applicable to interests owned by others) it estimates
12
<PAGE>
contained recoverable reserves at December 31, 1999, sufficient to produce at
least 11 million tons of direct shipping iron ore from properties located in
Brazil and 128 million tons of iron ore pellets from properties located in
Minnesota.
The iron ore operating properties in which Bethlehem has interests
have mining and processing facilities which can supply a majority of
Bethlehem's current annual iron ore requirements. The location of Bethlehem's
steel operations and the iron ore products best suited to these facilities
determine when Bethlehem sells, exchanges or purchases iron ore. These
purchases have been from various sources, including sources in which it has
ownership interests, under a variety of arrangements.
Bethlehem's share of the annual iron ore production by enterprises in
which it has ownership interests, for Bethlehem's use or sale to trade
customers, was 6.9 million tons in 1999 and 7.9 million tons in 1998. In
addition to these sources, Bethlehem purchased 4 million tons of iron ore in
1999 and 5.1 million tons of iron ore in 1998 from sources in which it had no
ownership interests. In 1999, Bethlehem obtained about 62 percent of its iron
ore requirements from operations in which it had ownership interests compared
with 58 percent in 1998.
Iron ore trade sales commitments for 2000 are .3 million tons and no
sales commitments exist beyond 2000.
The interests in foreign iron ore properties described above are
subject to the risks associated with investments in foreign countries,
including the risk of nationalization.
Coal and Coke. Bethlehem has sold all of its coal operating
-------------
properties and purchases all of the coal it uses from commercial sources.
Bethlehem owns undeveloped or nonoperating coal properties in Pennsylvania,
which it estimates contained recoverable reserves at December 31, 1999,
sufficient to produce at least 158 million tons of coal, of which about 91
percent and 9 percent, respectively, are metallurgical and steam coal.
Bethlehem operates coke-making facilities at Burns Harbor, Indiana and
Lackawanna, New York.
Other Raw Materials. Bethlehem purchases its other raw material
-------------------
requirements from commercial sources.
Transportation
Bethlehem owns nine subsidiary shortline railroads which transport raw
materials and semifinished steel products within various Bethlehem operations
and serve other customers on their lines. Bethlehem manages an interstate
trucking company serving Bethlehem's operations and other facilities and
manages a rail/truck intermodal facility in Bethlehem, Pennsylvania.
The Burns Harbor Division operates two 1,000-foot ore vessels (one
owned and one under long-term charter), which are used for the transportation
of iron ore on the Great Lakes.
General
While Bethlehem's principal operations and facilities are adequately
maintained, they are of varying ages, technologies and operating efficiencies.
Bethlehem believes that most of its operations and facilities currently are
competitive with the operations and facilities of its principal competitors.
Bethlehem will continue to make capital expenditures to improve and maintain
the competitiveness of its operations and facilities. See "ITEM 1. BUSINESS -
Capital Expenditures" of this Report for a discussion of Bethlehem's capital
expenditures.
13
<PAGE>
Bethlehem owns all principal operations and facilities. During 1998,
Bethlehem sold its No. 1 Coke Oven Battery at Burns Harbor to an affiliate of
DTE Energy Services, Inc. Bethlehem operates the facility for the owner and
purchases its output. Bethlehem financed the construction of two hot-dip
galvanizing lines at its Burns Harbor and Sparrows Point Divisions. These two
galvanizing lines are pledged as collateral for the borrowings.
ITEM 3. LEGAL PROCEEDINGS.
Bethlehem is a party to numerous legal proceedings incurred in the
ordinary course of its business. Bethlehem cannot predict with any certainty
the outcome of any legal proceedings to which it is a party. However, in the
opinion of Bethlehem's management, adequate reserves have been recorded for
losses which are likely to result from these proceedings. To the extent that
such reserves prove to be inadequate, Bethlehem would incur a charge to
earnings which could be material to its future results of operations in
particular quarterly or annual periods. The outcome of these proceedings,
however, is not currently expected to have a material adverse effect on
Bethlehem's consolidated financial position.
See "ITEM 1. BUSINESS - Environment" of this Report for a discussion
of Bethlehem's potential responsibilities for environmental cleanup at certain
sites under RCRA and CERCLA.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security holders during
the fourth quarter of 1999.
__________
14
<PAGE>
Executive Officers of the Registrant.
The executive officers of Bethlehem as of March 3, 2000, are as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Name Age Position
---- --- --------
Curtis H. Barnette 65 Chairman and Chief Executive Officer
Gary L. Millenbruch 62 Vice Chairman and Chief Financial Officer
Duane R. Dunham 58 President and Chief Operating Officer
Dr. Augustine E. Moffitt, Jr. 54 Executive Vice President (Administration)
and Chief Administrative Officer
Leonard M. Anthony 45 Treasurer
Lonnie A. Arnett 54 Vice President (Accounting), Controller
and Chief Accounting Officer
Dr. Walter N. Bargeron 57 President, Burns Harbor Division
David M. Beinner 60 Senior Vice President (Commercial)
Thomas J. Conarty, Jr. 50 Vice President (Information Technology)
and Chief Information Officer
Stephen G. Donches 54 Vice President (Public Affairs)
Andrew R. Futchko 57 President, Pennsylvania Steel
Technologies, Inc.
William H. Graham 54 Senior Vice President (Law), General
Counsel and Secretary
Carl W. Johnson 58 President, Sparrows Point Division
John L. Kluttz 57 Vice President (Union Relations)
Dr. Carl F. Meitzner 60 Vice President (Planning)
Van R. Reiner 51 President, Bethlehem Lukens Plate
Dr. Malcolm J. Roberts 57 Vice President (Technology) and
Chief Technology Officer
Robert A. Rudzki 46 Vice President (Purchasing and
Transportation) and Chief Procurement
Officer
Dorothy L. Stephenson 50 Vice President (Human Resources)
15
</TABLE>
<PAGE>
All of the executive officers have held responsible management or
professional positions with Bethlehem or its subsidiaries for more than the
past five years.
Bethlehem's By-laws provide that the Board of Directors annually
chooses the officers and that each officer holds office until his or her
successor is elected, or his or her death, resignation or removal.
16
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED SECURITY HOLDER MATTERS.
As of March 3, 2000, about 32,850 stockholders held 131,641,347 shares
of Bethlehem Common Stock. The principal market for Bethlehem Common Stock is
the New York Stock Exchange. Bethlehem Common Stock is also listed on the
Chicago Stock Exchange. Dividends on Bethlehem Common Stock are paid quarterly
when declared by Bethlehem's Board of Directors.
Under the provisions of Bethlehem's 10-3/8% Senior Notes due 2003,
Bethlehem's ability to pay dividends on its Common Stock is restricted. See
Note J to the Consolidated Financial Statements. At December 31, 1999, about
$280 million was available for the payment of Common Stock dividends under
these provisions.
Bethlehem has not paid a dividend on its Common Stock since the fourth
quarter of 1991. Bethlehem's Board of Directors will determine whether to pay
any future dividends (subject to any applicable restrictions) based on attained
financial results and business outlook.
The following table shows the high and low sales prices of Bethlehem
Common Stock as reported in the consolidated transaction reporting system. The
closing sale price of Bethlehem Common Stock on March 3, 2000, was $6.00.
<TABLE>
<CAPTION>
1999 1998
---- ----
Sales Prices Sales Prices
------------ ------------
Period High Low High Low
------ ---- --- ---- ---
<S> <C> <C> <C> <C>
First Quarter.................. $10.688 $ 7.688 $15.500 $ 8.063
Second Quarter................. 10.938 7.375 17.125 11.063
Third Quarter.................. 8.688 6.750 13.438 7.000
Fourth Quarter................. 8.500 5.875 10.750 7.313
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this Item is incorporated by reference
from page 31 of Bethlehem's 1999 Annual Report to Stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The information required by this Item is incorporated by reference
from pages 2 to 9 and 12 to 15 of Bethlehem's 1999 Annual Report to
Stockholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this Item is incorporated by reference
from pages 16 to 28 of Bethlehem's 1999 Annual Report to Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
17
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
In addition to the information under the caption "Executive Officers
of the Registrant" in Part I of this Report, the information required by this
Item is incorporated by reference from the material under the heading "Item 1
- -- Election of Directors" and "Section 16(a) Beneficial Ownership Reporting
Compliance" of Bethlehem's Proxy Statement for the 2000 Annual Meeting of
Stockholders, which will be filed with the Securities and Exchange Commission.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is incorporated by reference
from the material under the heading "Executive Compensation" of Bethlehem's
Proxy Statement for the 2000 Annual Meeting of Stockholders, which will be
filed with the Securities and Exchange Commission.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.
The information required by this Item is incorporated by reference
from the material under the heading "Stock Ownership Information" of
Bethlehem's Proxy Statement for the 2000 Annual Meeting of Stockholders, which
will be filed with the Securities and Exchange Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this Item is incorporated by reference
from the material under the heading "Certain Business Relationships and Related
Transactions" and under the heading "Indemnification Assurance Agreements" of
Bethlehem's Proxy Statement for the 2000 Annual Meeting of Stockholders, which
will be filed with the Securities and Exchange Commission.
Except for those items specifically incorporated by reference, you
should not consider Bethlehem's 1999 Annual Report to Stockholders or Proxy
Statement for the 2000 Annual Meeting of Stockholders to be part of this
Report.
18
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K.
(a) Documents filed as part of this Report:
The following is an index of the financial statements, schedules and
exhibits included in this Report or incorporated herein by reference.
(1) Financial Statements.
BETHLEHEM STEEL CORPORATION AND CONSOLIDATED SUBSIDIARIES
<TABLE>
<CAPTION>
<S> <C>
Page
----
Consolidated Statements of Income for years 1999, 1998 and 1997................ *
Consolidated Balance Sheets as of December 31, 1999 and 1998 .................. *
Consolidated Statements of Cash Flows for the years 1999, 1998 and 1997........ *
Notes to Consolidated Financial Statements (Including Quarterly Financial Data). *
(2) Consolidated Financial Statement Schedules.
Report of Independent Auditors On Consolidated Financial Statement Schedule.... F-1
II -- Valuation and Qualifying Accounts and Reserves, years ended
December 31, 1999, 1998 and 1997................................. F-3
</TABLE>
* Incorporated by reference from pages 16 to 28 of Bethlehem's 1999 Annual
Report to Stockholders.
The Consolidated Financial Statements, together with the report of
PricewaterhouseCoopers LLP dated January 26, 2000, on pages 16 to 29 of
Bethlehem's 1999 Annual Report to Stockholders are incorporated by reference in
this Form 10-K Annual Report. With the exception of those pages, you should
not consider Bethlehem's 1999 Annual Report to Stockholders as a part of this
Report for this Item. The Schedule listed above should be read in conjunction
with the consolidated financial statements in such 1999 Annual Report to
Stockholders.
Schedules not included have been omitted because they are not
applicable or the required information is shown in the consolidated financial
statements or notes.
Separate financial statements of subsidiaries not consolidated and 50
percent or less owned persons accounted for by the equity method have been
omitted because considered in the aggregate as a single subsidiary they do not
constitute a significant subsidiary.
(3) Exhibits.
The following is an index of the exhibits included in this Report or
incorporated herein by reference.
(3)(a) Second Restated Certificate of Incorporation (Incorporated by reference
from Exhibit 3(a) to Bethlehem's Annual Report on Form 10-K for the
year ended December 31, 1998).
19
<PAGE>
(b) Amendment to Second Restated Certificate of Incorporation
(Incorporated by reference from Exhibit 3(i) to Bethlehem's quarterly
report on Form 10-Q for the quarter ended June 30, 1995).
(c) By-laws of Bethlehem Steel Corporation, as amended October 1, 1999
(Incorporated by reference from Exhibit 4 to Bethlehem's quarterly
report on Form 10-Q for the quarter ended September 30, 1999).
(4)(a) Rights Agreement, dated as of July 29, 1998, between Bethlehem
Steel Corporation and First Chicago Trust Company of New York
(Incorporated by reference from Bethlehem's Report on Form 8-K
filed August 5, 1998).
(b) Amendment No. 1 to the Rights Agreement, dated as of March 17,
1999, between Bethlehem Steel Corporation and First Chicago Trust
Company of New York (Incorporated by reference from Bethlehem's
Amended Registration Statement on Form 8-A/A filed March 19,
1999).
(c) Amendment No. 2 to Rights Agreement, dated as of December 30,
1999, between Bethlehem Steel Corporation and First Chicago Trust
Company of New York (Incorporated by reference from Bethlehem's
Amended Registration Statement on Form 8-A/A filed December 30,
1999).
(d) Inventory Credit Agreement, dated as of September 12, 1995, as
amended and restated on June 5, 1997, June 19, 1998, and June 17,
1999.
(e) Receivables Purchase Agreement, dated as of September 12, 1995, as
amended and restated on June 5, 1997, June 19, 1998, and June 17,
1999.
(f) Bethlehem is a party to certain long-term debt agreements where
the amount involved does not exceed 10 percent of Bethlehem's
total consolidated assets. Bethlehem agrees to furnish a copy
of any such agreement to the Commission upon request.
*(10)(a) Excess Benefit Plan of Bethlehem Steel Corporation and Subsidiary
Companies, as amended September 20, 1995 (Incorporated by
reference from Exhibit 10 to Bethlehem's Annual Report on Form
10-K for the fiscal year ended December 31, 1997).
*(b) 1988 Stock Incentive Plan of Bethlehem Steel Corporation
(Incorporated by reference from Exhibit 10 to Bethlehem's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997).
*(c) 1994 Stock Incentive Plan of Bethlehem Steel Corporation
(Incorporated by reference from Exhibit 10(c) to Bethlehem's
Annual Report on Form 10-K for the year ended December 31, 1998).
*(d) 1994 Non-Employee Directors Stock Plan of Bethlehem Steel
Corporation (Incorporated by reference from Exhibit 10(d) to
Bethlehem's Annual Report on Form 10-K for the year ended December
31, 1998).
*(e) 1998 Stock Incentive Plan of Bethlehem Steel Corporation
(Incorporated by reference from Exhibit 1 to Bethlehem's Proxy
Statement in connection with its Annual Meeting of Shareholders
held on April 28, 1998).
*(f) Special Incentive Compensation Plan of Bethlehem Steel
Corporation, which is contained in Article Seven of the Second
Restated Certificate of Incorporation referred to in Exhibit 3(a)
to this Report.
20
<PAGE>
*(g) Supplemental Benefits Plan of Bethlehem Steel Corporation and
Subsidiary Companies, as amended September 20, 1995 (Incorporated
by reference from Exhibit 10 to Bethlehem's Annual Report on Form
10-K for the fiscal year ended December 31, 1997).
*(h) Post-Retirement Retainer Plan for Non-Officer Directors
(Incorporated by reference from Exhibit 10 to Bethlehem's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997).
(i) Form of Indemnification Assurance Agreement between Bethlehem
Steel Corporation and each of its directors and executive officers
listed on Schedule A thereto.
(j) Form of Agreement between Bethlehem Steel Corporation and eight
executive officers. Additional agreements have been entered into
between Bethlehem Steel Corporation and twelve other executive
officers and employees. These additional agreements are
substantially in the form of said Agreement except: (i) the
amount of compensation upon termination is two rather than three
times annual salary and bonus and (ii) the additional agreements
do not permit the recipient to terminate for any reason during the
30-day period following the first anniversary of the change in
control (Incorporated by reference from Exhibit 10 to Bethlehem's
quarterly report on Form 10-Q for the quarter ended September 30,
1998).
(k) Consulting Agreement and Covenant not to Compete, as amended,
between Bethlehem Steel Corporation and Curtis H. Barnette.
(l) Consulting Agreement and Covenant not to Compete, as amended,
between Bethlehem Steel Corporation and Roger P. Penny.
(13) Those portions of Bethlehem's 1999 Annual Report to Stockholders which
are incorporated by reference into this Form 10-K Annual Report.
(23) Consent of Independent Auditors (included on page F-2 of this Report).
(24) Power of Attorney.
(27) Financial Data Schedule for period ended December 31, 1999.
- -----------------
* Compensatory plans in which Bethlehem's directors and executive officers
participate.
(b) Reports on Form 8-K.
Bethlehem filed a report on Form 8-K on December 30, 1999, disclosing
the adoption of Amendment No. 2 to its Rights Agreement with First Chicago
Trust Company of New York. The Amendment is listed as Exhibit 4(c) to this
Report on Form 10-K.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, Bethlehem Steel Corporation has duly caused
this Report to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 9th day of March, 2000.
BETHLEHEM STEEL CORPORATION,
By: /s/ Lonnie A. Arnett
------------------------------
Lonnie A. Arnett
Vice President and Controller
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, this Report has been signed below by the following persons on
behalf of Bethlehem Steel Corporation and in the capacities indicated on the
9th day of March, 2000.
<TABLE>
<CAPTION>
<S> <C>
/s/ Curtis H. Barnette /s/ Duane R. Dunham
- ------------------------------ ------------------------------
Curtis H. Barnette Duane R. Dunham
Chairman and Director Director
(principal executive officer)
/s/ Gary L. Millenbruch /s/ Harry P. Kamen
- ------------------------------ ------------------------------
Gary L. Millenbruch Harry P. Kamen
Vice Chairman and Director Director
(principal financial officer)
/s/ Lonnie A. Arnett /s/ William M. Landuyt
- ------------------------------ ------------------------------
Lonnie A. Arnett William M. Landuyt
Vice President and Controller Director
(principal accounting officer)
/s/ Benjamin R. Civiletti /s/ Robert McClements, Jr.
- ------------------------------ ------------------------------
Benjamin R. Civiletti Robert McClements, Jr.
Director Director
22
<PAGE>
/s/ Worley H. Clark /s/ Shirley D. Peterson
- ------------------------------ ------------------------------
Worley H. Clark Shirley D. Peterson
Director Director
/s/ John B. Curcio /s/ Dean P. Phypers
- ------------------------------ ------------------------------
John B. Curcio Dean P. Phypers
Director Director
/s/ Lewis B. Kaden /s/ John F. Ruffle
- ------------------------------ ------------------------------
Lewis B. Kaden John F. Ruffle
Director Director
</TABLE>
23
<PAGE>
Report of Independent Auditors on
Financial Statement Schedule
To the Board of Directors
of Bethlehem Steel Corporation
Our audits of the consolidated financial statements referred to in our report
dated January 26, 2000 appearing in the 1999 Annual Report to Stockholders of
Bethlehem Steel Corporation (which report and consolidated financial statements
are incorporated by reference in this Annual Report on Form 10-K) also included
an audit of the Financial Statement Schedule listed in Item 14(a)(2) of this
Form 10-K. In our opinion, this Financial Statement Schedule presents fairly,
in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
New York, New York
January 26, 2000
F-1
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 2-90795, No. 2-71699, No. 2-53880, No. 2-90796,
No. 2-67314, No. 33- 23516, No. 33-23688, No. 33-52267, No. 33-58019, No.
33-58021, No. 33-60507, No. 333-53895, No. 333-57157 and No. 333-91941) of
Bethlehem Steel Corporation of our report dated January 26, 2000 relating to
the financial statements, which appears in the 1999 Annual Report to
Stockholders, which is incorporated in this Annual Report on Form 10-K. We
also consent to the incorporation by reference of our report dated January 26,
2000 relating to the Financial Statement Schedule, which appears in this Form
10-K.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
New York, New York
March 9, 2000
F-2
<PAGE>
BETHLEHEM STEEL CORPORATION
10-K SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
($ in Millions)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Charged
Balance at (Credited) Balance at
12/31/98 to Income Deductions Other 12/31/99
---------- ---------- ---------- ----- ---------
Classification
- --------------
Doubtful Receivables & Returns $20.0 $0.8 ($1.2)(a) - $19.6
Deferred Income Tax Asset 320.0 39.0 (19.0)(b) - 340.0
Charged
Balance at (Credited) Balance at
12/31/97 to Income Deductions Other 12/31/98
---------- ---------- ---------- ----- ----------
Classification
- --------------
Doubtful Receivables & Returns $18.8 ($0.4) $1.6 (a) - $20.0
Long-term Receivables 2.0 - - (2.0)(c) -
Deferred Income Tax Asset 350.0 (22.0) - (8.0)(d) 320.0
Charged
Balance at (Credited) Balance at
12/31/96 to Income Deductions Other 12/31/97
---------- ---------- ---------- ----- ----------
Classification
- --------------
Doubtful Receivables & Returns $20.8 ($2.8) $0.8 (a) - $18.8
Long-term Receivables 4.4 - (2.4)(a) - 2.0
Deferred Income Tax Asset 410.0 (60.0) - - 350.0
</TABLE>
(a) Amounts written-off less collections and reinstatements.
(b) Expiration of NOL carryforward and other tax adjustments.
(c) The property for which this receivable relates to was forclosed on by
Bethlehem and the receivable and related allowance was included in
the basis of the property.
(d) Allowance on taxable temporary differences acquired through
Bethlehem's purchase of Lukens.
F-3
<PAGE>
Exhibit 4(d)
[CONFORMED COPY]
$200,000,000
INVENTORY CREDIT AGREEMENT
dated as of
September 12, 1995
among
BETHLEHEM STEEL CORPORATION,
THE LENDERS LISTED HEREIN,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
and
J.P. MORGAN DELAWARE,
as Structuring and Collateral Agent
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
1.1. Definitions .............................................. 1
1.2. UCC Terms ................................................ 21
1.3. Accounting Terms and Determinations ...................... 21
ARTICLE 2
THE CREDITS
2.1. Commitments to Lend ...................................... 22
2.2. Letters of Credit ........................................ 23
2.3. Method of Borrowing ...................................... 33
2.4. Notes .................................................... 35
2.5. Maturity of Loans ........................................ 35
2.6. Method of Electing Interest Rates ........................ 35
2.7. Interest Rates ........................................... 37
2.8. Fees ..................................................... 42
2.9. Optional Termination or Reduction of Commitments ......... 43
2.10. Mandatory Termination of Commitments .................... 43
2.11. Optional Prepayments .................................... 44
2.12. Mandatory Prepayments ................................... 44
2.13. General Provisions as to Payments ....................... 46
2.14. Funding Losses .......................................... 47
2.15. Computation of Interest and Fees ........................ 47
ARTICLE 3
CONDITIONS TO BORROWINGS AND ISSUANCES
3.1. Closing .................................................. 48
3.2. All Borrowings and Issuances ............................. 50
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1. Corporate Existence and Power ............................ 51
4.2. Corporate and Governmental Authorization; No Contravention 51
4.3. Binding Effect ........................................... 52
4.4. Financial Information .................................... 52
4.5. Litigation ............................................... 53
i
<PAGE>
4.6. Compliance with ERISA .................................... 53
4.7. Taxes .................................................... 53
4.8. Environmental Compliance ................................. 54
4.9. Full Disclosure .......................................... 55
ARTICLE 5
COVENANTS
5.1. Information .............................................. 56
5.2. Maintenance of Property; Insurance ....................... 60
5.3. Compliance with Laws ..................................... 61
5.4. Inspection of Property, Books and Records ................ 62
5.5. Compliance with Certain Covenants in the Indenture ....... 62
5.6. Minimum Adjusted Consolidated Tangible Net Worth ......... 63
5.7. Sale of Borrower's Collateral ............................ 63
5.8. Use of Proceeds .......................................... 64
5.9. Mergers and Sales of Assets .............................. 64
5.10. Environmental Matters ................................... 64
ARTICLE 6
DEFAULTS
6.1. Events of Default ........................................ 65
6.2. Notice of Default ........................................ 69
ARTICLE 7
THE ADMINISTRATIVE AGENT
7.1. Appointment and Authorization ............................ 69
7.2. Administrative Agent and Affiliates ...................... 70
7.3. Action by Administrative Agent ........................... 70
7.4. Consultation with Experts ................................ 70
7.5. Liability of Administrative Agent ........................ 70
7.6. Indemnification .......................................... 71
7.7. Credit Decision .......................................... 71
7.8. Successor Administrative Agent ........................... 71
ARTICLE 8
CHANGE IN CIRCUMSTANCES
8.1. Basis for Determining Interest Rate Inadequate or Unfair . 72
8.2. Illegality ............................................... 73
8.3. Increased Cost and Reduced Return ........................ 74
8.4. Taxes .................................................... 77
8.5. Base Rate Loans Substituted for Affected Fixed Rate Loans. 81
ARTICLE 9
ii
<PAGE>
MISCELLANEOUS
9.1. Notices .................................................. 82
9.2. No Waivers ............................................... 82
9.3. Expenses; Indemnification ................................ 83
9.4. Sharing of Set-Offs ...................................... 85
9.5. Amendments and Waivers ................................... 85
9.6. Successors and Assigns ................................... 86
9.7. Margin Stock Collateral .................................. 89
9.8. Confidentiality .......................................... 89
9.9. Governing Law; Submission to Jurisdiction ................ 89
9.10. Counterparts; Integration; Effectiveness ................ 90
9.11. Termination of Existing Credit Agreement................. 90
9.12. WAIVER OF JURY TRIAL .................................... 91
1
<PAGE>
AGREEMENT dated as of September 12, 1995 among BETHLEHEM
STEEL CORPORATION, the LENDERS listed on the signature pages hereof,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent and
J.P. MORGAN DELAWARE, as Structuring and Collateral Agent.
RECITALS
WHEREAS, subject to the terms and conditions of this
Agreement, the Borrower desires to borrow Loans and to have Letters of
Credit issued for its account, all in an aggregate amount not to
exceed $200,000,000;
WHEREAS, the obligations of the Borrower with respect to such
Borrowings and such Letters of Credit will be secured by a security
interest in substantially all of the Borrower's Inventories, the
Pledged Securities and the Pledged Interests (as defined in the
Inventory Security Agreement);
WHEREAS, the Lenders are willing to make Loans to the
Borrower and to issue Letters of Credit and participate in Letters of
Credit issued for the account of the Borrower or any Subsidiary, all
on the terms and conditions set forth herein; and
WHEREAS, Morgan Guaranty has been requested and is willing to
act as the Administrative Agent and J.P. Morgan Delaware has been
requested and is willing to act as the Structuring and Collateral
Agent;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used
herein, have the following meanings:
"Adjusted CD Rate" has the meaning set forth in Section.
"Adjusted Consolidated Tangible Net Worth" means, at any date
of determination, Consolidated Tangible Net Worth adjusted upward by
the amount of any material non-recurring charges to income (without
deduction for any related income tax effect) resulting from
discontinuance of operations after December 31, 1994, all determined
as of such date of determination.
2
<PAGE>
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section .
"Administrative Agent" means Morgan Guaranty in its capacity
as administrative agent for the Lenders, and its successors and
assigns in such capacity.
"Administrative Questionnaire" means, with respect to each
Lender or L/C Issuing Bank, an administrative questionnaire in the
form prepared by the Administrative Agent and submitted to the
Administrative Agent (with a copy to the Borrower) duly completed by
such Lender or L/C Issuing Bank.
"Affiliate" means (i) any Person that directly, or indirectly
through one or more intermediaries, controls the Borrower (a
"Controlling Person") or (ii) any Person (other than the Borrower or a
Subsidiary) which is controlled by or is under common control with a
Controlling Person. As used herein, the term "control" means
possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" means the Administrative Agent or the Collateral
Agent and "Agents" means the Administrative Agent and the Collateral
Agent.
"Aggregate Letter of Credit Amount" means, at any time, the
sum of (i) the then aggregate outstanding face amount of the Letters
of Credit issued pursuant to Section 2.2 hereof and (ii) the then
aggregate outstanding face amount of letters of credit issued pursuant
to Section 2.9 of the Receivables Purchase Agreement.
"Agreement" means this Inventory Credit Agreement, as amended
from time to time.
"Applicable Lending Office" means, with respect to any
Lender, (i) in the case of its Domestic Loans, its Domestic Lending
Office and (ii) in the case of its Euro-Dollar Loans, its Euro-Dollar
Lending Office.
"Applicable Percentage" means (i) 100%, if no Increased
Coverage Event has occurred, or (ii) 105%, if an Increased Coverage
Event has occurred; provided that if the Secured Principal Amount does
not exceed 85% of the Borrowing Base for a period of six consecutive
months beginning at any time after the occurrence of the most recent
Increased Coverage Event, the Applicable Percentage shall be decreased
at the end of such six month period to 100% (unless and until another
Increased Coverage Event occurs).
"Assessment Rate" has the meaning set forth in Section.
"Assignee" has the meaning set forth in Section.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of
1% plus the Federal Funds Rate for such day.
3
<PAGE>
"Base Rate Loan" means a loan which bears interest at the
Base Rate pursuant to the applicable Notice of Borrowing or Notice of
Interest Rate Election or the provisions of Section 2.6(c) or Article
8".
"Base Rate Margin" means a rate per annum determined in
accordance with the Pricing Schedule.
"Benefit Arrangement" means at any time an "employee benefit
plan" within the meaning of Section 3(3) of ERISA which is not a Plan
or a Multiemployer Plan and which is maintained, or otherwise
contributed to, by any member of the ERISA Group.
"Borrower" means Bethlehem Steel Corporation, a Delaware
corporation, and its successors.
"Borrower's 1994 Form 10-K" means the Borrower's annual
report on Form 10-K for 1994, as filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934.
"Borrowers Latest Form 10-Q" means the Borrower's quarterly
report on Form 10-Q for the quarter ended June 30, 1995, as filed with
the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934.
"Borrowing" means a borrowing hereunder consisting of Loans
made to the Borrower on the same day pursuant to Article 2, all of
which Loans are of the same type (subject to Article 8") and, except
in the case of Base Rate Loans, have the same initial Interest Period.
A Borrowing is a "Domestic Borrowing" if such Loans are Domestic Loans
or a "Euro-Dollar Borrowing" if such Loans are Euro-Dollar Loans. A
Domestic Borrowing is a "CD Borrowing" if such Domestic Loans are CD
Loans or a "Base Rate Borrowing" if such Domestic Loans are Base Rate
Loans.
"Borrowing Base" means, at any date, an amount equal to the
sum of (i) 55% of the aggregate amount of Eligible Inventories which
are Finished and Semifinished Inventories at such date, and (ii) 25%
of the aggregate amount of Eligible Inventories which are Raw
Materials Inventories at such date; provided that (x) the Borrowing
Base shall at no time exceed the Receivables Maximum Purchase Price at
such time and (y) if an Event of Default specified in clause (l) of
Section 6.1 shall have been waived pursuant to Section 9.5, the
Borrowing Base shall be reduced by the aggregate amount of claims
secured by Federal Liens (or by such lesser amount as the Required
Lenders may agree).
"Borrowing Base Certificate" means a certificate duly
executed by the Chief Financial Officer, the Treasurer or the
Controller of the Borrower, appropriately completed and substantially
in the form of Exhibit F hereto.
"BSF" means Bethlehem Steel Funding, LLC, a Maryland limited
liability company.
"CD Base Rate" has the meaning set forth in Section.
4
<PAGE>
"CD Loan" means a loan which bears interest at a CD Rate
pursuant to the applicable Notice of Borrowing or Notice of Interest
Rate Election.
"CD Margin" means a rate per annum determined in accordance
with the Pricing Schedule.
"CD Rate" means a rate of interest determined pursuant to
Section on the basis of an Adjusted CD Rate.
"CD Reference Banks" means Chemical Bank, The Long-Term
Credit Bank of Japan, Ltd. and Morgan Guaranty and each such other
bank as may be appointed pursuant to Section 9.6(d).
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and regulations
promulgated thereunder.
"Closing Date" means the date on or after the Effective Date
on which the conditions set forth in Section 3.1 shall have been
satisfied.
"Collateral" has the meaning set forth in Section 1 of the
Inventory Security Agreement.
"Collateral Agent" means J.P. Morgan Delaware as Structuring
and Collateral Agent for the Lenders, and its successors and assigns
in such capacity.
"Collateral Report" means a report of the Collateral Agent
with respect to the Inventories included in the Borrowing Base
calculation by the Borrower referred to in such report. Such report
will state that it is based upon a review (but not an audit) by the
Collateral Agent of information supplied by the Borrower relating to
the Inventories (including information as to the cost, market price,
location and respective categories thereof).
"Commitment" means (i) with respect to each Lender, the
amount set forth opposite the name of such Lender on the signature
pages hereof, or (ii) with respect to any Assignee, the amount of the
transferor Lenders's Commitment assigned to such Assignee pursuant to
Section 9.6(c), in each case as such amount may be reduced from time
to time pursuant to Section 2.9! or changed as a result of an
assignment pursuant to Section 9.6(c).
"Commitment Fee" has the meaning set forth in Section 2.8.
"Consolidated Subsidiary" means, at any date, any Subsidiary
or other entity the accounts of which would be consolidated with those
of the Borrower in its consolidated financial statements if its
consolidated financial statements were prepared as of such date.
"Consolidated Tangible Net Worth" means, at any date, the
consolidated stockholders' equity of the Borrower and its Consolidated
Subsidiaries less their consolidated Intangible Assets, all determined
as of such date. For purposes of this definition "Intangible Assets"
means the amount (to the extent reflected in
5
<PAGE>
determining such consolidated stockholders' equity) of (i) all
write-ups (other than write-ups resulting from foreign currency
translations and write-ups of assets of a going concern business made
within twelve months after the acquisition of such business)
subsequent to December 31, 1994 in the book value of any asset owned
by the Borrower or a Consolidated Subsidiary, and (ii) all unamortized
debt discount and expense, unamortized deferred charges, goodwill,
patents, trademarks, service marks, trade names, copyrights,
organization or developmental expenses and other intangible assets
(but not including any deferred income tax asset or any pension
asset).
"Debt" of any Person means, at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person to pay
the deferred purchase price of property or services, except trade
accounts payable arising in the ordinary course of business, (iv) all
obligations of such Person as lessee which are capitalized in
accordance with generally accepted accounting principles, (v) all
non-contingent obligations of such Person to reimburse or repay any
lender or other Person in respect of amounts paid under a letter of
credit, banker's acceptance or similar instrument, and (vi) all Debt
secured by a Lien on any asset of such Person, whether or not such
Debt is otherwise an obligation of such Person.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or passage of time
or both would, unless cured or waived, become an Event of Default.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York City are
authorized by law to close.
"Domestic Lending Office" means, as to each Lender, its
office located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as
its Domestic Lending Office) or such other office as such Lender may
hereafter designate as its Domestic Lending Office by notice to the
Borrower and the Administrative Agent; provided that any Lender may so
designate separate Domestic Lending Offices for its Base Rate Loans,
on the one hand, and its CD Loans, on the other hand, in which case
all references herein to the Domestic Lending Office of such Lender
shall be deemed to refer to either or both of such offices, as the
context may require.
"Dollar" and "$" means lawful currency of the United States.
"Domestic Loan" means a CD Loan or a Base Rate Loan and
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in Section .
"EDS" means Electronic Data Systems Corporation, a Texas
corporation, and its successors and assigns.
6
<PAGE>
"Effective Date" means the date on which this Agreement
becomes effective in accordance with Section 9.10(.
"Eligible Inventories" means, at any date, the value
(determined at the lower of cost or market on a basis consistent with
the balance sheet as at December 31, 1994 referred to in Section
4.4(a)) at such date of all Inventories which are
(a) owned by the Borrower free of all Liens, other than
Permitted Liens (as defined in the Inventory Security
Agreement),
(b) in the possession of the Borrower (i) on premises owned
(or, in the case of the premises leased from Twincast
Property Leasing, Inc. at Burns Harbor and Sparrows Point,
leased) by the Borrower at its Burns Harbor, Sparrows Point,
Bethlehem, Steelton and Lackawanna facilities; provided that
in the case of leased premises the Collateral Agent has
received evidence satisfactory to it (including landlord
waivers satisfactory to it) that it may enter such leased
premises for the purposes specified in Section 8(C) of the
Inventory Security Agreement, (ii) on premises leased by the
Borrower at any of the locations listed on Exhibit B hereto;
provided that the Collateral Agent has received evidence
satisfactory to it (including landlord waivers satisfactory
to it) that it may enter such premises for the purposes
specified in Section 8(C) of the Inventory Security
Agreement, (iii) at such other premises, owned or leased by
the Borrower, as the Required Lenders may approve, or (iv) at
such other premises listed on Exhibit C-1 hereto and
maintained by processors or warehouses (the "Bailees") or as
the Required Lenders may approve; provided that (i) the
Inventories at such premises are (x) reflected on the
Borrower's books and records, (y) audited by the Borrower or
the Borrower's external auditors on a basis approved by the
Collateral Agent, and (z) appropriately identified and
monitored by the Borrower's Outside Processing Inventory
Control System or any successor system satisfactory to the
Collateral Agent, (ii) upon transfer or sale of such
Inventory, such Inventory is delivered on behalf of and for
the account of the Borrower, (iii) the form of the Inventory
is not fundamentally altered, and (iv) the Bailee has entered
into a Collateral Access Agreement substantially in the form
of Exhibit C-2 hereto;
(c) as to which appropriate UCC financing statements have
been filed naming the Borrower as "debtor" and the Collateral
Agent as "secured party";
provided that Eligible Inventories shall not include (i) any
Inventories which have been shipped to a customer of the Borrower,
even on a consignment basis; (ii) any Inventories which are not Raw
Materials Inventories or Finished and Semifinished Inventories; (iii)
any Inventories held by the Borrower for sale,
7
<PAGE>
lease or other disposition, or to be furnished by the Borrower under a
contract for services, or to be used or consumed by the Borrower, in
the Borrower's marine construction business; (iv) all Finished and
Semifinished Inventories in any product account at a facility of the
Borrower (a "Facility Product Account") included in any category or
subcategory of Finished and Semifinished Inventories set forth on
Exhibit D if such Facility Product Account has an Inventory Turnover
Rate lower than the rate for such category or subcategory set forth on
Exhibit D; and (v) any Inventories which the Required Lenders
reasonably determine in good faith to be unmarketable. For purposes
of this definition, "Inventory Turnover Rate" means, with respect to
any category or subcategory of Finished and Semifinished Inventories
and at any date, the quotient obtained by dividing (a) the average of
the amount of Eligible Inventories in such category or subcategory
sold or consumed by the Borrower during each of the three calendar
months ending immediately prior to such date, expressed on an
annualized basis, by (b) the average of the amount of Eligible
Inventories in such category or subcategory at the end of each of the
three calendar months ending immediately prior to such date. The
amount of Eligible Inventories in any such category or subcategory
shall be determined on the basis of the tonnage of such Eligible
Inventories.
"Environmental Laws" means any and all federal, state and
local statutes, laws (including case law), regulations, ordinances,
rules, judgments, orders, decrees, codes, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and governmental
restrictions, whether now or hereafter in effect, relating to the
environment, to the effect of the environment on human health or the
Release of pollutants, contaminants, Hazardous Substances, wastes or
any other materials into the environment or the clean-up or other
remediation thereof.
"Environmental Liabilities" means all liabilities of the
Borrower and any of its Subsidiaries, whether vested or unvested,
contingent or fixed, actual or potential, known or unknown, which
arise under or relate to matters covered by Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means the Borrower and all members of a
controlled group of corporations and all trades or businesses (whether
or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414 of the
Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including
dealings in Dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Lender, its
office, branch or affiliate located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative
Questionnaire as its Euro-Dollar Lending Office) or such other office,
branch or affiliate of such Lender as it may hereafter designate as
its Euro-Dollar Lending Office by notice to the Borrower and the
Administrative Agent.
8
<PAGE>
"Euro-Dollar Loan" means a loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Borrowing or
Notice of Interest Rate Election.
"Euro-Dollar Margin" means a rate per annum determined in
accordance with the Pricing Schedule.
"Euro-Dollar Rate" means a rate of interest determined
pursuant to Section on the basis of an Adjusted London Interbank
Offered Rate.
"Euro-Dollar Reference Banks" means the principal London
offices of Chemical Bank, The Long-Term Credit Bank of Japan, Ltd.
and Morgan Guaranty and each such other bank as may be appointed
pursuant to Section 9.6(d).
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section.
"Event of Default" has the meaning set forth in Section 6.1.
"Existing Credit Agreement" means the Credit Agreement dated as of
December 15, 1987 among the Borrower, the lenders party thereto and Morgan
Guaranty, as agent, as amended to the date hereof.
"Existing Letters of Credit" means the letters of credit issued before
the Closing Date and listed on Schedule 1 hereto.
"Existing Security Agreement" means the Security Agreement dated as of
December 15, 1987 among the Borrower, J.P. Morgan Delaware, as security agent
and Morgan Guaranty, as concentration bank and loan agent, as amended to the
date hereof.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day; provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Morgan Guaranty on such day on such
transactions as determined by the Administrative Agent.
"Federal Lien" has the meaning set forth in Section 6.1(l).
"Fees" means the Commitment Fee and the Letter of Credit Fees.
"Financing Documents" means this Agreement (including the Schedules
and Exhibits hereto), the Notes and the Inventory Security Agreement.
9
<PAGE>
"Finished and Semifinished Inventories" means, at any date,
all assets of the Borrower which were or would have been classified as
finished and semifinished products (including contract work in
progress less billings), in the Borrower's consolidated balance sheets
referred to in Section 4.4(a), except for tool steel, foundry products
and bolts, nuts, rivets and spikes.
"Fixed Rate Borrowing" means a CD Borrowing or a Euro-Dollar
Borrowing.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or
both.
"Group of Loans" means at any time a group of Loans
consisting of (i) all Loans which are Base Rate Loans at such time,
(ii) all Euro-Dollar Loans having the same Interest Period at such
time or (iii) all CD Loans having the same Interest Period at such
time; provided that, if a Loan of any particular Lender is converted
to or made as a Base Rate Loan pursuant to Article 8", such Loan shall
be included in the same Group or Groups of Loans from time to time as
it would have been in if it had not been so converted or made.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt
of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii) entered
into for the purpose of assuring in any other manner the holder of
such Debt of the payment thereof or to protect such holder against
loss in respect thereof (in whole or in part); provided that the term
Guarantee shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic
or otherwise hazardous substance, including petroleum, its
derivatives, by-products and other hydrocarbons, or any substance
having any constituent elements displaying any of the foregoing
characteristics, whether or not regulated under Environmental Laws.
"Increased Coverage Event" means any one of the following
three events or conditions:
(i) the maturity of Debt of the Borrower and its
Subsidiaries exceeding $10,000,000 in aggregate principal
amount is accelerated,
(ii) the maturity of Debt Guaranteed by the Borrower or
any Subsidiary is accelerated and the aggregate principal
amount which the Borrower and its Subsidiaries become
obligated to pay under their Guarantees of such Debt by
reason of such acceleration exceeds $10,000,000 in any twelve
month period or an aggregate of $30,000,000 at any time prior
to the Termination Date, or
10
<PAGE>
(iii) one or more defaults occur under any agreement or
agreements in respect of Debt Guaranteed by the Borrower or
any Subsidiary and the aggregate principal amount of such
Guaranteed Debt exceeds $10,000,000 and as a consequence of
such default or defaults the Borrower or any of its
Subsidiaries shall make any payment or give or agree to give
any consideration or benefit of any kind (including, without
limitation, any increased compensation, prepayment,
shortening of maturities, security or other credit support)
to the holders of such Guaranteed Debt and such payment,
consideration or benefit is determined by the Required
Lenders, after taking into account any payment, consideration
or benefit paid, given or agreed to be given by such holders
to the Borrower or any of its Subsidiaries (other than a
waiver of such default), to be a material benefit to the
holders of such Guaranteed Debt.
"Indemnitee" has the meaning set forth in Section 9.3(c).
"Initial Commitment" means, with respect to any Lender, such
Lender's initial commitment under this Agreement, as reflected in such
Lender's commitment letter delivered to the Borrower, with a copy to
the Administrative Agent.
"Interest Period" means: (i) with respect to each
Euro-Dollar Loan, the period commencing on the date of borrowing
specified in the applicable Notice of Borrowing or on the date
specified in the applicable Notice of Interest Rate Election and
ending one, two, three or six months thereafter, as the Borrower may
elect in the applicable notice; provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended
to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in
which case such Interest Period shall end on the next
preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall,
subject to clause (c) below, end on the last Euro-Dollar
Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after
the Termination Date shall end on the Termination Date;
(ii) with respect to each CD Loan, the period commencing on
the date of borrowing specified in the applicable Notice of Borrowing
or on the date specified in the applicable Notice of Interest Rate
Election and ending 30, 60 or 90 days thereafter, as the Borrower may
elect in the applicable notice; provided that:
11
<PAGE>
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would
otherwise end on a day which is not a Euro-Dollar
Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor statute.
"Inventories" means, whether now owned or hereafter acquired
by the Borrower, all "inventory" (as defined in the UCC), wherever
located, and shall also mean and include, without limitation, all raw
materials and other materials and supplies, work-in-process and
finished goods and any products made or processed therefrom and all
substances, if any, commingled therewith or added thereto, or which,
in accordance with generally accepted accounting principles, would be
included in inventories on the Borrower's balance sheets, (excluding,
however, any of the foregoing which (i) is located outside the United
States, (ii) is held at the Borrower's marine construction facilities
at Sparrows Point, Maryland or Port Arthur, Texas for sale or other
disposition, or to be furnished by the Borrower under a contract for
services, or to be used or consumed by the Borrower, in the Borrower's
marine construction business or (iii) has been returned to or
repossessed by the Borrower or stopped in transit (including all
additions and accessions thereto and replacements thereof)).
"Inventory Information Memorandum" means the Bethlehem Steel
Corporation Inventory Financing Facility Overview of Structure and
Collateral dated as of July 1995.
"Inventory Security Agreement" means the Inventory Security
and Pledge Agreement dated as of September 12, 1995 among the
Borrower, the Special Purpose Members, the Collateral Agent and the
Administrative Agent, substantially in the form of Exhibit E hereto,
as amended from time to time.
"Issuance" means the issuance of a Letter of Credit pursuant
to Section 2.2.
"L/C Fee Rate" means a rate per annum determined in
accordance with the Pricing Schedule.
"L/C Issuing Bank" means each of Morgan Guaranty, Chemical
Bank and The Long-Term Credit Bank of Japan, Ltd., each in its
capacity as issuing bank for the Letters of Credit hereunder, or all
of them, as the context may require, and their respective successors
and each such other bank as may be appointed pursuant to Section
2.2(j); provided that when used with respect to any Syndicated Letter
of Credit, "L/C Issuing Bank" shall mean Morgan Guaranty, and when
used with respect to any Participated Letter of Credit, "L/C Issuing
Bank" shall mean whichever of Morgan Guaranty, Chemical Bank, The
Long-
12
<PAGE>
Term Credit Bank of Japan, Ltd. and such other Lender as may be
appointed pursuant to Section 2.2 (j) shall have issued such
Participated Letter of Credit.
"L/C Issuing Bank Letter of Credit Fee" has the meaning set
forth in Section 2.2(g).
"Lender" means each lender listed on the signature pages
hereof, each Assignee which becomes a Lender pursuant to Section , and
their respective successors.
"Letter of Credit Fees" means the Letter of Credit
Participation Fee and the L/C Issuing Bank Letter of Credit Fee.
"Letter of Credit Participation Fee" has the meaning set
forth in Section 2.2(g).
"Letters of Credit" has the meaning set forth in Section
2.2(a)!.
"Lien" means, with respect to any asset, any mortgage,
pledge, lien, security interest, charge or other encumbrance or
security arrangement of any nature whatsoever, including, without
limitation, any conditional sale, capital lease or title retention
arrangement in respect of such asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan and
"Loans" means Domestic Loans or Euro-Dollar Loans or both.
"London Interbank Offered Rate" has the meaning set forth in
Section .
"Maximum Letter of Credit Amount" means at any time
$150,000,000.
"Morgan Guaranty" means Morgan Guaranty Trust Company of New
York, a New York State banking corporation.
"Multiemployer Plan" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to
which any member of the ERISA Group is then making or accruing an
obligation to make contributions or has within the preceding five plan
years made contributions, including for these purposes any Person
which ceased to be a member of the ERISA Group during such five year
period.
"Notes" means promissory notes of the Borrower, substantially
in the form of Exhibit A hereto, evidencing the obligation of the
Borrower to repay the Loans, and "Note" means any one of such
promissory notes issued hereunder.
"Notice of Borrowing" has the meaning set forth in Section
2.3(a)#.
"Notice of Interest Rate Election" has the meaning set forth
in Section 2.6(a)".
13
<PAGE>
"Notice of Issuance" has the meaning set forth in Section
2.2(b).
"Parent" means, with respect to any Lender, any Person
controlling such Lender.
"Participant" has the meaning set forth in Section .
"Participated Letter of Credit" has the meaning set forth in
Section 2.2(a)(ii).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership,
an association, a trust or any other entity or organization, including
a government or political subdivision or an agency or instrumentality
thereof.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of
the Internal Revenue Code and either (i) is maintained, or contributed
to, by any member of the ERISA Group for employees of any member of
the ERISA Group or (ii) for purposes of Section 6.1(j) only, has at
any time within the preceding five years been maintained, or
contributed to, by any Person which was at such time a member of the
ERISA Group for employees of any Person which was at such time a
member of the ERISA Group, if any member of the ERISA Group would be
subject to liability pursuant to Section 4069(a) of ERISA or any other
provision of Title IV of ERISA relating to treatment of transactions
to evade liability with respect to such plan.
"Pricing Schedule" means the Schedule attached hereto
identified as such.
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty in New York City from time to time as its prime rate.
"Quarterly Date" means each March 31, June 30, September 30
and December 31.
"Raw Materials Inventories" means, at any date, all assets of
the Borrower which were or would have been classified by the Borrower
as raw materials and supplies in the Borrower's consolidated financial
statements referred to in Section 4.4(a), except for stores supplies,
foundry products and supplies, initial complement of maintenance spare
parts, brick, lubrication oils and greases, paint, cleaning mixture
(including acids), bolts, nuts, rivets and tool steel.
"Receivables Commitment" means at any time with respect to
each financial institution which is a party to the Receivables
Purchase Agreement, the
14
<PAGE>
commitment of such financial institution under the Receivables
Purchase Agreement.
"Receivables Documents" means the Receivables Purchase
Agreement and such other agreements, documents or instruments entered
into and delivered by BSF or the Borrower in connection with the
transactions contemplated by the Receivables Purchase Agreement.
"Receivables Facility" means the receivables facility
established pursuant to the Receivables Documents.
"Receivables Maximum Purchase Price" means, at any date, the
level of the Adjusted Aggregate Net Investment (as defined in the
Receivables Purchase Agreement) under the Receivables Facility which
would give rise at such date to an Adjusted Buyers' Interest of 100%
under the Receivables Facility.
"Receivables Purchase Agreement" means the Receivables
Purchase Agreement dated as of September 12, 1995 among BSF, the
Special Purpose Members, the Borrower, as servicer, the financial
institutions party thereto, Morgan Guaranty, as administrative agent
and J.P. Morgan Delaware, as structuring and collateral agent,
substantially in the form delivered to the Lenders prior to the date
hereof, and as amended from time to time.
"Reference Banks" means the CD Reference Banks or the
Euro-Dollar Reference Banks, as the context may require, and
"Reference Bank" means any one of such Reference Banks.
"Regulated Activity" means any generation, treatment,
storage, recycling, transportation or disposal of any Hazardous
Substance.
"Regulation U" means Regulation U of the Board of Governors
of the Federal Reserve System, as in effect from time to time.
"Reimbursement Obligation" means an obligation of the
Borrower to reimburse the L/C Issuing Banks or the Lenders, as the
case may be, pursuant to Section 2.2 for the amount of a drawing under
a Letter of Credit.
"Release" means any discharge, emission or release, including
a Release as defined in CERCLA at 42 U.S.C. Section 9601(22). The
term "Released" has a corresponding meaning.
"Required Lenders" means, at any time, Lenders having at
least 66 2/3% of the aggregate amount of the Commitments or, if the
Commitments shall have been terminated, having at least 66 2/3% of the
aggregate Total Exposure of all the Lenders.
"Revolving Credit Period" means the period from and including
the Closing Date to but not including the Termination
Date.
15
<PAGE>
"S&P" means Standard & Poor's Ratings Group, together with
its successors.
"Secured Principal Amount" means, at any time, the sum of (i)
the aggregate principal amount of the Loans then outstanding, (ii) the
aggregate undrawn amount which is then, or may thereafter become,
available for drawing under outstanding Letters of Credit, (iii) the
aggregate amount of all unpaid Reimbursement Obligations for drawings
theretofore made under Letters of Credit and (iv) the aggregate
principal amount of Secured Tax Exempt Debt then outstanding.
"Secured Tax Exempt Debt" means all obligations (whether
contingent or non-contingent) of the Borrower arising under the
Reimbursement Agreement dated as of October 1, 1994 between the
Borrower and NBD Bank and the Tender Agent Agreement dated as of
October 1, 1994 between the Borrower and NBD Bank and all documents
and instruments executed in connection with the foregoing and all
renewals, extensions and amendments thereof; provided that the
aggregate principal amount of such Secured Tax Exempt Debt shall not
at any time exceed $3,000,000.
"Security Interests" means the security interests in the
Collateral granted under the Inventory Security Agreement to secure
the Secured Obligations and Guaranties (as defined therein).
"Significant Subsidiary" means at any time any Subsidiary,
except Subsidiaries which at such time have been designated by the
Borrower (by notice to the Administrative Agent, which may be amended
from time to time) as nonmaterial and which, if aggregated and
considered as a single subsidiary, would not meet the definition of a
"significant subsidiary" contained as of the date hereof in Regulation
S-X of the Securities and Exchange Commission.
"Special Purpose Member" means Bethlehem Steel Credit
Affiliate One, Inc., a Maryland corporation, or Bethlehem Steel Credit
Affiliate Two, Inc., a Maryland corporation, and "Special Purpose
Members" means both Bethlehem Steel Credit Affiliate One, Inc., a
Maryland corporation and Bethlehem Steel Credit Affiliate Two, Inc., a
Maryland corporation.
"Subsidiary" means, as to any Person, any corporation or
other entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person; unless otherwise specified,
"Subsidiary" means a Subsidiary of the Borrower.
"Syndicated Letter of Credit" has the meaning set forth in
Section 2.2(a)!(i).
"Termination Date" means September 12, 2000, or, if such day
is not a Euro-Dollar Business Day, the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case the Termination Date shall be the next
preceding Euro-Dollar Business Day.
16
<PAGE>
"Total Exposure" means, with respect to any Lender at any
time, the sum of (i) the aggregate principal amount of its Loans then
outstanding, (ii) its share of the undrawn amount which is then, or
may thereafter become, available for drawing under each outstanding
Letter of Credit and (iii) its share of the amount of each unpaid
Reimbursement Obligation for drawings theretofore made under any
Letter of Credit.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of New York; provided that if, by reason of
mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the Security Interests in any
Collateral is governed by the Uniform Commercial Code as in effect in
a jurisdiction other than New York, "UCC" means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection
or non-perfection.
"Undrawn L/C Amount" shall mean, with respect to each Letter
of Credit at any date of determination thereof, the undrawn amount of
such Letter of Credit on such date.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all
benefits under such Plan exceeds (ii) the fair market value of all
Plan assets allocable to such benefits (excluding any accrued but
unpaid contributions), all determined as of the then most recent
valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including
the States and the District of Columbia, but excluding its territories
and possessions.
SECTION 1.2. UCC Terms. With respect to the Security
Interests, terms not otherwise defined herein which are defined in the
UCC shall, unless the context otherwise requires, have the meanings
set forth therein.
SECTION 1.3. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made,
and all financial statements required to be delivered hereunder shall
be prepared in accordance with generally accepted accounting
principles as in effect from time to time, applied on a basis
consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Lenders; provided that, if any change in
generally accepted accounting principles after June 30, 1995 in itself
materially affects Adjusted Consolidated Tangible Net Worth, the
Borrower may by notice to the Administrative Agent, or the
Administrative Agent (at the request of the Required Lenders) may by
notice to the Borrower, require that Adjusted Consolidated Tangible
Net Worth thereafter be calculated in accordance with generally
accepted accounting principles as in effect, and applied by the
Borrower, immediately before such change in generally accepted
accounting principles occurs. If such notice is given,
17
<PAGE>
the compliance certificates delivered pursuant to Section 5.1(c) after
such change occurs shall be accompanied by reconciliations of the
difference between the calculation set forth therein and a calculation
made in accordance with generally accepted accounting principles as in
effect from time to time after such change occurs.
ARTICLE 2
THE CREDITS
SECTION 2.1. Commitments to Lend. During the Revolving
Credit Period, each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make Loans to the Borrower
from time to time; provided that, immediately after each such Loan is
made, such Lender's Total Exposure shall not exceed the amount of its
Commitment. Each Borrowing under this Section shall be in an
aggregate principal amount of $20,000,000 or any larger multiple of
$1,000,000 (except that any such Borrowing may be in the aggregate
amount of the unused Commitments) and shall be made from the several
Lenders ratably in proportion to their respective Commitments. Within
the foregoing limits, the Borrower may borrow under this Section,
prepay Loans to the extent permitted by Section 2.11" and reborrow at
any time during the Revolving Credit Period under this Section.
SECTION 2.2. Letters of Credit.
(a) Commitment to Issue Letters of Credit.
-------------------------------------
(i) The Borrower may from time to time request that (A) the
Lenders, acting through the L/C Issuing Bank in accordance with
subsection (iii) below, issue a letter of credit (a "Syndicated Letter
of Credit") pursuant to which the Lenders shall be severally obligated
to the beneficiary to pay any drawings made thereunder ratably in
proportion to their respective Commitments or (B) an L/C Issuing Bank
issue a letter of credit (a "Participated Letter of Credit") pursuant
to which such L/C Issuing Bank shall be obligated to the beneficiary
to pay any drawings made thereunder and the Lenders shall be obligated
to the L/C Issuing Bank to participate ratably in such drawings in
proportion to their respective Commitments as hereinafter provided.
Syndicated Letters of Credit and Participated Letters of Credit are
collectively referred to herein as "Letters of Credit".
(ii) On the Closing Date, each L/C Issuing Bank that has
issued an Existing Letter of Credit shall be deemed, without further
action by any party hereto, to have issued a Participated Letter of
Credit hereunder, and each Lender
18
<PAGE>
shall be deemed, without further action by any party hereto, to have
agreed to participate ratably in proportion to its Commitment in any
drawings made under such Existing Letter of Credit. The Borrower and
the Lenders party hereto that are also party to the Existing Credit
Agreement agree that, concurrently with such issuance hereunder, the
participations in the Existing Letters of Credit under the Existing
Credit Agreement shall be automatically canceled without further
action by any of the parties thereto. On and after the Closing Date
each Existing Letter of Credit shall be deemed issued hereunder and
shall thereupon be a Letter of Credit hereunder.
(iii) Subject to subsection (v) below, and in accordance with
its customary procedures (to the extent such procedures are not
inconsistent with the terms of this Agreement), the L/C Issuing Bank
agrees, on the terms and conditions set forth in this Agreement and at
the request of the Borrower, to execute and deliver Syndicated Letters
of Credit on behalf of each of the Lenders (and not as sole issuer)
for the account of the Borrower or any Subsidiary from time to time
from and including the Effective Date to but excluding the Termination
Date; provided that no Syndicated Letter of Credit shall be issued,
extended or renewed if such L/C Issuing Bank has been notified in
writing by the Borrower, the Administrative Agent or the Required
Lenders that any condition set forth in Section 3.2 is not satisfied
on the date such Syndicated Letter of Credit is to be issued, extended
or renewed; provided further that if any Syndicated Letter of Credit
contains a provision pursuant to which it is deemed extended unless
notice of termination is given by the L/C Issuing Bank, the L/C
Issuing Bank shall give such notice of termination on behalf of each
of the Lenders if it has been notified as provided in the immediately
preceding proviso. The terms of each such Syndicated Letter of Credit
shall provide that each Lender is obligated, severally and not
jointly, to pay any drawings under such Letter of Credit ratably in
proportion to such Lender's Commitment as in effect when such Letter
of Credit is issued. Upon receipt of a Notice of Issuance pursuant to
subsection (b) of this Section with respect to a Syndicated Letter of
Credit, the L/C Issuing Bank shall prepare such Letter of Credit in a
form customarily issued by it for its own account as issuing bank, but
with such changes as the L/C Issuing Bank deems necessary or
appropriate to reflect the fact that such Letter of Credit is a
Syndicated Letter of Credit. Each Lender authorizes the L/C Issuing
Bank to execute and issue such Syndicated Letter of Credit on its
behalf as its attorney in fact; provided that such Syndicated Letter
of Credit is issued in compliance with the provisions of this Section
and within the limitations set forth in subsection (v) below.
Promptly after issuance of any Syndicated Letter of Credit, the L/C
Issuing Bank will send to each of the Lenders a copy of such Letter of
Credit in the form in which it was issued.
(iv) Subject to subsection (v) below, and in accordance with
its customary procedures (to the extent such procedures are not
inconsistent with the terms of this Agreement), the L/C Issuing Bank
agrees, on the terms and conditions set forth in this Agreement and at
the request of the Borrower, to issue Participated Letters of Credit
as sole issuing bank for the account of the Borrower or any Subsidiary
from time to time from and including the Effective Date to but
excluding the Termination Date; provided that no Participated Letter
of Credit shall be issued, extended or renewed if such L/C Issuing
Bank has been notified in writing by the Borrower, the Administrative
Agent or the Required Lenders that any condition set forth in Section
3.2 is not satisfied on the date such Participated.
19
<PAGE>
Letter of Credit is to be issued, extended or renewed; provided
further that if any Participated Letter of Credit contains a provision
pursuant to which it is deemed extended unless notice of termination
is given by the L/C Issuing Bank, the L/C Issuing Bank shall give such
notice of termination if it has been notified as provided in the
immediately preceding proviso. Each Lender agrees to participate
ratably in proportion to its Commitment in any drawings made under
each Participated Letter of Credit.
(v) The obligations of the Lenders and the L/C Issuing Banks
to issue Letters of Credit pursuant to clauses (iii) and (iv) above
are subject to the following additional conditions:
(A) no Letter of Credit shall be issued (or extended or
renewed) if, immediately after the issuance thereof, any
Lender's Total Exposure would exceed the amount of its
Commitment;
(B) no Letter of Credit shall be issued (or extended or
renewed) if, immediately after the issuance thereof, the
Aggregate Letter of Credit Amount would exceed the Maximum
Letter of Credit Amount;
(C) no Letter of Credit shall expire more than 18 months
after its date of issuance; provided that a Letter of Credit
may contain a provision pursuant to which it is deemed to be
extended on an annual basis unless notice of termination is
given by the L/C Issuing Bank; provided further that no
Letter of Credit shall have an expiry date later than seven
Domestic Business Days prior to the Termination Date;
(D) without the approval of the Required Lenders (and in
the case of Participated Letters of Credit, the L/C Issuing
Bank), no Letter of Credit shall be issued (x) to support the
obligations of the Borrower or any Subsidiary with respect to
any Debt or Guarantee, or (y) to finance the export or import
of weapons;
(E) the Borrower shall have used its reasonable best
efforts to cause, to the extent practicable, the aggregate
face amount of all outstanding Participated Letters of Credit
issued by each L/C Issuing Bank to be equal to the aggregate
face amount of all outstanding Participated Letters of Credit
issued by each other L/C Issuing Bank; and
(F) the aggregate face amount of all outstanding
Participated Letters of Credit issued by any one L/C Issuing
Bank shall not exceed $80,000,000.
(vi) The L/C Issuing Banks and the Lenders shall not be
obligated to issue any Letter of Credit in connection with the
financing of imports into or exports from the United States if the L/C
Issuing Bank believes that the issuance of such Letter of Credit would
not meet the criteria (with regard to goods shipped, nationality of
beneficiary, country of origin, or other similar considerations)
customarily applied by it when considering a request to issue such
letters of credit.
20
<PAGE>
(b) Notice of Issuance. The Borrower shall give, at least
------------------
three Domestic Business Days before each Letter of Credit is to be
issued, notice (a "Notice of Issuance") to (x) the Administrative
Agent and (y) to the L/C Issuing Bank issuing such Letter of Credit
(which, in the case of a Participated Letter of Credit, shall, subject
to Section 2.2(a), be the L/C Issuing Bank selected by the Borrower)
specifying: (A) the date of issuance and expiry date of such Letter
of Credit, (B) if Morgan Guaranty is the L/C Issuing Bank, whether
such Letter of Credit is to be a Syndicated Letter of Credit or a
Participated Letter of Credit, (C) the proposed terms of such Letter
of Credit, including the face amount thereof, and (D) the transaction
that is to be supported or financed by such Letter of Credit. The
Administrative Agent shall, upon receipt of a Notice of Issuance,
promptly notify each Lender of the contents thereof and of the amount
of such Lender's ratable share of or participation in such Letter of
Credit and such Notice of Issuance shall not thereafter be revocable
by the Borrower.
(c) Undrawn L/C Amounts. Any increase in the Undrawn L/C
-------------------
Amount with respect to any outstanding Letter of Credit may be by
amendment or replacement of such Letter of Credit, but in either event
such increase shall be deemed to constitute the issuance of a new
Letters of Credit and, therefore, subject to the satisfaction of the
conditions set forth in Section 3.2. Reductions in the Undrawn L/C
Amounts of outstanding Letters of Credit (other than by drawings
thereunder) may occur by the terms thereof or by amendment or
replacement of such Letters of Credit, in which event such reduction
shall be effective at the time of such amendment or exchange.
(d) Drawings under Letters of Credit.
--------------------------------
(i) Upon receipt from the beneficiary of any Letter of
Credit of demand for payment under such Letter of Credit, the
L/C Issuing Bank shall promptly notify the Borrower and the
Administrative Agent of such request for payment and shall
determine in accordance with the terms of such Letter of
Credit whether such request for payment should be honored.
(ii) If the L/C Issuing Bank determines that a demand
for payment by the beneficiary of a Syndicated Letter of
Credit should be honored, the L/C Issuing Bank shall promptly
notify the Borrower, the Administrative Agent and each Lender
of the aggregate amount to be paid as a result of such demand
and shall notify each Lender of its share of such amount.
Each Lender shall make available its share of the amount so
demanded in accordance with the terms of such Syndicated
Letter of Credit, in Federal or other funds immediately
available in New York City, to the L/C Issuing Bank at the
L/C Issuing Bank's address specified in or pursuant to
Section 9.1. The L/C Issuing Bank will make the funds so
received from the Lenders available to the beneficiary at the
L/C Issuing Bank's aforesaid address in accordance with the
terms of such Syndicated Letter of Credit.
(iii) If the L/C Issuing Bank determines that a demand
for payment by the beneficiary of a Participated Letter of
Credit should be honored, the L/C Issuing Bank shall make
available to the beneficiary in
21
<PAGE>
accordance with the terms of such Participated Letter of
Credit the amount of the drawing under such Participated
Letter of Credit. The L/C Issuing Bank shall thereupon
notify the Borrower, the Administrative Agent and each Lender
of the amount of such drawing paid by it and the amount of
each Lender's participation therein.
(e) Reimbursement and Other Payments by the Borrower.
------------------------------------------------
(i) If any amount is drawn under any Letter of Credit, the
Borrower agrees to reimburse (A) the Administrative Agent for the
account of each Lender, in the case of a Syndicated Letter of Credit,
and (B) the L/C Issuing Bank, in the case of a Participated Letter of
Credit, for all amounts paid by such Lender or the L/C Issuing Bank
(as the case may be) upon such drawing, together with any and all
reasonable charges and expenses which any Lender or the L/C Issuing
Bank may pay or incur relative to such drawing and (x) interest on the
amount drawn at the average rate charged to the L/C Issuing Bank on
overnight Federal funds transactions for each day from and including
the date such amount is drawn to but excluding the date such
reimbursement payment is due and payable and (y) interest on any and
all amounts unpaid by the Borrower when due hereunder with respect to
a Letter of Credit from the date when due until such amount is paid in
full, whether before or after judgment, payable on demand, at a rate
per annum equal to the sum of 2% plus the Base Rate. Such
reimbursement payment shall be due and payable (x) on the date the L/C
Issuing Bank notifies the Borrower of such drawing, if such notice is
given at or before 12:00 Noon (New York City time), or (y) if such
notice is given after 12:00 Noon (New York City time), then not later
than 10:00 A.M. (New York City time) on the first Domestic Business
Day succeeding the date such notice is given. Promptly upon receipt
of a reimbursement payment with respect to a Syndicated Letter of
Credit, the Administrative Agent shall distribute to each Lender its
pro rata share thereof, including interest, to the extent received by
the Administrative Agent.
(ii) In addition, the Borrower agrees to pay to each Lender
(in the case of a Syndicated Letter of Credit) and the L/C Issuing
Bank (in the case of a Participated Letter of Credit) upon each
transfer of any Letter of Credit in accordance with its terms, a sum
equal to such amount as shall be necessary to cover the reasonable
costs and expenses of such Lender or the L/C Issuing Bank (as the case
may be) incurred in connection with such transfer.
(f) Payments by Lenders with Respect to Participated Letters
--------------------------------------------------------
of Credit.
- ---------
(i) Each Lender shall make available an amount equal to its
ratable share of any drawing under a Participated Letter of Credit, in
Federal or other funds immediately available in New York City, to the
L/C Issuing Bank by 3:00 P.M. (New York City time) on the Domestic
Business Day following such drawing, together with interest on such
amount at the average rate charged to the L/C Issuing Bank on
overnight Federal funds transactions on the date of such drawing as
determined by the L/C Issuing Bank, at the L/C Issuing Bank's address
specified in or pursuant to Section 9.1; provided that each Lender's
obligation shall be reduced by its pro rata share of any reimbursement
by the Borrower in respect of such drawing pursuant to Section
2.2(e)(i); provided further that no Lender shall be obligated to make
any payment under this Section with respect to.
22
<PAGE>
any Participat ed Letter of Credit issued, extended or renewed if such
L/C Issuing Bank had been notified in writing by the Borrower, the
Administra tive Agent or the Required Lenders that any condition set
forth in Section 3.2 was not satisfied on the date such Participat ed
Letter of Credit was issued, extended or renewed. The L/C Issuing
Bank shall notify each Lender and the Administra tive Agent of the
amount of such Lender's obligation in respect of any drawing under a
Participat ed Letter of Credit not later than 10:00 A.M. (New York
City time) on the day such payment by such Lender is due. Each Lender
shall be subrogated to the rights of the L/C Issuing Bank against the
Borrower to the extent of all amounts paid by such Lender to the L/C
Issuing Bank, plus interest thereon, from and including the day such
amount is paid by such Lender to the L/C Issuing Bank to but excluding
the day the Borrower makes payment to the L/C Issuing Bank pursuant to
subsection (d) above, whether before or after judgment, at a rate per
annum equal to the sum of 2% plus the Base Rate.
(ii) If any Lender fails to pay any amount required pursuant
to clause (i) of this subsection on the date on which such payment is
due, interest shall accrue on such Lender's obligation to make such
payment from and including the date such payment is due to but
excluding the day such Lender makes such payment, whether before or
after judgment, at a rate per annum equal to (A) in the case of the
day such payment is due to and including the first succeeding Domestic
Business Day (and any intervening days) following the day on which
notice of such Lender's obligation in respect of any drawing was
given, the average rate charged to the L/C Issuing Bank on overnight
Federal funds transactions for each such day as determined by the L/C
Issuing Bank and (B) thereafter, the sum of 2% plus the Base Rate.
Any payment made by any Lender after 3:00 P.M., New York City time, on
any Domestic Business Day shall be deemed for purposes of the
preceding sentence to have been made on the next succeeding Domestic
Business Day.
(iii) The obligation of each Lender to pay to the L/C Issuing
Bank its proportionate share of each drawing under a Participated
Letter of Credit and the obligation of the Borrower to reimburse the
Lenders or the L/C Issuing Banks for payments pursuant to this
Section, shall be irrevocable, shall not be subject to any
qualification or exception whatsoever and shall be binding in
accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, the following
circumstances:
(A) any lack of validity or enforceability of this Agreement;
(B) the existence of any claim, set-off, defense or other
right which the Borrower or any Lender may have at any time
against a beneficiary of any Letter of Credit or any
transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), any L/C Issuing Bank, any
Lender or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions;
(C) any draft, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient.
23
<PAGE>
in any respect or any statement therein being untrue or
inaccurate in any respect;
(D) the surrender or impairment of any security for the
performance or observance of any of the terms of this
Agreement; or
(E) the occurrence or continuance of any Default or Event of
Default.
(g) Letter of Credit Fees. The Borrower agrees to pay to the
---------------------
Administrative Agent for the account of each Lender a letter of credit
fee (the "Letter of Credit Participation Fee") with respect to each
Letter of Credit, computed for each day from and including the date of
issuance of such Letter of Credit until the last day a drawing is
available under such Letter of Credit, at the L/C Fee Rate on the
Undrawn L/C Amount. The Borrower also agrees to pay to each L/C
Issuing Bank, for its own account, a fee (the "L/C Issuing Bank Letter
of Credit Fee"), computed with respect to the Undrawn L/C Amount of
each Participated Letter of Credit issued by such L/C Issuing Bank as
set forth in the preceding sentence, at a rate per annum equal to 1/4
of 1%. Such Letter of Credit Fees shall be payable quarterly in
arrears on each Quarterly Date and on the Termination Date.
(h) Payment upon Acceleration. If the Commitments shall be
-------------------------
terminated or the principal of the Notes shall become immediately due
and payable pursuant to Section 2.10 or 6.1, but the Administrative
Agent shall not have given an Enforcement Notice (as defined in the
Inventory Security Agreement) as provided in Section 6.1, the Borrower
shall pay to the L/C Issuing Bank for application to drawings under
any then outstanding Letters of Credit an amount equal to the
aggregate amount which is then, or may thereafter become, available
for drawing under such Letters of Credit. The L/C Issuing Bank shall
invest such amount in Liquid Investments (as defined in the Inventory
Security Agreement) at the direction of the Administrative Agent. If
the Administrative Agent subsequently gives an Enforcement Notice or
an event specified in clause (h) or (i) of Section 6.1 shall have
occurred and be continuing with respect to the Borrower, the L/C
Issuing Bank shall pay all amounts held by it pursuant to this
subsection to the Collateral Agent for application pursuant to the
Inventory Security Agreement. If an Enforcement Notice is not then in
effect and no event specified in clause (h) or (i) of Section 6.1
shall have occurred and be continuing with respect to the Borrower,
any amount so paid by the Borrower to the L/C Issuing Bank with
respect to a Letter of Credit and not applied to a drawing thereunder
shall be repaid to the Borrower, with interest or other income (to the
extent received by the L/C Issuing Bank on the related Liquid
Investments), as promptly as practicable after such Letter of Credit
expires or is fully drawn.
(i) Limited Liability of the L/C Issuing Bank. The Borrower
-----------------------------------------
assumes all risks of the acts or omissions of any beneficiary and any
transferee of any Letter of Credit with respect to its use of such
Letter of Credit. The Lenders, the L/C Issuing Banks and their
respective officers and directors shall not be liable or responsible
for: (i) the use which may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection
therewith; (ii) the validity, sufficiency or genuineness of documents
presented under any Letter of Credit, or of any endorsements thereon,
even if such documents should in fact.
24
<PAGE>
prove to be in any or all respects invalid, insufficient, fraudulent
or forged; (iii) payment by the L/C Issuing Bank or, in the case of a
Syndicated Letter of Credit, any Lender against presentation of
documents to the L/C Issuing Bank which do not comply with the terms
of any Letter of Credit, including failure of any documents to bear
any reference or adequate reference to the Letter of Credit; or (iv)
any other circumstances whatsoever in making or failing to make or
notifying or failing to notify any Lender that it is required to make
any payment under any Letter of Credit. Notwithstanding the
foregoing, the Borrower shall have a claim against the L/C Issuing
Bank and, in the case of clause (ii)(B) of this sentence, against any
Lender, and the L/C Issuing Bank or a Lender, as the case may be,
shall be liable to the Borrower, to the extent, but only to the
extent, of any direct, as opposed to consequential, damages suffered
by the Borrower which were caused by (i) the L/C Issuing Bank's
willful misconduct or gross negligence in determining whether
documents presented under any Letter of Credit comply with the terms
thereof or (ii) (A) the L/C Issuing Bank's willful failure to pay, or
to notify any Lender that it is required to pay, or, (B) in the case
of Syndicated Letters of Credit, a Lender's willful failure to pay,
after receipt of notice from the L/C Issuing Bank pursuant to Section
2.2(d)(ii) , under any Letter of Credit after the presentation to the
L/C Issuing Bank by any beneficiary (or a successor beneficiary to
whom such Letter of Credit has been transferred in accordance with
its terms) of documents strictly complying with the terms and
conditions of such Letter of Credit; provided that this clause (ii)
shall not apply to any failure by the L/C Issuing Bank or Lender to
pay under any Letter of Credit to the extent that such payment is
prevented by injunction or other similar court order. Subject to the
preceding sentence, the L/C Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to
the contrary unless any beneficiary (or a successor beneficiary to
whom such Letter of Credit has been transferred in accordance with
its terms) and the Borrower shall have notified the L/C Issuing Bank
that such documents do not comply with the terms and conditions of
such Letter of Credit. Each Lender shall, ratably in accordance with
its Commitment , indemnify the L/C Issuing Bank (to the extent not
reimbursed by the Borrower) against any cost, expense (including
counsel fees and disbursements), claim, demand, action, loss or
liability (except such as result from the L/C Issuing Bank's gross
negligence or willful misconduct ) that the L/C Issuing Bank may
suffer or incur in connection with this Agreement or any action taken
or omitted by the L/C Issuing Bank hereunder.
(j) Appointment of L/C Issuing Bank. The Borrower and the
-------------------------------
Administrative Agent may, by one or more written instruments
acceptable to and executed by each of them, appoint one or more
Lenders to perform all or any portion of the functions of an L/C
Issuing Bank with respect to Participated Letters of Credit under this
Agreement.
SECTION 2.3. Method of Borrowing. (a) The Borrower shall
-------------------
give the Administrative Agent notice (a "Notice of Borrowing") not
later than (x) 10:30 A.M. (New York City time) on the date of each
Base Rate Borrowing, (y) 12:00 Noon (New York City time) on the second
Domestic Business Day before each CD Borrowing and (z) 12:00 Noon (New
York City time) on the third Euro-Dollar Business Day before each
Euro-Dollar Borrowing, specifying:
25
<PAGE>
(i) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Domestic Borrowing or
a Euro-Dollar Business Day in the case of a Euro-Dollar
Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether the Loans comprising such Borrowing are to
bear interest initially at the Base Rate, a CD Rate or a
Euro-Dollar Rate; and
(iv) in the case of a Fixed Rate Borrowing, the duration
of the initial Interest Period applicable thereto, subject to
the provisions of the definition of Interest Period.
A Notice of Borrowing shall not be required in connection
with a conversion pursuant to the second sentence of Section 2.6(c) or
a borrowing of Base Rate Loans pursuant to Section 8.1 or Section 8.2.
(b) Upon receipt of a Notice of Borrowing, the Administrative
Agent shall promptly notify each Lender of the contents thereof and of
such Lender's ratable share of such Borrowing and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
(c) Not later than 12:00 Noon (New York City time) on the
date of each Borrowing, each Lender shall make available its ratable
share of such Borrowing, in Federal or other funds immediately
available in New York City, to the Administrative Agent at its address
referred to in Section 9.1. Unless the Administrative Agent
determines that any applicable condition specified in Article 3 has
not been satisfied, the Administrative Agent will make the funds so
received from the Lenders available to the Borrower at the
Administrative Agent's aforesaid address.
(d) Unless the Administrative Agent shall have received
notice from a Lender prior to the date of any Borrowing that such
Lender will not make available to the Administrative Agent such
Lender's share of such Borrowing, the Administrative Agent may assume
that such Lender has made such share available to the Administrative
Agent on the date of such Borrowing in accordance with subsection (c)
of this Section and the Administrative Agent may, in reliance upon
such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not
have so made such share available to the Administrative Agent, such
Lender and the Borrower severally agree to repay to the Administrative
Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent, at (i) in the case of the Borrower, a rate per
annum equal to the higher of the Federal Funds Rate and the interest
rate applicable thereto pursuant to Section 2.7 and (ii) in the case
of such Lender, the Federal Funds Rate. If such Lender shall repay to
the Administrative Agent such corresponding amount, such amount so
repaid shall constitute such Lender's Loan included in such Borrowing
for purposes of this Agreement.
26
<PAGE>
SECTION 2.4. Notes. (a) The Loans of each Lender shall be
-----
evidenced by a single Note payable to the order of such Lender for the
account of its Applicable Lending Office in an amount equal to the
aggregate unpaid principal amount of such Lender's Loans.
(b) Each Lender may, by notice to the Borrower and the
Administrative Agent, request that its Loans of a particular type be
evidenced by a separate Note in an amount equal to the aggregate
unpaid principal amount of such Loans. Each such Note shall be in
substantially the form of Exhibit A hereto with appropriate
modifications to reflect the fact that it evidences solely Loans of
the relevant type. Each reference in this Agreement to the "Note" of
such Lender shall be deemed to refer to and include any or all of such
Notes, as the context may require.
(c) Upon receipt of each Lender's Note pursuant to Section ,
the Administrative Agent shall forward such Note to such Lender. Each
Lender shall record the date, amount and type of each Loan made by it
and the date and amount of each payment of principal made by the
Borrower with respect thereto, and may, if such Lender so elects in
connection with any transfer or enforcement of its Note, endorse on
the schedule forming a part thereof appropriate notations to evidence
the foregoing information with respect to each such Loan then
outstanding; provided that the failure of any Lender to make any such
recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under the Notes. Each Lender is hereby
irrevocably authorized by the Borrower so to endorse its Note and to
attach to and make a part of its Note a continuation of any such
schedule as and when required.
SECTION 2.5. Maturity of Loans. Each Loan shall mature, and
-----------------
the principal amount thereof shall be due and payable, on the
Termination Date.
SECTION 2.6. Method of Electing Interest Rates. (a) The
---------------------------------
Loans included in each Borrowing shall bear interest initially at the
type of rate specified by the Borrower in the applicable Notice of
Borrowing. Thereafter, the Borrower may from time to time elect to
change or continue the type of interest rate borne by each Group of
Loans (subject in each case to the provisions of Article 8"), as
follows:
(i) if such Loans are Base Rate Loans, the Borrower may
elect to convert such Loans to CD Loans or Euro-Dollar Loans;
(ii) if such Loans are CD Loans, the Borrower may elect
to convert such Loans to Base Rate Loans or Euro-Dollar Loans
or elect to continue such Loans as CD Loans for an additional
Interest Period, subject to Section 2.14 in the case of any
such conversion or continuation effective on any day other
than the last day of the then current Interest Period
applicable to such Loans; and
(iii) if such Loans are Euro-Dollar Loans, the Borrower
may elect to convert such Loans to Base Rate Loans or CD
Loans or elect to continue such Loans as Euro-Dollar Loans
for an additional Interest Period, subject to Section 2.14 in
the case of any such conversion or
27
<PAGE>
continuation effective on any day other than the last day of
the then current Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a
"Notice of Interest Rate Election") to the Administrative
Agent not later than 10:00 A.M. (New York City time) on the
third Euro-Dollar Business Day before the conversion or
continuation selected in such notice is to be effective
(unless the relevant Loans are Domestic Loans to be converted
to Domestic Loans of the other type or are CD Rate Loans to
be continued as CD Rate Loans for an additional Interest
Period, in which case such notice shall be delivered to the
Administrative Agent not later than 10:00 A.M. (New York
City time) on the second Domestic Business Day before such
conversion or continuation is to be effective). A Notice of
Interest Rate Election may, if it so specifies, apply to only
a portion of the aggregate principal amount of the relevant
Group of Loans; provided that (i) such portion is allocated
ratably among the Loans comprising such Group and (ii) the
portion to which such Notice applies, and the remaining
portion to which it does not apply, are each $20,000,000 or
any larger multiple of $1,000,000.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which
such notice applies;
(ii) the date on which the conversion or continuation
selected in such notice is to be effective, which shall
comply with the applicable clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be
converted, the new type of Loans and, if the Loans being
converted are to be Fixed Rate Loans, the duration of the
next succeeding Interest Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or
Euro-Dollar Loans for an additional Interest Period, the
duration of such additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate
Election shall comply with the provisions of the definition of
Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from
the Borrower pursuant to subsection (a) above, the Administrative
Agent shall promptly notify each Lender of the contents thereof and
such notice shall not thereafter be revocable by the Borrower. If the
Administrative Agent does not receive a Notice of Interest Period
Election for Fixed Rate Loans pursuant to subsection (a) of this
Section within the applicable time limit specified therein prior to
the last day of the current Interest Period applicable to such Loans,
and the Borrower has not
28
<PAGE>
delivered a notice of prepayment relating to such Loans, then the
Borrower shall be deemed to have elected that such Loans be converted
to Base Rate Loans on the last day of such Interest Period.
(d) An election by the Borrower to change or continue the
rate of interest applicable to any Group of Loans pursuant to this
Section shall not constitute a "Borrowing" subject to the provisions
of Section 3.2.
SECTION 2.7. Interest Rates. (a) Each Base Rate Loan shall
--------------
bear interest on the outstanding principal amount thereof, for each
day from the date such Loan is made until it becomes due, at a rate
per annum equal to the sum of the Base Rate Margin for such day plus
the Base Rate for such day. Such interest shall be payable quarterly
on each Quarterly Date and on the Termination Date, commencing on the
first such date after such Base Rate Loan is made and, with respect to
the principal amount of any Base Rate Loan converted to a CD Loan or a
Euro-Dollar Loan, on each date a Base Rate Loan is so converted. Any
overdue principal of or interest on any Base Rate Loan shall bear
interest, payable on demand, for each day until paid at a rate per
annum equal to the sum of 2% plus the rate otherwise applicable to
Base Rate Loans for such day.
(b) Each CD Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period
applicable thereto, at a rate per annum equal to the sum of the CD
Margin for such day plus the Adjusted CD Rate applicable to such
Interest Period; provided that if any CD Loan shall, as a result of
clause (ii)(b) of the definition of Interest Period, have an Interest
Period of less than 30 days, such CD Loan shall bear interest during
such Interest Period at the rate applicable to Base Rate Loans during
such period. Such interest shall be payable for each Interest Period
on the last day thereof and, with respect to the principal amount of
any CD Loan converted or continued pursuant to Section 2.6 on a day
other than the last day of the Interest Period applicable thereto, on
the date of such conversion or continuation. Any overdue principal of
or interest on any CD Loan shall bear interest, payable on demand, for
each day until paid at a rate per annum equal to the sum of 2% plus
the higher of (i) the rate applicable to Base Rate Loans for such day
and (ii) the sum of the CD Margin plus the Adjusted CD Rate applicable
to such Loan at the date such payment was due.
The "Adjusted CD Rate" applicable to any Interest Period
means a rate per annum determined pursuant to the following formula:
[ CDBR ] 1
ACDR = [ ------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
- ---------------------
1 The amount in brackets being rounded upward, if necessary, to the
next higher 1/100 of 1%.
29
<PAGE>
DRP = Domestic Reserve Percentage
AR = Assessment Rate.
The "CD Base Rate" applicable to any Interest Period is the
rate of interest determined by the Administrative Agent to be the
average (rounded upward, if necessary, to the next higher 1/100 of 1%)
of the prevailing rates per annum bid at 10:00 A.M. (New York City
time) (or as soon thereafter as practicable) on the first day of such
Interest Period by two or more New York certificate of deposit dealers
of recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable
to the principal amount of the CD Loan of such CD Reference Bank to
which such Interest Period applies and having a maturity comparable to
such Interest Period.
"Domestic Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency
reserves) for a member bank of the Federal Reserve System in New York
City with deposits exceeding five billion dollars in respect of new
non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of
$100,000 or more. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change in the
Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment
rate in effect on such day which is payable by a member of the Bank
Insurance Fund classified as adequately capitalized and within
supervisory subgroup "A" (or a comparable successor assessment risk
classification) within the meaning of 12 C.F.R. Sec 327.4(a) (or any
successor provision) to the Federal Deposit Insurance Corporation (or
any successor) for such Corporation's (or such successor's) insuring
time deposits at offices of such institution in the United States.
The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for each day during each
Interest Period applicable thereto, at a rate per annum equal to the
sum of the Euro-Dollar Margin for such day plus the Adjusted London
Interbank Offered Rate applicable to such Interest Period; provided
that, if any Euro-Dollar Loan shall, as a result of clause (i)(c) of
the definition of Interest Period, have an Interest Period of less
than one month, such Euro-Dollar Loan shall bear interest during such
Interest Period at the rate applicable to Base Rate Loans during such
period. Such interest shall be payable for each Interest Period on
the last day thereof and, if such Interest Period is longer than three
months, at intervals of three months after the first day thereof and,
with respect to the principal amount of any Euro-Dollar Loan converted
or continued pursuant to Section 2.6 on a day other than the last day
of the Interest Period applicable thereto, on the date of such
conversion or continuation.
30
<PAGE>
The "Adjusted London Interbank Offered Rate" applicable to
any Interest Period means a rate per annum equal to the quotient
obtained (rounded upward, if necessary, to the next higher 1/100 of
1%) by dividing (i) the applicable London Interbank Offered Rate by
(ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any
Interest Period means the average (rounded upward, if necessary, to
the next higher 1/16 of 1%) of the respective rates per annum at which
deposits in Dollars are offered to each of the Euro-Dollar Reference
Banks in the London interbank market at approximately 11:00 A.M.
(London time) two Euro-Dollar Business Days before the first day of
such Interest Period in an amount approximately equal to the principal
amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to
which such Interest Period is to apply and for a period of time
comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement for a
member bank of the Federal Reserve System in New York City with
deposits exceeding five billion dollars in respect of "Eurocurrency
liabilities" (or in respect of any other category of liabilities which
includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of
credit or other assets which includes loans by a non-United States
office of any Lender to United States residents). The Adjusted London
Interbank Offered Rate shall be adjusted automatically on and as of
the effective date of any change in the Euro-Dollar Reserve
Percentage.
(d) Any overdue principal of or interest on any Euro-Dollar
Loan shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to the higher of (i) the sum of 2% plus the
Euro-Dollar Margin for such day plus the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing (x)
the average (rounded upward, if necessary, to the next higher 1/16 of
1%) of the respective rates per annum at which one day (or, if such
amount due remains unpaid more than three Euro-Dollar Business Days,
then for such other period of time not longer than three months as the
Administrative Agent may select) deposits in dollars in an amount
approximately equal to such overdue payment due to each of the
Euro-Dollar Reference Banks are offered to such Euro-Dollar Reference
Bank in the London interbank market for the applicable period
determined as provided above by (y) 1.00 minus the Euro-Dollar Reserve
Percentage (or, if the circumstances described in clause (a) or (b) of
Section 8.1" shall exist, at a rate per annum equal to the sum of 2%
plus the rate applicable to Base Rate Loans for such day) and (ii) the
sum of 2% plus the Euro-Dollar Margin for such day plus the Adjusted
London Interbank Offered Rate applicable to such Loan at the date such
payment was due.
(e) The Administrative Agent shall determine each interest
rate applicable to the Loans hereunder. The Administrative Agent
shall give prompt notice to the Borrower and the participating Lenders
of each rate of interest so determined, and its determination thereof
shall be conclusive in the absence of manifest error.
31
<PAGE>
(f) Each Reference Bank agrees to use its best efforts to
furnish quotations to the Administrative Agent as contemplated by this
Section. If any Reference Bank does not furnish a timely quotation,
the Administrative Agent shall determine the relevant interest rate on
the basis of the quotation or quotations furnished by the remaining
Reference Bank or Banks or, if none of such quotations is available on
a timely basis, the provisions of Section 8.1" shall apply.
SECTION 2.8. Fees. (a) Subject to subsection (b) below, the
Borrower shall pay to the Administrative Agent for the account of each
Lender a commitment fee (the "Commitment Fee") calculated at the
Commitment Fee Rate (determined daily in accordance with the Pricing
Schedule) on the excess of such Lender's Commitment over such Lender's
Total Exposure.
(b) Commitment Fees shall accrue from and including the
Closing Date to but excluding the date of termination of the
Commitments in their entirety and shall be payable on each Quarterly
Date prior to the Termination Date with respect to the three month
period ending one month prior to such Quarterly Date, and on the
Termination Date. Commitment Fees which are payable on the
Termination Date or on any other date on which the termination of the
Commitments in their entirety is effective (the "Final Fee Payment
Date") shall be calculated with respect to the period from the most
recent date with respect to which such fees have been paid pursuant to
this Section to the Final Fee Payment Date. The aggregate amount of
Commitment Fees payable to the Administrative Agent for the account of
each Lender on each Quarterly Date shall be reduced by an amount
determined by the Borrower and such Lender to be equal to the product
of (i) the amount of Net Free Balances (if any) maintained by the
Borrower and its Subsidiaries with such Lender during the three month
period ending two months prior to such Quarterly Date and (ii) the
Average Credit Balance Rate for the three month period ending two
months prior to such Quarterly Date; provided that the portion of any
payment of Commitment Fees due on the Final Fee Payment Date that
relates to a period that is more recent than two months prior to such
date shall not be reduced on account of any Net Free Balances. Upon
making each payment of such Commitment Fees to the Administrative
Agent, the Borrower shall advise the Administrative Agent as to the
portion thereof to be paid for the account of each Lender, and the
Administrative Agent shall distribute such payment in accordance with
such advice. For purposes of this Section 2.8, "Net Free Balances"
for any Lender during any period means the daily average amount of
collected balances maintained by the Borrower and its Subsidiaries in
non-interest bearing accounts with such Lender during such period that
the Borrower and such Lender have agreed do not support credit or
operational services performed by such Lender (other than pursuant to
this Agreement) for the Borrower and its Subsidiaries, and "Average
Credit Balance Rate" means for any period the average of the 90-day
U.S. Treasury Bill rate as of the end of each week or portion thereof
during such period as calculated by the Administrative Agent, such
calculation to be conclusive in the absence of manifest error.
(c) On the Closing Date, the Borrower shall pay to the
Agents, for their own accounts, such fees and compensation in such
amounts as are set forth in the letter dated July 24, 1995.
32
<PAGE>
(d) On the Closing Date, the Borrower shall pay to the
Administrative Agent for the account of each Lender, a fee equal to
(w) 5/8 of 1% of such Lender's Commitment, if such Lender's Initial
Commitment was at least $30,000,000, (x) 1/2 of 1% of such Lender's
Commitment, if such Lender's Initial Commitment was at least
$20,000,000 but less than $30,000,000, (y) G of 1% of such Lender's
Commitment, if such Lender's Initial Commitment was at least
$10,000,000 but less than $20,000,000, and (z) 1/4 of 1% of such
Lender's Commitment, if such Lender's Initial Commitment was at least
$6,000,000 but less than $10,000,000.
SECTION 2.9. Optional Termination or Reduction of
------------------------------------
Commitments. During the Revolving Credit Period, the Borrower may,
- -----------
upon at least three Domestic Business Days' notice to the
Administrative Agent, (i) terminate the Commitments at any time, if no
Loans, Letters of Credit or Reimbursement Obligations are then
outstanding or (ii) reduce the Commitments from time to time by an
aggregate amount of $25,000,000 or any multiple of $5,000,000 in
excess thereof; provided that, in connection with each such reduction
of the Commitments, (x) the amounts by which the Commitments of the
several Lenders are reduced shall be in proportion to the amounts
shown on the signature pages hereof as their respective Commitments
and (y) after giving effect to such reduction, the Total Exposure of
each Lender shall not exceed the amount of its Commitment as so
reduced. If the Commitments are reduced, any accrued Commitment Fees
applicable to the amount by which the Commitments were so reduced
shall be due and payable one month after the effective date of such
reduction. If the Commitments are terminated in their entirety, all
accrued Commitment Fees shall be payable on the effective date of such
termination.
SECTION 2.10. Mandatory Termination of Commitments. The
------------------------------------
Commitments shall terminate on the earliest of (i) the Termination
Date, (ii) the date on which commitments are terminated under the
Receivables Purchase Agreement, and (iii) the date on which
Commitments are terminated in accordance with this Agreement, and, in
any case, any Loans then outstanding (together with accrued interest
thereon) shall be due and payable on such date and any Letters of
Credit then outstanding shall be cash collateralized on such date in
accordance with Section 2.2(h).
SECTION 2.11. Optional Prepayments. (a) Subject in the case
--------------------
of any Fixed Rate Borrowing to Section 2.14, the Borrower may, (i)
upon notice delivered to the Administrative Agent not later than 10:00
A.M. (New York City time) on the day of any prepayment, prepay the
Group of Base Rate Loans, (ii) upon notice delivered to the
Administrative Agent not later than 12:00 Noon (New York City time) on
the second Domestic Business Day before the day of prepayment, prepay
any Group of CD Loans, and (iii) upon notice delivered to the
Administrative Agent not later than 12:00 Noon (New York City time) on
the third Euro-Dollar Business Day before the day of prepayment,
prepay any Group of Euro-Dollar Loans, in each case, in whole at any
time, or from time to time in part in amounts aggregating $20,000,000
or any larger multiple of $1,000,000, by paying the principal amount
to be prepaid together with interest accrued thereon to the date of
prepayment. Each such optional prepayment shall be applied to prepay
ratably the Loans of the several Lenders included in such Group.
33
<PAGE>
(b) Upon receipt of a notice of prepayment pursuant to this
Section, the Administrative Agent shall promptly notify each Lender of
the contents thereof and of such Lender's ratable share of such
prepayment and such notice shall not thereafter be revocable by the
Borrower.
SECTION 2.12. Mandatory Prepayments. (a) If on the date of
---------------------
delivery of any Borrowing Base Certificate pursuant to Section
5.1(e)(ii), 5.1(f), 5.1(g) or 5.1(k) or on the date of any closing
referred to in any certificate delivered pursuant to Section 5.7(ii),
the Applicable Percentage of the Secured Principal Amount shall exceed
the Borrowing Base reflected in the applicable certificate, the
Borrower shall prepay the Loans (together with interest accrued
thereon) to the extent required so that the Applicable Percentage of
the Secured Principal Amount on such date does not exceed the
Borrowing Base so reflected.
(b) Each prepayment of Loans required by subsection (a) of
this Section shall be made with respect to such Group or Groups of
Loans as the Borrower may specify by notice to the Administrative
Agent at or before the time of such prepayment and shall be applied to
prepay the Loans comprising each such Group pro rata; provided that,
if no such timely specification is given by the Borrower, such payment
shall be allocated to such Group or Groups as the Administrative Agent
may determine.
(c) If after all Loans have been repaid pursuant to
subsection (a) of this Section the Total Exposure of any Lender still
exceeds the amount of such Lender's Commitment or the Applicable
Percentage of the Secured Principal Amount still exceeds the Borrowing
Base, the Borrower shall pay to the L/C Issuing Bank for application
to future drawings under any then outstanding Letters of Credit an
amount equal to such excess (or such lesser amount as the Lenders
agree is sufficient to cover such future drawings). Any amounts paid
to Morgan Guaranty in its capacity as L/C Issuing Bank with respect to
any Syndicated Letter of Credit shall be held and invested by Morgan
Guaranty on behalf of each of the Lenders. The L/C Issuing Bank shall
invest such amount in Liquid Investments (as defined in the Inventory
Security Agreement) at the direction of the Administrative Agent, and
shall apply such amount to drawings in the order in which such
drawings are made. To the extent not applied to drawings under any
Letter of Credit, such amount shall be repaid to the Borrower with
interest in the manner provided in Section 2.2(h) as promptly as
practicable after the earlier of (i) the date on which all outstanding
Letters of Credit have expired or been fully drawn and (ii) the date
("Delivery Date") the Collateral Agent delivers a Collateral Report,
if the Borrowing Base on each date for which the Borrower has been
required to calculate the Borrowing Base pursuant to Section 5.1(e)
since the date of payment by the Borrower of such amount and on any
other date for which an estimate has been made during the thirty-day
period preceding the Delivery Date exceeds the Applicable Percentage
of the Secured Principal Amount on such date. If the Administrative
Agent gives an Enforcement Notice (as defined in the Inventory
Security Agreement), the L/C Issuing Bank shall pay all amounts held
by it pursuant to this subsection to the Collateral Agent for
application pursuant to the Inventory Security Agreement.
(d) At any time the Borrower is required to make a payment to
the L/C Issuing Banks pursuant to subsection (c), the Collateral
Agent, if requested by the
34
<PAGE>
Required Lenders, shall prepare and deliver a Collateral Report to the
Lenders, the L/C Issuing Banks, the Administrative Agent and the
Borrower. The Borrower will, promptly upon notice of such request,
provide to the Collateral Agent all information and evidence
reasonably requested concerning the Inventory to enable the Collateral
Agent to prepare the Collateral Report.
SECTION 2.13. General Provisions as to Payments. (a) The
---------------------------------
Borrower shall make each payment of principal of, and interest on, the
Loans and of Fees and other amounts payable hereunder, not later than
12:00 Noon (New York City time) on the date when due, in Federal or
other funds immediately available in New York City, to the
Administrative Agent at its address referred to in Section 9.1. The
Administrative Agent shall promptly distribute to each Lender its
ratable share of each such payment received by the Administrative
Agent for the account of the Lenders. Whenever any payment of
principal of, or interest on, the Domestic Loans or of Fees or other
amounts payable hereunder shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended
to the next succeeding Domestic Business Day. Whenever any payment of
principal of, or interest on, the Euro-Dollar Loans shall be due on a
day which is not a Euro-Dollar Business Day, the date for payment
thereof shall be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar
month, in which case the date for payment thereof shall be the next
preceding Euro-Dollar Business Day. If the date for any payment of
principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Administrative Agent shall have received
notice from the Borrower prior to the date on which any payment is due
to the Lenders hereunder that the Borrower will not make such payment
in full, the Administrative Agent may assume that the Borrower has
made such payment in full to the Administrative Agent on such date and
the Administrative Agent may, in reliance upon such assumption, cause
to be distributed to each Lender on such due date an amount equal to
the amount then due such Lender. If and to the extent that the
Borrower shall not have so made such payment, each Lender shall repay
to the Administrative Agent forthwith on demand such amount
distributed to such Lender together with interest thereon, for each
day from the date such amount is distributed to such Lender until the
date such Lender repays such amount to the Administrative Agent, at
the Federal Funds Rate.
SECTION 2.14. Funding Losses. If the Borrower makes any
--------------
payment of principal with respect to any Fixed Rate Loan or any Fixed
Rate Loan is converted or continued (pursuant to Article 2, 6, 8" or
otherwise) on any day other than the last day of an Interest Period
applicable thereto, or the last day of an applicable period fixed
pursuant to Section , or if the Borrower fails to borrow, prepay,
convert or continue any Fixed Rate Loans after notice has been given
to any Lender in accordance with Section , 2.6 or the Borrower shall
reimburse each Lender within 15 days after demand for any resulting
loss or expense incurred by it (or by any existing or prospective
Participant in the related Loan), including (without limitation) any
loss incurred in obtaining, liquidating or employing deposits from
third parties, but excluding loss of margin for the period after any
such payment, conversion or continuation or failure to borrow, prepay,
convert or continue; provided that such Lender shall have delivered to
the Borrower a
35
<PAGE>
certificate as to the amount of such loss or expense, which
certificate shall be conclusive in the absence of manifest error.
SECTION 2.15. Computation of Interest and Fees. Interest
--------------------------------
based on the Prime Rate hereunder shall be computed on the basis of a
year of 365 days (or 366 days in a leap year) and paid for the actual
number of days elapsed (including the first day but excluding the last
day). All other interest and Commitment Fees shall be computed on the
basis of a year of 360 days and paid for the actual number of days
elapsed (including the first day but excluding the last day). Letter
of Credit Fees shall be computed on the basis of a year of 360 days
and paid for the actual number of days elapsed, calculated for the
relevant period (including the first day and including the last day).
ARTICLE 3
CONDITIONS TO BORROWINGS AND ISSUANCES
SECTION 3.1. Closing. The closing hereunder shall occur
-------
upon receipt by the Agents of the following, all of which shall be in
form and substance acceptable to the Agents:
(a) a duly executed Note for the account of each Lender dated
on or before the Closing Date complying with the provisions of Section
2.4;
(b) an opinion dated the Closing Date of the Assistant
General Counsel of the Borrower in substantially the form of Exhibit G
hereto and covering such other matters as the Administrative Agent may
reasonably request;
(c) an opinion dated the Closing Date of Davis Polk &
Wardwell, special counsel for the Agents in substantially the form of
Exhibit H hereto and covering such other matters as the Administrative
Agent may reasonably request;
(d) evidence satisfactory to the Administrative Agent that
the commitments under the Existing Credit Agreement have terminated,
all loans thereunder have been repaid in full (all Lenders hereunder
which are also lenders under the Existing Credit Agreement hereby
agreeing that such repayment may be made, whether at the end of
interest periods under the Existing Credit Agreement or not), all
accrued fees and other amounts payable thereunder (including, without
limitation, any funding costs payable pursuant to the Existing Credit
Agreement) have been paid in full and that all letters of credit
issued thereunder (other than those listed on Schedule 1 and those
deemed to be issued under the Receivables Purchase Agreement) have
been returned to the issuers thereof (or to the Administrative Agent)
for cancellation;
36
<PAGE>
(e) a Borrowing Base Certificate dated the Closing Date
setting forth the Borrowing Base as of August 31, 1995;
(f) a duly executed copy of the Inventory Security Agreement,
a duly executed copy of the Perfection Certificate (as defined in the
Inventory Security Agreement); all Pledged Instruments (as defined in
the Inventory Security Agreement) delivered to the Collateral Agent
and endorsed to the order of the Collateral Agent; and all
certificates representing Pledged Stock or Pledged Interests (in each
case as defined in the Inventory Security Agreement), accompanied by
duly executed instruments of transfer or assignment in blank,
delivered to the Collateral Agent;
(g) acknowledgement copies of proper financing statements
(Form UCC-1) naming the Borrower as the debtor and the Collateral
Agent, on behalf of the Lenders, as the secured party, or other
similar instruments or documents as may be necessary or, in the
opinion of the Collateral Agent or its counsel, desirable under the
UCC of all appropriate jurisdictions to evidence and perfect the
Lenders' Security Interests in the Borrower's Collateral (as defined
in the Inventory Security Agreement);
(h) acknowledgement copies of proper financing statements
(Form UCC-1) naming the Special Purpose Members as the debtors and the
Collateral Agent, on behalf of the Lenders, as the secured party, or
other similar instruments or documents as may be necessary or, in the
opinion of the Collateral Agent or its counsel, desirable under the
UCC of all appropriate jurisdictions to evidence and perfect the
Lenders' Security Interests in the Special Purpose Members' Collateral
(as defined in the Inventory Security Agreement);
(i) executed financing statements (Form UCC-3) necessary to
release all security interests and other rights of any Person
previously granted by the Borrower in the Borrower's Collateral;
(j) (i) requests for information or copies (Form UCC-11) (or
a similar search report certified by parties acceptable to the
Collateral Agent or its counsel) dated a date reasonably near the
Closing Date listing all effective financing statements which name the
Borrower (under its present name and any previous name) as debtor,
together with copies of such financing statements (none of which,
unless subject to a release referred to in clause (h) above, shall
cover any Collateral) and (ii) requests for information dated a date
reasonably near the Closing Date regarding tax liens against the
Borrower in the relevant offices in the States of Indiana, Maryland,
New York and Pennsylvania;
(k) from NBD Bank a certificate of an authorized officer of
NBD Bank attaching a true and correct copy of the instrument or
instruments evidencing the Secured Tax Exempt Debt;
(l) a certificate as to insurance coverage as required by
Section 5.2(b);
(m) a certificate signed by the Chief Financial Officer,
Treasurer or Controller of the Borrower that the representations and
warranties of the Borrower contained in this Agreement shall be true
on and as of the Closing Date;
37
<PAGE>
(n) the fees described in Section 2.8(c) and (d);
(o) evidence satisfactory to the Administrative Agent of the
satisfaction of all the conditions to the closing of the Receivables
Facility on the Closing Date, and that all transactions contemplated
by the Receivables Documents to be consummated on the Closing Date
will take place prior to or contemporaneously with the closing
contemplated hereunder; and
(p) all documents the Agents may reasonably request relating
to the existence of the Borrower, the corporate authority for and the
validity of the Financing Documents, and any other matters relevant
hereto, all in form and substance satisfactory to the Agents.
The Administrative Agent shall promptly notify the Borrower
and the Lenders of the date on which the foregoing conditions have
been satisfied, and such notice shall be conclusive and binding on all
parties hereto.
SECTION 3.2. All Borrowings and Issuances. The obligation
----------------------------
of each Lender to make a Loan on the occasion of each Borrowing and
the obligation of the L/C Issuing Bank to issue each Letter of Credit
are subject to the satisfaction of the following conditions:
(a) (i) receipt by the Administrative Agent of a Notice of
Borrowing as required by Section 2.3(a)# or (ii) receipt by the L/C
Issuing Bank of a Notice of Issuance as required by Section 2.2, as
the case may be;
(b) receipt by the Administrative Agent of a certificate
dated the date of such Borrowing or Issuance and signed by the Chief
Financial Officer, the Treasurer or the Controller of the Borrower
certifying that:
(i) immediately before and after such Borrowing or
Issuance, no Default or Potential Termination Event or
Termination Event (as such terms are defined in the
Receivables Purchase Agreement) shall have occurred and be
continuing; and
(ii) the representations and warranties of the Borrower
contained in this Agreement (other than the representation
and warranty set forth in Section 4.4(c)) and the other
Financing Documents shall be true on and as of the date of
such Borrowing;
(c) the fact that immediately after such Borrowing or
Issuance the Applicable Percentage of the Secured Principal Amount
shall not exceed the lesser of (i) the Borrowing Base reflected in the
most recent Borrowing Base Certificate delivered to the Administrative
Agent and (ii) the Receivables Maximum Purchase Price; and
38
<PAGE>
(d) the fact that no Federal Lien shall have been filed
against the Borrower which covers or may cover any Collateral (as
defined in the Inventory Security Agreement) and such Federal Lien
remains undischarged.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.1. Corporate Existence and Power. The Borrower is
-----------------------------
a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware, and has all corporate powers
and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
SECTION 4.2. Corporate and Governmental Authorization; No
--------------------------------------------
Contravention. The execution, delivery and performance by the
- -------------
Borrower of the Financing Documents are within the Borrower's
corporate powers, have been duly authorized by all necessary corporate
action, require no action by or in respect of, or filing with, any
governmental body, agency or official (except as contemplated by the
Inventory Security Agreement) and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of the Borrower or of any
agreement, judgment, injunction, order, decree or other instrument
binding upon the Borrower or result in the creation or imposition of
any Lien on any asset of the Borrower or any of its Subsidiaries
(except the Security Interests).
SECTION 4.3. Binding Effect. This Agreement and the
--------------
Inventory Security Agreement constitute valid and binding agreements
of the Borrower and each Note, when executed and delivered in
accordance with this Agreement, will constitute a valid and binding
obligation of the Borrower, in each case enforceable in accordance
with their respective terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization or moratorium or
other similar laws relating to the enforcement of creditors' rights
generally and by general equitable principles.
SECTION 4.4. Financial Information. (a) The consolidated
---------------------
balance sheets of the Borrower and its Consolidated Subsidiaries as of
December 31, 1994 and the related consolidated statements of income
and cash flows for the fiscal year then ended, reported on by Price
Waterhouse LLP and set forth in the Borrower's 1994 Form 10-K, a copy
of which has been delivered to each of the Lenders, fairly present, in
conformity with generally accepted accounting principles, the
consolidated financial position of the Borrower and its
39
<PAGE>
Consolidated Subsidiaries as of such date and their consolidated
results of operations and cash flows for such fiscal year.
(b) The unaudited consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as of June 30, 1995 and the related
unaudited consolidated statements of income and cash flows for the six
months then ended, set forth in the Borrower's quarterly report for
the fiscal quarter ended June 30, 1995 as filed with the Securities
and Exchange Commission on the Borrower's Latest Form 10-Q, a copy of
which has been delivered to each of the Lenders, fairly present, in
conformity with generally accepted accounting principles applied on a
basis consistent with the financial statements referred to in
paragraph (a) of this Section 4.4 (except that the notes to such
quarterly financial statements are abbreviated as permitted by the
Securities and Exchange Commission in its regulations relating to
interim financial statements), the consolidated financial position of
the Borrower and its Consolidated Subsidiaries as of such date and
their consolidated results of operations and cash flows for such six
month period (subject to normal year-end adjustments).
(c) Since June 30, 1995, there has been no material adverse
change in the business or financial position of the Borrower and its
Consolidated Subsidiaries, considered as a whole.
SECTION 4.5. Litigation. There is no action, suit or
----------
proceeding pending against, or to the knowledge of the Borrower
threatened against or affecting, the Borrower or any of its
Subsidiaries before any court or arbitrator or any governmental body,
agency or official in which there is a reasonable possibility of an
adverse decision (i) which could materially adversely affect the
ability of the Borrower to perform its obligations under any of the
Financing Documents, or (ii) which would in any material respect draw
into question the validity of any of the Financing Documents.
SECTION 4.6. Compliance with ERISA. Each member of the
---------------------
ERISA Group has fulfilled its obligations under the minimum funding
standards of ERISA and the Internal Revenue Code with respect to each
Plan and is in compliance in all material respects with the presently
applicable provisions of ERISA and the Internal Revenue Code with
respect to each Plan, and has not incurred any liability under Title
IV of ERISA (i) to the PBGC other than a liability to the PBGC for
premiums under Section 4007 of ERISA or (ii) in respect of a
Multiemployer Plan which has not been discharged in full when due.
SECTION 4.7. Taxes. United States Federal income tax
-----
returns of the Borrower and the members of its "affiliated group" (as
defined in Section 1504(a) of the Internal Revenue Code) have been
examined through the taxable year ended December 31, 1987 and are
closed through the taxable year ended December 31, 1986. The Borrower
and the members of its "affiliated group" (as so defined) have filed
all United States Federal income tax returns and all other material
tax returns which are required to be filed by them and have paid all
taxes stated to be due in such returns or pursuant to any assessment
received by them, except for taxes the amount, applicability or
validity of which is being contested in good faith by appropriate
proceedings. The charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of taxes or other similar
40
<PAGE>
governmental charges, additions to taxes and any penalties and
interest thereon are, in the opinion of the Borrower, adequate.
SECTION 4.8. Environmental Compliance.
(a) Except as disclosed on Schedule 4.8,
(i) the Borrower and its Subsidiaries have obtained, or
made timely application for, all permits, certificates,
licenses, approvals, registrations and other authorizations
(collectively "Permits") which are required under all
applicable Environmental Laws and are necessary for their
operations and are in compliance with the terms and
conditions of all such Permits, except where the failure to
obtain such Permits or to comply with their terms would not
have, individually or in the aggregate, a material adverse
effect on the Borrower and its Consolidated Subsidiaries,
considered as a whole;
(ii) no notice, notification, demand, request for
information, citation, summons, complaint or order has been
issued, no complaint has been filed, no penalty has been
assessed and no investigation or review is pending, or to the
Borrower's knowledge, threatened by any governmental entity
or other Person with respect to any (A) alleged violation by
the Borrower or any Subsidiary of any Environmental Law,
(B) alleged failure by the Borrower or any Subsidiary to
have any Permits required in connection with the conduct of
its business or to comply with the terms and conditions
thereof, (C) Regulated Activity or (D) Release of Hazardous
Substances, except where such event or events would not have,
individually or in the aggregate, a material adverse effect
on the Borrower and its Consolidated Subsidiaries, considered
as a whole;
(iii) to the knowledge of the Borrower, all oral or
written notifications of a Release of a Hazardous Substance
required to be filed under any applicable Environmental Law
have been filed or are in the process of being filed by or on
behalf of the Borrower or any Subsidiary;
(iv) no property now owned or coal mining operation or
steel facility which is now leased by the Borrower or any
Subsidiary and, to the knowledge of the Borrower, no such
property previously owned or leased or any property to which
the Borrower or any Subsidiary has, directly or indirectly,
transported or arranged for the transportation of any
Hazardous Substances is listed or, to the Borrower's
knowledge, proposed for listing, on the National Priorities
List promulgated pursuant to CERCLA, on CERCLIS (as defined
in CERCLA) or any similar state list or is the subject of
federal, state or local enforcement actions or, to the
knowledge of the Borrower, other investigations which may
lead to claims against the Borrower or any Subsidiary for
clean-up costs, remedial work, damage to natural resources or
personal injury claims, including, but not limited to, claims
under CERCLA, except where such listings or investigations
would not have,
41
<PAGE>
individually or in the aggregate, a material adverse effect
on the Borrower and its Consolidated Subsidiaries, considered
as a whole; and
(v) there are no Liens under or pursuant to any
applicable Environmental Laws on any real property or other
assets owned or leased by the Borrower or any Subsidiary, and
no government actions have been taken or, to the knowledge of
the Borrower, are in process which could subject any of such
properties or assets to such Liens.
(b) For purposes of this Section, the terms "Borrower" and
"Subsidiary" shall include any business or business entity (including
a corporation) which is a predecessor, in whole or in part, of the
Borrower or any Subsidiary.
SECTION 4.9. Full Disclosure. All information, including
---------------
the Inventory Information Memorandum, furnished by the Borrower to the
Agents or any Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, taken as whole
and in light of the circumstances under which such information is
furnished, true and accurate in all material respects on the date as
of which such information is stated or certified. It is understood
that the foregoing is limited to the extent that (i) information
relating to the steel industry generally is to the best of the
Borrower's knowledge, (ii) projections have been made in good faith by
the management of the Borrower and in the view of the Borrower's
management are reasonable in light of all information known to
management as of the Closing Date, and (iii) no representation or
warranty is made as to whether the projected results will be realized.
The Borrower has disclosed to the Lenders in writing any and all facts
which materially and adversely affect or may so affect (to the extent
that the Borrower can now reasonably foresee), the business,
operations or financial condition of the Borrower and its Consolidated
Subsidiaries, taken as a whole, or the ability of the Borrower to
perform its obligations under any of the Financing Documents.
ARTICLE 5
COVENANTS
The Borrower agrees that, as long as any Lender has any
Commitment hereunder or any Letter of Credit remains outstanding or
any amount payable under any Note or any Reimbursement Obligation
remains unpaid:
SECTION 5.1. Information. The Borrower will deliver to each
-----------
of the Lenders:
42
<PAGE>
(a) as soon as available and in any event within 95 days
after the end of each fiscal year of the Borrower, a consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of
the end of such fiscal year and the related consolidated statements of
income and cash flows for such fiscal year, setting forth in each case
in comparative form the figures for the previous fiscal year, all
reported on in a manner acceptable to the Securities and Exchange
Commission by Price Waterhouse LLP or other independent public
accountants of nationally recognized standing (the Borrower being
permitted to satisfy the requirements of this clause (a) by delivery
of its annual report on Form 10-K (or any successor form), and all
supplements or amendments thereto, as filed with the Securities and
Exchange Commission);
(b) as soon as available and in any event within 60 days
after the end of each of the first three quarters of each fiscal year
of the Borrower, consolidated balance sheets of the Borrower and its
Consolidated Subsidiaries as of the end of such quarter and the
related consolidated statements of income for such quarter and for the
portion of the Borrower's fiscal year ended at the end of such quarter
and statements of cash flow for the portion of the Borrower's fiscal
year ended at the end of such quarter, setting forth in each case, in
comparative form the figures for the corresponding quarter and the
corresponding portion of the Borrower's previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency
(except for the notes to such quarterly statements, which may be
abbreviated as permitted by the Securities and Exchange Commission in
its regulations relating to interim financial statements) by the Chief
Financial Officer, the Treasurer or the Controller of the Borrower
(the Borrower being permitted to satisfy the requirements of this
clause (b) by delivery of its quarterly report on Form 10-Q (or any
successor form), and all supplements or amendments thereto, as filed
with the Securities and Exchange Commission);
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of
the Chief Financial Officer, the Treasurer or the Controller of the
Borrower (i) setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance with the
requirements of Section 5.6 on the date of such financial statements
and (ii) stating whether any Default or Increased Coverage Event
exists on the date of such certificate and, if any Default or
Increased Coverage Event then exists, setting forth the details
thereof and the action which the Borrower is taking or proposes to
take with respect thereto and (iii) in the case of the certificate
delivered simultaneously with each set of financial statements
referred to in clause (a) above, showing in reasonable detail the
amount of insurance coverage for the Borrower and its Subsidiaries
then in effect;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i)
whether anything has come to their attention relating to accounting
matters in the course of their audit to cause them to believe that any
Default or Increased Coverage Event existed on the date of such
statements and (ii) confirming the calculations required by clause
(c)(i) above and set forth in the officer's certificate delivered
simultaneously therewith pursuant to clause (c)
above;
43
<PAGE>
(e) within 20 days after the end of each month, (i) a
Borrowing Base Certificate (the "Monthly Borrowing Base Certificate")
setting forth a calculation of the Borrowing Base as of the end of
such month and (ii) if the Applicable Percentage of the Secured
Principal Amount at the time of the delivery of the Monthly Borrowing
Base Certificate exceeds the Borrowing Base as set forth in such
certificate, simultaneously with the delivery of such certificate a
certificate of the Chief Financial Officer, the Treasurer or the
Controller of the Borrower dated as of one Domestic Business Day prior
to the delivery of the Monthly Borrowing Base Certificate setting
forth in the form of the Borrowing Base Certificate the Borrowing Base
as of the close of business on such date and specifying whether the
Borrower is required to take any action to comply with Section 2.12;
(f) if on any date any officer of the Borrower becomes aware
that the Applicable Percentage of the Secured Principal Amount exceeds
the Borrowing Base on such date, a Borrowing Base Certificate, to be
dated as of and delivered to the Administrative Agent one Domestic
Business Day after such date, setting forth the Borrower's good faith
estimate as to the calculation of the Borrowing Base as of the close
of business on such date;
(g) promptly, but in no event later than five Domestic
Business Days after any officer of the Borrower becomes aware of any
occurrence which such officer knows to constitute a Default or an
Increased Coverage Event, a certificate of the Chief Financial
Officer, the Treasurer or the Controller of the Borrower setting forth
the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto and, in the case of an Increased
Coverage Event, setting forth in the form of the Borrowing Base
Certificate the Borrower's good faith estimate as to the calculation
of the Borrowing Base as of the close of business on the Domestic
Business Day prior to the date of delivery of such certificate;
(h) promptly upon the mailing thereof to the shareholders of
the Borrower generally, copies of all financial statements, reports
and proxy statements so mailed;
(i) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) which the Borrower
shall have filed with the Securities and Exchange Commission;
(j) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows that the plan administrator of any Plan has given or
is required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability
under Title IV of ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate, impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for a waiver
of the
44
<PAGE>
minimum funding standard under Section 412 of the Internal Revenue
Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice
under Section 4063(a) of ERISA of withdrawal from any Plan as
described in Section 4063 of ERISA, a copy of such notice; (vii) fails
to make any payment or contribution to any Plan which results in the
imposition of a Lien, notice of such failure; or (viii) makes any
amendment to any Plan which requires posting a bond or other security
under Section 307 of ERISA, a copy of the notice required under
Section 307(e) of ERISA; and
(k) from time to time such additional information regarding
the Borrowing Base or the financial position or business of the
Borrower as the Required Lenders may reasonably request, which may
include a Borrowing Base Certificate, to be dated as of and delivered
to the Administrative Agent one Domestic Business Day after the date
on which such request is effective, setting forth the Borrower's good
faith estimate as to the calculation of the Borrowing Base as of the
close of business on the date of such request.
SECTION 5.2. Maintenance of Property; Insurance. (a) The
----------------------------------
Borrower will keep, and will cause each Significant Subsidiary to
keep, all property useful and necessary in its business as then
conducted in good working order and condition, ordinary wear and tear
excepted.
(b) The Borrower will maintain, to the extent commercially
available, (i) physical damage insurance on substantially all its real
and personal property in the United States (including all Inventories
and books and records relating to any proceeds of Inventories) on an
"All Risks" form subject to normal exclusions (including the perils of
flood and quake) on a repair and replacement cost basis (or, in the
case of idle properties, actual cash value basis) for all such
property in an amount not less than $90,000,000 (subject to a
deductible amount or retention not to exceed $10,000,000) and
consequential loss coverage for extra expense, (ii) public liability
insurance (including products liability coverage) in an amount not
less than $50,000,000 (subject to a deductible amount or retention not
to exceed $10,000,000), and (iii) such other insurance coverage in
such amounts and with respect to such risks relating to the Borrower's
Collateral as the Required Lenders may reasonably request. All such
insurance shall be provided by insurers having an A.M. Best
policyholders rating of not less than A- or by the insurers set forth
in Exhibit I hereto, as such exhibit may be modified from time to time
by the Administrative Agent (with the consent of the Required
Lenders). Prior to the Closing Date, the Borrower will cause the
Collateral Agent to be named as an insured party and loss payee, on
behalf of the Secured Parties, on each insurance policy covering risks
relating to any of its Inventories and books and records relating to
any proceeds of Inventories. Each such insurance policy in effect
during the term of this Agreement shall include effective waivers by
the insurer of all claims for insurance premiums against the
Collateral Agent or any other Secured Party, provide that all
insurance proceeds in excess of deductible amounts or retentions which
are payable in respect of losses relating to Inventories and books and
records shall be adjusted with and payable to the Collateral Agent,
and provide that no cancellation or termination thereof shall be
effective until at least 30 days (or, if such cancellation or
termination is for non-payment of premiums, 10 days) after receipt by
the Collateral Agent of written notice thereof. The
45
<PAGE>
Collateral Agent will consult with the Borrower before agreeing to any
adjustment of insurance proceeds covered by the preceding sentence.
If, in the opinion of the Borrower, commercially available insurance
is not available on reasonable terms, the Borrower shall so notify the
Agents and the Lenders and, with the consent of the Required Lenders
(which consent shall not be unreasonably withheld), may elect not to
purchase such insurance; provided that if the Borrower shall not have
received notice of disapproval from the Required Lenders within 60
days of receipt by the Lenders of such notice from the Borrower, the
Lenders shall be deemed to have consented, for purposes of this
Section 5.2(b), to the election not to purchase such insurance. The
Borrower will deliver to the Lenders (i) on the date of the first
Borrowing or Issuance hereunder and within 95 days after the end of
each fiscal year of the Borrower, a certificate dated such date
showing the total amount of insurance coverage as of such date, (ii)
from time to time true and complete copies of such insurance policies
of the Borrower (or, if the Borrower does not have such insurance
policies in its possession, evidence thereof) relating to such
insurance coverage as the Required Lenders through the Administrative
Agent may request, (iii) within 15 days of receipt of notice from any
insurer, a copy of any notice of cancellation or material adverse
change in coverage from that existing on the date of this Agreement
and (iv) within 15 days of any cancellation or nonrenewal of coverage
by the Borrower, notice of such cancellation or nonrenewal.
SECTION 5.3. Compliance with Laws. The Borrower will
--------------------
comply, and cause each Significant Subsidiary to comply, with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental
Laws and ERISA and the rules and regulations thereunder) except where
failure to comply would not have a material adverse effect on the
Borrower and its Significant Subsidiaries, considered as a whole, or
where the necessity of compliance therewith is being contested in good
faith by appropriate proceedings.
SECTION 5.4. Inspection of Property, Books and Records. The
-----------------------------------------
Borrower will keep, and will cause each Subsidiary to keep, proper
books of record and account reflecting its business and activities;
and will permit, and will cause each Subsidiary to permit,
representatives of any Lender at such Lender's expense to visit and
inspect any of their respective properties, to examine and make
abstracts from any of their respective books and records (including
those books and records, whether or not located on its property, which
are under the control of or in the possession of EDS) and to discuss
their respective affairs, finances and accounts with their respective
officers, employees, independent public accountants and with EDS, all
during normal business hours and as often as may reasonably be
desired; provided that the Borrower may, at its option, have one or
more employees or representatives present at any such inspection,
examination or discussion.
SECTION 5.5. Compliance with Certain Covenants in the
----------------------------------------
Indenture. The Borrower will fully comply with the terms and
- ---------
provisions of Sections 5.04, 5.05 and 5.07 of the Indenture dated
March 1, 1976 between the Borrower and Chemical Bank, as Trustee,
relating to the Borrower's 8 3/8% Debentures due March 1, 2001, as in
effect on the date hereof (the "Indenture"). The definitions
contained in the Indenture of any and all terms or words employed.
46
<PAGE>
in the above enumerated provisions of the Indenture shall be fully
applicable for purposes of this Section 5.5 except that:
(i) the reference to the "Corporation" in Sections 5.04,
5.05 and 5.07 shall be read as the "Borrower";
(ii) the reference to the "Indenture" in Section 5.04
shall be read as "Agreement"; and
(iii) the references to "Debentures" in Sections 5.04
and 5.07 shall be read as "Secured Obligations (as defined in
the Inventory Security Agreement)".
The foregoing covenant shall continue in full force and
effect as though the above-enumerated provisions of the Indenture were
set forth in full herein notwithstanding any waiver of performance
thereof pursuant to the Indenture or any modification, amendment or
termination of such provisions or the redemption, retirement or
repayment in full of the 8 3/8% Debentures issued under the Indenture
or the satisfaction and discharge of the Indenture pursuant to Article
Ten thereof or otherwise.
SECTION 5.6. Minimum Adjusted Consolidated Tangible Net
------------------------------------------
Worth. Adjusted Consolidated Tangible Net Worth will not be, at the
- -----
end of any calendar quarter, less than the sum of (i) $600,000,000 and
(ii) 50% of consolidated net income (if positive) of the Borrower and
its Consolidated Subsidiaries for each fiscal quarter of the Borrower,
commencing with the fiscal quarter ended June 30, 1995.
SECTION 5.7. Sale of Borrower's Collateral. From and after
-----------------------------
the date of the first Borrowing, the Borrower will not sell or
otherwise transfer any Borrower's Collateral without the consent of
all of the Lenders, which consent shall not be unreasonably withheld,
unless
(i) no Enforcement Notice or Automatic Release
Termination (as defined in the Inventory Security Agreement)
is in effect and no event specified in clause (h) or (i) of
Section 6.1 has occurred and is continuing with respect to
the Borrower;
(ii) (A) such sale or transfer is of Inventories in the
ordinary course of business or
(B) if such sale occurs in connection with the
disposition by the Borrower of all or any significant portion
of a facility at which, or a business in connection with
which, Inventories are held, such sale is of such
Inventories, and the Borrower has delivered to the
Administrative Agent prior to, but no more than three
Domestic Business Days before, the date of closing of such
sale or transfer a
47
<PAGE>
certificate signed by the Chief Financial Officer, the
Treasurer or the Controller of the Borrower certifying:
(x) that immediately after such closing the
Applicable Percentage of the Secured Principal Amount
will not exceed the attached good faith projection of
the Borrowing Base (set forth in the form of the
Borrowing Base Certificate) on the date of such closing,
adjusted to exclude the Borrower's Collateral being sold
or transferred,
(y) the amount, if any, by which the Secured
Principal Amount will have to be reduced in order for
such certificate to be true and correct and the
arrangements that have been made for such reduction, and
(z) that attached is a true and correct copy of the
portion of the contract of sale or transfer which
contains as a condition to closing a condition that the
Borrower shall have complied with this Section; and
(iii) in the case of a sale or transfer described in
clause (ii)(B) above, immediately after the closing referred
to therein the Applicable Percentage of the Secured Principal
Amount will not exceed the Borrowing Base.
SECTION 5.8. Use of Proceeds. The proceeds of the Loans
---------------
made under this Agreement will be used by the Borrower for general
corporate purposes. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any "margin stock" within the meaning
of Regulation U.
SECTION 5.9. Mergers and Sales of Assets. The Borrower will
---------------------------
not (i) consolidate or merge with or into any other Person or (ii)
except as permitted by Section 5.7, sell, lease or otherwise transfer,
directly or indirectly, all or substantially all of the assets of the
Borrower and its Subsidiaries, taken as a whole, to any other Person;
provided that the Borrower may merge with another Person (other than
the Special Purpose Members) if the Borrower is the corporation
surviving such merger and after giving effect to such merger, no
Default shall have occurred and be continuing.
SECTION 5.10. Environmental Matters. The Borrower will
---------------------
promptly give to the Lenders notice in writing of any complaint,
order, citation or notice of violation with respect to, or if the
Borrower becomes aware of, (i) the existence or alleged existence of a
violation of any applicable Environmental Law, (ii) any Release into
the environment, (iii) the commencement of any cleanup pursuant to or
in accordance with any applicable Environmental Law of any Hazardous
Substances, (iv) any pending legislative or threatened proceeding for
the termination, suspension or non-renewal of any permit required
under any applicable Environmental Law, (v) any property of the
Borrower or any
48
<PAGE>
Subsidiary that is or will be subject to a Lien imposed pursuant to
any Environmental Law, (vi) any pending legislative changes to
existing Environmental Laws, and (vii) any proposed acquisitions or
leasing of property, which, in each of cases (i) through (vii) above,
individually or in the aggregate, could have a material adverse effect
on the Borrower and its Consolidated Subsidiaries, considered as a
whole.
ARTICLE 6
DEFAULTS
SECTION 6.1. Events of Default. If one or more of the
-----------------
following events ("Events of Default") shall have occurred and be
continuing: (a) the Borrower shall fail to pay (i) any principal of
any Loan or any Reimbursement Obligation when due, (ii) any interest
on any Loan or Reimbursement Obligation or any Letter of Credit Fees
within two Domestic Business Days after the due date thereof, (iii)
any Commitment Fees within five Domestic Business Days after the due
date thereof or (iv) any other amount payable hereunder within five
Domestic Business Days after the later of the due date thereof and the
date on which the Borrower is notified of the amount thereof; or
(b) the Borrower shall fail to observe or perform any
covenant contained in Section 5.1(e), 5.1(f), 5.6, 5.7 or 5.9, or
shall fail to deliver a Borrowing Base Certificate pursuant to Section
5.1(g) or 5.1(k); or
(c) the Borrower shall fail to observe or perform any
covenant contained in Section 5.5 for 60 days after written notice
thereof has been given to the Borrower by the Administrative Agent at
the request of any Lender; or
(d) the Borrower shall fail to observe or perform any
covenant or agreement contained in any of the Financing Documents
(other than those covered by clause (a), (b) or (c) above) for 30 days
after written notice thereof has been given to the Borrower by the
Administrative Agent at the request of any Lender; or
(e) any representation, warranty, certification or statement
made by the Borrower in any of the Financing Documents or in any
certificate, financial statement or other document delivered pursuant
to the Financing Documents shall prove to have been incorrect in any
material respect when made; or
49
<PAGE>
(f) the Borrower and its Subsidiaries shall fail to pay when
due, or within any applicable grace period, (i) any payment in respect
of Secured Tax Exempt Debt or (ii) payments aggregating more than
$1,000,000 in respect of Debt of the Borrower or any of its
Subsidiaries (other than the Loans, the Reimbursement Obligations and
Secured Tax Exempt Debt) and Guarantees by the Borrower or any of its
Subsidiaries; or
(g) one or more events or conditions shall occur which result
in a default under any agreement or agreements in respect of Debt of
the Borrower or any Subsidiary and the aggregate principal amount of
such Debt exceeds $10,000,000 and as a consequence of such default or
defaults the Borrower or any of its Subsidiaries shall make any
payment or give or agree to give any consideration or benefit of any
kind (including, without limitation, any increased compensation,
prepayment, shortening of maturities, security or other credit
support) to the holders of such Debt and such payment, consideration
or benefit is determined by the Required Lenders, after taking into
account any payment, consideration or benefit made, given or agreed to
be given by such holders to the Borrower or any of its Subsidiaries
(other than a waiver of such default), to be a material benefit to the
holders of such Debt; or
(h) the Borrower or any Significant Subsidiary shall commence
a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing; or
(i) an involuntary case or other proceeding shall be
commenced against the Borrower or any Significant Subsidiary seeking
liquidation, reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the Borrower or
any Significant Subsidiary under the federal bankruptcy laws as now or
hereafter in effect; or
(j) any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $5,000,000 which it
shall have become liable to pay under Title IV of ERISA; or notice of
intent to terminate a Plan or Plans having aggregate Unfunded
Liabilities in excess of $10,000,000 (collectively, a "Material Plan")
shall be filed under Title IV of ERISA by any member of the ERISA
Group, any plan administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to administer any
Material Plan; or a "default", within the meaning of Section
4219(c)(5) of ERISA, shall occur with respect to one or more
Multiemployer Plans which could cause one or more members of the
50
<PAGE>
ERISA Group to incur an immediate payment obligation under Title IV of
ERISA for an amount or amounts aggregating in excess of $5,000,000; or
any applicable law, rule or regulation is adopted, changed or
interpreted, or the interpretation or administration thereof is
changed, in each case after the date hereof, by any governmental
authority or agency or by any court (a "Change in Law"), or, as a
result of a Change in Law, an event occurs following a Change in Law,
with respect to or otherwise affecting one or more Plans,
Multiemployer Plans or Benefit Arrangements, which in the reasonable
opinion of the Required Lenders, would have a material adverse effect
on the priority of the Security Interests; or
(k) a judgment or order for the payment of money in excess of
$5,000,000 shall be entered by a court of record against the Borrower
or any Subsidiary and such judgment or order shall continue
unsatisfied and unstayed for a period of 10 days (or such other period
of time as may be provided under applicable state law for obtaining a
stay of judgment); or
(l) a federal tax lien under Section 6321 of the Internal
Revenue Code or a Lien under Title I or Title IV of ERISA or Section
412 of the Internal Revenue Code shall have arisen against any member
of the ERISA Group (a "Federal Lien") and the aggregate amount secured
by Federal Liens exceeds $500,000; or
(m) the Lien created by the Inventory Security Agreement
shall at any time and for any reason not constitute a valid and
perfected Lien subject to no prior or equal Lien (other than Permitted
Liens) or the Borrower shall so assert in writing;
then, and in every such event, the Administrative Agent shall
(i) if requested by Lenders having more than 66 2/3% in aggregate
amount of the Commitments, by notice to the Borrower terminate the
Commitments and they shall thereupon terminate and (ii) if requested
by Lenders holding Notes evidencing more than 66 2/3% in aggregate
principal amount of the Loans, by notice to the Borrower declare the
Notes (and any Reimbursement Obligations together with accrued
interest thereon and all Fees and other amounts payable by the
Borrower hereunder) to be, and the same shall thereupon become,
immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the
Borrower; provided that in the case of any of the Events of Default
specified in clause (h) or (i) above with respect to the Borrower,
without any notice to the Borrower or any other act by the
Administrative Agent or the Lenders, the Commitments shall thereupon
terminate and the Notes (together with accrued interest thereon and
all Fees and other amounts payable by the Borrower hereunder) shall
become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by
the Borrower. If any Event of Default shall occur and be continuing
or Commitments are terminated pursuant to Section 2.10(ii) and, in
each case, any Loans, Letters of Credit or Reimbursement Obligations
are then outstanding, the Administrative Agent shall, upon written
request of the Required Lenders, give an Enforcement Notice (as
defined in the Inventory Security
51
<PAGE>
Agreement) pursuant to the Inventory Security Agreement. The Borrower
shall comply with Section 2.2(h) with respect to Letters of Credit.
Whether or not Commitments are terminated, the Administrative Agent
shall, upon written request of the Required Lenders, instruct the L/C
Issuing Banks to timely give notice that outstanding Letters of Credit
having automatic renewal provisions will not be renewed. The
Administrative Agent shall promptly advise the Borrower, each Lender,
Morgan Guaranty, as administrative agent and J.P. Morgan Delaware, as
structuring and collateral agent under the Receivable Purchase
Agreement of the giving of such Enforcement Notice.
SECTION 6.2. Notice of Default. The Administrative Agent
-----------------
shall give notice to the Borrower under Section 6.1(c) or (d) promptly
upon being requested to do so by any Lender and shall thereupon notify
all the Lenders thereof.
ARTICLE 7
THE ADMINISTRATIVE AGENT
SECTION 7.1. Appointment and Authorization. Each Lender
-----------------------------
irrevocably appoints and authorizes the Agents to take such action as
agent on its behalf and to exercise such powers under the Financing
Documents as are delegated to the Agents by the terms hereof or
thereof, together with all such powers as are reasonably incidental
thereto. Each Lender hereby irrevocably grants the Collateral Agent
or its designated agent, if any, an irrevocable power of attorney,
with full power of substitution, coupled with an interest, at any time
and from time to time, to take in the name of such Lender all actions
with respect to any Collateral which the Collateral Agent may deem
necessary or advisable to realize upon the Security Interest in any
Collateral. Each Lender hereby agrees to be bound by the provisions
of the Inventory Security Agreement.
SECTION 7.2. Administrative Agent and Affiliates. Morgan
-----------------------------------
Guaranty shall have the same rights and powers under this Agreement as
any other Lender and may exercise or refrain from exercising the same
as though it were not the Administrative Agent, and Morgan Guaranty
and its affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or any
Subsidiary or Affiliate of the Borrower as if it were not the
Administrative Agent.
SECTION 7.3. Action by Administrative Agent. The
------------------------------
obligations of the Administrative Agent hereunder are only those
expressly set forth herein. Without limiting the generality of the
foregoing, the Administrative Agent shall
52
<PAGE>
not be required to take any action with respect to any Default, except
as expressly provided in Article 6.
SECTION 7.4. Consultation with Experts. The Administrative
-------------------------
Agent may consult with legal counsel (who may be counsel for the
Borrower), independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
SECTION 7.5. Liability of Administrative Agent. Neither the
---------------------------------
Administrative Agent nor any of its affiliates nor any of their
respective directors, officers, agents or employees shall be liable
for any action taken or not taken by it in connection herewith (i)
with the consent or at the request of the Required Lenders (or, where
required by the terms hereof, the Lenders) or (ii) in the absence of
its own gross negligence or willful misconduct. Neither the
Administrative Agent nor any of its affiliates nor any of their
respective directors, officers, agents, affiliates or employees shall
be responsible for or have any duty to ascertain, inquire into or
verify (i) any statement, warranty or representation made in
connection with this Agreement or any Borrowing hereunder or in
connection with any of the other Financing Documents; (ii) the
performance or observance of any of the covenants or agreements of the
Borrower herein or in any of the other Financing Documents; (iii) the
satisfaction of any condition specified in Article 3 or in any of the
other Financing Documents, except receipt of items required to be
delivered to the Administrative Agent; (iv) the validity,
effectiveness or genuineness of any of the Financing Documents or any
other instrument or writing furnished in connection herewith; or (v)
the existence, genuineness or value of any of the Collateral or the
validity, perfection, priority or enforceability of the Security
Interests. The Administrative Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement,
or other writing (which may be a bank wire, telecopy or similar
writing) believed by it to be genuine or to be signed by the proper
party or parties.
SECTION 7.6. Indemnification. Each Lender shall, ratably in
---------------
accordance with its Commitment, indemnify the Administrative Agent,
its affiliates and their respective directors, officers, agents and
employees (to the extent not reimbursed by the Borrower) against any
cost, expense (including counsel fees and disbursements), claim,
demand, action, loss or liability (except such as result from such
indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with the Financing
Documents or any action taken or omitted by such indemnitees
hereunder.
SECTION 7.7. Credit Decision. Each Lender acknowledges that
---------------
it has, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges
that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking any action under
any of the Financing Documents.
53
<PAGE>
SECTION 7.8. Successor Administrative Agent. The
------------------------------
Administrative Agent may resign at any time by giving written notice
thereof to the Lenders and the Borrower. Upon any such resignation,
the Required Lenders shall have the right, after consultation with the
Borrower, to appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30
days after the retiring Administrative Agent gives notice of
resignation, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent, which shall be
a commercial bank organized or licensed under the laws of the United
States of America or of any State thereof and having a combined
capital and surplus of at least $100,000,000. Upon the acceptance of
its appointment as Administrative Agent hereunder by a successor
Administrative Agent and not before, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of this
Article shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.1. Basis for Determining Interest Rate Inadequate
or Unfair. If on or prior to the first day of any Interest Period for
any CD Loan or Euro-Dollar Loan:
(a) the Administrative Agent is advised by the Reference
Lenders that deposits in Dollars (in the applicable amounts)
are not being offered to the Reference Banks in the relevant
market for such Interest Period, or
(b) Lenders having 50% or more of the aggregate
principal amount of the affected Loans advise the
Administrative Agent that the Adjusted CD Rate or the
Adjusted London Interbank Offered Rate, as the case may be,
as determined by the Administrative Agent will not adequately
and fairly reflect the cost to such Lenders of funding their
CD Loans or Euro-Dollar Loans, as the case may be, for such
Interest Period,
54
<PAGE>
the Administrative Agent shall forthwith give notice thereof
to the Borrower and the Lenders, whereupon until the Administrative
Agent notifies the Borrower that the circumstances giving rise to such
suspension no longer exist, (i) the obligations of the Lenders to make
CD Loans or Euro-Dollar Loans, as the case may be, or to continue or
convert outstanding Loans as or into CD Loans or Euro-Dollar Loans, as
the case may be, shall be suspended and (ii) the Borrower shall repay
in full the then outstanding principal amount of each CD Loan or
Euro-Dollar Loan, as the case may be, together with accrued interest
thereon, on the last day of the then current Interest Period
applicable to such Loan. Concurrently with repaying each such Fixed
Rate Loan of each Lender pursuant to this Section, the Borrower shall
borrow a Base Rate Loan in an equal principal amount from such Lender,
and such Lender shall make such a Base Rate Loan, unless the Borrower
notifies the Administrative Agent at least two Domestic Business Days
before the date of such repayment that it elects not to borrow any
Base Rate Loans on such date. Unless the Borrower notifies the
Administrative Agent at least two Domestic Business Days before the
date of any Fixed Rate Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such date, such
Borrowing shall instead be made as a Base Rate Borrowing.
SECTION 8.2. Illegality. If, after the date of this
----------
Agreement, the adoption of any applicable law, rule or regulation, or
any change in any applicable law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender
(or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible
for any Lender (or its Euro-Dollar Lending Office) to make, maintain
or fund its Euro-Dollar Loans and such Lender shall so notify the
Administrative Agent, the Administrative Agent shall forthwith give
notice thereof to the other Lenders and the Borrower, whereupon until
such Lender notifies the Borrower and the Administrative Agent that
the circumstances giving rise to such suspension no longer exist, the
obligation of such Lender to make Euro-Dollar Loans, or to convert
outstanding Loans into Euro-Dollar Loans, shall be suspended. Before
giving any notice to the Administrative Agent pursuant to this
Section, such Lender shall designate a different Euro-Dollar Lending
Office if such designation will avoid the need for giving such notice
and will not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender. If such Lender shall determine that
it may not lawfully continue to maintain and fund any of its
outstanding Euro-Dollar Loans to maturity and shall so specify in such
notice, the Borrower shall immediately repay in full the then
outstanding principal amount of each such Euro-Dollar Loan, together
with accrued interest thereon. Concurrently with repaying each such
Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in an
equal principal amount from such Lender (on which interest and
principal shall be payable contemporaneously with the related
Euro-Dollar Loans of the other Lenders), and such Lender shall make
such a Base Rate Loan.
SECTION 8.3. Increased Cost and Reduced Return. (a) If
---------------------------------
after the date hereof, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation,
or any change in the interpretation or
55
<PAGE>
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its Applicable Lending
Office) with any request or directive (whether or not having the force
of law) of any such authority, central bank or comparable agency shall
impose, modify or deem applicable any reserve (including, without
limitation, any such requirement imposed by the Board of Governors of
the Federal Reserve System, but excluding (i) with respect to any CD
Loan any such requirement included in the applicable Domestic Reserve
Percentage and (ii) with respect to any Euro-Dollar Loan any such
requirement included in the applicable Euro-Dollar Reserve
Percentage), special deposit, insurance assessment (excluding, with
respect to any CD Loan, any such requirement reflected in the
applicable Assessment Rate) or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender
(or its Applicable Lending Office) or shall impose on any Lender (or
its Applicable Lending Office) or on the United States market for
certificates of deposit or the London interbank market any other
condition affecting its Fixed Rate Loans, its Note or its obligation
to make Fixed Rate Loans and the result of any of the foregoing is to
increase the cost to such Lender (or its Applicable Lending Office) of
making or maintaining any Fixed Rate Loan, or to reduce the amount of
any sum received or receivable by such Lender (or its Applicable
Lending Office) under this Agreement or under its Note with respect
thereto, by an amount deemed by such Lender to be material, then,
within 15 days after demand by such Lender (with a copy to the
Administrative Agent), the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such
increased cost or reduction.
(b) If, after the date hereof, the adoption of any applicable
law, rule or regulation, or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or
compliance by the L/C Issuing Bank or any Lender with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall either (i) impose,
modify or deem applicable any reserve, special deposit or similar
requirement (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System)
against letters of credit issued by the L/C Issuing Bank or any
Lender, or participations in letters of credit by any Lender or (ii)
impose on the L/C Issuing Bank or any Lender any other condition
(including, without limitation, any assessment for Federal deposit
insurance) regarding any Letter of Credit or the L/C Issuing Bank's or
any Lender's obligation to issue, maintain or fund any Letter of
Credit, and the result of any event referred to in clause (i) or (ii)
of this subsection (b) is to increase the cost to the L/C Issuing Bank
or such Lender of issuing, maintaining, participating in or funding
any Letter of Credit (which increase in cost shall be determined on
the basis of the L/C Issuing Bank's or such Lender's reasonable
allocation of the aggregate of such cost increases resulting from such
events), then, within 15 days after demand by the L/C Issuing Bank or
such Lender (with a copy to the Administrative Agent), the Borrower
shall pay to the L/C Issuing Bank or such Lender such additional
amount or amounts as will compensate the L/C Issuing Bank or such
Lender for such increased cost.
56
<PAGE>
(c) If any Lender or L/C Issuing Bank shall have determined
that, after the date hereof, the adoption of any applicable law, rule
or regulation regarding capital adequacy, or any change in any such
law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender or L/C Issuing Bank (or its
Applicable Lending Office) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on capital of such Lender or L/C
Issuing Bank (or its Parent) as a consequence of such Lender's or L/C
Issuing Bank's obligations hereunder to a level below that which such
Lender or L/C Issuing Bank (or its Parent) could have achieved but for
such adoption, change, request or directive (taking into consideration
its policies with respect to capital adequacy) by an amount deemed by
such Lender or L/C Issuing Bank to be material, then from time to
time, within 15 days after demand by such Lender or L/C Issuing Bank
(with a copy to the Administrative Agent), the Borrower shall pay to
such Lender or L/C Issuing Bank such additional amount or amounts as
will compensate such Lender or L/C Issuing Bank (or its Parent) for
such reduction.
(d) Each L/C Issuing Bank and each Lender will promptly
notify the Borrower and the Administrative Agent of any event of which
it has knowledge, occurring after the date hereof, which will entitle
such Lender or L/C Issuing Bank to compensation pursuant to this
Section and will designate a different Lending Office if such
designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of such Lender, be
otherwise disadvantageous to such Lender. A certificate of an L/C
Issuing Bank or a Lender claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error. In
determining such amount, such L/C Issuing Bank or Lender may use any
reasonable averaging and attribution methods. (e) If any Lender
demands compensation under this Section with respect to a Fixed Rate
Loan, the Borrower may at any time, upon at least five Euro-Dollar
Business Days' prior notice to such Lender through the Administrative
Agent, repay in full, without premium (other than as provided in
Section 2.14) or penalty, the then outstanding CD Loans or Euro-Dollar
Loans, as the case may be, of such Lender, together with interest
accrued thereon to the date of repayment. Concurrently with repaying
such Fixed Rate Loans of such Lender, the Borrower shall borrow from
such Lender a Base Rate Loan in an amount equal to the aggregate
principal amount of such Fixed Rate Loans, and such Lender shall make
such a Base Rate Loan.
SECTION 8.4. Taxes. (a) For the purposes of this Section ,
-----
the following terms have the following meanings:
"Taxes" means any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings
imposed with respect to or imposed on any payment by the
Borrower pursuant to this Agreement or under any Note, any
penalties, fines, additions to tax or interest thereon, and
the reasonable costs of defending against the same
57
<PAGE>
excluding (i) in the case of each Lender, each L/C Issuing
Bank and the Agents, taxes imposed on its net income, and
franchise, capital or doing business taxes (other than taxes
imposed by a jurisdiction solely as a result of the
Borrower's connection with such jurisdiction), (ii) in the
case of each Lender or L/C Issuing Bank, any United States
withholding tax imposed on such payments except to the extent
of any United States withholding tax imposed as a result of a
change of law (including a change in any tax treaty to which
the United States is a party) after the later of the date of
this Agreement and the date such person shall become a Lender
or L/C Issuing Bank and (iii) in the case of each Lender,
each L/C Issuing Bank and the Agents, any taxes imposed by a
jurisdiction under the laws of which such Lender, L/C Issuing
Bank or the Agents (as the case may be) is organized or in
which its principal executive office is located or, in the
case of each Lender or L/C Issuing Bank, in which its
Applicable Lending Office is located.
"Other Taxes" means any present or future stamp or
documentary taxes and any other excise or property taxes, or
similar charges or levies, which arise from any payment made
pursuant to this Agreement or from the execution or delivery
of, or otherwise with respect to, this Agreement, the other
Financing Documents, and any penalties, fines, additions to
tax or interest thereon, and the reasonable costs and
expenses in defending against the same, whether arising by
reason of the acts to be performed by the Borrower hereunder
or imposed against the Borrower, any Affiliate of the
Borrower, the property involved or otherwise.
(b) Any and all payments by the Borrower to or for the
account of any Lender, any L/C Issuing Bank or the Agents hereunder or
under any Note shall be made without deduction for any Taxes or Other
Taxes; provided that, if the Borrower shall be required by law to
withhold or deduct any Taxes or Other Taxes from any such payments,
(i) the sum payable shall be increased as necessary so that after
making all required withholdings or deductions (including withholdings
or deductions applicable to additional sums payable under this
Section) such Lender, L/C Issuing Bank or the Agents (as the case may
be) receives an amount equal to the sum it would have received had no
such withholdings or deductions been made, (ii) the Borrower shall
make such withholdings or deductions, (iii) the Borrower shall pay the
full amount withheld or deducted to the relevant taxation authority or
other authority in accordance with applicable law and (iv) the
Borrower shall furnish to the Administrative Agent, at its address
referred to in Section 9.1, the original or a certified copy of a
receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Lender, each L/C
Issuing Bank and each Agent for the full amount of Taxes or Other
Taxes (including, without limitation, any Taxes or Other Taxes imposed
or asserted by any jurisdiction on amounts payable under this Section
8.4) paid by such Lender, L/C Issuing Bank or such Agent (as the case
may be). This indemnification shall be paid within 15 days after such
Lender, L/C Issuing Bank or such Agent (as the case may be) makes
written demand therefor; provided that the Borrower shall not
58
<PAGE>
be required to make any payment pursuant to this Section 8.4(c) more
than five days prior to the due date of the Taxes or Other Taxes
indemnified against hereunder. If a Lender, L/C Issuing Bank or Agent
(as the case may be) shall become aware that it is entitled to claim a
refund (or refund in the form of a credit) (each a "Refund") from a
taxing authority of such Taxes or Other Taxes for which it has been
indemnified by the Borrower or with respect to which the Borrower has
paid additional amounts, pursuant to this Section 8.4, it shall
promptly notify the Borrower of the availability of such Refund and
shall, or if it shall be furnished by the Borrower with an opinion of
counsel selected by the Borrower and reasonably acceptable to it to
the effect that there is a strong likelihood such a Refund is
obtainable it shall, within 15 days after receipt of a written request
by the Borrower, make a claim to such taxing authority for such Refund
at the Borrower's expense if the expected financial costs to such
Lender, L/C Issuing Bank or Agent (as the case may be) of making such
claim will not be substantial taking into account any reimbursement of
such costs by the Borrower; provided that nothing in this subsection
(c) shall be construed to require any Lender, L/C Issuing Bank or
Agent to institute any administrative proceeding (other than the
filing of a claim for any such Refund) or judicial proceeding to
obtain any such Refund. If a Lender, L/C Issuing Bank or Agent (as
the case may be) receives a Refund from a taxing authority of any such
Taxes or Other Taxes for which it has been indemnified by the Borrower
or with respect to which the Borrower has paid additional amounts,
pursuant to this Section 8.4, it shall promptly pay to the Borrower
the amount so received (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section
8.4 with respect to the Taxes or Other Taxes giving rise to such
Refund), net of all reasonable out-of-pocket expenses (including the
net amount of taxes, if any, imposed on such Lender, L/C Issuing Bank
or such Agent with respect to such Refund and the making of such
payment) of such Lender, L/C Issuing Bank or such Agent, and without
interest (other than interest paid by the relevant taxing authority
with respect to such Refund); provided that the Borrower upon the
request of such Lender, L/C Issuing Bank or such Agent, agrees to
repay the amount paid over to the Borrower (plus penalties, interest
or other charges) to such Lender, L/C Issuing Bank or such Agent in
the event such Lender, L/C Issuing Bank or such Agent is required to
repay such Refund to such taxing authority. Nothing contained in this
Section 8.4 shall require any Lender, L/C Issuing Bank or Agent to
make available any of its tax returns (or any other information that
it deems to be confidential or proprietary).
(d) Each Lender or L/C Issuing Bank organized under the laws
of a jurisdiction outside the United States, on or prior to the date
of its execution and delivery of this Agreement in the case of each
Lender or L/C Issuing Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender or L/C Issuing Bank
in the case of each other Lender or L/C Issuing Bank, and from time to
time thereafter if requested in writing by the Borrower (but only so
long as such Lender or L/C Issuing Bank remains lawfully able to do
so), shall provide the Borrower and the Administrative Agent with
Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying
that such Lender or L/C Issuing Bank is entitled to benefits under an
income tax treaty to which the United States is a party which exempts
the Lender or the L/C Issuing Bank from United States withholding tax
or reduces the rate of withholding tax on payments of interest for
59
<PAGE>
the account of such Lender or L/C Issuing Bank or certifying that the
income receivable pursuant to this Agreement is effectively connected
with the conduct of a trade or business in the United States.
(e) For any period with respect to which a Lender or L/C
Issuing Bank has failed to provide the Borrower or the Administrative
Agent with the appropriate form pursuant to Section 8.4(d) (unless
such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which such form originally was required to
be provided), such Lender or L/C Issuing Bank shall not be entitled to
indemnification under Section 8.4(b) or (c) with respect to Taxes
imposed by the United States; provided that if a Lender or L/C Issuing
Bank, which is otherwise exempt from or subject to a reduced rate of
withholding tax, becomes subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps
as such Lender or L/C Issuing Bank shall reasonably request to assist
such Lender or L/C Issuing Bank to recover such Taxes.
(f) Notwithstanding anything to the contrary in this Section
8.4, if the Internal Revenue Service determines that any Lender, L/C
Issuing Bank or Agent is a conduit entity participating in a conduit
financing arrangement as defined in Section 7701(1) of the Internal
Revenue Code and any current or future regulation thereunder (a
"Conduit Financing Arrangement") with respect to the Loans or the
Letters of Credit, without the involvement of the Borrower or any of
its Affiliates, then the Borrower shall have no obligation under this
Section 8.4 to pay additional amounts or indemnify any Lender, L/C
Issuing Bank or Agent for any Taxes or Other Taxes to the extent the
amount of such additional amounts, Taxes or Other Taxes exceeds the
amount that would otherwise have been payable, withheld or deducted
had the Internal Revenue Service not made such a determination. Each
Lender, L/C Issuing Bank and Agent hereby represents that it is not a
conduit entity participating in a Conduit Financing Arrangement with
respect to the Loans or the Letters of Credit.
(g) If the Borrower is required to pay any indemnification or
additional amounts to, with respect to or for the account of any
Lender, L/C Issuing Bank or Agent pursuant to this Article, then such
Borrower, L/C Issuing Bank or Agent will change the jurisdiction of
its Applicable Lending office or take other appropriate steps if, in
the judgment of such Lender, L/C Issuing Bank or Agent, such change or
steps (i) will eliminate or reduce any such indemnification or
additional payment which may thereafter accrue and (ii) is not
otherwise disadvantageous to such Lender, L/C Issuing Bank or Agent.
If such Lender, L/C Issuing Bank or Agent does not change its
Applicable Lending Office or take other appropriate steps, the
Borrower may replace such Lender, L/C Issuing Bank or Agent; provided
that the Borrower has paid to such Lender, L/C Issuing Bank or Agent
any amounts accrued under this Section 8.4.
SECTION 8.5. Base Rate Loans Substituted for Affected Fixed
----------------------------------------------
Rate Loans. If (i) the obligation of any Lender to make, or convert
- ----------
outstanding Loans to, Euro-Dollar Loans has been suspended pursuant to
Section 8.2 or (ii) any Lender has demanded compensation under Section
8.3 or 8.4 with respect to its CD Loans or Euro-Dollar Loans and the
Borrower shall, by at least five Euro-Dollar Business Days' prior
notice to such Lender through the
60
<PAGE>
Administrative Agent, have elected that the provisions of this Section
shall apply to such Lender, then, unless and until such Lender
notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer exist:
(a) all Loans which would otherwise be made by such Lender as
(or continued as or converted into) CD Loans or Euro-Dollar Loans, as
the case may be, shall instead be Base Rate Loans (on which interest
and principal shall be payable contemporaneously with the related
Fixed Rate Loans of the other Lenders); and
(b) after each of its CD Loans or Euro-Dollar Loans, as the
case may be, has been repaid (or converted to a Base Rate Loan), all
payments of principal which would otherwise be applied to repay such
Fixed Rate Loans shall be applied to repay its Base Rate Loans
instead.
If such Lender notifies the Borrower that the circumstances
giving rise to such notice no longer apply, the Borrower shall have
the option to borrow a CD Loan or a Euro-Dollar Loan, as the case may
be, from such Lender on the first day of the next succeeding Interest
Period applicable to each related Borrowing in the amount of the Fixed
Rate Loan which would have been outstanding from such Lender as part
of such Borrowing if the provisions of Section 8.2, 8.3 or 8.4 had
never applied, and concurrently with each such Borrowing shall repay
an equal principal amount of such Lender's outstanding Base Rate
Loans.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1. Notices. All notices, requests and other
-------
communications to any party hereunder shall be in writing (including
bank wire, facsimile transmission or similar writing) and shall be
given to such party: (a) in the case of the Borrower or either Agent,
at its address or facsimile number set forth on the signature pages
hereof, (b) in the case of any L/C Issuing Bank or any Lender, at its
address or facsimile number set forth in its Administrative
Questionnaire or (c) in the case of any party, such other address or
facsimile number as such party may hereafter specify for the purpose
by notice to the Administrative Agent and the Borrower. Each such
notice, request or other communication shall be effective (i) if given
by facsimile transmission, when transmitted to the facsimile number
specified in this Section and confirmation of receipt is received,
(ii) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid
or
61
<PAGE>
(iii) if given by any other means, when delivered at the address
specified in this Section; provided that notices to the Administrative
Agent under Article 2 or Article 8" shall not be effective until
received.
SECTION 9.2. No Waivers. No failure or delay by either
----------
Agent, any L/C Issuing Bank or any Lender in exercising any right,
power or privilege hereunder or under any other Financing Document
shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and
remedies of the Agents, the L/C Issuing Banks and the Lenders under
the Financing Documents are cumulative and not exclusive of any rights
or remedies which the Agents, the L/C Issuing Bank and the Lenders
would otherwise have.
SECTION 9.3. Expenses; Indemnification. (a) The Borrower
-------------------------
shall pay (i) all reasonable out-of-pocket expenses of the Agents,
including fees and disbursements of special counsel for the Agents, in
connection with the preparation and interpretation of this Agreement
and the other Financing Documents, any waiver or consent hereunder or
thereunder or any amendment hereof or thereof, any Default or alleged
Default hereunder or any Increased Coverage Event or alleged Increased
Coverage Event and (ii) if an Event of Default occurs, all reasonable
out-of-pocket expenses incurred by the Agents, each L/C Issuing Bank
and each Lender, including (without duplication) the fees and
disbursements of outside counsel and the allocated cost of inside
counsel, in connection with such Event of Default and collection,
bankruptcy, insolvency and other enforcement proceedings resulting
therefrom, including out-of-pocket expenses incurred in enforcing any
of the Financing Documents.
(b) The Borrower shall pay the Collateral Agent upon demand
for all amounts arising out of (i) the preparation of Collateral
Reports, if any, and (ii) the preparation of analyses, if any, of the
current market value of the Inventories included in the Borrowing Base
as of the end of each quarter of the Borrower's fiscal year.
(c) The Borrower agrees to indemnify and hold harmless, the
Agents, the L/C Issuing Banks and each Lender and each of their
respective directors, officers, affiliates, shareholders, employees,
agents and each legal entity, if any, who controls any such Person
(each, an "Indemnitee") forthwith on demand, from and against any and
all losses, claims, damages, liabilities, costs and expenses
(including, without limitation, all reasonable fees and disbursements
of counsel, expenses incurred by their respective credit recovery
groups, expenses of settlement or litigation or preparation therefor
and the reasonable expenses of investigation by engineers,
environmental consultants and similar technical personnel) which any
Indemnitee may incur or which may be asserted against any Indemnitee
by any Person in connection with any investigative, administrative or
judicial notice or proceeding (whether or not such Indemnitee shall be
a designated party thereto) relating to, arising out of or in
connection with (i) any of the Financing Documents or any actual or
proposed use of Letters of Credit issued pursuant hereto or of
proceeds of Loans hereunder or (ii) any and all Environmental
Liabilities; provided that no Indemnitee shall have the right to be
indemnified hereunder for (x) its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction, (y) any
breach of its obligations
62
<PAGE>
hereunder or (z) any liabilities or expenses for which the Borrower is
obligated to make any payment to such Indemnitee under any other
provision of this Agreement or any of the other Financing Documents;
and provided further that the Borrower shall not be liable for any
settlements entered into by any Indemnitee without its consent.
Without limiting the generality of the foregoing, the Borrower hereby
waives all rights for contribution or any other rights of recovery
with respect to liabilities, losses, damages, costs and expenses
arising under or related to Environmental Laws that it might have by
statute or otherwise against any Lender by reason of its being a
signatory Lender under this Agreement.
Promptly after receipt by an Indemnitee of notice of the
commencement of any action, such Indemnitee shall, if a claim in
respect thereof is to be made against the Borrower under this
subsection (c), notify the Borrower of the commencement thereof. In
case any such action is brought against any Indemnitee and it notifies
the Borrower of the commencement thereof, the Borrower shall be
entitled to participate therein and, to the extent that it may wish,
to assume the defense thereof, with counsel reasonably satisfactory to
such Indemnitee, and after notice from the Borrower to such Indemnitee
of its election so to assume the defense thereof, the Borrower shall
not be liable to such Indemnitee under this subsection (c) for any
legal or other expenses subsequently incurred by such Indemnitee in
connection with the defense thereof other than reasonable costs of
investigation; provided that if the named parties in any such action
include both the Borrower and any Indemnitee and representation of
both parties by the same counsel would be inappropriate due to actual
or potential differing interests between them then the Indemnitees
shall have the right to separate counsel (the fees and expenses of
which shall be at the expense of the Borrower) and the Borrower shall
not have the right to assume the defense of any such action. It is
understood that the Borrower shall not in connection with any action
or related actions be liable for the fees and expenses of more than
one separate firm for all Indemnitees.
SECTION 9.4. Sharing of Set-Offs. Each Lender agrees that
-------------------
if it shall, by exercising any right of set-off or counterclaim or
otherwise, receive payment of a proportion of the aggregate amount
then due to it with respect to the principal of and interest on the
Notes held by it and its participation in the Reimbursement
Obligations and interest (if any) thereon or Commitment or Letter of
Credit Participation Fees (collectively, its "Relevant Obligations")
which is greater than the proportion received by any other Lender in
respect of the Relevant Obligations of such other Lender, the Lender
receiving such proportionately greater payment shall purchase such
participations in the Relevant Obligations held by or owing to the
other Lenders, and such other adjustments shall be made, as may be
required so that all such payments with respect to the Relevant
Obligations of the Lenders shall be shared by the Lenders pro rata;
provided that nothing in this Section shall impair the right of any
Lender to exercise any right of set-off or counterclaim it may have
and to apply the amount subject to such exercise to the payment of
indebtedness of the Borrower other than its Relevant Obligations. The
Borrower agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in a Note or Letter
of Credit, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and other
rights with respect to such
63
<PAGE>
participation as fully as if such holder of a participation were a
direct creditor of the Borrower in the amount of such participation.
SECTION 9.5. Amendments and Waivers. Any provision of this
----------------------
Agreement or the Notes may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and
the Required Lenders (and, if the rights or duties of either Agent or
any L/C Issuing Bank are affected thereby, by such Person); provided
that no such amendment or waiver shall, unless signed by all the
Lenders, (i) increase or decrease the Commitment of any Lender (except
for a ratable decrease in the Commitments of all Lenders) or subject
any Lender to any additional obligation, except as provided in Section
9.6, (ii) reduce the principal of or rate of interest on any Loan or
any Fees hereunder, (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any Fees hereunder, (iv)
change the definition of "Borrowing Base", "Eligible Inventories",
"Finished and Semifinished Inventories", "Inventories", "Raw Materials
Inventories", "Applicable Percentage", "Secured Principal Amount" or
change Section 2.12, (v) extend the Termination Date or (vi) change
the percentage of the Commitments or of the aggregate unpaid principal
amount of the Notes, or the number of Lenders, which shall be required
for the Lenders or any of them to take any action under this Section
or any other provision of this Agreement.
SECTION 9.6. Successors and Assigns. (a) The provisions of
----------------------
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except
that the Borrower may not assign or otherwise transfer any of its
rights under this Agreement without the prior written consent of all
Lenders. (b) Any Lender may at any time grant to one or more lenders
or other institutions (each a "Participant") participating interests
in its Commitment or any or all of its Loans. In the event of any
such grant by a Lender of a participating interest to a Participant,
whether or not upon notice to the Borrower and the Administrative
Agent, such Lender shall remain responsible for the performance of its
obligations hereunder, and the Borrower and the Administrative Agent
shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement. Any agreement pursuant to which any Lender may grant such
a participating interest shall provide that such Lender shall retain
the sole right and responsibility to enforce the obligations of the
Borrower hereunder including, without limitation, the right to approve
any amendment, modification or waiver of any provision of this
Agreement; provided that such participation agreement may provide that
such Lender will not agree to any modification, amendment or waiver of
this Agreement described in clause (i), (ii), (iii) or (v) of Section
9.5# without the consent of the Participant. The Borrower agrees that
each Participant shall, to the extent provided in its participation
agreement, be entitled to the benefits of Article 8" with respect to
its participating interest. An assignment or other transfer which is
not permitted by subsection (c) or (e) below shall be given effect for
purposes of this Agreement only to the extent of a participating
interest granted in accordance with this subsection (b). In the event
of any such grant by a Lender of a participating interest to a
Participant, the Lender shall give notice of such participation to the
Borrower and the Administrative Agent.
64
<PAGE>
(c) Any Lender may at any time assign to one or more lenders,
institutions or Persons (each an "Assignee") all, or a proportionate
part of all (such portion to comprise a Commitment and Receivables
Commitment of not less than $5,000,000 and to be for an equal
percentage of such Lender's Commitment hereunder and its Receivables
Commitment under the Receivables Purchase Agreement and after giving
effect to such assignment, the aggregate Commitment and Receivables
Commitment retained by the assigning Lender shall be in an aggregate
amount of not less than $5,000,000) of its rights and obligations
under this Agreement and the Receivables Purchase Agreement and such
Assignee shall assume such rights and obligations, pursuant to an
Assignment and Assumption Agreement in substantially the form of
Exhibit J hereto executed by such Assignee and such transferor Lender,
with (and subject to) the subscribed consent of the Borrower, which
shall not be unreasonably withheld, the Administrative Agent and the
L/C Issuing Banks; provided that if (i) an Assignee is a creditworthy
affiliate of such transferor Lender or was a Lender immediately prior
to such assignment, or (ii) an Event of Default has occurred and is
continuing and the Commitments have been terminated in their entirety,
and, such Assignee is not substantially engaged in the manufacture or
sale of steel or steel products, either directly or through a
Subsidiary or Affiliate then, in each such case, no consent of the
Borrower shall be required. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Lender of
an amount equal to the purchase price agreed between such transferor
Lender and such Assignee, such Assignee shall be a Lender party to
this Agreement and shall have all the rights and obligations of a
Lender with a Commitment as set forth in such instrument of
assumption, and the transferor Lender shall be released from its
obligations hereunder to a corresponding extent, and no further
consent or action by any party shall be required; provided that, if at
the time of such assignment, any Syndicated Letter of Credit is then
outstanding, then the transferor Lender, Morgan Guaranty, in its
capacity as L/C Issuing Bank, the Administrative Agent and the
Borrower shall make appropriate arrangements so that (i) a new
Syndicated Letter of Credit (a "Replacement Letter of Credit") is
issued by Morgan Guaranty, in its capacity as L/C Issuing Bank,
providing that the Assignee and the transferor Lender, to the extent
of its retained Commitment hereunder, if any, are severally obligated
to the beneficiary to pay any drawings thereunder ratably in
proportion to their respective Commitments (their respective
"Percentages"), or (ii) in the event that a Replacement Letter of
Credit is not issued, the Assignee shall agree in writing with the
transferor Lender and the Borrower that, upon any draw under a
Syndicated Letter of Credit, the Assignee shall pay to the transferor
Lender the Assignee's Percentage of such draw. Upon the consummation
of any assignment pursuant to this subsection (c), the transferor
Lender, the Administrative Agent and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to
the Assignee. In connection with any such assignment, the transferor
Lender shall pay to the Administrative Agent an administrative fee for
processing such assignment in the amount of $2,500. If the Assignee
is not incorporated under the laws of the United States or a state
thereof, it shall deliver to the Borrower and the Administrative Agent
certification as to exemption from deduction or withholding of any
United States Federal income taxes in accordance with Section 8.4.
Each Lender may furnish any confidential information concerning the
Borrower in the possession of such Lender from time to time to
Assignees and Participants (including prospective Assignees and
Participants)
65
<PAGE>
which have agreed in a writing delivered to the Borrower to be bound
by the provisions of Section 9.8 hereof.
(d) If any Reference Bank assigns its Notes to an
unaffiliated institution, the Administrative Agent shall in
consultation with the Borrower and with the consent of the Required
Lenders, appoint another bank to act as a Reference Bank hereunder.
(e) Any Lender may at any time assign all or any portion of
its rights under this Agreement and its Note to a Federal Reserve
Bank. No such assignment shall release the transferor Lender from its
obligations hereunder.
(f) No Assignee, Participant or other transferee of any
Lender's rights shall be entitled to receive any greater payment under
Section 8.3 or 8.4 than such Lender would have been entitled to
receive with respect to the rights transferred, unless such transfer
is made with the Borrower's prior written consent or by reason of the
provisions of Section 8.2, 8.3 or 8.4 requiring such Lender to
designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
SECTION 9.7. Margin Stock Collateral. Each of the Lenders
-----------------------
represents to the Administrative Agent and each of the other Lenders
that it in good faith is not relying upon any "margin stock" (as
defined in Regulation U) as collateral in the extension or maintenance
of the credit provided for in this Agreement.
SECTION 9.8. Confidentiality. The Agents and each Lender
---------------
agree for the benefit of the Borrower to keep confidential any
proprietary or financial information obtained by the Agents or such
Lender, as the case may be, based on a review of the books and records
of the Borrower or any Subsidiary pursuant to Section 5.4 and any
other information to the extent such information has been stated by
the Borrower to be confidential; provided that nothing herein shall
prevent the Agents or any Lender from disclosing such information (i)
to the Agents or any other Lender in connection with the transactions
contemplated by the Financing Documents, (ii) to its officers,
directors, employees, agents, attorneys and accountants who have a
need to know such information in accordance with customary banking
practices and to any of its Affiliates who need to know such
information in connection with administering the transactions
contemplated by the Financing Documents and, in any case, who receive
such information having been made aware of the restrictions set forth
in this Section, (iii) upon the order of any court or administrative
agency, (iv) upon the request or demand of any regulatory agency or
authority having jurisdiction over such party, (v) which has been
publicly disclosed, (vi) which has been obtained from any Person other
than the Borrower and its Affiliates; provided that such Person is not
known to it to be bound by a confidentiality agreement with the
Borrower or its Affiliates or known to it to be otherwise prohibited
from transmitting the information to it by a contractual, legal or
fiduciary obligation, (vii) in connection with the exercise of any
remedy hereunder or under any of the other Financing Documents, (viii)
to S&P or (ix) to any prospective Assignee or Participant which has
agreed in a writing delivered to the Borrower to be bound by this
Section.
66
<PAGE>
SECTION 9.9. Governing Law; Submission to Jurisdiction.
-----------------------------------------
This Agreement, each Note and each Letter of Credit (except Letters of
Credit to the extent therein stated to be governed by the Uniform
Customs and Practice for Documentary Credits issued by the
International Chamber of Commerce) shall be governed by and construed
in accordance with the laws of the State of New York. The Borrower
hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New
York State court sitting in New York City for purposes of all legal
proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Borrower irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought
in such a court has been brought in an inconvenient forum.
SECTION 9.10. Counterparts; Integration; Effectiveness.
----------------------------------------
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement
constitutes the entire agreement and understanding among the parties
hereto and supersedes any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof. This
Agreement shall become effective upon receipt by the Administrative
Agent of counterparts hereof signed by each of the parties hereto (or,
in the case of any party as to which an executed counterpart shall not
have been received, receipt by the Administrative Agent in form
satisfactory to it of telegraphic, facsimile or other written
confirmation from such party of execution of a counterpart hereof by
such party).
SECTION 9.11. Termination of Existing Credit Agreement.
----------------------------------------
Each party hereto agrees that effective as of the Closing Date the
Existing Credit Agreement and Existing Security Agreement shall
terminate (and hereby waives any requirement of separate notice of
such termination) and the security interests created by the Existing
Security Agreement shall be released; provided that expense and
indemnity provisions (but not letter of credit reimbursement
obligations) contained in the Existing Credit Agreement shall survive
in respect of periods prior to the Closing Date. The Lenders party
hereto expressly instruct Morgan Guaranty and/or J.P. Morgan Delaware
to take all actions necessary to release the security interests under
the Existing Credit Agreement effective as of the Closing Date.
SECTION 9.12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES
--------------------
HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
67
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers
as of the day and year first above written.
BETHLEHEM STEEL CORPORATION
By /s/ Gary L. Millenbruch
---------------------------------
Title: Executive Vice President,
Chief Financial Officer and
Treasurer
1170 Eighth Avenue
Bethlehem, PA 18016
Telephone: 610-694-4581
Facsimile: 610-694-3356
Attention: Edmund P. Reybitz
68
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Administrative Agent
By /s/ Laura Reim
---------------------------------
Title: Vice President
60 Wall Street
New York, NY 10260
Telephone: 212-648-6793
Facsimile: 212-648-5336
Attention: Laura E. Reim
J. P. MORGAN DELAWARE,
as Structuring and Collateral
Agent
By /s/ Robert S. Jones
---------------------------------
Title: Associate
902 Market Street
Wilmington, DE 19801
Telephone: 302-651-2402
Facsimile: 302-652-7416
Attention: Robert J. Henchey
69
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as L/C Issuing Bank
By /s/ Laura Reim
---------------------------------
Title: Vice President
CHEMICAL BANK,
as L/C Issuing Bank
By /s/ James H. Ramage
---------------------------------
Title: Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.,
as L/C Issuing Bank
By /s/ Noboru Kubota
---------------------------------
Title: Deputy General Manager
70
<PAGE>
LENDERS:
Commitment: $34,000,000 J.P. MORGAN DELAWARE
By /s/ Robert S. Jones
---------------------------------
Title: Associate
Commitment: $26,000,000 CHEMICAL BANK
By /s/ James H. Ramage
---------------------------------
Title: Vice President
Commitment: $26,000,000 THE LONG-TERM CREDIT BANK
OF JAPAN, LTD.
By /s/ Noboru Kubota
---------------------------------
Title: Deputy General Manager
Commitment: $16,000,000 THE BANK OF NEW YORK
By /s/ Peter H. Abdill
---------------------------------
Title: Vice President
71
<PAGE>
Commitment: $16,000,000 NATIONSBANK, N.A.
(CAROLINAS)
By /s/ Michael D. Monte
---------------------------------
Title: Vice President
72
<PAGE>
Commitment: $14,000,000 BANK OF AMERICA ILLINOIS
By /s/ Donald J. Chin
---------------------------------
Title: Authorized Officer
Commitment: $8,000,000 BANK AUSTRIA
AKTIENGESELLSCHAFT
By /s/ Robert Tenhave
---------------------------------
Title: Senior Vice President
By /s/ Amy Rick
---------------------------------
Title: Vice President
Commitment: $8,000,000 CORESTATES BANK, N.A.
By /s/ Joseph M. Finley
---------------------------------
Title: Vice President
Commitment: $8,000,000 THE FIRST NATIONAL BANK OF
CHICAGO
By /s/ Amy R. Howatt
---------------------------------
Title: Vice President
73
<PAGE>
Commitment: $8,000,000 THE FUJI BANK, LIMITED
By /s/ Yoshihiko Shiotsugu
---------------------------------
Title: Vice President & Manager
Commitment: $8,000,000 THE INDUSTRIAL BANK OF
JAPAN, LIMITED
By /s/ Robert W. Ramage, Jr.
---------------------------------
Title: Senior Vice President
Commitment: $8,000,000 MERIDIAN BANK
By /s/ Barbara T. Lampe
---------------------------------
Title: Vice President
Corporate Banking
Commitment: $8,000,000 THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By /s/ Yoshinori Kawamura
---------------------------------
Title: Joint General Manager
74
<PAGE>
Commitment: $6,000,000 FIRST VALLEY BANK
By /s/ David B. Kennedy
---------------------------------
Title: Regional Vice President
75
<PAGE>
Commitment: $6,000,000 NBD BANK
By /s/ Nancy L. Russell
---------------------------------
Title: Vice President
TOTAL COMMITMENTS: $200,000,000
76
<PAGE>
PRICING SCHEDULE
Each of "Euro-Dollar Margin", "CD Margin", "Base Rate
Margin", "Commitment Fee Rate" and "L/C Fee Rate" means, for any date,
the rates set forth below in the row opposite such term and in the
column corresponding to the "Pricing Level" that applies at such date:
Level I Level II Level III Level IV Level V
CD Margin 1.2 1.52 1.825 2.12 2
25% 5% % 5% .625%
Euro-Dollar 1.1 1.40 1.70% 2.0% 2
Margin 0% % .5%
Base Rate .10 .40% .70% 1.0% 1
Margin % .5%
Commitment .31 .375 .3750 .50%
Fee Rate 25% 0% % 6250%
L/C Fee 1.1 1.40 1.70% 2.0% 2
Rate 0% % %
For purposes of this Schedule, the following terms have the
following meanings:
"Level I Pricing" applies at any date if, at such date, the
Borrower's long-term debt is rated BB+ or higher by S&P and Ba1 or
higher by Moody's.
"Level II Pricing" applies at any date if, at such date, (i)
the Borrower's long-term debt is rated BB or higher by S&P and Ba2 or
higher by Moody's and (ii) Level I Pricing does not apply.
"Level III Pricing" applies at any date if, at such date, (i)
the Borrower's long-term debt is rated BB- or higher by S&P and Ba3 or
higher by Moody's and (ii) neither Level I Pricing nor Level II
Pricing applies.
"Level IV Pricing" applies at any date if, at such date, (i)
the Borrower's long-term debt is rated B+ or higher by S&P and B1 or
higher by Moody's and (ii) none of Level I Pricing, Level II Pricing
and Level III Pricing applies.
77
<PAGE>
"Level V Pricing" applies at any date if, at such date, no
other Pricing Level applies.
"Pricing Level" refers to the determination of which of Level
I, Level II, Level III, Level IV or Level V applies at any date.
The credit ratings to be utilized for purposes of this
Schedule are those assigned to the senior unsecured long-term debt
securities of the Borrower without third-party credit enhancement, and
any rating assigned to any other debt security of the Borrower shall
be disregarded. The rating in effect at any date is that in effect at
the close of business on such date.
78
<PAGE>
Schedule 1
Existing Letter of Credit
Beneficiary Amount
None
79
<PAGE>
Schedule 4.8
Environmental Matters
None
80
<PAGE>
EXHIBIT A
NOTE
New York, New York
September 12, 1995
For value received, Bethlehem Steel Corporation, a Delaware
corporation (the "Borrower"), promises to pay to the order of
______________________ (the " Lender"), for the account of its
Applicable Lending Office, the unpaid principal amount of each Loan
made by the Lender to the Borrower pursuant to the Inventory Credit
Agreement referred to below on the maturity date provided for in the
Inventory Credit Agreement and at the other times provided in the
Inventory Credit Agreement. The Borrower promises to pay interest on
the unpaid principal amount of each such Loan on the dates and at the
rate or rates provided for in the Inventory Credit Agreement. All
such payments of principal and interest shall be made in lawful money
of the United States in Federal or other immediately available funds
at the office of Morgan Guaranty Trust Company of New York, 60 Wall
Street, New York, New York.
All Loans made by the Lender, the respective types thereof
and all repayments of the principal thereof shall be recorded by the
Lender and, if the Lender so elects in connection with any transfer or
enforcement hereof, appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding may be
endorsed by the Lender on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof;
provided that the failure of the Lender to make any such recordation
or endorsement shall not affect the obligations of the Borrower
hereunder or under the Inventory Credit Agreement.
1
<PAGE>
The Loans evidenced hereby are secured as provided in the
Inventory Security and Pledge Agreement dated as of September 12, 1995
among the Borrower, the Special Purpose Members, J.P. Morgan
Delaware, as Structuring and Collateral Agent and Morgan Guaranty
Trust Company of New York, as Administrative Agent.
This note is one of the Notes referred to in the Inventory
Credit Agreement dated as of September 12, 1995 among the Borrower,
the lenders listed on the signature pages thereof, Morgan Guaranty
Trust Company of New York, as Administrative Agent and J.P. Morgan
Delaware, as Structuring and Collateral Agent (as the same may be
amended from time to time, the "Inventory Credit Agreement"). Terms
defined in the Inventory Credit Agreement are used herein with the
same meanings. Reference is made to the Inventory Credit Agreement
for provisions for the prepayment hereof and the acceleration of the
maturity hereof.
Bethlehem Steel Corporation
By ________________________________
Name:
Title:
2
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL
____________________________________________________________________
Amount Amount of
of Principal Notation
Date Loan Repaid Made By
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
3
<PAGE>
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
4
<PAGE>
_______________________________________________________________________
_______________________________________________________________________
6
<PAGE>
EXHIBIT B
Leased Premises
None
6
<PAGE>
EXHIBIT C-1
Approved Sites
Name Location
- ---- --------
Double G. Coatings, L.P. Jackson, Mississippi
Walbridge Coatings,
an Illinois Partnership Walbridge, Ohio
Indiana Pickling and
Processing Portage, Indiana
HS Processing LP Baltimore, Maryland
Metal Coaters of
Georgia, Inc. Marietta, Georgia
DoubleCote, L.L.C. Jackson, Mississippi
Metro Metals Corporation Portage, Indiana
7
<PAGE>
Roll & Hold Warehouse
& Distribution Corp. Indianapolis, Indiana
8
<PAGE>
EXHIBIT C-2
[Form of Collateral Access Agreement]
This Collateral Access Agreement (the " Agreement") is made
by and between [Name of Warehouse/Processor] (the "Bailee") and J.P.
Morgan Delaware, as Structuring and Collateral Agent (the "Collateral
Agent");
R E C I T A L S
WHEREAS, the Bailee presently holds Inventory (as defined
below) of the Company (as defined below) and may in the future hold
Inventory, in each case, at the facility located at the address set
forth below (the " Facility");
WHEREAS, the Company has entered into an Inventory Credit
Agreement (the "Inventory Credit Agreement") dated as of September 12,
1995 among Bethlehem Steel Corporation (the "Company"), the lenders
listed on the signature pages thereof (the "Lenders"), Morgan Guaranty
Trust Company of New York, as Administrative Agent and J.P. Morgan
Delaware, as Collateral Agent, and, as a condition to the loans and
other financial accommodations to the Company, the Lenders require,
among other things, liens on the Company's present and future
inventory (the "Inventory"), including all inventory held by the
Bailee and all inventory which may be shipped to and handled by the
Bailee from time to time in the future; and
WHEREAS, the Collateral Agent, on behalf of the Lenders, and
the Bailee desire to enter into an agreement in order to establish the
rights and obligations respecting the Inventory as between the
Collateral Agent and the Bailee, in order to assure mutual cooperation
and protection of their respective interests;
9
<PAGE>
NOW, THEREFORE, in consideration of the premises hereof and
mutual promises and agreements herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Representations and Warranties. The Bailee represents
and warrants that:
(i) its correct legal name and address are set forth on
the signature page hereof;
(ii) it does not have title to any of the Company's
Inventory, nor does it have any claim to or lien upon any of
the Company's Inventory (other than for customary
[warehousing] [processing] charges);
(iii) none of the Company's Inventory is reflected on
its books and records as an asset; and
(iv) the only receivables of the Bailee from the Company
relating to the Company's Inventory have been or will be
originated solely as a result of the services provided by the
Bailee with respect to the Inventory.
2. Covenants. The Bailee agrees that:
(i) in the future, if it changes the legal form in which
it does business (for example, changes from a sole
proprietorship to a partnership, a partnership to a
corporation, or forms a new corporation) or changes its
business name, the Bailee will give the Collateral Agent
prompt written notice of the change so that the Collateral
Agent can update its records and, if necessary, correct and
refile any security documents;
(ii) it will allow the Collateral Agent, its auditors
and its other designees, access to the Facility, upon
reasonable prior notice, during ordinary business hours in
order to inspect the Company's Inventory and verify the
amount. In addition, if the Collateral Agent elects to
remove the Company's Inventory from the Facility itself, the
Bailee will grant the Collateral Agent access to the
Facility, upon reasonable prior notice, during ordinary
business hours to do so and will not hinder the Collateral
Agent's actions in removing the Inventory, but the Collateral
Agent shall have no
10
<PAGE>
obligation to remove any Inventory from the Facility or,
having commenced such removal, to complete such removal. The
Collateral Agent will not interfere with the Bailee's
business operations and all costs of inspection, verification
and removal shall be for the account of the Lenders;
(iii) if the Collateral Agent notifies the Bailee in
writing that an event of default has occurred under the
Inventory Credit Agreement, then, without any responsibility
on the Bailee's part to verify the existence of such default,
it will release the Inventory to the Collateral Agent on
demand; provided that the Collateral Agent tenders payment of
any unpaid [warehousing] [processing] charges on the
Inventory being released;
(iv) if the Company defaults under any agreement it has
with the Bailee, the Bailee agrees not to exercise any remedy
under such agreement or applicable law or in equity, unless
it shall have provided the Collateral Agent written notice of
such default and given the Collateral Agent 20 business days
to cure a monetary default and 60 business days to cure a
non-monetary default and during such time, the Bailee will
allow the Collateral Agent to enter the Facility and remove
the Inventory as set forth in Section 2(ii) above. If any
default is cured during the applicable period, the Bailee
agrees to rescind the notice of default, but the Collateral
Agent shall have no obligation to cure any default of the
Company or, having commenced such cure, to complete such
cure. Notwithstanding the foregoing, the Bailee's failure to
provide such notice shall not render the Bailee liable to the
Collateral Agent in any manner or diminish or otherwise
affect the Bailee's rights under any such agreement with the
Company or with respect to the Inventory; and
(v) the Collateral Agent, on behalf of the secured
parties, has a perfected security interest in the Company's
Inventory now or in the future located at the Facility.
3. Notices. All notices, requests and other communications to either
party hereunder shall be in writing (including bank wire, telex, facsimile
transmission or similar writing) and shall be given to such party at its
address, facsimile number or telex number set forth on the signature pages
hereof. Each such notice, request or other communication shall be effective
(i) if given by telex, when
11
<PAGE>
such telex is transmitted to the telex number specified in this
Section and the appropriate answerback is received, (ii) if given by
facsimile transmission, when transmitted to the facsimile number
specified in this Section and confirmation of receipt is received,
(iii) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid
or (iv) if given by any other means, when delivered at the address
specified in this Section.
4. Amendments. The agreements contained herein may not be
----------
modified or terminated orally and shall be binding upon and inure to
the benefit of parties and their respective successors or assigns.
5. Term of Agreement. This Agreement shall continue in full
-----------------
force and effect until the date on which the Collateral Agent has
confirmed in writing that all of the Company's obligations and
liabilities to the secured parties are paid and satisfied in full and
all financing arrangements between the secured parties and the Company
have been terminated.
6. Company's Obligations. All of the Bailee's charges to
---------------------
the Company of any nature whatsoever shall continue to be charged to
and paid by the Company in accordance with the agreements under which
such charges arose. The Collateral Agent shall not be directly or
indirectly liable or responsible for any of said charges whether due
or to become due.
The arrangement and instructions outlined herein shall
continue without any change or modification until the Collateral Agent
has given written notification to the contrary to the Bailee at the
address set forth below, which notification need only be signed by the
Collateral Agent. Upon delivery of any such written notification, the
Bailee agrees to take the Collateral Agent's instructions as to any
processing, holding or delivery of the Inventory.
7. Agreement of the Company. The Company has signed below
------------------------
to indicate its confirmation of and agreement with the foregoing.
12
<PAGE>
Executed and delivered as of the ____ day of _____, 199_.
[NAME OF BAILEE]
By____________________________
Name:
Title:
Address:
Telex:
Facsimile:
J.P. MORGAN DELAWARE,
as Structuring and Collateral Agent
By____________________________
Name:
Title:
Address:
Telex:
Facsimile:
Acknowledged and Agreed to:
BETHLEHEM STEEL CORPORATION
13
<PAGE>
By____________________________
Name:
14
<PAGE>
EXHIBIT D
INVENTORY TURNOVER RATES FOR
FINISHED AND SEMIFINISHED INVENTORIES
CATEGORY OR
SUBCATEGORY DESCRIPTION INVENTORY TURNOVER RATE*
- ----------- ----------- --------- --------------
Group#30 Ingots 4.0 31
Slabs, Blooms & Billets 2.0 32
Structural 2.0 33
Plates 2.0 34
Bars
Subcategories:
Alloy Bars 3.0
Carbon Bars 2.5 36
Rails & Accessories 2.0 38
Pipe 2.0 39
Sheet & Strip
Subcategories:
Hot Rolled Sheet 2.0
15
<PAGE>
Cold Rolled Sheet 2.5
Coated Sheet 2.0 40
Tin Coated Sheet and Strip1 .5
__________
*The Inventory Turnover Rate applicable to each category and
subcategory of Finished and Semifinished Inventories set forth above
shall be the rate set forth opposite such category and subcategory or
such other rate as the Borrower and the Administrative Agent (with the
consent of the Required Lenders) may agree. The Borrower may request
that the rate be adjusted or that its application be waived in the
event of a strike or fire or other event beyond the Borrower's control
or while a facility is closed for periodic maintenance work such as
the relining of a blast furnace or for any other
reason..27009/075/CA/agt.inventory.conf
16
<PAGE>
EXHIBIT E
INVENTORY SECURITY AND PLEDGE AGREEMENT
dated as of
September 12, 1995
among
BETHLEHEM STEEL CORPORATION,
BETHLEHEM STEEL CREDIT AFFILIATE ONE, INC.,
BETHLEHEM STEEL CREDIT AFFILIATE TWO, INC.
<PAGE>
J.P. MORGAN DELAWARE,
as Structuring and Collateral Agent
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
2
<PAGE>
INVENTORY SECURITY AND PLEDGE AGREEMENT
AGREEMENT dated as of September 12, 1995 among BETHLEHEM
STEEL CORPORATION (with its successors, the "Borrower"), BETHLEHEM
STEEL CREDIT AFFILIATE ONE, INC., BETHLEHEM STEEL CREDIT AFFILIATE
TWO, INC., J.P. MORGAN DELAWARE, as Structuring and Collateral Agent,
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative
Agent.
W I T N E S E T H :
- - - - - - - - -
WHEREAS, the Borrower, certain lenders (with their successors
and assigns, the "Lenders"), Morgan Guaranty Trust Company of New
York, as administrative agent for such lenders (with its successors
and assigns in such capacity, the "Administrative Agent") and J.P.
Morgan Delaware, as structuring and collateral agent (with its
successors and assigns in such capacity, the "Collateral Agent") are
parties to an Inventory Credit Agreement of even date herewith (as the
same may be amended from time to time, the "Inventory Credit
Agreement"), pursuant to which the Borrower may incur obligations with
respect to Borrowings and Letters of Credit; and
WHEREAS, in order to induce the Lenders, the Agents and the
L/C Issuing Banks to enter into the Inventory Credit Agreement, (i)
the Borrower has agreed to grant a continuing security interest in and
to the Borrower's Collateral (as hereafter defined) to secure (x) its
obligations under the Inventory Credit Agreement, the Notes issued
pursuant thereto and any Reimbursement Obligations and (y) certain
other obligations as described herein and in the Inventory Credit
Agreement; and (ii) the Special Purpose Members have agreed to grant a
continuing security interest in and to the Special Purpose Members'
Collateral to secure their obligations under the Guaranties;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
3
<PAGE>
SECTION 1. Definitions
-----------
Terms defined in the Inventory Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings
provided for therein. The following additional terms, as used herein,
have the following respective meanings:
"Agreement" means this Inventory Security and Pledge
Agreement as amended from time to time.
"Automatic Release Termination" has the meaning set forth in
Section 5(C).
"Borrower's Collateral" means the collateral described in
Section 3(A).
"BSF" means Bethlehem Steel Funding, LLC, a Maryland limited
liability company.
"BSF Note" means the note of BSF payable to the Borrower in
connection with the Receivables Facility.
"Collateral" means the Borrower's Collateral and the Special
Purpose Members' Collateral.
"Documents" means all "documents" (as defined in the UCC) or
other receipts covering, evidencing or representing Inventories, now
owned or hereafter acquired by the Borrower.
"Enforcement Notice" means a written notice delivered by the
Administrative Agent to the Collateral Agent stating that it is an
Enforcement Notice (as defined in this Agreement) and that the
Required Lenders have instructed the Administrative Agent to deliver
such notice.
"Grantors" means the Borrower and the Special Purpose
Members.
"Guaranties" has the meaning set forth in Section 15.
"Instruments" means all "instruments", "chattel paper" or
"letters of credit" (each as defined in the UCC) evidencing,
representing, arising from or existing in respect of, relating to,
securing or otherwise supporting
4
<PAGE>
the payment of, any accounts receivable, including (but not limited
to) promissory notes, drafts, bills of exchange and trade acceptances,
now owned or hereafter acquired by the Borrower.
"Letter of Credit Obligation" means at any time any
Reimbursement Obligation or other obligation of the Borrower to make a
payment in connection with a Letter of Credit, including contingent
obligations with respect to amounts which are then, or may thereafter
become, available for drawing under Letters of Credit then
outstanding.
"Liquid Investment" means (i) direct obligations of the
United States or any agency thereof, or obligations guaranteed by the
United States or any agency thereof, (ii) commercial paper rated in
the highest grade by a nationally recognized credit rating agency or
(iii) time deposits with, including certificates of deposit issued by,
any Lender or any other bank or trust company which is organized under
the laws of the United States or any state thereof, which bank or
trust company has, or the holding company of which bank or trust
company together with its consolidated subsidiaries has, (A) capital,
surplus and undivided profits aggregating at least $500,000,000 and
(B) publicly traded debt securities outstanding which are rated in one
of the four highest rating categories by a nationally recognized
credit rating agency; provided in each case that (x) such Liquid
Investment matures within 90 days from the date of acquisition thereof
and (y) in order to provide the Collateral Agent, for the benefit of
the Secured Parties, with a perfected security interest therein, such
Liquid Investment is either:
(1) evidenced by a certificate or instrument which is
negotiable, or if non-negotiable is issued in the name of the
Collateral Agent, and which (together with any appropriate instruments
of transfer) is delivered to, and held by, the Collateral Agent or an
agent thereof (which shall not be the Borrower or any of its
Affiliates) in the State of New York; or
(2) in book-entry form and issued by the United States and
subject to pledge under applicable state law and Treasury regulations
and as to which (in the written opinion of counsel to the Borrower,
which counsel shall be satisfactory to the Collateral Agent)
appropriate measures shall have been taken to perfect the Security
Interests.
5
<PAGE>
"Operating Agreement" means the Operating Agreement of BSF.
"Perfection Certificate" means a certificate substantially in
the form of Annex A, completed and supplemented with the schedules and
attachments contemplated thereby to the satisfaction of the Collateral
Agent, and duly executed by the chief financial officer and the chief
accounting officer of the Borrower.
"Permitted Liens" means the Security Interests and Liens
(including mechanics' and warehousemens' liens) which (i) arise by
operation of law in the ordinary course of the conduct of the
Borrower's business or the ownership of its assets, (ii) do not secure
Debt and (iii) either (x) secure amounts not yet due and payable or
(y) secure amounts being contested in good faith by appropriate
proceedings so long as enforcement thereof is effectively stayed and
reserves therefor are maintained in accordance with generally accepted
accounting principles (it being understood that Permitted Liens do not
include Federal Liens to the extent such Federal Liens give rise to an
Event of Default (as defined in the Inventory Credit Agreement)).
"Pledged Interest" means, with respect to each Grantor, such
Grantor's (i) interest in BSF, (ii) right to inspect the books and
records of BSF, (iii) right to participate in the management of and
vote on matters coming before BSF, and (iv) unless otherwise provided,
right to act for BSF in accordance with Section 5.1 of the Operating
Agreement.
"Pledged Instruments" means (i) the BSF Note and (ii) any
Instrument required to be pledged to the Collateral Agent pursuant to
Section 4(B).
"Pledged Securities" means the Pledged Instruments and the
Pledged Stock.
"Pledged Stock" means (i) the Subsidiary Shares and (ii) any
other interests required to be pledged to the Collateral Agent
pursuant to Section 4(B).
6
<PAGE>
"Proceeds" means all cash and other proceeds of, and all
other profits, rentals or receipts, in whatever form, arising from the
collection, sale, lease, exchange, assignment, licensing or other
disposition of, or other realization upon, Collateral, including
without limitation all claims of the Borrower or either Special
Purpose Member against third parties for loss of, damage to or
destruction of, or for proceeds payable under, or unearned premiums
with respect to, policies of insurance in respect of, any Collateral,
and any condemnation or requisition payments with respect to any
Collateral, in each case whether now existing or hereafter arising.
"Required Secured Parties" means the Required Lenders;
provided that, at any time when an Automatic Release Termination is in
effect, "Required Secured Parties" shall mean Persons holding
obligations which represent at least 66 2/3% of the Secured Principal
Amount.
"Secured Obligations" means, whether now outstanding or
hereafter arising, (i) all principal of and interest on any Loan made
under, or any Note issued pursuant to, the Inventory Credit Agreement,
(ii) all Letter of Credit Obligations, (iii) all other amounts payable
by the Borrower hereunder or under the Inventory Credit Agreement,
(iv) all amounts payable by the Borrower under or in respect of
Secured Tax Exempt Debt and (v) any renewals or extensions of the
foregoing. The Secured Obligations shall include, without limitation,
any interest, costs, fees and expenses which accrue on or with respect
to any of the foregoing, whether before or after the commencement of
any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Borrower; provided that, for the
purposes of payments and allocations pursuant to Section 10 after the
commencement of any case, action or other proceeding relating to the
bankruptcy, insolvency or reorganization of the Borrower, each Secured
Obligation shall be deemed to include interest accrued thereon after
the commencement of such proceeding only to the extent that such
interest is allowed in such proceeding (pursuant to Section 506(b) of
the United States Bankruptcy Code or otherwise).
"Secured Parties" means the Lenders, the L/C Issuing Banks,
the Administrative Agent, the Collateral Agent and the holder of the
Secured Tax Exempt Debt.
"Special Purpose Members' Collateral" means the collateral
described in Section 3(B).
7
<PAGE>
"Subsidiary Shares" means the shares of capital stock of the
Special Purpose Members owned by the Borrower.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of New York; provided that if by reason of
mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the Security Interests in any
Collateral is governed by the Uniform Commercial Code as in effect in
a jurisdiction other than New York, "UCC" means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection
or non-perfection.
SECTION 2. Representations and Warranties
------------------------------
(A) The Borrower represents and warrants as follows:
(i) The Borrower has good and marketable title to all of the
Borrower's Collateral, free and clear of any Liens other than
Permitted Liens.
(ii) Neither the Borrower nor any of its Subsidiaries has
performed or will perform any acts which might prevent the Collateral
Agent from enforcing any of the terms of this Agreement or which would
limit the Collateral Agent in any such enforcement. Other than (x)
financing statements on file with respect to the Existing Credit
Agreement (which will be terminated in accordance with the provisions
of Section 3.1 of the Inventory Credit Agreement) and (y) financing
statements or other similar or equivalent documents or instruments
with respect to the Security Interests and Permitted Liens, no
financing statement, mortgage, security agreement or similar or
equivalent document or instrument covering all or any part of the
Collateral is on file or of record in any jurisdiction in which such
filing or recording would be effective to perfect a Lien on such
Collateral. None of the Borrower's Collateral is in the possession of
any Person (other than the Borrower) asserting any claim thereto or
security interest therein, except that the Collateral Agent or its
designee may have possession of Collateral as contemplated hereby and
warehousemen, carriers or other bailees may from time to time assert
claims to or security interests in Inventory in their possession.
(iii) Not less than five Domestic Business Days prior to the
Closing Date under the Inventory Credit Agreement, the Borrower shall
deliver the Perfection Certificate to the
8
<PAGE>
Collateral Agent. The information set forth therein shall be correct
and complete. Not later than 60 days following the Closing Date, the
Borrower shall furnish to the Collateral Agent certified file search
reports on file in each UCC filing office set forth in Schedule 7 to
the Perfection Certificate confirming the filing information set forth
in such Schedule.
(iv) The Security Interests constitute valid security
interests under the UCC securing the Secured Obligations. When UCC
financing statements in the form specified in the Perfection
Certificate or pursuant to Section 4(F) shall have been filed in the
offices specified in the Perfection Certificate or pursuant to Section
4(F), the Security Interests shall constitute perfected security
interests in the Collateral (except Inventory in transit) to the
extent that a security interest therein may be perfected by filing
pursuant to the UCC, prior to all other Liens and rights of others
therein except for Permitted Liens.
(v) The Inventory is insured in accordance with the
requirements of the Inventory Credit Agreement. (vi) All Inventories
produced by the Borrower have or will have been produced in compliance
with the applicable requirements of (i) the Fair Labor Standards Act,
as amended, and (ii) where the failure to comply would subject any of
the Secured Parties to any obligation or liability or affect the
priority or existence of the Security Interests, all applicable
federal and state environmental and waste disposal laws.
(vii) The Borrower owns all of the Pledged Stock, free and
clear of any Liens other than the Security Interests. The Pledged
Stock includes all of the issued and outstanding capital stock of the
Special Purpose Members. The Pledged Stock has been duly authorized
and validly issued, and is fully paid and non-assessable, and is
subject to no options to purchase or similar rights of any Person.
(viii) Upon the delivery of the Pledged Instruments, and
certificates representing the Pledged Stock to the Collateral Agent in
accordance with Section 4(A) hereof, the Collateral Agent will have
valid and perfected security interests in the Pledged Securities
subject to no prior Lien.
9
<PAGE>
(B) Each Grantor represents and warrants as follows:
(i)The Grantor owns all of its Pledged Interest, free and
clear of any Liens other than Permitted Liens. The Grantor is not and
will not become a party to or otherwise bound by any agreement, other
than this Agreement, which restricts in any manner the rights of any
present or future holder of any of the Pledged Interests with respect
thereto.
(ii) Upon the execution of this Agreement by the parties
hereto, the delivery to the Collateral Agent of certficates
representing the Pledged Interests and the filing of financing
statements on Form UCC-1 in substantially the form of Schedule
2(B)(ii) hereto in the jurisdiction identified in or pursuant to
Section 16, the Collateral Agent, on behalf of the Lenders, will have
valid and perfected security interests in the Pledged Interests prior
to all other Liens and rights of others therein except for Permitted
Liens. Except for the financing statements referred to above, no
registration, recordation or filing with any governmental body, agency
or official is required in connection with the execution or delivery
of this Agreement or is necessary for the validity or enforceability
hereof or for the perfection or enforcement of the Security Interests
in the Pledged Interests. The Grantor has not performed and will not
perform any acts which might prevent the Collateral Agent from
enforcing any of the terms and conditions of this Agreement or which
would limit the Collateral Agent in any such enforcement.
(iii) The chief executive office of the Grantor is located at
its address set forth in or pursuant to Section 16.
SECTION 3. The Security Interests
----------------------
(A) In order to secure the full and punctual payment of the
Secured Obligations in accordance with the terms thereof, and to
secure the performance of all of the obligations of the Borrower
hereunder, under the Inventory Credit Agreement and under the
agreements and other instruments evidencing Secured Tax Exempt Debt,
the Borrower hereby grants to the Collateral Agent for the ratable
benefit of the Secured Parties a continuing security interest in and
to all of the following property of the
10
<PAGE>
Borrower, whether now owned or existing or hereafter acquired
or arising and regardless of where located:
(1) Inventories;
(2) Documents;
(3) all books and records (including, without limitation,
customer lists, credit files, computer programs, printouts and other
computer materials and records) of the Borrower pertaining to any of
the Borrower's Collateral;
(4) the Liquid Investments and other monies and property of
any kind of the Borrower in the possession or under the control of the
Collateral Agent;
(5)the Pledged Securities, and all of the Borrower's rights
and privileges with respect to the Pledged Securities, and all income
and profits thereon, and all interest, dividends and other payments
and distributions with respect thereto;
(6) its Pledged Interest and all of its rights and privileges
with respect thereto (including, without limitation, all rights under
the Operating Agreement) and all certificates evidencing its Pledged
Interest; and
(7) all Proceeds of all or any of the Borrower's Collateral
described in Clauses 1 through 6 hereof;
provided that Collateral shall not include any of the
Borrower's Collateral released pursuant to Section 5 hereof.
(B) In order to secure the full and punctual payment of the
Guaranties in accordance with the terms thereof, and to secure the
performance of all of the obligations of such Special Purpose Member
hereunder, each Special Purpose Member hereby grants to the Collateral
Agent for the ratable benefit of the Secured Parties a continuing
security interest in and to all of the following property of such
Special Purpose Member, whether now owned or existing or hereafter
acquired or arising and regardless of where located:
(1) its Pledged Interest and all of its rights and privileges
with respect thereto (including, without
11
<PAGE>
limitation, all rights under the Operating Agreement) and all
certificates evidencing its Pledged Interest; and
(2) all Proceeds of all or any of the Special Purpose
Member's Collateral described in Clause 1 hereof.
(C) The Security Interests are granted as security only and
shall not subject the Collateral Agent or any other Secured Party to,
or transfer or in any way affect or modify, any obligation or
liability of the Grantors with respect to any of the Collateral or any
transaction in connection therewith.
SECTION 4. Pledged Securities and Pledged Interests
----------------------------------------
(A)All Pledged Instruments shall be delivered to the
Collateral Agent by the Borrower pursuant hereto indorsed to the order
of the Collateral Agent, and accompanied by any required transfer tax
stamps, all in form and substance satisfactory to the Collateral
Agent. All certificates representing Pledged Stock and Pledged
Interests shall be delivered to the Collateral Agent by the applicable
Grantor pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, with signatures appropriately
guaranteed, and accompanied by any required transfer tax stamps, all
in form and substance satisfactory to the Collateral Agent.
(B) In the event that either Special Purpose Member at any
time issues any additional or substitute shares of capital stock of
any class or any note, or owes any Debt, to the Borrower, the Borrower
will immediately pledge and deposit with the Collateral Agent
certificates representing all such shares and such note, or an
instrument evidencing such Debt, as additional security for the
Secured Obligations. All such shares, notes and instruments
constitute Pledged Securities and are subject to all provisions of
this Agreement. In the event that BSF at any time issues any
substitute note or owes any other Debt to the Borrower, the Borrower
will immediately pledge and deposit with the Collateral Agent such
notes or other instrument evidencing such other debt as additional
security for the Secured Obligations.
12
<PAGE>
(C) If directed to do so by the Required Lenders, the
Collateral Agent shall cause any or all of the Pledged Stock and/or
the Pledged Interests to be transferred of record into the name of the
Collateral Agent or its nominee. The applicable Grantor will promptly
give to the Collateral Agent copies of any notices or other
communications received by it with respect to Pledged Stock and/or
Pledged Interests registered in the name of such Grantor and the
Collateral Agent will promptly give to the applicable Grantor copies
of any notices and communications received by the Collateral Agent
with respect to Pledged Stock and/or Pledged Interests registered in
the name of the Collateral Agent or its nominee.
(D) (i) Unless an Enforcement Notice is in effect, the
relevant Grantor shall be entitled to receive and retain all
dividends, interest and other payments and distributions made upon or
with respect to the Pledged Securities or Pledged Interests; provided
that
(x) dividends, interest and other distributions paid or
payable other than in cash in respect of, and instruments and other
property received, receivable or otherwise distributed in respect of,
or in exchange for, any Pledged Securities or Pledged Interests; and
(y) dividends and other distributions paid or payable in cash
in respect of any Pledged Securities or Pledged Interests in
connection with a partial or total liquidation or dissolution;
shall be received in trust for the benefit of the Secured
Parties, shall be segregated from other funds of the relevant Grantor
and shall be paid over to the Collateral Agent as Collateral in the
same form as received (with any necessary endorsement).
(ii) If an Enforcement Notice is in effect,
(x) all rights of any Grantor to receive dividends, interest
and other payments and distributions which it would otherwise be
authorized to receive and retain pursuant to subsection (D)(i) shall
cease, and all such rights shall thereupon become vested in the
Collateral Agent who shall thereupon have the sole right to receive
and hold as Collateral such dividends, interest and other payments and
distributions; and
13
<PAGE>
(y) all dividends, interest and other payments and
distributions which are received by any Grantor shall be received in
trust for the benefit of the Secured Parties, shall be segregated from
other funds of such Grantor and shall be paid over to the Collateral
Agent as Collateral in the same form as received (with any necessary
endorsement).
After an Enforcement Notice has been canceled, the Collateral
Agent's right to retain dividends, interest and other payments and
distributions under this subsection 4(D)(ii) shall cease and the
Collateral Agent shall pay over to the relevant Grantor any such
Collateral retained by it while such Enforcement Notice was in effect.
(E) Unless an Enforcement Notice is in effect, the Borrower
shall have the right, from time to time, to vote and to give consents,
ratifications and waivers with respect to the Pledged Stock, and the
Collateral Agent shall, upon receiving a written request from the
Borrower accompanied by a certificate signed by its principal
financial officer stating that no Event of Default has occurred and is
continuing, deliver to the Borrower or as specified in such request
such proxies, powers of attorney, consents, ratifications and waivers
in respect of any of the Pledged Stock which is registered in the name
of the Collateral Agent or its nominee as shall be specified in such
request and be in form and substance satisfactory to the Collateral
Agent. If an Enforcement Notice is in effect, the Collateral Agent
shall have the right to the extent permitted by law and the Borrower
shall take all such action as may be necessary or appropriate to give
effect to such right, to vote and to give consents, ratifications and
waivers, and take any other action with respect to any or all of the
Pledged Stock with the same force and effect as if the Collateral
Agent were the absolute and sole owner thereof.
(F) Each Grantor agrees that it will, at its expense and in
such manner and form as the Collateral Agent may require, execute,
deliver, file and record any financing statement, specific assignment
or other paper and take any other action that may be necessary or
desirable, or that the Collateral Agent may reasonably request, in
order to create, preserve, perfect or validate any Security Interest
in the Pledged Interests or to enable the Collateral Agent to exercise
and enforce its rights hereunder with respect to any of the Pledged
Interests. To the extent permitted by applicable law, each Grantor
hereby authorizes the Collateral Agent to execute and file Uniform
Commercial Code
14
<PAGE>
financing statements (which may be carbon, photographic, photostatic
or other reproductions of this Agreement or of a financing statement
relating to this Agreement) which the Collateral Agent in its sole
discretion may deem necessary or appropriate to further perfect the
Security Interests in the Pledged Interests. In furtherance of the
foregoing, each Grantor hereby constitutes and appoints the Collateral
Agent its true and lawful attorney, with full power of substitution,
in the name of such Grantor, to execute and file financing statements
and continuation statements.
(G)Each Special Purpose Member agrees that it will not change
(i) its name, identity or corporate structure in any manner or (ii)
the location of its chief executive office or chief place of business
unless it shall have given (x) the Collateral Agent not less than 30
days' prior notice thereof and (y) delivered an opinion of counsel
with respect thereto in accordance with Section 6(I).
(H)Unless an Enforcement Notice is in effect, each Grantor
shall have all rights to vote and to give consents, ratifications and
waivers with respect to the Pledged Interests as and to the extent
provided in the Operating Agreement. If an Enforcement Notice is in
effect, the Collateral Agent shall have the right to the extent
permitted by law and the Grantors shall take all such action as may be
necessary or appropriate to give effect to such right, to vote and to
give consents, ratifications and waivers, and take any other action
with respect to any or all of the Pledged Interests with the same
force and effect as if the Collateral Agent were the absolute and sole
owner thereof.
(I) In the event that BSF issues any additional or substitute
limited liability company interests of any class or type to any
Grantor, such Grantor will immediately pledge and deposit with the
Collateral Agent certificates representing all such interests, as
additional security for the Guaranties. All such interests constitute
Pledged Interests and are subject to all provisions of this Agreement.
SECTION 5. Releases of Collateral
----------------------
(A) At any time and from time to time prior to the
termination of the Security Interests pursuant to Section 14, the
Collateral Agent (i) may release any of the
15
<PAGE>
Collateral with the prior written consent of all of the Lenders, which
consent shall not be unreasonably withheld, and (ii) shall release
Inventory which is being sold or transferred by the Borrower if the
Borrower has complied with the provisions of clauses (i), (ii) and (if
required) (iii) of Section 5.7 of the Inventory Credit Agreement with
respect to such sale or transfer. Upon any such release of
Collateral, the Collateral Agent will, at the expense of the
applicable Grantor, execute and deliver to such Grantor such documents
as such Grantor shall reasonably request to evidence the release of
the Collateral.
(B) Subject to the provisions of Section 5(C) of this
Agreement, the Proceeds of Inventory, including accounts receivable
arising from the sale thereof (and any books and records of the
Borrower pertaining to such accounts receivable), shall automatically
be released without the need for any action on the part of the
Collateral Agent, upon the sale of such Inventory by the Borrower.
(C) Upon the occurrence of either of the Events of Default
specified in clauses (h) or (i) of Section 6.1 of the Inventory Credit
Agreement with respect to the Borrower (and without any further act or
notice) or the giving by the Collateral Agent of an Enforcement Notice
to the Borrower, the automatic release set forth in Section 5(B) of
this Agreement shall terminate (an "Automatic Release Termination")
with respect to all Proceeds from (i) the sale of Inventory subsequent
to the second Domestic Business Day after the day on which the
Enforcement Notice is given or, if an Event of Default specified in
clause (h) or (i) of Section 6.1 of the Inventory Credit Agreement has
occurred, subsequent to the day after which such Event of Default
occurs, and (ii) the sale of Inventory during the period after the day
on which the Enforcement Notice is given to and including the second
Domestic Business Day after the day on which the Enforcement Notice is
given to the extent the aggregate amount of sales of Inventory during
such period are not made in the ordinary course of business of the
Borrower or exceed 10% of the Borrowing Base as of the date the
Automatic Release Termination occurs.
SECTION 6. Further Assurances; Covenants
-----------------------------
(A) The Borrower will not change (i) the location of its
chief executive office or chief place of business or (ii) the
locations where it keeps or holds any of the Borrower's Collateral,
other than Inventories or books and records relating to any Borrower's
Collateral, from the
16
<PAGE>
applicable locations described in the Perfection Certificate unless it
shall have (a) given the Collateral Agent not less than 30 days' prior
notice thereof and (b) delivered an opinion of counsel with respect
thereto in accordance with Section 6(I). Not later than 90 days after
the Borrower changes any location where it keeps or holds Inventories
or books and records relating to any Borrower's Collateral from a
location described in the Perfection Certificate to a location not
described in the Perfection Certificate, the Borrower will (a) give
the Collateral Agent notice thereof and (b) deliver an opinion of
counsel with respect thereto in accordance with Section 6(I); provided
that if all such Inventories are sold during such 90 day period then
no such notice or opinion need be delivered with respect to such
Inventories. No Grantor shall in any event change the location of any
Collateral if such change would cause the Security Interests in such
Collateral to lapse or cease to be perfected.
(B) The Borrower will not change its name, identity or
corporate structure (as the terms "identity" and "corporate structure"
are used in Section 9-402(7) of the UCC) in any manner unless it shall
have (i) given the Collateral Agent not less than 30 days' prior
notice thereof and (ii) if the Collateral Agent so requests, delivered
an opinion of counsel with respect thereto in accordance with Section
6(I).
(C) The Borrower will, from time to time, at its expense,
execute, deliver, file and record any statement, assignment,
instrument, document, agreement or other paper and take any other
action (including, without limitation, any filings of financing or
continuation statements under the UCC) that from time to time may be
necessary or desirable, or that the Collateral Agent may request, in
order to create, preserve, perfect, confirm or validate the Security
Interests or to enable the Collateral Agent and the other Secured
Parties to obtain the full benefits of this Agreement, or to enable
the Collateral Agent to exercise and enforce any of its rights, powers
and remedies hereunder with respect to any of the Borrower's
Collateral. To the extent permitted by applicable law, the Borrower
hereby authorizes the Collateral Agent to execute and file financing
statements or continuation statements without the Borrower's signature
appearing thereon. In furtherance of the foregoing, the Borrower
hereby constitutes and appoints the Collateral Agent its true and
lawful attorney, with full power of substitution, in the name of the
Borrower, to execute and file financing statements and continuation
statements. The Borrower agrees that a carbon, photographic,
photostatic or other reproduction of this Agreement or of a
17
<PAGE>
financing statement is sufficient as a financing statement. The
Borrower shall pay the costs of, or incidental to, any recording or
filing of any financing or continuation statements concerning the
Borrower's Collateral.
(D) If any Borrower's Collateral is at any time in the
possession or control of any warehouseman, bailee or any of the
Borrower's agents or processors, the Borrower shall, if requested to
do so by the Collateral Agent, notify such warehouseman, bailee, agent
or processor of the Security Interests created hereby and instruct
such warehouseman, bailee, agent or processor to hold all such
Borrower's Collateral for the Collateral Agent's account subject to
the Collateral Agent's instructions.
(E) The Borrower shall keep full and accurate books and
records relating to the Borrower's Collateral, and stamp or otherwise
mark such books and records in such manner as the Required Lenders may
reasonably require in order to reflect the Security Interests.
(F) (i) Without the prior written consent of the Required
Lenders, no Grantor will create, incur or suffer to exist any Lien
with respect to any Collateral, except for Permitted Liens, and (ii)
without the prior written consent of the Lenders, which consent shall
not be unreasonably withheld, no Grantor will sell, lease, exchange,
assign or otherwise dispose of, or grant any option with respect to,
any Collateral unless the Security Interests created hereby in such
Collateral have been released pursuant to Section 5 or Section 14.
(G) The Borrower will maintain insurance policies in
accordance with the terms of the Inventory Credit Agreement and all
insurance proceeds shall be paid in accordance with the terms of the
Inventory Credit Agreement.
(H) Each Grantor will, promptly upon request, provide to the
Collateral Agent all information and evidence it may reasonably
request concerning the Collateral to enable the Collateral Agent to
enforce the provisions of this Agreement and, if the Collateral Agent
has been requested to do so by the Required Lenders, to prepare a
Collateral Report. Each Grantor will permit the representatives of
the Collateral Agent to call at its places of business at any time and
from time to time during ordinary business hours, without hindrance or
delay, and will, at such Grantor's cost and expense but without undue
interference with its operations, permit such representatives to
inspect the Collateral and to inspect, audit, check and make extracts
from and copies of the books, records, journals, orders, receipts and
18
<PAGE>
correspondence which relate to the Collateral. Each Grantor will
provide each Secured Party with such information as to the Collateral
as such Secured Party may reasonably request. Each Secured Party
shall have the right to observe the annual physical inventory of
Inventories performed by the Borrower's independent public accountants
and the semi-annual physical inventory performed by the Borrower's
audit staff at each plant location. Any proprietary or financial
information provided pursuant to this subsection shall be kept
confidential in accordance with Section 9.8 of the Inventory Credit
Agreement.
(I) (i) Not more than six months nor less than 30 days prior
to (or, in the case of any action contemplated by the second sentence
of Section 6(A), more than 90 days after) each date on which the
Borrower proposes to take any action contemplated by Section 6(A) or
(B) or a Special Purpose Member prepares to take any action
contemplated by Section 4(G) and (ii) simultaneously with the delivery
of each set of financial statements referred to in Section 5.1(a) of
the Inventory Credit Agreement and in any event within 95 days after
the end of each fiscal year of the Borrower during the term of this
Agreement, the Grantors shall, at their cost and expense, jointly and
severally, cause to be delivered to the Lenders an opinion of counsel,
satisfactory to the Collateral Agent, substantially in the form of
Annex B hereto, to the effect that all financing statements and
amendments or supplements thereto, continuation statements and other
documents required to be recorded or filed in order to perfect and
protect the Security Interests for a period, specified in such
opinion, continuing until a date not earlier than eighteen months
after the date of such opinion, have been filed in each filing office
necessary for such purpose and that all filing fees and taxes, if any,
payable in connection with such filings have been paid in full.
(J) From time to time upon request by the Collateral Agent,
the Grantors shall, at their cost and expense, jointly and severally,
cause to be delivered to the Lenders an opinion of counsel
satisfactory to the Collateral Agent as to such matters relating to
the transactions contemplated hereby as the Required Lenders may
reasonably request.
19
<PAGE>
SECTION 7. General Authority
-----------------
Each Grantor hereby irrevocably appoints the Collateral Agent
its true and lawful attorney, with full power of substitution, in the
name of such Grantor, the other Secured Parties or otherwise, for the
sole use and benefit of the Secured Parties, but at such Grantor's
expense, to the extent permitted by law to exercise, at any time and
from time to time, but only while an Enforcement Notice or Automatic
Release Termination is in effect, all or any of the following powers
with respect to all or any of the Collateral:
(i) to demand, sue for, collect, receive and give acquittance
for any and all monies due or to become due thereon or by virtue
thereof,
(ii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(iii) subject to Section 6 of the Operating Agreement, to
sell, transfer, assign or otherwise deal in or with the same or the
proceeds or avails thereof, as fully and effectually as if the
Collateral Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and
to make any allowance and other adjustments with reference thereto;
provided that the Collateral Agent shall give each Grantor
not less than ten days' prior notice of the time and place of any sale
or other intended disposition of any of the Collateral, except any
Collateral which is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market. The
Collateral Agent and each Grantor agree that such notice constitutes
"reasonable notification" within the meaning of Section 9-504(3) of
the UCC.
SECTION 8. Remedies Relating to Giving of Enforcement
------------------------------------------
Notice
------
(A) (i) The Administrative Agent shall give an Enforcement
Notice to the Collateral Agent promptly after having been instructed
to do so in accordance with Section
20
<PAGE>
6.1 of the Inventory Credit Agreement. An Enforcement Notice
delivered by the Administrative Agent must include a certification by
the Administrative Agent of the principal amount (or, in the case of
doubt, an estimate of such amount) of Secured Obligations outstanding
under the Inventory Credit Agreement in respect of each Secured Party,
but shall be effective notwithstanding any inaccuracies in such
certification.
(ii) Upon receipt of an Enforcement Notice pursuant to
Section 8(A)(i), the Collateral Agent shall (i) forthwith notify each
Grantor of the receipt and contents thereof and (ii) promptly
thereafter, notify each other Secured Party thereof. The Collateral
Agent's notice shall advise each Secured Party that, if it does not
notify the Collateral Agent forthwith of the amount of its Secured
Obligations (including the interest rate or rates applicable thereto),
the Collateral Agent may rely on the information or documents (if any)
supplied to it by (1) the Administrative Agent pursuant to Section
8(A)(i) and (2) the holder of Secured Tax Exempt Debt pursuant to
Section 3.1(j) of the Inventory Credit Agreement in determining the
amount of any distribution to such Secured Party with respect to the
Collateral. So long as such Enforcement Notice or Automatic Release
Termination is in effect, the Collateral Agent may exercise the rights
and remedies provided in this Section. The Collateral Agent is not
empowered to exercise any remedy under this Section unless an
Enforcement Notice or Automatic Release Termination is in effect.
(iii) An Enforcement Notice shall become effective when the
Collateral Agent shall have received such Enforcement Notice. An
Enforcement Notice, once effective, shall remain in effect unless and
until it is canceled as provided in Section 8(A)(iv).
(iv) If after an Enforcement Notice becomes effective the
Borrower establishes to the satisfaction of the Required Secured
Parties that no Event of Default is continuing, the Administrative
Agent or the Required Secured Parties shall cancel such Enforcement
Notice by delivering a written notice of cancellation to the
Collateral Agent; provided that such notice is given (i) before the
Collateral Agent takes any action to exercise any remedy with respect
to the Collateral or (ii) thereafter, if the Collateral Agent believes
that all actions it has taken to exercise any remedy or remedies with
respect to the Collateral can be reversed without undue difficulty. A
notice of cancellation shall become effective one Domestic Business
Day after such notice is given as provided in this Section 8(A)(iv),
it being understood that after receipt of a notice of
21
<PAGE>
cancellation but before such notice becomes effective the Collateral
Agent shall not enforce any remedy for the disposition of Collateral
provided hereunder or make any distributions hereunder. The
Collateral Agent shall promptly notify each Grantor and each other
Secured Party of the cancellation of any Enforcement Notice.
(B) If an Enforcement Notice or Automatic Release Termination
is in effect, the Collateral Agent, at the request of the Required
Secured Parties, may exercise on behalf of the Secured Parties (i) all
rights of a secured party under the UCC (whether or not in effect in
the jurisdiction where such rights are exercised) and (ii) all of the
rights and remedies provided for in this Agreement. In addition, the
Collateral Agent may, without being required to give any notice,
except as herein provided or as may be required by mandatory
provisions of law, (i) withdraw all Liquid Investments and apply such
Liquid Investments and other cash, if any, then held by it as
Collateral as specified in Section 10 and (ii) if there shall be no
such monies, Liquid Investments or cash or if such monies, Liquid
Investments or cash shall be insufficient to pay all the Secured
Obligations in full, sell the Collateral or any part thereof at public
or private sale, for cash, upon credit or for future delivery, and at
such price or prices as the Collateral Agent may deem satisfactory;
provided that the Collateral Agent shall not sell the BSF Note to any
purchaser or purchasers unless the rating then assigned to the Buyers'
Certificates (as defined in the Receivables Purchase Agreement) is
reaffirmed by S&P if such Buyers' Certificates are then outstanding.
The Collateral Agent or any other Secured Party may be the purchaser
of any or all of the Collateral so sold at any public sale (or, if the
Collateral is of a type customarily sold in a recognized market or is
of a type which is the subject of widely distributed standard price
quotations, at any private sale). Subject to Section 6 of the
Operating Agreement with respect to the Pledged Interests, the
Collateral Agent is authorized in connection with any sale of the
Pledged Securities or the Pledged Interests, if it deems it advisable
so to do, (i) to restrict the prospective bidders on or purchasers of
any of the Pledged Securities or Pledged Interests to a limited number
of sophisticated investors who will represent and agree that they are
purchasing for their own account for investment and not with a view to
the distribution or sale of any of such Pledged Securities or Pledged
Interests, (ii) to cause to be placed on certificates for any or all
of the Pledged Securities or Pledged Interests or on any other
securities pledged hereunder a legend to the effect that such security
has not been registered under the Securities Act of 1933 and may not
be disposed of in violation of the
22
<PAGE>
provision of said Act, and (iii) to impose such other limitations or
conditions in connection with any such sale as the Collateral Agent
reasonably deems necessary or advisable in order to comply with said
Act or any other law. Each Grantor will execute and deliver such
documents and take such other action as the Collateral Agent deems
necessary or advisable in order that any such sale may be made in
compliance with law. Upon any such sale the Collateral Agent shall
have the right to deliver, assign and transfer to the purchaser
thereof the Collateral so sold. Each purchaser at any such sale shall
hold the Collateral so sold to it absolutely free from any claim or
right of whatsoever kind created by or through any Grantor, including
any equity or right of redemption of any Grantor which may be waived,
and each Grantor, to the extent permitted by law, hereby specifically
waives all rights of redemption, stay or appraisal which it has or may
have under any law now existing or hereafter adopted. The notice (if
any) of such sale required by Section 7 shall (1) in case of a public
sale, state the time and place fixed for such sale, (2) in the case of
a private sale, state the day after which such sale may be consummated
and (3) in the case of a sale at a broker's board or on a securities
exchange, state the board or exchange at which such sale is to be made
and the day on which the Collateral, or the portion thereof so being
sold, will first be offered for sale at such board or exchange. Any
such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Collateral Agent may
fix in the notice of such sale. At any such sale the Collateral may
be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may determine. The Collateral Agent shall not be
obligated to make any such sale pursuant to any such notice. The
Collateral Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to
time by announcement at the time and place fixed for the sale, and
such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral
on credit or for future delivery, the Collateral so sold may be
retained by the Collateral Agent until the selling price is paid by
the purchaser thereof, but the Collateral Agent shall not incur any
liability in case of the failure of such purchaser to take up and pay
for the Collateral so sold and, in case of any such failure, such
Collateral may again be sold upon like notice. The Collateral Agent,
instead of exercising the power of sale herein conferred upon it, may
proceed by a suit or suits at law or in equity to foreclose the
Security Interests and sell the Collateral, or any portion thereof,
under a judgment or decree of a court or courts of competent
jurisdiction.
23
<PAGE>
(C) For the purpose of enforcing any and all rights and
remedies under this Agreement, the Collateral Agent may (i) require
the Borrower to, and the Borrower agrees that it will, at its expense
and upon the request of the Collateral Agent, forthwith assemble all
or any part of the Collateral as directed by the Collateral Agent and
make it available at a place designated by the Collateral Agent which
is, in its opinion, reasonably convenient to the Collateral Agent and
the Borrower, whether at the premises of the Borrower or otherwise,
(ii) to the extent permitted by applicable law, enter, with or without
process of law and without breach of the peace, any premises where any
of the Collateral is or may be located, and without charge or
liability to it seize and remove such Collateral from such premises,
(iii) have access to and use such Grantor's books and records relating
to the Collateral and (iv) prior to the disposition of the Collateral,
store or transfer it without charge in or by means of any storage or
transportation facility owned or, to the extent the Borrower is
permitted to use a leased facility, leased by the Borrower, process,
repair or recondition it or otherwise prepare it for disposition in
any manner and to the extent the Collateral Agent deems appropriate
and, in connection with such preparation and disposition, use without
charge any trademark, trade name, copyright, patent or technical
process used by the Borrower, but only to the extent the Borrower is
permitted to use such trademark, trade name, copyright, patent or
technical process.
SECTION 9. Limitation on Duty of Collateral Agent in
-----------------------------------------
Respect of Collateral
---------------------
Beyond the exercise of reasonable care in the custody
thereof, the Collateral Agent shall have no duty as to any Collateral
in its possession or control or in the possession or control of any
agent or bailee or any income thereon or as to the preservation of
rights against prior parties or any other rights pertaining thereto.
The Collateral Agent shall be deemed to have exercised reasonable care
in the custody of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which it accords its
own property, and shall not be liable or responsible for any loss or
damage to any of the Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any warehouseman,
carrier, forwarding agency, consignee or other agent or bailee
selected by the Collateral Agent in good faith.
24
<PAGE>
SECTION 10. Application of Proceeds
-----------------------
(A) If an Enforcement Notice or an Automatic Release
Termination is in effect, the proceeds of any sale of, or other
realization upon, all or any part of the Collateral and any cash
otherwise held by the Collateral Agent pursuant to this Agreement
shall be applied by the Collateral Agent in the following order of
priorities:
first, to payment of the expenses of such sale or other
-----
realization, including reasonable compensation to agents and counsel
for the Collateral Agent, and all expenses, liabilities and advances
incurred or made by the Collateral Agent in connection therewith, and
any other unreimbursed expenses for which the Collateral Agent, the
Administrative Agent, or any Lender is to be reimbursed pursuant to
Section 13 hereof and unpaid fees owing to the Collateral Agent under
Section 13 hereof;
second, to the ratable payment of accrued but unpaid
------
interest, calculated from the interest payment date immediately
preceding the giving of the Enforcement Notice or the effectiveness of
the Automatic Release Termination, or such other date as shall have
been notified to the Collateral Agent, on all amounts included in the
Secured Principal Amount;
third, subject to the next to the last sentence of this
-----
subsection (A), to the ratable payment of all amounts included in the
Secured Principal Amount; fourth, to the ratable payment of all other
Secured Obligations, until all Secured Obligations shall have been
paid in full; and
finally, to payment to the relevant Grantor or Grantors or
-------
such Grantor's successors or assigns, or as a court of competent
jurisdiction may direct, of any surplus then remaining from such
proceeds.
The Collateral Agent may make distributions hereunder in cash
or in kind or, on a ratable basis, in any combination thereof. If at
any time any monies collected or received by the Collateral Agent are
distributable pursuant to this Section in respect of a Letter of
Credit Obligation or Secured Tax Exempt Debt, and if the
Administrative Agent or the holder of such Secured Tax Exempt Debt
shall notify the Collateral Agent that no provision is made under the
relevant agreement or other instrument for the application
25
<PAGE>
of such moneys (whether because such Letter of Credit Obligation is
contingent or such Secured Tax Exempt Debt has not become due and
payable or otherwise), then the Collateral Agent shall invest such
amounts in Liquid Investments at the direction of the Administrative
Agent or such holder and shall hold all such amounts so distributable
and all such investments and the net proceeds thereof in trust until
such time as the Administrative Agent or such holder shall request the
delivery thereof by the Collateral Agent for application to amounts
payable with respect to such Letter of Credit Obligation or Secured
Tax Exempt Debt. If the Collateral Agent holds any amounts which were
distributable in respect of a Letter of Credit Obligation or any
Secured Tax Exempt Debt after the relevant obligation has terminated
or matured and all amounts payable with respect thereto have been
paid, such amounts shall be applied by the Collateral Agent in the
order of priorities set forth in this subsection (A).
(B) In making the determinations and allocations required by
this Section, the Collateral Agent shall have no liability to any of
the Secured Parties for actions taken in reliance on information
supplied by the Secured Parties as to the amounts of the Secured
Obligations held by them. All distributions made by the Collateral
Agent pursuant to this Section shall be final and the Collateral Agent
shall have no duty to inquire as to the application by the Secured
Parties of any amount distributed to them. However, if at any time
the Collateral Agent determines that an allocation or distribution
previously made pursuant to this Section was based on a mistake of
fact (including, without limiting the generality of the foregoing,
mistakes based on an assumption that principal or interest has been
paid by payments which are subsequently recovered from the recipient
thereof through the operation of any bankruptcy, reorganization,
insolvency or other laws or otherwise), the Collateral Agent may in
its discretion, but shall not be obligated to, adjust subsequent
allocations and distributions hereunder so that, on a cumulative
basis, the Secured Parties receive the distributions to which they
would have been entitled if such mistake of fact had not been made.
SECTION 11. Concerning the Collateral Agent
-------------------------------
(A) The Collateral Agent is authorized to take all such
action as is provided to be taken by it as Collateral Agent hereunder
and all other action reasonably incidental thereto. As to any matters
not expressly provided for herein (including, without limitation, the
timing and
26
<PAGE>
methods of realization upon the Collateral) the Collateral Agent shall
act or refrain from acting in accordance with written instructions
from the Required Secured Parties or, in the absence of such
instructions, in accordance with its discretion; provided that the
Collateral Agent shall not be required to act (i) if upon advice of
counsel the Collateral Agent concludes that any such action creates
potential liability on its part or constitutes a violation of law or
(ii) the Collateral Agent shall not be indemnified to its satisfaction
in advance in respect of its costs and expenses in connection
therewith.
(B) J.P. Morgan Delaware and its Affiliates may accept
deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any Subsidiary or Affiliate of the
Borrower as if it were not the Collateral Agent hereunder.
(C) The obligations of the Collateral Agent hereunder are
only those expressly set forth herein. Without limiting the
generality of the foregoing, the Collateral Agent shall not be
required to take any action with respect to any Enforcement Notice or
Automatic Release Termination, except as expressly provided herein.
(D) The Collateral Agent may consult with legal counsel (who
may be counsel for the Borrower), independent public accountants and
other experts selected by it and shall not be liable for any action
taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
(E) Neither the Collateral Agent nor any director, officer,
agent, or employee of the Collateral Agent shall be liable for any
action taken or not taken by it in connection herewith (i) with the
consent or at the request of the Required Secured Parties (or, where
required by the terms hereof, the Lenders) or (ii) in the absence of
its own gross negligence or willful misconduct. Neither the
Collateral Agent nor any director, officer, agent or employee of the
Collateral Agent shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with this Agreement; (ii) the
performance or observance of any of the covenants or agreements of any
Grantor herein; or (iii) the validity, effectiveness or genuineness of
this Agreement or any instrument or writing furnished in connection
herewith. The Collateral Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement,
or other writing (which may be a bank wire, facsimile or similar
writing) believed by it to be genuine
27
<PAGE>
or to be signed by the proper party or parties. The Collateral Agent
shall not be responsible for the existence, genuineness or value of
any of the Collateral or for the validity, perfection, priority or
enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or
omission to act on its part hereunder. The Collateral Agent shall
have no duty to ascertain or inquire as to the performance or
observance of any of the terms of this Agreement by any Grantor.
(F) The Lenders shall, ratably in accordance with their
respective shares of the Secured Principal Amount on the relevant
Determination Date (as defined below), indemnify the Collateral Agent
(to the extent not reimbursed by the Borrower) against any cost,
expense (including counsel fees and disbursements), claim, demand,
action, loss or liability (except such as result from the Collateral
Agent's gross negligence or willful misconduct) that the Collateral
Agent may suffer or incur in connection with this Agreement or any
action taken or omitted by the Collateral Agent hereunder or
thereunder. The Determination Date for any such indemnification shall
be the earliest date (as determined by the Collateral Agent) on which
any of the acts, omissions or other events giving rise to the relevant
cost, expense, claim, demand, action, loss or liability occurred.
(G) The Collateral Agent may resign at any time (and, if so
requested by the Required Lenders after refusing to act on behalf of
the relevant Grantor pursuant to the first sentence of Section 13(B),
shall resign) by giving written notice thereof to the other Secured
Parties and the Borrower. Upon any such resignation, the Required
Lenders shall have the right, after consultation with the Borrower, to
appoint a successor Collateral Agent. If no successor Collateral
Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring
Collateral Agent gives such notice of resignation, then the retiring
Collateral Agent may, on behalf of the other Secured Parties, appoint
a successor Collateral Agent, which shall be a bank organized under
the laws of the United States or of any State thereof and having a
combined capital and surplus of at least $200,000,000. Upon the
acceptance of its appointment as Collateral Agent hereunder by a
successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights and duties
of the retiring Collateral Agent, and the retiring Collateral Agent
shall be discharged from its duties and obligations hereunder. After
any retiring Collateral Agent's
28
<PAGE>
resignation hereunder as Collateral Agent, the provisions of this
Section shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Collateral Agent.
SECTION 12. Appointment of Co-Agents
------------------------
At any time or times, in order to comply with any legal
requirement in any jurisdiction or, with the consent of the Borrower,
for any other reason, the Collateral Agent may appoint another bank or
trust company or one or more other persons, either to act as co-agent
or co-agents, jointly with the Collateral Agent, or to act as separate
agent or agents on behalf of the Secured Parties with such power and
authority as may be necessary for the effectual operation of the
provisions hereof and may be specified in the instrument of
appointment (which may, in the discretion of the Collateral Agent,
include provisions for the protection of such co-agent or separate
agent similar to the provisions of Sections 11 and 13).
SECTION 13. Collateral Agent's Fee; Expenses
--------------------------------
(A) The Borrower shall pay to the Collateral Agent, as
compensation for its services hereunder, from time to time a fee in
the amount previously agreed between the Borrower and the Collateral
Agent.
(B) If any Grantor fails to comply with the provisions of the
Inventory Credit Agreement or this Agreement, such that the value of
any Collateral or the validity, perfection, rank or value of any
Security Interest is thereby diminished or potentially diminished or
put at risk, the Collateral Agent, if requested by the Required
Lenders, may, but shall not be required to, effect such compliance on
behalf of such Grantor, and such Grantor shall reimburse the
Collateral Agent for the costs thereof on demand. All insurance
expenses and all expenses of protecting, storing, warehousing,
appraising, insuring, handling, maintaining and shipping the
Collateral and any and all excise, property, sales and use taxes
imposed by any state, federal, or local authority on any of the
Collateral, or in respect of periodic appraisals (if an Enforcement
Notice or Automatic Release Termination is in effect) and inspections
of the Collateral to the extent the same may be reasonably requested
by the Required Lenders from time to time, or in respect of the sale
or other disposition thereof, shall be
29
<PAGE>
borne and paid by such Grantor; and if such Grantor fails to promptly
pay any portion thereof when due, the Collateral Agent or any other
Secured Party may, at its option, but shall not be required to, pay
the same and charge such Grantor's account therefor, and such Grantor
agrees to reimburse the Collateral Agent or such other Secured Party
therefor on demand. All sums so paid or incurred by the Collateral
Agent or any other Secured Party for any of the foregoing and any and
all other sums for which such Grantor may become liable hereunder and
all costs and expenses (including attorneys' fees, legal expenses and
court costs) reasonably incurred by the Collateral Agent or any other
Secured Party in enforcing or protecting the Security Interests or any
of their rights or remedies under this Agreement, shall, together with
interest thereon until paid at the rate applicable to Base Rate Loans
under the Inventory Credit Agreement, be additional Secured
Obligations hereunder.
SECTION 14. Termination of Security Interests; Release
------------------------------------------
of Collateral
-------------
The Security Interests shall terminate upon (i) the repayment
in full of (x) all principal of and interest on any Loan made under,
or any Note issued pursuant to, the Inventory Credit Agreement, (y)
all Reimbursement Obligations and (z) all other amounts payable by the
Borrower hereunder or under the Inventory Credit Agreement, (ii) the
expiration of all Letters of Credit and (iii) the termination of the
Commitments under the Inventory Credit Agreement; provided that, if
any Secured Tax Exempt Debt is outstanding on the date of such
termination, the Borrower shall grant to the holders of such Secured
Tax Exempt Debt a first priority security interest (x) in Liquid
Investments (or caused to be issued by a bank acceptable to such
holders a letter of credit naming such holders as beneficiaries) in an
amount exceeding 115% of the amount of Secured Tax Exempt Debt
outstanding on the date of such termination, or (y) in other
collateral, with a fair market value (as determined by such holders)
exceeding 125% of the amount of Secured Tax Exempt Debt outstanding on
the date of such termination, in each case on the terms and conditions
and pursuant to documentation reasonably satisfactory to such holders.
When the Security Interests terminate, all rights to any remaining
Collateral shall revert to the relevant Grantor. Prior to such
termination of the Security Interests, Collateral may be released
pursuant to Section 5. Upon any such termination of the Security
Interests, the Collateral Agent will, at the expense of the relevant
Grantor, execute
30
<PAGE>
and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence the termination of the Security
Interests.
SECTION 15. Guaranties
----------
(A)The Special Purpose Members, jointly and severally,
unconditionally guarantee the full and punctual payment (whether at
stated maturity, upon acceleration or otherwise) of the Secured
Obligations (the "Guaranties"). Upon failure by the Borrower to pay
punctually any such amount, the Grantors shall forthwith on demand pay
the amount not so paid at the place and in the manner specified in
this Agreement.
(B) The obligations of the Special Purpose Members hereunder
shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or
otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower under this
Agreement, the Inventory Credit Agreement or any Secured Obligation,
by operation of law or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement, the Inventory Credit Agreement or any Secured Obligation;
(iii) any release, impairment, non-perfection or invalidity
of any direct or indirect security for any obligation of the Borrower
under this Agreement, the Inventory Credit Agreement or any Secured
Obligation;
(iv) any change in the corporate existence, structure or
ownership of the Borrower, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower or
its assets or any resulting release or discharge of any obligation of
the Borrower contained in this Agreement, the Inventory Credit
Agreement or any Secured Obligation;
(v) the existence of any claim, set-off or other rights which
the Special Purpose Member may have at any time against the Borrower,
the Agents, the L/C Issuing Banks or any Lender or any other
corporation or person, whether in
31
<PAGE>
connection herewith or any unrelated transactions, provided that
nothing herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim; (vi) any invalidity or
unenforceability relating to or against the Borrower for any reason of
this Agreement, the Inventory Credit Agreement or any Secured
Obligation, or any provision of applicable law or regulation
purporting to prohibit the payment by the Borrower of any Secured
Obligation; or
(vii) any other act or omission to act or delay of any kind
by the Borrower, the Agents, the L/C Issuing Banks or any Lender or
any other Person or any other circumstance whatsoever which might, but
for the provisions of this paragraph, constitute a legal or equitable
discharge of or defense to the Special Purpose Members' obligations
hereunder.
(C) The Special Purpose Members' obligations hereunder shall
remain in full force and effect until the Commitments shall have
terminated and all Secured Obligations have been paid in full. If at
any time any payment of any Secured Obligation is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Borrower or otherwise, the Special Purpose
Members' obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such
time.
(D) The Special Purpose Members irrevocably waive acceptance
hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be
taken by any Person against any Borrower or any other person.
(E) Upon making any payment with respect to the Borrower
hereunder, each Special Purpose Member shall be subrogated to the
rights of the payee against the Borrower with respect to such payment;
provided that such Special Purpose Member shall not enforce any
payment by way of subrogation until all Secured Obligations have been
paid in full.
(F) If acceleration of the time for payment of any amount
payable by the Borrower under this Agreement, the Inventory Credit
Agreement or the Secured Obligations is stayed upon the insolvency,
bankruptcy or reorganization of the Borrower, all such amounts
otherwise subject to acceleration under the terms of the Inventory
Credit Agreement shall nonetheless be payable by the Special
32
<PAGE>
Purpose Member hereunder forthwith on demand by the Administrative
Agent made at the request of the Required Lenders.
(G) Notwithstanding any other provision of this Section 15,
recourse against the Special Purpose Members in respect of the
Guaranties shall be limited to the Special Purpose Members'
Collateral.
SECTION 16. Notices
-------
All notices, communications and distributions hereunder shall
be given (i) in the case of the Borrower, the Agents, the L/C Issuing
Banks and the Lenders, in accordance with Section 9.1 of the Inventory
Credit Agreement, and (ii) in the case of each Special Purpose Member,
at its address or facsimile number set forth on the signature pages
hereof.
SECTION 17. Waivers, Non-Exclusive Remedies
-------------------------------
No failure on the part of the Collateral Agent to exercise,
and no delay in exercising and no course of dealing with respect to,
any right under this Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise by the Collateral Agent of any
right under this Agreement preclude any other or further exercise
thereof or the exercise of any other right. The rights and remedies
in this Agreement shall be cumulative and are not exclusive of any
other remedies provided by law.
SECTION 18. Successors and Assigns
----------------------
This Agreement is for the benefit of the Secured Parties and
their successors and assigns, and in the event of an assignment of all
or any of the Secured Obligations, the rights of the assignor
hereunder, to the extent applicable to the indebtedness so assigned,
shall automatically be transferred with such indebtedness. This
Agreement shall be binding on each Grantor and its successors and
assigns.
33
<PAGE>
SECTION 19. Changes in Writing
------------------
Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only by one or
more writings signed by each Grantor and by the Collateral Agent with
the consent of the Required Lenders (and, if the rights or duties of
the Administrative Agent are affected thereby, by the Administrative
Agent); provided that (i) the allocations and priorities set forth in
Section 10 may only be changed with the consent of each Secured Party
adversely affected thereby, and (ii) the definition of "Secured
Obligations", Section 5, Section 14, Section 15 and the percentage of
the Commitments or the aggregate unpaid principal amount of the Notes
or the Secured Principal Amount which shall be required for the
Lenders or any of them to take any action under this Section or any
other provision of this Agreement may only be changed with the consent
of all the Lenders.
SECTION 20. New York Law
------------
This Agreement shall be construed in accordance with and
governed by the laws of the State of New York, except as otherwise
required by mandatory provisions of law and except to the extent that
remedies provided by the laws of any jurisdiction other than New York
are governed by the laws of such jurisdiction.
SECTION 21. Severability
------------
If any provision hereof is invalid or unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the
other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Secured
Parties in order to carry out the intentions of the parties hereto as
nearly as may be possible; and (ii) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the
validity or enforceability of such provision in any other
jurisdiction.
34
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers
as of the day and year first above written.
BETHLEHEM STEEL CORPORATION
By___________________________
Name:
Title:
BETHLEHEM STEEL CREDITAFFILIATE ONE, INC.
By___________________________
Name:
Title:
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
Telephone: 410-388-7781
Facsimile: 410-388-7783
Attention: Edmund P. Reybitz
BETHLEHEM STEEL CREDITAFFILIATE TWO, INC.
By___________________________
Name:
Title:
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
Telephone: 410-388-7782
35
<PAGE>
Facsimile: 410-388-7783
Attention: Edmund P. Reybitz
36
<PAGE>
J.P. MORGAN DELAWARE, as
Structuring and Collateral
Agent
By___________________________
Name:
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as
Administrative Agent
By___________________________
Name:
Title:
37
<PAGE>
Schedule 2(B)(ii)
Description of Collateral
[Bethlehem Steel Credit Affiliate One, Inc.] [Bethlehem
Steel Credit Affiliate Two, Inc.], as Debtor, J.P. Morgan
Delaware, as Structuring and Collateral Agent. All of the
debtors' right, title and interest in and to the limited
liability company interest in Bethlehem Steel Funding, LLC,
a Maryland limited liability company, and its successors,
now owned or hereafter acquired by debtor, and all of
debtor's rights and privileges with respect thereto
(including, without limitation, all rights under the
Operating Agreement of Bethlehem Steel Funding, LLC), all
certificates evidencing any limited liability company
interest, and all income and profits thereon, and all
payments and distributions with respect thereto, and all
proceeds of the foregoing, including all cash proceeds and
all accounts, chattel paper, contract rights, general
intangibles, inventory and documents constituting noncash
proceeds, in each case now owned or hereafter acquired and
wherever located.
<PAGE>
ANNEX A
to EXHIBIT E
PERFECTION CERTIFICATE
The undersigned, the chief financial officer and chief
accounting officer of Bethlehem Steel Corporation, a Delaware
corporation (the "Borrower"), hereby certify with reference to the
Inventory Security and Pledge Agreement dated as of September 12, 1995
among the Borrower, the Special Purpose Members, J.P. Morgan
Delaware, as Structuring and Collateral Agent and Morgan Guaranty
Trust Company of New York, as Administrative Agent (terms defined
therein being used herein as therein defined), to the Structuring and
Collateral Agent, the Administrative Agent and each Lender as follows:
1. Names. (a) The exact corporate name of the Borrower as
it appears in its restated certificate of incorporation is as follows:
Bethlehem Steel Corporation
(b) The following is a list of all other names
(including trade names or similar appellations) used by the
Borrower or any of its divisions or other unincorporated
business units which produce or have produced goods which
would be included in the definition of Inventories at any
time during the past five years:
<PAGE>
2. Current Locations. (a) The chief executive office of the
Borrower is located at the following address:
Mailing
Address County State
------- ------ -----
(b) The following are all the locations where the Borrower
maintains any Inventories in the United States not identified above:
Mailing
Address County State
------- ------ -----
(c) The following are the names and addresses of all Persons
other than the Borrower which have possession of any of the Borrower's
Inventories in the United States:
Mailing
Address County State
------- ------ -----
(d) The following are all the places of business of the
Borrower not identified above which are located in states in which the
chief executive office of the Borrower or any Inventories are located:
Mailing
Address County State
------- ------ -----
2
<PAGE>
3. Prior Locations. (a) Set forth below is the information
required by subparagraphs (a) and (d) of paragraph 2 with respect to
each location or place ofbusiness not identified in paragraph 2 and
maintained by the Borrower at any time during the past five years in a
state in which it has maintained a location or place of business
during the past four months:
(b) Set forth below is the information required by
subparagraphs (b) and (c) of paragraph 2 with respect to each location
or bailee where or with whom Inventories have been lodged at any time
during the past four months:
4. Unusual Transactions. All Inventories of the Borrower
have been acquired by the Borrower in the ordinary course of its
business.
5. File Search Reports. Attached hereto as Schedule 5(A) is
a true copy of a file search report from the Uniform Commercial Code
filing officer in each jurisdiction identified in paragraph 2 or 3
above with respect to each name set forth in paragraph 1 above.
Attached hereto as Schedule 5(B) is a true copy of each financing
statement or other filing identified in such file search reports.
6. UCC Filings. A duly signed financing statement on Form
UCC-1 in substantially the form of Schedule 6(A) hereto has been duly
filed in the Uniform Commercial Code filing office in each
jurisdiction identified in paragraph 2 hereof. Attached hereto as
Schedule 6(B) is a true copy of each such filing duly acknowledged by
the filing officer.
7. Schedule of Filings. Attached hereto as Schedule 7 is a
schedule setting forth filing information with respect to the filings
described in paragraph 6 above.
3
<PAGE>
8. Filing Fees. All filing fees and taxes payable in
connection with the filings described in paragraph 6 above have been
paid.
4
<PAGE>
IN WITNESS WHEREOF, we have hereunto set our hands this ___
day of September, 1995.
_______________________________
Title:
________________________________
Title:
5
<PAGE>
SCHEDULE 6(A)
Description of Collateral
-------------------------
All (i) Inventories and documents, books and records
pertaining to Inventories, documents and proceeds thereof, in each
case, whether now owned or hereafter acquired or arising and wherever
located, and the proceeds of the foregoing, (ii) shares of capital
stock and debt instruments issued by Bethlehem Steel Credit Affiliate
One, Inc. and Bethlehem Steel Credit Affiliate Two, Inc., and each of
their successors to the debtor, now owned or hereafter acquired, and
all rights and privileges with respect thereto, and all income and
profits thereon, and all dividends, interest and other payments and
distributions with respect thereto, and all proceeds of the foregoing,
including, without limitation, all cash proceeds and all accounts,
chattel paper, contract rights, general intangibles, inventory and
documents constituting noncash proceeds of the foregoing, in each case
now owned or hereafter acquired and wherever located, and (iii) of the
debtor's right, title and interest in and to the limited liability
company interest in, and debt instruments issued by, Bethlehem Steel
Funding, LLC, a Maryland limited liability company, and its
successors, now owned or hereafter acquired, and all rights and
privileges with respect thereto (including, without limitation, all
rights under the Operating Agreement of Bethlehem Steel Funding, LLC),
all certificates evidencing any limited liability company interest,
and all income and profits thereon, and all payments, distributions,
interest and other payments with respect to the limited liability
company interest or the debt instruments, and all proceeds of the
foregoing, including, without limitation, all cash proceeds and all
accounts, chattel paper, contract rights, general intangibles,
inventory and documents constituting noncash
1
<PAGE>
proceeds of the foregoing, in each case now owned or hereafter
acquired and wherever located.
"Inventories" means now owned or hereafter acquired by
the debtor, all "inventory" (as defined in the UCC),
wherever located, and shall also mean and include, without
limitation, all raw materials and other materials and
supplies, work-in-process and finished goods and any
products made or processed therefrom and all substances, if
any, commingled therewith or added thereto, or which, in
accordance with generally accepted accounting principles,
would be included in inventories on the debtor's balance
sheet, (excluding, however, any of the foregoing which (i)
is located outside the United States of America, (ii) is
held at the debtor's marine construction facilities at
Sparrows Point, Maryland or Port Arthur, Texas for sale or
other disposition, or to be furnished by the debtor under a
contract for services, or to be used or consumed by the
debtor, in the debtor's marine construction business or
(iii) has been returned to or repossessed or stopped in
transit by the debtor (including all additions and
accessions thereto and replacements thereof)).
2
<PAGE>
SCHEDULE 7
SCHEDULE OF FILINGS
Debtor Filing Officer File NumberDate of Filing*
- ------ -------------- -------------------------
_______________
* Indicate lapse date, if other than fifth anniversary.
<PAGE>
ANNEX B
TO EXHIBIT E
FORM OF OPINION OF
COUNSEL FOR BORROWER
--------------------
1. The Inventory Security and Pledge Agreement creates a
valid security interest, for the benefit of the Secured Parties, in
all the Grantors' right, title and interest in all Collateral to the
extent the UCC is applicable thereto (the "Security Interest").
2. UCC financing statements and amendments thereto
(collectively, the "Financing Statements") have been filed in the
filing offices in the jurisdictions listed in Schedule 7 to the
Perfection Certificate (the " Filing Jurisdictions") and in the
jurisdiction identified in or pursuant to Section 16 of the Inventory
Security Agreement, which are all of the offices in which filings are
required to perfect the Security Interest, to the extent the Security
Interest may be perfected by filing under the UCC, and no further
filing or recording of any document or instrument or other action will
be required so to perfect the Security Interest, except that (i)
continuation statements with respect to each Financing Statement must
be filed within the respective time periods set forth on Schedule 7 to
the Perfection Certificate; (ii) additional filings may be necessary
if any Grantor changes its name, identity or corporate structure or
the jurisdiction in which its places of business, its chief executive
office or the Collateral are located; and (iii) I express no opinion
on the perfection of, or need for further filing or recording to
perfect, the Security Interest in Collateral now or hereafter located
in any jurisdiction other than the Filing Jurisdictions.
3. There are
(i) based solely on information provided to us by [Access
Information Services, Inc.] through the dates of searches in each of
the respective filing offices as set
<PAGE>
forth in Schedule A hereto and made a part hereof, no UCC financing
statements which name the Borrower as debtor or seller and cover any
of the Collateral, other than the Financing Statements, listed in the
available records in the UCC filing offices set forth in such filing
offices, which include all of the offices prescribed under the UCC as
the offices in which filings should have been made to perfect security
interests in the Collateral; and
(ii) no notices of the filing of any federal tax lien
(arising under Section 6321 of the Internal Revenue Code) or any lien
of the Pension Benefit Guaranty Corporation (arising under ERISA)
covering any of the Collateral listed in the available records in the
offices listed in Schedule B attached hereto and made a part hereof,
which include all of the offices having files which must be searched
in order to fully determine the existence of notices of the filing of
federal tax liens (arising under Section 6321 of the Internal Revenue
Code) and liens of the Pension Benefit Guaranty Corporation (arising
under ERISA) on the Collateral.
4. The Security Interest validly secures the payment of all
future Loans made by the Lenders to the Borrower and all Reimbursement
Obligations arising in connection with Letters of Credit issued by the
L/C Issuing Banks, whether or not at the time such Loans are made or
Letters of Credit are issued an Event of Default or other event not
within the control of the Lenders or the L/C Issuing Banks has
relieved or may relieve the Lenders from their obligations to make
such Loans or the L/C Issuing Banks from their obligations to issue
Letters of Credit, and is perfected to the extent set forth in
paragraph 2 above with respect to such future Loans and Reimbursement
Obligations. Except for (i) Instruments (and money) which must be in
the possession of the Collateral Agent in order to perfect the
Security Interest therein, (ii) Liquid Investments in book-entry form,
as to which the Inventory Security Agreement requires an opinion of
counsel that appropriate measures have been taken to perfect the
Security Interest therein and (iii) Proceeds (other than Proceeds in
which the Security Interest is perfected by reason of Section 9-306 of
the UCC), I am not aware of the existence of any Collateral as to
which the Security Interest cannot be perfected by filing under the
UCC. Insofar as the priority thereof is governed by the UCC, the
Security Interest has the same priority with respect to future Loans
and Reimbursement Obligations on the date such Loans are made and such
Reimbursement Obligations are incurred as it will have on such date
with respect to Loans made and Letters of Credit issued on the date
hereof. I call to your attention that notwithstanding the priorities
2
<PAGE>
governed by the UCC, the Security Interest may not have priority in
certain circumstances over a Federal Lien. To the extent the Security
Interest secures Loans, (i) the Security Interest in Collateral
acquired after the filing of a Federal Lien has priority over such
Federal Lien only with respect to Collateral that is commercial
financing security under Section 6323(c)(2)(C) of the Internal Revenue
Code acquired by the Borrower in the ordinary course of its trade or
business before the 46th day following such filing and (ii) the
Security Interest has priority over such Federal Lien to the extent it
secures Loans made after the date of filing of such Federal Lien only
if such future Loans are made before the earlier of the 46th day after
such Federal Lien is filed or the time that the relevant Lender or
Lenders have actual notice or knowledge, within the meaning of Section
6323(i)(1) of the Internal Revenue Code, that such Federal Lien was
filed. To the extent the Security Interest secures Reimbursement
Obligations arising in connection with Letters of Credit, (i) the
Security Interest in Collateral acquired after the filing of a Federal
Lien may have priority over such Federal Lien only with respect to
Collateral whose acquisition is directly traceable to a disbursement
under such Letters of Credit and (ii) the Security Interest may have
priority over a Federal Lien only to the extent such Security Interest
secures Reimbursement Obligations arising under irrevocable Letters of
Credit issued prior to the filing of such Federal Lien for the benefit
of a party not affiliated with the Borrower.
3
<PAGE>
EXHIBIT F
BORROWING BASE CERTIFICATE
I, _________________, [Chief Financial
Officer/Treasurer/Controller], for Bethlehem Steel Corporation (the
"Borrower") DO HEREBY CERTIFY, in accordance with Section 5.1 of the
Inventory Credit Agreement dated as of September 12, 1995 among the
Borrower, the Lenders listed therein, Morgan Guaranty Trust Company of
New York, as Administrative Agent, and J.P. Morgan Delaware, as
Structuring and Collateral Agent (the " Credit Agreement", capitalized
terms used herein and not otherwise defined herein having the meanings
assigned to them in the Credit Agreement), that attached hereto is the
Borrower's good faith estimate as to the calculation of the Borrowing
Base as of _____________.
IN WITNESS WHEREOF, I have signed this certificate as of this
______ day of ___________.
__________________________
Name:
Title:
<PAGE>
EXHIBIT G
Form of Opinion of Counsel to
Bethlehem Steel Corporation
[Letterhead of Bethlehem Steel Corporation]
September 12, 1995
Morgan Guaranty Trust
Company of New York, as
Administrative Agent
60 Wall Street
New York, New York 10260
J.P. Morgan Delaware, as Structuring
and Collateral Agent
902 Market Street
Wilmington, Delaware 19801
The Lenders (as defined in the
Inventory Credit Agreement
as referred to below)
Ladies and Gentlemen:
<PAGE>
I have acted as counsel for Bethlehem Steel Corporation (the
"Borrower") in connection with (i) the Inventory Credit Agreement (the
"Inventory Credit Agreement") dated as of September 12, 1995 among the
Borrower, the lenders listed on the signature pages thereof (the
"Lenders"), Morgan Guaranty Trust Company of New York, as
Administrative Agent (the "Administrative Agent") and J.P. Morgan
Delaware as Structuring and Collateral Agent (the " Collateral
Agent"), (ii) the Notes and (iii) the Inventory Security and Pledge
Agreement (the "Inventory Security Agreement") dated as of September
12, 1995 among the Borrower, the Special Purpose Members, J.P. Morgan
Delaware, the Collateral Agent and the Administrative Agent (documents
(i) through (iii) are referred to herein as the "Financing
Documents"). Terms defined in the Inventory Credit Agreement are used
herein as therein defined. This opinion is being rendered to you
pursuant to Section 3.1 of the Inventory Credit Agreement.
I have examined originals or copies, certified or otherwise
identified to my satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have
conducted such other investigations of fact and law as I have deemed
necessary or advisable for purposes of this opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware and has all
corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted.
2. Each Special Purpose Member is a corporation duly
incorporated, validly existing and in good standing under the laws of
Maryland and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on
its business as now conducted.
3. The execution, delivery and performance by the Borrower
of the Financing Documents are within the Borrower's corporate powers,
have been duly authorized by all necessary corporate action, require
no action by or in respect of, or filing with, any governmental body,
agency or official (except for the filing of UCC financing statements
as contemplated by the Inventory Security Agreement) and do not
contravene, or constitute a default under, any provision
2
<PAGE>
of applicable law or regulation or of the certificate of incorporation
or by-laws, as amended, of the Borrower or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the
Borrower and known to me after due inquiry, or result in the creation
or imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries (except the Security Interest as hereinafter defined).
4. The execution, delivery and performance by each Special
Purpose Member of the Inventory Security Agreement are within the such
Member's corporate powers, have been duly authorized by all necessary
corporate action, require no action by or in respect of, or filing
with, any governmental body, agency or official (except for the filing
of UCC financing statements as contemplated by the Inventory Security
Agreement) and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the articles of
incorporation or by-laws, as amended, of such Member or of any
agreement, judgment, injunction, order, decree or other instrument
binding upon such Member and known to me after due inquiry, or result
in the creation or imposition of any Lien on any asset of such Member
(except the Security Interest as hereinafter defined).
5. The Financing Documents constitute valid and binding
agreements of the Borrower, enforceable against the Borrower in
accordance with its terms, except to the extent that the (i) the
enforceability thereof may be limited by bankruptcy, reorganization,
insolvency, moratorium or other similar laws relating to the
enforcement of creditors' rights generally from time to time in effect
and by general equitable principles regardless of whether such
enforceability is considered in a proceeding in equity or at law and
(ii) certain of the remedial provisions of the Inventory Security
Agreement may be limited by applicable law, although such limitations
do not in my opinion make the remedies provided for therein (taken as
a whole) inadequate for the practical realization of the benefits
intended to be afforded thereby.
6. The Inventory Security Agreement constitutes a valid and
binding agreement of each of the Special Purpose Members, enforceable
against such Member in accordance with its terms, except to the extent
that the (i) the enforceability thereof may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws relating
to the enforcement of creditors' rights generally from time to time in
effect and by general equitable principles regardless of whether such
enforceability is considered in a proceeding in equity or at law and
(ii) certain of the remedial provisions may be limited by
3
<PAGE>
applicable law, although such limitations do not in my opinion make
the remedies provided for therein (taken as a whole) inadequate for
the practical realization of the benefits intended to be afforded
thereby.
7. To the best of my personal knowledge after due inquiry,
there is no action, suit or proceeding pending against the Borrower or
any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official, in which there is a reasonable
possibility of an adverse decision which could materially adversely
affect the ability of the Borrower or such Subsidiary to perform its
obligations under the Financing Documents or which in any manner draws
into question the validity of the Financing Documents.
8. The Inventory Security Agreement creates a valid security
interest, for the benefit of the Secured Parties, in all the Grantors'
right, title and interest in all Collateral to the extent the UCC is
applicable to the creation of a security interest therein (the "
Security Interest").
9. UCC financing statements (collectively, the "Financing
Statements") have been filed in the filing offices in the
jurisdictions listed in Schedule 7 to the Perfection Certificate dated
as of the date hereof (the "Perfection Certificate") and delivered to
you and in the jurisdiction identified in or pursuant to Section 16 of
the Inventory Security Agreement (the "Filing Jurisdictions"), which
are all of the offices in which filings are required so to perfect the
Security Interest, to the extent the Security Interest may be
perfected by any filing under the UCC, and no further filing or
recording of any document or instrument or other action is currently
required to perfect the Security Interest, except that (i)
continuation statements with respect to each Financing Statement must
be filed within the respective time periods set forth on Schedule 7 to
the Perfection Certificate; (ii) additional filings may be necessary
if any Grantor changes its name, identity or corporate structure or
the jurisdiction in which its places of business, its chief executive
office or the Collateral are located; and (iii) I express no opinion
on the perfection of, or need for further filing or recording to
perfect, the Security Interest in Collateral now or hereafter located
in any jurisdiction other than the Filing Jurisdictions.
10.Assuming that each of the Collateral Agent and the Secured
Parties is without notice of any adverse claim (as defined in Section
8-302 of the UCC), the delivery to and
4
<PAGE>
continued possession by the Collateral Agent in the State of New York
of the certificates, related stock powers executed in blank and the
BSF Note representing the Pledged Securities (as defined in the
Inventory Security Agreement) is effective to create in favor of the
Collateral Agent for the benefit of the secured parties named therein
a perfected and first priority security interest in the Pledged
Securities under the Uniform Commercial Code as in effect in the State
of New York prior to any other security interest that must be
perfected by possession or filing under the UCC. No registration,
recordation or filing with any governmental body, agency or official
is required in connection with the execution or delivery of the
Inventory Security Agreement with respect to the Pledged Securities or
necessary for the validity or enforceability thereof or for the
perfection of the security interest in the Pledged Securities.
11.Assuming that each of the Collateral Agent and the Secured
Parties is without notice of any adverse claim (as defined in Section
8-302 of the UCC), the delivery to and continued possession by the
Collateral Agent in the State of New York of the certificates
representing the Pledged Interests (as defined in the Inventory
Security Agreement) and filing of Financing Statements in the
jurisdiction identified in or pursuant to Section 16 of the Inventory
Security Agreement is effective to create in favor of the Collateral
Agent for the benefit of the secured parties named therein a perfected
and first priority security interest in the Pledged Interests under
the Uniform Commercial Code prior to any other security interest that
must be perfected by possession or filing under the UCC.
12. There are
(i) based solely on information provided to us by Access
Information Services, Inc. through the dates of searches in each of
the respective filing offices as set forth in Schedule A hereto and
made a part hereof, other than financing statements on file with
respect to the Existing Credit Agreement (which will be terminated in
accordance with the provisions of Section 3.1 of the Inventory Credit
Agreement), no UCC financing statements which name the Borrower as
debtor or seller and cover any of the Collateral, other than the
Financing Statements, listed in the available records in the UCC
filing offices set forth in such filing offices, which include all of
the offices prescribed under the UCC as the offices in which filings
should have been made to perfect security interests in the
5
<PAGE>
Collateral to the extent Security Interests may be perfected by
filing; and
(ii) no notices of the filing of any federal tax lien
(arising under Section 6321 of the Internal Revenue Code) or any lien
of the Pension Benefit Guaranty Corporation (arising under ERISA)
covering any of the Collateral listed in the available records in the
offices listed in Schedule B attached hereto and made a part hereof,
which include all of the offices having files which must be searched
in order to fully determine the existence of notices of the filing of
federal tax liens (arising under Section 6321 of the Internal Revenue
Code) and liens of the Pension Benefit Guaranty Corporation (arising
under ERISA) on the Collateral.
13. The Security Interest validly secures the payment of all
future Loans made by the Lenders to the Borrower and all Reimbursement
Obligations arising in connection with Letters of Credit issued by the
L/C Issuing Banks, whether or not at the time such Loans are made or
Letters of Credit are issued an Event of Default or other event not
within the control of the Lenders or the L/C Issuing Banks has
relieved or may relieve the Lenders from their obligations to make
such Loans or the L/C Issuing Banks from their obligations to issue
Letters of Credit, and is perfected to the extent set forth in
paragraph 9 above with respect to such future Loans and Reimbursement
Obligations. Except for (i) Pledged Securities, Instruments (and
money) which must be in the possession of the Collateral Agent in
order to perfect the Security Interest therein, (ii) Liquid
Investments in book-entry form, as to which the Inventory Security
Agreement requires an opinion of counsel that appropriate measures
have been taken to perfect the Security Interest therein and (iii)
Proceeds (other than Proceeds in which the Security Interest is
perfected by reason of Section 9-306 of the UCC), I am not aware of
the existence of any Collateral as to which the Security Interest
cannot be perfected by filing under the UCC. Insofar as the priority
thereof is governed by the UCC, the Security Interest has the same
priority with respect to future Loans and Reimbursement Obligations on
the date such Loans are made and such Reimbursement Obligations are
incurred as it will have on such date with respect to Loans made and
Letters of Credit issued on the date hereof. I call to your attention
that notwithstanding the priorities governed by the UCC, the Security
Interest may not have priority in certain circumstances over a Federal
Lien. To the extent the Security Interest secures Loans, (i) the
Security Interest
6
<PAGE>
in Collateral acquired after the filing of a Federal Lien has priority
over such Federal Lien only with respect to Collateral that is
commercial financing security under Section 6323(c)(2)(C) of the
Internal Revenue Code acquired by the Borrower in the ordinary course
of its trade or business before the 46th day following such filing and
(ii) the Security Interest has priority over such Federal Lien to the
extent it secures Loans made after the date of filing of such Federal
Lien only if such future Loans are made before the earlier of the 46th
day after such Federal Lien is filed or the time that the relevant
Lender or Lenders have actual notice or knowledge, within the meaning
of Section 6323(i)(1) of the Internal Revenue Code, that such Federal
Lien was filed. To the extent the Security Interest secures
Reimbursement Obligations arising in connection with Letters of
Credit, (i) the Security Interest in Collateral acquired after the
filing of a Federal Lien may have priority over such Federal Lien only
with respect to Collateral whose acquisition is directly traceable to
a disbursement under such Letters of Credit and (ii) the Security
Interest may have priority over a Federal Lien only to the extent such
Security Interest secures Reimbursement Obligations arising under
irrevocable Letters of Credit issued prior to the filing of such
Federal Lien for the benefit of a party not affiliated with the
Borrower.
I am a member of the bar of the Commonwealth of Pennsylvania
and I express no opinion as to any matters governed by any laws other
than the General Corporation Law of the State of Delaware, the laws of
the Commonwealth of Pennsylvania and the Federal laws of the United
States of America. I have made no independent examination of Indiana,
Maryland or New York law, and have retained special counsel in
Maryland, Pennsylvania and New York with respect to certain matters
relating to the Security Interest. In giving the opinions in
paragraphs 2, 4, 5, 6, 8, 9, 10, 11, 12 and 13 hereof I have relied
upon the opinions, each dated of even date herewith, of Cravath,
Swaine & Moore, Pepper, Hamilton & Scheetz, Venable, Baetjer and
Howard, LLP and Barnes & Thornburg, respectively. In giving the
opinion expressed in paragraphs 9 and 12(i) hereof with respect to
states other than Indiana, Maryland, Pennsylvania and New York, I have
relied solely upon a review of Part 4 (or the equivalent provisions)
of the Uniform Commercial Code in effect in each such state.
Very truly yours,
<PAGE>
EXHIBIT H
Form of Opinion of Davis Polk & Wardwell,
Special Counsel for the Agents
[Letterhead of Davis Polk & Wardwell]
September 12, 1995
Morgan Guaranty Trust
Company of New York, as
Administrative Agent
60 Wall Street
New York, New York 10260
J.P. Morgan Delaware, as Structuring
and Collateral Agent
902 Market Street
Wilmington, Delaware 19801
The Lenders (as defined in the
Inventory Credit Agreement
as referred to below)
<PAGE>
Ladies and Gentlemen:
We have participated in the preparation of the Inventory
Credit Agreement (the "Inventory Credit Agreement") dated as of
September 12, 1995 among Bethlehem Steel Corporation (the "Borrower"),
the lenders listed on the signature pages thereof, as Lenders, Morgan
Guaranty Trust Company of New York, as Administrative Agent and J.P.
Morgan Delaware, as Structuring and Collateral Agent. Terms defined
in the Agreement and not otherwise defined herein are used in this
opinion with the meanings so defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have
conducted such other investigations of fact and law as we have deemed
necessary or advisable for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower
of the Inventory Credit Agreement and the Notes are within the
Borrower's corporate powers and have been duly authorized by all
necessary corporate action.
2. The Inventory Credit Agreement constitutes a valid and
binding agreement of the Borrower and each Note constitutes a valid
and binding obligation of the Borrower, in each case enforceable in
accordance with its terms except as the same may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by general principles of equity.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the
federal laws of the United States of America and the General
Corporation Law of the State of Delaware. In giving the foregoing
opinion, we express no opinion as to the effect (if any) of any law of
any jurisdiction (except the State of New York) in which any Lender is
located which limits the rate of interest that such Lender may charge
or collect.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any
other purpose or relied upon by any other person without our prior
written consent.
Very truly yours,
2
<PAGE>
EXHIBIT I
ACCEPTABLE INSURERS
X.L. Insurance Company, Ltd.
<PAGE>
EXHIBIT J
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [NAME OF
ASSIGNOR] (the "Assignor"), [NAME OF ASSIGNEE] (the "Assignee"),
BETHLEHEM STEEL CORPORATION (the " Borrower") and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Administrative Agent (the
"Administrative Agent").
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the Inventory Credit Agreement dated as of
September 12, 1995 among the Borrower, the Assignor and the other
Lenders party thereto, as Lenders, the Administrative Agent and J.P.
Morgan Delaware, as Structuring and Collateral Agent (the " Inventory
Credit Agreement");
WHEREAS, as provided under the Inventory Credit Agreement,
the Assignor has a Commitment to make Loans to the Borrower in an
aggregate principal amount at any time outstanding not to exceed
$__________;
WHEREAS, Loans made to the Borrower by the Assignor under the
Inventory Credit Agreement in the aggregate principal amount of
$__________ are outstanding at the date hereof;
WHEREAS, the Assignor proposes to assign to the Assignee all
of the rights of the Assignor under the Inventory Credit Agreement in
respect of a portion of its Commitment thereunder in an amount equal
to $__________ (the "Assigned Amount"), together with a corresponding
portion of its outstanding Loans, and the Assignee proposes to accept
<PAGE>
assignment of such rights and assume the corresponding obligations
from the Assignor on such terms; and
WHEREAS, the Assignor concurrently proposes to assign all of
the rights of the Assignor under the Receivables Purchase Agreement in
respect of a portion of its Commitment thereunder, together with a
corresponding portion of its pro rata share of the Aggregate Net
Investment.
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as
follows:
SECTION 1. Definitions. All capitalized terms not otherwise
-----------
defined herein shall have the respective meanings set forth in the
Inventory Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and
----------
sells to the Assignee all of the rights of the Assignor under the
Inventory Credit Agreement to the extent of the Assigned Amount, and
the Assignee hereby accepts such assignment from the Assignor and
assumes all of the obligations of the Assignor under the Inventory
Credit Agreement to the extent of the Assigned Amount, including the
purchase from the Assignor of the corresponding portion of the
principal amount of the Loans made by the Assignor outstanding at the
date hereof. Upon the execution and delivery hereof by the Assignor,
the Assignee, and if required pursuant to Section 4, the Borrower and
the Administrative Agent, and the payment of the amounts specified in
Section 3 required to be paid on the date hereof (i) the Assignee
shall, as of the date hereof, succeed to the rights and be obligated
to perform the obligations of a Lender under the Inventory Credit
Agreement with a Commitment in an amount equal to the Assigned Amount,
and (ii) the Commitment of the Assignor shall, as of the date hereof,
be reduced by a like amount and the Assignor released from its
obligations under the Inventory Credit Agreement to the extent such
obligations have been assumed by the Assignee. The assignment
provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment
--------
and sale contemplated in Section 2 hereof, the Assignee shall pay to
the Assignor on the date hereof in
2
<PAGE>
Federal funds the amount heretofore agreed between them.(1) It is
understood that commitment and/or facility fees accrued to the date
hereof are for the account of the Assignor and such fees accruing from
and including the date hereof are for the account of the Assignee.
Each of the Assignor and the Assignee hereby agrees that if it
receives any amount under the Inventory Credit Agreement which is for
the account of the other party hereto, it shall receive the same for
the account of such other party to the extent of such other party's
interest therein and shall promptly pay the same to such other party.
SECTION 4. Consent of the Borrower and the Administrative
Agent. This Agreement is conditioned upon the consent of the Borrower
and the Administrative Agent pursuant to Section 9.6(c) of the
Inventory Credit Agreement. The execution of this Agreement by the
Borrower and the Administrative Agent is evidence of this consent.
Pursuant to Section 9.6(c), the Borrower agrees to execute and deliver
a Note payable to the order of the Assignee to evidence the assignment
and assumption provided for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no
responsibility with respect to, the solvency, financial condition, or
statements of the Borrower, or the validity and enforceability of the
obligations of the Borrower in respect of the Inventory Credit
Agreement or any Note. The Assignee acknowledges that it has,
independently and without reliance on the Assignor, and based on such
documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and will
continue to be responsible for making its own independent appraisal of
the business, affairs and financial condition of the Borrower.
SECTION 5. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York.
- ---------------
(1) Amount should combine principal together with accrued
interest and breakage compensation, if any, to be paid by the
Assignee, net of any portion of any upfront fee to be paid by the
Assignor to the Assignee. It may be preferable in an appropriate case
to specify these amounts generically or by formula rather than as a
fixed sum.
3
<PAGE>
SECTION 6. Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the
same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their duly authorized officers as of the
date first above written.
[NAME OF ASSIGNOR]
By_________________________
Name:
Title:
[NAME OF ASSIGNEE]
By__________________________
Name:
Title:
[BETHLEHEM STEEL CORPORATION
By__________________________
Name:
Title:]
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
as Administrative Agent
By__________________________
Name:
4
<PAGE>
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as
L/C Issuing Bank
By___________________________
Name:
Title:
CHEMICAL BANK, as L/C Issuing
Bank
By___________________________
Name:
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., as L/C
Issuing Bank
By___________________________
Name:
Title:
<PAGE>
<PAGE>
Exhibit 4(d)
AMENDED AND RESTATED INVENTORY CREDIT AGREEMENT
AMENDED AND RESTATED INVENTORY CREDIT AGREEMENT dated as of
June 5, 1997 among BETHLEHEM STEEL CORPORATION, the Lenders listed on
the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Administrative Agent and Structuring and Collateral Agent.
W I T N E S S E T H :
WHEREAS, the parties hereto have heretofore entered into a
Inventory Credit Agreement (the "Agreement") dated as of September 12,
1995, and
WHEREAS, the parties hereto desire to amend the Agreement as
set forth herein and to restate the Agreement in its entirety to read
as set forth in the Agreement with the amendments specified below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
-----------------------
specifically defined herein, each capitalized term used herein which
is defined in the Agreement shall have the meaning assigned to such
term in the Agreement. Each reference to "hereof", "hereunder",
"herein" and "hereby" and each other similar reference and each
reference to "this Agreement" and each other similar reference
contained in the Agreement shall from and after the effective date
hereof refer to the Agreement as amended and restated hereby.
SECTION 2. Amendments to Definitions. Section 1.1 of the
-------------------------
Agreement is amended as follows:
(a) The definition of "Adjusted Consolidated Tangible Net
Worth" is amended by replacing "December 31, 1994" with "March 31,
1997".
(b) The definition of "Borrower's 1994 Form 10-K" is amended
by replacing "1994" in each place where it appears with "1996".
(c) The definition of "Borrower's Latest Form 10-Q" is
amended by replacing "June 30, 1995" with "March 31, 1997"
<PAGE>
(d) The definition of "Collateral Agent" is amended by
replacing "J.P. Morgan Delaware" with "Morgan Guaranty".
(e) The definition of "Consolidated Tangible Net Worth" is
amended by replacing "December 31, 1994" with "March 31, 1997".
(f) The definition of "Eligible Inventories" is amended by
replacing "1994" with "1996".
(g) The definition of "Termination Date" is amended by
replacing the date "September 12, 2000" with the date "September 12,
2002".
(h) Each reference to "Chemical Bank" in the definitions "CD
Reference Banks", "Euro-Dollar Reference Banks" and "L/C Issuing Bank"
is changed to "The Chase Manhattan Bank".
SECTION 3. Updated Representations. (a) Each reference to
-----------------------
"1994" in Section 4.4 of the Agreement is changed to "1996".
(b) Each reference to "June 30, 1995" in Section 4.4 of the
Agreement is changed to "March 31, 1997".
(c) Each reference to "six" in Section 4.4(b) of the
Agreement is changed to "three".
(d) The references in Section 4.7 of the Agreement to
"December 31, 1987" and "December 31, 1986" are changed to "December
31, 1990" and "December 31, 1987", respectively.
SECTION 4. Amendment of Section 5.6 of the Agreement. The
-----------------------------------------
reference to "$600,000,000" in Section 5.6 is changed to
"$450,000,000" and the reference to "June 30, 1995" in Section 5.6 is
changed to "June 30, 1997".
SECTION 5. New Pricing Schedule. The Pricing Schedule to
--------------------
the Agreement is deleted and replaced by the Pricing Schedule attached
hereto.
SECTION 6. Addition of Approved Sites. Exhibit C-1 to the
--------------------------
Agreement is deleted and replaced by Exhibit C-1 attached hereto.
SECTION 7. Changes in Commitments. With effect from and
----------------------
including the date this Amendment and Restatement becomes effective in
accordance with Section 10, (i) each Person listed on the signature
pages hereof which is not a party to the Agreement (the "New Bank")
shall become a Bank party to the
2
<PAGE>
Agreement and (ii) the Commitment of each Bank shall be the amount set
forth opposite the name of such Bank on the signature pages hereof.
Any Bank whose Commitment is changed to zero shall upon such
effectiveness cease to be a Bank party to the Agreement, and all
accrued fees and other amounts (other than principal and interest)
payable under the Agreement for the account of such Bank shall be due
and payable on such date; provided that the provisions of Sections
8.3, 8.4 and 9.3 of the Agreement shall continue to inure to the
benefit of each such Bank , provided further that such Bank shall
continue to be bound by Section 9.8 of the Agreement with respect to
information provided to it prior to such date. If Loans are
outstanding on such date and, as a result of changes in the
Commitments of the Banks, such Loans are not held by the continuing
Banks ratably in proportion to their Commitments, the Banks shall, as
appropriate, buy and sell such Loans such that, after giving effect to
such purchases, such Loans are held ratably, and Section 2.14 of the
Agreement shall apply to any such purchases.
SECTION 8. Representations and Warranties. The Borrower
------------------------------
hereby represents and warrants that as of the effective date hereof
(after giving effect hereto):
(a) no Default has occurred and is continuing; and
(b) each representation and warranty of the Borrower set
forth in the Agreement after giving effect to this Amendment and
Restatement is true and correct.
SECTION 9. Governing Law. This Amendment and Restatement
-------------
shall be governed by and construed in accordance with the laws of the
State of New York.
SECTION 10. Counterparts; Effectiveness. This Amendment and
---------------------------
Restatement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Amendment and
Restatement shall become effective as of the date hereof if each of
the following conditions shall have been satisfied not later than June
30, 1997:
(i) receipt by the Administrative Agent of duly executed
counterparts hereof signed by each of the parties hereto (or,
in the case of any party as to which an executed counterpart
shall not have been received, the Agent shall have received
telegraphic, telex or other written confirmation from such
party of execution of a counterpart hereof by such
party);
3
<PAGE>
(ii) receipt by the Administrative Agent of an opinion
of the Assistant General Counsel of the Borrower (or such
other counsel for the Borrower as may be acceptable to the
Administrative Agent), substantially to the effect of
paragraphs 1-8 of Exhibit G to the Agreement with reference
to this Amendment and Restatement and the Agreement as
amended and restated hereby;
(iii) receipt by the Administrative Agent for the
several accounts of the Banks of fees equal to (w) .225% of
such Lender's Commitment, if such Lender's initial commitment
for this facility and under the Amendment and Restatement of
the Receivables Purchase Agreement (the "facilities") was at
least $75,000,000, (x) .1875% of such Lender's Commitment, if
such Lender's initial commitment for the facilities was at
least $50,000,000 but less than $75,000,000, (y) .15% of such
Lender's Commitment, if such Lenders's initial commitment for
the facilities was at least $25,000,000 but less than
$50,000,000, and (z) .125% of such Lender's Commitment, if
such Lender's initial commitment for the facilities was at
least $15,000,000 but less than $25,000,000;
(iv) the Borrower shall have paid to the Agents, for
their own accounts, such fees and compensation in such
amounts as are set forth in the letter dated May 8, 1997; and
(v) the Amendment and Restatement dated as of June 5,
1997 of the Receivables Purchase Agreement shall have become
effective;
The Administrative Agent shall promptly notify the Borrower and the
Banks of the effectiveness of this Amendment and Restatement, and such
notice shall be conclusive and binding on all parties hereto.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers
as of the day and year first above written.
BETHLEHEM STEEL CORPORATION
By
------------------------------
Name:
Title:
1170 Eighth Avenue
Bethlehem, PA 18016
Telephone: 610-694-4581
Facsimile: 610-694-3356
Attention: Edmund P. Reybitz,
Assistant Treasurer
5
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Administrative Agent,
Structuring and Collateral Agent, and
L/C Issuing Bank
By
------------------------------
Name:
Title:
60 Wall Street
New York, NY 10260
Telephone: 212-648-6793
Facsimile: 212-648-5336
Attention: Laura E. Reim
THE CHASE MANHATTAN BANK,
as L/C Issuing Bank
By
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., as L/C Issuing Bank
By
------------------------------
Name:
Title:
6
<PAGE>
LENDERS:
Commitment: $37,821,428.58 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By
------------------------------
Name:
Title:
Commitment: $29,142,857.14 THE CHASE MANHATTAN BANK,
By
------------------------------
Name:
Title:
Commitment: $29,142,857.14 THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By
------------------------------
Name:
Title:
Commitment: $18,000,000.00 THE BANK OF NEW YORK
By
------------------------------
Name:
Title:
7
<PAGE>
Commitment: $18,000,000.00 NATIONSBANK, N.A. (CAROLINAS)
By
------------------------------
Name:
Title:
Commitment: $18,000,000.00 CORESTATES BANK, N.A.
By
------------------------------
Name:
Title:
Commitment: $15,750,000.00 BANK OF AMERICA ILLINOIS
By
------------------------------
Name:
Title:
Commitment: $15,857,142.86 THE FIRST NATIONAL BANK
OF CHICAGO
By
------------------------------
Name:
Title:
Commitment: $9,000,000.00 THE FUJI BANK, LIMITED
By
------------------------------
Name:
Title:
8
<PAGE>
Commitment: $9,000,000.00 THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By
------------------------------
Name:
Title:
Commitment: $9,000,000.00 THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By
------------------------------
Name:
Title:
Commitment: $8,571,428.57 BANK AUSTRIA
AKTIENGESELLSCHAFT
By
------------------------------
Name:
Title:
By
------------------------------
Name:
Title:
9
<PAGE>
Commitment: $7,714,285.71 SUMMIT BANK
By
------------------------------
Name:
Title:
TOTAL COMMITMENTS:
$225,000,000
10
<PAGE>
EXHIBIT C-1
Approved Sites
Name Location
- ---- --------
Double G. Coatings, L.P. Jackson, Mississippi
Walbridge Coatings, an Illinois Walbridge, Ohio
Partnership
Indiana Pickling and Processing Portage, Indiana
HS Processing LP Baltimore, Maryland
Metal Coaters of Georgia, Inc. Marietta, Georgia
DoubleCote, L.L.C. Jackson, Mississippi
Metro Metals Corporation Portage, Indiana
Roll & Hold Warehouse & Indianapolis, Indiana
Distribution Corp.
Roll & Hold Warehouse & Macedonia, Ohio
Distribution Corp.
Roll & Hold Warehouse & Hammond, Indiana
Distribution Corp.
Roll & Hold Warehouse & Davenport, Iowa
Distribution Corp.
Dearborn Steel Center, Inc. Dearborn, Michigan
<PAGE>
Exhibit 4(d)
CONFORMED COPY
AMENDED AND RESTATED INVENTORY CREDIT AGREEMENT
AMENDED AND RESTATED INVENTORY CREDIT AGREEMENT dated as of
June 19, 1998 among BETHLEHEM STEEL CORPORATION, the Lenders listed on
the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Administrative Agent and Structuring and Collateral Agent.
W I T N E S S E T H :
WHEREAS, the parties hereto have heretofore entered into an
Inventory Credit Agreement dated as of September 12, 1995, which was
amended and restated by an Amended and Restated Inventory Credit
Agreement dated as of June 5, 1997 (as so amended and restated, the
"Agreement"), and
WHEREAS, the parties hereto desire to amend the Agreement to
increase the aggregate Commitments (as defined in the Agreement) from
$225,000,000 to $260,000,000 and otherwise as set forth herein and to
restate the Agreement in its entirety to read as set forth in the
Agreement with the amendments specified below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
-----------------------
specifically defined herein, each capitalized term used herein which
is defined in the Agreement shall have the meaning assigned to such
term in the Agreement. Each reference to "hereof", "hereunder",
"herein" and "hereby" and each other similar reference and each
reference to "this Agreement" and each other similar reference
contained in the Agreement shall from and after the effective date
hereof refer to the Agreement as amended and restated hereby.
<PAGE>
SECTION 2. Amendments to Definitions. (a) Section 1.1 of
-------------------------
the Agreement is amended as follows:
(i) The definition of "Borrower's 1996 Form 10-K" is amended
by replacing "1996" in each place where it appears with "1997".
(ii) The definition of "Borrower's Latest Form 10-Q" is
amended by replacing "1997" with "1998".
(iii) Clause (i) of the definition of "Commitment" is
superceded by the provisions of Section 5 of this Amendment and
Restatement.
(iv) The definition of "Eligible Inventories" is amended as
follows:
(A) by replacing "1996" with "1997",
(B) by redesignating subclause (ii) in clause (b) as
subclause "(iii)" and adding the following new subclause
(ii):
"(ii) on the premises of a Lukens Facility, but only for
so long as such premises remain owned or leased by the
Borrower or Lukens, provided that, in the case of leased
premises or premises owned by Lukens, the Collateral Agent
has received evidence satisfactory to it (including landlord
waivers satisfactory to it) that it may enter such premises
for the purposes specified in Section 8 (C) of the Inventory
Security Agreement;" and
(C) adding a further proviso at the end of the last
-------
proviso therein reading as follows:
-------
"and provided further that before any Inventory of the
-------- -------
category described in subclause (b)(ii) of this definition
may be first included in Eligible Inventories (and without
prejudice to any other provision of the Financing Documents
that may thereafter be applicable), the Borrower shall have
(i) furnished to the Collateral Agent (and the Collateral
Agent in its reasonable discretion shall be satisfied with)
information (x) as to such procedures being established and
agreed to by the Borrower and Lukens that will enable the
Collateral Agent to distinguish such Inventory from similar
property at such Lukens Facility, if any, that remains owned
by Lukens and (y) otherwise with respect to such Inventory
comparable to information that would be provided in a
Perfection Certificate (as defined in the Inventory Security
Agreement) and (ii) delivered to the Collateral Agent and the
Lenders such opinions of counsel (substantially in the
form
2
<PAGE>
of Annex B to Exhibit E), instruments and other
information requested by the Collateral Agent as
may be necessary or desirable to evidence that the
Lenders' Security Interest in such Inventory is
perfected subject to no prior Lien except as
permitted by the Financing Documents."
(v) The definition of "Inventories" is amended by changing
subclause (iii) in the parenthetical to (iv) and adding the following
as subclause (iii):
"following the sale of the No. 1 coke oven battery
at the coke oven facility at the Borrower's Burns
Harbor facility, is coal inventories located at
such facility"
(vi) The definition of "Termination Date" is amended by
replacing the date "September 12, 2002" with "June 19, 2003".
(vii) The definition of "Inventory Information Memorandum" is
amended in its entirety to read as follows:
"Inventory Information Memorandum" means the Bethlehem
Steel Corporation Inventory Credit Agreement Inventory Review
dated May 1998.
(b) Section 1.1 of the Agreement is further amended by adding
the following new definitions in alphabetical order:
"Lukens" means Lukens Steel Company, a Pennsylvania
corporation.
"Lukens Facilities" means the Conshohocken, Coatesville and
Piedmont facilities operated as of the date hereof by Lukens.
"Lukens Merger" means the merger of Lukens Acquisition
Corporation into Lukens Inc., which occurred on May 29, 1998 pursuant
to the Lukens Merger Agreement.
"Lukens Merger Agreement" means the Agreement and Plan of
Merger, dated as of December 15, 1997 and as amended as of January 4,
1998, among the Borrower, Lukens Acquisition Corporation and Lukens
Inc., as further amended from time to time.
"1998 Effective Date" means the date upon which the
conditions to effectiveness of this Amended and Restated Inventory
Credit Agreement dated as of June 19, 1998 are satisfied.
3
<PAGE>
SECTION 3. Updated Representations. (a) Each reference to
-----------------------
"1996" in Section 4.4(a) of the Agreement is changed to "1997".
(b) Each reference to "March 31, 1997" in Section 4.4 of the
Agreement is changed to "March 31, 1998".
(c) The reference in Section 4.7 of the Agreement to
"December 31, 1990" is changed to "December 31, 1994".
SECTION 4. Sale of No. 1 Coke Oven Battery at Burns Harbor.
------------------------------------------------
(a) Section 5.7 of the Agreement is amended by amending
subclause (B) of clause (ii) by (x) inserting the following at the
beginning of such subclause:
"(a) if such sale is of coal inventories located at the
coke oven facility at the Borrower's Burns Harbor facility in
connection with the sale of the No. 1 coke oven battery at
such facility (which will cause the release of all coal
inventories at such facility from Collateral pursuant to
Section 9.13 of this Agreement) or (b)"; and
(y) inserting following "such sale is of such
Inventories" the words "or such coal inventories in
connection with the sale of the No. 1 coke oven battery".
(b) The following is added as SECTION 9.13 to the
Agreement:
SECTION 9.13 Release of Coal Inventories from Collateral
-------------------------------------------
upon Sale of No. 1 Coke Oven Battery at Burns Harbor. Upon
-----------------------------------------------------
the sale of the No. 1 coke oven battery together with any
coal inventories located at the coke oven facility at the
Borrower's Burns Harbor facility, all coal inventories at
such facility will be excluded from the Borrowing Base, will
be released as Collateral pursuant to Section 5(A) of the
Inventory Security Agreement and will no longer be considered
to be part of Inventories under this Agreement.
SECTION 5. Changes in Commitments. With effect from and
----------------------
including the 1998 Effective Date, (i) each Person listed on the
signature pages hereof that is not a party to the Agreement (a "New
Lender") shall become a Lender party to the Agreement and (ii) the
Commitment of each Lender shall be the amount set forth opposite the
name of such Lender on the signature pages hereof. Any Lender whose
Commitment is changed to zero (an "Exiting Lender") shall upon the
1998 Effective Date cease to be a Lender party to the Agreement (and,
without omitting the generality of the foregoing, its participation in
any outstanding Participated
4
<PAGE>
Letter of Credit shall automatically be canceled without any further
action), and all accrued Fees and other amounts (other than principal
and interest) payable under the Agreement for the account of an
Exiting Lender to the 1998 Effective Date shall, notwithstanding the
provisions of Article 2 of the Agreement, be due and payable for the
account of such Exiting Lender on the 1998 Effective Date; provided
that the provisions of Sections 8.3, 8.4 and 9.3 of the Agreement
shall continue to inure to the benefit of each Exiting Lender and,
provided further that each Exiting Lender shall continue to be bound
- -------- -------
by Section 9.8 of the Agreement with respect to information provided
to it prior to such date. The calculation of accrued Fees payable to
each continuing Lender on the first Quarterly Date or other date after
the 1998 Effective Date on which Fees are payable shall reflect any
changes in the Commitments of such Lenders made pursuant to this
Section 5 and, notwithstanding the provisions of Section 2.13 of the
Agreement, shall be paid to each such Lender accordingly. If Loans
are outstanding on the 1998 Effective Date and, as a result of changes
in the Commitments of the Lenders, such Loans are not held by the
continuing Lenders ratably in proportion to their Commitments, the
Lenders (including New Lenders and Exiting Lenders) shall, as
appropriate, buy and sell such Loans such that, after giving effect to
such purchases, such Loans are held ratably, and Section 2.14 of the
Agreement shall apply to any such purchases.
SECTION 6. Representations and Warranties. The Borrower
------------------------------
hereby represents and warrants that as of the 1998 Effective Date
(after giving effect hereto):
(a) no Default, Increased Coverage Event or Potential
Termination Event or Termination Event (as such latter two terms are
defined in the Receivables Purchase Agreement) will have occurred and
be continuing; and
(b) each representation and warranty of the Borrower set
forth in the Agreement, after giving effect to this Amendment and
Restatement, will be true and correct.
SECTION 7. Assignment. (a) Section 1.1 of the Agreement is
----------
amended by adding the following new definition:
"Combined Commitment" means at any time with respect to each
Lender the sum of (x) such Lender's Commitment hereunder and (y) such
Lender's Receivables Commitment under the Receivables Purchase
Agreement.
(b) Section 9.6(c) of the Agreement is amended by amending
the second parenthetical therein to read as follows:
5
<PAGE>
(such portion to comprise a Combined Commitment of not less than
$5,000,000; provided that after giving effect to such assignment, (x)
the percentage of any Lender's Commitment hereunder be no less than
30% and no greater than 60% of its Combined Commitment and the
percentage of any Lender's Receivables Commitment under the
Receivables Purchase Agreement be no less than 40% and no greater than
70% of its Combined Commitment and (y) the Combined Commitment
retained by the assigning Lender shall be in an aggregate amount of
not less than $5,000,000)
(c) Section 9.6(c) of the Agreement is further amended by
deleting the clause ",which shall not be unreasonably withheld" which
appears immediately following the words "consent of the Borrower" and
inserting the clause ",which in each case shall not be unreasonably
withheld" after the words "the Administrative Agent and the L/C
Issuing Banks."
SECTION 8. Governing Law. This Amendment and Restatement
-------------
shall be governed by and construed in accordance with the laws of the
State of New York.
SECTION 9. Counterparts; Effectiveness. This Amendment and
---------------------------
Restatement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Amendment and
Restatement shall become effective as of the date (the "1998 Effective
Date", which must be not later than June 26, 1998) on which each of
the following conditions shall have been satisfied:
(i) receipt by the Administrative Agent of duly executed
counterparts hereof signed by each of the parties hereto (or,
in the case of any Lender as to which an executed counterpart
shall not have been received, the Agent shall have received
telegraphic, telex or other written confirmation from such
Lender of execution of a counterpart hereof by such Lender)
with the endorsed acknowledgment and agreement of each
Special Purpose Member, as provided on the signature pages
hereof;
(ii) receipt by the Administrative Agent of new Notes
for the Lenders;
(iii) receipt by the Administrative Agent of (x) a
certificate of the secretary or an assistant secretary of the
Borrower certifying as of the 1998 Effective Date (A) as to
no amendments to the certificate of incorporation of the
Borrower; (B) as to no liquidation or dissolution proceeding;
(C) as to the occurrence of the Lukens Merger; and (D) a copy
of the By-laws of the Borrower; (y) the certificate of
incorporation of the Borrower certified as of a date
reasonably near the 1998 Effective Date by the Secretary
of
6
<PAGE>
State of the State of Delaware; and (z) a good standing
certificate for the Borrower issued by the Secretary of State
of the State of Delaware, dated a date reasonably near the
1998 Effective Date;
(iv) receipt by the Administrative Agent of an opinion
of the Assistant General Counsel of the Borrower (or such
other counsel for the Borrower as may be acceptable to the
Administrative Agent), dated the 1998 Effective Date and
substantially to the effect of paragraphs 1, 3, 5, and 7 of
Exhibit G to the Agreement with reference to this Amendment
and Restatement and the Agreement as amended and restated
hereby;
(v) The Borrower shall have paid to the Administrative
Agent, for the several accounts of the Lenders, such
participation fees as are set forth in the attached Schedule
I;
(vi) the Borrower shall have paid to the Administrative
Agent, for its own account as Administrative Agent and
Structuring and Collateral Agent and the account of J.P.
Morgan Securities Inc. as Arranger, such fees as are agreed
to between the Borrower and the Administrative Agent in a
separate letter;
(vii) receipt by the Administrative Agent of a
certificate dated the 1998 Effective Date signed by the Chief
Financial Officer, Treasurer or Controller of the Borrower as
to the accuracy of the representations and warranties set
forth in Section 6 of this Amendment and Restatement; and
(viii) the Amendment and Restatement dated as of June
19, 1998 of the Receivables Purchase Agreement shall have
become, or concurrently shall become, effective.
The Administrative Agent shall promptly notify the Borrower
and the Lenders of the effectiveness of this Amendment and
Restatement, and such notice shall be conclusive and binding on all
parties hereto.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment and Restatement to be duly executed by their respective
authorized officers as of the day and year first above written.
BETHLEHEM STEEL CORPORATION
By: /s/ Gary L. Millenbruch
-------------------------------
Title: EVP, Chief Financial Officer
and Treasurer
1170 Eighth Avenue
Bethlehem, PA 18016
Telephone: (610) 694-2603
Facsimile: (610) 694-1258
Attention: Leonard M. Anthony
ACKNOWLEDGED AND AGREED:
BETHLEHEM STEEL CREDIT AFFILIATE ONE, INC.
By /s/ Gary L. Millenbruch
------------------------
Title: Authorized Agent
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
Telephone: 410-388-7781
Facsimile: 410-388-7783
Attention: D.K. Schoenen, President
BETHLEHEM STEEL CREDIT AFFILIATE TWO, INC.
By /s/ Gary L. Millenbruch
-----------------------
Title: Authorized Agent
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
Telephone: 410-388-7781
Facsimile: 410-388-7783
Attention: D.K. Schoenen, President
8
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Administrative Agent,
Structuring and Collateral Agent,
and L/C Issuing Bank
By: /s/ Robert Bottamedi
-----------------------------
Title: Vice President
60 Wall Street
New York, NY 10260
Telephone:
Facsimile:
Attention:
THE CHASE MANHATTAN BANK,
as L/C Issuing Bank
By: /s/ James H. Ramage
-----------------------------
Title: Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., as L/C Issuing Bank
By: /s/ Gregory L. Hong
-----------------------------
Title: Deputy General Manager
9
<PAGE>
LENDERS:
Commitment: $34,666,666.67 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ Robert Bottamedi
-----------------------------
Title: Vice President
Commitment: $28,166,666.67 THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By: /s/ Gregory L. Hong
-----------------------------
Title: Deputy General Manager
Commitment: $26,000,000.00 THE CHASE MANHATTAN BANK
By: /s/ James H. Ramage
-----------------------------
Title: Vice President
Commitment: $21,666,666.67 CORESTATES BANK, N.A.
(Corestates Bank, N.A. has merged
into First Union National Bank)
By: /s/ Jane Greenfield
-----------------------------
Title: Vice President
10
<PAGE>
Commitment: $21,666,666.67 THE BANK OF NEW YORK
By: /s/ Peter H. Abdill
-----------------------------
Title: Vice President
Commitment: $21,666,666.67 UNION BANK OF SWITZERLAND
NEW YORK BRANCH
By: /s/ Paula Mueller
-----------------------------
Title: Vice President
Structured Finance
By: /s/ Lawrence M. Charleson
-----------------------------
Title: Managing Director
Commitment: $19,5000,000.00 THE FIRST NATIONAL BANK
OF CHICAGO
By: /s/ Robert McMillan
-----------------------------
Title: Corporate Banking Officer
Commitment: $17,333,333.33 BANK OF AMERICA NT & SA
By: /s/ Dale Matson
-----------------------------
Title: Vice President
11
<PAGE>
Commitment: $17,333,333.33 NATIONSBANK, N.A.
By: /s/ Philip S. Durand
-----------------------------
Title: Vice President
Commitment: $10,833,333.33 BANK AUSTRIA
AKTIENGESELLSCHAFT
By: /s/ J. Anthony Seay
-----------------------------
Title: First Vice Preisdent
Bank Austria, AG
By: /s/ C. Miller
-----------------------------
Title: Assistant Vice President
Commitment: $10,833,333.33 SUMMIT BANK
By: /s/ David B. Kennedy
-----------------------------
Title: Regional Vice President
12
<PAGE>
Commitment: $10,833,333.33 THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By: /s/ Kazuyoshi Ogawa
-----------------------------
Title: Joint General Manager
Commitment: $10,833,333.33 WILMINGTON TRUST
By: /s/ Joseph M. Finley
-----------------------------
Title: Vice President
Commitment: $8,666,666.67 THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By: /s/ John Dippo
-----------------------------
Title: Senior Vice President
TOTAL COMMITMENTS: $260,000,000
13
<PAGE>
Exhibit 4(d)
CONFORMED COPY
AMENDED AND RESTATED INVENTORY CREDIT AGREEMENT
AMENDED AND RESTATED INVENTORY CREDIT AGREEMENT dated as of
June 17, 1999 among BETHLEHEM STEEL CORPORATION, the Lenders listed on
the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Administrative Agent and Structuring and Collateral Agent.
W I T N E S S E T H :
WHEREAS, the parties hereto have heretofore entered into an
Inventory Credit Agreement dated as of September 12, 1995, which was
amended and restated by an Amended and Restated Inventory Credit
Agreement dated as of June 5, 1997 and an Amended and Restated
Inventory Credit Agreement dated as of June 19, 1998 (as so amended
and restated, the "Agreement"), and
WHEREAS, the parties hereto desire to amend the Agreement to
increase the aggregate Commitments (as defined in the Agreement) from
$260,000,000 to $320,000,00 and to restate the Agreement in its
entirety to read as set forth in the Agreement with the amendments
specified below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
-----------------------
specifically defined herein, each capitalized term used herein which
is defined in the Agreement shall have the meaning assigned to such
term in the Agreement. Each reference to "hereof", "hereunder",
"herein" and "hereby" and each other similar reference and each
reference to "this Agreement" and each other similar reference
contained in the Agreement shall from and after the effective date
hereof refer to the Agreement as amended and restated hereby.
<PAGE>
SECTION 2. Amendments to Definitions. Section 1.1 of the
-------------------------
Agreement is amended as follows:
(i) The definition of "Borrower's 1997 Form 10-K" is amended
by replacing "1997" in each place where it appears with "1998".
(ii) The definition of "Borrower's Latest Form 10-Q" is
amended by replacing "1998" with "1999".
(iii) The definition of "Eligible Inventories" is amended by
replacing "1997" with "1998".
(iv) The definition of "Borrowing Base" is amended by
changing clause (x) therein to read as follows:
"(x) the Borrowing Base shall at no time exceed an
amount equal to the product of 1.4 times the Receivables
Maximum Purchase Price at such time."
(v) Clause (i) of the definition of "Commitment" is
superceded by the provisions of Section 5 of this Amendment and
Restatement.
SECTION 3. Amendment to Conditions to Borrowings. Section
-------------------------------------
3.2(c) of the Agreement is amended by changing clause (ii) therein to
read as follows:
"(ii) the product of 1.4 times the Receivables Maximum
Purchase Price;"
SECTION 4. Updated and Amended Representations. (a) Each
-----------------------------------
reference to "1997" in Section 4.4(a) of the Agreement is changed to
"1998".
(b) Each reference to "March 31, 1998" in Section 4.4 of the
Agreement is changed to "March 31, 1999".
(c) Article 4 of the Agreement is amended by adding thereto a
new Section 4.10 reading as follows:
Section 4.10. Year 2000. The Borrower represents and
warrants that the computer applications of the Borrower
material to the conduct of its businesses and operations,
considered as a whole, recognize and perform date sensitive
functions involving dates prior to and after December 31,
1999.
2
<PAGE>
SECTION 5. Changes in Commitments. With effect from and
----------------------
including the 1999 Effective Date (as defined in Section 8 of this
Amendment and Restatement), (i) each Person listed on the signature
pages hereof that is not a party to the Agreement (a "New Lender")
shall become a Lender party to the Agreement and (ii) the Commitment
of each Lender shall be the amount set forth opposite the name of such
Lender on the signature pages hereof. The calculation of accrued Fees
payable to each Lender on the first Quarterly Date or other date after
the 1999 Effective Date on which Fees are payable shall reflect any
additions to and changes in the Commitments of the Lenders made
pursuant to this Section 5 and, notwithstanding the provisions of
Section 2.13 of the Agreement, shall be paid to each Lender
accordingly. If Loans are outstanding on the 1999 Effective Date and,
as a result of additions to and changes in the Commitments of the
Lenders, such Loans are not held by the Lenders ratably in proportion
to their Commitments, the Lenders (including New Lenders) shall, as
appropriate, buy and sell such Loans such that, after giving effect to
such purchases, such Loans are held ratably, and Section 2.14 of the
Agreement shall apply to any such purchases.
SECTION 6. Representations and Warranties. The Borrower
------------------------------
hereby represents and warrants that as of the 1999 Effective Date
(after giving effect hereto):
(a) no Default, Increased Coverage Event or Potential
Termination Event or Termination Event (as such latter two terms are
defined in the Receivables Purchase Agreement) will have occurred and
be continuing;and
(b) each representation and warranty of the Borrower set
forth in the Agreement, after giving effect to this Amendment and
Restatement, will be true and correct.
SECTION 7. Governing Law. This Amendment and Restatement
-------------
shall be governed by and construed in accordance with the laws of the
State of New York.
SECTION 8. Counterparts; Effectiveness. This Amendment and
---------------------------
Restatement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Amendment and
Restatement shall become effective as of the date (the "1999 Effective
Date", which must be not later than June 30, 1999) on which each of
the following conditions shall have been satisfied:
(i) receipt by the Administrative Agent of duly executed
counterparts hereof signed by each of the parties hereto (or,
in the case of any Lender as to which an executed counterpart
shall not have been
3
<PAGE>
received, the Agent shall have received telegraphic, telex or other
written confirmation from such Lender of execution of a counterpart
hereof by such Lender) with the endorsed acknowledgment and agreement
of each Special Purpose Member, as provided on the signature pages
hereof;
(ii) receipt by the Administrative Agent of Notes for the New
Lenders;
(iii) receipt by the Administrative Agent of (x) a
certificate of the secretary or an assistant secretary of the Borrower
certifying as of the 1999 Effective Date (A) as to no amendments to
the certificate of incorporation or By-laws of the Borrower and (B) as
to no liquidation or dissolution proceeding; (y) the certificate of
incorporation of the Borrower certified as of a date reasonably near
the 1999 Effective Date by the Secretary of State of the State of
Delaware; and (z) a good standing certificate for the Borrower issued
by the Secretary of State of the State of Delaware, dated a date
reasonably near the 1999 Effective Date;
(iv) receipt by the Administrative Agent of opinions of
counsel reasonably satisfactory to the Administrative Agent;
(v) receipt by the Administrative Agent of a certificate
dated the 1999 Effective Date signed by the Chief Financial Officer,
Treasurer or Controller of the Borrower as to the accuracy of the
representations and warranties set forth in Section 6 of this
Amendment and Restatement;
(vi) receipt by the Administrative Agent for the account of
each Lender of an amendment fee in an amount equal to 0.1% of such
Lender's Commitment as set forth on the signature pages hereto; and
(vii) the Amendment and Restatement dated as of June 17, 1999
of the Receivables Purchase Agreement shall have become, or
concurrently shall become, effective.
The Administrative Agent shall promptly notify the Borrower and the
Lenders of the effectiveness of this Amendment and Restatement, and
such notice shall be conclusive and binding on all parties hereto.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment and Restatement to be duly executed by their respective
authorized officers as of the day and year first above written.
BETHLEHEM STEEL CORPORATION
By: /s/ Gary L. Millenbruch
-----------------------------------
Title: EVP, Chief Financial Officer
and Treasurer
1170 Eighth Avenue
Bethlehem, PA 18016
Telephone: (610) 694-2603
Facsimile: (610) 694-1258
Attention: Leonard M. Anthony
ACKNOWLEDGED AND AGREED:
BETHLEHEM STEEL CREDIT AFFILIATE ONE, INC.
By /s/ Gary L. Millenbruch
------------------------------------
Title: Authorized Agent
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
Telephone: 410-388-7781
Facsimile: 410-388-7783
Attention: D.K. Schoenen, President
BETHLEHEM STEEL CREDIT AFFILIATE TWO, INC.
By /s/ Gary L. Millenbruch
--------------------------------------
Title: Authorized Agent
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
Telephone: 410-388-7781
Facsimile: 410-388-7783
Attention: D.K. Schoenen, President
5
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Administrative Agent,
Structuring and Collateral Agent,
and L/C Issuing Bank
By: /s/ Robert S. Jones
-------------------------------
Title: Vice President
60 Wall Street
New York, NY 10260
Telephone:
Facsimile:
Attention:
6
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
THE CHASE MANHATTAN BANK,
as L/C Issuing Bank
By: /s/ James H. Ramage
--------------------------
Title: Vice President
7
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., as L/C Issuing Bank
By: /s/ Gregory L. Hong
--------------------------
Title: Deputy General Manager
8
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
Commitment: $38,787,878.79 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ Robert S. Jones
--------------------------
Title: Vice President
9
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
Commitment: $28,166,666.67 THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By: /s/ Gregory L. Hong
--------------------------
Title: Deputy General Manager
10
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
Commitment: $29,090,909.09 THE CHASE MANHATTAN BANK
By: /s/ James H. Ramage
--------------------------
Title: Vice President
11
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
Commitment: $24,242,424.24 FIRST UNION NATIONAL BANK
(successor to Corestates Bank, N.A. )
By: /s/ William M. Hogan
-------------------------------
Title: Vice President
12
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
Commitment: $24,242,424.24 THE BANK OF NEW YORK
By: /s/ Walter C. Parelli
--------------------------
Title: Vice President
13
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
Commitment: $24,242,424.24 UBS AG, Stamford Branch
By: /s/ Philippe R. Sandmeier
--------------------------
Title: Director
By: /s/ Paula Mueller
--------------------------
Title:
14
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
Commitment: $21,818,181.81 THE FIRST NATIONAL BANK
OF CHICAGO
By: /s/ Jeffrey Lubatkin
--------------------------
Title: Vice President
15
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
Commitment: $38,787,878.79 BANK OF AMERICA NT & SA
By: /s/ Thomas Blake
--------------------------
Title: Senior Vice President
16
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
Commitment: $17,893,939.40 SALOMON BROTHERS HOLDING
COMPANY INC.
By: /s/ Timothy L. Freeman
--------------------------
Title: Managing Director
17
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
Commitment: $14,545,454.55 CIETE GENERALE
By: /s/Joseph A. Philbin
--------------------------
Title: Director
18
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
Commitment: $12,121,212.12 BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC. (as
assignee from Bank Austria AG)
By: /s/ Amy Rick
--------------------------
Title: Vice President
By: /s/ Frederic W. Hall
--------------------------
Title: Vice President
19
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
Commitment: $12,121,212.12 SUMMIT BANK
By: /s/ David B. Kennedy
--------------------------
Title: Regional Vice President
20
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
Commitment: $12,121,212.12 THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By: /s/ C. Michael Garrido
--------------------------
Title: Senior Vice President
21
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
Commitment: $12,121,212.12 WILMINGTON TRUST
By: /s/ Joseph M. Finley
--------------------------
Title: Vice President
22
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Inventory Credit Agreement
Commitment: $9,696,969.70 THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By: /s/ John Dippo
--------------------------
Title: Senior Vice President
23
<PAGE>
Exhibit 4(e)
[CONFORMED COPY]
RECEIVABLES PURCHASE AGREEMENT
dated as of
September 12, 1995
among
BETHLEHEM STEEL FUNDING, LLC,
BETHLEHEM STEEL CORPORATION, as Servicer,
BETHLEHEM STEEL CREDIT AFFILIATE ONE, INC.,
BETHLEHEM STEEL CREDIT AFFILIATE TWO, INC.,
THE FINANCIAL INSTITUTIONS LISTED HEREIN,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
and
J.P. MORGAN DELAWARE, as
Structuring and Collateral Agent
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
1.1. Definitions ........................................ 1
1.2. UCC Terms .......................................... 34
1.3. Accounting Terms and Determinations ................ 34
ARTICLE 2
PURCHASES
2.1. Sale and Assignment ................................ 35
2.2. Incremental Purchases .............................. 35
2.3. Tranches; Yield Accrual Periods; Yield Rates ....... 37
2.4. Fees ............................................... 38
2.5. Optional Termination or Reduction of Commitments ... 39
2.6. Payments under Certain Circumstances ............... 39
2.7. General Provisions as to Payments .................. 40
2.8. Funding Losses ..................................... 41
2.9. Letters of Credit .................................. 41
ARTICLE 3
ASSIGNMENT;
COLLECTION AND ADMINISTRATION OF RECEIVABLES
3.1. Assignment. ........................................ 51
3.2. Accounts and Collections ........................... 53
3.3. Administration of Receivables ...................... 55
3.4. Servicer's Compensation............................. 56
3.5. Servicing Transfer ................................. 57
3.6. Protection of Purchased Interest ................... 57
3.7. Pre-Termination Procedures; Reinvestment ........... 59
3.8. Post-Termination Procedures ........................ 64
3.9. Payments under Certain Circumstances ............... 67
i
<PAGE>
ARTICLE 4
CONDITIONS
4.1. Closing ............................................ 68
4.2. Conditions to Each Incremental Purchase ............ 73
4.3. Conditions to Each Purchase ........................ 74
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1. Existence and Power ................................ 74
5.2. Governmental Authorization; No Contravention ....... 75
5.3. Binding Effect ..................................... 75
5.4. Material Adverse Change ............................ 75
5.5. Litigation ......................................... 75
5.6. Compliance with ERISA .............................. 75
5.7. Environmental Matters .............................. 76
5.8. Taxes .............................................. 76
5.9. Regulatory Restriction ............................. 76
5.10. Full Disclosure ................................... 76
5.11. Location .......................................... 77
ARTICLE 6
COVENANTS
6.1. General Information ................................ 77
6.2. Information Regarding the Receivables .............. 80
6.3. Preservation of Existence .......................... 82
6.4. Compliance with Laws ............................... 82
6.5. No Adverse Interests ............................... 82
6.6. No Merger .......................................... 82
6.7. Limitations on Activities of BSF ................... 83
6.8. Waivers and Amendments of Documents ................ 84
6.9. Maintenance of Property ............................ 84
6.10. Payment of Taxes .................................. 84
6.11. Accounting Treatment .............................. 84
ii
<PAGE>
ARTICLE 7
REPRESENTATIONS, WARRANTIES AND COVENANTS OF MEMBERS
7.1. Representations and Warranties of the Special Purpose
Members. ............................................. 85
7.2. Covenants of the Special Purpose Members.............. 85
7.3. Limitations on Activities of Special Purpose Members . 87
7.4. No Bankruptcy Petition ............................... 88
ARTICLE 8
TERMINATION EVENTS
8.1. Termination Events ................................... 88
8.2. Consequences of a Termination Event .................. 92
ARTICLE 9
THE AGENTS
9.1. Appointment and Authorization ........................ 93
9.2. Agents and Affiliates ................................ 94
9.3. Action by Agents ..................................... 94
9.4. Consultation with Experts ............................ 94
9.5. Liability of Agents .................................. 94
9.6. Indemnification ...................................... 95
9.7. Purchase Decision .................................... 95
9.8. Successor Agent ...................................... 95
9.9. Direction by Required Buyers ......................... 96
ARTICLE 10
CHANGE IN CIRCUMSTANCES
10.1. Change in Circumstances ............................. 96
10.2. Illegality .......................................... 97
10.3. Indemnity for Changes in Law ........................ 97
10.4. Taxes .............................................. 100
iii
<PAGE>
ARTICLE 11
MISCELLANEOUS
11.1. Notices ............................................ 104
11.2. No Waivers ......................................... 105
11.3. Expenses; Indemnification .......................... 105
11.4. Sharing of Set-Offs ................................ 108
11.5. Amendments and Waivers ............................. 108
11.6. Successors and Assigns ............................. 109
11.7. Confidentiality .................................... 112
11.8. Financial Accommodation ............................ 112
11.9. No Bankruptcy Petition Against BSF ................. 113
11.10. Limitation of Liability ........................... 113
11.11. Notices to Standard & Poor's ...................... 113
11.12. Governing Law; Submission to Jurisdiction ......... 113
11.13. Counterparts; Integration; Effectiveness .......... 114
11.14. Termination of Existing Credit Agreement........... 114
11.15. WAIVER OF JURY TRIAL............................... 115
iv
<PAGE>
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT, dated as of September 12, 1995,
between BETHLEHEM STEEL CORPORATION, a Delaware corporation, as
seller, and BETHLEHEM STEEL FUNDING, LLC, a Maryland limited liability
company, as purchaser. RECITALS
WHEREAS, in the ordinary course of its business the Seller
generates trade receivables from the sale of goods and services; and
WHEREAS, the Seller and BSF wish to set forth the terms
pursuant to which receivables are to be sold by the Seller to BSF;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
-------------------
1.01 Certain Definitions. Terms not defined in this
-------------------
Agreement shall have the meanings set forth in the Receivables
Purchase Agreement. As used in this Agreement, the following terms
shall, unless the context otherwise requires, have the following
meanings:
"Agreement" means this Purchase and Sale Agreement, as
amended from time to time.
"Bankruptcy Suspension Period" means, with respect to BSC,
the period beginning on the day on which an involuntary case or other
proceeding against BSC seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of BSC or any substantial part of its property is
commenced and ending on the day such proceeding is dismissed; provided
that if such proceeding is not controverted within 10 days of
commencement and dismissed within 60 days of commencement then such
commencement shall become an Event of Bankruptcy (and the provisions
of Section 8.2 of the Receivables Purchase Agreement shall apply) on
the earlier of 11 days from the day of commencement (in the case of
controversion) or 61 days from the day of commencement (in the case of
dismissal).
<PAGE>
"Consolidated Subsidiary" means, at any date, any Subsidiary
or other entity
the accounts of which would be consolidated with those of the Seller in its
consolidated financial statements if its consolidated financial statements were
prepared as of such date.
"Eligibility Criteria" means the requirements of paragraph
(a) of the definition of "Eligible Receivable" in the Receivables
Purchase Agreement.
"Final Purchase Date" means the earliest of (i) the date
specified by either party hereto, upon not less than 30 days' prior
written notice to the other party hereto, as the last day on which
Receivables are to be purchased hereunder, (ii) the Business Day on
which Commitments terminate pursuant to Section 8.2 of the Receivables
Purchase Agreement, and (iii) the Business day preceding the day on
which any Bankruptcy Event occurs with respect to the Seller or BSF.
"Purchase Price" means, with respect to a Receivable or
Receivables, the price paid by BSF to the Seller in consideration of
the sale of such Receivable or Receivables pursuant to Section 2.01(c)
of this Agreement.
"Receivables Purchase Agreement" means the Receivables
Purchase Agreement, dated as of September 12, 1995, among BSF,
Bethlehem Steel Credit Affiliate One, Inc., Bethlehem Steel Credit
Affiliate Two, Inc., BSC, as Servicer, the financial institutions
party thereto, as Buyers, Morgan Guaranty, as Administrative Agent,
and J.P. Morgan Delaware, as Structuring and Collateral Agent, as
amended from time to time.
"Seller's 1994 Form 10-K" means the Seller's annual report on
Form 10-K for 1994, as filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934.
"Seller's Latest Form 10-Q" means the Seller's quarterly
report on Form 10- Q for the quarter ended June 30, 1995, as filed
with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
--------------------------------
2.01 Purchase and Sale.
-----------------
(a) General. Pursuant and subject to the terms and
conditions hereof, the Seller hereby agrees to sell to BSF, and BSF
hereby agrees to purchase from the Seller, all of the Seller's right,
title and interest in, to and under (i) each and every Receivable
outstanding as of the Closing Date and thereafter arising through the
close of business on the Final Purchase Date, (ii) all Related
Security with respect to each such Receivable, (iii) all Collections
with respect thereto
2
<PAGE>
and (iv) all proceeds of the foregoing; provided that the Seller shall
not sell to BSF, and BSF shall not purchase from the Seller, any
Receivables (or any Related Security, Collections and proceeds with
respect thereto) arising during a Bankruptcy Suspension Period;
provided further that on the Closing Date the Seller may make a
capital contribution of $380,000 in the form of Receivables to each of
the Special Purpose Members.
(b) Sale Without Recourse. Subject only to the provisions of
---------------------
Section 2.02, the sale of Receivables by the Seller hereunder shall be
without recourse.
(c) Purchase Price. In consideration of the sale of
--------------
Receivables by the Seller to BSF pursuant to this Agreement, BSF shall
pay to Seller, on the Closing Date and each Business Day thereafter, a
Purchase Price for all Receivables first booked on such Business Day
(or, in the case of the purchase on the Closing Date, all outstanding
Receivables) in an amount equal to the outstanding face amount of all
such Receivables which the Seller has certified meet the Eligibility
Criteria, less adjustments for (i) an interest component, taking into
account the maturity of such Receivables, (ii) an amount representing
the historical losses on similar Receivables and (iii) an amount
representing a servicing fee, such Purchase Price to be calculated in
accordance with Appendix I hereto. The parties hereto represent that
the Purchase Price so calculated constitutes and represents an
arm's-length fair market value price for the Receivables sold.
Receivables transferred from the Seller to BSF which do not meet the
Eligibility Criteria on the date of transfer shall be deemed
contributed to the capital of BSF. At the request of the Seller, BSF
agrees to cause the Buyers to make Incremental Purchases pursuant to
the Receivables Purchase Agreement which Purchase Price for such
Incremental Purchase shall be payable in Dollars or the issuance of
Letters of Credit as set forth below. The Purchase Price for each
Receivable shall, be payable (x) to the extent of cash available to
BSF, in Dollars (or in the case of the purchase of Receivables
outstanding on the Closing Date, by crediting BSC with a capital
contribution of $37,240,000 (which capital contribution may be in the
form of Receivables)) or (y) to the extent cash is not so available,
by a deemed advance under the BSC Note. In addition, at the request
of the Seller, BSF agrees to procure the issuance of Letters of Credit
pursuant to the Receivables Purchase Agreement, such Letters of Credit
to be as specified by BSC. The amount of any drawing under any Letter
of Credit shall be credited against the outstanding balance under the
BSC Note, and the amount of Letter of Credit Fees paid under the
Receivables Purchase Agreement shall be credited against interest
accruing under the BSC Note.
(d) True Sale. The Seller and BSF intend the sales of the
---------
Receivables hereunder to be true sales of all of the Seller's right,
title and interest in, to and under such Receivables, providing BSF
with the full benefits of ownership of the same, and the Seller and
BSF do not intend this transaction to be, or for any purpose to be
characterized as, a loan secured by such Receivables. If despite such
intention, a court characterizes the sale of Receivables to BSF
hereunder as a loan rather than a true sale, then the Seller hereby
grants to BSF a first priority perfected security interest in, to and
under all of the Seller's right, title and interest in, to and under
each and every Receivable outstanding on the Closing Date or arising
on and after the Closing Date through the close of business on the
Final Purchase Date, together with all Related Security with respect
thereto, all Collections with respect thereto and all proceeds of the
foregoing, for the purpose of securing the rights of BSF under this
Agreement.
2.02 Purchase Price Adjustment; Repurchase.
-------------------------------------
(a) The Seller hereby agrees that if (x) the Seller's
representation and warranty made pursuant to Section 5.01 is incorrect
when made at the time of the purchase of a Receivable, (and the
provisions of subsection (c) below do not apply) or (y) a Receivable
certified as meeting the
3
<PAGE>
Eligibility Criteria on the date of purchase thereafter becomes
evidenced in a form (such as a promissory note) as to which filing is
not the appropriate method of perfection under the UCC, the Seller
shall, within two Business Days of discovery by or notice to the
Seller of such fact, make payment to BSF, or credit the Purchase Price
otherwise payable by BSF hereunder on such day, in an amount equal to
the then Outstanding Balance of such Receivable. Such Receivable
shall not be reconveyed to the Seller but an amount equal to
Collections subsequently received in respect thereof shall be paid
over promptly to the Seller after receipt.
(b) If on any day the Outstanding Balance of a Receivable
certified as meeting the Eligibility Criteria on the date of purchase
(and not subsequently the subject of an adjustment under subsection
(a) above) is reduced or canceled as a result of any Dilution Factor,
the Seller shall, on such day (or, if such day is not a Business Day,
the next succeeding Business Day), make payment to BSF, or credit the
Purchase Price otherwise payable by BSF hereunder on such day, in the
amount of such reduction or cancellation.
(c) If at any time,(x) BSF does not (except due to
circumstances described in clause (y) of subsection (a) above) have a
perfected ownership interest in any Receivable certified as meeting
the Eligibility Criteria on the date of purchase, free and clear of
any Adverse Interest, or (y) in the event of a default under any
Receivable with respect to which any statutory rights relating to such
Receivable or the goods which gave rise to such Receivable may only be
enforced by the Seller, as owner of such Receivable, then, in each
case, the Seller shall purchase such Receivable from BSF for an amount
equal to the aggregate then Outstanding Balance thereof within two
Business Days of discovery by or notice to the Seller of such fact.
With respect to all Receivables repurchased by the Seller, BSF shall,
against receipt of the purchase price therefor, assign, without
recourse, representation or warranty, to the Seller all of BSF's
right, title and interest in and to such Receivables. BSF shall
execute such documents and instruments of transfer and assignment
prepared by the Seller and take such other actions as shall be
reasonably requested by the Seller to effect the reconveyance of such
Receivables. The Seller shall thereafter assure that Collections with
respect to such Receivables shall not be commingled with the
Collections on the Receivables continued to be owned by it.
ARTICLE III
ADMINISTRATION OF RECEIVABLES
3.01 Administration of Receivables.
-----------------------------
(a) Consistent with BSF's ownership of the Receivables, BSF
shall be responsible for servicing, administering and collecting the
Receivables, and the Seller, as seller, shall have no obligation
whatsoever in this regard; provided that nothing shall prevent BSF
from engaging the services of any Person, including BSC, to service,
administer and collect the Receivables as Servicer. The Seller hereby
grants to BSF an irrevocable power of attorney, with full power of
substitution, coupled with an interest, to take in the name of the
Seller all steps necessary or desirable, as determined by BSF, to
collect all amounts due under any Receivable, including, without
limitation, endorsing the name of the Seller on checks and other
instruments representing
4
<PAGE>
Collections, enforcing such Receivables and the related Contracts, and
adjusting, settling or compromising the amount or payment thereof, in
the same manner and to the same extent as the Seller would have been
entitled.
(b) Upon BSF's request, the Seller shall promptly deliver or
make available to BSF all records relating to the Receivables, and, in
either case, shall hold all such records in trust for BSF. The Seller
will clearly indicate in its corporate records that Receivables are
owned by BSF or otherwise mark its records relating to Receivables
with a legend evidencing that BSF has purchased and owns such
Receivables.
(c) The Seller shall hold in trust for the benefit of the
Buyers any Collections received directly by the Seller with respect to
any Receivables and shall deposit such Collections in the Collection
Account within two Business Days of the receipt thereof.
3.02 Further Assurances.
------------------
(a) The Seller shall, from time to time at its own expense,
do and perform any and all acts and execute and deliver any and all
instruments and documents (including, without limitation any
amendment, supplement or continuation of any financing statements and
continuation statements under the UCC, the execution of any instrument
of transfer, the giving of notice of the sale of Receivables hereunder
to any Obligor and the making of notations in the records) as may be
necessary, or as may be reasonably requested by BSF, in order to
perfect, protect or more fully evidence the purchase of Receivables by
BSF pursuant to this Agreement and to protect the interests of BSF in
the Receivables against all Persons whomsoever. To the fullest extent
permitted by applicable law, BSF shall be permitted to sign and file
financing and continuation statements with respect to the Receivables
and amendments thereto without the Seller's execution thereof. In
furtherance of the foregoing, the Seller hereby constitutes and
appoints BSF its true and lawful attorney, with full power of
substitution, in the name of the Seller, to execute and file financing
and continuation statements.
(b) The Seller shall not change its name, identity, corporate
structure (within the meaning of Section 9-402(7) of the UCC) or
relocate its chief executive office or any office where records are
kept unless it shall have (i) given BSF at least 30 days' prior
written notice thereof and (ii) delivered an opinion of counsel (which
counsel and which opinion shall be satisfactory to BSF) to the effect
that all financing statements and amendments or supplements thereto,
continuation statements and other documents required to be recorded or
filed in order to perfect and protect the interest of BSF in the
Receivables, for the period specified in such opinion, against all
creditors of and purchasers from the Seller have been filed in each
filing office necessary for such purpose and that all filing fees and
taxes, if any, payable in connection with such filings have been paid
in full. The Seller shall at all times maintain its chief executive
office within the jurisdiction of the United States in which Article 9
of the Uniform Commercial Code (1972 or later revision) is in effect.
(c) The Seller agrees that, subject to applicable laws, BSF
shall have the right, if the Seller fails to do so, to do all such
acts and things as it may deem necessary to protect the interests of
BSF, including, without limitation, confirmation and verification of
the existence, amount and status of the Receivables and collection and
enforcement of the Receivables, and that the Seller shall cooperate
fully to give effect to the foregoing.
5
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01 Representations and Warranties of BSF.
-------------------------------------
BSF hereby makes the representations and warranties set forth
in Sections 5.1 through 5.3 of the Receivables Purchase Agreement.
4.02 Representations and Warranties of the Seller.
--------------------------------------------
The Seller hereby represents and warrants that:
(a) Corporate Existence and Power. The Seller is a
-----------------------------
corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has all
corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted.
(b) Corporate and Governmental Authorization; No
----------------------------------------
Contravention. The execution, delivery and performance by the Seller
of the Program Documents to which it is a party are within the
corporate powers of the Seller, have been duly authorized by all
necessary corporate action, require no action by or in respect of, or
filing with, any governmental body, agency or official (except as
contemplated by the Program Documents) and do not contravene, or
constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the
Seller or of any agreement, judgment, injunction, order, decree or
other instrument binding upon the Seller or result in the creation or
imposition of any Lien on any asset of the Seller (except as
contemplated by the Program Documents).
(c) Binding Effect. Each of the Program Documents to which
--------------
the Seller is a party constitutes a valid and binding agreement of the
Seller enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or moratorium or other similar laws relating to the
enforcement of creditors' rights generally and by general equitable
principles.
(d) Financial Information. (i) The consolidated balance
---------------------
sheet of the Seller and its Consolidated Subsidiaries as of December
31, 1994 and the related consolidated statements of income and changes
in financial position for the year then ended, reported on by Price
Waterhouse LLP and set forth in the Seller's 1994 Form 10-K, a copy of
which has been delivered to BSF and each of the Buyers, fairly
present, in conformity with GAAP, the consolidated financial position
of the Seller and its Consolidated Subsidiaries as of such date and
their consolidated results of operations and changes in financial
position for such year.
(ii) The unaudited consolidated balance sheet of the Seller
and its Consolidated Subsidiaries as of June 30, 1995 and the related
unaudited consolidated statements of income and cash flows for the six
months then ended, set forth in the Seller's quarterly report for the
fiscal quarter ended June 30, 1995 as filed with the Securities and
Exchange Commission on the Seller's Latest Form 10-Q, a copy of which
has been delivered to BSF and each of the Buyers, fairly present, in
conformity with GAAP applied on a basis consistent with the financial
statements referred to in paragraph (i) of this subsection (d) (except
that the notes to such
6
<PAGE>
quarterly financial statements are abbreviated as permitted by the
Securities and Exchange Commission in its regulations relating to
interim financial statements), the consolidated financial position of
the Seller and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such six month
period (subject to normal year-end adjustments).
(iii) Since June 30, 1995, there has been no material adverse
change in the business or financial position of the Seller and its
Consolidated Subsidiaries, considered as a whole, or in its ability to
perform its obligations under the Program Documents.
(e) Litigation. There is no action, suit or proceeding
----------
pending against, or to the knowledge of the Seller threatened against
or affecting, the Seller or any of its Subsidiaries before any court
or arbitrator or any governmental body, agency or official in which
there is a reasonable possibility of an adverse decision (i) which
could materially adversely affect the ability of the Seller to perform
its obligations under the Program Documents or (ii) which would in any
material respect draw into question the validity of the Program
Documents or the collectibility of the Receivables.
(f) Environmental Compliance. (i) Except as disclosed on
------------------------
Schedule 4.02(f),
(1) the Seller and its Subsidiaries have obtained, or
made timely application for, all permits, certificates,
licenses, approvals, registrations and other authorizations
(collectively "Permits") which are required under all
applicable Environmental Laws and are necessary for their
operations and are in compliance with the terms and
conditions of all such Permits, except where the failure to
obtain such Permits or to comply with their terms would not
have, individually or in the aggregate, a material adverse
effect on the Seller and its Consolidated Subsidiaries,
considered as a whole;
(2) no notice, notification, demand, request for
information, citation, summons, complaint or order has been
issued, no complaint has been filed, no penalty has been
assessed and no investigation or review is pending, or to the
Seller's knowledge, threatened by any governmental entity or
other Person with respect to any (A) alleged violation by the
Seller or any of its Subsidiaries of any Environmental Law,
(B) alleged failure by the Seller or any of its Subsidiaries
to have any Permits required in connection with the conduct
of its business or to comply with the terms and conditions
thereof, (C) Regulated Activity or (D) Release of Hazardous
Substances, except where such event or events would not have,
individually or in the aggregate, a material adverse effect
on the Seller and its Consolidated Subsidiaries, considered
as a whole;
(3) to the knowledge of the Seller, all oral or written
notifications of a Release of a Hazardous Substance required
to be filed under any applicable Environmental Law have been
filed or are in the process of being filed by or on behalf of
the Seller or any of its Subsidiaries;
(4) no property now owned or coal mining operation or
steel facility which is now leased by the Seller or any of
its Subsidiaries and, to the knowledge of the Seller, no such
property previously owned or leased or any property to which
the Seller or any of its Subsidiaries has, directly or
indirectly, transported or arranged for the transportation of
any Hazardous Substances is listed or, to the Seller's
knowledge,
7
<PAGE>
proposed for listing, on the National Priorities List
promulgated pursuant to CERCLA, on CERCLIS (as defined in
CERCLA) or any similar state list or is the subject of
federal, state or local enforcement actions or, to the
knowledge of the Seller, other investigations which may lead
to claims against the Seller or any of its Subsidiaries for
clean-up costs, remedial work, damage to natural resources or
personal injury claims, including, but not limited to, claims
under CERCLA, except where such listings or investigations
would not have, individually or in the aggregate, a material
adverse effect on the Seller and its Consolidated
Subsidiaries, considered as a whole; and
(5) there are no Liens under or pursuant to any
applicable Environmental Laws on any real property or other
assets owned or leased by the Seller or any of its
Subsidiaries, and no government actions have been taken or,
to the knowledge of the Seller, are in process which could
subject any of such properties or assets to such Liens.
(ii) For purposes of this Section, the terms "Seller"
and "Subsidiary" shall include any business or business
entity (including a corporation) which is a predecessor, in
whole or in part, of the Seller or any Subsidiary of the
Seller.
(g) Compliance with ERISA. Each member of the ERISA Group
---------------------
has fulfilled its obligations under the minimum funding standards of
ERISA and the Internal Revenue Code with respect to each Plan and is
in compliance in all material respects with the presently applicable
provisions of ERISA and the Internal Revenue Code with respect to each
Plan, and has not incurred any liability under Title IV of ERISA (i)
to the PBGC other than a liability to the PBGC for premiums under
Section 4007 of ERISA or (ii) in respect of a Multiemployer Plan which
has not been discharged in full when due.
(h) Taxes. United States Federal income tax returns of the
-----
Seller and the members of its "affiliated group" (as such term is
defined in Section 1504(a) of the Internal Revenue Code) have been
examined through the taxable year ended December 31, 1987 and are
closed through the taxable year ended December 31, 1986. The Sellers
and the members of its "affiliated group" (as so defined) have filed
all United States Federal income tax returns and all other material
tax returns which are required to be filed by them and have paid all
taxes stated to be due in such returns or pursuant to any assessment
received by them, except for taxes the amount, applicability or
validity of which is being contested in good faith by appropriate
proceedings. The charges, accruals and reserves on the books of the
Seller and its Subsidiaries in respect of taxes or other similar
governmental charges, additions to taxes and any penalties and
interest thereon are in the opinion of the Seller, adequately reserved
for in accordance with GAAP.
(i) Investment Company Act. It is not an "investment
----------------------
company" or a company controlled by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(j) Perfection Information. As of the Closing Date: (i) the
----------------------
information set forth regarding the Seller in the Perfection
Certificate attached as Exhibit M to the Receivables Purchase
Agreement is true and correct, and (ii) no Receivables arise from the
sale of goods by any Subsidiary or other Affiliate of the Seller or
any other Person other than the Seller.
(k) Receivables Information. All information, including the
-----------------------
Receivables Information Memorandum, furnished by the Seller or the
Servicer (to the extent that the Servicer, if not the
8
<PAGE>
Seller, is an Affiliate of the Seller) to the Agents or any Buyer for
purposes of or in connection with this Agreement or any of the other
Program Documents or any transaction contemplated hereby is, taken as
whole and in light of the circumstances under which such information
is furnished, true and accurate in all material respects on the date
as of which such information is stated or certified. It is understood
that the foregoing is limited to the extent that (i) information
relating to the steel industry generally is to the best of the
Seller's knowledge, (ii) projections have been made in good faith by
the management of the Seller and in the view of the Seller's
management are reasonable in light of all information known to
management as of the Closing Date, and (iii) no representation or
warranty is made as to whether the projected results will be realized.
(l) Margin Regulations. None of the funds provided by BSF
------------------
hereunder will be used, directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of buying or carrying any
"margin stock" within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System.
(m) Solvency. The Seller is not insolvent and will not be
--------
insolvent following the consummation of the transactions contemplated
by this Agreement. BSF will have given reasonably equivalent and fair
value to the Seller in consideration for the transfer to BSF of each
Receivable, and such transfer will not have been made for or on
account of an antecedent debt owed by the Seller to BSF.
(n) Location. The principal place of business and chief
--------
executive office of the Seller are located at its address set forth in
the Perfection Certificate attached as Exhibit M to the Receivables
Purchase Agreement or at such other address as changed in accordance
with Section 3.02(b).
ARTICLE V
CONDITIONS TO PURCHASE
----------------------
5.01 Conditions to BSF's Obligation to Purchase.
The obligation of BSF to purchase Receivables on any date
pursuant to Section 2.01 is subject to the condition that the Seller
shall have certified to BSF the Outstanding Balance of all Receivables
to be purchased on such date which meet the Eligibility Criteria on
and as of such date (such certificate to constitute a representation
and warranty by the Seller to such effect).
ARTICLE VI
9
<PAGE>
COVENANTS OF THE SELLER
-----------------------
The Seller covenants that:
6.01 General Information. Promptly upon becoming aware
-------------------
thereof, the Seller shall give BSF notice of any event or condition
which could reasonably be expected to have a material adverse effect
on the collectibility of a material amount of the Receivables or the
ability of the Servicer to service such Receivables or the ability of
the Seller to perform its obligations under the Program Documents. In
order to verify compliance with this Section and otherwise verify
compliance with this Agreement, the Seller shall furnish the following
to BSF:
(a) as soon as available and in any event within 60 days
after the end of each of the first three quarters of each
fiscal year of the Seller, consolidated balance sheets of the
Seller and its Consolidated Subsidiaries as of the end of
such quarter and the related consolidated statements of
income and cash flows for such quarter and for the portion of
the Seller's fiscal year ended at the end of such quarter and
changes in financial position for the portion of the Seller's
fiscal year ended at the end of such quarter, setting forth
in each case, in comparative form the figures for the
corresponding quarter and the corresponding portion of the
Seller's previous fiscal year, all certified (subject to
normal year-end adjustments) as to fairness of presentation,
GAAP and consistency (except for the notes to such quarterly
statements, which may be abbreviated as permitted by the
Securities and Exchange Commission in its regulations
relating to interim financial statements) by the Chief
Financial Officer, the Treasurer or the Controller of the
Seller (the Seller being permitted to satisfy the
requirements of this clause (a) by delivery of its quarterly
report on Form 10-Q (or any successor form), and all
supplements or amendments thereto, as filed with the
Securities and Exchange Commission);
(b) as soon as available and in any event within 95 days
after the end of each fiscal year of the Seller, consolidated
balance sheets of the Seller and its Consolidated
Subsidiaries as of the end of such fiscal year and the
related consolidated statements of income and cash flows for
such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year, all reported
on in a manner acceptable to the Securities and Exchange
Commission by Price Waterhouse LLP or other independent
public accountants of nationally recognized standing (the
Seller being permitted to satisfy the requirements of this
clause (b) by delivery of its annual report on Form 10-K (or
any successor form), and all supplements or amendments
thereto, as filed with the Securities and Exchange
Commission);
(c) together with the financial statements required in
clauses (a) and (b) above, a certificate of its Chief
Financial Officer, Chief Accounting Officer, Treasurer or
Controller stating that, as of the date of the relevant
financial statements, no Termination Event or Potential
Termination Event exists, or if any Termination Event or
Potential Termination Event exists, stating the nature and
status thereof;
(d) as soon as possible, and in any event within five
Business Days of its knowledge thereof, notice of any
litigation or proceeding against it which may exist at any
time which, in its reasonable judgment, could have a material
adverse effect on
10
<PAGE>
the collectibility of the Receivables or its ability to
perform its obligations under Program Documents;
(e) promptly upon any officer of the Seller becoming
aware of any occurrence which such officer knows to
constitute a Termination Event or Potential Termination
Event, a certificate of the Chief Financial Officer, Chief
Accounting Officer, Treasurer or Controller setting forth the
details thereof and the action which the Seller is taking or
proposes to take with respect thereto;
(f) not later than one Business Day after receiving
notice thereof, notice of any reduction, suspension or
withdrawal of the rating assigned by S&P to the Buyers'
Certificates;
(g) if and when any member of the ERISA Group (i) gives
or is required to give notice to the PBGC of any "reportable
event" (as defined in Section 4043 of ERISA) with respect to
any Plan which might constitute grounds for a termination of
such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of
such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal
liability under Title IV of ERISA or notice that any
Multiemployer Plan is in reorganization, is insolvent or has
been terminated, a copy of such notice; (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to
terminate, impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for
a waiver of the minimum funding standard under Section 412 of
the Internal Revenue Code, a copy of such application; (v)
gives notice of intent to terminate any Plan under Section
4041(c) of ERISA, a copy of such notice and other information
filed with the PBGC; (vi) gives notice under Section 4063(a)
of ERISA of withdrawal from any Plan described in Section
4063 of ERISA, a copy of such notice; (vii) fails to make any
payment or contribution to any Plan which results in the
imposition of a Lien, notice of such failure; or (viii) makes
any amendment to any Plan which requires posting a bond or
other security under Section 307 of ERISA, a copy of the
notice required under Section 307(e) of ERISA; and
(h) promptly upon the occurrence of an Automatic Release
Termination (as such term is defined in the Inventory
Security Agreement) pursuant to Section 5(C) of the Inventory
Security Agreement, notice thereof.
6.02 Information Regarding the Receivables. The Seller shall
-------------------------------------
furnish to BSF such information with respect to the Receivables as BSF
may request.
6.03 Books and Records. The Seller will keep proper books of
-----------------
record and account in which full, true and correct entries shall be
made of all dealings and transactions in relation to its business and
activities.
6.04 Accounting Treatment. For accounting purposes, the
--------------------
Seller shall treat each purchase made hereunder as a sale of the
Receivables subject thereto.
6.05 Disclosure. The Seller agrees that it shall make clear
----------
disclosure in its financial statements (or in the footnotes thereto)
that it has sold the Receivables to BSF.
11
<PAGE>
6.06 Compliance with Laws. The Seller shall comply in all
--------------------
material respects with all laws applicable to it except (A) where the
failure so to comply would not reasonably be expected to have a
material adverse effect on (i) the interests of BSF hereunder or the
Buyers under the Receivables Purchase Agreement or (ii) its ability to
perform its obligations under the Program Documents or (B) where the
necessity of compliance therewith is being contested in good faith by
appropriate proceedings.
6.07 No Adverse Interests. The Seller will not cause or
--------------------
permit any of the Receivables, or any Related Security, any
Collections thereon or any proceeds of the foregoing or any Lockbox or
Lockbox Account or the Collection Account to be sold, pledged,
assigned or transferred or to be subject to an Adverse Interest.
6.08 No Modification of Receivables. The Seller shall not do
------------------------------
anything to modify the terms of any Receivable, except in accordance
with the Credit and Collection Policy, if such modification would
materially adversely affect BSF or cause a Termination Event, or
otherwise impair the rights of BSF hereunder or the Buyers under the
Receivables Purchase Agreement; provided that (i) the Seller may
grant, or permit to be granted, to the Obligor under any Receivable,
any Dilution Factor which the Seller in good faith believes is
justified, subject to the provisions of Section 3.9(c) of the
Receivables Purchase Agreement and Section 2.02 hereunder, and (ii)
the Seller may take or permit to be taken such action to collect
Receivables as it may deem advisable, including resale of any
repossessed, returned or rejected goods and rescheduling through
extension or otherwise of payments due under any Receivable so long as
such action is consistent with the Servicer's historical collection
practices as modified from time to time in accordance with Section
6.09.
6.09 No Change in Business or Policy. The Seller shall not
-------------------------------
change the fundamental nature of its business or the Credit and
Collection Policy in a manner that would materially adversely affect
BSF or materially impair the collectibility of any Receivables (it
being understood that the Seller may amend the Credit and Collection
Policy as long as such amendment does not materially adversely affect
BSF or materially impair the collectibility of the Receivables).
6.10 Preservation of Corporate Existence. Except as
-----------------------------------
permitted pursuant to Section 6.11 hereof, the Seller shall preserve
and maintain its corporate existence and good standing in the
jurisdiction of its incorporation, and qualify and remain qualified in
good standing as a foreign corporation in each jurisdiction where the
failure to preserve and maintain such existence, rights, franchises,
privileges and qualification would materially adversely affect (i) the
interests of BSF hereunder or (ii) its ability to perform its
obligations under the Program Documents.
6.11 No Mergers. The Seller will not (i) consolidate or
----------
merge with or into any other corporation or (ii) except as permitted
by Section 5.7 of the Inventory Credit Agreement, sell, lease or
otherwise transfer, directly or indirectly, all or substantially all
of its assets; provided that the Seller may merge with another
corporation if (x) such corporation is not a Special Purpose Member
and none of the capital stock of such corporation is owned by BSF, (y)
the Seller is the surviving corporation in such merger and (z) after
giving effect to such merger, no Termination Event or Potential
Termination Event shall have occurred and be continuing.
6.12 Lockbox Accounts. The Seller agrees that it shall
----------------
direct Obligors with respect to the Receivables to cause all
Collections to be either (i) mailed directly to a Lockbox with a
Qualified Bank which has entered into a Lockbox Agreement governing
such Lockbox and the related Lockbox Account (which shall be a
separate and segregated account) pursuant to the
12
<PAGE>
Receivables Purchase Agreement or (ii) electronically transferred to a
Lockbox Account or the Collection Account.
6.13 Payment of Taxes. The Seller will promptly pay and
----------------
discharge all Federal and state taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profit or upon
any property belonging to it, unless such tax, assessment, charge or
levy shall not at the time be due and payable or can be paid
thereafter without penalty, or if the amount, applicability or
validity thereof shall be currently contested in good faith by
appropriate proceedings and adequate reserves with respect to such
tax, assessment, charge or levy shall have been established in
accordance with GAAP.
6.14 Covenants of BSF. The Seller agrees, as relevant, that
----------------
it shall comply with, and to cause BSF to comply with, Section 3.3 of
the Receivables Purchase Agreement.
ARTICLE VII
MISCELLANEOUS
-------------
7.01 Indemnity.
---------
(a) The Seller agrees to indemnify, defend and save harmless
BSF and its directors, officers, employees and agents (each an
"indemnitee"), other than for the indemnitee's own gross negligence or
willful misconduct, forthwith on demand, from and against any and all
losses, claims, damages, liabilities, costs and expenses (including,
without limitation, all reasonable attorneys' fees and expenses and
expenses of settlement, litigation or preparation therefor) which such
indemnitee may incur or which may be asserted against such indemnitee
by any Person (including, without limitation, any Obligor) arising
from or incurred in connection with:
(i) any breach of a representation, warranty or covenant
by the Seller made or deemed made hereunder or in connection
herewith or the transactions contemplated hereby,
(ii) any action taken or, if the Seller is otherwise
obligated to take action, failed to be taken, by the Seller
with respect to the Receivables or any of its obligations
hereunder, including, without limitation, the Seller's
failure to comply with an applicable law or regulation,
(iii) any failure attributable to the Seller to vest and
maintain vested in BSF an ownership interest in the
Receivables, free and clear of all Adverse Interests,
(iv) any products liability claim arising out of or
relating to the Receivables or the related Contracts,
13
<PAGE>
(v) any failure to pay when due any taxes required to be
paid by the Seller or BSF, including without limitation any
income tax, sales tax, excise tax or other tax or charge
payable in connection with the Receivables and their creation
or satisfaction,
(vi) any dispute, suit, action, claim, proceeding or
governmental investigation, pending or threatened, whether
based on statute, regulation or order (including any such
suit, action, claim or proceeding alleging a violation of any
Federal or state securities laws, on tort, on contract or
otherwise) before any court, arbitral panel, or other
tribunal which arises out of or relates to the Receivables or
related contracts, or the use of the proceeds of the sale of
the Receivables pursuant hereto,
(vii) any Environmental Liabilities, or
(viii) any amount required to be paid by BSF pursuant to
Section 2.4 of the Receivables Purchase Agreement or any
indemnity required to be paid by BSF pursuant to Section
10.3, 10.4 and 11.3 of the Receivables Purchase Agreement.
It is expressly agreed and understood by the parties hereto
that such indemnification is not intended to constitute a
guarantee of the collectibility or payment of the Receivables
purchased hereunder.
7.02 Amendment and Waiver.
--------------------
Subject to Section 7.09, this Agreement may be amended, or
the provisions hereof waived, from time to time by a written amendment
or waiver duly executed and delivered by the Seller and BSF.
7.03 No Implied Waivers; Cumulative Remedies.
---------------------------------------
No course of dealing and no delay or failure of BSF in
exercising any right, power or privilege under the Program Documents
shall affect any other or future exercise thereof or the exercise of
any other right, power or privilege; nor shall any single or partial
exercise of any such right, power or privilege or any abandonment or
discontinuance of steps to enforce such a right, power or privilege
preclude any further exercise thereof or of any other right, power or
privilege. The rights and remedies of BSF under the Program Documents
are cumulative and not exclusive of any rights or remedies which BSF
would otherwise have.
7.04 Notices.
-------
All communications and notices pursuant hereto to either
party shall be given in accordance with Section 11.1 of the
Receivables Purchase Agreement.
7.05 Costs and Expenses.
------------------
The Seller will pay all expenses incident to the performance
of its obligations under this Agreement and the Seller agrees to pay
all reasonable out-of-pocket costs and expenses of BSF in connection
with the perfection as against third parties of BSF's right, title and
interest in and to the Receivables and the enforcement of any
obligation of the Seller hereunder.
7.06 Survival.
--------
14
<PAGE>
This Agreement shall continue in full force and effect so
long as any Receivables remain outstanding; provided that Section 7.01
shall survive termination of this Agreement.
7.07 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
7.08 No Bankruptcy Petition.
----------------------
The Seller hereby covenants and agrees that, prior to the
date which is one year and one day after the Final Payment Date, it
will not institute against, or join any other Person in instituting
against, BSF any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceeding or other similar proceeding under the laws
of the United States or any State of the United States.
7.09 Assignment.
----------
(a) The Seller acknowledges that BSF will, pursuant to the
Receivables Purchase Agreement, convey an ownership interest in the
Receivables to the Buyers and assign all of its rights and remedies
under this Agreement to the Collateral Agent as security for its
obligations under the Receivables Purchase Agreement, and that,
without limiting the generality of the foregoing, the representations
and warranties contained in this Agreement and the rights of BSF under
Section 2.02 hereof and the indemnification provisions of Section 7.01
hereof are intended to benefit the Agents, the L/C Issuing Banks and
the Buyers. The Seller hereby consents to such conveyances and such
assignment and to the terms of the Receivables Purchase Agreement and
further acknowledges that pursuant to the Receivables Purchase
Agreement the consent of the Required Buyers and reaffirmation by S&P
of the rating then assigned to the Buyers' Certificates is required in
respect of amendments hereof and waivers by BSF of its rights
hereunder.
(b) The Seller shall not assign any of its rights or
obligations hereunder.
7.10 Governing Law.
-------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. The Seller and BSF
each hereby submits to the non-exclusive jurisdiction of the United
States District Court for the Southern District of New York and of any
New York State court sitting in New York City for purposes of all
legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Seller and BSF each waives, to
the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought
in such a court has been brought in an inconvenient forum.
7.11 Counterparts. This Agreement may be executed in any
------------
number of counterparts and by the different parties hereto on separate
counterparts each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute but one and the
same instrument.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereby have caused this
Agreement to be executed by their respective officers thereunto duly
authorized as of the date and year first above written.
BETHLEHEM STEEL CORPORATION
By____________________________
Name:
Title:
BETHLEHEM STEEL FUNDING, LLC
By__________________________
Name:
Title:
<PAGE>
SCHEDULE 4.02(f)
ENVIRONMENTAL MATTERS
---------------------
None
<PAGE>
APPENDIX I
NET PURCHASE PRICE OF RECEIVABLES
---------------------------------
For each Business Day
A. Face amount of new Receivables meeting the
Eligibility Criteria 0.00
B. A X Average Loss to Liquidation Ratio for
the last 12 months X 1.25 0.00
C. A - B 0.00
D. C X Yield Rate X 3 month average Days
-------------------------------------
Sales Outstanding X 1.25
------------------------
360 (1) 0.00
E. C - D 0.00
F. C X 1.5% X Days Sales Outstanding X 1.10
------------------------------------
360 0.00
G. E - F [Purchase Price of New Receivables] 0.00
H. Less - credits under Section 2.02 of PSA 0.00
- -------------
(1) Yield Rate = LIBOR (one month), as it appears in Bloomberg at
11:00 A.M. (New York City time) on the prior Business Day, plus the
Prime Rate, as printed in the Wall Street Journal on such Business
Day, divided by 2.
<PAGE>
I. G - H [Net Purchase Price of New Receivables] 0.00
<PAGE>
APPENDIX II
DAILY RECONCILIATION OF
INTERCOMPANY TRANSACTIONS
-------------------------
A. Net Purchase Price of New Receivables 0.00
B. Collections available for reinvestment 0.00
C. Proceeds of new dollar funding 0.00
D. Lesser of A and (B + C) paid to BSC 0.00
E. If A less than (B + C), the
difference to be:
- held at BSF 0.00
- paid on BSC 0.00
note
- paid as a 0.00
distribution
F. If (B + C) less than A, the
difference drawn on BSC note 0.00
<PAGE>
EXHIBIT J
[Form of BSC Note]
PROMISSORY NOTE
[$___________] New York, New York
September 12, 1995
For value received, Bethlehem Steel Funding, LLC, a Maryland
limited liability company ("BSF"), promises to pay (but only on a
subordinated basis as hereinafter described), to Bethlehem Steel
Corporation, a Delaware corporation (including permitted successors,
"BSC"), the principal sum of [$___________] (the "Maximum Amount"), or
such lesser amount as indicated on the schedule attached hereto, on
the date which is 366 days following the Final Payment Date (as
defined in the Receivables Purchase Agreement referred to below). The
principal amount of this Note is not subject to acceleration but may
be prepaid (subject to the Subordination Provisions set forth below)
in whole or in part at any time or from time to time, whether before,
on or after the Final Payment Date. Capitalized terms used herein
without definition shall have the meanings set forth in the
Receivables Purchase Agreement (as the same may from time to time be
amended, supplemented or otherwise modified, the "Receivables Purchase
Agreement"), dated as of September 12, 1995, among BSF, Bethlehem
Steel Credit Affiliate One, Inc., Bethlehem Steel Credit Affiliate
Two, Inc., BSC, as Servicer, the financial institutions listed on the
signature pages thereof, as Buyers, Morgan Guaranty Trust Company of
New York, as Administrative Agent and J.P. Morgan Delaware, as
Structuring and Collateral Agent.
BSF further promises to pay interest on the unpaid principal
hereof from time to time outstanding (subject to the Subordination
Provisions set forth below) from the dates specified in the schedule
attached hereto, said interest to be payable on each Settlement Date
and at maturity, until such principal shall have been paid in full, at
a fluctuating rate per annum equal to the Prime Rate of Morgan
Guaranty Trust Company of New York.
BSC agrees that it shall not sell, transfer, assign,
negotiate or pledge this Note (or any of its rights hereunder) except
as provided in the Inventory Security Agreement.
BSC is hereby irrevocably authorized to endorse on the
schedule attached hereto an appropriate notation evidencing the date
and amount of each advance of principal hereunder and of each payment
of principal with respect thereto; provided that the failure to make
any such endorsement shall not affect the obligations of BSF to make a
payment when due of any amount owing hereunder. Subject to the other
provisions of this Note
<PAGE>
(including the Subordination Provisions set forth below), during the
period prior to the Final Payment Date, BSF may borrow, repay and
reborrow up to the Maximum Amount.
SUBORDINATION PROVISIONS
------------------------
1. BSF, for itself and its successors, agrees, and BSC and
each holder of this Note by its acceptance hereof agrees that the
rights of the holder of this Note are hereby expressly subordinated as
a claim against BSF or any of its assets, whether such claim be (a) in
the ordinary course of business, (b) in the event of any distribution
of the assets of BSF upon any voluntary or involuntary dissolution,
winding-up, total or partial liquidation or reorganization, or
bankruptcy, insolvency, receivership or other statutory or common law
proceedings or arrangements involving BSF or other adjustment of BSF's
liabilities or any assignment for the benefit of creditors or any
marshalling of the assets or liabilities of BSF or (c) otherwise, to
the prior claims and rights of the Agents, the L/C Issuing Banks and
the Buyers against BSF, including the right to receive payment in full
of all Aggregate Unpaids due the Agents, the L/C Issuing Banks and the
Buyers (including Yield accruing after the commencement of any
proceedings, whether or not allowed or allowable as a claim in such
proceedings) prior to the payment of any amounts due to the holder of
this Note, and that these Subordination Provisions are for the benefit
of the Agents, the L/C Issuing Banks and the Buyers; provided that
notwithstanding the foregoing, the principal of and interest on this
Note may be paid from amounts distributed to BSF from time to time
pursuant to Sections 3.7 and 3.8 of the Receivables Purchase Agreement
(and, prior to the Final Payment Date, from only such amounts and only
if no Termination Event and no Potential Termination Event has
occurred and is then continuing).
2. If any payment or distribution of any assets of BSF of
any kind or character shall be received by set-off or otherwise by the
holder of this Note (other than from amounts distributed to BSF from
time to time pursuant to Sections 3.7 and 3.8 of the Receivables
Purchase Agreement), such payment or distribution and the amount of
any such set-off shall be held in trust for and paid over to the
Collateral Agent on behalf of and for the benefit of the Agents, the
L/C Issuing Banks and the Buyers.
3. The holder of this Note shall not be entitled to enforce
any right or receive any payment arising out of any right of
subrogation which it may have or be entitled to, by operation of law
or otherwise, as a result of payments or forbearance by such holder
hereunder or pursuant hereto, unless and until all amounts payable to
the Agents, the L/C Issuing Banks and the Buyers shall have paid in
full. BSC hereby covenants and agrees that, prior to the date which
is one year and one day after the Final Payment Date, it will not
institute against, or join any other Person in instituting against,
BSF any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other similar proceeding under the laws of
the United States or any State of the United States.
4. This Note shall be amended or modified only in accordance
with the Receivables Purchase Agreement.
* * * * * * * * * * * * * * * * *
2
<PAGE>
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, BSF has caused this Note to be duly
executed on the date first above written.
BETHLEHEM STEEL FUNDING, LLC
By_______________________________
Name:
Title:
BETHLEHEM STEEL CORPORATION
By: ______________________
Name:
Title:
<PAGE>
Schedule I to
Promissory Note
SUBORDINATED PROMISSORY NOTE
ADVANCES AND PAYMENTS OF PRINCIPAL
Amount
Amount of
of Principal Notation
Date Advance Repaid Made By
- ---- ------- --------- --------
<PAGE>
EXHIBIT K-1
BETHLEHEM STEEL FUNDING, LLC
ARTICLES OF ORGANIZATION
------------------------
BETHLEHEM STEEL FUNDING, LLC (the "LLC") hereby certifies:
1. Recital. The members of the LLC have designated Neal D.
-------
Borden as an "authorized person" as that term is defined in Section 4A-101 (C)
of the Corporations and Associations Article of the Maryland General
Corporation Law, for purposes of executing and filing these Articles of
Organization, and any other documents or certificates that may be required to
be filed on behalf of the LLC with the State Department of Assessments and
Taxation of Maryland from time to time.
2. Name. The name of the LLC is:
----
BETHLEHEM STEEL FUNDING, LLC
3. Purpose. The purpose of the LLC is to engage exclusively
-------
in the purchase of receivables originated in connection with the sale
of goods or the provision of services by Bethlehem Steel Corporation,
and the financing of such purchases pursuant to the Receivables
Purchase Agreement among the LLC, Bethlehem Steel Credit Affiliate
One, Inc., Bethlehem Steel Credit Affiliate Two, Inc., Bethlehem Steel
Corporation, as Servicer, the financial institutions from time to time
party thereto as Buyers, Morgan Guaranty Trust Company of New York, as
Administrative Agent and J.P. Morgan Delaware, as Structuring and
Collateral Agent, as the same may from time to time be amended or
extended (capitalized terms used in this Article having the meanings
given thereto in such Receivables Purchase Agreement) and the related
documents contemplated thereby, and the taking of any and all actions
and the doing of any and all things necessary or appropriate to
accomplish the foregoing. The LLC may not incur any Debt other than
pursuant to or as contemplated by the aforesaid Receivables Purchase
Agreement unless (x) such Debt is rated the same by Standard & Poor*s
Ratings Group or its successors (hereinafter referred to as "S&P") as
the Buyers' Certificates, or (y) is fully subordinated to the Buyers'
Certificates; is nonrecourse other than with respect to proceeds in
excess of the proceeds necessary to pay the Buyers' Certificates
("excess proceeds"); and does not constitute a claim against the LLC
to the extent that excess proceeds are insufficient to pay such Debt
or (z) such incurrence will not result in a reduction of the then
existing rating by S&P of the Buyers' Certificates.
<PAGE>
4. Principal Office and Resident Agent. The address of the
-----------------------------------
principal office of the LLC is 5111 North Point Boulevard, Sparrows
Point, Maryland 21219-1014. The name and address of the resident
agent of the LLC is Corporation Trust, Inc., First Maryland Building,
32 South Street, Baltimore, Maryland 21202.
5. Dissolution. The latest date upon which the LLC is to
-----------
dissolve is December 29, 2005.
6. Bankruptcy. The LLC shall not, without the affirmative
----------
vote of all of its members, institute proceedings to be adjudicated
bankrupt or insolvent; or consent to the institution of bankruptcy or
insolvency proceedings against it; or file a petition seeking, or
consent to, reorganization or relief under any applicable federal or
state law relating to bankruptcy; or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the LLC or a substantial part of its property; or
make any assignment for the benefit of creditors; or admit in writing
its inability to pay its debts generally as they become due; or take
any other action in furtherance of any such action.
7. Interests of Creditors. Members of the LLC shall take
----------------------
into account the interests of the creditors of the LLC, as well as the
interests of the LLC (notwithstanding the fact that the LLC is not
then insolvent), when acting on any matter subject to the vote of the
members.
2
<PAGE>
8. Amendments. The LLC reserves the right to amend these
----------
Articles of Organization in any manner permitted by the Maryland
General Corporation Law and all rights and powers conferred herein on
members, if any, are subject to this reserved power; provided that the
LLC shall not, without the prior written reaffirmation by S&P of the
rating then assigned to the Buyers* Certificates, amend, alter, change
or repeal Articles 3, 5, 6, 7 or this Article 8 of these Articles of
Organization.
IN WITNESS WHEREOF, the undersigned has executed these
Articles of Organization on this 12th day of September, 1995.
________________________________
Neal D. Borden
3
<PAGE>
EXHIBIT K-2
BETHLEHEM STEEL FUNDING, LLC
OPERATING AGREEMENT
This Operating Agreement (this "Agreement") is entered into
this 12th day of September, 1995 by and among Bethlehem Steel
Corporation, of Bethlehem, Pennsylvania; Bethlehem Steel Credit
Affiliate One, Inc., of Sparrows Point, Maryland; and Bethlehem Steel
Credit Affiliate Two, Inc., of Sparrows Point, Maryland.
Explanatory Statement
---------------------
The parties have agreed to organize and operate a limited
liability company in accordance with the terms of, and subject to the
conditions set forth in, this Agreement.
NOW, THEREFORE, for good and valuable consideration, the
parties, intending legally to be bound, agree as follows:
SECTION I
Defined Terms
-------------
The following capitalized terms shall have the meanings
specified in this Section I (any capitalized terms not defined herein
shall have the meanings given thereto in the Rated Receivables
Purchase Facility, as defined hereinbelow): "Act" means the Maryland
Limited Liability Company Act, as amended from time to time.
"Adjusted Capital Account Deficit" means, with respect to any
Interest Holder, the deficit balance, if any, in the Interest Holder's
Capital Account as of the end of the relevant taxable year, after
giving effect to the following adjustments:
<PAGE>
(i) the deficit shall be decreased by the amounts which the
Interest Holder is deemed obligated to restore pursuant to Regulation
Section 1.704-1(b)(2)(ii)(c); and
(ii) the deficit shall be increased by the items described in
Regulation Section 1.704-1(b)(2)(ii)-(d)(4), (5), and (6).
"Adjusted Capital Balance" means, with respect to any Member,
the Member's total Capital Contribution then paid to the Company less
all amounts actually distributed to such Member pursuant to Section
4.2.3, provided that the Adjusted Capital Balance of any Member shall
not be less than zero. If a Member transfers all or any portion of
his Interest in accordance with the terms of this Agreement, his
transferee shall succeed to the Adjusted Capital Balance of the
transferor to the extent it relates to the Interest transferred.
"Affiliate" means any entity other than the Company (i) which
owns beneficially, directly or indirectly, more than 50 percent of the
total of the Capital Accounts of the Company or which is otherwise in
control of the Company, (ii) of which more than 50 percent of the
outstanding voting securities are owned beneficially, directly or
indirectly, by any entity described in clause (i) above, or (iii)
which is controlled by any entity described in clause (i) above;
provided that for the purposes of this definition the terms "control"
and "controlled by" shall have the meanings assigned to them in Rule
405 under the Securities Act of 1933, as amended.
"Agent" means an officer, director, employee or agent of a
Member.
"Agreement" means this Agreement, as amended from time to
time.
"Capital Account" means the account maintained by the Company
for each Interest Holder in accordance with the following provisions:
(i) an Interest Holder's Capital Account shall be credited
with the Interest Holder's Capital Contributions, the amount of any
Company liabilities assumed by the Interest Holder (or which are
secured by Company property distributed to the Interest Holder), the
Interest Holder's distributive share of Profit and any item in the
nature of income or gain specially allocated to such Interest Holder
pursuant to the provisions of Section IV (other than Section 4.3.3);
and
(ii) an Interest Holder's Capital Account shall be debited
with the amount of money and the fair market value of any Company
property distributed to the Interest Holder, the amount of any
liabilities of the Interest Holder assumed by the Company (or which
are secured by property contributed by the Interest Holder to the
Company), the Interest Holder's distributive share of Loss and any
item in the nature of expenses or losses specially allocated to the
Interest Holder pursuant to the provisions of Section IV (other than
Section 4.3.3). If any Interest is transferred pursuant to the terms
of this Agreement, the transferee shall succeed to the Capital Account
of the transferor to the extent the Capital Account is attributable to
the transferred Interest. If the book value of Company property is
adjusted pursuant to Section 4.3.3, the Capital Account of each
Interest Holder shall be adjusted to reflect the aggregate adjustment
in the same manner as if the Company had recognized gain or loss equal
to the amount of such aggregate adjustment. It is intended that the
Capital Accounts of all Interest Holders shall be maintained in
compliance with the provisions of Regulation Section 1.704-1(b), and
all provisions of this Agreement relating to the maintenance of
Capital Accounts shall be interpreted and applied in a manner
consistent with that Regulation.
2
<PAGE>
"Capital Contribution" means the total amount of cash and the
fair market value of other assets contributed (or deemed contributed
under Regulation Section 1.704-1(b)(2)(iv)(d)) to the Company by a
Member, net of liabilities assumed or to which the assets are subject.
"Capital Proceeds" means the net amount of cash received by
the Company from a Capital Transaction after payment of all expenses
associated with the Capital Transaction.
"Capital Transaction" means any transaction not in the
ordinary course of business which results in the Company's receipt of
cash or other consideration other than Capital Contributions,
including without limitation, proceeds of sales or exchanges or other
dispositions of property not in the ordinary course of business,
financings, refinancings, condemnations, recoveries of damage awards,
and insurance proceeds.
"Cash Flow" means all cash funds derived from operations of
the Company (including interest received on reserves), without
reduction for any non-cash charges, but less cash funds used to pay
current operating expenses and to pay or establish reasonable reserves
for future expenses, debt payments, capital improvements, and
replacements as determined by the Members. Cash Flow shall not
include Capital Proceeds but shall be increased by the reduction of
any reserves previously established.
"Code" means the Internal Revenue Code of 1986, as amended,
or any corresponding provision of any succeeding law.
"Company" means the limited liability company organized in
accordance with this Agreement.
"Interest" means a Person's share of the Profits and Losses
of, and the right to receive distributions from, the Company.
"Interest Holder" means any Person who holds an Interest,
whether as a Member or as an unadmitted assignee of a Member.
"Involuntary Withdrawal" means, with respect to any Member,
the occurrence of any of the events set forth in Act Sections
4A-606(3) through (9).
"Member" means each Person signing this Agreement and any
Person who subsequently is admitted as a member of the Company.
"Member Loan Nonrecourse Deductions" means any Company
deductions that would be Nonrecourse Deductions if they were not
attributable to a loan made or guaranteed by a Member within the
meaning of Regulation Section 1.704-2(i).
"Membership Rights" means all of the rights of a Member in
the Company, including a Member's: (i) Interest; (ii) right to
inspect the Company's books and records; (iii) right to participate in
the management of and vote on matters coming before the Company; and
(iv) unless this Agreement or the Articles of Organization provide to
the contrary, right to act as an agent of the Company.
"Minimum Gain" has the meaning set forth in Regulation
Section 1.704-2(d). Minimum Gain shall be computed separately for
each Interest Holder in a manner consistent with the Regulations under
Code Section 704(b).
3
<PAGE>
"Negative Capital Account" means a Capital Account with a
balance of less than zero.
"Nonrecourse Deductions" has the meaning set forth in
Regulation Section 1.704- 2(b)(1). The amount of Nonrecourse
Deductions for a taxable year of the Company equals the net increase,
if any, in the amount of Minimum Gain during that taxable year,
determined according to the provisions of Regulation Section
1.704-2(c).
"Nonrecourse Liability" means any liability of the Company
with respect to which no Member has personal liability determined in
accordance with Code Section 752 and the Regulations promulgated
thereunder.
"Percentage" means, as to a Member, the percentage set forth
after the Member's name on Exhibit A, as amended from time to time,
and as to an Interest Holder who is not a Member, the Percentage of
the Member whose Interest has been acquired by such Interest Holder,
to the extent the Interest Holder has succeeded to that Member's
Interest.
"Person" means and includes a corporation, partnership,
association, limited liability company, trust, or other entity.
"Positive Capital Account" means a Capital Account with a
balance greater than zero.
"Profit" and "Loss" means, for each taxable year of the
Company (or other period for which Profit and Loss must be computed)
the Company's taxable income or loss determined in accordance with
Code Section 703(a), with the following adjustments:
(i) all items of income, gain, loss, deduction, or credit
required to be stated separately pursuant to Code Section 703(a)(1)
shall be included in computing taxable income or loss;
(ii) any tax-exempt income of the Company, not otherwise
taken into account in computing Profit or Loss, shall be included in
computing taxable income or loss;
(iii) any expenditures of the Company described in Code
Section 705(a)(2)(B) (or treated as such pursuant to Regulation
Section 1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in
computing Profit or Loss, shall be subtracted from taxable income or
loss;
(iv) gain or loss resulting from any taxable disposition of
Company property shall be computed by reference to the adjusted book
value of the property disposed of, notwithstanding the fact that the
adjusted book value differs from the adjusted basis of the property
for federal income tax purposes;
(v) in lieu of the depreciation, amortization or cost
recovery deductions allowable in computing taxable income or loss,
there shall be taken into account the depreciation computed based upon
the adjusted book value of the asset; and
(vi) notwithstanding any other provision of this definition,
any items which are specially allocated pursuant to Section 4.3 hereof
shall not be taken into account in computing Profit or Loss.
"Rated Receivables Purchase Facility" and "Facility" means
the receivables facility established pursuant to the Receivables
Purchase Agreement dated as of September 12, 1995,
4
<PAGE>
among the Company, Bethlehem Steel Credit Affiliate One, Inc.,
Bethlehem Steel Credit Affiliate Two, Inc., Bethlehem Steel
Corporation, as Servicer, the financial institutions listed therein,
Morgan Guaranty Trust Company of New York, as Administrative Agent,
and J.P.Morgan Delaware, as Structuring and Collateral Agent, and such
other agreements, documents and instruments contemplated by the
Receivables Purchase Agreement.
"Regulation" means the income tax regulations, including any
temporary regulations, from time to time promulgated under the Code.
"SDAT" means the State Department of Assessments and Taxation
of Maryland.
"Transfer" means, when used as a noun, any voluntary sale,
hypothecation, pledge, assignment, attachment, or other transfer, and,
when used as a verb, means voluntarily to sell, hypothecate, pledge,
assign, or otherwise transfer.
"Voluntary Withdrawal" means a Member's dissociation with the
Company by means other than a Transfer or an Involuntary Withdrawal.
SECTION II
Formation and Name; Office; Purpose; Term
-----------------------------------------
2.1 Organization. The parties hereby organize a limited
------------
liability company pursuant to the Act and the provisions of this
Agreement and, for that purpose, have caused Articles of Organization
to be prepared, executed and filed with SDAT on September 12, 1995.
2.2 Name of the Company. The name of the Company shall be
-------------------
"BETHLEHEM STEEL FUNDING, LLC." The Company may do business under that
name and under any other name or names upon which the Members agree.
If the Company does business under a name other than that set forth in
its Articles of Organization, the Company shall file a trade name
certificate as required by law.
2.3 Purpose. The purpose of the Company is to engage
-------
exclusively in the purchase of receivables originated in connection
with the sale of goods or the provision of services by Bethlehem Steel
Corporation, and the financing of such purchases pursuant to the Rated
Receivables Purchase Facility, as the same may from time to time be
amended or extended, and the related documents contemplated thereby,
and the taking of any and all actions and the doing of any and all
things necessary or appropriate to accomplish the foregoing. The
Company may not incur any Debt other than pursuant to or as
contemplated by the aforesaid Facility unless (x) such Debt is rated
the same by S&P as the Buyers' Certificates, or (y) is fully
subordinated to the Buyers' Certificates; is nonrecourse other than
with respect to proceeds in excess of the proceeds necessary to pay
the Buyers' Certificates ("excess proceeds"); and does not constitute
a claim against the LLC to the extent that excess proceeds are
insufficient to pay such Debt or (z) such incurrence will not result
in a reduction of the then existing rating by S&P of the Buyers'
Certificates.
2.4 Separateness Covenants.
----------------------
5
<PAGE>
2.4.1. Office. The Company shall maintain its principal
------
executive office separate from that of any Affiliate other than
Bethlehem Steel Credit Affiliate One, Inc. and Bethlehem Steel Credit
Affiliate Two, Inc. and shall conspicuously identify such office as
its office.
2.4.2. Financial Statements. The Company shall maintain its
--------------------
financial statements, accounting records and other documents separate
from those of any Affiliate or any other entity. The Company shall
prepare unaudited quarterly and audited annual financial statements,
and the Company's financial statements shall comply with GAAP. The
Company shall maintain its own bank accounts, payroll and correct,
complete and separate books of account. The Company shall retain as
its accountants a nationally recognized firm of independent certified
public accountants, provided that such accountants may also serve as
accountants of any Affiliate.
2.4.3. Separate Identity. The Company shall at all times
-----------------
hold itself out to the public (including any Affiliate's creditors)
under the Company's own name and as a separate and distinct entity.
Communications on behalf of the Company shall be made in its own name,
and the Company shall maintain its own separate telephone number and
stationery and other business forms.
2.4.4. Formalities. All customary formalities regarding the
-----------
proper existence of the Company, including holding meetings of or
obtaining the consent of its Members, as appropriate, and maintaining
current and accurate minute books, shall be observed.
2.4.5. Separate Action. Except for servicing activities to
---------------
be performed with respect to the receivables owned by the Company
(which may be performed by Bethlehem Steel Corporation (or a
subsidiary thereof)), the Company shall act solely in its own name and
through its own duly authorized officers and agents. Except for
servicing activities to be performed by Bethlehem Steel Corporation
(or a subsidiary thereof) with respect to the receivables owned by the
Company, no Affiliate shall act as an agent of the Company (provided
that an employee, officer or director of an Affiliate may also serve
as an employee, officer or director of the Company). Investments
shall be made directly by the Company or on its behalf by brokers or
agents engaged and paid by the Company or its agents.
2.4.6. Affiliate Transactions. All business transactions
----------------------
entered into by the Company with any Affiliate shall be on terms and
conditions that are not more or less favorable to the Company than
terms and conditions available at the time to the Company for
comparable transactions with unaffiliated persons and must be approved
by all of the Members. The Company shall not guarantee or assume or
hold itself out or permit itself to be held out as having guaranteed
or assumed any liabilities or obligations of any Affiliate, other than
the endorsement of checks for collection or deposit in the ordinary
course of business.
2.4.7. Liabilities. The Company shall pay its own
-----------
liabilities, indebtedness and obligations of any kind, including all
administrative expenses, from its own separate assets.
2.4.8. Segregation of Assets. Assets of the Company shall
---------------------
be separately identified, maintained and segregated. Except as
otherwise provided in the Program Documents, the Company's funds shall
not be commingled with those of any other corporate or natural person.
The Company's assets shall at all times be held by or on behalf of the
Company and, if held on behalf of the Company by another entity, shall
at all times be kept identifiable (in accordance with customary
usages) as assets owned by the Company. Except for servicing
activities to be performed by Bethlehem Steel Corporation (or a
subsidiary thereof) with respect.
6
<PAGE>
to the receivables owned by the Company, in no event shall any of the
Company's assets be held on its behalf by any Affiliate.
2.4.9. Investment Company Status. The Company shall
-------------------------
not take any action if, as a result of such action, the Company would
be required to register as an investment company under the Investment
Company Act of 1940, as amended.
2.5 Term. The term of the Company began upon the acceptance
----
of the Articles of Organization by SDAT and shall continue in
existence until December 29, 2005, unless its existence is sooner
terminated pursuant to Section VII of this Agreement.
2.6 Principal Office. The principal office of the Company in
----------------
the State of Maryland shall be located at 5111 North Point Boulevard,
Sparrows Point, Maryland 21219-1014 or at any other place within the
State of Maryland upon which the Members agree.
2.7 Resident Agent. The name and address of the Company's
--------------
resident agent in the State of Maryland shall be Corporation Trust,
Inc., First Maryland Building, 32 South Street, Baltimore, Maryland
21202.
2.8 Members. The name, present mailing address, taxpayer
-------
identification number and Percentage of each Member are set forth on
Exhibit A.
SECTION III
Members; Capital; Capital Accounts
----------------------------------
3.1 Initial Capital Contributions. Upon the execution of
-----------------------------
this Agreement, the Members shall contribute to the Company accounts
receivable with a fair market value of the amounts respectively set
forth on Exhibit A.
3.2 No Other Capital Contributions. No Member shall be
------------------------------
required to contribute any additional capital to the Company, and
except as set forth in the Act, no Member shall have any liability for
any obligations of the Company.
3.3 No Interest on Capital Contributions. Interest Holders
------------------------------------
shall not be paid interest on their Capital Contributions.
3.4 Return of Capital Contributions. Except as otherwise
-------------------------------
provided in this Agreement, no Interest Holder shall have the right to
receive the return of any Capital Contribution.
3.5 Form of Return of Capital. If an Interest Holder is
-------------------------
entitled to receive a return of a Capital Contribution, the Company
may distribute accounts receivable, cash, notes, property, or a
combination thereof to the Interest Holder in return of the Capital
Contribution.
7
<PAGE>
3.6 Capital Accounts. A separate Capital Account shall be
----------------
maintained for each Interest Holder.
SECTION IV
Profit, Loss, and Distributions
4.1 Distributions of Cash Flow and Allocations of Profit or
-------------------------------------------------------
Loss Other Than From Capital Transactions.
- -----------------------------------------
4.1.1. Profit or Loss Other Than from a Capital
----------------------------------------
Transaction. After giving effect to the special allocations set forth
- -----------
in Section 4.3, for any taxable year of the Company, Profit or Loss
(other than Profit or Loss resulting from a Capital Transaction, which
Profit or Loss shall be allocated in accordance with the provisions of
Sections 4.2) shall be allocated to the Interest Holders in proportion
to their Percentages.
4.1.2. Cash Flow. Subject to the limitations imposed
---------
by the Facility, Cash Flow for each taxable year of the Company shall
be distributed to the Interest Holders in proportion to their
Percentages no later than seventy-five (75) days after the end of the
taxable year.
4.2. Distributions of Capital Proceeds and Allocation of
---------------------------------------------------
Profit or Loss from Capital Transactions.
- ----------------------------------------
4.2.1. Profit. After giving effect to the special
------
allocations set forth in Section 4.3, Profit from a Capital
Transaction shall be allocated as follows:
4.2.1.1. If one or more Interest Holders has a
Negative Capital Account, to those Interest Holders, in proportion to
their Negative Capital Accounts, until all of those Negative Capital
Accounts have been reduced to zero.
4.2.1.2. Any Profit not allocated pursuant to
Section 4.2.1.1 shall be allocated to the Interest Holders in
proportion to, and to the extent of, the amounts distributable to them
pursuant to Section 4.2.3.4.1 and 4.2.3.4.2.
4.2.1.3. Any Profit in excess of the foregoing
allocations shall be allocated to the Interest Holders in proportion
to their Percentages.
4.2.2. Loss. After giving effect to the special
----
allocations set forth in Section 4.3, Loss from a Capital Transaction
shall be allocated as follows:
4.2.2.1. If one or more Interest Holders has a
Positive Capital Account, to those Interest Holders, in proportion to
their Positive Capital Accounts, until all Positive Capital Accounts
have been reduced to zero.
8
<PAGE>
4.2.2.2. Any Loss not allocated to reduce Positive
Capital Accounts to zero pursuant to Section 4.2.2.1 shall be
allocated to the Interest Holders in proportion to their Percentages.
4.2.3. Capital Proceeds. Capital Proceeds shall be
----------------
distributed and applied by the Company in the following order and priority:
4.2.3.1. to the payment of all expenses of the
Company incident to the Capital Transaction; then
4.2.3.2. to the payment of debts and liabilities
of the Company then due and outstanding (including all debts due to
any Interest Holder); then
4.2.3.3. to the establishment of any reserves
which the Members deem necessary for liabilities or obligations of the
Company; then
4.2.3.4. the balance shall be distributed as
follows:
4.2.3.4.1. to the Interest Holders in
proportion to their Adjusted Capital Balances, until their remaining
Adjusted Capital Balances have been paid in full;
4.2.3.4.2. if any Interest Holder has a
Positive Capital Account after the distributions made pursuant to
Section 4.2.3.4.1 and before any further allocation of Profit pursuant
to Section 4.2.1.3, to those Interest Holders in proportion to their
Positive Capital Accounts; then
4.2.3.4.3. the balance, to the Interest
Holders in proportion to their Percentages.
4.3 Regulatory Allocations.
----------------------
4.3.1. Qualified Income Offset. No Interest Holder
-----------------------
shall be allocated Losses or deductions if the allocation causes an
Interest Holder to have an Adjusted Capital Account Deficit. If an
Interest Holder receives (1) an allocation of Loss or deduction (or
item thereof) or (2) any distribution which causes the Interest Holder
to have an Adjusted Capital Account Deficit at the end of any taxable
year, then all items of income and gain of the Company (consisting of
a pro rata portion of each item of Company income, including gross
income and gain) for that taxable year shall be allocated to that
Interest Holder before any other allocation is made of Company items
for that taxable year, in the amount and in proportions required to
eliminate the excess as quickly as possible. This Section 4.3.1 is
intended to comply with, and shall be interpreted consistently with,
the "qualified income offset" provisions of the Regulations
promulgated under Code Section 704(b).
4.3.2. Minimum Gain Chargeback. Except as set forth in
-----------------------
Regulations Section 1.704-2(f)(2), (3), and (4), if, during any
taxable year, there is a net decrease in Minimum Gain, each Interest
Holder, prior to any other allocation pursuant to this Section IV,
shall be specially allocated items of gross income and gain for such
taxable year (and, if necessary, subsequent taxable years) in an
amount equal to that Interest Holder's share of the net decrease of
Minimum Gain, computed in accordance with Regulation Section
1.704-2(g). Allocations of gross income and gain pursuant to this
Section 4.3.2 shall be made first from gain recognized from the
disposition of Company assets subject to nonrecourse liabilities
(within the meaning of the
9
<PAGE>
Regulations promulgated under Code Section 752), to the extent of the
Minimum Gain attributable to those assets, and thereafter, from a pro
rata portion of the Company's other items of income and gain for the
taxable year. It is the intent of the parties hereto that any
allocation pursuant to this Section 4.3.2 shall constitute a "minimum
gain chargeback" under Regulation Section 1.704-2(f).
4.3.3. Contributed Property and Book-Ups. In accordance
---------------------------------
with Code Section 704(c) and the Regulations thereunder, as well as
Regulation Section 1.704-1(b)(2)(iv)(d)(3), income, gain, loss, and
deduction with respect to any property contributed (or deemed
contributed) to the Company shall, solely for tax purposes, be
allocated among the Interest Holders so as to take account of any
variation between the adjusted basis of the property to the Company
for federal income tax purposes and its fair market value at the date
of contribution (or deemed contribution). If the adjusted book value
of any Company asset is adjusted as provided herein, subsequent
allocations of income, gain, loss, and deduction with respect to the
asset shall take account of any variation between the adjusted basis
of the asset for federal income tax purposes and its adjusted book
value in the manner required under Code Section 704(c) and the
Regulations thereunder.
4.3.4. Contributed Property and Book-Ups. In accordance
---------------------------------
with Code Section 704(c) and the Regulations thereunder, as well as
Regulation Section 1.704-1(b)(2)(iv)(d)(3), income, gain, loss, and
deduction with respect to any property contributed (or deemed
contributed) to the Company shall, solely for tax purposes, be
allocated among the Interest Holders so as to take account of any
variation between the adjusted basis of the property to the Company
for federal income tax purposes and its fair market value at the date
of contribution (or deemed contribution). If the adjusted book value
of any Company asset is adjusted as provided herein, subsequent
allocations of income, gain, loss, and deduction with respect to the
asset shall take account of any variation between the adjusted basis
of the asset for federal income tax purposes and its adjusted book
value in the manner required under Code Section 704(c) and the
Regulations thereunder.
4.3.5. Code Section 754 Adjustment. To the extent an
---------------------------
adjustment to the tax basis of any Company asset pursuant to Code
Section 734(b) or Code Section 743(b) is required, pursuant to
Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of the adjustment to the
Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the
adjustment decreases basis), and the gain or loss shall be specially
allocated to the Interest Holders in a manner consistent with the
manner in which their Capital Accounts are required to be adjusted
pursuant to that Section of the Regulations.
4.3.6. Nonrecourse Deductions. Nonrecourse Deductions for a
----------------------
taxable year or other period shall be specially allocated among the
Interest Holders in proportion to their Percentages.
4.3.7. Member Loan Nonrecourse Deductions. Any Member Loan
----------------------------------
Nonrecourse Deduction for any taxable year or other period shall be
specially allocated to the Interest Holder who bears the risk of loss
with respect to the loan to which the Member Loan Nonrecourse
Deduction is attributable in accordance with Regulation Section
1.704-2(b).
4.3.8. Guaranteed Payments. To the extent any compensation
-------------------
paid to any Member by the Company, including any fees payable to any
Member pursuant to Section 5.3 hereof, is determined by the Internal
Revenue Service not to be a guaranteed payment under
10
<PAGE>
Code Section 707(c) or is not paid to the Member other than in the
Person's capacity as a Member within the meaning of Code Section
707(a), the Member shall be specially allocated gross income of the
Company in an amount equal to the amount of that compensation, and the
Member's Capital Account shall be adjusted to reflect the payment of
that compensation.
4.3.9. Unrealized Receivables. If an Interest Holder's
----------------------
Interest is reduced (provided the reduction does not result in a
complete termination of the Interest Holder's Interest), the Interest
Holder's share of the Company's "unrealized receivables" and
"substantially appreciated inventory" (within the meaning of Code
Section 751) shall not be reduced, so that, notwithstanding any other
provision of this Agreement to the contrary, that portion of the
Profit otherwise allocable upon a liquidation or dissolution of the
Company pursuant to Section 4.4 hereof which is taxable as ordinary
income (recaptured) for federal income tax purposes shall, to the
extent possible without increasing the total gain to the Company or to
any Interest Holder, be specially allocated among the Interest Holders
in proportion to the deductions (or basis reductions treated as
deductions) giving rise to such recapture.
4.3.10. Withholding. All amounts required to be
-----------
withheld pursuant to Code Section 1446 or any other provision of
federal, state, or local tax law shall be treated as amounts actually
distributed to the affected Interest Holders for all purposes under
this Agreement.
4.4 Liquidation and Dissolution.
---------------------------
4.4.1. If the Company is liquidated, the assets of the
Company shall be distributed to the Interest Holders in accordance
with the balances in their respective Capital Accounts, after taking
into account the allocations of Profit or Loss pursuant to Sections
4.1 or 4.2, if any, and distributions, if any, of cash or property,
pursuant to Sections 4.1 and 4.2.3.
4.4.2. No Interest Holder shall be obligated to restore
a Negative Capital Account.
4.5 General.
-------
4.5.1. Except as otherwise provided in this Agreement,
the timing and amount of all distributions shall be determined by the
Members.
4.5.2. If any assets of the Company are distributed in
kind to the Interest Holders, those assets shall be valued on the
basis of their fair market value, and any Interest Holder entitled to
any interest in those assets shall receive that interest as a
tenant-in-common with all other Interest Holders so entitled. Unless
the Members otherwise agree, the fair market value of the assets shall
be determined by an independent appraiser who shall be selected by the
Members. The Profit or Loss for each unsold asset shall be determined
as if the asset had been sold at its fair market value, and the Profit
or Loss shall be allocated as provided in Section 4.2 and shall be
properly credited or charged to the Capital Accounts of the Interest
Holders prior to the distribution of the assets in liquidation
pursuant to Section 4.4.
4.5.3. All Profit and Loss shall be allocated, and all
distributions shall be made, to the Persons shown on the records of
the Company to have been Interest Holders as of the last day of the
taxable year for which the allocation or distribution is to be made.
Notwithstanding the foregoing, unless the Company's taxable year is
separated into segments, if there is a Transfer or an Involuntary
Withdrawal during the taxable year, the Profit or Loss shall be
allocated
11
<PAGE>
between the original Interest Holder and the successor on the basis of
the number of days each was an Interest Holder during the taxable
year; provided, however, the Company's taxable year shall be
segregated into two or more segments in order to account for Profit,
Loss, or proceeds attributable to any extraordinary non-recurring
items of the Company.
4.5.4. The Members are hereby authorized, upon the
advice of the Company's tax counsel, to amend this Article IV, as
necessary from time to time, to comply with the Code and the
Regulations promulgated under Code Section 704(b), provided however,
that no amendment shall materially affect distributions to an Interest
Holder without the Interest Holder's prior written consent.
SECTION V
Management: Rights, Powers, Duties and Limitations
---------------------------------------------------
5.1 Management. The Company shall be managed by the Members.
----------
Except as otherwise provided in this Agreement, each Member shall have
the right to act for and bind the Company in the ordinary course of
its business.
5.2 Meetings of and Voting by Members.
---------------------------------
5.2.1. A meeting of the Members may be called at any
time by any Member. Meetings of Members shall be held at the
Company's principal place of business or at any other place in
Baltimore County, Maryland designated by the Member calling the
meeting. Not less than ten (10) nor more than ninety (90) days before
each meeting, the Member calling the meeting shall give written notice
of the meeting to each Member. The notice shall state the time,
place, and purpose of the meeting. Notwithstanding the foregoing
provisions, each Member waives notice if before or after the meeting
the Member signs a waiver of the notice which is filed with the
records of Members' meetings, or is present at the meeting in person
or by proxy. At a meeting of Members, the presence in person or by
proxy of all of the Members shall be required to constitute a quorum.
A Member may vote either in person or by written proxy signed by the
Member or by the Member's duly authorized attorney in fact.
5.2.2. The affirmative vote of all of the Members shall
be required to approve any matter coming before the Members.
5.2.3. In lieu of holding a meeting, the Members may
vote or otherwise take action by a written instrument indicating the
consent of all of the Members.
5.2.4. Wherever the Act requires unanimous consent to
approve or take any action, that consent shall be given in writing
and, in all cases, shall mean the consent of all Members.
5.3 Member Services. No Member shall be required to perform
---------------
services for the Company solely by virtue of being a Member. Unless
approved by the Members or contemplated
12
<PAGE>
by the Program Documents, no Member shall be entitled to compensation
for services performed for the Company. However, upon substantiation
of the amount and purpose thereof, the Members shall be entitled to
reimbursement for expenses reasonably incurred by them or their
respective Agents in connection with the activities of the Company.
5.4 Duties of Parties.
-----------------
5.4.1. Each Member shall cause one or more of its
Agents to devote such time to the business and affairs of the Company
as is necessary to carry out the Member's duties set forth in this
Agreement.
5.4.2. Except as otherwise expressly provided in
Section 5.4.3, nothing in this Agreement shall be deemed to restrict
in any way the rights of any Member, or of any Affiliate of any
Member, to conduct any other business or activity whatsoever, and no
Member shall be accountable to the Company or to any other Member with
respect to that business or activity. The organization of the Company
shall be without prejudice to the Members' respective rights (or the
rights of their respective Affiliates) to maintain, expand, or
diversify such other interests and activities and to receive and enjoy
profits or compensation therefrom. Each Member waives any rights the
Member might otherwise have to share or participate in such other
interests or activities of any other Member.
5.4.3. Each Member understands and acknowledges that
the conduct of the Company's business may involve business dealings
and undertakings with Members and their Affiliates. In any of those
cases, those dealings and undertakings shall be at arm's length and on
commercially reasonable terms.
5.5 Limitations on Debt. The Company may not incur any Debt
-------------------
other than pursuant to or as contemplated by the Facility unless (x)
such Debt is rated the same by S&P as the Buyers' Certificates, or (y)
is fully subordinated to the Buyers' Certificates; is nonrecourse
other than with respect to proceeds in excess of the proceeds
necessary to pay the Buyers' Certificates ("excess proceeds"); and
does not constitute a claim against the LLC to the extent that excess
proceeds are insufficient to pay such Debt, or (z) such incurrence
will not result in a reduction of the then existing rating by S&P of
the Buyers' Certificates.
5.6 Liability and Indemnification.
-----------------------------
5.6.1. A Member shall not be liable, responsible, or
accountable, in damages or otherwise, to any other Member or to the
Company for any act performed by the Member with respect to Company
matters, except for fraud, gross negligence, or an intentional breach
of this Agreement.
5.6.2. The Company hereby indemnifies each Member and
their respective Agents for any act performed by the Member or its
Agent with respect to Company matters, except for any action or
inaction which constitutes fraud, gross negligence, or an intentional
breach of this Agreement, provided however, that any indemnity under
this Section shall be provided out of and to the extent of the assets
of the Company only.
5.6.3. Notwithstanding anything to the contrary
contained in this Agreement, the right to indemnification (including
any costs, charges and expenses with respect thereto), in this Section
5.6 is expressly subordinated as a claim against the Company or any of
its assets to the prior claims and rights of the Buyers to receive
payment under the Buyers* Certificates.
13
<PAGE>
SECTION VI
Transfer of Interests and Withdrawals of Members
------------------------------------------------
6.1 Membership Certificates. The Membership Rights of each
-----------------------
Member shall be evidenced by a Membership Certificate in the form
attached as Exhibit B, executed by all of the Members.
6.2 Transfers. Subject to Section 6.5 hereinbelow, no Member
---------
may Transfer all, or any portion of, or any interest or rights in, the
Membership Rights owned by the Member, and no Interest Holder may
Transfer all, or any portion of, or any interest or rights in, any
Interest. Each Member hereby acknowledges the reasonableness of this
prohibition in view of the purposes of the Company and the
relationship of the Members. The Transfer of any Membership Rights or
Interests in violation of the prohibition contained in Section 6.1
shall be deemed invalid, null and void, and of no force or effect.
Any Person to whom Membership Rights are attempted to be transferred
in violation of this Section 6.1 shall not be entitled to vote on
matters coming before the Members, participate in the management of
the Company, act as an agent of the Company, receive distributions
from the Company, or have any other rights in or with respect to the
Membership Rights.
6.3 Voluntary Withdrawal. No Member shall have the right or
--------------------
power to Voluntarily Withdraw from the Company.
6.4 Involuntary Withdrawal. Immediately upon the occurrence
----------------------
of an Involuntary Withdrawal, the successor of the Withdrawn Member
shall thereupon become an Interest Holder but shall not become a
Member. If the Company is continued as provided in Section 7.1.3, the
successor Interest Holder shall have all the rights of an Interest
Holder but shall not be entitled to receive in liquidation of the
Interest, pursuant to Section 4A-905(1)(ii) of the Act, the fair
market value of the Member's Interest as of the date the Member
involuntarily withdrew from the Company.
6.5 Pledge and Foreclosure of Membership Rights. No
-------------------------------------------
provision of this Agreement is intended to prevent, or shall be
interpreted as preventing (i) the pledge by the Members of their
respective Membership Rights pursuant to the Inventory Security
Agreement, or (ii) the full exercise by J.P. Morgan Delaware, as
Structuring and Collateral Agent, of its rights of foreclosure under
the Inventory Credit Agreement and Inventory Security Agreement upon
the Membership Rights of the Members and the Transfer to J.P. Morgan
Delaware or its designee, pursuant thereto, of the Membership Rights
of each Member of the Company. Following any such Transfer, J.P.
Morgan Delaware or its designee, as the case may be, shall have, and
be entitled to exercise, all of the rights and privileges of a Member
under this Agreement.
SECTION VII
14
<PAGE>
Dissolution, Liquidation, Bankruptcy and
----------------------------------------
Termination of the Company
--------------------------
7.1 Events of Dissolution. The Company shall be dissolved
---------------------
upon the happening of any of the following events:
7.1.1. when the period fixed for its duration in
Section 2.4 has expired;
7.1.2. upon the occurrence of an Involuntary
Withdrawal, unless the remaining Members, within ninety (90) days
after the occurrence of the Involuntary Withdrawal, unanimously elect
to continue the business of the Company pursuant to the terms of this
Agreement.
7.2 Procedure for Winding Up and Dissolution. If the Company
----------------------------------------
is dissolved, the remaining Members shall wind up its affairs. On
winding up of the Company, the assets of the Company shall be
distributed, first to creditors of the Company, including Interest
Holders who are creditors, in satisfaction of the liabilities of the
Company, and then to the Interest Holders in accordance with Section
4.4. Any such distribution of assets shall in all events be subject
to the prior claims and rights of the Buyers to receive payment under
the Buyers* Certificates.
7.3 Filing of Articles of Cancellation. If the Company is
----------------------------------
dissolved, the Members shall promptly file Articles of Cancellation
with SDAT. If there are no remaining Members, the Articles shall be
filed by the last Person to be a Member; if there are no remaining
Members, or a Person who last was a Member, the Articles shall be
filed by the legal representatives of the Person who last was a
Member.
7.4 Filing of Voluntary Bankruptcy. The Company shall not,
------------------------------
without the prior unanimous consent of the Members pursuant to
unanimous action of the board of directors of each Member, file a
voluntary bankruptcy petition under the U.S. Bankruptcy Code (Title
11 of the U. S. Code) or under any similar statute of the United
States or any state for the relief or reorganization of a debtor.
SECTION VIII
Books, Records, Accounting, and Tax Elections
---------------------------------------------
8.1 Bank Accounts. All funds of the Company shall be
-------------
deposited in a bank account or accounts opened in the Company's name.
The Members shall determine the institution or institutions at which
the accounts will be opened and maintained, the types of accounts, and
the Persons who will have authority with respect to the accounts and
the funds therein.
8.2 Books and Records. The Members shall keep or cause to be
-----------------
kept complete and accurate books and records of the Company and
supporting documentation of the transactions with respect to the
conduct of the Company's business. The books and records shall
be
15
<PAGE>
maintained in accordance with sound accounting principles and
practices and shall be available at the Company's principal office for
examination by any Member or the Member's duly authorized
representative at any and all reasonable times during normal business
hours.
8.3 Annual Accounting Period. The annual accounting period
------------------------
of the Company shall be its taxable year. The Company's taxable year
shall be selected by the Members, subject to the requirements and
limitations of the Code.
8.4 Reports. Within seventy-five (75) days after the end of
-------
each taxable year of the Company, the Members shall cause to be sent
to each Person who was a Member at any time during the taxable year
then ended a complete accounting of the affairs of the Company for the
taxable year then ended. In addition, within seventy-five (75) days
after the end of each taxable year of the Company, the Members shall
cause to be sent to each Person who was an Interest Holder at any time
during the taxable year then ended, the tax information concerning the
Company which is necessary for preparing the Interest Holder's income
tax returns for that year. At the request of any Member, and at the
Member's expense, the Members shall cause an audit of the Company's
books and records to be prepared by independent accountants for the
period requested by the Member.
SECTION IX
General Provisions
------------------
9.1 Assurances. Each Member shall execute all such
----------
certificates and other documents and shall do all such filing,
recording, publishing, and other acts as the Members deem appropriate
to comply with the requirements of law for the formation and operation
of the Company and to comply with any laws, rules, and regulations
relating to the acquisition, operation, or holding of the property of
the Company.
9.2 Notifications. Any notice, demand, consent, election,
-------------
offer, approval, request, or other communication (collectively, a
"notice") required or permitted under this Agreement must be in
writing and delivered personally, sent by certified or registered
mail, postage prepaid, return receipt requested, or sent by courier
service that provides evidence of delivery. A notice must be
addressed to an Interest Holder at the Interest Holder's last known
address on the records of the Company. A notice to the Company must
be addressed to the Company's principal office. A notice delivered
personally will be deemed given only when acknowledged in writing by
the person to whom it is delivered. A notice that is sent by mail
will be deemed given three (3) business days after it is mailed. Any
party may designate, by notice to all of the others, substitute
addresses or addressees for notices; and, thereafter, notices are to
be directed to those substitute addresses or addressees.
9.3 Specific Performance. The parties recognize that
--------------------
irreparable injury will result from a breach of any provision of this
Agreement and that money damages will be inadequate to fully remedy
the injury. Accordingly, in the event of a breach or threatened
breach of one or more of the provisions of this Agreement, any party
who may be injured (in addition to any other
16
<PAGE>
remedies which may be available to that party) shall be entitled to
one or more preliminary or permanent orders (i) restraining and
enjoining any act which would constitute a breach or (ii) compelling
the performance of any obligation which, if not performed, would
constitute a breach.
9.4 Complete Agreement. Except as expressly provided
------------------
otherwise herein, this Agreement may not be amended without the
written consent of all of the Members and, as to any amendment to
Sections 2.3, 2.4, 6.5, 7.1, 7.4 or this section 9.4, the prior
reaffirmation by S&P of the rating then assigned to the Buyers*
Certificates.
9.5 Applicable Law. All questions concerning the
--------------
construction, validity, and interpretation of this Agreement and the
performance of the obligations imposed by this Agreement shall be
governed by the laws of the State of Maryland, without regard to
principles of conflict of laws.
9.6 Section Titles. The headings herein are inserted as a
--------------
matter of convenience only, and do not define, limit, or describe the
scope of this Agreement or the intent of the provisions hereof.
9.7 Binding Provisions. This Agreement is binding upon and
------------------
shall inure to the benefit of the parties hereto and their respective
legal representatives, successors, and permitted assigns.
9.8 Terms. Common nouns and pronouns shall be deemed to
-----
refer to the masculine, feminine, neuter, singular and plural, as the
identity of the Person may in the context require.
9.9 Separability of Provisions. Each provision of this
--------------------------
Agreement shall be considered separable. If, for any reason, any
provision or provisions herein are determined to be invalid and
contrary to any existing of future law, such invalidity shall not
impair the operation of or affect those portions of this Agreement
which are valid.
9.10 Counterparts. This Agreement may be executed
------------
simultaneously in two or more counterparts, each of which shall be
deemed an original and all of which, when taken together, shall
constitute one and the same document. The signature of any party to
any counterpart shall be deemed a signature to, and may be appended
to, any other counterpart.
17
<PAGE>
IN WITNESS WHEREOF, the parties have executed, or caused this
Agreement to be executed, under seal, as of the date set forth above.
ATTEST: MEMBERS
Bethlehem Steel Corporation
_________________________ By:_______________________(SEAL)
Bethlehem Steel Credit Affiliate
One, Inc.
________________________ By:_______________________(SEAL)
E.P. Reybitz
Bethlehem Steel Credit Affiliate
Two, Inc.
________________________ By:_______________________(SEAL)
E.P. Reybitz
18
<PAGE>
Bethlehem Steel Funding, LLC
Operating Agreement
EXHIBIT A
List of Members, Capital, and Percentages
-----------------------------------------
Name, Address,
and Taxpayer Value of Capital
I.D. Number Contribution Percentage
- -------------- ------------ ----------
Bethlehem Steel Corporation $37,240,000 98%
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
24-0526033
Bethlehem Steel Credit
Affiliate One, Inc. $ 380,000 1%
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
52-1941312
19
<PAGE>
Bethlehem Steel Credit
Affiliate Two, Inc. $ 380,000 1%
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
52-1941315
20
21
<PAGE>
Bethlehem Steel Funding, LLC
Operating Agreement
EXHIBIT B
---------
MEMBERSHIP CERTIFICATE
----------------------
BETHLEHEM STEEL FUNDING, LLC
A MARYLAND LIMITED LIABILITY COMPANY
CERTIFICATE OF MEMBERSHIP
This certifies that
BETHLEHEM STEEL CORPORATION
21
<PAGE>
is the registered holder of a Ninety-Eight Percent (98%) Membership
Interest in BETHLEHEM STEEL FUNDING, LLC, a limited liability company
organized under the laws of the State of Maryland. This Membership
Interest is not transferable except in accordance with the provisions
of the Operating Agreement of Bethlehem Steel Funding, LLC.
DATED: September 12, 1995
BETHLEHEM STEEL FUNDING, LLC
By:______________________________
E.P. Reybitz, Authorized Agent
<PAGE>
EXHIBIT L-1
ARTICLES OF INCORPORATION
OF
SPECIAL PURPOSE MEMBERS
ARTICLE I
INCORPORATOR
The undersigned, Neal D. Borden, Esquire, whose post office
address is 1800 Mercantile Bank and Trust Building, 2 Hopkins Plaza,
Baltimore, Maryland 21201, being over eighteen years of age and acting
as incorporator, hereby forms a corporation under the Maryland General
Corporation Law.
ARTICLE II
NAME
The name of the corporation (which is hereinafter called the
"Corporation") is:
[BETHLEHEM STEEL CREDIT AFFILIATE ONE, INC.]
[BETHLEHEM STEEL CREDIT AFFILIATE TWO, INC.]
ARTICLE III
PURPOSE FOR WHICH CORPORATION FORMED
The purpose for which the Corporation is formed is as
follows: To hold an interest in Bethlehem Steel Funding, LLC, a
limited liability company organized under the laws of the State of
Maryland, the purpose of which is to engage exclusively
<PAGE>
in the purchase of receivables originated in connection with the sale
of goods or the provision of services by Bethlehem Steel Corporation,
and the financing of such purchases pursuant to the Receivables
Purchase Agreement among the Corporation, Bethlehem Steel Credit
Affiliate [Number], Inc., Bethlehem Steel Funding, LLC, Bethlehem
Steel Corporation, as Servicer, the financial institutions from time
to time party thereto as Buyers, Morgan Guaranty Trust Company of New
York, as Administrative Agent, and J.P. Morgan Delaware, as
Structuring and Collateral Agent, as the same may from time to time be
amended or extended (capitalized terms used in these Articles having
the meanings given thereto in such Receivables Purchase Agreement) and
the related documents contemplated thereby, and the taking of any and
all actions and the doing of any and all things necessary or
appropriate to accomplish the foregoing. The Corporation may not
permit Bethlehem Steel Funding, LLC to incur any Debt other than
pursuant to or as contemplated by the aforesaid Receivables Purchase
Agreement unless (x) such Debt is rated the same by Standard &Poor*s
Ratings Group or its successors (hereinafter referred to as "S&P") as
the Buyers' Certificates, or (y) is fully subordinated to the Buyers'
Certificates; is nonrecourse other than with respect to proceeds in
excess of the proceeds necessary to pay the Buyers' Certificates
("excess proceeds"); and does not constitute a claim against Bethlehem
Steel Funding, LLC to the extent that excess proceeds are insufficient
to pay such Debt or (z) such incurrence will not result in a reduction
of the then existing rating by S&P of the Buyers' Certificates.
In connection with the foregoing purpose, the Corporation may
carry on any and all business, transactions and activities permitted
by the Maryland General Corporation Law which may be deemed desirable
by the Board of Directors of the Corporation, as well as all
activities and things necessary and incidental thereto, to the full
extent empowered by such laws.
ARTICLE IV
RESIDENT AGENT AND PRINCIPAL OFFICE
The post office address of the principal office of the
Corporation in this State is 5111 North Point Boulevard, Sparrows
Point, Maryland 21219-1014. The resident agent of the Corporation in
this State is Corporation Trust, Inc., whose post office address is
First Maryland Building, 32 South Street, Baltimore, Maryland 21202.
Said resident agent is a citizen of the State of Maryland, and
actually resides therein.
ARTICLE V
AUTHORIZED STOCK
The total number of shares of stock of all classes which the
Corporation has authority to issue is One Thousand (1000) shares, of
the par value of One Dollar ($1.00) each, all of which shares are of
one class and are designated Common Stock. The aggregate par value of
all shares having par value is One Thousand Dollars ($1,000.00).
2
<PAGE>
ARTICLE VI
BOARD OF DIRECTORS
Section 1. Number of Directors.
The Corporation shall have seven (7) directors, which number
may be increased or decreased pursuant to the Bylaws, but the number
of directors shall not be less than the lesser of three (3) or the
number of stockholders.
Section 2. Initial Directors.
James A. Flick, Jr., William R. Latham III, G. L.
Millenbruch, L. A. Arnett, E. P. Reybitz, D. K. Schoenen and S.
J. Selden shall act as the initial directors of the Corporation until
the first annual meeting and until their successors are duly chosen
and qualified. At all times, two (2) of the directors of the
Corporation (the "Independent Directors") shall be persons who are
not, and have not been, an officer, director, employee or one percent
(1%) or more shareholder of any Affiliate (as defined hereinbelow).
Section 3. Board Authorization of Stock Issuance.
The Board of Directors of the Corporation is hereby empowered
to authorize the issuance from time to time of shares of its stock of
any class, whether now or hereafter authorized, and securities
convertible into shares of its stock, of any class or classes, whether
now or hereafter authorized, for such consideration as the Board of
Directors may deem advisable.
Section 4. Classification of Stock.
The Board of Directors shall have the power to classify or
reclassify any unissued stock, whether now or hereafter authorized, by
setting or changing the preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption of such stock.
Section 5. Definition of Affiliate.
In these Articles of Incorporation, "Affiliate" shall mean
any entity other than the Corporation (i) which owns beneficially,
directly or indirectly, more than fifty percent (50%) of the
outstanding shares of the Common Stock or which is otherwise in
control of the Corporation or of Bethlehem Steel Funding, LLC, (ii) of
which more than fifty percent (50%) of the outstanding voting
securities are owned beneficially, directly or indirectly, by any
entity described in clause (i) above, or (iii) which is controlled by
any entity described in clause (i) above; provided that for the
purposes of this definition, the terms "control" and "controlled by"
shall have the meanings assigned to them in Rule 405 under the
Securities Act of 1933, as amended.
Section 6. Conflict of Interest.
No contract or other transaction between this Corporation and
any other corporation, partnership, limited liability company,
individual or other entity, and no act of this Corporation,
3
<PAGE>
shall in any way be affected or invalidated by the fact that any of
the directors of this Corporation are directors, principals, partners
or officers of such other entity, or are pecuniarily or otherwise
interested in such contract, transaction or act; provided that (i) the
existence of such relationship or such interest shall be disclosed or
known to the Board of Directors (or to a committee of the Board of
Directors, if the matter involves a committee decision), and the
contract, transaction or act shall be authorized, approved or ratified
by a majority of disinterested directors on the Board or on such
committee, as the case may be, even if the number of disinterested
directors constitutes less than a quorum; or (ii) the contract,
transaction or act shall be authorized, ratified or approved in any
other manner permitted by the Maryland General Corporation Law.
Section 7. Bankruptcy.
The Corporation shall not, without the affirmative vote of
one hundred percent (100%) of the Board of Directors (including the
Independent Directors), institute proceedings to be adjudicated
bankrupt or insolvent; or consent to the institution of bankruptcy or
insolvency proceedings against it; or file a petition seeking, or
consent to, reorganization or relief under any applicable federal or
state law relating to bankruptcy; or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Corporation or a substantial part of its
property; or make any assignment for the benefit of creditors; or
admit in writing its inability to pay its debts generally as they
become due; or take any corporate action in furtherance of any such
action.
Section 8. Bankruptcy of Bethlehem Steel Funding, LLC.
The Corporation shall not, without the affirmative vote of
one hundred percent (100%) of the Board of Directors (including the
Independent Directors), participate in or institute proceedings by
which Bethlehem Steel Funding, LLC would be adjudicated bankrupt or
insolvent; or consent to the institution of bankruptcy or insolvency
proceedings against Bethlehem Steel Funding, LLC; or file a petition
seeking, or consent to, the reorganization of Bethlehem Steel Funding,
LLC or its relief under any applicable federal or state law relating
to bankruptcy; or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar
official) of Bethlehem Steel Funding, LLC or a substantial part of its
property; or allow Bethlehem Steel Funding, LLC to make any assignment
for the benefit of creditors or admit in writing its inability to pay
its debts generally as they become due; or take any corporate action
in furtherance of any such action.
Section 9. Independent Directors.
No Independent Director shall, with regard to any act, or
failure to act, in connection with any matter referred to in Section 7
of this Article VI owe a fiduciary duty or other obligation to the
stockholders (except as may specifically be required by the statutory
or case law of any applicable jurisdiction); instead, each Independent
Director's fiduciary duty or other obligations with regard to such
act, or failure to act, in connection with any matter referred to in
Section 7 of this Article VI shall be owed to the Corporation
including, without limitation, the creditors of the Corporation.
Every stockholder shall be deemed to have consented to the foregoing
by virtue of such stockholder's purchase of shares of capital stock of
the Corporation, no further act or deed of any stockholder being
required to evidence such consent.
4
<PAGE>
ARTICLE VII
PROVISIONS CONCERNING CERTAIN RIGHTS OF THE CORPORATION AND
THE SHAREHOLDERS
Section 1. Right to Amend Charter.
The Corporation reserves the right to amend these Articles of
Incorporation in any manner permitted by the Maryland General
Corporation Law and, subject to the provisions of Article VIII, all
rights and powers conferred herein on stockholders, directors and
officers, if any, are subject to this reserved power; provided that
the Corporation shall not, without the prior reaffirmation by S&P of
the rating then assigned to the Buyers* Certificates, amend, alter,
change or repeal Articles III, VI, VIII, or this Article VII of these
Articles of Incorporation. Section 2. Elimination of Preemptive
Rights.
Unless otherwise provided by the Board of Directors, no
holder of stock of any class shall be entitled to preemptive rights to
subscribe for or purchase or receive any part of any new or additional
issue of stock of any class of the Corporation or securities
convertible into stock of any class of the Corporation.
Section 3. Required Stockholder Vote.
Notwithstanding any provision of law requiring any action to
be taken or authorized by the affirmative vote of the holders of a
greater proportion of the votes of all classes or of any class of
stock of the Corporation, such action shall be effective and valid if
taken or authorized by the affirmative vote of a majority of the total
number of votes entitled to be cast thereon, except as otherwise
provided in this charter.
Section 4. Applicability of the Maryland Control Share and
Business Combination Statutes.
The Corporation elects not to be governed by Subtitle 6 of
Title 3 of the Maryland General Corporation Law with respect to any
"business combination" as defined in such Subtitle. In addition, any
acquisition of any shares of stock of the Corporation, including any
acquisition of voting rights or other interests in any such stock,
shall be exempt from the provisions of Title 3, Subtitle 7 of the
Maryland General Corporation Law. Accordingly, the provisions of
Title 3, Subtitle 6 (Business Combination) and Subtitle 7 (Control
Share) of the Maryland General Corporation Law shall not apply to this
Corporation.
Section 5. Separateness Covenants.
5
<PAGE>
5.1. Office. The Corporation shall maintain a principal
------
executive office and conspicuously identify such office as its
office.
5.2. Financial Statements. The Corporation shall maintain
--------------------
its financial statements, accounting records and other documents
separate from those of any Affiliate or any other entity. The
Corporation shall prepare unaudited quarterly and audited annual
financial statements, and the Corporation's financial statements shall
comply with GAAP. The Corporation shall maintain its own bank
accounts, payroll and correct, complete and separate books of account.
The Corporation shall retain as its accountants a nationally
recognized firm of independent certified public accountants, provided
that such accountants may also serve as accountants of any Affiliate.
5.3. Separate Identity. The Corporation shall at all times
-----------------
hold itself out to the public (including any Affiliate's creditors)
under the Corporation's own name and as a separate and distinct
entity. Communications on behalf of the Corporation shall be made in
its own name, and the Corporation shall maintain its own separate
telephone number and stationery and other business forms.
5.4. Formalities. All customary formalities regarding the
-----------
proper existence of the Corporation, including holding meetings of or
obtaining the consent of its directors and shareholders, as
appropriate, and maintaining current and accurate corporate minute
books, shall be observed.
5.5. Separate Action. The Corporation shall act solely in
---------------
its own name and through its own duly authorized officers and agents.
No Affiliate shall act as an agent of the Corporation (provided that
an employee, officer or director of an Affiliate may also serve as an
employee, officer or director of the Corporation). Investments shall
be made directly by the Corporation or on its behalf by brokers or
agents engaged and paid by the Corporation or its agents.
5.6. Affiliate Transactions. All business transactions
----------------------
entered into by the Corporation with any Affiliate shall be on terms
and conditions that are not more or less favorable to the Corporation
than terms and conditions available at the time to the Corporation for
comparable transactions with unaffiliated persons and must be approved
by all of the Members. Except for its obligations under Sections
4(G), 15 and other applicable provisions of a certain Inventory
Security and Pledge Agreement dated September 12, 1995, among the
Corporation, Bethlehem Steel Corporation, Bethlehem Steel Credit
Affiliate [Number], Inc., J.P. Morgan Delaware, as Structuring and
Collateral Agent, and Morgan Guaranty Trust Company of New York, as
Administrative Agent, the Corporation shall not guarantee or assume or
hold itself out or permit itself to be held out as having guaranteed
or assumed any liabilities or obligations of any Affiliate, other than
the endorsement of checks for collection or deposit in the ordinary
course of business.
5.7. Liabilities. The Corporation shall pay its own
-----------
liabilities, indebtedness and obligations of any kind, including all
administrative expenses, from its own separate assets.
5.8. Segregation of Assets. Assets of the Corporation shall
---------------------
be separately identified, maintained and segregated. Except as
otherwise provided in the Program Documents, the Corporation's funds
shall not be commingled with those of any other corporate or natural
person. The Corporation's assets shall at all times be held by or on
behalf of the Corporation and, if held on behalf of the Corporation by
another entity, shall at all times be kept identifiable
(in
6
<PAGE>
accordance with customary usages) as assets owned by the Corporation.
In no event shall any of the Corporation's assets be held on its
behalf by any Affiliate.
5.9. Investment Company Status. The Corporation shall not
take any action if, as a result of such action, the Corporation would
be required to register as an investment company under the Investment
Company Act of 1940, as amended.
ARTICLE VIII
INDEMNIFICATION AND LIMITATION OF LIABILITY
Section 1. Mandatory Indemnification. The Corporation shall
indemnify its currently acting and its former directors against any
and all liabilities and expenses incurred in connection with their
services in such capacities to the maximum extent permitted by the
Maryland General Corporation Law, as from time to time amended.
Section 2. Discretionary Indemnification. If approved by
the Board of Directors, the Corporation may indemnify its officers,
employees, agents and persons who serve and have served at its request
as a director, officer, partner, trustee, employee or agent of another
corporation, partnership, limited liability company, joint venture or
other enterprise or employee benefit plan to the extent determined to
be appropriate by the Board of Directors.
Section 3. Advancing Expenses Prior to a Decision. The
Corporation shall advance expenses to its directors entitled to
mandatory indemnification to the maximum extent permitted by the
Maryland General Corporation Law and may in the discretion of the
Board of Directors advance expenses to officers, employees, agents and
others who may be granted indemnification.
Section 4. Other Provisions for Indemnification. The Board
of Directors may, by bylaw, resolution or agreement, make further
provision for indemnification of directors, officers, employees and
agents. The right to indemnification in this Article VIII is
expressly subordinated as a claim against the Corporation, Bethlehem
Steel Funding, LLC, or any of their assets to the prior claims and
rights of the Buyers to receive payment under the Buyers'
Certificates.
The rights and authority conferred in this Article VIII shall
not be exclusive of any other right which any person may otherwise
have or hereafter acquire.
Section 5. Insurance.
7
<PAGE>
The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss incurred by such person in any
such capacity or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such
liability under the Maryland General Corporation Law.
Section 6. Limitation of Liability of Directors.
To the maximum extent that limitations on the liability of
directors are permitted by the Maryland General Corporation Law, as
from time to time amended, no director of the Corporation shall have
any liability to the Corporation, its creditors, or its stockholders
for money damages. This limitation on liability applies to events
occurring at the time a person serves as a director of the
Corporation, whether or not such person is a director at the time of
any proceeding in which liability is asserted.
Section 7. Effect of Amendment or Repeal.
No amendment or repeal of any section of this Article, or the
adoption of any provision of the Corporation's charter inconsistent
with this Article, shall apply to or affect in any respect the rights
to indemnification or limitation of liability of any director of the
Corporation with respect to any alleged act or omission which occurred
prior to such amendment, repeal or adoption.
IN WITNESS WHEREOF, I have signed these Articles of
Incorporation on the 12th day of September, 1995, and have
acknowledged such Articles to be my act.
____________________________
Neal D. Borden, Incorporator
8
<PAGE>
EXHIBIT L-2
BYLAWS
OF
SPECIAL PURPOSE MEMBERS
ARTICLE I.
----------
Stockholders
------------
Section 1. Annual Meetings.
----------------------------
The annual meeting of the stockholders of the Corporation
shall be held on such date within the month of April as may be fixed
from time to time by the Board of Directors. Not less than ten nor
more than 90 days' written or printed notice stating the place, day
and hour of each annual meeting shall be given in the manner provided
in Section 1 of Article IX hereof. The business to be transacted at
the annual meetings shall include the election of directors,
consideration and action upon the reports of officers and directors,
and any other business within the power of the Corporation. All
annual meetings shall be general meetings at which any business may be
considered without being specified as a purpose in the notice unless
otherwise required by law.
Section 2. Special Meetings Called by Chairman of the Board,
-------------------------------------------------------------
President or Board of Directors.
- -------------------------------
At any time in the interval between annual meetings, special
meetings of stockholders may be called by the Chairman of the Board,
or by the President, or by the Board of Directors. Not less than ten
days' nor more than 90 days' written notice stating the place, day and
hour of such meeting and the matters proposed to be acted on thereat
shall be given in the manner provided in Section 1 of Article IX. No
business shall be transacted at any special meeting except that
specified in the notice.
<PAGE>
Section 3. Special Meeting Called by Stockholders.
--------------------------------------------------
Upon the request in writing delivered to the Secretary by the
stockholders entitled to cast at least 25% of all the votes entitled
to be cast at the meeting, it shall be the duty of the Secretary to
call forthwith a special meeting of the stockholders. Such request
shall state the purpose of such meeting and the matters proposed to be
acted on thereat, and no other business shall be transacted at any
such special meeting. The Secretary shall inform such stockholders of
the reasonably estimated costs of preparing and mailing the notice of
the meeting, and upon payment to the Corporation of such costs, the
Secretary shall give not less than ten nor more than 90 days' notice
of the time, place and purpose of the meeting in the manner provided
in Section 1 of Article IX. If, upon payment of such costs the
Secretary shall fail to issue a call for such meeting within ten days
after the receipt of such payment (unless such failure is excused by
law), then the stockholders entitled to cast 25% or more of the
outstanding shares entitled to vote may do so upon giving not less
than ten days' nor more than 90 days' notice of the time, place and
purpose of the meeting in the manner provided in Section 1 of Article
IX.
Section 4. Place of Meetings.
-----------------------------
All meetings of stockholders shall be held at the principal
office of the Corporation in the State of Maryland or at such other
place within the State of Maryland as may be fixed from time to time
by the Board of Directors and designated in the notice.
Section 5. Quorum.
------------------
At any meeting of stockholders the presence in person or by
proxy of stockholders entitled to cast a majority of the votes thereat
shall constitute a quorum. In the absence of a quorum, the
stockholders present in person or by proxy, by majority vote and
without notice other than by announcement, may adjourn the meeting
from time to time, but not for a period exceeding 120 days after the
original record date, until a quorum shall attend.
Section 6. Adjourned Meetings.
------------------------------
A meeting of stockholders convened on the date for which it
was called (including one adjourned to achieve a quorum as above
provided in Section 5 of this Article) may be adjourned from time to
time without further notice to a date not more than 120 days after the
original record date, and any business may be transacted at any
adjourned meeting which could have been transacted at the meeting as
originally called.
Section 7. Voting.
------------------
A plurality of all the votes cast at a meeting of
stockholders duly called and at which a quorum is present shall be
sufficient to elect a director. Each share of stock may be voted for
as
2
<PAGE>
many individuals as there are directors to be elected and for whose election
the share is entitled to be voted.
A majority of the votes cast at a meeting of stockholders,
duly called and at which a quorum is present, shall be sufficient to
take or authorize action upon any other matter which may properly come
before the meeting, unless more than a majority of votes cast is
required by statute or by the Articles of Incorporation. The Board of
Directors may fix the record date for the determination of
stockholders entitled to vote in the manner provided in Article VIII,
Section 3 of these Bylaws. Unless otherwise provided in the Articles
of Incorporation, each outstanding share of stock, regardless of
class, shall be entitled to one vote on each matter submitted to a
vote at a meeting of stockholders.
Section 8. Proxies.
-------------------
A stockholder may vote the shares owned of record either in
person or by proxy. The proxy shall be in writing and shall be signed
by the stockholder or by the stockholder*s duly authorized
attorney-in-fact or be in such other form as may be permitted by the
Maryland General Corporation Law, including documents conveyed by
electronic transmission. A copy, facsimile transmission or other
reproduction of the writing or transmission may be substituted for the
original writing or transmission for any purpose for which the
original transmission could be used. Every proxy shall be dated, but
need not be sealed, witnessed or acknowledged. No proxy shall be
valid after 11 months from its date, unless otherwise provided in the
proxy. In the case of stock held of record by more than one person,
any co-owner or co-fiduciary may execute the proxy without the joinder
of the co-owner(s) or co-fiduciary(ies), unless the Secretary of the
Corporation is notified in writing by any co-owner or co-fiduciary
that the joinder of more than one is to be required. At all meetings
of stockholders, the proxies shall be filed with and verified by the
Secretary of the Corporation, or, if the meeting shall so decide, by
the Secretary of the meeting.
Section 9. Order of Business.
-----------------------------
At all meetings of stockholders, any stockholder present and
entitled to vote in person or by proxy shall be entitled to require,
by written request to the Chairman of the meeting, that the order of
business shall be as follows:
(1) Organization.
(2) Proof of notice of meeting or of waivers thereof. (The
certificate of the Secretary of the Corporation, or the affidavit of
any other person who mailed or published the notice or caused the same
to be mailed or published, shall be proof of service of notice.)
(3) Submission by Secretary of the Corporation of a list of
the stockholders entitled to vote, present in person or by proxy.
(4) A reading of unapproved minutes of preceding meetings and
action thereon.
(5) Reports.
3
<PAGE>
(6) If an annual meeting, or a special meeting called for
that purpose, the election of directors.
(7) Unfinished business.
(8) New business.
(9) Adjournment.
Section 10. Removal of Directors.
---------------------------------
At any properly called annual or special stockholders*
meeting, the stockholders, by the affirmative vote of a majority of
all the votes entitled to be cast for the election of directors, may
remove any director or directors from office, with or without cause,
and may elect a successor or successors to fill any resulting
vacancies for the remainder of the term.
Section 11. Informal Action by Stockholders.
--------------------------------------------
Any action required or permitted to be taken at any meeting
of stockholders may be taken without a meeting if a consent in writing
setting forth such action is signed by all the stockholders entitled
to vote thereon and such consent is filed with the records of
stockholders' meetings.
ARTICLE II.
-----------
Directors
---------
Section 1. Powers.
------------------
The business and affairs of the Corporation shall be managed
under the direction of its Board of Directors. All powers of the
Corporation may be exercised by or under the authority of the Board of
Directors except as conferred on or reserved to the stockholders by
law, by the Articles of Incorporation or by these Bylaws. A director
need not be a stockholder. The Board of Directors shall keep minutes
of its meetings and full and fair accounts of its transactions.
Section 2. Number; Term of Office; Removal.
-------------------------------------------
The number of directors of the Corporation shall be not less
than three or the same number as the number of stockholders (or one if
there is no stockholder), whichever is less;
4
<PAGE>
provided, however, that such number may be increased and thereafter
decreased from time to time by vote of a majority of the entire Board
of Directors. The number of directors shall not exceed seven. The
first directors of the Corporation shall hold their office until the
first annual meeting of the Corporation, or until their successors are
elected and qualify, and thereafter the directors shall hold office
for the term of one year, or until their successors are elected and
qualify. A director may be removed from office as provided in Article
I, Section 10 of these Bylaws.
Section 3. Independent Directors.
---------------------------------
At all times two of the directors shall be persons who are
not, and have not been, an officer, director, employee or one percent
(1%) or more stockholder of any Affiliate (the "Independent
Directors"). For the purposes of this Section 3, "Affiliate" shall
have the same meaning as in Article VI of the Articles of
Incorporation of the Corporation.
Section 4. Annual Meeting; Regular Meetings.
--------------------------------------------
As soon as practicable after each annual meeting of
stockholders, the Board of Directors shall meet for the purpose of
organization and the transaction of other business. No notice of the
annual meeting of the Board of Directors need be given if it is held
immediately following the annual meeting of stockholders and at the
same place. Other regular meetings of the Board of Directors may be
held at such times and at such places within the State of Maryland as
shall be designated in the notice for such meeting by the party making
the call. All annual and regular meetings shall be general meetings,
and any business may be transacted thereat.
Section 5. Special Meetings.
----------------------------
Special meetings of the Board of Directors may be called by
the Chairman of the Board or the President, or by a majority of the
directors.
Section 6. Quorum; Voting.
--------------------------
A majority of the Board of Directors shall constitute a
quorum for the transaction of business at every meeting of the Board
of Directors; but, if at any meeting there be less than a quorum
present, a majority of those present may adjourn the meeting from time
to time, but not for a period exceeding ten days at any one time or 60
days in all, without notice other than by announcement at the meeting,
until a quorum shall attend. At any such adjourned meeting at which a
quorum shall be present, any business may be transacted which might
have been transacted at the meeting as originally called. Except
5
<PAGE>
as hereinafter provided or as otherwise provided by the Articles of
Incorporation or by law, directors shall act by a vote of a majority
of those members in attendance at a meeting at which a quorum is
present.
Section 7. Notice of Meetings.
------------------------------
Notice of the time and place of every regular and special
meeting of the Board of Directors shall be given to each director in
the manner provided in Section 2 of Article IX hereof. Subsequent to
each Board meeting, and as soon as practicable thereafter, each
director shall be furnished with a copy of the minutes of said
meeting. At least 24 hours' notice shall be given of all meetings.
The purpose of any meeting of the Board of Directors need not be
stated in the notice.
Section 8. Vacancies.
---------------------
(a) If the office of a director becomes vacant for any reason
other than removal or increase in the size of the Board, such vacancy
may be filled by the Board by a vote of a majority of directors then
in office, although such majority is less than a quorum.
(b) If the vacancy occurs as a result of the removal of a
director, the stockholders may elect a successor or may delegate that
authority to the Board of Directors.
(c) If the vacancy occurs as a result of an increase in the
number of directors, it may be filled by vote of a majority of the
entire Board of Directors holding office prior to the increase.
(d) If the entire Board of Directors shall become vacant, any
stockholder may call a special meeting in the same manner that the
Chairman of the Board or the President may call such meeting, and
directors for the unexpired term may be elected at such special
meeting in the manner provided for their election at annual meetings.
(e) A director elected by the Board of Directors to fill a
vacancy shall serve until the next annual meeting of stockholders and
until a successor is elected and qualifies. A director elected by the
stockholders to fill a vacancy shall serve for the unexpired term and
until a successor is elected and qualifies.
Section 9. Rules and Regulations.
---------------------------------
The Board of Directors may adopt such rules and regulations
for the conduct of its meetings and the management of the affairs of
the Corporation as it may deem proper and not inconsistent with the
laws of the State of Maryland, these Bylaws and the Articles of
Incorporation.
6
<PAGE>
Section 10. Executive Committee.
--------------------------------
The Board of Directors may constitute an Executive Committee,
composed of at least two directors, from among its members. The
Executive Committee shall hold office at the pleasure of the Board of
Directors. Between sessions of the Board of Directors, such Committee
shall have all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, except
those powers specifically denied by law. If any position on the
Executive Committee becomes vacant, or if the number of members is
increased, such vacancy may be filled by the Board of Directors. The
taking of any action by the Executive Committee shall be conclusive
evidence that the Board of Directors was not in session at the time of
such action. The Executive Committee shall hold formal meetings and
keep minutes of all of its proceedings. A copy of such minutes shall,
after approval by the members of the Committee, be sent to all
directors as a matter of information. Any action taken by the
Executive Committee within the limits permitted by law shall have the
force and effect of Board action unless and until revised or altered
by the Board. The presence of not less than a majority of the
Committee shall be necessary to constitute a quorum. Action may be
taken without a meeting if a unanimous written consent is signed by
all of the members of the Committee, and if such consent is filed with
the records of the Committee. The Executive Committee shall have the
power to elect one of its members to serve as its Chairman unless the
Board of Directors shall have designated such Chairman.
Section 11. Compensation.
-------------------------
The directors may receive a stated salary or an attendance
fee for each meeting of the Board of Directors or any committee
thereof attended, plus reimbursement of reasonable expenses of
attendance. The amount of the salary or attendance fee and any
entitlement to reimbursement of expenses shall be determined by
resolution of the Board; provided, however, that nothing herein
contained shall be construed as precluding a director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 12. Place of Meetings.
------------------------------
Regular or special meetings of the Board may be held at such
location within the State of Maryland, as the Board may from time to
time determine. The time and place of meeting may be fixed by the
party calling the meeting.
Section 13. Informal Action by the Directors.
---------------------------------------------
Any action required or permitted to be taken at any meeting
of the Board may be taken without a meeting, if a written consent to
such action is signed by all members of the Board and such consent is
filed with the minutes of the Board.
7
<PAGE>
Section 14. Telephone Conference.
---------------------------------
Members of the Board of Directors or any committee thereof
may participate in a meeting of the Board or such committee initiated
in Maryland by means of a conference telephone or similar
communications equipment, by means of which all persons participating
in the meeting can hear each other at the same time. Participation by
such means shall constitute presence in person at the meeting.
Section 15. Interested Directors and Officers.
----------------------------------------------
(a) No contract or transaction between the Corporation and
one or more of its directors or officers, or between the Corporation
and any other corporation, partnership, association, or other
organization in which one or more of the Corporation's directors or
officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting
of the Board or committee thereof which authorizes the contract or
transaction, or solely because his or her or their votes are counted
for such purpose if such contract or transaction complies with Article
VI of the Articles of Incorporation and:
(1) The material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed or are
known to the Board of Directors or the committee, and the Board or
committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even
though the disinterested directors be less than a quorum; or
(2) The material facts as to his or her relationship or
interest and as to the contract or transaction are disclosed or are
known to the stockholders entitled to vote thereon, and the contract
or transaction is specifically approved in good faith by vote of the
stockholders; or
(3) The contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof, or the stockholders.
(b) Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or
transaction.
Section 16. Bankruptcy Petition; Bankruptcy of Bethlehem
----------------------------------------------------------
Steel Funding, LLC.
- ------------------
The Corporation shall not, without an affirmative unanimous
vote of the Board of Directors (including the Independent Directors),
institute proceedings to be adjudicated bankrupt or insolvent; or
consent to the institution of bankruptcy or insolvency proceedings
against it; or file a petition seeking, or consent to, reorganization
or relief
8
<PAGE>
under any applicable federal or state law relating to bankruptcy; or
consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Corporation
or a substantial part of its property; or make any assignment for the
benefit of creditors; or admit in writing its inability to pay its
debts generally as they become due; or take any corporate action in
furtherance of any such action.
The Corporation shall not, without an affirmative unanimous
vote of the Board of Directors (including the Independent Directors),
participate in or institute proceedings by which Bethlehem Steel
Funding, LLC would be adjudicated bankrupt or insolvent; or consent to
the institution of bankruptcy or insolvency proceedings against
Bethlehem Steel Funding, LLC; or file a petition seeking, or consent
to, the reorganization of Bethlehem Steel Funding, LLC or its relief
under any applicable federal or state law relating to bankruptcy; or
consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of Bethlehem Steel
Funding, LLC or a substantial part of its property; or allow Bethlehem
Steel Funding, LLC to make any assignment for the benefit of creditors
or admit in writing its inability to pay its debts generally as they
become due; or take any corporate action in furtherance of any such
action.
ARTICLE III.
------------
Officers
--------
Section 1. In General.
----------------------
The Board of Directors may choose a Chairman of the Board
from among the directors. The Board of Directors shall elect a
President, a Treasurer, and a Secretary, and may elect one or more
Vice Presidents, Assistant Secretaries and Assistant Treasurers as the
Board may from time to time deem appropriate. All officers shall hold
office only during the pleasure of the Board or until their successors
are chosen and qualify. Any two of the above offices, except those of
President and Vice President, may be held by the same person, but no
officer shall execute, acknowledge or verify any instrument in more
than one capacity when such instrument is required to be executed,
acknowledged or verified by any two or more officers. The Board of
Directors may from time to time appoint such other agents and
employees with such powers and duties as the Board may deem proper.
In its discretion, the Board of Directors may leave unfilled any
offices except those of President, Treasurer and Secretary.
Section 2. Chairman of the Board.
---------------------------------
The Chairman of the Board, if one is elected, shall have the
responsibility for the implementation of the policies determined by
the Board of Directors and for the administration of the business
affairs of the Corporation. The Chairman shall preside
9
<PAGE>
over the meetings of the Board and of the stockholders if present at
the meeting. The Chairman shall be the Chief Executive Officer of the
Corporation if so designated by resolution of the Board.
Section 3. President.
---------------------
The President shall have the responsibility for the active
management of the business and general supervision and direction of
all of the affairs of the Corporation. In the absence of a Chairman
of the Board, the President shall preside over the meetings of the
Board and of the stockholders if present at the meeting, and shall
perform such other duties as may be assigned by the Board of Directors
or the Executive Committee. The President shall have the authority on
the Corporation's behalf to endorse securities owned by the
Corporation and to execute any documents requiring the signature of an
executive officer. The President shall perform such other duties as
the Board of Directors may direct and shall be the Chief Executive
Officer of the Corporation unless the Chairman of the Board is so
designated by resolution of the Board. Section 4. Vice Presidents.
The Vice Presidents, if any, in the order of priority
designated by the Board of Directors, shall be vested with all the
power and may perform all the duties of the President in the latter's
absence. They may perform such other duties as may be prescribed by
the Board of Directors, the Executive Committee or the President.
Section 5. Treasurer.
---------------------
The Treasurer shall have general supervision over the
Corporation*s finances, and shall perform such other duties as may be
assigned by the Board of Directors or the President. Unless the Board
designates another officer, the Treasurer shall be the Chief Financial
Officer of the Corporation. If required by resolution of the Board,
the Treasurer shall furnish a bond (which may be a blanket bond) with
such surety and in such penalty for the faithful performance of duty
as the Board of Directors may from time to time require, the cost of
such bond to be paid by the Corporation.
Section 6. Secretary.
---------------------
The Secretary shall keep the minutes of the meetings of the
stockholders and of the Board of Directors and shall attend to the
giving and serving of all notices of the Corporation required by law
or these Bylaws. The Secretary shall maintain at all times in the
principal office of the Corporation at least one copy of the Bylaws
with all amendments to date, and shall make the same, together with
the minutes of the meeting of the stockholders, the annual statement
of affairs of the Corporation and any voting trust or other
stockholders agreement on file at the office of the Corporation,
available for
10
<PAGE>
inspection by any officer, director or stockholder during reasonable
business hours. The Secretary shall perform such other duties as may
be assigned by the Board of Directors.
Section 7. Assistant Treasurer and Secretary.
---------------------------------------------
The Board of Directors may designate from time to time
Assistant Treasurers and Secretaries, who shall perform such duties as
may from time to time be assigned to them by the Board of Directors or
the President.
Section 8. Compensation; Removal; Vacancies.
--------------------------------------------
The Board of Directors shall have power to fix the
compensation of all officers of the Corporation. It may authorize any
committee or officer, upon whom the power of appointing subordinate
officers may have been conferred, to fix the compensation of such
subordinate officers. The Board of Directors shall have the power at
any regular or special meeting to remove any officer if, in the
judgment of the Board, the best interests of the Corporation will be
served by such removal. The Board of Directors may authorize any
officer to remove subordinate officers. The Board of Directors may
authorize the Corporation's employment of an officer for a period in
excess of the term of the Board. The Board of Directors at any
regular or special meeting shall have power to fill a vacancy
occurring in any office for the unexpired portion of the term.
Section 9. Substitutes.
-----------------------
The Board of Directors may, from time to time in the absence
of any one of its officers or at any other time, designate any other
person or persons on behalf of the Corporation to sign any contracts,
deeds, notes or other instruments in the place or stead of any of such
officers, and may designate any person to fill any one of said
offices, temporarily or for any particular purpose; and any
instruments so signed in accordance with a resolution of the Board
shall be the valid act of the Corporation as fully as if executed by
any regular officer.
ARTICLE IV
----------
Resignation
-----------
Any director or officer may resign from office at any time.
Such resignation shall be made in writing and shall take effect from
the time of its receipt by the Corporation, unless some time be fixed
in the resignation, and then from that date. The acceptance of a
resignation shall not be required to make it effective.
11
<PAGE>
ARTICLE V.
----------
Commercial Paper, Etc.
----------------------
All bills, notes, checks, drafts and commercial paper of all
kinds to be executed by the Corporation as maker, acceptor, endorser
or otherwise, and all assignments and transfers of stock, contracts,
or written obligations of the Corporation, and all negotiable
instruments, shall be made in the name of the Corporation and shall be
signed by any one or more of the following officers as the Board of
Directors may from time to time designate: the Chairman of the Board,
the President, any Vice President, or the Treasurer, or such other
person or persons as the Board of Directors or Executive Committee may
from time to time designate.
ARTICLE VI.
-----------
Fiscal Year
-----------
The fiscal year of the Corporation shall cover such period of
12 months as the Board of Directors may determine. In the absence of
any such determination, the accounts of the Corporation shall be kept
on a calendar year basis.
ARTICLE VII.
------------
Seal
----
The seal of the Corporation shall be in the form of two
concentric circles inscribed with the name of the Corporation and the
year and State in which it is incorporated. The Secretary or
Treasurer, or any Assistant Secretary or Assistant Treasurer, shall
have the right and power to attest to the corporate seal. In lieu of
affixing the corporate seal to any document, it shall be sufficient to
meet the requirements of any law, rule or regulation relating to a
corporate seal to affix the word "(SEAL)" adjacent to the signature of
the person authorized to sign the document on behalf of the
Corporation.
ARTICLE VIII.
-------------
12
<PAGE>
Stock
-----
Section 1. Issue.
-----------------
Each stockholder shall be entitled to a certificate or
certificates which shall represent and certify the number and class of
shares of stock owned in the Corporation. Each certificate shall be
signed by the Chairman of the Board, the President or any Vice
President and be countersigned by the Secretary or any Assistant
Secretary or the Treasurer or any Assistant Treasurer. The signatures
of the Corporation's officers and its corporate seal appearing on
stock certificates may be facsimiles if each such certificate is
authenticated by the manual signature of an officer of a duly
authorized transfer agent. Stock certificates shall be in such form,
not inconsistent with law and the Articles of Incorporation, as shall
be approved by the Board of Directors. In case any officer of the
Corporation who has signed any certificate ceases to be an officer of
the Corporation, whether by reason of death, resignation or otherwise,
before such certificate is issued, then the certificate may
nevertheless be issued by the Corporation with the same effect as if
the officer had not ceased to be such officer as of the date of such
issuance.
Section 2. Transfers.
---------------------
The Board of Directors shall have power and authority to make
all such rules and regulations as the Board may deem expedient
concerning the issue, transfer and registration of stock certificates.
The Board of Directors may appoint one or more transfer agents and/or
registrars for its outstanding stock, and their duties may be
combined. No transfer of stock shall be recognized or binding upon
the Corporation until recorded on the books of the Corporation, or, as
the case may be, of its transfer agent and/or of its registrar, upon
surrender and cancellation of a certificate or certificates for a like
number of shares.
Section 3. Record Dates for Dividends and Stockholders*
--------------------------------------------------------
Meeting.
- -------
The Board of Directors may fix a date not exceeding 90 days
preceding the date of any meeting of stockholders, any dividend
payment date or any date for the allotment of rights, as a record date
for the determination of the stockholders entitled to notice of and to
vote at such meeting, or entitled to receive such dividends or rights,
as the case may be, and only stockholders of record on such date shall
be entitled to notice of and to vote at such meeting or to receive
such dividends or rights, as the case may be. In the case of a
meeting of stockholders, the record date shall be fixed not less than
ten days prior to the date of the meeting.
Section 4. New Certificates.
----------------------------
13
<PAGE>
In case any certificate of stock is lost, stolen, mutilated or
destroyed, the Board of Directors may authorize the issuance of a new
certificate in place thereof upon such indemnity to the Corporation
against loss and such other terms and conditions as it may deem
advisable. The Board of Directors may delegate such power to any
officer or officers of the Corporation or to any transfer agent or
registrar of the Corporation; but the Board of Directors, such officer
or officers or such transfer agent or registrar may, in their
discretion, refuse to issue such new certificate save upon the order
of some court having jurisdiction.
ARTICLE IX.
-----------
Notice
------
Section 1. Notice to Stockholders.
----------------------------------
Whenever by law or these Bylaws notice is required to be
given to any stockholder, such notice shall be in writing and may be
given to each stockholder by personal delivery or at the stockholder's
residence or usual place of business, or by mailing it, postage
prepaid, and addressed to the stockholder at the address appearing on
the books of the Corporation or its transfer agent. Such leaving or
mailing of notice shall be deemed the time of giving such notice.
Section 2. Notice to Directors and Officers.
--------------------------------------------
Whenever by law or these Bylaws notice is required to be
given to any director or officer, such notice may be given in any one
of the following ways: by personal delivery to such director or
officer, by telephone communication with such director or officer
personally or by telephone facsimile transmission, by telegram,
cablegram, radiogram, first class mail or by delivery service
providing confirmation of delivery, addressed to such director or
officer at the address appearing on the books of the Corporation. The
time when such notice shall be consigned to a communication company
for delivery shall be deemed to be the time of the giving of such
notice; if mailed, such notice shall be deemed given 48 hours after
the time it is deposited in the mail, postage prepaid.
Section 3. Waiver of Notice.
----------------------------
Notice to any stockholder or director of the time, place
and/or purpose of any meeting of stockholders or directors required by
these Bylaws may be dispensed with if such stockholder shall either
attend in person or by proxy, or if such director shall attend
14
<PAGE>
in person, or if such absent stockholder or director shall, in writing
filed with the records of the meeting either before or after the
holding thereof, waive such notice.
ARTICLE X.
----------
Voting of Stock in Other Corporations
-------------------------------------
Any stock in other corporations, which may from time to time
be held by the Corporation, may be represented and voted at any
meeting of stockholders of such other corporations by the President or
a Vice-President or by proxy or proxies appointed by the President or
a Vice-President, or otherwise pursuant to authorization thereunto
given by a resolution of the Board of Directors adopted by a vote of a
majority of the directors.
ARTICLE XI.
-----------
Indemnification of Directors and Officers
-----------------------------------------
Section 1. In General.
----------------------
The Corporation shall indemnify any person who was or is a
party or a witness or is threatened to be made a party or a witness to
any threatened, pending or completed action, suit, investigation
(including internal investigations) or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or
in the right of the Corporation) by reason of the fact that he is or
was or has agreed to become a director, officer, employee, fiduciary,
trustee or agent of the Corporation, or is or was serving or has
agreed to serve at the request of the Corporation as a director,
officer, employee, fiduciary, trustee or agent of another corporation,
partnership, joint venture, trust, pension plan, employee benefit or
other similar plan or any other enterprise, or by reason of any action
alleged to have been taken or omitted in such capacity, against costs,
charges, expenses (including attorneys' fees), judgments, fines,
penalties, excise taxes and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with such
action, suit, investigation or proceeding and any appeal therefrom, if
he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action,
suit, investigation or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the person did not act in
good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
15
<PAGE>
Section 2. The Corporation shall indemnify any person who
---------
was or is a party or a witness or is threatened to be made a party or
a witness to any threatened, pending or completed action, suit,
investigation (including internal investigations) or proceeding by or
in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was or has agreed to become a
director, officer, employee, fiduciary, trustee of agent of the
Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as a director, officer, employee,
fiduciary, trustee or agent of another corporation, partnership, joint
venture, trust, pension plan, employee benefit or other similar plan
or any other enterprise, or by reason of any action alleged to have
been taken or omitted in such capacity, against costs, charges and
expenses (including attorneys' fees) actually and reasonably incurred
by him or on his behalf in connection with the defense or settlement
of such action, suit, investigation or proceeding and any appeal
therefrom, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Corporation except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent
that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of such
liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such costs,
charges and expenses which the court shall deem proper.
Section 3. Notwithstanding the other provisions of these
---------
By-laws, to the extent that a director, officer, employee, fiduciary,
trustee or agent of the Corporation has been successful on the merits
or otherwise, including, without limitation, the dismissal of an
action without prejudice, in defense of any action, suit,
investigation or proceeding referred to in Sections 1 and 2 of this
Article, or in defense of any claim, issue or matter therein, he shall
be indemnified against all costs, charges and expenses (including
attorneys' fees) actually and reasonably incurred by him or on his
behalf in connection therewith.
Section 4. Any indemnification under Sections 1 and 2 of
---------
this Article (unless ordered by a court) shall be paid by the
Corporation unless a determination is made (a) by the Board of
Directors in accordance with these By-laws, provided that the quorum
consists of directors who were not parties to such action, suit,
investigation or proceeding, or (b) if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written
opinion, or (c) by the stockholders, that indemnification of the
director, officer, employee, fiduciary, trustee or agent is not proper
in the circumstances because he has not met the applicable standard of
conduct set forth in Sections 1 and 2 of this Article.
Section 5. Costs, charges and expenses (including attorney's
---------
fees) incurred by a person referred to in Sections 1 and 2 of the
Article in defending a civil or criminal action, suit, investigation
or proceeding shall be paid by the Corporation in advance of the final
disposition of such action, suit, investigation or proceeding;
provided, however, that the payment of such costs, charges and
expenses incurred by a director or officer of the Corporation in his
capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such person while a director or
officer) in advance of the final disposition of such action, suit,
investigation or proceeding shall be made only upon receipt of a
written undertaking (in the form of an unsecured promissory note) by
or on behalf of the director or officer to repay all amounts so
advanced in the event that it shall ultimately be determined that such
director or officer is not entitled to be indemnified by the
Corporation as authorized in these By-laws. Such costs, charges and
expenses incurred by other employees, fiduciaries, trustees and agents
may be so paid in advance upon such terms and conditions, if
16
<PAGE>
any, as the Board of Directors deems appropriate. The Board of
Directors may, in the manner set forth above, and upon approval of
such director, officer, employee, fiduciary, trustee or agent of the
Corporation, authorize the Corporation's counsel to represent such
person, in any action, suit, investigation or proceeding, whether or
not the Corporation is a party to such action, suit, investigation or
proceeding.
Section 6. Any indemnification under Sections 1, 2 and 3, or
---------
advance of costs, charges and expenses under Section 5 of this
Article, shall be made promptly, and in any event within sixty (60)
days, upon the written request of the director, officer, employee,
fiduciary, trustee or agent. The right to indemnification or advances
as granted by these By-laws shall be specifically enforceable by the
director, officer, employee, fiduciary, trustee or agent in any court
of competent jurisdiction, if the Corporation denies such request, in
whole or in part, or if no disposition thereof is made within sixty
(60) days. Such person's costs and expenses incurred in connection
with successfully establishing his right to indemnification or
advances, in whole or in part, in any such action shall also be
indemnified by the Corporation. It shall be a defense to any such
action (other than an action brought to enforce a claim for the
advance of costs, charges and expenses under Section 5 of this Article
where the required undertaking, if any, has been received by the
Corporation) that the claimant has not met the standard of conduct set
forth in Sections 1 and 2 of this Article, but the burden of proving
such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, its independent legal
counsel, and its stockholders) to have made a determination prior to
the commencement of such action that indemnification of the claimant
is proper in the circumstances because he has met the applicable
standard of conduct set forth in Sections 1 or 2 of this Article, nor
the fact that there has been an actual determination by the
Corporation (including its Board of Directors, its independent legal
counsel, and its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable
standard of conduct.
Section 7. The rights to indemnification and advances
---------
provided by these By-laws shall be construed so as to mandate
indemnification and advancement of expenses to the fullest extent
permitted by applicable law and such indemnification and advancement
of expenses shall be made unless expressly prohibited by applicable
law. Indemnification and advancement of expenses hereunder shall not
be deemed exclusive of any rights to which a person seeking
indemnification and/or advances may be entitled under the
Corporation's Articles of Incorporation (as amended or restated), any
law (common or statutory), agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding
office or while employed by or acting as an agent for the Corporation,
and shall continue as to a person who has ceased to be a director,
officer, employee, fiduciary, trustee or agent, and shall inure to the
benefit of the estate, heirs, executors and administrators of such
person. All rights to indemnification and advances under these
By-laws shall be deemed to be a contract between the Corporation and
each director, officer, employee, fiduciary, trustee or agent of the
Corporation who serves or served in such capacity at any time while
these indemnification provisions of the By-laws are in effect. Any
repeal or modification of these indemnification provisions of the
By-laws or any repeal or modification of relevant provisions of the
applicable corporation or other laws shall not in any way diminish any
rights to indemnification and/or advances of such director, officer,
employee, fiduciary, trustee or agent or the obligations of the
Corporation arising hereunder.
17
<PAGE>
Section 8. The Corporation shall have the authority to
---------
purchase and maintain insurance on behalf of any person who is or was
or has agreed to become a director, officer, employee, fiduciary,
trustee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee,
fiduciary, trustee or agent of another corporation, partnership, joint
venture, trust, pension plan, employee benefit or other similar plan
or other enterprise against any liability asserted against him and
incurred by him or on his behalf in any such capacity, or arising out
of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under the provisions of
these By-laws.
Section 9. If these indemnification provisions of the
---------
By-laws or any portion hereof shall be invalidated on any ground by
any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify and provide advances to each director, officer,
employee, fiduciary, trustee and agent of the Corporation as to costs,
charges and expenses (including attorneys' fees), judgments, fines,
penalties, excise taxes and amounts paid in settlement with respect to
any action, suit, investigation or proceeding, whether civil,
criminal, administrative or investigative, including an action by or
in the right of the Corporation, to the full extent permitted by any
applicable portion of these By-laws that shall not have been
invalidated and to the full extent permitted by applicable law. The
phrase "to the full extent permitted" contained in this paragraph
shall be construed so as to mandate indemnification and advancement of
expenses unless expressly prohibited by applicable law.
Section 10. For the purposes of these By-laws, any person
----------
who is or was a director, officer, employee, fiduciary, trustee or
agent of another corporation, partnership, joint venture, trust,
pension plan, employee benefit or other similar plan or any other
enterprise in which the Corporation owns or controls or at the time
owned or controlled, directly or indirectly, fifty percent (50%) or
more of the ownership interests shall be conclusively presumed to be
serving or to have served in such capacity at the request of the
Corporation.
Section 11. Notwithstanding anything to the contrary
----------
contained in this Article XI, the right to indemnification (including
any costs, charges and expenses with respect thereto) in this Article
XI is expressly subordinated as a claim against the Corporation or any
of its assets to the prior claims and rights of the Buyers to receive
payment under the Buyers' Certificates (as those terms are defined in
the Articles of Incorporation of the Corporation).
ARTICLE XII.
------------
Amendments
----------
These Bylaws may be added to, altered, amended, repealed or
suspended only by a vote of a majority of the Board of Directors,
including the unanimous vote of the Independent Directors, at any
regular or special meeting of the
Board.
18
<PAGE>
EXHIBIT M
PERFECTION CERTIFICATE
The undersigned, the chief financial officer and chief
accounting officer of Bethlehem Steel Corporation, a Delaware
corporation (the "Seller"), hereby certify with reference to the
Purchase and Sale Agreement dated as of September 12, 1995 between the
Seller and Bethlehem Steel Funding, LLC, a Maryland limited liability
company ("BSF"):
1. Names. (a)(i) The exact corporate name of the Seller as
-----
it appears in its certificate of incorporation and (ii) the exact name
of BSF as it appears in its articles of organization, is as follows:
Seller: Bethlehem Steel Corporation BSF: Bethlehem Steel Funding,
LLC
(b) The following is a list of all other names (including
trade names or similar appellations) used by the Seller or any of its
divisions or other unincorporated business units which produce or have
produced goods which have given rise to accounts receivable at any
time during the past five years:
2. Current Locations. (a) The chief executive offices of
-----------------
each of the Seller and BSF are located at the following address:
Seller
Mailing Address County State
- --------------- ------ -----
<PAGE>
BSF
Mailing Address County State
- --------------- ------ -----
(b) The following are all the locations in the United States
of America where the Seller or BSF maintain any books or records
relating to any accounts receivable: Seller
Seller
Mailing Address County State
- --------------- ------ -----
BSF
Mailing Address County State
- --------------- ------ -----
(c) The following are all the places of business of the
Seller not identified above which are located in states in which the
chief executive office of the Seller or any books or records relating
to accounts receivable are located:
Mailing
Name Address County State
- ------- ------- ------ -----
3. Prior Locations. Set forth below is the information
---------------
required by subparagraphs (a), (b) and (c) of paragraph 2 with respect
to each location or place of business not identified
2
<PAGE>
in Paragraph 2 and maintained by the Seller at any time during the
past five years in a state in which it maintained a location or place
of business during the past four months:
Mailing Address County State
- --------------- ------ -----
4. Origination of Receivables. All accounts receivable of
--------------------------
the Seller have been originated by the Seller (and not by any of its
subsidiaries or affiliates) in the ordinary course of the Seller's
business.
5. File Search Reports. Attached hereto as Schedule 5(A) is
-------------------
a true copy of a file search report from the Uniform Commercial Code
filing officer in each jurisdiction identified in paragraph 2 or 3
above with respect to each name set forth in paragraph 1 above.
Attached hereto as Schedule 5(B) is a true copy of each financing
statement or other filing identified in such file search reports.
6. UCC Filings. A duly signed financing statement on Form
-----------
UCC-1 in substantially the form of Schedule 6(A), with respect to the
Seller, or 6(B), with respect to BSF, has been duly filed in the
Uniform Commercial Code filing office in each jurisdiction identified
in paragraph 2(a) and 2(b) hereof with respect to the Seller or BSF,
as relevant. Attached hereto as Schedule 6(C) is a true copy of each
such filing acknowledged by the filing officer.
7. Schedule of Filings. Attached hereto as Schedule 7 is a
-------------------
schedule setting forth filing information with respect to the filings
described in paragraph 6 above.
8. Filing Fees. All filing fees and taxes payable in
-----------
connection with the filings described in paragraph 6 above have been
paid. IN WITNESS WHEREOF, we have hereunto set our hands this ___ day
of September, 1995.
____________________________
Title:
3
<PAGE>
____________________________
Title:
4
<PAGE>
SCHEDULE 6(A)
Description of Collateral:
-------------------------
Bethlehem Steel Corporation as Debtor; Bethlehem Steel
Funding, LLC, as Secured Party; J.P. Morgan Delaware as Structuring
and Collateral Agent, Assignee of the Secured Party.
All accounts, contract rights, instruments, chattel paper and
general intangibles related thereto and all such other collateral as
is described below, in each case whether now owned or hereafter
acquired or arising and wherever located:
(i) All receivables originated in connection with the sale of
goods or the provision of services by Bethlehem Steel Corporation,
whether such receivables constitute accounts, contract rights,
instruments, chattel paper or general intangibles related thereto;
(ii) with respect to each such receivable, (x) all of the
interest, if any, of Bethlehem Steel Corporation in the goods
(including returned goods) the sale of which by Bethlehem Steel
Corporation gave rise to such receivable, (y) all other security
interests or liens and property subject thereto from time to time, if
any, securing payment of such receivable, and (z) all guarantees,
letters of credit, insurance or other agreements or arrangements of
any kind from time to time supporting or securing payment of such
receivable;
(iii) with respect to each such receivable, (y) all amounts,
whether in the form of cash, checks, drafts, other instruments or
electronic funds transfer, received in any lockbox, lockbox account or
collection account in payment of such receivable, including without
limitation, all amounts received on account of finance charges and
fees with respect to such receivable, and (z) all cash proceeds of the
collateral referred to in clause (ii) above with respect to such
receivable;
(iv) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any and all of the
foregoing; and
(v) all substitutions for and proceeds of any of the
foregoing (whether such proceeds constitute accounts, contract rights,
instruments, chattel paper, inventory, equipment, documents or general
intangibles) and, to the extent not otherwise included, all payments
under insurance or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the
foregoing.
<PAGE>
SCHEDULE 6(B)
Description of Collateral:
-------------------------
Bethlehem Steel Funding, LLC as Debtor; J.P. Morgan Delaware
as Structuring and Collateral Agent, as Secured Party.
All accounts, contract rights, instruments, chattel paper and
general intangibles related thereto and all such other collateral as
is described below, in each case whether now owned or hereafter
acquired or arising and wherever located:
(i) all receivables originated in connection with the sale of
goods or the provision of services by Bethlehem Steel Corporation,
whether such receivables constitute accounts, contract rights,
instruments, chattel paper or general intangibles related thereto;
(ii) with respect to each such receivable, (x) all of the
interest, if any, of Bethlehem Steel Corporation in the goods
(including returned goods) the sale of which by Bethlehem Steel
Corporation gave rise to such receivable, (y) all other security
interests or liens and property subject thereto from time to time, if
any, securing payment of such receivable, and (z) all guarantees,
letters of credit, insurance or other agreements or arrangements of
any kind from time to time supporting or securing payment of such
receivable;
(iii) with respect to each such receivable, (w) all amounts,
whether in the form of cash, checks, drafts, other instruments or
electronic funds transfer, received in any lockbox, lockbox account or
collection account in payment of such receivable, including without
limitation, all amounts received on account of finance charges and
fees with respect to such receivable, (x) all cash proceeds of the
collateral referred to in clause (ii) above with respect to such
receivable, (y) all amounts paid with respect to such receivable
pursuant to the Receivables Purchase Agreement referred to below and
(z) any amounts paid or credited by Bethlehem Steel Corporation to
Bethlehem Steel Funding, LLC in respect of such receivable pursuant to
the Purchase and Sale Agreement between Bethlehem Steel Corporation,
as Seller, and Bethlehem Steel Funding, LLC, as Purchaser, as the same
may be amended from time to time;
(iv) all bank accounts of Bethlehem Steel Funding, LLC,
including (a) the Cash Collateral Account maintained pursuant to the
Receivables Purchase Agreement among Bethlehem Steel Funding, LLC,
Bethlehem Steel Credit Affiliate One, Inc., Bethlehem Steel Credit
Affiliate Two, Inc., Bethlehem Steel Corporation, as Servicer, the
financial institutions listed therein, as Buyers, Morgan Guaranty
Trust Company of New York, as Administrative
<PAGE>
Agent and J.P. Morgan Delaware, as Structuring and Collateral Agent,
as the same may be amended from time to time (the "Receivables
Purchase Agreement") and all funds held therein, all income from the
investment of funds in such Cash Collateral Account and all
certificates and instruments, if any, from time to time representing
or evidencing such Cash Collateral Account or such investments; (b)
the Collection Account maintained pursuant to the Receivables Purchase
Agreement and all funds held therein, all income from the investment
of funds in such Collection Account and all certificates and
instruments, if any, from time to time representing or evidencing such
Collection Account or such investments; and (c) all lockboxes, all
lockbox accounts and all funds held therein, all income from the
investment of funds in the lockbox accounts and all certificates and
instruments, if any, from time to time in such lockboxes or
representing or evidencing lockbox accounts;
(v) all right, title and interest of Bethlehem Steel Funding,
LLC in, to and under the aforesaid Purchase and Sale Agreement,
including all monies due and to become due to Bethlehem Steel Funding,
LLC under or in connection therewith, whether as receivables or fees,
expenses, costs, indemnities, insurance recoveries, damages for breach
or otherwise, and all rights, remedies, powers, privileges and claims
of Bethlehem Steel Funding, LLC under or with respect to the aforesaid
Purchase and Sale Agreement (whether arising pursuant to the terms of
such agreement or otherwise available at law or in equity);
(vi) all right, title and interest of Bethlehem Steel
Funding, LLC in, to and under each of the other agreements, documents
and instruments (excluding the aforesaid Receivables Purchase
Agreement) (whether as an original party thereto, as assignee or
otherwise) as may be entered into and delivered in connection with the
transactions contemplated by the aforesaid Receivables Purchase
Agreement or the aforesaid Purchase and Sale Agreement, including all
monies due and to become due to Bethlehem Steel Funding, LLC under or
in connection with such agreements, documents and instruments, and all
rights, remedies, powers, privileges, benefits and claims of Bethlehem
Steel Funding, LLC under or with respect to such agreements, documents
and instruments (whether arising pursuant to the terms of such
agreements, documents and instruments or otherwise available at law or
in equity);
(vii) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any and all of the
foregoing; and
(viii) all substitutions for and proceeds of any of the
foregoing (including, without limitation, accounts, contract rights,
instruments, chattel paper, inventory, documents or general
intangibles) and, to the extent not otherwise included, all payments
under insurance or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the
foregoing.
2
<PAGE>
SCHEDULE 7
SCHEDULE OF FILINGS
Debtor Filing Officer File Number Date of Filing*
- ------ -------------- ----------- --------------
_______________
* Indicate lapse date, if other than fifth anniversary.
<PAGE>
EXHIBIT N
[Letterhead of Bethlehem Steel Corporation]
September 12, 1995
Electronic Data Systems Corporation
7171 Forest Lane
Dallas, Texas 75230
Ladies and Gentlemen:
We refer to our Information Technology Partnership Agreement
(the "Agreement") dated as of December 21, 1992. In connection with a
receivables facility pursuant to which we are selling substantially
all of our accounts receivable, J.P. Morgan Delaware, as Collateral
Agent, on behalf of the financial institutions participating in such
receivables facility, has requested your consent to an assignment of
certain portions of the Agreement under certain circumstances.
Accordingly, if the Collateral Agent notifies you that we are no
longer responsible for servicing, administering and collecting
accounts receivable under the receivables facility, in order for the
appropriate parties to have access to necessary information with
regards to accounts receivable or the collection thereof,
notwithstanding anything to the contrary contained in the Agreement,
you hereby consent to our assignment of any portion of the Agreement
in respect of Services (as defined in the Agreement) relating to
accounts receivable or the collection thereof to a successor servicer
engaged by the Collateral Agent.
This consent may not be terminated or modified without the
prior written consent of the Collateral Agent.
<PAGE>
Please acknowledge your consent by signing the two copies of
this letter enclosed herewith in the space provided below and
returning the signed copies to us.
Very truly yours,
BETHLEHEM STEEL CORPORATION
By:______________________
Name:____________________
Title:___________________
Acknowledged and consented to:
ELECTRONIC DATA SYSTEMS CORPORATION
By:______________________
Name:____________________
Title:___________________
2
<PAGE>
EXHIBIT O
Form of Concentration Limit Amendment Notice
[Letterhead of Bethlehem Steel Funding, LLC]
[Date]
Morgan Guaranty Trust
Company of New York, as
Administrative Agent
60 Wall Street
New York, New York 10260
J.P. Morgan Delaware, as Structuring
and Collateral Agent
902 Market Street
Wilmington, Delaware 19801
The Buyers (as defined in the
Receivables Purchase Agreement
as referred to below)
Standard & Poor's Ratings Group
26 Broadway
<PAGE>
New York, New York 10004
Attn: Asset-Backed Surveillance
Ladies and Gentlemen:
This Concentration Limit Amendment Notice is being delivered
to you pursuant to Section 11.5 of the Receivables Purchase Agreement
dated as of September 12, 1995 (the "Agreement") among Bethlehem Steel
Funding, LLC ("BSF"), Bethlehem Steel Credit Affiliate One, Inc.,
Bethlehem Steel Credit Affiliate Two, Inc., Bethlehem Steel
Corporation (the "Seller"), as Servicer, the financial institutions
listed on the signature pages thereof, as Buyers, Morgan Guaranty
Trust Company of New York, as Administrative Agent and J.P. Morgan
Delaware, as Structuring and Collateral Agent. Terms defined in the
Agreement and not otherwise defined herein are used herein with the
meanings so defined.
Section 1.1 of the Agreement is amended by [set forth changes
to the definition of Concentration Limit (including any changes to
Schedule 2)].
This amendment shall be governed by and construed in
accordance with the laws of the State of New York.
This amendment may be signed in any number of counterparts,
each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument. This
amendment shall become effective the later of (i) the date on which
the Administrative Agent shall have received duly executed
counterparts hereof signed by the Required Buyers, and (ii) the date
on which the Administrative Agent receives evidence satisfactory to it
that the rating then assigned to the Buyers' Certificates has been
reaffirmed by S&P.
Very truly yours,
BETHLEHEM STEEL
FUNDING, LLC
By
-----------------------
Title:
Acknowledged and Agreed to:
[BUYERS]
2
<PAGE>
By:
Title: ----------------------
3
<PAGE>
EXHIBIT P
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [NAME OF
ASSIGNOR] (the "Assignor"), [NAME OF ASSIGNEE] (the "Assignee"),
BETHLEHEM STEEL FUNDING, LLC ("BSF"), MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent (the "Administrative Agent") and the
L/C Issuing Banks listed on the signature pages hereof.
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the Receivables Purchase Agreement dated as of
September 12, 1995 among BSF, Bethlehem Steel Credit Affiliate One,
Inc., Bethlehem Steel Credit Affiliate Two, Inc., Bethlehem Steel
Corporation, as Servicer, the Assignor and the other financial
institutions party thereto, as Buyers, the Administrative Agent and
J.P. Morgan Delaware, as Structuring and Collateral Agent (the
"Receivables Purchase Agreement");
WHEREAS, as provided under the Receivables Purchase
Agreement, the Assignor has a Commitment to participate in Purchases
from BSF in an aggregate amount at any time not to exceed $__________;
WHEREAS, on the date hereof, the Assignor's pro rata share of
the Aggregate Net Investment under the Receivables Purchase Agreement
is in the aggregate amount of $__________;
WHEREAS, the Assignor proposes to assign to the Assignee all
of the rights of the Assignor under the Receivables Purchase Agreement
in respect of a portion of its Commitment thereunder in an amount
equal to $__________, together with a corresponding portion of its pro
rata share of the Aggregate Net Investment (the "Assigned Amount"),
and the Assignee proposes to accept assignment of such rights and
assume the corresponding obligations from the Assignor on such terms;
and
WHEREAS, the Assignor concurrently proposes to assign all of
the rights of the Assignor under the Inventory Credit Agreement in
respect of a portion of its Inventory Commitment thereunder, together
with a corresponding portion of its outstanding loans thereunder.
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as
follows:
4
<PAGE>
SECTION 1. Definitions. All capitalized terms not otherwise
-----------
defined herein shall have the respective meanings set forth in the
Receivables Purchase Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and
----------
sells to the Assignee all of the rights of the Assignor under the
Receivables Purchase Agreement to the extent of the Assigned Amount,
and the Assignee hereby accepts such assignment from the Assignor and
assumes all of the obligations of the Assignor under the Receivables
Purchase Agreement to the extent of the Assigned Amount, including the
purchase from the Assignor of the corresponding portion of the
Assignor's pro rata share of the Aggregate Net Investment at the date
hereof. Upon the execution and delivery hereof by the Assignor, the
Assignee, the L/C Issuing Banks, and if required pursuant to Section
4, BSF and the Administrative Agent, and the payment of the amounts
specified in Section 3 required to be paid on the date hereof (i) the
Assignee shall, as of the date hereof, succeed to the rights and be
obligated to perform the obligations of a Buyer under the Receivables
Purchase Agreement with a Commitment in an amount equal to the
Assigned Amount, and (ii) the Commitment of the Assignor shall, as of
the date hereof, be reduced by a like amount and the Assignor released
from its obligations under the Receivables Purchase Agreement to the
extent such obligations have been assumed by the Assignee. The
assignment provided for herein shall be without recourse to the
Assignor.
SECTION 3. Payments. As consideration for the assignment
--------
and sale contemplated in Section 2 hereof, the Assignee shall pay to
the Assignor on the date hereof in Federal funds the amount heretofore
agreed between them. It is understood that commitment and/or facility
fees accrued to the date hereof are for the account of the Assignor
and such fees accruing from and including the date hereof are for the
account of the Assignee. Each of the Assignor and the Assignee hereby
agrees that if it receives any amount under the Receivables Purchase
Agreement which is for the account of the other party hereto, it shall
receive the same for the account of such other party to the extent of
such other party's interest therein and shall promptly pay the same to
such other party.
SECTION 4. Consent of BSF and the Administrative Agent.
-------------------------------------------
This Agreement is conditioned upon the consent of BSF, if required,
the Administrative Agent and each L/C Issuing Bank pursuant to Section
11.6(c) of the Receivables Purchase Agreement. The execution of this
Agreement by BSF, the Administrative Agent and each L/C Issuing Bank
is evidence of this consent. Pursuant to Section 11.6(c), BSF agrees
to execute and deliver a Buyer's Certificate to the Assignee to
evidence the assignment and assumption provided for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
------------------------
representation or warranty in connection with, and shall have no
responsibility with respect to, the solvency, financial condition, or
statements of BSF, or the validity and enforceability of the
obligations of BSF in respect of the Receivables Purchase Agreement.
The Assignee acknowledges that it has, independently and without
reliance on the Assignor, and based on such documents and information
as it has deemed appropriate, made its own purchase analysis and
decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the business,
affairs and financial condition of BSF.
5
<PAGE>
SECTION 6. Governing Law. This Agreement shall be governed
-------------
by and construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in
------------
any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the
same instrument.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their duly authorized officers as of the
date first above written.
[NAME OF ASSIGNOR]
By
----------------------------
Name:
Title:
[NAME OF ASSIGNEE]
By
----------------------------
Name:
Title:
[BETHLEHEM STEEL FUNDING, LLC
By
----------------------------]
Name:
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
as Administrative Agent
By
----------------------------
Name:
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as L/C Issuing
Bank
7
<PAGE>
By
----------------------------
Name:
Title:
CHEMICAL BANK, as L/C Issuing
Bank
By
----------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., as L/C Issuing
Bank
By
----------------------------
Name:
Title:
8
<PAGE>
Exhibit 4(e)
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT dated as of June
5, 1997 among BETHLEHEM STEEL FUNDING, LLC, BETHLEHEM STEEL CREDIT AFFILIATE
ONE, INC., BETHLEHEM STEEL CREDIT AFFILIATE TWO, INC., BETHLEHEM STEEL
CORPORATION, as Servicer, the financial institutions listed on the signature
pages hereof, as Buyers and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Administrative Agent and Structuring and Collateral Agent.
W I T N E S S E T H :
WHEREAS, the parties hereto have heretofore entered into a Receivables
Purchase Agreement (the "Agreement") dated as of September 12, 1995, and
WHEREAS, the parties hereto desire to amend the Agreement as set forth
herein and to restate the Agreement in its entirety to read as set forth in the
Agreement with the amendments specified below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise specifically
-----------------------
defined herein, each capitalized term used herein which is defined in the
Agreement shall have the meaning assigned to such term in the Agreement. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other
similar reference and each reference to "this Agreement" and each other similar
reference contained in the Agreement shall from and after the effective date
hereof refer to the Agreement as amended and restated hereby.
SECTION 2. Amendments to Definitions. Section 1.1 of the Agreement
-------------------------
is amended as follows:
(a) The definition of "Business Day" is amended by deleting the
reference to "Wilmington, Delaware".
(b) The definition of "Collateral Agent" is amended by replacing "J.P.
Morgan Delaware" with "Morgan Guaranty".
<PAGE>
(c) The definition of "Commitment Fee" is amended by replacing
".1875%" with ".15%".
(d) The definition of "Euro-Dollar Rate" is amended by replacing
".50%" in each place where it appears with ".375%".
(e) The definition of "Expiry Date" is amended by replacing "September
12, 2000" with the date "September 12, 2002".
(f) The definition of "Fixed CD Rate" is amended by replacing ".625%"
in each place where it appears with ".50%".
(g) The definition of "Receivables Information Memorandum" is amended
by replacing "July 1995" with "May 1997".
(h) Each reference to "Chemical Bank" in the definitions "CD Reference
Banks", "Euro-Dollar Reference Banks" and "L/C Issuing Bank" is changed to "The
Chase Manhattan Bank".
SECTION 3. Amendment of Section 2.9 of the Agreement. Section 2.9(g)
-----------------------------------------
of the Agreement is amended by replacing "1/2 of 1%" with ".375%".
SECTION 4. Amendment of Section 5.10 of the Agreement. Section 5.10
------------------------------------------
of the Agreement is amended by replacing "Closing Date" with "June 5, 1997".
SECTION 5. Amendment of Section 9.2 of the Agreement. Section 9.2 of
-----------------------------------------
the Agreement is amended by deleting the references to "J.P. Morgan Delaware".
SECTION 6. Changes in Commitments. With effect from and including
----------------------
the date this Amendment and Restatement becomes effective in accordance with
Section 9, (i) the Person listed on the signature pages hereof which is not a
party to the Agreement (the "New Buyer") shall become a Buyer party to the
Agreement and (ii) the Commitment of each Buyer shall be the amount set forth
opposite the name of such Buyer on the signature pages hereof. Any Buyer whose
Commitment is changed to zero shall upon such effectiveness cease to be a Buyer
party to the Agreement, and all accrued fees and other amounts (other than such
Buyer's interest in the Aggregate Net Investment) payable under the Agreement
for the account of such Buyer shall be due and payable on such date; provided
that the provisions of Sections 10.3, 10.4 and 11.3 of the Agreement shall
continue to inure to the benefit of each such Buyer, provided further that such
--------
Bank shall continue to be bound by Section 11.7 of the Agreement with respect
to
2
<PAGE>
information provided to it prior to such date. If any Tranches are outstanding
on such date and, as a result of changes in the Commitments of the Banks, the
interests in such Tranches are not held by the continuing Banks ratably in
proportion to their Commitments, such Tranches shall continue to be held on a
non-pro rata basis until the next Yield Accrual Period therefor starts, at
which time the Banks shall, as appropriate, buy and sell the interests in such
Tranches such that, after giving effect to such purchases, the interests in
such Tranches are held ratably.
SECTION 7. Representations and Warranties. BSF hereby represents and
------------------------------
warrants that as of the effective date hereof (after giving effect hereto):
(a) no Termination Event or Potential Termination Event has occurred
and is continuing; and
(b) each representation and warranty of BSF set forth in the Agreement
after giving effect to this Amendment and Restatement is true and correct.
SECTION 8. Governing Law. This Amendment and Restatement shall be
-------------
governed by and construed in accordance with the laws of the State of New York.
SECTION 9. Counterparts; Effectiveness. This Amendment and
---------------------------
Restatement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Amendment and Restatement shall become
effective as of the date hereof if each of the following condition sshall
have been satisfied:
(i) receipt by the Administrative Agent of duly executed
counterparts hereof signed by each of the parties hereto (or, in the
case of any party as to which an executed counterpart shall not have
been received, the Administrative Agent shall have received
telegraphic, telex or other written confirmation from such party of
execution of a counterpart hereof by such party);
(ii) the Administrative Agent shall have received for the
several accounts of the Buyers fees equal to (w) .225% of such
Buyer's Commitment, if such Buyer's initial commitment for this
facility and under the Amendment and Restatement of the Inventory
Credit Agreement (the "facilities") was at least $75,000,000, (x)
.1875% of such Buyer's Commitment, if such Buyer's initial commitment
for the facilities was at least $50,000,000 but less than
$75,000,000, (y) .15% of such Buyer's initial Commitment, if such
Buyer's initial commitment for the facilities was at least
$25,000,000 but less than $50,000,000, and (z) .125% of such
3
<PAGE>
Buyer's Commitment, if such Buyer's initial commitment for the
facilities was at least $15,000,000 but less than $25,000,000;
(iii) BSF shall have paid any fees and expenses of S&P in
connection with the rating of the Buyers' Certificates;
(iv) an amendment to the Purchase and Sale Agreement in the form
of Annex I hereto shall have been executed; and
(v) the Amendment and Restatement dated as of June 5, 1997 of
the Inventory Credit Agreement shall have become effective.
The Administrative Agent shall promptly notify the parties hereto of
the effectiveness of this Amendment and Restatement, and such notice shall be
conclusive and binding on all parties hereto.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
BETHLEHEM STEEL FUNDING, LLC
By
-----------------------------
Authorized Agent
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
Telephone: 410-388-7780
Facsimile: 410-388-7783
Attention: D.K. Schoenen,
Authorized Agent
BETHLEHEM STEEL CREDIT
AFFILIATE ONE, INC.
By
---------------------------
Title:
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
Telephone: 410-388-7781
Facsimile: 410-388-7783
Attention: D.K. Schoenen,
President
5
<PAGE>
BETHLEHEM STEEL CREDIT
AFFILIATE TWO, INC.
By
---------------------------
Title:
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
Telephone: 410-388-7782
Facsimile: 410-388-7783
Attention: D.K. Schoenen,
President
BETHLEHEM STEEL CORPORATION, as
Servicer
By
--------------------------
Title:
1170 Eighth Avenue
Bethlehem, PA 18016
Telephone: 610-694-4581
Facsimile: 610-694-3356
Attention: Edmund P. Reybitz,
Assistant Treasurer
6
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Administrative Agent, Structuring and
Collateral Agent and L/C Issuing Bank
By
--------------------------
Title:
60 Wall Street
New York, NY 10260
Telephone: 212-648-6793
Facsimile: 212-648-5336
Attention: Laura E. Reim
THE CHASE MANHATTAN BANK,
as L/C Issuing Bank
By
--------------------------
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., as L/C Issuing
Bank
By
--------------------------
Title:
7
<PAGE>
LENDERS:
Commitment: $50,428,571.42 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By
--------------------------
Title:
Commitment: $38,857,142.86 THE CHASE MANHATTAN BANK,
By
--------------------------
Title:
Commitment: $38,857,142.86 THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By
--------------------------
Title:
Commitment: $24,000,000.00 THE BANK OF NEW YORK
By
--------------------------
Title:
Commitment: $24,000,000.00 NATIONSBANK, N.A. (CAROLINAS)
By
--------------------------
Title:
8
<PAGE>
Commitment: $24,000,000.00 CORESTATES BANK, N.A.
By
--------------------------
Title:
Commitment: $21,000,000.00 BANK OF AMERICA NT & SA
By
--------------------------
Title:
Commitment: $21,142,857.14 THE FIRST NATIONAL BANK
OF CHICAGO
By
--------------------------
Title:
Commitment: $12,000,000.00 THE FUJI BANK, LIMITED
By
--------------------------
Title:
Commitment: $12,000,000.00 THE INDUSTRIAL BANK OF
JAPAN, INC.
By
--------------------------
Title:
9
<PAGE>
Commitment: $12,000,000.00 THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By
--------------------------
Title:
Commitment: $11,428,571.43 BANK AUSTRIA
AKTIENGESELLSCHAFT
By
--------------------------
Title:
By
--------------------------
Title:
Commitment: $10,285,714.29 SUMMIT BANK
By
--------------------------
Title:
TOTAL
COMMITMENTS: $300,000,000
<PAGE>
Exhibit 4(e)
CONFORMED COPY
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT dated as
of June 19, 1998 among BETHLEHEM STEEL FUNDING, LLC, BETHLEHEM STEEL
CREDIT AFFILIATE ONE, INC., BETHLEHEM STEEL CREDIT AFFILIATE TWO,
INC., BETHLEHEM STEEL CORPORATION, as Servicer, the financial
institutions listed on the signature pages hereof, as Buyers, and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent and
Structuring and Collateral Agent.
W I T N E S S E T H :
WHEREAS, the parties hereto have heretofore entered into a
Receivables Purchase Agreement dated as of September 12, 1995, which
was amended and restated by an Amended and Restated Receivables
Purchase Agreement dated as of June 5, 1997 (as so amended and
restated, the "Agreement"),
WHEREAS, the Lukens Merger has been consummated, BSC has
entered into the BSC-Lukens Purchase and Sale Agreement and the
parties hereto desire to amend the Agreement to include the Lukens
Receivables, and
WHEREAS, the parties hereto desire to amend the Agreement to
increase the aggregate Commitments (as defined in the Agreement) from
$300,000,000 to $340,000,000 and otherwise as set forth herein and to
restate the Agreement in its entirety to read as set forth in the
Agreement with the amendments specified below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
-----------------------
specifically defined herein, each capitalized term used herein which
is defined in the Agreement shall have the meaning assigned to such
term in the Agreement. Each reference to "hereof", "hereunder",
"herein" and "hereby" and each other similar reference and each
reference to "this Agreement" and each other similar reference
contained in the Agreement shall from and after the effective date
hereof refer to the Agreement as amended and restated hereby.
<PAGE>
SECTION 2. Definitions. (a) Section 1.1 of the Agreement is
-----------
amended by adding the following new definitions in alphabetical order:
"BSC-Lukens Purchase and Sale Agreement" means the Purchase
and Sale Agreement No. 1 dated as of June 19, 1998 between Lukens, as
Seller, and BSC, as purchaser, substantially in the form of Exhibit Q
hereto, as amended from time to time.
"Lukens" means Lukens Steel Company, a Pennsylvania
corporation.
"Lukens Merger" means the merger of Lukens Acquisition
Corporation into Lukens Inc., which occurred on May 29, 1998, pursuant
to the Lukens Merger Agreement.
"Lukens Merger Agreement" means the Agreement and Plan of
Merger, dated as of December 15, 1997 and as amended as of January 4,
1998, among BSC, Lukens Acquisition Corporation and Lukens Inc., as
further amended from time to time.
"Lukens Receivable" means a "Receivable", as defined in the
BSC-Lukens Purchase and Sale Agreement.
"1998 Effective Date" means the date upon which the
conditions to effectiveness of this Amended and Restated Receivables
Purchase Agreement dated as of June 19, 1998 are satisfied.
(b) Section 1.1 of the Agreement is further amended as
follows:
(i) Clause (i) of the definition of "Commitment" is
superceded by the provisions of Section 12 of this Amendment
and Restatement.
(ii) The definition of "Contract" is amended in its
entirety to read as follows:
"Contract" as it relates to any Receivable means the
agreement between the Obligor and BSC or Lukens, as the case
may be, giving rise thereto (including as evidenced by an
invoice on an open account).
(iii) The definition of "Credit and Collection Policy"
is amended by inserting, after the words "Exhibit H hereto",
the phrase ", subject to Section 2.10,".
2
<PAGE>
(iv) Subparagraph (a)(iii) of the definition of
"Eligible Receivable" is amended by adding after the phrase
"originated in the name of the Seller" the words "or is a
Lukens Receivable purchased by BSC pursuant to the BSC-Lukens
Purchase and Sale Agreement".
(v) Subparagraph (a)(iv) of the definition of "Eligible
Receivable" is amended by adding after the reference to "the
Purchase and Sale Agreement" the following: "and, in the
case of a Lukens Receivable, immediately prior to its sale to
BSC pursuant to the BSC-Lukens Purchase and Sale Agreement".
(vi) Subparagraph (a)(viii) of the definition of
"Eligible Receivable" is amended in its entirety to read as
follows:
(viii) all consents, licenses, approvals, or
authorizations of, or registrations with, any
governmental authority required to be obtained or given
by the Seller or Lukens, as the case may be, in
connection with the creation of such Receivable or the
execution, delivery, creation and performance by the
Seller or Lukens, as the case may be, of the related
Contract, or in connection with the sale of such
Receivable to BSF (and, in the case of a Lukens
Receivable, the sale of such Receivable to the Seller),
have been duly obtained or given and are in full force
and effect and the sale of such Receivable to BSF (and,
in the case of a Lukens Receivable, the sale of such
Receivable to the Seller) complies with all applicable
requirements of law;
(vii) Subparagraph (a)(x) of the definition of "Eligible
Receivable" is amended in its entirety to read as follows:
(x) the transfer of such Receivable (A) under the
Purchase and Sale Agreement constitutes a valid sale,
transfer and assignment to BSF of all right, title and
interest of the Seller in the Receivable, any Related
Security, any Collections and any proceeds, enforceable
against all creditors of and purchasers from the Seller
and (B), in the case of any Lukens Receivable, under the
BSC-Lukens Purchase and Sale Agreement constitutes a
valid sale, transfer and assignment to the Seller of all
right, title and interest of Lukens in the Receivable,
any Related Security, any Collections and any proceeds,
enforceable against all creditors or and purchasers from
Lukens;
3
<PAGE>
(viii) The definition of "Expiry Date" is amended by
replacing "September 12, 2002" with "June 19, 2003".
(ix) The definition of "Liquidation Yield" is amended by
modifying "BR" to mean the following: BR = the rate
determined under clause (i) of the definition of "Base Rate"
multiplied by 1.2 plus 2%.
(x) The definition of "Program Documents" is amended by
(A) inserting after the first reference to "the Purchase and
Sale Agreement" the words "the BSC-Lukens Purchase and Sale
Agreement," and (B) inserting after the reference to "the
Seller" the word "Lukens,".
(xi) The definition of "Receivable" is amended by adding
"or a Lukens Receivable purchased by BSC pursuant to the
BSC-Lukens Purchase and Sale Agreement" following the words
"in its normal course of business".
(xii) The definition of "Receivables Information
Memorandum" is amended in its entirety to read as follows:
"Receivables Information Memorandum" means the
Bethlehem Steel Funding, LLC Receivables Purchase
Agreement Receivables Review dated as of May 1998."
(xiii) The definition of "Related Security" is amended
by (A) inserting after the first reference to "BSC" the words
"and, in the case of a Lukens Receivable, Lukens" and (B)
inserting after the second reference to "BSC" the words "or
Lukens, as the case may be,".
(xiv) The definition of "Termination Yield Rate" is
amended by inserting after each reference to "BSC" the words
"or Lukens".
(xv) The definition of "Yield Accrual Period" is amended
by, in clause (iii) of the proviso therein, inserting after
-------
the reference to "BSC" the words "or Lukens".
(xvi) The definition of "Yield Reserve" is amended by
changing subclause (v)(y) from "1.5% times" to "1.0% times".
SECTION 3. Underwriting Transition Period. The following is
------------------------------
added as Section 2.10 to the Agreement:
4
<PAGE>
SECTION 2.10. Underwriting Transition Period. All
------------------------------
Lukens Receivables will be subject to the standards and
procedures of the Credit and Collection Policy relating to
billing, invoicing and collection activities and procedures,
including lockbox arrangements. However, with respect to
those Lukens Receivables that are invoiced during the period
immediately following the Lukens Merger, the credit analysis,
decisions to extend credit and credit terms of sale
necessarily will have been conducted and established by
Lukens prior to the Lukens Merger. BSC represents that any
differences between the Credit and Collection Policy and
Lukens' credit policies in effect immediately prior to the
Lukens Merger are not material. In reliance upon such
representation, Lukens Receivables that are invoiced during
the period immediately following the Lukens Merger shall not
fail to qualify as Eligible Receivables solely by reason of
differences between the Credit and Collection Policy and such
Lukens' credit policies.
SECTION 4. Assignment; Addition of Servicer Representation
and Warranty. (a) Section 3.1(a) of the Agreement is amended by (i)
adding "all rights of BSF as assignee from BSC as purchaser under the
BSC-Lukens Purchase and Sale Agreement" after the words "damages for
breach or otherwise" in clause (iii) of the first sentence thereof ,
(ii) inserting in the last sentence thereof after the reference to
"the Seller" the word "Lukens," and (iii) inserting in the last
sentence thereof after the reference to "BSF under the Purchase and
Sale Agreement" the words "or BSC under the BSC-Lukens Purchase and
Sale Agreement,".
(b) Section 3.1(b) of the Agreement is amended in its
entirety to read as follows:
(b) BSF shall monitor and require compliance by the
Seller with its obligations under the Purchase and Sale
Agreement and by Lukens under the BSC-Lukens Purchase and
Sale Agreement, shall exercise its rights and remedies
thereunder so as to be afforded the benefits intended to
accrue to it (and, in the case of the BSC-Lukens Purchase and
Sale Agreement, BSC) and shall, in the event of any default
by the Seller or Lukens, as the case may be, in the
performance of its obligations under the pertinent Agreement,
exercise any and all of its rights and remedies thereunder
(as assignee of BSC in the case of the BSC-Lukens Purchase
and Sale Agreement) to the extent and in the manner directed
by the Collateral Agent.
(c) The following is added as SECTION 5.12 to the
Agreement:
5
<PAGE>
SECTION 5.12. Servicer's Representation and
Warranty.BSC, a s Servicer, represents and warrants that the
computer applications pertaining to the Receivables recognize
and perform date sensitive functions involving dates prior to
and after December 31, 1999.
SECTION 5. Amendment of Section 4.2 of the Agreement.
-----------------------------------------
Section 4.2 of the Agreement is amended by adding in clause (a)
thereof, after the reference to "Articles 5 and 7 hereof" the
following: ", Article IV of the BSC-Lukens Purchase and Sale
Agreement".
SECTION 6. Amendment of Section 5.10 of the Agreement.
------------------------------------------
Section 5.10 of the Agreement is amended by (i) inserting after the
first reference therein to "the Seller" the words ", Lukens" and (ii)
replacing "June 5, 1997" with "June 19, 1998".
SECTION 7. Amendment of Section 6.1 of the Agreement. (a)
-----------------------------------------
Section 6.1(a) of the Agreement is amended by (i) in the first
sentence thereof, changing the reference to "BSF or BSC" to read "BSF,
BSC or Lukens" and (ii) in clause (vii) of the second sentence
thereof, inserting immediately after the words "the Purchase and Sale
Agreement" the following: "(including any information pursuant to the
BSC-Lukens Purchase and Sale Agreement as assignee pursuant to the
Purchase and Sale Agreement of BSC's rights thereunder)".
(b) Section 6.1(b) of the Agreement is amended by, in the
first sentence thereof, changing the reference to "BSF or BSC" to read
"BSF, BSC or Lukens".
SECTION 8. Amendment of Section 6.2(c) of the Agreement.
--------------------------------------------
Section 6.2(c) of the Agreement is amended by (i) in clause (i)
thereof, inserting after the reference to "BSF's" the word ", Lukens'"
and (ii) in clause (ii) thereof, inserting after the reference to
"BSC" the word ", Lukens".
SECTION 9. Amendment of Section 6.8 of the Agreement.
-----------------------------------------
Section 6.8 of the Agreement is amended by inserting after the
reference to "the Purchase and Sale Agreement" the words ", the
BSC-Lukens Purchase and Sale Agreement".
SECTION 10. Additional Termination Events and Consequences.
----------------------------------------------
(a) Section 8.1 of the Agreement is amended by (i) in clause (c),
inserting after the reference to "the Servicer" the words ", Lukens",
(ii) in clause (d), replacing the word "or" following the word
"hereof" with a comma and adding to the end of such clause "or Section
2.02 of the BSC-Lukens Purchase and Sale Agreement" and (iii) in
clauses (e), (g) and (i), inserting after each reference to "BSF" the
words ", Lukens".
6
<PAGE>
(b) Section 8.2(a) is amended by inserting after each
reference to "Event of Bankruptcy with respect to BSF" the words
",Lukens".
(c) Section 8.2(b) is amended by, in clause (a) thereof, (i)
inserting after the first reference to "BSC" the words "or Lukens" and
(ii) inserting after the second reference to "BSC" the words "and
Lukens".
SECTION 11. Amendment of Article 9 of the Agreement.
Article 9 of the Agreement is amended by (i) in Section 9.4, inserting
in the parenthetical phrase a reference to "Lukens" and (ii) in the
second sentence of Section 9.5, inserting after the reference to "BSF"
the word ",Lukens".
SECTION 12. Changes in Commitments. With effect from and
----------------------
including the 1998 Effective Date, (i) each Person listed on the
signature pages hereof that is not a party to the Agreement (a "New
Buyer") shall become a Buyer party to the Agreement and (ii) the
Commitment of each Buyer shall be the amount set forth opposite the
name of such Buyer on the signature pages hereof. Any Buyer whose
Commitment is changed to zero (an "Exiting Buyer") shall upon the 1998
Effective Date, but subject to the last sentence of this Section 12,
cease to be a Buyer party to the Agreement (and, without omitting the
generality of the foregoing, its participation in any outstanding
Participated Letter of Credit shall automatically be canceled without
any further action), and all accrued Fees and other amounts (other
than such Buyer's interest in the Aggregate Net Investment) payable
under the Agreement for the account of an Exiting Buyer to the 1998
Effective Date shall, notwithstanding the provisions of Article 2 of
the Agreement, be due and payable for the account of such Exiting
Buyer on the 1998 Effective Date; provided that the provisions of
Sections 10.3, 10.4 and 11.3 of the Agreement shall continue to inure
to the benefit of each Exiting Buyer and, provided further that each
Exiting Buyer shall continue to be bound by Section 11.7 of the
Agreement with respect to information provided to it prior to such
date. The calculation of accrued Fees payable to each continuing
Buyer on the first Quarterly Date or other date after the 1998
Effective Date on which Fees are payable shall reflect any changes in
the Commitments of such Buyers made pursuant to this Section 12 and,
notwithstanding the provisions of Section 2.7 of the Agreement, shall
be paid to each such Buyer accordingly. If any Tranches are
outstanding on the 1998 Effective Date and, as a result of changes in
the Commitments of the Buyers, such Tranches are not held by the
continuing Buyers ratably in proportion to their Commitments, such
Tranches shall continue to be held on a non-pro-rata basis until the
next Yield Accrual Period therefor starts, at which time the Buyers
(including New Buyers and Exiting Buyers) shall, as appropriate, buy
and sell such Tranches such that, after giving effect to such
purchases, such Tranches are held ratably, and Section 2.8 of the
Agreement shall apply to any such purchases.
7
<PAGE>
SECTION 13. Representations and Warranties. BSF and BSC
------------------------------
each hereby represents and warrants that as of the 1998 Effective Date
(after giving effect hereto):
(a) no Termination Event or Potential Termination Event will
have occurred and be continuing; and
(b) the representations and warranties set forth in Articles
5 and 7 of the Agreement, Article IV of the Purchase and Sale
Agreement and Article IV of the BSC-Lukens Purchase and Sale
Agreement, after giving effect to this Amendment and Restatement, will
be true and correct.
SECTION 14. Amendment of Exhibits D and E. Each of Exhibit
-----------------------------
D and E to the Agreement is amended to the extent necessary to conform
to all changes made in this Amendment and Restatement.
SECTION 15. New Exhibit. The form of Annex I hereto is
-----------
added to the Agreement as Exhibit Q.
SECTION 16. Assignment. (a) Section 1.1 of the Agreement is
----------
amended by adding the following new definition:
"Combined Commitment" means at any time with respect to each
Buyer the sum of (x) such Buyer's Commitment hereunder and (y) such
Buyer's Inventory Commitment under the Inventory Credit Agreement.
(b) Section 11.6(c) of the Agreement is amended by amending
the second parenthetical therein to read as follows:
(such portion to comprise a Combined Commitment of not less than
$5,000,000; provided that after giving effect to such assignment, (x)
the percentage of any Buyer's Commitment hereunder be no less than 40%
and no greater than 70% of its Combined Commitment and the percentage
of any Buyer's Inventory Commitment under the Inventory Credit
Agreement be no less than 30% and no greater than 60% of its Combined
Commitment and (y) the Combined Commitment retained by the assigning
Buyer shall be in an aggregate amount of not less than $5,000,000)
(c) Section 11.6(c) of the Agreement is further amended by
deleting the clause ",which shall not be unreasonably withheld" which
appears immediately following the words "consent of BSF" and inserting
the clause ", which in each
8
<PAGE>
case shall not be unreasonably withheld" after the words "the
Administrative Agent and the L/C Issuing Banks."
SECTION 17. Governing Law. This Amendment and Restatement
-------------
shall be governed by and construed in accordance with the laws of the
State of New York.
SECTION 18. Counterparts; Effectiveness. This Amendment and
---------------------------
Restatement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Amendment and
Restatement shall become effective as of the date (the "1998 Effective
Date", which must be no later than June 26, 1998) on which each of the
following conditions shall have been satisfied: (i) receipt by the
Administrative Agent of duly executed counterparts hereof signed by
each of the parties hereto (or, in the case of any Buyer as to which
an executed counterpart shall not have been received, the
Administrative Agent shall have received telegraphic, telex or other
written confirmation from such Buyer of execution of a counterpart
hereof by such Buyer);
(ii) receipt by the Administrative Agent of new Buyer's
Certificates for the Buyers;
(iii) receipt by the Administrative Agent of (x) a
certificate of the secretary or an assistant secretary of BSC
certifying as of the 1998 Effective Date (A) as to no
amendments to the certificate of incorporation of BSC; (B) as
to no liquidation or dissolution proceeding; (C) as to the
occurrence of the Lukens Merger; and (D) a copy of the
By-laws of BSC; (y) the certificate of incorporation of BSC
certified as of a date reasonably near the 1998 Effective
Date by the Secretary of State of the State of Delaware; and
(z) a good standing certificate for BSC issued by the
Secretary of State of the State of Delaware, dated a date
reasonably near the 1998 Effective Date;
(iv) receipt by the Administrative Agent of (A) a good
standing certificate for BSF issued by the State Department
of Assessments and Taxation of Maryland dated a date
reasonably near the 1998 Effective Date; (B) a certificate of
the Members certifying as of the 1998 Effective Date (i) as
to no amendments to the Articles of Organization of BSF
(other than an amendment to incorporate Lukens Receivables);
(ii) as to no
9
<PAGE>
dissolution proceeding; and (iii) a copy of the Operating
Agreement of BSF (with an amendment to incorporate Lukens
Receivables); (C) a good standing certificate for each
Special Purpose Member issued by the State Department of
Assessments and Taxation of Maryland, dated a date reasonably
near the 1998 Effective Date; (D) a certificate of the
secretary or an assistant secretary of each Special Purpose
Member certifying as of the 1998 Effective Date (i) as to no
amendments to the Articles of Incorporation of such Special
Purpose Member (other than an amendment to incorporate Lukens
Receivables); (ii) as to no liquidation or dissolution
proceeding; and (iii) a copy of the By-laws of such Special
Purpose Member;
(v) receipt by the Administrative Agent of (x) certified
resolutions of the board of directors of BSC or a duly
authorized committee thereof, authorizing the execution,
delivery and performance by BSC of this Amendment and
Restatement, the Purchase and Sale Agreement Amendment (as
defined below) and the BSC-Lukens Purchase and Sale Agreement
and (y) a certificate setting forth the name and specimen
signature of each officer of BSC authorized on its behalf to
execute such agreements;
(vi) receipt by the Administrative Agent of certified
resolutions of the Members of BSF, authorizing the execution,
delivery and performance by BSF of this Amendment and
Restatement and the Purchase and Sale Agreement Amendment;
(vii) receipt by the Administrative Agent of (x)
certified resolutions of the board of directors of each
Special Purpose Member or a duly authorized committee
thereof, authorizing the execution, delivery and performance
by such Member of this Amendment and Restatement and the
Purchase and Sale Agreement Amendment and (y) a certificate
setting forth the name and specimen signature of each officer
of such Member authorized on its behalf to execute such
agreements;
(viii) BSC shall have paid to the Administrative Agent
for the several accounts of the Buyers such participation
fees as are set forth in Schedule I attached to the Amendment
and Restatement dated as of June 19, 1998 of the Inventory
Credit Agreement;
(ix) BSF shall have paid to the Administrative Agent,
for its own account as Administrative Agent and Structuring
and Collateral Agent and the account of J. P. Morgan
Securities Inc. as Arranger, such fees as are agreed to
between BSF and the Administrative Agent in a separate
letter;
10
<PAGE>
(x) receipt by the Administrative Agent of evidence
satisfactory to it that S&P has confirmed the AAA rating of
the Buyer's Certificates after giving effect to the
transactions contemplated hereby and that BSF has paid any
fees and expenses of S&P in connection with obtaining such
confirmation;
(xi) an amendment to the Purchase and Sale Agreement
substantially in the form of Annex II hereto (the "Purchase
and Sale Agreement Amendment") shall have been duly executed
and delivered by each of the parties thereto, and the
Administrative Agent shall have received an executed original
thereof;
(xii) the BSC-Lukens Purchase and Sale Agreement
substantially in the form of Annex I hereto shall have been
duly executed and delivered by each of the parties thereto,
and the Administrative Agent shall have received an executed
original thereof;
(xiii) receipt by the Administrative Agent of (v) a
certificate of the secretary or an assistant secretary of
Lukens certifying as of the 1998 Effective Date (A) as to no
amendments to the certificate of incorporation of Lukens; (B)
as to no liquidation or dissolution proceeding; and (C) a
copy of the By-laws of Lukens; (w) the certificate of
incorporation of Lukens certified as of a date reasonably
near the 1998 Effective Date by the Secretary of State of the
Commonwealth of Pennsylvania; (x) a good standing certificate
for Lukens issued by the Secretary of State of the
Commonwealth of Pennsylvania, dated a date reasonably near
the 1998 Effective Date;(y) certified resolutions of the
board of directors of Lukens or a duly authorized committee
thereof, authorizing the execution, delivery and performance
by Lukens of the BSC-Lukens Purchase and Sale Agreement and
(z) a certificate setting forth the name and specimen
signature of each officer of Lukens authorized on its behalf
to execute the BSC-Lukens Purchase and Sale Agreement;
(xiv) receipt by the Administrative Agent of an executed
and completed Perfection Certificate substantially in the
form of Annex I to the BSC-Lukens Purchase and Sale
Agreement, and such other information as the Administrative
Agent may reasonably request with respect to the Lukens
Receivables relevant to the transactions contemplated hereby;
(xv) receipt by the Administrative Agent of copies of
proper financing statements (Form UCC-1) naming Lukens as the
seller of Lukens Receivables under the BSC-Lukens Purchase
and Sale Agreement, BSC as initial purchaser thereof, BSF as
the assignee of BSC and the
11
<PAGE>
Collateral Agent as assignee of BSF, or other similar
instruments or documents as may be necessary or, in the
opinion of the Collateral Agent or its counsel, desirable for
filing under the UCC of all appropriate jurisdictions to
evidence and perfect BSF's ownership interest in such Lukens
Receivables;
(xvi) receipt by the Administrative Agent of executed
financing statements (Form UCC-3) necessary (if any) to
release all security interests and other rights of any Person
previously granted by Lukens in the Lukens Receivables sold
to BSC under the BSC-Lukens Purchase and Sale Agreement,
related Contracts or goods the sale of which may give rise to
a Lukens Receivable;
(xvii) receipt by the Administrative Agent of requests
for information or copies (Form UCC-11) (or a similar search
report certified by parties acceptable to Collateral Agent or
its counsel) dated a date reasonably near the 1998 Effective
Date listing all effective financing statements which name
Lukens (under its present name and any previous name) as
debtor and which are filed in jurisdictions in which the
filings were made pursuant to clause (xv) above, together
with copies of such financing statements (none of which,
unless subject to a release referred to in clause (xvi)
above, shall cover any Lukens Receivables sold to BSC under
the BSC-Lukens Purchase and Sale Agreement or Contracts
relating thereto which, or goods the sale of which, may give
rise to such a Lukens Receivable);
(xviii) receipt by the Administrative Agent of copies of
such additional financing statements (Form UCC-1) naming BSC
and BSF as debtors or such amendments to existing financing
statements (Form UCC-3) filed naming BSC and BSF as debtors
or sellers as maybe necessary or, in the opinion of the
Collateral Agent or its counsel, desirable for filing under
the UCC of all appropriate jurisdictions on account of the
amendments made by this Amendment and Restatement;
(xix) receipt by the Administrative Agent of opinions of
counsel reasonably satisfactory to the Administrative Agent;
(xx) receipt by the Administrative Agent of a letter
from BSC's independent auditor confirming the
characterization of the transfer of Receivables from BSC to
BSF as a sale under GAAP and the transfer of Lukens
Receivables from Lukens to BSC as a sale under GAAP and a
letter from BSF's independent auditor confirming the
characterization of
12
<PAGE>
each transfer of an interest in Receivables from BSF to the
Buyers as a sale under GAAP;
(xxi) receipt by the Administrative Agent of (A) a
certificate dated the 1998 Effective Date signed by the Chief
Financial Officer, Treasurer or Controller of BSC as to the
accuracy of the representations and warranties set forth in
Section 13 of this Amendment and Restatement and (B) a
certificate dated the 1998 Effective Date executed by the
Special Purpose Members as to the accuracy of the
representation and warranties set forth in Section 13 of this
Amendment and Restatement;
(xxii) receipt by the Administrative Agent of a revised
perfection certificate under the Purchase and Sale Agreement
making the information set forth regarding BSC true and
correct as of the 1998 Effective Date; and
(xxiii) the Amendment and Restatement dated as of June
19, 1998 of the Inventory Credit Agreement shall have become,
or concurrently shall become, effective.
The Administrative Agent shall promptly notify the parties
hereto of the effectiveness of this Amendment and Restatement, and
such notice shall be conclusive and binding on all parties hereto.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers
as of the day and year first above written.
BETHLEHEM STEEL CORPORATION
By: /s/ G.L. Millenbruch
--------------------------
Title: Authorized Agent
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
Telephone: 410-388-7781
Facsimile: 410-388-7783
Attention: D.K. Schoenen, Authorized
Agent
BETHLEHEM STEEL CREDIT
AFFILIATE ONE, INC.
By: /s/ G.L. Millenbruch
--------------------------
Title: Authorized Agent
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
Telephone: 410-388-7781
Facsimile: 410-388-7783
Attention: D.K. Schoenen, President
14
<PAGE>
BETHLEHEM STEEL CREDIT
AFFILIATE TWO, INC.
By: /s/ G.L. Millenbruch
--------------------------
Title: Authorized Agent
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
Telephone: 410-388-7781
Facsimile: 410-388-7783
Attention: D.K. Schoenen, President
BETHLEHEM STEEL CORPORATION,
as Servicer
By: /s/ Gary L. Millenbruch
--------------------------
Title: EVP, Chief Financial Officer
and Treasurer
1170 Eighth Avenue
Bethlehem, PA 18016
Telephone: (610) 694-2603
Facsimile: (610) 694-1258
Attention: Leonard M. Anthony
15
<PAGE>
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Administrative Agent, Structuring
and Collateral Agent, and L/C
Issuing Bank
By: /s/ Robert Bottamedi
--------------------------
Title: Vice President
60 Wall Street
New York, NY 10260
Telephone:
Facsimile:
Attention:
THE CHASE MANHATTAN BANK,
as L/C Issuing Bank
By: /s/ James H. Ramage
--------------------------
Title: Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., as L/C Issuing Bank
By: /s/ Gregory L. Hong
--------------------------
Title: Deputy General Manager
16
<PAGE>
BUYERS:
Commitment: $45,333,333.33 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ Robert Bottamedi
--------------------------
Title: Vice President
Commitment: $36,833,333.33 THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By: /s/ Gregory L. Hong
--------------------------
Title: Deputy General Manager
Commitment: $34,000,000.00 THE CHASE MANHATTAN BANK
By: /s/ James H. Ramage
--------------------------
Title: Vice President
Commitment: $28,333,333.33 CORESTATES BANK, N.A.
(Corestates Bank, N.A. has merged into
First Union National Bank)
By: /s/ Jane Greenfield
--------------------------
Title: Vice President
17
<PAGE>
Commitment: $28,333,333.33 THE BANK OF NEW YORK
By: /s/ Peter H. Abdill
--------------------------
Title: Vice President
Commitment: $28,333,333.33 UNION BANK OF SWITZERLAND
NEW YORK BRANCH
By: /s/ Paula Mueller
--------------------------
Title: Vice President
Structured Finance
By: /s/ Lawrence M. Charleson
--------------------------
Title: Managing Director
Commitment: $25,500,000.00 THE FIRST NATIONAL BANK OF
CHICAGO
By: /s/ Wanda Malone Harrison
-------------------------
Title: Authorized Signor
Commitment: $22,666,666.67 BANK OF AMERICA NT & SA
By: /s/ Marianne Mihalik
--------------------------
Title: Attorney-in-Fact.(NY)
18
<PAGE>
Commitment: $22,666,666.67 NATIONSBANK, N.A.
By: /s/ Philip S. Durand
--------------------------
Title: Vice President
Commitment: $14,166,666.67 BANK AUSTRIA
AKTIENGESELLSCHAFT
By: /s/ J. Anthony Seay
-------------------------
Title: First Vice Preisdent
Bank Austria, AG
By: /s/ C. Miller
--------------------------
Title: Assistant Vice President
Commitment: $14,166,666.67 SUMMIT BANK
By: /s/ David B. Kennedy
--------------------------
Title: Regional Vice President
Commitment: $14,166,666.67 THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By: /s/ Kazuyoshi Ogawa
--------------------------
Title: Joint General Manager
19
<PAGE>
Commitment: $14,166,666.67 WILMINGTON TRUST
By: /s/ Joseph M. Finley
--------------------------
Title: Vice President
Commitment: $11,333,333.33 THE INDUSTRIAL BANK OF
LIMITED
By: /s/ John Dippo
--------------------------
Title: Senior Vice President
TOTAL
COMMITMENTS: $340,000,000
<PAGE>
Exhibit 4(e)
CONFORMED COPY
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT dated as
of June 17, 1999 among BETHLEHEM STEEL FUNDING, LLC, BETHLEHEM STEEL
CREDIT AFFILIATE ONE, INC., BETHLEHEM STEEL CREDIT AFFILIATE TWO,
INC., BETHLEHEM STEEL CORPORATION, as Servicer, the financial
institutions listed on the signature pages hereof, as Buyers, and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent and
Structuring and Collateral Agent.
W I T N E S S E T H :
WHEREAS, the parties hereto have heretofore entered into a
Receivables Purchase Agreement dated as of September 12, 1995, which
was amended and restated by an Amended and Restated Receivables
Purchase Agreement dated as of June 5, 1997 and an Amended and
Restated Receivables Purchase Agreement dated as of June 19, 1998 (as
so amended and restated, the "Agreement"), and
WHEREAS, the parties hereto desire to amend the Agreement to
add new Buyers and to adjust the Commitments (as defined in the
Agreement) as set forth on the signature pages hereto and to restate
the Agreement in its entirety to read as set forth in the Agreement
with the amendments specified below; NOW, THEREFORE, the parties
hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
-----------------------
specifically defined herein, each capitalized term used herein which
is defined in the Agreement shall have the meaning assigned to such
term in the Agreement. Each reference to "hereof", "hereunder",
"herein" and "hereby" and each other similar reference and each
reference to "this Agreement" and each other similar reference
contained in the Agreement shall from and after the effective date
hereof refer to the Agreement as amended and restated hereby.
SECTION 2. Definitions.
-----------
Section 1.1 of the Agreement is amended as follows:
<PAGE>
Clause (i) of the definition of "Commitment" is
superceded by the provisions of Section 3 of this Amendment
and Restatement.
SECTION 3. Changes in Commitments. With effect from and
----------------------
including the 1999 Effective Date (as defined in Section 6 of this
Agreement and Restatement), (i) each Person listed on the signature
pages hereof that is not a party to the Agreement (a "New Buyer")
shall become a Buyer party to the Agreement and (ii) the Commitment of
each Buyer shall be the amount set forth opposite the name of such
Buyer on the signature pages hereof. The calculation of accrued Fees
payable to each Buyer on the first Quarterly Date or other date after
the 1999 Effective Date on which Fees are payable shall reflect any
additions to and changes in the Commitments of the Buyers made
pursuant to this Section 3 and, notwithstanding the provisions of
Section 2.7 of the Agreement, shall be paid to each Buyer accordingly.
If any Tranches are outstanding on the 1999 Effective Date and, as a
result of additions to and changes in the Commitments of the Buyers,
such Tranches are not held by the Buyers ratably in proportion to
their Commitments, such Tranches shall continue to be held on a
non-pro-rata basis until the next Yield Accrual Period therefor
starts, at which time the Buyers (including New Buyers) shall, as
appropriate, buy and sell such Tranches such that, after giving effect
to such purchases, such Tranches are held ratably, and Section 2.8 of
the Agreement shall apply to any such purchases.
SECTION 4. Representations and Warranties. BSF and BSC each
------------------------------
hereby represents and warrants that as of the 1999 Effective Date
(after giving effect hereto):
(a) no Termination Event or Potential Termination Event will
have occurred and be continuing; and
(b) the representations and warranties set forth in Articles
5 and 7 of the Agreement, Article IV of the Purchase and Sale
Agreement and Article IV of the BSC-Lukens Purchase and Sale
Agreement, after giving effect to this Amendment and Restatement, will
be true and correct.
SECTION 5. Governing Law. This Amendment and Restatement
-------------
shall be governed by and construed in accordance with the laws of the
State of New York.
SECTION 6. Counterparts; Effectiveness. This Amendment and
---------------------------
Restatement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Amendment and
Restatement shall become effective as of the date (the "1999 Effective
Date", which must be no later than June 30, 1999) on which each of the
following conditions shall have been satisfied:
2
<PAGE>
(i) receipt by the Administrative Agent of duly executed
counterparts hereof signed by each of the parties hereto (or,
in the case of any Buyer as to which an executed counterpart
shall not have been received, the Administrative Agent shall
have received telegraphic, telex or other written
confirmation from such Buyer of execution of a counterpart
hereof by such Buyer);
(ii) receipt by the Administrative Agent of new Buyer's
Certificates for the Buyers;
(iii) receipt by the Administrative Agent of (x) a
certificate of the secretary or an assistant secretary of BSC
certifying as of the 1999 Effective Date (A) as to no
amendments to the certificate of incorporation or By-laws of
BSC and (B) as to no liquidation or dissolution proceeding;
(y) the certificate of incorporation of BSC certified as of a
date reasonably near the 1999 Effective Date by the Secretary
of State of the State of Delaware; and (z) a good standing
certificate for BSC issued by the Secretary of State of the
State of Delaware, dated a date reasonably near the 1999
Effective Date;
(iv) receipt by the Administrative Agent of (A) a good
standing certificate for BSF issued by the State Department
of Assessments and Taxation of Maryland dated a date
reasonably near the 1999 Effective Date; (B) a certificate of
the Members certifying as of the 1999 Effective Date (i) as
to no amendments to the Articles of Organization or Operating
Agreement of BSF and (ii) as to no dissolution proceeding;
(C) a good standing certificate for each Special Purpose
Member issued by the State Department of Assessments and
Taxation of Maryland, dated a date reasonably near the 1999
Effective Date; (D) a certificate of the secretary or an
assistant secretary of each Special Purpose Member certifying
as of the 1999 Effective Date (i) as to no amendments to the
Articles of Incorporation or By-laws of such Special Purpose
Member and (ii) as to no liquidation or dissolution
proceeding;
(v) receipt by the Administrative Agent of certified
resolutions of the Members of BSF, authorizing the execution,
delivery and performance by BSF of this Amendment and
Restatement;
(vi) receipt by the Administrative Agent of (x)
certified resolutions of the board of directors of each
Special Purpose Member or a duly authorized committee
thereof, authorizing the execution, delivery and performance
by such Member of this Amendment and Restatement and (y)
3
<PAGE>
a certificate setting forth the name and specimen signature
of each officer of such Member authorized on its behalf to
execute such agreements;
(vii) receipt by the Administrative Agent of (A) a
certificate dated the 1999 Effective Date signed by the Chief
Financial Officer, Treasurer or Controller of BSC as to the
accuracy of the representations and warranties set forth in
Section 4 of this Amendment and Restatement and (B) a
certificate dated the 1999 Effective Date executed by the
Special Purpose Members as to the accuracy of the
representation and warranties set forth in Section 4 of this
Amendment and Restatement;
(viii) receipt by the Administrative Agent for the
account of each Buyer of an amendment fee in an amount equal
to 0.1% of such Buyer's Commitment as set forth on the
signature pages hereto;
(ix) the Amendment and Restatement dated as of June 17,
1999 of the Inventory Credit Agreement shall have become, or
concurrently shall become, effective; and
(x) an amendment to the Purchase and Sale Agreement in
the form of Annex I hereto shall have been duly executed and
delivered by each of the parties thereto, and the
Administrative Agent shall have received an executed original
thereof.
The Administrative Agent shall promptly notify the parties
hereto of the effectiveness of this Amendment and Restatement, and
such notice shall be conclusive and binding on all parties hereto.
BSC hereby also agrees to deliver to the Administrative Agent
no later than July 7, 1999: (x) certified resolutions of the board of
directors of BSC or a duly authorized committee thereof, authorizing
the execution, delivery and performance by BSC of this Amendment and
Restatement and (y) a certificate setting forth the name and specimen
signature of each officer of BSC authorized on its behalf to execute
such agreements.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment and Restatement to be duly executed by their respective
authorized officers as of the day and year first above written.
BETHLEHEM STEEL FUNDING, LLC
By: /s/ Gary L. Millenbruch
----------------------------
Title: Authorized Agent
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
Telephone: 410-388-7780
Facsimile: 410-388-7783
Attention: D.K. Schoenen, Authorized Agent
BETHLEHEM STEEL CREDIT AFFILIATE
ONE, INC.
By: /s/ Gary L. Millenbruch
----------------------------
Title: Authorized Agent
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
Telephone: 410-388-7781
Facsimile: 410-388-7783
Attention: D.K. Schoenen, President
5
<PAGE>
BETHLEHEM STEEL CREDIT AFFILIATE
TWO, INC.
By: /s/ Gary L. Millenbruch
----------------------------
Title: Authorized Agent
5111 North Point Boulevard
Sparrows Point, MD 21219-1014
Telephone: 410-388-7781
Facsimile: 410-388-7783
Attention: D.K. Schoenen, President
BETHLEHEM STEEL CORPORATION,
as Servicer
By: /s/ Gary L. Millenbruch
-----------------------------
Title: EVP, Chief Financial Officer
and Treasurer
1170 Eighth Avenue
Bethlehem, PA 18016
Telephone: (610) 694-2603
Facsimile: (610) 694-1258
Attention: Leonard M. Anthony
6
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Administrative Agent, Structuring and
Collateral Agent, and L/C Issuing Bank
By: /s/ Robert S. Jones
---------------------------------
Title: Vice President
60 Wall Street
New York, NY 10260
Telephone:
Facsimile:
Attention:
7
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
THE CHASE MANHATTAN BANK,
as L/C Issuing Bank
By: /s/ James H. Ramage
--------------------------
Title: Vice President
8
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., as L/C Issuing Bank
By: /s/ Gregory L. Hong
-----------------------------
Title: Deputy General Manager
9
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
Commitment: $41,212,121.21 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ Robert S. Jones
--------------------------
Title: Vice President
10
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
Commitment: $36,833,333.33 THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By: /s/ Gregory L. Hong
----------------------------
Title: Deputy General Manager
11
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
Commitment: $30,909,090.91 THE CHASE MANHATTAN BANK
By: /s/ James H. Ramage
----------------------------
Title: Vice President
12
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
Commitment: $25,757,575.76 FIRST UNION NATIONAL BANK
(successor to Corestates Bank, N.A.)
By: /s/ William M. Hogan
----------------------------
Title: Vice President
13
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
Commitment: $25,757,575.76 THE BANK OF NEW YORK
By: /s/ Walter C. Parelli
-------------------------
Title: Vice President
14
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
Commitment: $25,757,575.76 UBS AG, Stamford Branch
By: /s/ Philippe R. Sandmeier
---------------------------
Title: Director
By: /s/ Paula Mueller
----------------------------
Title: Director
15
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
Commitment: $23,181,818.19 THE FIRST NATIONAL BANK OF
CHICAGO
By: /s/ Jeffrey Lubatkin
----------------------------
Title: Vice President
16
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
Commitment: $41,212,121.21 BANK OF AMERICA NT & SA
By: /s/ Thomas Blake
--------------------------------
Title: Senior Vice President
17
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
Commitment: $12,106,060.60 SALOMON BROTHERS HOLDING
COMPANY INC.
By: /s/ Timothy L. Freeman
-------------------------------
Title: Attorney-in-Fact
18
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
Commitment: $15,454,545.45 SOCIETE GENERALE
By: /s/ Joseph A. Philbin
---------------------------------
Title: Director
19
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
Commitment: $12,878,787.88 BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC. (as
assignee from Bank Austria AG)
By: /s/ Amy Rick
-----------------------------
Title: Vice President
By: /s/ Frederic W. Hall
-----------------------------
Title: Vice President
20
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
Commitment: $12,878,787.88 SUMMIT BANK
By: /s/ David B. Kennedy
-------------------------------
Title: Regional Vice President
21
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
Commitment: $12,878,787.88 THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By: /s/ C. Michael Garrido
--------------------------------
Title: Senior Vice President
22
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
Commitment: $12,878,787.88 WILMINGTON TRUST
By: /s/ Joseph M. Finley
-----------------------------
Title: Vice President
23
<PAGE>
Signature page to June 17, 1999 Bethlehem Steel
Amended and Restated Receivables Purchase Agreement
Commitment: $10,303,030.30 THE INDUSTRIAL BANK OF JAPAN
LIMITED
By: /s/ John Dippo
------------------------------
Title: Senior Vice President
<PAGE>
Exhibit 10(i)
FORM OF INDEMNIFICATION ASSURANCE AGREEMENT
-------------------------------------------
[Bethlehem Steel Corporation]
[Name and Address of
Director or Officer]
Dear :
This letter will confirm the agreement and understanding between
Bethlehem Steel Corporation (the "Company") and you regarding your service as a
[Director/Officer] of the Company.
It is and has been the policy of the Company to indemnify its officers
and directors against any costs, expenses and other liabilities to which they
may become subject by reason of their service to the Company, and to insure its
directors and officers against such liabilities, as and to the extent permitted
by applicable law and in accordance with the principles of good corporate
governance. In this regard, the Company's By-laws (Article IX) require that
the Company indemnify and advance costs and expenses to (collectively,
"indemnify") its directors and officers as permitted by Delaware law. A copy
of the relevant provisions of the Company's By-laws, as amended, is attached
hereto.
In consideration of your service as a [Director/Officer] of the
Company, the Company shall indemnify you, and hereby confirms its agreement to
indemnify you, to the full extent provided by applicable law and the By-laws of
the Company as currently in effect. In particular, as provided by the By-laws,
the Company shall make any necessary determination as to your entitlement to
indemnification in respect of any liability within 60 days of receiving a
written request from you for indemnification against such liability. You have
agreed to provide the Company with such information or documentation as the
Company may reasonably request to evidence the liabilities against which
indemnification is sought or as may be necessary to permit the Company to
submit a claim in respect thereof under any applicable directors and officers
liability insurance or other liability insurance policy. You have further
agreed to cooperate with the Company in the making of any determination
regarding your entitlement to indemnification. If the Company does not make a
determination within the required 60-day period, a favorable determination will
be deemed to be made, and you shall be entitled to payment, subject only to
your written agreement to refund such payment if a contrary determination is
later made and the delay was by reason of the inability of the Company to make
such determination within the 60-day period. In the event the Company shall
determine that you are not entitled to indemnification, the Company shall give
you written notice thereof specifying the reason
<PAGE>
therefor, including any determinations of fact or conclusions of law relied
upon in reaching such determination. Notwithstanding any determination made by
the Company that you are not entitled to indemnification, you shall be entitled
to seek a de novo judicial determination of your right to indemnification under
the By-laws and this agreement by commencing an appropriate action therefor
within 180 days after the Company shall notify you of its determination. The
Company shall not oppose any such action by reason of any prior determination
made by it as to your right to indemnification or, except in good faith, raise
any objection not specifically relating to the merits of your indemnification
claim or not considered by the Company in making its own determination. In any
such proceeding, the Company shall bear the burden of proof in showing that
your conduct did not meet the applicable standard of conduct required by the
By-laws or applicable law for indemnification. It is understood that, as
provided in Section 4 of Article IX of the By-laws, any expenses incurred by
you in any investigation or proceeding by the Company or before any court
commenced for the purpose of making any such determination shall be reimbursed
by the Company. No future amendment of the By-laws shall diminish your rights
under this agreement, unless you shall have consented to such amendment.
Your right to indemnification as aforesaid shall be in addition to any
right to remuneration to which you may from time to time be entitled as a
[Director/Officer].
It is understood and agreed that your right to indemnification shall
not entitle you to continue in your present position with the Company or any
future position to which you may be appointed or elected and that you shall be
entitled to indemnification under the By-laws only in respect to liabilities
arising out of acts or omissions or alleged acts or omissions by you as a
[Director/Officer] or as otherwise provided by the By-laws, but you shall be
entitled to such indemnification with respect to any such liability, whether
incurred or arising during or after your service as a [Director/Officer] and
whether before or after the date of this letter, in respect of any claim,
cause, action, proceeding or investigation, whether commenced, accruing or
arising during or after your service as a [Director/Officer] and whether before
or after the date of this letter.
In further consideration of your service as a [Director/Officer] of
the Company, the Company in connection with its indemnification policy has
arranged for the issuance of, and you shall be entitled to the benefits of, an
"Irrevocable Straight Standby Letter of Credit" issued by Morgan Guaranty Trust
Company of New York. Said letter of credit has been arranged for the purpose
of assuring payment to you, certain other current and former directors and
officers of the Company and future directors, officers and employees of the
Company and its affiliates designated by the Board of Directors of the Company
("Indemnitees") of any amounts to which you and they may become entitled as
indemnification pursuant to the By-laws in the event that, for any reason, the
Company shall
2
<PAGE>
fail promptly to pay to you, upon written request therefor, any such
indemnification, said assurance for all Indemnitees being limited at any time
to $5,000,000 in aggregate amount. The Company understands that there has been
established an irrevocable trust, the Bethlehem Indemnification Trust, for
which First Valley Bank, Bethlehem, Pennsylvania, acts as trustee, for the
purpose, among other things, of administering the respective interests of the
Indemnitees in said letter of credit, and the Company has consented to the
issuance and delivery of said letter of credit to the Bethlehem Indemnification
Trust. Unless renewed or replaced by a comparable letter of credit in the
amount of $5,000,000, the full undrawn amount of said letter of credit may be
drawn upon prior to the expiration thereof. Drawings on said letter of credit
may be arranged through the Bethlehem Indemnification Trust, as provided by the
trust agreement therefor, by contacting the First Valley Bank, One Bethlehem
Plaza, Bethlehem, Pennsylvania 18018. You have agreed to repay to the
Bethlehem Indemnification Trust any amount paid to you by such trust (i) if it
shall ultimately be determined (by the Company and upon expiration of the
180-day period for commencement of a judicial proceeding for a de novo
determination or by a final judicial determination) that you are not entitled
under this agreement or otherwise to indemnification from Bethlehem in respect
of the liability for which you shall have received payment or (ii) if you shall
subsequently receive payment in respect of such liability from any liability
insurer or from Bethlehem or any successor thereto. It is agreed that, in
addition to the rights of any other person to do so, the Company shall have the
right to compel any repayment to the Bethlehem Indemnification Trust so
required.
This agreement shall terminate upon the later of (i) the tenth
anniversary of the date on which you shall cease to be a director or officer of
the Company or (ii) the final termination or resolution of all actions, suits,
proceedings or investigations commenced within such ten-year period and
relating to the Company or any of its affiliates or your services thereto to
which you may be or become a party and of all claims for indemnification by you
under this agreement or against the Bethlehem Indemnification Trust asserted
within such ten- year period.
This agreement supersedes any and all prior agreements between the
Company and you relating to the subject matter hereof. It is understood and
agreed that this agreement is binding upon the Company and its successors and
shall inure to your benefit and that of your heirs, distributees and legal
representatives. This agreement, and the interpretation and enforcement
hereof, shall be governed by the laws of the State of Delaware. In
confirmation of the provisions of the Company's By-laws, the Company hereby
agrees to pay, and you shall be held harmless from and indemnified against, any
costs and expenses (including attorneys' fees) which you may reasonably incur
in connection with any challenge to the validity of, or the performance and
enforcement of, this agreement, in the same manner as provided by the Company's
By-laws.
3
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly countersign the enclosed copies of this letter, whereupon
this letter shall become a binding agreement in accordance with the laws of the
State of Delaware.
Very truly yours,
BETHLEHEM STEEL CORPORATION
By:
--------------------------
- -------------------------------
[Signature of Director/Officer]
4
<PAGE>
Schedule A
----------
1. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Curtis H. Barnette.
2. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and George P. Jenkins.
3. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Reginald H. Jones.
4. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Winthrop Knowlton.
5. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Dean P. Phypers.
6. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Walter F. Williams.
7. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Lonnie A. Arnett.
8. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and D. Sheldon Arnot.
9. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Robert W. Cooney.
10. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and George T. Fugere.
11. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and John A. Jordan, Jr.
12. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and James F. Kegg.
13. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and David H. Klinges.
14. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and Gary L. Millenbruch.
<PAGE>
15. Indemnification Assurance Agreement dated August 22, 1986 between
Bethlehem Steel Corporation and C. Adams Moore.
16. Indemnification Assurance Agreement dated December 29, 1986 between
Bethlehem Steel Corporation and Larry L. Adams.
17. Indemnification Assurance Agreement dated December 29, 1986 between
Bethlehem Steel Corporation and Benjamin C. Boylston.
18. Indemnification Assurance Agreement dated January 28, 1987 between
Bethlehem Steel Corporation and Herman E. Collier.
19. Indemnification Assurance Agreement dated January 28, 1987 between
Bethlehem Steel Corporation and Edwin A. Gee.
20. Indemnification Assurance Agreement dated January 28, 1987 between
Bethlehem Steel Corporation and Thomas L. Holton.
21. Indemnification Assurance Agreement dated March 1, 1987 between
Bethlehem Steel Corporation and Roger P. Penny.
22. Indemnification Assurance Agreement dated May 27, 1987 between
Bethlehem Steel Corporation and Andrew M. Weller.
23. Indemnification Assurance Agreement dated January 27, 1988 between
Bethlehem Steel Corporation and John B. Curcio.
24. Indemnification Assurance Agreement dated January 27, 1988 between
Bethlehem Steel Corporation and William C. Hittinger.
25. Indemnification Assurance Agreement dated January 27, 1988 between
Bethlehem Steel Corporation and William A. Pogue.
26. Indemnification Assurance Agreement dated September 27, 1989 between
Bethlehem Steel Corporation and Robert McClements, Jr.
27. Indemnification Assurance Agreement dated September 27, 1989 between
Bethlehem Steel Corporation and John L. Kluttz.
2
<PAGE>
28. Indemnification Assurance Agreement dated June 27, 1990 between
Bethlehem Steel Corporation and Duane R. Dunham.
29. Indemnification Assurance Agreement dated September 26, 1990 between
Bethlehem Steel Corporation and John F. Ruffle.
30. Indemnification Assurance Agreement dated May 1, 1991 between
Bethlehem Steel Corporation and Carl F. Meitzner.
31. Indemnification Assurance Agreement dated July 1, 1991 between
Bethlehem Steel Corporation and Walter N. Bargeron.
32. Indemnification Assurance Agreement dated March 1, 1992 between
Bethlehem Steel Corporation and David P. Post.
33. Indemnification Assurance Agreement dated November 1, 1992 between
Bethlehem Steel Corporation and Stephen G. Donches.
34. Indemnification Assurance Agreement dated November 1, 1992 between
Bethlehem Steel Corporation and William H. Graham.
35. Indemnification Assurance Agreement dated November 1, 1992 between
Bethlehem Steel Corporation and G. Penn Holsenbeck.
36. Indemnification Assurance Agreement dated March 1, 1993 between
Bethlehem Steel Corporation and Benjamin R. Civiletti.
37. Indemnification Assurance Agreement dated March 1, 1993 between
Bethlehem Steel Corporation and Worley H. Clark.
38. Indemnification Assurance Agreement dated March 1, 1993 between
Bethlehem Steel Corporation and Harry P. Kamen.
39. Indemnification Assurance Agreement dated April 28, 1993 between
Bethlehem Steel Corporation and Joseph F. Emig.
40. Indemnification Assurance Agreement dated April 28, 1993 between
Bethlehem Steel Corporation and Andrew R. Futchko.
3
<PAGE>
41. Indemnification Assurance Agreement dated April 28, 1993 between
Bethlehem Steel Corporation and Timothy Lewis.
42. Indemnification Assurance Agreement dated April 28, 1993 between
Bethlehem Steel Corporation and William E. Wickert, Jr.
43. Indemnification Assurance Agreement dated March 1, 1994 between
Bethlehem Steel Corporation and Augustine E. Moffitt, Jr.
44. Indemnification Assurance Agreement dated March 16, 1994 between
Bethlehem Steel Corporation and Lewis B. Kaden.
45. Indemnification Assurance Agreement dated January 31, 1996 between
Bethlehem Steel Corporation and Shirley D. Peterson.
46. Indemnification Assurance Agreement dated May 1, 1996 between
Bethlehem Steel Corporation and Gregory F. Paolini.
47. Indemnification Assurance Agreement dated May 1, 1996 between
Bethlehem Steel Corporation and Malcolm J. Roberts.
48. Indemnification Assurance Agreement dated May 1, 1996 between
Bethlehem Steel Corporation and Robert A. Rudzki.
49. Indemnification Assurance Agreement dated May 1, 1996 between
Bethlehem Steel Corporation and Dorothy L. Stephenson.
50. Indemnification Assurance Agreement dated June 5, 1998 between
Bethlehem Steel Corporation and Van R. Reiner.
51. Indemnification Assurance Agreement dated June 17, 1998 between
Bethlehem Steel Corporation and William M. Landuyt.
52. Indemnification Assurance Agreement dated February 19, 1999 between
Bethlehem Steel Corporation and Carl W. Johnson.
53. Indemnification Assurance Agreement dated October 1, 1999 between
Bethlehem Steel Corporation and Leonard M. Anthony.
54. Indemnification Assurance Agreement dated October 1, 1999 between
4
<PAGE>
Bethlehem Steel Corporation and Thomas J. Conarty, Jr..
55. Indemnification Assurance Agreement dated October 1, 1999 between
Bethlehem Steel Corporation and David M. Beinner.
5
<PAGE>
<PAGE>
Exhibit 10(k)
AMENDED CONSULTING AGREEMENT
AND
COVENANT NOT TO COMPETE
AMENDED AGREEMENT, made this 28th day of July, 1999, by and between
BETHLEHEM STEEL CORPORATION, a Delaware corporation ("Bethlehem"), and Curtis
H. Barnette, residing at 1112 prospect Avenue, Bethlehem, PA 18018
("Consultant").
W I T N E S S E T H:
-------------------
WHEREAS, in recognition of the continued value to Bethlehem of
Consultant's extensive knowledge and expertise concerning the business of
Bethlehem, Bethlehem desires to be able to retain the Consultant after his
termination of employment to perform consulting services for Bethlehem, and the
Consultant desires to accept such position all in accordance with the terms and
conditions hereof; and
WHEREAS, Bethlehem and the Consultant desire to amend the Agreement
dated July 1, 1993 previously entered into by Bethlehem and the Consultant with
respect to the matters covered herein to reflect the agreed upon compensation
arrangement for the Consultant's services and certain other matters;
NOW, THEREFORE, in consideration of the premises and of the covenants
and conditions hereinafter set forth, the parties hereto agree as follows:
1. Retention of Consultant. Bethlehem agrees to retain Consultant to
-----------------------
perform and Consultant agrees to perform, consulting services for Bethlehem
upon the terms and conditions hereinafter set forth.
<PAGE>
2
2. Term. The term of this Amended Agreement shall be effective on
----
the date of the Consultant's termination of employment and shall extend to the
second anniversary of the date of the Consultant's termination of employment,
and shall thereafter be extended on a year-to-year basis, subject to
termination as provided in Section 9 of this Amended Agreement.
Notwithstanding anything to the contrary stated herein, the rights and
obligations of the parties provided in Section 7 of this Amended Agreement and
other Sections of this Amended Agreement relating to said matters dealt with in
Section 7 of this Amended Agreement shall not be affected by the termination of
this Amended Agreement prior to the fifth anniversary of the Consultant's
termination of employment and shall continue to be effective after such
termination of this Amended Agreement until the fifth anniversary of the
Consultant's termination of employment.
3. Duties and Extent of Services. Consultant agrees that during the
-----------------------------
term hereof, he shall offer assistance to Bethlehem and his successor(s) as
Chairman and Chief Executive Officer of Bethlehem during the transition period
following his termination of employment and furnish consulting services to
Bethlehem with respect to the operation of Bethlehem's businesses, including
but not limited to services in the areas of corporate strategy, governance,
international trade, governmental and public affairs, union relations, legal
and community affairs, at such times as are reasonably requested by Bethlehem,
but in no event shall such time exceed 45 hours per month unless the parties
shall otherwise agree. Consultant agrees that he shall serve Bethlehem during
the term hereof faithfully, diligently and to the best of his ability under the
direction of the
<PAGE>
3
Chairman and Board of Directors of Bethlehem, and he further agrees that he
shall not, directly or indirectly, take any action or knowingly approve the
taking of any action by any other person which would injure the business of
Bethlehem or bring Bethlehem into disrepute.
Consultant shall have the right, during the term hereof, to engage or
participate in, or become employed by, or render advisory or other services in
connection with, any and all other business activities, other than for a firm,
corporation or business enterprise which then directly or indirectly competes
with any of the business operations or activities of Bethlehem as provided in
Section 7 of this Amended Agreement.
Consultant will coordinate his activities hereunder with the Senior
Vice President and Chief Administrative Officer unless otherwise designated by
the Chairman or the Board.
4. Remuneration. Bethlehem agrees to pay Consultant, as full
------------
compensation for all of the services to be rendered by Consultant under and
pursuant to this Amended Agreement, as follows:
(a) Subject to Section 10, an annual retainer fee of $200,000, payable
$50,000 quarterly in advance, shall be paid to Consultant during the term of
this Amended Agreement commencing within thirty (30) days following the
Consultant's termination of employment. No hourly fees or payments shall be
payable in addition to such annual retainer fee(s) with respect to the
Consultant's furnishing of services during the term of this Amended Agreement
unless the parties shall otherwise agree.
<PAGE>
4
(b) Bethlehem shall reimburse Consultant for all reasonable expenses
properly incurred by him on behalf of Bethlehem in the performance of his
duties hereunder, provided that proper vouchers are submitted to Bethlehem by
Consultant evidencing such expenses and the purposes for which the same were
incurred.
5. No Employment Relationship. Consultant shall be an independent
--------------------------
contractor and shall have no power to bind Bethlehem or to assume or to create
any obligation or responsibility, expressed or implied, on behalf of or in the
name of Bethlehem. It is specifically acknowledged by the parties that
Bethlehem shall not, with respect to Consultant's consultative services,
exercise such control over him as would indicate or establish that a
relationship of employer and employee exists between him and Bethlehem.
6. Confidentiality. Consultant agrees that during the period
---------------
referred to in Section 7 of this Amended Agreement, or at any time thereafter,
he will not disclose or reveal to anyone (other than persons within Bethlehem,
including its subsidiaries and affiliates, and then only as required in the
performance of his duties) any confidential information relating to the
business, techniques, products, operations and affairs of Bethlehem, which is
not generally known or recognized as standard practice.
7. Restrictive Covenant. Consultant agrees that, during the period
--------------------
beginning on the date of the Consultant's termination of employment and ending
on the later of (a) the fifth anniversary of the date of the Consultant's
termination of employment or (b) the end of the term of this Amended Agreement,
he shall not, without the prior written approval of the Board of Directors,
directly or indirectly become an officer or
<PAGE>
5
director of, or become employed by, or render advisory or other services to, or
make any financial investment in, any firm, corporation or business enterprise
directly or directly or indirectly competitive with any of the business
operations or activities of Bethlehem as currently conducted. Consultant also
agrees that, during the period this covenant is in effect and upon reasonable
request by Bethlehem, he will disclose to Bethlehem the nature and extent of
his business activities which disclosure shall be in sufficient detail to
permit Bethlehem to make a reasonable determination that his activities are in
conformance with his obligations under this Amended Agreement.
Nothing contained in this Section 7 shall prohibit or restrict the
Consultant from being employed by a law firm that may provide services to a
client which is a competitor of Bethlehem provided that the Consultant shall
not directly or indirectly assist in the providing of such services. Also,
nothing contained in this Section 7 shall prohibit or restrict the Consultant
from making any investment in a corporation or other entity whose securities
are listed on a United States or Canadian securities exchange or actively
traded in the over-the-counter market, so long as such investment does not give
the Consultant the right to control or influence the policy decisions of any
business operations or activities which are, directly or indirectly, in
competition with any of the business operations or activities of Bethlehem.
The geographical area to which this provision refers is the United
States. It is intended that the foregoing provision shall be severable and
shall apply separately and distinctly to each of the said states of the United
States and within such states to each of the counties and municipalities
therein with the same force and effect as though the said
<PAGE>
6
covenant was separately expressed with respect to each state, country and
municipality. The Consultant declares that the territorial and time
limitations under this Amended Agreement are reasonable and are properly
required for the adequate protection of Bethlehem.
8. Indemnification. Bethlehem shall indemnify and defend The
---------------
Consultant against any and all claims, actions, expenses and liabilities
related to or arising from services performed for Bethlehem by the Consultant
under this Agreement. Bethlehem shall be responsible for the defense of any
actual or threatened legal or administrative action, including any attorney's
fees incurred by the Consultant, against the Consultant to which this
indemnification provision applies, provided that the Consultant cooperates with
the defense and resolution of the action. This indemnification provision shall
be in addition to any other indemnification that may be available to the
Consultant, and shall apply provided the Consultant has acted in good faith in
what he reasonably believes to be in the best interests of Bethlehem and has
not engaged in willful misconduct.
9. Notices. Any notices and other communications which are required
-------
or permitted hereunder, shall be sufficiently given if in writing and
personally delivered or sent by registered or certified mail, postage prepaid,
return receipt requested, to the parties at their respective addresses, or to
such other address or addresses as any party shall have given notice of
pursuant hereto.
10. Termination. This Amended Agreement shall be subject to
-----------
termination as follows:
<PAGE>
7
(a) at any time, by the mutual consent of the parties, and
(b) as of the second anniversary of the date of the Consultant's
termination of employment or as of any succeeding anniversary date, by
Bethlehem or the Consultant for any reason upon ninety (90) days prior written
notice to the other party.
In the case of termination date of this Amended Agreement, the annual
retainer fee for such year of services shall be subject to pro-ration based on
the ratio of (i) the period measured from the beginning of the year to the date
of termination to (ii) the entire year.
11. Arbitration. Disputes arising out of or in connection with the
-----------
interpretation and application of this Amended Agreement shall be discussed by
the Consultant and Bethlehem in good faith negotiations for the purpose of
reaching an amicable resolution. Any such disputes which cannot be settled
amicably within thirty (30) days after written notice by one party to the other
(or after such longer period agreed to in writing by the parties), shall
thereafter be settled by binding arbitration in Bethlehem, Pennsylvania, to be
conducted pursuant to the rules and procedures then obtaining of the American
Arbitration Association and judgment on the award rendered in such arbitration
may be entered in any court of competent jurisdiction.
12. Successors. This Amended Agreement shall inure to the benefit of
----------
and shall be binding upon Consultant's heirs, executors, administrators,
successors and legal representatives, and shall inure to the benefit of and be
binding upon Bethlehem and their successors, but Consultant's obligations may
not be delegated and, except as otherwise provided herein, Consultant may not
assign, transfer, pledge, encumber,
<PAGE>
8
hypothecate or otherwise dispose of this Amended Agreement, or any of his
rights hereunder (whether by operation of law or otherwise), and any such
attempted delegation or disposition shall be null and void without effect.
13. Successor Corporations. It is understood and agreed by
----------------------
Consultant that in the event the business of Bethlehem shall be carried on by a
successor to Bethlehem, this Amended Agreement shall apply to his consulting
services for such successor corporation.
14. Severability. If at any time subsequent to the date hereof, any
------------
provision of this Amended Agreement shall be held by any court of competent
jurisdiction to be illegal, void or unenforceable, such provision shall be of
no force and effect, but the illegality or unenforceability of such provision
shall have no effect upon and shall not impair the enforceability of any other
provision of this Amended Agreement.
15. General. This Amended Agreement has been made in the
-------
Commonwealth of Pennsylvania and shall be governed by, construed and enforced
in accordance with the laws of the Commonwealth of Pennsylvania. This Amended
Agreement contains the entire agreement among the parties hereto with respect
to the transactions referred to herein or contemplated hereby and may be
amended, modified or supplemented only by a written instrument signed by each
of the parties. This Amended Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original but all of
which shall constitute but one and the same
<PAGE>
9
instrument. The paragraph headings contained in this Amended Agreement
are for convenience of reference only and shall not be a part of this Amended
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Amended
Agreement as of the day and year first above written.
BETHLEHEM STEEL CORPORATION
By: /s/ A. E. Moffitt, Jr.
-----------------------
CONSULTANT
/s/ Curtis H. Barnette
- -----------------------------
<PAGE>
Exhibit 10(l)
CONSULTING AGREEMENT
AND
COVENANT NOT TO COMPETE
AGREEMENT, made this 31st day of January, 2000, by and between
BETHLEHEM STEEL CORPORATION, a Delaware corporation ("Bethlehem"), and R. P.
Penny, residing at 1666 Country Road, Bethlehem, Pennsylvania 18015
("Consultant").
W I T N E S S E T H:
-------------------
WHEREAS, in recognition of the continued value to Bethlehem, of
Consultant's extensive knowledge and expertise concerning the business of
Bethlehem, Bethlehem desires to be able to retain the Consultant after his
termination of employment to perform consulting services for Bethlehem, and the
Consultant desires to accept such position all in accordance with the terms and
conditions hereof;
NOW, THEREFORE, in consideration of the premises and of the covenants
and conditions hereinafter set forth, the parties hereto agree as follows:
1. Retention of Consultant. Bethlehem agrees to retain Consultant to
-----------------------
perform, and Consultant agrees to perform, consulting services for Bethlehem
upon the terms and conditions hereinafter set forth.
2. Term. The retention of Consultant hereunder shall be effective on
----
the date of the Consultant's termination of employment and shall terminate on
the fourth anniversary of the date of the Consultant's termination of
employment, unless sooner terminated by mutual written consent of the parties.
<PAGE>
2
3. Duties and Extent of Services. Consultant agrees that during the
-----------------------------
term hereof, he shall furnish consulting services to Bethlehem with respect to
the operation of Bethlehem's businesses at such times as are reasonably
requested by Bethlehem, but in no event shall such time exceed 30 hours per
month unless the parties shall otherwise agree. Consultant agrees that he
shall serve Bethlehem during the term hereof faithfully, diligently and to the
best of his ability under the direction of the Chairman and Board of Directors
of Bethlehem, and he further agrees that he shall not, directly or indirectly,
take any action or knowingly approve the taking of any action by any other
person which would injure the business of Bethlehem or bring Bethlehem into
disrepute.
Consultant shall have the right, during the term hereof, to engage or
participate in, or become employed by, or render advisory or other services in
connection with, any and all other business activities, other than for a firm,
corporation or business enterprise which then directly or indirectly competes
with any of the business operations or activities of Bethlehem as provided in
Section 7 of this Agreement.
4. Remuneration. Bethlehem agrees to pay Consultant, as full
------------
compensation for all of the services to be rendered by Consultant under and
pursuant to this Agreement, on a monthly basis at the rate of $200 per hour
worked after the third month following Consultant's termination of employment
or on such other basis or at such other rate as the parties may mutually agree.
Such payments by Bethlehem shall be paid to Consultant at the end of each month
in which services are rendered.
Bethlehem shall reimburse Consultant for all reasonable expenses
properly incurred by him on behalf of Bethlehem in the performance of his
duties hereunder, provided that proper vouchers are submitted to Bethlehem by
Consultant evidencing such expenses
<PAGE>
3
and the purposes for which the same were incurred.
In addition, Bethlehem agrees to pay Consultant a retainer fee of
$146,001 which shall be due and payable in three (3) equal installments of
$48,667 each as follows: (1) at the end of the first month following
Consultant's termination of employment, (2) at the end of the second month
following Consultant's termination of employment, and (3) at the end of the
third month following Consultant's termination of employment.
5. No Employment Relationship. Consultant shall be an independent
--------------------------
contractor and shall have no power to bind Bethlehem or to assume or to create
any obligation or responsibility, expressed or implied, on behalf of or in the
name of Bethlehem. It is specifically acknowledged by the parties that
Bethlehem shall not, with respect to Consultant's consultative services,
exercise such control over him as would indicate or establish that a
relationship of employer and employee exists between him and Bethlehem.
6. Confidentiality. Consultant agrees that during the term of this
---------------
Agreement, or at any time thereafter, he will not disclose or reveal to anyone
(other than persons within Bethlehem, including it subsidiaries and affiliates,
and then only as required in the performance of his duties) any confidential
information relating to the business, techniques, products, operations and
affairs of Bethlehem, which is not generally known or recognized as standard
practice.
7. Restrictive Covenant. Consultant agrees that, during the term of
--------------------
this Agreement, he shall not, without the prior written approval of the Board
of Directors, directly or indirectly become an officer or director of, or
become employed by, or render advisory or other services to, or make any
financial investment in, any firm, corporation or business enterprise directly
or indirectly competitive with any of the business operations or activities of
<PAGE>
4
Bethlehem. Consultant also agrees that, during the term of this Agreement and
upon request by Bethlehem, disclose to Bethlehem the nature and extent of his
business activities which disclosure shall be in sufficient detail to permit
Bethlehem to make a reasonable determination that his activities are in
conformance with his obligations under this Agreement.
Nothing contained in this Section 7 shall prohibit or restrict the
Consultant from making any investment in a corporation or other entity whose
securities are listed on a United States or Canadian securities exchange or
actively traded in the over-the-counter market, so long as such investment does
not give the Consultant the right to control or influence the policy decisions
of any business operations or activities which are, directly or indirectly, in
competition with any of the business operations or activities of Bethlehem.
The geographical area to which this provision refers is the United
States. It is intended that the foregoing provision shall be severable and
shall apply separately and distinctly to each of the said states of the United
States and within such states to each of the counties and municipalities
therein with the same force and effect as though the said covenant was
separately expressed with respect to each state, county and municipality. The
Consultant declares that the territorial and time limitations under this
Agreement are reasonable and are properly required for the adequate protection
of Bethlehem.
8. Notices. Any notices and other communications which are required
-------
or permitted hereunder, shall be sufficiently given if in writing and
personally delivered or sent by registered or certified mail, postage prepaid,
return receipt requested, to the parties at their respective addresses, or to
such other address or addresses as any party shall have given notice of
pursuant hereto.
9. Arbitration. Disputes arising out of or in connection with the
-----------
<PAGE>
5
interpretation and application of this Agreement shall be discussed by the
Consultant and Bethlehem in good faith negotiations for the purpose of reaching
an amicable resolution. Any such disputes which cannot be settled amicably
within thirty (30) days after written notice by one party to the other (or
after such longer period agreed to in writing by the parties), shall thereafter
be settled by binding arbitration in Bethlehem, Pennsylvania, to be conducted
pursuant to the rules and procedures then obtaining of the American Arbitration
Association and judgment on the award rendered in such arbitration may be
entered in any court of competent jurisdiction.
10. Successors. This Agreement shall inure to the benefit of and
----------
shall be binding upon Consultant's heirs, executors, administrators, successors
and legal representatives, and shall inure to the benefit of and be binding
upon Bethlehem and their successors, but Consultant's obligations may not be
delegated and, except as otherwise provided herein, Consultant may not assign,
transfer, pledge, encumber, hypothecate or otherwise dispose of this Agreement,
or any of his rights hereunder (whether by operation of law or otherwise), and
any such attempted delegation or disposition shall be null and void without
effect.
11. Successor Corporations. It is understood and agreed by
----------------------
Consultant that in the event the business of Bethlehem shall be carried on by a
successor to Bethlehem, this Agreement shall apply to his consulting services
for such successor corporation.
12. Severability. If at any time subsequent to the date hereof, any
------------
provision of this Agreement shall be held by any court of competent
jurisdiction to be illegal, void or unenforceable, such provision shall be of
no force and effect, but the illegality or unenforceability of such provision
shall have no effect upon and shall not impair the
<PAGE>
6
enforceability of any other provision of this Agreement.
13. General. This Agreement has been made in the Commonwealth of
-------
Pennsylvania and shall be governed by, construed and enforced in accordance
with the laws of the Commonwealth of Pennsylvania. This Agreement contains the
entire agreement among the parties hereto with respect to the transactions
referred to herein or contemplated hereby and may be amended, modified or
supplemented only by a written instrument signed by each of the parties. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute but one and
the same instrument. The paragraph headings contained in this Agreement are
for convenience of reference only and shall not be a part of this Agreement.
14. Prior Agreement. This Agreement cancels and supercedes the
---------------
Agreement dated July 1, 1993, between the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BETHLEHEM STEEL CORPORATION
By: /s/ A. E. Moffitt, Jr.
------------------------
CONSULTANT:
/s/ Roger P. Penny
- ------------------------
<PAGE>
Bethlehem Steel 1999 Annual Report
Letter to Stockholders
To Our Stockholders:
Last year was difficult and challenging for Bethlehem, as it was for most
companies in our industry. There were two principal reasons for our
disappointing net loss of $183 million. First, we were seriously injured by
unprecedented levels of dumped and subsidized steel imports. Second, we had
higher operating costs related to outages taken for extensive planned
modernization and related maintenance work, principally at our Sparrows Point
Division.
As a result of dumped and subsidized steel imports, shipments were reduced
and prices depressed. Average steel prices for our products were down 9% from
1998 prices. Generally for Bethlehem, every 1% increase or decrease in the
average realized price per ton for our products results in an increase or
decrease in our net sales and pre-tax income of about $40 million.
We took effective legal, governmental and public affairs actions to reduce
unfair trade. As a result, after five consecutive quarters of price declines, we
began to experience some price restoration in the fourth quarter of 1999 and the
first quarter of 2000 and our order entry has been strengthening.
During 1999, we also took steps to improve our long-term profitability and
we made steady progress toward our Vision to Be the Premier Steel Company:
. we completed the safest and most environmentally compliant year in the
history of our Company;
. we entered into new five-year labor agreements with the United Steelworkers
of America that we believe to be fair, reasonable and in the interests of
our employees and the Company;
. we completed a number of very significant strategic projects at Sparrows
Point, including the reline of the "L" Blast Furnace, and made substantial
progress on construction of the new Cold Mill;
. we completed the successful integration of the Bethlehem and Lukens plate
businesses, and in January of this year completed our planned divestiture
of Lukens' stainless businesses;
. we increased the size of our revolving credit arrangement;
. we received the General Motors Supplier of the Year Award for the fourth
consecutive year and won similar awards from other customers;
. we formed two joint-venture companies to help serve the automotive
industry --Columbus Coatings Company and Columbus Processing Company;
. we advanced e-business and e-commerce by becoming an equity partner in
MetalSite, an Internet metals marketplace, and we became one of the first
in the American steel industry to offer our customers "real-time" status of
their orders on our website; and
. we completed a successful transition to the year 2000 with no adverse
computer issues.
Since 1992, we have been transforming Bethlehem into a more competitive and
modern steel company by focusing on value-added products; utilizing our superior
capabilities in technology to provide value-added services to our customers;
restructuring through the elimination of underperforming businesses;
reorganizing through the establishment of individual business units; reducing
our unfunded pension obligation; rebuilding our financial strength and improving
our credit ratings; entering into joint ventures in key product lines; and
investing in new facilities and modernizing our existing operations.
<PAGE>
Upon completion of Sparrows Point's Cold Mill in 2000 and other projects
mentioned later in this report, Bethlehem will be well- positioned to achieve
and sustain superior rates of return on the capital we have invested in our
businesses, and to continue to rebuild our financial strength and achieve our
objective of an investment-grade credit rating. Our investments in facilities
and employee development will increase our productivity and help us to improve
continuously in everything we do in order to be even more competitive.
While we have made considerable progress in reshaping our company over the
last few years, we face many challenges including excess steel capacity,
restoring fair trade in steel and the rising cost of health care. Given the
extremely competitive environment in which we operate, we must further increase
the intensity of our cost-reduction efforts. We recently announced a series of
aggressive actions to improve production and administrative efficiencies and to
lower costs. Key changes include consolidating three of our major flat-rolled
production divisions -- Burns Harbor, Sparrows Point and Bethlehem Lukens Plate
(BLP) -- into two divisions, establishing a Shared Services unit and a smaller
Corporate Center and reducing our salaried workforce company-wide.
In consolidating our three business divisions, BLP's operations in
Coatesville and Conshohocken will be part of the Sparrows Point Division and
BLP's 110-inch and 160-inch plate mills located at Burns Harbor will be part of
that Division. Our plate product customers recognize the value of the Bethlehem
Lukens Plate name and, therefore, we will continue to market plate under that
name. The Shared Services unit will consolidate various services that are now
performed separately at the business divisions and at various corporate
departments.
We especially want to express our thanks to Roger Penny, former Vice
Chairman and Director, who retired this year after 41 years of service with
Bethlehem, and to Dean Phypers and Robert McClements, two of our Directors, who
will be retiring in April of this year. We greatly appreciate the valuable and
dedicated service they have provided to Bethlehem.
Since 1992, I have been privileged to serve as your Chairman. Your
management has taken significant actions since then to restructure and transform
Bethlehem into a stronger company to compete in the global steel market. We are
now completing an orderly transition to be effective April 25, 2000 to a new
management team under the very able leadership of Duane Dunham, who will succeed
me as Chairman and Chief Executive Officer. His extensive background in
commercial matters, steel operations and general management provides him with
the experience required to lead Bethlehem successfully into its Second Hundred
Years.
Duane and I share a common goal that all Bethlehem employees understand
what is required to be consistently profitable and to take those daily actions
that will give Bethlehem a competitive leadership position and provide you, our
stockholders, with increased value.
/s/ Curtis H. Barnette
Curtis H. Barnette
Chairman and
Chief Executive Officer
/s/ Duane R. Dunham
Duane R. Dunham
President and
Chief Operating Officer
January 26, 2000
<PAGE>
Year in Review
Operations
During 1999, we took steps to further strengthen the competitive position of our
four core steel businesses.
Burns Harbor
The Burns Harbor Division represents about 40% of our sales and ships flat-
rolled sheet products, primarily to the automotive and service center markets.
At Burns Harbor, we believe we have one of the most efficient producers of steel
anywhere in the world. It has many competitive strengths, including its location
and facility layout. Keeping Burns Harbor's leadership position as one of the
best steel businesses in the world will require some continuing capital
investments and productivity improvements that are currently in the planning
stages.
A major project currently under way to enhance the overall competitiveness
of Burns Harbor is our recently formed Columbus Coatings Company, a 50-50 joint
venture with The LTV Corporation, to serve the automotive industry's growing
requirements for hot dip galvanized and galvannealed sheet steel. The new
company will have an annual capacity of approximately 500,000 tons of premium
corrosion-resistant steel for automotive applications. Construction of this
state-of-the-art facility has started, and production is scheduled to begin
during the fourth quarter of 2000.
Burns Harbor sells about half of its finished product to the automotive
industry, and this new coating line joint venture will further strengthen and
grow Burns Harbor's position with the major automotive companies located in
North America.
Burns Harbor is already a supplier of choice to the very demanding
automotive market. Its consistent and excellent performance with General Motors,
its largest customer, has earned it the GM Supplier of the Year Award for four
consecutive years, something no other steel company in the world has achieved.
Sparrows Point
The Sparrows Point Division represents about 30% of our sales and ships flat-
rolled sheet products, primarily to the construction, service center and
container markets. Sparrows Point has undergone the most significant
transformation of all of our core businesses. Over the three-year period -- 1998
through 2000 -- Sparrows Point will have completed eight very significant
strategic projects:
. construction of a new cold sheet mill complex,
. reline of its "L" Blast Furnace,
. installation of pulverized coal injection for its blast furnace,
. modernization of its basic oxygen furnace steelmaking shop,
. construction of a new 30-acre scrap-processing yard,
. installation of a new wide-slab caster,
. renovations to its hot strip mill and
. construction of a new roll grinding facility.
The largest of these projects is the new, fully automated and continuous cold
sheet mill complex, which is right on schedule. All of the buildings have been
erected, cranes are operational and all six mill stands have been installed.
Certain components of the mill, such as the hydrogen annealing line and the
packaging and shipping facilities, have started. The pickler, skin pass mill,
temper mill and tandem mill are all scheduled to start up in the first quarter
of 2000, with full production expected to be achieved later in the year.
<PAGE>
We believe that these projects will result in significant improvements to
Sparrows Point's competitiveness and return on capital employed. Of the eight
projects at Sparrows Point, three of them -- the pulverized coal injection
facility, the new scrap-processing yard and the new roll grinding facility --
are in partnership with third parties, and each of these projects has new and
more flexible labor contracts covering them.
Bethlehem Lukens Plate (BLP)
The Bethlehem Lukens Plate Division represents about 20% of our sales and ships
carbon and alloy plate products, primarily to the construction, machinery and
energy markets. BLP was especially hard hit by the high levels of unfairly
traded steel imports this past year. As a result, plate prices dropped
precipitously to very low levels, and the Division took immediate steps to
significantly reduce costs to help offset the adverse affect of these lower
prices. We are just now beginning to see an improvement in plate market
conditions, and we have recently achieved some modest restoration of plate
prices.
During this past year, we achieved the operating, administrative and other
synergies that we had planned with the acquisition of Lukens. We also completed
certain improvements to the Steckel plate mill in Conshohocken in accordance
with our agreement to provide conversion services to Allegheny Ludlum
Corporation. Additionally, with the sale of our stainless sheet operations in
Massillon, Ohio in January 2000, we have completed the planned divestiture of
the stainless and distribution assets that we acquired as part of the
acquisition of Lukens.
As discussed elsewhere in this report, we have announced that BLP will be
consolidated into our Burns Harbor and Sparrows Point Divisions as part of a
series of aggressive actions to improve production and administrative
efficiencies and lower costs.
Excess global plate capacity and new domestic capacity being built by
competitors means we will continue to face a very challenging business
environment in the coming years. As a result, we must continue to aggressively
reduce costs while improving quality and service. We believe that we can become
North America's premier plate supplier with the widest range of plate products
on the continent.
Pennsylvania Steel Technologies (PST)
The Pennsylvania Steel Technologies business represents about 10% of our sales,
and ships railroad rails, specialty blooms, flat bars and large-diameter pipe,
primarily to the transportation, forging and energy markets.
PST is one of only two domestic rail producers. This past year, PST's rail
business was limited because of the sharp reduction in demand by the Class One
railroads, caused in part by the mergers and acquisitions occurring in the
railroad industry. As a result, rail demand declined significantly from 1998
levels. We anticipate a rebound in the rail market during 2000 to more normal
levels. However, additional domestic capacity recently announced by a potential
competitor means PST will continue to face intense competition.
PST recently rolled an entirely new section of railroad rail that promises
longer life through better wheel-to-rail contact. To be the first in the world
to roll this new section underscores PST's dedication to new technology in the
rail business.
PST's other major product lines, including its specialty bloom and large-
diameter pipe businesses, also suffered this past year. This was primarily
because of weakness in energy-related markets. These markets have improved
somewhat in recent months and our orders for specialty bloom products have been
strengthening.
Concentrating on Steel
We believe that by concentrating on steel, with a focus on being a high-quality,
low-cost producer, we will be among the most competitive producers for our
products and the markets we serve. We also believe that stockholder value is
inextricably linked to our ability to profitably serve our customers, promote
partnerships among our employees, fully engage our suppliers and be a good
corporate citizen.
Customers
<PAGE>
We know that our long-term success depends on our customers' long-term success.
We recognize that they have many choices of materials and steel suppliers, and
that we will be their primary choice only by providing what they need, when they
need it and at fair and competitive prices.
Because steel users have many options in today's competitive global
marketplace, our commercial team must be better informed, equipped and prepared
to meet the needs of our customers. We have instituted our Customer Success
Process, a cross-functional approach that involves multiple disciplines, to
serve our customers. This dynamic process requires customer involvement and uses
fact-based information and analysis. We expect significant benefits from this
process in the years ahead.
Employees
While companies have many important assets, its employees are the most
important. We will be successful only through the efforts of our employees
working together as a team with a sense of common purpose and shared goals. We
work hard every day at promoting partnerships among our employees by fostering
trust, open and honest communications, ongoing education and training, and an
acceptance of individual accountability and responsibility.
We conducted a comprehensive review of our compensation, benefits, work
environment and learning and development programs. The purpose of this review
was to ensure that our programs reward employees for their contributions toward
improving our performance. Bethlehem provides competitive pay and benefits,
challenging work, learning opportunities and a safe work environment for its
employees. At the same time, employees are responsible for helping us achieve
our objectives, satisfy our customers, be flexible and partner with one another
in their work.
We began to train employees company-wide in Six Sigma, a disciplined
methodology for reducing process variability. We will continue to expand
implementation of Six Sigma for manufacturing and transactional processes to
eliminate defects and reduce waste in everything we do, from entering purchase
orders to manufacturing and delivering products. The Six Sigma methodology is
one of our continuous improvement tools for making a significant impact on the
bottom line of our business and satisfying our customers.
We entered into five-year labor agreements with the United Steelworkers of
America that cover represented employees at all of our locations. We believe
that these are fair and competitive labor agreements. We established a new
annual incentive plan that closely aligns our employees' interests with those of
our stockholders. We believe that this supports our objective to have
partnerships among employees, to have clear performance expectations, to
effectively measure progress and to share the Company's success.
Suppliers
Suppliers represent a significant part of Bethlehem's business. They are an
integral part of our success because their products and services result in high-
quality, competitively priced products for our customers. Together with our
suppliers, we are working aggressively to reduce the costs of the approximately
$3 billion of goods and services purchased each year through the ongoing
implementation of a process we refer to as Strategic Sourcing.
The Strategic Sourcing effort began in late 1995 with a simple, easy-to-
understand objective -- achieve significant, sustainable reductions in total
costs of purchased goods and services. The process brings together employees
from throughout the Company to take a well-coordinated and continuous look at
the marketplace, the purchasing process and alternative suppliers, and we have
achieved some very meaningful results.
In 1998, we established a Supplier Awards Program that recognizes suppliers
that meet or exceed demanding criteria of quality, performance and cost. The
Awards Program emphasizes the value we place on suppliers that share our Vision.
This past year, we selected 15 companies from the more than 7,000 worldwide
providers of products and services. Their performances exemplify the standards
we are working to develop with all of our suppliers.
The following companies were recognized as Premier Suppliers of the Year for
their performance in 1999: AMCI/Kepler, Alloy Sling Chain Industries, Ltd.,
Baker Refractories, Brandenburg Industrial Service Co., Considar, Inc., Elkem
Metals Co. L.P., Ficel Transport, Inc., General Conservation Corporation, Koch
Metals Division of Koch Carbon,
<PAGE>
Inc., Landstar Ligon, C.J. Langenfelder & Son, Inc., Motion Industries, Inc., A.
Duie Pyle, Showa Denko Carbon, Inc. and Stauffer Manufacturing Co.
Safety, Environment and Good Citizenship
In last year's Annual Report, we reported that our safety and environmental
performance for 1998 was the best ever recorded by our Company. We are
especially proud to report that during 1999 we improved on those results and
completed the safest and most environmentally compliant year in the history of
our Company. Compared with 1998, our lost workday case incidence rate declined
by 21%, our all-injury rate declined by 10% and our recordable case rate
declined by 9%. Since 1994, when we began a joint safety performance improvement
effort with the United Steelworkers of America, our lost workday case incidence
rate declined by 67%, and our all-injury and recordable case rates declined by
53%. A major corporate objective is to have zero lost workdays.
During 1999, we further improved on our excellent 1998 environmental
performance. Compared with 1998, our Environmental Compliance Index, our
corporate method of measuring environmental compliance, declined by 10%. Our
corporate objective is zero environmental incidents.
Achieving our objective of Being a Good Citizen is substantially enhanced
through corporate leadership practices that improve the quality of life and help
solve social problems in our communities. We focus on communities where we have
an operating presence and, in a limited way, in other areas where our
participation will help influence others to address quality of life issues.
Our good citizenship approach emphasizes charitable contributions,
volunteerism and economic development. Giving to the United Way at all of our
facilities and individual volunteerism at educational, health services and other
nonprofit organizations are regular practices of our employees. Our brownfields
economic development initiatives involving almost 3,000 acres at former steel
operating sites in Bethlehem and Johnstown, Pennsylvania and in Lackawanna, New
York are industry-leading examples of the public-private partnerships that can
help revitalize communities. In 1999, we were honored by Pennsylvania's Governor
Tom Ridge with a Governor's Award for Environmental Excellence, recognizing our
economic revitalization initiatives in Bethlehem, Pennsylvania as a national
model for brownfields development. In 1999, Bethlehem became the first company
to receive approval from both the U.S. Environmental Protection Agency and the
Pennsylvania Department of Environmental Protection for a brownfields
remediation plan developed under Pennsylvania's voluntary clean-up program.
Technology
Our research efforts are focused on achieving quality improvements and cost
reductions in our operations and working closely with our major customers to
identify and incorporate process and product technologies that will benefit our
customers' manufacturing operations. For example, we are developing high-
strength steels that are readily manufacturable in terms of weldability and
formability and that allow automakers to produce cars that are lighter and more
fuel-efficient, while maintaining superior crashworthiness.
Similarly, we are supporting the production of high-performance plate for
the bridge market. We recently developed as-rolled high-strength steels that are
available in longer lengths than the conventional heat-treated grades and that
help reduce customers' fabrication costs. We also provide welding guidelines and
corrosion and welding data that demonstrate the excellent properties, and thus
superior service performance, of these steels.
As a result of a well-planned approach over the last five years, we achieved
a smooth transition to the year 2000 and continued to operate our business and
manufacturing systems and to serve our customers with no adverse computer
issues. Also, of great importance, the costs associated with this Y2K effort
were very low compared with competitor and industry norms and were charged to
normal operating expenses.
Electronic Business
<PAGE>
The emerging area of electronic business (e-business) has become increasingly
important as we attempt to extend our efforts to reduce our costs and serve our
customers. It involves enhanced interactions with our customers, improvements in
the speed and efficiency of our manufacturing operations, additional
effectiveness of our administrative processes and improved linkage and value
from our entire supply chain.
Internally, we have developed Internet web-based applications at
bethsteel.com that provide customers access to order data that is important to
their day-to-day operations. Cost of access, ease of use and timely availability
of these data improve the effectiveness of our customer relationships and also
reduce the total cost of doing business for both organizations. In addition, we
are deploying intranet-based applications in such areas as production reporting,
logistics and human resources.
Externally, our recent equity investment in MetalSite, a business-to-
business on-line metals marketplace, extends our leadership in the e-business
and electronic data interchange (EDI) marketplace. MetalSite provides additional
sales channels for our products, integrates order-to-delivery business processes
and enables buyers and sellers to be brought together on a global basis. Our
overall e-business strategy will continue to address these areas while
specifically targeting improvements in customer satisfaction and the
streamlining of business processes.
Rebuilding Financial Strength
We were disappointed this past year with our overall financial performance. Our
net loss, combined with our high level of capital expenditures, caused us to
incur additional debt and increase our financial leverage.
Our objective is unchanged. We want to achieve a capital structure that will
earn us an investment-grade credit rating. To do this, we know that we must
further reduce our total debt, including our retiree obligations, and increase
our stockholders' equity.
We have made some progress during the past six years in improving our
financial condition, especially in reducing our unfunded pension obligation. Our
balance sheet pension liability at the end of 1999 was $410 million compared
with $1.6 billion at the end of 1993. Additionally, we had a net unrecognized
gain that is not reflected in the pension liability shown on the balance sheet.
While accounting rules do not permit the immediate recognition of this net gain,
the market value of our pension trust assets at year-end of over $6 billion was
essentially equal to our projected benefit obligation. In other words, on this
basis our pension obligation was essentially fully funded at the end of 1999.
Our liquidity totaled $334 million at the end of last year. This consisted
of about $100 million in cash and $235 million of available borrowings under our
revolving credit arrangement. During 1999, we increased the size of our
revolving credit arrangement by $60 million, to $660 million.
We expect to maintain an adequate level of liquidity during 2000 primarily
with cash provided from operations, further reductions in inventory, additional
asset sales and available funds under our bank and other financing arrangements.
International Steel Trade
Unfairly traded imports continue to injure Bethlehem and the American steel
industry. Both shipments and prices were depressed from pre-crisis levels.
Average steel prices for domestic steel companies for all products in 1999 were
down from average 1998 steel prices and represent the largest aggregate decline
in nearly 20 years. Overall declines in steel prices for domestic steel
companies were 8% for hot rolled, 7% for cold rolled and 14% for plate.
Our trade position is simple and clear. We believe in: (1) open trade, (2)
market-based trade, (3) rule-based trade and (4) enforcement of the rules when
trade is unfair and injurious.
We have continued to take appropriate legal, governmental affairs and public
affairs actions. Our legal actions have included bringing appropriate trade
cases. Our government affairs actions are centered on working closely with the
Administration and Congress for the full and unyielding enforcement and
strengthening of U.S. trade laws. Our public affairs activities have been
coordinated with the United Steelworkers of America in the Stand Up for Steel
Campaign. We will continue to take all appropriate actions and believe that they
will in due course help to restore fair trade in steel.
<PAGE>
Financial Review and Operating
Analysis
Our net loss for 1999 was $183 million, or $1.72 per diluted share. Results for
1999 were especially depressed from record levels of unfairly traded steel
imports and higher costs in connection with extensive outages and maintenance
costs for planned modernization projects. Net income for 1998 was $120 million,
or $.64 per diluted share, including an after-tax charge of $29 million related
to closing our Sparrows Point plate mill. Net income for 1997 was $281 million,
or $2.03 per diluted share, including an after-tax gain of $113 million related
to the sale of our equity interest in Iron Ore Company of Canada (IOC).
Excluding the effects of the charge and gain, net income for 1998 was $149
million ($.87 per diluted share) and net income for 1997 was $168 million ($1.11
per diluted share). Sales in 1999 were $3.9 billion compared with $4.5 billion
in 1998 and $4.6 billion in 1997.
Lukens Acquisition
In May 1998, we acquired all of the outstanding stock of Lukens Inc. for about
$560 million. See Note C, Acquisition of Lukens Inc., to the Consolidated
Financial Statements for a description of the composition of the purchase price,
assets acquired and method of accounting for the acquisition. The acquisition
strengthened our position as the leading producer and supplier of carbon and
alloy steel plate products. In addition, we acquired certain stainless steel
plate and sheet manufacturing and distribution businesses that we intended to
dispose of. Through January 2000, we have sold and liquidated stainless
businesses, property and working capital generating net proceeds of about $316
million.
During 1998, we completed the sale of certain stainless assets to Allegheny
Ludlum Corporation (Allegheny) for $175 million. We also entered into agreements
with Allegheny to provide it with conversion services to produce stainless steel
slabs and coiled plate. We received $105 million in cash, and a non-interest-
bearing note for the remaining $70 million that was paid in 1999. In 1999, we
sold the stainless distribution business Washington Specialty Metals Corporation
for about $70 million, and the stainless sheet operations in Washington,
Pennsylvania for about $20 million. In January 2000, we completed our planned
divestiture of Lukens' stainless businesses with the sale of the sheet
operations in Massillon, Ohio. During this period, we liquidated substantially
all stainless related working capital.
During the fourth quarter of 1998, we closed the Sparrows Point 160-inch
plate mill in order to more fully utilize plate facilities at Burns Harbor,
Coatesville and Conshohocken to take advantage of the merged facilities'
capabilities. In connection with the consolidation of our plate production, we
recorded a charge of $35 million ($29 million after tax) during 1998 to write
off the net book value of certain equipment and to recognize employee benefit-
related costs.
Operating Results
Our loss from operations was $179 million for 1999 compared with income from
operations of $225 million (excluding the $35 million charge related to the
closing of the Sparrows Point plate mill) for 1998, and $239 million (excluding
the $135 million gain related to the sale of our equity interest in IOC) for
1997. Operating results for 1999 declined precipitously from 1998 primarily due
to (1) significantly lower realized prices and lower shipments from
unprecedented levels of steel imports, especially for plate products, and (2)
approximately $70 million of higher operating costs related to planned
modernization and maintenance outages, and the temporary idling of our majority-
owned iron ore operation located in Hibbing, Minnesota.
Results declined in 1998 from 1997 primarily due to lower shipments and
lower realized prices resulting from high levels of unfairly traded steel
imports that flooded the market in the second half of 1998. The reduction of
shipments and prices resulting from imports was partially offset by increased
shipments resulting from our acquisition of Lukens and by lower costs. Costs
improved principally from exiting underperforming businesses, reduced pension
expense and improved operating performance at Pennsylvania Steel Technologies,
Inc. (PST).
The effects of changes in average realized steel prices, shipments and
product mix on sales during the last two years were as follows:
Increase (decrease) from prior year
1999 1998
- --------------------------------------------------------------------------------
Realized Prices (9)% (2)%
Shipments (4) (1)
Product Mix -- --
(13)% (3)%
Raw steel production was 9.4 million tons in 1999, 10.2 million tons in 1998 and
9.6 million tons in 1997. The decrease in 1999 was due to the reline of our "L"
Blast Furnace at Sparrows Point and was partially offset by the full-year impact
of the acquisition of Lukens. The increase in 1998 was due to the acquisition of
Lukens.
<PAGE>
The Burns Harbor Division shipped 3.7 million tons of sheet and strip
products in 1999 compared with 3.6 million tons in 1998 and 3.9 million tons in
1997. Burns Harbor's 1999 operating results declined principally from
significantly lower realized prices, caused primarily by unfairly traded steel
imports, partially offset by lower costs.
The Sparrows Point Division shipped 2.7 million tons of sheet and tin mill
products in 1999, 2.6 million tons in 1998 and 2.8 million tons in 1997.
Sparrows Point's 1999 operating results declined principally from lower realized
prices caused primarily by unfairly traded steel imports. Sparrows Point also
incurred approximately $60 million of higher operating costs in connection with
the reline of its "L" Blast Furnace and certain other planned modernization and
maintenance outages.
Bethlehem Lukens Plate (BLP) shipped 1.7 million tons of plate products in
1999. Bethlehem shipped 1.7 million tons of plate products in 1998, including
425,000 tons from the Coatesville and Conshohocken facilities acquired in the
Lukens acquisition, and 1.4 million tons in 1997. The operating profit of our
plate products declined due to significantly lower realized prices principally
from record levels of unfairly traded steel imports that started in the second
half of 1998 and was partially offset by lower costs.
Results declined slightly at PST in 1999 primarily due to lower rail
shipments. Rail consumption was significantly lower in 1999 primarily due to the
merger and acquisition activity among the domestic railroads. The adverse effect
of lower shipments was almost completely offset by lower costs, which were
primarily due to lower raw material scrap prices.
Percentage of Bethlehem's Net Sales by Major Product
1999 1998 1997
Steel mill products:
Hot rolled sheets 14.0% 13.3% 14.9%
Cold rolled sheets 19.0 16.8 17.2
Coated sheets 30.8 28.6 31.5
Tin mill products 7.2 6.7 7.4
Plates 20.9 22.3 15.2
Rail products 2.7 4.4 4.3
Other steel mill products 2.6 4.5 4.5
Other products and services
(including raw materials) 2.8 3.4 5.0
100.0% 100.0% 100.0%
- --------------------------------------------------------------------------------
During 1999, our largest customer, General Motors Corporation, accounted for
slightly more than 10% of our consolidated net sales.
Percentage of Steel Mill Product Shipments by Principal Market
(Based on tons shipped) 1999 1998 1997
- --------------------------------------------------------------------------------
Service Centers, Processors and Converters 49.7% 46.9% 46.9%
Transportation
(including automotive) 21.3 23.0 24.9
Construction 12.9 12.1 11.0
Containers 5.4 5.2 5.8
Machinery 4.2 4.9 4.7
Other 6.5 7.9 6.7
100.0% 100.0% 100.0%
- --------------------------------------------------------------------------------
Liquidity and Capital Structure
At December 31, 1999, total liquidity, comprising cash, cash equivalents and
funds available under our credit arrangements, totaled $334 million compared
with $479 million at December 31, 1998. At December 31, 1999, funds available
under our credit arrangements totaled $235 million.
Cash provided from operations before funding postretirement benefits in 1999
decreased to $202 million from $487 million in 1998 due to lower earnings, which
was partially offset by changes in working capital, principally inventory. Net
sales of accounts receivable under our bank credit agreement were $70 million in
1999 and $64 million in 1998. Cash provided from operations before funding
postretirement benefits in 1998 decreased to $487 million from $551 million in
1997 due to lower earnings and changes in working capital, principally
inventory. Other sources of cash in 1999 included new borrowings of $250 million
and asset sales of $184 million. New borrowings included $160 million from our
inventory credit agreement, a $60 million short-term loan arrangement for a
portion of our Sparrows Point cold mill capital expenditures, and about $28
million of our $50 million construction financing arrangement for the wide-slab
casting project at Sparrows Point. Asset sales consisted primarily of the sale
of our stainless and distribution assets acquired from Lukens, including the
collection of the $70 million note from Allegheny for its purchase of stainless
assets in 1998. See Lukens Acquisition above.
Principal uses of cash during 1999 included capital expenditures, debt
payments and pension funding. We contributed $45 million to our pension fund in
1999 compared with $150 million in 1998. Our pension liability decreased to $410
million at December 31, 1999. Over the past six years, our pension liability has
been reduced by about $1.2 billion from $1.6 billion at December 31, 1993. We
have contributed amounts to our pension fund substantially in excess of amounts
required under current law and regulations. Because of these contributions and
better than expected earnings performance on our pension fund assets, we
currently have a funding standard credit balance that would allow us to defer
pension funding for several years, although we presently have no plans to do so.
Major uses of cash for 2000 are expected to be capital expenditures of about
$250 million, pension funding and debt payments. We expect to maintain an
adequate level of liquidity during 2000, primarily with operating cash flow,
further reductions in inventory, additional asset sales and available funds
under our bank and other financing arrangements.
Capital Expenditures
Capital expenditures were $557 million in 1999 compared with $328 million in
1998 and $228 million in 1997.
Capital expenditures for 1999 included several major projects at Sparrows
Point including the reline of the "L" Blast Furnace, upgrades to the BOF shop,
continuing construction of a new cold mill complex and preliminary work for the
conversion of a continuous slab caster to a continuous wide-slab caster. Other
capital expenditures included an investment in new joint ventures, Columbus
Coatings Company and Columbus Processing Company, and an equity interest in
MetalSite, an Internet marketplace where companies can buy and sell metal
products and services. Capital expenditures also included certain improvements
we made to the Steckel plate mill in Conshohocken in accordance with our
agreement to provide conversion services to Allegheny. See Lukens Acquisition
above.
At December 31, 1999, the estimated cost of completing all authorized
capital expenditures was about $410 million compared with $610 million at
December 31, 1998. We expect all authorized capital expenditures to be completed
during the 2000-2002 period.
Derivative Financial Instruments and Related Market Risk
We are exposed to certain risks associated with the change in foreign currency
rates, interest rates and commodity prices. We seek to minimize the potential
adverse impact of those market risks through the use of appropriate management
<PAGE>
techniques including derivative financial instruments. Our exposure to changes
in the value of foreign currencies is minimal.
We are exposed to interest rate risk arising from having certain variable
rate financing arrangements, and we use interest rate swaps to fix a portion of
the interest rates on these financings. The fair value of these swaps at
December 31, 1999 was a liability of $1 million.
We also use derivative financial instruments to manage the price risk for a
portion of our annual requirements for natural gas and zinc and other metals.
The fair value of these instruments at December 31, 1999 was an asset of $10
million. These instruments, which have maturity dates that coincide with our
expected purchases of the commodities, allow us to establish our cost for the
hedged portion of the commodity requirement, which reduces our exposure to
future price volatility. To the extent we have not entered into derivative
financial instruments, our cost will increase or decrease as the market prices
for the commodities rise or fall.
Common Stock Market and Dividend Information
1999 Prices* 1998 Prices*
Period High Low High Low
- --------------------------------------------------------------------------------
First Quarter $10.688 $7.688 $15.500 $ 8.063
Second Quarter 10.938 7.375 17.125 11.063
Third Quarter 8.688 6.750 13.438 7.000
Fourth Quarter 8.500 5.875 10.750 7.313
- --------------------------------------------------------------------------------
* The principal market for Bethlehem Common Stock is the New York Stock
Exchange. Bethlehem Common Stock is also listed on the Chicago Stock Exchange.
The high and low sales prices of Bethlehem Common Stock as reported in the
consolidated transaction system are shown in the table. The trading symbol for
Bethlehem Common Stock is BS. Bethlehem has not paid a dividend on its Common
Stock since the fourth quarter of 1991.
Employees and Employment Costs
At the end of 1999, we had about 15,500 employees compared with about 17,000
employees at the end of 1998 and 15,600 employees at the end of 1997. In May of
1998, we acquired Lukens which had about 3,300 employees. About three-quarters
of our employees are covered by our labor agreements with the United
Steelworkers of America (USWA).
On August 1, 1999, Bethlehem and the USWA entered into new five-year labor
agreements covering USWA-represented employees at Bethlehem's facilities in
Burns Harbor, Lackawanna, Sparrows Point, Coatesville and Steelton. The Burns
Harbor and Sparrows Point Divisions continue to be covered by one agreement,
while separate agreements were continued for PST and BLP's Coatesville facility.
The main labor agreement, which expires August 1, 2004, provides for wage
increases of $2 per hour over the life of the contract and improved pension
benefits. The new contract also aligns profit sharing more closely with
Bethlehem's overall financial performance.
Under the profit sharing provisions of the new 1999 labor agreements, which
become effective beginning with plan year 2000, most employees at our steel
operations will participate in profit sharing based on 10% of adjusted
consolidated annual income before taxes. Under the profit sharing provisions of
our 1993 labor agreements, which were effective through plan year 1999, most
employees at our steel operations participated in profit sharing based on 8% of
adjusted consolidated annual income before taxes, unusual items and expenses
applicable to the plan, plus 2% of adjusted profits of certain operations,
payable in the following year. A minimum payment of 14 cents per hour worked was
required but has been eliminated from the new plan. Profit sharing is also paid
to non-represented employees based on specific Corporate and Business Unit plans
and performance.
Under other provisions of the labor agreements, we are required to pay
"shortfall amounts" each year up to 10% of the first $100 million and 20% in
excess of $100 million of consolidated income before taxes, unusual items and
expenses applicable to the shortfall plan. Shortfall amounts, which recently
have been averaging $6 million per year, arise when employees terminate
employment and ESOP Preference Stock, held in trust for employees for certain
wage and benefit payments in prior years, is converted into Common Stock and
sold for amounts less than the stated value of the Preference Stock ($32 for
Series A and $40 for Series B). We issued approximately 1,500 shares of Series B
Preference Stock in 1999 and approximately 18,000 shares in 1998 to a trustee
for the benefit of employees for 1998 and 1997. We expect to issue about 80,000
shares in early 2000 for the 1999 plan year.
We paid about $37 million in 1999 for income-related bonus, profit sharing
and shortfall amounts, and expect to pay about $700,000 in early 2000.
<PAGE>
Employment Cost Summary *
(Dollars in millions) 1999 1998 1997
Salaries and Wages $ 857 $ 899 $ 914
- --------------------------------------------------------------------------------
Employee Benefits:
Pension Plans:
Actives 54 80 95
Retirees (14) 5 60
Medical and Insurance:
Actives 129 122 135
Retirees 152 140 122
Payroll Taxes 73 74 74
Workers' Compensation 22 27 21
Savings Plan and Other 18 20 18
Total Benefit Costs 434 468 525
Total Employment Costs $1,291 $1,367 $1,439
- --------------------------------------------------------------------------------
* Excluding Discontinued Stainless Operations
Environmental Matters
We are subject to various federal, state and local environmental laws and
regulations concerning, among other things, air emissions, waste water
discharges and solid and hazardous waste disposal. During the five years ended
December 31, 1999, we spent about $100 million for environmental control
equipment. Expenditures for new environmental control equipment totaled
approximately $11 million in 1999, $13 million in 1998 and $15 million in 1997.
The costs incurred in 1999 to operate and maintain existing environmental
control equipment were approximately $115 million (excluding interest costs but
including depreciation charges of $14 million) compared with $114 million in
1998 and $112 million in 1997.
Bethlehem and federal and state regulatory agencies conduct negotiations to
resolve differences in interpretation of certain environmental control
requirements. In some instances, those negotiations are held in connection with
the resolution of pending environmental proceedings. We believe that there will
not be any significant curtailment or interruptions of any of our important
operations as a result of these proceedings and negotiations. We cannot predict
the specific environmental control requirements that we will face in the future.
Based on existing and anticipated regulations under present legislation, we
currently estimate that capital expenditures for installation of new
environmental control equipment will average about $15 million per year over the
next two years. However, estimates of future capital expenditures and operating
costs required for environmental compliance are subject to numerous
uncertainties, including the evolving nature of regulations, possible imposition
of more stringent requirements, availability of new technologies and the timing
of expenditures.
Although it is possible that our future results of operations, in particular
quarterly or annual periods, could be materially affected by the future costs of
environmental compliance, we believe that the future costs of environmental
compliance will not have a material adverse effect on our consolidated financial
position or on our competitive position with respect to other integrated
domestic steelmakers that are subject to the same environmental requirements.
Forward-looking Statements
This Annual Report contains forward-looking statements. The use of the words
"expect", "believe", "intent", "should", "plan" and similar words are intended
to identify these statements as forward-looking. In accordance with provisions
of the Private Securities Litigation Reform Act of 1995, reference is made to
Item 1 of Bethlehem's 1999 Annual Report on Form 10-K, which will be filed
before the end of March 2000, and to "Cautionary Statement" of Bethlehem's
Registration Statement on Form S-4 filed with the Securities and Exchange
Commission on April 24, 1998 for important factors that could cause actual
results to differ materially from those projected. Prior to the filing of
Bethlehem's 1999 Annual Report on Form 10-K, reference should be made to
Bethlehem's 1998 Annual Report on Form 10-K for a discussion of these factors.
<PAGE>
Consolidated Statements of Income
<TABLE>
<CAPTION>
Year Ended December 31
(Dollars in millions, except per share data) 1999 1998 1997
<S> <C> <C> <C>
Net Sales $3,914.8 $4,477.8 $4,631.2
- ------------------------------------------------------------------------------------------------------
Costs and Expenses:
Cost of sales 3,708.8 3,883.2 4,053.3
Depreciation and amortization (Note A) 257.5 246.5 231.0
Selling, administration and general expense 127.1 123.6 107.9
Estimated loss (gain) on exiting businesses (Note B) -- 35.0 (135.0)
Total Costs and Expenses 4,093.4 4,288.3 4,257.2
- ------------------------------------------------------------------------------------------------------
Income (Loss) from Operations (178.6) 189.5 374.0
Financing Income (Expense):
Interest and other financing costs (Note A) (51.9) (55.4) (47.5)
Interest income 8.3 10.0 9.2
- ------------------------------------------------------------------------------------------------------
Income (Loss) Before Income Taxes (222.2) 144.1 335.7
Benefit (Provision) for Income Taxes (Note D) 39.0 (24.0) (55.0)
- ------------------------------------------------------------------------------------------------------
Net Income (Loss) (183.2) 120.1 280.7
Dividends on Preferred and Preference Stock 41.2 41.7 41.6
Net Income (Loss) Applicable to Common Stock $ (224.4) $ 78.4 $ 239.1
- ------------------------------------------------------------------------------------------------------
Net Income (Loss) per Common Share (Note K):
Basic $ (1.72) $ 0.64 $ 2.13
Diluted $ (1.72) $ 0.64 $ 2.03
- ------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31
(Dollars in millions, except per share data) 1999 1998
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents (Note A) $ 99.4 $ 137.8
Receivables (Notes C and E) 235.0 307.2
Inventories (Notes A and E)
Raw materials and supplies 292.3 319.9
Finished and semifinished products 572.5 720.7
- --------------------------------------------------------------------------------------------------------
Total inventories 864.8 1,040.6
Other current assets 10.2 9.2
- --------------------------------------------------------------------------------------------------------
Total Current Assets 1,209.4 1,494.8
Investments and Miscellaneous Assets 123.1 98.0
Property, Plant and Equipment, less accumulated
depreciation of $4,263.6 and $4,119.4 (Note A) 2,899.7 2,655.7
Deferred Income Tax Asset - net (Note D) 960.0 920.0
Net Assets of Discontinued Stainless Operations (Note C) 3.0 100.0
Goodwill, less accumulated amortization of $19.0 and $7.0 (Notes A and C) 341.0 353.0
Total Assets $5,536.2 $5,621.5
- --------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 427.6 $ 417.9
Accrued employment costs 117.2 147.7
Other postretirement benefits (Note G) 175.0 160.0
Accrued taxes (Note D) 56.4 53.4
Debt and capital lease obligations (Note E) 110.0 44.4
Other current liabilities 147.2 161.8
- --------------------------------------------------------------------------------------------------------
Total Current Liabilities 1,033.4 985.2
Pension Liability (Notes B and G) 410.0 415.0
Other Postretirement Benefits (Notes B and G) 1,645.0 1,630.0
Long-term Debt and Capital Lease Obligations (Note E) 754.1 627.7
Deferred Gain (Note F) 117.4 136.0
Other Long-term Liabilities 299.2 338.1
Stockholders' Equity (Notes H, I and J):
Preferred Stock - at $1 per share par value (aggregate liquidation
preference of $481.2); Authorized 20,000,000 shares 11.6 11.6
Preference Stock - at $1 per share par value (aggregate liquidation
preference of $69.4); Authorized 20,000,000 shares 2.0 2.2
Common Stock - at $1 per share par value; Authorized 250,000,000;
Issued 133,588,922 and 132,227,787 shares 133.6 132.2
Common Stock - Held in treasury 2,118,615 and 2,080,799 shares at cost (60.6) (60.3)
Additional Paid-in Capital 1,961.5 1,991.6
Accumulated Deficit (771.0) (587.8)
Total Stockholders' Equity 1,277.1 1,489.5
Total Liabilities and Stockholders' Equity $5,536.2 $5,621.5
- --------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
<PAGE>
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Year Ended December 31
(Dollars in millions) 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities:
Net Income (Loss) $(183.2) $ 120.1 $ 280.7
Adjustments for items not affecting cash from operating activities:
Depreciation and amortization (Note A) 257.5 246.5 231.0
Estimated loss (gain) on exiting businesses (Note B) -- 35.0 (135.0)
Deferred income taxes (Note D) (39.0) 18.0 53.0
Other - net 0.6 16.1 28.2
Working capital (excluding investing and financing activities):
Receivables - operating (65.7) 99.4 11.6
Receivables - net sold (Note E) 70.0 64.0 (6.0)
Inventories 175.7 (59.0) 115.6
Accounts payable 10.8 (13.1) (24.5)
Employment costs and other (24.7) (40.5) (3.7)
Cash Provided from Operations Before Funding Postretirement Benefits 202.0 486.5 550.9
- ------------------------------------------------------------------------------------------------------------------------
Funding Postretirement Benefits (Note G):
Pension funding more than expense (5.0) (65.0) (270.0)
Retiree healthcare and life insurance benefit payments less than expense 20.0 10.0 --
Cash Provided from Continuing Operating Activities 217.0 431.5 280.9
Cash Provided from Operating Activities of
Discontinued Stainless Operations (Note C) 9.6 22.2 --
- ------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Capital expenditures (557.0) (328.0) (228.2)
Purchase of Lukens (Note C):
Paid to Lukens stockholders, net of cash acquired -- (327.8) --
Transaction and other related payments (6.6) (41.4) --
Cash proceeds from asset sales and other 183.6 308.8 191.8
Cash Used for Investing Activities (380.0) (388.4) (36.4)
- ------------------------------------------------------------------------------------------------------------------------
Financing Activities:
Borrowings (Note E) 249.7 201.6 1.9
Debt and capital lease payments (Note E) (65.1) (290.4) (53.4)
Cash dividends paid (Note J) (40.4) (40.4) (40.4)
Other payments (29.2) (50.7) (36.8)
Cash Provided from (Used for) Financing Activities 115.0 (179.9) (128.7)
- ------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (38.4) (114.6) 115.8
Cash and Cash Equivalents - Beginning of Period 137.8 252.4 136.6
- End of Period $ 99.4 $ 137.8 $ 252.4
- ------------------------------------------------------------------------------------------------------------------------
Supplemental Cash Flow Information:
Interest paid, net of amount capitalized $ 46.1 $ 50.2 $ 52.6
Income taxes paid (received) - net (Note D) 0.7 (14.2) 7.6
Capital lease obligations incurred 7.9 -- --
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
<PAGE>
Notes to Consolidated Financial
Statements
A. Accounting Policies
Principles of Consolidation - The consolidated financial statements include the
accounts of Bethlehem Steel Corporation and all majority-owned subsidiaries and
joint ventures.
Cash and Cash Equivalents - Cash equivalents consist primarily of overnight
investments, certificates of deposit and other short-term, highly liquid
instruments generally with original maturities at the time of acquisition of
three months or less. Cash equivalents are stated at cost plus accrued interest,
which approximates market.
Inventories - Inventories are valued at the lower of cost (principally FIFO) or
market.
Property, Plant and Equipment - Property, plant and equipment is stated at cost.
Maintenance, repairs and renewals that neither materially add to the value of
the property nor appreciably prolong its life are charged to expense. Gains or
losses on dispositions of property, plant and equipment are recognized in
income. Interest is capitalized on significant construction projects and totaled
$26 million in 1999 and $7 million in both 1998 and 1997.
Our property, plant and equipment by major classification are as follows:
December 31
(Dollars in millions) 1999 1998
- -------------------------------------------------------------------
Land (net of depletion) $ 39.9 $ 33.2
Buildings 651.0 649.2
Machinery and equipment 5,949.8 5,720.7
Accumulated depreciation (4,263.6) (4,119.4)
- -------------------------------------------------------------------
2,377.1 2,283.7
Construction-in-progress 522.6 372.0
Total $ 2,899.7 $ 2,655.7
- -------------------------------------------------------------------
Depreciation - Depreciation is based upon the estimated useful lives of each
asset group. That life is 18 years for most steel producing assets. Steel
producing assets, other than blast furnace linings, are depreciated on a
straight-line basis adjusted by an activity factor. This factor is based on the
ratio of production and shipments for the current year to the average production
and shipments for the current and preceding four years at each operating
location. Annual depreciation after adjustment for this activity factor is not
less than 75% or more than 125% of straight-line depreciation. Depreciation
after adjustment for this activity factor was $10 million less than straight-
line in 1999, $1 million less than straight line in 1998 and $5 million more
than straight-line in 1997. Through December 31, 1999, $5 million more
accumulated depreciation has been recorded under this method than would have
been recorded under straight-line depreciation. The cost of blast furnace
linings is depreciated on a unit-of- production basis.
Amortization - Goodwill, resulting from the acquisition of Lukens, is being
amortized over a 30-year life using the straight-line method. Amortization was
$12 million in 1999 and $7 million in 1998. See Note C, Acquisition of Lukens
Inc.
Asset Impairment - We periodically evaluate the carrying value of property,
plant and equipment and goodwill when events and circumstances warrant such a
review. Property, plant and equipment is considered impaired when the
anticipated undiscounted future cash flows from a logical grouping of assets is
less than its carrying value. In that event,
<PAGE>
we recognize a loss equal to the amount by which the carrying value exceeds the
fair market value of assets (less estimated disposal costs, for assets to be
disposed of). See Note B, Estimated (Loss) Gain on Exiting Businesses.
Foreign Currency, Interest Rate and Commodity Price Risk Management -
Periodically, we enter into financial contracts to manage risks. We use foreign
currency exchange contracts to manage the cost of firm purchase commitments for
capital equipment or other purchased goods and services denominated in a foreign
currency. We use interest rate swap agreements to fix the interest rate on
certain floating rate financings. We use commodity contracts to fix the cost of
a portion of our annual requirements for natural gas, zinc and other metals.
Generally, foreign currency and commodity contracts are for periods of less than
a year. The gains or losses on these contracts are reflected in the cost of
goods or services purchased when the contracts are settled. Net payments or
receipts on interest rate swaps are reflected in interest expense. Gains or
losses on swaps settled or terminated are deferred and amortized to interest
expense over the life of the related debt.
Beginning January 1, 2001, Financial Accounting Standards Board (FASB)
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities,
requires that we recognize all financial derivative contracts as either assets
or liabilities on the balance sheet and measure them at fair value. At December
31, 1999, the fair value of all financial derivative contracts was an asset of
$9 million (an asset of $10 million for natural gas and metal contracts, net of
a $1 million liability for interest rate swaps). Gains or losses on these
contracts, to the extent they have been effective as hedges, will continue to be
recognized when they are settled. Gains or losses on interest rate swaps settled
or terminated will no longer be deferred but recognized in income immediately.
Adoption of Statement No. 133 is not expected to have a material impact on our
operating results or financial position.
Environmental Expenditures - Environmental expenditures that increase the life
or efficiency of property, plant and equipment, or that will reduce or prevent
future environmental contamination are capitalized. Expenditures that relate to
existing conditions caused by past operations and have no significant future
economic benefit are expensed. Environmental expenses are accrued at the time
the expenditure becomes probable and the cost can be reasonably estimated. We do
not discount any recorded obligations for future remediation expenditures to
their present value nor do we record recoveries of environmental remediation
costs from insurance carriers and other third parties, if any, as assets until
their receipt is deemed probable.
Revenue Recognition - We recognize substantially all revenues when products are
shipped to customers and risks of ownership change.
Use of Estimates - In preparing these financial statements, we make estimates
and use assumptions that affect some of the reported amounts and disclosures.
See, for example, Note D, Taxes; Note F, Commitments and Contingent Liabilities;
and Note G, Postretirement Benefits. In the future, actual amounts received or
paid could differ from those estimates.
B. Estimated (Loss) Gain on Exiting Businesses
In 1998, we recorded a $35 million ($29 million after-tax, or $.23 per diluted
share) charge in connection with closing the Sparrows Point 160-inch plate mill.
This loss included $25 million for the net book value of certain assets and $10
million for employee benefit related costs ($5 million for pensions, $2 million
of postretirement benefits other than pensions, and $3 million for severance and
other benefits).
In 1997, we sold our 37.57 percent interest in the Iron Ore Company of Canada
for about $145 million. This sale resulted in a gain of $135 million ($113
million after tax, or $.92 per diluted share).
C. Acquisition of Lukens Inc.
On May 29, 1998, Bethlehem acquired all of the outstanding capital stock of
Lukens Inc. The aggregate purchase price of $560.6 million comprised cash of
$327.8 million, the issuance of 15.1 million shares of Bethlehem Common Stock
valued at $184.8 million, and transaction related costs of $48.0 million. The
acquisition was accounted for as a purchase. Accordingly, Lukens' results are
included in the Consolidated Financial Statements from the date of acquisition.
The fair value (in millions) of the assets acquired and liabilities assumed is
as follows:
Current assets $ 187.8
Property, plant and equipment 265.1
Net assets of discontinued stainless and
distribution businesses 316.0
Deferred tax asset, other 70.4
Goodwill 360.0
Current liabilities (110.0)
Postretirement benefit liabilities (230.0)
Debt (268.5)
Other long-term liabilities (30.2)
Purchase price, net of cash acquired $ 560.6
- ------------------------------------------------------------------------
Through January 2000, we have completed our planned divestiture of the stainless
and distribution businesses acquired in the Lukens purchase for amounts
essentially equal to $316 million. Since the date of acquisition, these
operations were accounted for as discontinued operations and incurred operating
losses of about $36 million. The net assets of these businesses are shown
separately on the balance sheet and consist primarily of property, plant and
equipment and working capital.
The unaudited pro forma combined historical results (excluding stainless and
distribution businesses) as if Lukens had been acquired at the beginning of 1997
are estimated to be:
December 31
(Dollars in millions, except per share) 1998 1997
- -------------------------------------------------------------------------
Net Sales $4,717.5 $5,147.7
Income from Operations 200.1 404.3
Net Income 121.4 286.2
Net Income Per Share:
Basic $ .62 $ 1.92
Diluted .62 1.86
- -------------------------------------------------------------------------
<PAGE>
D. Taxes
Our benefit (provision) for income taxes are as follows:
(Dollars in millions) 1999 1998 1997
- -------------------------------------------------------------------------
Federal - deferred $ 39 $ (18) $ (53)
Federal, state and foreign - current -- (6) (2)
Total benefit (provision) $ 39 $ (24) $ (55)
- -------------------------------------------------------------------------
The benefit (provision) for income taxes differs from the amount computed by
applying the federal statutory rate to pre-tax income (loss). The computed
amounts and the items comprising the total differences are as follows:
(Dollars in millions) 1999 1998 1997
- -------------------------------------------------------------------------
Pre-tax income (loss):
United States $(223) $ 142 $ 333
Foreign 1 2 3
Total $(222) $ 144 $ 336
- -------------------------------------------------------------------------
Computed amounts $ 78 $ (50) $ (118)
Change in valuation allowance (39) 25 55
Percentage depletion 6 6 5
Goodwill amortization (4) (3) --
Dividend received deduction -- -- 3
Other differences - net (2) (2) --
Total benefit (provision) $ 39 $ (24) $ (55)
- -------------------------------------------------------------------------
The components of our net deferred income tax asset are as follows:
December 31
(Dollars in millions) 1999 1998
- -------------------------------------------------------------------------
Temporary differences:
Employee benefits $ 865 $ 855
Depreciable assets (290) (315)
Other 200 200
- -------------------------------------------------------------------------
Total 775 740
Operating loss carryforward 490 465
Alternative minimum tax credits 35 35
- -------------------------------------------------------------------------
Deferred income tax asset 1,300 1,240
Valuation allowance (340) (320)
Deferred income tax asset - net $ 960 $ 920
- -------------------------------------------------------------------------
Temporary differences represent the cumulative taxable or deductible amounts
recorded in our financial statements in different years than recognized in our
tax returns. Our employee benefits temporary difference includes amounts
expensed in our financial statements for postretirement pensions, health care
and life insurance that become deductible in our tax return upon payment or
funding in qualified trusts. The depreciable assets temporary difference
represents principally cumulative tax depreciation in excess of financial
statement depreciation. Other temporary differences represent principally
various expenses accrued for financial reporting purposes that are not
deductible for tax reporting purposes until paid. At December 31, 1999, we had
regular tax net operating loss carryforwards of about $1.4 billion and
alternative minimum tax loss carryforwards of about $600 million. A regular net
operating loss of about $65 million is expected to expire when we file our 1999
federal tax return later in 2000. Regular federal tax net operating loss carry-
<PAGE>
forwards of about $145 million and $220 million will expire in 2000 and 2001,
with the balance expiring in varying amounts from 2005 through 2019, if we are
unable to use the amounts in the related federal income tax returns. Under
certain conditions involving future changes in Bethlehem's ownership, Section
382 of the Internal Revenue Code could substantially reduce and limit the annual
utilization of our net operating loss carryforwards.
FASB Statement No. 109, Accounting for Income Taxes, requires that we record a
valuation allowance when it is "more likely than not that some portion or all of
the deferred tax assets will not be realized." It further states, "forming a
conclusion that a valuation allowance is not needed is difficult when there is
negative evidence such as cumulative losses in recent years." The ultimate
realization of this deferred tax asset depends on our ability to generate
sufficient taxable income in the future. Excluding estimated (losses) gains on
exiting businesses, Bethlehem has reported net income for five of the past six
years, and has undergone substantial restructuring and made strategic capital
expenditures during the last several years. Also, we have tax planning
opportunities that could affect taxable income including selection of
depreciation methods and lives, sales of assets and timing of contributions to
our pension trust fund.
Based on our current outlook for 2000, 2001 and beyond, we believe that our
deferred tax asset will be realized by future operating results together with
tax planning opportunities. However, our significant net operating loss
carryforwards and future tax deductions from temporary differences make it
appropriate to record a valuation allowance. Accordingly, we have provided a
valuation allowance equal to 50% of the deferred tax asset related to our
operating loss carry-forward and certain temporary differences. We have provided
a valuation allowance for other postretirement benefits, except for the
temporary differences of $1,555 million as of January 1, 1992 (See Note G,
Postretirement Benefits) and of $195 million assumed in connection with the
acquisition of Lukens (See Note C, Acquisition of Lukens Inc.). If we have a tax
loss in any year in which our tax deduction for other postretirement benefits
exceeds our financial statement expense, the tax law currently provides for a
20-year carryforward of that loss against future taxable income. Because we
should have sufficient time to realize these future tax benefits, we believe a
valuation allowance is not appropriate for the deferred tax asset related to
these temporary differences for other postretirement benefits.
If we are unable to generate sufficient taxable income in the future through
operating results or tax planning opportunities, we will be required to reduce
our net deferred tax asset through a charge to income tax expense (reducing our
stockholders' equity). On the other hand, if we achieve sufficient profitability
to use all of our deferred income tax asset, we will reduce the valuation
allowance through a reduction in income tax expense (increasing our
stockholders' equity).
In addition to income taxes, we incurred costs for certain other taxes as
follows:
(Dollars in millions) 1999 1998 1997
- ------------------------------------------------------------------------------
Employment taxes $ 73.3 $ 73.8 $ 74.0
Property taxes 34.2 34.4 26.5
State taxes and other 11.7 12.2 11.9
Total other taxes $119.2 $ 120.4 $112.4
- ------------------------------------------------------------------------------
E. Debt and Capital Lease Obligations
December 31
(Dollars in millions) 1999 1998
- ------------------------------------------------------------------------------
Notes and loans:
5.69% - 5.99% Galvanizing lines financing $ 37.4 $ 74.9
10-3/8%, Due 2003 105.0 105.0
7-5/8%, Due 2004 150.0 150.0
6-1/2%, Due 2006 75.0 75.0
2% - 9.64%, Due 2000-2009 4.7 7.5
Cold mill financing, LIBOR plus 1.925%, Due 2000 60.0 --
Wide-slab caster financing, LIBOR plus 3%,
Due 2000-2004 28.3 --
Inventory credit agreement, LIBOR plus
1.125%, Due 2003 140.0 --
Debentures:
6-7/8%, Due 1999 -- 4.0
8-3/8%, Due 2001 41.6 41.6
8.45%, Due 2005 90.2 90.8
Pollution control and industrial revenue bonds:
7-1/2% - 8%, Due 2015-2024 128.9 128.9
Capital lease obligations 7.6 --
Unamortized debt discount (4.6) (5.6)
- ------------------------------------------------------------------------------
Total 864.1 672.1
Amounts due within one year (110.0) (44.4)
Long-term $ 754.1 $627.7
- ------------------------------------------------------------------------------
<PAGE>
Maturities and sinking fund requirements for the next five years are $110
million in 2000, $58 million in 2001, $20 million in 2002, $265 million in 2003,
and $167 million in 2004. At December 31, 1999 and 1998, the estimated fair
value of our debt was not materially different from the recorded amounts.
The galvanizing lines financing is collateralized by such equipment at our
Sparrows Point and Burns Harbor Divisions and will be repaid in 2000.
The 10-3/8% Notes are senior in right of payment to all existing and future
subordinated indebtedness of Bethlehem. As unsecured senior obligations, the
Notes will effectively be subordinate to secured indebtedness of Bethlehem.
These Notes contain covenants that impose certain limitations on our ability to
incur or repay debt, to pay dividends and make other distributions on or redeem
capital stock, or to sell, merge, transfer or encumber assets. See Note J,
Stockholders' Equity.
We have a credit arrangement, through June 2003, with a group of 15 domestic
and international banks for $660 million, $150 million of which can be used for
letters of credit. The arrangement consists of a $340 million receivables
sale/purchase agreement through a wholly-owned special purpose subsidiary and a
$320 million secured inventory credit agreement.
As of December 31, 1999, we had sold to the banks an ownership interest in
trade receivables of $288 million in exchange for $212 million in cash, $12
million in letters of credit and required reserves of $64 million. The
receivables were sold at a discount, based on defined short-term, investment
grade, interest rates and a fixed fee per annum for the letters of credit. The
banks are required to pay us cash for the face amount of the letters of credit
upon expiration. We pay a .15% per annum fee on the daily available commitment.
Receivables from banks are for cash and required reserves that will be
returned to us upon expiration of the letters of credit and liquidation of
receivable ownership. Supplemental information on the receivable balances at
December 31, 1999 and 1998 follows:
December 31
(Dollars in millions) 1999 1998
- ------------------------------------------------------------------------------
Trade and other $178.1 $193.3
Notes 0.8 65.6
Banks 75.7 68.3
Allowances (19.6) (20.0)
Total receivables - net $235.0 $307.2
- ------------------------------------------------------------------------------
<PAGE>
Under the secured credit agreement, inventories are pledged as collateral for
any borrowings and letters of credit. Borrowings under the agreement are subject
to collateral coverage requirements and incur interest based on defined short-
term interest rates. We had $140 million of borrowings outstanding under this
agreement at December 31, 1999. We pay a .375% per annum fee on the daily
available commitment.
Our secured credit agreement and galvanizing lines financing agreements
contain restrictive covenants that require Bethlehem to maintain a minimum
adjusted consolidated tangible net worth. At December 31, 1999, our adjusted
tangible net worth as defined by these agreements exceeded the more restrictive
of these requirements by about $300 million.
At December 31, 1999, outstanding interest rate swap agreements with notional
amounts totaling $56 million effectively fix a portion of the interest rate on
our floating rate financings at 5.75% to 8.70%. These interest rate swap
agreements expire in 2000 and 2001.
F. Commitments and Contingent Liabilities
In July 1998, we sold the No. 1 Coke Oven Battery at Burns Harbor and entered
into nine-year agreements to operate the facility and purchase about 800,000
tons of coke per year through year 2008. During 1999, we purchased 857,000 tons
of coke at a cost of $103 million. The gain on the sale of about $160 million
was deferred and is being recognized over the nine year life of the operating
and purchase agreements. In 1999, $18 million of the gain was recognized as a
reduction in cost of goods sold.
In April 1997, we sold our interest in the Iron Ore Company of Canada (IOC)
and entered into a 14-year agreement to purchase up to 1.8 million tons of iron
ore per year through the year 2004 and about 500,000 tons in the years 2005
through 2011. In 1999, we purchased iron ore from IOC at a cost of $45 million.
We, along with other parties, have guaranteed the debt of certain joint
ventures totaling $85 million as of December 31, 1999.
At December 31, 1999, we had outstanding approximately $40 million of purchase
orders for additions and improvements to our properties.
<PAGE>
The domestic steel industry is subject to various environmental laws and
regulations imposed by federal, state and local governments. Because of the
continuing evolution of the specific regulatory requirements and available
technology to comply with the requirements, we cannot reasonably estimate the
future capital expenditures and operating costs required to comply with these
laws and regulations. Although it is possible that our future operating results
in a particular quarterly or annual period could be materially affected by the
future costs of environmental compliance, we believe that such costs will not
have a material adverse effect on our consolidated financial position or on our
competitive position with respect to other integrated domestic steelmakers
subject to the same environmental requirements.
In the ordinary course of our business, we are involved in various pending or
threatened legal actions. In our opinion, adequate reserves have been recorded
for losses that are likely to result from these proceedings. If such reserves
prove to be inadequate, however, we would incur a charge to earnings that could
be material to the results of operations in a particular future quarterly or
annual period. We believe that any ultimate liability arising from these actions
will not have a material adverse effect on our consolidated financial position.
Future minimum payments under noncancellable operating leases at December 31,
1999 were $27 million in 2000, $29 million in 2001, $25 million in 2002, $23
million in 2003, $22 million in 2004 and $106 million thereafter. Total rental
expense under operating leases was $35 million, $41 million and $40 million in
1999, 1998 and 1997.
G. Postretirement Benefits
We have noncontributory defined benefit pension plans that provide
postretirement benefits for substantially all our employees. Defined benefits
are based on years of service and the five highest consecutive years of
pensionable earnings during the last ten years prior to retirement or a minimum
amount based on years of service. We fund annually the amount required under
ERISA minimum funding standards plus additional amounts as appropriate. In
addition, we currently provide other postretirement benefits for health care and
life insurance to most employees and their dependents.
The following sets forth the plans' funded status at our valuation date
together with certain actuarial assumptions used and the amounts recognized in
our consolidated balance sheets and income statements:
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
(Dollars in millions) 1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Projected benefit obligation - beginning of year $6,255 $5,495 $ 2,430 $2,055
Current service cost 60 55 11 9
Interest cost 405 407 158 153
Actuarial adjustments (254) 379 305 191
Lukens acquisition -- 460 11 195
1999 plan amendments 218 -- 20 --
Other -- 4 -- 2
Benefits / administration fees paid (569) (545) (185) (175)
Projected benefit obligation - November 30 6,115 6,255 2,750 2,430
- ----------------------------------------------------------------------------------------------------------------------
Change in plan assets:
Fair value of plan assets - beginning of year 5,915 4,930 120 120
Actual return on plan assets 709 959 -- 9
Lukens acquisition -- 425 -- 10
Employer contributions 42 153 -- --
Benefits / administration fees paid (576) (552) (20) (19)
Fair value of plan assets - November 30 6,090 5,915 100 120
- ----------------------------------------------------------------------------------------------------------------------
Unfunded projected benefit obligation 25 340 2,650 2,310
Unrecognized:
Net actuarial gain (loss) 785 315 (810) (520)
Initial net obligation (71) (105) -- --
Prior service from plan amendments (329) (142) (20) --
December accruals / contributions - net -- 7 -- --
- ----------------------------------------------------------------------------------------------------------------------
Total recognized obligation at December 31 410 415 1,820 1,790
Current -- -- (175) (160)
- ----------------------------------------------------------------------------------------------------------------------
Long-term $ 410 $ 415 $ 1,645 $1,630
<CAPTION>
Pension Benefits Other Benefits
(Dollars in millions) 1999 1998 1997 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Components of net expense:
Current service cost $ 60 $ 55 $ 48 $ 11 $ 9 $ 7
Interest cost 405 407 395 158 153 148
Expected return on plan assets (496) (447) (375) (7) (9) (11)
Amortizations:
Initial net obligation 34 34 34 -- -- --
Plan amendments 29 29 29 -- -- --
Actuarial loss -- -- -- 23 12 6
PBGC, Multiemployer, other 8 7 24 15 15 15
- ----------------------------------------------------------------------------------------------------------------------
Net expense $ 40 $ 85 $ 155 $ 200 $ 180 $ 165
Assumptions:
Expected return on plan assets 8.75% 9.00% 9.00% 6.75% 7.375% 9.00%
Discount rate - expense 6.75% 7.375% 7.75% 6.75% 7.375% 7.75%
Discount rate - projected obligation 8.00% 6.75% 7.375% 8.00% 6.75% 7.375%
Rate of compensation increase 2.90% 3.10% 3.10% 2.90% 3.10% 3.10%
Trend rate
- beginning next year n/a n/a n/a 9.5% 5.0% 6.0%
- ending rate n/a n/a n/a 4.5% 4.6% 4.6%
- ending year n/a n/a n/a 2010 2001 2001
</TABLE>
<PAGE>
As a result of recent actuarial losses from trend rates, retirement ages and
mortality and our 1999 agreement with the United Steelworkers of America that
expires in 2004, we performed a detailed review of expected future retiree
health care costs in 1999. This review resulted in changing our expected future
health care trend rates, retirement ages and mortality at November 30, 1999.
Based on the November 30, 1999 unfunded projected benefit obligations, we expect
our 2000 expense for pensions to be about $55 million and other postretirement
benefits to be about $264 million. A one percentage point change in assumed
health care cost trend rates would have an effect of $20 million on total
service and interest cost components of the 2000 other postretirement benefits
expense and of $220 million on the November 30, 1999 projected benefit
obligation for other postretirement benefits.
H. Stockholder Rights Agreement
We have a Stockholder Rights Agreement under which holders of Common Stock have
rights to purchase a new series of Preference Stock or, under certain
circumstances, additional shares of Common Stock. When exercisable under clause
(1) of the following sentence, each right entitles the holder to purchase one
one-hundredth of a share of Series A Junior Participating Preference Stock at an
exercise price of $60 per unit, and when exercisable under clauses (2) or (3) of
the following sentence, each right entitles the holder (other than the acquirer)
to purchase, for the right's exercise price, a number of shares of Common Stock
(or, in certain circumstances, other consideration) worth twice the right's
exercise price. The rights will become exercisable if (1) a person or group
commences a tender or exchange offer that would result in such person or group
owning 15% or more of the Common Stock, (2) a person or group acquires 15% or
more of Common Stock or (3) a person or group acquires 5% or more of Common
Stock and makes a filing under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976. Subsequently, upon the occurrence of certain events, holders of rights
will be entitled to purchase Common Stock of Bethlehem or a third-party acquirer
worth twice the right's exercise price. We may redeem the rights under certain
circumstances at one cent per right. If the rights are not redeemed or extended,
they will expire in October 2008.
I. Stock Options
At December 31, 1999, we had options outstanding under Plans approved by our
stockholders in 1988, 1994 and 1998. New options can be granted only under the
1998 Plan, which reserved 5,000,000 shares of Common Stock for such use. At
December 31, 1999, options on 2,605,300 shares of Common Stock were available
for granting. Under the plans, the option price is the fair market value of our
Common Stock on the date the option is granted. Options issued under the 1998
Plan become exercisable one to four years after the date granted and expire ten
years from the date granted. Exercisable options may be surrendered for the
difference between the option price and the quoted market price of the Common
Stock on the date of surrender. Depending on the circumstances, option holders
receive either Common Stock, cash, or a combination of Common Stock and cash.
Because of the surrender component in our options, related expense is recognized
periodically based on the difference between the option price and current quoted
market prices. Compensation expense recognized and weighted average fair value
for the options granted in 1999, 1998 and 1997 were not material.
At the time of our merger with Lukens, all outstanding and unexercised stock
options of Lukens converted into options to purchase Bethlehem Common Stock and
immediately vested.
Changes in options outstanding during 1999, 1998 and 1997 were as follows:
Weighted
Number of Average
Options Price
- ----------------------------------------------------------------------------
Balance December 31, 1996 3,491,650 $17
Granted 656,200 8
Terminated or canceled (377,100) 17
- ----------------------------------------------------------------------------
Balance December 31, 1997 3,770,750 15
Granted 736,250 15
Assumed in Lukens acquisition 3,834,539 9
Terminated or canceled (240,576) 20
Surrendered or exercised (2,880,665) 9
- ----------------------------------------------------------------------------
Balance December 31, 1998 5,220,298 14
Granted 1,074,950 9
Terminated or canceled (318,506) 18
Surrendered or exercised (294,665) 9
Balance December 31, 1999 5,682,077 $13
- ----------------------------------------------------------------------------
Options exercisable at the end of 1999, 1998 and 1997 were 3,884,315; 3,379,823
and 2,083,250.
<PAGE>
Information on our stock options at December 31, 1999 follows:
<TABLE>
<CAPTION>
Range of Number of Average Average Number of Average
Exercise Options Exercise Contractual Options Exercise
Prices Outstanding Price Life Exercisable Price
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$6.41 - 8.61 1,131,534 $ 8 7 Years 807,834 $ 8
9.23 - 11.12 1,020,117 10 8 Years 250,167 10
12.38 - 14.53 1,643,093 14 5 Years 1,490,043 14
15.25 - 16.47 784,823 15 8 Years 233,761 15
17.625 - 20.375 1,102,510 19 3 Years 1,102,510 19
Total 5,682,077 13 6 Years 3,884,315 14
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
J. Stockholders' Equity
<TABLE>
<CAPTION>
Preferred Stock Preference Stock Common Stock Common Stock Additional
(Shares in thousands and dollars $1.00 Par Value $1.00 Par Value $1.00 Par Value Held in Treasury Paid-In Accumulated
in millions, except per share data) Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1996 11,623 $11.6 2,518 $ 2.5 113,851 $113.9 2,018 $(59.7) $ 1,886.3 $(988.6)
Net income for year 280.7
Dividends on Preferred Stock (40.4)
Preference Stock:
Stock dividend 124 0.1 (0.1)
Issued 35 0.3
Converted (331) (0.3) 331 0.3
Common Stock:
Acquired 39 (0.3)
Issued 866 0.8 7.9
- ------------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1997 11,623 11.6 2,346 2.3 115,048 115.0 2,057 (60.0) 1,854.0 (707.9)
Net income for year 120.1
Dividends on Preferred Stock (40.4)
Preference Stock:
Stock dividend 116 0.1 (0.1)
Issued 18 0.1 0.1
Converted (305) (0.3) 305 0.3
Common Stock:
Acquired 24 (0.3)
Issued 16,875 16.9 178.0
Balance December 31, 1998 11,623 11.6 2,175 2.2 132,228 132.2 2,081 (60.3) 1,991.6 (587.8)
Net loss for year (183.2)
Dividends on Preferred
Stock (40.4)
Preference Stock:
Stock dividend 108 0.1 (0.1)
Issued 3 0.1
Converted (276) (0.3) 276 0.3
Common Stock:
Acquired 38 (0.3)
Issued 1,085 1.1 10.3
Balance December 31, 1999 11,623 $11.6 2,010 $ 2.0 133,589 $133.6 2,119 $(60.6) $ 1,961.5 $(771.0)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
In all years presented, total non-owner changes in equity was the same as net
income or loss.
<PAGE>
Preferred and Preference Stock issued and outstanding:
December 31
(Shares in thousands) 1999 1998
- ----------------------------------------------------------------------------
Preferred Stock -Authorized 20,000 shares
$5.00 Cumulative Convertible Preferred Stock 2,500 2,500
$2.50 Cumulative Convertible Preferred Stock 4,000 4,000
$3.50 Cumulative Convertible Preferred Stock 5,123 5,123
Preference Stock - Authorized 20,000 shares
Series "A" 5% Cumulative Convertible Preference Stock 1,383 1,514
Series "B" 5% Cumulative Convertible Preference Stock 627 661
- ----------------------------------------------------------------------------
Each share of $3.50 Cumulative Convertible Preferred Stock issued in 1993 is
convertible into 2.39 shares of Common Stock, subject to certain events. Each
share of the $5.00 Cumulative Convertible Preferred Stock and the $2.50
Cumulative Convertible Preferred Stock issued in 1983 is convertible into 1.77
and .84 shares of Common Stock, subject to certain events.
In accordance with our labor agreements, we issue Preference Stock to a
trustee under the Employee Investment Program. Series "A" and Series "B" of
Preference Stock have a cumulative dividend of 5% per annum payable at our
option in cash, Common Stock or additional shares of Preference Stock. Each
share of Preference Stock is entitled to vote with Common Stock on all matters
and is convertible into one share of Common Stock.
Under the covenants of our 10-3/8% Notes, we can pay future dividends on our
Common Stock, among certain other restrictions, only if such cumulative
dividends do not exceed the aggregate net cash proceeds from the sale of capital
stock plus 50% of our consolidated net income and minus 100% of our consolidated
net loss since the second quarter of 1993, excluding certain restructuring
charges and other adjustments. The amount available at December 31, 1999 under
this covenant was about $280 million.
<PAGE>
K. Earnings Per Share
The following presents the details of our earnings per share calculations:
<TABLE>
<CAPTION>
(Shares in thousands and dollars in millions, except per share data) 1999 1998 1997
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic Earnings Per Share
Net income (loss) $ (183.2) $ 120.1 $ 280.7
Less dividend requirements:
$2.50 preferred dividend-cash (10.0) (10.0) (10.0)
$5.00 preferred dividend-cash (12.5) (12.5) (12.5)
$3.50 preferred dividend-cash (17.9) (17.9) (17.9)
5% preference dividend-stock (0.8) (1.3) (1.2)
- ------------------------------------------------------------------------------------------------------
Total preferred and preference dividends (41.2) (41.7) (41.6)
Net income (loss) applicable to Common Stock $ (224.4) $ 78.4 $ 239.1
Average Shares of Common Stock outstanding 130,199 122,585 112,439
Basic Earnings Per Share $ (1.72) $ 0.64 $ 2.13
- ------------------------------------------------------------------------------------------------------
(Shares in thousands and dollars in millions, except per share data) 1999 1998 1997
Diluted Earnings Per Share
Net income (loss) $ (183.2) $ 120.1 $ 280.7
Less dividend requirements:
$2.50 preferred dividend-cash (10.0) (10.0) (10.0)
$5.00 preferred dividend-cash (12.5) (12.5) (12.5)
$3.50 preferred dividend-cash (17.9) (17.9) --
5% preference dividend-stock (0.8) -- --
Net income (loss) applicable to Common Stock $ (224.4) $ 79.7 $ 258.2
- ------------------------------------------------------------------------------------------------------
Average shares of Common Stock equivalents
and other potentially dilutive securities outstanding:
Common Stock 130,199 122,585 112,439
Stock Options * 429 --
$2.50 Preferred Stock * * *
$5.00 Preferred Stock * * *
$3.50 Preferred Stock * * 12,255
5% Preference Stock * 2,175 2,346
Total 130,199 125,189 127,040
Diluted Earnings Per Share $ (1.72) $ 0.64 $ 2.03
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Antidilutive
L. Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
(Dollars in millions, except per share data) 1999 1998
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $959.5 $984.8 $958.3 $1,012.2 $1,132.5 $1,189.7 $1,143.1 $1,012.5
Cost of sales 888.4 915.5 962.0 942.9 957.0 1,008.8 988.4 929.0
Net income (loss) (25.6) (29.7) (89.8) (38.1) 68.6 37.6 37.1 (23.2)
Net income (loss) per Common Share
- basic $(0.28) $(0.31) $(0.77) $ (0.37) $ 0.51 $ 0.23 $ 0.21 $ (0.26)
- diluted $(0.28) $(0.31) $(0.77) $ (0.37) $ 0.49 $ 0.23 $ 0.21 $ (0.26)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Report of Independent Auditors
To the Board of Directors
and Stockholders of
Bethlehem Steel Corporation
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and of cash flows present fairly, in all
material respects, the financial position of Bethlehem Steel Corporation and its
subsidiaries at December 31, 1999 and 1998, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1999, in conformity with accounting principles generally accepted in the
United States. 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 auditing
standards generally accepted in the United States, 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 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.
1177 Avenue of the Americas
New York, NY 10036
January 26, 2000
<PAGE>
Five-Year Financial and Operating Summaries
<TABLE>
<CAPTION>
(Dollars in millions, except per share data) 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings Statistics
Net sales $ 3,914.8 $ 4,477.8 $ 4,631.2 $ 4,679.0 $ 4,867.5
Costs and Expenses:
Employment costs 1,291.0 1,367.0 1,439.0 1,555.0 1,683.5
Materials and services 2,499.0 2,593.2 2,683.8 2,680.6 2,592.7
Depreciation and amortization 257.5 246.5 231.0 268.7 284.0
Taxes (other than employment and income taxes) 45.9 46.6 38.4 38.1 38.4
Estimated loss (gain) on exiting businesses -- 35.0 (135.0) 465.0 --
Total Costs and Expenses 4,093.4 4,288.3 4,257.2 5,007.4 4,598.6
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) from operations (178.6) 189.5 374.0 (328.4) 268.9
Financing income (expense):
Interest and other financing costs (51.9) (55.4) (47.5) (53.3) (60.0)
Interest income 8.3 10.0 9.2 5.9 7.7
Benefit (provision) for income taxes 39.0 (24.0) (55.0) 67.0 (37.0)
- ---------------------------------------------------------------------------------------------------------------------
Net income (loss) (183.2) 120.1 280.7 (308.8) 179.6
Dividends on Preferred and Preference Stock 41.2 41.7 41.6 41.9 42.4
Net income (loss) applicable to Common Stock $ (224.4) $ 78.4 $ 239.1 $ (350.7) $ 137.2
- ---------------------------------------------------------------------------------------------------------------------
Net income (loss) per Common share
- basic $ (1.72) $ 0.64 $ 2.13 $ (3.15) $ 1.24
- diluted $ (1.72) $ 0.64 $ 2.03 $ (3.15) $ 1.23
- ---------------------------------------------------------------------------------------------------------------------
Balance Sheet Statistics
Cash and cash equivalents $ 99.4 $ 137.8 $ 252.4 $ 136.6 $ 180.0
Receivables, inventories and other current assets 1,110.0 1,357.0 1,211.6 1,351.8 1,345.8
Current liabilities (1,033.4) (985.2) (910.8) (957.4) (1,049.6)
- ---------------------------------------------------------------------------------------------------------------------
Working capital $ 176.0 $ 509.6 $ 553.2 $ 531.0 $ 476.2
Current ratio 1.2 1.5 1.6 1.6 1.5
Property, plant and equipment - net $ 2,899.7 $ 2,655.7 $ 2,357.7 $ 2,419.8 $ 2,714.2
Total assets 5,536.2 5,621.5 4,802.6 5,109.9 5,700.3
Total debt and capital lease obligations 864.1 672.1 493.4 546.7 638.3
Stockholder's equity 1,277.1 1,489.5 1,215.0 966.0 1,238.3
Total debt as a percent of invested capital 40% 31% 29% 36% 34%
- ---------------------------------------------------------------------------------------------------------------------
Other Statistics
Capital expenditures $ 557.0 $ 328.0 $ 228.2 $ 259.0 $ 266.8
Raw steel production capability
at year end (net tons in thousands) 11,300 11,300 10,500 10,500 11,500
Raw steel production (net tons in thousands) 9,406 10,191 9,599 9,447 10,449
Steel products shipped (net tons in thousands) 8,416 8,683 8,802 8,782 8,986
Pensioners receiving benefits at year end 74,600 74,300 70,400 70,100 71,000
Average number of employees
receiving pay (excluding stainless employees) 15,500 15,900 16,400 17,800 19,500
Common Stock outstanding at
year end (shares in thousands) 131,027 129,490 112,991 111,834 110,708
Common stockholders at year end 33,000 35,000 35,000 37,000 39,000
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned directors
and officers of Bethlehem Steel Corporation, a Delaware corporation,
constitutes and appoints Curtis H. Barnette, Gary L. Millenbruch, and Lonnie
A. Arnett, and each of them, with full power to act without the others, as his
or her true and lawful attorney-in-fact and agent, with full and several power
of substitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign Bethlehem Steel Corporation's Annual Report on Form
10-K, and to file the same, with all exhibits thereto, and other documents in
connection therewith, including any amendments thereto, with the Securities and
Exchange Commission under the provisions of the Securities and Exchange Act of
1934, as amended, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as they or he might or could do in person, hereby
ratifying and confirming all the said attorneys- in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals as of the 26th day of January, 2000.
/s/ Curtis H. Barnette /s/ Gary L. Millenbruch
- --------------------------------- --------------------------------------
Curtis H. Barnette Gary L. Millenbruch
Chairman, Chief Executive Officer Vice Chairman, Chief Financial Officer
(principal executive officer) (principal financial officer)
and Director and Director
/s/ Lonnie A. Arnett
- ---------------------------------
Lonnie A. Arnett
Vice President and Controller
(principal accounting officer)
<PAGE>
2
/s/ Benjamin r. Civiletti /s/ William M. Landuyt
- ----------------------------- ------------------------------
Benjamin R. Civiletti William M. Landuyt
Director Director
/s/ Worley H. Clark /s/ Robert McClements, Jr.
- ----------------------------- ------------------------------
Worley H. Clark Robert McClements, Jr.
Director Director
/s/ John B. Curcio /s/ Roger P. Penny
- ----------------------------- ------------------------------
John B. Curcio Roger P. Penny
Director Director
/s/ Duane R. Dunham /s/ Shirley D. Peterson
- ----------------------------- ------------------------------
Duane R. Dunham Shirley D. Peterson
Director Director
/s/ Lewis B. Kaden /s/ Dean P. Phypers
- ----------------------------- ------------------------------
Lewis B. Kaden Dean P. Phypers
Director Director
/s/ Harry P. Kamen /s/ John R. Ruffle
- ----------------------------- ------------------------------
Harry P. Kamen John F. Ruffle
Director Director
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 99
<SECURITIES> 0
<RECEIVABLES> 255
<ALLOWANCES> 20
<INVENTORY> 865
<CURRENT-ASSETS> 1209
<PP&E> 7164
<DEPRECIATION> 4264
<TOTAL-ASSETS> 5536
<CURRENT-LIABILITIES> 1033
<BONDS> 754
0
14
<COMMON> 134
<OTHER-SE> 1129
<TOTAL-LIABILITY-AND-EQUITY> 5536
<SALES> 3915
<TOTAL-REVENUES> 3915
<CGS> 3709
<TOTAL-COSTS> 4093
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 52
<INCOME-PRETAX> (222)
<INCOME-TAX> 39
<INCOME-CONTINUING> (183)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (183)
<EPS-BASIC> (1.72)
<EPS-DILUTED> (1.72)
</TABLE>
