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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended September 30, 1994, or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ___________ to
______________.
COMMISSION FILE NO. 1-10459
GENEVA STEEL COMPANY
(Exact name of Registrant as specified in its charter)
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<S> <C>
UTAH 93-0942346
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10 SOUTH GENEVA ROAD
VINEYARD, UTAH 84058
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (801) 227-9000
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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CLASS A COMMON STOCK, NEW YORK STOCK EXCHANGE
NO PAR VALUE PACIFIC STOCK EXCHANGE
WARRANTS TO PURCHASE
CLASS A COMMON STOCK PACIFIC STOCK EXCHANGE
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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
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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 the 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/
The aggregate market value of the Class A Common Stock held by
non-affiliates of the Registrant, based upon the closing sale price of the
Class A Common Stock on the New York Stock Exchange on December 21, 1994, was
approximately $186,146,000. Shares of Class A Common Stock held by each
officer and director and by each person who may be deemed to be an affiliate
have been excluded. As of December 21, 1994, the Registrant had 13,113,488 and
20,639,688 shares of Class A and Class B Common Stock, respectively,
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Parts of the following documents are incorporated by reference in
Parts II, III and IV of this Report: (1) Registrant's Annual Report to
Shareholders for the fiscal year ended September 30, 1994 (Parts II and IV),
and (2) Registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held on March 28, 1995 (Part III).
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PART I
ITEM 1. BUSINESS.
BACKGROUND
Geneva Steel Company (the "Company" or "Geneva") owns and operates the
only integrated steel mill operating west of the Mississippi River. The
Company's mill manufactures hot-rolled sheet, plate and pipe products for sale
primarily in the western and central United States.
The steel mill is located 45 miles south of Salt Lake City, Utah on
approximately 1,400 acres. The steel mill's facilities include four coke oven
batteries, three blast furnaces, two Q-BOP furnaces, a continuous casting
facility, a combination continuous rolling mill and various finishing
facilities. The Company's coke ovens produce coke from a blend of various
grades of metallurgical coal. Coke is used as the principal fuel for the
Company's blast furnaces, which convert iron ore into liquid iron. The liquid
iron is then blended with scrap metal and metallic alloys and further refined
in the Q-BOP furnaces to produce liquid steel. With the completion of the
continuous casting facility and related improvements, the liquid steel is now
continuously cast into slabs. The Company intends to process the majority of
its liquid steel through the caster facility, and in November 1994 more than
92% of the Company's steel slabs were processed through the caster.
Alternatively, liquid steel can be poured into ingot molds, with the ingots
being subsequently rolled into slabs. Steel slabs are either direct rolled or
allowed to cool and then reheated prior to rolling. Slabs are rolled into
hot-rolled steel products (sheet, plate and pipe) in the Company's rolling and
finishing mills.
The Company acquired the steel mill and related facilities from USX
Corporation ("USX") on August 31, 1987 at a price of approximately $44.1
million plus the assumption of certain liabilities. USX had operated the mill
from 1944 until 1986, when it placed the mill on hot-idle status. Pursuant to
the acquisition agreement between USX and the Company, USX retained liability
for retiree life insurance, health care and pension benefits relating to
employee service prior to the acquisition. USX also indemnified the Company
for costs due to any environmental condition existing on the Company's real
property as of the acquisition date that is determined to be in violation of
environmental laws or otherwise results in the imposition of environmental
liability, subject to the Company's sharing the first $20 million of
certain clean-up costs on an equal basis. See "-- Environmental Matters."
Since the Company began operations, its strategy has been to be a low-cost
producer and to optimize its product quality and mix.
CAPITAL PROJECTS
Overview
In February 1990, the Company announced a major modernization program
intended to strengthen its competitive position. The modernization program was
undertaken to reduce operating costs, broaden the Company's product line,
improve product quality and increase throughput capacity of finished
flat-rolled steel products from approximately 1.4 to 1.9 million tons per year.
The modernization program provides for improvements principally to the
Company's steelmaking, casting, rolling and finishing facilities. Management
believes that the modernization program has enabled the Company to produce the
widest continuously cast steel slabs in the world and is positioning the
Company for additional market penetration, particularly with respect to plate
products.
The Company has spent approximately $67 million, $83 million and $165
million on capital projects during the fiscal years ended September 30, 1992,
1993 and 1994, respectively. These expenditures were made primarily in
connection with the Company's ongoing modernization efforts. Management
believes that the modernization projects completed to date have resulted in
certain reduced production costs, increased throughput capacity and improved
product quality and yield. However, production inefficiencies and other
transition costs associated with completion and implementation of various
capital projects had a negative impact on the Company's operations during
fiscal year 1994. See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations."
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The Company's capital projects, including its modernization efforts,
are planned from the outset to be flexible and are managed accordingly. The
Company revises its capital projects from time to time in response to various
technological, financial, market and other operating considerations.
Modernization Projects
Since announcing the modernization program, the Company has (i)
completed a new continuous casting facility and related improvements, (ii)
installed two Q-BOP furnaces, (iii) completed a direct rolling and large coil
project, including installation of a coilbox and an in-line steel slab
conditioning or "scarfing" facility, (iv) installed various environmental
projects, including a biological wastewater treatment facility, benzene
mitigation equipment, coke oven gas desulfurization facility and other
projects, (v) completed the first phase of the wide plate coiler project, and
(vi) completed various other projects, including the conversion of the
Company's broadside mill to a re-powered and upgraded reversing mill. The
following discussion highlights the major components of projects that were
completed during fiscal year 1994 or which remain to be completed.
Continuous Casting Facility and Related Improvements. The Company
completed construction of its continuous caster in April 1994. The continuous
casting facility substantially replaces the Company's ingot mold operations.
The caster project includes a ladle metallurgy furnace, which allows the
Company to control more precisely the temperature and metallurgy of its liquid
steel. The Company has situated its caster and related improvements to feed
slabs directly into its rolling mill to minimize the cost of handling and
reheating slabs. The Company believes that the continuous caster and related
improvements have improved the mill's finished product yield, reduced certain
production costs, increased throughput capacity and improved the metallurgical
and surface quality of its products. The Company is nearing completion of the
start-up period of the project and the second phase of the wide plate coiler
project described below. Upon completion of these projects, the Company
expects to achieve a 1.9 million ton annual production rate, realize additional
operating cost savings, increase its percentage of plate products sold and
realize other operational benefits.
Wide Plate Coiler and Related Plate Processing Facilities. The wide
coiled plate project will allow the Company to produce plate in coil form up to
126 inches in width and 1 inch in thickness. The wide coils can either be
shipped directly to customers or uncoiled, sheared and leveled on the Company's
new cut-to-length line. Geneva has divided the project into two phases, the
first of which allows Geneva to coil plate up to 96 inches in width and to
uncoil, shear and level plate up to 126 inches wide. Geneva began rolling wide
coiled plate in July 1994. In connection with completion of the first phase,
the Company also converted its broadside mill to a reversing mill as described
above. The second phase of the project includes improvements designed to coil
plate up to 126 inches in width and 1 inch in thickness. This phase is
currently expected to be completed in early calendar year 1995. The Company
believes that the capability to produce and process wide plate in coil form
will be a significant competitive advantage.
Rolling Mill Finishing Stand Improvements. The Company has a
six-stand 132-inch combination continuous rolling mill, the widest of its type
in the world, which gives the Company the flexibility to alter its mix of sheet
and plate products in response to customer demands and changing market
conditions. The final phase of the rolling mill modernization includes
hydraulic gauge control, roll bending and automatic roll change. These
improvements are designed to enhance the shape and gauge of the Company's
products and to increase throughput capacity. In light of favorable steel
market conditions and the Company's improved competitive position resulting
from the continuous caster and other modernization projects, the Company has
elected to defer completion of the finishing stand improvements. The Company
currently anticipates completing the improvements in the Spring of 1996.
Additional Capital Projects
Additional Slab Heating Capacity. As part of its modernization
efforts, the Company modified its soaking pit furnaces to hold hot slabs taken
from the continuous caster and increase the temperature of the slabs in
preparation for rolling. As the continuous caster and other related capital
projects were implemented, the Company encountered difficulties in achieving
sufficient heating capacity from the soaking pits. Consequently, the Company
is using both the soaking pits and its existing reheat furnaces to heat slabs.
Utilization of both facilities has
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prevented the Company from realizing approximately $8 to $10 per ton of the
estimated operating cost savings previously associated with the Company's
modernization program. The Company is, therefore, investigating various
facilities designed to increase its slab heating capacity and achieve the
estimated operating cost savings. The Company's preliminary cost estimate for
the additional slab heating capacity is approximately $30 million.
Ironmaking Facility. The Company has recently commenced construction
of a plasma-fired cupola ironmaking facility. The cupola functions similar to
a blast furnace although it utilizes only a fraction of the coke required by
the blast furnace to produce liquid iron. The cupola can utilize scrap steel,
directly reduced iron or other metallic inputs. The cupola utilizes electric
plasma technology as a secondary fuel source to further reduce coke
requirements and substantially increase throughput. The technology represents
a means of meeting short-term ironmaking needs while providing a broader
flexibility of inputs and decreasing coke requirements. The cupola was
originally constructed by a steel company in Texas, but was never operated.
Geneva purchased the cupola and is in the process of having the facility
dismantled and shipped to the Company's mill. The estimated cost of the cupola
is approximately $29 million.
Development Venture
The Company, together with Air Products and Chemicals, Inc. and
Centerior Energy Corporation, has jointly agreed to pursue a unique project at
Geneva intended to demonstrate the commercial viability of an energy efficient,
environmentally sound process for producing hot metal and electricity. This
project, known as Clean Power from Integrated Coal/Ore Reduction (CPICOR(TM)),
was selected under the United States Department of Energy's Clean Coal
Technology Demonstration Program. The project includes construction and
operation of a 3,000 ton per day COREX(R) cokeless ironmaking unit. Potential
advantages of the project for the Company include additional ironmaking
capacity, decreased dependence on coke, increased energy production and various
environmental benefits. The project, which includes up to $150 million in cost
share funding from the Department of Energy, is not anticipated to startup
until 1999 and is still subject to a number of contingencies.
Project Management
The Company's capital projects are under continuous review, and it is
possible that the Company may in the future elect to make further changes in
the design and timing of, and amounts budgeted for, its capital projects and
improvements. Geneva plans to manage the construction and completion of the
modernization and additional capital projects as justified by future operating
results, availability of funds, market conditions and other factors.
There can be no assurance that the projected benefits of the
modernization and other capital projects will be fully achieved, sufficient
product demand will exist for the Company's additional throughput capacity, or
recent declines in production interruptions and other transition costs will
continue, or the planned capital projects can be completed in a timely manner
or for the amounts budgeted. The Company anticipates that, in any event, it
may incur significant start-up and transition costs as planned capital projects
are implemented. Notwithstanding completion of the modernization program and
other capital projects discussed above, management believes that the Company
will continue to require future improvements and additional capital projects
that are critical to the Company's long-term ability to compete and that will
require substantial capital expenditures.
PRODUCTS
The Company's principal product lines are hot-rolled sheet, plate and
pipe products. The Company also sells semi-finished slabs from time to time,
as well as non-steel materials that are by-products of its steelmaking
operations.
The Company has a 132-inch combination continuous rolling mill, the
widest of its type in the world, which gives the Company the flexibility to
alter its mix of sheet and plate products in response to customer demands and
changing market conditions and the opportunity to maximize utilization of the
facilities. Generally, the Company manufactures products in response to
specific customer orders. During fiscal year 1994, the Company increased its
percentage of sheet products sold. This shift was due primarily to the
Company's suspension of certain plate
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production while upgrades to various processing equipment were being
implemented and to favorable pricing associated with sheet products. Product
mix shifts are also determined by Geneva's product mix optimization efforts.
These efforts generally allow Geneva to focus on products with the highest
margin contribution based on throughput efficiency. The Company's product
sales mix for fiscal years 1990 through 1994 is shown below:
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FISCAL YEAR ENDED SEPTEMBER 30,
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1990 1991 1992 1993 1994
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Sheet . . . . . . . . . . . . . . . . . . . 42% 42% 45% 56% 65%
Plate . . . . . . . . . . . . . . . . . . . 46 42 41 31 24
Pipe . . . . . . . . . . . . . . . . . . . 9 12 11 10 7
Slabs and non-steel . . . . . . . . . . . . 3 4 3 3 4
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Total . . . . . . . . . . . . . . 100% 100% 100% 100% 100%
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Sheet. The mill produces hot-rolled sheet steel which is sold in
sheet or coil form in thicknesses of .06 to .230 of an inch and widths of 40 to
74 inches. Maximum widths vary according to thickness. Included in the sheet
products made by the Company are cut length sheet, hot-rolled bands and
tempered coil. Sheet is used in a variety of applications such as storage
tanks, light structural components and supports, and welded tubing.
Plate. The Company's plate products consist of hot rolled carbon and
high-strength low alloy steel plate in coil form, cut to length and flat rolled
in widths varying from 48 to 126 inches and in thicknesses varying from .1875
of an inch to 3 inches. The Company produces both strip mill plate and flat
plate. Plate can be used for heavy steel structures such as storage tanks,
railroad cars, ships and bridges.
Pipe. The Company produces electric resistance welded pipe ("ERW
pipe") ranging from approximately 7 to 16 inches in diameter. ERW pipe is
manufactured by heating and fusing the edges of the steel to form the pipe.
The Company's ERW pipe is used primarily in pipelines, including water, natural
gas and oil transmission and distribution systems, and in standard and
structural pipe applications.
Slabs and Non-Steel. The Company occasionally sells steel slabs when
excess capacity is available and market conditions are favorable. The Company
also sells products produced by its foundry operation and various by-products
resulting from its steelmaking activities.
MARKETING; PRINCIPAL CUSTOMERS
The Company sells its sheet and plate products primarily to steel
service centers and distributors, which in recent years have become one of the
largest customer groups in the domestic steel industry. Service centers and
distributors accounted for approximately 80% of the Company's sales in fiscal
1994. The Company also sells its products to steel processors and various
end-users, including manufacturers of welded tubing, highway guardrail, storage
tanks, railcars, ships and agricultural and industrial equipment. The Company
believes that sales of its products, either directly or through service centers
or distributors, to automotive or appliance manufacturers have been immaterial.
The Company has developed a broad customer base. In fiscal year 1994, the
Company sold its products domestically to approximately 230 customers in 41
states and abroad through exporters to several customers in Canada and Mexico.
The Company sells its ERW pipe to end-users and through distributors
primarily in the western and central United States where demand for pipe
fluctuates in partial response to oil and gas industry cycles. The Company
also sells products in the export market. Export sales, which generally have
lower margins than domestic sales, accounted for approximately 5.9%, 1.9% and
0.3% of the Company's net sales during fiscal years 1992, 1993 and 1994,
respectively. Export sales have decreased as a result of the Company's
involvement in certain trade cases in Canada and Mexico and improved domestic
market conditions.
The Company's principal direct marketing efforts are in the western
and central United States. Five sales representatives are employed in the
western market, two of whom are located in the greater Los Angeles area, the
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largest single market for steel in the western United States. Based on
industry information and the Company's own estimates, the Company believes that
it sells a significant portion of the hot-rolled sheet and plate purchased in
the eleven western states.
In the central United States, the Company currently has a small share
of the market. Management believes, however, that there are attractive
opportunities for revenue growth in this market. Substantially all of Geneva's
sales in the central United States are made through a sales arrangement with
Mannesmann Pipe and Steel Corporation ("Mannesmann"), the United States steel
marketing subsidiary of Mannesmann A.G., a major German industrial company.
The sales arrangement entitles Mannesmann to sell the Company's products in 15
central states and to certain of the Company's customers in the eastern United
States, and to receive a variable commission on its sales. Mannesmann has an
exclusive right to sell the Company's products in these areas, except that the
Company is entitled to make direct sales subject to a commission payable to
Mannesmann on certain sales. Within the 15 central states mentioned above,
Mannesmann is prohibited from selling products that compete with the Company's
products. The payment terms provide that Mannesmann make a production
prepayment of up to $10 million. The Company is currently considering amending
its agreement with Mannesmann to increase the amount of the production
prepayment to $20 million. See "Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations." The prepayment is recorded
as a production prepayment until the product is shipped, at which time the sale
is recorded. The arrangement may be terminated upon six month's notice by
either Mannesmann or the Company in December 1995 and at three-year intervals
thereafter. Mannesmann accounted for approximately 41% and 42% of the
Company's net sales in fiscal years 1993 and 1994, respectively. Any
termination or disruption of the Company's arrangements with Mannesmann could
have a material adverse effect on the Company's results of operations and
financial condition.
The Company's strategy is to maintain its core market in the western
United States, where its market position is the strongest, and to increase
growth in the midwest and eastern regions, while focusing on profit
maximization. The Company believes that service centers and distributors
account for a substantially larger proportion of its sales than of sales for
the industry as a whole. In addition, demand from this customer group
historically has experienced wide fluctuations due to substantial changes in
the group's inventory levels. In view of these factors, the Company intends to
develop a more diverse customer base, including steel processors and various
end-users, while retaining strong relationships with service center and
distributor customers. The Company expects its modernization efforts to play a
critical role in the implementation of these strategies by enabling the Company
to provide higher quality products and to gain access to a wider range of
customers than previously permitted.
The Company generally produces steel in response to specific orders.
As of November 30, 1994, the Company had estimated total orders on hand for
approximately 257,000 tons compared to approximately 307,000 tons as of
November 30, 1993. The Company does not believe that its orders on hand are
necessarily indicative of future operating results.
EMPLOYEES; LABOR AGREEMENT
The Company has a workforce of approximately 2,680 full-time
employees, of whom approximately 540 are salaried and approximately 2,140 are
hourly. The Company's 194 operating management personnel generally have had
considerable experience in the steel industry. Almost half have more than 20
years of industry experience, with most of the remaining managers ranging in
experience from 10 to 20 years. The Company's senior operating managers have
an average of over 25 years of industry experience.
Substantially all of the Company's hourly employees are represented by
the United Steelworkers of America under a collective bargaining agreement that
expires in February 1995. The Company believes that its labor agreement is an
important competitive advantage. Although the Company's wage rates under the
agreement are high by local standards and comparable to regional competitors,
its total hourly labor costs are substantially below recent industry averages
compiled by the American Iron and Steel Institute. Unlike labor agreements
negotiated by many other domestic integrated steel producers, the Company's
labor agreement does not contain traditional work rules, limits the Company's
financial pension obligations to a defined contribution plan, entitles the
Company to reduce its profit sharing obligations by an amount equal to a
portion of its capital expenditures, and does not require
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the Company to pay any retiree medical expenses. The Company did not assume
any pension obligations or retiree medical obligations related to workers'
service while the plant was owned by USX.
The Company's labor agreement also contains a performance dividend
plan designed to reward employees for increased shipments of steel products.
Compensation under the plan includes a monthly guarantee of $.33 per hour for
all represented workers. The guaranteed payment is based on an annualized
shipment rate of 1.5 million tons. As shipments increase above this level,
compensation under the plan also increases.
Geneva has also implemented a performance dividend plan for all
non-union employees that provides additional compensation as shipment
levels increase. Unlike the union plan, however, there are no guaranteed
payments.
The Company's profit sharing obligations under the labor agreement are
based on earnings before taxes, extraordinary items and profit sharing. Unlike
the profit sharing arrangements of many major domestic integrated steel
producers, the Company's profit sharing obligations are reduced by an amount
equal to a portion of its capital expenditures. The Company is required to
contribute each year to the profit sharing pool 10% of earnings before taxes,
extraordinary items and profit sharing after deducting 25% of the first $50
million of capital expenditures and 30% of all additional capital expenditures
in such year (including, in each case, capital maintenance). All payments made
to workers under the union performance dividend plan are deducted from any
profit sharing obligations otherwise required.
Given the expiration of the labor agreement in February 1995, the
Company will commence negotiations with the United Steelworkers of
America in the near-term. There can be no assurance regarding the effect of
future labor negotiations or the outcome thereof.
RAW MATERIALS AND RELATED SERVICES
The Company is strategically located near major deposits of several of
the principal raw materials used to make steel, including iron ore, high
volatile coal, limestone and natural gas. The Company believes that, in
certain instances, this proximity, together with the Company's importance as a
customer to suppliers of these materials, enhances its ability to obtain
competitive terms for these raw materials. As the Company evaluates emerging
technologies for the production of iron and steel, it intends to focus on those
technologies that allow increased utilization of resources available in the
western United States.
Iron Ore. The Company's steelmaking process can use both iron ore and
iron ore pellets. In recent years, the Company has used a higher percentage of
iron ore pellets in an effort to maximize operating efficiencies of its blast
furnaces in response to increased production needs. Iron ore pellets are
generally purchased from USX as discussed below and also purchased in the spot
market. As the Company increases production levels, it may continue to use a
higher percentage of iron ore pellets. The Company obtains its iron ore from
deposits at mines in Utah. The ore is mined by an independent contractor under
claims owned by the Company and transported by railroad to the steel mill. The
Company expects future costs of recovery of this ore to increase gradually as
the reserves are depleted.
The Company has historically purchased iron ore pellets from USX
pursuant to a contract that expired in August 1994 under which USX was
obligated to supply, and the Company was obligated to purchase, 58% of the
Company's iron unit requirements. The Company believes USX agreed to a new
contract that includes higher pellet prices; nevertheless, USX has recently
attempted to reopen contract negotiations in an effort to obtain even more
favorable pricing terms. The Company is currently attempting to resolve the
matter with USX.
Coal and Coke. The coke batteries operated by the Company require a
blend of various grades of metallurgical coal. The Company currently obtains
high volatile coal from a mine in western Colorado owned by Pacific Basin
Resources under a contract that expires in March 1997. The Company also
purchases various grades of coal under short-term contracts from sources
in the eastern United States. Although the Company
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believes that such coal is available from several alternative eastern
suppliers, the Company is subject to price volatility resulting from
fluctuations in the spot market. In the future, the Company may purchase
eastern coal under longer-term contracts. There can be no assurance that the
Company's blend of coal will not change or that its overall cost of coal
will not increase.
The Company is currently purchasing coke as a result of its increasing
steel production and decreasing capacity to produce its own coke. The ability
of other domestic integrated steel mills to produce coke is also decreasing,
thereby increasing the demand for purchased coke in the United States. The
Company purchases coke from sources in Japan and China pursuant to two separate
agreements. As the Company's consumption of purchased coke increases, the
Company's average cost of coke used in the manufacturing process will be
higher.
Energy. The Company's steel operations consume large amounts of
oxygen, electricity and natural gas. The Company purchases oxygen under a
contract with Big Three Industries, Inc. expiring in calendar year 1998. The
oxygen is delivered from an air separation plant located on the Company's
premises but owned by the supplier. In July 1990, the Company entered into an
agreement with Praxair, Inc. ("Praxair") to construct, own and operate a
facility (the "Oxygen Facility") at the steel mill for the production,
compression, storage and vaporization of additional oxygen, as well as nitrogen
and argon. The contract expires in 2006 and specifies that the cost associated
with the construction and operation of the Oxygen Facility be borne by Praxair.
The Company is required to pay a monthly charge for the right to receive 100%
of the production of the Oxygen Facility. Management anticipates that
additional oxygen capacity will be necessary as a result of the Company's
efforts to increase production levels.
The Company generates a substantial portion of its electrical
requirements using a 50 megawatt rated generator located at the steel mill and
currently purchases the remainder of its electrical requirements from Utah
Power & Light Company ("UP&L") under a 90 megawatt interruptible power contract
expiring in 1999. The contract provides for price increases tied to the cost
of energy used by the utility to produce electricity. The Company has also
entered into a firm power contract expiring in 1999 with UP&L under which the
Company is entitled to purchase additional electrical needs. The firm contract
provides for energy charges and price increases similar to the interruptible
contract but also includes a significantly higher capacity charge.
Natural gas is purchased at the wellhead in the Rocky Mountain region
and is transported to the steel mill by pipeline. The Rocky Mountain region
has substantial deposits of natural gas.
Other. The Company's mill is served by both the Southern Pacific
Transportation Company and the Union Pacific Railroad Company. The Company
believes that it is one of the largest western customers of each railroad. The
Company's location in the western United States facilitates backhauling, which
reduces freight costs. The Company has negotiated various reductions in
its transportation rates. The Company also owns mining claims in a limestone
quarry located approximately 30 miles from the Company's plant. The limestone
is mined by the Company and transported by railroad to the mill.
The Company uses scrap metal obtained from its own operations and
external sources in its steelmaking process. As the Company increases its
production volume, improves yield or implements additional ironmaking
processes, such as the plasma-fired cupola, that utilize scrap, management
anticipates that increased amounts of scrap will be purchased.
The cost of the Company's raw materials, including energy, has been
susceptible in the past to fluctuations in price and availability and is
expected to increase over time. Worldwide competition in the steel industry
has frequently limited the ability of steel producers to raise finished product
prices to recover higher raw material costs. The Company's future
profitability will be adversely affected to the extent it is unable to pass on
higher raw material costs to its customers.
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COMPETITION AND OTHER MARKET FACTORS
The Company competes with domestic and foreign steel producers on the
basis of price, quality and service. Many of the Company's competitors are
larger, have greater capital resources, more modern technology and larger sales
organizations than the Company. Intense worldwide sales competition exists for
all the Company's products. Both the industry and the Company face increasing
competition from producers of certain materials such as aluminum, composites,
plastics and concrete which compete with steel in many markets.
The Company believes that certain of its raw material arrangements,
particularly with respect to energy, and its current labor contract are
favorable in relation to those of the domestic steel industry as a whole. The
Company believes that its geographic location enhances its ability to compete
in the western United States. Although product quality has improved
significantly as a result of the continuous caster and other capital
improvements, the Company is presently at a competitive disadvantage with
respect to certain product quality factors, particularly with respect to sheet
products. The Company believes, however, that its ongoing modernization
efforts will continue to enhance the competitiveness of its products.
Nevertheless, standards of quality in the steel industry are rising as buyers
continually expect higher quality products. Foreign and domestic producers
continue to invest heavily to achieve increased production efficiencies and
product quality.
The steel industry is cyclical in nature and highly competitive.
Moreover, overall throughput capacity and competition are increasing due
primarily to construction of mini-mills and improvements in production
efficiencies. The Company, like other steel producers, is highly sensitive to
price and production volume changes. Consequently, any downward movement could
have an adverse effect on the Company given its high fixed costs of
operations.
Foreign competition is a significant factor in the steel industry and
has adversely affected product prices in the United States and tonnage sold by
domestic producers. The intensity of foreign competition is substantially
affected by fluctuations in the value of the United States dollar against
several other currencies. Despite a substantial decline in the value of the
United States dollar relative to certain foreign currencies, steel imports have
recently increased significantly due to the strength of the United States
economy, higher domestic prices for steel products and other factors. Although
foreign economies and currency exchange rates are subject to substantial
fluctuations, there can be no assurance that this condition will not continue.
In addition, many foreign steel producers are controlled or subsidized by
foreign governments whose decisions concerning production and exports may be
influenced in part by political and social policy considerations as well as by
prevailing market conditions and profit opportunities. Existing trade laws and
regulations may be inadequate to prevent unfair trade practices whereby imports
could pose increasing problems for the domestic steel industry and the Company.
In June 1992, the Company joined with other domestic steel producers
in filing cases with the United States Department of Commerce and International
Trade Commission (the "ITC") alleging that producers in certain foreign
countries had engaged in unlawful subsidization and dumping practices. In July
1993, the ITC issued final injury determinations in the flat-rolled steel
cases. As a result, anti-dumping and countervailing duties are now collected
on all imports covered by the affirmative ITC determinations, including
cut-to-length plate, a product produced by the Company. The domestic producers
and many of the foreign producers appealed the ITC determinations. The appeal
of the Canadian producers was heard by the NAFTA Binational Panel which issued
its opinion and order on October 31, 1994. The order does not appear to
require any material change to the existing duties applicable to the cut-
to-length plate products of such Canadian producers. If the remaining appeals
result in a significant reduction or complete lifting of existing duties, it
could have an adverse effect on prevailing prices for the Company's
cut-to-length plate products.
During the past three years, steel producers in Canada and Mexico have
filed trade cases in their respective countries against domestic steel
producers, including the Company. The Canadian cases have been concluded and
the Mexican cases are at various stages of resolution. Because the Company's
exports into these countries have been immaterial over the past two years,
these cases have not had a material effect on the Company.
Integrated steel producers are facing increasing competitive pressures
from mini-mills. Mini-mills are generally smaller volume steel producers which
use ferrous scrap metal as their basic raw material and serve
8
<PAGE> 10
regional markets. These operations generally produce lower margin, commodity
type steel goods such as bars, rods and structural products. A number of
mini-mills also produce plate and pipe products that compete directly with the
Company's products. In addition, three mini-mills have announced intentions to
construct facilities that will produce wide plate in coil form, thereby
potentially competing with products produced by the Company. Recently
developed thin slab/direct rolling techniques have allowed mini-mills to
produce the types of sheet products that have traditionally been supplied by
integrated producers. Two mini-mills located in the midwestern United States
produce these types of sheet products. Moreover, several competitors have
announced or expressed an intention to construct new sheet product facilities
that, if constructed, are expected to significantly increase domestic steel
production and thereby further increase competition.
ENVIRONMENTAL MATTERS
Compliance with environmental laws and regulations is a significant
factor in the Company's business. The Company is subject to federal, state and
local environmental laws and regulations concerning, among other things, air
emissions, wastewater discharge, and solid and hazardous waste disposal. The
Company believes that it is in compliance in all material respects with all
currently applicable environmental regulations.
The Company has incurred substantial capital expenditures for
environmental control facilities, including the Q-BOP furnaces, the wastewater
treatment facility, the benzene mitigation equipment, the coke oven gas
desulfurization facility and other projects. The Company has budgeted a total
of approximately $2.2 million for environmental capital improvements in fiscal
years 1995 and 1996. Such improvements include potential upgrades to the
Company's coking operation ($2.0 million) and a wastewater diffuser system
($0.2 million). Environmental legislation and regulations have changed rapidly
in recent years and it is likely that the Company will be subject to
increasingly stringent environmental standards in the future. Although the
Company has budgeted capital expenditures for environmental matters, it is not
possible at this time to predict the amount of capital expenditures that may
ultimately be required to comply with all environmental laws and regulations.
Under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the U.S. Environmental
Protection Agency and the states have authority to impose liability on waste
generators, site owners and operators and others regardless of fault or the
legality of the original disposal activity. Other environmental laws and
regulations may also impose liability on the Company for conditions existing
prior to the Company's acquisition of the steel mill.
At the time of the Company's acquisition of the steel mill, the
Company and USX identified certain hazardous and solid waste sites and other
environmental conditions which existed prior to the acquisition. USX has
agreed to indemnify the Company (subject to the sharing arrangements described
below) for any fines, penalties, costs (including costs of clean-up, required
studies, and reasonable attorneys' fees), or other liabilities for which the
Company becomes liable due to any environmental condition existing on the
Company's real property as of the acquisition date that is determined to be in
violation of any environmental law, is otherwise required by applicable
judicial or administrative action, or is determined to trigger civil liability
(the "Pre-existing Environmental Liabilities"). The Company has provided a
similar indemnity (but without any similar sharing arrangement) to USX for
conditions that may arise after the acquisition. Although the Company has not
completed a comprehensive analysis of the extent of the Pre-existing
Environmental Liabilities, such liabilities could be material.
Under the acquisition agreement between the two parties, the Company
and USX agreed to share on an equal basis the first $20 million of costs
incurred by either party to satisfy any government demand for studies, closure,
monitoring, or remediation at specified waste sites or facilities or for other
claims under CERCLA or the Resource Conservation and Recovery Act. The Company
is not obligated to contribute more than $10 million for the clean-up of wastes
generated prior to the acquisition. The Company believes that it has paid the
full $10 million necessary to satisfy its obligations under the cost-sharing
arrangement. USX has recently advised the Company, however, of its position
that a portion of the amount paid by the Company may not be properly credited
against Geneva's obligations. Although the Company believes that USX's
position is without merit, there can be no assurance that this matter will be
resolved without litigation. Moreover, the Company's ability to obtain
indemnification from USX in the future will depend on factors which may be
beyond the Company's control and may also be subject to dispute.
9
<PAGE> 11
ITEM 2. PROPERTIES.
The Company's principal properties consist of the approximately
1,400-acre site on which the steel mill and related facilities are located, the
Company's iron ore mines in southern Utah and the limestone quarry near the
steel mill. The Company also leases from the State of Utah, under a lease
expiring in 2016, a 300-acre site which includes a retention pond. The
retention pond is a significant part of the Company's water pollution control
facilities. Although the Company's facilities are generally suitable to its
needs, the Company believes that such facilities will continue to require
future improvements and additional modernization projects in order to remain
competitive. See Item 1. "Business--Capital Projects" and "--Competition and
Other Market Factors."
ITEM 3. LEGAL PROCEEDINGS.
In addition to the matters described under Item 1.
"Business--Competition and Other Market Factors," the Company is a party to
routine legal proceedings incident to its business. In the opinion of
management, none of the proceedings to which the Company is currently a party
are expected to have a material adverse effect on the Company's business or
financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this Report.
10
<PAGE> 12
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Class A Common Stock is listed and traded on the New
York Stock Exchange ("NYSE") and the Pacific Stock Exchange under the symbol
"GNV." The following table sets forth, for the periods indicated, the high and
low sales prices for the Class A Common Stock as reported on the NYSE Composite
Tape.
<TABLE>
<CAPTION>
Fiscal Year Ended September 30, 1993 HIGH LOW
<S> <C> <C>
First Quarter ended December 31 $12 $ 6 7/8
Second Quarter ended March 31 14 7/8 10 1/2
Third Quarter ended June 30 16 12
Fourth Quarter ended September 30 14 3/8 9 5/8
Fiscal Year Ended September 30, 1994 HIGH LOW
First Quarter ended December 31 $18 1/2 $11 7/8
Second Quarter ended March 31 21 3/8 13 1/4
Third Quarter ended June 30 20 13 3/8
Fourth Quarter ended September 30 21 1/4 15 1/2
</TABLE>
As of November 30, 1994, the Company had 13,113,488 shares of Class A Common
Stock outstanding, held by 587 stockholders of record, and 20,639,688 shares of
Class B Common Stock outstanding, held by five stockholders of record. Shares
of Class B Common Stock are convertible into shares of Class A Common Stock at
the rate of ten shares of Class B Common Stock for one share of Class A Common
Stock. There is no public market for the Class B Common Stock.
The Company currently anticipates that it will retain all available funds to
finance its capital expenditures and other business activities, and it does not
anticipate paying any cash dividends on the Common Stock in the foreseeable
future. In addition, the Company's revolving credit facility and senior notes
restrict the amount of dividends that the Company may pay. See Item 7.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and Note 2 of Notes to Financial
Statements included in this Report.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this Item is incorporated by reference to
page 15 of the Company's Annual Report to Shareholders for the fiscal year
ended September 30, 1994.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The information required by this Item is incorporated by reference to
pages 16 through 21 of the Company's Annual Report to Shareholders for the
fiscal year ended September 30, 1994.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this Item is incorporated by reference to
pages 22 through 36 of the Company's Annual Report to Shareholders for the
fiscal year ended September 30, 1994.
11
<PAGE> 13
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this Item is incorporated by reference to
the sections entitled "Election of Directors -- Nominees for Election as
Directors" and "Executive Officers" in the Company's definitive Proxy Statement
for the Annual Meeting of Shareholders to be held on March 28, 1995. The
definitive Proxy Statement will be filed with the Securities and Exchange
Commission not later than 120 days after September 30, 1994, pursuant to
Regulation 14A of the Securities Exchange Act of 1934, as amended.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is incorporated by reference to
the sections entitled "Election of Directors -- Director Compensation" and
"Executive Compensation" in the Company's definitive Proxy Statement for the
Annual Meeting of Shareholders to be held on March 28, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item is incorporated by reference to
the section entitled "Principal Holders of Voting Securities" in the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held on
March 28, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
12
<PAGE> 14
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Documents Filed:
1. Financial Statements. The following Financial
Statements of the Company and Report of Independent
Public Accountants included in the Company's Annual
Report to Shareholders for the fiscal year ended
September 30, 1994 are incorporated by reference in
Item 8 of this Report:
- Report of Independent Public Accountants
- Balance Sheets at September 30, 1994 and 1993
- Statements of Operations for the years ended
September 30, 1994, 1993 and 1992
- Statements of Stockholders' Equity for the
years ended September 30, 1994, 1993 and 1992
- Statements of Cash Flows for the years ended
September 30, 1994, 1993 and 1992
- Notes to Financial Statements
2. Financial Statement Schedules. The following
Financial Statement Schedules of the Company for the
years ended September 30, 1994, 1993 and 1992 are
filed as part of this Report and should be read in
conjunction with the Company's Financial Statements
and Notes thereto:
<TABLE>
<CAPTION>
Schedule Page
-------- ----
<S> <C>
V - Property, Plant and Equipment 19
VI - Accumulated Depreciation and Amortization of Property, 20
Plant and Equipment
VIII - Valuation and Qualifying Accounts 21
IX - Short-Term Borrowings 22
X - Supplementary Income Statement Information 23
</TABLE>
Financial statements and schedules other than those
listed are omitted for the reason that they are not
required or are not applicable, or the required
information is shown in the Financial Statements or
Notes thereto, or contained in this Report.
(b) Reports on Form 8-K
None.
13
<PAGE> 15
(c) Exhibits
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED FILED
NO. EXHIBIT BY REFERENCE HEREWITH
------- --------------------------------------------------- ------------ --------
<S> <C> <C> <C>
3.1 Revised Articles of Incorporation of the Registrant (1)
3.2 Articles of Amendment dated February 17, 1993 to the (2)
Registrant's Revised Articles of Incorporation
3.3 Articles of Amendment dated March 12, 1993 to the (3)
Registrant's Revised Articles of Incorporation
3.4 Restated Bylaws of the Registrant dated March 12, 1993 (2)
4.1 Specimen Certificate of the Registrant's Class A Common (1)
Stock, no par value
4.2 Specimen Certificate of the Registrant's Series B Preferred (4)
Stock, no par value
10.1 Asset Sales Agreement between USX and the Registrant dated as (1)
of June 26, 1987, as Amended and Restated August 31, 1987
10.2 Registration Rights Agreement among the signatories listed on (1)
the signature pages thereof and the Registrant dated November
6, 1989
10.3 License Agreement between ENSR Corporation and the Registrant (1)
dated December 8, 1988
10.4 Amended and Restated Revolving Credit Agreement among the X
Registrant, the Lender Parties named therein, Citibank, N.A.,
and Citicorp U.S.A., Inc., dated as of November 4, 1994
10.5 Receivables Purchase Agreement between the Registrant and X
Geneva Steel Funding Corporation ("GSFC") dated as of
November 4, 1994, including Annex
10.6 Pooling and Servicing Agreement among GSFC, the Registrant X
and Bankers Trust Company, as trustee, dated as of November
4, 1994, including Annex
10.7 Series 1994-1 Supplement to Pooling and Servicing Agreement X
among GSFC, the Registrant and Bankers Trust Company, as
trustee, dated as of November 4, 1994, including Annex
10.8 Certificate Purchase Agreement among GSFC, the Registrant, X
Corporate Receivables Corporation, the Liquidity Providers
named therein, and Citicorp North America, Inc., dated as of
November 4, 1994, including Annex
10.9 Sales Representation Agreement between Mannesmann Pipe & (1)
Steel Corporation and the Registrant dated December 8, 1988
10.10 Amendment to Sales Representation Agreement between (5)
Mannesmann Pipe & Steel Corporation and the Registrant dated
April 18, 1991
14
</TABLE>
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED FILED
NO. EXHIBIT BY REFERENCE HEREWITH
------- ------------------------------------------------------------ ------------ --------
<S> <C> <C> <C>
10.11 Amendment to Sales Representation Agreement between (6)
Mannesmann Pipe & Steel Corporation and the Registrant dated
April 17, 1992
10.12 Geneva Steel Key Employee Plan* (7)
10.13 Amendment to Geneva Steel Key Employee Plan dated May 12, (5)
1991*
10.14 Form of Non-Statutory Stock Option Agreement* (1)
10.15 Management Employee Savings and Pension Plan, as amended and (8)
restated effective October 1, 1992*
10.16 Form of revised Executive Split Dollar Insurance Agreement* (8)
10.17 Form of revised Executive Supplemental Retirement Agreement* (8)
10.18 Union Employee Savings and Pension Plan (1)
10.19 First Amendment to Union Employee Savings and Pension Plan (7)
dated June 14, 1990 and Excess Plan for Union Employees dated
June 14, 1990
10.20 Second Amendment to Union Employee Savings and Pension Plan, (5)
as amended and restated January 1, 1990
10.21 Collective Bargaining Agreement between United Steelworkers (1)
of America and the Registrant ("Collective Bargaining
Agreement") dated September 1, 1989
10.22 Amendment to Collective Bargaining Agreement dated June 18, (7)
1990
10.23 Amendment to Collective Bargaining Agreement dated September (9)
1, 1993
10.24 Agreement between Union Carbide Industrial Gases, Inc. and (7)
the Registrant dated July 12, 1990, as amended August 3, 1990
(the "Union Carbide Agreement")
10.25 Amendment to the Union Carbide Agreement dated December 1, (8)
1992
10.26 Oxygen Supply Agreement between Big Three Industrial Gas, (7)
Inc. (successor in interest to Liquid Air Corporation) and
the Registrant dated September 27, 1988 and Amendment thereto
dated June 8, 1990
10.27 Coilbox License Agreement between Stelco Technical Services (1)
Limited and the Registrant dated August 23,
1989
10.28 License Agreement for the K-OBM Process between (1)
Klockner Contracting and Technologies GmbH and the Registrant
dated November 25, 1989
</TABLE>
15
<PAGE> 17
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED FILED
NO. EXHIBIT BY REFERENCE HEREWITH
------- ------------------------------------------------------------ ------------ --------
<S> <C> <C> <C>
10.29 Special Use Lease Agreement No. 897 between the State of Utah (8)
and the Registrant dated January 13, 1992 and Amendment
thereto dated June 19, 1992
10.30 Indenture dated as of January 15, 1994 between the Registrant (10)
and Bankers Trust Company, as Trustee, including a form of 9
1/2% Senior Note due 2004
10.31 Indenture dated as of March 15, 1993 between the Registrant (3)
and The Bank of New York, as Trustee, including a form of 11
1/8% Senior Note due 2001
10.32 License Agreement relating to the desulfurization process (1)
between BS&B Engineering Company, Inc. and the Registrant
dated March 1, 1990
10.33 Lo-Cat(R) Licensing Agreement between ARI Technologies, Inc. (7)
and the Registrant dated April 16, 1990
10.34 Agreement relating to the closure of hazardous waste surface (7)
impoundments between USX Corporation, the Registrant and
Duncan Lagnese Associates, Incorporated dated October 22,
1990
10.35 Agreement for the Sale and Purchase of Coal among Pacific (5)
Basin Resources (a division of Oxbow Carbon and Minerals,
Inc.), Somerset Mining Company and the Registrant dated April
11, 1991
10.36 Agreement for the Sale and Purchase of Coke between (9)
the Registrant and Mitsubishi International Corporation dated
November 9, 1993 (the "Mitsubishi Agreement")
10.37 Amendment to the Mitsubishi Agreement dated as of December (11)
28, 1993
10.38 Agreement for Sale and Purchase of Coke between the (12)
Registrant and Pacific Basin Resources (a division of Oxbow
Carbon and Minerals, Inc.) dated April 29, 1994
10.39 Warrant Agreement dated as of March 16, 1993 between the (2)
Registrant and The Bank of New York, as Warrant Agent
10.40 Form of Indenture between the Registrant and the Trustee (3)
thereunder related to the Exchange Debentures, including a
form of Exchange Debenture
13 Selected portions of the Registrant's Annual Report to X
Shareholders for the year ended September 30, 1994 which are
incorporated by reference in Parts II and IV of this Report
21 Subsidiaries of the Registrant X
23 Consent of Arthur Andersen LLP, independent public X
accountants
27 Financial Data Schedule X
</TABLE>
16
<PAGE> 18
-------------
* Management contract or compensatory plan or
arrangement.
(1) Incorporated by reference to the Registration
Statement on Form S-1 dated March 27, 1990, File No.
33-33319.
(2) Incorporated by reference to the Registration
Statement on Form S-3 dated June 16, 1993, File No.
33-64548.
(3) Incorporated by reference to the Registration
Statement on Form S-4 dated April 15, 1993, File No.
33-61072.
(4) Incorporated by reference to the Registration
Statement on Form S-4 dated August 9, 1993, File No.
33-61072.
(5) Incorporated by reference to the Annual Report on
Form 10-K for the fiscal year ended September 30,
1991.
(6) Incorporated by reference to the Current Report on
Form 8-K dated May 22, 1992.
(7) Incorporated by reference to the Registration
Statement on Form S-1 dated November 5, 1990, File
No. 33-37238.
(8) Incorporated by reference to the Annual Report on
Form 10-K for the fiscal year ended September 30,
1992.
(9) Incorporated by reference to the Current Report on
Form 8-K dated December 2, 1993.
(10) Incorporated by reference to the Quarterly Report on
Form 10-Q for the fiscal quarter ended December 31,
1993.
(11) Incorporated by reference to the Quarterly Report on
Form 10-Q for the fiscal quarter ended March 31,
1994.
(12) Incorporated by reference to the Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30, 1994.
(d) Financial Statement Schedules
See pages 18 through 23 herein.
17
<PAGE> 19
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Geneva Steel Company:
We have audited in accordance with generally accepted auditing
standards, the financial statements incorporated by reference in Item 8 of this
Form 10-K, and have issued our report thereon dated October 28, 1994 (except
with respect to the matters discussed in Note 2 and Note 9 as to which the date
is November 30, 1994). Our audit was made for the purpose of forming an
opinion on those statements taken as a whole. The schedules listed in Item
14(a)2 are the responsibility of the Company's management and are presented for
purposes of complying with the Securities and Exchange Commission's rules and
are not part of the basic financial statements. These schedules have been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly state in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Salt Lake City, Utah
October 28, 1994
18
<PAGE> 20
GENEVA STEEL COMPANY
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(Dollars in Thousands)
<TABLE>
<CAPTION>
Balance at
Beginning Additions at Balance at
Classifications of Year Cost Retirements End of Year
--------------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Year Ended September 30, 1994
Land . . . . . . . . . . . . . . . . . . $ 1,931 $ -- $ -- $ 1,931
Buildings . . . . . . . . . . . . . . . . 3,725 12,367 -- 16,092
Machinery and equipment . . . . . . . . . 369,490 152,551 (312) 521,729
Mineral property and development costs. . 8,425 -- -- 8,425
-------- -------- ----- --------
$383,571 $164,918 $(312) $548,177
======== ======== ===== ========
Year Ended September 30, 1993
Land . . . . . . . . . . . . . . . . . . $ 1,931 $ -- $ -- $ 1,931
Buildings . . . . . . . . . . . . . . . . 3,725 -- -- 3,725
Machinery and equipment . . . . . . . . . 288,253 81,251 (14) 369,490
Mineral property and development costs. . 7,142 1,283 -- 8,425
-------- -------- ----- --------
$301,051 $ 82,534 $ (14) $383,571
======== ======== ===== ========
Year Ended September 30, 1992
Land . . . . . . . . . . . . . . . . . . $ 1,931 $ -- $ -- $ 1,931
Buildings . . . . . . . . . . . . . . . . 3,725 -- -- 3,725
Machinery and equipment . . . . . . . . . 221,694 66,617 (58) 288,253
Mineral property and development costs. . 7,142 -- -- 7,142
-------- -------- ----- --------
$234,492 $ 66,617 $ (58) $301,051
======== ======== ===== ========
</TABLE>
19
<PAGE> 21
GENEVA STEEL COMPANY
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(Dollars in Thousands)
<TABLE>
<CAPTION>
Additions
Balance at Charged to
Beginning Costs and Balance at
Description of Year Expenses Retirements End of Year
- ----------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Year Ended September 30, 1994
Land . . . . . . . . . . . . . . . . . . $ -- $ -- $ -- $ --
Buildings . . . . . . . . . . . . . . . . 704 249 -- 953
Machinery and equipment . . . . . . . . . 67,712 25,748 (202) 93,258
Mineral property and development costs. . 565 115 -- 680
------- ------- ----- -------
$68,981 $26,112 $(202) $94,891
======= ======= ===== =======
Year Ended September 30, 1993
Land . . . . . . . . . . . . . . . . . . $ -- $ -- $ -- $ --
Buildings . . . . . . . . . . . . . . . . 586 118 -- 704
Machinery and equipment . . . . . . . . . 47,529 20,194 (11) 67,712
Mineral property and development costs. . 139 426 -- 565
------- ------- ----- -------
$48,254 $20,738 $ (11) $68,981
======= ======= ====== =======
Year Ended September 30, 1992
Land . . . . . . . . . . . . . . . . . . $ -- $ -- $ -- $ --
Buildings . . . . . . . . . . . . . . . . 468 118 -- 586
Machinery and equipment . . . . . . . . . 29,836 17,724 (31) 47,529
Mineral property and development costs. . 38 101 -- 139
------- ------- ----- -------
$30,342 $17,943 $ (31) $48,254
======= ======= ====== =======
</TABLE>
20
<PAGE> 22
GENEVA STEEL COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(Dollars in Thousands)
<TABLE>
<CAPTION>
Additions
Balance at Charged to Deductions, Balance
Beginning Costs and Net of at End
Description of Year Expenses Recoveries of Year
- ----------- ---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Year Ended September 30, 1994
Allowance for doubtful accounts . . . $2,983 $4,826 $(4,696) $3,113
====== ====== ======== ======
Year Ended September 30, 1993
Allowance for doubtful accounts . . . $3,413 $5,230 $(5,660) $2,983
====== ====== ======== ======
Year Ended September 30, 1992
Allowance for doubtful accounts . . . $2,142 $5,658 $(4,387) $3,413
====== ====== ======== ======
</TABLE>
21
<PAGE> 23
GENEVA STEEL COMPANY
SCHEDULE IX - SHORT-TERM BORROWINGS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(Dollars in Thousands)
<TABLE>
<CAPTION>
Maximum Average (1) Weighted (2)
Weighted Amount Amount Average
Balance Average Outstanding Outstanding Interest Rate
Category of aggregate at End Interest During the During the During the
short-term borrowings of Year Rate Year Year Year
- ---------------------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Year Ended September 30, 1994
Amounts payable to a syndicate of
banks for borrowings . . . . . . . $ 32,348 9.25% $32,348 $ 5,072 9.02%
========= =========== ======= ========= =========
Year Ended September 30, 1993
Amounts payable to a syndicate of
banks for borrowings . . . . . . . $ -- -- $18,182 $ 2,937 7.03%
========= =========== ======= ========= =========
Year Ended September 30, 1992
Amounts payable to a syndicate of
banks for borrowings . . . . . . . $ 18,182 6.91% $18,182 $ 5,250 7.57%
========= =========== ======= ========= =========
</TABLE>
Amounts payable to a syndicate of banks for borrowings represent
obligations under a revolving credit facility.
______________________
(1) Average amount outstanding during the year has been calculated by
averaging the month end outstanding balances.
(2) Weighted average interest rate has been calculated based on the
average monthly interest rate charged on daily outstanding balances.
22
<PAGE> 24
GENEVA STEEL COMPANY
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
(Dollars in Thousands)
<TABLE>
<CAPTION>
Charged to Costs and Expenses
-------------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Maintenance and repairs . . . . . . . . . . . . . . . . . $67,729 $56,440 $52,866
</TABLE>
Other information required by Rule 12-11 has been omitted because the item
did not exceed 1% of net sales as presented in the Company's financial
statements and accompanying notes included in this report.
23
<PAGE> 25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on December 28,
1994.
GENEVA STEEL COMPANY
By: Joseph A. Cannon
__________________________
Joseph A. Cannon,
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Joseph A. Cannon Chairman of the Board and Chief December 28, 1994
- --------------------------------------- Executive Officer
Joseph A. Cannon (Principal executive officer)
Robert J. Grow President and Chief Operating December 28, 1994
- --------------------------------------- Officer and Director
Robert J. Grow
Richard D. Clayton Executive Vice President, Vice December 28, 1994
- --------------------------------------- President of Environment and
Richard D. Clayton Director
Dennis L. Wanlass Vice President, Treasurer and December 28, 1994
- --------------------------------------- Chief Financial Officer
Dennis L. Wanlass (Principal financial and
accounting officer)
A. Blaine Huntsman Director December 28, 1994
- ---------------------------------------
A. Blaine Huntsman
A. Thurl Jacobson Director December 22, 1994
- ---------------------------------------
A. Thurl Jacobson
Arch L. Madsen Director December 28, 1994
- ---------------------------------------
Arch L. Madsen
R. J. Shopf Director December 28, 1994
- ---------------------------------------
R. J. Shopf
</TABLE>
24
<PAGE> 26
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED FILED
NO. EXHIBIT BY REFERENCE HEREWITH
------- --------------------------------------------------- ------------ --------
<S> <C> <C> <C>
3.1 Revised Articles of Incorporation of the Registrant (1)
3.2 Articles of Amendment dated February 17, 1993 to the (2)
Registrant's Revised Articles of Incorporation
3.3 Articles of Amendment dated March 12, 1993 to the (3)
Registrant's Revised Articles of Incorporation
3.4 Restated Bylaws of the Registrant dated March 12, 1993 (2)
4.1 Specimen Certificate of the Registrant's Class A Common (1)
Stock, no par value
4.2 Specimen Certificate of the Registrant's Series B Preferred (4)
Stock, no par value
10.1 Asset Sales Agreement between USX and the Registrant dated as (1)
of June 26, 1987, as Amended and Restated August 31, 1987
10.2 Registration Rights Agreement among the signatories listed on (1)
the signature pages thereof and the Registrant dated November
6, 1989
10.3 License Agreement between ENSR Corporation and the Registrant (1)
dated December 8, 1988
10.4 Amended and Restated Revolving Credit Agreement among the X
Registrant, the Lender Parties named therein, Citibank, N.A.,
and Citicorp U.S.A., Inc., dated as of November 4, 1994
10.5 Receivables Purchase Agreement between the Registrant and X
Geneva Steel Funding Corporation ("GSFC") dated as of
November 4, 1994, including Annex
10.6 Pooling and Servicing Agreement among GSFC, the Registrant X
and Bankers Trust Company, as trustee, dated as of November
4, 1994, including Annex
10.7 Series 1994-1 Supplement to Pooling and Servicing Agreement X
among GSFC, the Registrant and Bankers Trust Company, as
trustee, dated as of November 4, 1994, including Annex
10.8 Certificate Purchase Agreement among GSFC, the Registrant, X
Corporate Receivables Corporation, the Liquidity Providers
named therein, and Citicorp North America, Inc., dated as of
November 4, 1994, including Annex
10.9 Sales Representation Agreement between Mannesmann Pipe & (1)
Steel Corporation and the Registrant dated December 8, 1988
10.10 Amendment to Sales Representation Agreement between (5)
Mannesmann Pipe & Steel Corporation and the Registrant dated
April 18, 1991
</TABLE>
<PAGE> 27
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED FILED
NO. EXHIBIT BY REFERENCE HEREWITH
------- ------------------------------------------------------------ ------------ --------
<S> <C> <C> <C>
10.11 Amendment to Sales Representation Agreement between (6)
Mannesmann Pipe & Steel Corporation and the Registrant dated
April 17, 1992
10.12 Geneva Steel Key Employee Plan* (7)
10.13 Amendment to Geneva Steel Key Employee Plan dated May 12, (5)
1991*
10.14 Form of Non-Statutory Stock Option Agreement* (1)
10.15 Management Employee Savings and Pension Plan, as amended and (8)
restated effective October 1, 1992*
10.16 Form of revised Executive Split Dollar Insurance Agreement* (8)
10.17 Form of revised Executive Supplemental Retirement Agreement* (8)
10.18 Union Employee Savings and Pension Plan (1)
10.19 First Amendment to Union Employee Savings and Pension Plan (7)
dated June 14, 1990 and Excess Plan for Union Employees dated
June 14, 1990
10.20 Second Amendment to Union Employee Savings and Pension Plan, (5)
as amended and restated January 1, 1990
10.21 Collective Bargaining Agreement between United Steelworkers (1)
of America and the Registrant ("Collective Bargaining
Agreement") dated September 1, 1989
10.22 Amendment to Collective Bargaining Agreement dated June 18, (7)
1990
10.23 Amendment to Collective Bargaining Agreement dated September (9)
1, 1993
10.24 Agreement between Union Carbide Industrial Gases, Inc. and (7)
the Registrant dated July 12, 1990, as amended August 3, 1990
(the "Union Carbide Agreement")
10.25 Amendment to the Union Carbide Agreement dated December 1, (8)
1992
10.26 Oxygen Supply Agreement between Big Three Industrial Gas, (7)
Inc. (successor in interest to Liquid Air Corporation) and
the Registrant dated September 27, 1988 and Amendment thereto
dated June 8, 1990
10.27 Coilbox License Agreement between Stelco Technical Services (1)
Limited and the Registrant dated August 23,
1989
10.28 License Agreement for the K-OBM Process between (1)
Klockner Contracting and Technologies GmbH and the Registrant
dated November 25, 1989
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED FILED
NO. EXHIBIT BY REFERENCE HEREWITH
------- ------------------------------------------------------------ ------------ --------
<S> <C> <C> <C>
10.29 Special Use Lease Agreement No. 897 between the State of Utah (8)
and the Registrant dated January 13, 1992 and Amendment
thereto dated June 19, 1992
10.30 Indenture dated as of January 15, 1994 between the Registrant (10)
and Bankers Trust Company, as Trustee, including a form of 9
1/2% Senior Note due 2004
10.31 Indenture dated as of March 15, 1993 between the Registrant (3)
and The Bank of New York, as Trustee, including a form of 11
1/8% Senior Note due 2001
10.32 License Agreement relating to the desulfurization process (1)
between BS&B Engineering Company, Inc. and the Registrant
dated March 1, 1990
10.33 Lo-Cat(R) Licensing Agreement between ARI Technologies, Inc. (7)
and the Registrant dated April 16, 1990
10.34 Agreement relating to the closure of hazardous waste surface (7)
impoundments between USX Corporation, the Registrant and
Duncan Lagnese Associates, Incorporated dated October 22,
1990
10.35 Agreement for the Sale and Purchase of Coal among Pacific (5)
Basin Resources (a division of Oxbow Carbon and Minerals,
Inc.), Somerset Mining Company and the Registrant dated April
11, 1991
10.36 Agreement for the Sale and Purchase of Coke between (9)
the Registrant and Mitsubishi International Corporation dated
November 9, 1993 (the "Mitsubishi Agreement")
10.37 Amendment to the Mitsubishi Agreement dated as of December (11)
28, 1993
10.38 Agreement for Sale and Purchase of Coke between the (12)
Registrant and Pacific Basin Resources (a division of Oxbow
Carbon and Minerals, Inc.) dated April 29, 1994
10.39 Warrant Agreement dated as of March 16, 1993 between the (2)
Registrant and The Bank of New York, as Warrant Agent
10.40 Form of Indenture between the Registrant and the Trustee (3)
thereunder related to the Exchange Debentures, including a
form of Exchange Debenture
13 Selected portions of the Registrant's Annual Report to X
Shareholders for the year ended September 30, 1994 which are
incorporated by reference in Parts II and IV of this Report
21 Subsidiaries of the Registrant X
23 Consent of Arthur Andersen LLP, independent public X
accountants
27 Financial Data Schedule X
</TABLE>
<PAGE> 29
-------------
* Management contract or compensatory plan or
arrangement.
(1) Incorporated by reference to the Registration
Statement on Form S-1 dated March 27, 1990, File No.
33-33319.
(2) Incorporated by reference to the Registration
Statement on Form S-3 dated June 16, 1993, File No.
33-64548.
(3) Incorporated by reference to the Registration
Statement on Form S-4 dated April 15, 1993, File No.
33-61072.
(4) Incorporated by reference to the Registration
Statement on Form S-4 dated August 9, 1993, File No.
33-61072.
(5) Incorporated by reference to the Annual Report on
Form 10-K for the fiscal year ended September 30,
1991.
(6) Incorporated by reference to the Current Report on
Form 8-K dated May 22, 1992.
(7) Incorporated by reference to the Registration
Statement on Form S-1 dated November 5, 1990, File
No. 33-37238.
(8) Incorporated by reference to the Annual Report on
Form 10-K for the fiscal year ended September 30,
1992.
(9) Incorporated by reference to the Current Report on
Form 8-K dated December 2, 1993.
(10) Incorporated by reference to the Quarterly Report on
Form 10-Q for the fiscal quarter ended December 31,
1993.
(11) Incorporated by reference to the Quarterly Report on
Form 10-Q for the fiscal quarter ended March 31,
1994.
(12) Incorporated by reference to the Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30, 1994.
<PAGE> 1
Exhibit 10.4
U.S. $45,000,000
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of November 4, 1994
Among
GENEVA STEEL COMPANY
as Borrower
and
THE LENDERS PARTY HERETO,
CITIBANK, N.A.
as Issuer
and
CITICORP USA, INC.
as Agent
<PAGE> 2
T A B L E O F C O N T E N T S
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . 2
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Computation of Time Periods . . . . . . . . . . . . . . . . . 29
1.3. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . 29
1.4. Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE II
AMOUNTS AND TERMS OF THE REVOLVING CREDIT LOANS . . . . . . 30
2.1. The Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.2. Making the Loans . . . . . . . . . . . . . . . . . . . . . . . 30
2.3. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.4. Reduction and Termination of the Commitments . . . . . . . . . 33
2.5. Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.6. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.7. Conversion/Continuation Option . . . . . . . . . . . . . . . . 36
2.8. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.9. Interest Rate Determination and Protection . . . . . . . . . . 37
2.10. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . 38
2.11. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2.12. Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . 39
2.13. Payments and Computations . . . . . . . . . . . . . . . . . . 40
2.14. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.15. Sharing of Payments, Etc . . . . . . . . . . . . . . . . . . . 43
2.16. Letter of Credit Facility . . . . . . . . . . . . . . . . . . 44
2.17. Settlement of Accounts . . . . . . . . . . . . . . . . . . . 51
2.18. Payments to Lenders . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE III
CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT . . . . 51
3.1. Conditions Precedent to Initial Loans
and Letters of Credit . . . . . . . . . . . . . . . . . . . 51
3.2. Additional Conditions Precedent to Initial
Loans and Initial Letters of Credit . . . . . . . . . . . . 54
3.3. Conditions Precedent to Each Loan and
Letter of Credit . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . 57
4.1. Corporate Existence; Compliance with Law . . . . . . . . . . . 57
4.2. Corporate Power; Authorization; Enforceable Obligations . . . 58
4.3. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.4. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . 59
4.5. Financial Matters . . . . . . . . . . . . . . . . . . . . . . 59
4.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 60
4.7. Margin Regulations . . . . . . . . . . . . . . . . . . . . . . 60
4.8. Ownership of Borrower; Subsidiaries . . . . . . . . . . . . . 61
4.9. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.10. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
4.11. No Burdensome Restrictions; No Defaults . . . . . . . . . . . 63
4.12. No Other Ventures . . . . . . . . . . . . . . . . . . . . . . 63
4.13. Investment Company Act . . . . . . . . . . . . . . . . . . . . 63
4.14. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 64
4.15. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . 64
4.16. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . 65
4.17. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 65
4.18. Environmental Protection . . . . . . . . . . . . . . . . . . . 65
4.19. Intellectual Property . . . . . . . . . . . . . . . . . . . . 67
4.20. Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
4.21. Certain Indebtedness . . . . . . . . . . . . . . . . . . . . . 69
4.22. Restricted Payments . . . . . . . . . . . . . . . . . . . . . 69
4.23. Seniority . . . . . . . . . . . . . . . . . . . . . . . . . . 69
4.24. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . 70
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE V
FINANCIAL COVENANTS . . . . . . . . . . . . 70
5.1. Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . . 70
5.2. Maintenance of Tangible Net Worth . . . . . . . . . . . . . 71
5.3. Capital Expenditures . . . . . . . . . . . . . . . . . . . . 72
5.4. Cash Flow. . . . . . . . . . . . . . . . . . . . . . . . . . 74
5.5. EBITDA to Cash Interest Expense Ratio . . . . . . . . . . . 75
ARTICLE VI
ADDITIONAL AFFIRMATIVE COVENANTS . . . . . . . . . 76
6.1. Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . 76
6.2. Conduct of Business . . . . . . . . . . . . . . . . . . . . 76
6.3. Payment of Taxes, Etc. . . . . . . . . . . . . . . . . . . . 76
6.4. Maintenance of Insurance . . . . . . . . . . . . . . . . . . 77
6.5. Preservation of Corporate Existence, Etc. . . . . . . . . . 77
6.6. Access . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
6.7. Keeping of Books . . . . . . . . . . . . . . . . . . . . . . 78
6.8. Maintenance of Properties, Etc . . . . . . . . . . . . . . . 78
6.9. Performance and Compliance with Other Covenants . . . . . . 78
6.10. Application of Proceeds. . . . . . . . . . . . . . . . . . . 78
6.11. Financial Statements . . . . . . . . . . . . . . . . . . . . 78
6.12. Reporting Requirements . . . . . . . . . . . . . . . . . . . 81
6.13. Broker's Fee . . . . . . . . . . . . . . . . . . . . . . . . 85
6.14. Employee Plans . . . . . . . . . . . . . . . . . . . . . . . 86
6.15. Interest Rate Contracts. . . . . . . . . . . . . . . . . . . 86
6.16. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . 86
6.17. Borrowing Base Determination . . . . . . . . . . . . . . . . 86
6.18. The Blocked Account. . . . . . . . . . . . . . . . . . . . . 87
6.19. Environmental . . . . . . . . . . . . . . . . . . . . . . . 87
6.20. Utilization of Intellectual Property . . . . . . . . . . . . 88
ARTICLE VII
NEGATIVE COVENANTS . . . . . . . . . . . . . 88
7.1. Liens, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 88
7.2. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 91
7.3. Lease Obligations . . . . . . . . . . . . . . . . . . . . . 93
7.4. Restricted Payments . . . . . . . . . . . . . . . . . . . . 94
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
7.5. Mergers, Stock Issuances, Sale of Assets, Etc. . . . . . . . . 95
7.6. Investments in Other Persons . . . . . . . . . . . . . . . . . 96
7.7. Maintenance of Ownership of Subsidiaries . . . . . . . . . . . 97
7.8. Change in Nature of Business . . . . . . . . . . . . . . . . . 97
7.9. Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
7.10. Modification of Material Agreements . . . . . . . . . . . . . 98
7.11. Accounting and Tax Reporting Changes . . . . . . . . . . . . . 98
7.12. Contingent Obligations . . . . . . . . . . . . . . . . . . . . 98
7.13. Transactions with Affiliates . . . . . . . . . . . . . . . . . 99
7.14. Adverse Transactions . . . . . . . . . . . . . . . . . . . . . 99
7.15. Cancellation of Indebtedness Owed to It . . . . . . . . . . . 100
7.16. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 100
7.17. Capital Structure . . . . . . . . . . . . . . . . . . . . . . 101
7.18. No Speculative Transactions . . . . . . . . . . . . . . . . . 101
7.19. Margin Regulations . . . . . . . . . . . . . . . . . . . . . . 101
7.20. Environmental . . . . . . . . . . . . . . . . . . . . . . . . 101
7.21. Management and Consulting Fees . . . . . . . . . . . . . . . . 101
7.22. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . 101
ARTICLE VIII
EVENTS OF DEFAULT . . . . . . . . . . . . . 102
8.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . 102
8.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
8.3. Actions in Respect of Letters of Credit . . . . . . . . . . . 105
ARTICLE IX
THE AGENT . . . . . . . . . . . . . . . 107
9.1. Authorization and Action . . . . . . . . . . . . . . . . . . . 107
9.2. Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . 107
9.3. CUSA and Affiliates . . . . . . . . . . . . . . . . . . . . . 108
9.4. Lender Credit Decision . . . . . . . . . . . . . . . . . . . . 108
9.5. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 108
9.6. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . 109
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE X
MISCELLANEOUS. . . . . . . . . . . . . .110
10.1. Amendments, Etc . . . . . . . . . . . . . . . . . . . . .110
10.2. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . .111
10.3. No Waiver; Remedies . . . . . . . . . . . . . . . . . . .111
10.4. Costs; Expenses; Indemnities . . . . . . . . . . . . . .111
10.5. Right of Set-off . . . . . . . . . . . . . . . . . . . .114
10.6. Binding Effect . . . . . . . . . . . . . . . . . . . . .114
10.7. Assignments and Participations . . . . . . . . . . . . .115
10.8. Governing Law; Severability . . . . . . . . . . . . . . .118
10.9. Submission to Jurisdiction . . . . . . . . . . . . . . .119
10.10. Section Titles . . . . . . . . . . . . . . . . . . . . .119
10.11. Execution in Counterparts . . . . . . . . . . . . . . . .119
10.12. Entire Agreement, etc . . . . . . . . . . . . . . . . . .119
10.13. Confidentiality . . . . . . . . . . . . . . . . . . . . .120
10.14. Waiver of Jury Trial . . . . . . . . . . . . . . . . . .120
10.15. Return of Old Revolving Credit Notes . . . . . . . . . .120
10.16. No Novation . . . . . . . . . . . . . . . . . . . . . . .120
</TABLE>
v
<PAGE> 7
SCHEDULES
Schedule I - Advance Rates on Eligible Inventory
Schedule II - Calculation of Cash Flow
Schedule III - Certain Holders of Voting Stock
Schedule IV - Applicable Lending Offices and
Addresses for Notices
Schedule V - Responsible Officers
Schedule VI - Revolving Credit Commitments
Schedule 4.3 - Taxes
Schedule 4.8 - Subsidiaries
Schedule 4.9 - ERISA
Schedule 4.20(a) - Borrower's Owned Real Estate
Schedule 4.20(b) - Borrower's Leased Real Estate
Schedule 4.21 - Certain Indebtedness
Schedule 4.24 - Bank Accounts
Schedule 7.1 - Liens
Schedule 7.3 - Leases
vi
<PAGE> 8
EXHIBITS
Exhibit A - Amended and Restated Cash Collateral Agreement
Exhibit B - Amended and Restated Revolving Credit Note
Exhibit C - Amended and Restated Security Agreement
Exhibit D - Assignment and Acceptance
Exhibit E - Blocked Account Letter
Exhibit F - Borrowing Base Certificate
Exhibit G - Notice of Borrowing
Exhibit H - Notice of Conversion/Continuation
Exhibit I - Letter of Credit Request
Exhibit J - Opinion of Counsel for the Borrower
Exhibit K - Opinion of Special New York Counsel for the
Borrower
Exhibit L - Opinion of General Counsel to the Borrower
Exhibit M - Letter from Borrower's Accountants
Exhibit N - Guaranty Agreement
vii
<PAGE> 9
This AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of
November 4, 1994, among GENEVA STEEL COMPANY, a Utah corporation (the
"Borrower"), the financial institutions listed on the signature pages hereof
(each individually a "Lender" and collectively the "Lenders"), CITIBANK, N.A.,
as Issuer (the "Issuer") and CITICORP USA, INC., a Delaware corporation
("CUSA"), as agent hereunder for the Lenders and the Issuer (in such capacity,
the "Agent"),
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders, the Issuer and the Agent are party
to a certain Revolving Credit Agreement, dated as of April 29, 1992 (as amended
prior to the date hereof, the "Existing Credit Agreement"); and
WHEREAS, the Borrower has requested that the Lenders (a) finance the
working capital requirements of the Borrower and (b) provide funds to the
Borrower to repay its outstanding indebtedness, if any, under the Existing
Credit Agreement, and for other corporate purposes; and
WHEREAS, the Lenders are willing to make funds available for such
purposes upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Borrower has requested that the Issuer commit to provide
the Borrower with letters of credit for general corporate purposes, and the
Issuer is willing to issue letters of credit upon the terms and subject to the
conditions contained herein; and
WHEREAS, each of the Borrower, the Lenders, the Issuer and the Agent
desire to amend and restate the Existing Credit Agreement in its entirety;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree that the Existing
Credit Agreement is hereby amended and restated to read in its entirety as
follows:
<PAGE> 10
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms. As used in this Agreement, the following terms
have the following meanings (such meanings to be equally applicable to both
the singular and plural forms of the terms defined):
"Accounts" has the meaning specified in the Amended and Restated
Security Agreement.
"Additional Discretionary Amount" means, for any date of
determination, an amount (which shall not be less than zero) equal to the
difference between (a) the sum of (i) the cumulative Cash Flow of the Borrower
for the period from September 30, 1994 through the end of the most recently
ended month at which the Borrower's Cash Flow has been determined and reported
to the Agent, plus (ii) the net (after payment of fees, commissions, expenses
and the like) cash proceeds received by the Borrower in respect of the issuance
of its Stock from September 30, 1994 to the date of such determination, plus
(iii) the net (after payment of fees, commissions, expenses and the like)
amount of Indebtedness permitted under Section 7.2(p) (and, for purposes of
determining the Additional Discretionary Amount for purposes of Section 5.3,
Sections 7.2(f) and 7.2(g)), incurred by the Borrower from the date hereof to
the date of such determination, plus (iv) cash dividends received by the
Borrower from September 30, 1994 to the date of such determination (to the
extent not reflected in Cash Flow), plus (v) the non-cash decrease in the
Borrower's Net Worth from September 30, 1994 to the date of such determination
(other than such non-cash decrease resulting from transactions in the ordinary
course of business), and (b) the sum of (i) the amount in respect of Cash Flow
set forth in Section 5.4 opposite the month ending on or immediately prior to
such date of determination, plus (ii) all required principal payments in
respect of the Borrower's outstanding Indebtedness made from the date hereof to
the date of such determination (other than (A) principal prepayments made
pursuant to Section 2.6(d) solely by reason of the existence of a Prepayment
Period and Section 2.6(c), (B) principal payments made in respect of
Indebtedness, if any, of the Borrower in connection with the Receivables
Securitization, and (C) principal payments made on the Closing Date in respect
of Indebtedness outstanding under the Existing Credit Documents), plus (iii)
the non-cash increase in the Borrower's Net Worth from September 30, 1994 to
the date of such determination (other than such non-cash increase resulting
from transactions in the ordinary course of business).
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"Affiliate" means, as to any Person, any Subsidiary of such Person and
any Person which, directly or indirectly, controls, is controlled by or is
under common control with such Person and includes each officer or director or
general partner of such Person, and each Person who is the beneficial owner of
5% or more of any class of voting Stock of such Person. For the purposes of
this definition, "control" means the possession of the power to direct or cause
the direction of management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" means this Amended and Restated Revolving Credit
Agreement, together with all Exhibits and Schedules hereto, as the same may be
amended, supplemented or otherwise modified from time to time.
"Amended and Restated Cash Collateral Agreement" means an agreement,
in substantially the form of Exhibit A, executed by the Borrower and the Agent,
as such agreement may be amended, supplemented or otherwise modified from time
to time.
"Amended and Restated Revolving Credit Note" means a promissory note
of the Borrower payable to the order of each Lender in a maximum principal
amount equal to the amount of such Lender's Revolving Credit Commitment, in
substantially the form of Exhibit B, evidencing the aggregate Indebtedness of
the Borrower to such Lender resulting from the Revolving Credit Loans (and, in
the case of the Swing Bank, its Swing Loans) made by such Lender, as such
promissory note may be amended, supplemented or otherwise modified from time to
time.
"Amended and Restated Security Agreement" means an agreement, in
substantially the form of Exhibit C, executed by the Borrower and the Agent, as
such agreement may be amended, supplemented or otherwise modified from time to
time.
"Annual Report" means the annual report of the Borrower on Form 10-K
filed with the Securities and Exchange Commission for the period ended
September 30, 1993.
"Applicable Base Rate Margin" means 1.25%; provided, however, that if
the Agent shall have received from the Borrower financial and other information
(which information shall be delivered to the Agent within 45 days after the end
of each Fiscal Quarter), satisfactory in form and substance to the Agent,
establishing that the Borrower achieved a ratio of EBITDA for the rolling
12-month period ended on the last day of the immediately preceding Fiscal
Quarter to Cash Interest Expense for such 12-month period of at least 3.60 to
1.00, then, commencing on the first day of
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<PAGE> 12
the month next succeeding the delivery of such information (but not prior to
July 1, 1995), the Applicable Base Rate Margin shall be reduced for the
three-month period commencing on such day to 1.00%; provided further, however,
that notwithstanding the foregoing, (a) no reduction in the Applicable Base
Rate Margin shall be or become effective for or on any day on which there
exists a Default or an Event of Default, and (b) any effected reductions in the
Applicable Base Rate Margin shall terminate (i) immediately upon the occurrence
and during the continuance of a Default or an Event of Default, and (ii) on the
first day of the first month next succeeding the date on which such information
is given evidencing that the Borrower has failed to achieve the above-described
ratio.
"Applicable Eurodollar Rate Margin" means 2.50%; provided, however,
that if the Agent shall have received from the Borrower financial and other
information (which information shall be delivered to the Agent within 45 days
after the end of each Fiscal Quarter), satisfactory in form and substance to
the Agent, establishing that the Borrower achieved a ratio of EBITDA for the
rolling 12-month period ended on the last day of the immediately preceding
Fiscal Quarter to Cash Interest Expense for such 12-month period of at least
3.60 to 1.00, then, commencing on the first day of the month next succeeding
the delivery of such information (but not prior to July 1, 1995), the
Applicable Eurodollar Rate Margin shall be reduced for the three-month period
commencing on such day to 2.25%; provided further, however, that
notwithstanding the foregoing, (a) no reduction in the Applicable Eurodollar
Rate Margin shall be effective for any day on which there exists a Default or
an Event of Default, and (b) any effected reductions in the Applicable
Eurodollar Rate Margin shall terminate (i) immediately upon the occurrence and
during the continuance of a Default or an Event of Default, and (ii) on the
first day of the first month next succeeding the date on which such information
is given evidencing that the Borrower has failed to achieve the above-described
ratio.
"Applicable Lending Office" means, with respect to each Lender, its
Domestic Lending Office in the case of a Base Rate Loan and its Eurodollar
Lending Office in the case of a Eurodollar Rate Loan.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender or an Issuer and an Eligible Assignee, and accepted by the
Agent, in substantially the form of Exhibit D.
"Available Credit" means, at any time, an amount equal to the
difference between (a) the lower of (i) the then effective Revolving Credit
Commitments of the
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<PAGE> 13
Lenders, and (ii) the Borrowing Base at such time, minus (b) the aggregate of
the outstanding principal amount of the Loans at such time and the Letter of
Credit Obligations at such time.
"Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall be
equal at all times to the highest of:
(a) the rate of interest announced publicly by Citibank in
New York, New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/4 of one percent or,
if there is no nearest 1/4 of one percent, to the next higher 1/4 of one
percent) of (i) 1/2 of one percent per annum, plus (ii) the rate per annum
obtained by dividing (A) the latest three-week moving average of secondary
market morning offering rates in the United States for three-month certificates
of deposit of major United States money market banks, such three-week moving
average being determined weekly on each Monday (or, if any such day is not a
Business Day, on the next succeeding Business Day) for the three-week period
ending on the previous Friday by Citibank on the basis of such rates reported
by certificate of deposit dealers to and published by the Federal Reserve Bank
of New York or, if such publication shall be suspended or terminated, on the
basis of quotations for such rates received by Citibank from three New York
certificate of deposit dealers of recognized standing selected by Citibank, by
(B) a percentage equal to 100% minus the average of the daily percentages
specified during such three-week period by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or
other marginal reserve requirement) for Citibank in respect of liabilities
consisting of or including (among other liabilities) three-month U.S. dollar
nonpersonal time deposits in the United States, plus (iii) the average during
such three-week period of the maximum annual assessment rates payable to the
Federal Deposit Insurance Corporation (or any successor) by banks which are
members of the Bank Insurance Fund for insuring U.S. dollar deposits in the
United States; and
(c) the sum (adjusted to the nearest one percent or, if there
is no nearest one percent, to the next higher one percent) of (i) one percent
per annum plus (ii) the Federal Funds Rate.
"Base Rate Loan" means any outstanding principal amount of any Loan of
any Lender that bears interest with reference to the Base Rate.
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<PAGE> 14
"Blocked Account" has the meaning specified in Section 6.18.
"Blocked Account Letter" means a letter agreement, substantially in
the form of Exhibit E, executed by the Borrower and the Agent and acknowledged
and agreed to by Citibank, as such letter agreement may be amended,
supplemented or otherwise modified from time to time.
"Borrowing Base" means, at any time, the sum of (a) such amount of
Eligible Inventory at such time as determined in accordance with the advance
rate formulae set forth on Schedule I, less such reserves as the Agent, in its
sole discretion (based upon its customary practice), may deem appropriate, plus
(b) all cash on deposit at such time in the Cash Collateral Account and the L/C
Cash Collateral Account; provided, however, that the aforementioned advance
rates in respect of Eligible Inventory may be prospectively adjusted by the
Agent from time to time upon at least five Business Days' prior written notice
to the Borrower to conform to the Agent's regular business practices and
policies applicable to asset based loans with advance rates based on current
assets in effect from time to time, which practices and policies may be changed
by the Agent in its sole discretion, and any changes with respect to reserves
(as contemplated above) to be evidenced by notice to the Borrower and
applicable prospectively on the Borrowing Base Certificate following such
notice.
"Borrowing Base Certificate" means a certificate of the Borrower
substantially in the form of Exhibit F.
"Business Day" means a day of the year on which banks are not required
or authorized to close in New York City or the State of Utah and, if the
applicable Business Day relates to a Eurodollar Rate Loan, a day on which
dealings are also carried on in the London interbank market.
"Capital Expenditures" means, for any Person for any period, the
aggregate of all expenditures by such Person and its Restricted Subsidiaries
during such period (including, without limitation, renewals, improvements,
replacements and capitalized repairs) that would be reflected as additions to
property, plant or equipment on a consolidated balance sheet of such Person and
its Restricted Subsidiaries prepared in accordance with GAAP. For the purpose
of this definition, (a) the purchase price of equipment which is acquired
simultaneously with the trade-in of existing equipment owned by such Person or
any of its Restricted Subsidiaries or with insurance proceeds shall be included
in Capital Expenditures only to the extent of the gross amount of such purchase
price less the credit granted by the seller of such equipment being traded in
at such time or the amount of such insurance proceeds, as the case may be,
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<PAGE> 15
and (b) the purchase price of equipment which is acquired within 180 days after
the sale of existing equipment owned by such Person or any of its Restricted
Subsidiaries shall be included in Capital Expenditures only to the extent of
the gross amount of such purchase price less the lower of the sales price or
book value of such equipment being sold at such time.
"Capitalized Lease" means, as to any Person, any lease of property by
such Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with GAAP.
"Capitalized Lease Obligations" means, as to any Person, the
capitalized amount of all obligations of such Person and its Restricted
Subsidiaries under Capitalized Leases, as determined on a consolidated basis in
accordance with GAAP.
"Cash Collateral Account" has the meaning set forth in the Amended and
Restated Cash Collateral Agreement.
"Cash Equivalents" means (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States government or any agency thereof and backed by the full faith and
credit of the United States, (b) certificates of deposit, eurodollar time
deposits, overnight bank deposits and bankers' acceptances of any Lender or any
bank or trust company organized under the laws of the United States or any
state thereof, having capital, surplus and undivided profits aggregating at
least $100,000,000 and which, at the date of determination, are rated at least
A+ by Standard & Poor's Corporation or A-1 by Moody's Investors Services, Inc.,
having maturities of one year or less from the date of acquisition, and (c)
commercial paper and money market preferred stock of an issuer rated at least
A-2 by Standard & Poor's Corporation or P-2 by Moody's Investors Services,
Inc., or carrying an equivalent rating by a nationally recognized rating agency
if both of the two named rating agencies cease publishing ratings of
investments.
"Cash Flow" means, in respect of the Borrower at any date of
determination, an amount equal to the difference between (a) the amount set
forth as the "Net cash provided by (used for) operating activities" appearing
on the Fiscal Year to date statement of cash flows of the Borrower and its
Restricted Subsidiaries, prepared in accordance with GAAP (other than the
footnote disclosures required by GAAP) and the methodology set forth on
Schedule II, minus (b) the outstanding amount of all investor certificates
(other than transferor certificates) outstanding under the Receivables
Securitization.
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<PAGE> 16
"Cash Interest Expense" means, for any Person for any period, the Net
Interest Expense of such Person for such period, plus (a) interest expense
capitalized for such period to the extent deducted in the determination of such
Net Interest Expense, less (b) Non-Cash Interest Expense of such Person for
such period.
"Change in Control" means (a) each and every issue, sale, series of
sales or other disposition or purchase or series of purchases of shares of
Voting Stock of the Borrower or other event or agreement with respect to shares
of Voting Stock of the Borrower which results in a Person or group of Persons
acting in concert (other than one or more present holders of the Class B Common
Stock of the Borrower listed on Schedule III hereto, any spouse or child of
such holder or any Person controlled by any such holder) obtaining majority
voting control or the right to elect the majority of the board of directors of
the Borrower, or (b) the consolidation or merger by the Borrower with another
corporation, in a transaction in which the then existing shareholders of the
Borrower hold less than a majority of the combined voting power of the then
outstanding securities of the surviving corporation of such merger or the
corporation resulting from such consolidation ordinarily (and apart from rights
arising under special circumstances) having the right to vote in the election
of directors (other than in connection with the creation of a holding company
not involving a change in shareholders provided such holding company owns
beneficially 100% of the issued Stock of the Borrower). In the event the
Borrower becomes a wholly-owned subsidiary of any such holding company a
"change in control" as defined and used herein shall also apply to such holding
company, with references to Class B Common Stock in the case of the holding
company being deemed a reference to the equivalent equity of such holding
company. As used in the parenthetical above relating to holders of Class B
Common Stock, the term "control" shall have the same meaning set forth in the
definition of the term "Affiliate".
"Citibank" means Citibank, N.A., a national banking association.
"Closing Date" means November 7, 1994.
"Code" means the Internal Revenue Code of 1986 (or any successor
legislation thereto), as amended from time to time.
"Collateral" means all property and interests in property and proceeds
thereof now owned or hereafter acquired by the Borrower in or upon which a Lien
is granted under any Collateral Document.
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<PAGE> 17
"Collateral Documents" means the Amended and Restated Security
Agreement, the Amended and Restated Cash Collateral Agreement, the Blocked
Account Letter and any other document executed and delivered by the Borrower or
a Subsidiary of the Borrower granting a Lien on any of its property to secure,
or to guarantee, payment of the Obligations (whether pursuant to Section 7.16
or otherwise).
"Commodity Contracts" means commodity options, futures, swaps, and
other similar agreements and arrangements designed to provide protection
against fluctuations in commodity prices.
"Computation Date" has the meaning specified in Section 2.17.
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste and any substance regulated or forming the basis of
liability under any Environmental Law, including, without limitation, any
special waste, petroleum or petroleum-derived substance or waste, or any
constituent of such substance or waste.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
Indebtedness or Contractual Obligation of another Person, if the purpose or
intent of such Person in incurring the Contingent Obligation is to provide
assurance to the obligee of such Indebtedness or Contractual Obligation that
such Indebtedness or Contractual Obligation will be paid or discharged, or that
any agreement entered into by such other Person relating to such Indebtedness
or Contingent Obligation will be complied with, or that any holder of such
Indebtedness or Contractual Obligation will be protected against loss in
respect thereof. Contingent Obligations of a Person include, without
limitation, (a) the direct or indirect guarantee, endorsement (other than for
collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of an obligation
of another Person, and (b) any liability of such Person for an obligation of
another Person through any agreement (contingent or otherwise) (i) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of a loan, advance, stock purchase, capital contribution or otherwise),
(ii) to maintain the solvency or any balance sheet item, level of income or
financial condition of another Person, (iii) to make take-or-pay or similar
payments, if required, regardless of non-performance by any other party or
parties to an agreement, (iv) to purchase, sell or lease (as lessor or lessee)
property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such obligation or to assure the holder
of such obligation against loss, or
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<PAGE> 18
(v) to supply funds to or in any other manner invest in such other Person
(including, without limitation, to pay for property or services irrespective of
whether such property is received or such services are rendered), if in the
case of any agreement or liability described under subclause (i), (ii), (iii),
(iv) or (v) of this sentence the primary purpose or intent thereof is as
described in the preceding sentence; provided, however, that it is understood
the transactions contemplated in agreements such as the Mannesmann Agreement
shall not be deemed "Contingent Obligations" for any purpose of this Agreement.
The amount of any Contingent Obligation shall be equal to the lesser of (i) the
amount payable under such Contingent Obligation (if quantifiable), or (ii) the
portion of the obligation so guaranteed or otherwise supported.
"Contractual Obligation" of any Person means any obligation,
agreement, undertaking or similar provision of any security issued by such
Person or of any agreement, undertaking, contract, lease, indenture, mortgage,
deed of trust or other instrument to which such Person is a party or by which
it or any of its property is bound or to which any of its properties is subject
including, in the case of the Borrower, any such provision contained in the
Mannesmann Agreement, the 1993 Senior Notes Indenture, the 1993 Senior Notes,
the Exchange Debentures Indenture, the Exchange Debentures, the 1994 Senior
Notes Indenture, the 1994 Senior Notes, and the Securitization Documents.
"Default" means any event which with the passing of time or the giving
of notice or both would become an Event of Default.
"DOL" means the United States Department of Labor, or any successor
thereto.
"Dollars" and the sign "$" each mean the lawful money of the United
States of America.
"Domestic Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite its
name on Schedule IV or such other office of such Lender as such Lender may from
time to time specify to the Borrower and the Agent.
"EBITDA" means, for any Person and its Restricted Subsidiaries for any
period, the Net Income (Loss) of such Person and its Restricted Subsidiaries
for such period taken as a single accounting period, plus (a) the sum of the
following amounts of such Person and its Restricted Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP to the extent
included in the determination
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of such Net Income (Loss): (i) depreciation expense, (ii) amortization
expense, (iii) Net Interest Expense, (iv) provision for income taxes and
similar taxes, and (v) extraordinary losses, less (b) the sum of the following
amounts of such Person and its Restricted Subsidiaries determined on a
consolidated basis in accordance with GAAP to the extent included in the
determination of such Net Income (Loss): (i) extraordinary gains, (ii) the Net
Income (Loss) of any other Person that is accounted for by the equity method of
accounting, after deducting the amount of dividends or distributions paid by
such other Person to such Person, (iii) the Net Income (Loss) of any other
Person acquired by such Person or a Restricted Subsidiary of such Person in a
transaction accounted for as a pooling of interests for any period prior to the
date of such acquisition, and (iv) other non-operating income.
"Eligible Assignee" means any commercial bank or other non-bank
financial institution including, without limitation, any insurance company,
savings bank or savings and loan association, in each case approved in writing
by the Borrower and the Agent as an Eligible Assignee for purposes of this
Agreement; provided that the Borrower's approval shall not be unreasonable
withheld. Without limitation on the foregoing, the Borrower may withhold its
consent of any such Person if (a) the proposed assignment of any portion of any
Lender's or the Issuer's rights and obligations under this Agreement to such
Person would significantly increase (i) the amount of payments required to be
made by the Borrower under Sections 2.10, 2.12 or 2.14 (determined as of the
date on which such other financial institution is proposed to become a Lender
hereunder), or (ii) the likelihood that any such financial institution will
give the notice and make the demand contemplated by Section 2.11, or (b) in the
case of an assignee of the Issuer, such assignee's letters of credit are not
generally accepted in commercial markets.
"Eligible Inventory" means such of the Inventory of the Borrower,
valued at the lower of (a) market, or (b) cost (determined on a weighted
average basis consistent with the past practices of the Borrower), as the
Agent, in its sole discretion (in accordance with its customary practice),
deems eligible, less all reserves as the Agent, in its sole discretion (in
accordance with its customary practice), from time to time deems appropriate
(any such changes to be evidenced by notice to the Borrower and applicable
prospectively on the Borrowing Base Certificate following receipt of such
notice). For the purposes of this definition, the Agent does not intend to
treat the following Inventory as eligible: (a) Inventory in transit (unless
otherwise determined to be eligible by the Agent in its sole discretion in
accordance with its customary practice after a request for such a determination
by the Borrower), (b) Inventory held by a bailee or Inventory held on leased
premises where the bailee or landlord thereof, as the case may be, has not
executed a waiver in form and substance reasonably
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<PAGE> 20
satisfactory to the Agent, (c) Inventory subject to a Lien prior in right to
that of the Lien in favor of the Secured Parties (unless determined to be
eligible by the Agent in its sole discretion after a request for such a
determination by the Borrower) or subject to any other Lien other than a
Permitted Lien, and (d) Inventory acquired by the Borrower after the date
hereof, outside the jurisdictions in which the Secured Parties have a
perfected, first priority Lien, subject to Permitted Liens. Nothing in the
preceding sentence shall limit the Agent's right, in its sole discretion (in
accordance with its customary practice), to treat any item of Inventory as
ineligible (any such ineligibility to be evidenced by notice to the Borrower
and applicable prospectively on the Borrowing Base Certificate following such
notice).
"Environmental Law" means all federal, state and local laws, statutes,
ordinances and regulations, now or hereafter in effect, and in each case as
amended or supplemented from time to time, and any judicial or administrative
interpretation thereof, including, without limitation, any applicable judicial
or administrative order, consent decree or judgment, relating to the regulation
and protection of human health, safety, the environment and natural resources
(including, without limitation, ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic species and
vegetation). Environmental Laws include but are not limited to the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. Section 9601 et seq.) ("CERCLA"); the Hazardous Material
Transportation Act, as amended (49 U.S.C. Section 180 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. Section 136
et seq.); the Resource Conservation and Recovery Act, as amended (42 U.S.C.
Section 6901 et seq.) ("RCRA"); the Toxic Substance Control Act, as amended
(42 U.S.C. Section 7401 et seq.); the Clean Air Act, as amended (42 U.S.C.
Section 740 et seq.); the Federal Water Pollution Control Act, as amended
(33 U.S.C. Section 1251 et seq.); the Occupational Safety and Health Act, as
amended (29 U.S.C. Section 651 et seq.); and the Safe Drinking Water Act, as
amended (42 U.S.C. Section 300f et seq.), and their state and local
counterparts or equivalents and any applicable transfer of ownership
notification or approval statutes such as the New Jersey Environmental Cleanup
Responsibility Act (N.J. Stat. Ann. Section 13:1K-6 et seq.) ("ECRA").
"Environmental Liabilities and Costs" means, as to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all fees, disbursements and expenses of
counsel, experts and consultants and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of any
claim or demand by any other Person, whether based in contract, tort, implied
or express warranty, strict liability, criminal or civil statute,
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including, without limitation, any thereof arising under any Environmental Law,
Permit, order or agreement with any Governmental Authority or other Person, and
which relate to any environmental, health or safety condition, or a Release or
threatened Release.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"ERISA" means the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with a Loan Party within the meaning of
Section 414(b), (c), (m) or (o) of the Code.
"ERISA Event" means, with respect to any Loan Party or any ERISA
Affiliate, (a) a Reportable Event with respect to a Title IV Plan or a
Multiemployer Plan, (b) the withdrawal of any Loan Party or any ERISA Affiliate
from a Title IV Plan subject to Section 4063 of ERISA during a plan year in
which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA,
(c) the complete or partial withdrawal of any Loan Party or any ERISA Affiliate
from any Multiemployer Plan, (d) the filing of a notice of intent to terminate
a Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA, (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC, or (f) any other event or condition
which might reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer,
any Title IV Plan or Multiemployer Plan or the imposition of any liability
under Title IV of ERISA, other than PBGC premiums due but not delinquent under
Section 4007 of ERISA.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" below its
name on Schedule IV (or, if no such office is specified, its Domestic Lending
Office) or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Agent.
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"Eurodollar Rate" means, for any Interest Period, an interest rate per
annum equal to the rate per annum obtained by dividing (a) the rate of interest
determined by the Agent to be the average (rounded upward to the nearest whole
multiple of 1/16 of 1% per annum, if such average is not such a multiple) of
the rate per annum at which deposits in Dollars are offered by the principal
office of Citibank in London, England to prime banks in the London interbank
market at 11:00 A.M. (London time) two Business Days before the first day of
such Interest Period in an amount substantially equal to the Eurodollar Rate
Loan of CUSA during such Interest Period and for a period equal to such
Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage for such Interest Period.
"Eurodollar Rate Loan" means any outstanding principal amount of the
Revolving Credit Loans of any Lender that, for an Interest Period, bears
interest at a rate determined with reference to the Eurodollar Rate.
"Eurodollar Rate Reserve Percentage" means for any Interest Period the
reserve percentage applicable two Business Days before the first day of such
Interest Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or
other marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities which includes deposits by reference to which the Eurodollar Rate
is determined) having a term equal to such Interest Period.
"Event of Default" has the meaning specified in Section 8.1.
"Exchange Debentures" means the Borrower's Exchange Debentures, due
March 15, 2003, issuable in exchange for the Preferred Stock in an aggregate
principal amount equal to the liquidation preference of the Preferred Stock
exchanged, bearing interest at an annual rate of 14.25%, as amended, modified
or extended from time to time.
"Exchange Debentures Indenture" means that certain Indenture, dated as
of a date to be determined, among the Borrower and a trustee to be designated,
as Trustee, pursuant to which the Exchange Debentures are to be issued, as the
same may be amended, supplemented or otherwise modified from time to time.
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<PAGE> 23
"Existing Credit Agreement" has the meaning set forth in the first
recital hereof.
"Fair Market Value" means (a) with respect to any asset (other than a
marketable security) at any date, the value of the consideration obtainable in
a sale of such asset at such date assuming a sale by a willing seller to a
willing purchaser dealing at arm's length and arranged in an orderly manner
over a reasonable period of time having regard to the nature and
characteristics of such asset or, if such asset shall have been the subject of
a relatively contemporaneous appraisal by an independent third party appraiser,
the basic assumptions underlying which have not materially changed since its
date, as set forth in such appraisal, and (b) with respect to any marketable
security at any date, the closing sale price of such security on the business
day (on which any national securities exchange is open for the normal
transaction of business) next preceding such date, as appearing in any
published list of any national securities exchange or in the National Market
List of the National Association of Securities Dealers, Inc. or, if there is no
such closing sale price of such security, the final price for the purchase of
such security at face value quoted on such business day by a financial
institution of recognized standing which regularly deals in securities of such
type.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Fiscal Quarter" means the three month period ending on March 31, June
30, September 30 or December 31.
"Fiscal Year" means the 12 month period ending on September 30.
"Funding" means Geneva Steel Funding Corporation, a Utah corporation,
which is a wholly owned Subsidiary of the Borrower.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Pub-
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<PAGE> 24
lic Accountants and the statements and pronouncements of the Financial
Accounting Standards Board, or in such other statements by such other entity as
may be in general use by significant segments of the accounting profession,
which are applicable to the circumstances as of the date of determination
except that, for purposes of Article V, the defined terms used therein and in
the definition of the term "Additional Discretionary Amount" and the defined
terms used therein, GAAP shall be determined on the basis of such principles in
effect on the date hereof and consistent with those used in the preparation of
the audited financial statements referred to in Section 4.5(a).
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Improvements" has the meaning specified in Section 4.20(d).
"Indebtedness" of any Person means (a) all indebtedness of such Person
for borrowed money (including, without limitation, reimbursement and all other
obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured) or for the deferred purchase price of
property or services, (b) all obligations of such Person evidenced by notes,
bonds, debentures or similar instruments, (c) all indebtedness of such Person
created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event
of default are limited to repossession or sale of such property), (d) all
Capitalized Lease Obligations of such Person, (e) all Contingent Obligations of
such Person, (f) all obligations of such Person to purchase, redeem, retire,
defease or otherwise acquire for value any Stock or Stock Equivalents of such
Person, valued, in the case of redeemable preferred stock, at the greater of
its voluntary or involuntary liquidation preference plus accrued and unpaid
dividends, (g) all obligations of such Person under Interest Rate Contracts and
Commodity Contracts, (h) all Indebtedness referred to in clause (a), (b), (c),
(d), (e), (f) or (g) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including, without limitation, Accounts and
general intangibles) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness, (i) in the case
of the Borrower, the Obligations, (j) all liabilities of such Person which
would be shown on a balance sheet of such Person prepared in accordance with
GAAP, and (k) all liabilities of such Person in connection with the failure to
make when due any contribution or payment pursuant to or under any Plan.
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<PAGE> 25
"Indemnitee" has the meaning specified in Section 10.4(b).
"Interest Period" means, (a) initially, the period commencing on the
date a Eurodollar Rate Loan is made or on the date of conversion of a Base Rate
Loan to such Eurodollar Rate Loan and ending one, three, six, nine or twelve
months thereafter, as selected by the Borrower in its Notice of Borrowing or
Notice of Conversion or Continuation given to the Agent pursuant to Section
2.2(a) or 2.7, and (b) thereafter, if such Loan is continued, in whole or in
part, as a Eurodollar Rate Loan pursuant to Section 2.7, a period commencing on
the last day of the immediately preceding Interest Period therefor and ending
one, three, six, nine or twelve months thereafter, as selected by the Borrower
in its Notice of Conversion or Continuation given to the Agent pursuant to
Section 2.7; provided, however, that:
(i) if any Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day, unless the result of such extension
would be to extend such Interest Period into another calendar month,
in which event such Interest Period shall end on the immediately
preceding Business Day;
(ii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month;
(iii) the Borrower may not select any Interest Period which
ends after the Termination Date; and
(iv) there shall be outstanding at any one time no more than
four Interest Periods in the aggregate.
"Interest Rate Contracts" means interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance, and other agreements or arrangements designed to provide protection
against fluctuations in interest rates.
"Inventory" has the meaning specified in the Amended and Restated
Security Agreement.
"Investments" has the meaning specified in Section 7.6.
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<PAGE> 26
"IRS" means the Internal Revenue Service, or any successor thereto.
"L/C Cash Collateral Account" has the meaning specified in Section
8.3(a).
"Leases" means, with respect to the Borrower or any of its Restricted
Subsidiaries, all of those leasehold estates in real property now owned as
lessee or hereafter acquired, as such may be amended, supplemented or otherwise
modified from time to time to the extent permitted by this Agreement.
"Letter of Credit" means any letter of credit issued for the account
of the Borrower by the Issuer pursuant to Section 2.16.
"Letter of Credit Obligations" means, at any time, all liabilities at
such time of the Borrower to the Issuer with respect to Letters of Credit,
whether or not any such liability is contingent, and includes the sum of (a)
the Reimbursement Obligations at such time and (b) the Letter of Credit Undrawn
Amounts at such time.
"Letter of Credit Reimbursement Agreement" has the meaning specified
in Section 2.16(c).
"Letter of Credit Request" has the meaning specified in Section
2.16(d).
"Letter of Credit Undrawn Amounts" means, at any time, the aggregate
amount available to be drawn under all Letters of Credit outstanding at such
time.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement or the
interest of a lessor under a Capitalized Lease Obligation or any Other Lease.
"Loan" means a Revolving Credit Loan or a Swing Loan, made by a Lender
to the Borrower pursuant to Article II.
"Loan Documents" means, collectively, this Agreement, the Amended and
Restated Revolving Credit Notes, each Letter of Credit Reimbursement Agreement
(if any) and the Collateral Documents.
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<PAGE> 27
"Loan Party" means the Borrower and each Subsidiary of the Borrower;
provided, however, that for the purposes of Sections 4.9, 6.11(d)(iv), 6.12(e),
6.12(f), 6.12(g), 6.12(h), 6.12(i), 6.12(j), 6.14 and 8.1(g) "Loan Party" means
the Borrower and each Restricted Subsidiary of the Borrower.
"Long-Term Leases" means any lease of real or personal property (other
than a Capitalized Lease) having an original term, including any period for
which the lease may be renewed or extended at the option of the lessor, of more
than three years.
"Majority Lenders" means (a) at any time there are two or fewer
Lenders, any Lender or Lenders having more than 50% of the Revolving Credit
Commitments, (b) at any time there are three or four Lenders, at least two
Lenders having at least 60% of the Revolving Credit Commitments, and (c) at any
time there are five or more Lenders, at least three Lenders having at least 60%
of the Revolving Credit Commitments.
"Mannesmann" means Mannesmann Pipe & Steel Corporation, a New York
corporation, and any successor thereto.
"Mannesmann Agreement" means that certain Sales Representation
Agreement, dated as of December 8, 1988, between the Borrower and Mannesmann,
as the same may be amended from time to time.
"Material Adverse Change" means a material adverse change in any of
(a) the condition (financial or otherwise), business, performance, prospects,
operations or properties of the Borrower or the Borrower and its Subsidiaries
taken as one enterprise, (b) the legality, validity or enforceability of any
Loan Document, (c) the perfection or priority of the Liens granted pursuant to
the Collateral Documents (it being understood that the existence and effect on
priority of Permitted Liens shall not, in and of itself, constitute such a
change), (d) the ability of the Borrower to repay the Obligations or of any
Loan Party to perform its obligations under any Loan Document, or (e) the
rights and remedies of the Lenders or the Agent under the Loan Documents;
provided, however, that for purposes hereof and without influencing the
interpretation of any of the foregoing, (i) the net losses of approximately
$27,000,000 of the Borrower for its 1994 Fiscal Year, (ii) the Projections of
the Borrower in effect on the date hereof, and (iii) the incurrence or
suffering to exist of any Indebtedness or the granting or suffering to exist of
any Liens by an Unrestricted Subsidiary shall not, in and of themselves,
constitute a Material Adverse Change.
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<PAGE> 28
"Material Adverse Effect" means an effect that has a reasonable
likelihood of resulting in or causing a Material Adverse Change.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, and to which any Loan Party or any ERISA Affiliate is
making, is obligated to make, has made or been obligated to make, contributions
on behalf of participants who are or were employed by any of them.
"Net Income (Loss)" means, for any Person for any period, the
aggregate of net income (or loss) from continuing operations of such Person and
its Restricted Subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP.
"Net Interest Expense" means, for any Person for any period, (a) the
gross interest expense of such Person and its Restricted Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP, plus (b) the
following for such Person and its Restricted Subsidiaries determined on a
consolidated basis in accordance with GAAP: the sum of (i) losses for such
period on Interest Rate Contracts (to the extent not included in such gross
interest expense), (ii) the amount expensed for upfront costs or fees for such
period associated with Interest Rate Contracts (to the extent not included in
gross interest expense), and (iii) in respect of any Person and its Restricted
Subsidiaries, an amount equal to the yield paid by such Person and its
Restricted Subsidiaries plus other related financing expenses in respect of
sales of Accounts pursuant to the Receivables Securitization during such
period, less (c) the following for such Person and its Restricted Subsidiaries
determined on a consolidated basis in accordance with GAAP: the sum of (i)
interest capitalized during construction for such period, (ii) interest income
for such period, (iii) gains for such period on Interest Rate Contracts (to the
extent not included in interest income above and to the extent not deducted in
the calculation of such gross interest expense), and (iv) the net interest
expense of any other Person acquired by such Person or a Restricted Subsidiary
of such Person in a transaction accounted for as a pooling of interests for any
period prior to the date of such acquisition.
"Net Worth" of any Person means, at any date, the difference between
Total Assets of such Person at such date and Total Liabilities of such Person
at such date.
"1994 Senior Notes" means the Borrower's Senior Notes, which are due
on January 15, 2004, in an initial aggregate principal amount of $190,000,000,
bearing interest at an annual rate of 9.5%, issued under the 1994 Senior Notes
Indenture, as amended, modified or extended from time to time.
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<PAGE> 29
"1994 Senior Notes Indenture" means that certain Indenture, dated as
of January 15, 1994 among the Borrower and Bankers Trust Company, as Trustee,
pursuant to which the Prepayment Senior Notes were issued, as the same may be
amended, supplemented or otherwise modified from time to time.
"1993 Senior Notes" means the Borrower's Senior Notes due March 15,
2001, in an initial aggregate principal amount of $135,000,000, bearing
interest at an annual rate of 11-1/8%, issued under the 1993 Senior Notes
Indenture, as amended, modified or extended from time to time.
"1993 Senior Notes Indenture" means that certain Indenture, dated as
of March 15, 1993 among the Borrower and Bankers Trust Company, as Trustee,
pursuant to which the Senior Notes were issued, as the same may be amended,
supplemented or otherwise modified from time to time.
"Non-Cash Interest Expense" means, for any Person for any period, the
sum of the following amounts to the extent included in Net Interest Expense of
such Person for such period: (a) the amount of amortized debt discount, (b)
charges relating to write-ups or write-downs in the book or carrying value of
existing Indebtedness, and (c) any increase in pay-in-kind interest payable
less any decrease in pay-in-kind interest payable.
"Notice of Borrowing" has the meaning specified in Section 2.2(a).
"Notice of Conversion or Continuation" has the meaning specified in
Section 2.7.
"Obligations" means the Swing Loans, the Revolving Credit Loans, the
Letter of Credit Obligations and all other advances, debts, liabilities,
obligations, covenants and duties arising under this Agreement or under any
other Loan Document owing by the Borrower to the Agent, any Lender, any
Affiliate of any of them or any Indemnitee, of every type and description,
present or future, whether or not evidenced by any note, guaranty or other
instrument, whether or not for the payment of money, whether arising by reason
of an extension of credit, issuance or amendment of a Letter of Credit or
payment of any draft drawn thereunder or any fees and expenses associated
therewith, loan, guaranty, indemnification, foreign exchange transaction,
Interest Rate Contract, or Commodity Contract or in any other manner, whether
direct or indirect (including, without limitation, those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term "Obligations" includes,
without limitation, all interest,
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<PAGE> 30
charges, expenses, fees, attorneys' fees and disbursements and any other sum
chargeable to the Borrower under this Agreement or any other Loan Document.
"Old Revolving Credit Notes" means the "Revolving Credit Notes", as
defined in the Existing Credit Agreement, which notes will be exchanged for the
Amended and Restated Revolving Credit Notes on the Closing Date.
"Other Lease" means any financing lease having substantially the same
economic effect as a conditional sale, title retention agreement or similar
arrangement.
"Other Taxes" has the meaning specified in Section 2.14(b).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Pension Plan" means an employee pension benefit plan, as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan), which is not an
individual account plan, as defined in Section 3(34) of ERISA, and which any
Loan Party or, if a Title IV Plan or a Plan subject to Section 412 of the Code,
any ERISA Affiliate maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of
them.
"Permit" means any permit, approval, authorization, license, variance
or permission required from a Governmental Authority under an applicable
Requirement of Law.
"Permitted Liens" has the meaning specified in Section 7.1.
"Person" means an individual, partnership, corporation (including,
without limitation, a business trust), joint stock company, limited liability
company, trust, unincorporated association, joint venture or other entity, or a
Governmental Authority.
"Plan" means an employee benefit plan, as defined in Section 3(3) of
ERISA, which any Loan Party maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of
them.
"Preferred Stock" means the Borrower's Cumulative Redeemable
Exchangeable Preferred Stock, no par value per share, having an annual dividend
rate
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<PAGE> 31
of 14.0%, and any other preferred stock of the Borrower exchanged for, and
having terms identical to, such Cumulative Redeemable Exchangeable Preferred
Stock.
"Prepayment Period" means a period commencing on any date on which the
sum of the Loans and the Letter of Credit Obligations outstanding is equal to
or greater than $10,000,000 and ending on the date, if any, which is 30 days
after the later to occur of (i) the decrease of the aggregate Loans and Letter
of Credit Obligations outstanding to an amount less than $10,000,000, and (ii)
the written request by the Borrower to the Agent made after the commencement of
such period to terminate such period.
"Projections" means those financial projections of the Borrower, dated
October 14, 1994, as updated periodically by the Borrower in the ordinary
course of business in a manner consistent with its past practices.
"Proxy Statement" means the Borrower's proxy statement, dated February
2, 1994.
"Qualified Plan" means an employee pension benefit plan, as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan), which is intended to
be tax-qualified under Section 401(a) of the Code, and which any Loan Party or,
if subject to Section 412 of the Code, any ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"Ratable Portion" or "ratably" means, with respect to any Lender, the
quotient obtained by dividing the Revolving Credit Commitment of such Lender by
the Revolving Credit Commitments of all the Lenders.
"Real Estate" means all of those plots, pieces or parcels of land now
owned or hereafter acquired by any Loan Party (the "Land"), including, without
limitation, those listed on Schedule 4.20(a), together with the right, title
and interest of such Loan Party, if any, in and to the streets, the land lying
in the bed of any streets, roads or avenues, opened or proposed, in front of,
adjoining or abutting the Land to the center line thereof, the air space and
development rights pertaining to the Land and the right to use such air space
and development rights, all rights of way, privileges, liberties, tenements,
hereditaments and appurtenances belonging or in any way appertaining thereto,
all fixtures, all easements now or hereafter benefiting the Land and all
royalties and rights appertaining to the use and enjoyment of the Land,
including, without limitation, all alley, vault, drainage, mineral, water, oil
and gas rights,
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<PAGE> 32
together with all of the buildings and other improvements now or hereafter
erected on the Land, and any fixtures appurtenant thereto.
"Receivables Purchase Agreement" means the Receivables Purchase
Agreement, dated the date hereof, between the Borrower and Funding, as the same
may be amended, supplemented or otherwise modified from time to time.
"Receivables Securitization" means the transactions described and
contemplated in the Securitization Documents.
"Register" has the meaning specified in Section 10.7(c).
"Reimbursement Obligations" means all reimbursement or repayment
obligations of the Borrower to the Issuer with respect to Letters of Credit
including, without limitation, pursuant to any applicable Letter of Credit
Reimbursement Agreement.
"Release" means, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration of a Contaminant into the indoor or outdoor environment or into or
out of any property owned or operated by such Person, including, without
limitation, the movement of Contaminants through or in the air, soil, surface
water, ground water or property.
"Remedial Action" means all actions required or voluntarily undertaken
to (a) clean up, remove, treat or in any other way address Contaminants in the
indoor or outdoor environment, (b) prevent the Release or threat of Release or
minimize the further Release of Contaminants so they do not migrate or endanger
or threaten to endanger public health or welfare or the indoor or outdoor
environment, or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
"Rentals" means, as of the date of determination, all fixed payments
(including as such all payments which the lessee is obligated to make to the
lessor on termination of the lease or surrender of the property) payable by the
Borrower or a Restricted Subsidiary, as lessee or sublessee under a lease of
real or personal property, but excluding any amounts required to be paid by the
Borrower or a Restricted Subsidiary (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges. Fixed rents under any so-called "percentage leases" shall be
computed solely on the basis of the minimum rents, if any, required to be paid
by the lessee regardless of sales volume or gross revenues.
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<PAGE> 33
"Reportable Event' means any of the events described in Section
4043(b)(1), (2), (3), (5), (6), (8) or (9) of ERISA.
"Requirement of Law" means, as to any Person, the articles of
incorporation and by-laws or other organizational or governing documents of
such Person, and all federal, state and local laws, rules, regulations and
executive orders, including, without limitation, federal, state or local
securities, antitrust and licensing laws, health and safety laws, and all
applicable trade laws and requirements, including, without limitation, all
disclosure requirements of Environmental Laws, ERISA and all orders, judgments,
decrees or other determinations of any Governmental Authority or arbitrator,
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"Responsible Officer" means, with respect to the Borrower, any of the
executive officers of the Borrower listed on Schedule V.
"Restricted Party" means the Borrower and any Restricted Subsidiary.
"Restricted Subsidiary" means any Subsidiary (a) which is organized
under the laws of the United States or any State thereof, (b) which conducts
substantially all of its business and has substantially all of its assets
within the United States, (c) of which more than 80% (by number of votes) of
the Voting Stock is owned by the Borrower and/or one or more Restricted
Subsidiaries, and (d) which at the time of creation or acquisition thereof by
the Borrower is designated by written notice to the Agent, accompanied by a
resolution of the Board of Directors of the Borrower, to be included in the
definition of Restricted Subsidiary for all purposes of this Agreement;
provided however, that once a Subsidiary is so designated a Restricted
Subsidiary it may never become an Unrestricted Subsidiary; and provided
further, however, that Funding shall be deemed a Restricted Subsidiary.
"Revolving Credit Borrowing" means a borrowing by the Borrower
consisting of Revolving Credit Loans made on the same day.
"Revolving Credit Commitment" means, as to each Lender, the commitment
of such Lender to make Revolving Credit Loans to the Borrower pursuant to
Section 2.1(a) in the aggregate principal amount outstanding not to exceed the
amount set forth opposite such Lender's name on Schedule VI under the caption
"Revolving Credit Commitment," as such amount may be reduced or modified
pursuant to this Agreement.
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"Revolving Credit Loan" means a Loan made by a Lender to the Borrower
pursuant to Section 2.1(a).
"Secured Parties" has the meaning specified in the Amended and
Restated Security Agreement.
"Securitization Documents" means each agreement, document and
instrument entered into by the Borrower or Funding in connection with the
Receivables Securitization, including without limitation, the Receivables
Purchase Agreement executed by the Borrower and Funding and the promissory note
of Funding in favor of the Borrower made in connection therewith.
"Settlement Date" has the meaning specified in Section 2.17.
"Solvent" means, with respect to any Person, that the value of the
assets of such Person (both at fair value and present fair saleable value) is,
on the date of determination, greater than the total amount of liabilities
(including, without limitation, contingent and unliquidated liabilities) of
such Person as of such date and that, as of such date, such Person is able to
pay all liabilities of such Person as such liabilities mature and does not have
unreasonably small capital. In computing the amount of contingent or
unliquidated liabilities at any time, such liabilities will be computed at the
amount which, in light of all the facts and circumstances existing at such
time, represents the amount that can reasonably be expected to become an actual
or matured liability.
"Stock" means shares of capital stock, beneficial or partnership
interests, participations or other equivalents (regardless of how designated)
of or in a corporation or equivalent entity, whether voting or non-voting, and
includes, without limitation, common stock and preferred stock.
"Stock Equivalents" means all securities convertible into or
exchangeable for Stock and all warrants, options or other rights to purchase or
subscribe for any Stock, whether or not presently convertible, exchangeable or
exercisable.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other business entity of which an aggregate of 50% or more of
the outstanding Stock having ordinary voting power to elect a majority of the
board of directors, managers, trustees or other controlling persons, is, at the
time, directly or indirectly, owned by such Person and/or one or more
Subsidiaries of such Person (irrespective of
26
<PAGE> 35
whether, at the time, Stock of any other class or classes of such entity shall
have or might have voting power by reason of the happening of any contingency).
"Swing Bank" means CUSA, or such other Lender who shall (a) also be
the Agent, or (b) agree with the Agent to act as Swing Bank.
"Swing Loan" means a Loan made by the Swing Bank to the Borrower
pursuant to Section 2.1(b).
"Swing Loan Available Credit" means the Swing Bank's Ratable Portion
of the Available Credit.
"Swing Loan Borrowing" means a borrowing consisting of a Swing Loan.
"Tangible Net Worth" of any Person means, at any date, the Net Worth
of such Person at such date, excluding, however, from the determination of the
Total Assets of such Person at such date (to the extent the same are included
in the determination of Total Assets and without duplication), (a) all
goodwill, organizational expenses, research and development expenses,
trademarks, trade names, copyrights, patents, patent applications, licenses and
rights in any thereof, and other similar intangibles, (b) all deferred charges
or unamortized debt discount and expense, (c) all reserves carried and not
deducted from assets or carried as a liability, (d) treasury stock and capital
stock of such Person and its Restricted Subsidiaries, and all obligations or
other securities of, or capital contributions to, or investments in or advances
or loans to, any Unrestricted Subsidiary of such Person or any of its
Subsidiaries, (e) securities which are not readily marketable, (f) cash held in
a sinking or other analogous fund established for the purpose of redemption,
retirement, defeasance or prepayment of any Stock, (g) any write-up in the book
value of any asset resulting from a revaluation thereof, and (h) any items not
included in clauses (a) through (g) above which are treated as intangibles in
conformity with GAAP.
"Tax Affiliate" means, as to any Person, any Affiliate of such Person
with which such Person files or is eligible to file consolidated, combined or
unitary tax returns.
"Tax Returns" has the meaning specified in Section 4.3.
"Taxes" has the meaning specified in Section 2.14(a).
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"Termination Date" means the earlier of (a) April 30, 1999 and (b) the
date of termination in whole of the Revolving Credit Commitments pursuant to
Section 2.4 or 8.2.
"Title IV Plan" means a Pension Plan, other than a Multiemployer Plan,
which is covered by Title IV of ERISA.
"Total Assets" of any Person means, at any date, the total assets of
such Person and its Restricted Subsidiaries at such date determined on a
consolidated basis in accordance with GAAP.
"Total Liabilities" of any Person means, at any date, the total
liabilities of such Person and its Restricted Subsidiaries at such date
determined on a consolidated basis in accordance with GAAP.
"Unfunded Pension Liability" means, as of any determination date, the
aggregate amount, if any, of the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with
Title IV of ERISA, all determined as of the most recent valuation date for each
such Title IV Plan using the actuarial assumptions in effect under such Title
IV Plan.
"Unrestricted Subsidiary" means any Subsidiary which is not a
Restricted Subsidiary.
"Voting Stock" means with respect to any Person, the Stock or other
securities of any class or classes, the holders of which are ordinarily, in the
absence of contingencies, entitled to elect a majority of the board of
directors of such Person (or Persons performing similar functions).
"Warrants" means the Borrower's warrants, dated the date of issuance
of the Preferred Stock, each of which is exercisable into one share of the
Borrower's Class A Common Stock (or such other class of the Borrower's Stock
having rights (other than voting rights) substantially equivalent to the
Borrower's Class A Common Stock).
"Welfare Benefit Plan" means an employee welfare benefit plan, as
defined in Section 3(1) of ERISA, to which any Loan Party maintains,
contributes to, or contributed to prior to the Closing Date, or has an
obligation to contribute to, on behalf of its former or active employees (or
their beneficiaries).
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1.2. Computation of Time Periods. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding" and the word "through" means "to and including".
1.3. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP and all accounting
determinations required to be made pursuant hereto shall, unless expressly
otherwise provided herein, be made in accordance with GAAP.
1.4. Certain Terms. (a) The words "herein," "hereof" and "hereunder"
and other words of similar import refer to this Agreement as a whole, and not
to any particular Article, Section, subsection or clause in this Agreement.
References herein to an Exhibit, Schedule, Article, Section, subsection or
clause refer to the appropriate Exhibit or Schedule to, or Article, Section,
subsection or clause in, this Agreement.
(b) The terms "Lender," "Issuer" and "Agent" include their
respective successors and the term "Lender" includes each assignee of such
Lender who becomes a party hereto pursuant to Section 10.7.
(c) For purposes of Articles IV and VI only, the terms "Loan
Party" and "Subsidiary" shall include an Unrestricted Subsidiary only if the
consequences of such inclusion (i) in the case of a representation or warranty
contained in Article IV, would cause a breach thereof, the circumstances of
which would have a Material Adverse Effect, and (ii) in the case of a covenant
contained in Article VI, would, upon a breach of such covenant due to such
inclusion, have a Material Adverse Effect.
(d) Any Default or Event of Default which occurred on a
specified date or during a specified period (such as a date or period specified
in Article V) shall not be "continuing" or "in continuance" if, as of any
subsequent date or for any subsequent period of determination, the Default or
Event of Default no longer exists even though the Default or Event of Default
occurred on the former date or for the former period of determination.
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ARTICLE II
AMOUNTS AND TERMS OF THE REVOLVING CREDIT LOANS
2.1. The Loans.
(a) The Revolving Credit Loans. On the terms and subject to
the conditions contained in this Agreement, each Lender severally agrees to
make loans (each a "Revolving Credit Loan") to the Borrower from time to time
on any Business Day during the period from the date hereof until the
Termination Date in an aggregate amount not to exceed at any time outstanding
such Lender's Revolving Credit Commitment; provided, however, that at no time
(except as provided for in Section 2.13(c)), shall any Lender be obligated to
make a Revolving Credit Loan in excess of such Lender's Ratable Portion of the
Available Credit. Each Lender agrees to make Revolving Credit Loans in
accordance with Section 2.17. Within the limits of each Lender's Revolving
Credit Commitment, until the Termination Date, amounts prepaid pursuant to
Section 2.6 may be reborrowed under this Section 2.1(a) and Section 2.17. The
Revolving Credit Loans of each Lender shall be evidenced by an Amended and
Restated Revolving Credit Note payable to the order of such Lender.
(b) The Swing Loans. The Swing Bank, in its sole discretion,
on the terms and subject to the conditions contained in this Agreement, may
make loans (each a "Swing Loan") to the Borrower from time to time on any
Business Day during the period from the date hereof until the Termination Date
as provided herein and in lieu of the making of Revolving Credit Loans in an
aggregate amount not to exceed at any time outstanding (except as provided for
in Section 2.13(c)), the lesser of (i) the Swing Loan Available Credit or (ii)
the difference between (x) the Swing Bank's Revolving Credit Commitment and (y)
the sum of the aggregate outstanding principal amount of the Swing Loans and
the Revolving Credit Loans made by the Swing Bank and the Swing Bank's Ratable
Portion of the outstanding Letter of Credit Obligations. The Swing Bank shall
be entitled to rely on the most recent Borrowing Base Certificate delivered to
the Agent. Within the limits set forth in clauses (i) and (ii) in the first
sentence of this Section 2.1(b), amounts prepaid pursuant to Section 2.6 may be
reborrowed under this Section 2.1(b).
2.2. Making the Loans. (a) Except as provided in Section 2.17, each
Revolving Credit Borrowing shall be made on written notice, given by the
Borrower to the Agent not later than 11:00 A.M. (New York City time) (i) on the
Business Day of the proposed Revolving Credit Borrowing, in the case of Base
Rate Loans, and (ii) on the fourth Business Day prior to the date of the
proposed Revolving Credit Borrowing, in
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the case of Eurodollar Rate Loans. Each such notice (a "Notice of Borrowing")
shall be in substantially the form of Exhibit G and executed by a Responsible
Officer, specifying therein (A) the date of such proposed Revolving Credit
Borrowing, (B) the aggregate amount of such proposed Revolving Credit
Borrowing, (C) the amount thereof, if any, requested to be Eurodollar Rate
Loans, (D) the initial Interest Period for any such Eurodollar Rate Loans, and
(E) that the proposed Revolving Credit Borrowing does not, to the knowledge of
the Responsible Officer executing such notice, exceed the Available Credit.
The Revolving Credit Loans shall be made as Base Rate Loans unless (subject to
Section 2.11) the Notice of Borrowing specifies that all or a pro rata portion
thereof shall be Eurodollar Rate Loans; provided, however, that the aggregate
of the Eurodollar Rate Loans for each Interest Period must be in an amount of
not less than $5,000,000 or an integral multiple of $1,000,000 in excess
thereof. No later than 4:00 P.M. (New York City time) on the second Business
Day prior to a proposed Revolving Credit Borrowing consisting in whole or in
part of Eurodollar Rate Loans, the Agent shall notify the Borrower of the
Eurodollar Rate(s) applicable to such proposed Eurodollar Rate Loans.
(b) Each Swing Loan Borrowing shall be made upon such notice
as the Swing Bank and the Borrower shall agree. All Swing Loan Borrowings
shall be made as Base Rate Loans.
(c) The Agent shall give to each Lender prompt notice of the
Agent's receipt of a Notice of Borrowing with respect of Revolving Credit Loans
and, if Eurodollar Rate Loans are properly requested in such Notice of
Borrowing, the applicable interest rate under Section 2.8(b). Each Lender
shall, before 1:00 P.M. (New York City time) on the date of the proposed
Revolving Credit Borrowing, make available for the account of its Applicable
Lending Office to the Agent at its address referred to in Section 10.2, in
immediately available funds, such Lender's Ratable Portion of such proposed
Revolving Credit Borrowing. After the Agent's receipt of such funds, the Agent
will (i) upon fulfillment of the applicable conditions set forth in Article
III, make such funds available to the Borrower as soon as is customarily
practicable, by depositing the same in the bank account referred to in Section
6.18(b) or as the Borrower shall otherwise direct, or (ii) if the applicable
conditions set forth in Article III have not been so fulfilled, promptly notify
the Borrower of such determination. In the event a Loan is not made to
Borrower, the Agent shall promptly return to each Lender the funds delivered to
it pursuant to this Section 2.2(c) in respect of such Loan. Each Revolving
Credit Borrowing shall be in an aggregate amount of not less than $100,000.
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(d) Each Notice of Borrowing shall be irrevocable and binding
on the Borrower; provided, however, that the Borrower may revoke a Notice of
Borrowing in respect of requested Eurodollar Rate Loans within one hour of
receipt of the notice contemplated in the last sentence of Section 2.2(a).
(e) In the case of any proposed Revolving Credit Borrowing
which the related Notice of Borrowing specifies is to be comprised of
Eurodollar Rate Loans, the Borrower shall indemnify each Lender against any
loss, cost or expense incurred by such Lender as a result of any failure to
fulfill on the date specified in such Notice of Borrowing for such proposed
Revolving Credit Borrowing the applicable conditions set forth in Article III,
including, without limitation, any loss, cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund any Eurodollar Rate Loan to be made by such Lender as part of
such proposed Revolving Credit Borrowing when such Eurodollar Rate Loan, as a
result of such failure, is not made on such date.
(f) Unless the Agent shall have received notice from a Lender
prior to the date of any proposed Revolving Credit Borrowing that such Lender
will not make available to the Agent such Lender's Ratable Portion of such
Revolving Credit Borrowing, the Agent may assume that such Lender has made such
Ratable Portion available to the Agent on the date of such Revolving Credit
Borrowing in accordance with this Section 2.2 and the 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 Ratable Portion available to the Agent, such Lender and the Borrower
severally agree to repay to the 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
Agent, at (i) in the case of the Borrower, the interest rate applicable at the
time to the Revolving Credit Loans comprising such Revolving Credit Borrowing
and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender
shall repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Lender's Revolving Credit Loan as part of such Revolving Credit
Borrowing for purposes of this Agreement. If the Borrower shall repay to the
Agent such corresponding amount, such payment shall not relieve such Lender of
any obligation it may have to the Borrower hereunder.
(g) The failure of any Lender to make the Revolving Credit
Loan to be made by it as part of any Revolving Credit Borrowing shall not
relieve any other Lender of its obligation, if any, hereunder to make its
Revolving Credit Loan on the date of such Revolving Credit Borrowing, but no
Lender shall be responsible for the
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failure of any other Lender to make the Revolving Credit Loan to be made by
such other Lender on the date of any Revolving Credit Borrowing.
2.3. Fees. (a) The Borrower agrees to pay to each Lender a
commitment fee (the "Commitment Fee") on the average daily unused portion of
such Lender's then effective Revolving Credit Commitment from the date hereof
until the Termination Date at the rate of 0.50% per annum, computed in arrears
on (i) the first day of each month during the term of such Lender's Revolving
Credit Commitment, commencing on the first day of the first month after the
date hereof, and (ii) on the Termination Date, which fees shall automatically
and without further action on the part of the Borrower or compliance with any
other terms hereof be added to the outstanding principal amount of the
Revolving Credit Loans that are Base Rate Loans.
(b) The Borrower has agreed to pay to CUSA additional fees,
the amount and dates of payment of which are embodied in a separate agreement
between the Borrower and CUSA.
2.4. Reduction and Termination of the Commitments. The Borrower may
(a) upon notice to the Agent no later than 10:00 A.M. (New York City time) on
the date of termination, in the case of a termination, and (b) upon at least
one Business Day's prior notice to the Agent, in the case of a reduction,
terminate in whole or reduce ratably in part the portions of the respective
Revolving Credit Commitments of the Lenders in excess of the outstanding Loans
and Letter of Credit Obligations; provided, however, that each partial
reduction shall be in the aggregate amount of not less than $1,000,000 or an
integral multiple of $1,000,000 in excess thereof.
2.5. Repayment. The Borrower shall repay the entire unpaid principal
amount of the Loans on the Termination Date.
2.6. Prepayments. (a) The Borrower shall have no right to prepay
the principal amount of any Loan other than as provided in this Section 2.6.
(b) Other than with respect to prepayments pursuant to
Section 2.6(c) and 2.6(d), the Borrower may, upon at least one Business Day's
prior written notice to the Agent, stating the proposed date and aggregate
principal amount of the prepayment, prepay the outstanding principal amount of
the Loans in whole or ratably in part; provided, however, that (i) any such
prepayment shall be applied first to the outstanding Swing Loans, next to the
outstanding Revolving Credit Loans that are Base Rate Loans and next to the
outstanding Eurodollar Rate Loans, (ii) any prepayment of any Eurodollar Rate
Loan shall be made on, and only on, the last day of an
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Interest Period for such Eurodollar Rate Loan, and (iii) each prepayment of
Revolving Credit Loans shall be in an aggregate principal amount equal to the
outstanding aggregate principal amount thereof or, if such Loans are being
prepaid in part, not less than $1,000,000 or integral multiples of $1,000,000
in excess thereof. Upon the giving of such notice of prepayment, the principal
amount of the Loans specified to be prepaid shall become due and payable on the
date specified for such prepayment.
(c) If, to the knowledge of an officer of the Borrower, at
any time, the sum of the aggregate principal amount of the Loans and Letter of
Credit Obligations outstanding at such time exceeds the lower of the Revolving
Credit Commitments or the Borrowing Base at such time, the Borrower shall
forthwith prepay the Swing Loans then outstanding in an amount equal to such
excess, and if there are no Swing Loans outstanding or if such prepayment of
the Swing Loans does not eliminate such excess, the Revolving Credit Loans that
are Base Rate Loans then outstanding in an amount equal to such excess, and if
there are no Revolving Credit Loans that are Base Rate Loans outstanding or if
such prepayment of Revolving Credit Loans that are Base Rate Loans does not
eliminate such excess, the Revolving Credit Loans that are Eurodollar Rate
Loans then outstanding in an amount equal to such excess, and if there are no
Revolving Credit Loans that are Eurodollar Rate Loans outstanding or if such
prepayment of Revolving Credit Loans that are Eurodollar Rate Loans does not
eliminate such excess, to fund the L/C Cash Collateral Account (if there are
any Letters of Credit then outstanding) in an amount equal to the lesser of (i)
such excess, and (ii) the amount necessary to fully fund the L/C Cash
Collateral Account as contemplated by Section 8.3; provided, however, that if
the excess of the outstanding principal amount of the Loans and the Letter of
Credit Obligations over the Borrowing Base results solely from the
establishment of reserves by the Agent as contemplated by the definitions of
"Borrowing Base" and "Eligible Inventory" or the adjustments of advance rates
by the Agent as contemplated by the definition of "Borrowing Base" or the
determination by the Agent that certain Inventory previously included in a
Borrowing Base Certificate is ineligible as contemplated by the definition of
"Eligible Inventory", then, in each case, the mandatory prepayments required to
be made by the Borrower pursuant to this Section 2.6(c) attributable solely to
such actions or determinations of the Agent shall not be due and payable until
five days after the Borrower is notified of such action or determination by the
Agent; provided that if such fifth day is not a Business Day such amount shall
be due and payable on the next succeeding Business Day and further provided
that during such five day (or longer) period prior to the making of such
prepayment the Banks shall have no obligation to make Loans (except as provided
in Section 2.17) or issue Letters of Credit.
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(d) Except as provided in Section 2.6(e) hereof and in
Section 4 of the Amended and Restated Cash Collateral Agreement, upon the
occurrence and during the continuance of a Default or an Event of Default or
during a Prepayment Period, all immediately available funds in the Blocked
Account and the Cash Collateral Account shall be applied on the date on which
they are immediately available first to the outstanding principal amount of the
Swing Loans, next to the outstanding principal amount of the Revolving Credit
Loans that are Base Rate Loans, next to the outstanding principal amount of the
Revolving Credit Loans that are Eurodollar Rate Loans, and finally (if there
are any Letters of Credit then outstanding and then only to the extent the
Available Credit is insufficient to cover any drawings under such Letters of
Credit, or if there shall have occurred and be continuing any Event of Default)
to fund the L/C Cash Collateral Account pursuant to Section 8.3; provided,
however, to the extent there is any excess after application of such funds as
described above and in the absence of the occurrence and continuance of an
Event of Default, such excess shall be deposited in Borrower's operation
account with Citibank (or an Affiliate thereof) and provided further, however,
and without limiting the generality of the foregoing, that subject to the
satisfaction of the applicable conditions set forth in Section 3.3 (without
regard to the minimum amount of Base Rate Loans), the Borrower may, from time
to time, borrow Swing Loans and Revolving Credit Loans that are Base Rate Loans
and deposit the proceeds thereof in the Cash Collateral Account (to avoid the
incurrence by any Lender of losses, costs or expenses of the type described in
Section 10.4(c) or otherwise) and the amount so borrowed (i) shall not be
applied to Revolving Credit Loans that are Eurodollar Rate Loans and (ii) shall
be deemed to have been repaid with the funds in the Blocked Account and the
Cash Collateral Account in accordance with this Section 2.6(d).
(e) All proceeds of Collateral received by the Secured Parties
after the giving of notice to the Borrower pursuant to clause (a) or (b) of the
first sentence of Section 8.2 or the occurrence of an Event of Default
specified in Section 8.1(e) shall be applied first to fund the L/C Cash
Collateral Account, and if the L/C Cash Collateral Account has been fully
funded pursuant to Section 8.3, to pay any Swing Loans then outstanding
together with accrued interest thereon, and if no Swing Loans are outstanding,
ratably, to pay all of the Revolving Credit Loans that are Base Rate Loans
outstanding together with accrued interest thereon, and if no such Revolving
Credit Loans or accrued interest are outstanding, to pay all of the Revolving
Credit Loans that are Eurodollar Rate Loans outstanding together with accrued
interest thereon, and if no such Revolving Credit Loans are outstanding, then
to the Secured Parties, ratably, in respect of all other Obligations hereunder
and, finally, to the person or persons legally entitled thereto.
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2.7. Conversion/Continuation Option. The Borrower may elect (a) at
any time and from time to time to convert Revolving Credit Loans that are Base
Rate Loans or any portion thereof to Eurodollar Rate Loans, or (b) at the end
of any Interest Period with respect thereto, to convert Revolving Credit Loans
that are Eurodollar Rate Loans or any portion thereof into Base Rate Loans, or
to continue such Revolving Credit Loans that are Eurodollar Rate Loans or any
portion thereof for one or more additional Interest Periods; provided, however,
that the aggregate of the Eurodollar Rate Loans for each Interest Period
therefor must be in the amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof. Each conversion or continuation shall be
allocated among the Revolving Credit Loans of all Lenders in accordance with
their Ratable Portion. Each such election shall be in substantially the form
of Exhibit H hereto (a "Notice of Conversion or Continuation") and shall be
made by giving the Agent at least three Business Days' prior written notice
thereof specifying (i) the amount and type of conversion or continuation, (ii)
in the case of a conversion to or a continuation of Eurodollar Rate Loans, the
Interest Period therefor, and (iii) in the case of a conversion, the date of
conversion (which date shall be a Business Day and, if a conversion from
Eurodollar Rate Loans, shall also be the last day of the Interest Period
therefor). No conversion of any Swing Loan to a Eurodollar Rate Loan may be
made. The Agent shall promptly notify each Lender of its receipt of a Notice
of Conversion or Continuation and of the contents thereof. Notwithstanding the
foregoing, no conversion in whole or in part of Base Rate Loans to Eurodollar
Rate Loans, and no continuation in whole or in part of Eurodollar Rate Loans
upon the expiration of any Interest Period therefor, shall be permitted at any
time at which a Default or an Event of Default shall have occurred and be
continuing. If, within the time period required under the terms of this
Section 2.7, the Agent does not receive a Notice of Conversion or Continuation
from the Borrower containing a permitted election to continue any Eurodollar
Rate Loans for an additional Interest Period or to convert any such Eurodollar
Rate Loans, then, upon the expiration of the Interest Period therefor, such
Eurodollar Rate Loans will be automatically converted to Base Rate Loans. Each
Notice of Conversion or Continuation shall be irrevocable and binding on the
Borrower.
2.8. Interest. Each Loan shall bear interest on the unpaid
principal amount thereof from the date thereof until the principal amount
thereof shall be paid in full, at the following rates per annum:
(a) Base Rate Loans. For Base Rate Loans, at a rate per
annum equal at all times to the Applicable Base Rate Margin plus the Base Rate
in effect from time to time, computed in arrears monthly on the first day of
each month, on the Termination Date and on the date any Base Rate Loan is
converted or paid in full; provided,
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however, that during the continuance of an Event of Default, all Base Rate
Loans shall bear interest, payable on demand, at a rate per annum equal at all
times to 2.00% per annum above the Base Rate in effect plus the Applicable Base
Rate Margin.
(b) Eurodollar Rate Loans. For Eurodollar Rate Loans, at a
rate per annum equal at all times during the applicable Interest Period for
each Eurodollar Rate Loan to the sum of the Eurodollar Rate for such Interest
Period plus the Applicable Eurodollar Rate Margin in effect on the first day of
such Interest Period, computed in arrears on the last day of such Interest
Period; provided, however, that during the continuance of an Event of Default,
all Eurodollar Rate Loans shall bear interest, payable on demand, at a rate per
annum equal at all times to 2.00% above the Eurodollar Rate in effect from time
to time plus the Applicable Eurodollar Rate Margin.
(c) Accrued interest shall, except as provided in Section
2.8(e), be paid by adding the same, automatically and without any action on the
part of the Borrower or any other Person, to the outstanding principal amount
of (i) the Swing Loans or Base Rate Loans, as the case may be, on the first day
of each month, and (ii) Eurodollar Rate Loans, on the last day of each Interest
Period in respect thereof and, in the case of a Eurodollar Rate Loan having an
Interest Period of six months, on the first day of each month. The Agent will
give timely notification to the Borrower of all interest paid pursuant to this
subsection (c).
(d) The addition of interest to the principal amount of the
Loans pursuant to Section 2.8(c) shall not constitute the making of Loans for
purposes of Section 3.3.
(e) The Borrower shall, on the repayment of the Loans on the
Termination Date and on the date of any prepayment of Revolving Credit Loans
made in accordance with Section 2.6, pay, in cash, all accrued interest on the
outstanding principal amount of the Loans so repaid or prepaid.
2.9. Interest Rate Determination and Protection. (a) The Eurodollar
Rate for each Interest Period for Eurodollar Rate Loans shall be determined by
the Agent two Business Days before the first day of such Interest Period.
(b) The Agent shall give prompt notice to the Borrower and
the Lenders of the applicable interest rate determined by the Agent for
purposes of Section 2.8(b).
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(c) If, with respect to Eurodollar Rate Loans, any Lender
notifies the Agent that the Eurodollar Rate for any Interest Period therefor
will not adequately reflect the cost to such Lender of making such Eurodollar
Rate Loans or funding or maintaining its respective Eurodollar Rate Loans for
such Interest Period, the Agent shall forthwith so notify the Borrower and the
Lenders, whereupon:
(i) each Eurodollar Loan of each Lender will
automatically, on the last day of the then existing Interest Period
therefor, convert into a Base Rate Loan; and
(ii) the obligations of all the Lenders to make
Eurodollar Rate Loans or to convert Base Rate Loans into Eurodollar
Rate Loans shall be suspended until the Agent shall notify the
Borrower that such Lenders have determined that the circumstances
causing such suspension no longer exist.
2.10. Increased Costs. If, due to either (a) the introduction of or
any change in or in the interpretation of any law or regulation after the date
hereof (other than any change by way of imposition or increase of reserve
requirements included in determining the Eurodollar Rate Reserve Percentage),
or (b) compliance with any guideline or request from any central bank or other
Governmental Authority promulgated after the date hereof (whether or not having
the force of law), there shall be any increase in the cost to any Lender of
agreeing to make or making, funding or maintaining any Eurodollar Rate Loans
(and such Lender is not able to designate a different Eurodollar Lending Office
which will avoid or reduce such cost and will not, in the reasonable judgment
of such Lender, be otherwise disadvantageous to such Lender), then the Borrower
shall from time to time, upon demand by such Lender (with a copy of such demand
to the Agent), pay to the Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to the Borrower
and the Agent by such Lender, shall be conclusive and binding for all purposes,
absent manifest error. If the Borrower so notifies the Agent within five
Business Days after any Lender notifies the Borrower of any increased cost
pursuant to the foregoing provisions of this Section 2.10, the Borrower may
either (i) prepay in full all Eurodollar Rate Loans of all Lenders then
outstanding in accordance with Section 2.6(b) and, additionally, reimburse such
Lender for such increased cost in accordance with this Section 2.10 or (ii)
convert all Eurodollar Rate Loans of all Lenders then outstanding into Base
Rate Loans, in accordance with Section 2.7 and, additionally, reimburse such
Lender for such increased cost in accordance with this Section 2.10.
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2.11. Illegality. Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation of
any law or regulation after the date hereof shall make it unlawful, or any
central bank or other Governmental Authority shall after the date hereof assert
that it is unlawful, for any Lender or its Eurodollar Lending Office to make
Eurodollar Rate Loans or to continue to fund or maintain Eurodollar Rate Loans
(and such Lender is not able to designate a different Eurodollar Lending Office
which will avoid or reduce such cost and will not, in the reasonable judgment
of such Lender, be otherwise disadvantageous to such Lender), then, on notice
thereof and demand therefor by such Lender to the Borrower through the Agent,
(a) the obligations of all the Lenders to make or to continue Eurodollar Rate
Loans and to convert Base Rate Loans into Eurodollar Rate Loans shall be
suspended until the Lender shall notify the Borrower and the Agent that such
Lender has determined that the circumstances causing such suspension no longer
exist, and (b) the Borrower shall forthwith prepay in full all Eurodollar Rate
Loans of all the Lenders then outstanding, together with interest accrued
thereon, unless the Borrower, within five Business Days of such notice and
demand, converts all Eurodollar Rate Loans of all Lenders then outstanding into
Base Rate Loans.
2.12. Capital Adequacy. As long as any of the Obligations or the
Revolving Credit Commitments remain outstanding, if (a) after the date hereof
the introduction of or any change in or in the interpretation of any law or
regulation, (b) compliance with any law or regulation hereinafter enacted or
promulgated, or (c) compliance with any guideline or request hereinafter
promulgated or made from any central bank or other Governmental Authority
(whether or not having the force of law) increases the amount of capital
required or expected to be maintained by any Lender or the Issuer or any
corporation controlling any Lender or the Issuer and such Lender or the Issuer
reasonably determines that such amount is based upon the existence of such
Lender's or the Issuer's Revolving Credit Commitment, Loans, Letters of Credit,
Letter of Credit Obligations and other commitments and loans of this type,
including, without limitation, the Issuer's commitments in respect of letters
of credit (or similar contingent obligations), then, upon demand by such Lender
or the Issuer (with a copy of such demand to the Agent), the Borrower shall pay
to the Agent for the account of such Lender or the Issuer, from time to time as
specified by such Lender or the Issuer, additional amounts sufficient to
compensate such Lender or the Issuer in the light of such circumstances, to the
extent that such Lender or the Issuer reasonably determines such increase in
capital to be allocable to the existence of such Lender's or the Issuer's
Revolving Credit Commitment, Loans, Letters of Credit, Letter of Credit
Obligations and its agreements herein with respect to the making, issuance or
maintenance of any thereof. A certificate as to such amounts submitted to the
Bor-
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rower and the Agent by such Lender or the Issuer shall be conclusive and
binding for all purposes absent manifest error.
2.13. Payments and Computations. (a) The Borrower shall make each
payment and prepayment hereunder and under the Amended and Restated Revolving
Credit Notes not later than 11:00 A.M. (New York City time) on the day when
due, in Dollars, to the Agent at its address referred to in Section 10.2 in
immediately available funds without set-off or counterclaim. The Agent will
promptly thereafter cause to be distributed like funds relating to the payment
of principal of or interest on the Revolving Credit Loans or fees (other than
amounts payable pursuant to Sections 2.10, 2.11, 2.12, 2.14 or 2.16(h)) to the
Lenders, in accordance with their respective Ratable Portions, for the account
of their respective Applicable Lending Offices, and like funds relating to the
payment of any other amount payable to any Lender to such Lender for the
account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement; provided, however, that payment of
principal pursuant to Section 2.6(d) need not be distributed by the Agent prior
to the Settlement Date. With respect to Swing Loans, after receipt of payment
of principal of or interest thereon, the Agent will promptly distribute the
same to the Swing Bank for the account of its Applicable Lending Office.
Payment received by the Agent after 11:00 a.m. (New York City time) shall be
deemed to be received on the next Business Day.
(b) Upon the occurrence and during the continuance of a
Default or an Event of Default or during a Prepayment Period, all amounts
credited to the Blocked Account and the Cash Collateral Account shall be
applied by the Agent against the outstanding balance of the Obligations in
accordance with Sections 2.6(d) and 2.6(e); provided, however, that in no event
shall any such amount be required to be applied by the Agent against the
outstanding balance of the Obligations unless and until such amount shall have
been credited in immediately available funds to the Blocked Account or the Cash
Collateral Account.
(c) The Borrower hereby authorizes each Lender, if and to the
extent payment owed to such Lender is not made when due hereunder, to charge
from time to time against any or all of the Borrower's accounts with such
Lender or its Affiliates any amount so due or to treat any amounts due
hereunder as having been paid by proceeds of a Revolving Credit Borrowing. The
Borrower and the Lenders hereby authorize the Swing Bank to pay directly any
amount due hereunder and to treat such payment as a Swing Loan.
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(d) All computations of interest and fees shall be made by
the Agent on the basis of a year of 360 days and the actual number of days
(including the first day but excluding the last day) occurring in the period
for which such interest and fees are payable. Each determination by the Agent
of an interest rate hereunder shall be conclusive and binding for all purposes,
absent manifest error or calculation thereof by the Agent in a manner
inconsistent with this Agreement; provided, however, that any objection to such
calculations shall be raised no later than 10 Business Days after receipt by
the Borrower of the Agent's customary monthly loan statement.
(e) Whenever any payment hereunder or under the Amended and
Restated Revolving Credit Notes shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest or fee, as the case may be; provided, however, that if such
extension would cause payment of interest on or principal of any Eurodollar
Rate Loan to be made in the next calendar month, such payment shall be made on
the next preceding Business Day.
(f) Unless the Agent shall have received notice from the
Borrower prior to the date on which any payment is due hereunder to the Lenders
that the Borrower will not make such payment in full, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date and the
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 the Borrower shall not have so made such payment in full to
the Agent, each Lender shall repay to the 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 Agent, at the Federal Funds Rate.
2.14. Taxes. (a) Any and all payments by the Borrower hereunder or
under the Amended and Restated Revolving Credit Notes and Letter of Credit
Reimbursement Agreements shall be made, in accordance with Section 2.13, free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, (i) in the case of each Lender, each Issuer and the
Agent, taxes measured by its net income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which such Lender, such Issuer or the Agent
(as the case may be) is organized or any political subdivision thereof, (ii) in
the case of each Lender and Issuer, taxes measured by its net income, and
franchise taxes imposed on it, by the jurisdiction of
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such Lender's or Issuer's Applicable Lending Office or any political
subdivision thereof, and (iii) in the case of each Lender and Issuer organized
under the laws of a jurisdiction outside the United States, United States
federal withholding tax payable with respect to payments by the Borrower that
would not have been imposed had such Lender or Issuer, to the extent then
required hereunder, delivered to the Borrower or the Agent the forms prescribed
by the first sentence of Section 2.14(f) (all such non- excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder to any Lender or the
Agent (i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including, without limitation, deductions
applicable to additional sums payable under this Section 2.14) such Lender or
the Agent (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions, and (iii) the Borrower shall pay the full amount deducted to
the relevant taxing authority or other authority in accordance with applicable
law.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes,
charges, duties or similar assessment or reserve, special deposit or similar
levies of the United States or any political subdivision thereof or any
applicable foreign jurisdiction which arise from any payment made by the
Borrower hereunder or under any Letter of Credit Reimbursement Agreement or
under any of the other Loan Documents or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any of the
other Loan Documents (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender, each Issuer and
the Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes and Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.14) paid by such Lender, the Issuer or the Agent
(as the case may be) and any liability (including, without limitation, for
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
The Agent, each Lender and the Issuer agree to promptly notify the Borrower of
any payment of the foregoing made by any of them and, if practicable, any
request, demand or notice received in respect thereof prior to such payment.
This indemnification shall be made within 30 days from the date such Lender,
the Issuer or the Agent (as the case may be) makes written demand therefor.
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(d) Within 30 days after the date of any payment of Taxes or
Other Taxes, the Borrower will furnish to the Agent, at its address referred to
in Section 10.2, the original or a certified copy of a receipt evidencing
payment thereof.
(e) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.14 shall survive the payment in full of principal
and interest hereunder and under the Amended and Restated Revolving Credit
Notes and all Obligations in respect of Letter of Credit Reimbursement
Agreements.
(f) Prior to the Closing Date in the case of each Lender, and
on the date of the Assignment and Acceptance pursuant to which it becomes a
Lender in the case of each Eligible Assignee and from time to time thereafter
if either required by law due to a change in circumstances or reasonably
requested by the Borrower or the Agent (unless such Lender is unable to do so
by reason of a change in law (including, without limitation, any statute,
treaty, regulation, ruling, determination, guideline or policy) occurring
subsequent to the Closing Date or the date of the Assignment and Acceptance, as
the case may be), each Lender organized under the laws of a jurisdiction
outside the United States shall provide the Agent and the Borrower with an IRS
Form 4224 or Form 1001 or other applicable form, certificate or document
prescribed by the IRS certifying as to such Lender's entitlement to full
exemption from United States withholding tax with respect to all payments to be
made to such Lender hereunder and under the Amended and Restated Revolving
Credit Notes and any Letter of Credit Reimbursement Agreement. Unless the
Borrower and the Agent have received forms or other documents satisfactory to
them indicating that payments hereunder or under any Amended and Restated
Revolving Credit Note or Letter of Credit Reimbursement Agreement are not
subject to United States withholding tax, the Borrower or the Agent shall, in
the case of payments for any such Lender organized under the laws of a
jurisdiction outside the United States, (i) withhold Taxes for such payments at
the applicable statutory rate or at a rate reduced by an applicable tax treaty
(provided that the Borrower and the Agent have received forms or other
documents satisfactory to them indicating that such reduced rate applies), and
(ii) pay such Lender such payment net of any Taxes withheld.
2.15. Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Revolving Credit Loans made by it
(other than pursuant to Sections 2.10, 2.11, 2.12, 2.14 or 2.16(h)) in excess
of its Ratable Portion of payments on account of the Revolving Credit Loans
obtained by all the Lenders, such Lender shall forthwith purchase from the
other Lenders such participations in their
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Revolving Credit Loans as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them; provided, however, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and such
Lender shall repay to the purchasing Lender the purchase price to the extent of
such recovery together with an amount equal to such Lender's ratable share
(according to the proportion of (a) the amount of such Lender's required
repayment to (b) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Borrower agrees that any Lender
so purchasing a participation from another Lender pursuant to this Section 2.15
may, to the fullest extent permitted by law, exercise all its rights of payment
(including, without limitation, the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
2.16. Letter of Credit Facility. (a) On the terms and subject to
the conditions contained in this Agreement, the Issuer agrees promptly to issue
one or more Letters of Credit at the request of the Borrower for the account of
the Borrower from time to time during the period commencing on the date hereof
and ending 30 days prior to the Termination Date; provided, however, that no
Issuer shall issue any Letter of Credit if:
(i) any order, judgment or decree of any
Governmental Authority or arbitrator of which the Issuer is aware
shall purport by its terms to enjoin or restrain the Issuer from
issuing such Letter of Credit or any Requirement of Law applicable to
the Issuer or any request or directive (whether or not having the
force of law) from any Governmental Authority with jurisdiction over
the Issuer shall prohibit, or request that the Issuer refrain from,
the issuance of letters of credit generally or such Letter of Credit
in particular or shall impose upon the Issuer with respect to such
Letter of Credit any restriction or reserve or capital requirement
(for which the Issuer is not otherwise compensated) not in effect on
the date hereof or result in any loss, cost or expense which (A) was
not applicable, in effect or known to the Issuer as of the date hereof
and which the Issuer in good faith deems material to it, and (B) the
reimbursement of which is not provided for hereunder;
(ii) the Issuer shall have received written notice
from the Agent or the Borrower, on or prior to the Business Day prior
to the requested date of issuance of such Letter of Credit, that one
or more of the applicable conditions contained in Article III is not
then satisfied;
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(iii) after giving effect to the issuance of such
Letter of Credit, the Letter of Credit Obligations exceed $25,000,000;
(iv) the amount of the Letter of Credit requested
exceeds the Available Credit; or
(v) fees due in connection with a requested
issuance have not been paid.
None of the Lenders (other than a Lender which becomes the Issuer) shall have
any obligation to issue any Letters of Credit.
(b) In no event shall:
(i) the expiration date of any Letter of Credit be
more than (A) one year (or such longer period as agreed to by the
Agent in its sole discretion), in the case of a Letter of Credit that
is a standby letter of credit, or (B) 90 days (or such longer period
as agreed to by the Agent in its sole discretion), in the case of a
Letter of Credit that is a trade (documentary) letter of credit, after
the date of issuance thereof, nor shall the expiration date of any
Letter of Credit fall after 10 days prior to the Termination Date; or
(ii) the Issuer issue any Letter of Credit for the
purpose of supporting the issuance of any letter of credit by any
other Person other than as permitted by the Agent in its sole
discretion.
(c) Prior to the issuance of each Letter of Credit, and as a
condition of such issuance and of the participation of each Lender (other than
the Issuer) in the Letter of Credit Obligations arising with respect thereto,
the Borrower shall have delivered to the Issuer, if requested by the Issuer, a
letter of credit reimbursement agreement, in a form satisfactory to the Issuer
and the Borrower (a "Letter of Credit Reimbursement Agreement"), signed by the
Borrower, and such other documents or items as may be required pursuant to the
terms thereof. In the event of any conflict between the terms of any Letter of
Credit Reimbursement Agreement and this Agreement, the terms of this Agreement
shall govern.
(d) In connection with the issuance of each Letter of Credit,
the Borrower shall give the Issuer and the Agent at least four Business Days'
prior written notice (a "Letter of Credit Request"), in substantially the form
of Exhibit I of the requested issuance of such Letter of Credit. Such notice
shall be irrevocable and
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binding on the Borrower and shall specify (i) the stated amount of the Letter
of Credit requested, which stated amount shall not be less than $100,000, (ii)
the date of issuance of such requested Letter of Credit (which day shall be a
Business Day), (iii) the date on which such Letter of Credit is to expire
(which date shall be a Business Day and shall in no event be later than 10 days
prior to the Termination Date), (iv) the Person for whose benefit the requested
Letter of Credit is to be issued, and (v) such other terms and conditions of
the proposed Letter of Credit as are requested by the Borrower and acceptable
to the Issuer. Such notice, to be effective, must be received by such Issuer
and the Agent not later than 11:00 A.M. (New York City time) on the last
Business Day on which notice can be given under the immediately preceding
sentence. Prior to the close of business on the second Business Day following
the Business Day on which the Agent first received such notice, the Agent shall
confirm to the Issuer of the requested Letter of Credit that the applicable
conditions in Article III are satisfied.
(e) Subject to the terms and conditions of this Section 2.16
and provided that the applicable conditions set forth in Article III have been
satisfied, the Issuer shall, on the requested date, issue a Letter of Credit on
behalf of the Borrower in accordance with the instructions set forth in Section
2.16(d), the applicable Letter of Credit Request and the Issuer's usual and
customary business practices and in a final form satisfactory to the Borrower.
(f) Immediately upon the issuance by the Issuer of a Letter
of Credit in accordance with the terms and conditions of this Agreement, the
Issuer shall be deemed to have sold and transferred to each Lender, and each
Lender shall be deemed irrevocably and unconditionally to have purchased and
received from the Issuer, without recourse or warranty, an undivided interest
and participation, to the extent of such Lender's Ratable Portion, in such
Letter of Credit and the obligations of the Borrower with respect thereto
(including, without limitation, all Letter of Credit Obligations with respect
thereto) and any security therefor and guaranty pertaining thereto and each
Lender's Revolving Credit Commitment shall be deemed used to the extent of such
Lender's Ratable Portion of such Letter of Credit Obligations.
(g) In determining whether to pay under any Letter of Credit,
the Issuer shall not have any obligation relative to the Lenders other than to
confirm that any documents required to be delivered under such Letter of Credit
appear to have been delivered and that they appear to comply on their face with
the requirements of such Letter of Credit. Any action taken or omitted to be
taken by the Issuer under or in connection with any Letter of Credit, if taken
or omitted in the absence of gross
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negligence or willful misconduct, shall not put the Issuer under any resulting
liability to any Lender.
(h) In the event that any Issuer makes any payment under any
Letter of Credit, the Issuer shall promptly notify the Agent, who shall
promptly notify each Lender, and each Lender shall promptly and unconditionally
pay to the Agent for the account of the Issuer the amount of such Lender's
Ratable Portion of such payment in Dollars and in same day funds (and upon
receipt, the Agent shall promptly pay the same to the Issuer), which payment
shall be deemed and constitute a Revolving Credit Loan that is a Base Rate Loan
made by such Lender to the Borrower; provided, however, that if the Swing Bank
so elects, and if a Swing Loan can be made in such amount, the Agent shall
promptly notify the Swing Bank of such payment by the Issuer, and the Swing
Bank shall, and the Borrower hereby authorizes the Swing Bank to, pay to the
Agent for the account of the Issuer the amount of such payment in Dollars and
in same day funds, which payment shall be deemed and constitute a Swing Loan
made by the Swing Bank to the Borrower. The Revolving Credit Loans shall be
made, or the Swing Loan may be made as contemplated in the preceding sentence
notwithstanding the Borrower's failure to satisfy the conditions set forth in
Section 3.3 (without regard to the minimum amount of Base Rate Loans). If the
Agent so notifies such Lender prior to 11:00 A.M. (New York City time) on any
Business Day, such Lender shall make available to the Agent for the account of
the Issuer its Ratable Portion of the amount of such payment on such Business
Day in same day funds. If and to the extent such Lender shall not have so made
such Lender's Ratable Portion of the amount of such payment available to the
Agent for the account of the Issuer, such Lender agrees to repay to the Agent
for the account of such Issuer forthwith on demand such amount together with
interest thereon, for each day from such date until the date such amount is
repaid to the Agent for the account of the Issuer, at the Federal Funds Rate.
The failure of any Lender to make available to the Agent for the account of the
Issuer its Ratable Portion of any such payment shall not relieve any other
Lender of its obligation hereunder to make available to the Agent for the
account of the Issuer its Ratable Portion of any payment on the date such
payment is to be made, but no Lender shall be responsible for the failure of
any other Lender to make available to the Agent for the account of the Issuer
such other Lender's Ratable Portion of any such payment.
(i) Whenever the Issuer receives a payment of a Reimbursement
Obligation pursuant to Section 2.16(l) as to which the Agent has received for
the account of the Issuer any payment from a Lender pursuant to Section
2.16(h), the Issuer shall pay to the Agent and the Agent shall promptly pay to
each Lender which has paid such Lender's Ratable Portion thereof, in same day
funds, an amount equal to such
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Lender's Ratable Portion thereof in the amount so received and such payment
shall be treated as a prepayment pursuant to Section 2.6(b) (without regard to
the minimum amount of prepayment specified therein).
(j) Upon the request of any Lender, the Issuer shall furnish
to such Lender copies of any Letter of Credit Reimbursement Agreement to which
the Issuer is a party and such other documentation as may reasonably be
requested by such Lender.
(k) The obligations of the Lenders to make payments to the
Agent for the account of the Issuer with respect to Letters of Credit shall be
irrevocable and not subject to any qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances (except as expressly provided in Section 2.16(g)),
including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(ii) the existence of any claim, set-off, defense or
other right which the Borrower may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter
of Credit (or any Person for whom any such transferee may be acting),
the Agent, the Issuer, any Lender or any other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including, without
limitation, any underlying transaction between the Borrower and the
beneficiary named in any Letter of Credit);
(iii) any draft, certificate or any other document
presented under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for
the performance or observance of any of the terms of any of the
Collateral Documents; or
(v) the occurrence of any Default or Event of
Default.
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(l) Notwithstanding Section 2.16(h), the Borrower may pay to
the Issuer the amount of all Reimbursement Obligations owing to the Issuer
under any Letter of Credit, irrespective of any claim, set-off, defense or
other right which the Borrower may have at any time against the Issuer or any
other Person. Any such payments shall be made no later than the date on which
such payment by the Issuer was made. If the Borrower does not pay any such
Reimbursement Obligation pursuant to this Section 2.16(l), such Reimbursement
Obligation shall immediately constitute, without necessity of further act or
evidence, a loan made by the Issuer payable on demand in an aggregate principal
amount equal to such Reimbursement Obligation remaining unpaid or, to the
extent the Agent has received any payments from Lenders for the account of such
Issuer, Revolving Credit Loans that are Base Rate Loans or Swing Loans, as the
case may be, pursuant to Section 2.16(h). If any payment made by or on behalf
of the Borrower and received by the Issuer with respect to any Letter of Credit
pursuant to this Section 2.16(l) is rescinded or must otherwise be returned by
the Issuer for any reason, each such Lender shall, upon notice by the Issuer,
forthwith pay over to the Issuer an amount equal to such Lender's Ratable
Portion of the amount which must be so returned by the Issuer or the Swing Bank
may, upon notice to the Issuer, forthwith pay over to the Issuer an amount
equal to the amount which must be returned by the Issuer, and such payments
shall be deemed and constitute Base Rate Loans or a Swing Loan, as the case may
be, made to the Borrower.
(m) The Borrower agrees to pay the following amounts with
respect to Letters of Credit issued at its request:
(i) to the Agent for the ratable benefit of each
Lender who has purchased or has been deemed to have purchased
participations in the Letters of Credit, an administrative fee equal
to 2.25% of the maximum amount available from time to time to be drawn
under such Letter of Credit, computed monthly in arrears on the first
day of each month and on the termination of such Letter of Credit, and
calculated on the basis of a 360-day year and the actual number of
days elapsed, which amounts shall, without further action on the part
of the Borrower, be added to the outstanding principal amount of the
Revolving Credit Loans as Base Rate Loans; provided, however, that if
the Agent shall have received from the Borrower financial and other
information (which information shall be delivered to the Agent within
45 days after the end of each Fiscal Quarter), satisfactory in form
and substance to the Agent, establishing that the Borrower achieved a
ratio of EBITDA for the rolling 12-month period ended on the last day
of the immediately preceding Fiscal Quarter to Cash Interest Expense
for such 12-month period of at least 3.60 to 1.00, then, commencing on
the first day of the month next succeeding the
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delivery of such information (but not prior to July 1, 1995), the
administrative fee shall be reduced for the three-month period
commencing on such day to 2.00% provided further, however, that
notwithstanding the foregoing, (a) no reduction in the administrative
fee shall be effective for any day on which there exists a Default or
an Event of Default, (b) any effected reductions in the administrative
fee shall terminate (i) immediately upon the occurrence and during the
continuance of a Default or a Event of Default, and (ii) on the first
day of the first month next succeeding the date on which such
information is given evidencing that the Borrower has failed to
achieve the above-described ratio, and (c) during the continuance of
an Event of Default, such administrative fee shall increase by 2.00%
and shall be payable on demand;
(ii) to the Agent for the benefit of the Issuer, an
administrative fee equal to 0.25% of the maximum amount available from
time to time to be drawn under such Letter of Credit, computed monthly
in arrears on the first day of each month and on the termination of
such Letter of Credit, and calculated on the basis of a 360-day year
and the actual number of days elapsed; and
(iii) to the Issuer, with respect to the issuance,
amendment or transfer of each Letter of Credit and each drawing made
thereunder, documentary and processing charges in accordance with the
Issuer's standard schedule for such charges in effect at the time of
issuance, amendment, transfer or drawing, as the case may be.
(n) The Issuer agrees to forward to the Borrower copies
of all Letters of Credit issued on behalf of the Borrower and all
correspondence to and from the beneficiary and any advising or confirming bank
thereof.
(o) Any Letter of Credit requested by the Borrower to be
issued by the Issuer may, at the request of such Issuer, and with the consent
of the Borrower, the Agent and the Majority Lenders, be issued by any Lender
pursuant to the provisions of this Agreement. In any such case, to the extent
applicable, references in this Agreement with respect to the Issuer regarding a
Letter of Credit shall be deemed to be references to such Lender issuing such
Letter of Credit pursuant to this Section 2.16(o).
(p) For purposes of this Agreement, the letter of credit,
dated March 26, 1993, issued by Bank One, Utah, N.A. (formerly known as Valley
Bank and Trust Company, National Association) under the Existing Credit
Agreement (number
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93-002-310) and outstanding on the date hereof, shall be deemed to have been
issued in compliance with Sections 2.16(a) and 2.16(b).
2.17. Settlement of Accounts. The Agent shall notify each Lender no
less frequently than weekly, as determined by the Agent, of the principal
amount of Swing Loans outstanding as of 1:00 P.M. (New York City time) as of
such date (the "Computation Date") and each Lender's Ratable Portion thereof.
Each Lender shall before 11:00 A.M. (New York City time) on the next Business
Day (the "Settlement Date") make available to the Agent, in immediately
available funds, the amount of its Ratable Portion of such principal amount of
Swing Loans outstanding. Upon such payment by a Lender, such Lender shall be
deemed to have made a Revolving Credit Loan as a Base Rate Loan to the
Borrower, notwithstanding any failure by the Borrower to satisfy the conditions
contained in Section 3.3 (without regard to the minimum amount of Base Rate
Loans). The Agent shall use such funds to repay the principal amount of Swing
Loans to the Swing Bank. All interest due on the Swing Loans shall be payable
to the Swing Bank in accordance with Sections 2.8 and 2.13.
2.18. Payments to Lenders. The Lenders and Borrower agree that Swing
Loans may be made to allow the Agent to pay to each Lender on the first
Business Day of each month its share of fees and interest accrued on the Loans
outstanding hereunder in respect of the preceding month.
ARTICLE III
CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
3.1. Conditions Precedent to Initial Loans and Letters of Credit.
The obligation of each Lender to make its initial Loan and of the Issuer to
issue its initial Letter of Credit is subject to satisfaction of the conditions
precedent that the Agent shall have received, on the Closing Date, the
following, each dated the Closing Date unless otherwise indicated, in form and
substance satisfactory to the Agent and (except for the Amended and Restated
Revolving Credit Notes) in sufficient copies for each Lender:
(a) The Amended and Restated Revolving Credit Notes, duly
executed by the Borrower, payable to the order of the Lenders, respectively.
(b) Certified copies of (i) the resolutions of the Board of
Directors of the Borrower approving each Loan Document and the transactions
contemplated
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thereby, and (ii) all documents evidencing other necessary corporate action and
required governmental approvals, licenses and consents with respect to each
Loan Document and the transactions contemplated thereby.
(c) A copy of the articles of incorporation of the Borrower,
certified as of a recent date by the Director of the Division of Corporations
and Commercial Code of the Department of Commerce of the State of Utah,
together with a certificate of such official as of a recent date attesting to
the good standing of the Borrower, and a copy of the articles of incorporation
and the by- laws of the Borrower certified as of the Closing Date by the
Secretary or an Assistant Secretary of the Borrower.
(d) A certificate of the Secretary or Assistant Secretary
of the Borrower certifying the names and true signatures of each Responsible
Officer of the Borrower who has executed and delivered any Loan Document or
other document required hereunder to be executed and delivered by or on behalf
of the Borrower.
(e) The Amended and Restated Security Agreement, duly
executed by the Borrower, together with:
(i) acknowledgment copies of proper Financing Statements
(Form UCC-1) or amendments thereto (Form UCC-3) duly filed under the
Uniform Commercial Code in each jurisdiction as may be necessary or,
in the opinion of the Agent, desirable to continue perfection of the
Lien continued by the Amended and Restated Security Agreement;
(ii) certified copies of Requests for Information or
Copies (Form UCC-11), or equivalent reports, listing the Financing
Statements referred to in clause (i) above and all other effective
financing statements which name the Borrower (under its present name
and/or previous name) as debtor and which are filed in the
jurisdictions referred to in said clause (i) above, together with
copies of such other financing statements (none of which shall cover
the Collateral purported to be covered by the Amended and Restated
Security Agreement); and
(iii) evidence that the insurance required by the terms of
the Amended and Restated Security Agreement and by Section 6.4 is in
full force and effect.
(f) The Blocked Account Letter and the Amended and Restated
Cash Collateral Agreement, each duly executed by the Borrower.
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(g) A favorable opinion of (i) Kimball, Parr, Waddoups, Brown
& Gee, counsel to the Borrower, (ii) Howard, Darby & Levin, special New York
counsel to the Borrower, and (iii) Ken C. Johnsen, Esq., general counsel to the
Borrower, in substantially the form of Exhibits J, K and L, respectively, and
as to such other matters as any Lender through the Agent may reasonably
request.
(h) A certificate of the chief financial officer of the
Borrower, stating that the Borrower is and would be Solvent after giving effect
to Revolving Credit Loans in an amount outstanding equal to the aggregate
Revolving Credit Commitments, the application of the proceeds thereof in
accordance with Section 6.10 and the payment of all estimated legal, investment
banking, accounting and other fees related hereto.
(i) A certificate, signed by a Responsible Officer of the
Borrower, stating that the conditions specified in Sections 3.2(a) and (d) and
3.3 have been met.
(j) A copy of a letter from the Borrower's independent public
accountants, substantially in the form of Exhibit M.
(k) A copy of the Projections.
(l) Evidence, satisfactory to the Agent, of irrevocable
payment instructions from the Borrower to Funding instructing that all payments
to the Borrower under the Receivables Purchase Agreement be paid directly to
the Blocked Account.
(m) A copy of the Securitization Documents, duly executed by
each of the parties thereto, in form and substance satisfactory to the Agent,
certified by a Responsible Officer as being a true and correct copy and in full
force and effect on and as of the Closing Date.
(n) An intercreditor agreement, in form and substance
satisfactory to the Agent, executed by the Borrower, Funding, and each of the
other parties to the Securitization Documents.
(o) Such additional documents, information and materials as
any Lender, through the Agent, may reasonably request.
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3.2. Additional Conditions Precedent to Initial Loans and Initial
Letters of Credit. The obligation of each Lender to make its initial Loan and
of the Issuer to issue its initial Letter of Credit is subject to the further
conditions precedent that:
(a) On the Closing Date, the following statements shall be
true:
(i) There has been no Material Adverse Change since
September 30, 1993;
(ii) Since September 30, 1993, there has been no material
adverse change in the capital structure of the Borrower which has not
been disclosed to the Lenders and the Agent;
(iii) The aggregate principal amount of Indebtedness of
the Borrower for or in respect of borrowed money outstanding (it being
understood that amounts payable by the Borrower under the Mannesmann
Agreement do not constitute such Indebtedness and without giving
effect to the obligations of the Borrower, if any, under the
Securitization Documents) does not exceed $370,000,000.00 (including
all outstanding Indebtedness to be repaid on the Closing Date under
the Existing Credit Agreement);
(iv) All necessary governmental and third party approvals
required to be obtained by the Borrower in connection with the
transactions contemplated hereby, including, without limitation, its
obtaining the Revolving Credit Loans and Letters of Credit, have been
obtained and remain in effect, and all applicable waiting periods have
expired without any action being taken by any competent authority
which restrains, prevents, impedes, delays or imposes materially
adverse conditions upon, the consummation of the transactions
contemplated hereby;
(v) There exists no judgment, order, injunction or other
restraint prohibiting or, in the reasonable judgment of the Lenders,
imposing any materially adverse conditions on the Borrower or the
consummation of the transactions contemplated hereby; and
(vi) There exists no claim, action, suit, investigation
or proceeding (including, without limitation, shareholder or
derivative litigation) pending or, to the knowledge of the Borrower,
threatened in any court or before any arbitrator or Governmental
Authority which relates to the financing hereunder or which has a
reasonable likelihood of having a Material Adverse Effect.
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(b) All costs and accrued and unpaid fees and expenses
(including, without limitation, legal fees and expenses) required to be paid to
the Lenders on or before the Closing Date, including, without limitation, those
referred to in Sections 2.3 and 10.4, to the extent then due and payable, shall
have been paid.
(c) Nothing contained in any public disclosure made by the
Borrower after September 30, 1993 or in any information disclosed to the
Lenders by the Borrower shall lead any Lender, in its sole judgment, exercised
reasonably, to determine that the Borrower's condition (financial or
otherwise), operations, performance, properties or prospects are different in
any materially adverse respect from that contained in public filings (and other
documents delivered to the Agent prior to the date hereof) of the Borrower at
such date.
(d) The Borrower's Tangible Net Worth shall be not less than
$86,100,000 as of the Closing Date.
(e) No Lender in its sole judgment, exercised reasonably,
shall have determined (i) that there has been any Material Adverse Change since
September 30, 1993, or (ii) that there has occurred any adverse change which
such Lender deems material in the financial markets generally, since July 31,
1994 and nothing shall have occurred since September 30, 1993, which, in the
judgment of any Lender, has had a Material Adverse Effect.
(f) No Lender, in its sole judgment, exercised reasonably,
shall have determined that there is any claim, action, suit, investigation,
litigation or proceeding (including, without limitation, shareholder or
derivative litigation) pending or threatened in any court or before any
arbitrator or Governmental Authority which would have a Material Adverse
Effect.
(g) The Agent shall have received an agreement, executed by
the Borrower and Funding and in form and substance satisfactory to the Agent,
providing that the Agent may cause the Borrower, upon one (1) Business Day's
prior written notice, to terminate transfers of Accounts to Funding under the
Securitization Documents while any Event of Default is continuing, if, on the
date of such notice, (i) either (A) the sum of the outstanding principal amount
of the Loans and the Letter of Credit Obligations equals or exceeds
$10,000,000, or (B) the sum of the outstanding principal amount of the Loans
and the Letter of Credit Obligations is less than $10,000,000 and the Available
Credit is less than $10,000,000, and (ii) the aggregate consideration
consisting of cash and any increase in the outstanding principal balance of the
subordinated note made by Funding and payable to the
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Borrower under the Receivables Securitization received by the Borrower from
Funding in connection with the sale, transfer, capital contribution, or other
conveyance of Accounts to Funding pursuant to the Receivables Purchase
Agreement during a rolling period of 14 consecutive calendar days prior to the
date of such notice, shall not have been at least 65% of the average
outstanding balance of all eligible Accounts transferred during such period, as
such amounts are calculated under the Receivables Documents as of each
applicable date of determination hereunder.
(h) The Borrower (i) shall have provided to the Agent copies
of all information requests under Section 104(e) of CERCLA, notices of
violation, inspection reports, consent agreements and decrees, settlement
agreements, and memoranda of understanding in respect of Environmental Laws to
which the Borrower or any of its Subsidiaries has been subject or to which any
of them is a party, together with all correspondence from the Borrower related
thereto, in each case, since February 1, 1992, and (ii) as of the Closing Date,
shall have disclosed to the Agent all budgeted Capital Expenditures expected to
exceed $1,000,000, projected as of such date to be made in respect of Remedial
Actions.
3.3. Conditions Precedent to Each Loan and Letter of Credit. The
obligation of each Lender to make any Loan (including any Loan being made by
such Lender on the Closing Date) and of the Issuer to issue any Letter of
Credit shall be subject to the further conditions precedent that:
(a) The following statements shall be true on the date of
such Loan or issuance, both before and after giving effect thereto and to the
application of the proceeds therefrom (and the acceptance by the Borrower of
the proceeds of such Loan or by the beneficiary thereof or its designee of such
Letter of Credit shall constitute a representation and warranty by the Borrower
that on the date of such Loan or such issuance such statements are true):
(i) The representations and warranties of the
Borrower contained in Article IV and of each Loan Party in the other
Loan Documents are correct on and as of such date as though made on
and as of such date or, as to those representations and warranties
limited by their terms to a specified date, were correct on and as of
such date; and
(ii) No Default or Event of Default is continuing or
would result from the Loans being made or the Letter of Credit being
issued on such date.
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(b) The making of the Loans or the issuance of such Letter of
Credit on such date does not violate any Requirement of Law and is not
enjoined, temporarily, preliminarily or permanently.
(c) No Revolving Credit Loans shall be made if any Swing
Loans are outstanding unless the proceeds of such Revolving Credit Loans are
being used, in whole or in part, to repay in full the outstanding Swing Loans.
(d) The Agent shall have received such additional documents,
information and materials as any Lender or the Issuer, through the Agent, may
reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lenders, the Issuer and the Agent to enter into
this Agreement, the Borrower represents and warrants to the Lenders, the Issuer
and the Agent that:
4.1. Corporate Existence; Compliance with Law. Each Loan Party (a)
is a corporation duly organized, validly existing and in good standing under
the laws of the state of its incorporation, (b) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where such
qualification is necessary, except for failures which in the aggregate would
have no Material Adverse Effect, (c) has all requisite corporate power and
authority and the legal right to own, pledge, mortgage and operate its
properties, to lease the property it operates under lease and to conduct its
business as now or currently proposed to be conducted, (d) is in compliance
with its articles of incorporation and by-laws, (e) is in compliance with all
other applicable Requirements of Law except for such non-compliances as in the
aggregate would have no Material Adverse Effect, and (f) has all necessary
licenses, permits, consents or approvals from or by, has made all necessary
filings with, and has given all necessary notices to, each Governmental
Authority having jurisdiction, to the extent required for such ownership,
operation and conduct, except for licenses, permits, consents or approvals
which can be obtained by the taking of ministerial action to secure the grant
or transfer thereof or failures which in the aggregate would have no Material
Adverse Effect.
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4.2. Corporate Power; Authorization; Enforceable Obligations.
(a) The execution, delivery and performance by each Loan Party of the Loan
Documents to which it is a party and the consummation of the transactions
related to the financing contemplated hereby:
(i) are within such Loan Party's corporate powers;
(ii) have been duly authorized by all necessary corporate
action, including, without limitation, the consent of stockholders
where required;
(iii) do not and will not (A) contravene any Loan Party's
articles of incorporation or by-laws or other comparable governing
documents, (B) violate any other applicable Requirement of Law
(including, without limitation, Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System), or any order or decree of
any Governmental Authority or arbitrator, (C) conflict with or result
in the breach of, or constitute a default under, or result in or
permit the termination or acceleration of, any Contractual Obligation
of any Loan Party, or (D) result in the creation or imposition of any
Lien upon any of the property of any Loan Party, other than those in
favor of the Agent pursuant to the Amended and Restated Security
Agreement; and
(iv) do not require the consent of, authorization by,
approval of, notice to, or filing or registration with, any
Governmental Authority or any other Person, other than (A)
informational filings made with the Securities and Exchange Commission
in the ordinary course of the Borrower's business, and (B) those which
have been obtained or made and copies of which have been or will be
delivered to the Agent pursuant to Section 3.1, each of which on the
Closing Date will be in full force and effect.
(b) This Agreement has been and each of the other Loan
Documents will have been upon delivery thereof, duly executed and delivered by
each Loan Party party thereto. This Agreement is, and the other Loan Documents
will be, when delivered hereunder, the legal, valid and binding obligation of
each Loan Party party thereto, enforceable against such Loan Party in
accordance with its terms except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws or
equitable principles relating to or limiting creditors' rights generally.
4.3. Taxes. All federal and all material state, local
and foreign tax returns, reports and statements (collectively, the "Tax
Returns") required to be filed by the
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Borrower or any of its Tax Affiliates have been filed with the appropriate
governmental agencies in all jurisdictions in which such Tax Returns are
required to be filed, and all such Tax Returns are true and correct in all
material respects, and all taxes, charges and other impositions due and payable
have been timely paid prior to the date on which any fine, penalty, loss or
interest or late charge may be added thereto for non-payment thereof (other
than interest and late charges in an aggregate amount not in excess of $500,000
for any Fiscal Year), except where contested in good faith and by appropriate
proceedings if (a) adequate reserves therefor have been established on the
books of the Borrower or such Tax Affiliate in accordance with GAAP, and (b)
the non-payment and contest thereof and the establishment of such reserves in
the aggregate are not reasonably likely to have a Material Adverse Effect. To
the Borrower's knowledge, proper and accurate amounts have been withheld by the
Borrower and each of its Tax Affiliates from their respective employees for all
periods in full and complete compliance with the tax, social security and
unemployment withholding provisions of applicable federal, state, local and
foreign law and such withholdings have been timely paid to the respective
Governmental Authorities. Except as disclosed on Schedule 4.3 or disclosed
after the Closing Date to the Agent in writing, neither the Borrower nor any of
its Tax Affiliates has (i) executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any charges,
(ii) agreed or been requested to make any adjustment under Section 481(a) of
the Code by reason of a change in accounting method or otherwise, or (iii) any
obligation under any written or oral tax sharing agreement with any Person
other than a Tax Affiliate (it being understood and agreed that tax
indemnification, reimbursement or gross-up obligations of the type contained in
Section 2.14 do not constitute tax sharing agreements).
4.4. Full Disclosure. No written statement prepared or furnished
by any Loan Party or any of its Affiliates in connection with any of the Loan
Documents or the consummation of the transactions contemplated thereby, and no
financial statement delivered pursuant hereto or thereto, contained any untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements contained herein or therein not misleading at the time such
statement was so prepared, furnished or delivered. All information and facts
known to the Borrower which the Borrower believes are material to an
understanding of the financial condition, business, properties or prospects of
the Borrower and its Subsidiaries taken as one enterprise, have been disclosed
to the Lenders.
4.5. Financial Matters. (a) The balance sheet of the
Borrower as at September 30, 1993, and the related statements of income,
retained earnings and cash
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flow of the Borrower for the fiscal year then ended, certified by Arthur
Anderson & Co., and the balance sheets of the Borrower as at June 30, 1994, and
the related statements of income, retained earnings and cash flow of the
Borrower for the nine months then ended, certified by the chief financial
officer of the Borrower, copies of which have been furnished to each Lender,
fairly present the financial condition of the Borrower as at such dates and the
results of the operations of the Borrower for the period ended on such dates,
all in conformity with GAAP.
(b) Since September 30, 1993, there has been no Material
Adverse Change and there have been no events or developments that in the
aggregate have had a Material Adverse Effect.
(c) The Borrower did not have at September 30, 1993 any
material obligation, contingent liability or liability for taxes, long-term
leases or unusual forward or long-term commitment which is not reflected in the
Annual Report.
(d) The Borrower is, and the Borrower and its Subsidiaries
are, on a consolidated basis, Solvent.
4.6. Litigation. All pending and, to the Borrower's knowledge,
threatened actions or proceedings to which the Borrower is a party as of the
date hereof and involving claims related to the same proceedings in excess of
$500,000 are described in a separate letter from the Borrower to the Lenders
of even date herewith. There are no such pending or, to the Borrower's
knowledge, threatened actions, investigations or proceedings affecting any Loan
Party before any court, Governmental Authority or arbitrator, other than those
that in the aggregate, are not reasonably likely to have a Material Adverse
Effect. The performance of any action by any Loan Party required or
contemplated by any of the Loan Documents and the consummation of the
transactions contemplated thereby is not restrained or enjoined (either
temporarily, preliminarily or permanently), and no material adverse condition
has been imposed by any Governmental Authority or arbitrator upon any of the
foregoing transactions.
4.7. Margin Regulations. (a) No proceeds of any Revolving Credit
Borrowing will be used to acquire any margin security of a class which is
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended.
(b) The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no proceeds
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of any Revolving Credit Borrowing will be used to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any margin stock.
4.8. Ownership of Borrower; Subsidiaries. (a) As of the date
hereof, the authorized capital stock of the Borrower consists of (i) 60,000,000
shares of Class A common stock, no par value per share, of which 13,106,382
shares are issued and outstanding, (ii) 50,000,000 shares of Class B common
stock, no par value per share, of which 20,639,688 shares are issued and
outstanding, and (iii) 4,000,000 shares of Preferred Stock, of which 400,000
shares are issued and outstanding. All of the outstanding capital stock of the
Borrower has been validly issued, is fully paid and non-assessable. Except (x)
as set forth in the Borrower's Annual Report and Proxy Statement, and (y) the
Warrants, on the date hereof (A) no authorized but unissued shares, no treasury
shares and no other outstanding shares of capital stock of the Borrower are
subject to any option, warrant, right of conversion or purchase or any similar
right granted by the Borrower, and (B) the Borrower is not a party to any
agreement or understanding with respect to the voting, sale or transfer of any
shares of capital stock of the Borrower.
(b) Schedule 4.8 lists each of the Borrower's Subsidiaries as
of the date hereof. Except as set forth on Schedule 4.8, as of the date hereof
the Borrower has no Subsidiaries, and does not own or hold, directly or
indirectly, any capital stock or equity security of, or any equity interest in,
any Person.
4.9. ERISA. (a) Schedule 4.9 sets forth by category all Plans,
all Qualified Plans and all unfunded Pension Plans and all other Plans subject
to Section 412 of the Code as of the date hereof. There are no Title IV Plans
or Multiemployer Plans as of the date hereof. There are no Welfare Benefit
Plans that provide post-retirement life insurance or medical benefits (other
than continuation coverage required to be provided pursuant to Section 4980B
of the Code and which are required to be paid 100% by the recipient, the
recipient's spouse or the recipient's parent) as of the date hereof.
(b) Each Qualified Plan has received a favorable
determination letter from the IRS with respect to its qualification under
Section 401 of the Code, and the trusts created under each such Qualified Plan
are exempt from tax under the provisions of Section 501 of the Code, and to the
knowledge of the Borrower, nothing has occurred which would cause the loss of
such qualification or tax-exempt status.
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(c) Each Plan (other than a Multiemployer Plan) is in
compliance in all material respects with applicable provisions of ERISA and the
Code, including, without limitation, the filing of reports required under the
Code or ERISA which are true and correct in all material respects as of the
date filed, and with respect to each such Plan, and all required contributions
and benefits have been paid in accordance with the provisions of each such
Plan.
(d) There are no pending or, to the knowledge of any Loan
Party, threatened claims, actions or lawsuits (other than claims for benefits
in the normal course) asserted or instituted against any Loan Party or ERISA
Affiliate with respect to a Title IV Plan. To the knowledge of the Borrower
there are no pending or threatened claims, actions or lawsuits (other than
claims for benefits in the normal course), asserted or instituted against (i)
any Plan or its assets, or (ii) any fiduciary with respect to any Plan.
(e) Within the last five years, no Loan Party or ERISA
Affiliate has engaged in a transaction which resulted in a Title IV Plan with
any Unfunded Pension Liability being transferred outside of the "controlled
group" (within the meaning of Section 4001(a)(14) of ERISA) of any such entity.
(f) Each Loan Party and each ERISA Affiliate has complied in
all material respects with the notice and continuation coverage requirements of
Section 4980B of the Code and the regulations thereunder.
(g) No Loan Party has engaged in a prohibited transaction, as
defined in Section 4975 of the Code or Section 406 of ERISA, in connection with
any Plan, which would subject or has any reasonable likelihood of subjecting
any Loan Party (after giving effect to any exemption) to a material tax on
prohibited transactions imposed by Section 4975 of the Code or any other
material liability.
(h) No Loan Party or any ERISA Affiliate has any liability
under any terminated "employee benefit plan", as defined in Section 3(2) of
ERISA, of any related or unrelated entity or any Multiemployer Plan other than
liability for benefit payments payable in the ordinary course.
(i) The present value of any liability as of the date hereof
with respect to any unfunded Pension Plan of each Loan Party is reflected on
the audited financial statements referred to in Section 4.5(a) or is provided
on Schedule 4.9, together with the assumptions utilized in the calculations.
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(j) Except as set forth on Schedule 4.9, as supplemented from
time to time by the Borrower, none of the assets of any Plan (other than a
Multiemployer Plan) are invested in a guaranteed annuity contract with any
insurance company that is not rated the highest available rating by Standard &
Poor's Corporation, Moody's Investors Service and A.M. Best Company, Inc.
4.10. Liens. There are no Liens of any nature whatsoever on any
properties of any Restricted Party other than Permitted Liens. The Liens
granted by the Borrower to the Agent pursuant to the Collateral Documents are
fully perfected first priority Permitted Liens in and to the collateral
described therein (other than (a) Collateral consisting of Inventory acquired
after April 29, 1992 outside the states of Utah and Minnesota and any other
state in which a financing statement had been filed pursuant to the Amended and
Restated Security Agreement, and (b) unidentifiable proceeds), subject only to
Permitted Liens.
4.11. No Burdensome Restrictions; No Defaults. (a) No Loan Party is
(i) a party to any Contractual Obligation the compliance with which would have
a Material Adverse Effect or the performance of which by any Restricted Party,
either unconditionally or upon the happening of an event, will result in the
creation of a Lien (other than a Lien granted pursuant to the Collateral
Documents or other Permitted Liens) on the property or assets of any Restricted
Party, or (ii) subject to any charter or corporate restriction which would have
a Material Adverse Effect.
(b) No Loan Party is, and, to the knowledge of the Borrower,
no other party is in default under (i) the 1993 Senior Notes Indenture, the
Senior Notes, the Exchange Debenture Indenture, the Exchange Debentures, the
1994 Senior Notes Indenture, or the 1994 Senior Notes, or (ii) any other
Contractual Obligation other than, in the case of this clause (ii), those
defaults which in the aggregate would have no Material Adverse Effect.
(c) No Event of Default or Default has occurred and is
continuing.
(d) There is no Requirement of Law the compliance with which
by any Loan Party would have a Material Adverse Effect.
4.12. No Other Ventures. No Restricted Party is engaged in any
joint venture or partnership with any other Person, except as permitted under
Section 7.6.
4.13. Investment Company Act. The Borrower is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an
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"investment company", as such terms are defined in the Investment Company Act
of 1940, as amended. The making of the Loans by the Lenders, the application
of the proceeds and repayment thereof by the Borrower and the consummation of
the transactions contemplated by the Loan Documents will not violate any
provision of such Act or any rule, regulation or order issued by the Securities
and Exchange Commission thereunder.
4.14. Insurance. All policies of insurance of any kind or nature
owned by or issued to each Restricted Party, including, without limitation,
policies of life, fire, theft, product liability, public liability, property
damage, other casualty, employee fidelity, workers' compensation and employee
health and welfare insurance, are in full force and effect and are of a nature
and provide such coverage as is sufficient and as is customarily carried by
companies of the size and character of such Restricted Party. The Borrower has
no reason to believe that it will be unable to comply with Section 6.4.
4.15. Labor Matters. (a) There are no strikes, work stoppages,
slowdowns or lockouts pending or, to the Borrower's knowledge, threatened,
against or involving any Loan Party, other than those which in the aggregate
have no reasonable likelihood of having a Material Adverse Effect.
(b) There are no arbitrations or grievances pending against
or involving any Loan Party, nor to the Borrower's knowledge are there any
arbitrations or grievances threatened involving any Loan Party, other than
those which, in the aggregate, have no reasonable likelihood of having a
Material Adverse Effect.
(c) Except as set forth in the Borrower's Annual Report, as
of the date hereof no Loan Party is a party to, and has no obligations under,
any collective bargaining agreement.
(d) There is no organizing activity involving any Loan Party
pending or, to the Borrower's knowledge, threatened, by any labor union or
group of employees, other than those which in the aggregate have no reasonable
likelihood of having a Material Adverse Effect. There are no representation
proceedings pending or, to the Borrower's knowledge, threatened with the
National Labor Relations Board, and no labor organization or group of employees
of any Loan Party has made a pending demand on the Borrower for recognition,
other than those which in the aggregate have no reasonable likelihood of having
a Material Adverse Effect.
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<PAGE> 73
(e) There are no unfair labor practice charges, grievances or
complaints pending or in process or, to the Borrower's knowledge, threatened,
by or on behalf of any employee or group of employees of any Loan Party, other
than those which in the aggregate have no reasonable likelihood of having a
Material Adverse Effect.
(f) There are no complaints or charges against any Loan Party
pending or, to the Borrower's knowledge, threatened to be filed with any
federal, state or local court, governmental agency or arbitrator based on,
arising out of, in connection with, or otherwise relating to the employment by
any Loan Party of any individual, other than those which in the aggregate have
no reasonable likelihood of having a Material Adverse Effect.
(g) Each Loan Party is in compliance with all laws, and all
orders of any court, Governmental Authority or arbitrator, relating to the
employment of labor including all such laws relating to wages, hours,
collective bargaining, discrimination, civil rights, and the payment of
withholding and/or social security and similar taxes, other than those the non-
compliance with which in the aggregate would have no Material Adverse Effect.
4.16. Force Majeure. Neither the business nor the properties of any
Loan Party are currently suffering from the effects of any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), other than those the consequences of
which in the aggregate would have no Material Adverse Effect.
4.17. Use of Proceeds. The proceeds of the Loans and the Letters
of Credit are being used by the Borrower solely for (a), in the case of the
Loans, the repayment of all outstanding Indebtedness incurred under the
Existing Credit Agreement, and/or (b) in the case of the Loans and the Letters
of Credit, general working capital and corporate purposes.
4.18. Environmental Protection. (a) The operations of each Loan
Party and, to the Borrower's knowledge, its tenants comply with all applicable
Environmental Laws other than such non-compliance the consequences of which in
the aggregate would give rise to any Environmental Liabilities and Costs that
are not reasonably likely to have a Material Adverse Effect;
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<PAGE> 74
(b) Each Loan Party has obtained all environmental, health
and safety Permits necessary for its operations, and all such Permits are in
good standing and the Borrower is in compliance with the terms and conditions
of such Permits other than such failures to obtain, lack of good standing and
non-compliance the consequences of which in the aggregate would give rise to
any Environmental Liabilities and Costs that are not reasonably likely to have
a Material Adverse Effect;
(c) No Loan Party has currently or previously owned or leased
real property or operations subject to any threatened or outstanding order or
judgment from, or consent decree or similar agreement in response thereto with,
any Governmental Authority or other Person or subject to any judicial or
docketed administrative proceeding respecting (i) Environmental Laws, (ii)
Remedial Action, or (iii) any Environmental Liabilities and Costs arising from
a Release or threatened Release, other than those the consequences of which in
the aggregate would give rise to any Environmental Liabilities and Costs that
are not reasonably likely to have a Material Adverse Effect;
(d) There are no conditions or circumstances associated with
the currently or previously owned or leased real property or operations of any
Loan Party or, to the Borrower's knowledge, their respective tenants, which
would give rise to any Environmental Liabilities and Costs other than those
which in the aggregate are not reasonably likely to have a Material Adverse
Effect;
(e) No Loan Party is a treatment, storage or disposal
facility requiring a permit under the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901 et seq., the regulations thereunder or any state
analog. Each Loan Party is in compliance with all applicable financial
responsibility requirements of all Environmental Laws, including, without
limitation, those contained in 40 C.F.R., parts 264 and 265, subpart H, and any
state equivalents;
(f) No Loan Party has failed to file any notice required
under any applicable Environmental Law reporting a Release, the consequences of
which in the aggregate would give rise to Environmental Liabilities and Costs
that would have a Material Adverse Effect;
(g) No Environmental Lien and, to the Borrower's knowledge,
no unrecorded Environmental Lien has attached to any property owned, leased or
operated by any Loan Party, except as permitted by Section 7.1(k); and
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<PAGE> 75
(h) There is not now on or in the property owned, leased or
operated by any Loan Party (i) any underground storage tanks or surface
impoundments, (ii) any polychlorinated biphenyls ("PCBs") used in electrical or
other equipment, or (iii) to the knowledge of the Borrower, any
asbestos-containing material, the existence of any of which would have a
Material Adverse Effect.
4.19. Intellectual Property. Each Loan Party owns or licenses or
otherwise has the right to use all material licenses, permits, patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, copyright applications, franchises, authorizations and other
intellectual property rights that are necessary for the operations of its
businesses, without infringement upon or conflict with the rights of any other
Person with respect thereto, including, without limitation, all trade names.
To the knowledge of the Borrower, no slogan or other advertising device,
product, process, method, substance, part or other material now employed, or
now contemplated to be employed, by any Loan Party infringes upon or conflicts
with any rights owned by any other Person, and no claim or litigation regarding
any of the foregoing is pending or, to the Borrower's knowledge, threatened
other than as set forth in the letter referred to in Section 4.6. No patent,
invention, device, application, principle or any statute, law, rule, regulation
, standard or code is pending or, to the knowledge of the Borrower, proposed,
other than those the consequences of which in the aggregate have no reasonable
likelihood of having a Material Adverse Effect.
4.20. Title. (a) Each Restricted Party has good and marketable
title to all of the Real Estate purported to be owned by it, which Real Estate
is at the date hereof described on Schedule 4.20(a), and good title to, or
valid leasehold interests in, all other properties and assets purported to be
owned by such Restricted Party, including, without limitation, valid leasehold
interests pursuant to the Leases and all property reflected in the balance
sheet referred to in Section 4.5(a), and none of such properties and assets,
including, without limitation, the Real Estate and the Leases, is subject to
any Lien, except Permitted Liens. Each Restricted Party has received all deeds
, assignments, waivers, consents, non-disturbance and recognition or similar
agreements, bills of sale and other documents, and has duly effected all
recordings, filings and other actions necessary to establish, protect and
perfect its right, title and interest in and to all such property as are
necessary for the continued use and operation thereof in the manner currently
being used and operated.
(b) All real property leased at the date hereof by the
Restricted Parties which is material to the operations of the Borrower, and the
termination dates of the related leases, are listed on Schedule 4.20(b). Each
of the Leases is valid and enforceable in accordance with its terms and is in
full force and effect. The Borrower
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<PAGE> 76
has, to the extent so requested by the Agent, delivered to the Agent true and
complete copies of each of the Leases and all documents affecting the rights or
obligations of each Loan Party which is a party thereto, including, without
limitation, any non- disturbance and recognition agreements, subordination
agreements, attornment agreements and agreements regarding the term or rental
of any of the Leases. No Loan Party and, to the knowledge of the Borrower, no
other party to any Lease is in default of its obligations thereunder or has
delivered or received any notice of default under any such Lease, nor has any
event occurred which, with the giving of notice, the passage of time or both,
would constitute a default under any such Lease, except for defaults the
consequences of which in the aggregate would have no Material Adverse Effect.
(c) As of the date hereof, no Restricted Party owns or holds,
or is obligated under or a party to, any option, right of first refusal or
other contractual right to purchase, acquire, sell, assign or dispose of any
real property owned or leased by such Restricted Party having an aggregate Fair
Market Value in excess of $3,000,000.
(d) All components of all improvements included within the
real property owned or leased by each Restricted Party (hereinafter
collectively referred to as the "Improvements"), including, without limitation,
the roofs and structural elements thereof and the heating, ventilation, air
conditioning, plumbing, electrical, mechanical, sewer, waste water, storm
water, paving and parking equipment, systems and facilities included therein,
which are necessary to the conduct of its business, are in good working order
and repair, except where the failure to be in such order and repair would not
have a Material Adverse Effect. All water, gas, electrical, steam, compressed
air, telecommunication, sanitary and storm sewage lines and systems and other
similar systems serving the real property owned or leased by each Restricted
Party, which are necessary to the conduct of its business, are installed and
operating and are sufficient to enable the real property owned or leased by
such Restricted Party to continue to be used and operated in the manner
currently being used and operated, and the Borrower has no knowledge of any
factor or condition that could result in a termination or impairment of the
furnishing thereof that would have a Material Adverse Effect. No material
Improvement or portion thereof is dependent for its access, operation or
utility on any land, building or other Improvement (other than public streets
and roads) not included in the real property owned or leased by a Restricted
Party.
(e) All Permits required to have been issued or appropriate
to enable all real property owned or leased by each Loan Party to be lawfully
occupied and
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<PAGE> 77
used for all of the purposes for which they are currently occupied and used,
have been lawfully issued and are in full force and effect, other than such
failures the consequences of which in the aggregate would have no Material
Adverse Effect.
(f) No Restricted Party has received any notice, nor does the
Borrower have any knowledge of, any pending, threatened or contemplated
condemnation proceeding affecting any real property owned or leased by any
Restricted Party or any part thereof which is material to the operation its
business, or any proposed termination or impairment of any parking at any such
real property or of any sale or other disposition of such real property or any
part thereof in lieu of condemnation.
(g) No portion of any real property owned or leased by any
Loan Party which is material to the operation of its business has suffered any
material damage by fire or other casualty loss which has not heretofore been
completely repaired and restored to its original condition. No material
portion of the Borrower's operating facility is located in a special flood
hazard area designated "Zone A".
4.21. Certain Indebtedness. Schedule 4.21 separately identifies as
of the date hereof all Indebtedness (other than current liabilities (including
the current portion of long-term Indebtedness)) of the Borrower which is either
(a) for borrowed money, (b) incurred outside of the ordinary course of the
business or in a manner and to the extent inconsistent with past practice, or
(c) material to the financial condition, business, operations or prospects of
the Borrower, $1,000,000 being hereby deemed material for purposes of this
Section 4.21.
4.22. Restricted Payments. Since September 30, 1993 to the date
hereof, no Restricted Party has done any of the following, except as expressly
permitted by this Agreement: (a) declared or made any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account of any shares of any class of its Stock, (b) made any payment or
distribution on account of any Indebtedness for or in respect of borrowed money
(other than the making of regularly scheduled fee, interest and principal
payments) including, without limitation, to secure any waiver or consent in
respect of any such Indebtedness, (c) purchased, redeemed, or otherwise acquired
for value or made any payment in respect of any of its Stock or Stock
Equivalents or (d) purchased, redeemed, prepaid, defeased or otherwise acquired
for value any Indebtedness for or in respect of borrowed money.
4.23. Seniority. The Obligations rank at least paripassu with all
other Indebtedness of the Borrower.
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<PAGE> 78
4.24. Bank Accounts. Schedule 4.24 lists as of the date hereof each
of the bank accounts maintained by the Borrower and the purpose thereof.
ARTICLE V
FINANCIAL COVENANTS
As long as any of the Obligations or the Revolving Credit
Commitments remain outstanding, unless the Majority Lenders otherwise consent
in writing:
5.1. Maximum Leverage Ratio. The Borrower shall achieve a ratio of
(a) the sum of (i) Total Liabilities plus (ii) the carrying value of all
outstanding preferred stock issued by the Borrower and its Restrictive
Subsidiaries, to (b) Tangible Net Worth not in excess of the ratio set forth
below:
<TABLE>
<CAPTION>
During Each Month
Ending on the Date
Set Forth Below Maximum Ratio
------------------ -------------
<S> <C>
October 31, 1994 5.60:1.0
November 30, 1994 5.60:1.0
December 31, 1994 5.60:1.0
January 31, 1995 5.60:1.0
February 28, 1995 5.60:1.0
March 31, 1995 5.60:1.0
April 30, 1995 5.60:1.0
May 31, 1995 5.60:1.0
June 30, 1995 5.40:1.0
July 31, 1995 5.40:1.0
August 31, 1995 5.40:1.0
September 30, 1995 5.00:1.0
October 31, 1995 5.00:1.0
November 30, 1995 5.00:1.0
December 31, 1995 4.75:1.0
January 31, 1996 4.75:1.0
February 29, 1996 4.75:1.0
March 31, 1996 4.75:1.0
April 30, 1996 4.75:1.0
May 31, 1996 4.75:1.0
</TABLE>
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<PAGE> 79
<TABLE>
<CAPTION>
During Each Month
Ending on the Date
Set Forth Below Maximum Ratio
------------------ -------------
<S> <C>
June 30, 1996 4.50:1.0
July 31, 1996 4.50:1.0
August 31, 1996 4.50:1.0
September 30, 1996 4.25:1.0
October 31, 1996 4.25:1.0
November 30, 1996 4.25:1.0
December 31, 1996 4.00:1.0
January 31, 1997 4.00:1.0
February 28, 1997 4.00:1.0
March 31, 1997 3.75:1.0
April 30, 1997 3.75:1.0
May 31, 1997 3.75:1.0
June 30, 1997 3.50:1.0
July 31, 1997 3.50:1.0
August 31, 1997 3.50:1.0
September 30, 1997 and thereafter 3.25:1.0
</TABLE>
5.2. Maintenance of Tangible Net Worth. The Borrower shall
maintain, during each of the months set forth below, Tangible Net Worth
no less than the sum of (a) the amounts set forth below plus (b) an amount
equal to 75% of the net proceeds received by the Borrower from the sale of
its Stock since the date hereof:
<TABLE>
<CAPTION>
During Each Month
Ending on the Date Minimum
Set Forth Below Amount
------------------ -------
<S> <C>
October 31, 1994 $86,000,000
November 30, 1994 $86,000,000
December 31, 1994 $88,000,000
January 31, 1995 $88,000,000
February 28, 1995 $88,000,000
March 31, 1995 $90,000,000
April 30, 1995 $90,000,000
May 31, 1995 $90,000,000
June 30, 1995 $100,000,000
July 31, 1995 $100,000,000
August 31, 1995 $100,000,000
September 30, 1995 $115,000,000
October 31, 1995 $115,000,000
November 30, 1995 $115,000,000
</TABLE>
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<PAGE> 80
<TABLE>
<CAPTION>
During Each Month
Ending on the Date Minimum
Set Forth Below Amount
------------------ -------
<S> <C>
December 31, 1995 $130,000,000
January 31, 1996 $130,000,000
February 29, 1996 $130,000,000
March 31, 1996 $145,000,000
April 30, 1996 $145,000,000
May 31, 1996 $145,000,000
June 30, 1996 $160,000,000
July 31, 1996 $160,000,000
August 31, 1996 $160,000,000
September 30, 1996 $165,000,000
October 31, 1996 $165,000,000
November 30, 1996 $165,000,000
December 31, 1996 $167,500,000
January 31, 1997 $167,500,000
February 28, 1997 $167,500,000
March 31, 1997 $170,000,000
April 30, 1997 $170,000,000
May 31, 1997 $170,000,000
June 30, 1997 $172,500,000
July 31, 1997 $172,500,000
August 31, 1997 $172,500,000
September 30, 1997 and thereafter $175,000,000
</TABLE>
5.3. Capital Expenditures. The Borrower shall not make cumulative
Capital Expenditures for the period from September 30, 1994 through the date
set forth below in excess of the amount set forth below:
<TABLE>
<CAPTION>
Maximum Amount of
During the Cumulative Capital
Period Ending Expenditures
------------- ------------------
<S> <C>
December 31, 1994 $13,000,000
January 31, 1995 $16,000,000
February 28, 1995 $21,000,000
March 31, 1995 $28,000,000
April 30, 1995 $33,000,000
May 31, 1995 $48,000,000
June 30, 1995 $63,000,000
July 31, 1995 $76,000,000
August 31, 1995 $86,000,000
</TABLE>
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<TABLE>
<CAPTION>
Maximum Amount of
During the Cumulative Capital
Period Ending Expenditures
------------- ------------------
<S> <C>
September 30, 1995 $97,000,000
October 31, 1995 $108,000,000
November 30, 1995 $118,000,000
December 31, 1995 $125,000,000
January 31, 1996 $133,000,000
February 29, 1996 $139,000,000
March 31, 1996 $146,000,000
April 30, 1996 $153,000,000
May 31, 1996 $163,000,000
June 30, 1996 $173,000,000
July 31, 1996 $178,000,000
August 31, 1996 $188,000,000
September 30, 1996 $193,000,000
October 31, 1996 $210,000,000
November 30, 1996 $210,000,000
December 31, 1996 $210,000,000
January 31, 1997 $225,000,000
February 28, 1997 $225,000,000
March 31, 1997 $225,000,000
April 30, 1997 $240,000,000
May 31, 1997 $240,000,000
June 30, 1997 $240,000,000
July 31, 1997 $260,000,000
August 31, 1997 $260,000,000
September 30, 1997 $260,000,000
October 31, 1997 $270,000,000
November 30, 1997 $270,000,000
December 31, 1997 $270,000,000
January 31, 1998 $290,000,000
February 28, 1998 $290,000,000
March 31, 1998 $290,000,000
April 30, 1998 $310,000,000
May 31, 1998 $310,000,000
June 30, 1998 $310,000,000
July 31, 1998 $325,000,000
August 31, 1998 $325,000,000
September 30, 1998 $325,000,000
October 31, 1998 $345,000,000
November 30, 1998 $345,000,000
December 31, 1998 $345,000,000
</TABLE>
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<TABLE>
<CAPTION>
Maximum Amount of
During the Cumulative Capital
Period Ending Expenditures
------------- ------------------
<S> <C>
January 31, 1999 and thereafter $365,000,000
</TABLE>
provided, however, that the Borrower may, in any calendar month, make Capital
Expenditures in addition to those set forth above in an aggregate amount not in
excess of the difference between (a) the Additional Discretionary Amount (to
the extent not previously utilized pursuant to this proviso after September 30,
1994), and (b) the sum of (i) all cash Investments in Subsidiaries made by the
Borrower from September 30, 1994 to the date of such determination (other than
Investments made in Funding pursuant to the Securitization Documents and
permitted under Section 7.6), plus (ii) all cash dividends paid and
Indebtedness purchased, redeemed, prepaid, defeased or otherwise acquired for
value or paid by the Borrower from September 30, 1994 to the date of such
determination (other than purchases, redemptions, prepayments, defeasances,
acquisitions for value or payments that are required payments or are
specifically permitted by Sections 7.4(b)(i) through (v)).
5.4. Cash Flow. The Borrower's cumulative Cash Flow (exclusive of
Capital Expenditures) for the period from September 30, 1994 through and as of
each of the dates set forth below shall not be less than (if negative,
expressed as a negative number larger than) the amount set forth below:
<TABLE>
<CAPTION>
Date Minimum Cash Flow
---- -----------------
<S> <C>
December 31, 1994 $(20,000,000)
January 31, 1995 $(22,000,000)
February 28, 1995 $(22,000,000)
March 31, 1995 $(20,000,000)
April 30, 1995 $(20,000,000)
May 31, 1995 $3,000,000
June 30, 1995 $13,000,000
July 31, 1995 $16,000,000
August 31, 1995 $27,000,000
September 30, 1995 $33,000,000
October 31, 1995 $43,000,000
November 30, 1995 $57,000,000
December 31, 1995 $68,000,000
January 31, 1996 $73,000,000
February 29, 1996 $88,000,000
March 31, 1996 $93,000,000
April 30, 1996 $98,000,000
May 31, 1996 $113,000,000
</TABLE>
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<PAGE> 83
<TABLE>
<CAPTION>
<S> <C>
June 30, 1996 $128,000,000
July 31, 1996 $133,000,000
August 31, 1996 $148,000,000
September 30, 1996 $153,000,000
October 31, 1996 $155,000,000
November 30, 1996 $155,000,000
December 31, 1996 $185,000,000
January 31, 1997 $185,000,000
February 28, 1997 $185,000,000
March 31, 1997 $195,000,000
April 30, 1997 $195,000,000
May 31, 1997 $195,000,000
June 30, 1997 $225,000,000
July 31, 1997 $225,000,000
August 31, 1997 $225,000,000
September 30, 1997 $240,000,000
October 31, 1997 $240,000,000
November 30, 1997 $240,000,000
December 31, 1997 $270,000,000
January 31, 1998 $270,000,000
February 28, 1998 $270,000,000
March 31, 1998 $280,000,000
April 30, 1998 $280,000,000
May 31, 1998 $280,000,000
June 30, 1998 $295,000,000
July 31, 1998 $295,000,000
August 31, 1998 $295,000,000
September 30, 1998 $315,000,000
October 31, 1998 $315,000,000
November 30, 1998 $315,000,000
December 31, 1998 $330,000,000
January 31, 1999 $330,000,000
February 28, 1999 $330,000,000
March 31, 1999 and thereafter $340,000,000
</TABLE>
5.5. EBITDA to Cash Interest Expense Ratio. The Borrower shall
achieve as of the last day of each Fiscal Quarter commencing with the Fiscal
Quarter ending December 31, 1994, determined on the basis of the four Fiscal
Quarters ending on the date of determination, a ratio of (a) EBITDA for such
period to (b) Cash Interest Expense for such period, not less than the ratio
set forth below:
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<PAGE> 84
<TABLE>
<CAPTION>
For the Fiscal Minimum
Quarter Ending Ratio Required
-------------- --------------
<S> <C>
March 31, 1995 2.10:1.0
June 30, 1995 2.25:1.0
September 30, 1995 2.60:1.0
December 31, 1995 and thereafter 2.75:1.0
</TABLE>
ARTICLE VI
ADDITIONAL AFFIRMATIVE COVENANTS
As long as any of the Obligations or the Revolving Credit
Commitments remain outstanding, unless the Majority Lenders otherwise consent
in writing:
6.1. Compliance with Laws, Etc. The Borrower shall, and shall
cause each of its Subsidiaries to, comply in all material respects, with all
Requirements of Law, Contractual Obligations, commitments, instruments,
licenses, permits and franchises, including, without limitation, all Permits,
other than such non-compliances the consequences of which in the aggregate would
have no Material Adverse Effect.
6.2. Conduct of Business. The Borrower shall, and shall cause each
of its Subsidiaries to, (a) conduct its business in a regular manner and (b)
use its reasonable efforts, in the ordinary course and consistent with past
practice, to (i) preserve its business and the goodwill and business of the
customers, advertisers, suppliers and others with whom it has business
relations, (ii) keep available the services and goodwill of its present
employees, and (iii) preserve all rights, permits (including all Permits),
licenses, approvals, privileges, registered patents, trademarks, trade names,
copyrights and service marks and other intellectual property with respect to its
business.
6.3. Payment of Taxes, Etc. The Borrower shall, and shall cause
each of its Subsidiaries to, pay and discharge, before the same shall become
delinquent, all lawful governmental claims, taxes, assessments, charges and
levies, except (a) in the case of a Restricted Party, where contested in good
faith, by proper proceedings, if adequate reserves therefor have been
established on the books of the Borrower or such Subsidiary, as the case may be,
in conformity with GAAP and (b) where the consequence of all such non- payments
and, in the case of a Restricted Party, contests and reserves, in the aggregate
would have no Material Adverse Effect.
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<PAGE> 85
6.4. Maintenance of Insurance. The Borrower shall, and shall cause
each of its Subsidiaries to, maintain insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks as
is usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which the Borrower or such
Subsidiary, as the case may be, operates and as otherwise satisfactory to the
Agent, in its sole judgment, exercised reasonably, and, in any event in the case
of the Borrower, all insurance required by the Amended and Restated Security
Agreement; provided, however, that the Borrower may self-insure an amount of its
health insurance and worker's compensation insurance in an amount to be agreed
upon by the Agent and the Borrower. All such insurance in respect of the
Collateral shall name the Agent and the Lenders as additional insured or loss
payees as their interests may appear, as the Agent shall determine. The
Borrower will furnish to the Lenders from time to time any information as may
be reasonably requested as to such insurance in respect of the Collateral and
such information as to other insurance as is in its possession or which can be
readily obtained.
6.5. Preservation of Corporate Existence, Etc. Except
as permitted under Section 7.5, the Borrower shall, and shall, unless otherwise
consented to in writing by the Agent, cause each of its Subsidiaries to,
preserve and maintain its corporate existence, rights (charter and statutory)
and material franchises.
6.6. Access. The Borrower shall, and shall cause each
of its Subsidiaries to, at any reasonable time and from time to time upon at
least two Business Days' prior notice from the Agent (unless an Event of
Default shall have occurred and be continuing, in which case no prior notice is
necessary), permit the Agent (either individually or together with one or more
of the Lenders), or any agents or representatives thereof, to (a) examine and
make copies of and abstracts from the records and books of account of each Loan
Party, (b) visit the properties of each Loan Party, (c) discuss the affairs,
finances and accounts of each Loan Party with any of its officers or directors
who may then be reasonably available, and (d) communicate directly with each
Loan Party's independent certified public accountants. The Borrower shall
authorize its independent certified public accountants to disclose to the Agent
or any Lender any and all financial statements and other information of any
kind, including, without limitation, copies of any management letter, or the
substance of any oral information that such accountants may have with respect
to the business, financial condition, results of operations or other affairs of
the Borrower and each of its Subsidiaries.
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6.7. Keeping of Books. The Borrower shall, and shall cause each of
its Subsidiaries to, keep books of record and account, in which entries shall
be made of all financial transactions and the assets and business of the
Borrower or such Subsidiary, as the case may be, in conformity with GAAP and
any Requirement of Law.
6.8. Maintenance of Properties, Etc. The Borrower shall, and shall
cause each of its Subsidiaries to, maintain and preserve all of its properties
which are used in the conduct of its business in good working order and
condition (reasonable wear and tear excepted), where the failure to so maintain
or preserve would have a Material Adverse Effect.
6.9. Performance and Compliance with Other Covenants. The Borrower
shall, and shall cause each of its Subsidiaries to, perform and observe all the
terms, covenants and conditions required to be performed and observed by it
under its Contractual Obligations (including, without limitation, to pay all
rent and other charges payable under any lease and all debts and other
obligations as the same become due), and do all things necessary to preserve
and to keep unimpaired its rights under such Contractual Obligations, other
than such failures the consequences of which in the aggregate would have no
Material Adverse Effect.
6.10. Application of Proceeds. The Borrower shall use the entire
amount of the proceeds of each Revolving Credit Loan as provided in Section
4.17.
6.11. Financial Statements. The Borrower shall furnish to the
Lenders:
(a) as soon as available and in any event within 30 days
after the end of each month other than the last month of a Fiscal Quarter,
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of the end of such month and consolidated and consolidating
statements of income and cash flows of the Borrower and its Subsidiaries for
the period commencing at the end of the previous Fiscal Year and ending with
the end of such month, certified by the chief financial officer of the Borrower
as fairly presenting the financial condition and results of operations of the
Borrower and its Subsidiaries at such date and for such period, together with
(i) a certificate of said officer stating that no Default or Event of Default
has occurred and is continuing or, if a Default or an Event of Default has
occurred and is continuing, a statement as to the nature thereof and the action
which the Borrower proposes to take with respect thereto, (ii) a schedule in
form satisfactory to the Agent of the computations used by the Borrower in
determining compliance with all financial covenants contained herein, and (iii)
a written operating and financial summary by the management of the Borrower of
the financial statements furnished in respect of such month;
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(b) as soon as available and in any event within 45 days
after the end of each of the first three Fiscal Quarters of each Fiscal Year,
consolidated and consolidating balance sheets of the Borrower as of the end of
such quarter and consolidated and consolidating statements of income, retained
earnings and cash flows of the Borrower for the period commencing at the end of
the previous Fiscal Year and ending with the end of such Fiscal Quarter,
certified by the chief financial officer of the Borrower as fairly presenting
the financial condition and results of operations of the Borrower and its
Subsidiaries at such date and for such period, together with (i) a certificate
of said officer stating that no Default or Event of Default has occurred and is
continuing or, if a Default or an Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action which the
Borrower proposes to take with respect thereto, (ii) a schedule in form
satisfactory to the Agent of the computations used by the Borrower in
determining compliance with all financial covenants contained herein, and (iii)
a written discussion and analysis by the management of the Borrower of the
financial statements furnished in respect of such Fiscal Quarter;
(c) as soon as available and in any event within 45 days
after the end of each Fiscal Year, consolidated and consolidating balance
sheets of the Borrower as of the end of such Fiscal Year and consolidated and
consolidating statements of income, retained earnings and cash flows of the
Borrower for the period commencing at the end of the previous Fiscal Year and
ending with the end of such Fiscal Year, certified by the chief financial
officer of the Borrower as fairly presenting the financial condition and
results of operations of the Borrower and its Subsidiaries at such date and for
such period, together with (i) a certificate of said officer stating that no
Default or Event of Default has occurred and is continuing or, if a Default or
an Event of Default has occurred and is continuing, a statement as to the
nature thereof and the action which the Borrower proposes to take with respect
thereto, (ii) a schedule in form satisfactory to the Agent of the computations
used by the Borrower in determining compliance with all financial covenants
contained herein, and (iii) a written discussion and analysis by the management
of the Borrower of the financial statements furnished in respect of such Fiscal
Year;
(d) as soon as available and in any event within 90 days
after the end of each Fiscal Year, consolidated and consolidating balance
sheets of the Borrower and its Subsidiaries as of the end of such year and
consolidated and consolidating statements of income, retained earnings and cash
flows of the Borrower for the period commencing at the end of the previous
Fiscal Year and ending with the end of such Fiscal Year, certified without
qualification as to the scope of the audit by Arthur Andersen & Co. or other
independent public accountants acceptable to the Majority Lenders, together
with (i) a certificate of such accounting firm stating that in the
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course of the regular audit of the business of the Borrower and its
Subsidiaries, which audit was conducted by such accounting firm in accordance
with generally accepted auditing standards, such auditing firm has obtained no
knowledge that a Default or Event of Default has occurred and is continuing,
or, if in the opinion of such accounting firm, a Default or Event of Default
has occurred and is continuing, a statement as to the nature thereof, (ii) a
schedule in form satisfactory to the Agent of the computations used by such
accountants in determining, as of the end of such Fiscal Year, the Borrower's
compliance with all financial covenants contained herein, (iii) a written
discussion and analysis by the Management of the Borrower of the financial
statements furnished in respect of such Fiscal Year, and (iv) the present value
of any liability as of the end of such Fiscal Year with respect to any unfunded
Pension Plan of each Loan Party together with the assumptions utilized in the
calculations;
(e) not later than the date on which the Borrower shall
deliver to the Lenders the financial statements referred to in Section 6.11(c)
for any Fiscal Year, a letter from the Borrower's independent public
accountants, substantially in the form of Exhibit M;
(f) promptly after the same are received by the Borrower, a
copy of each management letter provided to the Borrower by its independent
certified public accountants which refers in whole or in part to any
inadequacy, defect, problem, qualification or other lack of fully satisfactory
accounting controls utilized by the Borrower or any of its Subsidiaries;
(g) on the Closing Date and prior to the Borrower's close of
office hours on the twentieth Business Day of each month thereafter, a
Borrowing Base Certificate, signed by a Responsible Officer of the Borrower,
setting forth, on an itemized basis, the Borrowing Base as of the close of
office hours on the last day of the preceding month, and the Borrowing Base
computations based thereon, as well as (i) a schedule listing changes (if any)
to Schedule 4.24 and Schedule V and (ii) a certification by a Responsible
Officer of the Borrower that from the date of the most recent Borrowing Base
Certificate previously delivered to the date of the new Borrowing Base
Certificate, no Default or Event of Default has occurred and is continuing or,
if a Default or an Event of Default has occurred and is continuing, a statement
as to the nature thereof and the action which the Borrower proposes to take
with respect thereto. Each Borrowing Base Certificate shall become effective
upon the Agent's review and implementation thereof and shall remain in effect
until the review and implementation by the Agent of the next Borrowing Base
Certificate to be delivered hereunder;
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(h) promptly after such a determination, written notification
that the Borrowing Base is, in the belief of any officer of the Borrower, an
amount less than the Revolving Credit Commitments; and
(i) at the time of delivery of each Borrowing Base
Certificate, electronic tapes providing inventory reporting.
6.12. Reporting Requirements. The Borrower shall furnish:
(a) to the Lenders, as soon as available and in any event
within 30 days prior to the end of each Fiscal Year, the proposed projections
of the Borrower and its Subsidiaries for the succeeding Fiscal Year and all
associated data and assumptions, displaying on a monthly and quarterly basis
anticipated balance sheets, forecasted revenues, net income and cash flow, all
on a consolidating and consolidated basis, and EBITDA and sales on a
consolidated and consolidating basis;
(b) to the Lenders, as soon as available and in any event
within 30 days prior to the end of each Fiscal Year, commencing with the 1996
Fiscal Year, a forecast of annual sales, EBITDA, Capital Expenditures, working
capital requirements and projected cash flow results of the Borrower and its
Subsidiaries on a consolidated and consolidating basis for each of the next
succeeding three Fiscal Years;
(c) to the Lenders, as soon as available and in any event
prior to the end of the first month immediately after the end of each Fiscal
Year, final projections (and all associated data and assumptions) and forecasts
covering the matters identified in clauses (a) and (b) above;
(d) to the Lenders, as soon as available and in any event
within 45 days after the end of each Fiscal Quarter, revisions or updates to
the reports delivered pursuant to Section 6.12(c);
(e) to the Agent, promptly and in any event within 10
Business Days after any officer of any Loan Party or any ERISA Affiliate knows
or has reason to know that (i) any ERISA Event has occurred, a written
statement of the chief financial officer or other appropriate officer of such
Loan Party or ERISA Affiliate describing such event and the action, if any,
which such Loan Party or such ERISA Affiliate proposes to take with respect
thereto;
(f) to the Agent, promptly and in any event within 10
Business Days after any officer of any Loan Party or any ERISA Affiliate knows
or has reason to
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know that a contribution or payment under any Plan has not been made when due
(except for contributions to defined contribution plans that are de minimis in
amount and result from reasonable administrative delays and which are timely
corrected in the ordinary course) a written statement of the chief financial
officer of such Loan Party or ERISA Affiliate describing such event and the
action, if any, which such ERISA Affiliate proposes to take with respect
thereto;
(g) to the Agent, promptly and in any event within 30 days
after the filing thereof by any Loan Party, with respect to any Pension Plan,
and by any ERISA Affiliate, with respect to any Pension Plan subject to Section
412 of the Code, a copy of each annual report (Form 5500 Series, including
Schedule B thereto), and upon request by any Lender through the Agent with
respect to any other Plan including any Multiemployer Plan to the extent any
Loan Party may obtain such report through reasonable efforts;
(h) to the Agent, promptly and in any event within 10
Business Days after receipt thereof, a copy of any adverse notice,
determination letter, ruling or opinion any Loan Party or any ERISA Affiliate
receives from the DOL or IRS with respect to any Plan and, at the request of
any Lender, a copy of any favorable notice, determination letter, ruling or
opinion with respect thereto from any such Governmental Authority;
(i) to the Agent, promptly and in any event within 10
Business Days after receipt of knowledge or written notice of commencement
thereof, notice of any action, suit or proceeding before any Governmental
Authority or arbitrator affecting any Loan Party or any ERISA Affiliate with
respect to any Plan, except those which in the aggregate have no reasonable
likelihood of having a Material Adverse Effect;
(j) to the Agent, promptly and in any event within 10 days
after notice or knowledge thereof by an officer of the Borrower, notice that
any Loan Party has become liable to pay the tax on prohibited transactions
imposed by Section 4975 of the Code, and a copy of Form 5330 as soon as
available thereafter;
(k) to the Agent, promptly and in any event within 10
Business Days after an officer of the Borrower receives notice of the
commencement thereof, notice of all actions, suits and proceedings before any
domestic or foreign Governmental Authority or arbitrator, affecting any Loan
Party, except those which in the aggregate have no reasonable likelihood of
having a Material Adverse Effect;
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(l) to the Agent, promptly and in any event within 10
Business Days after an officer of the Borrower becomes aware of the existence
of (i) any Default or Event of Default, (ii) any breach or non-performance of,
or any default under, or any claim of any of the foregoing in respect of, any
Contractual Obligation of any Loan Party which is material to the business,
prospects, operations or financial condition of the Borrower and the Borrower
and its Subsidiaries taken as a whole, or (iii) any Material Adverse Change or
any event or development or other circumstance which is reasonably likely to
cause or result in a Material Adverse Change, telephonic or telegraphic notice
in reasonable detail specifying the nature of the Event of Default, Default,
development or circumstance, including, without limitation, the anticipated
effect thereof, which notice shall be promptly confirmed in writing within five
days after the notice is given;
(m) to the Lenders, promptly after the sending or filing
thereof, copies of all press releases, reports which any Loan Party sends to
its security holders generally, and copies of all reports and registration
statements which any Loan Party files with the Securities and Exchange
Commission or any national securities exchange;
(n) to the Agent, upon its request, copies of all Tax Returns
filed by each Loan Party in respect of taxes measured by income (excluding
sales, use and like taxes);
(o) to the Agent, promptly and in any event within 45 days of
any officer of the Borrower learning of any of the following, written notice of
any of the following:
(i) except for the amounts contemplated by the
Projections, knowledge that any Loan Party is or could reasonably be
expected to be liable for Environmental Liabilities and Costs of
$1,000,000 or more in any twelve month period as a result of a Release
or threatened Release;
(ii) the receipt by any Loan Party of written
notification that any real or personal property of such Loan Party is
subject to any Environmental Lien;
(iii) the receipt, after the date hereof, by any Loan
Party of any written notice from a Governmental Authority of any
violation of any Requirement of Law involving environmental, health or
safety matters, except for violations the consequence of which in the
aggregate would have no reasonable
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likelihood of subjecting such Loan Party to Environmental Liabilities
and Costs of $500,000 or more in any 12-month period; provided,
however, that from and after the date the aggregate of all
Environmental Liabilities and Costs under Section 6.12(o)(iii), (iv)
and (vi) in any 12-month period exceeds $1,000,000, the Borrower shall
furnish written notice of each subsequent violation which individually
is reasonably likely to subject any Loan Party to Environmental
Liabilities and Costs in excess of $250,000.
(iv) the commencement of any judicial or administrative
proceeding or investigation by any Governmental Authority alleging a
violation of any Requirement of Law involving environmental, health or
safety matters other than those the consequences of which in the
aggregate would have no reasonable likelihood of subjecting any Loan
Party to Environmental Liabilities and Costs of $500,000 or more in
any 12-month period; provided, however, that from and after the date
the aggregate of all Environmental Liabilities and Costs under Section
6.12(o)(iii), (iv) and (vi) in any 12-month period exceeds $1,000,000,
the Borrower shall furnish written notice of each subsequent violation
which individually is reasonably likely to subject any Loan Party to
Environmental Liabilities and Costs in excess of $250,000.
(v) any proposed acquisition of stock, assets or real
estate, or any proposed leasing of property by any Loan Party other
than those the consequences of which in the aggregate have no
reasonable likelihood of subjecting such Loan Party to Environmental
Liabilities and Costs of $250,000 or more in any 12-month period;
(vi) any proposed action taken by any Loan Party to
commence, recommence or cease manufacturing, industrial or other
operations other than those the consequences of which in the aggregate
have no reasonable likelihood of requiring the Borrower to obtain
additional environmental, health or safety Permits that collectively
require the expenditure of $500,000 or more or become subject to
additional Environmental Liabilities and Costs of $500,000 or more in
any 12-month period; provided, however, that from and after the date
the aggregate of all Environmental Liabilities and Costs under Section
6.12(o)(iii), (iv) and (vi) in any 12-month period exceeds $1,000,000,
the Borrower shall furnish written notice of each subsequent violation
which individually is reasonably likely to subject any Loan Party to
Environmental Liabilities and Costs in excess of $250,000; and
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(vii) any proposed Capital Expenditures of any Loan Party
intended or designed to implement any existing or additional Remedial
Action other than those which in the aggregate will not exceed the
amounts set forth in the Projections;
(p) upon the written request of the Agent, a report providing
an update of the status of any environmental, health or safety compliance,
hazard or liability issue identified in any notice or report required pursuant
to this Section 6.12 and any other environmental, health or safety compliance
obligation, remedial obligation or liability, other than those which in the
aggregate are not reasonably likely to subject any Loan Party to Environmental
Liabilities and Costs of $250,000 or more in any 12- month period;
(q) to the Agent, promptly upon any officer of the Borrower
becoming aware that any Loan Party has been refused insurance for which it
applied or had any policy of insurance terminated (other than at its request),
all information relating to such refusal or termination;
(r) to the Agent, within five Business Days after the end of
each month, a statement as to any change in any previously delivered schedule
of bank accounts maintained by the Borrower;
(s) to the Agent, promptly upon the termination or
non-renewal of any material lease to which the Borrower is a party (which lease
is not replaced by a comparable lease), all information relating to such
termination or non-renewal;
(t) to the Agent, promptly and in any event within 30 days of
the Borrower entering into any tax sharing agreement with any of its
Subsidiaries;
(u) to the Agent, on the first Business Day of each week, a
report covering the previous two-calendar week period, setting forth the
information required to make the calculations set forth in Section 3.2(g); and
(v) such other information respecting the business,
properties, condition, financial or otherwise, or operations of each Loan Party
as the Agent may from time to time reasonably request.
6.13. Broker's Fee. The Borrower shall indemnify the Agent and the
Lenders for, and hold the Agent and the Lenders harmless from and against, any
and all claims for brokerage commissions, fees and other compensation made
against the
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Agent and the Lenders for any broker, finder or consultant with respect to any
agreement, arrangement or understanding made by or on behalf of the Borrower in
connection with the transactions contemplated by this Agreement.
6.14. Employee Plans. (a) For each Qualified Plan hereafter adopted
or maintained by any Loan Party or any ERISA Affiliate, the Borrower shall (i)
seek, and cause, as applicable, each other Loan Party and its ERISA Affiliates
to seek, and receive determination letters from the IRS to the effect that such
Qualified Plan is qualified within the meaning of Section 401(a) of the Code,
and (ii) from and after the adoption of any such Qualified Plan, cause such
plan to be administered in all material respects in accordance with the
requirements of ERISA and Section 401(a) of the Code.
(b) With respect to each Welfare Benefit Plan hereafter
adopted or maintained by any Loan Party or any ERISA Affiliate that is subject
to the requirements of Section 4980B of the Code, the Borrower shall, and shall
cause such of its Restricted Subsidiaries and ERISA Affiliates to, comply in
all material respects with the notice and continuation coverage requirements of
Section 4980B of the Code and any final regulations thereunder.
6.15. Interest Rate Contracts. The Borrower shall, within 45 days
after the aggregate principal amount of Indebtedness for borrowed money of the
Borrower which bears interest at floating rates exceeds 60% of all Indebtedness
for borrowed money of the Borrower, enter into or have in effect such Interest
Rate Contracts on terms and with counterparties satisfactory to the Agent, to
provide protection against such interest rates on Indebtedness for borrowed
money bearing floating interest rates and for such period (not later than the
Termination Date) as the Agent may request, covering a notional amount equal to
such excess.
6.16. Fiscal Year. The Borrower shall maintain as its Fiscal Year the
twelve- month period ending on September 30 of each year.
6.17. Borrowing Base Determination. (a) The Borrower shall furnish
to the Agent any information which the Agent may reasonably request which was
either used by the Borrower in the determination and calculation of the
Borrowing Base or is otherwise relevant in respect thereof which is readily
available to the Borrower including, without limitation, correct and complete
copies of any invoices, underlying agreements, instruments or other documents
and the identity of all obligors.
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(b) The Borrower shall notify the Agent (by telephone, facsimile
transmission or mailing by overnight courier service on the date any officer of
the Borrower obtains such knowledge) in the event that the Borrower receives or
otherwise gains knowledge that (i) the Borrowing Base is less than 75% of the
Borrowing Base reflected in the most recent Borrowing Base Certificate
delivered pursuant to Section 6.11(g) or (ii) the Revolving Credit Loans
borrowed under Section 2.1 outstanding at such time exceed the Available Credit
as a result of any decrease in the Borrowing Base, and the amount of such
excess.
6.18. The Blocked Account. (a) The Borrower shall establish and
maintain, pursuant to the Blocked Account Letter, an account with Citibank,
such account to be in the name and under the sole dominion and control of the
Agent (the "Blocked Account"). All amounts in the Blocked Account shall be
applied to the Obligations by the Agent as specified in Section 2.6(d).
(b) Except for the funds held in the bank accounts otherwise
permitted by Section 7.22, the Borrower shall cause all cash, Cash Equivalents,
checks, notes, drafts or similar items of payments received by it which
constitute (i) payments from account debtors for Accounts not sold to, or
reacquired from, Funding pursuant to the Receivables Securitization, (ii) all
intercompany receivables and payments made to the Borrower pursuant to the
Receivables Purchase Agreement or otherwise, and (iii) proceeds of all other
Collateral, to be deposited promptly upon the receipt thereof in the Blocked
Account.
6.19. Environmental. Upon receipt of any notification or otherwise
obtaining knowledge of any Release or other event that could result in Borrower
incurring Environmental Liabilities and Costs, the Borrower shall, at its cost,
conduct or pay for consultants to conduct, such tests or assessments of
environmental condition at such operations or properties (if any), including,
without limitation, the investigation and testing of subsurface conditions, and
shall take such remedial, investigational or other action as any Governmental
Authority requires (except where contested in good faith, by proper proceedings
and where the consequence of such contest would not have a Material Adverse
Effect) or as is appropriate and consistent with good business practice. If,
in the reasonable judgment of the Agent, such Environmental Liabilities and
Costs would have a Material Adverse Effect, and if the consultant selected by
the Borrower is not reasonably acceptable to the Agent, the Agent shall (i)
select a consultant of its own choosing to monitor the work of the Borrower's
consultant and the Borrower shall pay for all reasonable costs incurred by the
Agent's consultant in connection with performing such monitoring activities,
and (ii) promptly notify the Borrower of such determination and appointment.
Nothing contained in this Agreement
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shall be construed as limiting or impeding the Borrower's rights and
obligations to take any and all actions necessary and desirable to address any
Release or Environmental Liabilities and Costs or to comply with all
Environmental Laws.
6.20. Utilization of Intellectual Property. Upon the occurrence and
during the continuance of an Event of Default, the Borrower shall utilize its
intellectual property (including, without limitation, trademarks and service
marks) in such a manner as the Agent may deem necessary or advisable in order
to take possession of, hold, preserve, process, assemble, prepare for sale or
lease, market for sale or lease, sell or lease, or otherwise dispose of, any
Collateral.
ARTICLE VII
NEGATIVE COVENANTS
As long as any of the Obligations or Revolving Credit
Commitments remain outstanding, without the written consent of the Majority
Lenders:
7.1. Liens, Etc. The Borrower shall not, and shall not permit (x)
any of its Restricted Subsidiaries, or (y) in respect of Sections 7.1(e) and
(k) any of its Subsidiaries, to, create or suffer to exist any Lien upon or
with respect to any of its properties, whether now owned or hereafter acquired,
or assign any right to receive income, except for the following, none of which
Liens, except in respect of those permitted in clause (a), shall be Liens on
the Collateral (collectively, "Permitted Liens"):
(a) Liens created pursuant to the Loan Documents;
(b) Purchase money Liens upon or in any property of the
Borrower or such Restricted Subsidiary, as the case may be, and used by the
Borrower or such Restricted Subsidiary in the ordinary course of business,
which Liens secure the obligation to pay the purchase price of such property,
related payment and performance obligations and the obligation to pay the cost
of services in respect of such property or to secure Indebtedness and related
payment and performance obligations incurred solely for the purpose of
financing the acquisition of such property or such services, and Liens existing
on such property at the time of its acquisition; provided, however, that the
aggregate principal amount of outstanding Indebtedness secured by the Liens
referred to in this clause (b) shall not at any time exceed the sum of (i)
$30,000,000 plus (ii) the amount of Indebtedness outstanding under Section
7.2(p);
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(c) Any Lien securing the renewal, extension or refunding of
any Indebtedness or other Obligation secured by any Lien permitted by
subsections (b), (i), (j), or (l) of this Section 7.1 without any increase in
the amount secured thereby (except for increases in respect of transaction
expenses related thereto) or in the assets subject to such Lien;
(d) Liens arising by operation of law in favor of
materialmen, mechanics, warehousemen, carriers, handlers, lessors, bankers
(solely in respect to rights of setoff arising by operation of law) or other
similar Persons incurred by the Borrower or any of its Restricted Subsidiaries
in the ordinary course of business (including the incurrence of Capital
Expenditures contemplated by the Projections) which secure obligations to such
Person; provided, however, that (i) neither the Borrower nor any of its
Restricted Subsidiaries is in default with respect to such payment obligation
to such Person, or is in good faith and by appropriate proceedings diligently
contesting such obligation and adequate provision is made for the payment
thereof and (ii) the likely liability in respect of all such Liens in the
aggregate would have no Material Adverse Effect;
(e) Liens (excluding Environmental Liens) securing taxes,
assessments or governmental charges or levies; provided, however, that (i)
neither the Borrower nor any of its Subsidiaries is in default in respect of
any payment obligation with respect thereto unless the Borrower or such
Subsidiary is in good faith and by appropriate proceedings diligently
contesting such obligation and adequate provision is made for the payment
thereof and (ii) the likely liability in respect of all such Liens in the
aggregate would have no Material Adverse Effect;
(f) Liens incurred or pledges and deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance, old-age pensions and other social security benefits;
(g) Liens securing trustee's fees and the performance of
bids, tenders, leases, contracts (other than for the repayment of borrowed
money), statutory obligations, surety and appeal bonds and other obligations of
like nature, incurred as an incident to and in the ordinary course of business,
and judgment, attachment or award liens; provided, however, that (i) with
respect to judgment, attachment or award liens, such Liens (A) are against
property of the Borrower or a Restricted Subsidiary other than the Collateral,
and (B) such Liens are terminated or otherwise extinguished within 60 days
after the creation thereof, and (ii) all such Liens (A) in the aggregate have
no Material Adverse Effect and (B) do not secure directly or indirectly
judgments, attachments or awards in excess of $1,000,000;
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(h) Zoning restrictions, easements, rights of way, survey
exceptions, encroachments, covenants, licenses, reservations, leasehold
interests, restrictions on the use of real property or minor irregularities
incident thereto which do not in the aggregate materially detract from the
value or use of the property or assets of the Borrower or any of its Restricted
Subsidiaries or impair, in any material manner, the use of such property for
the purposes for which such property is held by the Borrower or any of its
Restricted Subsidiaries;
(i) Liens existing on the date of this Agreement and
disclosed on Schedule 7.1 and any related payment and performance obligations
in respect of the Indebtedness secured thereby;
(j) Liens to secure Capitalized Lease Obligations and Other
Leases and any related payment and performance obligations if the incurrence of
such Indebtedness is permitted by Section 7.2(g); provided, however, that: (i)
any such Lien is created solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund, the cost (including,
without limitation, the cost of construction and the reasonable fees and
expenses relating to such Indebtedness) of the property subject thereto, (ii)
the principal amount of the Indebtedness secured by such Lien does not exceed
100% of such cost, and (iii) such Lien does not extend to or cover any other
property other than such item of property and any improvements on such item;
(k) Environmental Liens, that (i) are being contested in good
faith by appropriate proceedings, unless such contest would reasonably be
likely to have a Material Adverse Effect, (ii) do not materially interfere with
the business operations of such Loan Party as presently conducted and, (iii)
the consequences of which in the aggregate would not subject any Loan Party to
Environmental Liabilities and Costs in excess of $1,000,000 in any 12-month
period (after the application of insurance and indemnification proceeds
receivable with respect to which the insurer or indemnifying party, as the case
may be, does not contest or dispute);
(l) The interests of lessors or lessees of property leased
pursuant to leases permitted hereunder;
(m) Liens in favor of the Agent and/or any of its Affiliates;
(n) Liens on Accounts and other assets and properties of
Funding or the Borrower, or both, securing Indebtedness incurred, if any, or
Accounts sold in
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connection with the Receivables Securitization pursuant to the Securitization
Documents; and
(o) Additional Liens on the assets of the Borrower or any of
its Restricted Subsidiaries (other than the Collateral) securing up to
$5,000,000 of Indebtedness.
7.2. Indebtedness. The Borrower shall not, and shall
not permit (x) any of its Restricted Subsidiaries, or (y) in respect of Section
7.2(k), any of its Unrestricted Subsidiaries, to, create or suffer to exist any
Indebtedness except:
(a) the Obligations;
(b) Indebtedness with respect to Contingent Obligations
permitted by Section 7.12;
(c) current liabilities in respect of taxes, assessments and
governmental charges or levies incurred, or liabilities for labor, materials,
inventory, services, supplies and rentals incurred, or for goods or services
purchased, or amounts properly payable to Mannesmann under the Mannesmann
Agreement, in the ordinary course of business consistent with industry practice
in respect of arm's length transactions and the past practice of the Borrower
or such Restricted Subsidiary, as the case may be;
(d) Indebtedness of the Borrower outstanding on the Closing
Date and reflected on Schedule 4.21;
(e) Indebtedness arising under any surety, payment or
performance bond reimbursement obligation or similar obligations relating to
the performance of bids, tenders, leases, contracts (other than for the
repayment of borrowed money), statutory obligations, surety and appeal bonds,
entered into in the ordinary course of the Borrower's or any of its Restricted
Subsidiaries' business and consistent with their respective past practices;
(f) Indebtedness of the type and in the amount contemplated
by Section 7.1(b)(i), whether secured by Liens described therein or not;
(g) Indebtedness of the Borrower or any of its Restricted
Subsidiaries under Capitalized Lease Obligations and Other Leases; provided,
however, that the aggregate amount of Capitalized Lease Obligations and Other
Leases incurred under this clause (g) by the Borrower and its Restricted
Subsidiaries and the aggregate
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amount of Indebtedness incurred pursuant to clause (f) above by the Borrower
and its Restricted Subsidiaries shall not exceed $30,000,000 at any one time
outstanding;
(h) Obligations pursuant to (i) Interest Rate Contracts, and
(ii) Commodity Contracts permitted under Section 7.18, to the extent such
obligations constitute Indebtedness;
(i) Indebtedness in an aggregate outstanding principal amount
of (i) $135,000,000 incurred under the 1993 Senior Notes Indenture and (ii)
$190,000,000 incurred under the 1994 Senior Notes Indenture;
(j) Indebtedness constituting a renewal, extension,
refinancing or refunding of Indebtedness described in Section 7.2(d), (f), (g),
(i) (l), (m) and (p), (i) in a principal amount which does not exceed the then
outstanding principal amount, together with all prepayment fees, penalties and
expenses in respect of the Indebtedness being renewed, extended, refinanced or
refunded, and (ii) on terms and conditions as in each instance are as or more
favorable to the Borrower and no less favorable to the Lenders as the
Indebtedness being renewed, extended, refinanced or refunded;
(k) Indebtedness of Unrestricted Subsidiaries of the Borrower
in an aggregate principal amount outstanding at any time not in excess of
$30,000,000;
(l) Indebtedness consisting of the Preferred Stock;
(m) Indebtedness of the Borrower evidenced by the Exchange
Debentures in an aggregate outstanding principal amount equal to the
liquidation value of the Preferred Stock at the time of the exchange of
Exchange Debentures for Preferred Stock, provided that no Default or Event of
Default (i) arising from the breach by the Borrower of any of the covenants set
forth in Article V or (ii) of the type described in Section 8.1(a) is
continuing or would result from the incurrence of such Indebtedness;
(n) Indebtedness of Funding or the Borrower, or both, if any,
incurred in connection with the Receivables Securitization pursuant to the
Securitization Documents;
(o) Indebtedness constituting trade payables arising in the
ordinary course of business;
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(p) Indebtedness in an aggregate principal amount at any time
outstanding not in excess of an amount which, after giving pro forma effect to
the incurrence thereof and the application of the proceeds thereof as of the
last day of the immediately preceding month, in the case of clause (A), and as
of the last day of the immediately preceding Fiscal Quarter, in the case of
clause (B), would not cause (A) the ratio of Total Liabilities to Tangible Net
Worth for such month to exceed 3.0 to 1.0, or (B) the ratio of EBITDA to Cash
Interest Expense for such Fiscal Quarter to exceed 3.5 to 1.0.; provided,
however, that the documentation pursuant to which any such Indebtedness is
incurred shall not contain any financial maintenance tests (or related
representations, warranties, covenants or defaults) of any type, other than an
Indebtedness incurrence test;
(q) Additional Indebtedness in an aggregate principal amount
at any time outstanding which, when added to Indebtedness outstanding pursuant
to Section 7.2(r), does not exceed $10,000,000 in the aggregate; provided,
however, that the documentation pursuant to which any such Indebtedness is
incurred shall not contain any financial maintenance tests (or related
representations, warranties, covenants or defaults) of any type, other than an
Indebtedness incurrence test; and
(r) Additional Indebtedness in an aggregate principal amount
at any time outstanding not in excess of $3,000,000.
7.3. Lease Obligations. (a) Except for existing leases listed on
Schedules 4.20(b) and 7.3, the Borrower shall not, and shall not permit its
Restricted Subsidiaries to, create or suffer to exist any obligations as lessee
for the rental or hire of real or personal property of any kind under other
leases or agreements to lease (other than Capitalized Leases and Other Leases)
having an original term of one year or more which would cause the aggregate
direct or contingent liabilities of the Borrower and its Restricted
Subsidiaries in respect of all such obligations to exceed $5,000,000 payable in
any period of 12 consecutive months.
(b) Except as permitted by Sections 7.3(a) and 7.2(g),
neither the Borrower nor any of its Restricted Subsidiaries shall become or
remain liable as lessee or guarantor or other surety with respect to any lease,
whether an operating lease or a Capitalized Lease, of any property material to
the operations of their respective businesses (whether real or personal or
mixed), whether now owned or hereafter acquired, which (i) the Borrower or such
Restricted Subsidiary has sold or transferred or is to sell or transfer to any
other Person, or (ii) the Borrower or such Restricted Subsidiary intends to use
for substantially the same purposes as any other
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property which has been or is to be sold or transferred by that entity to any
other Person in connection with such lease.
7.4. Restricted Payments. The Borrower shall not, and shall not
permit its Restricted Subsidiaries to, (a) declare or make any dividend payment
or other distribution of assets, properties, cash, rights, obligations or
securities on account or in respect of any of its Stock or Stock Equivalents
except (so long as a Default or an Event of Default under any other provision
hereof shall not be continuing or result therefrom) (i) dividends paid to the
Borrower or any wholly-owned Restricted Subsidiary of the Borrower by any
direct or indirect wholly-owned Subsidiary of the Borrower, and (ii) dividends
paid by the Borrower (A) solely in Stock or Stock Equivalents of the Borrower,
(B) in cash in an aggregate amount not in excess of $2,000,000 in respect of
common stock of the Borrower, and (C) from and after March 16, 1995, in cash in
respect of the Preferred Stock in an aggregate amount in any Fiscal Year of 14%
of the liquidation preference of the then outstanding shares of Preferred
Stock, or (b) purchase, redeem, prepay, defease or otherwise acquire for value
or make any payment (other than required payments) on account or in respect of
any principal amount of Indebtedness for borrowed money, now or hereafter
outstanding, except (i) the Loans, (ii) required scheduled payments on
permitted Indebtedness, (iii) Indebtedness pursuant to Sections 7.2(j), 7.2(m)
and 7.2(n), (iv) repayment of Indebtedness referred to in clause (a) of Section
4.17, and (v) redemptions of the Exchange Debentures in accordance with the
terms thereof; provided, however, that commencing in the Borrower's 1996 fiscal
year, in addition to the foregoing, the Borrower may (A) pay cash dividends in
respect of its Stock, and (B) purchase, redeem, prepay, defease or otherwise
acquire for value or make payments on account of or in respect of such
Indebtedness, in an aggregate amount not in excess of the lesser of (1) the
difference between (x) the Additional Discretionary Amount (to the extent not
previously utilized pursuant to Section 5.3), and (y) the sum of (i) all cash
Investments in Subsidiaries made by the Borrower from September 30, 1994 to the
date of such determination (other than Investments made in Funding pursuant to
the Securitization Documents and permitted under Section 7.6), plus (ii) all
cash dividends paid and Indebtedness purchased, redeemed, prepaid, defeased or
otherwise acquired for value or paid by the Borrower from September 30, 1994 to
the date of such determination (other than purchases, redemptions, prepayments,
defeasances, acquisitions for value or payments that are required payments or
are specifically permitted by Sections 7.4(b)(i) through (v)), and (2) an
amount which, when added to all cash dividends paid and Indebtedness purchased,
redeemed, prepaid, defeased or otherwise acquired for value or paid by the
Borrower since September 30, 1994 (other than purchases, redemptions,
prepayments, defeasances, acquisitions for value or payments that are required
payments or are
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specifically permitted by Sections 7.4(b)(i) through (v)), does not exceed
15.0% of the Borrower's cumulative Net Income, calculated as of the end of the
immediately preceding Fiscal Year.
7.5. Mergers, Stock Issuances, Sale of Assets, Etc. (a) The Borrower
shall not, and shall not permit any of its Restricted Subsidiaries to, (i)
merge or consolidate with any Person, (ii) acquire all or substantially all of
the Stock or Stock Equivalents of any Person except as permitted under Sections
7.6 or 7.16, or (iii) except for Capital Expenditures permitted hereunder,
acquire all or substantially all of the assets of any Person or all or
substantially all of the assets constituting the business of a division, branch
or other unit operation of any Person; provided, however, that so long as no
Event of Default shall be continuing under any other provision hereof or result
therefrom, any Restricted Subsidiary may merge or consolidate with or into any
other Person (including the Borrower) so long as in any merger or consolidation
involving a Restricted Subsidiary and the Borrower, the Borrower shall be the
surviving corporation; and provided further, that the Borrower or a Restricted
Subsidiary may so acquire such Stock, Stock Equivalents and assets if (A) both
before and after such acquisition, no Event of Default shall be continuing
under any other provision hereof, and (B) in respect of acquisitions not
constituting Capital Expenditures, the aggregate purchase price paid by the
Borrower and/or its Restricted Subsidiaries for all acquisitions contemplated
in clauses (ii) and (iii) does not exceed $8,000,000 in cash or property other
than common stock.
(b) The Borrower shall not, and shall not permit any of its
Restricted Subsidiaries to, sell, convey, transfer, lease or otherwise dispose
of any of its assets (including, without limitation, the Stock of a Subsidiary)
or any interest therein to any Person, or permit or suffer any other Person to
acquire any interest in any of the assets of the Borrower or such Restricted
Subsidiary, except (i) the sale or disposition of inventory in the ordinary
course of business or assets which have become obsolete or are replaced in the
ordinary course of business, (ii) the lease or sublease of property, to the
extent not otherwise prohibited by this Agreement, (iii) as long as no Default
or Event of Default shall have occurred and be continuing or result therefrom,
any such sale of any assets (other than assets constituting Collateral) for the
Fair Market Value thereof; provided, however, that with respect to any such
sale pursuant to this clause (iii), the aggregate Fair Market Value of all
assets sold pursuant to this clause (iii) during any Fiscal Year (other than in
respect of the sale of the Borrower's "cut up line") shall not exceed
$10,000,000, (iv) Permitted Liens, or (v) as permitted in clause (c) below.
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(c) The Borrower shall not, and shall not permit any of its
Restricted Subsidiaries to, sell or otherwise dispose of, or factor at maturity
or collection, any Accounts (it being understood and agreed that performance by
the Borrower under the Mannesmann Agreement shall not constitute such a sale,
disposition or factor arrangement); provided, however, that the Borrower and
Funding may sell or dispose of Accounts of the Borrower and accounts receivable
of Funding in connection with the Receivables Securitization pursuant to the
Securitization Documents.
7.6. Investments in Other Persons. The Borrower shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly,
make or maintain any loan or advance to any Person or own, purchase or
otherwise acquire any Stock, Stock Equivalents, other equity interest,
obligations or other securities of, or otherwise invest in, any Person (any
such transaction being an "Investment"), except:
(a) Investments in accounts, contract rights and chattel
paper (each as defined in the Uniform Commercial Code), notes receivable and
similar items arising or acquired in the ordinary course of business consistent
with the past practice of the Borrower and its Restricted Subsidiaries and the
proceeds thereof;
(b) loans or advances to employees of the Borrower, which
loans and advances shall not in the aggregate exceed $5,000,000 outstanding at
any time;
(c) Investments in (i) treasury stock of the Borrower owned
by the Borrower on the date hereof and (ii) Cash Equivalents;
(d) additional Investments by the Borrower and its Restricted
Subsidiaries (including the capitalization of Subsidiaries and Investments in
joint ventures (other than, in the case of the Borrower, Investments
constituting general partnership interests)) which Investments are
complementary to the Borrower's business and consistent with the provisions of
Section 7.8; provided, however, that the aggregate amount of such Investments
made after September 30, 1994, together with all Contingent Obligations of the
Borrower and its Restricted Subsidiaries with respect to the Indebtedness of
such Subsidiaries and joint ventures incurred after September 30, 1994 shall
not exceed the difference between (i) the Additional Discretionary Amount (to
the extent not previously utilized pursuant to Section 5.3), and (ii) the sum
of (A) all cash Investments in Subsidiaries made by the Borrower from September
30, 1994 to the date of such determination (other than Investments made in
Funding pursuant to the Securitization Documents and permitted under the
following proviso), plus (B) all cash dividends paid and Indebtedness
purchased, redeemed, prepaid, defeased or otherwise acquired for value or paid
by the Borrower
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from September 30, 1994 to the date of such determination (other than
purchases, redemptions, prepayments, defeasances, acquisitions for value or
payments that are required payments or are specifically permitted by Sections
7.4(b)(i) through (v)); and provided, further, that after giving effect to any
such Investment, no Default or Event of Default under any other provision
hereof has occurred and is continuing or would result therefrom;
(e) Investments consisting of the ownership by the Borrower
of shares of the capital stock of The West Union Canal Company; provided,
however, that the purchase price for all such stock purchased after the date
hereof shall not exceed $500,000;
(f) Investments in and by the Borrower and Funding in an
amount not in excess of the amount necessary to consummate the transactions
contemplated by the Securitization Documents;
(g) Investments by the Borrower in a Subsidiary in an
aggregate amount not in excess of $2,000,000 in respect of the Borrower's
Corex(TM) project; provided, however, that (i) all such Investments made during
the one-year period following the Closing Date shall be deemed Capital
Expenditures for purposes of the table set forth above the proviso in Section
5.3, and (ii) all such Investments made during the one-year period following
the Closing Date shall reduce the Additional Discretionary Amount on a
dollar-for-dollar basis; and
(h) purchases, acquisitions and exchanges of shares of the
Borrower's outstanding Preferred Stock solely in exchange for the Exchange
Debentures (to the extent permitted by Section 7.23 hereof) or other shares of
Preferred Stock.
7.7. Maintenance of Ownership of Subsidiaries. The Borrower shall
not permit any Subsidiary to issue, sell or otherwise dispose of any shares of
its Stock or any Stock Equivalent or the Stock or any Stock Equivalent of any
other Subsidiary, except to the Borrower or a Subsidiary of the Borrower.
7.8. Change in Nature of Business. The Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, change the
nature or conduct of its business from the manufacturing and sale of steel and
businesses or activities related or incident thereto (including the Receivables
Securitization).
7.9. Plans. The Borrower shall not, and shall not permit any of its
Restricted Subsidiaries or ERISA Affiliates to, (a) adopt or become obligated
to contribute to
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any Title IV Plan or any Multiemployer Plan or any other Plan subject to
Section 412 of the Code (except for any such Plan listed on Schedule 4.9 on the
Closing Date), (b) establish or become obligated with respect to any new
Welfare Benefit Plan, or modify any existing Welfare Benefit Plan, which would
result in an increase of the present value of future liabilities for
post-retirement life insurance and medical benefits under all such plans to
increase by more than $1,000,000, or (c) establish or become obligated to
contribute to any new unfunded Pension Plan, or modify any existing unfunded
Pension Plan, which would result in an increase in the present value of future
liabilities under all such plans of more than $1,000,000.
7.10. Modification of Material Agreements. The Borrower shall not,
and shall not permit any of its Restricted Subsidiaries to, alter, amend,
modify, rescind, terminate or waive any of its material rights under, or fail
to comply in all material respects with all of its material Contractual
Obligations as in effect on the date hereof; provided, however, that, with
respect to any Contractual Obligations other than the Loan Documents, the 1993
Senior Notes Indenture, the Senior Notes, the Exchange Debentures Indenture,
the Exchange Debentures, the 1994 Senior Notes Indenture, and the 1994 Senior
Notes, the Borrower or its Restricted Subsidiaries may do so if the
consequences thereof would have no Material Adverse Effect; and provided,
further, that in the event of any breach or event of default thereof by a
Person other than the Borrower or any of its Restricted Subsidiaries, as the
case may be, the Borrower shall promptly notify the Agent of any such breach or
event of default and take all such action as may be reasonably necessary in
order to cause (or cause such Restricted Subsidiary to cause) such breach or
event of default to be cured, unless such breach or event of default would have
no Material Adverse Effect.
7.11. Accounting and Tax Reporting Changes. The Borrower shall not,
and shall not permit any of its Restricted Subsidiaries to, make any change in
accounting treatment and reporting practices or tax reporting treatment, except
(i) as required by GAAP or law and (ii) tax reporting treatment permitted by
law, and disclosed to the Lenders and the Agent.
7.12. Contingent Obligations. The Borrower shall not, and shall not
permit any of its Restricted Subsidiaries to, incur, assume, endorse, be or
become liable for, or guarantee, directly or indirectly, or permit or suffer to
exist, any Contingent Obligation of the Borrower or such Restricted Subsidiary,
except for:
(a) Contingent Obligations evidenced by a Loan Document;
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(b) Contingent Obligations with respect to Indebtedness, if
any, or obligations of the Borrower or Funding under the Securitization
Documents; and
(c) Contingent Obligations in addition to those permitted in
subsection (a) and (b) with respect to any Indebtedness, including, without
limitation, Indebtedness of a Subsidiary of the Borrower; provided, however,
that the aggregate liability of the Borrower and all Restricted Subsidiaries
pursuant to this subsection (c) shall not exceed (i) $5,000,000 at any time
outstanding with respect to Indebtedness of an Affiliate of the Borrower and
(ii) $5,000,000 at any time outstanding with respect to Indebtedness of any
other Person, it being understood and agreed that all Contingent Obligations
contemplated in clause (i) above shall constitute a part of and not be in
addition to the amount permitted under Section 7.6(d), and all Contingent
Obligations contemplated in clause (ii) above shall constitute a part of and
not in addition to the amount permitted under Section 7.2(b).
7.13. Transactions with Affiliates. The Borrower shall not, and
shall not permit any of its Restricted Subsidiaries to, except as otherwise
expressly permitted herein, do any of the following: (a) make any Investment
in an Affiliate of the Borrower except as permitted in Section 7.6(b), (c),
(d), (e) and (f) and Section 7.12, (b) transfer, sell, lease, assign or
otherwise dispose of any asset to any Affiliate of the Borrower or any
Subsidiary of the Borrower, (c) purchase or acquire assets from any Affiliate
of the Borrower or any Subsidiary of the Borrower, (d) prepay any Indebtedness
to any Affiliate of the Borrower or any Subsidiary of the Borrower, or (e)
enter into any other transaction directly or indirectly with or for the benefit
of any Affiliate of the Borrower or any of its Subsidiaries (including, without
limitation, guaranties and assumptions of obligations of any such Affiliate)
except for (i) in the case of clauses (b), (c) or (e), transfers, sales,
leases, assignments, dispositions, purchases or acquisitions of assets and
transactions in the ordinary course of business on a basis no less favorable to
the Borrower or any Restricted Subsidiary as would be obtained in a comparable
arm's length transaction with a Person not an Affiliate involving assets that
are not material to the business and operations of the Borrower or any
Restricted Subsidiary, it being understood and agreed that any transfer or
assignment of any such asset to an Unrestricted Subsidiary by the Borrower or
any Restricted Subsidiary shall constitute an Investment pursuant to Section
7.6(d), (ii) salaries, fees and other compensation to officers or directors of
the Borrower or any Restricted Subsidiary of the Borrower and (iii)
transactions contemplated under the Securitization Documents.
7.14. Adverse Transactions. The borrower shall not, and shall not
permit any of its Subsidiaries to, enter into or be a party to any transaction
the performance of which in the future would be inconsistent in any material
respect with or reason-
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ably likely to result in a breach of any covenant contained herein or give rise
to a Default or Event of Default.
7.15. Cancellation of Indebtedness Owed to It. The Borrower shall
not, and shall not permit any of its Restricted Subsidiaries to, cancel any
claim or Indebtedness owed to it except for legitimate business purposes in the
reasonable judgment of the Borrower or such Restricted Subsidiary and in the
ordinary course of business.
7.16. Subsidiaries. (a) Upon the incorporation or other
organization of any Subsidiary, the Borrower shall, and shall cause each of its
Subsidiaries to notify the Agent promptly after such Person becomes a
Subsidiary of the Borrower or such Subsidiary and whether such Subsidiary is to
be designated a Restricted Subsidiary.
(b) Prior to the Borrower or any of its Restricted
Subsidiaries making any Investment in a Subsidiary (other than (i) in respect
of Funding or in respect of the Investments described in Section 7.6(g), or
(ii) with the prior written consent of the Agent), which together with all
other Investments of the Borrower and its Restricted Subsidiaries in
Subsidiaries, would equal or exceed $1,000,000 in the aggregate, the Borrower
shall either (i) pledge all of the Stock of such Subsidiary, then or thereafter
issued, to the Agent for the benefit of the Lenders pursuant to such pledge
agreement or other arrangement as shall be reasonably satisfactory to the Agent
and which results in the creation and perfection of a first priority security
interest in such Stock in favor of the Agent for the benefit of the Lenders, or
(ii) cause each such Subsidiary, and any Subsidiary formed or acquired by such
Subsidiary to execute and deliver a guaranty agreement, substantially in the
form of Exhibit N, and, in either case, to deliver proof of corporate action,
incumbency of officers, opinions of counsel and other documents as the Agent
may reasonably request. The obligations of any Subsidiary under any such
guaranty agreement shall terminate on and as of the date all of the issued and
outstanding stock of such Subsidiary is pledged to the Agent for the benefit of
the Lenders pursuant to such pledge agreement or other arrangement, which is
mutually satisfactory to the Agent and the pledgor of such Stock and which
results in the creation and perfection of a first priority security interest in
such Stock in favor of the Agent for the benefit of the Lenders. Upon receipt
of a first priority security interest in the Stock of any such Subsidiary, the
Agent shall take such action as may be required to terminate the outstanding
guaranty of the Obligations by such Subsidiary. The agreement contained in the
immediately preceding sentence shall be for the benefit of any Subsidiary the
Stock of which is pledged pursuant hereto and such Subsidiary shall be entitled
to rely on such agreement and to enforce such agreement.
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7.17. Capital Structure. The Borrower shall not, and shall not
permit any of its Restricted Subsidiaries to, make any change in its capital
structure (including, without limitation, in the terms of its outstanding
Stock), amend its articles of incorporation or by-laws or make any change in
any of its business objectives, purposes or operations other than changes or
amendments which in the aggregate would have no Material Adverse Effect (it
being understood and agreed that any amendment of the articles of incorporation
of the Borrower to change the voting terms or the dividend or liquidation
rights of the Borrower's Stock (provided no term requiring mandatory
distributions is included) or any change in the status of ownership of the
Borrower's Class B Common Stock (provided such change does not constitute a
Change in Control) shall not constitute such a change or amendment).
7.18. No Speculative Transactions. The Borrower shall not, and shall
not permit any of its Restricted Subsidiaries to, engage in any speculative
transaction or in any transaction involving commodity options or swaps or
futures contracts except in either case for the sole purpose of hedging in the
normal course of business and consistent with industry practices.
7.19. Margin Regulations. The Borrower shall not use the proceeds of
any Revolving Credit Loans to purchase or carry any margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System).
7.20. Environmental. The Borrower shall not, shall not permit any
Subsidiary to, and shall not knowingly permit any lessee or any other Person to,
dispose of any Contaminant by placing it in or on the ground or waters of any
property owned or leased by the Borrower or any of its Subsidiaries, except for
such dispositions the consequences of which in the aggregate are not reasonably
likely to have a Material Adverse Effect.
7.21. Management and Consulting Fees. From and after the date
hereof, the Borrower shall not, directly or indirectly, enter into any
agreement to pay any management, consulting or similar fee to, (a) any
Affiliate of the Borrower (other than directors' fees and employment
compensation in the ordinary course of business consistent with past practice)
except for renewals and extensions of existing agreements, or (b) any other
Person except as, in good faith, the Borrower deems necessary for legitimate
business purposes.
7.22. Bank Accounts. The Borrower shall maintain no bank account
other than those provided for in Section 6.18, the Cash Collateral Account and
those listed on Schedule 4.24 for the purposes listed thereon; provided,
however, that no such
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bank account listed on Schedule 4.24 shall contain funds more than necessary
for such stated purposes; and provided, further, that the Borrower may open one
or more bank accounts to facilitate the performance of its servicing
obligations in connection with the Receivables Securitization. Notwithstanding
the foregoing, provided the Agent receives prior written notification thereof,
the Borrower shall be entitled to open new accounts (a) in replacement of those
identified in Schedule 4.24 having the same purposes, and (b) for specified
purposes including employee payroll, trustee and escrow accounts.
ARTICLE VIII
EVENTS OF DEFAULT
8.1. Events of Default. Each of the following events shall be
an Event of Default:
(a) The Borrower shall fail to pay any principal (including,
without limitation, mandatory prepayments of principal) of, or interest on, any
Loan when the same becomes due and payable; or
(b) (i) Any representation or warranty made or deemed made by
any Restricted Party in any Loan Document or by any Restricted Party (or any of
its officers) pursuant to any Loan Document shall prove to have been incorrect
in any material respect when made or deemed made, or (ii) any representation or
warranty made or deemed made by any Unrestricted Subsidiary in any Loan
Document or by any Unrestricted Subsidiary (or any of its officers) pursuant to
any Loan Document shall prove to have been incorrect in any material respect
when made or deemed made and the circumstances of which would have a Material
Adverse Effect; or
(c) Any Loan Party shall (i) fail to perform or observe any
term, covenant or agreement contained in Articles V, VI or VII hereof or in any
Collateral Document, or (ii) fail to (A) pay any fee, any other amount due
hereunder or under the other Loan Documents or other of the Obligations when
the same becomes due and payable or (B) comply with any other term, covenant or
agreement contained in this Agreement or in any other Loan Document, if (1) any
such failure under this clause (ii) shall remain unremedied for five Business
Days after the earlier of the date on which (x) an officer of the Borrower
becomes aware of such failure or (y) written notice thereof shall have been
given to the Borrower by the Agent or any Lender, and
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(2) in the case of any failure by an Unrestricted Subsidiary pursuant to clause
(ii)(B), such failure would have a Material Adverse Effect; or
(d) Any Restricted Party shall fail to pay any principal of
or premium or interest on any Indebtedness of such Restricted Party (excluding
Indebtedness evidenced by the Amended and Restated Revolving Credit Notes)
having an aggregate outstanding principal amount of $3,000,000 or more, when
the same becomes due and payable after giving effect to any applicable grace
periods (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) or any other event shall occur or condition shall exist
under any agreement or instrument relating to any Indebtedness of any
Restricted Party having an aggregate outstanding principal amount of $3,000,000
or more, if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Indebtedness; or any such
Indebtedness shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment or in connection with
a refinancing or refunding permitted under Section 7.2(j)), prior to the stated
maturity thereof; or
(e) Any Loan Party shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors, or
any proceeding shall be instituted by or against any Loan Party seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee or other similar official for
it or for any substantial part of its property and, in the case of any such
proceedings instituted against any Loan Party (but not instituted by it),
either such proceedings shall remain undismissed or unstayed for a period of 60
days or any of the foregoing actions sought in such proceedings shall occur; or
any Loan Party shall take any corporate action to authorize any of the actions
set forth above in this subsection (e); provided, however, that none of the
foregoing events listed in this subsection (e) if in respect of an Unrestricted
Subsidiary, shall constitute an Event of Default in and of itself unless the
same has a Material Adverse Effect; or
(f) One or more judgments or orders for the payment of money
exceeding in the aggregate $1,000,000 shall be rendered against any Restricted
Party and either (i) enforcement proceedings shall have been commenced by any
creditor upon any such judgment or order, or (ii) there shall be any period of
30 consecutive
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days during which a stay of enforcement of any such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; or
(g) (i) With respect to any Plan, a prohibited transaction
within the meaning of Section 4975 of the Code or Section 406 of ERISA occurs
which, in the reasonable determination of the Majority Lenders, has a
substantial probability of resulting in direct or indirect liability to any
Loan Party, (ii) with respect to any Title IV Plan, the filing of a notice to
voluntarily terminate any such plan in a distress termination, (iii) with
respect to any Multiemployer Plan any Loan Party or any ERISA Affiliate shall
incur withdrawal liability, (iv) with respect to any Qualified Plan, any Loan
Party or any ERISA Affiliate shall incur an accumulated funding deficiency or
request a funding waiver from the IRS, or (v) with respect to any Title IV Plan
or Multiemployer Plan which has an ERISA Event which is not described in
clauses (ii) - (iv) hereof, in the reasonable determination of the Majority
Lenders there is a substantial probability of the termination of any such plan
by the PBGC under Section 4042 of ERISA; provided, however, that the events
listed in clauses (i) - (v) hereof shall constitute Events of Default only if
the amount of the liability, deficiency or waiver request of the Loan Party or
ERISA Affiliate, assessed or reasonably expected to be assessed, exceeds
$100,000 in any case set forth in (i) through (v) above, or exceeds $500,000 in
the aggregate for all such cases; or
(h) Any provision of any Collateral Document shall for any
reason cease to be valid and binding on the Loan Party party thereto other than
by reason of the application of applicable bankruptcy, insolvency,
reorganization or other similar laws or the application of equitable principles
relating to or limiting creditors' rights generally, or such Loan Party shall
so state in writing; or
(i) Any Collateral Document shall, for any reason, cease to
create a valid Lien on any of the Collateral purported to be covered thereby,
or such Lien shall cease to be a perfected and first priority Lien on the
Collateral (other than (i) unidentifiable cash proceeds, and (ii) Inventory
sold or disposed of, and Proceeds applied, as permitted hereunder and under the
Amended and Restated Security Agreement and the Amended and Restated Cash
Collateral Agreement), subject only to Permitted Liens; or
(j) There shall occur any Change of Control; or
(k) There shall occur a Material Adverse Change or an event
which would have a Material Adverse Effect; or
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(l) Any Loan Party shall have entered into any consent or
settlement decree or agreement or similar arrangement with any Governmental
Authority or any judgment, order, decree or similar action shall have been
entered against any Loan Party, in either case based on or arising from the
violation of or pursuant to any Environmental Law, or the generation, storage,
transportation, treatment, disposal or Release of any Contaminant and, in
connection with all the foregoing, such Loan Party is likely to incur
Environmental Liabilities and Costs, other than those contemplated by the
Projections, in any 12 month period, in excess of $1,000,000; or
(m) An early amortization event under any of the
Securitization Documents shall occur and be continuing and shall not have been
rescinded in accordance with the terms of such Securitization Documents.
8.2. Remedies. If there shall occur and be continuing any Event of
Default, the Agent (a) shall at the request, or may with the consent, of the
Majority Lenders by notice to the Borrower, declare the obligation of each
Lender to make Loans and of the Issuer to issue Letters of Credit to be
terminated, whereupon the same shall forthwith terminate, and (b) shall at the
request, or may with the consent, of the Majority Lenders by notice to the
Borrower, declare the Loans, all interest thereon and all other amounts and
Obligations payable under this Agreement to be forthwith due and payable,
whereupon the Amended and Restated Revolving Credit Notes, all such interest
and all such amounts and Obligations shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower; provided, however,
that upon the occurrence of the Event of Default specified in Section 8.1(e),
(A) the obligation of each Lender to make Loans and of the Issuer to issue
Letters of Credit shall automatically be terminated and (B) the Loans, all such
interest and all such amounts and Obligations shall automatically become and be
due and payable, without presentment, demand, protest or any notice of any
kind, all of which are hereby expressly waived by the Borrower. In addition to
the remedies set forth above, the Agent may exercise any remedies provided for
by the Collateral Documents in accordance with the terms thereof or any other
remedies provided by applicable law.
8.3. Actions in Respect of Letters of Credit. (a) Upon the giving
of notice to the Borrower pursuant to clause (a) or (b) of the first sentence
of Section 8.2 and automatically upon the occurrence of an Event of Default
specified in Section 8.1(e), the Borrower shall pay to the Agent in same day
funds at the Agent's office specified in the Amended and Restated Revolving
Credit Notes, for deposit in a special non-interest-bearing cash collateral
account (the "L/C Cash Collateral Account") to be maintained in the name of the
Agent on behalf of the Secured Parties at such place as
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shall be designated by the Agent, an amount equal to all outstanding Letter of
Credit Obligations.
(b) The Agent shall, from time to time after funds are
deposited in the L/C Cash Collateral Account, apply funds then held in the L/C
Cash Collateral Account to the payment of any amounts, in such order as the
Agent may elect, as shall have become or shall become due and payable by the
Borrower to the Issuer or Lenders in respect of the Obligations.
(c) Neither the Borrower nor any Person claiming on behalf of
or through the Borrower shall have any right to withdraw any of the funds held
in the L/C Cash Collateral Account until all of the Obligations have been paid
or satisfied in full.
(d) The Borrower agrees that it will not (i) sell or
otherwise dispose of any interest in the L/C Cash Collateral Account or any
funds held therein or (ii) create or permit to exist any Lien upon or with
respect to the L/C Cash Collateral Account or any funds held therein, except as
provided in or contemplated by this Agreement.
(e) Upon the occurrence and during the continuation of an
Event of Default, the Agent may also exercise, in its sole discretion, in
respect of the L/C Cash Collateral Account, in addition to the other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party upon default under the Uniform Commercial Code in
effect in the State of New York at that time, and the Agent may, without notice
except as specified below, sell the L/C Cash Collateral Account or any part
thereof in one or more parcels at public or private sale, at any of the Agent's
offices or elsewhere, for cash, or credit or for future delivery, and upon such
other terms as the Agent may deem commercially reasonable. The Borrower agrees
that, to the extent notice of sale shall be required by law, at least ten days'
notice to the Borrower of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Agent shall not be obligated to make any sale of the L/C
Cash Collateral Account, regardless of notice of sale having been given. The
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
(f) Any cash held in the L/C Cash Collateral Account, and all
cash proceeds received by the Agent in respect of any sale of, collection from
or other
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realization upon all or any part of the L/C Cash Collateral Account, shall be
applied (after the expiration of all outstanding Letters of Credit and the
payment of any amounts payable pursuant to Section 10.4) in whole or in part by
the Agent against all or any part of the other Obligations in such order as the
Agent shall elect. Any surplus of such cash or cash proceeds held by the Agent
and remaining after the indefeasible cash payment in full of all of the
Obligations shall be paid over to the Borrower or to whomsoever may be lawfully
entitled to receive such surplus.
ARTICLE IX
THE AGENT
9.1. Authorization and Action. Each Lender hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement and the other Loan Documents (including, without limitation,
enforcement or collection of the Amended and Restated Revolving Credit Notes),
the Agent shall not be required to exercise any discretion or take any action,
but shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Majority Lenders, and such instructions shall be binding upon all Lenders and
all holders of Amended and Restated Revolving Credit Notes; provided, however,
that the Agent shall not be required to take any action which the Agent in good
faith believes exposes it to personal liability or is contrary to this
Agreement or applicable law. The Agent agrees to give to each Lender prompt
notice of each notice given to it by the Borrower pursuant to the terms of this
Agreement or the other Loan Documents.
9.2. Agent's Reliance, Etc. None of the Agent or any of its Affiliates
or any of the respective directors, officers, agents or employees of the Agent
or any such Affiliate shall be liable for any action taken or omitted to be
taken by it or them under or in connection with this Agreement or the other
Loan Documents, except for its or their own gross negligence or wilful
misconduct. Without limitation of the generality of the foregoing, the Agent
(a) may treat the payee of any Amended and Restated Revolving Credit Note as
the holder thereof until such note has been assigned in accordance with Section
10.7, (b) may consult with legal counsel (including, without limitation,
counsel to the Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action
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taken or omitted to be taken in good faith by it in accordance with the advice
of such counsel, accountants or experts, (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or any of the other Loan Documents, (d) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement or any of the other Loan
Documents on the part of any Loan Party or to inspect the property (including,
without limitation, the books and records) of any Loan Party, (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any of
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto, and (f) shall incur no liability under or in respect of this
Agreement or any of the other Loan Documents by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.3. CUSA and Affiliates. With respect to its Revolving Credit
Commitment, the Loans made by it and the Amended and Restated Revolving Credit
Note issued to it, CUSA shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include CUSA in its individual capacity. CUSA and its Affiliates
may accept deposits from, lend money to, act as trustee under indentures of,
and generally engage in any kind of business with, the Borrower, its
Subsidiaries and any Person who may do business with or own securities of the
Borrower or its Subsidiaries, all as if CUSA were not the Agent and without any
duty to account therefor to the Lenders.
9.4. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements referred to in Article IV and such other 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 Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Loan Documents.
9.5. Indemnification. The Lenders agree to indemnify the Agent and its
Affiliates, and their respective directors, officers, employees, agents and
advisors (to the extent not reimbursed by the Borrower), ratably according to
the respective princi-
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pal amounts of the Amended and Restated Revolving Credit Notes then held
by each of them and the Letter of Credit Obligations (including, without
limitation, participations therein) owing to them (or if no Amended and Restated
Revolving Credit Notes or Letter of Credit Obligations are at the time
outstanding, ratably according to the respective amounts of the aggregate of
their Revolving Credit Commitments), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements (including, without limitation, fees and
disbursements of legal counsel) of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against, the Agent in any way relating to
or arising out of this Agreement or the other Loan Documents or any action
taken or omitted by the Agent under this Agreement or the other Loan Documents;
provided, however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent's gross negligence or
wilful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Agent promptly upon demand for its ratable share of any out-of-
pocket expenses (including, without limitation, fees and disbursements of legal
counsel) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of its rights or responsibilities under, this Agreement or the other
Loan Documents, to the extent that the Agent is not reimbursed for such expenses
by the Borrower.
9.6. Successor Agent. The Agent may resign at any time by giving
advance written notice thereof to the Lenders and the Borrower and may be
removed at any time with or without cause by the Lenders upon advance written
notice from the Lenders. Upon any such resignation or removal, the Lenders
shall have the right to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Lenders, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of notice of
resignation or the Lenders' removal of the retiring Agent, then the retiring
Agent, on behalf of the Lenders, or the Lenders shall appoint a successor
Agent, which shall be a commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of at least $50,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from any
further duties and obligations under this Agreement and the other Loan
Documents. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article IX shall
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inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement and the other Loan Documents.
ARTICLE X
MISCELLANEOUS
10.1. Amendments, Etc. No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Borrower therefrom shall in
any event be effective unless the same shall be in writing and signed by the
Majority Lenders, and then any such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given;
provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by all the Lenders do any of the following:
(a) waive any of the conditions specified in Article III
except as otherwise provided therein;
(b) increase the Revolving Credit Commitments of the Lenders
or subject the Lenders to any additional obligations;
(c) except as otherwise provided herein, reduce the principal
of, or interest on, the Revolving Credit Loans or any fees or other amounts
payable hereunder;
(d) postpone any date fixed for any payment of principal of,
or interest on, the Revolving Credit Loans or any fees or other amounts payable
hereunder;
(e) change the percentage of the Revolving Credit
Commitments, the aggregate unpaid principal amount of the Amended and Restated
Revolving Credit Notes, or the number of Lenders which shall be required for
the Lenders or any of them to take any action hereunder;
(f) release a material portion of the Collateral (as
determined by the Agent but in any event not more than $1,000,000 in any one
instance) except as shall otherwise be provided in the Collateral Documents;
(g) amend this Section 10.1; or
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(h) amend the definition of Majority Lenders,
and provided, further, that no amendment, waiver or consent shall affect the
rights or duties of the Agent or the Issuer under this Agreement or the other
Loan Documents, unless such amendment, waiver or consent shall be in writing
and signed by the Agent or the Issuer, as the case may be, in addition to the
Lenders required above to take such action,.
10.2. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including, without limitation, telegraphic,
telex, telecopy or cable communication) and mailed, telegraphed, telexed,
telecopied, cabled or delivered by hand, if to the Borrower, at its address at
10 South Geneva Road, Vineyard, Utah 84058 (telecopy number: (801) 227-9090)
(telephone number: (801) 227-9000), Attention: Chief Financial Officer; if to
any Lender, at its Domestic Lending Office specified opposite its name on
Schedule IV; if to the Issuer, at its address specified opposite its name on
Schedule IV; and if to the Agent, at its address at 399 Park Avenue, Sixth
Floor, New York, New York 10043 (telecopy number: (212) 793-1290) (telephone
number: (212) 559-3149), Attention: Keith Karako, with a copy to Weil, Gotshal
& Manges, 767 Fifth Avenue, New York, New York 10153, Attention: Marsha E.
Simms, Esq.; or, as to the Borrower or the Agent, at such other address as
shall be designated by such party in a written notice to the other parties and,
as to each other party, at such other address as shall be designated by such
party in a written notice to the Borrower and the Agent. All such notices and
communications shall, when mailed, telegraphed, telexed, telecopied, cabled or
delivered, be effective when deposited in the mails, delivered to the telegraph
company, confirmed by telex answerback, telecopied with confirmation of
receipt, delivered to the cable company or delivered by hand to the addressee
or its agent, respectively, except that notices and communications to the Agent
pursuant to Article II or IX shall not be effective until received by the
Agent.
10.3. No Waiver; Remedies. No failure on the part of any Lender or
the Agent to exercise, and no delay in exercising, any right hereunder or under
any Amended and Restated Revolving Credit Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude
any other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
10.4. Costs; Expenses; Indemnities. (a) The Borrower agrees to pay
on demand (i) all costs and expenses of the Agent in connection with the
preparation, execution, delivery, administration, modification and amendment of
this Agreement,
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each of the other Loan Documents and each of the other documents to be
delivered hereunder and thereunder, including, without limitation, the fees and
out-of-pocket expenses of counsel, accountants, consultants or industry experts
retained by the Agent with respect thereto and of counsel to the Agent with
respect to advising the Agent as to its rights and responsibilities under this
Agreement and the other Loan Documents, (ii) all costs and expenses of the
Agent in connection with the Agent's quarterly Borrowing Base audit, (iii) wire
transfer, duplicating and photocopying, telephone, travel and other
administrative costs and expenses, and (iv) all costs and expenses of the
Agent, each Lender and the Issuer (including, without limitation, counsel fees
and expenses) in connection with the restructuring or enforcement (whether
through negotiation, legal proceedings or otherwise) of this Agreement, the
other Loan Documents and the other documents to be delivered hereunder or
thereunder.
(b) The Borrower agrees to defend, indemnify and hold
harmless the Agent, each Lender and the Issuer and their respective Affiliates,
and the directors, officers, employees, agents, attorneys, consultants and
advisors of or to any of the foregoing (including, without limitation, those
retained in connection with the satisfaction or attempted satisfaction of any
of the conditions set forth in Article III) (each of the foregoing being an
"Indemnitee") from and against any and all claims, damages, liabilities,
obligations, losses, penalties, actions, judgments, suits, costs, disbursements
and expenses of any kind or nature (including, without limitation, fees and
disbursements of counsel to any such Indemnitee) which may be imposed on,
incurred by or asserted against any such Indemnitee in connection with or
arising out of any investigation, litigation or proceeding, whether or not any
such Indemnitee is a party thereto, whether direct, indirect, or consequential
and whether based on any federal, state or local law or other statutory
regulation, securities or commercial law or regulation, or under common law or
in equity, or on contract, tort or otherwise, in any manner relating to or
arising out of this Agreement, any other Loan Document, any Obligation, any
Letter of Credit, or any act, event or transaction related or attendant to any
thereof, including, without limitation, (i) all Environmental Liabilities and
Costs arising from or connected with the past, present or future operations of
the Borrower and its Subsidiaries involving any property subject to the Amended
and Restated Security Agreement, or damage to real or personal property or
natural resources or harm or injury alleged to have resulted from any Release
of Contaminants on, upon or into such property or any contiguous real estate,
(ii) any costs or liabilities incurred in connection with the investigation,
removal, cleanup and/or remediation of any Contaminant present or arising out
of the operations of any facility of the Borrower or its Subsidiaries, (iii)
any costs or liabilities incurred in connection with any Environmental Lien,
(iv) any costs or liabilities incurred in
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connection with any other matter affecting any facility pursuant to
Environmental Laws, including, without limitation, CERCLA and applicable state
property transfer laws, whether, with respect to any of the foregoing, such
Indemnitee is a mortgagee pursuant to any leasehold mortgage, a mortgagee in
possession, the successor in interest to the Borrower or any of its
Subsidiaries, or the owner, lessee or operator of any facility of the Borrower
or any of its Subsidiaries by virtue of foreclosure, except, with respect to
any of the foregoing referred to in clauses (i), (ii), (iii) and (iv), to the
extent incurred following (x) foreclosure by the Agent, any Lender or the
Issuer, or (y) the Agent, any Lender or the Issuer having become the successor
in interest to the Borrower or any of its Subsidiaries, attributable solely to
acts of the Agent, such Lender or the Issuer or any agent on behalf of the
Agent, such Lender or the Issuer, (v) the making of any assignments of or
participations in the Revolving Credit Loans or Letters of Credit and the
management of such Revolving Credit Loans and Letters of Credit, or (vi) the
use or intended use of the proceeds of the Revolving Credit Loans or Letters of
Credit or in connection with any investigation of any potential matter covered
hereby (collectively, the "Indemnified Matters"); provided, that the Borrower
shall not have any obligation under this Section 10.4(b) to an Indemnitee with
respect to any Indemnified Matter caused by or resulting from the gross
negligence or willful misconduct of that Indemnitee, as determined by a court
of competent jurisdiction in a final non-appealable judgment or order.
(c) If any Lender receives any payment of principal of, or is
subject to a conversion of, any Eurodollar Rate Loan other than on the last day
of an Interest Period relating to such Loan, as a result of any payment or
conversion made by the Borrower or acceleration of the maturity of the Amended
and Restated Revolving Credit Notes pursuant to Section 8.2 or for any other
reason, the Borrower shall, upon demand by such Lender (with a copy of such
demand to the Agent), pay to the Agent for the account of such Lender all
amounts required to compensate such Lender for any additional losses, costs or
expenses which it may reasonably incur as a result of such payment or
conversion, including, without limitation, any loss (including, without
limitation, loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund or maintain such Eurodollar Rate Loan.
(d) The Agent, each Lender and the Issuer agree that in the
event that any such investigation, litigation or proceeding set forth in
subparagraph (b) above is asserted or threatened in writing or instituted
against it or any other Indemnitee, or any remedial, removal or response action
is requested of it or any of its officers, directors, agents and employees, for
which any Indemnitee may desire indemnity or defense hereunder, such Indemnitee
shall promptly notify the Borrower in writing.
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(e) The Borrower, at the request of any Indemnitee, shall
have the obligation to defend against such investigation, litigation or
proceeding or requested remedial, removal or response action, and the Borrower,
in any event, may participate in the defense thereof with legal counsel of the
Borrower's choice. In the event that such Indemnitee requests the Borrower to
defend against such investigation, litigation or proceeding or requested
remedial, removal or response action, the Borrower shall promptly do so and
such Indemnitee shall have the right to have legal counsel of its choice
participate in such defense. No action taken by legal counsel chosen by such
Indemnitee in defending against any such investigation, litigation or
proceeding or requested remedial, removal or response action shall vitiate or
in any way impair the Borrower's obligation and duty hereunder to indemnify and
hold harmless such Indemnitee.
(f) The Agent shall give the Borrower reasonable prior notice
of any settlement, compromise or similar disposition by the Agent, any Lender
or the Issuer of any investigation, litigation or proceeding pursuant to which
the Borrower has an obligation to defend.
(g) The obligations of the Borrower under this Section 10.4
shall survive the repayment of the Revolving Credit Loans and the termination
of the Revolving Credit Commitments.
10.5. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default each Lender and its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits, whether general or special,
time or demand, provisional or final, at any time held and other indebtedness
at any time owing by such Lender or any of its Affiliates to or for the credit
or the account of the Borrower against any and all of the Obligations now or
hereafter existing irrespective of whether or not such Lender shall have made
any demand under this Agreement or any Amended and Restated Revolving Credit
Note, any Reimbursement Agreement or any other Loan Document and although such
Obligations may be unmatured. Each Lender agrees promptly to notify the
Borrower after any such set-off and application made by such Lender or its
Affiliates; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Lender
under this Section 10.5 are in addition to the other rights and remedies
(including, without limitation, other rights of set-off) which such Lender may
have.
10.6. Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower and the Agent and when the Agent shall
have
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been notified by each Lender and the Issuer that such Lender and the Issuer has
executed it and thereafter shall be binding upon and inure to the benefit of
the Borrower, the Agent, each Lender and the Issuer and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lenders and the Issuer.
10.7. Assignments and Participations. (a) Each Lender and the
Issuer may sell, transfer, negotiate or assign to one or more other Lenders or
Eligible Assignees all or a portion of its Revolving Credit Commitments,
commitment to issue Letters of Credit, Loans, the Letter of Credit Obligations
owing to it and the Amended and Restated Revolving Credit Notes held by it and
a commensurate portion of its rights and obligations hereunder and under the
other Loan Documents; provided, however, that (i) each such assignment shall be
of a constant, and not a varying, percentage of all of the assigning Lender's
or Issuer's rights and obligations under this Agreement, (ii) the aggregate
amount of the Revolving Credit Commitments, Letters of Credit, Letter of Credit
Obligations and Loans being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to
such assignment) shall in no event be less than the lesser of (A) the assigning
Lender's Revolving Credit Commitment on the date hereof and (B) $10,000,000 or
an integral multiple of $1,000,000 in excess thereof, or, in the case of the
Issuer, all of its rights hereunder, and (iii) each assignee hereunder shall
also be an Eligible Assignee. The parties to each assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together, in the case of the Lenders, with the Notes
subject to such assignment. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in such Assignment and
Acceptance, (A) the assignee thereunder shall become a party hereto and, to the
extent that rights and obligations under the Loan Documents have been assigned
to such assignee pursuant to such Assignment and Acceptance, have the rights
and obligations of a Lender, or the Issuer, as the case may be, hereunder and
thereunder, and (B) the assignor thereunder shall, to the extent that rights
and obligations under this Agreement have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Documents (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's
rights and obligations under the Loan Documents, such Lender shall cease to be
a party hereto and shall be released from any further obligations hereunder).
(b) By executing and delivering an Assignment and Acceptance,
the Lender or an Issuer assignor thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (i)
other than as pro-
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vided in such Assignment and Acceptance, such assigning Lender or Issuer
makes no representation or warranty and assumes no responsibility with respect
to any of the statements, warranties or representations made in or in
connection with this Agreement or any other Loan Document furnished pursuant
thereto or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document or any other
instrument or document furnished pursuant hereto or thereto, (ii) such
assigning Lender or Issuer makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under this
Agreement or any other Loan Document or of any other instrument or document
furnished pursuant hereto or thereto, (iii) such assignee confirms that it has
received a copy of this Agreement and each of the Loan Documents together with
a copy of each of the financial statements referred to in Section 4.5 of this
Agreement and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Acceptance, (iv) such assignee will, independently and without reliance upon
the Agent, such assigning Lender, any other Lender or the Issuer, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (v) such assignee confirms that it is an Eligible Assignee,
(vi) such assignee appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement and the
other Loan Documents as are delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto, and (vii) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed
by it as a Lender or an Issuer, as the case may be.
(c) The Agent shall maintain at its address referred to in
Section 10.2 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Lenders and the Issuer and the Revolving Credit Commitments of, Letter of
Credit Obligations owing to, and principal amount of the Revolving Credit Loans
owing to, each Lender from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender or Issuer, as the case may be, for
all purposes of this Agreement. The Register shall be available for inspection
by the Borrower, the Agent, any Lender and the Issuer at any reasonable time
and from time to time upon reasonable prior notice.
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<PAGE> 125
(d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender or Issuer and an assignee representing that it is an
Eligible Assignee, together with the Amended and Restated Revolving Credit
Notes subject to such assignment, the Agent shall, if such Assignment and
Acceptance has been completed, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Borrower. Within five Business Days after its receipt of
such notice, the Borrower, at its own expense, shall execute and deliver to the
Agent, in exchange for such surrendered Amended and Restated Revolving Credit
Notes, new Amended and Restated Revolving Credit Notes to the order of such
Eligible Assignee in an amount equal to the Revolving Credit Commitment assumed
by it pursuant to such Assignment and Acceptance and, if the assigning Lender
has retained a Revolving Credit Commitment hereunder, new Amended and Restated
Revolving Credit Notes to the order of the assigning Lender in an amount equal
to the Revolving Credit Commitment retained by it hereunder. Such new Amended
and Restated Revolving Credit Notes shall be dated the same date as the
surrendered Amended and Restated Revolving Credit Note and be in substantially
the form of Exhibit E.
(e) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Revolving Credit Loans owing to it and the Amended and Restated Revolving
Credit Note(s) held by it in favor of any Federal Reserve Bank in accordance
with Regulation A of the Board of Governors of the Federal Reserve System).
(f) Each Lender may sell participations to one or more banks
or other Persons in or to all or a portion of its rights and obligations under
the Loan Documents (including, without limitation, all or a portion of its
Revolving Credit Commitment, its commitment to issue Letters of Credit, the
Letter of Credit Obligations owing to it, the Loans owing to it and the Amended
and Restated Revolving Credit Notes held by it) and such Lender shall notify
the Agent (who, in turn, will notify the Borrower) of any such participations
sold, identifying the purchaser and amount thereof. The terms of such
participation shall not, in any event, require the participant's consent to any
amendments, waivers or other modifications of any provision of any Loan
Documents, the consent to any departure by any Loan Party therefrom, or to the
exercising or refraining from exercising any powers or rights which such Lender
may have under or in respect of the Loan Documents (including, without
limitation, the right to enforce the obligations of the Borrower), except if
any such amendment, waiver or other modification or consent would (i) reduce
the amount, or postpone any date fixed for, any amount (whether of principal,
interest or
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fees) payable to such participant under the Loan Documents, to which such
participant would otherwise be entitled under such participation or (ii) result
in the release of all or substantially all of the Collateral other than in
accordance with the Amended and Restated Security Agreement. In the event of
the sale of any participation by any Lender, (A) such Lender's obligations
under the Loan Documents (including, without limitation, its Revolving Credit
Commitment and commitment to issue Letters of Credit) shall remain unchanged,
(B) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (C) such Lender shall remain the holder of
such Amended and Restated Revolving Credit Notes and Obligations for all
purposes of this Agreement, and (v) the Borrower, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement.
(g) In the event that CUSA is removed as the Agent for any
reason (other than by reason of the Agent's gross negligence or wilful
misconduct), the Lenders who have voted to remove the Agent shall, or shall
cause an Eligible Assignee to, purchase from CUSA all Revolving Credit Loans,
Letter of Credit Obligations and Revolving Credit Commitments held by CUSA.
(h) In the event any Lender shall not agree to any amendment,
waiver or consent requiring the unanimous approval of the Lenders pursuant to
Section 10.1, at the joint request of the Borrower and the Agent, the Lenders
who have so agreed shall have the right (but not the obligation) to, or to
cause an Eligible Assignee(s) to, purchase from such Lender (at the face amount
thereof) all Revolving Credit Loans, Letter of Credit Obligations and Revolving
Credit Commitments held by such Lender.
(i) If, on two or more occasions within any 12-month period,
a notice or demand has been given by any Lender pursuant to Sections 2.9(c),
2.10, 2.11 or 2.12 requiring or permitting Eurodollar Rate Loans of such Lender
to be repaid, or amounts to be paid or reimbursed, and such Lender shall not
have convinced the Agent and the Borrower that such notices and demands are not
reasonably likely to continue, the Borrower and the Agent shall in good faith
seek a mutually satisfactory substitute bank or banks (which may be one or more
of the Lenders) to purchase from such Lender all Revolving Credit Loans, Letter
of Credit Obligations and Revolving Credit Commitments held by such Lender.
10.8. Governing Law; Severability. This Agreement and the Amended
and Restated Revolving Credit Notes and the rights and obligations of the
parties hereto and thereto shall be governed by, and construed and interpreted
in accordance with, the law of the State of New York. Wherever possible, each
provision of this
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Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
10.9. Submission to Jurisdiction. (a) Any legal action or proceeding
with respect to this Agreement or the Amended and Restated Revolving Credit
Notes or any document related thereto may be brought in the courts of the State
of New York or of the United States of America for the Southern District of New
York, and, by execution and delivery of this Agreement, the Borrower hereby
accepts for itself and, to the maximum extent permitted by law, in respect of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The parties hereto hereby irrevocably waive any objection, including,
without limitation, any objection to the laying of venue or based on the
grounds of forum non conveniens, which any of them may now or hereafter have to
the bringing of any such action or proceeding in such respective jurisdictions.
(b) The Borrower irrevocably consents to the service of
process of any of the aforesaid courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Borrower at its address provided herein.
(c) Nothing contained in this Section 10.9 shall affect the
right of the Agent, any Lender, any holder of an Amended and Restated Revolving
Credit Note or the Issuer to serve process in any other manner permitted by law
or commence legal proceedings or otherwise proceed against the Borrower in any
other jurisdiction.
10.10. Section Titles. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
10.11. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
10.12. Entire Agreement, etc. This Agreement, together with all of
the other Loan Documents and all certificates and documents delivered hereunder
or thereunder, and the fee agreements referred to in Section 2.3 embody the
entire agreement
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of the parties and supersedes all prior agreements and understandings relating
to the subject matter hereof.
10.13. Confidentiality. Each Lender, the Issuer and the Agent agree
to keep information obtained by it pursuant hereto and the other Loan Documents
confidential in accordance with such Lender's, the Issuer's or the Agent's, as
the case may be, customary practices and agrees that it will only use such
information in connection with the transactions contemplated by this Agreement
and not disclose any of such information other than (a) to such Lender's, the
Issuer's or the Agent's, as the case may be, employees, representatives and
agents who are or are expected to be involved in the evaluation of such
information in connection with the transactions contemplated by this Agreement
and who are advised of the confidential nature of such information, (b) to the
extent such information presently is or hereafter becomes available to such
Lender, the Issuer or the Agent, as the case may be, on a non-confidential
basis from a source other than the Borrower, (c) to the extent disclosure is
required by law, regulation or judicial order (which requirement or order shall
be promptly notified to the Borrower) or requested or required by bank
regulators or auditors, or (d) to assignees or participants or potential
assignees or participants who agree to be bound by the provisions of this
sentence.
10.14. Waiver of Jury Trial. Each of the parties hereto waives any
right it may have to trial by jury in respect of any litigation based on, or
arising out of, under or in connection with this Agreement or any other Loan
Document, or any course of conduct, course of dealing, verbal or written
statement or action of any party hereto.
10.15. Return of Old Revolving Credit Notes. On the Closing Date,
each Lender holding an Old Revolving Credit Note will exchange such Old
Revolving Credit Note issued to it for the Amended and Restated Revolving
Credit Note delivered by the Borrower pursuant to Section 3.1(a).
10.16. No Novation. The terms and conditions of the Existing Credit
Agreement, the Old Revolving Credit Notes and the "Loan Documents" (as defined
in the Existing Credit Agreement) are amended as set forth in, and restated in
their entirety and superseded by, this Agreement, the Amended and Restated
Revolving Credit Notes and the other Loan Documents. It is expressly
understood and acknowledged that nothing in this Agreement shall be deemed to
work a novation of the Old Revolving Credit Notes or any obligation under the
Existing Credit Agreement. Notwithstanding any provision of this Agreement or
any other Loan Document, the execution and delivery of this Agreement and the
incurrence of Obligations hereunder and under the Amended and Restated
Revolving Credit Notes
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shall be in substitution for, but not in payment of, the Old Revolving Credit
Notes and obligations owing to the Lenders under the Existing Credit Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
GENEVA STEEL COMPANY
By: Dennis L. Wanlass
-------------------------------------
Name: Dennis L. Wanlass
Title: Vice President, Treasurer
and Chief Financial Officer
CITICORP USA, INC.
as Agent
By: Keith R. Karako
-------------------------------------
Name: Keith R. Karako
Title: Attorney-in-Fact
Lenders
CITICORP USA, INC.
By: Keith R. Karako
-------------------------------------
Name: Keith R. Karako
Title: Attorney-in-Fact
CORESTATES BANK, N.A.
By: Myron Landau
-------------------------------------
Name: Myron Landau
Title: Vice President
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BANK ONE, UTAH, N.A.
By: Stephen A. Cazier
-------------------------------------
Name: Stephen A. Cazier
Title: Vice President
FIRST SECURITY BANK
OF UTAH, N.A.
By: Scott Eastwood
-------------------------------------
Name: Scott Eastwood
Title: Vice President
Issuer
CITIBANK, N.A.
By: Keith R. Karako
-------------------------------------
Name: Keith R. Karako
Title: Attorney-in-Fact
123
<PAGE> 132
Schedules and Exhibits
[Intentionally omitted. The Registrant shall furnish supplementally a copy of
these schedules and exhibits to the Commission upon request.]
<PAGE> 1
Exhibit 10.5
________________________________________________________________________________
RECEIVABLES PURCHASE AGREEMENT
BETWEEN
GENEVA STEEL COMPANY
AND
GENEVA STEEL FUNDING CORPORATION
DATED AS OF NOVEMBER 4, 1994
________________________________________________________________________________
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
----
<S> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES . . . . . . . . . . . . . . . . . . . . 2
2.1 Purchase and Sale of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III
THE SERVICER . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Appointment of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE IV
COVENANTS, REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 5
4.1 Representations and Warranties of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Affirmative Covenants of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Negative Covenants of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.4 Obligations Unaffected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V
CONDITIONS TO EFFECTIVENESS AND PURCHASES . . . . . . . . . . . . . . . . . 12
5.1 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 Conditions to All Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI
TERMINATION EVENTS . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.2 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.3 Costs and Expenses; Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.5 Governing Law, Jurisdiction, Consent to Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.6 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.7 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.11 Construction of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.12 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.13 Limitations on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.14 Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SCHEDULES
Schedule 4.1(h) - Location of Chief Executive Office;
Location of Books and Records
EXHIBITS
EXHIBIT A - Form of Subordinated Note
</TABLE>
ii
<PAGE> 4
RECEIVABLES PURCHASE AGREEMENT, dated as of November 4, 1994 (as
modified, amended, restated or supplemented from time to time, the
"Agreement"), by and between Geneva Steel Company, a Utah corporation (in its
capacity as originator of the Receivables and as seller hereunder, the
"Seller"; in its capacity as servicer hereunder and under the Pooling and
Servicing Agreement, the "Servicer") and Geneva Steel Funding Corporation, a
Utah corporation (the "Purchaser").
WHEREAS, the Seller desires to sell to the Purchaser, and the
Purchaser desires to buy from the Seller, on the Closing Date and from time to
time thereafter, all of the Seller's right, title and interest in, to and under
the Receivables existing on the date hereof or thereafter created;
WHEREAS, Purchaser is a wholly-owned Subsidiary of Seller and a
portion of the Receivables will be transferred to the Purchaser by the Seller
as a capital contribution to the Purchaser; and
WHEREAS, pursuant to that certain Pooling and Servicing Agreement,
dated as of November 4, 1994 (as modified, amended, restated or supplemented,
the "Pooling and Servicing Agreement"), among the Purchaser, the Servicer and
Bankers Trust Company, not in its individual capacity, but solely as Trustee
(the "Trustee"), the Purchaser has agreed to transfer and convey to the Trustee
for the benefit of the trust created pursuant to the Pooling and Servicing
Agreement for the benefit of the Certificateholders referred to in the Pooling
and Servicing Agreement (the "Trust"), all of its right, title and interest in,
to and under the Transferor Receivables;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Capitalized terms not otherwise defined herein
shall have the meanings set forth in Annex X attached hereto.
1.2 Other Definitional Provisions. (a) As used herein and in any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Agreement, and accounting terms partly
defined in this Agreement to the extent not defined, shall have the respective
meanings given to them under GAAP. To the extent that the definitions of
accounting terms herein are inconsistent with the meanings of
<PAGE> 5
such terms under GAAP, the definitions contained herein shall control.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references contained in this Agreement are references to
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
1.3 Computation of Time Periods. Unless otherwise stated in this
Agreement, in the computation of a period of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" mean "to but excluding."
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1 Purchase and Sale of Receivables. Subject to the terms and
conditions of this Agreement, the Seller agrees to sell to the Purchaser, and
the Purchaser agrees to purchase from the Seller, during the Effective Period,
without recourse except as specifically provided herein, all right, title and
interest of the Seller in, to and under all Receivables existing at the close
of business on the Business Day preceding the Closing Date or thereafter
created, including, without limitation, all monies due and to become due
thereunder, and all amounts received with respect thereto and all proceeds
thereof.
2.2 Payment of Purchase Price. (a) On the Closing Date, the
Seller shall sell to the Purchaser, and the Purchaser shall purchase from the
Seller, without recourse except as specifically provided herein, all of the
Seller's right, title and interest in, to and under all Receivables existing at
the close of business on the Business Day preceding the Closing Date for a
purchase price equal to $49,490,699.15.
(b) By 1:00 p.m. (New York City time) on each Business Day during
the Effective Period (each, a "Purchase Date"), the Servicer shall determine
the Receivables arising since the earlier of the close of business on the
preceding Business Day or the last such determination, and such Receivables
shall be deemed available for purchase by the Purchaser on such day.
Notwithstanding anything to the contrary in this Agreement, no purchase or sale
of any Receivable shall be deemed to occur
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hereunder until such time, and only to the extent that the entirety of such
Receivable is included in the amount shown in Part X -- Inputs of the Daily
Report and listed as "New Accounts Receivable sold to the Transferor Since
Receipt of Prior Daily Report." A copy of the Daily Report transmitted or
delivered to the Trustee setting forth the amount of such Receivables purchased
hereunder shall constitute conclusive evidence of the transfer of title in and
to such Receivables from the Seller to the Purchaser. The Seller and the
Purchaser shall, at the time of such sale and purchase, record in their
respective accounting records all Receivables sold to and purchased by the
Purchaser pursuant to this Agreement on such Purchase Date and such recording
shall constitute evidence of such sale and purchase.
(c) The purchase price payable to the Seller for the Receivables
to be purchased on any Purchase Date (other than the Closing Date) shall be an
amount equal to the product of (i) the Outstanding Balance of all Receivables
determined pursuant to paragraph 2.2(b) on such Purchase Date to have so arisen
and (ii) the Purchase Percentage (such amount, the "Purchase Price").
(d) The Purchase Price for any Receivables purchased shall be paid
to Seller in immediately available funds to the extent of funds available to
the Purchaser after (i) payment of all other obligations then due and owing
under the Pooling and Servicing Agreement and (ii) reservation of funds by the
Purchaser to be applied as permitted under this Agreement and the Pooling and
Servicing Agreement.
(e) If less than all the Receivables available for purchase with
cash or with an increase to the Subordinated Note referred to below from the
Seller on any Purchase Date are purchased, the Receivables so purchased will be
selected from the list of available Receivables in alphabetical order.
Notwithstanding any other provision of this Agreement, in no event shall the
Seller make any partial conveyance of any Receivable pursuant to this
Agreement; the amount of any Receivable included in the Receivables purchased
by the Purchaser shall be the full amount of such Receivable.
(f) To the extent that cash funds available to Purchaser on any
Purchase Date following the Closing Date are not sufficient to pay in full the
Purchase Price payable on such Purchase Date, the amount equal to the
difference between (i) the Purchase Price and (ii) the amount of such available
funds shall, subject to subparagraph (g) below, be a Subordinated Loan made by
the Seller to the Purchaser.
(g) Any Subordinated Loan made pursuant to subparagraph (f) above
shall be evidenced by and shall be fully subordinated to every other obligation
of the Purchaser on the terms set forth in a Subordinated Note in the form
attached hereto as Exhibit A.
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The amount of any Subordinated Loan made by the Seller to the Purchaser
pursuant to paragraph 2.2(f) shall be recorded by the Seller on Attachment A to
the Subordinated Note at the time such Subordinated Loan is made.
Notwithstanding anything contained herein to the contrary, the aggregate
principal balance of the Subordinated Note shall not at any time exceed ten
percent (10%) of the aggregate Purchase Price (as determined pursuant to this
Agreement) of the Receivables purchased under this Agreement which are still
outstanding at such time (whether owned by Purchaser or by the Trust).
(h) Nothing in this Agreement shall prevent the Seller from
making, from time to time, at its discretion, capital contributions to the
capital of the Purchaser, whether in cash or by the transfer of Receivables to
Purchaser without payment therefor by the Purchaser. The amount of any such
capital contribution shall be recorded by the Seller in its accounting records
at the time such capital contribution is made.
(i) Legal and equitable title to any Receivable purchased on any
Purchase Date shall pass to the Purchaser at the time when each of the Seller
and the Purchaser record or should have recorded in their respective accounting
records that such Receivable has been sold to and purchased by the Purchaser.
ARTICLE III
THE SERVICER
3.1 Appointment of Servicer. (a) The Purchaser hereby appoints
the Servicer as its agent to service and administer the Transferor Receivables.
The Servicer hereby consents to such appointment and agrees to service and
administer the Transferor Receivables for the benefit of the Purchaser and the
Trust in accordance with the terms and conditions contained herein and in the
Pooling and Servicing Agreement.
(b) The Servicer agrees to perform all obligations to be performed
by it as Servicer under the Pooling and Servicing Agreement and any amendment
or supplement thereto to which it is a party and to comply in all material
respects with all terms, covenants and conditions applicable to the Servicer
thereunder.
3.2 Servicing Fee. In consideration for performing its function
as Servicer hereunder and under the Pooling and Servicing Agreement, the
Servicer shall receive the Servicing Fee referred to in the Pooling and
Servicing Agreement.
ARTICLE IV
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COVENANTS, REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Seller. The Seller
represents and warrants to the Purchaser as of the Closing Date and each
Purchase Date that:
(a) Organization and Good Standing. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Utah and has full corporate power and authority to own its properties
and conduct its business as presently owned or conducted, and to execute,
deliver and perform its obligations under this Agreement.
(b) Due Qualification. The Seller is duly qualified to do
business and is in good standing as a foreign corporation, and has obtained all
necessary licenses and approvals, in each jurisdiction in which failure to so
qualify or to obtain such licenses and approvals is reasonably likely to have a
material adverse effect on the Seller's ability to perform its obligations
hereunder.
(c) Due Authorization. The execution, delivery and performance of
this Agreement by the Seller and the consummation by the Seller of the
transactions provided for in this Agreement, have been duly authorized by all
necessary corporate action on the part of the Seller and this Agreement and the
other documents and agreements executed in connection herewith have been duly
executed and delivered on behalf of the Seller.
(d) No Conflict. The Seller's execution and delivery of this
Agreement, performance of the transactions contemplated hereby, and fulfillment
of the terms hereof applicable to the Seller, do not conflict with or violate
in any material respect any Requirements of Law applicable to the Seller or
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default under,
any material indenture, contract, agreement, mortgage, deed of trust or other
instrument to which the Seller is a party or by which its properties are bound,
which conflict, violation or breach is reasonably likely to have a material
adverse effect on Seller's ability to perform its obligations hereunder or on
the Trust's rights in the Transferor Receivables.
(e) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Seller, threatened against the Seller
before any Governmental Authority that are reasonably likely to prevail (i)
asserting the illegality, invalidity or unenforceability, or seeking any
determination or ruling that is reasonably likely to materially adversely
affect the legality, binding effect, validity or enforceability, of this
Agreement, the Pooling and Servicing Agreement or the Investor Certificates,
(ii) seeking to prevent
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the issuance of the Investor Certificates or the consummation of any of the
transactions contemplated by this Agreement, the Pooling and Servicing
Agreement or the Investor Certificates, (iii) seeking any determination or
ruling that is reasonably likely materially and adversely to affect the
performance by the Seller of its obligations under this Agreement or (iv)
seeking to affect adversely the income, franchise or other tax attributes of
the Trust under the United States federal or Utah state income, franchise or
other tax systems.
(f) Consents. No authorization, consent, license, order or
approval of or registration or declaration with any Governmental Authority is
required to be obtained, effected or given by the Seller in connection with the
execution and delivery of this Agreement by the Seller or its performance of
its obligations under this Agreement or the transactions contemplated hereby,
except for (i) the filing of financing statements or other documents required
to have been filed on or prior to the Closing Date pursuant to Section 2.01 of
the Pooling and Servicing Agreement, all of which were so filed and are in full
force and effect, (ii) the filing from time to time of any amendments,
assignments or continuation statements which may become applicable pursuant to
Section 2.01 of the Pooling and Servicing Agreement and (iii) those which the
failure to obtain, effect or give are not reasonably likely to have a material
adverse effect on the Seller's ability to perform its obligations hereunder or
on the transfer of the Transferor Receivables by the Purchaser to the Trustee
pursuant to the Pooling and Servicing Agreement.
(g) Liens. After giving effect to the termination of any Liens in
favor of the Inventory Lender, each Transferor Receivable is owned by the
Seller free and clear of any Lien except as provided for herein; and no
effective financing statement or other instrument similar in effect covering
any Transferor Receivable or Collections with respect thereto is on file in any
recording office except such as may be filed in favor of the Purchaser and the
Trustee and as otherwise provided in this Agreement and the Pooling and
Servicing Agreement.
(h) Locations. The chief place of business and chief executive
office of the Seller, and the offices where the Seller keeps all its books,
records and documents evidencing Receivables are located at the addresses
specified in Schedule 4.1(h) hereto (or at such other locations, identified to
the Purchaser and the Trustee in accordance with Sections 4.2(e) and 7.9
hereof, in jurisdictions with respect to which all applicable action required
by the last two paragraphs of Section 2.01(a) of the Pooling and Servicing
Agreement has been taken and completed).
(i) Information. Each certificate, report, information, exhibit,
financial statement, document, book, record or report furnished by the Seller
to Purchaser in connection with this
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Agreement is accurate in all material respects as of its date, when considered
as a whole with all other such documents, and no such document contained as of
such date any material misstatement of fact or omitted as of such date to state
a material fact or any fact necessary to make the statements contained therein
not materially misleading as of its date.
(j) Enforceability. This Agreement constitutes the legal, valid
and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting creditors' rights generally, (ii) general principles
of equity (whether considered in a suit at law or in equity) and, (iii) as to
the enforceability of the sale, purchase, transfer and assignment pursuant to
this Agreement, as a result of the application of or reference to Octagon in
any proceeding before any state or federal court within the tenth federal
circuit or the United States Supreme Court.
(k) Valid Transfers. Other than as a result of the application of
or reference to Octagon in any proceeding before any state or federal court
within the tenth federal circuit or the United States Supreme Court, this
Agreement constitutes a valid sale, transfer and assignment to the Purchaser of
all right, title and interest of the Seller in and to the Transferor
Receivables, whether now existing or hereafter created during the Effective
Period, and the proceeds thereof.
(l) Outstanding Balance. As of the Effective Date, the aggregate
Outstanding Balance of the Receivables being sold hereunder is at least
$52,030,289.
(m) Collection Accounts. Schedule I to the Pooling and Servicing
Agreement (as amended from time to time by notice to the Purchaser and the
Trustee in accordance with Section 4.3(i)) is a complete and accurate list of
each Geneva Steel Collection Account as of the Closing Date.
(n) Solvency. The Seller is solvent and will not become insolvent
after giving effect to the transactions contemplated by this Agreement; the
Seller is currently repaying or refinancing all of its indebtedness as or
before such indebtedness becomes due; and, after giving effect to the
transactions contemplated by this Agreement, the Seller has adequate capital to
conduct its business as presently conducted. The Seller has received
equivalent value in consideration for the sale of the Receivables to the
Purchaser, and such sale has not been made for or on account of an antecedent
debt owed by the Seller to the Purchaser.
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(o) Compliance. The Seller has complied in all material respects
with all applicable Requirements of Law with respect to it, its business and
its properties and all Transferor Receivables sold hereunder and the Contracts
related thereto except such compliance which is not reasonably likely to have a
material adverse effect on the Seller's ability to perform its obligations
hereunder or on the transfer of the Transferor Receivables by the Purchaser to
the Trustee pursuant to the Pooling and Servicing Agreement.
(p) No Rescission. Immediately prior to transfer, neither any
Transferor Receivable sold hereunder nor the related Contract has been
satisfied, subordinated or rescinded or, except as disclosed in writing to the
Purchaser, amended in any manner and the amounts billed under such Receivables
have not, except as permitted under the Pooling and Servicing Agreement, been
compromised, adjusted, extended, satisfied, subordinated, rescinded or
modified.
(q) No Payment. Except for matters relating to the ability of the
Obligors to pay such Receivables when due, the Seller has no knowledge of any
specific fact which would lead it to expect that, when billed, the amount
billed under any Transferor Receivable sold hereunder would not be paid in
accordance with its terms when due.
(r) Fraudulent Conveyance. The Seller is not entering into the
transactions contemplated hereby with the intent of hindering, delaying or
defrauding its creditors.
4.2 Affirmative Covenants of the Seller. The Seller hereby
covenants that, until the termination of the Effective Period:
(a) Compliance with Law. The Seller will comply in all material
respects with all applicable Requirements of Law with respect to it, its
business and properties and all Transferor Receivables sold hereunder and the
Contracts related thereto except such noncompliance as is not reasonably likely
to have a material adverse effect on Seller's ability to perform its
obligations hereunder or on the transfer of the Transferor Receivables by the
Purchaser to the Trustee pursuant to the Pooling and Servicing Agreement.
(b) Preservation of Corporate Existence. Except as otherwise
permitted by Section 8.02 of the Pooling and Servicing Agreement, the Seller
will preserve and maintain its corporate existence, rights, franchises and
privileges 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 maintain such qualification would materially and adversely
affect (i) the interests of the Purchaser hereunder or in the Transferor
Receivables, (ii) the collectability of any
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Transferor Receivable or (iii) the ability of the Seller to perform its
obligations hereunder; provided, that the Seller may, upon prior written notice
to the Purchaser, change its jurisdiction of incorporation if (A) the Seller
shall at all times preserve and maintain its corporate existence in no less
than one jurisdiction and (B) such change would not materially and adversely
affect (1) the interests of the Purchaser hereunder or in the Transferor
Receivables, (2) the collectability of any Transferor Receivable or (3) the
ability of the Seller to perform its obligations hereunder.
(c) Keeping of Records and Books of Account. The Seller will
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate copies or reproductions of records
evidencing the Transferor Receivables in the event of the destruction of the
originals thereof), and keep and maintain, all documents, books, records and
other information reasonably necessary for the collection of all Transferor
Receivables (including, without limitation, records adequate to permit the
daily identification of each new Transferor Receivable and all Collections of
and adjustments to each existing Transferor Receivable).
(d) Performance and Compliance with Provisions. The Seller will
at its expense timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by it
hereunder, except where the failure to so perform or comply would not have a
material adverse effect on the collectability of the Transferor Receivables or
Seller's ability to perform in all material respects its obligations hereunder.
(e) Location of Records. The Seller will keep its chief place of
business and chief executive office, and the offices where it keeps its records
concerning the Transferor Receivables related thereto (and all original
documents relating thereto), at the addresses of the Seller referred to in
Schedule 4.1(h) or, upon 30 days' prior written notice to the Purchaser and the
Trustee, at such other locations in a jurisdiction with respect to which all
action required by Section 2.01 of the Pooling and Servicing Agreement shall
have been taken and completed.
(f) Credit Policy Manual. The Seller will comply in all material
respects with the Credit Policy Manual in regard to the Transferor Receivables.
(g) Protection of Purchaser's Interest in Receivables.
(i) The Seller will not create, permit or suffer to exist, and will defend the
Purchaser's and the Trustee's rights to the Transferor Receivables and Trust
Assets conveyed hereunder against, and take such other actions as are necessary
to remove any Lien in, to or on the Transferor Receivables and Trust Assets
conveyed hereunder, other than the Liens created hereby and by
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the Pooling and Servicing Agreement, and will defend the right, title and
interest of the Purchaser and the Trustee in and to the Receivables and Trust
Assets conveyed hereunder against any Liens of all persons whomsoever (other
than the Purchaser or the Trustee) to the extent the same represent breaches of
any of the representations and warranties in this Agreement.
(ii) The Seller will advise the Purchaser, the Trustee and the
Certificateholders promptly, in reasonable detail, (x) of any Lien or claim
known to the Seller to be asserted against any of the Transferor Receivables or
Trust Assets, other than Liens created hereby or by the Pooling and Servicing
Agreement, (y) of the occurrence of any breach by the Seller of any of its
representations, warranties or covenants contained herein and (z) of the
occurrence of any other event, which, in the case of clauses (x), (y) or (z) is
reasonably likely to have a material adverse effect on the value of the
Transferor Receivables.
(iii) The Seller shall execute and file such documents and
instruments as may be reasonably requested by the Purchaser or which may be
required by law to fully preserve and protect the interests of the Purchaser
hereunder and of the Trustee under the Pooling and Servicing Agreement in and
to the Receivables and the Trust Assets conveyed hereby.
(h) Repurchase. In the event (i) any Transferor Receivable
classified as an "Eligible Receivable" by the Seller on its records or in any
document or report delivered hereunder does not satisfy the requirements of
eligibility contained in the definition of Eligible Receivables on the date of
its purchase by Purchaser and (ii) the Purchaser shall be obligated to
repurchase Reconveyed Receivables pursuant to Section 2.05(l) of the Pooling
and Servicing Agreement, the Seller shall repurchase from the Purchaser the
Receivable described in (i) above if it is one of the Reconveyed Receivables
and shall pay to the Purchaser on the Business Day preceding the day on which
such repurchase of Reconveyed Receivables is to be made by the Purchaser an
amount equal to the purchase price for the Receivable described in (i) above if
it is one of the Reconveyed Receivables paid by the Purchaser pursuant to the
Pooling and Servicing Agreement. The obligation of the Seller to purchase the
Reconveyed Receivables pursuant to this 4.2(h) shall constitute the sole remedy
against the Seller, respecting an event of the type specified in the first
sentence of this paragraph, that is available to the Purchaser and to the
Investor Certificateholders (or the Trustee on behalf of the Investor
Certificateholders).
4.3 Negative Covenants of the Seller. The Seller will not, until
the termination of the Effective Period:
(a) Sales, Liens, Etc. Except as otherwise contemplated herein,
or pursuant to or as contemplated by the Pooling and
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Servicing Agreement, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Lien, upon or with
respect to, any Transferor Receivable or upon or with respect to any Geneva
Steel Collection Account to which any Collections are sent, or assign any right
to receive income in respect thereof.
(b) Extension or Amendment of Receivables. (i) Extend, amend or
otherwise modify the terms of any Transferor Receivable, (ii) amend, modify or
waive any payment term or condition of any invoice related thereto, which
extension, amendment, modification or waiver is reasonably likely to impair the
collectability or delay the payment of any then existing Transferor Receivable,
or (iii) rescind or cancel any Transferor Receivable except as ordered by a
court of competent jurisdiction or other Governmental Authority except as
permitted in its capacity as the Servicer under Sections 3.01(c) or 3.04(d) of
the Pooling and Servicing Agreement.
(c) Change in Credit Policy Manual. Make any change in the Credit
Policy Manual except as provided in the Pooling and Servicing Agreement, if
such change would materially impair the collectability or credit quality of the
Transferor Receivables.
(d) Deposits to Geneva Steel Collection Accounts. Deposit or
otherwise credit, or cause or permit to be so deposited or credited, to any
Geneva Steel Collection Account cash or cash proceeds other than collections of
Receivables; provided, however, that proceeds of certain accounts receivable
belonging to the Seller may from time to time be deposited into the Geneva
Steel Collection Accounts, the Concentration Account or the Transferor Account.
(e) No Actions Against Obligors. Except in accordance with the
Credit Policy Manual and the Pooling and Servicing Agreement, commence or
settle any legal action to enforce collection of any Transferor Receivable.
(f) No Bankruptcy Filing Against the Purchaser or the Trust.
Commence, or cause to be commenced, any case, proceeding or other action of the
type described in Section 6.1(d) below against the Purchaser or the Trust.
(g) No Claims Against the Assets. Claim any credit on, or make
any deduction from, the principal or interest payable in respect of the
Certificates by reason of the payment of any taxes levied or assessed upon any
part of the Trust Assets.
(h) Subordinated Note. Transfer or pledge the Subordinated Note
to any Person, other than in connection with a financing.
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(i) Change in Collection Accounts. Except as permitted under the
Pooling and Servicing Agreement, add, terminate or change any Geneva Steel
Collection Account Banks or any account number of any Geneva Steel Collection
Accounts from those listed in Schedule I to the Pooling and Servicing
Agreement, unless the Purchaser and the Trustee shall have received (i) thirty
days' prior notice of such addition, termination or change and (ii) prior to
the effective date of such addition, termination or change, (x) executed copies
of Geneva Steel Collection Account Letters to each new Geneva Steel Collection
Account Bank and (y) copies of all agreements and documents signed by either
the Seller or the respective Geneva Steel Collection Account Bank with respect
to any new Geneva Steel Collection Account.
4.4 Obligations Unaffected. The obligations of the Seller to the
Purchaser under this Agreement shall not be affected by reason of any
invalidity, illegality or irregularity of any Transferor Receivable or any sale
of a Transferor Receivable.
ARTICLE V
CONDITIONS TO EFFECTIVENESS AND PURCHASES
5.1 Effective Date. This Agreement shall become effective on
November 4, 1994 or such other date agreed upon by the parties in writing (the
"Effective Date") on which:
(a) There shall have been delivered to the Purchaser file-stamped
copies of the financing statements relating to the Transferor Receivables,
naming the Seller as seller/debtor and the Purchaser as purchaser/secured
party, that were filed on or prior to the Effective Date with the Division.
(b) There shall have been delivered to the Purchaser a copy of the
Articles of Incorporation of the Seller, certified as of a recent date by the
Director of the Division.
(c) There shall have been delivered to the Purchaser a certificate
of the Director of the Division as to the good standing of the Seller and as to
the documents on file in the office of such Division.
(d) There shall have been delivered to the Purchaser a certificate
of the Secretary or Assistant Secretary of the Seller, dated as of the
Effective Date, and certifying (i) that attached thereto is a true and complete
copy of the bylaws of the Seller as in effect on the date of such
certification, (ii) that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors of the Seller authorizing the
transactions provided for herein and the execution, delivery and performance of
this Agreement and any other documents required or
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contemplated hereunder, (iii) that the Articles of Incorporation of the Seller
have not been amended since the date of the last amendment thereto indicated on
the certificate of the Director of the Division furnished pursuant to clause
(c) above and (iv) as to the incumbency of the officers of the Seller executing
this Agreement, and any other documents contemplated hereunder and appropriate
evidence of the incumbency of such Secretary or Assistant Secretary.
(e) There shall have been delivered to the Seller a certificate of
the Secretary or Assistant Secretary of the Purchaser, dated the Effective
Date, and certifying (i) that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors of the Purchaser authorizing the
transactions provided for herein and the execution, delivery and performance of
this Agreement, the Pooling and Servicing Agreement and any other documents
required or contemplated hereunder and (ii) as to the incumbency of the
officers of the Purchaser executing this Agreement, the Pooling and Servicing
Agreement and any other documents contemplated hereunder and appropriate
evidence of the incumbency of such Secretary or Assistant Secretary.
(f) The Pooling and Servicing Agreement and all documentation to
be delivered in connection therewith shall have been executed and delivered and
all conditions to the effectiveness thereof shall have been satisfied in all
material respects.
(g) All legal matters incident to the execution and delivery of
this Agreement and to the purchases by the Purchaser of the Transferor
Receivables from the Seller shall be satisfactory to counsel for the Purchaser.
5.2 Conditions to All Purchases. The obligation of the Purchaser
to purchase the Transferor Receivables on any Purchase Date is subject to the
following conditions precedent:
(a) On such Purchase Date the Seller shall have complied in all
material respects with all of its covenants hereunder and shall have fulfilled
in all material respects all of its obligations hereunder; and
(b) No Termination Event shall have occurred and then be
continuing.
The acceptance by the Seller of any payment for any Transferor
Receivables shall be deemed to be a representation and warranty by the Seller
as of such acceptance date as to the matters set forth in this Section 5.2.
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ARTICLE VI
TERMINATION EVENTS
6.1 If any of the following events (each herein called a
"Termination Event") shall have occurred:
(a) The Seller shall fail to pay any amount required to be paid by
the Seller hereunder within five (5) Business Days after the date when due;
(b) Any representation, warranty, certification or statement made
or deemed made by the Seller in this Agreement or in any statement, record,
certificate, financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect in any material respect on or as
of the date made or deemed made and shall have a material adverse effect on the
Investor Certificateholders and continues unremedied for 30 days (or, with
respect to such representations, warranties, certifications or statements made
in Sections 4.1(g) and 4.1(k), continues unremedied for 5 days) after the
earlier of knowledge of a Responsible Officer of the Seller or the Purchaser or
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Seller by the Purchaser or the Trustee;
(c) The Seller shall fail to observe or perform in any material
respect any covenant or agreement applicable to it contained herein (other than
as specified in Section (a) or (b) of this Article VI), provided that no such
failure shall constitute a Termination Event under this Section (c) unless such
failure shall (i) have a material adverse effect on the Investor
Certificateholders and (ii) continue for 30 days (or with respect to the
covenants contained in Sections 4.3(a) and 4.3(i) shall continue for 5 days)
after the date on which written notice of such failure, requiring the same to
be remedied, shall have been given to the Seller by the Purchaser or the
Trustee;
(d) The occurrence, with respect to the Seller or the Purchaser, of
an Insolvency Event, or the adoption by the Board of Directors of the Seller of
a resolution which authorizes action by the Seller in furtherance of an
Insolvency Event; provided, however, that for the purposes of this Article VI
the definition of "Insolvency Event" shall be construed without giving effect
to the 60-day grace period in clause (a) thereof; or
(e) There shall have occurred and be continuing an Early
Amortization Event under the Pooling and Servicing Agreement (but not in any
Supplement thereto);
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then, so long as any of the foregoing events shall have occurred and be
continuing, the Effective Period shall automatically terminate without any
notice, demand, protest or other requirement of any kind (any termination of
the Effective Period pursuant to this Article VI is herein called an "Early
Termination")"; provided, however, if any of the foregoing events is validly
waived or by the 30th day of the grace period in clause (a) of the definition
of "Insolvency Event" the Insolvency Event specified therein shall be
dismissed, the Effective Period shall be reinstated retroactively as though it
had not been terminated.
ARTICLE VII
MISCELLANEOUS
7.1 Further Assurances. The Seller agrees to do and perform, from
time to time any and all acts and to execute any and all further instruments
reasonably required or requested by the Purchaser more fully to effect the
purposes of this Agreement and the sales of the Transferor Receivables
hereunder, including, without limitation, the execution of any financing
statements or continuation statements relating to the Transferor Receivables
for filing under the provisions of the UCC, or any similar law, of any
applicable jurisdiction. The Seller will mark its computer files in a manner
which will reasonably indicate that the Transferor Receivables have been sold
to the Purchaser.
7.2 Payments. Each payment to be made by either of the Purchaser
or the Seller hereunder shall be made on the required payment date, or on the
next succeeding Business Day if the required payment date is not a Business
Day, in lawful money of the United States and in immediately available funds at
the office of the payee set forth below its signature hereto or to such other
office as may be specified by either party in a written notice to the other
party hereto.
7.3 Costs and Expenses; Indemnity. (a) The Seller agrees to pay
or reimburse the Purchaser for all its reasonable out-of-pocket costs and
expenses incurred including, without limitation, all reasonable fees and
disbursements of its counsel (but not any portion of the Purchase Price paid
for the Transferor Receivables), in connection with (i) the development,
preparation, execution, delivery and administration of this Agreement or of any
amendment or restatement hereof or of any waiver relating hereto, (ii) except
as expressly provided herein and as a result of the application of or reference
to Octagon in any proceeding before any state or federal court within the tenth
federal circuit or the United States Supreme Court, the sale of the Transferor
Receivables hereunder and (iii) except as expressly provided herein and as a
result of the application of
15
<PAGE> 19
or reference to Octagon in any proceeding before any state or federal court
within the tenth federal circuit or the United States Supreme Court, the
perfection as against all third parties whatsoever of the right, title and
interest of the Purchaser and any permitted transferee of the Purchaser in, to
and under the Transferor Receivables.
(b) In addition, without limiting any other rights which the
Purchaser may have hereunder or under applicable law, the Seller hereby agrees
to indemnify the Purchaser from and against any and all claims, losses,
judgments and liabilities (including reasonable attorneys' fees) (including,
without limitation, any indemnified amounts required to be paid by the
Transferor pursuant to Section 7.03 of the Pooling and Servicing Agreement)
(all of the foregoing being collectively referred to as "Indemnified Amounts"),
which (i) may at any time be imposed on, incurred by or asserted against the
Purchaser in any way relating to or arising out of this Agreement (including
any breach of the representations contained in Section 4.1(g) hereof) or the
transactions contemplated hereby or any action taken or omitted by the
Purchaser under or in connection with any of the foregoing, (ii) would not have
been imposed on, incurred by or asserted against the Purchaser but for its
having purchased the Transferor Receivables hereunder or (iii) relate to the
services underlying the Transferor Receivables or any act or omission to act by
the Seller in respect of any Transferor Receivable, excluding, however, (A)
Indemnified Amounts arising from the financial inability, unwillingness or
legal preclusion of any Obligor to pay the Receivables owed by it or any
credits, rebates, discounts or allowances granted to the Obligor which were
reflected in the Outstanding Balance of a Receivable prior to the purchase
thereof, (B) any income, franchise or other taxes (or interest or penalties
with respect thereto) incurred by the Purchaser arising out of or as a result
of this Agreement or the interest conveyed hereunder in respect of any
Transferor Receivable or (C) Indemnified Amounts arising in connection with any
assertion that the transaction does not constitute a valid sale as a result of
the application of or reference to Octagon in any proceeding before any federal
or state court within the tenth federal circuit or the United States Supreme
Court. Without in any way limiting the foregoing, except as otherwise provided
in this Section 7.3, the Seller shall pay to the Purchaser, on demand, any and
all amounts necessary to indemnify the Purchaser from and against any and all
Indemnified Amounts relating to or resulting from: (x) any and all recording
and filing fees and any and all liabilities with respect to, or resulting from
any delay in paying, any sales, gross receipts, intangible personal property,
privilege or license taxes, but not including taxes imposed upon the Purchaser
under the laws of the United States or any jurisdiction within the United
States in which the Purchaser is organized or maintains its principal office or
in which the Purchaser books this transaction; (y) any and all recording and
16
<PAGE> 20
filing fees and any and all liabilities with respect to, or resulting from, any
delay in paying any taxes which may arise at any time and from time to time in
the future in respect of this Agreement, the transactions contemplated hereby
and the subject matter hereof and thereof; and (z) costs, expenses and
reasonable counsel fees in defending against the same, whether arising by
reason of the acts to be performed by the Seller hereunder or imposed against
the Purchaser or the Seller, the property involved or otherwise.
(c) The agreements in this Section 7.3 shall survive the
collection of all Receivables, the termination of this Agreement and the
payment of all amounts payable hereunder. For purposes of this Section 7.3,
any reference to the Purchaser shall include any officer, director, employee,
agent or affiliate thereof.
7.4 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Seller and the Purchaser and their respective
permitted successors (whether by merger, consolidation or otherwise) and
assigns. Except as otherwise permitted herein and in the Pooling and Servicing
Agreement, the Seller agrees that it will not assign or transfer all or any
portion of its rights or obligations hereunder without the prior written
consent of the Purchaser and a Majority in Interest of each outstanding Series.
The Seller acknowledges that the Purchaser shall assign to the Trustee on
behalf of the Trust, as collateral security for the Purchaser's obligations
under the Pooling and Servicing Agreement, all of the Purchaser's rights,
remedies, powers and privileges hereunder (including, without limitation, the
right to give any notice which the Purchaser may provide to the Seller
hereunder), provided that the Purchaser shall not assign or delegate any of its
duties or obligations hereunder to the Trustee or the Trust.
7.5 Governing Law, Jurisdiction, Consent to Service of Process.
(a) This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits to the nonexclusive jurisdiction of any federal court
of the United States of America sitting in New York City or, if jurisdiction is
not available in such federal court, New York State court, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in New York State or, to the extent
permitted by law, in such federal court.
17
<PAGE> 21
(c) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 7.9. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
7.6 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of any party hereto, any right, remedy, power
or privilege hereunder, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.
7.7 Amendments and Waivers. Neither this Agreement nor any terms
hereof may be amended, supplemented or modified except in writing signed by the
Purchaser and the Seller.
7.8 Severability. If any provision hereof is void or
unenforceable in any jurisdiction, such voiding or unenforceability shall not
affect the validity or enforceability of (i) such provision in any other
jurisdiction or (ii) any other provision hereof in such or any other
jurisdiction.
7.9 Notices. Unless otherwise expressly permitted hereby, all
notices, requests and demands to or upon any party hereto to be effective shall
be in writing delivered by hand or by facsimile and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered
by hand to the address set forth below its signature hereto or such address as
may be hereafter notified by it to the other party hereto, or, in the case of
notice by facsimile, when telecopied to the number set forth below its
signature hereto.
7.10 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original, and all of which
taken together shall constitute one and the same agreement.
7.11 Construction of Agreement. It is the intention of the parties
hereto that, pursuant to this Agreement, Seller shall sell and transfer all of
its right, title and interest in and to the Transferor Receivables to the
Purchaser and that the Purchaser shall purchase and receive all of the Seller's
right, title and interest in and to the Transferor Receivables. It is not the
intention of the parties that Seller merely transfer to Purchaser a security
interest in the Transferor Receivables. All references in this Agreement to
the filing or amendment of financing statements and continuation statements in
order to
18
<PAGE> 22
perfect the Purchaser's interest in the Transferor Receivables relate to the
parties' intention to comply with the applicable provisions of the Uniform
Commercial Code which may require the filing of a financing statement to
perfect an ownership interest, rather than a security interest, in accounts.
Such references are not intended to evidence or suggest that Seller merely
transferred to the Purchaser a security interest in the Transferor Receivables.
If, however, such transactions are deemed to be loans by a court of competent
jurisdiction, (i) it shall likewise be deemed that the Seller has granted to
the Purchaser a first priority security interest in all of the Seller's right,
title and interest in and to the Transferor Receivables now existing and
hereafter created, all monies due or to become due and all amounts and other
proceeds received with respect thereto, to secure all of the Seller's
obligations hereunder, which obligations shall be likewise deemed to include an
obligation to repay to Purchaser, with interest, all amounts paid by Purchaser
to Seller as the purchase price of the Receivables and (ii) this Agreement
shall likewise be deemed to constitute a security agreement under applicable
law. The parties agree to use their best efforts to support the treatment of
the transfer as a sale and not as a financing.
7.12 Termination. This Agreement will terminate upon the termination
of the Trust, provided, however, that the indemnities of the Seller to the
Purchaser set forth in this Agreement shall survive such termination and
provided, further, that the Purchaser shall remain entitled to receive any
collections on Receivables sold hereunder which have become Defaulted
Receivables after it shall have completed its collection efforts in respect
thereof.
7.13 Limitations on Liability. None of the directors, officers,
shareholders, employees or agents of the Seller or Purchaser, past, present or
future, shall be under any liability to the Purchaser or Seller (as the case
may be) or any other Person for any action taken or omitted to be taken in such
capacities pursuant to this Agreement; provided, however, that this provision
shall not protect any such Person against any liability which would otherwise
be imposed by reason of such Person's willful misconduct or bad faith in the
performance of such Person's duties or the reckless disregard by such Person of
any of such Person's obligations and duties hereunder. The Seller and
Purchaser and any director, officer, employee or agent of the Seller and
Purchaser may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person (other than the Seller or
Purchaser or any Affiliate thereof as the case may be) respecting any matters
arising hereunder.
7.14 Third Party Beneficiary. The Seller and the Purchaser agree
that the Trustee is a third party beneficiary of Section
19
<PAGE> 23
7.3. The Trustee shall have full right to bring any action or begin any
proceeding for the enforcement of Section 7.3 with respect to the obligations
of the Seller.
IN WITNESS WHEREOF, the parties hereto have caused this Receivables
Purchase Agreement to be executed by their respective officers thereunto duly
authorized, all as of the day and year first above written.
GENEVA STEEL COMPANY
as Seller
By: Dennis L. Wanlass
------------------------------
Name: Dennis L. Wanlass
Title: Vice President
Address: 10 South Geneva Road
Vineyard, Utah 84058
Facsimile No.: (801) 227-9090
Attention: Chief Financial Officer
GENEVA STEEL COMPANY
as Servicer
By: Dennis L. Wanlass
------------------------------
Name: Dennis L. Wanlass
Title: Vice President
Address: 10 South Geneva Road
Vineyard, Utah 84058
Facsimile No.: (801) 227-9090
Attention: Chief Financial Officer
GENEVA STEEL FUNDING CORPORATION
as Purchaser
By: Richard D. Clayton
------------------------------
Name: Richard D. Clayton
Title: President
Address: 10 South Geneva Road
Vineyard, Utah 84058
Facsimile No.: (801) 227-9020
Attention: Treasurer
20
<PAGE> 24
EXHIBIT A TO RECEIVABLES
PURCHASE AGREEMENT
GENEVA STEEL FUNDING CORPORATION
SUBORDINATED NOTE
DUE: November 4, 2014 No. 1
Geneva Steel Funding Corporation (the "Issuer"), for value received,
hereby promises to pay to GENEVA STEEL COMPANY (the "Holder"), or its
registered assigns, at its address for payments set forth in the Receivables
Purchase Agreement hereinafter referred to, all principal sums which are to be
evidenced hereby from time to time under the provisions of the Receivables
Purchase Agreement, upon the earlier to occur of (i) November 4, 2014 or (ii)
the date upon which the aggregate Invested Amount for each Series is zero (the
"Stated Maturity" of said principal sum), unless earlier prepaid pursuant to
the provisions for repayment referred to herein, and to pay interest (computed
on the basis of a 360-day year and the actual number of days in each calendar
year) on the unpaid principal balance hereof from the date such principal sum
is evidenced hereby, such interest being payable on (a) November 15, 1994 and
the fifteenth day of each month thereafter and (b) on the earlier of (1) the
date of prepayment and (2) Stated Maturity at a rate per annum equal to the
Certificate Rate until the principal hereof is paid in full, both before and
after judgment. The Holder shall enter on the grid, attached hereto as
Attachment A, information reflecting the date and amount of each principal sum
to be evidenced hereby, the interest rate applicable thereto and the amount of
any payments made hereon. Notwithstanding anything contained herein to the
contrary, the principal sum hereof shall not at any time exceed ten percent
(10%) of the aggregate purchase price (as determined pursuant to the
Receivables Purchase Agreement) of the Receivables purchased under the
Receivables Purchase Agreement which are still outstanding at such time
(whether owned by Purchaser or the Trustee for the benefit of the Trust).
Payments of the principal of and interest on this Subordinated Note
(the "Note") will be made in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts by check mailed to, or wire transfer in federal funds to the
account of, the Holder as directed by the Holder. If any payment on this Note
shall remain unpaid on the due date thereof, the same shall thereafter be
payable with interest thereon (to the extent permitted by law) at the
Certificate Rate plus 2%, from such due date to the date of payment thereof.
This Note is issued under the Receivables Purchase Agreement, dated as
of November 4, 1994, between the Issuer and
<PAGE> 25
the Holder (as the same may be modified, amended, restated or supplemented from
time to time, the "Receivables Purchase Agreement"). This Note represents a
portion of the Purchase Price for Receivables purchased by the Issuer pursuant
to the terms of the Receivables Purchase Agreement. Each capitalized term
utilized herein which is defined in the Receivables Purchase Agreement or the
Pooling and Servicing Agreement, dated as of November 4, 1994, among the
Issuer, as transferor, the Holder, as Servicer and Bankers Trust Company, as
Trustee (as the same may be modified, amended, restated or supplemented from
time to time, the "Pooling and Servicing Agreement") shall have the meaning
ascribed to it in the Receivables Purchase Agreement or the Pooling and
Servicing Agreement, as the case may be.
This Note is subject to prepayment in full or in part at the option of
the Issuer at any time upon three business days' prior notice to the Holder,
without a premium.
This Note is subordinate and junior in right and time of payment to
all "Senior Debt" of the Issuer, which is any Indebtedness (as defined below)
of the Issuer (including, without limitation, the Series 1994-1 Floating Rate
Trade Receivables Asset Backed Certificate and any other Series of Certificates
issued by the Trust), and all renewals, extensions, refinancing and refundings
thereof, except any such Indebtedness that expressly provides that it is not
senior or superior in right of payment hereto. "Indebtedness" is any
indebtedness in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereto) and any obligations of the Issuer under the
Pooling and Service Agreement, the Receivables Purchase Agreement and any
Supplement.
All scheduled payments of principal and interest then due and owing in
respect of Senior Debt must be paid before this Note may be paid, and all
scheduled payments of principal and interest then due on this Note shall be
payable only to the extent that the Issuer, after paying all of its accounts
payable and other current expenses, has the funds to make such payments. The
Issuer agrees, and the Holder by accepting this Note agrees, to the
subordination provisions herein contained.
The Holder of this Note, by its acceptance hereof, hereby covenants
and agrees that it will not at any time institute against the Issuer any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law.
In the event the Holder of this Note shall retain or engage an
attorney to collect or enforce or protect its interests with respect to this
Note, the Issuer shall pay all of the reasonable costs and expenses of such
collection, enforcement or protection,
A-2
<PAGE> 26
including reasonable attorneys' fees, whether or not suit is instituted.
This Note shall for purposes be governed by, and construed in
accordance with, the laws of the State of New York without reference to its
conflict of law provisions.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed manually by its undersigned officer duly authorized thereunto.
Dated: November 4, 1994
GENEVA STEEL FUNDING CORPORATION
By:
----------------------------
Name:
Title:
A-3
<PAGE> 27
Attachment A
<TABLE>
<CAPTION>
Principal Interest Principal Interest
Date Advanced Paid Paid Rate
- ---- --------- -------- --------- --------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 28
ANNEX X
DEFINITIONS
Whenever used in the Transaction Documents, the following
words and phrases shall have the following meanings, and the definitions of
such terms are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of
such terms.
"Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Additional Early Amortization Event" shall have the meaning
specified in Section 7.01 of each Supplement.
"Additional Interest Period" shall have the meaning specified
in Section 2.05(d) of the Certificate Purchase Agreement.
"Adjusted Eurodollar Rate" shall mean, for each Interest
Period, for any Increase, an interest rate per annum equal to the sum of (a)
the rate of interest per annum (the "Eurodollar Rate") at which deposits in
U.S. Dollars are offered by the principal office in London, England of the
Reference Bank to prime banks in the interbank eurodollar market at 11:00 a.m.
(London time) two Eurodollar Business Days (as defined below) before the first
day of such Interest Period in an amount approximately equal or comparable to
the principal amount of such Increase and for a period equal to such Interest
Period plus (b) the remainder obtained by subtracting (i) the Eurodollar Rate
for such Interest Period from (ii) the rate obtained by dividing such
Eurodollar Rate by the percentage equal to 100% minus the "Eurodollar Reserve
Percentage" (as defined below) for such Interest Period. "Eurodollar Business
Day" means a day of the year on which dealings are carried on in the London
interbank market and banks are open for business in London and are not required
or authorized to close in New York City. "Eurodollar Reserve Percentage" of
the Reference Bank for any Interest Period means the reserve percentage
applicable during such Interest Period under regulations issued from time to
time by the Board of Governors of the Federal Reserve System (or any successor)
(or if more than one such percentage shall be so applicable, the daily average
of such percentages for such day) for determining the maximum reserve
requirement (including, without limitation, any marginal reserve requirement)
for a member bank of the Federal Reserve System in New York City, the Reference
Bank in respect of liabilities or assets consisting of or including
Eurocurrency liabilities as that term is used in Regulation D of the Board of
Governors of the Federal Reserve System as in effect from time to time having a
term equal to such Interest Period.
<PAGE> 29
"Affiliate" shall mean, with respect to any specified Person,
any other Person controlling, controlled by or under common control with such
specified Person and, without limiting the generality of the foregoing, shall
be presumed to include (A) any Person which beneficially owns or holds 10% or
more of any class of voting securities of such designated Person or 10% or more
of the equity interest in such designated Person and (B) any Person of which
such designated Person beneficially owns or holds 10% or more of any class of
voting securities or in which such designated Person beneficially owns or holds
10% or more of the equity interest. For the purposes of this definition,
"control" when used with respect to any specified Person shall mean the power
to direct the management and policies of such specified Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Aggregate Certificateholders' Interest" shall mean the
aggregate of the Certificateholders' Interests for each Series as defined in
Section 4.01(a) of the Pooling and Servicing Agreement.
"Aggregate Liquidity Provider Commitment" shall mean the
aggregate of the amount of the Liquidity Provider Commitments which at all
times shall equal the Maximum Invested Amount.
"Alternate Base Rate" means a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall at
all times be equal to the highest of:
(i) the rate of interest announced publicly by the
Reference Bank in New York, New York, from time to time as the
Reference Bank's base rate; or
(ii) 1.50% per annum above the latest three-week
moving average of secondary market morning offering rates in
the United States for three-month certificates of deposit of
major United States money market banks, such three- week
moving average being determined weekly on each Monday (or, if
any such day is not a Business Day on the next succeeding
Business Day) for the three-week period ending on the previous
Friday by the Reference Bank on the basis of such rates
reported by certificate of deposit dealers to and published by
the Federal Reserve Bank of New York in Federal Reserve
Statistical Release H.15(519) or, if such publication shall be
suspended or terminated, on the basis of quotations for the
latest three-week average of secondary market morning offering
rates received by the Reference Bank from three New York
certificate of deposit dealers of recognized standing selected
by the
2
<PAGE> 30
Reference Bank, in either case adjusted to the nearest 1/4 of
one percent or, if there is no nearest 1/4 of one percent, to
the next higher 1/4 of one percent; or
(iii) 1.50% percent per annum above the Federal
Funds Rate.
"Amortization Date" with respect to any Series, shall have the
meaning specified in the related Supplement.
"Amortization Period" shall mean, with respect to any Series,
unless otherwise specified in the related Supplement, the period beginning on
the related Amortization Date, and ending upon the full reduction of the
Invested Amount with respect to such Series, all accrued and unpaid Yield
thereon and all other amounts due and owing to the Investor Certificateholders
under the Transaction Documents.
"Bank Rate" for any Interest Period for any Increase means an
interest rate per annum equal to the sum of (a) the Adjusted Eurodollar Rate
for such Interest Period for such Increase, plus (b) 1.00% per annum; provided,
however, that (i) in the case of any Interest Period for any such Increase of
one to (and including) thirteen days, or in respect of an Increase the
principal balance of which is less than $5,000,000, the "Bank Rate" for such
Interest Period for such Increase shall be the Alternate Base Rate in effect on
the first day of such Interest Period unless the Certificate Agent and the
Transferor agree in writing to a different rate; (ii) if it shall become
unlawful for the Reference Bank to obtain funds in the London interbank market
in order to purchase, fund or maintain any Increase under the Certificate
Purchase Agreement or deposits in dollars (in the applicable amounts) are not
being offered by the Reference Bank in the London interbank market, then the
"Bank Rate" for any Interest Period for such Increase shall be the Alternate
Base Rate in effect from time to time during such Interest Period; and (iii)
following the occurrence and during the continuation of an Early Amortization
Period, the "Bank Rate" for any Interest Period for such Increase shall be the
sum of the applicable interest rate per annum determined pursuant to the
provisions set forth above plus 2% per annum.
"Beneficiary" shall mean, as of any date of determination, any
of the then holders of the Investor Certificates and any Enhancement Provider.
"Breakage Costs" shall mean, for each Increase for the
Interest Period during which the principal amount for such Increase is reduced
and for which the applicable Yield Rate is the CP Rate or a rate calculated on
the basis of the Adjusted Eurodollar Rate, the amount, if any, billed by which
(i) the Yield (calculated without taking into account any Breakage Costs)
3
<PAGE> 31
which would have accrued on the reductions of such Increase or Liquidity
Provider Commitment Percentage of such Increase, as applicable, during such
Interest Period (as so computed) if such reductions had remained as Increases
through the last day of the Interest Period exceeds (ii) the income, if any,
received by the Purchaser or a Liquidity Provider funding such Increase or
Liquidity Provider Commitment Percentage of such Increase, as applicable, from
the Purchaser's or Liquidity Provider's investment of the proceeds of such
reductions of such Increase.
"Business Day" shall mean any day other than a Saturday or
Sunday or any other day on which national banking associations or state banking
institutions in New York, New York, Salt Lake City, Utah or the city in which
the Corporate Trust Office is located are authorized or obligated by law,
executive order or governmental decree to be closed.
"Canadian Obligors" shall mean each Person who is obligated to
pay for goods or services provided by Geneva Steel which gave rise to a
Receivable, including any guarantor of such Person's obligations, in the case
of any Person who is an individual, who is a citizen and, in the case of any
other Person, which is formed, organized or incorporated under the laws of the
Commonwealth of Canada or any province of Canada.
"Canadian Receivables" shall mean United States dollar
denominated accounts receivable generated from sales to Canadian Obligors.
"Certificate" shall mean any one of the Investor Certificates
or the Transferor Certificate.
"Certificate Agent" shall mean Citicorp North America, Inc. in
its capacity as agent for CRC and the Liquidity Providers under the Certificate
Purchase Agreement.
"Certificate Interest" shall mean each participating interest
in the Series 1994-1 Certificate acquired by CRC or a Liquidity Provider in
connection with the funding of an Increase by CRC or a Liquidity Provider
pursuant to Section 2.05 of the Certificate Purchase Agreement.
"Certificate Purchase Agreement" shall mean the Certificate
Purchase Agreement dated November 4, 1994, among the Transferor, the Purchaser,
the Liquidity Providers named therein, the Servicer, the Certificate Agent and
the Trustee, as amended, supplemented, restated or otherwise modified from time
to time.
"Certificate Purchase Price" shall have the meaning specified
in Section 2.01 of the Certificate Purchase Agreement.
4
<PAGE> 32
"Certificate Rate" shall mean, with respect to any Series or
Class, the certificate rate specified therefor in the related Supplement.
"Certificate Register" shall have the meaning specified in
Section 6.03(a) of the Pooling and Servicing Agreement.
"Certificateholder" or "Holder" shall mean the Person in whose
name an Investor Certificate or the Transferor Certificate is registered in the
Certificate Register.
"Certificateholders' Interest" shall have the meaning
specified in Section 4.01(a) of the Pooling and Servicing Agreement.
"Class" shall mean, with respect to any Series divided into
classes, any one of the classes of Investor Certificates of that Series.
"Closing Date" shall mean, with respect to any Series, the
Closing Date specified in the related Supplement.
"Collection Period" shall mean, with respect to any
Distribution Date, the calendar month (or, in the case of the calendar month in
which any Closing Date occurs, the portion of such calendar month following the
Closing Date) immediately preceding the calendar month in which such
Distribution Date occurs.
"Collections" shall mean (a) all cash payments by or on behalf
of the Obligors deposited to any Geneva Steel Collection Account or
Concentration Account, or received by the Servicer, in respect of Transferor
Receivables in the form of cash, checks, wire transfers, electronic transfers
or any other form of cash payment, and (b) all interest and other investment
earnings (net of losses and investment expenses) on Collections (including
without limitation funds on deposit in the Reserve Accounts) as a result of the
investment thereof pursuant to Section 4.02 of the Pooling and Servicing
Agreement.
"Concentration Account" shall have the meaning specified in
Section 4.02 of the Pooling and Servicing Agreement.
"Concentration Account Bank" shall initially be Bankers Trust
Company, and shall have the meaning specified in Section 4.02 of the Pooling
and Servicing Agreement.
"Concentration Amount" shall mean as of any date, with respect
to each Concentration Limit, the product of (a) such Concentration Limit and
(b) the aggregate amount of Eligible Receivables of a particular Obligor or
Obligors held by the Trust as to which such Concentration Limit applies.
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<PAGE> 33
"Concentration Limit" shall mean, with respect to the
following types of Receivables, the percentages of the aggregate amount of
Eligible Receivables held by the Trust set forth as follows: (a) Receivables
of any single Obligor rated at least "A-1" or its equivalent by each Rating
Agency, 6%; (b) Receivables of any single Obligor rated below "A-1", but at
least "A-2" or its equivalent by each Rating Agency, 5%; (c) Receivables of any
single Obligor rated below "A-2" but at least "A-3" or its equivalent by each
Rating Agency, 4%; (d) Receivables of any other single Obligor not rated on its
short-term debt, or the Mannesman Receivable, 3%; and (e) if the Commonwealth
of Canada sovereign debt rating is less than "AA" (or its equivalent) by each
Rating Agency, Receivables of any Canadian Obligor, 3%; provided, however, that
the Transferor may adjust the level of any Concentration Limit (i) if such
adjustment in and of itself does not cause each Rating Agency, as confirmed in
writing by each Rating Agency, to lower or withdraw its rating of any Series of
Certificates and (ii) subject to any further conditions specified in any Series
Supplement; provided, further, that (A) if two or more Rating Agencies assign
different ratings to a single Obligor or the Commonwealth of Canada, as the
case may be, the lower of such ratings shall be used to determine the
Concentration Limit and (B) if only one Rating Agency rates an Obligor or the
Commonwealth of Canada, as the case may be, the rating of such Rating Agency
shall be used to determine the Concentration Limit for such Obligor or Canada,
as the case may be.
"Confidential Information" shall mean, in relation to any
Person, any written information delivered or made available by or on behalf of
Geneva Steel (or its Affiliates or Subsidiaries) or the Transferor to such
Person in connection with or pursuant to this Agreement or the transactions
contemplated hereby which is proprietary in nature, other than information (i)
that is or becomes publicly known, or information obtained by the Person from
sources other than Geneva Steel or the Transferor, (ii) required to be
disclosed (A) by any applicable statute, law, rule or regulation, (B) by any
government agency or regulatory or self-regulatory body having or claiming
authority to regulate or oversee any aspects of the Person's business or that
of its Affiliates, (C) pursuant to any subpoena, civil investigative demand or
similar demand or request of any court, regulatory authority, arbitrator or
arbitration to which the Person or an Affiliate or an officer, director,
employer or shareholder thereof is a party, (D) in any preliminary or final
offering circular, registration statement or contract or other document
pertaining to the transactions contemplated by the Agreement approved in
advance by Geneva Steel or the Transferor, as the case may be, or (E) to any
Affiliate, independent or internal auditor, agent, employee or attorney of the
Person having a need to know the same, provided that the Person advises such
recipient of the confidential nature of the information
6
<PAGE> 34
being disclosed, (iii) any other disclosure authorized by Geneva Steel or the
Transferor as the case may be or (iv) disclosure to the other parties to the
transactions contemplated by the Pooling and Servicing Agreement.
"Contract" shall mean an agreement between Geneva Steel and an
Obligor, containing terms pursuant to or under which such Obligor shall be
obligated to pay from time to time for merchandise delivered or to be delivered
or services performed or to be performed and shall include, as applicable, any
invoice related thereto.
"Contractual Obligation" shall mean as to any Person, any
provision of any security issued by such Person or of any agreement, instrument
or other undertaking to which such Person is a party or by which it or any of
its property is bound.
"Corporate Trust Office" shall have the meaning specified in
Section 11.16 of the Pooling and Servicing Agreement.
"CP Note" shall mean any commercial paper note issued by CRC
to fund any Increase the Yield Rate in respect of which shall be determined by
reference to the CP Rate.
"CP Note Issuance Fees" shall mean with respect to each
issuance of CP Notes, the costs associated with such issuance paid by CRC.
"CP Rate" shall mean as to any Interest Period for the CRC
Tranche related to an Increase, a rate per annum equal to the weighted average
of the rates (or, if such rates are discount rates, the rates determined by
converting the discount rates to an interest-bearing equivalent rate per annum)
at which CP Notes allocable, in whole or part, by the Certificate Agent and
having a term equal to such Interest Period are issued by CRC to fund such
Increase through a placement agent or commercial paper dealer selected by the
Certificate Agent, as agreed between each such agent or dealer and the
Certificate Agent.
"CRC" shall mean Corporate Receivables Corporation, a
California corporation, including any successors and assigns.
"CRC Tranche" shall mean any issuance of Notes the proceeds of
which are used by CRC to fund an Increase and which CRC Tranche has the
principal amount and, in the case of any Increase the Yield Rate in respect of
which shall be determined by reference to the CP Rate, the Interest Period, in
each case, as specified by the Transferor pursuant to the Certificate Purchase
Agreement.
"Credit Policy Manual" shall mean those credit and collection
policies and practices of Geneva Steel described in
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<PAGE> 35
its credit policy manual in effect on the date hereof relating to Receivables,
as the same may be amended or modified from time to time in compliance with
Section 3.04(j) of the Pooling and Servicing Agreement.
"Cure Funds" shall have the meaning specified in the
definition of the term "Cure Period" contained in this Annex X.
"Cure Period" shall mean the period beginning on a Pool
Non-compliance Date if the Transferor shall begin depositing Collections or
funds pro rata to the Reserve Account of each Series on the day collected (all
such funds so deposited from time to time by the Transferor being "Cure
Funds"), and continuing until the earlier of (a) the date on which the Net
Receivables Balance equals at least the Required Net Receivables Balance and
(b) the fifteenth day following the occurrence of such Pool Non-compliance
Date.
"Cut-Off Date" shall mean the close of business on the
Business Day immediately preceding the Closing Date.
"Daily CRC Expense Amount" shall mean with respect to any
Collection Period, the Monthly CRC Expense Amount divided by the number of days
in such Collection Period.
"Daily Report" shall mean, with respect to any Series, the
daily report in the form set forth in the related Supplement.
"Daily Trust Expense Amount" shall mean with respect to any
Collection Period, the Monthly Trust Expense Amount divided by the number of
days in such Collection Period.
"Default Ratio" shall mean, for any month, the average of the
ratios for each of the three most recently ended months (each expressed as a
percentage) of (i) aggregate Transferor Receivables (without giving effect to
extended debits and credits) that were 121 days past due at the end of each
such month plus Transferor Receivables which were charged off as uncollectible
during the current month which were less than 150 days past due when charged
off to (ii) aggregate Transferor Receivables that were acquired by the Trust
during the sixth month preceding such date.
"Defaulted Receivable" shall mean a Transferor Receivable: (i)
as to which the Obligor thereof has taken any action, or suffered any event to
occur, of the type constituting an Insolvency Event, (ii) as to which any
payment, or part thereof, remains unpaid by the Obligor thereof for 121 days or
more from the original due date for such payment specified in the relevant
invoice, and (iii) which, consistent with the Credit Policy Manual, would be
written off as uncollectible.
8
<PAGE> 36
"Deposit Date" shall mean each Business Day on which any
Collections are deposited in the Concentration Account.
"Determination Date" shall mean, with respect to any
Distribution Date, the second Business Day preceding such Distribution Date.
"Determination Date Certificate" shall mean, with respect to
any Determination Date and any Series, a report prepared by a Servicing Officer
for such Determination Date as of the end of the immediately preceding month in
substantially the form set forth in the related Supplement.
"Diluted Receivable" shall mean, that portion of any Eligible
Receivable which is either (a) reduced or canceled as a result of (i) any
failure by Geneva Steel to deliver any merchandise or provide any services or
otherwise to perform under the underlying Contract, (ii) any change in the
terms of, or cancellation of, a Contract or any other adjustment by Geneva
Steel which reduces the amount payable by the Obligor on the related Receivable
or (iii) any setoff in respect of any claim by an Obligor thereof (whether such
claim arises out of the same or an unrelated transaction) or (b) subject to any
specific dispute, offset, counterclaim or defense whatsoever asserted (except
the discharge in bankruptcy of the Obligor thereof); provided, that Diluted
Receivables do not include (x) contractual adjustments to the amount payable by
an Obligor that are eliminated from the Receivables balance sold to the Trust
through a reduction in the Purchase Price for the related Receivable or (y) any
portion of those Receivables for which a production prepayment has been
received.
"Dilution Ratio" shall mean as of any date, the ratio for the
most recently ended month (expressed as a percentage) of (i) the aggregate
balance of Transferor Receivables that became Diluted Receivables during such
month to (ii) the aggregate balance of all Transferor Receivables acquired by
the Trust during the month preceding such date of calculation.
"Dilution Volatility Factor" shall mean as of any date a
percentage equal to the product of (i) the amount by which (A) the highest
Dilution Ratio during the most recently ended twelve-month period exceeds (B)
the average of the Dilution Ratios during such twelve-month period and (ii) (A)
the highest Dilution Ratio during such twelve-month period divided by (B) the
average of the Dilution Ratios during such twelve-month period.
"Discount Amount" shall mean, with respect to any Series, the
amount set forth in the related Supplement.
"Distribution Date" shall mean, with respect to any Collection
Period, the fifteenth day of the calendar month
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<PAGE> 37
immediately following such Collection Period, or, if such day is not a Business
Day, the next succeeding Business Day or such other day as set forth in the
Supplement for a Series.
"Division" shall mean the Division of Corporations and
Commercial Code of the Department of Commerce of the State of Utah.
"Dollars and $" shall mean lawful money of the United States
of America.
"Duff & Phelps" shall mean Duff & Phelps Credit Rating Co. or
its successor.
"Dynamic Loss and Dilution Reserve Percentage" shall mean as
of any date of determination the sum of (a) the product of (i) 2.25 times (ii)
the average Dilution Ratio during the preceding 12 months times (iii) a
fraction the numerator of which is the total sales for the past month and the
denominator of which is the aggregate outstanding balance of Eligible
Receivables as of the end of the most recently ended month, plus (b) the
product of the Dilution Volatility Factor times the fraction specified in
clause (a)(iii) above, plus (c) the product of (i) 2.25, times (ii) the highest
Default Ratio during the preceding 12 months, times (iii) a fraction the
numerator of which is the total sales for the past 6 months and the denominator
of which is the aggregate outstanding balance of Eligible Receivables as of the
end of the most recently ended month.
"Early Amortization Event" shall have the meaning specified in
Section 9.01 of the Pooling and Servicing Agreement and with respect to any
Series shall also mean any Additional Early Amortization Event specified in the
related Supplement.
"Early Amortization Period" shall mean, with respect to any
Series, unless otherwise specified in the related Supplement, the period
beginning at the close of business on the Business Day immediately preceding
the day on which an Early Amortization Event is deemed to have occurred, and in
each case ending upon the earlier to occur of (a) the payment in full to the
Investor Certificateholders of such Series of the Invested Amount with respect
to such Series and (b) the Termination Date with respect to such Series.
"Early Termination" shall have the meaning specified in
Article VI of the Receivables Purchase Agreement.
"Effective Period" shall mean the period beginning on the
Closing Date and terminating on the earliest of (a) the close of business on
the Business Day on which a Termination Event occurs, and (b) the close of
business on the Business Day
10
<PAGE> 38
immediately preceding the day on which the Amortization Period for the last
outstanding Series begins.
"Eligible Institution" shall have the meaning specified in the
related Supplement.
"Eligible Investments" shall mean book-entry securities
entered on the books of the registrar of such security and held in the name or
on behalf of the Trustee or negotiable instruments or securities represented by
instruments in bearer or registered form (registered in the name of the Trustee
or its nominee) which evidence:
(a) direct obligations of, or obligations fully
guaranteed as to timely payment by, the United States of
America or any agency;
(b) demand deposits, time deposits or
certificates of deposit (having original maturities of no more
than 270 days) of depository institutions or trust companies
incorporated under the laws of the United States of America or
any state thereof (or domestic branches of foreign banks),
subject to supervision and examination by Federal or state
banking or depository institution authorities, and having, at
the time of the Trust's investment or contractual commitment
to invest therein, the highest short-term unsecured debt
rating from S&P, Moody's and Duff & Phelps;
(c) commercial paper (having original maturities
of no more than 270 days) having, at the time of the Trust's
investment or contractual commitment to invest therein, the
highest short-term rating from S&P, Moody's and Duff & Phelps;
(d) investments in no load money market funds
having a rating from each rating agency rating such fund in
its highest investment category (including funds for which the
Trustee or any of its Affiliates is an investment manager or
advisor);
(e) notes or bankers' acceptances (having
original maturities of no more than 270 days) issued by any
depository institution or trust company referred to in clause
(b) above;
(f) Such other investments, so long as they shall
be rated by S&P, Moody's and Duff & Phelps as either AAA, Aaa
or Duff-1+, as an eligible investment for AAA rated
transactions, or in the highest short term rating assigned by
each such rating agency; or
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<PAGE> 39
(g) repurchase agreements secured by other
Eligible Investments.
"Eligible Receivable" shall mean each Transferor Receivable or
portion thereof:
(i) the Obligor of which is not an
Affiliate of Geneva Steel or the Transferor;
(ii) as to which, other than as a result
of the application of or reference to Octagon in any proceeding before
any state or federal court within the tenth federal circuit or the
United States Supreme Court, at the time of the Transfer of such
Receivable to the Trust, the Transferor or the Trust will have good
and marketable title thereto free and clear from Liens except as
created under the Transaction Documents, and which has been the
subject of either a valid transfer and assignment from the Transferor
to the Trust of all the Transferor's right, title and interest therein
(and in the proceeds thereof), or the grant of a first priority
perfected "security interest" (within the meaning of the UCC of the
jurisdiction the law of which governs the perfection of the interest
in such Receivable created under the Transaction Documents) therein
(and in the proceeds thereof);
(iii) which is not a Defaulted Receivable
or a Diluted Receivable;
(iv) which arose in the ordinary course
of business of Geneva Steel and is an account receivable representing
all or part of the sales price of merchandise, or services within the
meaning of Section 3(c)(5) of the Investment Company Act, the Obligor
of which is primarily liable with respect thereto;
(v) which is an "account" (within the
meaning of Section 9-106 of the UCC of the jurisdiction the law of
which governs the perfection of the interest in such Receivable
created under the Transaction Documents);
(vi) which is denominated and payable
only in United States dollars in the United States;
(vii) the Obligor of which is a United
States or Canadian resident or citizen;
(viii) which is the legal and assignable
payment obligation of the Obligor of such Receivable, enforceable
against such Obligor in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, morato-
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<PAGE> 40
rium or other laws affecting creditors' rights generally, and except
as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity);
(ix) which was created in material
compliance with, and which, at the time of the Transfer of such
Receivable to the Trust, does not contravene in any material respect,
any applicable Requirements of Law, and the Obligor on which is not in
violation of any such Requirements of Law in any material respect with
respect to such Receivable;
(x) which satisfies in all material
respects all applicable requirements of the Credit Policy Manual
including, without limitation, payment terms that conform to the
provisions of such Credit Policy Manual;
(xi) with respect to which all material
consents, licenses, approvals or authorizations of, or registrations
or declarations with, any Governmental Authority required to be
obtained, effected or given in connection with the creation of such
Receivable have been duly obtained, effected or given and are in full
force and effect;
(xii) which is not subject to any specific
waiver or modification except for a Receivable which is subject to a
waiver or modification as permitted in accordance with the Credit
Policy Manual and which waiver or modification is reflected in the
Servicer's records and computer files relating thereto;
(xiii) which is not subject to any
enforceable provision prohibiting the transfer or assignment by Geneva
Steel of such payment obligation; and
(xiv) the Obligor of which is not a
Governmental Authority.
"Eligible Servicer" shall mean Geneva Steel, the Trustee or an
entity which, at the time of its appointment as Servicer, (a) is servicing a
portfolio of trade receivables, (b) is legally qualified and has the capacity
to service the Receivables and (c) has demonstrated the ability to
professionally and competently service a portfolio of similar trade receivables
with high standards of skill and care.
"Enhancement" shall mean the rights and benefits provided to
the Investor Certificateholders of any Series or Class pursuant to any letter
of credit, surety bond, cash collateral account, spread account, guaranteed
rate agreement, maturity liquidity facility, tax protection agreement, interest
rate swap
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<PAGE> 41
agreement or other similar arrangement. The subordination of any Series or
Class to any other Series or Class or of the Transferor's Interest to any
Series or Class shall be deemed to be an Enhancement.
"Enhancement Agreement" shall mean any agreement, instrument
or document governing the terms of any Enhancement of any Series or pursuant
to which any Enhancement of any Series is issued or outstanding.
"Enhancement Provider" shall mean the Person providing any
Enhancement, other than any Certificateholders (including any holder of the
Transferor Certificate) the Certificates of which are subordinated to any other
Series or Class.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any Person who is a member of a
group which is under common control with the Transferor, or who together with
the Transferor is treated as a single employer within the meaning of Title IV
of ERISA.
"Expected Final Payment Date" with respect to any Series shall
have the meaning specified in the related Supplement.
"Extension Term" shall mean, with respect to the term of any
Liquidity Provider Commitment, a period of 364 days.
"FDIC" shall mean the Federal Deposit Insurance Corporation or
any successor.
"Federal Funds Rate" shall mean, with respect to any day, the
rate set forth in H.15(519) for that day opposite the caption "Federal Funds
(Effective)". If on any date of determination, such rate is not published in
H.15(519), such rate will be the rate set forth in Composite 3:30 P.M.
Quotations for U.S. Government Securities for that day under the caption
"Federal Funds/Effective Rate". If on any date of determination, the
appropriate rate is not published in either H.15(519) or Composite 3:30 P.M.
Quotations for U.S. Government Securities, such rate will be the arithmetic
mean of the rates for the last transaction in overnight Federal funds arranged
by three leading brokers of Federal funds transactions in New York City prior
to 9:00 A.M., New York City time, on that day.
"Fee Letter" shall have the meaning specified in Section 3.01
of the Certificate Purchase Agreement.
"Floating Allocation Percentage" with respect to each Series,
shall have the meaning specified in the related Supple-
14
<PAGE> 42
ment; provided, however, that the aggregate of the Floating Allocation
Percentages of all outstanding Series shall not exceed 100%.
"GAAP" shall mean generally accepted accounting principles in
the United States, as in effect from time to time.
"Geneva Steel" shall mean Geneva Steel Company, including any
successors and assigns.
"Geneva Steel Collection Account" shall have the meaning
specified in Section 4.02 of the Pooling and Servicing Agreement.
"Geneva Steel Collection Account Bank" shall have the meaning
specified in Section 4.02 of the Pooling and Servicing Agreement.
"Geneva Steel Collection Account Letter" shall have the
meaning specified in Section 4.02 of the Pooling and Servicing Agreement.
"Government Receivable" shall mean a receivable with respect
to which the Obligor is the federal government of the United States or a
political, administrative or regulatory subdivision thereof.
"Governmental Authority" shall mean any country or nation, any
political subdivision, state or municipality of such country or nation, and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government of any country or
nation or political subdivision thereof.
"GSFC" shall mean, with respect to this Annex X, Geneva Steel
Funding Corporation, including any successors and assigns.
"Increase" shall mean the Certificate Purchase Price and the
amount of each increase in the Invested Amount funded by a CRC Tranche or the
Liquidity Providers and paid to GSFC by the Certificate Agent pursuant to the
terms of the Certificate Purchase Agreement.
"Increase Date" shall have the meaning specified in Section
2.05 of the Certificate Purchase Agreement.
"Indemnified Amounts" shall have the meaning specified in
Section 7.03 of the Pooling and Servicing Agreement.
"Indemnified Party" shall have the meaning specified in
Section 7.03 of the Pooling and Servicing Agreement.
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<PAGE> 43
"Independent Public Accountants" means any of (a) Arthur
Andersen & Co., (b) Deloitte & Touche, (c) Coopers & Lybrand, (d) Ernst &
Young, (e) KPMG Peat Marwick and (f) Price Waterhouse, or any of their
successors so long as such successor is one of the six largest national
accounting firms, provided, that such firm is independent with respect to the
Servicer within the meaning of the Act.
"Initial Invested Amount" shall mean, with respect to any
Series and for any date, an amount equal to the initial invested amount
specified in the related Supplement.
"Initial Term" shall mean, with respect to each Liquidity
Provider Commitment, the period which commences on the Closing Date and ends on
November 6, 1995 inclusive.
"Insolvency Event" shall mean, with respect to a specified
Person, (a) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of such person or any substantial part
of its property in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or the appointing
of a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for such Person or for any substantial part of its property,
or the ordering of the winding-up or liquidation of such Person's business,
and, other than in a case in which such proceeding was instituted by an
Affiliate of such Person, such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such law, or the
consent by such Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors,
or the failure by such Person generally to pay its debts as such debts become
due or the admission by such Person in writing (as to which the Trustee shall
have written notice) of its inability to pay its debts generally as they become
due.
"Interest Period" shall mean, unless otherwise specified in
the Supplement relating to any Series, with respect to any Distribution Date
except for the initial Distribution Date, the period from and including the
preceding Distribution Date to but excluding such Distribution Date, and, in
the case of the initial Distribution Date, the period from and including the
Closing Date to but excluding such initial Distribution Date.
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<PAGE> 44
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
"Inventory Lender" shall mean Citibank USA, Inc. as agent for
those certain lenders under the Amended and Restated Revolving Credit Agreement
dated as of November 4, 1994 between Geneva Steel, Citibank, N.A. and Citicorp
USA, Inc. as agent for various lenders.
"Invested Amount" shall mean, with respect to any Series and
for any date, an amount equal to the invested amount determined as provided in
the related Supplement.
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended from time to time.
"Investor Certificate" shall mean any one of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee, in
substantially the form attached to the related Supplement, other than the
Transferor Certificate.
"Investor Certificateholder" shall mean the Person in whose
name an Investor Certificate is registered in the Certificate Register.
"Investor Collections" with respect to each Series, shall have
the meaning specified in the related Supplement.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment for security, encumbrance, lien (statutory or other
and including a Lien created by PBGC), preference, participation interest,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever resulting in an encumbrance against real or personal property
of a Person, including, without limitation, any conditional sale or other title
retention agreement, and any financing lease having substantially the same
economic effect as any of the foregoing, except as may otherwise be imposed as
a result of the application of or reference to Octagon in any proceeding before
any state or federal court within the tenth federal circuit or the United
States Supreme Court.
"Liquidity Provider" shall mean the banks party to the
Certificate Purchase Agreement as their names appear on the signature page
thereof.
"Liquidity Provider Commitment" shall mean, as to any
Liquidity Provider, the obligation of such Liquidity Provider to fund
Increases, including a Term Increase, up to the amount set forth opposite such
Liquidity Provider's name on the signature page of the Certificate Purchase
Agreement subject to Section 2.04 of that agreement.
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<PAGE> 45
"Liquidity Provider Commitment Percentage" shall mean, as to
any Liquidity Provider at any time, the percentage set forth under the heading
"Percentage" opposite its signature line to the Certificate Purchase Agreement,
as such percentage may be modified by (a) assignments made from time to time
pursuant to Section 6.01 of the Certificate Purchase Agreement or (b) in the
case of a defaulting Liquidity Provider, pursuant to Section 2.09 of the
Certificate Purchase Agreement.
"Loss and Dilution Reserve" shall mean, with respect to any
Series, the amount set forth in the related Supplement.
"Loss and Dilution Reserve Percentage" shall mean as of any
date of determination the greater of (a) the Specified Loss and Dilution
Reserve Percentage and (b) the Dynamic Loss and Dilution Reserve Percentage.
"Loss to Liquidation Ratio" shall mean as to any date the
ratio (expressed as a percentage) calculated by dividing (a) the aggregate
Outstanding Balance of all Receivables written off as uncollectible in
accordance with the Credit Policy Manual by Geneva Steel during the
twelve-month period most recently ended by (b) the aggregate amount of
Collections during such twelve-month period.
"Majority in Interest" shall mean, with respect to each
Series, the Holders of Certificates evidencing more than 50% of the aggregate
Certificateholders' Interest in such outstanding Series.
"Majority Liquidity Providers" shall mean, at any time,
Liquidity Providers whose Liquidity Provider Commitment Percentage aggregates
more than 50% of the total amount of all Liquidity Provider Commitment
Percentages.
"Mannesmann" shall mean Mannesmann Pipe & Steel Corporation, a
New York corporation, and any successor thereto.
"Mannesmann Receivables" shall mean Receivables in an amount
calculated as follows:
MOB - PPA
where:
MOB = the aggregate Outstanding Balance of all Transferor
Receivables owing by Mannesmann.
PPA = the aggregate amount received from Mannesmann and
shown on the books and records of the Servicer as a
production prepayment.
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<PAGE> 46
"Market Make Whole Premium" with respect to any Series, shall
have the meaning specified in the related Supplement, if applicable.
"Maximum Invested Amount" shall mean $65,000,000.
"Monthly CRC Expense Amount" shall mean with respect to any
Collection Period the sum of (a) the fees set forth in the Fee Letter, and (b)
all expenses billed during such Collection Period, including, without
limitation, any increased costs, Breakage Costs and other expenses payable to
the Liquidity Providers.
"Monthly Trust Expense Amount" shall mean with respect to any
Collection Period the sum of (a) expenses of the Trustee billed during such
Collection Period, plus (b) the Series Trustee's Fee, plus (c) the Series
Servicing Fee, plus (d) Service Transfer expenses, if any, billed during such
Collection Period.
"Moody's" shall mean Moody's Investors Service, Inc. or its
successor.
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which the Transferor or any ERISA
Affiliate is making, or is accruing an obligation to make, contributions or has
made, or been obligated to make, contributions at any time within the preceding
six years.
"Net Receivables Balance" shall mean at any time the excess of
(a) the aggregate Outstanding Balance of Transferor Receivables that are
Eligible Receivables over (b) the Overconcentration Amount at such time.
"Note" shall mean any commercial paper or other promissory
note issued by CRC to fund any Increase the Yield Rate in respect of which
shall be determined by reference to the Pool Rate.
"Note Dealer Fees" shall mean with respect to each issuance of
Notes, the product of (a) the face amount of Notes issued on such day, times
(b) the result obtained by dividing (i) the number of days from the day of
issuance through the day on which such Notes mature by (ii) 360 times (c) the
per annum rate (adjusted to exclude any fees contained in the CP Rate) charged
by the Note dealers from time to time for the issuance of Notes by CRC.
"Notices" shall have the meaning specified in Section 13.05(a)
of the Pooling and Servicing Agreement.
19
<PAGE> 47
"Obligations" shall mean all obligations of the Transferor and
the Servicer to the Trustee, the Trust, the Purchaser, the Liquidity Providers,
the other Indemnified Parties and their respective successors, permitted
transferees and assigns, arising under or in connection with the Transaction
Documents, howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due.
"Obligor" shall mean each Person who is obligated to pay for
goods or services provided by Geneva Steel which gave rise to a Transferor
Receivable, including any guarantor of such Person's obligations.
"Octagon" shall mean Octagon Gas Systems v. Rimmer, 995 F.2d
948, cert. denied, 114 S. Ct. 554 (1993).
"Officer's Certificate" shall mean, unless otherwise specified
in this Agreement, a certificate signed by the President, any Vice President,
the Chief Financial Officer, the Treasurer or Controller of the Transferor, or
of the Servicer, or any Successor Servicer, as the case may be, and delivered
to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may be counsel for, or an employee of, the Person providing the opinion and
who shall, and which opinion shall, be reasonably acceptable to the Trustee.
"Originator" shall mean Geneva Steel, including any successors
and assigns.
"Outstanding Balance" of any Receivable at any time shall mean
the then outstanding principal balance thereof.
"Overconcentration Amount" shall mean at any time the sum of
the amounts, if any, by which the aggregate Outstanding Balance of Eligible
Receivables of the types specified in clauses (a) through (e) of the definition
of Concentration Limit owned by the Trust exceeds the aggregate of the
respective Concentration Amounts.
"Partial Amortization Period" shall mean, with respect to any
Series, unless the Transferor shall have initiated a Cure Period or an Early
Amortization Period or the Amortization Period shall have commenced prior
thereto, the period beginning on a Pool Non-compliance Date and continuing each
day thereafter until the earlier of (a) the day on which the Net Receivables
Balance shall be equal to or greater than the Required Net Receivables Balance
and (b) the fifteenth day following such Pool Non-compliance Date.
20
<PAGE> 48
"Paying Agent" shall mean any paying agent appointed pursuant
to Section 6.06 of the Pooling and Servicing Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Person" shall mean any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, Governmental Authority or any
other entity of similar nature.
"Pooling and Servicing Agreement" shall mean the Pooling and
Servicing Agreement, dated as of November 4, 1994, among the Transferor, the
Servicer and the Trustee, as amended, supplemented, restated or otherwise
modified from time to time.
"Pool Non-compliance Date" shall mean any day on which the Net
Receivables Balance falls below the Required Net Receivables Balance.
"Pool Rate" shall mean as to any Interest Period for the CRC
Tranche related to an Increase, a rate per annum equal to the weighted average
of the rates (or, if such rates are discount rates, the rates determined by
converting the discount rates to an interest-bearing equivalent rate per annum)
at which Notes allocable, in whole or part, by the Certificate Agent are issued
by CRC to fund such Increase through a placement agent or commercial paper
dealer selected by the Certificate Agent, as agreed between each such agent or
dealer and the Certificate Agent which rates shall reflect and give effect to
the commissions of placement agents and dealers in respect of such promissory
notes, to the extent such commissions are allocated, in whole or in part, to
such promissory notes by the Certificate Agent (on behalf of CRC).
"Principal Terms" shall mean, with respect to any Series: (a)
the name or designation; (b) the Initial Invested Amount or principal amount
(or method for calculating such amount); (c) the Certificate Rate (or method
for the determination thereof); (d) the payment date or dates and the date or
dates from which interest shall accrue; (e) the method for allocating
collections to Investor Certificateholders; (f) the designation of any Series
Accounts and the terms governing the operation of any such Series Accounts; (g)
the issuer and terms of any form of Enhancement with respect thereto; (h) to
the extent applicable, the terms on which the Investor Certificates of such
Series may be exchanged for Investor Certificates of another Series,
repurchased or redeemed by the Transferor or remarketed to other investors; (i)
the number of Classes of Investor Certificates of such Series and, if more than
one Class, the rights and priorities of each such Class; (j) the
21
<PAGE> 49
Series Servicing Fee and the Series Trustee's Fee; (k) the Amortization Date
and the Termination Date; and (l) any other terms of such Series.
"Purchase Percentage" shall mean initially 94.596%; provided,
however, that the Purchase Percentage may change from time to time, based on
principles used to establish the initial Purchase Percentage, to reflect (a)
historic loss experience of the Transferor's accounts receivable portfolio and
the Receivables sold under the Transaction Documents and (b) prevailing
interest rates, as agreed upon by the Transferor and the Purchaser. The
Purchaser shall notify the Trustee if any change in the Purchase Percentage.
"Purchase Price" shall have the meaning specified in Section
2.2 of the Receivables Purchase Agreement.
"Purchaser" shall mean CRC, including any of its successors or
assigns.
"Rating Agency" shall mean each nationally recognized rating
agency which, at the request of the Transferor, has rated any Series of
Certificates, as set forth in the related Supplement.
"Rating Agency Condition" shall mean, with respect to any
action, that each Rating Agency shall have notified such parties in writing
that such action in and of itself will not result in a reduction or withdrawal
of the rating of any outstanding Series or Class with respect to which it is a
Rating Agency.
"Receivable" shall mean an account receivable shown on the
records of Geneva Steel as of the Cut-Off Date, and from time to time
thereafter, arising from the sale of merchandise or providing of services by
Geneva Steel in the ordinary course of business of Geneva Steel, including
without limitation, all monies due or to become due and all Collections and
other amounts received from time to time with respect to such Receivable and
all proceeds (including, without limitation, "proceeds" as defined in the UCC
of the jurisdiction the law of which governs the perfection of the interest in
the Receivables transferred under the Transaction Documents) thereof and
"Receivables" shall mean all such Receivables; provided, however, that the term
"Receivable" shall not include (i) as of the Cut-Off Date and any subsequent
date of Transfer to the Trust, accounts receivable which do not satisfy the
conditions of clauses (i), (vi), (vii) and (xiv) of the definition of Eligible
Receivable and (ii) any consideration paid or payable by (x) the Transferor or
(y) the Trustee on behalf of the Trust for the purchase of any Receivable,
including the Subordinated Loan or any Certificate or any payment on such
consideration.
22
<PAGE> 50
"Receivables Purchase Agreement" shall mean the agreement
between Geneva Steel and the Transferor, dated as of the date hereof, governing
the terms and conditions upon which the Transferor shall acquire the
Receivables transferred to the Trustee for the benefit of the Trust on the
Closing Date and all Transferor Receivables to be transferred to the Trustee
for the benefit of the Trust from time to time thereafter, as the same may from
time to time be amended, supplemented, restated or otherwise modified.
"Record Date" shall mean, with respect to any Distribution
Date, the last day of the preceding calendar month.
"Reference Bank" shall mean for purposes of determining the
Yield Rate, Citibank, N.A., a national banking association, its successors and
assigns.
"Regulation D" shall mean Regulation D of the Board of
Governors (or any successor) of the Federal Reserve System, as the same may be
amended or supplemented from time to time.
"Regulatory Change" means, relative to any Person:
(a) any change in (or the adoption, implementation,
phase-in or commencement of effectiveness of) any
(i) United States Federal or state law or foreign
law applicable to such Person;
(ii) regulation, interpretation, directive,
requirement or request (whether or not having the force of law)
applicable to such Person of (A) any court, government authority
charged with the interpretation or administration of any law referred
to in clause (a)(i) or of (B) any fiscal, monetary or other authority
having jurisdiction over such Person; or
(iii) generally accepted accounting principles or
regulatory accounting principles applicable to such Person and
affecting the application to such person of any law, regulation,
interpretation, directive, requirement or request referred to in
clause (a)(i) or (a)(ii) above; or
(b) any change in the application to such Person of any
existing law, regulation, interpretation, directive, requirement, request or
accounting principles referred to in clause (a)(i), (a)(ii) or (a)(iii) above.
"Reportable Event" shall mean a Reportable Event as defined in
Section 4043(b) of ERISA.
23
<PAGE> 51
"Required Net Receivables Balance" shall mean as of any day of
determination, the sum of (i) the aggregate of the Loss and Dilution Reserves
for all outstanding Series, (ii) the aggregate of the Yield Reserves for all
outstanding Series and (iii) the Trust Invested Amount (computed as if reduced
by (A) the amount of Cure Funds held in the Reserve Account for each Series and
(B) the cumulative amount of funds held in the Concentration Account at such
time allocated to the portion of the Trust Partial Amortization Amount
allocable to each such Series).
"Requirements of Law" shall mean any law, treaty, rule or
regulation, or final binding determination of an arbitrator or Governmental
Authority, and, when used with respect to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person.
"Reserve Account" with respect to each Series shall have the
meaning specified in the related Supplement and "Reserve Accounts" shall refer
to all the Reserve Accounts established for outstanding Series in accordance
with the terms of the related Supplements.
"Responsible Officer" shall mean, (i) when used with respect
to the Trustee, any officer within the Corporate Trust Office of the Trustee
including any vice president, assistant vice president, assistant secretary,
treasurer, assistant treasurer, or any other officer of the Trustee who
customarily performs functions similar to those performed by the persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such officer's knowledge of and familiarity with
the particular subject and (ii) when used with respect to the Transferor or
Servicer, any of the President, Chief Executive Officer, Vice President,
Secretary, Treasurer, or Chief Financial Officer.
"Revolving Period" shall mean, with respect to any Series, the
period specified in the related Supplement.
"S&P" shall mean Standard & Poor's Corporation or Standard &
Poor's Ratings Group, as applicable, or the successor of either of them.
"Series" shall mean any series of Investor Certificates.
"Series Account" shall mean any deposit, trust, escrow,
reserve or similar account maintained for the benefit of the Investor
Certificateholders or any Series or Class, as specified in any Supplement.
24
<PAGE> 52
"Series Allocation Percentage" shall mean, with respect to any
Series, the percentage equivalent of a fraction, the numerator of which is the
sum of (a) Invested Amount for such Series (computed as if reduced by the
amount of Cure Funds held in the Reserve Account for such Series and by the
cumulative amount of funds held in the Concentration Account at such time
allocated to the portion of the Trust Partial Amortization Amount allocable to
such Series) plus (b) the Yield Reserve for such Series, plus (c) the Loss and
Dilution Reserve for such Series, and the denominator of which is the aggregate
of the amounts specified in clauses (a), (b) and (c) for all outstanding
Series.
"Series Cut-Off Date" shall mean, with respect to any Series,
the date specified as such in the related Supplement.
"Series Issuance Date" shall mean, with respect to any Series,
the date on which the Investor Certificates of such Series are to be originally
issued in accordance with Section 6.09 of the Pooling and Servicing Agreement
and the related Supplement.
"Series 1994-1 Supplement" shall mean the Series 1994-1
Supplement dated as of November 4, 1994 to the Pooling and Servicing Agreement,
among the Transferor the Servicer and the Trustee as modified, amended,
restated or supplemented from time to time.
"Series 1994-1 Certificateholder" shall mean the Purchaser,
subject to the provisions of Section 2.10 of the Certificate Purchase
Agreement.
"Series Servicing Fee" shall mean, with respect to any Series,
the amount specified in the applicable Supplement.
"Series Trustee's Fee" shall mean, with respect to any Series,
the amount specified in the applicable Supplement.
"Service Transfer" shall have the meaning specified in Section
10.01 of the Pooling and Servicing Agreement.
"Servicer" initially shall mean Geneva Steel in its capacity
as Servicer pursuant to the Pooling and Servicing Agreement, and after any
Service Transfer shall mean the Successor Servicer.
"Servicer Default" shall have the meaning specified in Section
10.01 of the Pooling and Servicing Agreement.
"Servicing Fee" shall have the meaning specified in Section
3.02(a) of the Pooling and Servicing Agreement.
25
<PAGE> 53
"Servicing Officer" shall mean any officer, employee or other
agent of the Servicer who is involved in, or responsible for, the
administration and servicing of the Receivables and whose name appears on a
list of servicing officers furnished to the Trustee by the Servicer, as such
list may from time to time be amended.
"Specified Loss and Dilution Reserve Percentage" shall mean
the sum of (a) 15% plus (b) the product of (i) the average Dilution Ratio
during the preceding 12 months times (ii) a fraction the numerator of which is
the total sales for the past month and the denominator of which is the
aggregate outstanding balance of Transferor Receivables which are Eligible
Receivables as of the end of the most recently ended month.
"Subordinated Loan" shall mean the loan, if any, made pursuant
to Section 2.2(f) of the Receivables Purchase Agreement.
"Subordinated Note" shall mean the subordinated promissory
note, due November 4, 2014, by GSFC in favor of Geneva Steel.
"Subsidiary" shall mean as to any Person, a corporation,
partnership or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person.
"Successor Servicer" shall have the meaning specified in
Section 10.02(a) of the Pooling and Servicing Agreement.
"Supplement" shall mean, with respect to any Series, a
supplement to the Pooling and Servicing Agreement, executed and delivered in
connection with the original issuance of the Investor Certificates of such
Series pursuant to Article VI of the Pooling and Servicing Agreement, and all
amendments, modifications or supplements to the Pooling and Servicing
Agreement.
"Supplemental Certificate" shall have the meaning specified in
Section 6.09(c) of the Pooling and Servicing Agreement.
"Tax Opinion" shall mean, with respect to any action, an
Opinion of Counsel who is not an employee of the Servicer or any Affiliate of
the Servicer to the effect that, for federal and Utah (and any other State
where substantial servicing activities
26
<PAGE> 54
in respect of Receivables are conducted by the Transferor or the Servicer if
there is a substantial change from present servicing activities) state income
and franchise tax purposes, (a) such action will not adversely affect the
characterization of the Investor Certificates of any outstanding Series or
Class as debt, (b) such action will not cause a taxable event to any Investor
Certificateholder, (c) following such action the Trust should not be treated as
an association (or publicly traded partnership) taxable as a corporation, (d)
in the case of the original issuance of Certificates, the Investor Certificates
should properly be characterized as debt for tax purposes, or if not as debt,
as an interest in a partnership and not in an association taxable as a
corporation and (e) in the case of Section 6.09(b) of the Pooling and Servicing
Agreement, the Investor Certificates of the new Series will be characterized as
debt.
"Term" shall mean with respect to each Liquidity Provider
Commitment, the shorter of (a) the Initial Term and each Extension Term and (b)
the period ending on the date of expiration of the Aggregate Liquidity Provider
Commitment pursuant to Section 2.10 of the Certificate Purchase Agreement.
"Term Increase" shall have the meaning specified in Section
2.10 of the Certificate Purchase Agreement.
"Termination Date" shall mean, with respect to any Series, the
termination date specified in the related Supplement.
"Termination Event" shall have the meaning specified in
Article VI of the Receivables Purchase Agreement.
"Termination Notice" shall have the meaning specified in
Section 10.01 of the Pooling and Servicing Agreement.
"Transaction Documents" shall mean, collectively, the
Certificate Purchase Agreement, the Series 1994-1 Certificate, the Pooling and
Servicing Agreement, the Receivables Purchase Agreement, the Series 1994-1
Supplement, the Articles or Certificate of Incorporation and the By-Laws of the
Servicer and GSFC, respectively, and any other agreement or instrument related
or delivered pursuant to any of the foregoing documents.
"Transfer" shall have the meanings specified in Section 2.01
of the Pooling and Servicing Agreement, it being understood that the date of
Transfer of any Receivable or other Trust Asset shall be the date on which such
Receivable or other Trust Asset shall be created or otherwise arise and, in the
case of such Receivable, be acquired by the Transferor under the Receivables
Purchase Agreement.
27
<PAGE> 55
"Transfer Agent and Registrar" shall have the meaning
specified in Section 6.03(a) of the Pooling and Servicing Agreement.
"Transferor" shall mean GSFC, as transferor under the Pooling
and Servicing Agreement, including any successors and assigns.
"Transferor Certificate" shall mean the certificate executed
by the Transferor and authenticated by or on behalf of the Trustee, in
substantially the form of Exhibit A to the Pooling and Servicing Agreement
"Transferor Collections" shall mean, with respect to any date,
that portion of the Collections deposited to the Concentration Account equal to
the product of (i) the Transferor Percentage on such date multiplied by (ii)
the aggregate amount of such Collections.
"Transferor Interest" shall have the meaning specified in
Section 4.01(a) of the Pooling and Servicing Agreement.
"Transferor Percentage" shall mean at any time 100% minus the
aggregate of the Floating Allocation Percentages of all outstanding Series at
such time.
"Transferor Receivable" shall mean a Receivable acquired by
the Transferor pursuant to the Receivables Purchase Agreement other than those
reconveyed by the Transferor pursuant to Section 4.2 of the Receivables
Purchase Agreement except to the extent such Receivable is reacquired by the
Transferor.
"Transferor's Account" shall mean the special account (account
number ), under the dominion and control of the Transferor, for deposits
by the Servicer pursuant to the applicable Supplement, maintained at the office
of Bankers Trust Company in New York, New York, or such other account at such
other bank, under the dominion and control of the Transferor, as Transferor may
designate for such purpose from time to time.
"Trust" shall mean the Geneva Steel Trade Receivables Master
Trust created by the Pooling and Servicing Agreement.
"Trust Assets" shall have the meaning specified in Section
2.01 of the Pooling and Servicing Agreement.
"Trust Invested Amount" shall mean at any time the sum of the
Invested Amounts for all outstanding Series at such time.
"Trust Partial Amortization Amount" shall mean, with respect
to any date of determination during a Partial Amortiza-
28
<PAGE> 56
tion Period, the amount by which the Net Receivables Balance is less than the
Required Net Receivables Balance.
"Trustee" shall mean Bankers Trust Company, solely in its
capacity as trustee on behalf of the Trust, or its successor in interest, or
any successor trustee appointed as herein provided.
"Trustee's Account" with respect to each Series, shall have
the meaning specified in the related Supplement.
"Trustee's Fee" shall have the meaning specified in Section
11.05 of the Pooling and Servicing Agreement.
"Turnover Rate" shall mean for any date the average of the
percentage equivalent of a fraction for each of the three most recently ended
months the numerator of which is the Net Receivables Balance as of the last day
of each such month and the denominator of which is the aggregate balance of
Receivables transferred to the Trust during each such month; provided, however,
that with respect to any such months, or portion thereof, occurring prior to
the Closing Date, the denominator of such fraction shall be the aggregate
balance of Receivables originated by Geneva Steel during such month or portion
thereof.
"UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in any applicable or specified jurisdiction.
"Undivided Fractional Interest" with respect to each Series
shall have the meaning specified in the related Supplement.
"Weighted Average Term" shall mean, as of any date, a fraction
the numerator of which is the aggregate of the product for each Receivable sold
to the Trust during the preceding month of (i) the outstanding balance of such
Receivable (at the time such Receivable is transferred to the Trust) multiplied
by (ii) the payment term (in days) for each such Receivable, and the
denominator of which is the aggregate outstanding balance of such Receivable
(at the time such Receivable is transferred to the Trust).
"Yield" shall mean with respect to any Interest Period of an
Increase, the sum of (i) the product of (a) the Yield Rate divided by 360,
times (b) the amount of such Increase, times (c) the number of days in such
Interest Period and (ii) for each Increase the Yield Rate in respect of which
shall be determined by reference to the CP Rate, the Note Dealer Fees and any
Note Issuance Fees, if any, incurred with respect to the CRC Tranche related to
such Increase.
29
<PAGE> 57
"Yield Rate" shall mean with respect to any Interest Period of
an Increase, either (a) the per annum rate of interest borne by the Notes
issued in connection with a CRC Tranche the Yield Rate in respect of which
shall be determined by reference to the Pool Rate and the per annum rate of
interest borne by the CP Notes issued in connection with a CRC Tranche the
Yield Rate in respect of which shall be determined by reference to the CP Rate,
or, if such Notes or CP Notes are issued at a discount, the per annum rate of
interest equivalent of such discount or (b) the Bank Rate.
"Yield Reserve" shall mean as of any date two multiplied by
the product of (a) the Turnover Rate for such date and (b) the Discount Amount
with respect to such date.
30
<PAGE> 1
Exhibit 10.6
==========================================
GENEVA STEEL FUNDING CORPORATION, Transferor
GENEVA STEEL COMPANY, Servicer
and
BANKERS TRUST COMPANY, not in its individual capacity,
but solely as Trustee
GENEVA STEEL TRADE RECEIVABLES MASTER TRUST
POOLING AND SERVICING AGREEMENT
Dated as of November 4, 1994
==========================================
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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<S> <C> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
TRANSFER OF RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.01. Transfer of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.02. Acceptance by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.03. Representations and Warranties of the Transferor Relating to the Transferor . . . . . . . . . . . . . . 4
SECTION 2.04. Representations and Warranties of the Transferor Relating to this Agreement and the Trust Assets . . . 7
SECTION 2.05. Affirmative Covenants of the Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.06. Negative Covenants of the Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES . . . . . . . . . . . . . . . . . . . 17
SECTION 3.01. Acceptance of Appointment and Other Matters Relating to the Servicer . . . . . . . . . . . . . . . . . 17
SECTION 3.02. Servicing Compensation; Servicer's Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.03. Representations and Warranties of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.04. Covenants of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.05. Reports and Records for the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.06. Annual Certificate of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.07. Annual Servicing Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.08. Tax and Usury Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.09. Notices to Geneva Steel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.10. Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.11. Securities and Exchange Commission Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Table of Contents (cont'd)
Page
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<S> <C> <C>
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS . . . . . . . . . . . . . . . . . . . 29
SECTION 4.01. Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.02. Establishment of Geneva Steel Collection Accounts and Concentration Account . . . . . . . . . . . . . . 30
SECTION 4.03. Allocation of Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE V
DISTRIBUTIONS AND REPORTS TO CERTIFICATEHOLDERS . . . . . . . . . . . . . . . . . . 33
ARTICLE VI
THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.01. The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.02. Authentication of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.03. Registration of Transfer and Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.04. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.05. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.06. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.07. Access to List of Certificateholders' Names and Addresses . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.08. Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.09. New Issuances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.01. Obligations not Assignable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.02. Limitations on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.03. Indemnification of the Trustee, the Trust and the Investor Certificateholders . . . . . . . . . . . . . 43
ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.01. Liability of the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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SECTION 8.02. Merger or Consolidation of, or Assumption of the Obligations of, the Servicer . . . . . . . . . . . . 46
SECTION 8.03. Limitations on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.04. Servicer Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.05. The Servicer Not to Resign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.06. Examination of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.07. Utah Bank Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE IX
EARLY AMORTIZATION EVENTS . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.01. Early Amortization Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.02. Additional Rights Upon the Occurrence of any Early Amortization Event . . . . . . . . . . . . . . . . 51
ARTICLE X
SERVICER DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 10.01. Servicer Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 10.02. Trustee to Act; Appointment of Successor Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.03. Notification to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE XI
THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.02. Certain Matters Affecting the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 11.03. Trustee Not Liable for Recitals in Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 11.04. Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 11.05. Compensation; Trustee's Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 11.06. Eligibility Requirements for Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 11.07. Resignation or Removal of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 11.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 11.09. Merger or Consolidation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 11.10. Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 11.11. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 11.12. Trustee May Enforce Claims Without Possession of Certificates . . . . . . . . . . . . . . . . . . . . 66
SECTION 11.13. Suits for Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 11.14. Rights of Certificateholders to Direct Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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SECTION 11.15. Representations and Warranties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 11.16. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE XII
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 12.01. Termination of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 12.02. Final Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 12.03. Transferor's Termination Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE XIII
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 13.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 13.02. Protection of Right, Title and Interest to Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 13.03. Limitation on Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 13.04. Governing Law; Jurisdiction; Consent to Service of Process . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 13.05. Notices; Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 13.06. Rule 144A Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 13.07. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 13.08. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 13.09. Certificates Nonassessable and Fully Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 13.10. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 13.11. Nonpetition Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 13.12. No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 13.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 13.14. Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 13.15. Actions by Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 13.16. Merger and Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 13.17. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 13.18. Construction of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
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EXHIBITS
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Exhibit A Form of Transferor Certificate
Exhibit B Form of Annual Servicer's Certificate
Exhibit C Form of Geneva Steel Collection Account Letter
SCHEDULES
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Schedule I Geneva Steel Collection Accounts
Schedule II Credit Policy Manual
Schedule III Locations of Receivables Records
Schedule IV Information specified in Section 2.03(n)
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POOLING AND SERVICING AGREEMENT, dated as of November 4, 1994
(as modified, amended, restated or supplemented from time to time, including,
with respect to any Series or Class, by the related Supplement, the
"Agreement") among GENEVA STEEL FUNDING CORPORATION ("GSFC"), a Utah
corporation, as Transferor (the "Transferor"), GENEVA STEEL COMPANY ("Geneva
Steel"), a Utah corporation, as Servicer (the "Servicer"), and BANKERS TRUST
COMPANY, a New York banking corporation, not in its individual capacity, but
solely as Trustee (the "Trustee").
In consideration of the mutual agreements herein contained,
each party agrees as follows for the benefit of the other parties and the
Certificateholders to the extent provided herein:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. All capitalized terms used
herein but not defined shall have the meanings ascribed to them in Annex X
attached hereto.
SECTION 1.02. Other Definitional Provisions. (a) All terms
defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.
(b) As used herein and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement, and accounting terms partly defined in this Agreement to the
extent not completely defined, shall have the respective meanings given to them
under GAAP or regulatory accounting principles, as applicable and in effect
from time to time. To the extent that the definitions of accounting terms
herein are inconsistent with the meanings of such terms under GAAP or
regulatory accounting principles, the definitions contained herein shall
control.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; and Section,
Schedule and Exhibit references contained in this Agreement are references to
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" means "including without limitation".
<PAGE> 8
ARTICLE II
TRANSFER OF RECEIVABLES
SECTION 2.01. Transfer of Receivables. (a) By execution of
this Agreement, the Transferor does hereby transfer, assign, set-over and
otherwise convey without recourse, except as expressly provided herein (the
making of such transfer, assignment, set-over and conveyance being a
"Transfer", and so to transfer, assign, set-over and otherwise convey being to
"Transfer") to the Trustee on behalf of the Trust, for the benefit of the
Certificateholders (each reference in this Agreement to each such Transfer to
be construed accordingly):
(i) all of the Transferor's right, title and interest in, to
and under all Transferor Receivables existing at the close of business on the
Cut-Off Date and thereafter created from time to time, and conveyed to the
Transferor under the Receivables Purchase Agreement from time to time, until
the termination of the Revolving Period of the last outstanding Series, and all
monies due or to become due and all Collections and other amounts received from
time to time with respect to such Transferor Receivables and all proceeds
(including, without limitation, "proceeds" as defined in the UCC of the
jurisdiction the law of which governs the perfection of the interest in the
Transferor Receivables transferred hereunder) thereof; and
(ii) all of the Transferor's rights, remedies, powers and
privileges under the Receivables Purchase Agreement.
Such property described in the preceding sentence, together with all monies
from time to time on deposit in, and all Eligible Investments and other
securities, instruments and other investments purchased from funds on deposit
in, each Geneva Steel Collection Account, the Concentration Account and any
Series Account, and any Enhancements shall constitute the assets of the Trust
(collectively the "Trust Assets").
The foregoing Transfer does not constitute and is not intended
to result in an assumption by the Trust, the Trustee or any Certificateholder
of any obligation of the Servicer, Geneva Steel, the Transferor or any other
Person in connection with the Receivables or under the Receivables Purchase
Agreement or under any agreement or instrument relating thereto, including,
without limitation, any obligation to any Obligor.
The Transferor agrees to record and file from time to time, at
its own expense, financing statements and other documents (and amendments
thereto, assignments thereof and continuation statements, when applicable) with
respect to the Receivables and the other Trust Assets now existing and
hereafter created meeting the requirements of applicable law in such manner
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and in such jurisdictions as are necessary to perfect, and maintain perfection
of, the Transfers of the Transferor Receivables and the other Trust Assets to
the Trust, and to deliver a file-stamped copy of such a financing statement or
other document or other evidence of such filing to the Trustee on or prior to
the Closing Date. The Trustee shall be under no obligation whatsoever to file,
or to monitor the status of, such financing statements, documents, amendments,
assignments or continuation statements, or to make any other filing under the
UCC in connection with such Transfer. The Trustee shall be entitled to rely
conclusively on the filings made by or behalf of the Transferor without any
independent investigation.
Geneva Steel and the Transferor further agree, at their own
expense, at the time of transfer of each Transferor Receivable to indicate in
their computer records that the Transferor Receivables have been sold, in the
case of Geneva Steel, to the Transferor in accordance with the Receivables
Purchase Agreement and conveyed, in the case of the Transferor, to the Trustee
on behalf of the Trust in accordance with this Agreement for the benefit of the
Certificateholders.
(b) The Trustee hereby agrees not to disclose to any Person
any information delivered to the Trustee from time to time with respect to the
Receivables or any Obligor provided, however, that the foregoing shall not be
construed to prohibit (i) disclosure of any and all information that is or
becomes publicly known, or information obtained by the Trustee from sources
other than the Transferor or the Servicer, (ii) disclosure of any and all
information (A) if required to do so by any applicable statute, law, rule or
regulation, (B) to any government agency or regulatory or self-regulatory body
having or claiming authority to regulate or oversee any aspects of the
Trustee's business or that of its Affiliates, (C) pursuant to any subpoena,
civil investigative demand or similar demand or request of any court,
regulatory authority, arbitrator or arbitration to which the Trustee or an
Affiliate or an officer, director, employer or shareholder thereof is a party,
(D) in any preliminary or final offering circular, registration statement or
contract or other document pertaining to the transactions contemplated by the
Agreement approved in advance by the Transferor or (E) to any Affiliate,
independent or internal auditor, agent, employee or attorney of the Trustee
having a need to know the same, provided that the Trustee advises such
recipient of the confidential nature of the information being disclosed, (iii)
any other disclosure authorized by the Transferor or the Servicer or (iv)
disclosure to the other parties to the transactions contemplated by the
Agreement. The Trustee agrees to take such measures as shall be reasonably
requested by the Transferor to protect and maintain the security and
confidentiality of such information. The Trustee shall use its best efforts to
provide the Transferor and the Servicer written notice at least five Business
Days prior
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to any disclosure pursuant to this Section and in any event will provide
written notice whenever disclosure is made.
SECTION 2.02. Acceptance by Trustee. (a) The Trustee hereby
acknowledges its acceptance on behalf of the Trust of all right, title and
interest in and to the Trust Assets, now existing and hereafter created and
transferred to the Trust pursuant to Section 2.01 and the Trustee declares that
it shall maintain such right, title and interest, upon the trust herein set
forth, for the benefit of all Certificateholders except for those certain Trust
Assets which, pursuant to the applicable Supplement, shall be held for the
benefit of the Certificateholders of a specified Series.
(b) The Trustee shall have no power to create, assume or
incur indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.
SECTION 2.03. Representations and Warranties of the
Transferor Relating to the Transferor. The Transferor hereby represents and
warrants to the Trust and the Trustee as of the date hereof and, by accepting
on the date of the initial Transfer of Receivables the proceeds of such
Transfer, as of such date and with respect to any Series, as of the date of any
Supplement and the related Closing Date, unless otherwise stated in such
Supplement, that:
(a) Organization and Good Standing. The Transferor is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Utah and has full corporate power and authority to own its
properties and conduct its business as presently owned or conducted, to
execute, deliver and perform its obligations under this Agreement and the
Receivables Purchase Agreement, and to execute and deliver the Certificates to
the Trustee pursuant hereto.
(b) Due Qualification. The Transferor is duly qualified to
do business and is in good standing as a corporation or foreign corporation, as
applicable, and has obtained all necessary licenses and approvals, in each
jurisdiction in which failure to so qualify or to obtain such licenses and
approvals would have a material adverse effect on the Transferor's ability to
perform its obligations hereunder, under the applicable Supplement or under the
Receivables Purchase Agreement.
(c) Due Authorization. The execution, delivery and
performance of this Agreement and the applicable Supplement and the Receivables
Purchase Agreement by the Transferor, and the execution and delivery by the
Transferor to the Trustee of the Certificates and the consummation by the
Transferor of the transactions provided for in this Agreement and the
applicable Supplement and the Receivables Purchase Agreement, have been duly
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authorized by all necessary corporate action on the part of the Transferor and
this Agreement and the other documents and agreements executed in connection
herewith have been duly executed and delivered on behalf of the Transferor.
(d) Enforceability. Each of this Agreement, the applicable
Supplement and the Receivables Purchase Agreement constitutes a legal, valid
and binding obligation of the Transferor enforceable against the Transferor in
accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, reorganization, insolvency, moratorium or other similar
laws affecting creditors' rights generally, now or hereafter in effect, (ii)
general principles of equity (whether considered in a suit at law or in equity)
and (iii) with respect to the Receivables Purchase Agreement only, as a result
of the application of or reference to Octagon in any proceeding before any
state or federal court within the tenth federal circuit or the United States
Supreme Court. The Receivables Purchase Agreement is in full force and effect,
and is not subject to any dispute, offset, counterclaim or defense.
(e) No Conflict. The Transferor's execution and delivery of
this Agreement, the applicable Supplement, the Receivables Purchase Agreement
and the Certificates, performance of the transactions contemplated by this
Agreement and the applicable Supplement and the Receivables Purchase Agreement,
and fulfillment of the terms hereof and thereof applicable to the Transferor,
do not conflict with or violate any Requirements of Law applicable to the
Transferor or conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time or both)
a default under, any indenture, contract, agreement, mortgage, deed of trust or
other instrument to which the Transferor is a party or by which it or its
properties are bound.
(f) No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of the Transferor, threatened
against the Transferor before any Governmental Authority which is reasonably
likely to materially adversely affect the financial condition or operations of
the Transferor or the Trust Assets or the ability of the Transferor to perform
its obligations under this Agreement, the applicable Supplement, the
Receivables Purchase Agreement and the Certificates or which purport to affect
the legality, validity or enforceability of this Agreement, the applicable
Supplement, the Receivables Purchase Agreement and the Certificates.
(g) Consents. No authorization, consent, license, order or
approval of, registration or declaration with any Governmental Authority is
required to be obtained, effected or given by the Transferor in connection with
the execution and delivery of this Agreement, the applicable Supplement, the
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Receivables Purchase Agreement and the Certificates by the Transferor or its
performance of its obligations under this Agreement, the applicable Supplement
and the Receivables Purchase Agreement or the transactions contemplated hereby
and thereby except for (i) the filings of the financing statements or other
documents required to have been filed on or prior to the Closing Date pursuant
to Section 2.01, all of which were so filed and are in full force and effect,
and (ii) the filing of any amendments, assignments or continuation statements
which may become applicable pursuant to Section 2.01.
(h) Liens on Properties. Except as created hereby or by the
Receivables Purchase Agreement, and except for Liens that will be terminated
upon each transfer of Transferor Receivables on the Closing Date, there are no
Liens of any nature whatsoever on any Transferor Receivable. The Transferor is
not a party to any contract, agreement, lease or instrument (other than this
Agreement) the performance of which, either unconditionally or upon the
happening of an event, will result in or require the creation of any Lien on
any Transferor Receivable, or otherwise result in a violation of this
Agreement.
(i) Contractual Obligations. (i) The Transferor is not a
party to any indenture, loan or credit agreement or any lease or other
agreement or instrument, or subject to any Requirements of Law, that would have
a material adverse effect on the ability of the Transferor to carry out its
obligations under this Agreement, the applicable Supplement or the Receivables
Purchase Agreement, and (ii) neither the Transferor nor, to the best of the
knowledge of the Transferor, any other party is in default in any respect under
or with respect to the Receivables Purchase Agreement or any other material
contract, agreement, lease or other instrument to which the Transferor is a
party.
(j) Investment Company Act. The Transferor is not an
"investment company", or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company", as such terms are defined in the
Investment Company Act.
(k) Locations. The chief place of business and chief
executive office of the Transferor are located at the address of the Transferor
referred to in Section 13.05, and the locations of the offices where the
Transferor keeps the originals of its books, records and documents regarding
the Receivables and the other Trust Assets are listed on Schedule III hereto
(or at such other locations, notified to the Trustee in accordance with Section
2.05(d), in jurisdictions with respect to which all applicable action required
by the last two paragraphs of Section 2.01(a) has been taken and completed).
(l) Tradenames. The legal name of the Transferor is as set
forth on the signature page of this Agreement and the
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Transferor has no tradenames, fictitious names, assumed names or "doing
business as" names.
(m) Subsidiaries. The Transferor has no subsidiaries.
(n) Information. (i) Each certificate, information, exhibit,
financial statement, document, book or record or report furnished by the
Transferor to the Trustee or the Servicer in connection with this Agreement and
(ii) any information contained in the documents set forth in Schedule IV (as
such Schedule may be updated from time to time by written notice from the
Transferor to the Trustee and Servicer) hereto regarding the Transferor
provided by the Transferor to Investor Certificateholders is accurate in all
material respects as of its date, when considered as a whole with other such
documents, and no such document contains any material misstatement of fact or
omits to state a material fact or any fact necessary to make the statements
contained therein not materially misleading.
(o) Solvency. As of the date hereof and after giving effect
to the transactions contemplated by this Agreement, the Transferor is solvent;
the Transferor is currently repaying or refinancing all of its indebtedness on
or before such indebtedness becomes due; and, after giving effect to the
transactions contemplated by this Agreement, the applicable Supplement and the
Receivables Purchase Agreement, the Transferor will have adequate capital to
conduct its business as presently conducted.
(p) Compliance. The Transferor has complied in all material
respects with all Requirements of Law with respect to it, its business and
properties and all Receivables transferred to the Trust hereunder and the
Contracts related thereto.
The representations and warranties set forth in this Section
2.03 shall survive the Transfer of the Receivables to the Trust and the
issuance of the Certificates, and shall cease and be of no effect upon
repayment in full of the Invested Amount of the last outstanding Series and all
other obligations of the Transferor hereunder. Upon discovery by the
Transferor, the Servicer or the Trustee of a material breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the other parties and to any Enhancement
Providers. The Trustee's obligations in respect of any such breach are limited
as provided in Section 11.02(g).
SECTION 2.04. Representations and Warranties of the
Transferor Relating to this Agreement and the Trust Assets. The Transferor
hereby represents and warrants to the Trust and to the Trustee as of the date
hereof and, by accepting on the date of the initial Transfer of Receivables the
proceeds of such
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Transfer, as of such date and, in the case of the representations and
warranties contained in Sections 2.04(a) and (c) below, by accepting on each
date during the Revolving Period for any Series the proceeds of each Transfer
of Receivables, as of such date, that:
(a) Valid Transfer. Other than as a result of the
application of or reference to Octagon in any proceeding before any state or
federal court within the tenth federal circuit or the United States Supreme
Court, the Receivables Purchase Agreement creates a valid sale, transfer and
assignment to the Transferor of, and the Transferor is the legal and beneficial
owner of, all right, title and interest of Geneva Steel in and to the
Transferor Receivables now existing and hereafter created during the Revolving
Period and the proceeds thereof. Other than as a result of the application of
or reference to Octagon in any proceeding before any state or federal court
within the tenth federal circuit or the United States Supreme Court, this
Agreement constitutes a valid transfer and assignment to the Trust of all
right, title and interest of the Transferor in and to the Transferor
Receivables now existing and hereafter created and purchased by the Transferor
pursuant to the Receivables Purchase Agreement, and in and to all other Trust
Assets and the proceeds thereof or, if this Agreement does not constitute such
a transfer and assignment, constitutes a valid grant to the Trust of a first
priority perfected "security interest" (as defined in the UCC of the
jurisdiction the law of which governs the perfection of the interest in the
Transferor Receivables and other Trust Assets created hereunder) in all right,
title and interest of the Transferor in and to the Transferor Receivables now
existing and hereafter created and purchased by the Transferor pursuant to the
Receivables Purchase Agreement, and in and to all other Trust Assets and the
proceeds thereof which, in the case of existing Transferor Receivables and the
other existing Trust Assets and the proceeds thereof, is enforceable (except as
such enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors' rights
generally, now or hereafter in effect, and except as such enforceability may be
limited by general principles of equity, whether considered in a suit at law or
in equity) by the Trustee upon execution and delivery of this Agreement, and
which, in the case of the Transferor Receivables and all other Trust Assets
hereafter created and the proceeds thereof, will be enforceable (except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors' rights
generally, now or hereafter in effect, and except as such enforceability may be
limited by general principles of equity, whether considered in a suit at law or
in equity) by the Trustee upon such creation. Upon the filing of the financing
statements and, in the case of the Transferor Receivables hereafter created and
the proceeds thereof, upon the creation thereof and payment
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therefor, the Trustee on behalf of the Trust shall have an ownership or first
priority perfected security interest in those Trust Assets in which a security
interest may be perfected by filing and the proceeds thereof. The Transferor
has caused the Servicer to clearly and unambiguously mark all its computer
records and all its microfiche storage files, if any, regarding such Transferor
Receivables as the property of the Trustee on behalf of the Trust and shall
cause the Servicer to maintain such records in a manner such that the Trust's
perfected interest of first priority in the Transferor Receivables shall not be
adversely affected in any material respect.
(b) No Claim or Interest. Except as otherwise provided in
this Agreement and the applicable Supplement, neither the Transferor nor any
Person claiming through or under the Transferor has any claim to or interest in
the Geneva Steel Collection Account, the Concentration Account or any Series
Account.
(c) Outstanding Balance; Net Receivables Balance. As of the
Closing Date and on each Series Issuance Date, the Net Receivables Balance is
at least equal to the sum of (i) the aggregate of the Loss and Dilution
Reserves for all outstanding Series, (ii) the aggregate of the Yield Reserves
for all outstanding Series and (iii) the Trust Invested Amount (computed as if
reduced by (A) the amount of Cure Funds held in the Reserve Account for each
Series and (B) the cumulative amount of funds held in the Concentration Account
at such time allocated to the portion of the Trust Partial Amortization Amount
allocable to each such Series).
(d) Liens. Each Transferor Receivable and all other Trust
Assets have been Transferred to the Trust free and clear of any Lien except as
created hereby or by the Receivables Purchase Agreement.
(e) Investment Company Act. Each Transfer of Transferor
Receivables to the Trust hereunder constitutes a purchase or other acquisition
of notes, drafts, acceptances, open accounts receivable or other obligations
representing part or all of the sales price of merchandise or services within
the meaning of Section 3(c)(5) of the Investment Company Act.
(f) Offering of Certificates. Neither the Transferor nor any
agent acting on its behalf has, directly or indirectly, offered any Certificate
or any similar security of the Transferor for sale to, or solicited any offer
to buy any Certificate or any similar security of the Transferor from, or
otherwise approached or negotiated with respect thereto, with any Person which,
and neither the Transferor nor any agent acting on its behalf has taken or will
take any action which, would subject the issuance or sale of any Certificate to
the provisions of Section 5 of the
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Act or to the qualification provisions of any securities or blue sky law of any
applicable jurisdiction.
The representations and warranties set forth in this Section
2.04 shall survive the Transfer of the Transferor Receivables to the Trust and
the issuance of the Certificates, and shall cease and be of no effect upon
repayment in full of the Invested Amount of the last outstanding Series and all
other obligations of the Transferor hereunder. Upon discovery by the
Transferor, the Servicer or the Trustee of a material breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the other parties and to any Enhancement
Provider. The Trustee's obligations in respect of any such breach are limited
as provided in Section 11.02(g).
SECTION 2.05. Affirmative Covenants of the Transferor. The
Transferor hereby covenants that, until the termination of the Amortization
Period:
(a) Compliance with Law. The Transferor will comply in
all material respects with all Requirements of Law applicable to the
Transferor, its business and properties and the Trust Assets, where failure to
so comply is reasonably likely to have a material adverse effect on the Trust
Assets or the ability of the Transferor to perform in any material respects its
obligations hereunder, under the applicable Supplement or under the Receivables
Purchase Agreement.
(b) Preservation of Corporate Existence. The Transferor
will preserve and maintain its corporate existence, rights, franchises and
privileges, and qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where the failure to maintain such
qualification would materially and adversely affect (i) the interests of the
Trust, the Trustee or of the Investor Certificateholders hereunder or in the
Trust Assets, (ii) the collectability of the Transferor Receivables or (iii)
the ability of the Transferor to perform its obligations hereunder, under the
applicable Supplement or under the Receivables Purchase Agreement.
(c) Keeping of Records and Books of Account. The
Transferor will (i) keep proper books of record and account, which shall be
maintained by the Transferor and shall be separate and apart from those of any
Affiliate of the Transferor, in which full and correct entries shall be made of
all financial transactions and the assets and business of the Transferor in
accordance with GAAP consistently applied, and (ii) maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate photocopies of records evidencing the Transferor
Receivables in the event of the
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destruction of the originals thereof) and keep and maintain all documents,
books, records and other information reasonably necessary or advisable for the
collection of all Transferor Receivables (including, without limitation,
records adequate to permit the daily identification of each new Transferor
Receivable and all Collections of and adjustments to each existing Transferor
Receivable).
The Transferor shall provide to the Trustee access to the
documentation regarding the Transferor Receivables in such cases where the
Trustee is required, in connection with the enforcement of the rights of
Certificateholders or by applicable statutes or regulations, to review such
documentation, such access being afforded without charge but only (i) upon
reasonable written request, (ii) during normal business hours, and (iii)
subject to the Transferor's customary security and confidentiality procedures.
(d) Location of Records. The Transferor will keep its
chief place of business and chief executive office, and the office where it
keeps the books, records and documents regarding the Trust Assets, at the
address of the Transferor referred to in Section 13.05 or, upon 10 days' prior
written notice to the Trustee, at any other location within the United States
with respect to which all applicable action required by the last two paragraphs
of Section 2.01(a) shall have been taken and completed.
(e) Maintenance of Separate Director. The Transferor
will maintain at least one independent director who is not an officer, director
or employee of (i) Geneva Steel or (ii) any Affiliate (other than the
Transferor), or a parent, child, spouse or sibling of any such Person;
provided, however, that if such independent director dies or resigns, the
Transferor shall have 30 days to replace such person with another independent
director.
(f) Payment of Taxes, Etc. The Transferor will pay
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or any Trust Asset, or in respect of its income or profits
therefrom, and any and all claims of any kind, except that no such amount need
be paid if (i) such nonpayment is not reasonably likely to subject any
Indemnified Party to civil or criminal penalty or liability or involve any risk
of the sale, forfeiture or loss of any of the property, rights or interests
covered hereunder or under the Receivables Purchase Agreement, (ii) the charge
or levy is being contested in good faith and by proper proceedings and (iii)
the obligation to pay such amount is adequately reserved against in accordance
with and to the extent required by GAAP.
(g) Reporting Requirements. The Transferor will:
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(i) within one Business Day after a Responsible
Officer of the Transferor becomes aware of the occurrence of any Early
Amortization Event, the commencement of a Partial Amortization Period
or Cure Period and each event which, with the giving of notice or
lapse of time or both, would constitute an Early Amortization Event,
notify the Trustee of such occurrence;
(ii) as soon as possible and in any event (A)
within 5 Business Days after a Responsible Officer of the Transferor
becomes aware of the occurrence of each Early Amortization Event, the
commencement of a Partial Amortization Period or Cure Period, and each
event which, with the giving of notice or lapse of time or both, would
constitute an Early Amortization Event, furnish to the Trustee the
statement of the chief administrative and credit officer or other
Responsible Officer of the Transferor setting forth details of such
Early Amortization Event, Partial Amortization Period or Cure Period
commencement or event and the action which the Transferor has taken
and proposes to take with respect thereto, and (B) within 5 Business
Days after the occurrence thereof, notify the Trustee of any other
event, development or information which is reasonably likely to
materially and adversely affect the ability of the Transferor to
perform its obligations under this Agreement or the Receivables
Purchase Agreement; and
(iii) promptly, from time to time, furnish to the
Trustee such other information, documents, records or reports
respecting the Transferor Receivables, the other Trust Assets or the
condition or operations, financial or otherwise, of the Transferor as
the Trustee may from time to time reasonably request.
(h) Receivables Purchase Agreement. The Transferor will
at its expense timely perform and comply in all material respects with all
provisions, covenants and other promises required to be observed by it under
the Receivables Purchase Agreement, maintain the Receivables Purchase Agreement
in full force and effect, enforce its rights under the Receivables Purchase
Agreement substantially in accordance with its terms and comply with its
obligations under Contracts giving rise to Transferor Receivables.
(i) UCC Opinion. On or before March 31 of each calendar
year, beginning with March 31, 1995, the Transferor shall deliver to the
Trustee an Opinion of Counsel to the effect that no financing statements or
continuation statements, other than those currently filed, are necessary to be
filed by the Transferor or the Servicer in order to fully preserve and protect
the interest of the Trust, the Trustee, Transferor or any of the
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Certificateholders hereunder in and to the Transferor Receivables or describing
such filings as may be necessary.
(j) Rating Maintenance. For so long as the Investor
Certificates of any Series are outstanding and to the extent any Series is then
rated by any Rating Agency, the Transferor shall use all reasonable efforts to
cause each Rating Agency to maintain its rating of the Investor Certificates of
each such Series; provided, however, that such efforts shall not require the
Transferor to adversely affect its economic position.
(k) ERISA. The Transferor shall promptly give the Trustee
notice of the following events, as soon as possible and in any event within 30
days after the Transferor or any of its ERISA Affiliates knows or has reason to
know thereof: (i) the occurrence or expected occurrence of any Reportable
Event with respect to any Multiemployer Plan to which the Transferor or any of
its ERISA Affiliates contributed, or any withdrawal from, or the termination,
reorganization or Insolvency Event of any Multiemployer Plan to which the
Transferor or any of its ERISA Affiliates contributes or to which contributions
have been required to be made by the Transferor or such ERISA Affiliate or (ii)
the institution of proceedings or the taking of any other action by the PBGC or
the Transferor or any of its ERISA Affiliates or any such Multiemployer Plan
with respect to the withdrawal from, or the termination, reorganization or
Insolvency Event of, any such Plan or Multiemployer Plan.
(l) Repurchase. In the event (a) any Receivable classified
as an "Eligible Receivable" by the Transferor in any document or report
delivered hereunder fails to satisfy the requirements of eligibility contained
in the definition of Eligible Receivable, (b) such failure cannot be cured by
the Business Day following the first day on which a Responsible Officer of the
Transferor has knowledge thereof and (c) such failure causes the Net
Receivables Balance to be less than the Required Net Receivables Balance, the
Transferor shall repurchase an amount of such Receivables (each, a "Reconveyed
Receivable") from the Trust such that the payment for such Reconveyed
Receivables is sufficient to cause the Net Receivables Balance to be equal to
or greater than the Required Net Receivables Balance. The Servicer shall
deduct the unpaid balance of each such Reconveyed Receivable from the balance
of Eligible Receivables in the Trust and on and after the date of such removal,
each Reconveyed Receivable so removed shall not be included in the calculation
of the Net Receivables Balance until such time as such Receivable shall again
be classified as a Transferor Receivable. As payment for each such Reconveyed
Receivable, the Transferor shall make or cause to be made a deposit in
immediately available funds in the Reserve Account of each outstanding Series
in an amount equal to such Series' pro rata share of the aggregate of the
unpaid principal balances of such
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Reconveyed Receivables or portion thereof. The Transferor shall make such
deposit, or cause such deposit to be made, by the close of business on the
Business Day following the first day a Responsible Officer of the Transferor
has knowledge of the occurrence of the events set forth in clauses (a), (b) and
(c) above with respect to such Receivables. Such deposit shall be considered
payment in full for each such Reconveyed Receivable during the Collection
Period in which such payment occurs. Upon each removal of a Reconveyed
Receivable from the Trust, the Trustee on behalf of the Trust shall
automatically and without further action be deemed to transfer, assign,
set-over and otherwise convey to or upon the order of the Transferor, without
recourse, representation or warranty, all the right, title and interest of the
Trust in and to such Reconveyed Receivable and Collections with respect thereto
and all proceeds thereof. Collections related to Reconveyed Receivables shall
be deposited by the Trustee to the Transferor Account as instructed by the
Servicer. The Trustee on behalf of the Trust shall execute such documents and
instruments of transfer or assignment as shall be prepared by the Transferor or
the Servicer, and shall take such other actions as shall reasonably be
requested by the Transferor to effect the conveyance of such Reconveyed
Receivable pursuant to this Section 2.05(l). The obligation of the Transferor
set forth in this Section 2.05(l) shall constitute the sole remedy respecting
the occurrence of the events set forth in clauses (a), (b) and (c) above with
respect to such Receivable available to the Investor Certificateholders or the
Trustee on behalf of the Investor Certificateholders.
SECTION 2.06. Negative Covenants of the Transferor. The
Transferor hereby further covenants that, unless it shall have received the
written consent of the Majority in Interest of each outstanding Series and the
Rating Agency Condition shall have been satisfied (to the extent any Series is
then rated by a Rating Agency), until all Series are no longer outstanding
under the related Supplement:
(a) No Liens. Except for the Transfer hereunder and the
security interest granted pursuant to Section 2.01(a), the Transferor will not
sell, pledge, assign or transfer any Transferor Receivable or any interest
therein or any other Trust Asset to any other Person, or grant, create, incur,
assume or suffer to exist any Lien on, any Trust Asset or any other property or
asset of the Transferor (other than the Transferor Certificate, any
Supplemental Certificate and funds deposited to the Transferor's Account
pursuant to the applicable Supplement or the Transferor Certificate), whether
now existing or hereafter created, or any interest therein, and the Transferor
shall defend the right, title and interest of the Trust in and to the Trust
Assets, whether now existing or hereafter created, against all claims of third
parties claiming through or under the Transferor.
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(b) Activities of the Transferor. The Transferor will
not engage in, enter into or be a party to any business, activity or
transaction of any kind other than the businesses, activities and transactions
contemplated and authorized by this Agreement or the Receivables Purchase
Agreement or any document related hereto or thereto or incidental to its
ability to carry out its obligations under such agreements.
(c) Indebtedness. Except as provided herein or in the
Receivables Purchase Agreement or as contemplated thereby or hereby, the
Transferor will not create, incur or assume any indebtedness (other than
operating expenses incurred in the performance of or incidental to its
obligations under this Agreement) or sell or transfer any receivables to a
trust or other Person which issues securities in respect of any such
receivables.
(d) Guarantees. Except as provided for herein, the
Transferor will not become or remain liable, directly or contingently, in
connection with any indebtedness or other liability of any other Person,
whether by guarantee, endorsement (other than endorsements of negotiable
instruments for deposit or collection in the ordinary course of business),
agreement to purchase or repurchase, agreement to supply or advance funds, or
otherwise.
(e) Investments. The Transferor will not make or suffer
to exist any loans or advances to, or extend any credit to, or make any
investments (by way of transfer of property, contributions to capital, purchase
of stock or securities or evidences of indebtedness, acquisition of the
business or assets, or otherwise) in, any Affiliate or any other Person except
for purchases of Transferor Receivables pursuant to the terms of the
Receivables Purchase Agreement and investments in Eligible Investments in
accordance with the terms of this Agreement.
(f) Extension or Amendment of Transferor Receivables.
The Transferor will not extend, amend or otherwise modify (or consent or fail
to object to any such extension, amendment or modification by the Servicer) the
terms of any Transferor Receivable, or extend, amend, modify or waive (or
consent or fail to object to any such extension, amendment, modification or
waiver by the Servicer) any payment term or condition of any Contract related
thereto (other than, in each case above, as provided in the Credit Policy
Manual) if the effect of such extension, amendment, modification or waiver is
reasonably likely to impair materially the collectability or delay the payment
of any then existing Transferor Receivable except as ordered by a court of
competent jurisdiction or other Governmental Authority.
(g) Change in Corporate Name. The Transferor will not
(i) make any change to its name, identity, structure or
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principal place of business or use any tradenames, fictitious names, assumed
names or "doing business as" names unless, prior to the effective date of any
such change or use, the Transferor delivers an Opinion of Counsel, in form and
substance reasonably satisfactory to the Trustee, and such financing statements
(Forms UCC-1 and UCC-3) executed by the Transferor which reflect such change or
use, together with such other documents and instruments that are required in
connection therewith or (ii) change its jurisdiction of formation unless the
Trustee shall have received from the Transferor (A) written notice of such
change at least 30 days prior to the effective date thereof, and (B) prior to
the effective date thereof, if requested by the Trustee, an Opinion of Counsel,
in form and substance reasonably satisfactory to the Trustee, as to such
formation, the Transferor's valid existence and good standing.
(h) Receivables Purchase Agreement. The Transferor will
not (i) cancel or terminate the Receivables Purchase Agreement or consent to or
accept any cancellation or termination thereof, (ii) amend or otherwise modify
any term or condition of the Receivables Purchase Agreement or give any
consent, waiver or approval thereunder, (iii) waive any default under or breach
of the Receivables Purchase Agreement or (iv) take any other action under the
Receivables Purchase Agreement not required by the terms thereof, in each case,
to the extent that it would impair the value of any Trust Asset or impair in
any material respect the rights or interests of the Transferor thereunder or of
the Trustee or the Investor Certificateholders hereunder or thereunder.
(i) Organization. Except as permitted by Section
2.06(g), 2.06(k) or as required to comply with the applicable Requirements of
Law, or, with respect to the bylaws, to the extent such action is not likely to
have a material adverse effect on the Investor Certificateholders, the
Transferor will not amend its articles of incorporation or bylaws.
(j) Maintenance of Separate Existence. The Transferor
will not (i) fail to do all things necessary to maintain its existence as a
corporation separate and apart from Geneva Steel and any Affiliate of Geneva
Steel, and any Affiliate of the Transferor including, without limitation,
maintaining all correspondence in its own name, holding regular meetings of, or
obtaining regular written consents from, its shareholders and Board of
Directors and maintaining appropriate books and records; (ii) suffer any
limitation on the authority of its directors and officers to conduct its
business and affairs in accordance with their independent business judgment, or
authorize or suffer any Person other than its directors and officers to act on
its behalf with respect to matters (other than matters customarily delegated to
others under powers of attorney) for which a corporation's own directors and
officers would customarily be responsible;
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(iii) fail to (A) maintain or cause to be maintained by the Transferor or an
agent of the Transferor physical possession of all its books and records, (B)
maintain capitalization adequate for the conduct of its business, (C) account
for and manage its liabilities separately from those of any other Person,
including, without limitation, payment of all payroll and other administrative
expenses and taxes from its own assets, (D) segregate and identify separately
all of its assets from those of any other Person, and (E) maintain offices
through which its business is conducted separate from those of Geneva Steel and
any Affiliates of Geneva Steel and any Affiliates of the Transferor (provided
that, to the extent that the Transferor and any of its Affiliates have offices
in the same location, there shall be a fair and appropriate allocation of
overhead costs and expenses among them, and each such entity shall bear its
share of such expenses); or (iv) commingle its funds with those of Geneva Steel
or any Affiliate of Geneva Steel or any Affiliates of the Transferor, or use
its funds for other than the Transferor's uses; provided, however, that
proceeds of certain accounts receivable belonging to Geneva Steel may from time
to time be deposited into the Geneva Steel Collection Accounts, the Transferor
Account, or the Concentration Account.
(k) Ownership; Merger. The Transferor will not (i) sell
any shares of any class of its capital stock to any Person (other than Geneva
Steel), or enter into any transaction of merger or consolidation, or convey or
otherwise dispose of all or substantially all of its assets (except as
contemplated herein), provided, that the Transferor shall not be prohibited
from transferring or pledging the Transferor Certificate, or (ii) terminate,
liquidate or dissolve itself (or suffer any termination, liquidation or
dissolution), or (iii) pledge its capital stock, or (iv) acquire or be acquired
by any Person, except indirectly in connection with a consolidation, merger or
transfer of stock of Geneva Steel (which consolidation or merger shall be
permitted by Section 8.02 if Geneva Steel is then serving as the Servicer), in
connection with which the Trustee shall have received an Opinion of Counsel,
which counsel is not an employee of Geneva Steel or any of its Affiliates, that
such consolidation or merger does not affect the separate corporate existence
of the Transferor.
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 3.01. Acceptance of Appointment and Other Matters
Relating to the Servicer. (a) Geneva Steel agrees to act as the Servicer
under this Agreement (subject to Article X) and the Certificateholders by their
acceptance of the Certificates consent to Geneva Steel so acting as Servicer.
The
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Servicer, in such capacity, hereby disclaims all right, title and interest in
and to the Transferor Receivables and the proceeds thereof, except for the
payment of its fees and expenses hereunder.
(b) The Servicer shall (subject to Article X) enforce the
Trust's respective rights and interests in, to and under the Transferor
Receivables and the other Trust Assets on behalf of the Trust. The Servicer,
on behalf of the Trustee, shall service, administer and collect the Transferor
Receivables and, in connection therewith, the Servicer shall take or cause to
be taken all such actions as may be necessary or advisable to attempt to
collect each Transferor Receivable from time to time, all in accordance with
applicable laws, rules and regulations, with reasonable care and diligence, and
in accordance with the Credit Policy Manual.
(c) Provided no Early Amortization Event or Servicer Default
shall have occurred and be continuing, and no Partial Amortization Period shall
have commenced and be continuing, the Servicer may, in accordance with the
Credit Policy Manual, extend the maturity, adjust the Outstanding Balance, or
otherwise modify the terms of any Defaulted Receivable or amend, modify or
waive any payment term or condition of any Contract related thereto, all as it
may determine to be appropriate to maximize Collections thereof, to the extent
permitted by Section 3.04(d) provided that, for all purposes hereunder, any
such Transferor Receivable which is otherwise a Defaulted Receivable shall
remain a "Defaulted Receivable" in the amount of its Outstanding Balance
(without giving effect to any such extension, adjustment, amendment,
modification or waiver) until paid or charged off as uncollectible.
(d) The Servicer shall have full power and authority, acting
alone or through any party properly designated by it hereunder, to do any and
all things in connection with such servicing and administration which it may
deem necessary or desirable. Without limiting the generality of the foregoing
and subject to Section 10.01, the Servicer or its designee is hereby authorized
and empowered (i) to instruct the Trustee to make withdrawals and payments from
the Concentration Account, subject to the limitations set forth in Section 4.02
and as otherwise set forth in this Agreement, (ii) to instruct the Trustee to
make withdrawals and payments from the Series Accounts, subject to the
limitations set forth in Section 4.02 and as otherwise set forth in this
Agreement, (iii) to instruct the Trustee to take any action required or
permitted under any Enhancement, (iv) to make any filings, reports, notices,
applications and registrations with, and to seek any consents or authorizations
from, the Securities and Exchange Commission and any state securities authority
on behalf of the Trust as may be necessary or advisable to comply with any
Federal or state securities laws or reporting
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requirements, and (v) only upon satisfaction of the Rating Agency Condition (to
the extent that any Series is then rated by a Rating Agency) to subcontract
with any other Person (at the Servicer's expense) for servicing, administering
or collecting the Transferor Receivables, provided that such Person shall not
become Servicer hereunder and the Servicer shall remain liable for the
performance of the duties and obligations of the Servicer pursuant to the terms
hereof. The Trustee shall execute any documents furnished by the Servicer
which are necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder and such documents shall be
acceptable in form and substance to the Trustee. The Trustee shall, upon the
written request of the Servicer, furnish the Servicer with any documents then
in the Trustee's possession which are necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder.
(e) The Servicer shall not, and no Successor Servicer shall
be obligated to, use separate servicing procedures, offices, employees or
accounts for servicing the Transferor Receivables from the procedures, offices,
employees and accounts used by the Servicer or such Successor Servicer, as the
case may be, in connection with servicing other trade receivables or its
business in general.
(f) The relationship of the Servicer (and of any successor to
the Servicer under this Agreement) to the Trust and the Trustee under this
Agreement is intended by the parties to be that of an independent contractor to
the Trust and shall not be construed to be that of a joint venturer, partner,
or agent, such that the acts of the Servicer are in any way attributable to the
Trustee in its individual capacity prior to such time as the Trustee may serve
as Servicer pursuant to the provisions of Article X.
SECTION 3.02. Servicing Compensation; Servicer's Expenses.
(a) Compensation. As full compensation for its servicing
activities hereunder, the Servicer shall be entitled to receive a monthly
servicing fee (the "Servicing Fee") for each Collection Period (or portion
thereof) from the Closing Date until the termination of the Amortization
Period, payable in arrears on the Distribution Date with respect to such
Collection Period (or portion thereof), in an amount equal to the aggregate of
the Series Servicing Fees specified in the Supplements. In the case of any
Servicer other than Geneva Steel or any Affiliate thereof, the Servicing Fee
may be a higher fee, as shall be agreed to by the Trustee in its sole
discretion, but in no event in excess of a per annum fee equal to 1.00% of the
Trust Invested Amount. The Servicing Fee shall be payable only from Investor
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Collections pursuant to, and subject to the priority of payment set forth in,
the Supplements.
(b) Expenses. The Servicer's expenses include first, the
Trustee's Fee (to the extent not paid from Collections); then, all documented
expenses and liabilities of the Trust (other than any liability of the Trust
with respect to any amount payable solely out of Collections or any personal
liability of the Trust to repay the Certificates) not expressly stated herein
to be for the account of the Certificateholders (including, without limitation,
the other amounts due to the Trustee pursuant to Section 11.05), the reasonable
fees and disbursements of independent accountants and counsel, all fees and
expenses incurred by or on behalf of the Servicer in connection with its
servicing activities hereunder (including, without limitation, expenses related
to enforcement of the Transferor Receivables and the costs of a Service
Transfer) or otherwise in connection herewith, and other fees and documented
expenses (including, without limitation, the costs of filing UCC continuation
statements); provided that, in no event shall the Servicer be liable for any
federal, state or local income, franchise or other tax, or any interest or
penalties with respect thereto, assessed on the Trust, the Trustee or the
Certificateholders except as expressly provided herein. Such expenses shall be
payable, first, from the Servicing Fee, and, second, to the extent not paid
from the Servicing Fee, by the Transferor for its own account, and, third, to
the extent the Transferor shall fail to pay any of such expenses, by the
Servicer for its own account, provided, that the Servicer shall not be entitled
to any payment or any fee or other payment from, or claim on, any of the Trust
Assets, other than the Servicing Fee. The Transferor's and Servicer's
obligation to pay the expenses and disbursements provided for in this Section
3.02(b) shall survive the termination of this Agreement.
SECTION 3.03. Representations and Warranties of the
Servicer. Geneva Steel, as initial Servicer, and in such capacity, hereby
makes, and each Successor Servicer by acceptance of its appointment hereunder
shall make, the following representations and warranties, in the case of the
initial Servicer, as of the date hereof and as of the date of the initial
Transfer of Transferor Receivables and with respect to any Series as of the
date of any Supplement and the related Closing Date or, in the case of any
Successor Servicer, the date of such appointment and, with respect to any
Series issued after such date, as of the date of the related Supplement and the
related Closing Date, in each case unless otherwise stated in such Supplement:
(a) Organization and Good Standing. The Servicer and
each of its subsidiaries is a corporation duly organized, validly existing and
in good standing under the applicable laws of its
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jurisdiction of organization or incorporation and has full corporate power and
authority to own its properties and conduct its business (in the case of the
Servicer, including its receivables servicing business) as such properties are
presently owned and as such business is presently conducted and, in the case of
the Servicer, as is proposed to be conducted under this Agreement and the
Receivables Purchase Agreement, and, in the case of the Servicer, to execute,
deliver and perform its obligations under this Agreement and the applicable
Supplement.
(b) Due Qualification. The Servicer and each of its
subsidiaries is duly qualified to do business and is in good standing as a
foreign corporation (or is exempt from such requirements), and has obtained all
necessary licenses and approvals, in each jurisdiction in which the servicing
of the Receivables in accordance with the terms of this Agreement and any
Supplement requires such qualification, except where failure to so qualify or
to obtain such licenses or approvals would not have a material adverse effect
on the Servicer's ability to perform its obligations under this Agreement and
the applicable Supplement.
(c) Due Authorization. The Servicer's execution,
delivery and performance of this Agreement and the applicable Supplement and
the other agreements and instruments executed or to be executed by the Servicer
as contemplated hereby and thereby have been duly authorized by all necessary
corporate action.
(d) Binding Obligation. Each of this Agreement and the
applicable Supplement constitutes a legal, valid and binding obligation of the
Servicer enforceable against it in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws now and hereafter in effect
affecting creditors' rights generally, and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at law or
in equity).
(e) No Conflict. The Servicer's execution and delivery
of this Agreement, performance of the transactions contemplated by this
Agreement and the applicable Supplement, and fulfillment of the terms hereof
and thereof applicable to the Servicer, do not conflict with or violate in any
material respects any Requirements of Law applicable to the Servicer, or
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default under,
any material indenture, contract, agreement, mortgage, deed of trust or other
instrument to which the Servicer is a party or by which it or its properties
are bound.
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(f) No Proceedings. There are no proceedings or, to the
best knowledge of the Servicer, investigations pending or threatened against
the Servicer before any Governmental Authority (i) asserting the illegality,
invalidity or unenforceability or seeking any determination or ruling, (ii)
seeking to prevent, the consummation of any of the transactions contemplated by
this Agreement and the applicable Supplement, or (iii) seeking any
determination or ruling, in each case of (i), (ii) and (iii) above, that is
reasonably likely to materially and adversely affect, respectively, the
legality, binding effect, validity or enforceability of, consummation of any
transactions contemplated by, or performance by the Servicer of its obligations
under, this Agreement and the applicable Supplement.
(g) No Consents. No authorization, consent, license,
order or approval of or registration or declaration with any Governmental
Authority is required to be obtained, effected or given by the Servicer in
connection with the execution and delivery of this Agreement and the applicable
Supplement by the Servicer or the performance of its obligations hereunder and
thereunder.
(h) Geneva Steel Collection Accounts. The names,
addresses and ABA numbers of all the Geneva Steel Collection Account Banks, the
account numbers of the Geneva Steel Collection Accounts, the name of a contact
person at such Geneva Steel Collection Account Bank, the name, address and ABA
numbers of the Concentration Account Bank and the account number and the name
of a contact person for the Concentration Account are specified in Schedule I
hereto.
(i) Payment Instructions. The Servicer has notified the
Obligor on each Transferor Receivable to make payments on such Transferor
Receivable to one of the Geneva Steel Collection Accounts.
(j) Daily Reports and Determination Date Certificates.
Each Daily Report and Determination Date Certificate delivered by the Servicer
pursuant to this Agreement shall be true and correct in all material respects
as of the date such report or certificate is delivered.
(k) Servicer Default. No Servicer Default has occurred
and is continuing.
The representations and warranties set forth in this Section
3.03 shall survive the Transfer of the Receivables to the Trust and the
issuance of the Certificates, and shall cease and be of no effect upon
repayment in full of the Invested Amount of the last outstanding Series and all
other obligations of the Transferor hereunder. Upon a discovery by the
Transferor, the Servicer or the Trustee of a material breach of any of the
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foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the other parties. The Trustee's
obligations in respect of any such breach are limited as provided in Section
11.02(g).
SECTION 3.04. Covenants of the Servicer. The Servicer, in
such capacity, hereby covenants that, until the termination of the Amortization
Period:
(a) Change in Accounts. The Servicer will not (i)
terminate and substitute any Concentration Account (or make any change in its
instructions to Geneva Steel Collection Account Banks regarding payments to be
made to the Concentration Account) except as required pursuant to Section 4.02
or any Reserve Account except as required pursuant to the applicable Supplement
or (ii) add or terminate any institution as a Geneva Steel Collection Account
Bank from those listed in Schedule I hereto, except as otherwise permitted
pursuant to Section 4.02 or unless the Trustee shall have received notice of
such addition, termination or change and executed copies of Geneva Steel
Collection Account Letters to each new Geneva Steel Collection Account Bank.
(b) Collections. In the event that the Servicer or any
Affiliate thereof receives any Collections, the Servicer agrees to hold, or
cause such Affiliate to hold, all such Collections in trust and to deposit, or
cause such Affiliate to deposit, such Collections to the appropriate Geneva
Steel Collection Account as soon as practicable, but in no event later than two
Business Days after receipt thereof.
(c) Compliance with Requirements of Law. The Servicer
will duly satisfy in all material respects all obligations on its part to be
fulfilled under or in connection with each Transferor Receivable, will maintain
in effect all material qualifications required under Requirements of Law in
order to service each Transferor Receivable and will comply in all material
respects with all other Requirements of Law in connection with servicing each
Transferor Receivable.
(d) Extension or Amendment of Transferor Receivables.
Subject to Section 3.01(c), the Servicer will not extend, amend or otherwise
modify (or consent or fail to object to any such extension, amendment or
modification by Geneva Steel or the Transferor) the terms of any then existing
Transferor Receivable, or extend, amend, modify or waive (or consent or fail to
object to any such extension, amendment, modification or waiver by Geneva Steel
or the Transferor) any payment term or condition of any Contract related
thereto if the effect of any such extension, amendment, modification or waiver
would materially impair the collectability or delay the payment of any
Transferor Receivable, in each case above, in a manner inconsistent with the
Credit
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Policy Manual but in no event beyond 60 days from date of invoice or except as
ordered by a court of competent jurisdiction or other Governmental Authority.
Notwithstanding the foregoing provisions of this Section 3.04(d), the Servicer
may extend, amend, modify, cancel or rescind any Diluted Receivable in
connection with a valid dispute; provided, however, that such amendment,
modification, cancellation or rescission shall not have a material adverse
effect on the interests of the Certificateholders.
(e) Protection of Certificateholders' Rights. Except as
authorized by this Agreement and the applicable Supplement, the Servicer will
not take any action which, or omit to take any action the omission of which,
would materially impair the rights of Certificateholders in any Transferor
Receivable or Trust Asset.
(f) Deposits to Concentration Account, any Series Account
or any Geneva Steel Collection Account. The Servicer will not deposit or
otherwise credit, or cause to be so deposited or credited, or consent or fail
to object to any such deposit or credit, to the Concentration Account, any
Geneva Steel Collection Account or any Series Account cash or cash proceeds
other than Collections or Cure Funds; provided, however, that proceeds of
certain accounts receivable belonging to Geneva Steel may from time to time be
deposited into the Geneva Steel Collection Accounts, the Concentration Account
or the Transferor Account.
(g) Transferor Receivables Not to Be Evidenced by
Promissory Notes. The Servicer will take no action to cause any Transferor
Receivable to be evidenced by any "instrument" (as defined in the UCC of the
State the law of which governs the perfection of the interest in such
Receivable created hereunder), except in connection with its enforcement, in
which event the Transferor shall deliver such instrument to the Trustee as soon
as reasonably practicable but in no event more than three Business Days after
execution thereof.
(h) Reporting Requirements. The Servicer will furnish to
the Trustee:
(i) within one Business Day after a Responsible
Officer of the Servicer becomes aware of the occurrence of a Servicer
Default, any Early Amortization Event, the commencement of a Partial
Amortization Period or Cure Period and each event which, with the
giving of notice or lapse of time or both, would constitute an Early
Amortization Event, notification of such occurrence;
(ii) as soon as possible and in any event (A)
within 5 Business Days after a Responsible Officer of the Servicer
becomes aware of the occurrence of a Servicer
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Default, any Early Amortization Event, the commencement of a Partial
Amortization Period or Cure Period, and each event which, with the
giving of notice or lapse of time or both, would constitute a Servicer
Default, the statement of the chief financial officer or chief
accounting officer or other Responsible Officer setting forth details
of such Servicer Default or Early Amortization Event or Partial
Amortization Period or Cure Period commencement or event and the
action which the Servicer has taken and proposes to take with respect
thereto, and (B) within 5 Business Days after the occurrence thereof,
notice of any other event, development or information which is
reasonably likely to materially and adversely affect the ability of
the Servicer to perform its obligations under this Agreement; and
(iii) promptly, from time to time, such other
information, documents, records or reports within its possession
respecting the Transferor Receivables, the other Trust Assets or the
condition or operations, financial or otherwise, of the Servicer as
the Trustee may from time to time reasonably request.
The Servicer shall provide to the Trustee access to the
documentation regarding the Transferor Receivables in such cases where the
Trustee is required in connection with the enforcement of the rights of
Certificateholders or by applicable statutes or regulations to review such
documentation, such access being afforded without charge but only (i) upon
reasonable request, (ii) during normal business hours, and (iii) subject to the
Servicer's normal security and confidentiality procedures.
(i) Filing of Continuation Statements. The Servicer
shall prepare and file such continuation statements and other documents
reasonably requested by the Trustee, Transferor or any of the
Certificateholders or which may otherwise be required by law to fully preserve
and protect the interest of the Trustee, Transferor or any of the
Certificateholders hereunder in and to the Transferor Receivables.
(j) Changes in Geneva Steel Credit Policy Manual. The
Servicer shall comply with and perform its servicing obligations with respect
to the Transferor Receivables in accordance with the Credit Policy Manual,
except insofar as any failure to so comply or perform would not materially and
adversely affect the Certificateholders. Subject to compliance with all
Requirements of Law, the Transferor or the Servicer, as applicable, may change
the terms and provisions of the Credit Policy Manual, provided, however, that
(i) with respect to a material change of collection policies, each Rating
Agency Condition (to the extent that any outstanding Series is then rated by a
Rating Agency) is satisfied and (ii) with respect to a material change of
collection
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procedures, no material and adverse effect on any Series of Certificates would
result.
(k) Change in Corporate Name. The Servicer will not
(i) if the Servicer is Geneva Steel, make any change to its company name or
principal place of business or use any tradenames, fictitious names, assumed
names or "doing business as" names for such company's business operations other
than "Geneva Steel" unless, prior to the effective date of any such change or
use, the Servicer delivers to the Trustee such financing statements (Forms
UCC-1 and UCC-3) executed by the Servicer which are required to reflect such
name change, change in principal business, or use, together with such other
documents and instruments that the Trustee may reasonably request in connection
therewith or (ii) change its jurisdiction of incorporation unless the Trustee
shall have received from the Servicer (A) written notice of such change at
least 30 days prior to the effective date thereof, and (B) prior to the
effective date thereof, an Opinion of Counsel, in form and substance reasonably
satisfactory to the Trustee, as to such incorporation and the Servicer's valid
existence and good standing.
(l) Credit and Collection Policies. The Servicer will
comply in all material respects with the Credit Policy Manual in regard to each
Transferor Receivable subject to Section 3.04(j).
(m) Receivables Purchase Agreement. The Servicer will at
its expense timely perform and comply in all material respects with all
provisions, covenants and other promises required to be observed by it under
the Receivables Purchase Agreement, maintain the Receivables Purchase Agreement
in full force and effect, enforce its rights under the Receivables Purchase
Agreement in accordance with its terms, and make to any party to the
Receivables Purchase Agreement, upon the Trustee's request, such reasonable
demands and requests for information and reports or for action as the Servicer
is entitled to make thereunder.
(n) Notice to Obligors. The Servicer will notify the
Obligor on each Transferor Receivable conveyed to the Trust on or after the
Closing Date to make payments on such Transferor Receivable to one of the
Geneva Steel Collection Accounts.
(o) Application of Transferor Receivables. On each
Business Day, the Servicer shall apply all Collections received in the Geneva
Steel Collection Accounts on such day to the related Transferor Receivables
balances on the records of the Servicer prior to the preparation of the Daily
Report on the immediately following Business Day; provided that the Servicer
shall use its best efforts to apply any such funds within five (5) Business
Days after receipt thereof.
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SECTION 3.05. Reports and Records for the Trustee.
(a) Daily Records. On each Business Day, the Servicer shall
provide by telecopy to the Trustee, and, upon request, to any Enhancement
Provider and each Investor Certificateholder, the Daily Report and, to the
extent not covered in the Daily Report, a record setting forth (i) the
Collections in respect of the Transferor Receivables processed by the Servicer
on the immediately preceding Business Day, (ii) the amount of Eligible
Receivables as of the close of business on the immediately preceding Business
Day and (iii) the Floating Allocation Percentage for each Series at the close
of business on the immediately preceding Business Day.
(b) Determination Date Certificate. On or before each
Determination Date with respect to each outstanding Series, the Servicer shall
deliver by telecopy to each Rating Agency (to the extent such Series is then
rated) and the Trustee, and the Trustee shall deliver to each Investor
Certificateholder, a Determination Date Certificate for such Determination Date
substantially in the form set forth in the related Supplement.
SECTION 3.06. Annual Certificate of Servicer. On or before
December 31 of each calendar year, beginning with December 31, 1995, the
Servicer shall deliver to the Trustee, each Rating Agency (to the extent such
Series is then rated) and each Enhancement Provider, an Officer's Certificate,
executed by the chief financial officer of the Servicer, substantially in the
form of Exhibit B hereto. A copy of each such certificate will be sent to each
Investor Certificateholder by the Trustee.
SECTION 3.07. Annual Servicing Report of Independent Public
Accountants. (a) On or before December 31 of each calendar year, beginning
with December 31, 1995, the Servicer shall cause a firm of Independent Public
Accountants (who may also render other services to the Servicer or the
Transferor) to furnish a report (addressed to the Trustee) to the Trustee, the
Servicer, each Rating Agency (to the extent such Series is then rated by a
Rating Agency) and each Enhancement Provider substantially to the effect that
(i) such accountants have examined certain documents and records relating to
the servicing of Transferor Receivables under this Agreement, compared the
information contained in the Servicer's certificates delivered pursuant to
Section 3.05(b) during the period covered by such report with such documents
and records and that, on the basis of such examination, and subject to such
limitations and qualifications as may be reasonably set forth in such report,
such accountants are of the opinion that the servicing has been conducted
substantially in compliance with the terms and conditions as set forth in
Articles III and IV of this Agreement, except for such exceptions as they
believe to be immaterial and such other exceptions as shall be set forth in
such statement and
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(ii) such accountants have compared the mathematical calculations of each
amount set forth in the Servicer's certificates delivered pursuant to Section
3.05(b) during the period covered by such report with the Servicer's computer
reports which were the source of such amounts and that on the basis of such
comparison, such accountants are of the opinion that such amounts are in
agreement, except for such exceptions as they believe to be immaterial and such
other exceptions as shall be set forth in such statement. The Trustee will
send a copy of each such report to each Investor Certificateholder.
(b) As soon as practicable and in any event within 120
days after the close of each of its fiscal years commencing with 1994, each of
the Servicer and the Transferor shall deliver to each Rating Agency (to the
extent such Series is then rated by a Rating Agency) the annual audited
consolidated financial statements of Geneva Steel (including balance sheets as
of the end of such period, related revenue and expense statements, and a
statement of cash flows) certified by Independent Public Accountants and
prepared in accordance with GAAP.
SECTION 3.08. Tax and Usury Treatment. The Transferor has
entered into this Agreement, and the Investor Certificates have been (or will
be) issued to and acquired by the Investor Certificateholders, with the
intention that, for federal, state, foreign and local income and franchise tax
and usury law purposes, the Investor Certificates will be indebtedness of the
Transferor (or, if so provided in a Supplement, as an interest in a
partnership) secured by the Transferor Receivables. The Transferor, by
entering into this Agreement, and each Certificateholder, by the acceptance of
its Certificate, agree to treat the Certificates for purposes of federal, state
and local income and franchise taxes and for any other tax imposed on or
measured by income and usury law purposes as indebtedness of the Transferor.
In accordance with the foregoing, the Transferor agrees that it will report its
income for such federal, state, foreign and local income or franchise taxes, or
for purposes of any other taxes on or measured by income, on the basis that it
is the owner of the Transferor Receivables. Furthermore, the Trustee hereby
agrees to treat the Trust as a security device only, and shall not file tax
returns or obtain an employer identification number on behalf of the Trust
(except as may be required as a result of changes in law about which a
Responsible Officer of the Trustee has knowledge; provided that the Trustee is
under no obligation to monitor such changes in the law).
SECTION 3.09. Notices to Geneva Steel. In the event that
Geneva Steel is no longer acting as Servicer, any Successor Servicer shall
deliver or make available to Geneva Steel and the Transferor each certificate
and report required to be delivered thereafter pursuant to Sections 3.05, 3.06
and 3.07.
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SECTION 3.10. Adjustments. If the Servicer makes a mistake
with respect to the amount of any Collection and deposits or pays an amount
that is less than or more than the actual amount of such Collection, the
Servicer shall appropriately adjust the amount so deposited or paid to correct
such mistake and send written notice thereof to the Trustee. If the Servicer
provides written notice to the Trustee with regard to any overpayment, the
Trustee shall promptly refund any such overpayment to the Servicer in
accordance with the Servicer's instructions. Any Transferor Receivable in
respect of which a dishonored check is received shall be deemed not to have
been paid.
SECTION 3.11. Securities and Exchange Commission Filings.
For so long as Geneva Steel is the Servicer, the Servicer shall deliver to the
Trustee copies of each report of the Servicer or any of its Affiliates filed
with the Securities and Exchange Commission on Forms 10-K and 10-Q promptly
after any such filing has been made.
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.01. Rights of Certificateholders. (a) The
Investor Certificates shall represent fractional undivided beneficial interests
in the Trust Assets allocable to the related Series (with respect to each
Series, the "Certificateholders' Interest"), which shall consist of the right
to receive, to the extent necessary to make the required payments with respect
to the Investor Certificates of such Series at the times and in the amounts
specified in the related Supplement, the portion of Collections allocable to
Investor Certificateholders of such Series pursuant to this Agreement and the
related Supplement from funds on deposit in the Concentration Account allocable
to Certificateholders of such Series, funds on deposit in any related Series
Account and funds available pursuant to any related Enhancement (collectively
with respect to all Series, the "Aggregate Certificateholders' Interest"), it
being understood that the Investor Certificates of any Series or Class shall
not represent any interest in any Series Account or Enhancement for the benefit
of any other Series or Class. The Transferor Certificate shall represent the
fractional undivided beneficial interest in the remainder of the Trust Assets
not allocated pursuant to this Agreement or any Supplement to the Aggregate
Certificateholders' Interest, including the right to receive Collections with
respect to the Transferor Receivables and other amounts at the times and in the
amounts specified in this Agreement or in any Supplement to be paid to the
Holder of the Transferor Certificate (the "Transferor Interest"); provided,
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however, that the Transferor Certificate shall not represent any interest in
the Concentration Account, any Series Account or any Enhancement, except as
specifically provided in this Agreement or any Supplement.
(b) The Floating Allocation Percentage for each Series
and the Transferor Percentage shall be initially computed by the Servicer as of
the opening of business of the Servicer on the Closing Date. Thereafter, until
the commencement of the Amortization Period or a Partial Amortization Period,
the Floating Allocation Percentage for each Series and the Transferor
Percentage, and through the recomputations thereof, the Certificateholders'
Interest for each Series and the Transferor Interest shall be automatically
recomputed by the Servicer as of the close of business of the Servicer on each
Business Day. Each of the Certificateholders' Interests, the Floating
Allocation Percentage for each Series, the Transferor Interest and the
Transferor Percentage (i) shall remain constant from the time as of which any
such computation or recomputation is made until the time as of which the next
such recomputation, if any, shall be made and (ii) as computed as of the close
of business of the Servicer on the day on which the Amortization Period or
Partial Amortization Period commences, shall remain constant at all times
during the Amortization Period or a Partial Amortization Period.
SECTION 4.02. Establishment of Geneva Steel Collection
Accounts and Concentration Account. (a) On or prior to the Closing Date, the
Servicer, for the benefit of the Certificateholders, shall establish and
maintain, or cause to be established and maintained, with an Eligible
Institution a segregated trust account in the name of the Trustee, accessible
by the Trustee and, subject to the limitations set forth in this Section 4.02,
the Servicer (such account being the "Concentration Account" and such
institution holding such account being the "Concentration Account Bank"). Such
account shall bear a designation clearly indicating that the funds deposited
therein are held for the benefit of the Certificateholders. The Trustee shall
possess all right, title and interest in and to all funds from time to time on
deposit in the Concentration Account and in all proceeds thereof. The
Concentration Account shall be under the sole dominion and control of the
Trustee for the benefit of the Certificateholders. Except as expressly
provided in this Agreement, the Servicer agrees that it shall have no right of
setoff or banker's lien against, and no right to otherwise deduct from, any
funds held in the Concentration Account for any amount owed to it by the
Trustee, the Trust or any Certificateholder. Geneva Steel will deposit any
Collections received by it into a Geneva Steel Collection Account within two
Business Days following the Business Day on which such Collections are so
received or, if such day is not a Business Day, the Business Day following such
day. The Servicer shall deposit, or cause to be deposited, Collections into
the Concentration Account by the
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close of business on the day of receipt thereof as available funds in a Geneva
Steel Collection Account. Notwithstanding the foregoing, if and to the extent
that funds that are not Collections are deposited into the Concentration
Account, the Servicer may direct the Trustee to, and the Trustee shall,
withdraw such funds from the Concentration Account for deposit as directed by
the Servicer. The Geneva Steel Collection Account shall initially be held at
Citibank N.A. and the Concentration Account shall initially be held at Bankers
Trust Company.
If, at any time, the institution holding the Concentration
Account ceases to be an Eligible Institution, the Servicer, upon actual
knowledge thereof, for the benefit of the Certificateholders, shall within 30
Business Days (i) establish a new Concentration Account meeting the conditions
specified above with an Eligible Institution, (ii) transfer any cash and/or any
investments held therein or with respect thereto to such new Concentration
Account and (iii) in the case of any new Concentration Account, deliver to all
Geneva Steel Collection Account Banks new Geneva Steel Collection Account
Letters (with copies thereof to the Trustee) referring to such new
Concentration Account, and from the date such new Concentration Account is
established, it shall be the "Concentration Account." Pursuant to the
authority granted to the Servicer in Section 3.01, the Servicer shall have the
power to instruct the Trustee to make, and the Trustee shall, as directed by
the Servicer, make, withdrawals and payments from the Concentration Account for
the purposes of carrying out the Servicer's or the Trustee's duties specified
in this Agreement.
Funds on deposit in the Concentration Account or, in the case
of funds on deposit on any Deposit Date or Distribution Date, funds required
pursuant to the applicable Supplement to be deposited to the Trustee's Account
or the Transferor's Account on such date, shall at the direction of the
Servicer be invested by the Trustee or the Eligible Institution maintaining
such accounts in Eligible Investments as instructed by the Servicer in writing,
or by telephone confirmed promptly in writing (which may be a standing
instruction). All such Eligible Investments shall be held by the Trustee.
Such funds shall be invested in Eligible Investments that will mature so that
such funds will be available in amounts sufficient for the Servicer, or the
Trustee, as the case may be, to make each distribution required under the
applicable Supplement on the Distribution Date with respect to such Collection
Period or the last day of an Interest Period if such day is other than a
Distribution Date. Eligible Investments maintained with the Trustee in the
Trustee's Account may mature on the Distribution Date or last day of an
Interest Period on which funds are required to be distributed. Funds deposited
in the Concentration Account on a Determination Date with respect to the next
following Distribution Date are not required to be invested overnight. On each
Distribution Date, all interest and
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other investment earnings (net of losses and investment expenses) received on
funds on deposit in the Concentration Account, to the extent such investment
income is not needed to pay the Certificateholders on such Distribution Date,
shall be paid to the Transferor, except as otherwise specified in any
Supplement. The Trustee is hereby authorized, unless otherwise directed by the
Servicer, to effect transactions in Eligible Investments through a capital
markets affiliate of the Trustee or its own investment department.
(b) On or prior to the Closing Date, the Servicer, for
the benefit of the Certificateholders, shall establish and maintain or cause to
be established and maintained in the name of the Trustee, on behalf of the
Trust, with an Eligible Institution (each, a "Geneva Steel Collection Bank")
segregated accounts accessible by the Trustee and the Servicer, subject to the
limitations set forth in this Section 4.02 (each such account, a "Geneva Steel
Collection Account") to which Collections are to be remitted directly by
Obligors. The Geneva Steel Collection Accounts shall be under the sole
dominion and control of the Trustee for the benefit of the Certificateholders;
provided, however, that each Geneva Steel Collection Account shall be
accessible by the Servicer for the purpose of transferring Collections to the
Concentration Account in the manner set forth in Section 4.02(a). The name,
location and account number of each Geneva Steel Collection Account is attached
to this Agreement on Schedule I attached hereto. Each Geneva Steel Collection
Account shall be maintained with documentation and instructions in form and
substance satisfactory to the Trustee. Such documentation shall provide, among
other things, that available amounts shall be promptly transferred to the
Concentration Account. Geneva Steel shall not, without the prior written
consent of the Trustee, change any Geneva Steel Collection Account, establish
any additional Geneva Steel Collection Account or change such instructions or
documentation so long as the Trustee on behalf of the Trust has any interest in
the Transferor Receivables.
(c) Geneva Steel hereby agrees and acknowledges that (i)
it has executed and delivered to the Trustee a letter and acknowledgement
thereto substantially in the form of Exhibit C hereto, addressed to each
banking institution with which the Geneva Steel Collection Account is
maintained (each, a "Geneva Steel Collection Account Letter") and (ii) it shall
execute and deliver a substantially similar Geneva Steel Collection Account
Letter prior to the establishment by Geneva Steel of any additional or
alternative Geneva Steel Collection Account. Geneva Steel hereby agrees, and
the Trustee hereby acknowledges, that such letter transfers all right, title
and interest in all monies, securities and instruments in each Geneva Steel
Collection Account to the Trustee. Geneva Steel agrees to execute such further
documents and take such other actions as may
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be reasonably requested by the Trustee in order to effect such transfer.
SECTION 4.03. Allocation of Collections. Collections will
be allocated to each Series from and after the related Series Cut-Off Date as
specified in the related Supplement, and amounts so allocated to any Series
will not, except as specified in the related Supplement, be available to the
Investor Certificateholders of any other Series. Allocations of Collections
between the Certificateholders' Interest and the Transferor Interest, among the
Series or to any Enhancement Agreement and among the Classes in any Series or
to any Enhancement Provider shall be set forth in the related Supplement or
Supplements. If, on any day, the Floating Allocation Percentages for all
outstanding Series exceed 100%, then the aggregate of the Investor Collections
for all outstanding Series shall be allocated pro rata among all outstanding
Series on the basis of the Series Allocation Percentage for each Series;
provided, however, that if on any day during an Early Amortization Period or an
Amortization Period, the amount of Investor Collections for any Series is not
sufficient to pay the full amount of interest due and payable on such day to
the Investor Certificateholders of each Series on such day, then the aggregate
of the Investor Collections for all outstanding Series shall be allocated pro
rata among all outstanding Series on the basis of a fraction, for each Series,
the numerator of which is the Invested Amount of such Series and the
denominator of which is the Trust Invested Amount.
ARTICLE V
DISTRIBUTIONS AND REPORTS TO CERTIFICATEHOLDERS
Distributions shall be made to, and reports shall be provided to,
Certificateholders as set forth in the applicable Supplement.
ARTICLE VI
THE CERTIFICATES
SECTION 6.01. The Certificates. The Investor Certificates
of any Series or Class shall be issued in registered form and shall be in
substantially the form of Exhibit A to the applicable Supplement and shall upon
issue be executed and delivered by the Transferor to the Trustee for
authentication and redelivery as provided in Section 6.02. The Investor
Certificates shall be issued in minimum denominations of $500,000 and in
integral multiples of $1,000 in excess thereof (except that one Certificate may
be issued in a denomination that includes any
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residual amount), and shall be Certificates in an aggregate original principal
amount equal to the Initial Invested Amount or in the case of any variable
funding certificate, the Maximum Invested Amount. The Transferor Certificate
shall be a single certificate, substantially in the form of Exhibit A hereto,
and shall represent the entire Transferor Interest. Each Certificate shall be
executed by manual or facsimile signature on behalf of the Transferor by a
Responsible Officer of the Transferor or by any other officer or assistant
officer duly authorized to execute such Certificate on behalf of the
Transferor. Certificates bearing the manual or facsimile signature of the
individual who was, at the time when such signature was affixed, authorized to
sign on behalf of the Transferor shall not be rendered invalid, notwithstanding
that such individual ceased to be so authorized prior to the authentication and
delivery of such Certificates or does not hold such office at the date of such
Certificates. No Certificates shall be entitled to any benefit under this
Agreement or the applicable Supplement or be valid for any purpose, unless
there appears on such Certificate a certificate of authentication in
substantially the form provided for herein executed by or on behalf of the
Trustee by the manual signature of a duly authorized signatory, and such
certificate upon any Certificate shall be the conclusive and only evidence,
that such Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
SECTION 6.02. Authentication of Certificates. The Trustee
shall authenticate and deliver the Investor Certificates of each Series to, and
upon the written order of, the Transferor against payment to the Transferor of
the purchase price therefor. The Trustee shall authenticate and deliver the
Transferor Certificate to the Transferor simultaneously with its delivery of
the first Series of Investor Certificates to be issued hereunder. The
Certificates of any Series or Class shall be duly authenticated by or on behalf
of the Trustee, in authorized denominations equal to (in the aggregate) in the
case of the Investor Certificates, the Initial Invested Amount of such Series,
or in the case of any variable funding certificate, the Maximum Invested
Amount, and, in the case of the Transferor Certificate, in the denomination
equal to the Transferor's Interest from time to time, and together evidencing
the entire ownership of the Trust.
SECTION 6.03. Registration of Transfer and Exchange of
Certificates. (a) The Trustee shall cause to be kept at its corporate trust
office designated pursuant to Section 11.16, a register (the "Certificate
Register") in which, subject to such reasonable regulations as it may
prescribe, a transfer agent and registrar (which may be the Trustee) (the
"Transfer Agent and Registrar") shall provide for the registration of the
Certificates and transfers and exchanges of the Certificates as herein
provided. The Transfer Agent and Registrar shall initially be the Trustee, and
any co-transfer agent and
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co-registrar chosen by the Trustee and acceptable to the Servicer. Any
reference in this Agreement to the Transfer Agent and Registrar shall include
any co-transfer agent and co-registrar unless the context requires otherwise.
The Trustee shall be permitted to resign as Transfer Agent and
Registrar upon 30 days' written notice (60 days' during an Amortization Period)
to the Transferor and the Servicer; provided, however, that such resignation
shall not be effective and the Trustee shall continue to perform its duties as
Transfer Agent and Registrar until the Servicer has appointed a successor
Transfer Agent and Registrar reasonably acceptable to the Transferor.
Upon surrender for registration of transfer of any Investor
Certificate at any office or agency of the Transfer Agent and Registrar
maintained for such purpose, the Transferor shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Investor Certificates (of the same Series and
Class) in authorized denominations of like aggregate Undivided Fractional
Interests in the Aggregate Certificateholders' Interest.
At the option of an Investor Certificateholder, Investor
Certificates may be exchanged for other Investor Certificates (of the same
Series and Class) of authorized denominations of like aggregate Undivided
Fractional Interests in the Certificateholders' Interest, upon surrender of the
Investor Certificates to be exchanged at any such office or agency. Whenever
any Investor Certificates are so surrendered for exchange, the Transferor shall
execute, and the Trustee shall authenticate and deliver, the Investor
Certificates which the Certificateholder making the exchange is entitled to
receive.
Every Investor Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in a form satisfactory to the Trustee or the Transfer
Agent and Registrar, duly executed by the Certificateholder thereof or his
attorney-in-fact. Each Holder must satisfy the transfer restrictions set forth
in the Certificates.
Each Investor Certificate shall be registered at all times as
herein provided, and any transfer or exchange of such Investor Certificate will
be valid for purposes hereunder only upon registration of such transfer or
exchange by the Trustee or the Transfer Agent and Registrar as provided herein.
Payments on any Distribution Date shall be made to Holders of record on the
immediately preceding Record Date.
No service charge shall be made for any registration of
transfer or exchange of Investor Certificates, but the Transfer
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Agent and Registrar or any co-transfer agent and co-registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Investor Certificates.
All Investor Certificates surrendered for registration of
transfer or exchange, or for payment, shall be canceled and disposed of in a
manner reasonably satisfactory to the Trustee.
(b) The Transfer Agent and Registrar will maintain at its
expense in the Borough of Manhattan, The City of New York, an office or offices
or agency or agencies where Investor Certificates may be surrendered for
registration of transfer or exchange.
(c) (i) Notwithstanding any other provision of this Section
6.03, no registration of transfer of any Investor Certificate shall be made
unless the transferor or the transferee shall deliver, at its expense, to the
Transferor, the Servicer and the Trustee either (A) a representation letter, in
form and substance satisfactory to the Trustee, stating whether such transferee
is a "benefit plan investor" as defined in Section 2510.3-101(f)(2) of the
Labor Regulations promulgated under ERISA, or (B) if such transferee is an
insurance company licensed to issue contracts of insurance in any state, the
information described in paragraph (c)(ii) below. The Transfer Agent and
Registrar will maintain, as a part of the Certificate Register, a list of all
Investor Certificates (or the portion of any thereof) that are held by benefit
plan investors on the basis of any representation provided pursuant to the
foregoing clause (A) or on the basis of any information provided to the
Transfer Agent and Registrar pursuant to the second sentence of clause (ii)
below. The Transfer Agent and Registrar will not register the transfer of any
Investor Certificate if, immediately after the registration of transfer of such
Investor Certificate, 25% or more of the outstanding principal balance of the
Investor Certificates of all Series are held by benefit plan investors.
Notwithstanding anything else to the contrary herein, any purported transfer of
an Investor Certificate to a "benefit plan investor" in violation of the
preceding sentence shall be void and of no effect.
(ii) In the event that such transferee is an insurance
company licensed to issue contracts of insurance in any state, such transferee
shall provide to the Transferor, the Servicer and the Trustee, in lieu of such
representation letter described in (c)(i)(A) above, information in writing
sufficient for the Transferor to determine that such transferee will purchase
Investor Certificates with funds that either (A) will not, for purposes of
ERISA, be classified as "plan assets," or (B) if such funds are composed (in
whole or in part) of plan assets, what proportion or dollar value of such funds
may be deemed to be plan
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assets. The Transferor shall analyze such information and shall inform the
Transfer Agent and Registrar as to the proportion of such Investor Certificates
that will thereby be deemed to be acquired by benefit plan investors for
purpose of the 25% determination described above. Any determination made by
the Transferor pursuant to this clause (ii) shall be made on a reasonable basis
and in good faith and on a basis consistent with that used in making such
determination with respect to the initial Certificateholders.
SECTION 6.04. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate is surrendered to the Transfer
Agent and Registrar, or the Transfer Agent and Registrar receives evidence to
its satisfaction of the destruction, loss or theft of any Certificate and (b)
there is delivered to the Transfer Agent and Registrar, the Trustee, the
Transferor and Geneva Steel such indemnity as may be required by them to
indemnify each of them and save each of them harmless (provided, that a letter
of indemnity from (i) an insurance company or (ii) an institutional investor
having a long term debt rating or claim paying ability of BBB (or equivalent
rating) or higher by a nationally recognized rating agency shall satisfy such
requirement), then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Transferor shall
execute and the Trustee shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and (in the case of any new Investor Certificate)
Undivided Fractional Interest. In connection with the issuance of any new
Certificate under this Section 6.04, the Trustee or the Transfer Agent and
Registrar may require the payment by the Certificateholder of a sum sufficient
to pay any tax or other governmental charge that may be imposed in relation
thereto. Any duplicate Certificate issued pursuant to this Section 6.04 shall
constitute complete and indefeasible evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 6.05. Persons Deemed Owners. At all times prior to
due presentation of a Certificate for registration of transfer, the Trustee,
the Paying Agent, the Transfer Agent and Registrar and any agent of any of them
shall treat the Person in whose name any Certificate is registered as the owner
of such Certificate as of the most recent Record Date for the purpose of
receiving distributions pursuant to the terms of the applicable Supplement and
for all other purposes whatsoever and none of the Trustee, the Paying Agent,
the Transfer Agent and Registrar or any agent of any of them shall be affected
by any notice to the contrary. Notwithstanding the foregoing, in determining
whether the Holders of the requisite Undivided Fractional Interests have given
any request, demand, authorization, direction, notice, consent or waiver
hereunder, Certificates owned by the
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Transferor, the Servicer or any Affiliate thereof shall be disregarded and
deemed not to be outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Certificates which a Responsible
Officer of the Trustee actually knows to be so owned shall be so disregarded.
Certificates so owned which have been pledged in good faith shall not be
disregarded and may be regarded as outstanding if the pledgee establishes to
the satisfaction of the Trustee the pledgee's right so to act with respect to
such Certificates and that the pledgee is not the Transferor, the Servicer or
an Affiliate thereof.
SECTION 6.06. Appointment of Paying Agent. The Paying
Agent shall make distributions to Investor Certificateholders, the Servicer and
the Trustee pursuant to the applicable Supplement and shall report the amounts
of such distributions to the Trustee. The Trustee shall make available to the
Paying Agent funds from the Trustee's Account on the day on which they are to
be distributed pursuant to the applicable Supplement. The Paying Agent shall
initially be the Trustee, and any co-paying agent chosen by the Trustee and
acceptable to the Servicer. The Trustee shall be permitted to resign as Paying
Agent upon 30 days' written notice to the Servicer. In the event that the
Trustee shall no longer be the Paying Agent, the Servicer shall appoint a
successor to act as Paying Agent (which shall be a bank or trust company). The
Servicer shall cause such successor Paying Agent or any additional Paying Agent
appointed by the Servicer to execute and deliver to the Trustee an instrument
in which such successor Paying Agent or additional Paying Agent shall agree
with the Trustee that it will hold all sums in trust for the benefit of the
Certificateholders entitled thereto, the Servicer or the Trustee, respectively,
until such sums shall be paid to such Certificateholders, the Servicer or the
Trustee, respectively. The Paying Agent shall return all unclaimed funds to
the Trustee and upon removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to the Trustee. The provisions of Sections
7.03, 11.01, 11.02, 11.03 and 11.05 shall apply to the Trustee also in its role
as Paying Agent, for so long as the Trustee shall act as Paying Agent. Any
reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.
SECTION 6.07. Access to List of Certificateholders' Names
and Addresses. The Trustee will furnish or cause to be furnished by the
Transfer Agent and Registrar to the Servicer, any Investor Certificateholder,
the Transferor or the Paying Agent, within five Business Days after receipt by
the Trustee of a written request therefor from the Servicer, the Transferor,
any Investor Certificateholder or the Paying Agent, a list of the names and
addresses of the Certificateholders which in the case of any request from any
Investor Certificateholder shall be
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limited to the names and addresses of the Certificateholders of the same
Series.
Every Certificateholder, by receiving and holding a
Certificate, agrees that none of the Trustee, the Transfer Agent and Registrar,
the Transferor, the Servicer, Geneva Steel, or any of their respective agents,
shall be held accountable by reason of the disclosure of any such information
as to the names and addresses of the Certificateholders hereunder, regardless
of the sources from which such information was derived.
SECTION 6.08. Authenticating Agent. (a) The Trustee may
appoint one or more authenticating agents with respect to the Certificates
which agent or agents shall be authorized to act on behalf of the Trustee in
authenticating the Certificates. Whenever reference is made in this Agreement
to the authentication of Certificates by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication on behalf of the Trustee by an authenticating agent. Each
authenticating agent must be acceptable to the Transferor and the Servicer.
(b) Any institution succeeding to the corporate agency
business of an authenticating agent shall continue to be an authenticating
agent without the execution or filing of any power of attorney or any further
act on the part of the Trustee or such authentication agent.
(c) An authenticating agent may at any time resign by
giving written notice of resignation to the Trustee and to the Transferor. The
Trustee may at any time terminate the agency of an authenticating agent by
giving notice of termination to such authenticating agent and to the
Transferor. Upon receiving such a notice of resignation or upon such a
termination, or if an authenticating agent shall cease to be acceptable to the
Trustee or the Transferor, the Trustee shall promptly appoint a successor
authenticating agent. Any successor authenticating agent upon acceptance of
its appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally named as
an authenticating agent. No successor authenticating agent shall be appointed
unless acceptable to the Trustee and the Transferor.
(d) The Transferor agrees to pay to each authenticating
agent from time to time reasonable compensation for its services under this
Section 6.08.
(e) The provisions of Sections 7.03, 11.01, 11.02 and
11.03 shall be applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section
6.08, the Certificates may have endorsed thereon, in lieu of or
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in addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in substantially the following form:
This is one of the Certificates described in the Pooling and
Servicing Agreement.
- ------------------------------
- ------------------------------
as Authenticating Agent
for the Trustee
By:
---------------------------
Authorized Officer
SECTION 6.09. New Issuances. (a) The Transferor may from
time to time direct the Trustee to, and the Trustee shall, issue one or more
new Series of Investor Certificates pursuant to a Supplement. The Investor
Certificates of all outstanding Series and the Transferor Certificate shall be
equally and ratably entitled to the benefits of this Agreement without
preference, priority or distinction, all in accordance with the terms and
provisions of this Agreement and the applicable Supplement except as provided
in the related Supplement.
(b) On or before the Series Issuance Date relating to any
new Series, the parties hereto will execute and deliver a Supplement which will
specify the Principal Terms of such new Series. The terms of such Supplement
may modify or amend the terms of this Agreement solely as applied to such new
Series. The obligation of the Trustee to issue the Investor Certificates of
such new Series and to execute and deliver the related Supplement is subject to
the satisfaction of the following conditions:
(i) on or before the tenth Business Day immediately
preceding the Series Issuance Date, the Transferor shall have given
the Trustee, the Servicer, each Rating Agency (to the extent any
Series is then rated) and any Enhancement Provider written notice of
such issuance and the Series Issuance Date;
(ii) the Transferor shall have delivered to the Trustee
the related Supplement in a form satisfactory to the Trustee, executed
by each party hereto other than the Trustee;
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(iii) the Transferor shall have delivered to the Trustee
any related Enhancement Agreement executed by each party hereto other
than the Trustee;
(iv) to the extent any Series is then rated by a Rating
Agency, each Rating Agency shall have notified the Transferor, the
Servicer, the Trustee and any Enhancement Provider in writing that the
issuance of such new Series of Investor Certificates will not result
in a reduction or withdrawal of the rating of any outstanding Series
or Class rated by such Rating Agency;
(v) such issuance will not result in the occurrence of an
Early Amortization Event and the Transferor shall have delivered to
the Trustee and any Enhancement Provider an Officer's Certificate,
dated the Series Issuance Date (upon which the Trustee may
conclusively rely), to the effect that the Transferor reasonably
believes that such issuance will not result in the occurrence of an
Early Amortization Event and is not reasonably expected to result in
the occurrence of an Early Amortization Event;
(vi) the Transferor shall have delivered to the Trustee
and any Enhancement Provider an Opinion of Counsel to the effect that
the issuance of the Investor Certificates of such Series (A) has been,
or need not be, registered under the Act and will not result in the
requirement that any other Series of Investor Certificates not
registered under the Act be so registered (unless the Transferor has
elected, in its sole discretion, to register such Certificates), (B)
will not result in the Trust becoming subject to registration as an
investment company under the Investment Company Act and (C) will not
require this Agreement or the related Supplement to be qualified under
the Trust Indenture Act of 1939, as amended;
(vii) the Transferor shall have delivered to the Trustee a
Tax Opinion, dated the Series Issuance Date, with respect to such
issuance; and
(viii) such issuance will not result in the aggregate
Floating Allocation Percentage for all outstanding Series (after
giving effect to such new issuance) exceeding 100%.
Upon satisfaction of the above conditions, the Trustee shall execute the
Supplement and the Transferor shall execute and deliver the Investor
Certificates of such Series for authentication and redelivery to or upon the
order of the Transferor. Notwithstanding the provisions of this Section
6.09(b), prior to the execution of any Supplement, the Trustee shall be
entitled to receive and rely upon an Opinion of Counsel stating that the
execution of such Supplement is authorized or
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permitted by this Agreement and any Supplement related to any outstanding
Series. The Trustee may, but shall not be obligated to, enter into any such
Supplement which adversely affects the Trustee's own rights, duties or
immunities under this Agreement.
(c) The Transferor may surrender the Transferor
Certificate to the Trustee in exchange for a newly issued Transferor
Certificate and a second certificate (a "Supplemental Certificate"), the terms
of which shall be subject to Section 13.01 hereof to the extent that it amends
any of the terms of this Agreement, to be delivered to or upon the order of the
Transferor (or the holder of a Supplemental Certificate, in the case of the
transfer or exchange thereof, as provided below), upon satisfaction of the
following conditions:
(i) the Transferor shall have delivered to the Trustee an
Officer's Certificate certifying that the result obtained by
multiplying (x) an amount equal to the excess of the Net Receivables
Balance over the Trust Invested Amount by (y) the percentage
equivalent of the portion of the Transferor Interest represented by
the newly issued Transferor Certificate, shall not be less than 2% of
the aggregate balance of all Receivables owned by the Trust, in each
case as of the date of, and after giving effect to, such exchange;
(ii) to the extent that any Series is then rated by a
Rating Agency, each Rating Agency Condition shall have been satisfied
with respect to such transfer or exchange; and
(iii) the Transferor shall have delivered to the Trustee,
any Paying Agent and any Enhancement Provider, a Tax Opinion, dated
the date of such transfer or exchange, with respect thereto.
The Transferor Certificate will be beneficially owned by the
Transferor at all times. Any Supplemental Certificate may be transferred or
exchanged only upon satisfaction of the conditions set forth in clauses (ii)
and (iii) above.
ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR
SECTION 7.01. Obligations not Assignable. The obligations of
the Transferor hereunder shall not be assignable nor shall any Person succeed
to the obligations of the Transferor hereunder.
SECTION 7.02. Limitations on Liability. None of the
directors, officers, shareholders, employees or agents of the
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Transferor, past, present or future, shall be under any liability to the Trust,
the Trustee, the Certificateholders or any other Person for any action taken or
omitted to be taken in such capacities pursuant to this Agreement; provided,
however, that this provision shall not protect any such Person against any
liability which would otherwise be imposed by reason of such Person's willful
misconduct or bad faith in the performance of such Person's duties or the
reckless disregard by such Person of any of such Person's obligations and
duties hereunder. The Transferor and any director, officer, employee or agent
of the Transferor may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person (other than the Transferor
or any Affiliate thereof) respecting any matters arising hereunder.
SECTION 7.03. Indemnification of the Trustee, the Trust and
the Investor Certificateholders. Without limiting any other rights which the
Trustee, its directors, officers, agents and employees, the Trust or any
Investor Certificateholder (each, an "Indemnified Party") may have hereunder or
under applicable law, the Transferor hereby agrees to indemnify each
Indemnified Party from and against any and all claims, losses, expenses and
liabilities (including reasonable attorneys' fees) (all of the foregoing being
collectively referred to as "Indemnified Amounts") arising out of or resulting
from this Agreement or the other Transaction Documents, the activities of the
Trust or the Trustee in connection herewith, the Transferor's use of proceeds
of Transfers of Receivables or reinvestments of Collections, the interest
conveyed hereunder in Trust Assets, or in respect of any Transferor Receivable
or the Receivables Purchase Agreement, excluding, however, (a) Indemnified
Amounts to the extent resulting from willful misconduct, bad faith, gross
negligence, the reckless disregard by such Indemnified Party of any of his, her
or its obligations and duties or breach of fiduciary duty on the part of such
Indemnified Party, (b) recourse for uncollectible Transferor Receivables or (c)
any income or franchise taxes (or any interest or penalties with respect
thereto) incurred by such Indemnified Party arising out of or as a result of
this Agreement or the interest conveyed hereunder in Trust Assets or in respect
of any Transferor Receivable or the Receivables Purchase Agreement. Without
limiting the foregoing (other than clauses (a), (b) and (c)), the Transferor
shall pay on demand to each Indemnified Party any and all amounts necessary to
indemnify such Indemnified Party from and against any and all Indemnified
Amounts relating to or resulting from:
(i) reliance on any representation or warranty or
statement made or deemed made by the Transferor, Geneva Steel or any
of their respective Affiliates under or in connection with this
Agreement or the Receivables Purchase Agreement which shall have been
incorrect in any material respect when made;
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(ii) the failure by the Transferor or the Servicer
(provided the Servicer is the Transferor, Geneva Steel or any
Affiliate thereof) substantially to comply with this Agreement, the
failure of the Transferor or Geneva Steel to comply with any material
provision of the Receivables Purchase Agreement, the failure by the
Transferor to comply with any material applicable Requirement of Law
with respect to any Receivable or the related Contract or the
Receivables Purchase Agreement, or the nonconformity of any Receivable
or the related Contract or the Receivables Purchase Agreement with any
material Requirement of Law;
(iii) the failure to vest in the Investor
Certificateholders an undivided fractional beneficial interest to the
extent of their respective Undivided Fractional Interests, in the
Transferor Receivables and the other Trust Assets, free and clear of
any Lien;
(iv) the failure to have filed, or any delay in
filing, financing statements or other similar instruments or documents
under the UCC of any applicable jurisdiction or other applicable laws
with respect to any Transferor Receivable or any other Trust Asset,
whether at the time of Transfer thereof or reinvestment of the
proceeds thereof or at any subsequent time;
(v) any investigation, litigation or proceeding
related to this Agreement or any Receivables Purchase Agreement or the
Trust or the use of proceeds of Transfers of Receivables or
reinvestments of proceeds thereof or the ownership of Trust Assets or
in respect of any Transferor Receivable or any Contract relating
thereto, other than any litigation or proceeding between Geneva Steel
or the Transferor or any Affiliate thereof, on the one hand, and the
Trustee or any Investor Certificateholder or any Affiliate thereof, on
the other hand, in which Geneva Steel or the Transferor or an
Affiliate thereof prevails in a final non-appealable judgment by a
court of competent jurisdiction;
(vi) the commingling of Collections of Transferor
Receivables at any time with other funds prior to distribution under
the applicable Supplement;
(vii) any tax (other than any income or franchise
tax, or any interest or penalties with respect thereto) imposed by
reason of ownership of the Transferor Receivables or other Trust
Assets by the Trustee; or
(viii) any dispute, claim, offset or defense of any
Obligor to the payment of any Transferor Receivable or any
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other claim resulting from the sale of merchandise or services related
to any Diluted Receivable.
In case any proceeding shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to this Section the
Indemnified Party shall promptly notify the Transferor in writing and the
Transferor, upon request of the Indemnified Party, shall retain counsel
reasonably satisfactory to the Indemnified Party to represent the Indemnified
Party and any others the Transferor may designate in such proceeding and shall
pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any Indemnified Party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Party unless (i) the Transferor and the
Indemnified Party shall have mutually agreed to the retention of such counsel
or (ii) the named parties to any such proceeding (including any impleaded
parties) include both the Transferor and the Indemnified Party and
representation of both parties by the same counsel would be inappropriate due
to actual conflicts of interests between them. It is understood that the
Transferor shall not, in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for the reasonable fees and expenses of
more than one separate firm for all such Indemnified Parties. It is further
understood that the Transferor shall not be liable to any Indemnified Party
until or unless such Indemnified Party notifies the Transferor in writing of
its request for indemnification.
Indemnification pursuant to this Section shall only be from
assets of the Transferor (and, as a result, any such indemnification may be
payable from any Trust Asset only if, to the extent that, and after, such Trust
Asset shall have been released from the Trust and distributed to the Holder of
the Transferor Certificate). The agreement contained in this Section 7.03
shall survive the collection of all Transferor Receivables, the termination of
this Agreement and the payment of all amounts otherwise payable hereunder.
ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER
SECTION 8.01. Liability of the Servicer. The Servicer
shall be liable under this Agreement only to the extent of the obligations
specifically undertaken by the Servicer.
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SECTION 8.02. Merger or Consolidation of, or Assumption of
the Obligations of, the Servicer. The Servicer shall not consolidate with or
merge into any other Person or convey or transfer its properties and assets
substantially as an entirety to any Person unless:
(a) (i) the Person formed by such consolidation or into which
the Servicer is merged or the Person which acquires by conveyance or transfer
the properties and assets of the Servicer substantially as an entirety shall
be, if the Servicer is not the surviving entity, a corporation organized and
existing under the laws of the United States of America or any State or the
District of Columbia, and such corporation (if not the Servicer) shall have
expressly assumed, by an agreement supplemental hereto, executed and delivered
to the Trustee, in form reasonably satisfactory to the Trustee, the performance
of every covenant and obligation of the Servicer hereunder; (ii) the Servicer
shall have delivered to the Trustee an Officer's Certificate and an Opinion of
Counsel, each in form reasonably satisfactory to the Trustee, stating that such
consolidation, merger, conveyance or transfer complies with this Section 8.02
and that all conditions precedent herein provided for relating to such
transaction have been complied with; and (iii) each Rating Agency Condition
shall have been satisfied (to the extent that any Series is then rated by a
Rating Agency); and
(b) if the Servicer is Geneva Steel, all conditions for
such merger or consolidation or conveyance or transfer, as the case may be,
contained in the Receivables Purchase Agreement shall be satisfied; and
(c) the corporation formed by such consolidation or into
which the Servicer is merged or which acquires by conveyance or transfer the
properties and assets of the Servicer substantially as an entirety shall have
all licenses and approvals of Governmental Authorities required to service the
Transferor Receivables, as evidenced by an Opinion of Counsel delivered to the
Trustee, except to the extent the failure to have any such license would not
have a material adverse effect on its ability to perform the obligations of
Servicer hereunder.
SECTION 8.03. Limitations on Liability. None of the
directors, officers, shareholders, employees or agents of the Servicer, past,
present or future, shall be under any liability to the Trust, the Trustee, the
Certificateholders or any other Person for any action taken or omitted to be
taken in such capacities pursuant to this Agreement or for any obligation or
covenant under this Agreement, it being understood that, with respect to the
Servicer, this Agreement and the obligations created hereunder are solely the
corporate obligations of the Servicer; provided, however, that this provision
shall not protect the Servicer or any such Person against any liability
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which would otherwise be imposed by reason of willful misconduct, bad faith,
gross negligence or the reckless disregard by such Person of any of such
Person's obligations and duties. The Servicer and any director, officer,
employee or agent of the Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person (other than the
Servicer or any Affiliate thereof) respecting any matters arising hereunder.
The Servicer shall not be under any obligation to appear in, prosecute or
defend any legal action which is not incidental to its duties as Servicer in
accordance with this Agreement and which in its reasonable judgment may involve
it in any material expense or liability.
SECTION 8.04. Servicer Indemnification. The Servicer shall
indemnify and hold harmless each Indemnified Party from and against Indemnified
Amounts suffered or sustained by reason of any breach by the Servicer of its
representations and warranties or obligations under this Agreement, excluding,
however, Indemnified Amounts to the extent resulting from (i) willful
misconduct, bad faith, gross negligence, the reckless disregard by such
Indemnified Party of any of such Indemnified Party's obligations and duties or
breach of fiduciary duty on the part of such Indemnified Party, (ii) recourse
for uncollectible Transferor Receivables or (iii) any income or franchise taxes
(or any interest or penalties with respect thereto) incurred by such
Indemnified Party arising out of or as a result of this Agreement or the
interest conveyed hereunder in Trust Assets or in respect of any Transferor
Receivable or any Contract or the Receivables Purchase Agreement.
Indemnification pursuant to this Section shall not be payable from the Trust
Assets. The agreement contained in this Section 8.04 shall survive the
collection of all Transferor Receivables, the termination of this Agreement and
the payment of all amounts otherwise due hereunder.
In case any proceeding shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to this Section
8.04, the Indemnified Party shall promptly notify the Servicer in writing and
the Servicer, upon request of the Indemnified Party, shall retain counsel
reasonably satisfactory to the Indemnified Party to represent the Indemnified
Party and any others the Indemnified Party may designate in such proceeding and
shall pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any Indemnified Party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Party unless (i) the Servicer and the
Indemnified Party shall have mutually agreed to the retention of such counsel
or (ii) the named parties to any such proceeding (including any impleaded
parties) include both the Servicer and the Indemnified Party and representation
of both parties by the same counsel would be inappropriate due to actual
conflicts of interest between them. It is understood that the Servicer shall
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not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm for all such Indemnified Parties. It is further understood that
the Servicer shall not be liable to any Indemnified Party unless such
Indemnified Party notifies the Servicer in writing of its request for
indemnification.
SECTION 8.05. The Servicer Not to Resign. The Servicer shall
not resign from the obligations and duties hereby imposed on it except upon
determination that (i) its performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
the Servicer could take to make its performance of its duties hereunder
permissible under applicable law. Any determination permitting the resignation
of the Servicer shall be evidenced by an Opinion of Counsel who is not an
employee of the Servicer or any Affiliate of the Servicer with respect to
clause (i) above, delivered to, and in form reasonably satisfactory to, the
Trustee. No resignation shall become effective until the Trustee or a
Successor Servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 10.02 hereof. If within 60 days of the
date of the determination that the Servicer may no longer act as Servicer
hereunder for any reason and the Trustee has not appointed a Successor
Servicer, the Trustee shall serve as Successor Servicer hereunder.
Notwithstanding the foregoing, the Trustee shall, if it is legally unable so to
act, and in any other case, may, petition a court of competent jurisdiction to
appoint any established institution that is an Eligible Servicer (other than
the Trustee) as the Successor Servicer hereunder in accordance with Section
10.02.
SECTION 8.06. Examination of Records. The Servicer shall
indicate in its computer records that the Transferor Receivables and other
Trust Assets have been Transferred to the Trustee on behalf of the Trust
pursuant to this Agreement for the benefit of the Certificateholders. The
Servicer (and the Transferor) shall, prior to the sale or transfer to a third
party of any Receivable held in its custody, examine its records to determine
that such receivable is not a Transferor Receivable.
SECTION 8.07. Utah Bank Holidays. The Servicer shall, on
or prior to the Effective Date and at least 30 days prior to the end of each
calendar year, provide to a Responsible Officer of the Trustee, a list for the
following year of the days on which national banking associations or state
banking institutions in Salt Lake City, Utah are authorized or obligated by
law, executive order or governmental decree to be closed.
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ARTICLE IX
EARLY AMORTIZATION EVENTS
SECTION 9.01. Early Amortization Events. If any one of the
following events shall occur:
(a) any failure by the Transferor, Geneva Steel or the
Servicer (i) to make any payment, transfer or deposit required to be paid by it
under the terms of this Agreement, or the Receivables Purchase Agreement, or
observe or perform the obligations specified in Section 2.05(l) of this
Agreement or Section 4.3(h) of the Receivables Purchase Agreement on or before
the date occurring five Business Days after the date such payment, transfer or
deposit is required to be made hereunder or thereunder, or (ii) to observe or
perform any other covenant or agreement to be performed by it under this
Agreement, or the Receivables Purchase Agreement, which failure (in the case of
this clause (ii)) has a material adverse effect on the interests of the
Certificateholders of any Series and which continues unremedied for a period of
thirty days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Transferor, Geneva Steel
or the Servicer, as applicable, by the Trustee or any Enhancement Provider or
to the Transferor, Geneva Steel or the Servicer, as applicable, and the Trustee
by the Holders of Investor Certificates evidencing not less than 25% of the
Invested Amount of any Series; or
(b) any representation, warranty or certification made by the
Transferor, Geneva Steel or the Servicer under or in connection with this
Agreement, or the Receivables Purchase Agreement, or in any certificate or
information delivered pursuant hereto or thereto shall prove to have been
incorrect in any material respect when made and which continues to be incorrect
in any material respect for a period of 30 days (or, with respect to any
representation, warranty or certification made by the Transferor in Sections
2.03(g) and 2.03(h) hereof, shall prove to have been incorrect in any material
respect when made and which continues to be incorrect in any material respect
for a period of 5 days, or with respect to any representations and warranties
made under Section 2.04, such longer period as may be agreed to by the Trustee
and the Majority in Interest of any Series that is materially and adversely
affected by such incorrectness) after the date on which notice of such failure,
requiring the same to be remedied, shall have been given to the Transferor by
the Trustee or to the Transferor and the Trustee by an Investor
Certificateholder; or
(c) any other default by the Transferor, Geneva Steel or the
Servicer shall occur, and shall not be remedied within the applicable grace
period, if any, under the Receivables Purchase
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Agreement, or the Receivables Purchase Agreement shall for any reason cease to
be in full force and effect or an Early Termination (as defined therein) shall
occur; or
(d) an Insolvency Event shall occur with respect to the
Transferor, the Servicer (provided the Servicer is the Transferor, Geneva Steel
or any Affiliate thereof) or the Trust; or
(e) the Securities and Exchange Commission or other
regulatory body reaches a final determination that the Transferor or the Trust
is an "investment company" within the meaning of the Investment Company Act; or
(f) (i) other than as a result of the application of or
reference to Octagon in any proceeding before any state or federal court within
the tenth federal circuit or the United States Supreme Court, any purchase of
any Receivables by the Transferor under the Receivables Purchase Agreement
shall cease to create a valid sale, transfer and assignment to the Transferor
of all right, title and interest of Geneva Steel in and to such Receivables and
the proceeds thereof; or (ii) any Transfer of any Transferor Receivables on any
date shall for any reason cease to create a valid transfer and assignment to
the Trust of all right, title and interest of the Transferor in and to such
Transferor Receivables and the proceeds thereof or, if such Transfer does not
constitute such a sale, transfer and assignment, cease to create a valid and
perfected first priority "security interest" (as defined in the UCC of the
jurisdiction the law of which governs the perfection of the interest in such
Transferor Receivables created hereunder) in such Transferor Receivables and
the proceeds thereof; or (iii) the Investor Certificates delivered hereunder
shall for any reason cease to evidence the transfer to the Investor
Certificateholders of rights in, or the Investor Certificateholders shall
otherwise cease to have a beneficial interest in, a trust owning or having a
perfected first priority security interest in the Transferor Receivables and
the other Trust Assets allocable to such Series of Investor Certificates now
existing and hereafter arising and the proceeds thereof to the extent of their
respective Undivided Fractional Interests; or
(g) a Servicer Default shall have occurred and be
continuing, which Servicer Default shall have a material adverse effect on the
interests of the Certificateholders; or
(h) the Servicer shall have resigned in accordance with
Section 8.05 above; or
(i) the Trust at any time receives a final determination
that it will be treated as an association taxable as a corporation for federal
income tax purposes; or
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(j) within fifteen days following a Pool Non-compliance
Date (i) the Transferor shall have failed to deposit to the Reserve Accounts,
Cure Funds in an amount equal to the Trust Partial Amortization Amount, (ii)
funds equal to the Trust Partial Amortization Amount are not on deposit in the
Concentration Account, or (iii) the aggregate of amounts in the Reserve
Accounts and the Concentration Account does not equal the Trust Partial
Amortization Amount; or
(k) the Loss to Liquidation Ratio shall be greater than
3%; or
(l) the Dilution Ratio shall be greater than 10%; or
(m) the Default Ratio shall be greater than 5%;
then, in the case of any event as described in subsection (k), (l) or (m),
either the Trustee (unless otherwise directed by the Majority in Interest of
each affected Series) or the Majority in Interest of each affected Series, by
notice then given in writing to the Transferor and the Servicer (and to the
Trustee if given by such Investor Certificateholders), may declare (provided
such event shall not have been remedied) that an early amortization event (an
"Early Amortization Event") has occurred as of the date of such notice, and, in
the case of any event other than as described in subsection (k), (l) or (m),
subject to applicable law, an Early Amortization Event shall occur without any
notice or other action on the part of the Trustee or the Investor
Certificateholders, immediately upon the occurrence of such event and
additional Receivables will not be transferred to the Trust. Promptly and in
any event within 5 Business Days after the Servicer becomes aware of any Early
Amortization Event, the Servicer shall notify the Trustee of the occurrence of
such Early Amortization Event. Promptly and in any event within 5 Business
Days after the Trustee becomes aware of any Early Amortization Event with
respect to any Series then rated by any Rating Agency, the Trustee shall notify
in writing each Rating Agency of the occurrence of such Early Amortization
Event. The Trustee shall not be deemed to have knowledge of an Early
Amortization Event unless a Responsible Officer of the Trustee has actual
knowledge or has received written notice thereof.
SECTION 9.02. Additional Rights Upon the Occurrence of any
Early Amortization Event. (a) Upon the occurrence and during the continuance
of any Early Amortization Event, in addition to all other rights and remedies
under this Agreement or otherwise and all other rights and remedies provided
under the UCC of the applicable jurisdiction and other applicable laws (which
rights shall be cumulative), each of the Servicer, at the direction of the
Trustee, and the Trustee may exercise any and all rights and remedies of the
Transferor under or in connection with the Receivables Purchase Agreement,
including, without
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limitation, any and all rights of the Transferor to demand or otherwise require
payment of any amount under, or performance of any provision of, the
Receivables Purchase Agreement.
(b) If an Insolvency Event with respect to the Transferor
occurs, the Transferor shall immediately cease to transfer Receivables to the
Trust and shall promptly give written notice to the Trustee, who shall within
two Business Days forward such notice to the Certificateholders and the
Servicer of such event. Notwithstanding the above, Receivables transferred to
the Trust prior to the occurrence of such Insolvency Event and collections
relating to such Receivables shall continue to be part of the Trust. Unless,
within 30 days of the date of the notice provided for in the preceding
paragraph, the Trustee receives written instructions from the Majority in
Interest of each Series instructing the Trustee not to sell, dispose of or
liquidate the Transferor Receivables, the Trustee shall promptly proceed to
sell, dispose of, or otherwise liquidate the Transferor Receivables in a
commercially reasonable manner and on commercially reasonable terms; provided,
however, that if the amount available to the Trust for distribution after such
sale, disposition or liquidation would be less than the aggregate Invested
Amount of the Investor Certificates plus any unpaid Discount Amount thereon
through the Distribution Date next succeeding the date of such sale, the
Trustee shall not proceed with such sale, disposition or liquidation unless 80%
of Investor Certificateholders of all outstanding Series have consented in
writing thereto. The proceeds from such sale, disposition or liquidation of
the Transferor Receivables shall be treated as Collections on the Transferor
Receivables and shall be distributed in accordance with the terms of this
Agreement after being deposited in the Concentration Account.
ARTICLE X
SERVICER DEFAULTS
SECTION 10.01. Servicer Defaults. If any one of the
following events (each being a "Servicer Default") shall occur and be
continuing:
(a) any failure by the Servicer to make any payment,
transfer or deposit, or, if applicable, to give instructions or notice to the
Trustee to make such payment, transfer or deposit, or to give notice to the
Trustee as to any action to be taken under any Enhancement Agreement, or any
failure to provide the Determination Date Certificate to the Trustee, on or
before the date occurring five (5) Business Days after the date such payment,
transfer or deposit or such instruction or notice is required to be made or
given, as the case may be, under the terms of this Agreement;
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(b) any failure by the Servicer duly to observe or
perform in any material respect any other covenant or agreement of the Servicer
set forth in this Agreement, which failure has a material adverse effect on the
interest of the Certificateholders and which continues unremedied for ten (10)
Business Days; or the Servicer shall assign its duties under this Agreement,
except as permitted by Sections 3.01(d)(v) and 8.02;
(c) any representation, warranty or certification made by
the Servicer under or in connection with this Agreement, or in any certificate
or information delivered pursuant to or in connection with this Agreement,
shall prove to have been incorrect in any material respect when made and which
has a material adverse effect on the interests of the Certificateholders of any
Series and which material adverse effect continues for a period of ten (10)
Business Days; or
(d) an Insolvency Event shall occur with respect to the
Servicer;
then, as long as such Servicer Default shall not have been remedied and is
continuing, either the Trustee (unless otherwise directed by the Majority in
Interest of each Series) or the Majority in Interest of each Series, by notice
then given in writing to the Servicer (and to the Trustee if given by such
Investor Certificateholders) (each such notice being a "Termination Notice"),
may terminate all but not less than all the rights and obligations of the
Servicer as Servicer under this Agreement. The Trustee shall be deemed to have
knowledge of a Servicer Default if a Responsible Officer of the Trustee has
actual knowledge or has received written notice thereof.
The Majority in Interest of each Series may, on behalf of all
Certificateholders, waive any default by the Transferor or the Servicer in the
performance of their obligations hereunder and its consequences, except the
failure to make any distributions required to be made to Certificateholders or
to make any required deposits of any amounts to be so distributed. Upon any
such waiver of a past default, such default shall cease to exist, and any
default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
After receipt by the Servicer of a Termination Notice, and on
the date that a Successor Servicer shall have been appointed pursuant to
Section 10.02, all authority and power of the Servicer under this Agreement
shall pass to and be vested in such Successor Servicer (a "Service Transfer");
and, without limitation, the Trustee is hereby authorized, empowered and
instructed (upon the failure of the Servicer to cooperate) to
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execute and deliver, on behalf of the Servicer, as attorney-in fact or
otherwise, all documents and other instruments upon the failure of the Servicer
to execute or deliver such documents or instruments, and to do and accomplish
all other acts or things necessary or appropriate to effect the purposes of
such Service Transfer. The Servicer agrees to cooperate, at its expense, with
the Trustee and such Successor Servicer in (i) effecting the termination of the
responsibilities and rights of the Servicer to conduct servicing hereunder,
including, without limitation, the transfer to such Successor Servicer of all
authority of the Servicer to service the Transferor Receivables as provided
under this Agreement, including all authority over all Collections which shall
on the date of such Service Transfer be held by the Servicer for deposit to any
Geneva Steel Collection Account, the Concentration Account, the Trustee's
Account or the Transferor's Account, or which have been deposited by the
Servicer to any Geneva Steel Collection Account, the Concentration Account, or
any other account, or which shall thereafter be received with respect to the
Transferor Receivables, and (ii) assisting the Successor Servicer until all
servicing activities have been transferred to such Successor Servicer, such
assistance to include, without limitation, (x) assisting any accountants
selected by the Successor Servicer to verify collection records and reports
made prior to the Service Transfer and (y) assisting to make the computer
systems of the Servicer and the Successor Servicer compatible to the extent
necessary to effect the Servicer Transfer. The Servicer shall, at its expense,
within five Business Days of such Service Transfer, (A) assemble such
documents, instruments and other records (including computer tapes and discs),
which evidence the Transferor Receivables and the other Trust Assets, and which
are necessary or desirable to collect the Transferor Receivables, and shall
make the same available to the Successor Servicer or the Trustee or its
designee at a place selected by the Successor Servicer or the Trustee and in
such form as the Successor Servicer or the Trustee may reasonably request, and
(B) segregate all cash, checks and other instruments received by it from time
to time constituting Collections of Transferor Receivables in a manner
acceptable to the Successor Servicer and the Trustee, and, promptly upon
receipt, remit all such cash, checks and instruments to the Successor Servicer
or the Trustee or its designee.
At any time following a Termination Notice:
(1) The Servicer shall, at the Trustee's request and
at the Servicer's expense, give notice of the Trust's ownership of the
Transferor Receivables to the related Obligors and direct that
payments be made directly to the Trustee or its designee;
(2) If the Servicer fails to provide the notice to
Obligors required in paragraph (1) above, the Trustee may
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direct the Obligors of Transferor Receivables, or any of them, that
payment of all amounts payable under any such Transferor Receivables
be made directly to the Trustee or its designee;
(3) The Servicer shall, at its expense and at the
Trustee's or Successor Servicer's request as soon as possible but in
any event not more than ten (10) days after such request, (x) assemble
such documents, instruments and other records (including, without
limitation, computer tapes and disks) which evidence the Transferor
Receivables and the other Trust Assets, and which are necessary or
desirable to collect the Transferor Receivables, and shall make the
same available to the Successor Servicer or the Trustee or its
designee at a place selected by the Successor Servicer or the Trustee
and in such form as the Successor Servicer or the Trustee may
reasonably request, and (y) segregate all cash, checks and other
instruments received by it from time to time constituting Collections
of such Transferor Receivables in a manner acceptable to the Successor
Servicer and the Trustee and, promptly upon receipt, remit all such
cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the Trustee or its designee; and
(4) Each of the Transferor and each
Certificateholder hereby authorizes the Trustee to take any and all
steps in the Transferor's name and on behalf of the Transferor and the
Certificateholders necessary or desirable, in the determination of the
Trustee, to collect all amounts due under any and all Transferor
Receivables, including, without limitation, endorsing Geneva Steel's
or the Transferor's name on checks and other instruments representing
Collections in respect of such Transferor Receivables and enforcing
such Transferor Receivables.
Notwithstanding the foregoing, a delay in or failure of
performance referred to in Section 10.01(a) for a period of ten (10) days after
the applicable grace period, or under Section 10.01(b) for a period of ten (10)
days after the applicable grace period, shall not constitute a Servicer Default
if such delay or failure could not have been prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was caused by an
act of God or the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods, union strikes, work stoppages or similar
causes. The preceding sentence shall not relieve the Servicer from using its
best efforts to perform its obligations in a timely manner in accordance with
the terms of this Agreement, and the Servicer shall provide the Trustee, the
Transferor, any Enhancement Provider and the Investor Certificateholders with
an Officer's
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Certificate giving prompt notice of such failure or delay by it, together with
a description of its efforts so to perform its obligations.
SECTION 10.02. Trustee to Act; Appointment of Successor
Servicer. (a) On and after the receipt by the Servicer of a Termination
Notice pursuant to Section 10.01 or upon a resignation by the Servicer pursuant
to Section 8.05, the Servicer shall continue to perform all servicing functions
under this Agreement until (i) in the case of any such receipt, the date
specified in such Termination Notice or otherwise specified by the Trustee in
writing or, if no such date is specified in such Termination Notice or
otherwise specified by the Trustee, until the earlier of a date agreed upon by
the Servicer and the Trustee or a date specified by the Trustee in a written
notice to the Servicer, and (ii) in the case of any such resignation, until the
Trustee or a Successor Servicer shall have assumed the responsibilities and
obligations of the Servicer pursuant to this section. The Trustee shall as
promptly as possible after the giving of a Termination Notice or such a
resignation appoint an Eligible Servicer as a successor servicer (the
"Successor Servicer"), subject to the consent of any Enhancement Providers and
if specified in any Series Supplement, the consent of the Majority in Interest
of the Certificateholders of such Series, which consent shall not be
unreasonably withheld, and such Successor Servicer shall accept its appointment
by a written assumption in a form acceptable to the Trustee. In the event that
a Successor Servicer has not been appointed or has not accepted its appointment
by the earlier of 60 days after the date of such Termination Notice or the time
when the Servicer ceases to act as Servicer, the Trustee without further action
shall automatically be appointed the Successor Servicer. The Trustee may
delegate any of its servicing obligations to an affiliate or agent in
accordance with the terms of this Agreement. Notwithstanding the foregoing,
the Trustee shall, if it is legally unable so to act as Successor Servicer, or,
in any other case, may, petition a court of competent jurisdiction to appoint
any established institution that is an Eligible Servicer (other than the
Trustee) as the Successor Servicer hereunder.
(b) Upon its appointment, the Successor Servicer shall be
the successor in all respects to the Servicer with respect to servicing
functions under this Agreement, shall be subject to all the responsibilities,
duties and liabilities of the Servicer by the terms and provisions hereof and
all references in this Agreement to the Servicer shall be deemed to refer to
such Successor Servicer; provided, however, that neither the Trustee (solely in
its capacity as such) nor any Successor Servicer shall be deemed in default
hereunder as a result of a predecessor Servicer's failure to deliver necessary
Trust Assets, documents, or records to the Trustee (solely in its capacity as
such) or to such Successor Servicer. No Successor Servicer hereunder shall
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be liable for the acts or omissions of any predecessor Servicer hereunder. Any
Successor Servicer, by its acceptance of its appointment, will automatically
agree to be bound by the terms and provisions of any Enhancement Agreement.
(c) In connection with any Termination Notice, the
Trustee shall review any bids which it obtains from Eligible Servicers and
shall be permitted to appoint any Eligible Servicer submitting such a bid as a
Successor Servicer for servicing compensation not in excess of the Servicing
Fee.
(d) All authority and power granted to the Successor
Servicer under this Agreement shall automatically terminate upon termination
of the Trust pursuant to Section 12.01, and shall pass to and be vested in
the Transferor. The Transferor is hereby authorized and empowered to execute
and deliver, on behalf of the Successor Servicer, as attorney-in-fact or
otherwise, all documents and other instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes of such
transfer of servicing rights. The Successor Servicer agrees to cooperate with
the Transferor in effecting the termination of the rights and responsibilities
of the Successor Servicer to conduct servicing of the Transferor Receivables.
The Successor Servicer shall transfer its electronic records relating to the
Transferor Receivables to the Transferor in such electronic form as the
Transferor may reasonably request and shall transfer all other records,
correspondence and documents to the Transferor in the manner and at such times
as the Transferor shall reasonably request.
(e) Upon the effectiveness of the appointment of a
Successor Servicer, the Successor Servicer shall as soon as practicable upon
demand deliver to Geneva Steel all documents, instruments and records in its
possession which evidence or relate to Receivables owned by Geneva Steel which
are not Trust Assets, and copies of documents, instruments and records in its
possession which evidence or relate to such Receivables.
SECTION 10.03. Notification to Certificateholders. Promptly
and in any event within three (3) days after the Servicer becomes aware of any
Servicer Default, the Servicer shall give written notice thereof to a
Responsible Officer of the Trustee, and the Trustee shall promptly deliver a
copy of such notice to the Certificateholders and each Rating Agency (to the
extent such Series is then rated). Upon any termination or appointment of a
Successor Servicer pursuant to this Article X, the Trustee shall give prompt
written notice thereof to the Transferor and the Certificateholders.
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ARTICLE XI
THE TRUSTEE
SECTION 11.01. Duties of Trustee. (a) The Trustee, prior to
the occurrence of a Servicer Default of which it has actual knowledge and after
the cure of all Servicer Defaults which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement and no implied duties or covenants shall be read into this Agreement
against the Trustee. If a Servicer Default to the actual knowledge of a
Responsible Officer of the Trustee has occurred (which has not been cured or
waived), the Trustee shall exercise such of the rights and powers vested in it
by this Agreement and use the same degree of care and skill in its exercise, as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(b) The Trustee, upon receipt of any resolutions,
certificates, statements, opinions, reports, documents, orders or other
documents or instruments furnished to the Trustee which are specifically
required to be furnished pursuant to any provision of this Agreement or any
Supplement, shall examine them to determine whether they substantially conform
to the requirements of this Agreement or any Supplement. The Trustee shall
give prompt written notice to the Certificateholders and each Rating Agency of
any material lack of conformity of any such document or instrument to the
applicable requirements of this Agreement or any Supplement discovered by the
Trustee which would entitle a specified percentage of the Investor
Certificateholders to take any action pursuant to this Agreement or any
Supplement.
(c) Subject to Section 11.01(a), no provision of this
Agreement shall be construed to relieve the Trustee from liability for its own
grossly negligent action, grossly negligent failure to act or willful
misconduct; provided, however, that:
(i) the Trustee shall not be personally liable
for an error of judgment made in good faith by a Responsible Officer
or Responsible Officers of the Trustee, unless it shall be proved that
the Trustee was grossly negligent in ascertaining the pertinent facts;
(ii) the Trustee shall not be personally liable
with respect to any action taken, suffered or omitted to be taken by
it in good faith in accordance with the direction of the requisite
amount of Certificateholders specified hereunder for each Series
relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee under this Agreement; and
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(iii) the Trustee shall not be charged with
knowledge of any failure by the Servicer to comply with the
obligations of the Servicer referred to in Section 10.01 unless a
Responsible Officer of the Trustee obtains actual knowledge of such
failure or the Trustee receives written notice of such failure from
the Servicer or any Holders of Investor Certificates evidencing not
less than 25% of the Invested Amount of any Series.
(d) The Trustee shall not be required to expend or risk
its own funds or otherwise incur financial liability in the performance of any
of its duties hereunder or under any Supplement or in the exercise of any of its
rights or powers. None of the provisions contained in this Agreement shall
require the Trustee to perform, or be responsible for the manner of performance
of, any obligations of the Servicer under this Agreement except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement.
(e) Except for actions expressly authorized by this
Agreement, the Trustee shall take no action reasonably likely to impair the
interests of the Trust in any Transferor Receivable now existing or hereafter
created or to impair the value of any Transferor Receivable now existing or
hereafter created.
(f) Except as expressly provided in this Agreement, the
Trustee shall have no power to vary the corpus of the Trust including, without
limitation, by (i) accepting any substitute obligation for a Receivable
initially Transferred to the Trust under Section 2.01, (ii) adding any other
investment, obligation or security to the Trust, or (iii) withdrawing any
Transferor Receivable from the Trust.
(g) In the event that the Paying Agent or the Transfer
Agent and Registrar shall fail to perform any obligation, duty or agreement in
the manner or on the day required to be so performed under this Agreement or
under any Supplement, the Trustee shall be obligated promptly upon its actual
knowledge thereof to perform such obligation, duty or agreement in the manner
so required.
(h) The Trustee shall have no responsibility or liability
for the selection of, or investment losses on, Eligible Investments.
(i) Notwithstanding any other provision contained herein,
the Trustee is not acting as, and shall not be deemed to be, a fiduciary for
any Enhancement Provider in its capacity as such or as a Beneficiary, and the
Trustee's sole responsibility with respect to any such Enhancement Provider
shall be to perform
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those duties with respect to any such Enhancement Provider as are specifically
set forth herein and no implied duties or obligations shall be read into this
Agreement against the Trustee with respect to any such Enhancement Provider.
SECTION 11.02. Certain Matters Affecting the Trustee. Except
as otherwise provided in Section 11.01:
(a) the Trustee may conclusively rely on and shall be
fully protected in acting on, or in refraining from acting in accord with, any
resolution, Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond ,note or other paper or document believed by it to be
genuine and to have been signed or presented to it pursuant to this Agreement
by the proper party or parties;
(b) the Trustee may consult with counsel and any advice
or Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by it hereunder in good
faith and in accordance with such advice or Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at the
request, order or direction of any of the Certificateholders, pursuant to the
provisions of this Agreement, unless such Certificateholders shall have offered
to the Trustee security or indemnity reasonably satisfactory to the Trustee
against the costs, expenses and liabilities which may be incurred therein or
thereby; provided, however, that nothing contained herein shall relieve the
Trustee upon the occurrence of a Servicer Default (which has not been cured or
waived), of the obligation to exercise such of the rights and powers vested in
it by this Agreement, and to use the same degree of care and skill in its
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs;
(d) the Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(e) the Trustee shall not be bound to make any
investigation into the facts of matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, approval, bond, note or other paper or document, unless requested in
writing to do so by Holders of Investor Certificates evidencing more than 25%
of the Trust Invested Amount;
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(f) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or a nominee, and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent,
attorney, custodian or nominee appointed with due care by it hereunder;
(g) the Trustee shall not be required to make any initial
or periodic examination of any documents or records related to the Transferor
Receivables for the purpose of establishing the presence or absence of defects,
the compliance by the Transferor with its representations and warranties or for
any other purpose and the Trustee shall not be deemed to have made any
representations or warranties with respect to the Receivables or the validity
or sufficiency of any assignment of the Receivables to the Trust;
(h) nothing in this Agreement shall be construed to
require the Trustee to monitor the performance of the Servicer or act as a
guarantor of the Servicer's performance; and
(i) in the event the Trustee incurs expenses or renders
services in connection with an Insolvency Event, such expenses (including the
fees and expenses of its counsel) and the compensation for such services are
intended to constitute expenses of administration under any bankruptcy law.
SECTION 11.03. Trustee Not Liable for Recitals in
Certificates. The Trustee assumes no responsibility for the correctness of the
recitals contained herein and in the Certificates (other than the certificate
of authentication on the Certificates). Except as set forth in Section 11.15,
the Trustee makes no representations as to the validity or sufficiency of this
Agreement or any Supplement or of the Certificates (other than the certificate
of authentication on the Certificates) or of any Receivable or related
document. The Trustee shall not be accountable for the use or application by
the Transferor of any of the Certificates or of the proceeds of such
Certificates, or for the use or application of any funds paid to the Transferor
in respect of the Receivables or deposited in or withdrawn from any Geneva
Steel Collection Account, the Concentration Account, the Transferor's Account,
the Trustee's Account or any other account hereafter established to effectuate
the transactions contemplated by and in accordance with the terms of this
Agreement and any Supplement.
SECTION 11.04. Trustee May Own Certificates. The Trustee in
its individual or any other capacity may become the owner or pledgee of
Investor Certificates and may otherwise deal, and transact banking business,
with the Servicer and the Transferor with the same rights as it would have if
it were not the Trustee.
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SECTION 11.05. Compensation; Trustee's Expenses. (a) The
Trustee shall be entitled to receive a monthly fee (which shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust, such fee being the "Trustee's Fee") in respect of each
Collection Period (or portion thereof) from the Closing Date until the
termination of the Amortization Period, payable in arrears on each Distribution
Date in an amount agreed upon in writing by the Trustee and the Transferor.
The Trustee's Fee shall be the aggregate of the Series Trustee's Fees specified
in the Supplements. The Trustee's Fee shall be payable, first, from Investor
Collections pursuant to, and subject to the priority of payment set forth in,
Section 6.01 of the applicable Supplement and, second, to the extent not paid
from Investor Collections, by the Transferor, and, third, to the extent not
paid from Investor Collections or by the Transferor, by the Servicer pursuant
to Section 3.02(b).
(b) Expenses. With respect to each Series and pursuant
to the related Supplement, the Transferor or Servicer, as the case may be, will
pay or reimburse the Trustee upon its request, and if the Transferor shall fail
to do so, the Servicer will so pay or reimburse the Trustee (with a right to
reimbursement from the Transferor) pursuant to Section 3.02(b), for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Agreement or any Supplement or
in connection with any amendment hereto (including the reasonable fees and
expenses of its agents, any co-trustee and counsel and fees incurred in
connection with a Servicer Default or an Early Amortization Event) except any
such expense, disbursement or advance as may arise from its gross negligence or
bad faith and except as provided in the following sentence. If the Trustee is
appointed Successor Servicer pursuant to Section 10.02, the provision of this
Section 11.05 shall not apply to expenses, disbursements and advances made or
incurred by the Trustee in its capacity as Successor Servicer, which shall be
paid, first, out of the Servicing Fee, and, second, to the extent not paid out
of the Servicing Fee, by the Transferor pursuant to Section 3.02(b). The
Transferor's and Servicer's covenant and disbursements provided for in this
Section 11.05 shall survive the termination of this Agreement.
SECTION 11.06. Eligibility Requirements for Trustee. The
Trustee hereunder shall at all times be an Eligible Institution. If the
Trustee publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then, for
the purpose of this Section 11.06, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case, at any time, the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 11.06, the Trustee
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shall resign immediately in the manner and with the effect specified in Section
11.07.
SECTION 11.07. Resignation or Removal of Trustee. (a) The
Trustee may at any time resign and be discharged from the Trust hereby created
by giving written notice thereof to the Transferor and the Servicer. Upon
receiving such notice of resignation, the Servicer shall promptly appoint a
successor trustee acceptable to a Majority in Interest of the Investor
Certificateholders of each Series by written instrument, in duplicate, one copy
of such instrument which shall be delivered to the resigning Trustee and one
copy which shall be delivered to the successor trustee. If no successor
trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee.
(b) If at any time the Trustee shall cease to be eligible
in accordance with the provisions of Section 11.06 hereof and shall fail to
resign after written request therefor by the Servicer, or if at any time the
Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or if a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Servicer may remove the Trustee and promptly appoint a
successor trustee acceptable to a Majority in Interest of the Investor
Certificateholders of all outstanding Series by written instrument, in
duplicate, one copy of such instrument which shall be delivered to the Trustee
so removed and one copy to the successor trustee.
(c) If at any time the Trustee shall fail to perform its
obligations under this Agreement, Investor Certificateholders representing the
Majority in Interest of all outstanding Series may remove the Trustee and
direct the Servicer to promptly appoint a successor trustee acceptable to a
Majority in Interest of the Investor Certificateholders of all outstanding
Series by written instrument, in duplicate, one copy of such instrument which
shall be delivered to the Trustee so removed and one copy which shall be
delivered to the successor trustee.
(d) Notwithstanding anything herein to the contrary, any
resignation or removal of the Trustee and appointment of successor trustee
pursuant to any of the provisions of this Section 11.07 shall not become
effective until acceptance of such appointment by the successor trustee as
provided in Section 11.08 hereof.
SECTION 11.08. Successor Trustee. (a) Any successor trustee
appointed as provided in Section 11.07 shall execute,
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acknowledge and deliver to the Transferor, to the Servicer and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon, the resignation or removal of the predecessor Trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee herein. The predecessor Trustee shall deliver (with the
expense therefor payable out of the Servicing Fee, and by the Transferor and
the Servicer, pursuant to Sections 3.02(b) and 11.05(b)) to the successor
trustee all documents or copies thereof and statements held by it hereunder;
and the Transferor and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully
and certainly vesting and confirming in the successor trustee all such rights,
powers, duties and obligations.
(b) No successor trustee shall accept appointment as
provided in this Section 11.08 unless at the time of such acceptance such
successor trustee shall be eligible under the provisions of Section 11.06
hereof.
(c) Upon acceptance of appointment by a successor trustee
as provided in this Section 11.08, such successor trustee shall mail notice of
such succession hereunder to all Investor Certificateholders.
(d) No predecessor Trustee hereunder shall be liable for
the acts or omissions of any successor Trustee.
SECTION 11.09. Merger or Consolidation of Trustee. Any
Person into which the Trustee may be merged or converted or with which it may
be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding
to the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 11.06, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.
SECTION 11.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust may at such time be located, the Trustee shall have the power
to appoint one or more persons to act as a co-trustee or co-trustees, or
separate trustee or separate trustees, of all or any part of the Trust, to vest
in such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and, subject
to the
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other provisions of this Section 11.10, such powers, duties, obligations,
rights and trusts as the Trustee may consider necessary or desirable and to
execute and deliver all instruments in connection therewith. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 11.06 and no notice to Certificateholders
of the appointment of any co-trustee or separate trustee shall be required
under Section 11.08 hereof.
(b) Every separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed (whether as Trustee hereunder or as Successor Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable
by reason of any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the
Trustee shall be deemed to have been given to each of the then separate
trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article XI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of this Agreement, specifically including every provision of
this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed
with the Trustee and a copy thereof given to the Servicer.
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(d) Any separate trustee or co-trustee may at any time
constitute the Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all its estates, properties, rights, remedies and trusts shall vest in
and be exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 11.11. Tax Returns. No federal income tax return
shall be filed on behalf of the Trust unless either (i) the Trustee or the
Servicer shall receive an Opinion of Counsel based on a change in applicable
law occurring after the date hereof that the Code requires such a filing or
(ii) the Internal Revenue Service shall determine that the Trust is required to
file such a return or (iii) the Trust is required to file such a return by
order of a court of competent jurisdiction. In the event the Trust shall be
required to file tax returns, the Servicer shall prepare or shall cause to be
prepared any tax returns required to be filed by the Trust and shall remit such
returns to the Trustee for signature at least five days before such returns are
due to be filed; the Trustee shall promptly sign such returns and deliver them
to the Servicer and such returns shall be filed by the Servicer. The Servicer
in accordance with the Supplements shall also prepare or shall cause to be
prepared all tax information required by law to be distributed to Investor
Certificateholders and shall deliver such information to the Trustee at least
five days prior to the date it is required by law to be distributed to the
Certificateholders. The Trustee, upon request, will furnish the Servicer with
all such information known to the Trustee as may be reasonably required in
connection with the preparation of all tax returns of the Trust, and shall upon
request, execute such returns. In no event shall the Trustee, the Servicer or
the Transferor be liable for any liabilities, costs or expenses of the Trust or
the Investor Certificateholders arising out of the application of any tax law,
including federal, state, foreign or local income or excise taxes or any other
tax imposed on or measured by income (or any interest penalty or addition with
respect thereto or arising from a failure to comply therewith).
SECTION 11.12. Trustee May Enforce Claims Without Possession
of Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of
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the Certificateholders in respect of which such judgment has been obtained.
SECTION 11.13. Suits for Enforcement. (a) If a Servicer
Default shall occur and be continuing, the Trustee, in its discretion may,
subject to the provisions of Sections 11.01 and 11.14, proceed to protect and
enforce its rights and the rights of the Certificateholders under this
Agreement by a suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in aid of the execution of any power granted in this
Agreement or for the enforcement of any other legal, equitable or other remedy
as the Trustee, as advised by counsel, shall deem most effectual to protect and
enforce any of the rights of the Trustee or the Certificateholders.
(b) Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Certificateholder any plan of reorganization, arrangement, adjustment or
composition affecting the Certificates or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any
Certificateholder in any such proceeding.
SECTION 11.14. Rights of Certificateholders to Direct
Trustee. The Majority in Interest of each Series shall have the right to
direct the time, method, and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee; provided, however, that subject to Section 11.01, the Trustee shall
have the right to decline to follow any such direction if the Trustee, after
being advised by counsel, determines that the action so directed may not
lawfully be taken, or if a Responsible Officer or Responsible Officers of the
Trustee in good faith shall, determine that the proceedings so directed would
be illegal or involve the Trustee in personal liability or be unduly
prejudicial to the rights of Certificateholders not parties to such direction;
and, provided, further, that nothing in this Agreement shall impair the right
of the Trustee to take any action deemed proper by the Trustee and which is not
inconsistent with such direction of the Investor Certificateholders unless the
Majority in Interest of each Series shall have directed the Trustee to not take
such action.
SECTION 11.15. Representations and Warranties of Trustee.
The Trustee represents and warrants that:
(a) the Trustee is a New York banking corporation;
(b) the Trustee has full power, authority and right to
execute, deliver and perform this Agreement, and has taken all
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necessary action to authorize the execution, delivery and performance by it of
this Agreement; and
(c) this Agreement has been duly executed and delivered
by the Trustee.
SECTION 11.16. Maintenance of Office or Agency. The Trustee
will maintain at its expense in the Borough of Manhattan, The City of New York,
an office or agency (the "Corporate Trust Office") where notices and demands to
or upon the Trustee in respect of the Certificates and this Agreement may be
served. The Trustee initially designates its office or agency at Four Albany
Street, 10th Floor, New York, New York, 10006, Attention: Corporate Trust and
Agency Group / Structured Finance Team, (facsimile: (212) 250-6439) as such
office. The Trustee will give prompt written notice to the Servicer and to
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
ARTICLE XII
TERMINATION
SECTION 12.01. Termination of Trust. The Trust and the
respective obligations and responsibilities of the Transferor, the Servicer and
the Trustee created hereby (other than the obligation of the Trustee to make
payments to Certificateholders as hereinafter set forth) shall terminate,
except with respect to the duties described in Sections 3.02(b), 7.03, 8.04,
11.05 and 12.02(b), upon the earlier to occur of (i) the termination of the
Amortization Period, (ii) November 4, 2014 and (iii) the day following the
Distribution Date on which the final distribution for each Series is made in
accordance with this Article XII and under the related Supplement.
SECTION 12.02. Final Distribution. (a) The Servicer shall
give the Trustee and the Trustee shall give each Certificateholder at least 30
days' prior written notice of the date on which (i) the Trust is expected to
terminate in accordance with Section 12.01 and (ii) the Certificateholders may
surrender their Certificates for payment of the final distribution on and
cancellation of such Certificates. Such notice shall be accompanied by an
Officer's Certificate setting forth the information specified in Section 3.06
covering the period during the then-current calendar year through the date of
such notice. Not later than five days after the Trustee shall receive such
notice, the Trustee shall mail notice to the Certificateholders specifying (i)
the date upon which such final distribution will be made upon presentation and
surrender of such Certificates at the office or offices therein designated,
(ii) the amount of any such final distribution and (iii) that the
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Distribution Date otherwise applicable to such final distribution is not
applicable, payments being made only upon presentation and surrender of such
Certificates at the office or offices therein specified; provided, however,
that such presentation and surrender shall not be required for a
Certificateholder that is an insurance company or institutional investor. Each
such Certificateholder shall surrender its Certificate to the Trustee following
receipt of the final distribution thereon. The Trustee shall give such notice
to the Transfer Agent and Registrar and the Paying Agent at the time such
notice is given to the Certificateholders.
(b) Notwithstanding the Servicer's delivery to the
Trustee, or the Trustee's delivery to the Certificateholders, of the notices
required under Section 12.02(a), all funds then on deposit in any Geneva Steel
Collection Account, the Concentration Account, any Series Account, the
Transferor's Account or the Trustee's Account shall continue to be held in
trust for the benefit of the Certificateholders, and the Paying Agent or the
Trustee shall pay such funds to the Certificateholders upon surrender of their
Certificates pursuant to, and subject to the priorities set forth in, the
applicable Supplement, as if such surrender date were on a Distribution Date
(and any excess shall be paid in accordance with the terms of any Enhancement
Agreement). In the event that all Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in the
above-mentioned written notice from the Trustee, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Trustee may take appropriate
steps, or may appoint an agent to take appropriate steps, to contact the
remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds in the Trustee's Account (if
such Certificateholders are Investor Certificateholders) or the Transferor's
Account (if any such Certificateholder is the Holder of the Transferor
Certificate) held for the benefit of such Certificateholders. The Trustee and
the Paying Agent shall pay to the Transferor any monies held by them for the
payment of principal or interest that remains unclaimed for two years. After
payment to the Transferor, Investor Certificateholders entitled to the money
must look to the Transferor for payment as general creditors unless another
person is designated by an applicable abandoned property statute.
SECTION 12.03. Transferor's Termination Rights. Upon the
termination of the Trust pursuant to Section 12.01, the payment in full of all
amounts due to the Investor Certificateholders, payment of Trustee's fees and
expenses and any other amounts owing to the Trustee under the Transaction
Documents and
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the surrender of the Transferor Certificate, the Trustee shall assign and
convey to the Holder of the Transferor Certificate or its designee, without
recourse, representation or warranty, all right, title and interest of the
Trust in and to the Transferor Receivables, whether then existing or thereafter
created, and all other Trust Assets, and all proceeds thereof, except for
amounts held in any account by the Trustee or the Paying Agent pursuant to
Section 12.02(b). The Trustee, at the expense of the Transferor, shall execute
and deliver such instruments of transfer and assignment, in each case without
recourse, representation or warranty, as shall be prepared by the Transferor
for execution by the Trustee which are reasonably requested by the Transferor
to vest in the Transferor all right, title and interest which the Trust had in
the Transferor Receivables and all other Trust Assets.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Amendment. (a) This Agreement or any
Supplement may be amended from time to time by the Servicer, the Transferor and
the Trustee without the consent of any of the Investor Certificateholders, (i)
to cure any ambiguity, (ii) to correct or supplement any provision herein which
may be inconsistent with any other provision herein or (iii) to add any other
provisions with respect to matters or questions arising under this Agreement or
any Supplement which are not inconsistent with the provisions of this Agreement
or such Supplement; provided, that any amendment pursuant to this paragraph (a)
shall not, as evidenced by an Opinion of Counsel, materially and adversely
affect the interests of any Certificateholders.
(b) This Agreement or any Supplement may be amended from
time to time by the Servicer, the Transferor and the Trustee, with the consent
of the Majority in Interest of each adversely affected Series, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall (i) reduce
in any manner the amount of, or delay the timing of, distributions to be made
to any Certificateholder or deposits of amounts to be so distributed or the
amount available under any Enhancement without the consent of such
Certificateholder, (ii) change the definition of or the manner of calculating
the Certificateholders' Interest or the Aggregate Certificateholders' Interest
or any Investor Certificateholder's interest therein without the consent of
each affected Investor Certificateholder, (iii) reduce the aforesaid percentage
required to consent to any such amendment without the consent of each Investor
Certificateholder or (iv) cause any adverse tax effect
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for any Investor Certificateholder without the consent of each affected
Investor Certificateholder. The Trustee may request an Officer's Certificate
and Opinion of Counsel with respect to an amendment entered into pursuant to
this Section 13.01(b) concerning compliance with the requirements of this
Agreement. Any amendment to be effected pursuant to this paragraph shall be
deemed to adversely affect all outstanding Series, other than any Series with
respect to which such action shall not, as evidenced by an Opinion of Counsel
(which counsel shall not be an employee of, or counsel for, the Servicer or the
Transferor), addressed and delivered to the Trustee, adversely affect the
interests of any Investor Certificateholder of such Series.
(c) Promptly after the execution of any such amendment or
consent (other than an amendment pursuant to Section 13.01(a)), the Trustee
shall furnish written notification of the substance of such amendment to each
Investor Certificateholder and each Enhancement Provider.
(d) It shall not be necessary for the consent of Investor
Certificateholders under this Section 13.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Investor
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe.
(e) Notwithstanding anything in this Section to the
contrary, no amendment may be made to this Agreement or any Supplement which
would materially adversely affect the interests of any Enhancement Provider
without the consent of such Enhancement Provider.
(f) Any Supplement executed in accordance with the
provisions of Section 6.09 shall not be considered an amendment to this
Agreement for the purposes of this Section.
(g) Prior to the execution of any amendment to this
Agreement or any Supplement, the Trustee and any Enhancement Provider shall be
entitled to receive and rely upon an Opinion of Counsel stating that the
execution of such amendment or supplement is authorized or permitted by this
Agreement. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement, any Supplement or otherwise.
SECTION 13.02. Protection of Right, Title and Interest to
Trust. (a) The Servicer shall cause this Agreement, all amendments hereto and
all financing statements and continuation statements and any other necessary
documents covering the Trustee's right, title and interest in and to the Trust
to be
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promptly recorded, registered and filed, and at all times to be kept recorded,
registered and filed, all in such manner and in such places as may be required
by law to preserve and protect fully the right, title and interest of the
Trustee hereunder in and to all property comprising the Trust. The Servicer
shall deliver to the Trustee file-stamped copies of, or filing receipts for,
each document recorded, registered or filed as provided above, as soon as
available following such recording, registration or filing. The Transferor
shall cooperate fully with the Servicer in connection with the obligations set
forth above and will execute any and all documents reasonably required to
fulfill the intent of this Section 13.02(a).
(b) The Servicer will give the Trustee prompt written
notice of any relocation of any office from which it services Receivables or
keeps records concerning the Receivables or of its principal executive office
and whether, as a result of such relocation, the applicable provisions of the
UCC would require the filing of any amendment of any previously filed financing
or continuation statement or of any new financing statement and shall file such
financing statements or amendments as may be necessary to perfect or to
continue the perfection of the Trust's interest in the Transferor Receivables
and the other Trust Assets and the proceeds thereof contemplated by Section
2.01 hereof. The Servicer will at all times maintain each office from which it
services Receivables and its principal executive offices within the United
States of America.
SECTION 13.03. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Investor Certificateholder shall not
operate to terminate this Agreement or the Trust, nor shall such death or
incapacity entitle such Investor Certificateholders' legal representatives or
heirs to claim an accounting or to take any action or commence any proceeding
in any court for a partition or winding up of the Trust, or otherwise affect
the rights, obligations and liabilities of the parties hereto or any of them.
(b) No Certificateholder shall have the right to vote
(except as expressly provided in this Agreement, including without limitation
under Section 11.14) or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Certificates, be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association other than for Federal, state or local
income or franchise tax purposes only, nor shall any Investor Certificateholder
be under any liability to any third person by reason of any action taken by the
parties to this Agreement pursuant to any provision hereof.
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(c) No Investor Certificateholder shall have any right by
virtue of any provisions of this Agreement to file or otherwise institute any
suit, action or proceeding in equity or at law with respect to this Agreement,
unless such Investor Certificateholder previously shall have made, and unless
the Holders of Investor Certificates evidencing more than 50% of the Trust
Invested Amount shall have made, a written request to the Trustee to institute
such action, suit or proceeding in its own name as Trustee hereunder and shall
have offered to the Trustee such reasonable indemnity as it may require against
the costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after such request and offer of indemnity, shall have
failed to file or otherwise refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted,
by each Certificateholder with every other Certificateholder and the Trustee,
that no one or more Certificateholders shall have any right in any manner
whatever by virtue of or by availing itself or themselves of any provisions of
this Agreement to affect, disturb or prejudice the rights of the Holders of any
of the Investor Certificates, or to obtain or seek to obtain priority over or
preference to any such Investor Certificateholder, or to enforce any right
under this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Investor Certificateholders. For the
protection and enforcement of the provisions of this Section 13.03, each and
every Investor Certificateholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity. Notwithstanding any other
provision of this Agreement, the Certificates or any Supplement, each Investor
Certificateholder shall have the right to receive the payments of all amounts
due hereunder, under the Certificates held by such Holder and under the
Supplement relating to the Series of Certificates held by such Holder and the
right to institute suit for the enforcement of any such payment without the
consent of the Trustee or any other Holder.
(d) By its acceptance of the Transferor Certificate, the
Holder thereof agrees that it will take no action with respect to such Holder's
rights under the Agreement that is inconsistent with, or adverse to, the
interests of the Investor Certificateholders. This Section 13.03(d) is not
intended to affect the pari passu nature of the Transferor Certificate.
SECTION 13.04. Governing Law; Jurisdiction; Consent to
Service of Process. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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(b) Each of the parties hereto hereby irrevocably and
unconditionally submits to the nonexclusive jurisdiction of any federal court
of the United States of America sitting in New York City or, if jurisdiction is
not available in such federal court, New York State court, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such federal court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 13.05.
Nothing in this Agreement will affect the right of any party to this Agreement
to serve process in any other manner permitted by law.
SECTION 13.05. Notices; Payments. (a) All demands, notices,
instructions, directions, requests, authorizations and communications
(collectively, "Notices") under this Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered at, mailed by registered
mail, return receipt requested, or sent by facsimile transmission (i) in the
case of the Transferor, to Geneva Steel Funding Corporation, 10 South Geneva
Road, Vineyard, Utah 84058, Attention: Chief Financial Officer, (ii) in the
case of the Servicer (if the Servicer is Geneva Steel) to Geneva Steel, 10
South Geneva Road, Vineyard, Utah 84058, Attention: Chief Financial Officer,
(iii) in the case of the Trustee, to Bankers Trust Company, Four Albany Street,
10th Floor, New York, New York, 10006, Attention: Corporate Trust and Agency
Group / Structured Finance Team (facsimile: (212) 250- 6439), and (iv) in the
case of the Paying Agent or the Transfer Agent and Registrar, to Bankers Trust
Company, Four Albany Street, 10th Floor, New York, New York, 10006, Attention:
Corporate Trust and Agency Group / Structured Finance Team (facsimile: (212)
250-6439), and as to each party, at such other address or facsimile number as
shall be designated by such party in a written notice to each other party. If
the Servicer is not Geneva Steel, notices shall be given to the Servicer at the
address designated by such Servicer, with a copy to Geneva Steel at the address
designated above.
(b) Any notice required or permitted to be mailed to an
Investor Certificateholder shall be given by first-class mail, postage prepaid,
at the address of such Certificateholder as shown in the Certificate Register.
Notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
(c) If the Transferor is not the Holder of the Transferor
Certificate, the Holder of the Transferor Certificate
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shall be entitled to receive all notices which the Investor Certificateholders
receive.
SECTION 13.06. Rule 144A Information. For so long as any of
the Investor Certificates of any Series or Class are "restricted securities"
within the meaning of Rule 144(a)(3) under the Act, the Transferor, the
Servicer and any Enhancement Provider agree to cooperate with each other to
provide to each Investor Certificateholder of such Series or Class and to each
prospective purchaser of Investor Certificates designated by such an Investor
Certificateholder, upon the request of such Investor Certificateholder or
prospective purchaser, any information required to be provided to such Holder
or prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4)
under the Act (or any successor provision).
SECTION 13.07. Severability of Provisions. If any one or
more of the covenants, agreements, provisions or terms of this Agreement shall
for any reason whatsoever be held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect
the validity or enforceability of the other covenants, agreements, provisions
or terms of this Agreement or of the Certificates or rights of the
Certificateholders.
SECTION 13.08. Assignment. Notwithstanding anything to the
contrary contained herein, but subject to Section 3.01(d)(v), (i) this
Agreement may not be assigned by the Transferor, and (ii) except as provided in
Section 8.02, this Agreement may not be assigned by the Servicer without the
prior consent of the Majority in Interest of each Series.
SECTION 13.09. Certificates Nonassessable and Fully Paid. It
is the intention of the parties to this Agreement that the Certificateholders
shall not be personally liable for obligations of the Trust, that the interests
in the Trust represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever and that
Certificates, upon authentication thereof by the Trustee pursuant to Section
6.02, are and shall be deemed fully paid.
SECTION 13.10. Further Assurances. The Transferor and the
Servicer agree to do and perform, from time to time, any and all acts and to
execute any and all further instruments and documents required or reasonably
requested by the Trustee more fully to effect the purposes of this Agreement,
including, without limitation, the execution of any financing statements or
continuation statements relating to the Transferor Receivables for filing under
the provisions of the UCC of any applicable jurisdiction.
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SECTION 13.11. Nonpetition Covenant. Notwithstanding any
prior termination of this Agreement, the Servicer, the Trustee and the
Transferor shall not, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Trust, acquiesce, petition or
otherwise invoke or cause the Trust to invoke the process of any Governmental
Authority for the purpose of commencing or sustaining a case against the Trust
under any Federal or state bankruptcy, insolvency or similar law or appointing
a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Trust or any substantial part of its property or
ordering the winding-up or liquidation of the affairs of the Trust.
SECTION 13.12. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of any Person, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; no
single or partial exercise of any right, remedy, power or privilege under this
Agreement shall preclude any other or further exercise thereof or the exercise
of any other right, remedy, power or privilege. The rights, remedies, powers
and privileges herein provided are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by law.
SECTION 13.13. Counterparts. This Agreement may be executed
in one or more counterparts and by different parties on separate counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
SECTION 13.14. Third-Party Beneficiaries. This Agreement
will inure to the benefit of and be binding upon the parties hereto, the
Certificateholders and their respective successors and permitted assigns.
Except as otherwise provided in this Agreement, no other person will have any
right or obligation hereunder.
SECTION 13.15. Actions by Certificateholders. (a) Wherever
in this Agreement a provision is made that an action may be taken or a Notice
given by Investor Certificateholders, such action or Notice may be taken or
given by any Investor Certificateholder, unless such provision requires a
specific percentage of Investor Certificateholders.
(b) Any Notice, consent, waiver or other act by the Holder of
a Certificate shall bind such Holder and every subsequent Holder of such
Certificate and of any Certificate issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
or omitted to be done by the Trustee or the Servicer in reliance
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thereon, whether or not notation of such action is made upon such Certificate.
SECTION 13.16. Merger and Integration. Except as
specifically stated otherwise herein, this Agreement sets forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement. This
Agreement may not be modified, amended, waived or supplemented except as
provided herein.
SECTION 13.17. Headings. The headings herein are for
purposes of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.
SECTION 13.18. Construction of Agreement. The Transferor
hereby grants to the Trustee on behalf of the Trust a security interest in all
of the Transferor's right, title and interest in, to and under the Transferor
Receivables now existing and hereafter created, all monies due or to become due
and all amounts received with respect thereto, and all other Trust Assets, and
all "proceeds" thereof, to secure all the Transferor's and the Servicer's
obligations hereunder, including, without limitation, the Transferor's
obligation to transfer and convey to the Trust all Receivables existing on the
date hereof or hereafter created and transferred to the Transferor from time to
time under the Receivables Purchase Agreement. This Agreement shall constitute
a security agreement under applicable law.
SECTION 13.19. Limitation of Liability. It is expressly
understood and agreed by the parties hereto that (a) this Agreement is executed
and delivered by Bankers Trust Company, not individually or personally, but
solely as Trustee of the Trust, in the exercise of the powers and authority
conferred and vested in it, (b) except with respect to Section 11.15 hereof,
the representations, undertakings and agreements herein made on the part of the
Trust are made and intended not as personal representations, undertakings and
agreements by Bankers Trust Company, but are made and intended for the purpose
of binding only the Trust, and (c) under no circumstances shall Bankers Trust
Company be personally liable for the payment of any indebtedness or expenses of
the Trust or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trust under this
Agreement except to the extent such breach or failure resulted from the gross
negligence, bad faith or wilful misconduct of the Trustee and provided,
however, Bankers Trust Company shall be liable in its individual capacity for
any tax assessed against Bankers Trust Company based on or measured by any
fees, commissions, compensation or other amounts received by it for or as a
result of its acting as Trustee.
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IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers as of the day and year first above written.
GENEVA STEEL FUNDING CORPORATION,
Transferor
By: Richard D. Clayton
------------------------------
Name: Richard D. Clayton
Title: President
GENEVA STEEL COMPANY,
Servicer
By: Dennis L. Wanlass
------------------------------
Name: Dennis L. Wanlass
Title: Vice President
BANKERS TRUST COMPANY,
Not in its individual capacity,
but solely as Trustee
By: Sandra Whalen
------------------------------
Name: Sandra Whalen
Title: Asst. Vice President
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EXHIBIT A
FORM OF TRANSFEROR CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). NEITHER THIS CERTIFICATE
NOR ANY PORTION HEREOF MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EXEMPTION
FROM THE REGISTRATION PROVISIONS OF THE ACT.
GENEVA STEEL TRADE RECEIVABLES MASTER TRUST
TRANSFEROR CERTIFICATE
THIS CERTIFICATE REPRESENTS AN UNDIVIDED INTEREST
IN CERTAIN ASSETS OF THE GENEVA STEEL TRADE RECEIVABLES
MASTER TRUST
the corpus of which consists primarily of certain receivables generated from
time to time by Geneva Steel Company and any other entities designated in the
future as an "Originator" pursuant to the terms of the Pooling and Servicing
Agreement, and purchased by GENEVA STEEL FUNDING CORPORATION (the
"Transferor"), which in turn transfers and assigns such receivables to the
Trustee on behalf of the Geneva Steel Trade Receivables Master Trust. This
certificate does not represent any obligation of any kind whatsoever of, and is
not guaranteed by, the Transferor, Geneva Steel or any Affiliate of any of
them.
This certifies that Geneva Steel Funding Corporation is the
registered owner of the fractional undivided interest (the "Transferor
Interest") in the assets allocated thereto of the Geneva Steel Trade
Receivables Master Trust (the "Trust") not represented by the Investor
Certificates pursuant to that certain Pooling and Servicing Agreement, dated as
of November 4, 1994 (as modified, amended, supplemented or restated from time
to time, the "Agreement"), by and among the Transferor, Geneva Steel Company,
as Servicer, and Bankers Trust Company (the "Trustee"). To the extent not
defined herein, the capitalized terms used herein have the meanings ascribed to
them in the Agreement.
The corpus of the Trust consists of (i) a portfolio of
receivables meeting certain eligibility requirements (the "Receivables")
identified under the Agreement from time to time, (ii) funds collected or to be
collected from Obligors in respect of the Receivables, (iii) all funds which
are from time to time on deposit in the Concentration Account and any other
account or accounts held for the benefit of Certificateholders, and (iv) all
other assets and interests constituting the Trust Assets.
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This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement. Although a summary of certain
provisions of the Agreement is set forth below, this Certificate does not
purport to summarize the Agreement, is qualified in its entirety by the terms
and provisions of the Agreement and reference is made to the Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and obligations of
the Trustee, the Servicer and the other parties bound by the Agreement.
This Certificate is the Transferor Certificate, which
represents an interest in the Trust, including the right to receive Collections
and other amounts at the times and in the amounts specified in the Agreement to
be paid to the holder of the Transferor Certificate. In addition to this
Certificate, Investor Certificates are being issued to investors pursuant to
the Agreement, which will represent the interests of Investor
Certificateholders in the Trust. This Certificate shall not represent any
interest in any Trust Asset except as provided in the Agreement.
Subject to certain conditions in the Agreement, the
obligations created by the Agreement and the Trust created thereby shall
terminate upon the earliest of (i) the termination of the Amortization Period,
(ii) November 4, 2014 and (iii) the day following the Distribution Date on
which the Invested Amount for each Series is zero.
By its acceptance of this Transferor Certificate, the Holder
hereof agrees that it will take no action with respect to such Holder's rights
under the Agreement that is inconsistent with, or adverse to, the interests of
the Investor Certificateholders as provided under the Agreement. This
paragraph is not intended to affect the pari passu nature of this Transferor
Certificate.
Upon termination of the Trust pursuant to Article XII of the
Agreement, subject to the provisions of the Agreement, payment in full of the
Investor Certificateholders and the surrender of this Certificate, the Trustee
shall assign and convey to the Holder of the Transferor Certificate (without
recourse, representation or warranty) all right, title and interest of the
Trust in the Trust Assets, whether then existing or thereafter created,
including the Receivables and all proceeds thereof, except for amounts held by
the Trustee pursuant to Section 12.02(b) of the Agreement. The Trustee shall
execute and deliver such instruments of transfer and assignment, in each case
without recourse, as shall be reasonably requested by the Transferor to vest in
the Transferor all right, title and interest which the Trust has in the Trust
Assets.
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Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement, or be valid for any
purpose.
IN WITNESS WHEREOF, the Transferor has caused this Certificate
to be duly executed.
Dated:
--------------------------
GENEVA STEEL FUNDING CORPORATION
By:
-----------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates described in the
within-mentioned Pooling and Servicing Agreement.
Dated: November 4, 1994
BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Trustee
By: OR
------------------------------
Authorized Officer
-------------------------
Authenticating Agent for
the Trustee
By:
----------------------
Authorized Officer
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EXHIBIT B
FORM OF ANNUAL SERVICER'S CERTIFICATE
(As required to be delivered on or before December 31 of each
calendar year beginning with December 31, 1995 pursuant to
Section 3.06 of the Pooling and Servicing Agreement)
Geneva Steel Company
-------------------------------------------
GENEVA STEEL TRADE RECEIVABLES MASTER TRUST
-------------------------------------------
The undersigned, chief financial officer of Geneva Steel Company
("Geneva Steel"), as Servicer, pursuant to the Pooling and Servicing Agreement,
dated as of November 4, 1994 (as modified, amended supplemented or restated
from time to time, the "Agreement"), by and among Geneva Steel Funding
Corporation, as transferor, Geneva Steel, as servicer, and Bankers Trust
Company, as trustee, does hereby certify on behalf of Geneva Steel that:
1. Geneva Steel is, as of the date hereof, the
Servicer under the Agreement.
2. The undersigned chief financial officer is duly
authorized pursuant to the Agreement to execute and deliver this
Certificate to the Trustee, each Rating Agency and any Enhancement
Providers.
3. A review of the activities of the Servicer during
the calendar year ended December 31, ____, and of its performance
under the Agreement was conducted under my supervision.
4. Based on such review, the Servicer has, to the
best of my knowledge, performed in all material respects all of its
obligations under the Agreement throughout such year and no material
default in the performance of such obligations has occurred or is
continuing except as set forth in paragraph 5 below.
5. The following is a description of each material
default in the performance of the Servicer's obligations under the
provisions of the Agreement known to me to have been made by the
Servicer during the calendar year ended December 31, ____, which sets
forth in detail the (a) nature of such material default, (b) the
action taken by the Servicer, if any, to remedy each such material
default
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and (c) the current status of each such default: [If applicable,
insert "None."]
Capitalized terms used but not defined herein are used as defined in
the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
on behalf of Geneva Steel this _____ day of ______________, ____.
By:
--------------------------------
Name:
Title:
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<PAGE> 90
EXHIBIT C
FORM OF GENEVA STEEL COLLECTION ACCOUNT LETTER
[Geneva Steel Collection Account Bank]
Re: Lock Box Nos.
Lock Box Account No.
Ladies and Gentlemen:
We hereby notify you that we have transferred exclusive ownership and
control of our lock-box numbers (the "Lock-Boxes") and the corresponding
lock-box account no. (the "Lock-Box Account") maintained with [Geneva
Steel Collection Account Bank] to Bankers Trust Company, as trustee for the
Geneva Steel Trade Receivables Master Trust, established pursuant to a Pooling
and Servicing Agreement, dated as of November 4, 1994, among Geneva Steel
Funding Corporation ("GSFC"), as transferor, Geneva Steel Company ("Geneva
Steel"), as Servicer, and Bankers Trust Company, as trustee (the "Trustee").
We hereby irrevocably instruct you to collect the monies, checks,
instruments and other items of payment mailed to the Lock-Boxes and deposit
into the Lock-Box Account all monies, checks, instruments and other items of
payment (unless otherwise instructed by the Trustee), and to make all payments
to be made by you out of or in connection with the Lock-Box Account directly to
the Geneva Steel Trade Receivables Master Trust Concentration Account, account
no. , such account being in the name of the Trustee at [Concentration
Account Bank], Attention: ___________________, for the account of the Trustee.
Anything in this letter agreement to the contrary notwithstanding, we and the
Trustee understand and agree that you will make the proceeds of items deposited
into the Lock-Box account available for withdrawal in accordance with your
applicable availability schedule(s) in effect from time to time.
We also hereby notify you that the Trustee shall be irrevocably
entitled to exercise any and all rights in respect of or in connection with the
Lock-Boxes and the Lock-Box Account, including without limitation, the right to
specify when payments are to be made out of or in connection with the
Lock-Boxes and the Lock-Box Account. The monies, checks, instruments and other
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items of payment mailed to the Lock-Boxes and the funds deposited into the
Lock-Box Account will not be subject to deduction, set off, banker's lien, or
any other right in favor of any person other than the Trustee; provided,
however, that you may deduct from or set-off against amounts from time to time
in the Lock-Box Account (i) your usual and customary costs and expenses in
respect of interest on overdrafts and any return items, and your usual and
customary fees and expenses associated with any such return item, overdraft
and/or the maintenance of the Lock-Box Account or any related lock-box and (ii)
the face amount (or portion thereof) of any check, instrument or other item
which was deposited in the Lock-Box Account and which has been returned unpaid
for reasons of insufficient funds or has otherwise not been collected. You
hereby acknowledge and agree that all such interest costs, fees and expenses
shall be for the account of Geneva Steel and in the event the amounts in the
Lock-Box Account are insufficient to reimburse you for the same, Geneva Steel
agrees to reimburse you for such interest, costs, fees and/or expenses
immediately upon your demand therefor in immediately available funds. In the
event Geneva Steel fails to reimburse you as set forth above, you may so notify
the Trustee and the Trustee may, but shall have no obligation to, pay the same.
You shall not be liable to either us or the Trustee, directly or
indirectly, for any damages arising out of your provision of services pursuant
to this letter agreement, other than damages arising as a result of your
negligence or willful misconduct, and in no event shall you be liable for any
consequential, indirect or special damages, even if you have been advised of
the possibility of such damages.
This letter agreement is binding upon us, you and the Trustee and each
of our respective successors and assigns and shall inure to the benefit of each
of us and our respective successors and assigns. It supersedes all prior
agreements, oral or written, with respect to the subject matter hereof and may
not be modified without the prior written consent of the Trustee. This letter
agreement may be terminated only as follows: (i) you may terminate this letter
agreement and the Lock-Box Account at any time which is thirty (30) days or
more after the date you shall have given written notice of such termination to
us, GSFC and the Servicer (if other than Geneva Steel), with a copy to the
Trustee, and the (ii) the Trustee may terminate this letter agreement and the
Lock-Box Account at any time which is thirty (30) days or more after the date
the Trustee shall have given written notice of such termination to Geneva
Steel, GSFC and the Servicer (if other than Geneva Steel) and you. Notice
hereunder shall be delivered to each party hereto (i) in the case of the GSFC,
to Geneva Steel Funding Corporation, 10 South Geneva Road, Vineyard, Utah
84058, Attention: Treasurer, (ii) in the case of the Servicer (if the Servicer
is Geneva Steel) to Geneva Steel, 10 South Geneva Road, Vineyard, Utah 84058,
Attention: Chief
C-2
<PAGE> 92
Financial Officer, (iii) in the case of the Trustee, to Bankers Trust Company,
Four Albany Street, 10th Floor, New York, New York, 10006, Attention:
Corporate Trust and Agency Group / Structured Finance Team (facsimile: (212)
250-6439), and (iv) in the case of the Paying Agent or the Transfer Agent and
Registrar, to Bankers Trust Company, Four Albany Street, 10th Floor, New York,
New York, 10006, Attention: Corporate Trust and Agency Group / Structured
Finance Team (facsimile: (212) 250-6439), or at such other address or to the
attention of such other party as the party to be addressed may specify by
written notice delivered to each other party hereto. No termination shall
affect or impair any of the agreements, rights or obligations hereunder of any
party with respect to any period of time prior to the date of such
termination.
This letter agreement shall be governed by and construed in accordance
with the internal law of the State of ______________ and applicable federal
law. This letter agreement shall become effective immediately upon being
executed by all of the parties hereto.
Very truly yours,
GENEVA STEEL COMPANY
By:
-------------------------
Name:
Title:
Acknowledged and agreed to this
___ day of _____________, 1994
[Geneva Steel Collection Account Bank]
By:
----------------------------
Name:
Title:
C-3
<PAGE> 93
ACKNOWLEDGMENT AND AUTHORIZATION
Bankers Trust Company, as trustee (the "Trustee") for the Geneva Steel
Trade Receivables Master Trust, referenced in the attached letter executed by
Geneva Steel Company and acknowledged by [Geneva Steel Collection Account Bank]
and the Trustee (the "Lock-Box Notice"), hereby acknowledges the transfer of
exclusive ownership and control of the "Lock-Boxes" and the "Lock-Box Account",
in each case, as defined in and pursuant to the Lock-Box Notice. Pursuant to
the second paragraph of the Lock-Box Notice, the Trustee hereby authorizes
[Geneva Steel Collection Account Bank] to continue to accept instructions from
the Servicer (currently Geneva Steel) for the payment of funds from said
Lock-Boxes and Lock-Box Account until the Trustee notifies [Geneva Steel
Collection Account Bank] in writing to the contrary.
Very truly yours,
BANKERS TRUST COMPANY,
Not in its individual capacity,
but solely as Trustee
By:
-----------------------------
Name:
Title:
Agreed and Acknowledged:
[Geneva Steel Collection Account Bank]
By:
----------------------------
Name:
Title:
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<PAGE> 94
ANNEX X
DEFINITIONS
Whenever used in the Transaction Documents, the following
words and phrases shall have the following meanings, and the definitions of
such terms are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of
such terms.
"Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Additional Early Amortization Event" shall have the meaning
specified in Section 7.01 of each Supplement.
"Additional Interest Period" shall have the meaning specified
in Section 2.05(d) of the Certificate Purchase Agreement.
"Adjusted Eurodollar Rate" shall mean, for each Interest
Period, for any Increase, an interest rate per annum equal to the sum of (a)
the rate of interest per annum (the "Eurodollar Rate") at which deposits in
U.S. Dollars are offered by the principal office in London, England of the
Reference Bank to prime banks in the interbank eurodollar market at 11:00 a.m.
(London time) two Eurodollar Business Days (as defined below) before the first
day of such Interest Period in an amount approximately equal or comparable to
the principal amount of such Increase and for a period equal to such Interest
Period plus (b) the remainder obtained by subtracting (i) the Eurodollar Rate
for such Interest Period from (ii) the rate obtained by dividing such
Eurodollar Rate by the percentage equal to 100% minus the "Eurodollar Reserve
Percentage" (as defined below) for such Interest Period. "Eurodollar Business
Day" means a day of the year on which dealings are carried on in the London
interbank market and banks are open for business in London and are not required
or authorized to close in New York City. "Eurodollar Reserve Percentage" of
the Reference Bank for any Interest Period means the reserve percentage
applicable during such Interest Period under regulations issued from time to
time by the Board of Governors of the Federal Reserve System (or any successor)
(or if more than one such percentage shall be so applicable, the daily average
of such percentages for such day) for determining the maximum reserve
requirement (including, without limitation, any marginal reserve requirement)
for a member bank of the Federal Reserve System in New York City, the Reference
Bank in respect of liabilities or assets consisting of or including
Eurocurrency liabilities as that term is used in Regulation D of the Board of
Governors of the Federal Reserve System as in effect from time to time having a
term equal to such Interest Period.
<PAGE> 95
"Affiliate" shall mean, with respect to any specified Person,
any other Person controlling, controlled by or under common control with such
specified Person and, without limiting the generality of the foregoing, shall
be presumed to include (A) any Person which beneficially owns or holds 10% or
more of any class of voting securities of such designated Person or 10% or more
of the equity interest in such designated Person and (B) any Person of which
such designated Person beneficially owns or holds 10% or more of any class of
voting securities or in which such designated Person beneficially owns or holds
10% or more of the equity interest. For the purposes of this definition,
"control" when used with respect to any specified Person shall mean the power
to direct the management and policies of such specified Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Aggregate Certificateholders' Interest" shall mean the
aggregate of the Certificateholders' Interests for each Series as defined in
Section 4.01(a) of the Pooling and Servicing Agreement.
"Aggregate Liquidity Provider Commitment" shall mean the
aggregate of the amount of the Liquidity Provider Commitments which at all
times shall equal the Maximum Invested Amount.
"Alternate Base Rate" means a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall at
all times be equal to the highest of:
(i) the rate of interest announced publicly by the
Reference Bank in New York, New York, from time to time as the
Reference Bank's base rate; or
(ii) 1.50% per annum above the latest three-week
moving average of secondary market morning offering rates in
the United States for three-month certificates of deposit of
major United States money market banks, such three- week
moving average being determined weekly on each Monday (or, if
any such day is not a Business Day on the next succeeding
Business Day) for the three-week period ending on the previous
Friday by the Reference Bank on the basis of such rates
reported by certificate of deposit dealers to and published by
the Federal Reserve Bank of New York in Federal Reserve
Statistical Release H.15(519) or, if such publication shall be
suspended or terminated, on the basis of quotations for the
latest three-week average of secondary market morning offering
rates received by the Reference Bank from three New York
certificate of deposit dealers of recognized standing selected
by the
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<PAGE> 96
Reference Bank, in either case adjusted to the nearest 1/4 of
one percent or, if there is no nearest 1/4 of one percent, to
the next higher 1/4 of one percent; or
(iii) 1.50% percent per annum above the Federal
Funds Rate.
"Amortization Date" with respect to any Series, shall have the
meaning specified in the related Supplement.
"Amortization Period" shall mean, with respect to any Series,
unless otherwise specified in the related Supplement, the period beginning on
the related Amortization Date, and ending upon the full reduction of the
Invested Amount with respect to such Series, all accrued and unpaid Yield
thereon and all other amounts due and owing to the Investor Certificateholders
under the Transaction Documents.
"Bank Rate" for any Interest Period for any Increase means an
interest rate per annum equal to the sum of (a) the Adjusted Eurodollar Rate
for such Interest Period for such Increase, plus (b) 1.00% per annum; provided,
however, that (i) in the case of any Interest Period for any such Increase of
one to (and including) thirteen days, or in respect of an Increase the
principal balance of which is less than $5,000,000, the "Bank Rate" for such
Interest Period for such Increase shall be the Alternate Base Rate in effect on
the first day of such Interest Period unless the Certificate Agent and the
Transferor agree in writing to a different rate; (ii) if it shall become
unlawful for the Reference Bank to obtain funds in the London interbank market
in order to purchase, fund or maintain any Increase under the Certificate
Purchase Agreement or deposits in dollars (in the applicable amounts) are not
being offered by the Reference Bank in the London interbank market, then the
"Bank Rate" for any Interest Period for such Increase shall be the Alternate
Base Rate in effect from time to time during such Interest Period; and (iii)
following the occurrence and during the continuation of an Early Amortization
Period, the "Bank Rate" for any Interest Period for such Increase shall be the
sum of the applicable interest rate per annum determined pursuant to the
provisions set forth above plus 2% per annum.
"Beneficiary" shall mean, as of any date of determination, any
of the then holders of the Investor Certificates and any Enhancement Provider.
"Breakage Costs" shall mean, for each Increase for the
Interest Period during which the principal amount for such Increase is reduced
and for which the applicable Yield Rate is the CP Rate or a rate calculated on
the basis of the Adjusted Eurodollar Rate, the amount, if any, billed by which
(i) the Yield (calculated without taking into account any Breakage Costs)
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<PAGE> 97
which would have accrued on the reductions of such Increase or Liquidity
Provider Commitment Percentage of such Increase, as applicable, during such
Interest Period (as so computed) if such reductions had remained as Increases
through the last day of the Interest Period exceeds (ii) the income, if any,
received by the Purchaser or a Liquidity Provider funding such Increase or
Liquidity Provider Commitment Percentage of such Increase, as applicable, from
the Purchaser's or Liquidity Provider's investment of the proceeds of such
reductions of such Increase.
"Business Day" shall mean any day other than a Saturday or
Sunday or any other day on which national banking associations or state banking
institutions in New York, New York, Salt Lake City, Utah or the city in which
the Corporate Trust Office is located are authorized or obligated by law,
executive order or governmental decree to be closed.
"Canadian Obligors" shall mean each Person who is obligated to
pay for goods or services provided by Geneva Steel which gave rise to a
Receivable, including any guarantor of such Person's obligations, in the case
of any Person who is an individual, who is a citizen and, in the case of any
other Person, which is formed, organized or incorporated under the laws of the
Commonwealth of Canada or any province of Canada.
"Canadian Receivables" shall mean United States dollar
denominated accounts receivable generated from sales to Canadian Obligors.
"Certificate" shall mean any one of the Investor Certificates
or the Transferor Certificate.
"Certificate Agent" shall mean Citicorp North America, Inc. in
its capacity as agent for CRC and the Liquidity Providers under the Certificate
Purchase Agreement.
"Certificate Interest" shall mean each participating interest
in the Series 1994-1 Certificate acquired by CRC or a Liquidity Provider in
connection with the funding of an Increase by CRC or a Liquidity Provider
pursuant to Section 2.05 of the Certificate Purchase Agreement.
"Certificate Purchase Agreement" shall mean the Certificate
Purchase Agreement dated November 4, 1994, among the Transferor, the Purchaser,
the Liquidity Providers named therein, the Servicer, the Certificate Agent and
the Trustee, as amended, supplemented, restated or otherwise modified from time
to time.
"Certificate Purchase Price" shall have the meaning specified
in Section 2.01 of the Certificate Purchase Agreement.
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<PAGE> 98
"Certificate Rate" shall mean, with respect to any Series or
Class, the certificate rate specified therefor in the related Supplement.
"Certificate Register" shall have the meaning specified in
Section 6.03(a) of the Pooling and Servicing Agreement.
"Certificateholder" or "Holder" shall mean the Person in whose
name an Investor Certificate or the Transferor Certificate is registered in the
Certificate Register.
"Certificateholders' Interest" shall have the meaning
specified in Section 4.01(a) of the Pooling and Servicing Agreement.
"Class" shall mean, with respect to any Series divided into
classes, any one of the classes of Investor Certificates of that Series.
"Closing Date" shall mean, with respect to any Series, the
Closing Date specified in the related Supplement.
"Collection Period" shall mean, with respect to any
Distribution Date, the calendar month (or, in the case of the calendar month in
which any Closing Date occurs, the portion of such calendar month following the
Closing Date) immediately preceding the calendar month in which such
Distribution Date occurs.
"Collections" shall mean (a) all cash payments by or on behalf
of the Obligors deposited to any Geneva Steel Collection Account or
Concentration Account, or received by the Servicer, in respect of Transferor
Receivables in the form of cash, checks, wire transfers, electronic transfers
or any other form of cash payment, and (b) all interest and other investment
earnings (net of losses and investment expenses) on Collections (including
without limitation funds on deposit in the Reserve Accounts) as a result of the
investment thereof pursuant to Section 4.02 of the Pooling and Servicing
Agreement.
"Concentration Account" shall have the meaning specified in
Section 4.02 of the Pooling and Servicing Agreement.
"Concentration Account Bank" shall initially be Bankers Trust
Company, and shall have the meaning specified in Section 4.02 of the Pooling
and Servicing Agreement.
"Concentration Amount" shall mean as of any date, with respect
to each Concentration Limit, the product of (a) such Concentration Limit and
(b) the aggregate amount of Eligible Receivables of a particular Obligor or
Obligors held by the Trust as to which such Concentration Limit applies.
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<PAGE> 99
"Concentration Limit" shall mean, with respect to the
following types of Receivables, the percentages of the aggregate amount of
Eligible Receivables held by the Trust set forth as follows: (a) Receivables
of any single Obligor rated at least "A-1" or its equivalent by each Rating
Agency, 6%; (b) Receivables of any single Obligor rated below "A-1", but at
least "A-2" or its equivalent by each Rating Agency, 5%; (c) Receivables of any
single Obligor rated below "A-2" but at least "A-3" or its equivalent by each
Rating Agency, 4%; (d) Receivables of any other single Obligor not rated on its
short-term debt, or the Mannesman Receivable, 3%; and (e) if the Commonwealth
of Canada sovereign debt rating is less than "AA" (or its equivalent) by each
Rating Agency, Receivables of any Canadian Obligor, 3%; provided, however, that
the Transferor may adjust the level of any Concentration Limit (i) if such
adjustment in and of itself does not cause each Rating Agency, as confirmed in
writing by each Rating Agency, to lower or withdraw its rating of any Series of
Certificates and (ii) subject to any further conditions specified in any Series
Supplement; provided, further, that (A) if two or more Rating Agencies assign
different ratings to a single Obligor or the Commonwealth of Canada, as the
case may be, the lower of such ratings shall be used to determine the
Concentration Limit and (B) if only one Rating Agency rates an Obligor or the
Commonwealth of Canada, as the case may be, the rating of such Rating Agency
shall be used to determine the Concentration Limit for such Obligor or Canada,
as the case may be.
"Confidential Information" shall mean, in relation to any
Person, any written information delivered or made available by or on behalf of
Geneva Steel (or its Affiliates or Subsidiaries) or the Transferor to such
Person in connection with or pursuant to this Agreement or the transactions
contemplated hereby which is proprietary in nature, other than information (i)
that is or becomes publicly known, or information obtained by the Person from
sources other than Geneva Steel or the Transferor, (ii) required to be
disclosed (A) by any applicable statute, law, rule or regulation, (B) by any
government agency or regulatory or self-regulatory body having or claiming
authority to regulate or oversee any aspects of the Person's business or that
of its Affiliates, (C) pursuant to any subpoena, civil investigative demand or
similar demand or request of any court, regulatory authority, arbitrator or
arbitration to which the Person or an Affiliate or an officer, director,
employer or shareholder thereof is a party, (D) in any preliminary or final
offering circular, registration statement or contract or other document
pertaining to the transactions contemplated by the Agreement approved in
advance by Geneva Steel or the Transferor, as the case may be, or (E) to any
Affiliate, independent or internal auditor, agent, employee or attorney of the
Person having a need to know the same, provided that the Person advises such
recipient of the confidential nature of the information
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<PAGE> 100
being disclosed, (iii) any other disclosure authorized by Geneva Steel or the
Transferor as the case may be or (iv) disclosure to the other parties to the
transactions contemplated by the Pooling and Servicing Agreement.
"Contract" shall mean an agreement between Geneva Steel and an
Obligor, containing terms pursuant to or under which such Obligor shall be
obligated to pay from time to time for merchandise delivered or to be delivered
or services performed or to be performed and shall include, as applicable, any
invoice related thereto.
"Contractual Obligation" shall mean as to any Person, any
provision of any security issued by such Person or of any agreement, instrument
or other undertaking to which such Person is a party or by which it or any of
its property is bound.
"Corporate Trust Office" shall have the meaning specified in
Section 11.16 of the Pooling and Servicing Agreement.
"CP Note" shall mean any commercial paper note issued by CRC
to fund any Increase the Yield Rate in respect of which shall be determined by
reference to the CP Rate.
"CP Note Issuance Fees" shall mean with respect to each
issuance of CP Notes, the costs associated with such issuance paid by CRC.
"CP Rate" shall mean as to any Interest Period for the CRC
Tranche related to an Increase, a rate per annum equal to the weighted average
of the rates (or, if such rates are discount rates, the rates determined by
converting the discount rates to an interest-bearing equivalent rate per annum)
at which CP Notes allocable, in whole or part, by the Certificate Agent and
having a term equal to such Interest Period are issued by CRC to fund such
Increase through a placement agent or commercial paper dealer selected by the
Certificate Agent, as agreed between each such agent or dealer and the
Certificate Agent.
"CRC" shall mean Corporate Receivables Corporation, a
California corporation, including any successors and assigns.
"CRC Tranche" shall mean any issuance of Notes the proceeds of
which are used by CRC to fund an Increase and which CRC Tranche has the
principal amount and, in the case of any Increase the Yield Rate in respect of
which shall be determined by reference to the CP Rate, the Interest Period, in
each case, as specified by the Transferor pursuant to the Certificate Purchase
Agreement.
"Credit Policy Manual" shall mean those credit and collection
policies and practices of Geneva Steel described in
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<PAGE> 101
its credit policy manual in effect on the date hereof relating to Receivables,
as the same may be amended or modified from time to time in compliance with
Section 3.04(j) of the Pooling and Servicing Agreement.
"Cure Funds" shall have the meaning specified in the
definition of the term "Cure Period" contained in this Annex X.
"Cure Period" shall mean the period beginning on a Pool
Non-compliance Date if the Transferor shall begin depositing Collections or
funds pro rata to the Reserve Account of each Series on the day collected (all
such funds so deposited from time to time by the Transferor being "Cure
Funds"), and continuing until the earlier of (a) the date on which the Net
Receivables Balance equals at least the Required Net Receivables Balance and
(b) the fifteenth day following the occurrence of such Pool Non-compliance
Date.
"Cut-Off Date" shall mean the close of business on the
Business Day immediately preceding the Closing Date.
"Daily CRC Expense Amount" shall mean with respect to any
Collection Period, the Monthly CRC Expense Amount divided by the number of days
in such Collection Period.
"Daily Report" shall mean, with respect to any Series, the
daily report in the form set forth in the related Supplement.
"Daily Trust Expense Amount" shall mean with respect to any
Collection Period, the Monthly Trust Expense Amount divided by the number of
days in such Collection Period.
"Default Ratio" shall mean, for any month, the average of the
ratios for each of the three most recently ended months (each expressed as a
percentage) of (i) aggregate Transferor Receivables (without giving effect to
extended debits and credits) that were 121 days past due at the end of each
such month plus Transferor Receivables which were charged off as uncollectible
during the current month which were less than 150 days past due when charged
off to (ii) aggregate Transferor Receivables that were acquired by the Trust
during the sixth month preceding such date.
"Defaulted Receivable" shall mean a Transferor Receivable: (i)
as to which the Obligor thereof has taken any action, or suffered any event to
occur, of the type constituting an Insolvency Event, (ii) as to which any
payment, or part thereof, remains unpaid by the Obligor thereof for 121 days or
more from the original due date for such payment specified in the relevant
invoice, and (iii) which, consistent with the Credit Policy Manual, would be
written off as uncollectible.
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"Deposit Date" shall mean each Business Day on which any
Collections are deposited in the Concentration Account.
"Determination Date" shall mean, with respect to any
Distribution Date, the second Business Day preceding such Distribution Date.
"Determination Date Certificate" shall mean, with respect to
any Determination Date and any Series, a report prepared by a Servicing Officer
for such Determination Date as of the end of the immediately preceding month in
substantially the form set forth in the related Supplement.
"Diluted Receivable" shall mean, that portion of any Eligible
Receivable which is either (a) reduced or canceled as a result of (i) any
failure by Geneva Steel to deliver any merchandise or provide any services or
otherwise to perform under the underlying Contract, (ii) any change in the
terms of, or cancellation of, a Contract or any other adjustment by Geneva
Steel which reduces the amount payable by the Obligor on the related Receivable
or (iii) any setoff in respect of any claim by an Obligor thereof (whether such
claim arises out of the same or an unrelated transaction) or (b) subject to any
specific dispute, offset, counterclaim or defense whatsoever asserted (except
the discharge in bankruptcy of the Obligor thereof); provided, that Diluted
Receivables do not include (x) contractual adjustments to the amount payable by
an Obligor that are eliminated from the Receivables balance sold to the Trust
through a reduction in the Purchase Price for the related Receivable or (y) any
portion of those Receivables for which a production prepayment has been
received.
"Dilution Ratio" shall mean as of any date, the ratio for the
most recently ended month (expressed as a percentage) of (i) the aggregate
balance of Transferor Receivables that became Diluted Receivables during such
month to (ii) the aggregate balance of all Transferor Receivables acquired by
the Trust during the month preceding such date of calculation.
"Dilution Volatility Factor" shall mean as of any date a
percentage equal to the product of (i) the amount by which (A) the highest
Dilution Ratio during the most recently ended twelve-month period exceeds (B)
the average of the Dilution Ratios during such twelve-month period and (ii) (A)
the highest Dilution Ratio during such twelve-month period divided by (B) the
average of the Dilution Ratios during such twelve-month period.
"Discount Amount" shall mean, with respect to any Series, the
amount set forth in the related Supplement.
"Distribution Date" shall mean, with respect to any Collection
Period, the fifteenth day of the calendar month
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immediately following such Collection Period, or, if such day is not a Business
Day, the next succeeding Business Day or such other day as set forth in the
Supplement for a Series.
"Division" shall mean the Division of Corporations and
Commercial Code of the Department of Commerce of the State of Utah.
"Dollars and $" shall mean lawful money of the United States
of America.
"Duff & Phelps" shall mean Duff & Phelps Credit Rating Co. or
its successor.
"Dynamic Loss and Dilution Reserve Percentage" shall mean as
of any date of determination the sum of (a) the product of (i) 2.25 times (ii)
the average Dilution Ratio during the preceding 12 months times (iii) a
fraction the numerator of which is the total sales for the past month and the
denominator of which is the aggregate outstanding balance of Eligible
Receivables as of the end of the most recently ended month, plus (b) the
product of the Dilution Volatility Factor times the fraction specified in
clause (a)(iii) above, plus (c) the product of (i) 2.25, times (ii) the highest
Default Ratio during the preceding 12 months, times (iii) a fraction the
numerator of which is the total sales for the past 6 months and the denominator
of which is the aggregate outstanding balance of Eligible Receivables as of the
end of the most recently ended month.
"Early Amortization Event" shall have the meaning specified in
Section 9.01 of the Pooling and Servicing Agreement and with respect to any
Series shall also mean any Additional Early Amortization Event specified in the
related Supplement.
"Early Amortization Period" shall mean, with respect to any
Series, unless otherwise specified in the related Supplement, the period
beginning at the close of business on the Business Day immediately preceding
the day on which an Early Amortization Event is deemed to have occurred, and in
each case ending upon the earlier to occur of (a) the payment in full to the
Investor Certificateholders of such Series of the Invested Amount with respect
to such Series and (b) the Termination Date with respect to such Series.
"Early Termination" shall have the meaning specified in
Article VI of the Receivables Purchase Agreement.
"Effective Period" shall mean the period beginning on the
Closing Date and terminating on the earliest of (a) the close of business on
the Business Day on which a Termination Event occurs, and (b) the close of
business on the Business Day
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immediately preceding the day on which the Amortization Period for the last
outstanding Series begins.
"Eligible Institution" shall have the meaning specified in the
related Supplement.
"Eligible Investments" shall mean book-entry securities
entered on the books of the registrar of such security and held in the name or
on behalf of the Trustee or negotiable instruments or securities represented by
instruments in bearer or registered form (registered in the name of the Trustee
or its nominee) which evidence:
(a) direct obligations of, or obligations fully
guaranteed as to timely payment by, the United States of
America or any agency;
(b) demand deposits, time deposits or
certificates of deposit (having original maturities of no more
than 270 days) of depository institutions or trust companies
incorporated under the laws of the United States of America or
any state thereof (or domestic branches of foreign banks),
subject to supervision and examination by Federal or state
banking or depository institution authorities, and having, at
the time of the Trust's investment or contractual commitment
to invest therein, the highest short-term unsecured debt
rating from S&P, Moody's and Duff & Phelps;
(c) commercial paper (having original maturities
of no more than 270 days) having, at the time of the Trust's
investment or contractual commitment to invest therein, the
highest short-term rating from S&P, Moody's and Duff & Phelps;
(d) investments in no load money market funds
having a rating from each rating agency rating such fund in
its highest investment category (including funds for which the
Trustee or any of its Affiliates is an investment manager or
advisor);
(e) notes or bankers' acceptances (having
original maturities of no more than 270 days) issued by any
depository institution or trust company referred to in clause
(b) above;
(f) Such other investments, so long as they shall
be rated by S&P, Moody's and Duff & Phelps as either AAA, Aaa
or Duff-1+, as an eligible investment for AAA rated
transactions, or in the highest short term rating assigned by
each such rating agency; or
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(g) repurchase agreements secured by other
Eligible Investments.
"Eligible Receivable" shall mean each Transferor Receivable or
portion thereof:
(i) the Obligor of which is not an
Affiliate of Geneva Steel or the Transferor;
(ii) as to which, other than as a result
of the application of or reference to Octagon in any proceeding before
any state or federal court within the tenth federal circuit or the
United States Supreme Court, at the time of the Transfer of such
Receivable to the Trust, the Transferor or the Trust will have good
and marketable title thereto free and clear from Liens except as
created under the Transaction Documents, and which has been the
subject of either a valid transfer and assignment from the Transferor
to the Trust of all the Transferor's right, title and interest therein
(and in the proceeds thereof), or the grant of a first priority
perfected "security interest" (within the meaning of the UCC of the
jurisdiction the law of which governs the perfection of the interest
in such Receivable created under the Transaction Documents) therein
(and in the proceeds thereof);
(iii) which is not a Defaulted Receivable
or a Diluted Receivable;
(iv) which arose in the ordinary course
of business of Geneva Steel and is an account receivable representing
all or part of the sales price of merchandise, or services within the
meaning of Section 3(c)(5) of the Investment Company Act, the Obligor
of which is primarily liable with respect thereto;
(v) which is an "account" (within the
meaning of Section 9-106 of the UCC of the jurisdiction the law of
which governs the perfection of the interest in such Receivable
created under the Transaction Documents);
(vi) which is denominated and payable
only in United States dollars in the United States;
(vii) the Obligor of which is a United
States or Canadian resident or citizen;
(viii) which is the legal and assignable
payment obligation of the Obligor of such Receivable, enforceable
against such Obligor in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, morato-
12
<PAGE> 106
rium or other laws affecting creditors' rights generally, and except
as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity);
(ix) which was created in material
compliance with, and which, at the time of the Transfer of such
Receivable to the Trust, does not contravene in any material respect,
any applicable Requirements of Law, and the Obligor on which is not in
violation of any such Requirements of Law in any material respect with
respect to such Receivable;
(x) which satisfies in all material
respects all applicable requirements of the Credit Policy Manual
including, without limitation, payment terms that conform to the
provisions of such Credit Policy Manual;
(xi) with respect to which all material
consents, licenses, approvals or authorizations of, or registrations
or declarations with, any Governmental Authority required to be
obtained, effected or given in connection with the creation of such
Receivable have been duly obtained, effected or given and are in full
force and effect;
(xii) which is not subject to any specific
waiver or modification except for a Receivable which is subject to a
waiver or modification as permitted in accordance with the Credit
Policy Manual and which waiver or modification is reflected in the
Servicer's records and computer files relating thereto;
(xiii) which is not subject to any
enforceable provision prohibiting the transfer or assignment by Geneva
Steel of such payment obligation; and
(xiv) the Obligor of which is not a
Governmental Authority.
"Eligible Servicer" shall mean Geneva Steel, the Trustee or an
entity which, at the time of its appointment as Servicer, (a) is servicing a
portfolio of trade receivables, (b) is legally qualified and has the capacity
to service the Receivables and (c) has demonstrated the ability to
professionally and competently service a portfolio of similar trade receivables
with high standards of skill and care.
"Enhancement" shall mean the rights and benefits provided to
the Investor Certificateholders of any Series or Class pursuant to any letter
of credit, surety bond, cash collateral account, spread account, guaranteed
rate agreement, maturity liquidity facility, tax protection agreement, interest
rate swap
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<PAGE> 107
agreement or other similar arrangement. The subordination of any Series or
Class to any other Series or Class or of the Transferor's Interest to any
Series or Class shall be deemed to be an Enhancement.
"Enhancement Agreement" shall mean any agreement, instrument
or document governing the terms of any Enhancement of any Series or pursuant
to which any Enhancement of any Series is issued or outstanding.
"Enhancement Provider" shall mean the Person providing any
Enhancement, other than any Certificateholders (including any holder of the
Transferor Certificate) the Certificates of which are subordinated to any other
Series or Class.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any Person who is a member of a
group which is under common control with the Transferor, or who together with
the Transferor is treated as a single employer within the meaning of Title IV
of ERISA.
"Expected Final Payment Date" with respect to any Series shall
have the meaning specified in the related Supplement.
"Extension Term" shall mean, with respect to the term of any
Liquidity Provider Commitment, a period of 364 days.
"FDIC" shall mean the Federal Deposit Insurance Corporation or
any successor.
"Federal Funds Rate" shall mean, with respect to any day, the
rate set forth in H.15(519) for that day opposite the caption "Federal Funds
(Effective)". If on any date of determination, such rate is not published in
H.15(519), such rate will be the rate set forth in Composite 3:30 P.M.
Quotations for U.S. Government Securities for that day under the caption
"Federal Funds/Effective Rate". If on any date of determination, the
appropriate rate is not published in either H.15(519) or Composite 3:30 P.M.
Quotations for U.S. Government Securities, such rate will be the arithmetic
mean of the rates for the last transaction in overnight Federal funds arranged
by three leading brokers of Federal funds transactions in New York City prior
to 9:00 A.M., New York City time, on that day.
"Fee Letter" shall have the meaning specified in Section 3.01
of the Certificate Purchase Agreement.
"Floating Allocation Percentage" with respect to each Series,
shall have the meaning specified in the related Supple-
14
<PAGE> 108
ment; provided, however, that the aggregate of the Floating Allocation
Percentages of all outstanding Series shall not exceed 100%.
"GAAP" shall mean generally accepted accounting principles in
the United States, as in effect from time to time.
"Geneva Steel" shall mean Geneva Steel Company, including any
successors and assigns.
"Geneva Steel Collection Account" shall have the meaning
specified in Section 4.02 of the Pooling and Servicing Agreement.
"Geneva Steel Collection Account Bank" shall have the meaning
specified in Section 4.02 of the Pooling and Servicing Agreement.
"Geneva Steel Collection Account Letter" shall have the
meaning specified in Section 4.02 of the Pooling and Servicing Agreement.
"Government Receivable" shall mean a receivable with respect
to which the Obligor is the federal government of the United States or a
political, administrative or regulatory subdivision thereof.
"Governmental Authority" shall mean any country or nation, any
political subdivision, state or municipality of such country or nation, and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government of any country or
nation or political subdivision thereof.
"GSFC" shall mean, with respect to this Annex X, Geneva Steel
Funding Corporation, including any successors and assigns.
"Increase" shall mean the Certificate Purchase Price and the
amount of each increase in the Invested Amount funded by a CRC Tranche or the
Liquidity Providers and paid to GSFC by the Certificate Agent pursuant to the
terms of the Certificate Purchase Agreement.
"Increase Date" shall have the meaning specified in Section
2.05 of the Certificate Purchase Agreement.
"Indemnified Amounts" shall have the meaning specified in
Section 7.03 of the Pooling and Servicing Agreement.
"Indemnified Party" shall have the meaning specified in
Section 7.03 of the Pooling and Servicing Agreement.
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<PAGE> 109
"Independent Public Accountants" means any of (a) Arthur
Andersen & Co., (b) Deloitte & Touche, (c) Coopers & Lybrand, (d) Ernst &
Young, (e) KPMG Peat Marwick and (f) Price Waterhouse, or any of their
successors so long as such successor is one of the six largest national
accounting firms, provided, that such firm is independent with respect to the
Servicer within the meaning of the Act.
"Initial Invested Amount" shall mean, with respect to any
Series and for any date, an amount equal to the initial invested amount
specified in the related Supplement.
"Initial Term" shall mean, with respect to each Liquidity
Provider Commitment, the period which commences on the Closing Date and ends on
November 6, 1995 inclusive.
"Insolvency Event" shall mean, with respect to a specified
Person, (a) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of such person or any substantial part
of its property in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or the appointing
of a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for such Person or for any substantial part of its property,
or the ordering of the winding-up or liquidation of such Person's business,
and, other than in a case in which such proceeding was instituted by an
Affiliate of such Person, such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such law, or the
consent by such Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors,
or the failure by such Person generally to pay its debts as such debts become
due or the admission by such Person in writing (as to which the Trustee shall
have written notice) of its inability to pay its debts generally as they become
due.
"Interest Period" shall mean, unless otherwise specified in
the Supplement relating to any Series, with respect to any Distribution Date
except for the initial Distribution Date, the period from and including the
preceding Distribution Date to but excluding such Distribution Date, and, in
the case of the initial Distribution Date, the period from and including the
Closing Date to but excluding such initial Distribution Date.
16
<PAGE> 110
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
"Inventory Lender" shall mean Citibank USA, Inc. as agent for
those certain lenders under the Amended and Restated Revolving Credit Agreement
dated as of November 4, 1994 between Geneva Steel, Citibank, N.A. and Citicorp
USA, Inc. as agent for various lenders.
"Invested Amount" shall mean, with respect to any Series and
for any date, an amount equal to the invested amount determined as provided in
the related Supplement.
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended from time to time.
"Investor Certificate" shall mean any one of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee, in
substantially the form attached to the related Supplement, other than the
Transferor Certificate.
"Investor Certificateholder" shall mean the Person in whose
name an Investor Certificate is registered in the Certificate Register.
"Investor Collections" with respect to each Series, shall have
the meaning specified in the related Supplement.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment for security, encumbrance, lien (statutory or other
and including a Lien created by PBGC), preference, participation interest,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever resulting in an encumbrance against real or personal property
of a Person, including, without limitation, any conditional sale or other title
retention agreement, and any financing lease having substantially the same
economic effect as any of the foregoing, except as may otherwise be imposed as
a result of the application of or reference to Octagon in any proceeding before
any state or federal court within the tenth federal circuit or the United
States Supreme Court.
"Liquidity Provider" shall mean the banks party to the
Certificate Purchase Agreement as their names appear on the signature page
thereof.
"Liquidity Provider Commitment" shall mean, as to any
Liquidity Provider, the obligation of such Liquidity Provider to fund
Increases, including a Term Increase, up to the amount set forth opposite such
Liquidity Provider's name on the signature page of the Certificate Purchase
Agreement subject to Section 2.04 of that agreement.
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<PAGE> 111
"Liquidity Provider Commitment Percentage" shall mean, as to
any Liquidity Provider at any time, the percentage set forth under the heading
"Percentage" opposite its signature line to the Certificate Purchase Agreement,
as such percentage may be modified by (a) assignments made from time to time
pursuant to Section 6.01 of the Certificate Purchase Agreement or (b) in the
case of a defaulting Liquidity Provider, pursuant to Section 2.09 of the
Certificate Purchase Agreement.
"Loss and Dilution Reserve" shall mean, with respect to any
Series, the amount set forth in the related Supplement.
"Loss and Dilution Reserve Percentage" shall mean as of any
date of determination the greater of (a) the Specified Loss and Dilution
Reserve Percentage and (b) the Dynamic Loss and Dilution Reserve Percentage.
"Loss to Liquidation Ratio" shall mean as to any date the
ratio (expressed as a percentage) calculated by dividing (a) the aggregate
Outstanding Balance of all Receivables written off as uncollectible in
accordance with the Credit Policy Manual by Geneva Steel during the
twelve-month period most recently ended by (b) the aggregate amount of
Collections during such twelve-month period.
"Majority in Interest" shall mean, with respect to each
Series, the Holders of Certificates evidencing more than 50% of the aggregate
Certificateholders' Interest in such outstanding Series.
"Majority Liquidity Providers" shall mean, at any time,
Liquidity Providers whose Liquidity Provider Commitment Percentage aggregates
more than 50% of the total amount of all Liquidity Provider Commitment
Percentages.
"Mannesmann" shall mean Mannesmann Pipe & Steel Corporation, a
New York corporation, and any successor thereto.
"Mannesmann Receivables" shall mean Receivables in an amount
calculated as follows:
MOB - PPA
where:
MOB = the aggregate Outstanding Balance of all Transferor
Receivables owing by Mannesmann.
PPA = the aggregate amount received from Mannesmann and
shown on the books and records of the Servicer as a
production prepayment.
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<PAGE> 112
"Market Make Whole Premium" with respect to any Series, shall
have the meaning specified in the related Supplement, if applicable.
"Maximum Invested Amount" shall mean $65,000,000.
"Monthly CRC Expense Amount" shall mean with respect to any
Collection Period the sum of (a) the fees set forth in the Fee Letter, and (b)
all expenses billed during such Collection Period, including, without
limitation, any increased costs, Breakage Costs and other expenses payable to
the Liquidity Providers.
"Monthly Trust Expense Amount" shall mean with respect to any
Collection Period the sum of (a) expenses of the Trustee billed during such
Collection Period, plus (b) the Series Trustee's Fee, plus (c) the Series
Servicing Fee, plus (d) Service Transfer expenses, if any, billed during such
Collection Period.
"Moody's" shall mean Moody's Investors Service, Inc. or its
successor.
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which the Transferor or any ERISA
Affiliate is making, or is accruing an obligation to make, contributions or has
made, or been obligated to make, contributions at any time within the preceding
six years.
"Net Receivables Balance" shall mean at any time the excess of
(a) the aggregate Outstanding Balance of Transferor Receivables that are
Eligible Receivables over (b) the Overconcentration Amount at such time.
"Note" shall mean any commercial paper or other promissory
note issued by CRC to fund any Increase the Yield Rate in respect of which
shall be determined by reference to the Pool Rate.
"Note Dealer Fees" shall mean with respect to each issuance of
Notes, the product of (a) the face amount of Notes issued on such day, times
(b) the result obtained by dividing (i) the number of days from the day of
issuance through the day on which such Notes mature by (ii) 360 times (c) the
per annum rate (adjusted to exclude any fees contained in the CP Rate) charged
by the Note dealers from time to time for the issuance of Notes by CRC.
"Notices" shall have the meaning specified in Section 13.05(a)
of the Pooling and Servicing Agreement.
19
<PAGE> 113
"Obligations" shall mean all obligations of the Transferor and
the Servicer to the Trustee, the Trust, the Purchaser, the Liquidity Providers,
the other Indemnified Parties and their respective successors, permitted
transferees and assigns, arising under or in connection with the Transaction
Documents, howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due.
"Obligor" shall mean each Person who is obligated to pay for
goods or services provided by Geneva Steel which gave rise to a Transferor
Receivable, including any guarantor of such Person's obligations.
"Octagon" shall mean Octagon Gas Systems v. Rimmer, 995 F.2d
948, cert. denied, 114 S. Ct. 554 (1993).
"Officer's Certificate" shall mean, unless otherwise specified
in this Agreement, a certificate signed by the President, any Vice President,
the Chief Financial Officer, the Treasurer or Controller of the Transferor, or
of the Servicer, or any Successor Servicer, as the case may be, and delivered
to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may be counsel for, or an employee of, the Person providing the opinion and
who shall, and which opinion shall, be reasonably acceptable to the Trustee.
"Originator" shall mean Geneva Steel, including any successors
and assigns.
"Outstanding Balance" of any Receivable at any time shall mean
the then outstanding principal balance thereof.
"Overconcentration Amount" shall mean at any time the sum of
the amounts, if any, by which the aggregate Outstanding Balance of Eligible
Receivables of the types specified in clauses (a) through (e) of the definition
of Concentration Limit owned by the Trust exceeds the aggregate of the
respective Concentration Amounts.
"Partial Amortization Period" shall mean, with respect to any
Series, unless the Transferor shall have initiated a Cure Period or an Early
Amortization Period or the Amortization Period shall have commenced prior
thereto, the period beginning on a Pool Non-compliance Date and continuing each
day thereafter until the earlier of (a) the day on which the Net Receivables
Balance shall be equal to or greater than the Required Net Receivables Balance
and (b) the fifteenth day following such Pool Non-compliance Date.
20
<PAGE> 114
"Paying Agent" shall mean any paying agent appointed pursuant
to Section 6.06 of the Pooling and Servicing Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Person" shall mean any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, Governmental Authority or any
other entity of similar nature.
"Pooling and Servicing Agreement" shall mean the Pooling and
Servicing Agreement, dated as of November 4, 1994, among the Transferor, the
Servicer and the Trustee, as amended, supplemented, restated or otherwise
modified from time to time.
"Pool Non-compliance Date" shall mean any day on which the Net
Receivables Balance falls below the Required Net Receivables Balance.
"Pool Rate" shall mean as to any Interest Period for the CRC
Tranche related to an Increase, a rate per annum equal to the weighted average
of the rates (or, if such rates are discount rates, the rates determined by
converting the discount rates to an interest-bearing equivalent rate per annum)
at which Notes allocable, in whole or part, by the Certificate Agent are issued
by CRC to fund such Increase through a placement agent or commercial paper
dealer selected by the Certificate Agent, as agreed between each such agent or
dealer and the Certificate Agent which rates shall reflect and give effect to
the commissions of placement agents and dealers in respect of such promissory
notes, to the extent such commissions are allocated, in whole or in part, to
such promissory notes by the Certificate Agent (on behalf of CRC).
"Principal Terms" shall mean, with respect to any Series: (a)
the name or designation; (b) the Initial Invested Amount or principal amount
(or method for calculating such amount); (c) the Certificate Rate (or method
for the determination thereof); (d) the payment date or dates and the date or
dates from which interest shall accrue; (e) the method for allocating
collections to Investor Certificateholders; (f) the designation of any Series
Accounts and the terms governing the operation of any such Series Accounts; (g)
the issuer and terms of any form of Enhancement with respect thereto; (h) to
the extent applicable, the terms on which the Investor Certificates of such
Series may be exchanged for Investor Certificates of another Series,
repurchased or redeemed by the Transferor or remarketed to other investors; (i)
the number of Classes of Investor Certificates of such Series and, if more than
one Class, the rights and priorities of each such Class; (j) the
21
<PAGE> 115
Series Servicing Fee and the Series Trustee's Fee; (k) the Amortization Date
and the Termination Date; and (l) any other terms of such Series.
"Purchase Percentage" shall mean initially 94.596%; provided,
however, that the Purchase Percentage may change from time to time, based on
principles used to establish the initial Purchase Percentage, to reflect (a)
historic loss experience of the Transferor's accounts receivable portfolio and
the Receivables sold under the Transaction Documents and (b) prevailing
interest rates, as agreed upon by the Transferor and the Purchaser. The
Purchaser shall notify the Trustee if any change in the Purchase Percentage.
"Purchase Price" shall have the meaning specified in Section
2.2 of the Receivables Purchase Agreement.
"Purchaser" shall mean CRC, including any of its successors or
assigns.
"Rating Agency" shall mean each nationally recognized rating
agency which, at the request of the Transferor, has rated any Series of
Certificates, as set forth in the related Supplement.
"Rating Agency Condition" shall mean, with respect to any
action, that each Rating Agency shall have notified such parties in writing
that such action in and of itself will not result in a reduction or withdrawal
of the rating of any outstanding Series or Class with respect to which it is a
Rating Agency.
"Receivable" shall mean an account receivable shown on the
records of Geneva Steel as of the Cut-Off Date, and from time to time
thereafter, arising from the sale of merchandise or providing of services by
Geneva Steel in the ordinary course of business of Geneva Steel, including
without limitation, all monies due or to become due and all Collections and
other amounts received from time to time with respect to such Receivable and
all proceeds (including, without limitation, "proceeds" as defined in the UCC
of the jurisdiction the law of which governs the perfection of the interest in
the Receivables transferred under the Transaction Documents) thereof and
"Receivables" shall mean all such Receivables; provided, however, that the term
"Receivable" shall not include (i) as of the Cut-Off Date and any subsequent
date of Transfer to the Trust, accounts receivable which do not satisfy the
conditions of clauses (i), (vi), (vii) and (xiv) of the definition of Eligible
Receivable and (ii) any consideration paid or payable by (x) the Transferor or
(y) the Trustee on behalf of the Trust for the purchase of any Receivable,
including the Subordinated Loan or any Certificate or any payment on such
consideration.
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<PAGE> 116
"Receivables Purchase Agreement" shall mean the agreement
between Geneva Steel and the Transferor, dated as of the date hereof, governing
the terms and conditions upon which the Transferor shall acquire the
Receivables transferred to the Trustee for the benefit of the Trust on the
Closing Date and all Transferor Receivables to be transferred to the Trustee
for the benefit of the Trust from time to time thereafter, as the same may from
time to time be amended, supplemented, restated or otherwise modified.
"Record Date" shall mean, with respect to any Distribution
Date, the last day of the preceding calendar month.
"Reference Bank" shall mean for purposes of determining the
Yield Rate, Citibank, N.A., a national banking association, its successors and
assigns.
"Regulation D" shall mean Regulation D of the Board of
Governors (or any successor) of the Federal Reserve System, as the same may be
amended or supplemented from time to time.
"Regulatory Change" means, relative to any Person:
(a) any change in (or the adoption, implementation,
phase-in or commencement of effectiveness of) any
(i) United States Federal or state law or foreign
law applicable to such Person;
(ii) regulation, interpretation, directive,
requirement or request (whether or not having the force of law)
applicable to such Person of (A) any court, government authority
charged with the interpretation or administration of any law referred
to in clause (a)(i) or of (B) any fiscal, monetary or other authority
having jurisdiction over such Person; or
(iii) generally accepted accounting principles or
regulatory accounting principles applicable to such Person and
affecting the application to such person of any law, regulation,
interpretation, directive, requirement or request referred to in
clause (a)(i) or (a)(ii) above; or
(b) any change in the application to such Person of any
existing law, regulation, interpretation, directive, requirement, request or
accounting principles referred to in clause (a)(i), (a)(ii) or (a)(iii) above.
"Reportable Event" shall mean a Reportable Event as defined in
Section 4043(b) of ERISA.
23
<PAGE> 117
"Required Net Receivables Balance" shall mean as of any day of
determination, the sum of (i) the aggregate of the Loss and Dilution Reserves
for all outstanding Series, (ii) the aggregate of the Yield Reserves for all
outstanding Series and (iii) the Trust Invested Amount (computed as if reduced
by (A) the amount of Cure Funds held in the Reserve Account for each Series and
(B) the cumulative amount of funds held in the Concentration Account at such
time allocated to the portion of the Trust Partial Amortization Amount
allocable to each such Series).
"Requirements of Law" shall mean any law, treaty, rule or
regulation, or final binding determination of an arbitrator or Governmental
Authority, and, when used with respect to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person.
"Reserve Account" with respect to each Series shall have the
meaning specified in the related Supplement and "Reserve Accounts" shall refer
to all the Reserve Accounts established for outstanding Series in accordance
with the terms of the related Supplements.
"Responsible Officer" shall mean, (i) when used with respect
to the Trustee, any officer within the Corporate Trust Office of the Trustee
including any vice president, assistant vice president, assistant secretary,
treasurer, assistant treasurer, or any other officer of the Trustee who
customarily performs functions similar to those performed by the persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such officer's knowledge of and familiarity with
the particular subject and (ii) when used with respect to the Transferor or
Servicer, any of the President, Chief Executive Officer, Vice President,
Secretary, Treasurer, or Chief Financial Officer.
"Revolving Period" shall mean, with respect to any Series, the
period specified in the related Supplement.
"S&P" shall mean Standard & Poor's Corporation or Standard &
Poor's Ratings Group, as applicable, or the successor of either of them.
"Series" shall mean any series of Investor Certificates.
"Series Account" shall mean any deposit, trust, escrow,
reserve or similar account maintained for the benefit of the Investor
Certificateholders or any Series or Class, as specified in any Supplement.
24
<PAGE> 118
"Series Allocation Percentage" shall mean, with respect to any
Series, the percentage equivalent of a fraction, the numerator of which is the
sum of (a) Invested Amount for such Series (computed as if reduced by the
amount of Cure Funds held in the Reserve Account for such Series and by the
cumulative amount of funds held in the Concentration Account at such time
allocated to the portion of the Trust Partial Amortization Amount allocable to
such Series) plus (b) the Yield Reserve for such Series, plus (c) the Loss and
Dilution Reserve for such Series, and the denominator of which is the aggregate
of the amounts specified in clauses (a), (b) and (c) for all outstanding
Series.
"Series Cut-Off Date" shall mean, with respect to any Series,
the date specified as such in the related Supplement.
"Series Issuance Date" shall mean, with respect to any Series,
the date on which the Investor Certificates of such Series are to be originally
issued in accordance with Section 6.09 of the Pooling and Servicing Agreement
and the related Supplement.
"Series 1994-1 Supplement" shall mean the Series 1994-1
Supplement dated as of November 4, 1994 to the Pooling and Servicing Agreement,
among the Transferor the Servicer and the Trustee as modified, amended,
restated or supplemented from time to time.
"Series 1994-1 Certificateholder" shall mean the Purchaser,
subject to the provisions of Section 2.10 of the Certificate Purchase
Agreement.
"Series Servicing Fee" shall mean, with respect to any Series,
the amount specified in the applicable Supplement.
"Series Trustee's Fee" shall mean, with respect to any Series,
the amount specified in the applicable Supplement.
"Service Transfer" shall have the meaning specified in Section
10.01 of the Pooling and Servicing Agreement.
"Servicer" initially shall mean Geneva Steel in its capacity
as Servicer pursuant to the Pooling and Servicing Agreement, and after any
Service Transfer shall mean the Successor Servicer.
"Servicer Default" shall have the meaning specified in Section
10.01 of the Pooling and Servicing Agreement.
"Servicing Fee" shall have the meaning specified in Section
3.02(a) of the Pooling and Servicing Agreement.
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<PAGE> 119
"Servicing Officer" shall mean any officer, employee or other
agent of the Servicer who is involved in, or responsible for, the
administration and servicing of the Receivables and whose name appears on a
list of servicing officers furnished to the Trustee by the Servicer, as such
list may from time to time be amended.
"Specified Loss and Dilution Reserve Percentage" shall mean
the sum of (a) 15% plus (b) the product of (i) the average Dilution Ratio
during the preceding 12 months times (ii) a fraction the numerator of which is
the total sales for the past month and the denominator of which is the
aggregate outstanding balance of Transferor Receivables which are Eligible
Receivables as of the end of the most recently ended month.
"Subordinated Loan" shall mean the loan, if any, made pursuant
to Section 2.2(f) of the Receivables Purchase Agreement.
"Subordinated Note" shall mean the subordinated promissory
note, due November 4, 2014, by GSFC in favor of Geneva Steel.
"Subsidiary" shall mean as to any Person, a corporation,
partnership or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person.
"Successor Servicer" shall have the meaning specified in
Section 10.02(a) of the Pooling and Servicing Agreement.
"Supplement" shall mean, with respect to any Series, a
supplement to the Pooling and Servicing Agreement, executed and delivered in
connection with the original issuance of the Investor Certificates of such
Series pursuant to Article VI of the Pooling and Servicing Agreement, and all
amendments, modifications or supplements to the Pooling and Servicing
Agreement.
"Supplemental Certificate" shall have the meaning specified in
Section 6.09(c) of the Pooling and Servicing Agreement.
"Tax Opinion" shall mean, with respect to any action, an
Opinion of Counsel who is not an employee of the Servicer or any Affiliate of
the Servicer to the effect that, for federal and Utah (and any other State
where substantial servicing activities
26
<PAGE> 120
in respect of Receivables are conducted by the Transferor or the Servicer if
there is a substantial change from present servicing activities) state income
and franchise tax purposes, (a) such action will not adversely affect the
characterization of the Investor Certificates of any outstanding Series or
Class as debt, (b) such action will not cause a taxable event to any Investor
Certificateholder, (c) following such action the Trust should not be treated as
an association (or publicly traded partnership) taxable as a corporation, (d)
in the case of the original issuance of Certificates, the Investor Certificates
should properly be characterized as debt for tax purposes, or if not as debt,
as an interest in a partnership and not in an association taxable as a
corporation and (e) in the case of Section 6.09(b) of the Pooling and Servicing
Agreement, the Investor Certificates of the new Series will be characterized as
debt.
"Term" shall mean with respect to each Liquidity Provider
Commitment, the shorter of (a) the Initial Term and each Extension Term and (b)
the period ending on the date of expiration of the Aggregate Liquidity Provider
Commitment pursuant to Section 2.10 of the Certificate Purchase Agreement.
"Term Increase" shall have the meaning specified in Section
2.10 of the Certificate Purchase Agreement.
"Termination Date" shall mean, with respect to any Series, the
termination date specified in the related Supplement.
"Termination Event" shall have the meaning specified in
Article VI of the Receivables Purchase Agreement.
"Termination Notice" shall have the meaning specified in
Section 10.01 of the Pooling and Servicing Agreement.
"Transaction Documents" shall mean, collectively, the
Certificate Purchase Agreement, the Series 1994-1 Certificate, the Pooling and
Servicing Agreement, the Receivables Purchase Agreement, the Series 1994-1
Supplement, the Articles or Certificate of Incorporation and the By-Laws of the
Servicer and GSFC, respectively, and any other agreement or instrument related
or delivered pursuant to any of the foregoing documents.
"Transfer" shall have the meanings specified in Section 2.01
of the Pooling and Servicing Agreement, it being understood that the date of
Transfer of any Receivable or other Trust Asset shall be the date on which such
Receivable or other Trust Asset shall be created or otherwise arise and, in the
case of such Receivable, be acquired by the Transferor under the Receivables
Purchase Agreement.
27
<PAGE> 121
"Transfer Agent and Registrar" shall have the meaning
specified in Section 6.03(a) of the Pooling and Servicing Agreement.
"Transferor" shall mean GSFC, as transferor under the Pooling
and Servicing Agreement, including any successors and assigns.
"Transferor Certificate" shall mean the certificate executed
by the Transferor and authenticated by or on behalf of the Trustee, in
substantially the form of Exhibit A to the Pooling and Servicing Agreement
"Transferor Collections" shall mean, with respect to any date,
that portion of the Collections deposited to the Concentration Account equal to
the product of (i) the Transferor Percentage on such date multiplied by (ii)
the aggregate amount of such Collections.
"Transferor Interest" shall have the meaning specified in
Section 4.01(a) of the Pooling and Servicing Agreement.
"Transferor Percentage" shall mean at any time 100% minus the
aggregate of the Floating Allocation Percentages of all outstanding Series at
such time.
"Transferor Receivable" shall mean a Receivable acquired by
the Transferor pursuant to the Receivables Purchase Agreement other than those
reconveyed by the Transferor pursuant to Section 4.2 of the Receivables
Purchase Agreement except to the extent such Receivable is reacquired by the
Transferor.
"Transferor's Account" shall mean the special account (account
number ), under the dominion and control of the Transferor, for deposits
by the Servicer pursuant to the applicable Supplement, maintained at the office
of Bankers Trust Company in New York, New York, or such other account at such
other bank, under the dominion and control of the Transferor, as Transferor may
designate for such purpose from time to time.
"Trust" shall mean the Geneva Steel Trade Receivables Master
Trust created by the Pooling and Servicing Agreement.
"Trust Assets" shall have the meaning specified in Section
2.01 of the Pooling and Servicing Agreement.
"Trust Invested Amount" shall mean at any time the sum of the
Invested Amounts for all outstanding Series at such time.
"Trust Partial Amortization Amount" shall mean, with respect
to any date of determination during a Partial Amortiza-
28
<PAGE> 122
tion Period, the amount by which the Net Receivables Balance is less than the
Required Net Receivables Balance.
"Trustee" shall mean Bankers Trust Company, solely in its
capacity as trustee on behalf of the Trust, or its successor in interest, or
any successor trustee appointed as herein provided.
"Trustee's Account" with respect to each Series, shall have
the meaning specified in the related Supplement.
"Trustee's Fee" shall have the meaning specified in Section
11.05 of the Pooling and Servicing Agreement.
"Turnover Rate" shall mean for any date the average of the
percentage equivalent of a fraction for each of the three most recently ended
months the numerator of which is the Net Receivables Balance as of the last day
of each such month and the denominator of which is the aggregate balance of
Receivables transferred to the Trust during each such month; provided, however,
that with respect to any such months, or portion thereof, occurring prior to
the Closing Date, the denominator of such fraction shall be the aggregate
balance of Receivables originated by Geneva Steel during such month or portion
thereof.
"UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in any applicable or specified jurisdiction.
"Undivided Fractional Interest" with respect to each Series
shall have the meaning specified in the related Supplement.
"Weighted Average Term" shall mean, as of any date, a fraction
the numerator of which is the aggregate of the product for each Receivable sold
to the Trust during the preceding month of (i) the outstanding balance of such
Receivable (at the time such Receivable is transferred to the Trust) multiplied
by (ii) the payment term (in days) for each such Receivable, and the
denominator of which is the aggregate outstanding balance of such Receivable
(at the time such Receivable is transferred to the Trust).
"Yield" shall mean with respect to any Interest Period of an
Increase, the sum of (i) the product of (a) the Yield Rate divided by 360,
times (b) the amount of such Increase, times (c) the number of days in such
Interest Period and (ii) for each Increase the Yield Rate in respect of which
shall be determined by reference to the CP Rate, the Note Dealer Fees and any
Note Issuance Fees, if any, incurred with respect to the CRC Tranche related to
such Increase.
29
<PAGE> 123
"Yield Rate" shall mean with respect to any Interest Period of
an Increase, either (a) the per annum rate of interest borne by the Notes
issued in connection with a CRC Tranche the Yield Rate in respect of which
shall be determined by reference to the Pool Rate and the per annum rate of
interest borne by the CP Notes issued in connection with a CRC Tranche the
Yield Rate in respect of which shall be determined by reference to the CP Rate,
or, if such Notes or CP Notes are issued at a discount, the per annum rate of
interest equivalent of such discount or (b) the Bank Rate.
"Yield Reserve" shall mean as of any date two multiplied by
the product of (a) the Turnover Rate for such date and (b) the Discount Amount
with respect to such date.
30
<PAGE> 1
Exhibit 10.7
____________________________________________
GENEVA STEEL FUNDING CORPORATION,
as Transferor
GENEVA STEEL COMPANY,
as Servicer
and
BANKERS TRUST COMPANY,
not in its individual
capacity, but solely
as Trustee
SERIES 1994-1 SUPPLEMENT
Dated as of November 4, 1994
to
POOLING AND SERVICING AGREEMENT
Dated as of November 4, 1994
GENEVA STEEL TRADE RECEIVABLES MASTER TRUST
Floating Rate Trade Receivables Asset Backed Certificate,
Series 1994-1
____________________________________________
<PAGE> 2
<TABLE>
<CAPTION>
Page
TABLE OF CONTENTS ----
<S> <C>
ARTICLE I
CREATION OF THE SERIES 1994-1 CERTIFICATE . . . . . . . . . . . . . . . . . 1
SECTION 1.01. Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE III
SERVICING FEE . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.01. Servicing Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV
RIGHTS OF SERIES 1994-1 CERTIFICATEHOLDER
AND ALLOCATION AND APPLICATION OF COLLECTIONS . . . . . . . . . . . . . . . 7
SECTION 4.01. Establishment of Series Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4.02. Settlement Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE V
CONDITIONS TO INCREASE . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.01. Conditions to Increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI
DISTRIBUTIONS AND REPORTS TO
SERIES 1994-1 CERTIFICATEHOLDER . . . . . . . . . . . . . . . . . . . 17
SECTION 6.01. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 6.02. Annual Certificateholder's Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII
EARLY AMORTIZATION EVENTS . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.01. Additional Early Amortization Events . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VIII
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . 21
SECTION 8.01. Ratification of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 8.02. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 8.03. Governing Law; Jurisdiction; Consent. . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 8.04. The Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 8.05. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
EXHIBIT A Form of Series 1994-1 Investor Certificate
EXHIBIT B Form of Determination Date Certificate
EXHIBIT C Form of Daily Report
EXHIBIT D Form of Officer's Certificate specified in Section 4.02(f)
</TABLE>
ii
<PAGE> 4
SERIES 1994-1 SUPPLEMENT, dated as of November 4, 1994 (the
"Series Supplement"), among GENEVA STEEL FUNDING CORPORATION ("GSFC"), a Utah
corporation, as Transferor (the "Transferor"), GENEVA STEEL COMPANY ("Geneva
Steel"), a Utah corporation, as Servicer (the "Servicer"), and Bankers Trust
Company, a New York banking corporation, not in its individual capacity, but
solely as Trustee (the "Trustee").
Pursuant to Section 6.09 of the Pooling and Servicing
Agreement dated as of November 4, 1994 (as amended and supplemented, the
"Agreement"), among the Transferor, the Servicer and the Trustee, the
Transferor may from time to time direct the Trustee to issue, on behalf of the
Trust, one or more Series of Investor Certificates representing fractional
undivided interests in the Trust Assets. Certain Principal Terms of any new
Series are to be set forth in a Supplement to the Agreement.
Pursuant to this Series Supplement, the Transferor and the
Trustee shall create a Series of Investor Certificates and specify certain
Principal Terms thereof.
ARTICLE I
Creation of the Series 1994-1 Certificate
SECTION 1.01. Designation. (a) There is hereby created a
Series of Investor Certificates to be issued pursuant to the Agreement and this
Series Supplement to be known as the "Floating Rate Trade Receivables Asset
Backed Certificate, Series 1994-1".
(b) In the event that any term or provision contained
herein shall conflict with or be inconsistent with any term or provision
contained in the Agreement, the terms and provisions of this Series Supplement
shall govern.
(c) Unless otherwise indicated, terms defined herein
shall be deemed to apply only to Series 1994-1.
ARTICLE II
Definitions
SECTION 2.01. Definitions. (a) Whenever used in this
Series Supplement the following words and phrases shall have the following
meanings.
<PAGE> 5
"Amortization Date" shall mean the last day of the 57th full
calendar month following the month during which the Effective Date shall have
occurred.
"Certificate Rate" shall mean the Yield Rate.
"Daily Report" shall mean a daily report substantially in the
form of Exhibit C hereto.
"Determination Date Certificate" shall mean with respect to
each Collection Period, the certificate prepared by the Servicer, substantially
in the form of Exhibit B hereto.
"Discount Amount" shall mean with respect to any day in any
Collection Period, an amount equal to the sum of (a) the Yield for each
Increase outstanding on such day, plus (b) the aggregate of the components of
the Monthly Trust Expense Amount, plus (c) the aggregate of the components of
the Monthly CRC Expense Amount; provided, that for purposes of this definition,
the portion of the Monthly Trust Expense Amount constituting expenses of the
Trustee shall not exceed the product of the Series Allocation Percentage for
Series 1994-1 on the date of determination of the Discount Amount times $2,500.
Notwithstanding the preceding sentence, for the purpose of calculating the
Yield Reserve, the Discount Amount on such day shall be deemed to include (x)
expenses of the Trustee equal to the product of the Series Allocation
Percentage for Series 1994-1 times $2,500, (y) the Series Servicing Fee
calculated on the basis of a rate of 1.00% per annum and (z) an amount equal to
one month's interest on the Invested Amount on such date of determination
calculated at (A) a rate equal to the Adjusted Eurodollar Rate plus 1.00% per
annum during any period other than an Amortization Period or an Early
Amortization Period, or (B) a rate equal to the Alternate Base Rate plus 2.00%
per annum during an Amortization Period or Early Amortization Period.
"Early Amortization Event" shall mean any Early Amortization
Event specified in Section 9.01 of the Agreement, together with any Additional
Early Amortization Event specified in Section 7.01 of this Series Supplement.
"Early Amortization Period" shall mean an Early Amortization
Period with respect to Series 1994-1.
"Effective Date" shall mean the later of (i) November 4, 1994,
(ii) the date on which the conditions specified in Article IV of the
Certificate Purchase Agreement are satisfied or
2
<PAGE> 6
(iii) such other date as may be agreed to by the Transferor, the Trustee and
the Series 1994-1 Certificateholder.
"Eligible Institution" shall mean a depository institution
organized under the laws of the United States of America or any one of the
states thereof, including the District of Columbia (or any domestic branch of a
foreign bank), which at all times is a member of the FDIC, has a combined
capital and surplus of at least $100,000,000 and satisfies two (2) of the
following three (3) criteria: (i) has (A) a long-term unsecured debt rating of
at least A3 or better by Moody's or (B) a certificate of deposit rating or
short-term unsecured debt rating of P-1 by Moody's, (ii) has (A) a long-term
unsecured debt rating of at least A- or better by S&P or (B) a certificate of
deposit rating or short-term unsecured debt rating of A-1 by S&P and (iii) has
(A) a long-term unsecured debt rating of at least A- or better by Duff & Phelps
or (B) a certificate of deposit rating or short-term unsecured debt rating of
Duff-1 by Duff & Phelps.
"Expected Final Payment Date" shall mean the Distribution Date
occurring in December, 1999.
"Floating Allocation Percentage" shall mean the fraction that
determines the Series 1994-1 Certificateholder's Interest during the Revolving
Period, a Partial Amortization Period or a Cure Period, the numerator of which
is the sum of (a) the Invested Amount (computed as if reduced by (A) the amount
of Cure Funds held in the Reserve Account at such time and (B) the cumulative
amount of funds held at such time in the Concentration Account allocated to the
Series 1994-1 Partial Amortization Amount) plus (b) the Yield Reserve plus (c)
the Loss and Dilution Reserve, and as the denominator, the Net Receivables
Balance. The Floating Allocation Percentage is calculated on each Business Day
during the Revolving Period, and during a Partial Amortization Period, or Cure
Period, remains fixed at the percentage calculated at the close of business on
the last Business Day prior to such Partial Amortization Period or Cure Period
(subject to the provisions of Section 4.02(c)).
"Initial Invested Amount" shall mean the aggregate initial
invested amount of the Series 1994-1 Certificate, which shall equal
$24,700,000.
"Interest Period" shall mean with respect to each Increase,
(a) with respect to any Increase funded by a CRC Tranche (i) the Yield Rate in
respect of which shall be determined by reference to the Pool Rate, the period
beginning on each
3
<PAGE> 7
Distribution Date and ending on the day prior to the following Distribution
Date and (ii) the Yield Rate in respect of which shall be determined by
reference to the CP Rate, the period beginning on the day on which the CP Notes
relating to such CRC Tranche are issued and ending on the day on which such CP
Notes mature, which period shall be of 1 to 180 days or (b) with respect to any
Increase funded by the Liquidity Providers, the period beginning on the day on
which such Increase is funded or renewed and ending on the last day of the
Interest Period for such Increase or in the case of any Increase funded by
reference to the Adjusted Eurodollar Rate, one, three or six months thereafter
in accordance with the Adjusted Eurodollar Rate selected by the Transferor, in
each case as specified by the Transferor pursuant to Section 2.05(a) of the
Certificate Purchase Agreement.
"Invested Amount" shall mean (a) with respect to any date, the
Initial Invested Amount, plus (b) the aggregate amount of Increases funded
under the Series 1994-1 Certificate after the Effective Date, minus (c) the
aggregate amount of distributions to the Series 1994-1 Certificateholders in
reduction of the Invested Amount; provided, however, that (x) the Invested
Amount shall at no time exceed the Maximum Invested Amount; (y) the Invested
Amount shall not be reduced by any amount of Series 1994-1 Investor Collections
so received and distributed if at any time such distribution of such amount of
Series 1994-1 Investor Collections is rescinded or must otherwise be returned
for any reason; and (z) whenever the term Invested Amount appears in this
Series Supplement without reference to reduction by (i) Cure Funds in the
Reserve Account or (ii) the cumulative amount of funds held in the
Concentration Account at such time allocated to the Series 1994-1 Partial
Amortization Amount, the Invested Amount shall not be reduced by such Cure
Funds or such funds held in respect of the Series 1994-1 Partial Amortization
Amount.
"Loss and Dilution Reserve" shall mean as of any date an
amount equal to the product of (a) an amount which is (i) the Invested Amount
(computed as if reduced by the amount of Cure Funds held in the Reserve Account
at such time and the cumulative amount of funds held in the Concentration
Account at such time allocated to the Series 1994-1 Partial Amortization
Amount) plus the Yield Reserve, divided by (ii) one minus the Loss and Dilution
Reserve Percentage, multiplied by (b) the Loss and Dilution Reserve Percentage.
"Loss and Dilution Reserve Percentage" shall mean as of any
date of determination the greater of (a) the Specified Loss
4
<PAGE> 8
and Dilution Reserve Percentage and (b) the Dynamic Loss and Dilution Reserve
Percentage.
"Reference Bank" shall mean for purposes of determining the
Yield Rate, Citibank, N.A., a national banking association, its successors and
assigns.
"Reserve Account" shall have the meaning specified in Section
4.01(b).
"Revolving Period" shall mean the period beginning on the
Effective Date and terminating on the earlier of (a) the close of business on
the Business Day immediately preceding the Amortization Date and (b) the close
of business on the Business Day immediately preceding the day on which any
Early Amortization Event which has not been waived shall occur; provided,
however, that if an Early Amortization Event is waived, the Revolving Period
shall be reinstated as though no Early Amortization Event had occurred.
"Series Cut-Off Date" shall mean the close of business on
November 6, 1994.
"Series 1994-1" shall mean the Series of Investor Certificates
created pursuant to, and certain Principal Terms of which are specified in,
this Series Supplement.
"Series 1994-1 Accounts" shall have the meaning specified in
Section 4.01(d).
"Series 1994-1 Certificate" shall mean the certificate or,
collectively, group of certificates executed by the Transferor and
authenticated by the Trustee, substantially in the form of Exhibit A.
"Series 1994-1 Certificateholder" shall mean the Holder of the
Series 1994-1 Certificate.
"Series 1994-1 Certificateholder's Interest" shall mean that
portion of the Certificateholders' Interest evidenced by the Series 1994-1
Certificate.
"Series 1994-1 Investor Collections" shall mean, as of any
date, that portion of the Collections deposited to the Concentration Account on
such date equal to the product of the Floating Allocation Percentage on such
date and the aggregate amount of such Collections.
5
<PAGE> 9
"Series 1994-1 Partial Amortization Amount" shall mean on any
day the product of (a) the Series Allocation Percentage for Series 1994-1 times
(b) the Trust Partial Amortization Amount.
"Series 1994-1 Trustee's Account" shall have the meaning
specified in Section 4.01(a).
"Series Servicing Fee" shall have the meaning specified in
Section 3.01.
"Series Trustee's Fee" shall mean one-twelfth of the annual
fee set forth in that certain letter agreement dated October 3, 1994 between
Geneva Steel Company and Bankers Trust Company.
"Undivided Fractional Interest" shall mean the undivided
fractional interest in the aggregate Investor Interest evidenced by an Investor
Certificate, the numerator of the fraction in such undivided fractional
interest being the outstanding Invested Amount of such Investor Certificate at
the time of determination and the denominator of such fraction being the
aggregate outstanding Invested Amount for all Series at such time.
(b) Notwithstanding anything to the contrary in this
Series Supplement or the Agreement, the term "Rating Agency" shall mean,
whenever used in this Series Supplement or the Agreement with respect to Series
1994-1, S&P and Duff & Phelps. As used in this Series Supplement and in the
Agreement with respect to Series 1994-1, "highest investment category" shall
mean AAA.
(c) All capitalized terms used herein and not otherwise
defined herein have the meanings ascribed to them in Annex X attached hereto.
Each capitalized term defined herein shall relate only to the Series 1994-1
Certificates and no other Series of Certificates issued by the Trust. The
definitions in Section 2.01 are applicable to the singular as well as the
plural forms of such terms and to the masculine as well as to the feminine and
neuter genders of such terms.
(d) The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Series Supplement shall refer to this
Series Supplement as a whole and not to any particular provision of this Series
Supplement; references to any Article, Section or Exhibit are references to
Articles, Sections
6
<PAGE> 10
and Exhibits in or to this Series Supplement unless otherwise specified; and
the term "including" means "including without limitation".
ARTICLE III
Servicing Fee
SECTION 3.01. Servicing Compensation.
The portion of the Servicing Fee allocable to the Series
1994-1 Certificateholder with respect to any Distribution Date (the "Series
Servicing Fee") shall be equal to one-twelfth (1/12) of 0.25% of the Invested
Amount; provided, however, that in the case of any Servicer other than Geneva
Steel or any Affiliate thereof, the Series Servicing Fee may be a higher fee,
as shall be agreed to by the Trustee in its sole discretion, but in no event in
excess of a per annum fee equal to one-twelfth (1/12) of 1.00% of the Invested
Amount.
ARTICLE IV
Rights of Series 1994-1 Certificateholder and
Allocation and Application of Collections
SECTION 4.01. Establishment of Series Accounts.
(a) The Servicer, for the benefit of the Series 1994-1 Certificateholder,
shall establish and maintain in the name of the Trustee, on behalf of the
Trust, with an Eligible Institution a segregated trust account accessible only
by the Trustee (the "Series 1994-1 Trustee's Account"), which shall be
identified as the "Trustee's Account for the Geneva Steel Trade Receivables
Master Trust, Series 1994-1" and shall bear a designation clearly indicating
that the funds deposited therein are held for the benefit of the Series 1994-1
Certificateholder.
(b) (i) The Servicer, for the benefit of the Series 1994-1
Certificateholder, shall establish and maintain in the name of the Trustee, on
behalf of the Trust, with an Eligible Institution a segregated trust account
accessible only by the Trustee (the "Reserve Account"), which shall be
identified as the "Reserve Account for the Geneva Steel Trade Receivables
Master Trust, Series 1994-1" and shall bear a designation clearly indicating
that the funds deposited therein are held for the benefit of the Series 1994-1
Certificateholder.
7
<PAGE> 11
(ii) At the direction of the Servicer (which may be a
standing direction), funds on deposit in the Reserve Account shall be invested
by the Trustee in Eligible Investments selected by the Servicer. All such
Eligible Investments shall be held by the Trustee for the benefit of the Series
1994-1 Certificateholder. On each Distribution Date all interest and other
investment earnings (net of losses and investment expenses) on funds on deposit
in the Reserve Account shall be applied as set forth in Section 4.02 of this
Series Supplement. Funds on deposit in the Reserve Account shall be invested
at the written direction of the Servicer in Eligible Investments that will
mature so that such funds will be available on or before the close of business
on the Business Day next preceding the following Distribution Date (except for
Eligible Investments maintained with the Trustee, which may mature on the last
day of such Interest Period or such Distribution Date, as applicable). Funds
deposited in the Reserve Account on a Business Day which immediately precedes a
Distribution Date upon the maturity of any Eligible Investments may, to the
extent otherwise provided herein, but are not required to, be invested
overnight.
(c) (i) The Trustee shall possess all right, title and
interest in and to all funds on deposit from time to time in, and all Eligible
Investments credited to, the Series 1994-1 Trustee's Account and the Reserve
Account (collectively, the "Series 1994-1 Accounts") and in all proceeds
thereof. The Series 1994-1 Accounts shall be under the sole dominion and
control of the Trustee for the benefit of the Series 1994-1 Certificateholder.
If, at any time, any of the Series 1994-1 Accounts are held by an institution
other than an Eligible Institution, the Trustee (or the Servicer on its behalf)
shall within 10 Business Days establish a new corresponding Series 1994-1
Account meeting the conditions specified in paragraph (a), (b)(i) or (c)(i)
above, as applicable, and shall transfer any cash and/or any investments to
such new corresponding Series 1994-1 Account. Neither the Transferor, the
Servicer nor any person or entity claiming by, through or under the Transferor,
the Servicer or any such person or entity shall have any right, title or
interest in, or any right to withdraw any amount from, any Series 1994-1
Account, except as expressly provided herein. Schedule 1, which is hereby
incorporated into and made part of this Series Supplement, identifies each
Series 1994-1 Account by setting forth the account number of each such account,
the account designation of each such account and the name and location of the
institution with which such account has been established. If a substitute
Series 1994-1 Account is established pursuant to this Section, the Servicer
shall promptly provide to the Trustee an amended
8
<PAGE> 12
Schedule 1, setting forth the relevant information for such substitute Series
1994-1 Account.
(ii) Notwithstanding anything herein to the contrary, the
Servicer shall have the power, revocable by the Trustee, to instruct the
Trustee to make allocations, withdrawals and set aside payments from the Series
1994-1 Accounts for the purposes of carrying out the Servicer's or Trustee's
duties hereunder; provided, however, that in the event that the Trustee revokes
the power so granted to the Servicer hereunder, the Trustee shall make such
calculations as may be necessary to make allocations, withdrawals and set aside
payments from the Series 1994-1 Accounts for the purposes of carrying out the
Servicer's or Trustee's duties hereunder.
(iii) Notwithstanding anything herein to the contrary, the
Servicer shall have the power, revocable by the Transferor, to instruct the
Trustee to make allocations, withdrawals and set aside payments from the
Transferor's Account for the purposes of carrying out the Servicer's or the
Transferor's duties hereunder; provided, however, that in the event that the
Transferor revokes the power so granted to the Servicer hereunder, the
Transferor must make such calculations as may be necessary to make allocations,
withdrawals and set aside payments from the Transferor's Account for the
purposes of carrying out the Servicer's or the Transferor's duties hereunder.
(d) Unless otherwise agreed to in writing by the Rating
Agency, at no time may greater than 10% of the outstanding principal balance of
the Certificates be invested in Eligible Investments (other than (i)
obligations of the United States government or agencies the obligations of
which are guaranteed by the United States government ,(ii) demand deposit
accounts, (iii) repurchase agreements and (iv) commercial accounts) of any
single entity or its Affiliates.
(e) Any request by the Servicer to invest funds on deposit in
any Series 1994-1 Account shall be in writing, or by telephone, confirmed
promptly in writing, and shall certify that the requested investment is an
Eligible Investment which matures at or prior to the time required hereby.
(f) The Series 1994-1 Accounts shall initially be established
at Bankers Trust Company.
SECTION 4.02. Settlement Procedures. (a) Revolving Period.
On each Deposit Date during each Collection Period
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<PAGE> 13
during the Revolving Period, unless a Partial Amortization Period or a Cure
Period shall have commenced and be continuing, the Servicer shall instruct the
Trustee by a Daily Report delivered to the Trustee by 12:00 noon, New York City
time, to, and the Trustee shall, in accordance with such Daily Report at such
time and in the following order:
(i) allocate Collections received since receipt of the last
such Daily Report and held in the Concentration Account on such day,
based on the Floating Allocation Percentage on such day and the Daily
Report, either as Series 1994-1 Investor Collections, Collections
allocable to another Series or Transferor Collections;
(ii) out of such Series 1994-1 Investor Collections, allocate
to, and hold in trust in the Concentration Account for the Series
1994-1 Certificateholder, the Trustee and the Servicer, an amount
equal to the Discount Amount for such day to the extent such amount
has not been previously so allocated;
(iii) deposit the remainder of such Series 1994-1 Investor
Collections (including funds, if any, previously held as Discount
Amount in the Concentration Account and no longer required to be so
held) to the Transferor's Account to be invested in Receivables by the
Transferor or otherwise applied as specified in the Receivables
Purchase Agreement; and
(iv) deposit to the Transferor's Account, the Transferor
Collections and, to the appropriate account pursuant to the applicable
Series Supplement, all Collections allocable to another Series.
On the Business Day immediately prior to (A) a Distribution
Date, in the case of any Increase in respect of which the Yield Rate shall be
determined by reference to the Pool Rate, and the last day of the Interest
Period for each Increase, in the case of any Increase in respect of which the
Yield Rate shall be determined by reference to the CP Rate, the Servicer shall
direct the Trustee to, and the Trustee shall, deposit to the Series 1994-1
Trustee's Account for the account of the Series 1994-1 Certificateholder that
portion of the Discount Amount allocated and held in trust as described in
clause (ii) above equal to the Yield for such Increase, payable with respect to
the immediately preceding Interest Period, in the case of any Increase in
respect of which the Yield Rate shall be determined
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<PAGE> 14
by reference to the Pool Rate, and payable with respect to such Interest
Period, in the case of any Increase in respect of which the Yield Rate shall be
determined by reference to the CP Rate; (B) a Distribution Date, the Servicer
shall direct the Trustee to, and the Trustee shall, deposit to the Series
1994-1 Trustee's Account for the account of the Series 1994-1
Certificateholder, the Trustee and the Servicer, that portion of the Discount
Amount allocated and held in trust as described in clause (ii) above equal to
the sum of (1) the Monthly Trust Expense Amount and (2) the Monthly CRC Expense
Amount; and (C) a Business Day on which the Transferor elects to decrease an
Increase or portion thereof, the Servicer shall direct the Trustee to, and the
Trustee shall, deposit for the account of the Series 1994-1 Certificateholder
that portion of the Discount Amount allocated and held in trust as described in
clause (ii) above equal to the Yield plus any Breakage Costs for such Increase
or portion thereof to be decreased; provided, however, that the Servicer shall
direct the Trustee to, and the Trustee shall, deposit to the Series 1994-1
Trustee's Account that portion of the Discount Amount allocable to the
Trustee's expenses and Monthly CRC Expense Amounts; provided, that the Servicer
shall direct the Trustee to, and the Trustee shall, deposit such Trustee's
expenses only to the extent of expenses actually incurred by the Trustee (as
certified to the Servicer in writing by the Trustee) during the Collection
Period relating to such Distribution Date or remaining unpaid with respect to
any prior Collection Period.
(b) Partial Amortization Period or Cure Period. On each
Deposit Date during each Collection Period if and so long as a Partial
Amortization Period or Cure Period shall have commenced and be continuing, the
Servicer shall instruct the Trustee by a Daily Report delivered to the Trustee
by 12:00 noon, New York City time, to, and the Trustee shall, in accordance
with such Daily Report at that time and in the following order:
(i) allocate Collections received since receipt of the last
such Daily Report and held in the Concentration Account, based on the
Floating Allocation Percentage for such Partial Amortization Period or
Cure Period and the Daily Report, either as Series 1994-1 Investor
Collections, Collections allocable to another Series or as Transferor
Collections;
(ii) set aside and hold in trust in the Concentration Account
for the Series 1994-1 Certificateholder, the Trustee and the Servicer
an amount equal to the Discount Amount in the manner set forth in
clause (a)(ii) of this Section 4.02;
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(iii) (A) in the case of a Partial Amortization Period, set aside
and hold in trust in the Concentration Account for the Series 1994-1
Certificateholder such Series 1994-1 Investor Collections up to an
amount equal to the Series 1994-1 Partial Amortization Amount and (B)
in the case of a Cure Period, deposit such Series 1994-1 Investor
Collections to the Reserve Account in an amount up to the amount
sufficient (if added to the amounts on deposit in the Reserve Accounts
of all outstanding Series) to equal the insufficiency between the Net
Receivables Balance and the Required Net Receivables Balance;
(iv) deposit the remainder of such Series 1994-1 Investor
Collections (including funds, if any, previously held as the Discount
Amount in the Concentration Account and no longer required to be so
held) to the Transferor Account to be invested in Receivables by the
Transferor and otherwise set aside and held as specified in the
Receivable Purchase Agreement; and
(v) deposit to the Transferor's Account the Transferor
Collections and, to the appropriate account pursuant to the applicable
Series Supplement, all Collections allocable to another Series.
On the Business Day immediately following the day on which any
Partial Amortization Period ends, the Servicer shall direct the Trustee to, and
the Trustee shall, deposit to the Series 1994-1 Trustee's Account for the
account of the Series 1994-1 Certificateholder the amount set aside as
described in clause (iii) (A) of this Section 4.02(b), but not to exceed the
Invested Amount; provided, however, that if such following Business Day is a
Distribution Date, a day on which the Transferor elects to decrease an Increase
or a day on which an Increase matures, the Servicer shall also direct the
Trustee to, and the Trustee shall, deposit to the Series 1994-1 Trustee's
Account for the account of the Series 1994-1 Certificateholder, the Trustee and
the Servicer, from funds held in the Concentration Account as Discount Amount
pursuant to clause (ii) of this Section 4.02(b), the funds necessary to be
distributed on such date as Yield or other amounts due and payable from the
Discount Amount.
On the Business Day immediately prior to (A) a Distribution
Date, in the case of any Increase in respect of which the Yield Rate shall be
determined by reference to the Pool Rate, and the last day of the Interest
Period for each Increase,
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<PAGE> 16
in the case of any Increase in respect of which the Yield Rate shall be
determined by reference to the CP Rate, the Servicer shall direct the Trustee
to, and the Trustee shall, deposit to the Series 1994-1 Trustee's Account for
the account of the Series 1994-1 Certificateholder, that portion of the
Discount Amount allocated and held in trust as described in clause (ii) above
equal to the Yield for such Increase, payable with respect to the immediately
preceding Interest Period, in the case of any Increase in respect of which the
Yield Rate shall be determined by reference to the Pool Rate, and payable with
respect to such Interest Period for each Increase, in the case of any Increase
in respect of which the Yield Rate shall be determined by reference to the CP
Rate; (B) a Distribution Date, the Servicer shall direct the Trustee to, and
the Trustee shall, deposit to the Series 1994-1 Trustee's Account for the
account of the Series 1994-1 Certificateholder, the Trustee and the Servicer,
that portion of the Discount Amount allocated and held in trust as described in
clause (ii) above equal to the sum of (1) the Monthly Trust Expense Amount and
(2) the Monthly CRC Expense Amount; and (C) a Business Day on which the
Transferor elects to decrease an Increase or portion thereof, the Servicer
shall direct the Trustee to, and the Trustee shall, deposit for the account of
the Series 1994-1 Certificateholder that portion of the Discount Amount
allocated and held in trust as described in clause (ii) above equal to the
Yield plus any Breakage Costs for such Increase or portion thereof to be
decreased; provided, however, that the Servicer shall direct the Trustee to,
and the Trustee shall, deposit to the Series 1994-1 Trustee's Account that
portion of the Discount Amount allocable to the Trustee's expenses only to the
extent of expenses actually incurred by the Trustee (as certified to the
Servicer in writing by the Trustee) during the Collection Period relating to
such Distribution Date or remaining unpaid with respect to any prior Collection
Period.
All funds held in the Concentration Account during a Partial
Amortization Period as all or a portion of the Series 1994-1 Partial
Amortization Amount shall remain in the Concentration Account, without
reduction, until such funds are distributed to the Investor Certificateholder
as provided in Section 6.01(d) hereof.
(c) Early Amortization Period or Amortization Period. On
each Deposit Date during an Early Amortization Period or the Amortization
Period, the Servicer shall instruct the Trustee by a Daily Report delivered to
the Trustee by 12:00 noon, New York City time, to, and the Trustee shall, in
accordance with such Daily Report at that time and in the following order:
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<PAGE> 17
(i) allocate Collections received since receipt of the last
such Daily Report and held in the Concentration Account, based on the
Floating Allocation Percentage for such Early Amortization Period or
the Amortization Period, as the case may be, and the Daily Report,
either as Series 1994-1 Investor Collections, Collections allocable to
another Series or as Transferor Collections;
(ii) set aside and hold in trust in the Concentration Account
for the Series 1994-1 Certificateholder, the Trustee and the Servicer,
an amount equal to the Discount Amount in the manner set forth in
clause (a)(ii) of this Section 4.02 plus all of such Series 1994-1
Investor Collections; and
(iii) deposit to the Transferor's Account all Transferor
Collections and, to the appropriate account pursuant to the applicable
Series Supplement, all Collections allocable to another Series.
The Servicer shall direct the Trustee to, and the Trustee
shall, deposit to the Series 1994-1 Trustee's Account for the account of the
Series 1994-1 Certificateholder, the Trustee and the Servicer, as applicable
(a) all amounts set aside as described in clause (ii) of this Section 4.02(c),
(b) the amount of Cure Funds on deposit in the Reserve Account and (c) the
amount of funds held in the Concentration Account representing all or a portion
of the Series 1994-1 Partial Amortization Amount as follows: (i) on the
Business Day immediately prior to the Distribution Date, in the case of any
Increase in respect of which the Yield Rate shall be determined by reference to
the Pool Rate, and the last Business Day of the Interest Period for any
Increase, in the case of any Increase in respect of which the Yield Rate shall
be determined by reference to the CP Rate, in aggregate not to exceed the sum
of (A) the Yield for such maturing Increase, plus (B) the portion of the
Invested Amount represented by such Increase; and (ii) on the Business Day
immediately prior to each Distribution Date, in the aggregate not to exceed the
sum of (A) the Monthly CRC Expense Amount, (B) the Monthly Trust Expense Amount
and (C) the aggregate of all other amounts then due and owing to the Series
1994-1 Certificateholder hereunder.
(d) Interest Period. On the Business Day immediately prior
to any Distribution Date, for any Increase, the Yield Rate in respect of which
shall be determined by reference to the Pool Rate, and the last day of the
Interest Period, for any Increase, the Yield Rate in respect of which shall be
determined by
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reference to the CP Rate, the Transferor may (i) instruct the Servicer to
direct the Trustee (as set forth in the Daily Report) to, and the Trustee
shall, deposit to the Series 1994-1 Trustee's Account all or a portion of (A)
the Collections otherwise to be deposited into the Transferor's Account
pursuant to Sections 4.02(a)(iii) and (iv) and (B) the Discount Amount held in
the Concentration Account pursuant to Section 4.02(a)(ii), and (ii) deposit to
the Series 1994-1 Trustee's Account the Transferor's own funds, in each case
for distribution on the next Business Day to the Holders of Series 1994-1
Certificate to decrease the amount of the Increase, plus Yield accrued thereon,
pursuant to Section 6.01(d).
(e) Deposit of Transferor Amounts. On any Business Day
during the Revolving Period the Transferor may (i) instruct the Servicer to
direct the Trustee (as set forth in the Daily Report) to, and the Trustee
shall, deposit to the Series 1994-1 Trustee's Account all or a portion of (A)
the Collections otherwise to be deposited into the Transferor's Account
pursuant to Sections 4.02(a)(iii) and (iv) and (B) the Discount Amount held in
the Concentration Account pursuant to Section 4.02(a)(ii), and (ii) deposit to
the Series 1994-1 Trustee's Account the Transferor's own funds, in each case
for distribution on the third Business Day thereafter, in the case of any
Increase the Yield Rate in respect of which shall be determined by reference to
the Pool Rate, and the next Business Day in the case of any Increase the Yield
Rate in respect of which shall be determined by reference to the CP Rate,
pursuant to Section 6.01(c) to the Series 1994-1 Certificateholder to decrease
in whole or in part the balance of any outstanding Increase, including Yield
accrued thereon, and any Breakage Costs.
(f) Transferor Account Cure Funds. On any Business Day
during the Revolving Period, the Transferor may instruct the Servicer (which
may be a standing instruction) to direct the Trustee by an Officer's
Certificate delivered to the Trustee by noon New York City time, to, and the
Trustee shall, deposit to the Transferor's Account Cure Funds, if any, held in
the Reserve Account, provided, that the Transferor shall have delivered to the
Trustee at the time of such request an Officer's Certificate (in substantially
the form of Exhibit D hereto) stating that, after taking account of the
requested withdrawal from the Reserve Account, the Net Receivables Balance on
such day is equal to or greater than the Required Net Receivables Balance and
setting forth the calculations supporting such statement.
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(g) Termination of Amortization Period. On the Business
Day prior to any Distribution Date during an Early Amortization Period or the
Amortization Period, the Transferor may deposit to the Series 1994-1 Trustee's
Account funds in an amount sufficient, when added to the amounts deposited to
the Series 1994-1 Trustee's Account pursuant to Section 4.02(c), to reduce the
Invested Amount to zero on such Distribution Date. Upon the termination of the
Amortization Period, the Servicer shall instruct the Trustee to, and the
Trustee shall, withdraw from the Reserve Account all remaining Cure Funds on
deposit therein and deposit such funds to the Series 1994-1 Trustee's Account
for use by the Paying Agent in making the distribution required under Section
6.01(e).
ARTICLE V
Conditions to Increase
SECTION 5.01. Conditions to Increases. During the Revolving
Period, the Transferor may from time to time separately or simultaneously (a)
request increases in the Invested Amount and (b) extend the Interest Period of
an Increase pursuant to the terms of the Certificate Purchase Agreement. The
funding, or extension, of each such Increase will be subject to the following
conditions:
(i) no Early Amortization Event and no event that (a) if
notice of such event were given or (b) after a specified amount of
time had elapsed would become an Early Amortization Event shall have
occurred and be continuing;
(ii) each such Increase funded by the Certificate Agent on
behalf of the Series 1994-1 Certificateholders shall constitute a
representation and warranty by the Transferor that no Early
Amortization Event shall have occurred and be continuing on the date
of such Increase;
(iii) such Increase is permitted under the terms of Sections
4.01 and 4.02 of the Certificate Purchase Agreement;
(iv) any and all representations and warranties made by the
Transferor and by the Servicer herein shall be true and correct in all
material respects, as if repeated on such date with respect to the
facts and circumstances then
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existing except as the same are limited by the terms thereof to a
specific date;
(v) after making such Increase, the Invested Amount shall not
exceed the Maximum Invested Amount;
(vi) the Certificate Agent shall have received the Daily Report
by 12:00 noon (New York City time) on the day of such Increase;
(vii) the Revolving Period shall not have ended;
(viii) the Transferor shall have delivered to the Trustee the
Officer's Certificate in substantially the form of Exhibit A to the
Certificate Purchase Agreement; and
(ix) the last day of the related Interest Period shall occur on
or before the Expected Final Payment Date.
ARTICLE VI
Distributions and Reports to
Series 1994-1 Certificateholder
SECTION 6.01. Distributions. (a) On the Distribution Date
with respect to each Collection Period, the Paying Agent shall distribute the
amount of funds on deposit in the Series 1994-1 Trustee's Account on such
Distribution Date, in the following order of priority, in accordance with the
Servicer's Determination Date Certificate:
(i) to the Trustee, the accrued and unpaid Series
Trustee's Fee and expenses of the Trustee, not in excess of the
product of (A) $2,500 and (B) the Series Allocation Percentage for
Series 1994-1;
(ii) to the Servicer (if the Servicer is other than
Geneva Steel), the accrued and unpaid Series Servicing Fee;
(iii) to the Certificate Agent, Breakage Costs;
(iv) if such Distribution Date occurs during an Early
Amortization Period or the Amortization Period, to the Trustee,
Trustee's accrued and unpaid expenses in excess of
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the product of (A) $2,500 and (B) the Series Allocation Percentage for
Series 1994-1;
(v) to a Successor Servicer, Service Transfer
expenses incurred by such Successor Servicer which have not been paid
by the initial Servicer; and
(vi) to the Servicer (if the Servicer is Geneva Steel),
the accrued and unpaid Series Servicing Fee.
(b) On the Distribution Date following each Interest Period
for any Increase, the Yield Rate in respect of which shall be determined by
reference to the Pool Rate, and on the last Business Day of any Interest
Period for any Increase, the Yield Rate in respect of which shall be determined
by reference to the CP Rate, the Paying Agent shall distribute the amount of
funds on deposit in the Series 1994-1 Trustee's Account on such Business Day
pursuant to Section 4.02(d), in the following order of priority, in accordance
with the Daily Report:
(i) to the Investor Certificateholder, as payment of accrued
and unpaid Yield on such Increase; and
(ii) unless (A) a Partial Amortization Period shall have
occurred and be continuing or (B) the Transferor has selected an
Additional Interest Period for such Increase (pursuant to Section
2.05(d) of the Certificate Purchase Agreement), to the Investor
Certificateholder, in reduction of the amount of such Increase.
(c) During the Revolving Period, on any Business Day
other than the Distribution Date following the last day of any Interest Period
for any Increase, the Yield Rate in respect of which shall be determined by
reference to the Pool Rate, and on any Business Day other than the last day of
any Interest Period for any Increase, the Yield Rate in respect of which shall
be determined by reference to the CP Rate, if and so long as a Partial
Amortization Period shall not have occurred and be continuing, the Paying Agent
shall distribute the funds deposited in the Series 1994-1 Trustee's Account on
the preceding Business Day pursuant to Section 4.02(e), in the following order
of priority, in accordance with the Daily Report:
(i) to the Investor Certificateholder, payment of accrued
and unpaid Yield on such Increase and any Breakage Costs then due and
payable with respect to such Increase; and
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(ii) to the Investor Certificateholder, in reduction of
the amount of such Increase.
(d) During the Partial Amortization Period, Early
Amortization Period or Amortization Period, on any Business Day other than the
Distribution Date for any Increase, the Yield Rate in respect of which shall be
determined by reference to the Pool Rate, or the last Business Day of any
Interest Period for any Increase, the Yield Rate in respect of which shall be
determined by reference to the CP Rate, the Paying Agent shall distribute the
funds deposited in the Series 1994-1 Trustee's Account on the preceding
Business Day pursuant to Section 4.02(c), in the following order of priority,
in accordance with the Daily Report:
(i) to the Investor Certificateholder, payment of accrued
and unpaid Yield on such Increase and any Breakage Costs then due and
payable with respect to such Increase, the Yield Rate in respect of
which shall be determined by reference to the Pool Rate; and
(ii) to the Investor Certificateholder, in reduction of
the amount of such Increase.
(e) During the Revolving Period, on the Business Day
immediately following the day on which a Partial Amortization Period ends, the
Paying Agent shall distribute the amount of funds representing the Series
1994-1 Partial Amortization Amount that have been deposited during the Partial
Amortization Period to the Series 1994-1 Trustee's Account pursuant to Section
4.02(b)(iii)(A) to the Series 1994-1 Certificateholder.
(f) Upon the payment in full to the Series 1994-1
Certificateholder of the Invested Amount on the last day of an Early
Amortization Period or the Amortization Period, all accrued and unpaid Yield on
the Series 1994-1 Certificate and all other amounts then due and owing it
hereunder, the payment in full of all Monthly Trust Expense Amounts and the
payment in full of all Monthly CRC Expense Amounts then due and owing, all
amounts remaining on deposit in the Series 1994-1 Trustee's Account shall be
distributed by the Paying Agent to the Holder of the Transferor Certificate,
and all amounts, if any, remaining in the Geneva Steel Collection Accounts, the
Concentration Account and the Reserve Account shall be distributed by the
Paying Agent to the Holder of the Transferor Certificate; provided, however,
that if at any time after the payment that would have otherwise resulted in
such payment in full, such payment is rescinded or must otherwise be returned
for any reason, effective upon such
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<PAGE> 23
rescission or return such payment in full shall automatically be deemed, as
between the Investor Certificateholder and the Transferor, never to have
occurred, and the Transferor shall be required, to the extent it received any
amounts under this Section 6.01(e), to remit to the Investor Certificateholder
an amount equal to the rescinded or returned payment.
(g) Except as provided in Section 12.02 of the Agreement
with respect to a final distribution, distributions to the Series 1994-1
Certificateholder hereunder shall be made by wire transfer to such account as
may be designated in writing, received by the Paying Agent on or prior to the
relevant Record Date, by the Series 1994-1 Certificateholder without
presentation or surrender of the Series 1994-1 Certificate or the making of any
notation thereon. In the absence of such timely wire transfer instructions,
payment will be made on the relevant Distribution Date by check to the address
of record as of the relevant Record Date of the Series 1994-1
Certificateholder.
SECTION 6.02. Annual Certificateholder's Statement. On or
before January 31 of each calendar year, beginning with January 31, 1995, the
Servicer shall provide to the Paying Agent and the Paying Agent shall forward
or cause to be forwarded to any Person who at any time during the preceding
calendar year was a Certificateholder, a statement prepared by the Servicer
containing any information which is required to be contained in the
Determination Date Certificates provided to the Series 1994-1 Certificateholder
pursuant to Section 3.05(b) of the Agreement, aggregated for such calendar year
or the applicable portion thereof during which such Person was a
Certificateholder, together with other information as is required to be
provided under the Internal Revenue Code and such other customary information
as in each case is in the possession of the Transferor or the Servicer as is
necessary to enable the Series 1994-1 Certificateholder to prepare the portion
of its tax returns relating to the distributions hereunder. Such obligation of
the Servicer shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Paying Agent
pursuant to any requirements of the Internal Revenue Code as from time to time
in effect.
ARTICLE VII
Early Amortization Events
SECTION 7.01. Additional Early Amortization Events. The
following Early Amortization Event is applicable to the Series
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<PAGE> 24
1994-1 Certificate in addition to those specified in Section 9.01 of the
Pooling and Servicing Agreement:
The Transferor shall at any time fail to maintain a tangible
net worth of at least 9.0% of the Outstanding Balance of Transferor Receivables
and such failure shall remain unremedied for a period of 30 days.
ARTICLE VIII
Miscellaneous Provisions
SECTION 8.01. Ratification of Agreement. As supplemented by
this Series Supplement, the Agreement is in all respects ratified and confirmed
and the Agreement as so supplemented by this Series Supplement shall be read,
taken and construed as one and the same instrument.
SECTION 8.02. Counterparts. This Series Supplement may be
executed in two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which together
shall constitute one and the same instrument.
SECTION 8.03. Governing Law; Jurisdiction; Consent. (a)
Governing Law. This Series Supplement shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
(b) Jurisdiction. Each of the parties hereto hereby
irrevocably and unconditionally submits to the nonexclusive jurisdiction of any
federal court of the United States of America sitting in New York City or if
jurisdiction is not available in such federal court, New York State court, and
any appellate court from any thereof, in any action or proceeding arising out
of or relating to this Series Supplement, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State or, to
the extent permitted by law, in such federal court.
(c) Consent to Service of Process. Each party to this
Series Supplement irrevocably consents to service of process in the manner
provided for notices in Section 13.05 of the
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<PAGE> 25
Agreement. Nothing in this Series Supplement will affect the right of any
party to this Series Supplement to serve process in any other manner permitted
by law.
SECTION 8.04. The Trustee. The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Series Supplement, or for or in respect of the recitals
contained herein, all of which recitals are made solely by the Transferor.
SECTION 8.05. Limitation of Liability. It is expressly
understood and agreed by the parties hereto that (a) this Agreement is executed
and delivered by Bankers Trust Company, not individually or personally, but
solely as Trustee of the Trust, in the exercise of the powers and authority
conferred and vested in it, (b) except with respect to Section 11.15 of the
Pooling and Servicing Agreement, the representations, undertakings and
agreements herein made on the part of the Trust are made and intended not as
personal representations, undertakings and agreements by Bankers Trust Company,
but are made and intended for the purpose of binding only the Trust, and (c)
under no circumstances shall Bankers Trust Company be personally liable for the
payment of any indebtedness or expenses of the Trust or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Trust under this Agreement except to the extent such
breach or failure resulted from the gross negligence, bad faith or wilful
misconduct of the Trustee and provided, however, Bankers Trust Company shall be
liable in its individual capacity for any tax assessed against Bankers Trust
Company based on or measured by any fees, commissions, compensation or other
amounts received by it for or as a result of its acting as Trustee.
IN WITNESS WHEREOF, the Transferor, the Servicer and the
Trustee have caused this Series Supplement to be duly executed by their
respective officers as of the day and year first above written.
GENEVA STEEL FUNDING CORPORATION,
Transferor
By: Richard D. Clayton
------------------------------
Name: Richard D. Clayton
Title: President
GENEVA STEEL COMPANY, Servicer
By: Dennis L. Wanlass
------------------------------
Name: Dennis L. Wanlass
Title: Vice President
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BANKERS TRUST COMPANY, not in its
individual capacity, but
solely as Trustee
By: Sandra Whalen
------------------------------
Name: Sandra Whalen
Title: Asst. Vice President
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EXHIBIT A
FORM OF SERIES 1994-1 INVESTOR CERTIFICATE
REGISTERED
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
ACT.
100 Percentage Interest
SERIES 1994-1
FLOATING RATE TRADE RECEIVABLES ASSET BACKED CERTIFICATE
This certificate represents an
undivided interest in certain assets of the
GENEVA STEEL TRADE RECEIVABLES MASTER TRUST
the corpus of which consists primarily of certain receivables generated from
time to time by Geneva Steel Company ("Geneva Steel") and purchased by Geneva
Steel Funding Corporation, a Utah corporation (the "Transferor"), from Geneva
Steel, which in turn transfers and assigns such receivables to Bankers Trust
Company (the "Trustee") on behalf of the Geneva Steel Trade Receivables Master
Trust. This floating rate trade receivables asset backed certificate (the
"Investor Certificate") does not represent any obligation of any kind
whatsoever of, and is not guaranteed by, the Transferor, Geneva Steel or any
Affiliate thereof.
This certifies that _________________________, (the "Investor
Certificateholder") is the registered owner of a fractional undivided interest
in the assets of the Geneva Steel Trade Receivables Master Trust (the "Trust"),
created pursuant to the Series 1994-1 Supplement dated as of November 4, 1994
(the "Series 1994-1 Supplement") to the Pooling and Servicing Agreement, dated
as of November 4, 1994 (as further modified, amended, restated or supplemented
from time to time, the "Agreement"), by and among the Transferor, Geneva Steel,
as Servicer (the "Servicer"), and Bankers Trust Company, not in its individual
capacity, but solely as trustee (the "Trustee"). Unless the certificate of
authentication hereon has been executed by an authorized signatory of the
Trustee by manual signature, this Investor Certificate shall not be entitled to
any benefit under the Agreement or be valid for any purpose.
Reference is hereby made to the further provisions of this
Investor Certificate set forth below, which further provisions shall for all
purposes have the same effect as if set forth at this place.
A-1
<PAGE> 28
This Investor Certificate represents the entire aggregate
invested amount of the Investor Certificate issued on November 4, 1994.
The holder of this Investor Certificate, represents,
acknowledges and agrees that: (1) this Investor Certificate is a "restricted"
security which has not been and will not be registered under the Act; and (2)
if it should decide to dispose of this Investor Certificate or any part thereof
or interest therein, it will not offer, sell, transfer, pledge, hypothecate or
otherwise dispose of this Investor Certificate except, (A) pursuant to Rule
144A under the Act, (B) to a sophisticated institutional investor that is an
"accredited investor" (within the meaning of Rule 501(a) (1), (2), (3) or (7)
under the Act) in a transaction not involving any general solicitation or
advertising as evidenced by a certificate of the proposed officer, purchaser,
transferor, or pledgee thereof delivered to the Trustee or (C) pursuant to any
other exemption from the registration requirements of the Act in each case in
accordance with any applicable state laws governing the offer or sale of
securities; provided, however, that in the case of clauses (B) and (C), the
Trustee shall receive from the proposed transferee, prior to the Trustee being
required to effect the transfer of this Certificate, a written opinion of
counsel stating that such transfer is exempt from the registration requirements
of the Act.
The corpus of the Trust consists of (i) a portfolio of certain
receivables (the "Receivables") identified under the Agreement from time to
time, (ii) funds collected or to be collected from Obligors in respect of the
Receivables, (iii) all funds which are from time to time on deposit in the
Concentration Account and any other account or accounts held for the benefit of
the Investor Certificateholder, and (iv) other assets and interests
constituting the Trust Assets. Although a summary of certain provisions of the
Agreement is set forth below, this Investor Certificate does not purport to
summarize the Agreement and the Series 1994-1 Supplement and is qualified in
its entirety by the terms and provisions of the Agreement and the Series 1994-1
Supplement. Reference is made to the Agreement and the Series 1994-1
Supplement for information with respect to the interests, rights, benefits,
obligations, proceeds and duties evidenced hereby and the rights, duties and
obligations of the Trustee, the Servicer and the other parties bound by the
Agreement and the Series 1994-1 Supplement. A copy of the Agreement and the
Series 1994-1 Supplement may be requested by writing to the Trustee at Four
Albany Street, 10th Floor, New York, New York, 10006, Attention: Corporate
Trust and Agency Group / Structured Finance Team (facsimile: (212) 250-6439) at
the expense of the Transferor. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed to them in the
Agreement and the Series 1994-1 Supplement.
A-2
<PAGE> 29
This Investor Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement and the Series 1994-1
Supplement, to which Agreement and the Series 1994-1 Supplement, as further
supplemented and amended from time to time in accordance with the terms
thereof, the Investor Certificateholder by virtue of the acceptance hereof
assents and is bound.
The Trust Assets are allocated in part to the Investor
Certificateholder and the certificateholders of other Series, if any, with the
remainder allocated to the holder of the Transferor Certificate. The Investor
Certificate represents an undivided fractional beneficial interest in such
Trust Assets so allocated and the right to receive, to the extent necessary to
make the required payments with respect to the Investor Certificate, at the
times and in the amounts specified in the Agreement, of Series 1994-1 Investor
Collections from time to time. The Transferor Certificate represents the
interest in the Trust Assets not represented by the Certificateholders of all
Series.
The Initial Invested Amount of the Investor Certificate on
November 7, 1994 is $24,700,000. The Invested Amount of this Investor
Certificate with respect to any date will be an amount equal to (a) the Initial
Invested Amount, plus (b) the aggregate amount of any Increases funded on or
prior to such date, minus (c) the amount of any distributions to the Investor
Certificateholder in reduction of the Invested Amount on or prior to such date
pursuant to the terms of the Agreement. The Initial Invested Amount and the
amount of any Increases and distributions of Increases to the Investor
Certificateholder shall be recorded on the Certificate Register.
Yield with respect to the Investor Certificate shall be
distributed to the Investor Certificateholder on each date on which an Increase
is decreased and as otherwise provided in the Agreement and the Series 1994-1
Supplement. Payment of any Yield on this Investor Certificate will be made or
caused to be made by the Trustee to the person in whose name such Investor
Certificate is registered at the close of business on the Record Date. Payment
of such Yield will be made by wire transfer to a designated account maintained
by the Holder, provided that such Holder has provided the Paying Agent with the
wire transfer designation, in writing, received by the Paying Agent on or prior
to the relevant Record Date. In the absence of such timely wire transfer
instructions, payment will be made by check to the address of record of the
Holder.
The Revolving Period under the Agreement shall terminate on
the earliest to occur of the close of business on (a) the Amortization Date and
(b) the Business Day immediately preceding the day on which any Early
Amortization Event which has not been waived shall occur.
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<PAGE> 30
The Transferor may elect to pay all or a portion of the
Invested Amount on any Business Day pursuant to Section 4.02(e) of the Series
1994-1 Supplement to the Agreement.
Payments in reduction of Invested Amounts of this Investor
Certificate will be made by transfer to an account maintained by the Holder.
The final distribution on the Investor Certificate will be made after due
notice by the Trustee of the pendency of such distribution and, if such
Investor Certificateholder is not an insurance company or an institutional
investor, only upon presentation and surrender of this Investor Certificate at
the Corporate Trust Office of the Trustee. Upon payment of all accrued and
unpaid Yield on the Invested Amount and all other amounts due and owing under
the Agreement and the Series 1994-1 Supplement, the payment in full of all
Monthly Trust Expense Amounts and Monthly CRC Expense Amounts, the Holder shall
have no further interest in the assets of the Trust.
The Agreement and the Series 1994-1 Supplement may be amended
by the Transferor, the Servicer and the Trustee, without the consent of any
Investor Certificateholder, (i) to cure any ambiguity, (ii) to correct or
supplement any provision therein which may be inconsistent with any other
provision therein, or (iii) to add any other provisions with respect to matters
or questions arising under the Agreement and the Series 1994-1 Supplement which
are not inconsistent with the provisions of the Agreement and the Series 1994-1
Supplement; provided, that any amendment pursuant to clause (iii) above shall
not, as evidenced by an Opinion of Counsel, cause any adverse tax effect or
otherwise adversely affect in any material respect, the enforceability of the
Supplement by such Investor Certificateholders.
The Agreement also may be amended by the Servicer, the Transferor and
the Trustee, with the consent of the Investor Certificateholders owning a
Majority in Interest of the Investor Certificates of each adversely affected
Series, for the purpose of adding any provisions to, changing in any manner or
eliminating any of the provisions of, the Agreement, or modifying in any manner
the rights of the Investor Certificateholders of such Series; provided,
however, that no such amendment shall (a) reduce in any manner the amount of,
or delay the timing of, distributions which are required to be made to any
Certificateholder without the consent of such Certificateholder, (b) change the
definition of or the manner of calculating the Certificateholders' Interest or
the Aggregate Certificateholders' Interest or any Investor Certificateholder's
interest therein without the consent of each affected Investor
Certificateholder, (c) reduce the aforesaid percentage required to consent to
any such amendment without the consent of each Investor Certificateholder or
(d) cause any adverse tax effect for any Investor Certificateholder without the
consent of each affected
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<PAGE> 31
Investor Certificateholder. Any such amendment and any such consent by the
holder of this Investor Certificate shall be conclusive and binding on such
Investor Certificateholder and upon all future holders of this Investor
Certificate and of any Investor Certificate issued in exchange hereof or in
lieu hereof whether or not notation thereof is made upon this Investor
Certificate.
The Investor Certificate is only issuable in registered form
without coupons in denominations of $500,000 and integral multiples of $1,000
in excess thereof. The Investor Certificate is transferable, pursuant to the
terms of Section 6.01 of the Certificate Purchase Agreement, upon surrender of
the Investor Certificate, and any other required documents, to the corporate
trust office of the Trustee at Four Albany Street, 10th Floor, New York, New
York, 10006, Attention: Corporate Trust and Agency Group / Structured Finance
Team (facsimile: (212) 250-6439), where a newly executed and authenticated
Investor Certificate in the name of the designated transferee will be
delivered.
As provided in the Agreement and the Series 1994-1 Supplement
and subject to certain limitations therein set forth, this Investor Certificate
is exchangeable for a new Investor Certificate evidencing a like fractional
undivided interest in the Trust Assets, as requested by the Investor
Certificateholder surrendering this Investor Certificate. No service charge
will be imposed for any such transfer or exchange, but the Transfer Agent and
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
This Investor Certificate shall be construed in accordance
with and governed by the laws of the State of New York without reference to its
conflict of law provisions.
IN WITNESS WHEREOF, the Transferor has caused this Investor
Certificate to be duly executed.
GENEVA STEEL FUNDING CORPORATION
By:
-----------------------------
Name:
Title:
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<PAGE> 32
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the Investor Certificate described in the
within-mentioned Agreement and Series 1994-1 Supplement.
Dated:
------------------------
BANKERS TRUST COMPANY,
not in its individual capacity
but solely as Trustee
By: OR
--------------------------- ---------------------------
Authorized Signatory as Authenticating Agent
for the Trustee
By:
-----------------------
Authorized Officer
A-6
<PAGE> 33
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned Holder hereby sell(s),
assign(s) and transfer(s) unto ___________________ whose taxpayer
identification number is _________________________ and whose address including
postal zip code is _______________ the within Certificate and all rights
thereunder, hereby irrevocably constituting and appointing ______________
attorney-in-fact to transfer said Certificate on the books of the Trustee with
full power of substitution in the premises.
In connection with the transfer of this Certificate, the
undersigned holder certifies that:
[CHECK ONE]
/ / (A) This Certificate is being transferred to a "qualified
institutional buyer" as defined in Rule 144A under
the Act, in compliance with the exemption from
registration under the Act provided by Rule 144A.
/ / (B) This Certificate is being transferred to a
sophisticated institutional investor which is an
"accredited investor" (within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Act) in a
transaction not involving any general solicitation or
advertising.
/ / (C) This Certificate is being transferred in compliance
with another exemption from registration under the
Act.
Dated: Name:
---------------------- ---------------------------------
By:
---------------------------------
Title:
---------------------------------
NOTICE: The signature of the holder of
this assignment must correspond with the
name as written upon the face of the
within instrument in every particular,
without any change whatsoever.
* If Box B or C is checked, the Trustee shall receive from the proposed
transferee, prior to the Trustee being required to effect the transfer of
this Certificate, a written opinion of counsel stating that such transfer is
exempt from the registration requirements of the Act.
<PAGE> 34
SIGNATURE GUARANTEED
___________________________________________
IF NONE OF THE FOREGOING BOXES IS CHECKED, THE TRUSTEE SHALL NOT BE OBLIGATED
TO REGISTER THIS CERTIFICATE IN THE NAME OF ANY PERSON OTHER THAN THE HOLDER
HEREOF UNLESS AND UNTIL THE CONDITIONS TO ANY SUCH TRANSFER OF REGISTRATION SET
FORTH HEREIN, ON THE FACE HEREOF AND IN THE AGREEMENT AND THE SERIES 1994-1
SUPPLEMENT, SHALL HAVE BEEN SATISFIED.
<PAGE> 35
EXHIBIT B
FORM OF DETERMINATION DATE CERTIFICATE
[Intentionally omitted. The Registrant shall furnish supplementally a copy of
this exhibit to the Commission upon request.]
<PAGE> 36
EXHIBIT C
FORM OF DAILY REPORT
[Intentionally omitted. The Registrant shall furnish supplementally a copy of
this exhibit to the Commission upon request.]
<PAGE> 37
EXHIBIT D
FORM OF OFFICER'S CERTIFICATE SPECIFIED IN SECTION 4.02(f)
(As required to be delivered pursuant to Section 4.02(f) of the Series 1994-1
Supplement)
Geneva Steel Funding Corporation
GENEVA STEEL TRADE RECEIVABLES MASTER TRUST
The undersigned, _____________________, the ________________
of Geneva Steel Funding Corporation, a Utah corporation (the "Transferor"),
pursuant to Section 4.02(f) of the Series 1994-1 Supplement, dated as of
November 4, 1994 (as modified, amended, supplemented or restated from time to
time, the "Series 1994-1 Supplement") to the Pooling and Servicing Agreement,
dated as of November 4, 1994, by and among the Transferor, Geneva Steel
Company, as servicer (the "Servicer"), and Bankers Trust Company, as trustee
(the "Trustee") (as modified, amended, supplemented or restated, the "Pooling
and Servicing Agreement"), hereby on behalf of the Transferor:
(i) instructs the Servicer to direct the Trustee to
deposit to the Transferor's Account Cure Funds held
in the Reserve Account; and
(ii) certifies that after taking account of the requested
withdrawal from the Reserve Account, the Net
Receivables Balance is equal to or greater than the
Required Net Receivables Balance as calculated below:
Capitalized terms used herein but not defined herein are used
as defined in the Series 1994-1 Supplement and the Pooling and Servicing
Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate on behalf of the Transferor this _________ day of _________, ____.
----------------------------
Name:
Title:
<PAGE> 38
ANNEX X
DEFINITIONS
Whenever used in the Transaction Documents, the following
words and phrases shall have the following meanings, and the definitions of
such terms are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of
such terms.
"Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Additional Early Amortization Event" shall have the meaning
specified in Section 7.01 of each Supplement.
"Additional Interest Period" shall have the meaning specified
in Section 2.05(d) of the Certificate Purchase Agreement.
"Adjusted Eurodollar Rate" shall mean, for each Interest
Period, for any Increase, an interest rate per annum equal to the sum of (a)
the rate of interest per annum (the "Eurodollar Rate") at which deposits in
U.S. Dollars are offered by the principal office in London, England of the
Reference Bank to prime banks in the interbank eurodollar market at 11:00 a.m.
(London time) two Eurodollar Business Days (as defined below) before the first
day of such Interest Period in an amount approximately equal or comparable to
the principal amount of such Increase and for a period equal to such Interest
Period plus (b) the remainder obtained by subtracting (i) the Eurodollar Rate
for such Interest Period from (ii) the rate obtained by dividing such
Eurodollar Rate by the percentage equal to 100% minus the "Eurodollar Reserve
Percentage" (as defined below) for such Interest Period. "Eurodollar Business
Day" means a day of the year on which dealings are carried on in the London
interbank market and banks are open for business in London and are not required
or authorized to close in New York City. "Eurodollar Reserve Percentage" of
the Reference Bank for any Interest Period means the reserve percentage
applicable during such Interest Period under regulations issued from time to
time by the Board of Governors of the Federal Reserve System (or any successor)
(or if more than one such percentage shall be so applicable, the daily average
of such percentages for such day) for determining the maximum reserve
requirement (including, without limitation, any marginal reserve requirement)
for a member bank of the Federal Reserve System in New York City, the Reference
Bank in respect of liabilities or assets consisting of or including
Eurocurrency liabilities as that term is used in Regulation D of the Board of
Governors of the Federal Reserve System as in effect from time to time having a
term equal to such Interest Period.
<PAGE> 39
"Affiliate" shall mean, with respect to any specified Person,
any other Person controlling, controlled by or under common control with such
specified Person and, without limiting the generality of the foregoing, shall
be presumed to include (A) any Person which beneficially owns or holds 10% or
more of any class of voting securities of such designated Person or 10% or more
of the equity interest in such designated Person and (B) any Person of which
such designated Person beneficially owns or holds 10% or more of any class of
voting securities or in which such designated Person beneficially owns or holds
10% or more of the equity interest. For the purposes of this definition,
"control" when used with respect to any specified Person shall mean the power
to direct the management and policies of such specified Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Aggregate Certificateholders' Interest" shall mean the
aggregate of the Certificateholders' Interests for each Series as defined in
Section 4.01(a) of the Pooling and Servicing Agreement.
"Aggregate Liquidity Provider Commitment" shall mean the
aggregate of the amount of the Liquidity Provider Commitments which at all
times shall equal the Maximum Invested Amount.
"Alternate Base Rate" means a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall at
all times be equal to the highest of:
(i) the rate of interest announced publicly by the
Reference Bank in New York, New York, from time to time as the
Reference Bank's base rate; or
(ii) 1.50% per annum above the latest three-week
moving average of secondary market morning offering rates in
the United States for three-month certificates of deposit of
major United States money market banks, such three- week
moving average being determined weekly on each Monday (or, if
any such day is not a Business Day on the next succeeding
Business Day) for the three-week period ending on the previous
Friday by the Reference Bank on the basis of such rates
reported by certificate of deposit dealers to and published by
the Federal Reserve Bank of New York in Federal Reserve
Statistical Release H.15(519) or, if such publication shall be
suspended or terminated, on the basis of quotations for the
latest three-week average of secondary market morning offering
rates received by the Reference Bank from three New York
certificate of deposit dealers of recognized standing selected
by the
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<PAGE> 40
Reference Bank, in either case adjusted to the nearest 1/4 of
one percent or, if there is no nearest 1/4 of one percent, to
the next higher 1/4 of one percent; or
(iii) 1.50% percent per annum above the Federal
Funds Rate.
"Amortization Date" with respect to any Series, shall have the
meaning specified in the related Supplement.
"Amortization Period" shall mean, with respect to any Series,
unless otherwise specified in the related Supplement, the period beginning on
the related Amortization Date, and ending upon the full reduction of the
Invested Amount with respect to such Series, all accrued and unpaid Yield
thereon and all other amounts due and owing to the Investor Certificateholders
under the Transaction Documents.
"Bank Rate" for any Interest Period for any Increase means an
interest rate per annum equal to the sum of (a) the Adjusted Eurodollar Rate
for such Interest Period for such Increase, plus (b) 1.00% per annum; provided,
however, that (i) in the case of any Interest Period for any such Increase of
one to (and including) thirteen days, or in respect of an Increase the
principal balance of which is less than $5,000,000, the "Bank Rate" for such
Interest Period for such Increase shall be the Alternate Base Rate in effect on
the first day of such Interest Period unless the Certificate Agent and the
Transferor agree in writing to a different rate; (ii) if it shall become
unlawful for the Reference Bank to obtain funds in the London interbank market
in order to purchase, fund or maintain any Increase under the Certificate
Purchase Agreement or deposits in dollars (in the applicable amounts) are not
being offered by the Reference Bank in the London interbank market, then the
"Bank Rate" for any Interest Period for such Increase shall be the Alternate
Base Rate in effect from time to time during such Interest Period; and (iii)
following the occurrence and during the continuation of an Early Amortization
Period, the "Bank Rate" for any Interest Period for such Increase shall be the
sum of the applicable interest rate per annum determined pursuant to the
provisions set forth above plus 2% per annum.
"Beneficiary" shall mean, as of any date of determination, any
of the then holders of the Investor Certificates and any Enhancement Provider.
"Breakage Costs" shall mean, for each Increase for the
Interest Period during which the principal amount for such Increase is reduced
and for which the applicable Yield Rate is the CP Rate or a rate calculated on
the basis of the Adjusted Eurodollar Rate, the amount, if any, billed by which
(i) the Yield (calculated without taking into account any Breakage Costs)
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<PAGE> 41
which would have accrued on the reductions of such Increase or Liquidity
Provider Commitment Percentage of such Increase, as applicable, during such
Interest Period (as so computed) if such reductions had remained as Increases
through the last day of the Interest Period exceeds (ii) the income, if any,
received by the Purchaser or a Liquidity Provider funding such Increase or
Liquidity Provider Commitment Percentage of such Increase, as applicable, from
the Purchaser's or Liquidity Provider's investment of the proceeds of such
reductions of such Increase.
"Business Day" shall mean any day other than a Saturday or
Sunday or any other day on which national banking associations or state banking
institutions in New York, New York, Salt Lake City, Utah or the city in which
the Corporate Trust Office is located are authorized or obligated by law,
executive order or governmental decree to be closed.
"Canadian Obligors" shall mean each Person who is obligated to
pay for goods or services provided by Geneva Steel which gave rise to a
Receivable, including any guarantor of such Person's obligations, in the case
of any Person who is an individual, who is a citizen and, in the case of any
other Person, which is formed, organized or incorporated under the laws of the
Commonwealth of Canada or any province of Canada.
"Canadian Receivables" shall mean United States dollar
denominated accounts receivable generated from sales to Canadian Obligors.
"Certificate" shall mean any one of the Investor Certificates
or the Transferor Certificate.
"Certificate Agent" shall mean Citicorp North America, Inc. in
its capacity as agent for CRC and the Liquidity Providers under the Certificate
Purchase Agreement.
"Certificate Interest" shall mean each participating interest
in the Series 1994-1 Certificate acquired by CRC or a Liquidity Provider in
connection with the funding of an Increase by CRC or a Liquidity Provider
pursuant to Section 2.05 of the Certificate Purchase Agreement.
"Certificate Purchase Agreement" shall mean the Certificate
Purchase Agreement dated November 4, 1994, among the Transferor, the Purchaser,
the Liquidity Providers named therein, the Servicer, the Certificate Agent and
the Trustee, as amended, supplemented, restated or otherwise modified from time
to time.
"Certificate Purchase Price" shall have the meaning specified
in Section 2.01 of the Certificate Purchase Agreement.
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<PAGE> 42
"Certificate Rate" shall mean, with respect to any Series or
Class, the certificate rate specified therefor in the related Supplement.
"Certificate Register" shall have the meaning specified in
Section 6.03(a) of the Pooling and Servicing Agreement.
"Certificateholder" or "Holder" shall mean the Person in whose
name an Investor Certificate or the Transferor Certificate is registered in the
Certificate Register.
"Certificateholders' Interest" shall have the meaning
specified in Section 4.01(a) of the Pooling and Servicing Agreement.
"Class" shall mean, with respect to any Series divided into
classes, any one of the classes of Investor Certificates of that Series.
"Closing Date" shall mean, with respect to any Series, the
Closing Date specified in the related Supplement.
"Collection Period" shall mean, with respect to any
Distribution Date, the calendar month (or, in the case of the calendar month in
which any Closing Date occurs, the portion of such calendar month following the
Closing Date) immediately preceding the calendar month in which such
Distribution Date occurs.
"Collections" shall mean (a) all cash payments by or on behalf
of the Obligors deposited to any Geneva Steel Collection Account or
Concentration Account, or received by the Servicer, in respect of Transferor
Receivables in the form of cash, checks, wire transfers, electronic transfers
or any other form of cash payment, and (b) all interest and other investment
earnings (net of losses and investment expenses) on Collections (including
without limitation funds on deposit in the Reserve Accounts) as a result of the
investment thereof pursuant to Section 4.02 of the Pooling and Servicing
Agreement.
"Concentration Account" shall have the meaning specified in
Section 4.02 of the Pooling and Servicing Agreement.
"Concentration Account Bank" shall initially be Bankers Trust
Company, and shall have the meaning specified in Section 4.02 of the Pooling
and Servicing Agreement.
"Concentration Amount" shall mean as of any date, with respect
to each Concentration Limit, the product of (a) such Concentration Limit and
(b) the aggregate amount of Eligible Receivables of a particular Obligor or
Obligors held by the Trust as to which such Concentration Limit applies.
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<PAGE> 43
"Concentration Limit" shall mean, with respect to the
following types of Receivables, the percentages of the aggregate amount of
Eligible Receivables held by the Trust set forth as follows: (a) Receivables
of any single Obligor rated at least "A-1" or its equivalent by each Rating
Agency, 6%; (b) Receivables of any single Obligor rated below "A-1", but at
least "A-2" or its equivalent by each Rating Agency, 5%; (c) Receivables of any
single Obligor rated below "A-2" but at least "A-3" or its equivalent by each
Rating Agency, 4%; (d) Receivables of any other single Obligor not rated on its
short-term debt, or the Mannesman Receivable, 3%; and (e) if the Commonwealth
of Canada sovereign debt rating is less than "AA" (or its equivalent) by each
Rating Agency, Receivables of any Canadian Obligor, 3%; provided, however, that
the Transferor may adjust the level of any Concentration Limit (i) if such
adjustment in and of itself does not cause each Rating Agency, as confirmed in
writing by each Rating Agency, to lower or withdraw its rating of any Series of
Certificates and (ii) subject to any further conditions specified in any Series
Supplement; provided, further, that (A) if two or more Rating Agencies assign
different ratings to a single Obligor or the Commonwealth of Canada, as the
case may be, the lower of such ratings shall be used to determine the
Concentration Limit and (B) if only one Rating Agency rates an Obligor or the
Commonwealth of Canada, as the case may be, the rating of such Rating Agency
shall be used to determine the Concentration Limit for such Obligor or Canada,
as the case may be.
"Confidential Information" shall mean, in relation to any
Person, any written information delivered or made available by or on behalf of
Geneva Steel (or its Affiliates or Subsidiaries) or the Transferor to such
Person in connection with or pursuant to this Agreement or the transactions
contemplated hereby which is proprietary in nature, other than information (i)
that is or becomes publicly known, or information obtained by the Person from
sources other than Geneva Steel or the Transferor, (ii) required to be
disclosed (A) by any applicable statute, law, rule or regulation, (B) by any
government agency or regulatory or self-regulatory body having or claiming
authority to regulate or oversee any aspects of the Person's business or that
of its Affiliates, (C) pursuant to any subpoena, civil investigative demand or
similar demand or request of any court, regulatory authority, arbitrator or
arbitration to which the Person or an Affiliate or an officer, director,
employer or shareholder thereof is a party, (D) in any preliminary or final
offering circular, registration statement or contract or other document
pertaining to the transactions contemplated by the Agreement approved in
advance by Geneva Steel or the Transferor, as the case may be, or (E) to any
Affiliate, independent or internal auditor, agent, employee or attorney of the
Person having a need to know the same, provided that the Person advises such
recipient of the confidential nature of the information
6
<PAGE> 44
being disclosed, (iii) any other disclosure authorized by Geneva Steel or the
Transferor as the case may be or (iv) disclosure to the other parties to the
transactions contemplated by the Pooling and Servicing Agreement.
"Contract" shall mean an agreement between Geneva Steel and an
Obligor, containing terms pursuant to or under which such Obligor shall be
obligated to pay from time to time for merchandise delivered or to be delivered
or services performed or to be performed and shall include, as applicable, any
invoice related thereto.
"Contractual Obligation" shall mean as to any Person, any
provision of any security issued by such Person or of any agreement, instrument
or other undertaking to which such Person is a party or by which it or any of
its property is bound.
"Corporate Trust Office" shall have the meaning specified in
Section 11.16 of the Pooling and Servicing Agreement.
"CP Note" shall mean any commercial paper note issued by CRC
to fund any Increase the Yield Rate in respect of which shall be determined by
reference to the CP Rate.
"CP Note Issuance Fees" shall mean with respect to each
issuance of CP Notes, the costs associated with such issuance paid by CRC.
"CP Rate" shall mean as to any Interest Period for the CRC
Tranche related to an Increase, a rate per annum equal to the weighted average
of the rates (or, if such rates are discount rates, the rates determined by
converting the discount rates to an interest-bearing equivalent rate per annum)
at which CP Notes allocable, in whole or part, by the Certificate Agent and
having a term equal to such Interest Period are issued by CRC to fund such
Increase through a placement agent or commercial paper dealer selected by the
Certificate Agent, as agreed between each such agent or dealer and the
Certificate Agent.
"CRC" shall mean Corporate Receivables Corporation, a
California corporation, including any successors and assigns.
"CRC Tranche" shall mean any issuance of Notes the proceeds of
which are used by CRC to fund an Increase and which CRC Tranche has the
principal amount and, in the case of any Increase the Yield Rate in respect of
which shall be determined by reference to the CP Rate, the Interest Period, in
each case, as specified by the Transferor pursuant to the Certificate Purchase
Agreement.
"Credit Policy Manual" shall mean those credit and collection
policies and practices of Geneva Steel described in
7
<PAGE> 45
its credit policy manual in effect on the date hereof relating to Receivables,
as the same may be amended or modified from time to time in compliance with
Section 3.04(j) of the Pooling and Servicing Agreement.
"Cure Funds" shall have the meaning specified in the
definition of the term "Cure Period" contained in this Annex X.
"Cure Period" shall mean the period beginning on a Pool
Non-compliance Date if the Transferor shall begin depositing Collections or
funds pro rata to the Reserve Account of each Series on the day collected (all
such funds so deposited from time to time by the Transferor being "Cure
Funds"), and continuing until the earlier of (a) the date on which the Net
Receivables Balance equals at least the Required Net Receivables Balance and
(b) the fifteenth day following the occurrence of such Pool Non-compliance
Date.
"Cut-Off Date" shall mean the close of business on the
Business Day immediately preceding the Closing Date.
"Daily CRC Expense Amount" shall mean with respect to any
Collection Period, the Monthly CRC Expense Amount divided by the number of days
in such Collection Period.
"Daily Report" shall mean, with respect to any Series, the
daily report in the form set forth in the related Supplement.
"Daily Trust Expense Amount" shall mean with respect to any
Collection Period, the Monthly Trust Expense Amount divided by the number of
days in such Collection Period.
"Default Ratio" shall mean, for any month, the average of the
ratios for each of the three most recently ended months (each expressed as a
percentage) of (i) aggregate Transferor Receivables (without giving effect to
extended debits and credits) that were 121 days past due at the end of each
such month plus Transferor Receivables which were charged off as uncollectible
during the current month which were less than 150 days past due when charged
off to (ii) aggregate Transferor Receivables that were acquired by the Trust
during the sixth month preceding such date.
"Defaulted Receivable" shall mean a Transferor Receivable: (i)
as to which the Obligor thereof has taken any action, or suffered any event to
occur, of the type constituting an Insolvency Event, (ii) as to which any
payment, or part thereof, remains unpaid by the Obligor thereof for 121 days or
more from the original due date for such payment specified in the relevant
invoice, and (iii) which, consistent with the Credit Policy Manual, would be
written off as uncollectible.
8
<PAGE> 46
"Deposit Date" shall mean each Business Day on which any
Collections are deposited in the Concentration Account.
"Determination Date" shall mean, with respect to any
Distribution Date, the second Business Day preceding such Distribution Date.
"Determination Date Certificate" shall mean, with respect to
any Determination Date and any Series, a report prepared by a Servicing Officer
for such Determination Date as of the end of the immediately preceding month in
substantially the form set forth in the related Supplement.
"Diluted Receivable" shall mean, that portion of any Eligible
Receivable which is either (a) reduced or canceled as a result of (i) any
failure by Geneva Steel to deliver any merchandise or provide any services or
otherwise to perform under the underlying Contract, (ii) any change in the
terms of, or cancellation of, a Contract or any other adjustment by Geneva
Steel which reduces the amount payable by the Obligor on the related Receivable
or (iii) any setoff in respect of any claim by an Obligor thereof (whether such
claim arises out of the same or an unrelated transaction) or (b) subject to any
specific dispute, offset, counterclaim or defense whatsoever asserted (except
the discharge in bankruptcy of the Obligor thereof); provided, that Diluted
Receivables do not include (x) contractual adjustments to the amount payable by
an Obligor that are eliminated from the Receivables balance sold to the Trust
through a reduction in the Purchase Price for the related Receivable or (y) any
portion of those Receivables for which a production prepayment has been
received.
"Dilution Ratio" shall mean as of any date, the ratio for the
most recently ended month (expressed as a percentage) of (i) the aggregate
balance of Transferor Receivables that became Diluted Receivables during such
month to (ii) the aggregate balance of all Transferor Receivables acquired by
the Trust during the month preceding such date of calculation.
"Dilution Volatility Factor" shall mean as of any date a
percentage equal to the product of (i) the amount by which (A) the highest
Dilution Ratio during the most recently ended twelve-month period exceeds (B)
the average of the Dilution Ratios during such twelve-month period and (ii) (A)
the highest Dilution Ratio during such twelve-month period divided by (B) the
average of the Dilution Ratios during such twelve-month period.
"Discount Amount" shall mean, with respect to any Series, the
amount set forth in the related Supplement.
"Distribution Date" shall mean, with respect to any Collection
Period, the fifteenth day of the calendar month
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<PAGE> 47
immediately following such Collection Period, or, if such day is not a Business
Day, the next succeeding Business Day or such other day as set forth in the
Supplement for a Series.
"Division" shall mean the Division of Corporations and
Commercial Code of the Department of Commerce of the State of Utah.
"Dollars and $" shall mean lawful money of the United States
of America.
"Duff & Phelps" shall mean Duff & Phelps Credit Rating Co. or
its successor.
"Dynamic Loss and Dilution Reserve Percentage" shall mean as
of any date of determination the sum of (a) the product of (i) 2.25 times (ii)
the average Dilution Ratio during the preceding 12 months times (iii) a
fraction the numerator of which is the total sales for the past month and the
denominator of which is the aggregate outstanding balance of Eligible
Receivables as of the end of the most recently ended month, plus (b) the
product of the Dilution Volatility Factor times the fraction specified in
clause (a)(iii) above, plus (c) the product of (i) 2.25, times (ii) the highest
Default Ratio during the preceding 12 months, times (iii) a fraction the
numerator of which is the total sales for the past 6 months and the denominator
of which is the aggregate outstanding balance of Eligible Receivables as of the
end of the most recently ended month.
"Early Amortization Event" shall have the meaning specified in
Section 9.01 of the Pooling and Servicing Agreement and with respect to any
Series shall also mean any Additional Early Amortization Event specified in the
related Supplement.
"Early Amortization Period" shall mean, with respect to any
Series, unless otherwise specified in the related Supplement, the period
beginning at the close of business on the Business Day immediately preceding
the day on which an Early Amortization Event is deemed to have occurred, and in
each case ending upon the earlier to occur of (a) the payment in full to the
Investor Certificateholders of such Series of the Invested Amount with respect
to such Series and (b) the Termination Date with respect to such Series.
"Early Termination" shall have the meaning specified in
Article VI of the Receivables Purchase Agreement.
"Effective Period" shall mean the period beginning on the
Closing Date and terminating on the earliest of (a) the close of business on
the Business Day on which a Termination Event occurs, and (b) the close of
business on the Business Day
10
<PAGE> 48
immediately preceding the day on which the Amortization Period for the last
outstanding Series begins.
"Eligible Institution" shall have the meaning specified in the
related Supplement.
"Eligible Investments" shall mean book-entry securities
entered on the books of the registrar of such security and held in the name or
on behalf of the Trustee or negotiable instruments or securities represented by
instruments in bearer or registered form (registered in the name of the Trustee
or its nominee) which evidence:
(a) direct obligations of, or obligations fully
guaranteed as to timely payment by, the United States of
America or any agency;
(b) demand deposits, time deposits or
certificates of deposit (having original maturities of no more
than 270 days) of depository institutions or trust companies
incorporated under the laws of the United States of America or
any state thereof (or domestic branches of foreign banks),
subject to supervision and examination by Federal or state
banking or depository institution authorities, and having, at
the time of the Trust's investment or contractual commitment
to invest therein, the highest short-term unsecured debt
rating from S&P, Moody's and Duff & Phelps;
(c) commercial paper (having original maturities
of no more than 270 days) having, at the time of the Trust's
investment or contractual commitment to invest therein, the
highest short-term rating from S&P, Moody's and Duff & Phelps;
(d) investments in no load money market funds
having a rating from each rating agency rating such fund in
its highest investment category (including funds for which the
Trustee or any of its Affiliates is an investment manager or
advisor);
(e) notes or bankers' acceptances (having
original maturities of no more than 270 days) issued by any
depository institution or trust company referred to in clause
(b) above;
(f) Such other investments, so long as they shall
be rated by S&P, Moody's and Duff & Phelps as either AAA, Aaa
or Duff-1+, as an eligible investment for AAA rated
transactions, or in the highest short term rating assigned by
each such rating agency; or
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<PAGE> 49
(g) repurchase agreements secured by other
Eligible Investments.
"Eligible Receivable" shall mean each Transferor Receivable or
portion thereof:
(i) the Obligor of which is not an
Affiliate of Geneva Steel or the Transferor;
(ii) as to which, other than as a result
of the application of or reference to Octagon in any proceeding before
any state or federal court within the tenth federal circuit or the
United States Supreme Court, at the time of the Transfer of such
Receivable to the Trust, the Transferor or the Trust will have good
and marketable title thereto free and clear from Liens except as
created under the Transaction Documents, and which has been the
subject of either a valid transfer and assignment from the Transferor
to the Trust of all the Transferor's right, title and interest therein
(and in the proceeds thereof), or the grant of a first priority
perfected "security interest" (within the meaning of the UCC of the
jurisdiction the law of which governs the perfection of the interest
in such Receivable created under the Transaction Documents) therein
(and in the proceeds thereof);
(iii) which is not a Defaulted Receivable
or a Diluted Receivable;
(iv) which arose in the ordinary course
of business of Geneva Steel and is an account receivable representing
all or part of the sales price of merchandise, or services within the
meaning of Section 3(c)(5) of the Investment Company Act, the Obligor
of which is primarily liable with respect thereto;
(v) which is an "account" (within the
meaning of Section 9-106 of the UCC of the jurisdiction the law of
which governs the perfection of the interest in such Receivable
created under the Transaction Documents);
(vi) which is denominated and payable
only in United States dollars in the United States;
(vii) the Obligor of which is a United
States or Canadian resident or citizen;
(viii) which is the legal and assignable
payment obligation of the Obligor of such Receivable, enforceable
against such Obligor in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, morato-
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<PAGE> 50
rium or other laws affecting creditors' rights generally, and except
as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity);
(ix) which was created in material
compliance with, and which, at the time of the Transfer of such
Receivable to the Trust, does not contravene in any material respect,
any applicable Requirements of Law, and the Obligor on which is not in
violation of any such Requirements of Law in any material respect with
respect to such Receivable;
(x) which satisfies in all material
respects all applicable requirements of the Credit Policy Manual
including, without limitation, payment terms that conform to the
provisions of such Credit Policy Manual;
(xi) with respect to which all material
consents, licenses, approvals or authorizations of, or registrations
or declarations with, any Governmental Authority required to be
obtained, effected or given in connection with the creation of such
Receivable have been duly obtained, effected or given and are in full
force and effect;
(xii) which is not subject to any specific
waiver or modification except for a Receivable which is subject to a
waiver or modification as permitted in accordance with the Credit
Policy Manual and which waiver or modification is reflected in the
Servicer's records and computer files relating thereto;
(xiii) which is not subject to any
enforceable provision prohibiting the transfer or assignment by Geneva
Steel of such payment obligation; and
(xiv) the Obligor of which is not a
Governmental Authority.
"Eligible Servicer" shall mean Geneva Steel, the Trustee or an
entity which, at the time of its appointment as Servicer, (a) is servicing a
portfolio of trade receivables, (b) is legally qualified and has the capacity
to service the Receivables and (c) has demonstrated the ability to
professionally and competently service a portfolio of similar trade receivables
with high standards of skill and care.
"Enhancement" shall mean the rights and benefits provided to
the Investor Certificateholders of any Series or Class pursuant to any letter
of credit, surety bond, cash collateral account, spread account, guaranteed
rate agreement, maturity liquidity facility, tax protection agreement, interest
rate swap
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<PAGE> 51
agreement or other similar arrangement. The subordination of any Series or
Class to any other Series or Class or of the Transferor's Interest to any
Series or Class shall be deemed to be an Enhancement.
"Enhancement Agreement" shall mean any agreement, instrument
or document governing the terms of any Enhancement of any Series or pursuant
to which any Enhancement of any Series is issued or outstanding.
"Enhancement Provider" shall mean the Person providing any
Enhancement, other than any Certificateholders (including any holder of the
Transferor Certificate) the Certificates of which are subordinated to any other
Series or Class.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any Person who is a member of a
group which is under common control with the Transferor, or who together with
the Transferor is treated as a single employer within the meaning of Title IV
of ERISA.
"Expected Final Payment Date" with respect to any Series shall
have the meaning specified in the related Supplement.
"Extension Term" shall mean, with respect to the term of any
Liquidity Provider Commitment, a period of 364 days.
"FDIC" shall mean the Federal Deposit Insurance Corporation or
any successor.
"Federal Funds Rate" shall mean, with respect to any day, the
rate set forth in H.15(519) for that day opposite the caption "Federal Funds
(Effective)". If on any date of determination, such rate is not published in
H.15(519), such rate will be the rate set forth in Composite 3:30 P.M.
Quotations for U.S. Government Securities for that day under the caption
"Federal Funds/Effective Rate". If on any date of determination, the
appropriate rate is not published in either H.15(519) or Composite 3:30 P.M.
Quotations for U.S. Government Securities, such rate will be the arithmetic
mean of the rates for the last transaction in overnight Federal funds arranged
by three leading brokers of Federal funds transactions in New York City prior
to 9:00 A.M., New York City time, on that day.
"Fee Letter" shall have the meaning specified in Section 3.01
of the Certificate Purchase Agreement.
"Floating Allocation Percentage" with respect to each Series,
shall have the meaning specified in the related Supple-
14
<PAGE> 52
ment; provided, however, that the aggregate of the Floating Allocation
Percentages of all outstanding Series shall not exceed 100%.
"GAAP" shall mean generally accepted accounting principles in
the United States, as in effect from time to time.
"Geneva Steel" shall mean Geneva Steel Company, including any
successors and assigns.
"Geneva Steel Collection Account" shall have the meaning
specified in Section 4.02 of the Pooling and Servicing Agreement.
"Geneva Steel Collection Account Bank" shall have the meaning
specified in Section 4.02 of the Pooling and Servicing Agreement.
"Geneva Steel Collection Account Letter" shall have the
meaning specified in Section 4.02 of the Pooling and Servicing Agreement.
"Government Receivable" shall mean a receivable with respect
to which the Obligor is the federal government of the United States or a
political, administrative or regulatory subdivision thereof.
"Governmental Authority" shall mean any country or nation, any
political subdivision, state or municipality of such country or nation, and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government of any country or
nation or political subdivision thereof.
"GSFC" shall mean, with respect to this Annex X, Geneva Steel
Funding Corporation, including any successors and assigns.
"Increase" shall mean the Certificate Purchase Price and the
amount of each increase in the Invested Amount funded by a CRC Tranche or the
Liquidity Providers and paid to GSFC by the Certificate Agent pursuant to the
terms of the Certificate Purchase Agreement.
"Increase Date" shall have the meaning specified in Section
2.05 of the Certificate Purchase Agreement.
"Indemnified Amounts" shall have the meaning specified in
Section 7.03 of the Pooling and Servicing Agreement.
"Indemnified Party" shall have the meaning specified in
Section 7.03 of the Pooling and Servicing Agreement.
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<PAGE> 53
"Independent Public Accountants" means any of (a) Arthur
Andersen & Co., (b) Deloitte & Touche, (c) Coopers & Lybrand, (d) Ernst &
Young, (e) KPMG Peat Marwick and (f) Price Waterhouse, or any of their
successors so long as such successor is one of the six largest national
accounting firms, provided, that such firm is independent with respect to the
Servicer within the meaning of the Act.
"Initial Invested Amount" shall mean, with respect to any
Series and for any date, an amount equal to the initial invested amount
specified in the related Supplement.
"Initial Term" shall mean, with respect to each Liquidity
Provider Commitment, the period which commences on the Closing Date and ends on
November 6, 1995 inclusive.
"Insolvency Event" shall mean, with respect to a specified
Person, (a) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of such person or any substantial part
of its property in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or the appointing
of a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for such Person or for any substantial part of its property,
or the ordering of the winding-up or liquidation of such Person's business,
and, other than in a case in which such proceeding was instituted by an
Affiliate of such Person, such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such law, or the
consent by such Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors,
or the failure by such Person generally to pay its debts as such debts become
due or the admission by such Person in writing (as to which the Trustee shall
have written notice) of its inability to pay its debts generally as they become
due.
"Interest Period" shall mean, unless otherwise specified in
the Supplement relating to any Series, with respect to any Distribution Date
except for the initial Distribution Date, the period from and including the
preceding Distribution Date to but excluding such Distribution Date, and, in
the case of the initial Distribution Date, the period from and including the
Closing Date to but excluding such initial Distribution Date.
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<PAGE> 54
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
"Inventory Lender" shall mean Citibank USA, Inc. as agent for
those certain lenders under the Amended and Restated Revolving Credit Agreement
dated as of November 4, 1994 between Geneva Steel, Citibank, N.A. and Citicorp
USA, Inc. as agent for various lenders.
"Invested Amount" shall mean, with respect to any Series and
for any date, an amount equal to the invested amount determined as provided in
the related Supplement.
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended from time to time.
"Investor Certificate" shall mean any one of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee, in
substantially the form attached to the related Supplement, other than the
Transferor Certificate.
"Investor Certificateholder" shall mean the Person in whose
name an Investor Certificate is registered in the Certificate Register.
"Investor Collections" with respect to each Series, shall have
the meaning specified in the related Supplement.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment for security, encumbrance, lien (statutory or other
and including a Lien created by PBGC), preference, participation interest,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever resulting in an encumbrance against real or personal property
of a Person, including, without limitation, any conditional sale or other title
retention agreement, and any financing lease having substantially the same
economic effect as any of the foregoing, except as may otherwise be imposed as
a result of the application of or reference to Octagon in any proceeding before
any state or federal court within the tenth federal circuit or the United
States Supreme Court.
"Liquidity Provider" shall mean the banks party to the
Certificate Purchase Agreement as their names appear on the signature page
thereof.
"Liquidity Provider Commitment" shall mean, as to any
Liquidity Provider, the obligation of such Liquidity Provider to fund
Increases, including a Term Increase, up to the amount set forth opposite such
Liquidity Provider's name on the signature page of the Certificate Purchase
Agreement subject to Section 2.04 of that agreement.
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<PAGE> 55
"Liquidity Provider Commitment Percentage" shall mean, as to
any Liquidity Provider at any time, the percentage set forth under the heading
"Percentage" opposite its signature line to the Certificate Purchase Agreement,
as such percentage may be modified by (a) assignments made from time to time
pursuant to Section 6.01 of the Certificate Purchase Agreement or (b) in the
case of a defaulting Liquidity Provider, pursuant to Section 2.09 of the
Certificate Purchase Agreement.
"Loss and Dilution Reserve" shall mean, with respect to any
Series, the amount set forth in the related Supplement.
"Loss and Dilution Reserve Percentage" shall mean as of any
date of determination the greater of (a) the Specified Loss and Dilution
Reserve Percentage and (b) the Dynamic Loss and Dilution Reserve Percentage.
"Loss to Liquidation Ratio" shall mean as to any date the
ratio (expressed as a percentage) calculated by dividing (a) the aggregate
Outstanding Balance of all Receivables written off as uncollectible in
accordance with the Credit Policy Manual by Geneva Steel during the
twelve-month period most recently ended by (b) the aggregate amount of
Collections during such twelve-month period.
"Majority in Interest" shall mean, with respect to each
Series, the Holders of Certificates evidencing more than 50% of the aggregate
Certificateholders' Interest in such outstanding Series.
"Majority Liquidity Providers" shall mean, at any time,
Liquidity Providers whose Liquidity Provider Commitment Percentage aggregates
more than 50% of the total amount of all Liquidity Provider Commitment
Percentages.
"Mannesmann" shall mean Mannesmann Pipe & Steel Corporation, a
New York corporation, and any successor thereto.
"Mannesmann Receivables" shall mean Receivables in an amount
calculated as follows:
MOB - PPA
where:
MOB = the aggregate Outstanding Balance of all Transferor
Receivables owing by Mannesmann.
PPA = the aggregate amount received from Mannesmann and
shown on the books and records of the Servicer as a
production prepayment.
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<PAGE> 56
"Market Make Whole Premium" with respect to any Series, shall
have the meaning specified in the related Supplement, if applicable.
"Maximum Invested Amount" shall mean $65,000,000.
"Monthly CRC Expense Amount" shall mean with respect to any
Collection Period the sum of (a) the fees set forth in the Fee Letter, and (b)
all expenses billed during such Collection Period, including, without
limitation, any increased costs, Breakage Costs and other expenses payable to
the Liquidity Providers.
"Monthly Trust Expense Amount" shall mean with respect to any
Collection Period the sum of (a) expenses of the Trustee billed during such
Collection Period, plus (b) the Series Trustee's Fee, plus (c) the Series
Servicing Fee, plus (d) Service Transfer expenses, if any, billed during such
Collection Period.
"Moody's" shall mean Moody's Investors Service, Inc. or its
successor.
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which the Transferor or any ERISA
Affiliate is making, or is accruing an obligation to make, contributions or has
made, or been obligated to make, contributions at any time within the preceding
six years.
"Net Receivables Balance" shall mean at any time the excess of
(a) the aggregate Outstanding Balance of Transferor Receivables that are
Eligible Receivables over (b) the Overconcentration Amount at such time.
"Note" shall mean any commercial paper or other promissory
note issued by CRC to fund any Increase the Yield Rate in respect of which
shall be determined by reference to the Pool Rate.
"Note Dealer Fees" shall mean with respect to each issuance of
Notes, the product of (a) the face amount of Notes issued on such day, times
(b) the result obtained by dividing (i) the number of days from the day of
issuance through the day on which such Notes mature by (ii) 360 times (c) the
per annum rate (adjusted to exclude any fees contained in the CP Rate) charged
by the Note dealers from time to time for the issuance of Notes by CRC.
"Notices" shall have the meaning specified in Section 13.05(a)
of the Pooling and Servicing Agreement.
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<PAGE> 57
"Obligations" shall mean all obligations of the Transferor and
the Servicer to the Trustee, the Trust, the Purchaser, the Liquidity Providers,
the other Indemnified Parties and their respective successors, permitted
transferees and assigns, arising under or in connection with the Transaction
Documents, howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due.
"Obligor" shall mean each Person who is obligated to pay for
goods or services provided by Geneva Steel which gave rise to a Transferor
Receivable, including any guarantor of such Person's obligations.
"Octagon" shall mean Octagon Gas Systems v. Rimmer, 995 F.2d
948, cert. denied, 114 S. Ct. 554 (1993).
"Officer's Certificate" shall mean, unless otherwise specified
in this Agreement, a certificate signed by the President, any Vice President,
the Chief Financial Officer, the Treasurer or Controller of the Transferor, or
of the Servicer, or any Successor Servicer, as the case may be, and delivered
to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may be counsel for, or an employee of, the Person providing the opinion and
who shall, and which opinion shall, be reasonably acceptable to the Trustee.
"Originator" shall mean Geneva Steel, including any successors
and assigns.
"Outstanding Balance" of any Receivable at any time shall mean
the then outstanding principal balance thereof.
"Overconcentration Amount" shall mean at any time the sum of
the amounts, if any, by which the aggregate Outstanding Balance of Eligible
Receivables of the types specified in clauses (a) through (e) of the definition
of Concentration Limit owned by the Trust exceeds the aggregate of the
respective Concentration Amounts.
"Partial Amortization Period" shall mean, with respect to any
Series, unless the Transferor shall have initiated a Cure Period or an Early
Amortization Period or the Amortization Period shall have commenced prior
thereto, the period beginning on a Pool Non-compliance Date and continuing each
day thereafter until the earlier of (a) the day on which the Net Receivables
Balance shall be equal to or greater than the Required Net Receivables Balance
and (b) the fifteenth day following such Pool Non-compliance Date.
20
<PAGE> 58
"Paying Agent" shall mean any paying agent appointed pursuant
to Section 6.06 of the Pooling and Servicing Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Person" shall mean any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, Governmental Authority or any
other entity of similar nature.
"Pooling and Servicing Agreement" shall mean the Pooling and
Servicing Agreement, dated as of November 4, 1994, among the Transferor, the
Servicer and the Trustee, as amended, supplemented, restated or otherwise
modified from time to time.
"Pool Non-compliance Date" shall mean any day on which the Net
Receivables Balance falls below the Required Net Receivables Balance.
"Pool Rate" shall mean as to any Interest Period for the CRC
Tranche related to an Increase, a rate per annum equal to the weighted average
of the rates (or, if such rates are discount rates, the rates determined by
converting the discount rates to an interest-bearing equivalent rate per annum)
at which Notes allocable, in whole or part, by the Certificate Agent are issued
by CRC to fund such Increase through a placement agent or commercial paper
dealer selected by the Certificate Agent, as agreed between each such agent or
dealer and the Certificate Agent which rates shall reflect and give effect to
the commissions of placement agents and dealers in respect of such promissory
notes, to the extent such commissions are allocated, in whole or in part, to
such promissory notes by the Certificate Agent (on behalf of CRC).
"Principal Terms" shall mean, with respect to any Series: (a)
the name or designation; (b) the Initial Invested Amount or principal amount
(or method for calculating such amount); (c) the Certificate Rate (or method
for the determination thereof); (d) the payment date or dates and the date or
dates from which interest shall accrue; (e) the method for allocating
collections to Investor Certificateholders; (f) the designation of any Series
Accounts and the terms governing the operation of any such Series Accounts; (g)
the issuer and terms of any form of Enhancement with respect thereto; (h) to
the extent applicable, the terms on which the Investor Certificates of such
Series may be exchanged for Investor Certificates of another Series,
repurchased or redeemed by the Transferor or remarketed to other investors; (i)
the number of Classes of Investor Certificates of such Series and, if more than
one Class, the rights and priorities of each such Class; (j) the
21
<PAGE> 59
Series Servicing Fee and the Series Trustee's Fee; (k) the Amortization Date
and the Termination Date; and (l) any other terms of such Series.
"Purchase Percentage" shall mean initially 94.596%; provided,
however, that the Purchase Percentage may change from time to time, based on
principles used to establish the initial Purchase Percentage, to reflect (a)
historic loss experience of the Transferor's accounts receivable portfolio and
the Receivables sold under the Transaction Documents and (b) prevailing
interest rates, as agreed upon by the Transferor and the Purchaser. The
Purchaser shall notify the Trustee if any change in the Purchase Percentage.
"Purchase Price" shall have the meaning specified in Section
2.2 of the Receivables Purchase Agreement.
"Purchaser" shall mean CRC, including any of its successors or
assigns.
"Rating Agency" shall mean each nationally recognized rating
agency which, at the request of the Transferor, has rated any Series of
Certificates, as set forth in the related Supplement.
"Rating Agency Condition" shall mean, with respect to any
action, that each Rating Agency shall have notified such parties in writing
that such action in and of itself will not result in a reduction or withdrawal
of the rating of any outstanding Series or Class with respect to which it is a
Rating Agency.
"Receivable" shall mean an account receivable shown on the
records of Geneva Steel as of the Cut-Off Date, and from time to time
thereafter, arising from the sale of merchandise or providing of services by
Geneva Steel in the ordinary course of business of Geneva Steel, including
without limitation, all monies due or to become due and all Collections and
other amounts received from time to time with respect to such Receivable and
all proceeds (including, without limitation, "proceeds" as defined in the UCC
of the jurisdiction the law of which governs the perfection of the interest in
the Receivables transferred under the Transaction Documents) thereof and
"Receivables" shall mean all such Receivables; provided, however, that the term
"Receivable" shall not include (i) as of the Cut-Off Date and any subsequent
date of Transfer to the Trust, accounts receivable which do not satisfy the
conditions of clauses (i), (vi), (vii) and (xiv) of the definition of Eligible
Receivable and (ii) any consideration paid or payable by (x) the Transferor or
(y) the Trustee on behalf of the Trust for the purchase of any Receivable,
including the Subordinated Loan or any Certificate or any payment on such
consideration.
22
<PAGE> 60
"Receivables Purchase Agreement" shall mean the agreement
between Geneva Steel and the Transferor, dated as of the date hereof, governing
the terms and conditions upon which the Transferor shall acquire the
Receivables transferred to the Trustee for the benefit of the Trust on the
Closing Date and all Transferor Receivables to be transferred to the Trustee
for the benefit of the Trust from time to time thereafter, as the same may from
time to time be amended, supplemented, restated or otherwise modified.
"Record Date" shall mean, with respect to any Distribution
Date, the last day of the preceding calendar month.
"Reference Bank" shall mean for purposes of determining the
Yield Rate, Citibank, N.A., a national banking association, its successors and
assigns.
"Regulation D" shall mean Regulation D of the Board of
Governors (or any successor) of the Federal Reserve System, as the same may be
amended or supplemented from time to time.
"Regulatory Change" means, relative to any Person:
(a) any change in (or the adoption, implementation,
phase-in or commencement of effectiveness of) any
(i) United States Federal or state law or foreign
law applicable to such Person;
(ii) regulation, interpretation, directive,
requirement or request (whether or not having the force of law)
applicable to such Person of (A) any court, government authority
charged with the interpretation or administration of any law referred
to in clause (a)(i) or of (B) any fiscal, monetary or other authority
having jurisdiction over such Person; or
(iii) generally accepted accounting principles or
regulatory accounting principles applicable to such Person and
affecting the application to such person of any law, regulation,
interpretation, directive, requirement or request referred to in
clause (a)(i) or (a)(ii) above; or
(b) any change in the application to such Person of any
existing law, regulation, interpretation, directive, requirement, request or
accounting principles referred to in clause (a)(i), (a)(ii) or (a)(iii) above.
"Reportable Event" shall mean a Reportable Event as defined in
Section 4043(b) of ERISA.
23
<PAGE> 61
"Required Net Receivables Balance" shall mean as of any day of
determination, the sum of (i) the aggregate of the Loss and Dilution Reserves
for all outstanding Series, (ii) the aggregate of the Yield Reserves for all
outstanding Series and (iii) the Trust Invested Amount (computed as if reduced
by (A) the amount of Cure Funds held in the Reserve Account for each Series and
(B) the cumulative amount of funds held in the Concentration Account at such
time allocated to the portion of the Trust Partial Amortization Amount
allocable to each such Series).
"Requirements of Law" shall mean any law, treaty, rule or
regulation, or final binding determination of an arbitrator or Governmental
Authority, and, when used with respect to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person.
"Reserve Account" with respect to each Series shall have the
meaning specified in the related Supplement and "Reserve Accounts" shall refer
to all the Reserve Accounts established for outstanding Series in accordance
with the terms of the related Supplements.
"Responsible Officer" shall mean, (i) when used with respect
to the Trustee, any officer within the Corporate Trust Office of the Trustee
including any vice president, assistant vice president, assistant secretary,
treasurer, assistant treasurer, or any other officer of the Trustee who
customarily performs functions similar to those performed by the persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such officer's knowledge of and familiarity with
the particular subject and (ii) when used with respect to the Transferor or
Servicer, any of the President, Chief Executive Officer, Vice President,
Secretary, Treasurer, or Chief Financial Officer.
"Revolving Period" shall mean, with respect to any Series, the
period specified in the related Supplement.
"S&P" shall mean Standard & Poor's Corporation or Standard &
Poor's Ratings Group, as applicable, or the successor of either of them.
"Series" shall mean any series of Investor Certificates.
"Series Account" shall mean any deposit, trust, escrow,
reserve or similar account maintained for the benefit of the Investor
Certificateholders or any Series or Class, as specified in any Supplement.
24
<PAGE> 62
"Series Allocation Percentage" shall mean, with respect to any
Series, the percentage equivalent of a fraction, the numerator of which is the
sum of (a) Invested Amount for such Series (computed as if reduced by the
amount of Cure Funds held in the Reserve Account for such Series and by the
cumulative amount of funds held in the Concentration Account at such time
allocated to the portion of the Trust Partial Amortization Amount allocable to
such Series) plus (b) the Yield Reserve for such Series, plus (c) the Loss and
Dilution Reserve for such Series, and the denominator of which is the aggregate
of the amounts specified in clauses (a), (b) and (c) for all outstanding
Series.
"Series Cut-Off Date" shall mean, with respect to any Series,
the date specified as such in the related Supplement.
"Series Issuance Date" shall mean, with respect to any Series,
the date on which the Investor Certificates of such Series are to be originally
issued in accordance with Section 6.09 of the Pooling and Servicing Agreement
and the related Supplement.
"Series 1994-1 Supplement" shall mean the Series 1994-1
Supplement dated as of November 4, 1994 to the Pooling and Servicing Agreement,
among the Transferor the Servicer and the Trustee as modified, amended,
restated or supplemented from time to time.
"Series 1994-1 Certificateholder" shall mean the Purchaser,
subject to the provisions of Section 2.10 of the Certificate Purchase
Agreement.
"Series Servicing Fee" shall mean, with respect to any Series,
the amount specified in the applicable Supplement.
"Series Trustee's Fee" shall mean, with respect to any Series,
the amount specified in the applicable Supplement.
"Service Transfer" shall have the meaning specified in Section
10.01 of the Pooling and Servicing Agreement.
"Servicer" initially shall mean Geneva Steel in its capacity
as Servicer pursuant to the Pooling and Servicing Agreement, and after any
Service Transfer shall mean the Successor Servicer.
"Servicer Default" shall have the meaning specified in Section
10.01 of the Pooling and Servicing Agreement.
"Servicing Fee" shall have the meaning specified in Section
3.02(a) of the Pooling and Servicing Agreement.
25
<PAGE> 63
"Servicing Officer" shall mean any officer, employee or other
agent of the Servicer who is involved in, or responsible for, the
administration and servicing of the Receivables and whose name appears on a
list of servicing officers furnished to the Trustee by the Servicer, as such
list may from time to time be amended.
"Specified Loss and Dilution Reserve Percentage" shall mean
the sum of (a) 15% plus (b) the product of (i) the average Dilution Ratio
during the preceding 12 months times (ii) a fraction the numerator of which is
the total sales for the past month and the denominator of which is the
aggregate outstanding balance of Transferor Receivables which are Eligible
Receivables as of the end of the most recently ended month.
"Subordinated Loan" shall mean the loan, if any, made pursuant
to Section 2.2(f) of the Receivables Purchase Agreement.
"Subordinated Note" shall mean the subordinated promissory
note, due November 4, 2014, by GSFC in favor of Geneva Steel.
"Subsidiary" shall mean as to any Person, a corporation,
partnership or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person.
"Successor Servicer" shall have the meaning specified in
Section 10.02(a) of the Pooling and Servicing Agreement.
"Supplement" shall mean, with respect to any Series, a
supplement to the Pooling and Servicing Agreement, executed and delivered in
connection with the original issuance of the Investor Certificates of such
Series pursuant to Article VI of the Pooling and Servicing Agreement, and all
amendments, modifications or supplements to the Pooling and Servicing
Agreement.
"Supplemental Certificate" shall have the meaning specified in
Section 6.09(c) of the Pooling and Servicing Agreement.
"Tax Opinion" shall mean, with respect to any action, an
Opinion of Counsel who is not an employee of the Servicer or any Affiliate of
the Servicer to the effect that, for federal and Utah (and any other State
where substantial servicing activities
26
<PAGE> 64
in respect of Receivables are conducted by the Transferor or the Servicer if
there is a substantial change from present servicing activities) state income
and franchise tax purposes, (a) such action will not adversely affect the
characterization of the Investor Certificates of any outstanding Series or
Class as debt, (b) such action will not cause a taxable event to any Investor
Certificateholder, (c) following such action the Trust should not be treated as
an association (or publicly traded partnership) taxable as a corporation, (d)
in the case of the original issuance of Certificates, the Investor Certificates
should properly be characterized as debt for tax purposes, or if not as debt,
as an interest in a partnership and not in an association taxable as a
corporation and (e) in the case of Section 6.09(b) of the Pooling and Servicing
Agreement, the Investor Certificates of the new Series will be characterized as
debt.
"Term" shall mean with respect to each Liquidity Provider
Commitment, the shorter of (a) the Initial Term and each Extension Term and (b)
the period ending on the date of expiration of the Aggregate Liquidity Provider
Commitment pursuant to Section 2.10 of the Certificate Purchase Agreement.
"Term Increase" shall have the meaning specified in Section
2.10 of the Certificate Purchase Agreement.
"Termination Date" shall mean, with respect to any Series, the
termination date specified in the related Supplement.
"Termination Event" shall have the meaning specified in
Article VI of the Receivables Purchase Agreement.
"Termination Notice" shall have the meaning specified in
Section 10.01 of the Pooling and Servicing Agreement.
"Transaction Documents" shall mean, collectively, the
Certificate Purchase Agreement, the Series 1994-1 Certificate, the Pooling and
Servicing Agreement, the Receivables Purchase Agreement, the Series 1994-1
Supplement, the Articles or Certificate of Incorporation and the By-Laws of the
Servicer and GSFC, respectively, and any other agreement or instrument related
or delivered pursuant to any of the foregoing documents.
"Transfer" shall have the meanings specified in Section 2.01
of the Pooling and Servicing Agreement, it being understood that the date of
Transfer of any Receivable or other Trust Asset shall be the date on which such
Receivable or other Trust Asset shall be created or otherwise arise and, in the
case of such Receivable, be acquired by the Transferor under the Receivables
Purchase Agreement.
27
<PAGE> 65
"Transfer Agent and Registrar" shall have the meaning
specified in Section 6.03(a) of the Pooling and Servicing Agreement.
"Transferor" shall mean GSFC, as transferor under the Pooling
and Servicing Agreement, including any successors and assigns.
"Transferor Certificate" shall mean the certificate executed
by the Transferor and authenticated by or on behalf of the Trustee, in
substantially the form of Exhibit A to the Pooling and Servicing Agreement
"Transferor Collections" shall mean, with respect to any date,
that portion of the Collections deposited to the Concentration Account equal to
the product of (i) the Transferor Percentage on such date multiplied by (ii)
the aggregate amount of such Collections.
"Transferor Interest" shall have the meaning specified in
Section 4.01(a) of the Pooling and Servicing Agreement.
"Transferor Percentage" shall mean at any time 100% minus the
aggregate of the Floating Allocation Percentages of all outstanding Series at
such time.
"Transferor Receivable" shall mean a Receivable acquired by
the Transferor pursuant to the Receivables Purchase Agreement other than those
reconveyed by the Transferor pursuant to Section 4.2 of the Receivables
Purchase Agreement except to the extent such Receivable is reacquired by the
Transferor.
"Transferor's Account" shall mean the special account (account
number ), under the dominion and control of the Transferor, for deposits
by the Servicer pursuant to the applicable Supplement, maintained at the office
of Bankers Trust Company in New York, New York, or such other account at such
other bank, under the dominion and control of the Transferor, as Transferor may
designate for such purpose from time to time.
"Trust" shall mean the Geneva Steel Trade Receivables Master
Trust created by the Pooling and Servicing Agreement.
"Trust Assets" shall have the meaning specified in Section
2.01 of the Pooling and Servicing Agreement.
"Trust Invested Amount" shall mean at any time the sum of the
Invested Amounts for all outstanding Series at such time.
"Trust Partial Amortization Amount" shall mean, with respect
to any date of determination during a Partial Amortiza-
28
<PAGE> 66
tion Period, the amount by which the Net Receivables Balance is less than the
Required Net Receivables Balance.
"Trustee" shall mean Bankers Trust Company, solely in its
capacity as trustee on behalf of the Trust, or its successor in interest, or
any successor trustee appointed as herein provided.
"Trustee's Account" with respect to each Series, shall have
the meaning specified in the related Supplement.
"Trustee's Fee" shall have the meaning specified in Section
11.05 of the Pooling and Servicing Agreement.
"Turnover Rate" shall mean for any date the average of the
percentage equivalent of a fraction for each of the three most recently ended
months the numerator of which is the Net Receivables Balance as of the last day
of each such month and the denominator of which is the aggregate balance of
Receivables transferred to the Trust during each such month; provided, however,
that with respect to any such months, or portion thereof, occurring prior to
the Closing Date, the denominator of such fraction shall be the aggregate
balance of Receivables originated by Geneva Steel during such month or portion
thereof.
"UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in any applicable or specified jurisdiction.
"Undivided Fractional Interest" with respect to each Series
shall have the meaning specified in the related Supplement.
"Weighted Average Term" shall mean, as of any date, a fraction
the numerator of which is the aggregate of the product for each Receivable sold
to the Trust during the preceding month of (i) the outstanding balance of such
Receivable (at the time such Receivable is transferred to the Trust) multiplied
by (ii) the payment term (in days) for each such Receivable, and the
denominator of which is the aggregate outstanding balance of such Receivable
(at the time such Receivable is transferred to the Trust).
"Yield" shall mean with respect to any Interest Period of an
Increase, the sum of (i) the product of (a) the Yield Rate divided by 360,
times (b) the amount of such Increase, times (c) the number of days in such
Interest Period and (ii) for each Increase the Yield Rate in respect of which
shall be determined by reference to the CP Rate, the Note Dealer Fees and any
Note Issuance Fees, if any, incurred with respect to the CRC Tranche related to
such Increase.
29
<PAGE> 67
"Yield Rate" shall mean with respect to any Interest Period of
an Increase, either (a) the per annum rate of interest borne by the Notes
issued in connection with a CRC Tranche the Yield Rate in respect of which
shall be determined by reference to the Pool Rate and the per annum rate of
interest borne by the CP Notes issued in connection with a CRC Tranche the
Yield Rate in respect of which shall be determined by reference to the CP Rate,
or, if such Notes or CP Notes are issued at a discount, the per annum rate of
interest equivalent of such discount or (b) the Bank Rate.
"Yield Reserve" shall mean as of any date two multiplied by
the product of (a) the Turnover Rate for such date and (b) the Discount Amount
with respect to such date.
30
<PAGE> 1
Exhibit 10.8
===============================================================================
CERTIFICATE PURCHASE AGREEMENT
dated as of November 4, 1994
among
GENEVA STEEL FUNDING CORPORATION,
as Seller,
CORPORATE RECEIVABLES CORPORATION,
as Purchaser,
THE LIQUIDITY PROVIDERS NAMED HEREIN,
CITICORP NORTH AMERICA, INC.,
as Certificate Agent for
Corporate Receivables Corporation
and the Liquidity Providers,
and
GENEVA STEEL COMPANY,
as Servicer
================================================================================
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
PURCHASE AND SALE OF THE
SERIES 1994-1 CERTIFICATE; INCREASES
SECTION 2.01 Purchase and Sale of the Series 1994-1 Certificate . . . . . . . . . . . . . . . . . . . 2
SECTION 2.02 Series 1994-1 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.03 Increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.04 Increase Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.05 Procedure for Making Increases; Additional Interest Periods . . . . . . . . . . . . . . 4
SECTION 2.06 Assignments by CRC to Liquidity Providers . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.07 Pro Rata Increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.08 Number of Certificate Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.09 Defaulting Liquidity Provider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.10 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
FEES, YIELD AND YIELD PROTECTION
SECTION 3.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.02 Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.03 Yield Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.04 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.05 Mitigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.06 Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01 Conditions Precedent to Funding of the Initial Increase . . . . . . . . . . . . . . . . 14
SECTION 4.02 Conditions Precedent to All Increases . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.03 CRC Discretionary Fundings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
ARTICLE V
THE CERTIFICATE AGENT
<S> <C> <C>
SECTION 5.01 Authorization and Action of the Certificate Agent . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.02 The Certificate Agent's Reliance, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.03 The Certificate Agent and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.04 Amendments, Waivers and Other Actions by the Certificate Agent . . . . . . . . . . . . . . . . . 16
ARTICLE VI
ASSIGNMENTS
SECTION 6.0 Restrictions on Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 6.02 Rights of Assignee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.03 Notice of Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.02 Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.03 No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.04 Binding Effect; Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.05 No Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.06 Captions and Cross References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.07 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.08 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.09 Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.10 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.11 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
EXHIBIT A - Notice of Increase
</TABLE>
ii
<PAGE> 4
CERTIFICATE PURCHASE AGREEMENT dated as of November 4, 1994
(as modified, amended, supplemented or restated from time to time the
"Agreement") among GENEVA STEEL FUNDING CORPORATION, as seller (either "GSFC"
or the "Seller"), CORPORATE RECEIVABLES CORPORATION, as purchaser (either "CRC"
or the "Purchaser"), CITIBANK, N.A., as a liquidity provider and each other
liquidity provider party hereto by virtue of an assignment pursuant to Article
VI hereof (each a "Liquidity Provider" and collectively, the "Liquidity
Providers"), CITICORP NORTH AMERICA, INC., as agent (the "Certificate Agent")
for CRC and the Liquidity Providers, and GENEVA STEEL COMPANY, as servicer
(either "Geneva Steel" or the "Servicer").
W I T N E S E T H:
WHEREAS, the Geneva Steel Trade Receivables Master Trust (the
"Trust") intends to issue the Series 1994-1 Certificate (as hereinafter
defined);
WHEREAS, subject to the terms and conditions of this Agreement
and of the Series 1994-1 Supplement, GSFC will sell the Series 1994-1
Certificate to the Purchaser;
WHEREAS, subject to the terms and conditions of this
Agreement, CRC may, and the Liquidity Providers shall, fund from time to time
increases in the Invested Amount of the Series 1994-1 Certificate; and
WHEREAS, except as provided in Section 2.06, the Series 1994-1
Certificate will initially be held by CRC subject to assignment to the
Certificate Agent for the Liquidity Providers;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Defined Terms. Capitalized terms not otherwise defined
herein shall have the meanings set forth in Annex X attached hereto or the
Series 1994-1 Supplement.
SECTION 1.02 Other Definitional Provisions.
(a) As used herein, in the Series 1994-1 Certificate and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Agreement and accounting terms partly
defined in this Agreement to the extent not defined, shall have the respective
meanings given to them under GAAP. To the extent that the definitions of
accounting terms
<PAGE> 5
herein are inconsistent with the meanings of such terms under GAAP, the
definitions contained herein shall control.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to a Section, subsection,
Schedule and Exhibit in or to this Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
ARTICLE II
PURCHASE AND SALE OF THE
SERIES 1994-1 CERTIFICATE; INCREASES
SECTION 2.01 Purchase and Sale of the Series 1994-1 Certificate. (a)
On the terms and subject to the conditions set forth in the Pooling and
Servicing Agreement, the Series 1994-1 Supplement and this Agreement, and in
reliance on the covenants, representations and agreements set forth herein, the
Seller agrees to sell to the Purchaser, and the Purchaser agrees to purchase
from the Seller, the Series 1994-1 Certificate on the Closing Date for an
initial price, not to exceed the Maximum Invested Amount, as may be agreed by
the Seller and the Purchaser on the Closing Date (the "Certificate Purchase
Price"). Without limiting any other provision of this Agreement, the
obligation of the Purchaser to purchase the Series 1994-1 Certificate on the
Closing Date is subject to the satisfaction of the conditions precedent set
forth in Section 4.01 hereof.
(b) On the Closing Date, the Seller will deliver to the
Certificate Agent for the Purchaser the Series 1994-1 Certificate, dated the
Closing Date, registered in the name of CRC and duly authenticated in
accordance with the provisions of the Pooling and Servicing Agreement against
delivery by the Certificate Agent, on behalf of the Purchaser, to the Seller of
the Certificate Purchase Price.
SECTION 2.02 Series 1994-1 Certificate. On the Closing Date, on each
date and at any time an Increase is funded hereunder and on each date and at
any time any Increase is decreased, a duly authorized officer or employee of
the Certificate Agent shall make appropriate notations in its books and records
of the Purchase Price, the amount of such Increase and the amount of such
reduction, as applicable. Each of the Servicer, the Seller and the Trustee
hereby authorizes each duly authorized officer and employee of the Certificate
Agent to make such notations on the books and records as aforesaid and every
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such notation made in accordance with the foregoing authority shall be prima
facie evidence of the accuracy of the information so recorded and shall be
binding on the Seller and the Trustee absent manifest error. All Increases in
the Invested Amount shall be subject to decreases in accordance with the
provisions of this Agreement and the Series 1994-1 Supplement and shall mature
and be decreased in full no later than the Expected Final Payment Date.
SECTION 2.03 Increases. On the terms and subject to the conditions
set forth in this Agreement and the Series 1994-1 Supplement (including Article
IV hereof):
(a) Increases Generally. The Series 1994-1
Certificateholder may in its discretion, in the case of CRC, and
shall, in the case of the Liquidity Providers (where the Certificate
Agent is holding the Series 1994-1 Certificate on the Liquidity
Providers' behalf), from time to time during the period from the
Closing Date to the last day of the Revolving Period for the Series
1994-1 Certificate, acquire Certificate Interests in the Series 1994-1
Certificate by providing funds to GSFC for the purchase of Receivables
from Geneva Steel or the repayment to Geneva Steel of amounts owing
under the Subordinated Note or capital contributions related to prior
purchases of Receivables.
(b) CRC Discretionary Increases. To the extent CRC is
the Series 1994-1 Certificateholder, CRC may (but is not committed to)
at the request of the Seller fund Increases through the issuance of CP
Notes or Notes (each such issuance, a "CRC Tranche") from time to time
during the period specified in clause (a) above.
(c) Liquidity Provider Increases. During the period
specified in clause (a) above, if CRC chooses at any time not to fund
an Increase when requested by GSFC and assigns its Certificate
Interests pursuant to Section 2.06, each Liquidity Provider shall fund
an Increase in an amount equal to its Liquidity Provider Commitment
Percentage of the amount of such requested Increase. At such time,
each Liquidity Provider shall acquire the Certificate Interest
corresponding to its pro rata share of each Increase funded by such
Liquidity Provider. All fundings by the Liquidity Providers shall be
at the Bank Rate and shall be made on a pro rata basis in accordance
with the Liquidity Provider Commitments pursuant to Section 2.07.
SECTION 2.04 Increase Limits. Under no circumstances shall CRC or any
Liquidity Provider be obligated to fund any Increase to the extent that, after
giving effect to such Increase and the other Increases to be funded by the
other Liquidity Providers
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concurrently therewith and the application of all or any portion of the
proceeds thereof to the account of the Certificate Agent designated by the
Certificate Agent, (a) the aggregate amount of outstanding Increases funded by
CRC plus the aggregate amount of the outstanding Increases funded at any time
by Liquidity Providers would exceed the Maximum Invested Amount; and (b) with
respect to any Liquidity Provider, the aggregate amount of outstanding
Increases funded by such Liquidity Provider would exceed its Liquidity Provider
Commitment Percentage of the Maximum Invested Amount.
SECTION 2.05 Procedure for Making Increases; Additional Interest
Periods.
(a) Notice of Increase. Each Increase shall be funded on notice
from GSFC (substantially in the form of Exhibit A hereto) to the Certificate
Agent received by the Certificate Agent not later than 4:00 p.m. (New York City
time) on the Business Day immediately preceding the date of such proposed
Increase (each, an "Increase Date") (with a copy provided to the Trustee);
provided, that if the Yield Rate for the initial Interest Period for the
resulting Increase is to be calculated at a rate based on the Adjusted
Eurodollar Rate, then such notice must be received not later than 4:00 p.m.
(New York City time) on the third Business Day next preceding such Increase
Date. Each such notice of a proposed Increase shall specify the amount of the
Increase, the Increase Date, whether the Yield Rate applicable to such Increase
will be determined by reference to the CP Rate or Pool Rate and, in the case of
any Increase the Yield Rate in respect of which shall be determined by
reference to the CP Rate, the desired duration of the initial Interest Period
for such Increase. The Certificate Agent shall promptly notify each Liquidity
Provider, the Servicer and the Seller if CRC elects in its discretion not to
fund an Increase.
(b) Amount of Increases. The amount of each Increase shall be
equal to the lesser of (i) the amount proposed by GSFC, pursuant to subsection
(a) and (ii) the maximum amount permitted under Section 2.04 unless CRC or the
Liquidity Providers otherwise elect.
(c) Funding of Increases. On the date of each Increase, CRC or
the Liquidity Providers, as applicable, shall, upon satisfaction of the
applicable conditions set forth in Article IV, make available to the
Certificate Agent at its office at 399 Park Avenue in New York, New York, the
amount of its Increase (determined pursuant to subsection (b)) in same day
funds, and after receipt by the Certificate Agent of such funds, the
Certificate Agent will deposit the same in same day funds into the account
designated therefor by GSFC, the Certificate Agent to use its best efforts to
make such deposit by not later than 12:00
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noon, New York City time on the date of receipt thereof by the Certificate
Agent.
(d) Additional Interest Periods. Upon the expiration of any
initial Interest Period or Additional Interest Period (as defined below) for an
Increase, the Seller may direct that such Interest Period for any Increase be
renewed for a period of time selected by the Seller (such renewal period, an
"Additional Interest Period"). Each Additional Interest Period for an Increase
shall commence on the day immediately following the last day of the current
Interest Period and shall end on the day specified by the Seller in the notice
delivered pursuant to Section 2.05(a); provided, however, that (i) during the
Amortization Period, any Additional Interest Period selected by the Seller must
end on or prior to the Expected Final Payment Date; and (ii) during a Partial
Amortization Period or Early Amortization Period, any Additional Interest
Period must be for a period of one day. The Seller shall provide notice to the
Certificate Agent received by the Certificate Agent not later than 4:00 p.m.
(New York City time) on the Business Day immediately preceding the first day of
such Additional Interest Period (with a copy provided to the Trustee) if the
Yield Rate for such Additional Interest Period is to be calculated at a rate
based on the Alternate Base Rate; provided, that if the Yield Rate for such
Additional Interest Period is to be calculated at a rate based on the Adjusted
Eurodollar Rate, then such notice must be received not later than 4:00 p.m.
(New York City time) on the third Business Day next preceding the date on which
such Additional Interest Period is to commence. Each such notice of a proposed
Additional Interest Period shall specify the desired duration of such
Additional Interest Period.
SECTION 2.06 Assignments by CRC to Liquidity Providers. (a) On or
after any date during the Term of the Aggregate Liquidity Provider Commitment,
on which CRC has elected in its discretion not to fund an Increase hereunder,
CRC may, in its own discretion, and will, at the request of GSFC (which request
may be made at any time, whether before or after CRC has elected to fund or not
fund an Increase hereunder, but with the consent of the Certificate Agent,
which consent shall not be unreasonably withheld, conditioned or delayed),
assign to the Liquidity Providers (in accordance with their respective
Liquidity Provider Commitment Percentages) and the Liquidity Providers shall
purchase all of CRC's right, title to and interest in, all Certificate
Interests then owned by CRC corresponding to outstanding Increases owned by
CRC. Each such assignment of Certificate Interests then owned by CRC shall be
made upon receipt of consideration (in cash) from the Liquidity Providers
equal to the lesser of the following amounts, each computed with respect to
the Series 1994-1 Certificate:
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<PAGE> 9
(i) the Invested Amount plus accrued but unpaid Yield
thereon, and
(ii) FAP x (OB-Defaulted Receivables)
--------------------------------
LDLA
where:
FAP = the Floating Allocation Percentage.
OB = the Outstanding Balance of Transferor
Receivables.
LDLA = a loss and dilution reserve adjustment, computed by
adding to the number 1 an amount (expressed as a
fraction) equal to 50% of the Specified Loss and
Dilution Reserve Percentage;
provided, that for purposes of the foregoing computations, the Outstanding
Balance shall be calculated on the date, and Defaulted Receivables shall be
computed since the date, the Floating Allocation Percentage was last computed
or deemed computed; provided further, that no Liquidity Provider shall be
required to purchase any Certificate Interest to the extent that, after giving
effect thereto, the aggregate amount of Increases of such Liquidity Provider
(including any Certificate Interests purchased from CRC as described below)
would exceed its Liquidity Provider Commitment.
(b) Upon an assignment described in subsection (a) and upon any
other assignment of Certificate Interests by CRC to the Liquidity Providers,
(i) all Certificate Interests previously owned by CRC and so assigned shall
become Certificate Interests owned by the Liquidity Providers, (ii) all
Interest Periods for the related Increases shall immediately terminate, (iii)
the Increases related to such Certificate Interests shall be assigned new
Interest Periods selected by GSFC commencing on the date of such assignment and
the Yield Rates for which shall be determined in accordance with the definition
of "Yield Rate," and (iv) CRC shall present the Series 1994-1 Certificate to
the Trustee for transfer to the Certificate Agent and the Trustee shall
register a new Series 1994-1 Certificate in the name of the Certificate Agent,
to be held by the Certificate Agent for the benefit of the Liquidity Providers.
(c) Notwithstanding any assignment described in subsection (a) or
any other assignment of Certificate Interests by CRC to the Liquidity
Providers, the Trustee on behalf of the Trust shall continue to be obligated,
to the extent provided under the Series 1994-1 Supplement, to pay to CRC the
following
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<PAGE> 10
amounts (in each case out of Collections available for such payments as
provided in the Series 1994-1 Supplement):
(i) as of the date of such assignment, all accrued and
unpaid Yield with respect to the Increases; and
(ii) to the extent that any Increase related to
Certificate Interests so assigned had been previously allocated to an
Interest Period ending after the date of such assignment, the lesser
of (A) any Breakage Costs which would have been payable under the
Series 1994-1 Supplement on account of such early termination of such
Interest Period as though the Increase so assigned had been reduced on
the day of such assignment and (B) any actual Breakage Costs paid by
CRC to third-parties in connection with the prepayment of any CP Notes
from the proceeds from the Liquidity Providers of the Certificate
Interests so assigned, or, if CRC is unable to prepay such CP Notes,
the amount, if any, by which interest on such CP Notes at the CP Rate
during the remainder of such Interest Periods exceeds the income, if
any, received by CRC from investing the proceeds of such assignments;
provided, that the Certificate Agent on behalf of CRC shall use
reasonable efforts to mitigate any such excess costs by investing the
proceeds of such assignment in Eligible Investments or similar types
of investments.
(d) Each assignment of Certificate Interests and the Series 1994-1
Certificate from CRC to the Liquidity Providers pursuant to this Section 2.06
shall be without recourse or warranty, express or implied, except that such
Certificate Interests and the Series 1994-1 Certificate are free and clear of
adverse claims created by or arising as a result of claims against the
Certificate Agent or CRC. Nothing in this Section 2.06 shall be deemed to
limit any rights of CRC under any other provisions of this Agreement to assign
its right, title to and interest in any portion of the Certificate Interests or
the Series 1994-1 Certificate owned by CRC.
(e) The Certificate Agent shall promptly notify the Servicer and
GSFC of any assignment described in subsection (a) of this Section 2.06.
SECTION 2.07 Pro Rata Increases. Following an assignment of the
Series 1994-1 Certificate pursuant to Section 2.06, each request by GSFC for
Increases from the Liquidity Providers shall be made to the Certificate Agent
for pro rata amounts in accordance with the Liquidity Provider Commitments of
the Liquidity Providers.
SECTION 2.08 Number of Certificate Interests. The number of
Certificate Interests held by CRC all or every portion of which was funded with
any Increase the Yield Rate in respect of
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which shall be determined by reference to the CP Rate or the Liquidity
Providers hereunder at any one time, after giving effect to any Increases and
decreases of Increases the Yield Rate in respect of which shall be determined
by reference to the CP Rate, shall not exceed ten (10) without the consent of
the Certificate Agent, which consent shall not be unreasonably withheld,
conditioned or delayed.
SECTION 2.09 Defaulting Liquidity Provider. In the event any
Liquidity Provider is required to fund an Increase under Section 2.03(c), and
such Liquidity Provider (the "Defaulting Liquidity Provider") fails, for any
reason, to make available to the Certificate Agent its Liquidity Provider
Commitment Percentage of the amount of such Increase, then the Liquidity
Provider Commitment Percentage of the Defaulting Liquidity Provider shall be
zero, and
(a) if the Certificate Agent has not made available to
GSFC the amount of such Increase which the Defaulting Liquidity
Provider was required to provide, the Certificate Commitment
Percentages of each of the other Liquidity Providers shall be
proportionately increased so that such Liquidity Provider Commitment
Percentages aggregate to 100%.
(b) if the Certificate Agent has made available to GSFC
the amount of an Increase which the Defaulting Liquidity Provider was
required to provide, unless and until the amount of such Increase
(along with any Yield accrued thereon in accordance with the Series
1994-1 Supplement) is reimbursed to the Certificate Agent by GSFC, the
Trustee or the Defaulting Liquidity Provider, the Certificate Agent
shall be a "Liquidity Provider" hereunder for all purposes relevant to
such Increase and the related Certificate Interest with respect to
such Increase and, notwithstanding anything herein to the contrary,
the Certificate Agent shall be deemed to have a Certificate Interest
equal to that of the Defaulting Liquidity Provider (determined without
giving effect to this proviso) and the Defaulting Liquidity Provider's
Certificate Interest shall be reduced to zero until such time as the
Certificate Agent is reimbursed by the Defaulting Liquidity Provider.
Notwithstanding anything in the foregoing, in Section 2.03 or 2.05 or elsewhere
in this Agreement to the contrary, the Certificate Agent shall have no
commitment whatsoever to make any Increase and no Liquidity Provider shall have
any obligation to make available the amount of any Increase to the Certificate
Agent in connection with any Increase an amount of funds which exceeds the
Liquidity Provider Commitment of such Liquidity Provider.
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<PAGE> 12
SECTION 2.10 Term. (a) The term of the Aggregate Liquidity Provider
Commitment and each Liquidity Provider Commitment hereunder shall be for a
period of 364 days following the Closing Date or the date on which any
Extension Term is granted (in each case, a "Commencement Date"), unless
extended as provided below. Prior to the expiration of the Initial Term or
any Extension Term the Certificate Agent shall request a 364 day extension of
such expiration date and each Liquidity Provider may, in its sole and absolute
discretion, extend its Liquidity Provider Commitment by delivering to the
Certificate Agent a written notice of such Liquidity Provider's commitment to
extend; provided, however, that (i) in no event shall the term of any Liquidity
Provider Commitment at any time exceed one (1) year, (ii) any such extension
shall be ineffective if an Early Amortization Event has occurred and is
continuing at the time of the proposed commencement of such Extension Term and
(iii) the last day of any Extension Term shall occur on or prior to the
Amortization Date. Failure of a Liquidity Provider to deliver a notice of such
Liquidity Provider's intent to grant an Extension Term shall be deemed to be
an election by such Liquidity Provider not to grant an Extension Term. Each
Extension Term shall expire 364 days from its Commencement Date. If less than
all of the Liquidity Providers have elected to grant an Extension Term and the
Certificate Agent has been unable to replace any Liquidity Provider which has
declined to grant an Extension Term, the Certificate Agent will so notify the
Liquidity Providers, the Seller and the Servicer prior to the day on which the
Term or Extension Term expires.
(b) Upon any assignment pursuant to Section 2.06(a), the
obligation of each Liquidity Provider to fund Increases shall be governed by
Section 2.03.
ARTICLE III
FEES, YIELD AND YIELD PROTECTION
SECTION 3.01 Fees. (a) GSFC shall pay to the Certificate Agent such
fees for its own account and for the account of CRC in such amounts and at such
times as set forth in the fee letter agreement dated the date hereof between
the Seller and the Certificate Agent, as such fee letter agreement may be
amended or modified from time to time.
(b) In the event that CRC is not the Series 1994-1 Certificateholder,
GSFC shall pay to the Certificate Agent, for the account of the Liquidity
Providers, for each Collection Period a fee equal to the product of (i) 0.375,
times (ii) a fraction, the numerator of which is the number of days in such
Interest Period and the denominator of which is 360, times (iii) the
difference, if any, between the Maximum Invested Amount
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<PAGE> 13
and the weighted average Invested Amount during such Collection Period.
SECTION 3.02 Yield. Yield shall accrue and be payable with respect to
each Increase as provided in the Series 1994-1 Supplement.
SECTION 3.03 Yield Protection. (a) If (i) compliance by any
Liquidity Provider with Regulation D or any other guideline or request from any
central bank or other Governmental Authority (whether or not having the force
of law) or (ii) any Regulatory Change occurring after the date hereof:
(A) shall subject any Liquidity Provider to any tax, duty
or other charge with respect to any Certificate Interest owned or any
Increase funded by it, or any obligations or right to fund Increases
or to provide funding therefor, or shall change the basis of taxation
of payments to the Liquidity Provider of any Certificate Interest or
Yield owned by, owed to or funded by it or any other amounts due under
this Agreement or any other Transaction Document in respect of any
Certificate Interest owned by or funded by it or its obligations or
rights, if any, to fund Increases or to provide funding therefor
(except for changes in the rate of tax on the overall net income of
such Liquidity Provider imposed by the United States of America, by
the jurisdiction in which such Liquidity Provider's principal
executive office and the relevant funding branch is located and, if
such Liquidity Provider's principal executive office is not in the
United States of America, by the jurisdiction where such Liquidity
Provider's principal office in the United States is located); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Federal
Reserve Board, but excluding any reserve included in the determination
of Yield), special deposit or similar requirement against assets of
any Liquidity Provider, deposits or obligations with or for the
account of any Liquidity Provider or with or for the account of any
affiliate (or entity deemed by the Federal Reserve Board to be an
affiliate) of any Liquidity Provider, or credit extended by any
Liquidity Provider; or
(C) shall change the amount of capital maintained or
required or requested or directed to be maintained by any Liquidity
Provider; or
(D) shall impose any other condition affecting any
Certificate Interest owned or funded by any Liquidity Provider, or its
obligations or rights, if any, to fund Increases or to provide funding
therefor;
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and the result of any of the foregoing is or would be
(x) to increase the cost to or to impose a cost on (I) a
Liquidity Provider funding or maintaining any Increases or other
extensions of credit under this Agreement, or any commitment of such
Liquidity Provider with respect to any of the foregoing or (II) the
Certificate Agent for continuing its relationship with CRC,
(y) to reduce the amount of any sum received or
receivable by a Liquidity Provider under this Agreement or any other
Transaction Document with respect thereto, or
(z) in the sole determination of such Liquidity Provider,
to reduce the rate of return on the capital of a Liquidity Provider as
a consequence of its obligations hereunder or arising in connection
herewith to a level below that which such Liquidity Provider could
otherwise have achieved,
then within thirty days after demand by such Liquidity Provider to CRC, the
Seller and the Certificate Agent (which demand shall be accompanied by a
statement addressed to the Seller setting forth the basis of such demand), such
Liquidity Provider shall be entitled to payment for such additional amount or
amounts as will compensate such Liquidity Provider for such additional or
increased cost or such reduction as an owner of Certificate Interests in the
Series 1994-1 Certificate pursuant to the terms of the Series 1994-1
Supplement; provided, however, that no Liquidity Provider having its principal
place of business outside the United States of America shall be entitled to
payments of additional amounts in respect of any taxes described in paragraph
(A) above.
(b) Each Liquidity Provider will promptly notify GSFC and the
Certificate Agent of any event of which it has knowledge which is reasonably
likely to entitle such Liquidity Provider to compensation pursuant to this
Section 3.03; provided, however, no failure to give or delay in giving such
notification shall adversely affect the rights of any Liquidity Provider to
such compensation.
(c) In determining any amount provided for or referred to in this
Section 3.03, a Liquidity Provider may use any reasonable averaging and
attribution methods that it (in its sole discretion) shall deem applicable. Any
Liquidity Provider when making a claim under this Section 3.03 shall submit to
GSFC a statement as to such increased cost or reduced return (including
calculation thereof in reasonable detail), which statement shall, in the
absence of manifest error, be conclusive and binding upon the Seller.
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SECTION 3.04 Taxes. (a) Any and all payments and deposits required
to be made hereunder or under any other Transaction Document by the Seller or
the Trustee to or for the benefit of any Liquidity Provider shall be made free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding net income taxes that are imposed by the United
States and franchise taxes and net income taxes that are imposed on such
Liquidity Provider by the state or foreign jurisdiction under the laws of which
such Liquidity Provider is organized or in which it is otherwise doing business
or any political subdivision thereof (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If GSFC or the Trustee shall be required by law to
deduct any Taxes from or in respect of any sum required to be paid or deposited
hereunder or under any instrument delivered hereunder to or for the benefit of
any Liquidity Provider, (A) such sum shall be increased as may be necessary so
that after making all required deductions (including deductions applicable to
additional sums required to be paid or deposited under this Section 3.04) the
amount received by the relevant Liquidity Provider, or otherwise deposited
hereunder or under such instrument, shall be equal to the sum which would have
been so received or deposited had no such deductions been made, (B) GSFC or the
Trustee (as appropriate) shall make such deductions and (C) GSFC or the Trustee
(as appropriate) shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) GSFC will indemnify each Liquidity Provider for the full
amount of Taxes (including, without, limitation, any Taxes imposed by any
jurisdiction on amounts, payable under this Section 3.04) paid by such
Liquidity Provider and any liability (including penalties, interest and
expenses) arising therefrom or required to be paid with respect thereto;
provided, however, that GSFC will have no obligation to provide such
indemnification to a Liquidity Provider having its principal place of business
or funding branch outside the United States of America. Each Liquidity
Provider agrees to promptly notify Seller of any payment of Taxes made by such
Liquidity Provider and, if practicable, any request, demand or notice received
in respect thereof prior to such payment. Each Liquidity Provider shall be
entitled to payment of this indemnification, as owner of Certificate Interests
pursuant to the terms of the Series 1994-1 Supplement, within 30 days from the
later of the date such Taxes are due and owing by such Liquidity Provider or
the Liquidity Provider makes written demand therefor to the Certificate Agent
and GSFC. A certificate as to the amount of such indemnification submitted to
the Seller and the Certificate Agent by such Liquidity Provider, setting forth
the calculation thereof, shall
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(absent manifest error) be conclusive and binding for all purposes.
(c) Notwithstanding the foregoing and any other provisions of this
Section 3.04, the obligations of the Trustee under this Section 3.04 shall be
payable only out of the Trust Assets.
(d) Each Liquidity Provider that is organized under the laws of a
jurisdiction other than the United States of America or a state thereof hereby
agrees to complete, execute and deliver to the Trustee from time to time prior
to the initial Distribution Date on which such Liquidity Provider will be
entitled to receive distributions pursuant to the Series 1994-1 Supplement and
this Agreement Internal Revenue Service Form 1001 or 4224 (or any successor
form), as applicable, or such other forms or certificates as may be required
under the laws of any applicable jurisdiction in order to permit GSFC or the
Trustee to make payments to, and deposit funds to or for the account of, such
Liquidity Provider hereunder and under the other Transaction Documents without
any deduction or withholding for or on account of any tax or with such
withholding or deduction at a reduced rate.
SECTION 3.05 Mitigation. (a) If at any time GSFC, the Trustee or the
Paying Agent is required to pay any additional amount pursuant to Section 3.03
or 3.04, then (i) the Liquidity Provider shall make all reasonable efforts to
transfer (pursuant to documentation reasonably satisfactory to the Liquidity
Provider and GSFC) its rights and obligations under the Transaction Documents
to another branch or office of such Liquidity Provider satisfactory to GSFC,
and to take such other steps as may be available, so that the payment,
deduction or withholding referred to in Section 3.03 or 3.04 would no longer be
required or the amount of such payment, deduction or withholding would be
reduced, provided that such transfer does not materially adversely affect the
Liquidity Provider in its reasonable judgment, and (ii) if at the end of thirty
(30) days the efforts referred to in clause (i) have not been made or have not
been successful, then, on request by GSFC or the Certificate Agent, the
Liquidity Provider shall make all reasonable efforts to transfer (pursuant to
documentation satisfactory to the Liquidity Provider and GSFC) its rights and
obligations under the Transaction Documents to a permitted assignee pursuant to
Article VI. GSFC shall cooperate with any efforts of the Liquidity Provider to
take action pursuant to this Section 3.05.
(b) No assignee of or participant in the rights and obligations of
CRC (other than any Liquidity Provider) or any Liquidity Provider shall be
entitled to receive any payment under Section 3.03 or 3.04 to the extent the
amount of such payment would exceed the amount that would have been payable to
the assignor.
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(c) The Certificate Agent on behalf of CRC or the Liquidity
Providers shall use reasonable efforts to mitigate Breakage Costs and other
similar amounts payable under the Transaction Documents by investing proceeds
of decreases of Increases in Eligible Investments or similar types of
investments.
SECTION 3.06 Sharing of Payments. If CRC or the Liquidity Providers
shall obtain any payment or other recovery (whether voluntary, involuntary, by
application of set-off or otherwise) on account of any Obligation (other than
pursuant to Section 3.03 or 3.04 of this Agreement) which is in excess of its
pro rata share of the sum of payments then or theretofore obtained by CRC or
the Liquidity Providers, CRC or any such Liquidity Provider shall purchase from
CRC or the Liquidity Providers, as applicable, such participations in
Obligations held by them as shall be necessary to cause such purchaser to
share the excess payment or other recovery ratably with each of them; provided,
however, that if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing Liquidity Provider or CRC, as the
case may be, the purchase of such participations shall be rescinded and the
seller of such participation to such purchaser shall repay to such purchaser
the purchase price of such participation to the ratable extent of such recovery
together with an amount equal to such Liquidity Provider's or CRC's ratable
share (according to the proportion of the amount of such seller's required
repayment to such purchaser to the total amount so recovered from such
purchaser) of any interest or other amount payable by such purchaser in
respect of the total amount so recovered.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01 Conditions Precedent to Funding of the Initial Increase.
The initial funding of Increases is subject to the conditions precedent that
the conditions precedent to each purchase under the Receivables Purchase
Agreement, the Series 1994-1 Supplement and the Pooling and Servicing Agreement
have been satisfied to the reasonable satisfaction of (or waived in writing by)
the Certificate Agent, CRC and the Liquidity Providers.
SECTION 4.02 Conditions Precedent to All Increases. The funding of
each Increase (including the initial Increase) hereunder shall be subject to
the further conditions precedent that on the date of such Increase the
following statements shall be true in all material respects (and GSFC by
accepting the amount of such Increase shall be deemed to have certified that):
(a) The representations of GSFC and the Servicer
contained in the Receivables Purchase Agreement and the
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<PAGE> 18
Pooling and Servicing Agreement are correct in all material respects
on and as of such day as though made on and as of such day (and shall
be deemed to have been made on such day);
(b) No event shall have occurred and be continuing, or
would result from the funding of such Increase, that constitutes an
Early Amortization Event; and
(c) After giving effect to each proposed Increase, the
limits on the amount of Increases in Section 2.04 shall not be
breached unless CRC and the Liquidity Providers shall otherwise
consent.
SECTION 4.03 CRC Discretionary Fundings. It shall be a condition
precedent to the funding of any Increase by CRC that the Certificate Agent
shall not have delivered to GSFC, the Servicer and the Trustee a notice
pursuant to Section 2.05(a) stating that CRC shall not fund any further
Increases hereunder.
ARTICLE V
THE CERTIFICATE AGENT
SECTION 5.01 Authorization and Action of the Certificate Agent. CRC
and each Liquidity Provider hereby appoints and authorizes the Certificate
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Transaction Documents as are delegated to
the Certificate Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto.
SECTION 5.02 The Certificate Agent's Reliance, Etc. Neither the
Certificate Agent nor any of its directors, officers, agents or employees shall
be liable for any action taken or omitted to be taken by it or the Certificate
Agent under or in connection with this Agreement or the other Transaction
Documents, except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, the Certificate Agent: (a)
may consult with independent legal counsel (including counsel for the Trust,
GSFC or the Servicer), independent certified public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (b) makes no warranty or representation to CRC, any
Liquidity Provider or any other holder of any interest in the Trust Assets and
shall not be responsible to CRC, any Liquidity Provider or any such other
holder for any statements, warranties or representations made in or in
connection with this Agreement; (c) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or
15
<PAGE> 19
the other Transaction Documents on the part of the Trust, GSFC or the Servicer
or to inspect the property (including the books and records) of the Trust, GSFC
or the Servicer; (d) shall not be responsible to CRC, any Liquidity Provider or
any other holder of any interest in Trust Assets for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other Transaction Document (except for the execution by the
Certificate Agent of, and legality, validity and enforceability against the
Certificate Agent of its obligations under, the Transaction Documents to which
the Certificate Agent is a party); and (e) shall incur no liability under or in
respect of this Agreement or the other Transaction Documents by acting upon any
notice (including notice by telephone), consent, certificate or other
instrument or writing (which may be by facsimile or telex) believed by it to be
genuine and signed or sent by the proper party or parties; except in each case,
for gross negligence or wilful misconduct on the part of the Certificate Agent.
SECTION 5.03 The Certificate Agent and Affiliates. Citicorp North
America, Inc. and its Affiliates (including Citibank, N.A.) may generally
engage in any kind of business with GSFC or the Servicer or any Obligor, any of
their respective Affiliates and any Person who may do business with or own
securities of the Servicer or any Obligor or any of their respective
Affiliates, all as if Citicorp North America, Inc. were not the Certificate
Agent and without any duty to account therefor to CRC, any Liquidity Provider
or any other holder of an interest in Trust Asset.
SECTION 5.04 Amendments, Waivers and Other Actions by the Certificate
Agent. The Certificate Agent reserves the right, in its sole discretion
(subject to the next following sentence), to exercise any rights and remedies
available to the Certificate Agent under the Transaction Documents or pursuant
to applicable law, and also to agree to any amendment, modification or waiver
of this Agreement or any other Transaction Document, to the extent such
Transaction Documents provide for, or require, the Certificate Agent's
agreement (in its capacity as the Certificate Agent) to such amendment,
modification or waiver. Notwithstanding the foregoing, the Certificate Agent
agrees for the benefit of the Liquidity Providers that it shall not, subject to
the terms of the Transaction Documents,
(a) without the prior written consent of each of the Liquidity
Providers,
(i) modify the assignability provisions of any of the
Transaction Documents so as to impair any rights expressly
granted to an assignee or participant under this Agreement,
or
16
<PAGE> 20
(ii) amend or waive any provision of clause (b) of Section
2.04 of this Agreement, or
(iii) reduce any fees payable to the Certificate Agent or
CRC which relate to payments to Liquidity Providers or extend the
dates on which such fees are payable, or
(iv) increase the dollar amount of any Liquidity Provider's
Liquidity Provider Commitment;
(b) without the prior written consent of the Majority Liquidity
Providers (as defined below), amend any provision of clause (a) of Section 2.04
of this Agreement.
ARTICLE VI
ASSIGNMENTS
SECTION 6.01 Restrictions on Assignments. (a) Neither CRC nor any
Liquidity Provider may assign its rights or delegate its obligations hereunder
or any interest herein without the prior written consent of GSFC (such consent
not to be unreasonably withheld), and neither CRC nor any Liquidity Provider
may assign any Certificate Interest (or portion thereof) to any Person without
the prior written consent of the Certificate Agent; provided, however, that
(i) CRC may at any time assign, or grant a security
interest in, Certificate Interests (or portions thereof) pursuant to
this Agreement to the Certificate Agent or any Liquidity Provider;
(ii) Any Liquidity Provider may assign any Certificate
Interest (or portion thereof) to any other Liquidity Provider upon 30
days' prior notice to the Certificate Agent and GSFC; and
(iii) Any Liquidity Provider may assign any Certificate
Interest (or a portion thereof) funded by such Liquidity Provider to
any commercial bank or other financial institution (subject to the
prior written consent of GSFC and the Certificate Agent, such consent
not to be unreasonably withheld, in the case of any assignment to a
commercial bank or other financial institution having a rating for its
short-term debt of lower than A-1/P-1 or the equivalent from the
rating agencies then rating CRC's commercial paper). No such
assignment may occur if the effect thereof is to increase any
liability under Sections 3.03 and 3.04.
(b) GSFC agrees to advise the Certificate Agent within five
Business Days after notice to GSFC of any proposed assignment or
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<PAGE> 21
delegation by a Liquidity Provider of any Certificate Interest (or portion
thereof), not otherwise permitted under subsection (a), of GSFC's consent or
non-consent to such assignment.
SECTION 6.02 Rights of Assignee. Upon the assignment by CRC or any
Liquidity Provider of any Certificate Interest (or portion thereof) in
accordance with this Article VI, (a) the assignee receiving such assignment
shall have all of the rights of such assignor hereunder with respect to such
Certificate Interest (or such part thereof) and (b) all references to such
assignor in the Transaction Documents shall be deemed to apply to such assignee
to the extent of its interest in the related Collections.
SECTION 6.03 Notice of Assignment. Each of CRC and any Liquidity
Provider shall promptly provide notice to GSFC and the Certificate Agent of any
assignment of any Certificate Interest (or portion thereof) by CRC or any
Liquidity Provider to any assignee.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 Amendments, Etc. No amendment of any provision of this
Agreement shall in any event be effective unless the same shall be in writing
and signed by the parties hereto. Any waiver or consent shall be effective only
if signed by the party waiving any right, in the specific instance and for the
specific purpose for which given.
SECTION 7.02 Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telex and facsimile communication) and shall be personally delivered
or sent by certified mail, postage prepaid, or by telex, or by facsimile, to
the intended party at the address or telex or facsimile number of such party
set forth under its name on the signature pages hereof or at such other address
or telex or facsimile number as shall be designated by such party in a written
notice to the other parties hereto. All such notices and communications shall
be effective, (a) if personally delivered, when received, (b) if sent by
certified mail, four Business Days after having been deposited in the mail,
postage prepaid, (c) if sent by overnight courier, two Business Days after
having been given to such courier, unless sooner received by the addressee and
(d) if transmitted by facsimile, when sent, upon receipt confirmed by telephone
or electronic means, except that notices and communications pursuant to Article
III shall not be effective until received. Notices and communications sent
hereunder on a day that is not a Business Day shall be deemed to have been sent
on the following Business Day.
18
<PAGE> 22
SECTION 7.03 No Waiver; Remedies. No failure on the part of the
Certificate Agent, any Liquidity Provider, any Indemnified Party, CRC or any
other holder of any Certificate Interest, GSFC, the Servicer or the Trustee to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law. Without limiting the foregoing, the Certificate
Agent and each Liquidity Provider is hereby authorized by GSFC at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by the Certificate
Agent and each Liquidity Provider to or for the credit or the account of GSFC,
now or hereafter existing under this Agreement, to the Certificate Agent, any
Liquidity Provider, any Indemnified Party or CRC, or their respective
successors and assigns; provided, however, no such Person shall exercise any
such right of set-off without the prior written consent of the Certificate
Agent. Each set-off by CRC or any Liquidity Provider under this Section 7.03
against the amount of any Increase shall decrease the amount of such Increase
accordingly.
SECTION 7.04 Binding Effect; Survival. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, and the provisions of Sections 3.03 and 3.04 shall
inure to the benefit of the Liquidity Providers and their respective successors
and assigns; provided, however, nothing in the foregoing shall be deemed to
authorize any assignment not permitted by Section 6.01. This Agreement shall
create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until one
year and one day after the earlier of the date on which all Obligations are
paid in full or the Trust shall terminate in accordance with the Pooling and
Servicing Agreement. The provisions of Sections 3.03 and 3.04 shall be
continuing and shall survive any termination of this Agreement.
SECTION 7.05 No Proceedings. CRC, the Seller, the Trustee, Citicorp
North America, Inc., individually and as Certificate Agent, and each Liquidity
Provider each hereby agrees that it will not institute against CRC, or join any
other Person in instituting against CRC, any insolvency proceeding (namely, any
proceeding of the type referred to in the definition of "Insolvency Event") so
long as any CP Notes issued by CRC shall be outstanding or there shall not have
elapsed one year plus one day since the last day on which any such CP Notes
shall have been outstanding. The foregoing shall not limit the right of CRC,
GSFC, the Trustee, Citicorp North America, Inc., individually or
19
<PAGE> 23
as the Certificate Agent, or any Liquidity Provider to file any claim in or
otherwise take any action with respect to any such insolvency proceeding that
was instituted against CRC by any Person other than CRC, the Seller, the
Trustee, Citicorp North America, Inc., individually or as the Certificate
Agent, or any Liquidity Provider.
SECTION 7.06 Captions and Cross References. The various captions
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning
or interpretation of any provision of this Agreement.
SECTION 7.07 Integration. This Agreement, together with the other
Transaction Documents, contains a final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof
and, together with all the other Transaction Documents, shall constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof, superseding all prior oral or written understandings.
SECTION 7.08 Governing Law. This Agreement, including the rights and
duties of the parties hereto, shall be governed by, and construed in accordance
with, the internal laws of the State of New York, without reference to its
conflict of law provisions, except to the extent that the perfection of the
interests of the investors in the trust assets is governed by the laws of a
jurisdiction other than the State of New York.
SECTION 7.09 Submission to Jurisdiction. Each party hereto hereby
irrevocably submits to the non-exclusive jurisdiction of any federal court of
the United States of America sitting in New York City or, if jurisdiction is
not available in such federal court, New York state court, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement or any other transaction document, and hereby (a) irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York state or federal court; and (b) irrevocably waives,
to the fullest extent it may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding. As an alternative
method of service, GSFC also irrevocably consents to the service of any and all
process in any such action or proceeding by the mailing of copies of such
process to the Servicer at its address specified herein. Nothing in this
Section 7.09 shall affect the right of any party hereto to bring any action or
proceeding against another party hereto or any of its properties in the courts
of any other jurisdiction.
SECTION 7.10 Waiver of Jury Trial. Each party hereto waives any right
to a trial by jury in any action or proceeding to enforce or defend any rights
under or relating to this Agree-
20
<PAGE> 24
ment, any other Transaction Document, or any amendment, instrument, document
or agreement delivered or which may in the future be delivered in connection
herewith or therewith or arising from any course of conduct, course of dealing,
statements (whether verbal or written), actions of any of the parties hereto
and the Liquidity Provider or any other relationship existing in connection
with this Agreement or any other Transaction Document, and agrees that any
such action or proceeding shall be tried before a court and not before a jury.
SECTION 7.11 Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Certificate
Purchase Agreement to be duly executed by their respective officers thereunto
duly authorized as of the date first above written.
GENEVA STEEL FUNDING CORPORATION,
as Seller
By Richard D. Clayton
--------------------------------
Name: Richard D. Clayton
Title: President
10 South Geneva Road
Vineyard, Utah 84058
Facsimile No.: (801) 227-9020
Attention: Treasurer
CORPORATE RECEIVABLES CORPORATION,
as Purchaser
By Citicorp North America, Inc.,
as Attorney-in-Fact
By Radford C. West
--------------------------------
Name: Radford C. West
Title: Vice President
450 Mamaroneck Avenue
Harrison, New York 10528
Facsimile No.: (914) 899 7015
Attention: Dana Hartmann
21
<PAGE> 25
CITICORP NORTH AMERICA, INC.,
as Certificate Agent
By Radford C. West
---------------------------------
Name: Radford C. West
Title: Vice President
450 Mamaroneck Avenue
Harrison, New York 10528
Facsimile No.: (914) 899 7015
Attention: Dana Hartmann
CITIBANK, N.A.,
Commitment: $65,000,000 as a Liquidity Provider
Percentage: 100%
By Radford C. West
---------------------------------
Name: Radford C. West
Title: Attorney-in-Fact
399 Park Avenue
New York, New York 10043
Facsimile No.: (212) 758 7245
Attention: Radford C. West
GENEVA STEEL COMPANY,
as Servicer
By Dennis L. Wanlass
---------------------------------
Name: Dennis L. Wanlass
Title: Vice President
10 South Geneva Road
Vineyard, Utah 84058
Facsimile No.: (801) 227 9090
Attention: Chief Financial Officer
Acknowledged and Accepted:
BANKERS TRUST COMPANY
not in its individual capacity,
but solely as Trustee
By Sandra Whalen
---------------------------
Name: Sandra Whalen
Title: Authorized Signatory
22
<PAGE> 26
EXHIBIT A TO
CERTIFICATE PURCHASE AGREEMENT
FORM OF NOTICE OF INCREASE
[Date]
CITICORP NORTH AMERICA, INC.,
as Certificate Agent
399 Park Avenue
New York, NY 10043
Attention: __________________
Gentlemen:
The undersigned, Geneva Steel Funding Corporation, refers to the
Certificate Purchase Agreement, dated as of November 4, 1994 (as modified,
amended, supplemented or restated from time to time, the "Agreement"; the terms
defined therein being used herein as therein defined), among the undersigned,
Corporate Receivables Corporation, the liquidity providers named therein,
Citicorp North America, Inc., as certificate agent, Geneva Steel Company, as
servicer, and Bankers Trust Company, as trustee, and hereby gives you notice
pursuant to Section 2.05(a) of the Agreement that the undersigned hereby
requests an Increase under the Agreement, and in that connection sets forth
below the information relating to such Increase as required by Section 2.05(a)
of the Agreement:
(i) The Increase Date for the proposed Increase shall
be__________ __, 19__.
(ii) The amount of the proposed Increase shall be $____________.
(iii) The Yield Rate for the proposed Increase shall be calculated
at a rate based on the [CP Rate] [Pool Rate] [Adjusted Eurodollar Rate]
[Alternate Base Rate].
(iv) In the case of an Increase, the Yield Rate for which is to
be calculated at a rate based on the Adjusted Eurodollar Rate or CP Rate, the
desired duration of the initial Interest Period for such proposed Increase
shall be _____________________.
Very truly yours,
GENEVA STEEL FUNDING CORPORATION
By
------------------------------
Name:
Title:
<PAGE> 27
ANNEX X
DEFINITIONS
Whenever used in the Transaction Documents, the following
words and phrases shall have the following meanings, and the definitions of
such terms are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of
such terms.
"Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Additional Early Amortization Event" shall have the meaning
specified in Section 7.01 of each Supplement.
"Additional Interest Period" shall have the meaning specified
in Section 2.05(d) of the Certificate Purchase Agreement.
"Adjusted Eurodollar Rate" shall mean, for each Interest
Period, for any Increase, an interest rate per annum equal to the sum of (a)
the rate of interest per annum (the "Eurodollar Rate") at which deposits in
U.S. Dollars are offered by the principal office in London, England of the
Reference Bank to prime banks in the interbank eurodollar market at 11:00 a.m.
(London time) two Eurodollar Business Days (as defined below) before the first
day of such Interest Period in an amount approximately equal or comparable to
the principal amount of such Increase and for a period equal to such Interest
Period plus (b) the remainder obtained by subtracting (i) the Eurodollar Rate
for such Interest Period from (ii) the rate obtained by dividing such
Eurodollar Rate by the percentage equal to 100% minus the "Eurodollar Reserve
Percentage" (as defined below) for such Interest Period. "Eurodollar Business
Day" means a day of the year on which dealings are carried on in the London
interbank market and banks are open for business in London and are not required
or authorized to close in New York City. "Eurodollar Reserve Percentage" of
the Reference Bank for any Interest Period means the reserve percentage
applicable during such Interest Period under regulations issued from time to
time by the Board of Governors of the Federal Reserve System (or any successor)
(or if more than one such percentage shall be so applicable, the daily average
of such percentages for such day) for determining the maximum reserve
requirement (including, without limitation, any marginal reserve requirement)
for a member bank of the Federal Reserve System in New York City, the Reference
Bank in respect of liabilities or assets consisting of or including
Eurocurrency liabilities as that term is used in Regulation D of the Board of
Governors of the Federal Reserve System as in effect from time to time having a
term equal to such Interest Period.
<PAGE> 28
"Affiliate" shall mean, with respect to any specified Person,
any other Person controlling, controlled by or under common control with such
specified Person and, without limiting the generality of the foregoing, shall
be presumed to include (A) any Person which beneficially owns or holds 10% or
more of any class of voting securities of such designated Person or 10% or more
of the equity interest in such designated Person and (B) any Person of which
such designated Person beneficially owns or holds 10% or more of any class of
voting securities or in which such designated Person beneficially owns or holds
10% or more of the equity interest. For the purposes of this definition,
"control" when used with respect to any specified Person shall mean the power
to direct the management and policies of such specified Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Aggregate Certificateholders' Interest" shall mean the
aggregate of the Certificateholders' Interests for each Series as defined in
Section 4.01(a) of the Pooling and Servicing Agreement.
"Aggregate Liquidity Provider Commitment" shall mean the
aggregate of the amount of the Liquidity Provider Commitments which at all
times shall equal the Maximum Invested Amount.
"Alternate Base Rate" means a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall at
all times be equal to the highest of:
(i) the rate of interest announced publicly by the
Reference Bank in New York, New York, from time to time as the
Reference Bank's base rate; or
(ii) 1.50% per annum above the latest three-week
moving average of secondary market morning offering rates in
the United States for three-month certificates of deposit of
major United States money market banks, such three- week
moving average being determined weekly on each Monday (or, if
any such day is not a Business Day on the next succeeding
Business Day) for the three-week period ending on the previous
Friday by the Reference Bank on the basis of such rates
reported by certificate of deposit dealers to and published by
the Federal Reserve Bank of New York in Federal Reserve
Statistical Release H.15(519) or, if such publication shall be
suspended or terminated, on the basis of quotations for the
latest three-week average of secondary market morning offering
rates received by the Reference Bank from three New York
certificate of deposit dealers of recognized standing selected
by the
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<PAGE> 29
Reference Bank, in either case adjusted to the nearest 1/4 of
one percent or, if there is no nearest 1/4 of one percent, to
the next higher 1/4 of one percent; or
(iii) 1.50% percent per annum above the Federal
Funds Rate.
"Amortization Date" with respect to any Series, shall have the
meaning specified in the related Supplement.
"Amortization Period" shall mean, with respect to any Series,
unless otherwise specified in the related Supplement, the period beginning on
the related Amortization Date, and ending upon the full reduction of the
Invested Amount with respect to such Series, all accrued and unpaid Yield
thereon and all other amounts due and owing to the Investor Certificateholders
under the Transaction Documents.
"Bank Rate" for any Interest Period for any Increase means an
interest rate per annum equal to the sum of (a) the Adjusted Eurodollar Rate
for such Interest Period for such Increase, plus (b) 1.00% per annum; provided,
however, that (i) in the case of any Interest Period for any such Increase of
one to (and including) thirteen days, or in respect of an Increase the
principal balance of which is less than $5,000,000, the "Bank Rate" for such
Interest Period for such Increase shall be the Alternate Base Rate in effect on
the first day of such Interest Period unless the Certificate Agent and the
Transferor agree in writing to a different rate; (ii) if it shall become
unlawful for the Reference Bank to obtain funds in the London interbank market
in order to purchase, fund or maintain any Increase under the Certificate
Purchase Agreement or deposits in dollars (in the applicable amounts) are not
being offered by the Reference Bank in the London interbank market, then the
"Bank Rate" for any Interest Period for such Increase shall be the Alternate
Base Rate in effect from time to time during such Interest Period; and (iii)
following the occurrence and during the continuation of an Early Amortization
Period, the "Bank Rate" for any Interest Period for such Increase shall be the
sum of the applicable interest rate per annum determined pursuant to the
provisions set forth above plus 2% per annum.
"Beneficiary" shall mean, as of any date of determination, any
of the then holders of the Investor Certificates and any Enhancement Provider.
"Breakage Costs" shall mean, for each Increase for the
Interest Period during which the principal amount for such Increase is reduced
and for which the applicable Yield Rate is the CP Rate or a rate calculated on
the basis of the Adjusted Eurodollar Rate, the amount, if any, billed by which
(i) the Yield (calculated without taking into account any Breakage Costs)
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<PAGE> 30
which would have accrued on the reductions of such Increase or Liquidity
Provider Commitment Percentage of such Increase, as applicable, during such
Interest Period (as so computed) if such reductions had remained as Increases
through the last day of the Interest Period exceeds (ii) the income, if any,
received by the Purchaser or a Liquidity Provider funding such Increase or
Liquidity Provider Commitment Percentage of such Increase, as applicable, from
the Purchaser's or Liquidity Provider's investment of the proceeds of such
reductions of such Increase.
"Business Day" shall mean any day other than a Saturday or
Sunday or any other day on which national banking associations or state banking
institutions in New York, New York, Salt Lake City, Utah or the city in which
the Corporate Trust Office is located are authorized or obligated by law,
executive order or governmental decree to be closed.
"Canadian Obligors" shall mean each Person who is obligated to
pay for goods or services provided by Geneva Steel which gave rise to a
Receivable, including any guarantor of such Person's obligations, in the case
of any Person who is an individual, who is a citizen and, in the case of any
other Person, which is formed, organized or incorporated under the laws of the
Commonwealth of Canada or any province of Canada.
"Canadian Receivables" shall mean United States dollar
denominated accounts receivable generated from sales to Canadian Obligors.
"Certificate" shall mean any one of the Investor Certificates
or the Transferor Certificate.
"Certificate Agent" shall mean Citicorp North America, Inc. in
its capacity as agent for CRC and the Liquidity Providers under the Certificate
Purchase Agreement.
"Certificate Interest" shall mean each participating interest
in the Series 1994-1 Certificate acquired by CRC or a Liquidity Provider in
connection with the funding of an Increase by CRC or a Liquidity Provider
pursuant to Section 2.05 of the Certificate Purchase Agreement.
"Certificate Purchase Agreement" shall mean the Certificate
Purchase Agreement dated November 4, 1994, among the Transferor, the Purchaser,
the Liquidity Providers named therein, the Servicer, the Certificate Agent and
the Trustee, as amended, supplemented, restated or otherwise modified from time
to time.
"Certificate Purchase Price" shall have the meaning specified
in Section 2.01 of the Certificate Purchase Agreement.
4
<PAGE> 31
"Certificate Rate" shall mean, with respect to any Series or
Class, the certificate rate specified therefor in the related Supplement.
"Certificate Register" shall have the meaning specified in
Section 6.03(a) of the Pooling and Servicing Agreement.
"Certificateholder" or "Holder" shall mean the Person in whose
name an Investor Certificate or the Transferor Certificate is registered in the
Certificate Register.
"Certificateholders' Interest" shall have the meaning
specified in Section 4.01(a) of the Pooling and Servicing Agreement.
"Class" shall mean, with respect to any Series divided into
classes, any one of the classes of Investor Certificates of that Series.
"Closing Date" shall mean, with respect to any Series, the
Closing Date specified in the related Supplement.
"Collection Period" shall mean, with respect to any
Distribution Date, the calendar month (or, in the case of the calendar month in
which any Closing Date occurs, the portion of such calendar month following the
Closing Date) immediately preceding the calendar month in which such
Distribution Date occurs.
"Collections" shall mean (a) all cash payments by or on behalf
of the Obligors deposited to any Geneva Steel Collection Account or
Concentration Account, or received by the Servicer, in respect of Transferor
Receivables in the form of cash, checks, wire transfers, electronic transfers
or any other form of cash payment, and (b) all interest and other investment
earnings (net of losses and investment expenses) on Collections (including
without limitation funds on deposit in the Reserve Accounts) as a result of the
investment thereof pursuant to Section 4.02 of the Pooling and Servicing
Agreement.
"Concentration Account" shall have the meaning specified in
Section 4.02 of the Pooling and Servicing Agreement.
"Concentration Account Bank" shall initially be Bankers Trust
Company, and shall have the meaning specified in Section 4.02 of the Pooling
and Servicing Agreement.
"Concentration Amount" shall mean as of any date, with respect
to each Concentration Limit, the product of (a) such Concentration Limit and
(b) the aggregate amount of Eligible Receivables of a particular Obligor or
Obligors held by the Trust as to which such Concentration Limit applies.
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<PAGE> 32
"Concentration Limit" shall mean, with respect to the
following types of Receivables, the percentages of the aggregate amount of
Eligible Receivables held by the Trust set forth as follows: (a) Receivables
of any single Obligor rated at least "A-1" or its equivalent by each Rating
Agency, 6%; (b) Receivables of any single Obligor rated below "A-1", but at
least "A-2" or its equivalent by each Rating Agency, 5%; (c) Receivables of any
single Obligor rated below "A-2" but at least "A-3" or its equivalent by each
Rating Agency, 4%; (d) Receivables of any other single Obligor not rated on its
short-term debt, or the Mannesman Receivable, 3%; and (e) if the Commonwealth
of Canada sovereign debt rating is less than "AA" (or its equivalent) by each
Rating Agency, Receivables of any Canadian Obligor, 3%; provided, however, that
the Transferor may adjust the level of any Concentration Limit (i) if such
adjustment in and of itself does not cause each Rating Agency, as confirmed in
writing by each Rating Agency, to lower or withdraw its rating of any Series of
Certificates and (ii) subject to any further conditions specified in any Series
Supplement; provided, further, that (A) if two or more Rating Agencies assign
different ratings to a single Obligor or the Commonwealth of Canada, as the
case may be, the lower of such ratings shall be used to determine the
Concentration Limit and (B) if only one Rating Agency rates an Obligor or the
Commonwealth of Canada, as the case may be, the rating of such Rating Agency
shall be used to determine the Concentration Limit for such Obligor or Canada,
as the case may be.
"Confidential Information" shall mean, in relation to any
Person, any written information delivered or made available by or on behalf of
Geneva Steel (or its Affiliates or Subsidiaries) or the Transferor to such
Person in connection with or pursuant to this Agreement or the transactions
contemplated hereby which is proprietary in nature, other than information (i)
that is or becomes publicly known, or information obtained by the Person from
sources other than Geneva Steel or the Transferor, (ii) required to be
disclosed (A) by any applicable statute, law, rule or regulation, (B) by any
government agency or regulatory or self-regulatory body having or claiming
authority to regulate or oversee any aspects of the Person's business or that
of its Affiliates, (C) pursuant to any subpoena, civil investigative demand or
similar demand or request of any court, regulatory authority, arbitrator or
arbitration to which the Person or an Affiliate or an officer, director,
employer or shareholder thereof is a party, (D) in any preliminary or final
offering circular, registration statement or contract or other document
pertaining to the transactions contemplated by the Agreement approved in
advance by Geneva Steel or the Transferor, as the case may be, or (E) to any
Affiliate, independent or internal auditor, agent, employee or attorney of the
Person having a need to know the same, provided that the Person advises such
recipient of the confidential nature of the information
6
<PAGE> 33
being disclosed, (iii) any other disclosure authorized by Geneva Steel or the
Transferor as the case may be or (iv) disclosure to the other parties to the
transactions contemplated by the Pooling and Servicing Agreement.
"Contract" shall mean an agreement between Geneva Steel and an
Obligor, containing terms pursuant to or under which such Obligor shall be
obligated to pay from time to time for merchandise delivered or to be delivered
or services performed or to be performed and shall include, as applicable, any
invoice related thereto.
"Contractual Obligation" shall mean as to any Person, any
provision of any security issued by such Person or of any agreement, instrument
or other undertaking to which such Person is a party or by which it or any of
its property is bound.
"Corporate Trust Office" shall have the meaning specified in
Section 11.16 of the Pooling and Servicing Agreement.
"CP Note" shall mean any commercial paper note issued by CRC
to fund any Increase the Yield Rate in respect of which shall be determined by
reference to the CP Rate.
"CP Note Issuance Fees" shall mean with respect to each
issuance of CP Notes, the costs associated with such issuance paid by CRC.
"CP Rate" shall mean as to any Interest Period for the CRC
Tranche related to an Increase, a rate per annum equal to the weighted average
of the rates (or, if such rates are discount rates, the rates determined by
converting the discount rates to an interest-bearing equivalent rate per annum)
at which CP Notes allocable, in whole or part, by the Certificate Agent and
having a term equal to such Interest Period are issued by CRC to fund such
Increase through a placement agent or commercial paper dealer selected by the
Certificate Agent, as agreed between each such agent or dealer and the
Certificate Agent.
"CRC" shall mean Corporate Receivables Corporation, a
California corporation, including any successors and assigns.
"CRC Tranche" shall mean any issuance of Notes the proceeds of
which are used by CRC to fund an Increase and which CRC Tranche has the
principal amount and, in the case of any Increase the Yield Rate in respect of
which shall be determined by reference to the CP Rate, the Interest Period, in
each case, as specified by the Transferor pursuant to the Certificate Purchase
Agreement.
"Credit Policy Manual" shall mean those credit and collection
policies and practices of Geneva Steel described in
7
<PAGE> 34
its credit policy manual in effect on the date hereof relating to Receivables,
as the same may be amended or modified from time to time in compliance with
Section 3.04(j) of the Pooling and Servicing Agreement.
"Cure Funds" shall have the meaning specified in the
definition of the term "Cure Period" contained in this Annex X.
"Cure Period" shall mean the period beginning on a Pool
Non-compliance Date if the Transferor shall begin depositing Collections or
funds pro rata to the Reserve Account of each Series on the day collected (all
such funds so deposited from time to time by the Transferor being "Cure
Funds"), and continuing until the earlier of (a) the date on which the Net
Receivables Balance equals at least the Required Net Receivables Balance and
(b) the fifteenth day following the occurrence of such Pool Non-compliance
Date.
"Cut-Off Date" shall mean the close of business on the
Business Day immediately preceding the Closing Date.
"Daily CRC Expense Amount" shall mean with respect to any
Collection Period, the Monthly CRC Expense Amount divided by the number of days
in such Collection Period.
"Daily Report" shall mean, with respect to any Series, the
daily report in the form set forth in the related Supplement.
"Daily Trust Expense Amount" shall mean with respect to any
Collection Period, the Monthly Trust Expense Amount divided by the number of
days in such Collection Period.
"Default Ratio" shall mean, for any month, the average of the
ratios for each of the three most recently ended months (each expressed as a
percentage) of (i) aggregate Transferor Receivables (without giving effect to
extended debits and credits) that were 121 days past due at the end of each
such month plus Transferor Receivables which were charged off as uncollectible
during the current month which were less than 150 days past due when charged
off to (ii) aggregate Transferor Receivables that were acquired by the Trust
during the sixth month preceding such date.
"Defaulted Receivable" shall mean a Transferor Receivable: (i)
as to which the Obligor thereof has taken any action, or suffered any event to
occur, of the type constituting an Insolvency Event, (ii) as to which any
payment, or part thereof, remains unpaid by the Obligor thereof for 121 days or
more from the original due date for such payment specified in the relevant
invoice, and (iii) which, consistent with the Credit Policy Manual, would be
written off as uncollectible.
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<PAGE> 35
"Deposit Date" shall mean each Business Day on which any
Collections are deposited in the Concentration Account.
"Determination Date" shall mean, with respect to any
Distribution Date, the second Business Day preceding such Distribution Date.
"Determination Date Certificate" shall mean, with respect to
any Determination Date and any Series, a report prepared by a Servicing Officer
for such Determination Date as of the end of the immediately preceding month in
substantially the form set forth in the related Supplement.
"Diluted Receivable" shall mean, that portion of any Eligible
Receivable which is either (a) reduced or canceled as a result of (i) any
failure by Geneva Steel to deliver any merchandise or provide any services or
otherwise to perform under the underlying Contract, (ii) any change in the
terms of, or cancellation of, a Contract or any other adjustment by Geneva
Steel which reduces the amount payable by the Obligor on the related Receivable
or (iii) any setoff in respect of any claim by an Obligor thereof (whether such
claim arises out of the same or an unrelated transaction) or (b) subject to any
specific dispute, offset, counterclaim or defense whatsoever asserted (except
the discharge in bankruptcy of the Obligor thereof); provided, that Diluted
Receivables do not include (x) contractual adjustments to the amount payable by
an Obligor that are eliminated from the Receivables balance sold to the Trust
through a reduction in the Purchase Price for the related Receivable or (y) any
portion of those Receivables for which a production prepayment has been
received.
"Dilution Ratio" shall mean as of any date, the ratio for the
most recently ended month (expressed as a percentage) of (i) the aggregate
balance of Transferor Receivables that became Diluted Receivables during such
month to (ii) the aggregate balance of all Transferor Receivables acquired by
the Trust during the month preceding such date of calculation.
"Dilution Volatility Factor" shall mean as of any date a
percentage equal to the product of (i) the amount by which (A) the highest
Dilution Ratio during the most recently ended twelve-month period exceeds (B)
the average of the Dilution Ratios during such twelve-month period and (ii) (A)
the highest Dilution Ratio during such twelve-month period divided by (B) the
average of the Dilution Ratios during such twelve-month period.
"Discount Amount" shall mean, with respect to any Series, the
amount set forth in the related Supplement.
"Distribution Date" shall mean, with respect to any Collection
Period, the fifteenth day of the calendar month
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<PAGE> 36
immediately following such Collection Period, or, if such day is not a Business
Day, the next succeeding Business Day or such other day as set forth in the
Supplement for a Series.
"Division" shall mean the Division of Corporations and
Commercial Code of the Department of Commerce of the State of Utah.
"Dollars and $" shall mean lawful money of the United States
of America.
"Duff & Phelps" shall mean Duff & Phelps Credit Rating Co. or
its successor.
"Dynamic Loss and Dilution Reserve Percentage" shall mean as
of any date of determination the sum of (a) the product of (i) 2.25 times (ii)
the average Dilution Ratio during the preceding 12 months times (iii) a
fraction the numerator of which is the total sales for the past month and the
denominator of which is the aggregate outstanding balance of Eligible
Receivables as of the end of the most recently ended month, plus (b) the
product of the Dilution Volatility Factor times the fraction specified in
clause (a)(iii) above, plus (c) the product of (i) 2.25, times (ii) the highest
Default Ratio during the preceding 12 months, times (iii) a fraction the
numerator of which is the total sales for the past 6 months and the denominator
of which is the aggregate outstanding balance of Eligible Receivables as of the
end of the most recently ended month.
"Early Amortization Event" shall have the meaning specified in
Section 9.01 of the Pooling and Servicing Agreement and with respect to any
Series shall also mean any Additional Early Amortization Event specified in the
related Supplement.
"Early Amortization Period" shall mean, with respect to any
Series, unless otherwise specified in the related Supplement, the period
beginning at the close of business on the Business Day immediately preceding
the day on which an Early Amortization Event is deemed to have occurred, and in
each case ending upon the earlier to occur of (a) the payment in full to the
Investor Certificateholders of such Series of the Invested Amount with respect
to such Series and (b) the Termination Date with respect to such Series.
"Early Termination" shall have the meaning specified in
Article VI of the Receivables Purchase Agreement.
"Effective Period" shall mean the period beginning on the
Closing Date and terminating on the earliest of (a) the close of business on
the Business Day on which a Termination Event occurs, and (b) the close of
business on the Business Day
10
<PAGE> 37
immediately preceding the day on which the Amortization Period for the last
outstanding Series begins.
"Eligible Institution" shall have the meaning specified in the
related Supplement.
"Eligible Investments" shall mean book-entry securities
entered on the books of the registrar of such security and held in the name or
on behalf of the Trustee or negotiable instruments or securities represented by
instruments in bearer or registered form (registered in the name of the Trustee
or its nominee) which evidence:
(a) direct obligations of, or obligations fully
guaranteed as to timely payment by, the United States of
America or any agency;
(b) demand deposits, time deposits or
certificates of deposit (having original maturities of no more
than 270 days) of depository institutions or trust companies
incorporated under the laws of the United States of America or
any state thereof (or domestic branches of foreign banks),
subject to supervision and examination by Federal or state
banking or depository institution authorities, and having, at
the time of the Trust's investment or contractual commitment
to invest therein, the highest short-term unsecured debt
rating from S&P, Moody's and Duff & Phelps;
(c) commercial paper (having original maturities
of no more than 270 days) having, at the time of the Trust's
investment or contractual commitment to invest therein, the
highest short-term rating from S&P, Moody's and Duff & Phelps;
(d) investments in no load money market funds
having a rating from each rating agency rating such fund in
its highest investment category (including funds for which the
Trustee or any of its Affiliates is an investment manager or
advisor);
(e) notes or bankers' acceptances (having
original maturities of no more than 270 days) issued by any
depository institution or trust company referred to in clause
(b) above;
(f) Such other investments, so long as they shall
be rated by S&P, Moody's and Duff & Phelps as either AAA, Aaa
or Duff-1+, as an eligible investment for AAA rated
transactions, or in the highest short term rating assigned by
each such rating agency; or
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<PAGE> 38
(g) repurchase agreements secured by other
Eligible Investments.
"Eligible Receivable" shall mean each Transferor Receivable or
portion thereof:
(i) the Obligor of which is not an
Affiliate of Geneva Steel or the Transferor;
(ii) as to which, other than as a result
of the application of or reference to Octagon in any proceeding before
any state or federal court within the tenth federal circuit or the
United States Supreme Court, at the time of the Transfer of such
Receivable to the Trust, the Transferor or the Trust will have good
and marketable title thereto free and clear from Liens except as
created under the Transaction Documents, and which has been the
subject of either a valid transfer and assignment from the Transferor
to the Trust of all the Transferor's right, title and interest therein
(and in the proceeds thereof), or the grant of a first priority
perfected "security interest" (within the meaning of the UCC of the
jurisdiction the law of which governs the perfection of the interest
in such Receivable created under the Transaction Documents) therein
(and in the proceeds thereof);
(iii) which is not a Defaulted Receivable
or a Diluted Receivable;
(iv) which arose in the ordinary course
of business of Geneva Steel and is an account receivable representing
all or part of the sales price of merchandise, or services within the
meaning of Section 3(c)(5) of the Investment Company Act, the Obligor
of which is primarily liable with respect thereto;
(v) which is an "account" (within the
meaning of Section 9-106 of the UCC of the jurisdiction the law of
which governs the perfection of the interest in such Receivable
created under the Transaction Documents);
(vi) which is denominated and payable
only in United States dollars in the United States;
(vii) the Obligor of which is a United
States or Canadian resident or citizen;
(viii) which is the legal and assignable
payment obligation of the Obligor of such Receivable, enforceable
against such Obligor in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, morato-
12
<PAGE> 39
rium or other laws affecting creditors' rights generally, and except
as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity);
(ix) which was created in material
compliance with, and which, at the time of the Transfer of such
Receivable to the Trust, does not contravene in any material respect,
any applicable Requirements of Law, and the Obligor on which is not in
violation of any such Requirements of Law in any material respect with
respect to such Receivable;
(x) which satisfies in all material
respects all applicable requirements of the Credit Policy Manual
including, without limitation, payment terms that conform to the
provisions of such Credit Policy Manual;
(xi) with respect to which all material
consents, licenses, approvals or authorizations of, or registrations
or declarations with, any Governmental Authority required to be
obtained, effected or given in connection with the creation of such
Receivable have been duly obtained, effected or given and are in full
force and effect;
(xii) which is not subject to any specific
waiver or modification except for a Receivable which is subject to a
waiver or modification as permitted in accordance with the Credit
Policy Manual and which waiver or modification is reflected in the
Servicer's records and computer files relating thereto;
(xiii) which is not subject to any
enforceable provision prohibiting the transfer or assignment by Geneva
Steel of such payment obligation; and
(xiv) the Obligor of which is not a
Governmental Authority.
"Eligible Servicer" shall mean Geneva Steel, the Trustee or an
entity which, at the time of its appointment as Servicer, (a) is servicing a
portfolio of trade receivables, (b) is legally qualified and has the capacity
to service the Receivables and (c) has demonstrated the ability to
professionally and competently service a portfolio of similar trade receivables
with high standards of skill and care.
"Enhancement" shall mean the rights and benefits provided to
the Investor Certificateholders of any Series or Class pursuant to any letter
of credit, surety bond, cash collateral account, spread account, guaranteed
rate agreement, maturity liquidity facility, tax protection agreement, interest
rate swap
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<PAGE> 40
agreement or other similar arrangement. The subordination of any Series or
Class to any other Series or Class or of the Transferor's Interest to any
Series or Class shall be deemed to be an Enhancement.
"Enhancement Agreement" shall mean any agreement, instrument
or document governing the terms of any Enhancement of any Series or pursuant
to which any Enhancement of any Series is issued or outstanding.
"Enhancement Provider" shall mean the Person providing any
Enhancement, other than any Certificateholders (including any holder of the
Transferor Certificate) the Certificates of which are subordinated to any other
Series or Class.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any Person who is a member of a
group which is under common control with the Transferor, or who together with
the Transferor is treated as a single employer within the meaning of Title IV
of ERISA.
"Expected Final Payment Date" with respect to any Series shall
have the meaning specified in the related Supplement.
"Extension Term" shall mean, with respect to the term of any
Liquidity Provider Commitment, a period of 364 days.
"FDIC" shall mean the Federal Deposit Insurance Corporation or
any successor.
"Federal Funds Rate" shall mean, with respect to any day, the
rate set forth in H.15(519) for that day opposite the caption "Federal Funds
(Effective)". If on any date of determination, such rate is not published in
H.15(519), such rate will be the rate set forth in Composite 3:30 P.M.
Quotations for U.S. Government Securities for that day under the caption
"Federal Funds/Effective Rate". If on any date of determination, the
appropriate rate is not published in either H.15(519) or Composite 3:30 P.M.
Quotations for U.S. Government Securities, such rate will be the arithmetic
mean of the rates for the last transaction in overnight Federal funds arranged
by three leading brokers of Federal funds transactions in New York City prior
to 9:00 A.M., New York City time, on that day.
"Fee Letter" shall have the meaning specified in Section 3.01
of the Certificate Purchase Agreement.
"Floating Allocation Percentage" with respect to each Series,
shall have the meaning specified in the related Supple-
14
<PAGE> 41
ment; provided, however, that the aggregate of the Floating Allocation
Percentages of all outstanding Series shall not exceed 100%.
"GAAP" shall mean generally accepted accounting principles in
the United States, as in effect from time to time.
"Geneva Steel" shall mean Geneva Steel Company, including any
successors and assigns.
"Geneva Steel Collection Account" shall have the meaning
specified in Section 4.02 of the Pooling and Servicing Agreement.
"Geneva Steel Collection Account Bank" shall have the meaning
specified in Section 4.02 of the Pooling and Servicing Agreement.
"Geneva Steel Collection Account Letter" shall have the
meaning specified in Section 4.02 of the Pooling and Servicing Agreement.
"Government Receivable" shall mean a receivable with respect
to which the Obligor is the federal government of the United States or a
political, administrative or regulatory subdivision thereof.
"Governmental Authority" shall mean any country or nation, any
political subdivision, state or municipality of such country or nation, and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government of any country or
nation or political subdivision thereof.
"GSFC" shall mean, with respect to this Annex X, Geneva Steel
Funding Corporation, including any successors and assigns.
"Increase" shall mean the Certificate Purchase Price and the
amount of each increase in the Invested Amount funded by a CRC Tranche or the
Liquidity Providers and paid to GSFC by the Certificate Agent pursuant to the
terms of the Certificate Purchase Agreement.
"Increase Date" shall have the meaning specified in Section
2.05 of the Certificate Purchase Agreement.
"Indemnified Amounts" shall have the meaning specified in
Section 7.03 of the Pooling and Servicing Agreement.
"Indemnified Party" shall have the meaning specified in
Section 7.03 of the Pooling and Servicing Agreement.
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<PAGE> 42
"Independent Public Accountants" means any of (a) Arthur
Andersen & Co., (b) Deloitte & Touche, (c) Coopers & Lybrand, (d) Ernst &
Young, (e) KPMG Peat Marwick and (f) Price Waterhouse, or any of their
successors so long as such successor is one of the six largest national
accounting firms, provided, that such firm is independent with respect to the
Servicer within the meaning of the Act.
"Initial Invested Amount" shall mean, with respect to any
Series and for any date, an amount equal to the initial invested amount
specified in the related Supplement.
"Initial Term" shall mean, with respect to each Liquidity
Provider Commitment, the period which commences on the Closing Date and ends on
November 6, 1995 inclusive.
"Insolvency Event" shall mean, with respect to a specified
Person, (a) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of such person or any substantial part
of its property in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or the appointing
of a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for such Person or for any substantial part of its property,
or the ordering of the winding-up or liquidation of such Person's business,
and, other than in a case in which such proceeding was instituted by an
Affiliate of such Person, such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such law, or the
consent by such Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors,
or the failure by such Person generally to pay its debts as such debts become
due or the admission by such Person in writing (as to which the Trustee shall
have written notice) of its inability to pay its debts generally as they become
due.
"Interest Period" shall mean, unless otherwise specified in
the Supplement relating to any Series, with respect to any Distribution Date
except for the initial Distribution Date, the period from and including the
preceding Distribution Date to but excluding such Distribution Date, and, in
the case of the initial Distribution Date, the period from and including the
Closing Date to but excluding such initial Distribution Date.
16
<PAGE> 43
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
"Inventory Lender" shall mean Citibank USA, Inc. as agent for
those certain lenders under the Amended and Restated Revolving Credit Agreement
dated as of November 4, 1994 between Geneva Steel, Citibank, N.A. and Citicorp
USA, Inc. as agent for various lenders.
"Invested Amount" shall mean, with respect to any Series and
for any date, an amount equal to the invested amount determined as provided in
the related Supplement.
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended from time to time.
"Investor Certificate" shall mean any one of the certificates
executed by the Transferor and authenticated by or on behalf of the Trustee, in
substantially the form attached to the related Supplement, other than the
Transferor Certificate.
"Investor Certificateholder" shall mean the Person in whose
name an Investor Certificate is registered in the Certificate Register.
"Investor Collections" with respect to each Series, shall have
the meaning specified in the related Supplement.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment for security, encumbrance, lien (statutory or other
and including a Lien created by PBGC), preference, participation interest,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever resulting in an encumbrance against real or personal property
of a Person, including, without limitation, any conditional sale or other title
retention agreement, and any financing lease having substantially the same
economic effect as any of the foregoing, except as may otherwise be imposed as
a result of the application of or reference to Octagon in any proceeding before
any state or federal court within the tenth federal circuit or the United
States Supreme Court.
"Liquidity Provider" shall mean the banks party to the
Certificate Purchase Agreement as their names appear on the signature page
thereof.
"Liquidity Provider Commitment" shall mean, as to any
Liquidity Provider, the obligation of such Liquidity Provider to fund
Increases, including a Term Increase, up to the amount set forth opposite such
Liquidity Provider's name on the signature page of the Certificate Purchase
Agreement subject to Section 2.04 of that agreement.
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<PAGE> 44
"Liquidity Provider Commitment Percentage" shall mean, as to
any Liquidity Provider at any time, the percentage set forth under the heading
"Percentage" opposite its signature line to the Certificate Purchase Agreement,
as such percentage may be modified by (a) assignments made from time to time
pursuant to Section 6.01 of the Certificate Purchase Agreement or (b) in the
case of a defaulting Liquidity Provider, pursuant to Section 2.09 of the
Certificate Purchase Agreement.
"Loss and Dilution Reserve" shall mean, with respect to any
Series, the amount set forth in the related Supplement.
"Loss and Dilution Reserve Percentage" shall mean as of any
date of determination the greater of (a) the Specified Loss and Dilution
Reserve Percentage and (b) the Dynamic Loss and Dilution Reserve Percentage.
"Loss to Liquidation Ratio" shall mean as to any date the
ratio (expressed as a percentage) calculated by dividing (a) the aggregate
Outstanding Balance of all Receivables written off as uncollectible in
accordance with the Credit Policy Manual by Geneva Steel during the
twelve-month period most recently ended by (b) the aggregate amount of
Collections during such twelve-month period.
"Majority in Interest" shall mean, with respect to each
Series, the Holders of Certificates evidencing more than 50% of the aggregate
Certificateholders' Interest in such outstanding Series.
"Majority Liquidity Providers" shall mean, at any time,
Liquidity Providers whose Liquidity Provider Commitment Percentage aggregates
more than 50% of the total amount of all Liquidity Provider Commitment
Percentages.
"Mannesmann" shall mean Mannesmann Pipe & Steel Corporation, a
New York corporation, and any successor thereto.
"Mannesmann Receivables" shall mean Receivables in an amount
calculated as follows:
MOB - PPA
where:
MOB = the aggregate Outstanding Balance of all Transferor
Receivables owing by Mannesmann.
PPA = the aggregate amount received from Mannesmann and
shown on the books and records of the Servicer as a
production prepayment.
18
<PAGE> 45
"Market Make Whole Premium" with respect to any Series, shall
have the meaning specified in the related Supplement, if applicable.
"Maximum Invested Amount" shall mean $65,000,000.
"Monthly CRC Expense Amount" shall mean with respect to any
Collection Period the sum of (a) the fees set forth in the Fee Letter, and (b)
all expenses billed during such Collection Period, including, without
limitation, any increased costs, Breakage Costs and other expenses payable to
the Liquidity Providers.
"Monthly Trust Expense Amount" shall mean with respect to any
Collection Period the sum of (a) expenses of the Trustee billed during such
Collection Period, plus (b) the Series Trustee's Fee, plus (c) the Series
Servicing Fee, plus (d) Service Transfer expenses, if any, billed during such
Collection Period.
"Moody's" shall mean Moody's Investors Service, Inc. or its
successor.
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which the Transferor or any ERISA
Affiliate is making, or is accruing an obligation to make, contributions or has
made, or been obligated to make, contributions at any time within the preceding
six years.
"Net Receivables Balance" shall mean at any time the excess of
(a) the aggregate Outstanding Balance of Transferor Receivables that are
Eligible Receivables over (b) the Overconcentration Amount at such time.
"Note" shall mean any commercial paper or other promissory
note issued by CRC to fund any Increase the Yield Rate in respect of which
shall be determined by reference to the Pool Rate.
"Note Dealer Fees" shall mean with respect to each issuance of
Notes, the product of (a) the face amount of Notes issued on such day, times
(b) the result obtained by dividing (i) the number of days from the day of
issuance through the day on which such Notes mature by (ii) 360 times (c) the
per annum rate (adjusted to exclude any fees contained in the CP Rate) charged
by the Note dealers from time to time for the issuance of Notes by CRC.
"Notices" shall have the meaning specified in Section 13.05(a)
of the Pooling and Servicing Agreement.
19
<PAGE> 46
"Obligations" shall mean all obligations of the Transferor and
the Servicer to the Trustee, the Trust, the Purchaser, the Liquidity Providers,
the other Indemnified Parties and their respective successors, permitted
transferees and assigns, arising under or in connection with the Transaction
Documents, howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due.
"Obligor" shall mean each Person who is obligated to pay for
goods or services provided by Geneva Steel which gave rise to a Transferor
Receivable, including any guarantor of such Person's obligations.
"Octagon" shall mean Octagon Gas Systems v. Rimmer, 995 F.2d
948, cert. denied, 114 S. Ct. 554 (1993).
"Officer's Certificate" shall mean, unless otherwise specified
in this Agreement, a certificate signed by the President, any Vice President,
the Chief Financial Officer, the Treasurer or Controller of the Transferor, or
of the Servicer, or any Successor Servicer, as the case may be, and delivered
to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may be counsel for, or an employee of, the Person providing the opinion and
who shall, and which opinion shall, be reasonably acceptable to the Trustee.
"Originator" shall mean Geneva Steel, including any successors
and assigns.
"Outstanding Balance" of any Receivable at any time shall mean
the then outstanding principal balance thereof.
"Overconcentration Amount" shall mean at any time the sum of
the amounts, if any, by which the aggregate Outstanding Balance of Eligible
Receivables of the types specified in clauses (a) through (e) of the definition
of Concentration Limit owned by the Trust exceeds the aggregate of the
respective Concentration Amounts.
"Partial Amortization Period" shall mean, with respect to any
Series, unless the Transferor shall have initiated a Cure Period or an Early
Amortization Period or the Amortization Period shall have commenced prior
thereto, the period beginning on a Pool Non-compliance Date and continuing each
day thereafter until the earlier of (a) the day on which the Net Receivables
Balance shall be equal to or greater than the Required Net Receivables Balance
and (b) the fifteenth day following such Pool Non-compliance Date.
20
<PAGE> 47
"Paying Agent" shall mean any paying agent appointed pursuant
to Section 6.06 of the Pooling and Servicing Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Person" shall mean any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, Governmental Authority or any
other entity of similar nature.
"Pooling and Servicing Agreement" shall mean the Pooling and
Servicing Agreement, dated as of November 4, 1994, among the Transferor, the
Servicer and the Trustee, as amended, supplemented, restated or otherwise
modified from time to time.
"Pool Non-compliance Date" shall mean any day on which the Net
Receivables Balance falls below the Required Net Receivables Balance.
"Pool Rate" shall mean as to any Interest Period for the CRC
Tranche related to an Increase, a rate per annum equal to the weighted average
of the rates (or, if such rates are discount rates, the rates determined by
converting the discount rates to an interest-bearing equivalent rate per annum)
at which Notes allocable, in whole or part, by the Certificate Agent are issued
by CRC to fund such Increase through a placement agent or commercial paper
dealer selected by the Certificate Agent, as agreed between each such agent or
dealer and the Certificate Agent which rates shall reflect and give effect to
the commissions of placement agents and dealers in respect of such promissory
notes, to the extent such commissions are allocated, in whole or in part, to
such promissory notes by the Certificate Agent (on behalf of CRC).
"Principal Terms" shall mean, with respect to any Series: (a)
the name or designation; (b) the Initial Invested Amount or principal amount
(or method for calculating such amount); (c) the Certificate Rate (or method
for the determination thereof); (d) the payment date or dates and the date or
dates from which interest shall accrue; (e) the method for allocating
collections to Investor Certificateholders; (f) the designation of any Series
Accounts and the terms governing the operation of any such Series Accounts; (g)
the issuer and terms of any form of Enhancement with respect thereto; (h) to
the extent applicable, the terms on which the Investor Certificates of such
Series may be exchanged for Investor Certificates of another Series,
repurchased or redeemed by the Transferor or remarketed to other investors; (i)
the number of Classes of Investor Certificates of such Series and, if more than
one Class, the rights and priorities of each such Class; (j) the
21
<PAGE> 48
Series Servicing Fee and the Series Trustee's Fee; (k) the Amortization Date
and the Termination Date; and (l) any other terms of such Series.
"Purchase Percentage" shall mean initially 94.596%; provided,
however, that the Purchase Percentage may change from time to time, based on
principles used to establish the initial Purchase Percentage, to reflect (a)
historic loss experience of the Transferor's accounts receivable portfolio and
the Receivables sold under the Transaction Documents and (b) prevailing
interest rates, as agreed upon by the Transferor and the Purchaser. The
Purchaser shall notify the Trustee if any change in the Purchase Percentage.
"Purchase Price" shall have the meaning specified in Section
2.2 of the Receivables Purchase Agreement.
"Purchaser" shall mean CRC, including any of its successors or
assigns.
"Rating Agency" shall mean each nationally recognized rating
agency which, at the request of the Transferor, has rated any Series of
Certificates, as set forth in the related Supplement.
"Rating Agency Condition" shall mean, with respect to any
action, that each Rating Agency shall have notified such parties in writing
that such action in and of itself will not result in a reduction or withdrawal
of the rating of any outstanding Series or Class with respect to which it is a
Rating Agency.
"Receivable" shall mean an account receivable shown on the
records of Geneva Steel as of the Cut-Off Date, and from time to time
thereafter, arising from the sale of merchandise or providing of services by
Geneva Steel in the ordinary course of business of Geneva Steel, including
without limitation, all monies due or to become due and all Collections and
other amounts received from time to time with respect to such Receivable and
all proceeds (including, without limitation, "proceeds" as defined in the UCC
of the jurisdiction the law of which governs the perfection of the interest in
the Receivables transferred under the Transaction Documents) thereof and
"Receivables" shall mean all such Receivables; provided, however, that the term
"Receivable" shall not include (i) as of the Cut-Off Date and any subsequent
date of Transfer to the Trust, accounts receivable which do not satisfy the
conditions of clauses (i), (vi), (vii) and (xiv) of the definition of Eligible
Receivable and (ii) any consideration paid or payable by (x) the Transferor or
(y) the Trustee on behalf of the Trust for the purchase of any Receivable,
including the Subordinated Loan or any Certificate or any payment on such
consideration.
22
<PAGE> 49
"Receivables Purchase Agreement" shall mean the agreement
between Geneva Steel and the Transferor, dated as of the date hereof, governing
the terms and conditions upon which the Transferor shall acquire the
Receivables transferred to the Trustee for the benefit of the Trust on the
Closing Date and all Transferor Receivables to be transferred to the Trustee
for the benefit of the Trust from time to time thereafter, as the same may from
time to time be amended, supplemented, restated or otherwise modified.
"Record Date" shall mean, with respect to any Distribution
Date, the last day of the preceding calendar month.
"Reference Bank" shall mean for purposes of determining the
Yield Rate, Citibank, N.A., a national banking association, its successors and
assigns.
"Regulation D" shall mean Regulation D of the Board of
Governors (or any successor) of the Federal Reserve System, as the same may be
amended or supplemented from time to time.
"Regulatory Change" means, relative to any Person:
(a) any change in (or the adoption, implementation,
phase-in or commencement of effectiveness of) any
(i) United States Federal or state law or foreign
law applicable to such Person;
(ii) regulation, interpretation, directive,
requirement or request (whether or not having the force of law)
applicable to such Person of (A) any court, government authority
charged with the interpretation or administration of any law referred
to in clause (a)(i) or of (B) any fiscal, monetary or other authority
having jurisdiction over such Person; or
(iii) generally accepted accounting principles or
regulatory accounting principles applicable to such Person and
affecting the application to such person of any law, regulation,
interpretation, directive, requirement or request referred to in
clause (a)(i) or (a)(ii) above; or
(b) any change in the application to such Person of any
existing law, regulation, interpretation, directive, requirement, request or
accounting principles referred to in clause (a)(i), (a)(ii) or (a)(iii) above.
"Reportable Event" shall mean a Reportable Event as defined in
Section 4043(b) of ERISA.
23
<PAGE> 50
"Required Net Receivables Balance" shall mean as of any day of
determination, the sum of (i) the aggregate of the Loss and Dilution Reserves
for all outstanding Series, (ii) the aggregate of the Yield Reserves for all
outstanding Series and (iii) the Trust Invested Amount (computed as if reduced
by (A) the amount of Cure Funds held in the Reserve Account for each Series and
(B) the cumulative amount of funds held in the Concentration Account at such
time allocated to the portion of the Trust Partial Amortization Amount
allocable to each such Series).
"Requirements of Law" shall mean any law, treaty, rule or
regulation, or final binding determination of an arbitrator or Governmental
Authority, and, when used with respect to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person.
"Reserve Account" with respect to each Series shall have the
meaning specified in the related Supplement and "Reserve Accounts" shall refer
to all the Reserve Accounts established for outstanding Series in accordance
with the terms of the related Supplements.
"Responsible Officer" shall mean, (i) when used with respect
to the Trustee, any officer within the Corporate Trust Office of the Trustee
including any vice president, assistant vice president, assistant secretary,
treasurer, assistant treasurer, or any other officer of the Trustee who
customarily performs functions similar to those performed by the persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such officer's knowledge of and familiarity with
the particular subject and (ii) when used with respect to the Transferor or
Servicer, any of the President, Chief Executive Officer, Vice President,
Secretary, Treasurer, or Chief Financial Officer.
"Revolving Period" shall mean, with respect to any Series, the
period specified in the related Supplement.
"S&P" shall mean Standard & Poor's Corporation or Standard &
Poor's Ratings Group, as applicable, or the successor of either of them.
"Series" shall mean any series of Investor Certificates.
"Series Account" shall mean any deposit, trust, escrow,
reserve or similar account maintained for the benefit of the Investor
Certificateholders or any Series or Class, as specified in any Supplement.
24
<PAGE> 51
"Series Allocation Percentage" shall mean, with respect to any
Series, the percentage equivalent of a fraction, the numerator of which is the
sum of (a) Invested Amount for such Series (computed as if reduced by the
amount of Cure Funds held in the Reserve Account for such Series and by the
cumulative amount of funds held in the Concentration Account at such time
allocated to the portion of the Trust Partial Amortization Amount allocable to
such Series) plus (b) the Yield Reserve for such Series, plus (c) the Loss and
Dilution Reserve for such Series, and the denominator of which is the aggregate
of the amounts specified in clauses (a), (b) and (c) for all outstanding
Series.
"Series Cut-Off Date" shall mean, with respect to any Series,
the date specified as such in the related Supplement.
"Series Issuance Date" shall mean, with respect to any Series,
the date on which the Investor Certificates of such Series are to be originally
issued in accordance with Section 6.09 of the Pooling and Servicing Agreement
and the related Supplement.
"Series 1994-1 Supplement" shall mean the Series 1994-1
Supplement dated as of November 4, 1994 to the Pooling and Servicing Agreement,
among the Transferor the Servicer and the Trustee as modified, amended,
restated or supplemented from time to time.
"Series 1994-1 Certificateholder" shall mean the Purchaser,
subject to the provisions of Section 2.10 of the Certificate Purchase
Agreement.
"Series Servicing Fee" shall mean, with respect to any Series,
the amount specified in the applicable Supplement.
"Series Trustee's Fee" shall mean, with respect to any Series,
the amount specified in the applicable Supplement.
"Service Transfer" shall have the meaning specified in Section
10.01 of the Pooling and Servicing Agreement.
"Servicer" initially shall mean Geneva Steel in its capacity
as Servicer pursuant to the Pooling and Servicing Agreement, and after any
Service Transfer shall mean the Successor Servicer.
"Servicer Default" shall have the meaning specified in Section
10.01 of the Pooling and Servicing Agreement.
"Servicing Fee" shall have the meaning specified in Section
3.02(a) of the Pooling and Servicing Agreement.
25
<PAGE> 52
"Servicing Officer" shall mean any officer, employee or other
agent of the Servicer who is involved in, or responsible for, the
administration and servicing of the Receivables and whose name appears on a
list of servicing officers furnished to the Trustee by the Servicer, as such
list may from time to time be amended.
"Specified Loss and Dilution Reserve Percentage" shall mean
the sum of (a) 15% plus (b) the product of (i) the average Dilution Ratio
during the preceding 12 months times (ii) a fraction the numerator of which is
the total sales for the past month and the denominator of which is the
aggregate outstanding balance of Transferor Receivables which are Eligible
Receivables as of the end of the most recently ended month.
"Subordinated Loan" shall mean the loan, if any, made pursuant
to Section 2.2(f) of the Receivables Purchase Agreement.
"Subordinated Note" shall mean the subordinated promissory
note, due November 4, 2014, by GSFC in favor of Geneva Steel.
"Subsidiary" shall mean as to any Person, a corporation,
partnership or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person.
"Successor Servicer" shall have the meaning specified in
Section 10.02(a) of the Pooling and Servicing Agreement.
"Supplement" shall mean, with respect to any Series, a
supplement to the Pooling and Servicing Agreement, executed and delivered in
connection with the original issuance of the Investor Certificates of such
Series pursuant to Article VI of the Pooling and Servicing Agreement, and all
amendments, modifications or supplements to the Pooling and Servicing
Agreement.
"Supplemental Certificate" shall have the meaning specified in
Section 6.09(c) of the Pooling and Servicing Agreement.
"Tax Opinion" shall mean, with respect to any action, an
Opinion of Counsel who is not an employee of the Servicer or any Affiliate of
the Servicer to the effect that, for federal and Utah (and any other State
where substantial servicing activities
26
<PAGE> 53
in respect of Receivables are conducted by the Transferor or the Servicer if
there is a substantial change from present servicing activities) state income
and franchise tax purposes, (a) such action will not adversely affect the
characterization of the Investor Certificates of any outstanding Series or
Class as debt, (b) such action will not cause a taxable event to any Investor
Certificateholder, (c) following such action the Trust should not be treated as
an association (or publicly traded partnership) taxable as a corporation, (d)
in the case of the original issuance of Certificates, the Investor Certificates
should properly be characterized as debt for tax purposes, or if not as debt,
as an interest in a partnership and not in an association taxable as a
corporation and (e) in the case of Section 6.09(b) of the Pooling and Servicing
Agreement, the Investor Certificates of the new Series will be characterized as
debt.
"Term" shall mean with respect to each Liquidity Provider
Commitment, the shorter of (a) the Initial Term and each Extension Term and (b)
the period ending on the date of expiration of the Aggregate Liquidity Provider
Commitment pursuant to Section 2.10 of the Certificate Purchase Agreement.
"Term Increase" shall have the meaning specified in Section
2.10 of the Certificate Purchase Agreement.
"Termination Date" shall mean, with respect to any Series, the
termination date specified in the related Supplement.
"Termination Event" shall have the meaning specified in
Article VI of the Receivables Purchase Agreement.
"Termination Notice" shall have the meaning specified in
Section 10.01 of the Pooling and Servicing Agreement.
"Transaction Documents" shall mean, collectively, the
Certificate Purchase Agreement, the Series 1994-1 Certificate, the Pooling and
Servicing Agreement, the Receivables Purchase Agreement, the Series 1994-1
Supplement, the Articles or Certificate of Incorporation and the By-Laws of the
Servicer and GSFC, respectively, and any other agreement or instrument related
or delivered pursuant to any of the foregoing documents.
"Transfer" shall have the meanings specified in Section 2.01
of the Pooling and Servicing Agreement, it being understood that the date of
Transfer of any Receivable or other Trust Asset shall be the date on which such
Receivable or other Trust Asset shall be created or otherwise arise and, in the
case of such Receivable, be acquired by the Transferor under the Receivables
Purchase Agreement.
27
<PAGE> 54
"Transfer Agent and Registrar" shall have the meaning
specified in Section 6.03(a) of the Pooling and Servicing Agreement.
"Transferor" shall mean GSFC, as transferor under the Pooling
and Servicing Agreement, including any successors and assigns.
"Transferor Certificate" shall mean the certificate executed
by the Transferor and authenticated by or on behalf of the Trustee, in
substantially the form of Exhibit A to the Pooling and Servicing Agreement
"Transferor Collections" shall mean, with respect to any date,
that portion of the Collections deposited to the Concentration Account equal to
the product of (i) the Transferor Percentage on such date multiplied by (ii)
the aggregate amount of such Collections.
"Transferor Interest" shall have the meaning specified in
Section 4.01(a) of the Pooling and Servicing Agreement.
"Transferor Percentage" shall mean at any time 100% minus the
aggregate of the Floating Allocation Percentages of all outstanding Series at
such time.
"Transferor Receivable" shall mean a Receivable acquired by
the Transferor pursuant to the Receivables Purchase Agreement other than those
reconveyed by the Transferor pursuant to Section 4.2 of the Receivables
Purchase Agreement except to the extent such Receivable is reacquired by the
Transferor.
"Transferor's Account" shall mean the special account (account
number ), under the dominion and control of the Transferor, for deposits
by the Servicer pursuant to the applicable Supplement, maintained at the office
of Bankers Trust Company in New York, New York, or such other account at such
other bank, under the dominion and control of the Transferor, as Transferor may
designate for such purpose from time to time.
"Trust" shall mean the Geneva Steel Trade Receivables Master
Trust created by the Pooling and Servicing Agreement.
"Trust Assets" shall have the meaning specified in Section
2.01 of the Pooling and Servicing Agreement.
"Trust Invested Amount" shall mean at any time the sum of the
Invested Amounts for all outstanding Series at such time.
"Trust Partial Amortization Amount" shall mean, with respect
to any date of determination during a Partial Amortiza-
28
<PAGE> 55
tion Period, the amount by which the Net Receivables Balance is less than the
Required Net Receivables Balance.
"Trustee" shall mean Bankers Trust Company, solely in its
capacity as trustee on behalf of the Trust, or its successor in interest, or
any successor trustee appointed as herein provided.
"Trustee's Account" with respect to each Series, shall have
the meaning specified in the related Supplement.
"Trustee's Fee" shall have the meaning specified in Section
11.05 of the Pooling and Servicing Agreement.
"Turnover Rate" shall mean for any date the average of the
percentage equivalent of a fraction for each of the three most recently ended
months the numerator of which is the Net Receivables Balance as of the last day
of each such month and the denominator of which is the aggregate balance of
Receivables transferred to the Trust during each such month; provided, however,
that with respect to any such months, or portion thereof, occurring prior to
the Closing Date, the denominator of such fraction shall be the aggregate
balance of Receivables originated by Geneva Steel during such month or portion
thereof.
"UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in any applicable or specified jurisdiction.
"Undivided Fractional Interest" with respect to each Series
shall have the meaning specified in the related Supplement.
"Weighted Average Term" shall mean, as of any date, a fraction
the numerator of which is the aggregate of the product for each Receivable sold
to the Trust during the preceding month of (i) the outstanding balance of such
Receivable (at the time such Receivable is transferred to the Trust) multiplied
by (ii) the payment term (in days) for each such Receivable, and the
denominator of which is the aggregate outstanding balance of such Receivable
(at the time such Receivable is transferred to the Trust).
"Yield" shall mean with respect to any Interest Period of an
Increase, the sum of (i) the product of (a) the Yield Rate divided by 360,
times (b) the amount of such Increase, times (c) the number of days in such
Interest Period and (ii) for each Increase the Yield Rate in respect of which
shall be determined by reference to the CP Rate, the Note Dealer Fees and any
Note Issuance Fees, if any, incurred with respect to the CRC Tranche related to
such Increase.
29
<PAGE> 56
"Yield Rate" shall mean with respect to any Interest Period of
an Increase, either (a) the per annum rate of interest borne by the Notes
issued in connection with a CRC Tranche the Yield Rate in respect of which
shall be determined by reference to the Pool Rate and the per annum rate of
interest borne by the CP Notes issued in connection with a CRC Tranche the
Yield Rate in respect of which shall be determined by reference to the CP Rate,
or, if such Notes or CP Notes are issued at a discount, the per annum rate of
interest equivalent of such discount or (b) the Bank Rate.
"Yield Reserve" shall mean as of any date two multiplied by
the product of (a) the Turnover Rate for such date and (b) the Discount Amount
with respect to such date.
30
<PAGE> 1
EXHIBIT 13
SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND PER TON DATA)
<TABLE>
<CAPTION>
OPERATING STATISTICS 1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales $486,062 $465,181 $420,026 $445,981 $507,297
Gross margin 15,514 21,723 13,735 52,801 97,617
Income (loss) from operations (6,791) 1,102 (8,587) 30,920 68,664
Income (loss) before extraordinary item (16,696) (8,606) (13,092) 17,554 38,239
Net income (loss) (26,230) (8,606) (13,092) 17,554 38,239
Net income (loss) applicable to common shares (33,276) (12,072) (13,092) 17,554 38,239
Net income (loss) per common share before
extraordinary item (1.57) (.80) (.87) 1.17 2.86
Net income (loss) per common share (2.20) (.80) (.87) 1.17 2.86
BALANCE SHEET STATISTICS 1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
Cash and cash equivalents $ -- $ 64,267 $ 3,122 $ 45,597 $ 62,882
Working capital 46,797 89,167 75,654 105,926 134,022
Current ratio 1.49 2.04 2.33 2.77 3.08
Property, plant and equipment, net 453,286 314,590 252,797 204,150 102,677
Total assets 606,815 498,384 390,462 375,888 308,402
Long-term debt 357,348 224,991 178,182 160,000 110,553
Redeemable preferred stock 43,032 35,986 -- -- --
Stockholders' equity 103,664 135,775 141,832 154,416 133,508
Debt as a percentage of stockholders' equity 345% 166% 126% 104% 83%
ADDITIONAL STATISTICS 1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
Operating margin per ton shipped $ (4.63) $ .73 $ (6.49) $ 24.27 $ 49.94
Capital expenditures 164,918 82,534 66,617 113,410 56,219
Depreciation and amortization 29,870 23,150 21,136 14,728 11,318
Cash flow from operations (27,469) 64,394 8,200 47,782 50,563
Raw steel production (net tons in thousands) 1,890 2,000 1,769 1,708 1,818
Steel products shipped (net tons in thousands) 1,467 1,511 1,323 1,274 1,375
</TABLE>
PRICE RANGE OF COMMON STOCK
The following table sets forth, for the periods indicated, the high and
low sales prices for the Class A common stock as reported on the NYSE Composite
Tape.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30, 1993 HIGH LOW
------- --------
<S> <C> <C>
First Quarter ended December 31 $12 $ 6 7/8
Second Quarter ended March 31 14 7/8 10 1/2
Third Quarter ended June 30 16 12
Fourth Quarter ended September 30 14 3/8 9 5/8
FISCAL YEAR ENDED SEPTEMBER 30, 1994 HIGH LOW
------- --------
First Quarter ended December 31 $18 1/2 $11 7/8
Second Quarter ended March 31 21 3/8 13 1/4
Third Quarter ended June 30 20 13 3/8
Fourth Quarter ended September 30 21 1/4 15 1/2
</TABLE>
As of November 30, 1994, the Company had 13,113,488 shares of Class A common
stock outstanding, held by 587 stockholders of record, and 20,639,688 shares of
Class B common stock outstanding, held by five stockholders of record.
15
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The following table sets forth the percentage relationship of certain cost and
expense items to net sales for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------------
1994 1993 1992
----- ----- -----
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of sales 96.8 95.3 96.7
----- ----- -----
Gross margin 3.2 4.7 3.3
Selling, general and administrative expenses 4.6 4.4 5.3
----- ----- -----
Income (loss) from operations (1.4) 0.3 (2.0)
Other income (expense):
Interest and other income 0.3 0.4 0.2
Interest expense (4.4) (3.7) (3.3)
----- ----- -----
Loss before benefit for income taxes and
extraordinary item (5.5) (3.0) (5.1)
Benefit for income taxes (2.1) (1.2) (2.0)
----- ----- -----
Loss before extraordinary item (3.4)% (1.8)% (3.1)%
===== ===== =====
</TABLE>
The following table sets forth the sales product mix as a percentage of net
sales for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------------
1994 1993 1992
----- ----- -----
<S> <C> <C> <C>
Sheet 65.3% 56.4% 44.8%
Plate 23.5 30.8 41.4
Pipe 6.9 9.7 11.2
Slabs and non-steel 4.3 3.1 2.6
----- ----- -----
100.0% 100.0% 100.0%
===== ===== =====
</TABLE>
Fiscal Year Ended September 30, 1994 Compared with Fiscal Year Ended
September 30, 1993
The steel industry is cyclical in nature. Since early calendar year 1993, the
industry has experienced increasing steel prices resulting from increased
demand, and the Company has implemented several price increases for certain
steel products. Various producers have announced future price increases which
the Company intends to follow as justified by market conditions. Industry
experience has shown, however, that announced price increases may not be
immediately realized, if at all, due to the competitive environment within the
industry. The Company has phased in price increases as new orders have been
accepted, subject to adjustments as necessary in response to market conditions.
The Company's current backlog of orders booked at lower prices may, therefore,
delay the realization of future price increases. The Company sells
substantially all of its products in the spot market at prevailing market
prices. The Company believes its percentage of such sales is significantly
higher than that of most of the other domestic integrated producers.
Consequently, the Company may be affected by price decreases and increases more
quickly than many of its competitors.
Net sales increased 4.5% while shipments decreased by approximately 43,300
tons, or 2.9%, for the year ended September 30, 1994 as compared to the
previous fiscal year. The increased sales resulted from increased average
selling prices on all products. The weighted average sales price (net of
transportation costs) per ton of sheet, plate and pipe products increased by
12.2%, 6.1% and 0.6%, respectively, in the year ended September 30, 1994
compared to the previous fiscal year. The overall average selling price
realization per ton also increased between the years; however, this increase
was offset, in part, by a shift in product mix to lower priced sheet products
from higher priced plate and pipe products. The shift in product mix was due
primarily to the Company's suspension of certain plate production while
upgrades to various processing equipment were being implemented and to
favorable pricing associated with sheet products. The decrease in total
shipments
16
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
resulted primarily from lower production due to production inefficiencies and
interruptions associated with completion and implementation of various capital
projects. Shipped tonnage of sheet increased approximately 74,300 tons or 7.7%,
while shipped tonnage of plate and pipe decreased approximately 106,200 tons or
24.9% and 31,200 tons or 26.3%, respectively, between the two years.
Cost of sales includes raw materials, labor costs, energy costs (consisting
primarily of oxygen, electricity and natural gas), depreciation and other
operating and support costs associated with the production process. The
Company's costs of sales, as a percentage of net sales, increased to 96.8% for
the year ended September 30, 1994 from 95.3% for the previous fiscal year as a
result of higher operating costs, offset, in part, by higher average selling
prices. The average cost of sales per ton shipped increased approximately $27
per ton between the two years. The increased cost per ton was offset, in part,
by a shift in product mix to lower cost sheet products. Costs increased
primarily as a result of production inefficiencies and transition costs
associated with construction and implementation of various modernization and
capital projects. Costs also increased due to repair work at the blast furnace
operations, increased depreciation expense, increased coke costs as a result of
purchasing coke to supplement internal coke production, higher wages and
benefits as required by the union labor agreement and increases in certain
other operating costs. The Company expects that certain operating costs will
increase in future periods. The Company's consumption of purchased coke will be
higher, thereby increasing the Company's average cost of coke used in the
manufacturing process. The Company also anticipates higher iron ore pellet
costs and increased labor costs.
As part of its modernization efforts, the Company modified its soaking pit
furnaces to hold hot slabs taken from the continuous caster and increase the
temperature of the slabs in preparation for rolling. As the continuous caster
and other related capital projects were implemented, the Company encountered
difficulties in achieving sufficient slab heating capacity from the soaking
pits. Consequently, the Company is using both the soaking pits and its existing
reheat furnaces to heat slabs. Utilization of both facilities has prevented the
Company from realizing approximately $8 to $10 per ton of the estimated
operating cost savings previously associated with the Company's modernization
program. The Company is therefore investigating various facilities designed to
increase its slab heating capacity and achieve the estimated operating cost
savings. Insufficient heating capacity limits the Company's ability to heat
long slabs and has, therefore, reduced the percentage of large coils produced.
In April 1994, the Company began phasing in its new continuous casting
facility. The start-up of the continuous casting facility has been successful
with numerous milestones being achieved ahead of schedule, including
production of wide cast slabs (126") and the "twin casting" of slabs.
Continuously cast slabs have shown improved product quality and yield. By the
end of fiscal year 1994, the Company was producing approximately 85% of its
slabs through the caster. Cast slabs produced during November 1994 were
approximately 92% of slab production. In the fourth quarter of fiscal year
1994, the Company successfully completed construction and began start-up of the
first phase of the wide coiled plate project and other capital projects,
including the conversion of the Company's broadside mill to a re-powered and
upgraded reversing mill. Management believes that these projects, together
with other completed modernization projects, have resulted in certain reduced
production costs, increased throughput capacity and improved product quality
and yield.
The Company is nearing completion of the start-up period of the continuous
caster and expects to complete the final phase of the wide coiled plate project
in early calendar year 1995. Upon completion of these projects, the Company
expects to achieve a 1.9 million ton annual production rate, realize additional
operating cost savings, increase its percentage of plate products sold and
realize other operational benefits. The Company has implemented measures
designed to minimize transition costs and other start-up difficulties with
respect to these and other capital projects. There can be no assurance,
however, that such conditions will not be greater than currently expected or
extend beyond the anticipated start-up periods.
Depreciation costs included in cost of sales increased approximately $5.4
million for the year ended September 30, 1994 compared with the previous fiscal
year. This increase was due to increases in the asset base resulting from
capital expenditures. Depreciation expense will increase substantially due to
implementation of the Company's capital projects.
Selling, general and administrative expenses for the year ended September 30,
1994 increased approximately $1.7 million as compared to fiscal year 1993. The
higher expenses resulted primarily from increased wages and salaries and
increased outside services in fiscal year 1994. The Company expects that wages
and salaries will further increase in future periods.
17
<PAGE> 4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Interest and other income decreased approximately $0.3 million during fiscal
year 1994 as compared to the previous fiscal year as a result of a decrease in
the amount of invested cash and cash equivalents.
Interest expense increased approximately $4.6 million during fiscal year 1994
as compared to fiscal year 1993. Increased interest expense due to higher
levels of borrowing in fiscal year 1994 was partially offset by an increase in
capitalized interest and a reduction in interest rates as a result of
restructuring the Company's debt. Interest expense is expected to increase in
future periods due to increased borrowings incurred in fiscal year 1994 and as
capitalized interest is reduced due to lower levels of spending on capital
projects.
In February 1994, the Company completed a public offering of $190 million
aggregate principal amount of 9 1/2% senior notes (the "9 1/2% Senior Notes").
A portion of the proceeds from the offering was used to repay an aggregate of
approximately $90 million principal amount of senior and subordinated term debt
bearing a weighted average interest rate of 11.24%, plus contractual prepayment
premiums of approximately $12.3 million. In addition, deferred loan costs of
approximately $1.6 million were written-off in connection with the early
extinguishment of the debt. The prepayment premiums and deferred loan costs
have been reflected as an extraordinary item in the Company's statement of
operations.
Fiscal Year Ended September 30, 1993 Compared With Fiscal Year Ended
September 30, 1992
Net sales increased 10.8% on increased shipments of approximately 188,000 tons,
or 14.2%, for the year ended September 30, 1993 as compared to the previous
fiscal year. The increased sales from higher shipments were slightly offset by
lower average selling prices. Despite the price increases announced in early
calendar year 1993, the weighted average sales price (net of transportation
costs) per ton of plate and pipe products decreased in the year ended September
30, 1993 compared to the previous fiscal year by 1.8% and 2.6%, respectively,
while the weighted average sales price per ton of sheet increased by 0.4%
between the two years. The general decline in weighted average sales prices
resulted from lower average selling prices and higher transportation costs due
to a shift in sales volume from the western market to the midwestern and
eastern markets. The overall average selling price realization per ton was also
affected by a shift in product mix to lower priced sheet products from higher
priced plate products. Shipped tonnage of sheet increased approximately 271,000
tons or 39.1%, while shipped tonnage of plate and pipe decreased approximately
82,000 tons or 16.1% and 1,000 tons or 1.3%, respectively, between the two
years.
During the third and fourth quarters of fiscal year 1993, the Company increased
its percentage of sheet products sold. Although this shift in product mix
involved increased shipments outside of the western market, higher
transportation costs and lower average selling prices as discussed above, such
shift improved the Company's operating margin as a result of throughput
efficiencies. This mix shift also allowed the Company to increase its
annualized shipping rate to 1.6 million tons.
The Company's cost of sales, as a percentage of net sales, decreased to 95.3%
for the year ended September 30, 1993 from 96.7% for the previous fiscal year.
The average cost of sales per ton shipped decreased approximately $13 per ton
between the two years. Costs declined primarily due to the shift in product mix
to lower cost sheet products coupled with production efficiencies associated
with the Company's completed modernization projects. These reduced costs were
partially offset by increased depreciation expense resulting from additional
capital expenditures, increased wages and benefits as required by the union
labor agreement, increased coke costs as a result of purchasing coke to
supplement internal coke production, and increases in certain other operating
costs.
Depreciation costs included in cost of sales increased approximately $2.7
million in fiscal year 1993 compared with the previous fiscal year. This
increase was due to increases in the asset base resulting from capital
expenditures.
Selling, general and administrative expenses for the year ended September 30,
1993 decreased approximately $1.7 million as compared to the previous fiscal
year. The lower expenses resulted primarily from a write-off of approximately
$1.0 million in the first quarter of fiscal year 1992 made as a result of
replacing the Company's then existing revolving credit facility and reduced
usage of outside services.
Interest expense increased by approximately $3.4 million during the year ended
September 30, 1993 as compared to the previous fiscal year. This increase was
due to higher levels of borrowing offset, in part, by an increase in interest
capitalized in fiscal year 1993 and a noncash write-off of deferred loan costs
of approximately $0.8 million resulting from the plan of financing completed in
March 1993 described below.
18
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Liquidity and Capital Resources
The Company's liquidity requirements arise from capital expenditures and
working capital requirements, including interest payments. The Company has met
these requirements over the past three years principally from the incurrence of
additional long-term indebtedness, including borrowings under the Company's
revolving credit facility, and cash provided by operations.
In March 1993, the Company issued in a public offering $135 million principal
amount of 11 1/8% senior notes (the "11 1/8% Senior Notes" and together with the
9 1/2% Senior Notes, the "Senior Notes"). The 11 1/8% Senior Notes mature in
2001, are unsecured and require interest payments semi-annually on March 15 and
September 15. After March 1998, the 11 1/8% Senior Notes are redeemable, in
whole or in part, at the option of the Company, subject to certain redemption
premiums. A portion of the proceeds from the 11 1/8% Senior Notes offering was
used to repurchase, at par value, approximately $70 million aggregate principal
amount of term debt.
In connection with the offering of the 11 1/8% Senior Notes, the Company issued
$40 million of 14% cumulative redeemable exchangeable preferred stock (the
"Redeemable Preferred Stock") at a value of $100 per share and related warrants
to purchase an aggregate of 1,132,000 shares of Class A common stock. The
Redeemable Preferred Stock consists of 400,000 shares, no par value, with a
liquidation preference of approximately $124 per share as of September 30,
1994. Dividends accrue at a rate equal to 14% per annum of the liquidation
preference and, except as provided below, are payable quarterly in cash from
funds legally available therefor. For dividend periods ending before April
1996, the Company may, at its option, add dividends to the liquidation
preference in lieu of payment in cash. In fiscal years 1994 and 1993, the
Company elected to add the applicable dividends to the liquidation preference.
The Company currently intends to continue to add the dividends to the
liquidation preference through March 1996. The Redeemable Preferred Stock is
exchangeable, at the Company's option, into subordinated debentures of the
Company due 2003 (the "Exchange Debentures"). However, the indentures governing
the Senior Notes and the Company's revolving credit facility currently limit
the Company's ability to incur additional indebtedness. The Company is
obligated to redeem all of the Redeemable Preferred Stock in March 2003 from
funds legally available therefor. The Company's ability to incur debt resulting
from the exchange of the Redeemable Preferred Stock for Exchange Debentures and
to pay cash dividends on the Redeemable Preferred Stock is subject to
compliance with the covenants and tests contained in the indentures governing
the Senior Notes and in the Company's revolving credit facility. After March
1998, both the Redeemable Preferred Stock and/or the Exchange Debentures are
redeemable, at the Company's option, subject to certain redemption premiums.
While not affecting net income/loss, dividends and the accretion required over
time to amortize the original issue discount associated with the Redeemable
Preferred Stock will negatively impact quarterly earnings per share, which
impact is currently $.13 per share per quarter. The warrants to purchase the
Company's Class A common stock are exercisable at $11 per share, subject to
adjustment in certain circumstances, and expire in March 2000.
In February 1994, the Company completed a public offering of $190 million
principal amount of the 9 1/2% Senior Notes. The 9 1/2% Senior Notes mature in
2004, are unsecured and require interest payments semi-annually on January 15
and July 15. After January 1999, the 9 1/2% Senior Notes are redeemable, in
whole or in part, at the option of the Company, subject to certain redemption
premiums. A portion of the proceeds from the 9 1/2% Senior Notes offering was
used to repay the Company's remaining outstanding term debt of approximately
$90 million aggregate principal amount and to pay contractual prepayment
premiums of approximately $12.3 million. In the event of a change in control,
the Company must offer to purchase all Senior Notes then outstanding at a
premium.
In November 1994, the Company amended and restated its revolving credit
facility with a syndicate of banks led by Citicorp USA, Inc., as agent (the
"Revolving Credit Facility"), which is used primarily for the working capital
and capital expenditure needs of the Company. The Revolving Credit Facility in
the amount of up to $45 million is secured by the Company's inventories, unsold
accounts receivable, and general intangibles, and proceeds thereof, and expires
on April 30, 1999. The amount available to the Company under the Revolving
Credit Facility currently ranges from 50% to 55%, in the aggregate, of eligible
inventories. At November 30, 1994, approximately $38.4 million was available
for borrowing under the Revolving Credit Facility. Interest is payable monthly
at 1.25% above the defined base rate (9.75% at November 30, 1994) or 2.5% above
the defined LIBOR rate (8.5% at November 30, 1994). The Company's ability to
borrow under the Revolving Credit Facility is subject to compliance with
various financial covenants and tests contained therein. As of November 30,
1994, the Company had $7.5 million in borrowings outstanding under the
Revolving Credit Facility.
19
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
The debt instruments governing the Revolving Credit Facility and the Senior
Notes contain cross default and other customary provisions. Financial
covenants contained in the Revolving Credit Facility and/or the Senior Notes
also include, among other things, a limitation on dividends and distributions
on capital stock of the Company, a tangible net worth maintenance requirement,
a current ratio maintenance requirement, a leverage ratio maintenance
requirement, an interest coverage requirement, a cumulative cash flow
requirement, a cumulative capital expenditure limitation, a limitation on the
incurrence of additional indebtedness unless certain financial tests are
satisfied, a limitation on mergers, consolidations and dispositions of assets
and a limitation on liens. The Company has from time-to-time entered into
amendments modifying certain of the covenants and tests contained in its
previous revolving credit facility and may be required to seek amendments of
the Revolving Credit Facility in the future based on actual operating results
or capital spending. Covenants amended in the past include the interest
coverage requirement, the leverage ratio maintenance requirement and the
tangible net worth maintenance requirement.
In November 1994, the Company also executed agreements to create and fund a
five-year accounts receivable securitization facility of up to $65 million (the
"Receivables Facility"). Under the Receivables Facility, the Company sells
substantially all of its accounts receivable to a wholly owned special purpose
subsidiary, Geneva Steel Funding Corporation ("GSFC"). GSFC transfers the
accounts receivable purchased from the Company to a trust in exchange for
certain trust certificates representing ownership interests in the assets of
the trust. One of the trust certificates was sold to an institutional investor
and the proceeds of such sale and of subsequent fundings by the investor are
used by GSFC to pay the Company for the receivables purchased by GSFC. During
the term of the Receivables Facility, the cash generated by collection of the
receivables will be used to purchase additional receivables (GSFC will purchase
substantially all receivables from the Company on an ongoing basis) or make
payments to the investor. Pursuant to the Receivables Facility, the Company
acts as servicer for the accounts receivable.
The yield on amounts funded by the institutional investor under the Receivables
Facility is the applicable commercial paper rate plus 0.5% (5.5% at November
30, 1994). In addition, GSFC pays a 0.375% fee on unfunded amounts. Funding
availability under the Receivables Facility is based on eligible receivables as
defined in the applicable agreements. At November 30, 1994, $30.9 million was
available under the Receivables Facility, of which $24.7 million had been
funded. The Company is not subject to any financial ratio tests under the
Receivables Facility, but the agreements provide for early termination and
payment upon certain events, which include the incurrence of losses or
delinquencies on the receivables in excess of certain levels or the bankruptcy
or insolvency of the Company. The principal benefit of the Receivables Facility
is to reduce the Company's cost of funding related to its working capital
needs.
Besides these and other financing activities, the Company's major source of
liquidity has been cash provided by operations. Net cash used for operating
activities was $27.5 million for fiscal year 1994 compared with net cash
provided by operating activities of $64.4 million and $8.2 million for fiscal
years 1993 and 1992, respectively. The $27.5 million used for operating
activities during the year ended September 30, 1994 included approximately
$41.8 million resulting from a net loss of $26.2 million and a change in
deferred income taxes of $15.6 million, offset, in part, by depreciation and
amortization of approximately $29.9 million. In addition, uses of cash included
significant increases in raw materials and work-in-process inventories
resulting from throughput decreases associated with production inefficiencies
related to implementation of modernization and capital projects and from
anticipated higher manufacturing volumes. This use was offset, in part, by
increases in certain current liabilities primarily associated with higher
inventory levels and increased purchases related to capital projects.
The Company expects its capital expenditures to require significant cash
resources over the next several years. Capital expenditures were approximately
$165 million, $83 million and $67 million for fiscal years 1994, 1993 and 1992,
respectively. For fiscal year 1995, the Company has identified approximately
$117 million in potential capital expenditures. These expenditures include
additional slab heating capacity at a cost of approximately $30 million ($25
million in fiscal year 1995), an additional ironmaking facility at a cost of
approximately $29 million ($27 million in fiscal year 1995), and the final
phase of the wide coiled plate project at a cost of approximately $14 million.
The Company has elected to defer completion of the rolling mill finishing stand
improvements until the Spring of 1996. The above cost estimates are preliminary
and may change as projects become more defined. Moreover, the Company may elect
to adjust the design, timing and budgets of capital projects for operational,
liquidity or other reasons. The Company anticipates that, in any event, it may
incur significant start-up and transition costs as planned capital projects are
implemented. The Revolving Credit
20
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - CONTINUED
Facility contains certain limitations on capital expenditures that are
dependent, in part, on the Company's actual cash flows. If the Company fails to
achieve anticipated operating and cash flow results, such limitations could
preclude the Company from making capital expenditures in the amounts that are
currently anticipated.
The Company is required to make substantial interest and dividend payments on
the Senior Notes, the Redeemable Preferred Stock or the Exchange Debentures,
and outstanding balances under the Revolving Credit Facility, together with
interest on any additional funding necessary for the additional capital
expenditures and other working capital needs. In addition, the Company will
incur costs based on the yield applicable to funded amounts under the
Receivables Facility. The Company's annual debt interest expense on currently
outstanding amounts is approximately $36 million and its annual preferred stock
dividends are approximately $7 million. Dividends not paid in cash before April
1996 will be added to the liquidation preference of the Redeemable Preferred
Stock as discussed above.
The capital costs, production inefficiencies and other transition costs
associated with the Company's modernization efforts have reduced operating cash
flow and liquidity as discussed above. The Company expects to enhance its
liquidity and meet future capital needs through improved operating cash flows
and other means discussed below. During the first quarter of fiscal year 1995,
the Company's operations have improved significantly. The Company expects
further improvement due to declining transition costs and production
inefficiencies, increasing production, and certain operating cost savings.
There can be no assurance, however, that the decline in transition costs and
production inefficiencies or the increase in production and operating cost
savings will continue, that sufficient product demand will exist for the
Company's additional throughput capacity, or that the projected benefits of the
modernization and other capital projects will be fully achieved.
The Company's ability to meet its anticipated cash needs, including capital
spending, is highly dependent on cash provided by operations, which includes
the effect of changes in working capital. The Company anticipates that
work-in-process inventories will decline somewhat as throughput capacity
increases. This decline, however, is expected to be offset by increases in
certain raw materials necessary to sustain future production needs. To improve
liquidity and operating cash flow, the Company may contract with independent
companies to provide just-in-time supplies or consigned inventories of certain
raw materials. The Company may also lease facilities and equipment related to
certain capital projects. The Company has previously entered into an
arrangement with one of its major customers whereby the customer makes a
production prepayment of up to $10 million upon the entry of new orders. As an
additional means of enhancing the Company's liquidity, the Company may
negotiate an increase in the maximum amount of production prepayments to $20
million.
Although the Company believes that the anticipated cash from future operations,
funding of receivables under the Receivables Facility and borrowings under the
Revolving Credit Facility will provide sufficient liquidity for the Company to
meet its debt service requirements and to fund ongoing operations, including
required capital expenditures, there can be no assurance that these or other
possible sources will be adequate. In such event, the Company may defer certain
capital expenditures or pursue alternative financing sources.
The short-term and long-term liquidity of the Company is dependent upon several
factors, including the Company's ongoing operations, availability of financing,
foreign currency fluctuations, competitive and market forces, capital
expenditures and general economic conditions. Moreover, the United States
steel market is subject to cyclical fluctuations that may affect the amount of
cash internally generated by the Company and the ability of the Company to
obtain external financing. Consequently, there can be no assurance that the
Company will have sufficient resources to fund all of its planned and future
capital projects or to satisfy other working capital and cash needs. The
Company also faces pending labor negotiations with the expiration of its union
labor agreement in February 1995. The Company is currently unable to predict
the effect such negotiations may have on the Company's operations and financial
condition.
Inflation can be expected to have an effect on many of the Company's operating
costs and expenses. Due to worldwide competition in the steel industry, the
Company may not be able to pass through such increased costs to its customers.
21
<PAGE> 8
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Geneva Steel Company:
We have audited the accompanying balance sheets of Geneva Steel Company (a Utah
corporation) as of September 30, 1994 and 1993, and the related statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended September 30, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Geneva Steel Company as of
September 30, 1994 and 1993, and the results of its operations and its cash
flows for each of the three years in the period ended September 30, 1994 in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Salt Lake City, Utah
October 28, 1994
(except with respect to the
matters discussed in Note 2
and Note 9 as to which the
date is November 30, 1994)
22
<PAGE> 9
BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------
1994 1993
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ -- $ 64,267
Accounts receivable, less allowance for doubtful
accounts of $3,113 and $2,983, respectively 47,907 46,257
Inventories 86,009 63,230
Deferred income taxes 6,407 --
Prepaid expenses and other 2,838 1,426
-------- --------
Total current assets 143,161 175,180
-------- --------
Property, Plant and Equipment:
Land 1,931 1,931
Buildings 16,092 3,725
Machinery and equipment 521,729 369,490
Mineral property and development costs 8,425 8,425
-------- --------
548,177 383,571
Less accumulated depreciation (94,891) (68,981)
-------- --------
Net property, plant and equipment 453,286 314,590
-------- --------
Other Assets 10,368 8,614
-------- --------
$606,815 $498,384
======== ========
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------
1994 1993
-------- --------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 57,021 $ 52,982
Accrued payroll and related taxes 9,178 8,578
Accrued liabilities 14,471 11,810
Production prepayments 10,000 10,000
Accrued interest payable 4,580 1,533
Accrued pension and profit sharing costs 1,114 1,110
-------- --------
Total current liabilities 96,364 86,013
-------- --------
Long-Term Debt 357,348 224,991
-------- --------
Deferred Income Tax Liability 6,407 15,619
-------- --------
Commitments and Contingencies (Note 5)
Redeemable Preferred Stock, Series B, no par value,
400,000 shares authorized, issued and outstanding, with
a liquidation value of $49,457 and $43,099, respectively 43,032 35,986
-------- --------
Stockholders' Equity:
Preferred stock, no par value, 3,600,000 shares authorized
for all series, excluding Series B, none issued -- --
Common stock:
Class A, no par value, 60,000,000 shares authorized, 14,556,431 and
14,360,886 shares issued, respectively 87,193 86,094
Class B, no par value, 50,000,000 shares authorized, 20,639,688
and 22,595,138 shares issued and outstanding, respectively 10,896 11,929
Warrants to purchase Class A common stock 5,360 5,360
Retained earnings 19,266 52,542
Less 1,450,049 and 1,533,719 Class A common stock treasury shares,
respectively, at cost (19,051) (20,150)
-------- --------
Total stockholders' equity 103,664 135,775
-------- --------
$606,815 $498,384
======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
23
<PAGE> 10
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Net sales $486,062 $465,181 $420,026
Cost of sales 470,548 443,458 406,291
-------- -------- --------
Gross margin 15,514 21,723 13,735
Selling, general and administrative expenses 22,305 20,621 22,322
-------- -------- --------
Income (loss) from operations (6,791) 1,102 (8,587)
-------- -------- --------
Other income (expense):
Interest and other income 1,583 1,885 807
Interest expense (21,722) (17,096) (13,695)
-------- -------- --------
(20,139) (15,211) (12,888)
-------- -------- --------
Loss before benefit for income taxes and extraordinary item (26,930) (14,109) (21,475)
Benefit for income taxes (10,234) (5,503) (8,383)
-------- -------- --------
Loss before extraordinary item (16,696) (8,606) (13,092)
Loss on early extinguishment of debt (net of benefit for
income taxes of $4,429) 9,534 -- --
-------- -------- --------
Net loss (26,230) (8,606) (13,092)
Less redeemable preferred stock dividends and
accretion for original issue discount 7,046 3,466 --
-------- -------- --------
Net loss applicable to common shares $(33,276) $(12,072) $(13,092)
======== ======== ========
Loss per common share before extraordinary item $ (1.57) $ (.80) $ (.87)
Extraordinary item per common share (.63) -- --
-------- -------- --------
Net loss per common share $ (2.20) $ (.80) $ (.87)
======== ======== ========
Weighted average common shares outstanding 15,129 15,059 15,021
======== ======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
24
<PAGE> 11
STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
WARRANTS
SHARES ISSUED AMOUNT TO
----------------------- ------------------ PURCHASE
COMMON COMMON COMMON COMMON COMMON RETAINED TREASURY
CLASS A CLASS B CLASS A CLASS B CLASS A EARNINGS STOCK TOTAL
---------- ---------- ------- ------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1991 14,079,871 25,405,288 $84,597 $13,410 $ -- $ 77,870 $(21,461) $154,416
Exercise of options to purchase
Class A common stock -- -- -- -- -- (102) 607 505
Capitalization to common stock of
S Corporation stockholders
distributions for income taxes
returned to Company -- -- 2 1 -- -- -- 3
Conversion of Class B common stock
into Class A common stock 110,000 (1,100,000) 581 (581) -- -- -- --
Net loss -- -- -- -- -- (13,092) -- (13,092)
---------- ---------- ------- ------- ------ -------- -------- --------
Balance at September 30, 1992 14,189,871 24,305,288 85,180 12,830 -- 64,676 (20,854) 141,832
Capitalization to common stock of
S Corporation stockholders
distributions for income taxes
returned to Company -- -- 9 2 -- -- -- 11
Conversion of Class B common stock
into Class A common stock 171,015 (1,710,150) 903 (903) -- -- -- --
Issuance of Class A common stock to
employee savings plan -- -- 2 -- -- (62) 704 644
Redeemable preferred stock dividends -- -- -- -- -- (3,099) -- (3,099)
Redeemable preferred stock accretion
for original issue discount -- -- -- -- -- (367) -- (367)
Issuance of 1,132,000 warrants to
purchase Class A common stock
in connection with issuance of
redeemable preferred stock -- -- -- -- 5,360 -- -- 5,360
Net loss -- -- -- -- -- (8,606) -- (8,606)
---------- ---------- ------- ------- ------ -------- -------- --------
Balance at September 30, 1993 14,360,886 22,595,138 86,094 11,929 5,360 52,542 (20,150) 135,775
Exercise of options to purchase
Class A common stock -- -- (76) -- -- -- 449 373
Conversion of Class B common stock
into Class A common stock 195,545 (1,955,450) 1,033 (1,033) -- -- -- --
Issuance of Class A common stock to
employee savings plan -- -- 142 -- -- -- 650 792
Redeemable preferred stock dividends -- -- -- -- -- (6,358) -- (6,358)
Redeemable preferred stock accretion
for original issue discount -- -- -- -- -- (688) -- (688)
Net loss -- -- -- -- -- (26,230) -- (26,230)
---------- ---------- ------- ------- ------ -------- -------- --------
Balance at September 30, 1994 14,556,431 20,639,688 $87,193 $10,896 $5,360 $ 19,266 $(19,051) $103,664
========== ========== ======= ======= ====== ======== ======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
25
<PAGE> 12
STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------------
1994 1993 1992
--------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (26,230) $ (8,606) $(13,092)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation and amortization 29,870 23,150 21,136
Deferred income tax provision (benefit) (15,619) 2,218 11,899
(Increase) decrease in current assets -
Accounts receivable, net (1,650) 4,148 (4,575)
Inventories (22,779) (3,958) 10,085
Income taxes receivable -- 15,239 (15,239)
Prepaid expenses and other (1,412) 3,237 449
Increase (decrease) in current liabilities -
Accounts payable 4,039 19,104 (1,298)
Accrued payroll and related taxes 600 654 (4,027)
Accrued liabilities 2,661 4,743 (501)
Production prepayments -- 4,001 5,999
Accrued interest payable 3,047 29 (15)
Accrued pension and profit sharing costs 4 435 (177)
Income taxes payable -- -- (2,444)
--------- -------- --------
Net cash provided by (used for) operating activities (27,469) 64,394 8,200
--------- -------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment (164,918) (82,534) (66,617)
--------- -------- --------
Net cash used for investing activities $(164,918) $(82,534) $(66,617)
========= ======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
26
<PAGE> 13
STATEMENTS OF CASH FLOWS - CONTINUED
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from long-term debt $222,348 $135,000 $ 18,182
Payments on long-term debt (89,991) (88,191) (460)
Proceeds from issuance of redeemable
preferred stock, net of offering costs -- 32,521 --
Proceeds from issuance of warrants to purchase
Class A common stock, net of offering costs -- 5,360 --
Payments for deferred loan costs (5,513) (6,062) (2,318)
S Corporation stockholders distributions for
income taxes returned to Company -- 11 3
Proceeds from exercise of options to purchase
Class A common stock 373 -- 505
Issuance of Class A common stock to employee
savings plan 792 644 --
Other 111 2 30
-------- -------- --------
Net cash provided by financing activities 128,120 79,285 15,942
-------- -------- --------
Net increase (decrease) in cash and cash equivalents (64,267) 61,145 (42,475)
Cash and cash equivalents at beginning of year 64,267 3,122 45,597
-------- -------- --------
Cash and cash equivalents at end of year $ -- $ 64,267 $ 3,122
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized) $ 16,559 $ 14,655 $ 12,787
Income taxes 512 -- --
</TABLE>
Supplemental schedule of noncash financing activities:
For the year ended September 30, 1994 and 1993, the Company increased the
redeemable preferred stock liquidation preference by $6,358 and $3,099,
respectively, in lieu of paying a cash dividend. In addition, for the same
years, redeemable preferred stock was increased by $688 and $367, respectively,
for the accretion required over time to amortize the original issue discount on
the redeemable preferred stock incurred at the time of issuance.
The accompanying notes to financial statements are an integral part of these
statements.
27
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly
liquid income-earning securities with an initial maturity, at time of purchase,
of ninety days or less to be cash equivalents. Cash equivalents are stated at
cost plus accrued interest, which approximates fair market value.
The Company's cash management system utilizes a revolving credit facility with
a syndicate of banks and an accounts receivable securitization facility. During
periods when amounts are outstanding on the revolving credit facility, the
syndicate of banks requires that cash receipts be remitted directly to the
agent bank in payment of such outstanding amounts through a lockbox account
and, as disbursements are made, the Company borrows against the revolving
credit facility or the accounts receivable securitization facility (See Notes 2
and 9).
Inventories
Inventories include costs of material, labor and manufacturing overhead.
Inventories are stated at the lower of cost (using a weighted-average method)
or market value. The composition of inventories as of September 30, 1994 and
1993 was as follows:
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Raw materials $46,302 $20,138
Semi-finished and finished goods 31,608 34,462
Operating materials 8,099 8,630
------- -------
$86,009 $63,230
======= =======
</TABLE>
Operating materials consist primarily of production molds, platforms for the
production molds and furnace lining refractories. Operating materials are
normally consumed within one year and are accounted for as inventory.
Property, Plant and Equipment
Property, plant and equipment are stated at cost and depreciated using the
straight-line method over their estimated useful lives as follows:
<TABLE>
<S> <C>
Buildings 31.5 years
Machinery and Equipment 3-30 years
</TABLE>
Interest related to the construction or major rebuild of facilities is
capitalized and amortized over the estimated life of the related asset.
Capitalization of interest ceases when the asset is placed in service. The
Company capitalized approximately $12,053, $7,696 and $5,774 of interest during
the years ended September 30, 1994, 1993 and 1992, respectively.
Maintenance and repairs are charged to expense as incurred and costs of
improvements and betterments are capitalized. Upon disposal, related costs and
accumulated depreciation are removed from the accounts and resulting gains or
losses are reflected in income.
Major spare parts for machinery and equipment are capitalized and included in
machinery and equipment in the accompanying financial statements. Spare parts
are depreciated using the straight-line method over the useful lives of the
related machinery and equipment.
Costs incurred in connection with the construction or major rebuild of
facilities are capitalized as construction in progress. No depreciation is
recognized on these assets until placed in service. As of September 30, 1994
and 1993, approximately $63,889 and $130,567, respectively, of construction in
progress was included in machinery and equipment in the accompanying financial
statements.
Mineral property and development costs are depleted using the units of
production method based upon estimated recoverable reserves. Accumulated
depletion is included in accumulated depreciation in the accompanying financial
statements.
Other Assets
Other assets consist of deferred loan costs incurred in connection with
obtaining long-term financing. These costs are being amortized on a
straight-line basis over the term of the applicable financing agreement.
Accumulated amortization totaled $3,659 and $2,582 at September 30, 1994 and
1993, respectively.
Production Prepayments
The Company has production prepayment terms with a major customer. The
prepayment is recorded as a production prepayment liability until the product
is shipped, at which time the sale is recorded. As of September 30, 1994 and
1993, production prepayments of $10,000 are included in the accompanying
financial statements.
28
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenue Recognition
Sales are recognized when the product is shipped to the customer. Sales are
reduced by the amount of customer claims. Reserves for estimated customer
claims of $1,811 were included in the allowance for doubtful accounts in the
accompanying financial statements as of September 30, 1994 and 1993.
Income Taxes
In February 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting For Income Taxes."
SFAS No. 109 supersedes SFAS No. 96. Effective October 1, 1993, the Company
adopted SFAS No. 109. The Company had previously adopted SFAS No. 96, and
therefore, the impact of adopting SFAS No. 109 did not have a significant
impact on the Company's financial statements. In accordance with the provisions
of SFAS No. 109, the Company recognizes a liability or asset for the deferred
tax consequences of all temporary differences between the tax basis of assets
or liabilities and their reported amounts in the financial statements that will
result in taxable or deductible amounts in future years when the reported
amounts of the assets or liabilities are recovered or settled. Also, in
accordance with the provisions of SFAS No. 109, as of September 30, 1994, the
Company reclassified current deferred tax items of $6,407 to a current deferred
tax asset in the accompanying financial statements. These items were netted
against deferred income tax liabilities in previous periods.
Net Loss Per Common Share
Net loss per common share is based upon the weighted average number of common
and common equivalent shares outstanding during the periods presented. Common
equivalent shares consist of warrants and options to purchase Class A common
stock which have a dilutive effect when applying the treasury stock method.
Class B common stock is included in the weighted average number of common
shares outstanding at one share for every ten shares outstanding as the Class B
common stock can be converted into Class A common stock at this same rate.
Also, the Class B common stock is entitled to one-tenth of the dividends and
other distributions paid to Class A common stockholders. The holders of both
classes of common stock are entitled to one vote per share.
The net loss for the years ended September 30, 1994 and 1993 was adjusted for
redeemable preferred stock dividends and accretion required over time to
amortize the original issue discount on the redeemable preferred stock incurred
at the time of issuance.
Reclassifications
Certain reclassifications have been made in the prior periods' financial
statements to conform to the current period presentation.
2 LONG-TERM DEBT
Long-term debt as of September 30, 1994 and 1993 consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------
1994 1993
-------- ---------
<S> <C> <C>
Senior term notes issued publicly, interest payable semi-annually at 9 1/2%,
principal due January 15, 2004, unsecured $190,000 $ --
Senior term notes issued publicly, interest payable semi-annually at 11 1/8%,
principal due March 15, 2001, unsecured 135,000 135,000
Senior term notes issued to a group of institutional investors, interest payable
semi-annually at 11.40%, principal paid in full in March 1994 -- 64,410
Senior term notes issued to a group of institutional investors, interest payable
semi-annually at 10.55%, principal paid in full in March 1994 -- 22,623
Subordinated term notes issued to institutional investors, interest payable
semi-annually at 13.00%, principal paid in full in March 1994 -- 2,958
Revolving credit facility from a syndicate of banks, interest is payable monthly
at 1.50% above the defined base rate (9.25% at September 30, 1994), due
February 28, 1995 (see discussion below), secured by accounts receivable
and inventories 32,348 --
-------- --------
$357,348 $224,991
======== ========
</TABLE>
29
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The aggregate amounts of principal maturities of long-term debt as of September
30, 1994 were as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
<S> <C>
1995 $ --
1996 --
1997 --
1998 --
1999 32,348
Thereafter 325,000
--------
$357,348
========
</TABLE>
In November 1994, the Company amended and restated its revolving credit
facility with a syndicate of banks led by Citicorp USA, Inc., as agent (the
"Revolving Credit Facility"), which is used primarily for the working capital
and capital expenditure needs of the Company. The Revolving Credit Facility in
the amount of up to $45,000 is secured by the Company's inventories, unsold
accounts receivable, and general intangibles, and proceeds thereof, and expires
on April 30, 1999. The amount available to the Company under the Revolving
Credit Facility generally ranges from 50 to 55%, in the aggregate, of eligible
inventories. At November 30, 1994, approximately $38,400 was available for
borrowing under the Revolving Credit Facility. Interest is payable monthly at
1.25% above the defined base rate (9.75% at November 30, 1994) or 2.5% above
the defined LIBOR rate (8.5% at November 30, 1994). The Company pays a monthly
commitment fee based on an annual rate of .50% of the average unused portion of
the borrowing limit under the Revolving Credit Facility. As of November 30,
1994, the Company had $7,500 in borrowings outstanding under the Revolving
Credit Facility.
In February 1994, the Company completed a public offering of $190,000 principal
amount of 9 1/2% senior notes (the "9 1/2% Senior Notes"). The 9 1/2% Senior
Notes mature in 2004, are unsecured and require interest payments semi-annually
on January 15 and July 15. After January 1999, the 9 1/2% Senior Notes are
redeemable, in whole or in part, at the option of the Company, subject to
certain redemption premiums. A portion of the proceeds from the 9 1/2% Senior
Notes offering was used to repay the Company's remaining outstanding term debt
of $89,991 aggregate principal amount and to pay contractual prepayment
premiums of approximately $12,300. These prepayment premiums and the related
write-off of deferred loan costs of approximately $1,600 were reflected as an
extraordinary item in the accompanying financial statements.
During the years ended September 30, 1994, 1993 and 1992, the Company retired
certain term loans and revolving credit facilities. Deferred loan costs
applicable to debt retired were written-off by the Company and were included in
the accompanying financial statements.
The debt instruments governing the Revolving Credit Facility, the 9 1/2% Senior
Notes and the $135,000 principal amount of 11 1/8% senior notes (the "11 1/8%
Senior Notes" and together with the 9 1/2% Senior Notes, the "Senior Notes")
contain cross default and other customary provisions. Financial covenants
contained in the Revolving Credit Facility and/or the Senior Notes include,
among other things, a limitation on dividends and distributions on capital
stock of the Company, a tangible net worth maintenance requirement, a current
ratio maintenance requirement, a leverage ratio maintenance requirement, an
interest coverage requirement, a cumulative cash flow requirement, a cumulative
capital expenditure limitation, a limitation on the incurrence of additional
indebtedness unless certain financial tests are satisfied, a limitation on
mergers, consolidations and dispositions of assets and a limitation on liens.
Based on such covenants, as of September 30, 1994, all of the Company's $19,266
retained earnings balance was restricted from payment of cash dividends. As of
November 30, 1994, the Company was in compliance with the covenants and tests
contained in the Revolving Credit Facility and the Senior Notes.
The Company estimates that the aggregate fair market value of its debt and
related obligations was approximately $339,736 as of September 30, 1994. These
estimates were based on quoted market prices or current rates offered for debt
with similar terms and maturities.
3 MAJOR CUSTOMER (DISTRIBUTOR) AND INTERNATIONAL SALES
During the years ended September 30, 1994, 1993, and 1992, the Company derived
approximately 42%, 41% and 27%, respectively, of its net sales through one
customer, who is a distributor to other companies. International sales during
the years ended September 30, 1994, 1993 and 1992 did not exceed 10%.
30
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
4 INCOME TAXES
The provision (benefit) for income taxes as of September 30, 1994, 1993 and
1992 consisted of the following:
<TABLE>
Year Ended September 30,
-------------------------------------------
1994 1993 1992
-------- ------- --------
<S> <C> <C> <C>
Current income tax provision (benefit)
Federal $ 1,163 $(6,201) $(17,634)
State (207) (1,520) (2,648)
-------- ------- --------
956 (7,721) (20,282)
-------- ------- --------
Deferred income tax provision (benefit)
Federal (10,118) 1,424 10,374
State (1,072) 794 1,525
-------- ------- --------
(11,190) 2,218 11,899
-------- ------- --------
Benefit for income taxes $(10,234) $(5,503) $ (8,383)
======== ======= ========
</TABLE>
The benefit for income taxes as a percentage of loss for the years ended
September 30, 1994, 1993 and 1992 differs from the statutory federal income tax
rate due to the following:
<TABLE>
Year Ended September 30,
-------------------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Statutory federal income tax rate (35.0)% (34.8)% (34.0)%
State income taxes, net of federal income tax benefit (3.3) (3.3) (3.3)
Other 0.3 (0.9) (1.7)
----- ----- -----
Effective tax rate (38.0)% (39.0)% (39.0)%
===== ===== =====
</TABLE>
As of September 30, 1994, the Company had deferred income tax assets of
$40,906. The deferred income tax assets have been reduced by a $1,186 valuation
allowance. This valuation allowance was established during the year ended
September 30, 1994 for a portion of the Company's net operating loss
carryforward. The components of and the changes in the net deferred income tax
assets and liabilities for the year ended September 30, 1994 were as follows:
<TABLE>
Deferred
October 1, (Expense) September 30,
1993 Benefit 1994
---------- --------- -------------
<S> <C> <C> <C>
Deferred income tax assets:
Net operating loss carryforward $ -- $ 24,986 $ 24,986
Inventory costs capitalized 4,351 (173) 4,178
Alternative minimum tax credit carryforward 4,134 2,614 6,748
Accrued vacation 1,723 (27) 1,696
Allowance for doubtful accounts 930 (246) 684
General business credits 1,810 461 2,271
Other 109 234 343
-------- -------- --------
Total deferred income tax assets 13,057 27,849 40,906
Valuation allowance -- (1,186) (1,186)
-------- -------- --------
13,057 26,663 39,720
-------- -------- --------
Deferred income tax liabilities:
Accelerated depreciation (22,976) (12,001) (34,977)
Mineral property development costs (1,792) (349) (2,141)
Operating materials (3,305) 746 (2,559)
Other (603) 560 (43)
-------- -------- --------
Total deferred income tax liabilities (28,676) (11,044) (39,720)
-------- -------- --------
Net deferred income tax liability $(15,619) $ 15,619 $ --
======== ======== ========
</TABLE>
As of September 30, 1994, the Company had a net operating loss carryforward and
an alternative minimum tax credit carryforward for tax reporting purposes of
approximately $62,430 and $6,748, respectively. The net operating loss
carryforward expires in 2009.
31
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
5 COMMITMENTS AND CONTINGENCIES
Capital Projects
The Company has initiated substantial capital expenditures to modernize its
steelmaking, casting, rolling and finishing facilities, thereby reducing
overall operating costs, broadening the Company's product line, improving
product quality and increasing throughput capacity. The Company has spent
approximately $165,000 and $83,000 on capital projects during the fiscal years
ended September 30, 1994 and 1993, respectively. These expenditures were made
primarily in connection with the Company's ongoing modernization efforts. For
fiscal year 1995, the Company has identified approximately $117,000 in
potential capital expenditures. These expenditures include additional slab
heating capacity, an additional ironmaking facility and the final phase of the
wide coiled plate project. The Company plans to manage the construction and
completion of these capital projects as justified by future operating results,
availability of funds, market conditions and other factors.
Legal Matters
The Company is subject to various legal matters, which it considers normal for
its business activities. Management believes that none of these matters will
have a material impact on the financial condition of the Company.
Environmental Matters
Compliance with environmental laws and regulations is a significant factor in
the Company's business. The Company is subject to federal, state and local
environmental laws and regulations concerning, among other things, air
emissions, wastewater discharge, and solid and hazardous waste disposal. The
Company believes that it is in compliance in all material respects with all
currently applicable environmental regulations.
The Company has incurred substantial capital expenditures for environmental
control facilities, including the Q-BOP furnaces, the waste-water treatment
facility, the benzene mitigation equipment, the coke oven gas desulfurization
facility and other projects. The Company has budgeted a total of $2,204 for
environmental capital improvements in fiscal years 1995 and 1996. Such
improvements include potential upgrades to the Company's coking operations
($2,000) and a wastewater diffuser system ($204). Environmental legislation and
regulations have changed rapidly in recent years and it is likely that the
Company will be subject to increasingly stringent environmental standards in
the future. Although the Company has budgeted capital expenditures for
environmental matters, it is not possible at this time to predict the amount of
capital expenditures that may ultimately be required to comply with all
environmental laws and regulations.
Under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA"), EPA and the states have authority to impose
liability on waste generators, site owners and operators and others regardless
of fault or the legality of the original disposal activity. Other environmental
laws and regulations may also impose liability on the Company for conditions
existing prior to the Company's acquisition of the steel mill.
At the time of the Company's acquisition of the steel mill, the Company and USX
Corporation (USX) identified certain hazardous and solid waste sites and other
environmental conditions which existed prior to the acquisition. USX has agreed
to indemnify the Company (subject to the sharing arrangements described below)
for any fines, penalties, costs (including costs of clean-up, required studies
and reasonable attorney's fees), or other liabilities for which the Company
becomes liable due to any environmental condition existing on the Company's
real property as of the acquisition date that is determined to be in violation
of any environmental law, is otherwise required by applicable judicial or
administrative action, or is determined to trigger civil liability (the
"Pre-existing Environmental Liabilities"). The Company has provided a similar
indemnity (but without any similar sharing arrangement) to USX for conditions
that may arise after the acquisition. Although the Company has not completed a
comprehensive analysis of the extent of the Pre-existing Environmental
Liabilities, such liabilities could be material.
Under the acquisition agreement between the two parties, the Company and USX
agreed to share on an equal basis the first $20,000 of costs incurred by either
party to satisfy any government demand for studies, closure, monitoring, or
remediation at specified waste sites or facilities or for other claims under
CERCLA or the Resource Conservation and Recovery Act. The Company is not
obligated to contribute more than $10,000 for the clean-up of wastes generated
prior to the acquisition. The Company believes that it has paid the full
$10,000 necessary to satisfy its obligations under the cost-sharing
arrangement. USX has recently advised the Company, however, of its position
that a portion of the amount paid by the Company may not be properly credited
against the Company's obligations. Although the Company believes that USX's
position is without merit, there can be no assurance that this matter will be
resolved without litigation. Moreover, the Company's ability to obtain
indemnification from USX in the future will depend on factors which may be
beyond the Company's control and may also be subject to dispute.
32
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Purchase Commitments
Effective September 27, 1988, the Company entered into an agreement, which was
subsequently amended on June 8, 1990, to purchase a minimum of approximately
207 million standard cubic feet of oxygen each month. The contract expires on
April 1, 1998. The contract price is adjusted semi-annually based on the change
in the Producer Price Index for Industrial Commodities ("PPI"). The Company
has agreed to pay all sales and excise taxes levied against the supplier.
Effective September 1, 1989, the Company entered into an agreement to purchase
interruptible and firm back-up power through January 31, 1999. For
interruptible power, the Company pays an energy charge adjusted annually to
reflect changes in the supplier's average energy costs and a facilities charge,
based on 90,000 kilowatts, adjusted annually to reflect changes in the
supplier's per megawatt fixed transmission investment. For firm back-up power,
the Company pays a monthly facilities charge based on 20,000 kilowatts that
remains constant, and demand and energy charges based on actual usage. On
November 3, 1993, the Company executed a firm power contract with the same
supplier for additional power needs. Under this contract, the Company will pay
the same energy price as under the interruptible contract and a power charge
based on the supplier's filed industrial tariff.
Effective April 1, 1991, the Company entered into a six-year agreement to
purchase high-volatile metallurgical-grade coking coal. The Company has
commitments to purchase a minimum of 180,000 tons of high-volatile
metallurgical-grade coking coal in each remaining contract year. The purchase
price is adjusted in each contract year based on the change in the PPI.
Effective July 12, 1990, the Company entered into an agreement, which was
subsequently amended in December 1992, to purchase 100% of the oxygen, nitrogen
and argon produced at a facility located at the Company's steel mill which is
owned and operated by an independent party. The contract expires in September
2006 and specifies that the Company will pay a base monthly charge that is
adjusted semi-annually each January 1 and July 1 based upon a percentage of the
change in the PPI.
Effective January 12, 1993 the Company entered into a three-year agreement to
purchase metallurgical coke. The contract expires on December 31, 1995. The
Company has commitments to purchase a minimum of 152,000 tons of metallurgical
coke during the third contract year.
Effective January 1, 1994, the Company entered into a nine-year agreement to
purchase metallurgical coke. The Company has commitments to purchase a minimum
of 274,000 tons of coke at a specified price in the second and third contract
years. The quantity and price for subsequent years will be as agreed by the
parties.
Lease Obligations
The Company leases certain facilities and equipment used in its operations.
Management expects that, in the normal course of business, leases that expire
will be renewed or replaced by other leases. The aggregate commitments under
non-cancelable operating leases at September 30, 1994, were as follows:
<TABLE>
Year Ended
September 30,
-------------
<S> <C>
1995 $2,173
1996 2,029
1997 875
1998 196
1999 175
Thereafter 313
------
$5,761
======
</TABLE>
Total rental expenses for non-cancelable operating leases was approximately
$1,505 for the year ended September 30, 1994.
Letters of Credit
As of September 30, 1994, the Company had outstanding letters of credit
totaling approximately $2,550.
6 REDEEMABLE PREFERRED STOCK
In March 1993, the Company issued $40,000 of 14% cumulative redeemable
exchangeable preferred stock (the "Redeemable Preferred Stock") and related
warrants to purchase an aggregate of 1,132,000 shares of Class A common stock.
The Redeemable Preferred Stock consists of 400,000 shares, no par value, with a
liquidation preference of approximately $124 per share as of September 30,
1994. Dividends accrue at a rate equal to 14% per annum of the liquidation
preference and, except as provided below, are payable quarterly in cash from
funds legally available therefor. For dividend periods ending before April
1996, the Company may, at its option,
33
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
add dividends to the liquidation preference in lieu of payment in cash. During
the years ended September 30, 1994 and 1993, the Company increased the
liquidation value of the Redeemable Preferred Stock to $49,457 and $43,099,
respectively, by adding dividends to the liquidation preference. The Company
currently intends to continue to add the dividends to the liquidation
preference through March 1996. The Redeemable Preferred Stock is exchangeable,
at the Company's option, into subordinated debentures of the Company due 2003
(the "Exchange Debentures"). However, the indentures governing the Senior
Notes and the Company's Revolving Credit Facility currently limit the Company's
ability to incur additional indebtedness. The Company is obligated to redeem
all of the Redeemable Preferred Stock in March 2003 from funds legally
available therefor. The Company's ability to incur debt resulting from the
exchange of the Redeemable Preferred Stock for Exchange Debentures and to pay
cash dividends on the Redeemable Preferred Stock is subject to compliance with
the covenants and tests contained in the indentures governing the Senior Notes
and in the Company's Revolving Credit Facility. After March 1998, both the
Redeemable Preferred Stock and/or the Exchange Debentures are redeemable, at
the Company's option, subject to certain redemption premiums. The warrants to
purchase Class A common stock are exercisable at $11 per share, subject to
adjustment in certain circumstances, and expire in March 2000.
The Company estimates that the aggregate fair market value of its Redeemable
Preferred Stock was approximately $48,000 at September 30, 1994. The Company
estimates that the aggregate fair market value of its warrants to purchase
Class A common stock was approximately $9,622 at September 30, 1994. The
Company's estimates for the Redeemable Preferred Stock and warrants to purchase
Class A common stock were based on quoted market prices.
7 STOCK OPTIONS
Effective January 2, 1990, the Company granted options to purchase 330,000
shares of Class A common stock to key employees at an exercise price of ten
dollars and ninety-one cents per share. On January 2, 1992, 40% of the stock
options became exercisable and an additional 20% become exercisable each
January 2 thereafter through 1995. The stock options remain exercisable until
the earlier of 90 days after the employee's termination of employment or ten
years from the date such stock options were granted.
During the year ended September 30, 1992, the Company amended its stock option
agreement with a former employee of the Company. Pursuant to this amendment,
the Company agreed to vest all of the former employee's options to purchase an
aggregate of 66,000 shares of Class A common stock and permit exercise of such
options at any time through the tenth anniversary of the date the options were
granted. As of September 30, 1994, 11,000 of these options to purchase Class A
common stock had been exercised.
Effective July 20, 1990, the Company's Board of Directors adopted a Key
Employee Plan (the "Employee Plan") which was approved by the Company's
stockholders in January 1991. The Employee Plan provides that incentive and
nonstatutory stock options to purchase Class A common stock and corresponding
stock appreciation rights may be granted. The Employee Plan provides for
issuance of up to 1,000,000 shares of Class A common stock, with no more than
750,000 shares of Class A common stock cumulatively available upon exercise of
incentive stock options. Effective August 6, 1992, March 3, 1993 and April 5,
1994, the Company granted incentive stock options to purchase an aggregate of
125,000, 155,900 and 128,700 shares of Class A common stock, respectively,
under the Employee Plan.
The Employee Plan Committee (the "Committee") shall determine the time or times
when each incentive or nonstatutory stock option vests and becomes exercisable;
provided no stock option shall be exercisable within six months of the date of
grant (except in the event of death or disability) and no incentive stock
option shall be exercisable after the expiration of ten years from the date of
grant. The exercise price of incentive stock options to purchase Class A common
stock shall be at least the fair market value of the Class A common stock on
the date of grant. The exercise price of nonstatutory options to purchase Class
A common stock is determined by the Committee.
34
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Stock option activity for the years ended September 30, 1994, 1993, and 1992
consisted of the following:
NUMBER OF PRICE PER
SHARES SHARE RANGE
--------- ------------
Outstanding at September 30, 1991 297,000 $ 10.91
Granted 125,000 7.88-8.66
Exercised (46,200) 10.91
------- ------------
Outstanding at September 30, 1992 375,800 7.88-10.91
Granted 155,900 11.75-12.93
Cancelled (1,700) 7.88-11.75
------- ------------
Outstanding at September 30, 1993 530,000 7.88-12.93
Granted 128,700 15.00-16.50
Exercised (34,200) 10.91
Cancelled (4,100) 7.88-11.75
------- ------------
Outstanding at September 30, 1994 620,400 $ 7.88-16.50
======= ============
Options to purchase 237,600, 177,600 and 132,000 shares of Class A common stock
were exercisable on September 30, 1994, 1993 and 1992, respectively.
8 EMPLOYEE BENEFIT PLANS
Union Pension Plan
The Company has a qualified noncontributory defined contribution pension plan
which provides benefits for all eligible employees covered by a collective
bargaining agreement. The Company contributed 4% of each participant's
compensation to this plan during the years ended September 30, 1994, 1993 and
1992. Total contributions by the Company for the years ended September 30,
1994, 1993 and 1992 were $3,086, $2,675 and $2,900, respectively. The
participants vest in these contributions at 20% for each year of service and
become fully vested after five years.
Management Employee Savings and Pension Plan
The Company has a savings and pension plan which provides benefits for all
eligible employees not covered by a collective bargaining agreement. This plan
is comprised of two qualified plans: (1) a management employee savings 401(k)
plan with a cash or deferred compensation arrangement and discretionary
matching contributions and (2) a noncontributory defined contribution pension
plan.
Participants may direct the investment of funds related to their deferred
compensation in this plan. The employee savings plan provides for discretionary
matching contributions as determined each plan year by the Company's Board of
Directors. The Board of Directors elected to match each participant's
contribution to the employee savings plan up to 4% of their compensation for
fiscal years 1994, 1993 and 1992. The pension plan provided for contributions
by the Company of 4% of each participant's compensation for fiscal years 1994,
1993 and 1992. During fiscal years 1994, 1993 and 1992, total contributions by
the Company were $1,780, $1,567 and $1,467, respectively. The participants vest
in the Company's contributions at 20% for each year of service and become fully
vested after five years.
Profit Sharing and Bonus Programs
The Company has a profit sharing program for full-time union eligible
employees. Participants receive payments based upon operating income reduced by
an amount equal to a portion of the Company's capital expenditures. No profit
sharing and bonus payments were accrued in the years ended September 30, 1994,
1993 and 1992.
During the year ended September 30, 1993, the Company implemented a performance
dividend plan designed to reward employees for increased shipments. As
shipments increase above an annualized rate of 1.5 million tons, compensation
under this plan increases. Payments made under the performance dividend plan
are deducted from any profit sharing obligations to the extent such obligations
exceed the performance plan payments in any given fiscal year.
Supplemental Executive Plans
The Company maintains insurance and retirement agreements with certain of the
management employees and executive officers. Pursuant to the insurance
agreements, the Company pays the annual pre-
35
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
miums and receives certain policy proceeds upon the death of the retired
management employee or executive officer. Pursuant to the retirement
agreements, the Company provides for the payment of supplemental benefits to
certain management employees and executive officers upon retirement.
9 SUBSEQUENT EVENT
In November 1994, the Company executed agreements to create and fund a
five-year accounts receivable securitization facility of up to $65,000 (the
"Receivables Facility"). Under the Receivables Facility, the Company sells
substantially all of its accounts receivable to a wholly owned special purpose
subsidiary, Geneva Steel Funding Corporation ("GSFC"). GSFC transfers the
accounts receivable purchased from the Company to a trust in exchange for
certain trust certificates representing ownership interests in the assets of
the trust. One of the trust certificates was sold to an institutional investor
and the proceeds of such sale and of subsequent fundings by the investor are
used by GSFC to pay the Company for the receivables purchased by GSFC. During
the term of the Receivables Facility, the cash generated by collection of the
receivables will be used to purchase additional receivables (GSFC will purchase
substantially all receivables from the Company on an ongoing basis) or make
payments to the investor. Pursuant to the Receivables Facility, the Company
acts as servicer for the accounts receivable.
The yield on amounts funded by the institutional investor under the Receivables
Facility is the applicable commercial paper rate plus 0.5% (5.5% at November
30, 1994). In addition, GSFC pays a 0.375% fee on unfunded amounts. Funding
availability under the Receivables Facility is based on eligible receivables as
defined in the applicable agreements. At November 30, 1994, $30,900 was
available under the Receivables Facility, of which $24,700 had been funded. The
Company is not subject to any financial ratio tests under the Receivables
Facility, but the agreements provide for early termination and payment upon
certain events, which include the incurrence of losses or delinquencies on the
receivables in excess of certain levels or the bankruptcy or insolvency of the
Company. In the event of a liquidation of GSFC, such institutional investor
would be entitled to receive proceeds from collections of accounts receivable
based on a formula which takes into account the investor's pro rata share of
funding to total trust assets.
10 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
A summary of quarterly financial information for the years ended September 30,
1994 and 1993 is as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1994,
-----------------------------------------------
FIRST SECOND THIRD FOURTH
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $127,099 $121,115 $113,195 $124,653
Gross margin 11,473 1,899 (855) 2,997
Income (loss) before extraordinary item (a) 1,710 (4,680) (7,074) (6,652)
Net income (loss) 1,710 (13,938) (7,074) (6,928)
Net income (loss) applicable to common shares 31 (15,671) (8,862) (8,774)
Net income (loss) per common share before extraordinary item .002 (.43) (.59) (.56)
Net income (loss) per common share .002 (1.04) (.59) (.58)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1994,
-----------------------------------------------
FIRST SECOND THIRD FOURTH
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $101,149 $115,542 $124,954 $123,536
Gross margin 1,681 1,702 7,595 10,745
Net income (loss) (3,937) (4,568) (1,029) 928
Net loss applicable to common shares (3,937) (4,829) (2,607) (699)
Net loss per common share (.26) (.32) (.17) (.05)
</TABLE>
(a) The extraordinary item is a loss on early extinguishment of debt in the
second quarter of fiscal year 1994 with an adjustment in the fourth quarter of
fiscal year 1994 (See Note 2).
36
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Subsidiary State of Incorporation Business Name
- --------------------------------- ---------------------- --------------------------------
<S> <C> <C>
Geneva Steel Funding Corporation Utah Geneva Steel Funding Corporation
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report incorporated by reference in this Form 10-K, into
the Company's previously filed Registration Statement on Form S-8, File No.
33-40867 and the Company's previously filed Registration Statement on Form S-3,
File No. 33-64548.
ARTHUR ANDERSEN LLP
Salt Lake City, Utah
December 29, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S BALANCE SHEET AND STATEMENT OF OPERATIONS AS OF AND FOR THE YEAR
ENDED SEPTEMBER 30, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 51,020,000
<ALLOWANCES> 3,113,000
<INVENTORY> 86,009,000
<CURRENT-ASSETS> 143,161,000
<PP&E> 548,177,000
<DEPRECIATION> 94,891,000
<TOTAL-ASSETS> 606,815,000
<CURRENT-LIABILITIES> 96,364,000
<BONDS> 357,348,000
<COMMON> 79,038,000
43,032,000
0
<OTHER-SE> 19,266,000
<TOTAL-LIABILITY-AND-EQUITY> 606,815,000
<SALES> 486,062,000
<TOTAL-REVENUES> 486,062,000
<CGS> 470,548,000
<TOTAL-COSTS> 470,548,000
<OTHER-EXPENSES> 22,305,000
<LOSS-PROVISION> 4,826,000
<INTEREST-EXPENSE> 21,722,000
<INCOME-PRETAX> (26,930,000)
<INCOME-TAX> (10,234,000)
<INCOME-CONTINUING> (16,696,000)
<DISCONTINUED> 0
<EXTRAORDINARY> (9,534,000)
<CHANGES> 0
<NET-INCOME> (26,230,000)
<EPS-PRIMARY> (2.20)
<EPS-DILUTED> (2.20)
</TABLE>
