As filed with the Securities and Exchange Commission on March 24, 1998
Registration No. 333-43867
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
AMENDMENT NO. 2 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------------
WHEELING-PITTSBURGH CORPORATION
WHEELING-PITTSBURGH STEEL CORPORATION
CONSUMERS MINING CORPORATION
WHEELING-EMPIRE COMPANY
MINGO OXYGEN COMPANY
PITTSBURGH-CANFIELD COMPANY
WHEELING CONSTRUCTION PRODUCTS, INC.
WP STEEL VENTURE CORPORATION
CHAMPION METAL PRODUCTS, INC.
(Exact name of Registrants as specified in their charters)
DELAWARE 3312 55-0309927
DELAWARE (Primary Standard Industrial 55-0703273
PENNSYLVANIA Classification Code Number) 55-0149670
DELAWARE 25-1450838
OHIO 55-6018996
PENNSYLVANIA 34-1016803
DELAWARE 55-0721401
DELAWARE 55-0737095
DELAWARE 55-0754536
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Wheeling-Pittsburgh Corporation
1134 Market Street
Wheeling, West Virginia 26003
(304) 234-2400
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
------------------------------------
JOHN R. SCHEESSELE
WHEELING-PITTSBURGH CORPORATION
1134 MARKET STREET
WHEELING, WEST VIRGINIA 26003
(304) 234-2424
(Name, address and telephone number of agent for service for registrants)
------------------------------------
Copy to:
STEVEN WOLOSKY, ESQ.
OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
505 PARK AVENUE
NEW YORK, NEW YORK 10022
(212) 753-7200
------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED EXCHANGE OFFER: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
<PAGE>
------------------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered Offering Price Per Note Aggregate Offering Price Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 1/4% Senior Exchange Notes Due 2007(1) $275,000,000 $1,000 $275,000,000 $83,333.33(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Wheeling-Pittsburgh Steel Corporation -- -- -- --
Guarantee of 9 1/4% Senior Exchange Notes due 2007 (2)
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Consumers Mining Corporation -- -- -- --
Guarantee of 9 1/4% Senior Exchange Notes due 2007 (2)
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Wheeling-Empire Company -- -- -- --
Guarantee of 9 1/4% Senior Exchange Notes due 2007 (2)
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Mingo Oxygen Company -- -- -- --
Guarantee of 9 1/4% Senior Exchange Notes due 2007 (2)
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Pittsburgh-Canfield Company -- -- -- --
Guarantee of 9 1/4% Senior Exchange Notes due 2007 (2)
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Wheeling Construction Products, Inc. -- -- -- --
Guarantee of 9 1/4% Senior Exchange Notes due 2007 (2)
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WP Steel Venture Corporation -- -- -- --
Guarantee of 9 1/4% Senior Exchange Notes due 2007 (2)
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Champion Metal Products, Inc. -- -- -- --
Guarantee of 9 1/4% Senior Exchange Notes due 2007 (2)
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Total $83,333.33(1)
====================================================================================================================================
</TABLE>
(1) Such fee was paid with the initial filing of the Registration Statement.
(2) No additional consideration is to be received for the guarantee.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to buy nor shall there
be any sale of these securities in any state in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the
securities laws of any such state.
PROSPECTUS (Subject to Completion)
DATED MARCH 24, 1998
OFFER TO EXCHANGE
9 1/4% SENIOR EXCHANGE NOTES DUE 2007
FOR
ALL OUTSTANDING
9 1/4% SENIOR NOTES DUE 2007
($275,000,000 AGGREGATE PRINCIPAL AMOUNT OUTSTANDING)
OF
WHEELING-PITTSBURGH CORPORATION
WHICH ARE FULLY AND UNCONDITIONALLY GUARANTEED BY ALL
OF THE PRESENT AND FUTURE OPERATING SUBSIDIARIES
OF WHEELING-PITTSBURGH CORPORATION, CONSISTING OF
WHEELING-PITTSBURGH STEEL CORPORATION
CONSUMERS MINING CORPORATION
WHEELING-EMPIRE COMPANY
MINGO OXYGEN COMPANY
PITTSBURGH-CANFIELD COMPANY
WHEELING CONSTRUCTION PRODUCTS, INC.
WP STEEL VENTURE CORPORATION
CHAMPION METAL PRODUCTS, INC.
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME
ON __________ __, 1998, UNLESS EXTENDED
--------------
SEE "RISK FACTORS" IMMEDIATELY FOLLOWING THE PROSPECTUS SUMMARY FOR A
DISCUSSION OF CERTAIN INFORMATION THAT SHOULD BE CONSIDERED IN CONNECTION WITH
THE EXCHANGE OFFER AND AN INVESTMENT IN THE NEW NOTES.
IF ANY HOLDER OF OLD NOTES IS AN AFFILIATE OF THE COMPANY, IS ENGAGED
IN OR INTENDS TO ENGAGE IN OR HAS ANY ARRANGEMENT OR UNDERSTANDING WITH ANY
PERSON TO PARTICIPATE IN THE DISTRIBUTION OF THE NEW NOTES TO BE ACQUIRED IN THE
EXCHANGE OFFER, SUCH HOLDER (I) COULD NOT RELY ON THE APPLICABLE INTERPRETATIONS
OF THE COMMISSION AND (II) MUST COMPLY WITH THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT IN CONNECTION WITH ANY RESALE TRANSACTION.
--------------
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------
THE DATE OF THIS PROSPECTUS IS _________, 1998
(Continued on next page)
<PAGE>
(Cover page continued)
Wheeling-Pittsburgh Corporation, a Delaware corporation (the
"Company"), hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying Letter of Transmittal (the
"Exchange Offer"), to exchange $1,000 principal amount of its 9 1/4% Senior
Exchange Notes Due 2007 (the "New Notes") for each $1,000 principal amount of
its outstanding 9 1/4% Senior Notes Due 2007 (the "Old Notes"). The offer and
sale of the New Notes have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to the Registration Statement (as
defined herein) of which this Prospectus constitutes a part. As of March __,
1998, $275,000,000 aggregate principal amount of the Old Notes was outstanding.
The Exchange Offer is being made pursuant to the terms of the registration
rights agreement (the "Registration Rights Agreement") dated November 20, 1997,
by and between the Company, Donaldson, Lufkin & Jenrette Securities Corporation
("Donaldson, Lufkin & Jenrette") and Citicorp Securities, Inc. ("Citicorp,"
together with Donaldson, Lufkin & Jenrette, the "Initial Purchasers"), pursuant
to the terms of the Purchase Agreement dated November 20, 1997, by and between
the Company and the Initial Purchasers. The New Notes and the Old Notes are
collectively referred to herein as the "Notes." As used herein, the term
"Holder" means a holder of the Notes.
THE NOTES ARE SENIOR UNSECURED OBLIGATIONS OF THE COMPANY. The Notes
are fully and unconditionally guaranteed (the "Subsidiary Guarantees") by all of
the Company's present and future operating subsidiaries (the "Guarantors"). The
Subsidiary Guarantees rank pari passu in right of payment to all existing and
future senior indebtedness of the Guarantors. The Notes will be effectively
junior to secured indebtedness of the Company and its subsidiaries, including
borrowings under the Revolving Credit Facility (as defined), to the extent of
the assets securing such indebtedness. At December 31, 1997, the Notes were
subordinated to the $90.9 million of secured indebtedness of the Company and its
subsidiaries and the Notes were pari passu with $75.0 million of borrowings
under the Term Loan Agreement (as defined).
The Company will accept for exchange any and all Old Notes that are
validly tendered and not withdrawn on or prior to 5:00 p.m., New York City time,
on the date the Exchange Offer expires, which will be __________ __, 1998 [20
BUSINESS DAYS AFTER COMMENCEMENT OF THE EXCHANGE OFFER], unless the Exchange
Offer is extended (the "Expiration Date"). Tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date. The
Exchange Offer is not conditioned upon any aggregate minimum principal amount of
Old Notes being tendered for exchange. However, the Exchange Offer is subject to
certain conditions, which may be waived by the Company, and to the terms and
provisions of the Registration Rights Agreement. Old Notes may be tendered only
in denominations of $1,000 aggregate principal amount and integral multiples
thereof. The Company has agreed to pay the expenses of the Exchange Offer. See
"The Exchange Offer."
Any waiver, extension or termination of the Exchange Offer will be
publicly announced by the Company through a release to the Dow Jones News
Service and as otherwise required by applicable law or regulations.
The Notes were issued in a private placement (the "November Offering")
under an indenture (the "Indenture"), dated as of November 26, 1997, by and
among the Company and Bank One Trust Company, N.A. (in such capacity, the
"Trustee"). The New Notes will be obligations of the Company and are entitled to
the benefits of the Indenture, including the accrual of interest from the time
of their issuance. The net proceeds of the November Offering, together with the
borrowings under the Term Loan Agreement, were used to defease the Company's 9
3/8% Senior Notes due 2003 (the "9 3/8% Notes") pursuant to the terms of the
indenture under which the 9 3/8% Notes were issued and to reduce outstanding
borrowings under the Revolving Credit Facility.
The form and terms of the New Notes are identical in all material
respects to the form and terms of the Old Notes, except that the offer and sale
of the New Notes have been registered under the Securities Act. Any Old Notes
not tendered and accepted in the Exchange Offer will remain outstanding and will
be entitled to all the rights and preferences and will be subject to the
limitations applicable thereto under the Indenture. Following consummation of
the Exchange Offer, the Holders of Old Notes will continue to be subject to the
existing restrictions upon transfer thereof and the Company will have no further
obligation to such Holders to provide for the registration under the Securities
Act of the offer and sale of the Old Notes held by them. Following the
<PAGE>
completion of the Exchange Offer, none of the Notes will be entitled to the
contingent increase in interest rate provided pursuant to the Registration
Rights Agreement. See "The Exchange Offer."
The Notes will mature on November 15, 2007. Interest on the Notes will
be paid in cash at a rate of 9 1/4% per annum on each May 15 and November 15,
commencing May 15, 1998.
The Notes will be redeemable at the option of the Company whole or in
part, on or after November 15, 2002, initially at 104.625% of their principal
amount, plus accrued and unpaid interest, declining to 100% of their principal
amount, plus accrued and unpaid interest on or after November 15, 2005. In
addition, upon a Change of Control (as hereinafter defined), the Company will be
required to make an offer to purchase the Notes at a purchase price equal to
101% of their principal amount plus accrued and unpaid interest and liquidated
damages, if any. See "Description the New Notes -- Mandatory Redemption," "--
Optional Redemption," and "-- Repurchase at the Option of Holders."
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission") to third parties, the Company believes
that New Notes issued pursuant to this Exchange Offer in exchange for Old Notes
may be offered for resale, resold and otherwise transferred by a Holder thereof
other than (i) a broker-dealer who purchased such Old Notes directly from the
Company to resell pursuant to Rule 144A or any other available exemption under
the Securities Act or (ii) a person that is an "affiliate" (within the meaning
of Rule 405 of the Securities Act) of the Company, without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that the Holder is acquiring the New Notes in the ordinary course of its
business and is not participating, and has no arrangement or understanding with
any person to participate, in the distribution of the New Notes. Holders of Old
Notes who tender in the Exchange Offer with the intention to participate in a
distribution of the New Notes may not rely upon the position of the staff of the
Commission enunciated in the above-referenced no-action letters, and, in the
absence of an exemption, must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction. Holders of Old Notes wishing to participate in the Exchange
Offer must represent to the Company in the Letter of Transmittal that such
conditions have been met.
Each broker-dealer (other than an "affiliate" of the Company) that
receives New Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the consummation of the Exchange Offer, it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution." Any broker-dealer who is an
affiliate of the Company may not rely on such no-action letters and must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction.
The New Notes constitute a new issue of securities with no established
trading market.
This Prospectus, together with the Letter of Transmittal, is being sent
to all registered Holders of Old Notes as of _____________ __, 1998.
The Company will not receive any proceeds from the Exchange Offer. No
dealer-manager is being used in connection with this Exchange Offer. See "Use of
Proceeds" and "Plan of Distribution."
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus and the Letter of Transmittal and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company or the Exchange Agent (as defined herein). This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy the New
Notes in any jurisdiction to any person to whom it is unlawful to make such
offer or
<PAGE>
solicitation in such jurisdiction. The delivery of this Prospectus shall not,
under any circumstances, create any implication that the information herein is
correct at any time subsequent to its date.
---------------------------
TABLE OF CONTENTS
PAGE
----
AVAILABLE INFORMATION.......................................................2
PROSPECTUS SUMMARY..........................................................4
RISK FACTORS...............................................................15
THE EXCHANGE OFFER.........................................................23
USE OF PROCEEDS............................................................29
CAPITALIZATION............................................................30
SELECTED CONSOLIDATED FINANCIAL
DATA...................................................................31
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS..............................................33
BUSINESS...................................................................39
LEGAL PROCEEDINGS..........................................................52
MANAGEMENT.................................................................54
EXECUTIVE COMPENSATION.....................................................56
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS;
TRANSACTIONS BETWEEN
THE COMPANY AND WHX....................................................60
DESCRIPTION OF PRINCIPAL
INDEBTEDNESS...........................................................62
DESCRIPTION OF RECEIVABLES FACILITY........................................63
INDEMNIFICATION AND INTERCREDITOR
AGREEMENT..............................................................63
DESCRIPTION OF THE NEW NOTES...............................................64
CERTAIN U.S. FEDERAL INCOME TAX
CONSEQUENCES...........................................................89
PLAN OF DISTRIBUTION.......................................................93
LEGAL MATTERS..............................................................93
EXPERTS....................................................................93
INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS............................................................F-1
<PAGE>
---------------------------
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on
Form S-4 under the Securities Act with respect to the New Notes offered in the
Exchange Offer. For the purposes hereof, the term "Registration Statement" means
the original Registration Statement and any and all amendments thereto. In
accordance with the rules and regulations of the Commission, this Prospectus
does not contain all of the information set forth in the Registration Statement
and the schedules and exhibits thereto. Each statement made in this Prospectus
concerning a document filed as an exhibit to the Registration Statement is
qualified in its entirety by reference to such exhibit for a complete statement
of its provisions, although all material terms of such documents are set forth
herein. For further information pertaining to the Company and the New Notes
offered in the Exchange Offer, reference is made to such Registration Statement,
including the exhibits and schedules thereto and the financial statements, notes
and schedules filed as a part thereof. The Registration Statement (and the
exhibits and schedules thereto) may be inspected and copied at the public
reference facilities maintained by the Commission at its principal office at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, or
at its regional offices at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and at Seven World Trade Center, Suite 1300, New York, New York
10048. Any interested party may obtain copies of all or any portion of the
Registration Statement and the exhibits thereto at prescribed rates from the
Public Reference Section of the Commission at its principal office at Judiciary
Plaza, 450 Fifth Street, Room 1024, Washington, D.C. 20549. In addition,
registration statements and other filings made with the Commission through its
Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system are publicly
available through the Commission's site on the Internet's World Wide Web,
located at http://www.sec.gov.
Upon effectiveness of this Registration Statement the Company and each
of the Subsidiary Guarantors will be subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports and other information with the Commission.
Such reports and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549; 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and Seven World Trade Center, Suite 1300, New York, New
York 10048. Copies of such material can be obtained from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
The Indenture requires the Company to file with the Commission the
annual, quarterly and other reports required by Sections 13(a) and 15(d) of the
Exchange Act. The Company will supply without cost to each Holder of Notes, and
file with the Trustee under the Indenture, copies of the audited financial
statements, quarterly reports and other reports that the Company is required to
file with the Commission pursuant to Sections 13(a) and 15(d) of the Exchange
Act.
---------------------------------------
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made hereby, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, the securities offered hereby to any person in
any state or other jurisdiction in which such offer or solicitation is unlawful.
The delivery of this Prospectus at any time does not imply that information
contained herein is correct as of any time subsequent to its date.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT SURRENDERS
FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH THE
EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
-2-
<PAGE>
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON
REQUEST FROM THE COMPANY AT 1134 MARKET STREET, WHEELING, WEST VIRGINIA 26003,
ATTENTION: VICE PRESIDENT, ASSISTANT SECRETARY AND TREASURER, (304) 234-2460. IN
ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE
________, 1998 [FIVE BUSINESS DAYS PRIOR TO THE DATE ON WHICH THE FINAL
INVESTMENT DECISION MUST BE MADE].
-3-
<PAGE>
PROSPECTUS SUMMARY
The following is qualified in its entirety by reference to, and should
be read in conjunction with, the more detailed information and consolidated
financial statements (including notes thereto) appearing elsewhere in this
Prospectus. All references to operating and financial data and other information
of Wheeling-Pittsburgh Corporation ("WPC," and together with its consolidated
subsidiaries, the "Company") for the years ended December 31, 1996 and 1997,
respectively, reflect the adverse impact of a ten-month strike against the
Company which commenced October 1, 1996 and was settled August 12, 1997 (the
"Strike").
THE COMPANY
GENERAL
The Company is a vertically integrated manufacturer of predominantly
value-added flat rolled steel products. The Company sells a broad array of
value-added products, including cold rolled steel, tin- and zinc-coated steels
and fabricated steel products. The Company's products are sold to steel service
centers, converters, processors, the construction industry, and the container,
automotive and appliance industries. During 1997, the Company had revenues of
approximately $489.7 million on shipments of approximately 850.5 thousand tons
of steel and an operating loss of $287.1 million. These results reflect the
effects of the Strike.
The Company believes that it is one of the low cost domestic flat
rolled steel producers. The Company's low cost structure is the result of: (i)
the restructuring of its work rules and manning requirements under its new
five-year collective bargaining agreement (the "New Labor Agreement") with the
United Steelworkers of America ("USWA"), which settled the Company's ten-month
Strike in August 1997; (ii) the strategic balance between its basic steel
operations and its finishing and fabricating facilities; and (iii) its efficient
production of low cost, high quality metallurgical coke.
The new work rule package affords the Company substantially greater
flexibility in down-sizing its overall workforce and assigning and scheduling
work, thereby reducing costs and increasing efficiency. Furthermore, the Company
expects to maintain pre-Strike steel production levels with 850 fewer employees
(a reduction of approximately 20% in its hourly workforce). Finally, the Company
believes the five year term provides the Company with a significant advantage
since a majority of the Company's integrated steel competitors have labor
contracts that will expire in 1999.
The Company has structured its operations so that its hot strip mill
and downstream operations have greater capacity than do its raw steel making
operations. The Company therefore can purchase slabs and ship at greater than
100% of its internal production capacity in periods of high demand, while
maintaining the ability to curtail such purchases and still operate its basic
steel facilities at or near capacity during periods of lower demand. The Company
believes this flexibility results in enhanced profitability throughout an
economic cycle. The Company also believes that it produces metallurgical coke at
a substantially lower cost than do other coke manufacturers because of its
proximity to high quality coal reserves and its efficient coke producing plant.
This reduces the Company's costs and, if coke demand remains high, allows the
Company to sell coke profitably in the spot and contract markets.
The Company conducts its operations primarily through two business
units, the Steel Division and Wheeling Corrugating Company ("Wheeling
Corrugating"). The Steel Division sells flat rolled steel products such as hot
rolled, cold rolled, coated and tin mill steel to third parties, and cold rolled
and coated steel substrate to Wheeling Corrugating. Wheeling Corrugating, the
Company's primary downstream operation, is a fabricator of roll-formed products
primarily for the construction and agricultural industries. As part of the
Company's strategy to expand its downstream operations, the Company has acquired
several fabricating facilities in order to enhance profit margins and reduce
exposure to downturns in steel demand. Other important examples of the Company's
downstream operations are its joint venture interests in Wheeling-Nisshin, Inc.
("Wheeling-Nisshin") and Ohio Coatings Company ("OCC"). Wheeling-Nisshin, in
which the Company owns a 35.7% interest, produces and ships from its
state-of-the-art production facility a diverse line of galvanized, galvannealed,
galvalume and aluminized products, principally to steel service centers and the
construction and automotive industries. OCC, in which the Company owns a 50%
interest, operates a new tin coating facility that commenced commercial
production in January 1997. The Company has long-term contracts to supply up to
75% of Wheeling-Nisshin's steel requirements and almost
-4-
<PAGE>
100% of OCC's. These downstream operations and joint ventures are integral to
the Company's strategy of increasing shipments of higher value-added steel
products while decreasing dependence on hot rolled coils, a lower-margin
commodity steel product.
SUBSIDIARY GUARANTORS
Wheeling-Pittsburgh Steel Corporation is the Company's wholly-owned
operating subsidiary and produces flat rolled steel products.
Consumers Mining Corporation holds royalty interests in coal deposits.
Wheeling-Empire Company holds a 12.5% ownership interest in the Empire
Iron Mining partnership, which operates an iron ore mine in Michigan.
Mingo Oxygen Company produces oxygen and other gasses for use in steel
making operations.
Pittsburgh-Canfield Company produces electrogalvanized steel products.
Wheeling Construction Products, Inc. produces fabricated steel
products.
WP Steel Venture Corporation holds the Company's 50% interest in a
joint venture in Wheeling-Ispat Partners.
Champion Metal Products, Inc. produces fabricated steel products.
All of the Company's raw steel producing facilities have been restarted
as of September 30, 1997, and the Company expects to be at pre-Strike production
and shipment levels during the second quarter of 1998.
BUSINESS STRATEGY
The Company's business strategy includes the following initiatives:
Improve Cost Structure. The New Labor Agreement has allowed the Company
to eliminate 850 hourly positions (approximately 20% of its pre-Strike hourly
workforce). The Company believes that these reductions, combined with the
significantly more flexible work rules under the New Labor Agreement, will allow
it to operate at pre-Strike levels with 850 fewer employees. As a result, the
Company anticipates substantial cost savings and productivity improvements once
pre-Strike production levels are reached. In addition, the Company has directed
its capital expenditures towards upgrading and modernizing its steelmaking
facilities, with a goal toward increasing productivity. These expenditures
include modernization of its hot and cold rolling facilities and a major reline
in 1995 of its No. 5 blast furnace located in Steubenville, Ohio. This reline
increased productivity and provided the Company with the ability to produce 100%
of the hot metal necessary to satisfy caster production requirements from two
rather than three blast furnaces. The Company's ability to produce low cost,
high quality metallurgical coke helps the Company maintain lower costs than
those of many of its competitors. In addition, during periods of high demand the
Company is able to profitably sell coke produced in excess of its internal
needs.
Expand Production of Value-Added Products. The Company intends to
continue to expand its sale of value-added products such as coated and
fabricated steels in order to improve profit margins and reduce its exposure to
commodity steel market volatility. This strategy is evidenced by the Company's
expansion of Wheeling Corrugating and its emphasis on joint ventures, such as
Wheeling-Nisshin and OCC, which give the Company access to downstream markets
through long-term supply contracts. The Company's shipments of
Wheeling-Corrugating products increased approximately 22.7% from 1993 to 1997.
Shipments of other value-added products were lower due to the Strike. The
Company will continue to target strategic acquisitions and joint ventures that
support the Company's sales of value-added products.
-5-
<PAGE>
RECENT DEVELOPMENTS
In November 1997, the Company sold $275,000,000 of the Old Notes
pursuant to the Old Indenture in the November Offering. Concurrently with the
consummation of the November Offering, the Company entered into a Term Loan
Agreement with DLJ Capital Funding, Inc., as syndication agent, Donaldson,
Lufkin & Jenrette Securities Corporation, as arranger, Citicorp USA, Inc., as
documentation agent, National City Bank, as administrative agent, and the
lenders party thereto (the "Term Loan Agreement"). Pursuant to the Term Loan
Agreement, the Company borrowed an aggregate of $75.0 million, the net proceeds
of which were, together with the proceeds of the November Offering, used to
defease the 93/8% Notes and reduce outstanding borrowings under the Revolving
Credit Facility. See "Use of Proceeds."
WPC is a wholly-owned subsidiary of WHX Corporation ("WHX"), a publicly
traded company listed on the New York Stock Exchange, Inc. ("NYSE"). The Company
comprises the majority of the operating assets of WHX. The principal executive
offices of the Company are located at 1134 Market Street; Wheeling, West
Virginia 26003; its telephone number is (304) 234-2400.
-6-
<PAGE>
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
The Exchange Offer.........................Pursuant to the Exchange Offer, New
Notes will be issued in exchange for
outstanding Old Notes validly
tendered and not withdrawn. The
aggregate principal amount of the New
Notes will be equal to that of the
Old Notes and will be issued in
denominations of $1,000 in principal
amount and any integral multiple of
$1,000 in excess thereof. The Company
will issue New Notes to tendering
Holders of Old Notes as promptly as
practicable after the Expiration
Date.
Resale.....................................Based on an interpretation by the
staff of the Commission set forth in
no-action letters issued to third
parties, The Company believes that
the New Notes issued pursuant to the
Exchange Offer in exchange for Old
Notes may be offered for resale,
resold and otherwise transferred by
any Holder thereof (other than
broker-dealers, as set forth below,
and any such Holder that is an
"affiliate" (within the meaning of
Rule 405 under the Securities Act) of
the Company) without compliance with
the registration and prospectus
delivery provisions of the Securities
Act, provided that such New Notes are
acquired in the ordinary course of
such Holder's business and that such
Holder has no arrangement or
understanding with any person to
participate in the distribution of
such New Notes. Each broker-dealer
(other than an affiliate of the
Company) that receives New Notes for
its own account in exchange for Old
Notes that were acquired as a result
of market-making or other trading
activity must acknowledge that it
will deliver a prospectus in
connection with any resale of such
New Notes. The Letter of Transmittal
states that by so acknowledging and
delivering a prospectus, such
broker-dealer will not be deemed to
admit that it is an "underwriter"
within the meaning of the Securities
Act. This Prospectus, as it may be
amended or supplemented from time to
time, may be used by such broker-
dealer in connection with resales of
New Notes received in exchange for
Old Notes where such New Notes were
acquired by such broker-dealer as a
result of market-making activities or
other trading activities. The Company
has agreed that, for a period of 180
days after the Expiration Date, it
will make this Prospectus available
to any such broker-dealer for use in
connection with any such resale. See
"Plan of Distribution." Any Holder
who tenders in the Exchange Offer
with the intention to participate, or
for the purpose of participating, in
a distribution of the New Notes or
who is an affiliate of the Company
may not rely on the position of the
staff of the Commission enunciated in
Exxon Capital Holdings Corporation
(available May 13, 1988) or similar
no-action letters and, in the absence
of an exemption therefrom, must
comply with the registration and
prospectus delivery requirements of
the Securities Act in connection with
a secondary resale transaction.
Failure to comply with such
requirements in such instance may
result in such Holder incurring
liabilities under the Securities Act
for which the Holder is not
indemnified by the Company.
-7-
<PAGE>
The Exchange Offer is not being made
to, nor will the Company accept
surrenders for exchanges from,
Holders of Old Notes in any
jurisdiction in which this Exchange
Offer or the acceptance thereof would
not be in compliance with the
securities or blue sky laws of such
jurisdiction.
Expiration Date............................5:00 p.m., New York City time, on
_______ __, 1998 [20 BUSINESS DAYS
AFTER COMMENCEMENT OF THE EXCHANGE
OFFER], unless the Exchange Offer is
extended, in which case the term
"Expiration Date" means the latest
date and time to which the Exchange
Offer is extended. Any extension, if
made, will be publicly announced
through a release to the Dow Jones
News Service and as otherwise
required by applicable law or
regulations.
Conditions to the
Exchange Offer...........................The Exchange Offer is subject to
certain conditions, which may be
waived by the Company. See "The
Exchange Offer -- Conditions to the
Exchange Offer." The Exchange Offer
is not conditioned upon any minimum
principal amount of Old Notes being
tendered.
Procedures for Tendering Old Notes.........Each Holder of Old Notes wishing to
accept the Exchange Offer must
complete, sign and date the Letter of
Transmittal, or a facsimile thereof,
in accordance with the instructions
contained herein and therein, and
mail or otherwise deliver the Letter
of Transmittal, or a facsimile
thereof, together with the Old Notes
to be exchanged and any other
required documentation to Bank One,
N.A., as Exchange Agent, at the
address set forth herein and therein.
By executing a Letter of Transmittal,
each Holder will represent to the
Company that, among other things, the
New Notes acquired pursuant to the
Exchange Offer are being obtained in
the ordinary course of business of
the person receiving such New Notes,
whether or not such person is the
Holder, that neither the Holder nor
any such other person has any
arrangement or understanding with any
person to participate in the
distribution of such New Notes and
that neither the Holder nor any such
other person is an "affiliate," as
defined in Rule 405 under the
Securities Act, of the Company.
Special Procedures for
Beneficial Owners........................Any beneficial owner whose Old Notes
are registered in the name of a
broker, dealer, commercial bank,
trust company or other nominee and
who wishes to tender in the Exchange
Offer should contact such registered
Holder promptly and instruct such
registered Holder to tender on such
beneficial owner's behalf. If such
beneficial owner wishes to tender on
his own behalf, such beneficial owner
must, prior to completing and
executing the Letter of Transmittal
and delivering his Old Notes, either
make appropriate arrangements to
register ownership of the Old Notes
in such owner's name or obtain a
properly completed bond power from
the registered Holder. The transfer
of registered ownership may take
considerable time and may not be able
to be completed prior to the
Expiration Date.
-8-
<PAGE>
Guaranteed Delivery Procedures.............Holders of Old Notes who wish to
tender such Old Notes and whose Old
Notes are not immediately available
or who cannot deliver their Old Notes
and a properly completed Letter of
Transmittal or any other documents
required by the Letter of Transmittal
to the Exchange Agent prior to the
Expiration Date may tender their Old
Notes according to the guaranteed
delivery procedures set forth in "The
Exchange Offer -- Procedures for
Tendering."
Acceptance of Old Notes and
Delivery of New Notes....................Subject to certain conditions (as
described more fully in "The Exchange
Offer -- Conditions to the Exchange
Offer"), the Company will accept for
exchange any and all Old Notes that
are properly tendered in the Exchange
Offer and not withdrawn, prior to
5:00 p.m., New York City time, on the
Expiration Date. The New Notes issued
pursuant to the Exchange Offer will
be delivered as promptly as
practicable following the Expiration
Date.
Withdrawal Rights..........................Subject to the conditions set forth
herein, tenders of Old Notes may be
withdrawn at any time prior to 5:00
p.m., New York City time, on the
Expiration Date. See "The Exchange
Offer -- Withdrawal of Tenders."
Certain United States Federal Income Tax
Considerations...........................The exchange pursuant to the Exchange
Offer should not constitute a taxable
exchange for United States federal
income tax purposes. Each such New
Note should be treated as having been
originally issued at the time the Old
Note exchanged therefor was
originally issued. See "Certain
United States Federal Income Tax
Considerations."
Exchange Agent.............................Bank One, N.A., the Trustee under the
Indenture, is serving as exchange
agent (the "Exchange Agent") in
connection with the Exchange Offer.
For information with respect to the
Exchange Offer, the telephone number
for the Exchange Agent is (614)
248-5811 and the facsimile number for
the Exchange Agent is (614) 248-2566.
See "The Exchange Offer" for more detailed information concerning the terms of
the Exchange Offer.
-9-
<PAGE>
SUMMARY DESCRIPTION OF THE NEW NOTES
The Exchange Offer applies to $275,000,000 aggregate principal amount
of Old Notes. The form and terms of the New Notes will be the same in all
material respects as the form and terms of the Old Notes, except that the offer
and sale of the New Notes will be registered under the Securities Act and,
therefore, the New Notes will not bear legends restricting the transfer thereof.
Upon consummation of the Exchange Offer, none of the Notes will be entitled to
registration rights under the Registration Rights Agreement. The New Notes will
evidence the same debt as the Old Notes, will be entitled to the benefits of the
Indenture and will be treated as a single class thereunder with any Old Notes
that remain outstanding. See "Description of the New Notes."
SECURITIES OFFERED.................$275,000,000 principal amount of 9 1/4%
Senior Exchange Notes due 2007.
MATURITY DATE......................November 15, 2007.
INTEREST AND PAYMENT DATES.........The Notes bear interest at the rate of 9 1/4%
per annum, payable semi-annually on May 15
and November 15 of each year, commencing May
15, 1998.
OPTIONAL REDEMPTION................The Notes are redeemable at the option of the
Company, in whole or in part, on or after
November 15, 2002, at the redemption prices
set forth herein, together with accrued and
unpaid interest and Liquidated Damages, if
any, thereon to the date of redemption. The
Company has the option, at any time prior to
November 15, 2002, to redeem the Notes, in
whole but not in part, at a redemption price
equal to 100% of the principal amount thereof
plus the Applicable Premium, together with
accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of
redemption. In addition, at any time on or
prior to November 15, 2000 in the event of
one or more Public Equity Offerings the
Company may, subject to certain requirements,
redeem up to 35% of the original aggregate
principal amount of the Notes with the net
cash proceeds thereof at a redemption price
equal to 109.25% of the principal amount
thereof, together with accrued and unpaid
interest and Liquidated Damages, if any,
thereon to the date of redemption; provided
that at least 65% of the original aggregate
principal amount of the Notes remains
outstanding immediately after such
redemption. See "Description of the New
Notes--Optional Redemption."
CHANGE OF CONTROL..................Upon the occurrence of a Change of Control,
the Company is required to make an offer to
repurchase all or a portion of such holder's
Notes at a price of 101% of the principal
amount thereof plus accrued interest and
Liquidated Damages, if any, thereon to the
date of repurchase. If a Change of Control
were to occur, it is unlikely that the
Company would be able to both repay all of
its obligations under the Revolving Credit
Facility and repay other indebtedness,
including borrowings under the Term Loan
Agreement that would become payable upon the
occurrence of such Change of Control, unless
it could obtain alternate financing. See
"Risk Factors --Possible Need to Obtain
Alternate Financing Upon a Change in Control"
and "Description of the New Notes--Repurchase
at the Option of Holders--Change of Control."
SUBSIDIARY GUARANTEES..............The Notes are fully and unconditionally
guaranteed on a senior basis by the
Guarantors, which consist of all of the
Company's present and future Subsidiaries
(excluding Unrestricted Subsidiaries). The
Subsidiary Guarantees may be released under
certain circumstances. See "Description of
the New Notes--Guarantees."
ASSET SALE PROCEEDS................The Company is obligated in certain
circumstances to make an offer to purchase
the Notes at a purchase price equal to 100%
of the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages,
if any, thereon to the repurchase date with
the net cash proceeds of certain sales or
other dispositions
-10-
<PAGE>
of assets. See "Description of the New
Notes--Repurchase at the Option of
Holders--Asset Sales."
RANKING ..........................The Notes are unsecured obligations of the
Company, ranking senior in right of payment
to all existing and future subordinated
indebtedness of the Company and pari passu
with all existing and future senior unsecured
indebtedness of the Company, including
borrowings under the Term Loan Agreement. The
Notes will be effectively junior to secured
indebtedness of the Company and its
subsidiaries, including borrowings under the
Revolving Credit Facility, to the extent of
the assets securing such indebtedness. As of
September 30, 1997, on a pro forma basis
giving effect to the November Offering, the
borrowings under the Term Loan Agreement and
the use of proceeds therefrom, there would
have been an aggregate of $405.7 million of
indebtedness of the Company and its
Subsidiaries, the Notes would have been
effectively subordinated to $56.8 million of
secured indebtedness of the Company and its
Subsidiaries, additional availability of
approximately $94.5 million would have
existed under the Revolving Credit Facility
and the Notes would have been pari passu with
$75.0 million of borrowings under the Term
Loan Agreement.
CERTAIN COVENANTS..................The Indenture pursuant to which the Notes are
issued (the "Indenture") contains certain
covenants, including, but not limited to,
covenants with respect to: (i) limitations on
indebtedness; (ii) limitations on restricted
payments; (iii) limitations on transactions
with affiliates; (iv) limitations on liens;
(v) limitations on sale of assets; (vi)
limitations on issuance and sale of capital
stock of subsidiaries; (vii) limitations on
dividends and other payment restrictions
affecting subsidiaries; and (viii)
restrictions on consolidations, mergers and
sales of assets. The Company may incur
Indebtedness if the Consolidated Interest
Coverage Ratio for the Company's most
recently ended four full fiscal quarters for
which internal financial statements are
available immediately preceding the date on
which such additional Indebtedness is
incurred would have been at least 2.00 to 1,
on a pro forma basis (including a pro forma
application of the net proceeds therefrom),
as if the additional Indebtedness had been
incurred at the beginning of such
four-quarter period. At December 31, 1997,
the Company could not incur additional
indebtedness under this formula.
Notwithstanding the foregoing, the Company
may incur specific indebtedness including
Permitted Capital Expenditure Indebtedness of
the Company and its Restricted Subsidiaries
and Existing Indebtedness (other than
Permitted Working Capital Indebtedness and
Indebtedness under the Letter of Credit
Facility). See "Description of the New
Notes--Certain Covenants."
EVENTS OF DEFAULT..................The Indenture provides that each of the
following constitutes an Event of Default:
(a) default in the payment when due of
interest or Liquidated Damages on the Notes
and such default continues for 30 days; (b)
default in payment when due of the principal
of or premium (if any) on the Notes; (c)
failure by the Company to comply with the
provisions described under the captions
"Description of the New Notes--Repurchase at
the Option of Holders--Change of Control,"
"--Asset Sales," "--Certain
Covenants--Restricted Payments," "--
Incurrence of Indebtedness and Issuance of
Preferred Stock" or "--Merger, Consolidation
or Sale of Assets"; (d) failure by the
Company for 30 days after notice to comply
with any of its other agreements in the
Indenture or the Notes; (e) default under any
mortgage, indenture or instrument under which
there may be issued or by which there may be
secured or evidenced any Indebtedness for
money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of
which is guaranteed by the Company or any of
its Restricted Subsidiaries), whether such
Indebtedness or guarantee now exists or is
created after the date of the Indenture,
which default (i) is a Payment Default (as
-11-
<PAGE>
defined) or (ii) results in the acceleration
of such Indebtedness prior to its express
maturity and, in each case, the principal
amount of any such Indebtedness, together
with the principal amount of any other such
Indebtedness under which there has been a
Payment Default or the maturity of which has
been so accelerated, aggregates $10.0 million
or more; (f) failure by the Company or any of
its Restricted Subsidiaries to pay final
judgments aggregating in excess of $10.0
million, which judgments are not paid,
discharged or stayed for a period of 60 days;
(g) failure by any Guarantor to perform any
covenant set forth in its Subsidiary
Guarantee, or the repudiation by any
Guarantor of its obligations under its
Subsidiary Guarantee or the unenforceability
of any Subsidiary Guarantee against a
Guarantor for any reason, unless, in each
such case, such Guarantor and its
Subsidiaries have no Indebtedness outstanding
at such time or at any time thereafter; and
(h) certain events of bankruptcy or
insolvency with respect to the Company or any
of its Restricted Subsidiaries. See "Risk
Factor--Cross Default Provisions" and
"Description of the New Notes--Events of
Default and Remedies."
SETTLEMENT AT DTC..................Transfers of Notes between participants in
The Depository Trust Company ("DTC") will be
effected in the ordinary way in accordance
with DTC rules and will be settled in
next-day funds.
RISK FACTORS
For a discussion of risks that should be considered by prospective
purchasers in connection with an investment in the Notes, including risks
relating to sensitivity of results of operations to realized steel prices;
impact of strike; resumption of operations, significant outstanding indebtedness
of the Company, cross-default provisions, joint venture obligations, ranking;
holding company structure, substantial capital expenditure requirements,
substantial employee post retirement obligations, uncertainty of impact of
future collective bargaining agreements; possibility of strikes, control by WHX;
conflicts of interest; transactions with WHX, fraudulent conveyance; possible
invalidity of Subsidiary Guarantees and need to obtain alternate financing upon
a Change of Control, see "Risk Factors."
-12-
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table sets forth certain summary consolidated financial
data of the Company for each of the five years in the period ended December 31,
1997. Such information is derived from the consolidated financial statements of
the Company which have been audited by Price Waterhouse LLP, independent
accountants. EBITDA is operating income plus depreciation, amortization and
special charges. The Company has included EBITDA because it is commonly used by
certain investors and analysts to analyze and compare companies on the basis of
operating performance, leverage and liquidity and to determine a company's
ability to service debt. EBITDA does not represent cash flows as defined by
generally accepted accounting principles and does not necessarily indicate that
cash flows are sufficient to fund all of the Company's cash needs. EBITDA should
not be considered in isolation or as a substitute for net income (loss), cash
flows from operating activities or other measures of liquidity determined in
accordance with generally accepted accounting principles. EBITDA measures
presented may not be comparable to similarly titled measures of other companies.
This information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and related consolidated notes thereto included elsewhere
herein.
<TABLE>
<CAPTION>
Fiscal Year Ended December 31,
-------------------------------------------------------------------------
1993 1994 1995 1996 1997(6)
---- ---- ---- ---- -------
(in thousands)
<S> <C> <C> <C> <C> <C>
Net sales............. $1,046,795 $1,193,878 $1,267,869 $1,110,684 $489,662
Cost of products sold
(excluding depreciation
and profit sharing) 876,814 980,044 1,059,622 988,161 585,609
Depreciation......... 57,069 61,094 65,760 66,125 46,203
Profit sharing........ 4,819 9,257 6,718 -- --
Selling, administrative and
general expenses... 58,564 60,832 55,023 54,903 52,222
Special charges(1).... -- -- -- -- 92,701
------- ------- ------- -------- --------
Operating income (loss) 49,529 82,651 80,746 1,495 (287,073)
Interest expense...... 21,373 22,581 22,431 23,763 27,204
Other income (expense) 11,965 6,731 3,234 9,476 (221)
B & LE lawsuit settlement -- 36,091 -- -- --
------- ------- ------- -------- --------
Income (loss) before
taxes, extraordinary
items and cumulative
effect of change in
accounting method.. 40,121 102,892 61,549 (12,792) (314,498)
Tax provision (benefit) 9,400 21,173 3,030 (7,509) (110,035)
------- ------- ------- -------- ---------
Income (loss) before
extraordinary items and
cumulative effect of
change in accounting
method(2).......... $ 30,721 $81,719 $ 58,519 $ (5,283) $ (204,463)
======== ======= ======== ======== ===========
OTHER DATA:
Cash flow from:
Operations......... $(174,963) $ 162,600 $ 146,569 $ 92,282 $ (175,506)
Investing.......... (88,991) (66,639) (86,407) (44,503) (37,188)
Financing.......... 261,292 (89,179) (30,114) (54,655) 176,744
EBITDA, as adjusted for
special charges.... 106,598 143,745 146,506 67,620 (148,169)
Capital expenditures.. 73,652 69,139 81,554 31,188 33,755
Depreciation.......... 57,069 61,094 65,760 66,125 46,203
SELECTED OPERATING DATA:
Tons shipped (000's).. 2,251 2,397 2,385 2,105 851
Percent value-added
products........... 67.9% 68.6% 70.1% 71.9% 67.9%
Dollars per shipped ton:
Sales.............. $465 $498 $532 $528 $576
Cost of products sold
(excluding
depreciation and
profit sharing) 390 409 444 469 689
Gross profit (loss) 75 89 88 59 (113)
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Fiscal Year Ended December 31,
-------------------------------------------------------------------------
1993 1994 1995 1996 1997(6)
---- ---- ---- ---- -------
EBITDA, as adjusted for
<S> <C> <C> <C> <C> <C>
special charges.... 47 60 61 32 (174)
Operating income
(loss)........... 22 34 34 1 (338)
Average number of
active employees(3) 5,381 5,402 5,333 5,228 3,878
Man-hours per net ton
shipped(4)......... 4.91 4.58 4.62 4.54 4.95
Raw steel production
(000's of tons).... 2,260 2,270 2,200 1,780 663
Capacity utilization.. 94% 95% 92% 74% 28%
</TABLE>
<TABLE>
<CAPTION>
As of December 31, 1997(5)
-----------------------------------
(in thousands)
BALANCE SHEET DATA:
<S> <C>
Cash, cash equivalents and short-term investments............................. $ 0
Working capital (excluding cash, cash equivalents and short-term investments). 9,169
Property, plant and equipment, net............................................ 694,108
Total assets.................................................................. 1,424,568
Total debt (including current portion)........................................ 439,903
Stockholder's equity......................................................... 114,712
</TABLE>
- ---------------------
(1) Includes a special charge for benefits included in the New Labor
Agreement related to enhanced retirement benefits, 1997 bonuses and
special assistance payments for those not returning to work
immediately.
(2) The Company adopted Statement of Financial Accounting Standard No. 112,
"Accounting for Post-employment Benefits" in 1994 and recorded a charge
of $12.2 million ($10.0 million net of tax). These benefits include,
among others, disability, severance and workmen's compensation.
(3) "Average number of active employees" is calculated for each period as
the quotient of: the sum of total salaried and hourly employees paid
for one pay period of each month, as determined from the mid-month
salaried and hourly payroll registers, divided by the total number of
months in the respective period.
(4) "Man-hours per net ton shipped" is calculated for each period as the
quotient of: the sum of total hours worked for all union and non-union
employees for the related period plus an estimated amount of 173 hours
worked per month for each of the Company's salaried employees, divided
by the sum of total tons shipped.
(5) The Balance Sheet Data gives effect to the November Offering and the
use of proceeds therefrom.
(6) On a pro forma basis, if the borrowings under the Term Loan Agreement
had been incurred and the Old Notes had been issued as of January 1,
1997, the net loss would have increased by $5.9 million due to
additional interest expense of $9.1 million (pre-tax) and stockholder's
equity would have been $5.9 million less.
-14-
<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK
FACTORS SET FORTH BELOW AS WELL AS THE OTHER INFORMATION SET FORTH IN THIS
PROSPECTUS.
FACTORS RELATING TO THE COMPANY
SENSITIVITY OF RESULTS OF OPERATIONS TO REALIZED STEEL PRICES
The Company's results of operations are significantly affected by
relatively small variations (on a percentage basis) in the realized sales prices
of its products, which, in turn, depend upon both the prevailing prices for
steel and the demand for particular products. During the first nine months of
1996, the Company shipped approximately 1.9 million tons, and realized an
average sales price per ton of approximately $514. A one percent decrease in
this average realized price would have resulted in a decrease in net sales and
operating income of approximately $9.8 million. The Company sells approximately
75% of its products at spot prices (including shipments to Wheeling-Nisshin and
OCC under supply contracts at prices approximating spot prices, see "Business--
Wheeling-Nisshin" and "--Ohio Coatings Company"). The Company believes its
percentage of sales at spot prices is higher than that of many of its domestic
integrated competitors. The Company therefore may be affected by price decreases
more quickly than many of such competitors.
IMPACT OF STRIKE; RESUMPTION OF OPERATIONS
The Strike has had a material adverse effect on the Company's results
of operations and may continue to adversely affect the Company in the short-run.
The Company reported losses for the fourth quarter of 1996 and the first three
quarters of 1997 of $30.9 million, $40.3 million, $34.6 million and $96.8
million, respectively. Included in the loss for the third quarter of 1997 is a
pre-tax charge of $88.9 million primarily associated with the costs attributable
to the New Labor Agreement. The Company anticipates that it will continue
reporting losses until shipments return to pre-Strike levels, which is
anticipated to occur during the first half of 1998, although there can be no
assurance that delays will not occur. Until the Company's operations are fully
resumed, the Company anticipates that it will need to invest substantial
resources to rebuild inventories and generate accounts receivable. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources." In addition, there can be no
assurance that the Company will return to pre-Strike shipment levels or that the
Company will otherwise operate profitably.
SIGNIFICANT OUTSTANDING INDEBTEDNESS OF THE COMPANY
The Company has, and after giving effect to the November Offering and
the use of proceeds therefrom, will continue to have substantial indebtedness
and debt service requirements. At December 31, 1997, after giving effect to the
November Offering, the borrowings under the Term Loan Agreement and the use of
proceeds therefrom, the Company's total indebtedness was $439.9 million and its
stockholder's equity was $114.7 million. The Company's current annual debt
service requirement is $32.2 million.
The Company's level of indebtedness will have several important effects
on its future operations, including the following: (a) a significant portion of
the Company's cash flow from operations will be dedicated to the payment of
interest on and principal of its indebtedness and will not be available for
other purposes; (b) the financial covenants and other restrictions contained in
the Company's existing $150.0 million revolving credit agreement (the "Revolving
Credit Facility") require the Company to meet certain financial tests and limit
its ability to borrow additional funds or to dispose of assets; and (c) the
Company's ability to obtain additional financing in the future for working
capital, postretirement health care and pension funding, capital expenditures,
acquisitions, general corporate purposes or other purposes may be impaired.
Additionally, the Company's ability to meet its debt service obligations and to
reduce its total debt will be dependent upon the Company's future performance,
which will be
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<PAGE>
subject to general economic conditions and to financial, business and other
factors affecting the operations of the Company, many of which are beyond its
control. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources" and "Description of
Principal Indebtedness."
There can be no assurance that the Company's business will generate
sufficient cash flow from operations or that future borrowings will be available
under the Revolving Credit Facility in an amount sufficient to enable the
Company to service its indebtedness, including the Notes and the Term Loan
Agreement, or to make anticipated capital expenditures. If the Company is unable
to draw amounts under the Revolving Credit Facility in the future, such
inability could have a material adverse effect on the financial condition and
results of operations of the Company. Moreover, an inability of the Company to
meet the financial covenants contained in the Revolving Credit Facility or other
indebtedness could result in an acceleration of amounts due thereunder. In the
event the Company is unable to make required payments or otherwise comply with
the terms of its indebtedness, including borrowings under the Revolving Credit
Facility and the Term Loan Agreement, the holders of such indebtedness could
accelerate the obligations of the Company thereunder, which could result in the
Company being forced to seek protection under applicable bankruptcy laws or in
an involuntary bankruptcy proceeding being brought against the Company. Under
such circumstances, the holders of the Notes may be adversely affected. If it
becomes necessary for the Company to refinance all or a portion of the principal
of the Notes on or prior to maturity there can be no assurance that the Company
will be able to effect such refinancing on commercially reasonable terms or at
all.
A portion of the Company's outstanding indebtedness, including all
borrowings under the Revolving Credit Facility and the Term Loan Agreement,
bears interest at floating rates. As a result, the Company's results of
operations and ability to service its indebtedness will be affected by future
fluctuations in interest rates.
For further information on the Company's outstanding indebtedness and
Receivables Facility (as defined herein), see "Description of Principal
Indebtedness," "Description of Receivables Facility" and "Indemnification and
Intercreditor Agreement."
CROSS-DEFAULT PROVISIONS
Wheeling-Pittsburgh Steel Corporation ("WPSC") is the borrower under
the Revolving Credit Facility, which is guaranteed by WPC, two subsidiaries of
the Company and Unimast Incorporated ("Unimast"), a wholly-owned subsidiary of
WHX. Unimast's inventory is included in the borrowing base under the Revolving
Credit Facility, and Unimast receives advances from WPSC of funds borrowed by
WPSC under the Revolving Credit Facility. Under the Indenture, such advances may
not exceed $40 million at any time outstanding and must be repaid not later than
the first anniversary of the date of the Indenture. Unimast is also a
participant in the Receivables Facility, and its receivables are included in the
pool of receivables sold. Unimast, WHX and the Company entered into an
intercreditor agreement upon the consummation of the November Offering which
provides, among other things, that Unimast and WHX will be solely responsible
for repayment of any funds advanced by WPSC to Unimast in respect of borrowings
under the Revolving Credit Facility and have agreed to indemnify the Company if
a default occurs under the Revolving Credit Facility or if the Receivables
Facility is terminated as a result of a breach of either of such agreements by
Unimast or WHX. In addition, the Company is solely responsible for repayment of
its borrowings under the Revolving Credit Facility and has agreed to indemnify
WHX and Unimast if a default occurs under the Revolving Credit Facility or if
the Receivables Facility is terminated as a result of a breach of either of such
agreements by the Company. There can be no assurance, however, that in the event
of a default by Unimast or WHX, that either Unimast or WHX will be able to make
any payments to the Company required by such intercreditor agreement. In
addition, in the event Unimast or WHX causes a default under the Revolving
Credit Facility, the amounts due thereunder for all participants including the
Company could be accelerated (which could lead to an event of default under the
Notes) and the Company's ability to borrow additional funds under the Revolving
Credit Facility could be terminated. In the event such acceleration occurs,
there can be no assurance that the Company will be able to refinance such
borrowings. A failure by the Company to refinance such borrowings would have a
material adverse effect on the Company. See "Description of Principal
Indebtedness."
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JOINT VENTURE OBLIGATIONS
WPC has certain commitments and contingent obligations with respect to
the OCC joint venture including the following: (i) WPC is required, along with
Dong Yang Tinplate Ltd. ("Dong Yang"), to contribute additional funds to OCC to
cover its pro rata share of any cost overruns and working capital needs of OCC
to the extent that OCC is unable to otherwise finance such amounts (the Company
anticipates that its pro rata share of such funding obligations will be between
$5.0 million and $10.0 million through December 31, 1998); and (ii) WPC is
jointly and severally liable, together with Dong Yang, to contribute to OCC,
either as a loan or a capital contribution, amounts sufficient to cure certain
defaults and violations of certain financial covenants of OCC under OCC's
borrowing facility, which currently has a maximum availability of $17.0 million.
OCC is negotiating to increase such borrowing facility from $17.0 million to
$20.0 million, and in connection therewith Dong Yang and the Company may agree
to jointly and severally guarantee all of such obligations. In addition, WPC
also has certain commitments and contingent obligations under the
Wheeling-Nisshin joint venture including the following: (i) WPC is required,
along with Nisshin Steel, to contribute additional funds to Wheeling-Nisshin to
cover its pro rata share of working capital needs of Wheeling-Nisshin, to the
extent Wheeling-Nisshin is unable to cover its working capital needs or
Wheeling-Nisshin is unable to finance such needs; and (ii) WPC has agreed to
indemnify WHX for WHX's agreement with Nisshin Steel to contribute in proportion
to WPC's interest in Wheeling-Nisshin to the repayment of outstanding borrowings
of Wheeling-Nisshin should Wheeling-Nisshin be unable to repay its debt
obligations. There can be no assurance that the Company will be able to make any
such required payments or if made, that they will not have a material adverse
effect upon the Company. If the Company is unable to make any of such required
payments, it would be a breach of the Company's joint venture agreements.
RANKING; HOLDING COMPANY STRUCTURE
The Notes are unsecured obligations of the Company, ranking senior in
right of payment to all existing and future subordinated indebtedness of the
Company, and pari passu with all existing and future senior unsecured
indebtedness of the Company, including borrowings under the Term Loan Agreement.
The Subsidiary Guarantees rank pari passu in right of payment with all existing
and future senior indebtedness of the Guarantors, including the obligations of
the Guarantors under the Revolving Credit Facility, any successor credit
facility and the Term Loan Agreement. At December 31, 1997, the borrowings under
the Term Loan Agreement and the use of proceeds therefrom, the aggregate
principal amount of indebtedness (excluding trade payables, other accrued
liabilities and the Notes) of the Company and its subsidiaries is approximately
$165.9 million, all of which would have ranked effectively senior to the Notes.
Although the Notes constitute senior obligations of the Company, the holders of
secured indebtedness would have a prior claim to the assets securing such
indebtedness. The Revolving Credit Facility is secured by the inventory of WPSC,
two of the Company's Subsidiaries, and Unimast, and certain other assets. In
addition, pursuant to the Receivables Facility, WPSC sells an undivided
percentage ownership in a designated pool of accounts receivable generated by
it, two of the Company's Subsidiaries, and Unimast. See "Description of
Principal Indebtedness" and "Description of Receivables Facility."
The Company is a holding company that conducts substantially all of its
business operations through its subsidiaries. Consequently, the Company's
operating cash flow and its ability to service its indebtedness, including the
Notes, is dependent upon the cash flow of its subsidiaries and the payment of
funds by such subsidiaries to the Company in the form of loans, dividends or
otherwise. The Company's subsidiaries are separate and distinct legal entities
apart from the Company and each operating subsidiary has agreed to guarantee
payment of the Notes on a senior basis. The Indenture contains financial and
restrictive covenants that limit the ability of the Company and its subsidiaries
to, among other things, borrow additional funds, dispose of assets, pay cash
dividends or make certain restricted payments. See "Description of
Notes--Certain Covenants" and "Description of Principal Indebtedness."
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SUBSTANTIAL CAPITAL EXPENDITURE REQUIREMENTS
The Company operates in a capital intensive industry. From 1993 through
1997, the Company's capital expenditures totalled approximately $289.3 million.
This level of capital expenditures was used to maintain productive capacity,
improve productivity and upgrade selected facilities to meet competitive
requirements and maintain compliance with environmental laws and regulations,
including the Clean Air Act of 1990. The Company anticipates funding its capital
expenditures in 1998 from cash on hand and funds generated by operations. Prior
to the resolution of the Strike, the Company had delayed most capital
expenditures at the Strike-affected plants. The Company anticipates that capital
expenditures will approximate depreciation, on average, over the next few years.
There can be no assurance that the Company will have adequate funds from
operations to make all required capital expenditures or that the amount of
future capital expenditures will be commensurate with historical averages.
SUBSTANTIAL EMPLOYEE POSTRETIREMENT OBLIGATIONS
The Company has substantial financial obligations related to its
employee and retiree postretirement plans for medical and life insurance and
pensions. Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions" ("SFAS 106")
requires accrual of retiree medical and life insurance benefits rather than
recognition of costs as claims are paid. In accordance with SFAS 106, a
liability has been established for the present value of the estimated future
unfunded medical obligations. In addition, in accordance with the Statement of
Financial Accounting Standards No. 87, "Employers' Accounting for Pensions," the
Company has recognized a liability equal to its unfunded accumulated pension
benefit obligations. As of December 31, 1997, the Company had an unfunded
accumulated postretirement benefit obligation for retiree health care of
approximately $301.0 million. In addition, the Company had recorded an unfunded
accumulated pension benefit obligation for the recently implemented defined
benefit pension plan ("DB Plan") of approximately $167.3 million, of which
approximately 75% must be funded over the next five years.
UNCERTAINTY OF IMPACT OF FUTURE COLLECTIVE BARGAINING AGREEMENTS; POSSIBILITY OF
STRIKES
As of December 31, 1997, the USWA represented approximately 73% of the
Company's employees. In August 1997, the Company entered into the New Labor
Agreement with the USWA, which expires on September 1, 2002. There can be no
assurance as to the results of negotiations of future collective bargaining
agreements, whether future collective bargaining agreements will be negotiated
without production interruptions or the possible impact of future collective
bargaining agreements, or the negotiations thereof, on the Company's financial
condition and results of operations. In addition, there can be no assurance that
strikes will not occur in the future in connection with labor negotiations or
otherwise.
CONTROL BY WHX; CONFLICTS OF INTEREST; TRANSACTIONS WITH WHX
The Company is a wholly-owned subsidiary of WHX and all directors are
elected at the direction of WHX. See "Management." The Company believes that WHX
will not be prohibited from acting in its own self interest in respect of, among
other things, approval of various corporate activities and the voting or
disposition of the shares of Common Stock owned by it. The ongoing relationship
between the Company and WHX could result in conflicts of interest between the
Company and WHX. Also, WHX and the Company have entered into certain agreements,
which were not the result of arms-length negotiations between independent
parties, providing for indemnification and certain other rights and obligations
for each of them after consummation of the November Offering.
In addition, as a subsidiary of WHX, the Company has had the financial
resources of WHX available to meet its liquidity needs. The Notes are not an
obligation of WHX and are stand-alone obligations of WPC. WHX is not obligated
to provide funds to the Company, and the Company will in the future have to rely
on its own resources and third-party credit to meet its cash requirements. WHX
and WPC are jointly and severally obligated to make certain payments to WPSC
pursuant to the terms of a keepwell agreement entered into in connection with
the Revolving Credit Facility to maintain certain financial ratios of the
Company. The Company has agreed to
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indemnify WHX with respect to any payments made by WHX on account of WHX's
obligations under such keepwell agreement. See "Certain Relationships and
Related Transactions; Transactions between the Company and WHX."
From time to time, WHX has made advances to the Company, principally to
fund working capital needs and interest payments on debt. The Company also has
made advances to WHX, from time to time, principally to fund the payment by WHX
of dividends on its outstanding preferred stock and the working capital needs of
Unimast. As of December 31, 1997, the Company had made advances to WHX in the
net amount of $28.0 million. All advances are repayable upon demand and do not
bear interest. To the extent the Company has net outstanding advances from WHX,
the Company's obligation to repay such advances will be subordinated to the
repayment obligations on the Notes.
FRAUDULENT CONVEYANCE; POSSIBLE INVALIDITY OF SUBSIDIARY GUARANTEES
Under applicable provisions of the United States Bankruptcy Code or
comparable provisions of state fraudulent transfer or conveyance laws, if the
Company, at the time it issues the Notes, or any one of the Guarantors, at the
time it issues its Subsidiary Guarantee, (a) incurs such indebtedness with the
intent to hinder, delay or defraud creditors, or (b)(i) receives less than
reasonably equivalent value or fair consideration for incurring such
indebtedness and (ii)(A) is insolvent at the time of the incurrence, (B) is
rendered insolvent by reason of such incurrence (after the application of the
proceeds of the November Offering), (C) is engaged or is about to engage in a
business or transaction for which the assets that will remain with the Company
or such Guarantor constitute unreasonably small capital to carry on its
business, or (D) intends to incur, or believes that it will incur, debts beyond
its ability to pay such debts as they mature, then, in each such case, a court
of competent jurisdiction could avoid, in whole or in part, the Notes or such
Subsidiary Guarantee. The measure of insolvency for purposes of the foregoing
will vary depending upon the law applied in such case. Generally, however, the
Company or any Guarantor would be considered insolvent if the sum of its debts,
including contingent liabilities, was greater than all of its assets at fair
valuation or if the present fair saleable value of its assets was less than the
amount that would be required to pay the probable liability on its existing
debts, including contingent liabilities, as they become absolute and matured.
To the extent any Subsidiary Guarantee were to be avoided as a
fraudulent conveyance or held unenforceable for any other reason, holders of the
Notes would cease to have any claim in respect of such Guarantor and would be
creditors solely of the Company and any Guarantor whose Subsidiary Guarantee was
not avoided or held unenforceable. In such event, the claims of the holders of
the Notes against the issuer of an invalid Subsidiary Guarantee would be subject
to the prior payment of all other liabilities of such Guarantor. There can be no
assurance that, after providing for all prior claims, there would be sufficient
assets to satisfy the claims of the holders of the Notes relating to any avoided
Subsidiary Guarantee. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Description of the New Notes."
NEED TO OBTAIN ALTERNATE FINANCING UPON A CHANGE OF CONTROL
The Indenture provides that, upon the occurrence of any Change of
Control, the Company will be required to make a Change of Control Offer (as
defined) to purchase all or any part of each holder's Notes issued and then
outstanding under the Indenture at a purchase price equal to 101% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase. The Revolving Credit Facility
prohibits the Company from purchasing any Notes prior to their stated maturity
and also provides that certain Change of Control events would constitute a
default thereunder. In addition, any future credit or other borrowing agreements
may contain similar restrictions. Finally, the Company's ability to pay cash to
the holders of Notes upon a repurchase may be limited by the Company's then
existing financial resources. See "Description of Principal Indebtedness" and
"Description of the New Notes--Repurchase at the Option of Holders--Change of
Control."
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If a Change of Control were to occur, it is unlikely that the Company
would be able to both repay all of its obligations under the Revolving Credit
Facility and repay other indebtedness, including borrowings under the Term Loan
Agreement that would become payable upon the occurrence of such Change of
Control, unless it could obtain alternate financing. There can be no assurance
that the Company would be able to obtain any such financing on commercially
reasonable terms or at all, and consequently no assurance can be given that the
Company would be able to purchase any of the Notes tendered pursuant to a Change
of Control Offer.
FACTORS RELATING TO THE INDUSTRY
CYCLICALITY
Historically, steel industry performance has been cyclical in nature,
reflecting changes in industry capacity as well as the cyclicality of many of
the principal markets it serves, including the automotive, appliance and
construction industries. Although total domestic steel industry capacity was
substantially reduced during the 1980s through extensive restructuring, and
demand has been particularly strong since 1993, with domestic steel industry
earnings strong during the 1994-1996 period, there can be no assurance that
demand will continue at current levels or that the addition of new minimills and
recent restarts of previously idled domestic facilities will not adversely
impact pricing and margins.
POSSIBLE FLUCTUATIONS IN THE COST OF RAW MATERIALS
The Company's operations require substantial amounts of raw materials,
including various types of iron ore pellets, steel scrap, coal, zinc, oxygen,
natural gas and electricity. The price and availability of these raw materials
are subject to steel industry and general market conditions affecting supply and
demand. Furthermore, 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 may be
adversely affected to the extent it is unable to pass on higher raw material
costs to its customers.
COMPETITION
The domestic steel industry is highly competitive. Despite significant
reductions in raw steel production capacity by major domestic producers in the
1980s, partially offset by the recent minimill capacity additions and joint
ventures, the domestic industry continues to be threatened by excess world
capacity.
The Company faces increasing competitive pressures from other domestic
integrated producers, minimills and processors. Processors compete with the
Company in the areas of slitting, cold rolling and coating. Minimills are
generally smaller volume steel producers that use ferrous scrap metals as their
basic raw material. Compared to integrated producers, minimills, which rely on
less labor and capital intensive hot metal sources, have certain advantages.
Since minimills typically are not unionized, they have more flexible work rules
that have resulted in lower employment costs per net ton shipped. Since 1989,
significant flat rolled minimill capacity has been constructed and these
minimills now compete with integrated producers in product areas that
traditionally have not faced significant competition from minimills. In
addition, there is significant additional flat rolled minimill capacity under
construction or announced with various planned commissioning dates in 1997
through 1999. Near term, these minimills are expected to compete with the
Company primarily in the commodity flat rolled steel market, and processors are
expected to compete with the Company in the flat rolled and cold rolled steel
market. In the long-term, such minimills may also compete with the Company in
producing value-added products. In addition, the increased competition in
commodity product markets may influence certain integrated producers to increase
product offerings to compete with the Company's custom products.
During the early 1990s, the domestic steel market experienced
significant increases in imports of foreign produced flat rolled products. The
level of imports, however, declined somewhat in late 1995 and early 1996. During
the same period, exports of domestically produced flat rolled steel increased
significantly. In recent months,
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there has been an increase in imports of flat rolled products, and a decrease in
exports of flat rolled steel products. The strength of the U.S. dollar and
economy, as well as the strength of foreign economies, can significantly affect
the import/export trade balance for flat rolled steel products. The status of
the trade balance may significantly affect the ability of the new minimill
capacity to come on-line without disrupting the domestic flat rolled steel
market.
Wheeling Corrugating and the Company's other fabricating operations
compete in a large number of regional markets with numerous other fabricating
operations, most of which are independent of the major integrated manufacturers.
Independent fabricators generally are able to acquire flat rolled steel
products, their basic raw material, at prevailing market prices. There are few
barriers to entry into the manufacture of fabricated products in certain
individual markets currently served by Wheeling Corrugating (although the
geographic breadth of the markets served by Wheeling Corrugating would be hard
to replicate). Other competitors, including domestic integrated producers and
minimills, may decide to manufacture fabricated products and compete with
Wheeling Corrugating in its markets. Such competition may negatively affect
prices that may be obtained in certain markets by the Company for its fabricated
products. Many of Wheeling Corrugating's competitors do not have a unionized
workforce and, therefore, may have lower operating costs than Wheeling
Corrugating.
Materials such as aluminum, cement, composites, glass and plastics
compete as substitutes for steel in many markets.
COSTS OF COMPLYING WITH ENVIRONMENTAL STANDARDS
The Company and other steel producers have become subject to
increasingly stringent environmental standards imposed by Federal, state and
local environmental laws and regulations. The Company has expended, and can be
expected to be required to expend in the future, significant amounts for
installation of environmental control facilities, remediation of environmental
conditions and other similar matters. The costs of complying with such stringent
environmental standards as the new ambient air quality standards for ozone and
PM2.5 as well as the climate change treaty negotiations may cause the Company
and other domestic steel producers to be competitively disadvantaged vis-a-vis
foreign steel producers and producers of steel substitutes, who may be subject
to less stringent standards. The Company has also been identified as a
potentially responsible party at five "Superfund" sites and has been alleged to
be a potentially responsible party at two other "Superfund" sites. The Superfund
law imposes strict joint and several liability upon potentially responsible
parties. See "Legal Proceedings--Environmental Matters."
LACK OF A PUBLIC MARKET
The New Notes will constitute a new issue of securities with no
established trading market. The Company does not intend to list the New Notes on
any United States securities exchange or to seek approval for quotation through
any automated quotation system. The Company has been advised by the Initial
Purchasers that following completion of the Exchange Offer, the Initial
Purchasers intend to make a market in the New Notes. However, the Initial
Purchasers are not obligated to do so and any market-making activities with
respect to the New Notes may be discontinued at any time without notice.
Accordingly, no assurance can be given that an active public or other market
will develop for the New Notes or as to the liquidity of or the trading market
for the New Notes. If a trading market does not develop or is not maintained,
Holders of the New Notes may experience difficulty in reselling the New Notes or
may be unable to sell them at all. If a market for the New Notes develops, any
such market may cease to continue at any time. If a public trading market
develops for the New Notes, future trading prices of the New Notes will depend
on many factors, including, among other things, prevailing interest rates, the
Company's results of operations and the market for similar securities and other
factors, including the financial condition of the Company.
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CONSEQUENCES OF THE EXCHANGE OFFER TO NON-TENDERING HOLDERS OF THE OLD NOTES
In the event the Exchange Offer is consummated, the Company will not be
required to register any Old Notes not tendered and accepted in the Exchange
Offer. In such event, Holders of Old Notes seeking liquidity in their investment
would have to rely on exemptions to the registration requirements under the
Securities Act. Following the Exchange Offer, none of the Notes will be entitled
to the contingent increase in interest rate provided for (in the event of a
failure to consummate the Exchange Offer in accordance with the terms of the
Registration Rights Agreement) pursuant to the Registration Rights Agreement.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were sold by the Company on November 26, 1997 to the
Initial Purchasers, which placed the Old Notes with certain institutional
investors in reliance on Section 4(2) of, and Rule 144A under, the Securities
Act. In connection with the sale of the Old Notes, the Company entered into the
Registration Rights Agreement, pursuant to which the Company agreed to use its
best efforts to consummate an offer to exchange the Old Notes for the New Notes
pursuant to an effective registration statement on or before April 10, 1998. A
copy of the Registration Rights Agreement has been filed as an exhibit to this
Registration Statement. Unless the context requires otherwise, the term "Holder"
with respect to the Exchange Offer means any person in whose name Old Notes are
registered on the books of the Company or any other person who has obtained a
properly completed bond power from the registered Holder, or any person whose
Old Notes are held of record by DTC who desires to deliver such Old Notes by
book-entry transfer at DTC.
The Company has not requested, and does not intend to request, an
interpretation by the staff of the Commission with respect to whether the New
Notes issued pursuant to the Exchange Offer in exchange for the Old Notes may be
offered for sale, resold or otherwise transferred by any Holder without
compliance with the registration and prospectus delivery provisions of the
Securities Act. Based on interpretations by the staff of the Commission set
forth in no-action letters issued to third parties, the Company believes that
New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be
offered for resale, resold and otherwise transferred by any Holder of such New
Notes (other than any such Holder that is an "affiliate" of the Company, within
the meaning of Rule 405 under the Securities Act and except in the case of
broker-dealers, as set forth below) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such Holder's business and such
Holder has no arrangement or understanding with any person to participate in the
distribution of such New Notes. Any Holder who tenders in the Exchange Offer for
the purpose of participating in a distribution of the New Notes or who is an
affiliate of the Company may not rely on such interpretation by the staff of the
Commission and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any secondary resale
transaction. Each broker-dealer that receives New Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. See "Plan of Distribution."
By tendering in the Exchange Offer, each Holder of Old Notes will
represent to the Company that, among other things, (i) the New Notes acquired
pursuant to the Exchange Offer are being obtained in the ordinary course of
business of the person receiving such New Notes, whether or not such person is
such Holder, (ii) neither the Holder of Old Notes, nor any such other person,
has an arrangement or understanding with any person to participate in the
distribution of such New Notes, (iii) if the Holder is not a broker-dealer, or
is a broker-dealer but will not receive New Notes for its own account in
exchange for Old Notes, neither the Holder, nor any such other person, is
engaged in or intends to participate in the distribution of such New Notes and
(iv) neither the Holder nor any such other person is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act or, if such
Holder is an "affiliate," that such Holder will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
Following the consummation of the Exchange Offer, Holders of Old Notes
not tendered will not have any further registration rights and the Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for the Old Notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this
Prospectus and in the Letter of Transmittal, the Company will accept any and all
Old Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. Subject to the minimum denomination requirements
of the New Notes, the Company will issue $1,000 principal amount of New Notes in
exchange for each $1,000 principal amount of
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outstanding Old Notes accepted in the Exchange Offer. Holders may tender some or
all of their Old Notes pursuant to the Exchange Offer. However, Old Notes may be
tendered only in integral multiples of $1,000 principal amount.
The forms and terms of the New Notes will be identical in all material
respects to the forms and terms of the corresponding Old Notes, except that the
offer and sale of the New Notes will have been registered under the Securities
Act and, therefore, the New Notes will not bear legends restricting the transfer
thereof. The Exchange Offer is not conditioned upon any minimum aggregate
principal amount of Old Notes being tendered for exchange. As of _______, 1998,
$275,000,000 aggregate principal amount of the Old Notes were outstanding. This
Prospectus, together with the Letter of Transmittal, is being sent to all
Holders as of ________, 1998. Holders of Old Notes do not have any appraisal or
dissenters' rights under the Indenture in connection with the Exchange Offer.
The Company intends to conduct the Exchange Offer in accordance with the
applicable requirements of the Exchange Act and the applicable rules and
regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering Holders
for the purpose of receiving the New Notes from the Company. If any tendered Old
Notes are not accepted for exchange because of an invalid tender, the occurrence
of certain other events set forth herein or otherwise, such unaccepted Old Notes
will be returned, without expense, to the tendering Holder thereof as promptly
as practicable after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
" -- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
_____________, 1998, [20 BUSINESS DAYS AFTER THE COMMENCEMENT OF THE EXCHANGE
OFFER] unless the Company in its sole discretion, extends the Exchange Offer, in
which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended. Although the Company has no current
intention to extend the Exchange Offer, the Company reserves the right to extend
the Exchange Offer at any time and from time to time by giving oral or written
notice to the Exchange Agent and by timely public announcement communicated,
unless otherwise required by applicable law or regulation, by making a release
to the Dow Jones News Service. During any extension of the Exchange Offer, all
Old Notes previously tendered pursuant to the Exchange Offer and not withdrawn
will remain subject to the Exchange Offer. The date of the exchange of the New
Notes for Old Notes will be the first AMEX trading day following the Expiration
Date.
The Company expressly reserves the right to (i) terminate the Exchange
Offer and not accept for exchange any Old Notes if any of the events set forth
below under " -- Conditions to the Exchange Offer" shall have occurred and shall
not have been waived by the Company and (ii) amend the terms of the Exchange
Offer in any manner that, in its good faith judgment, is advantageous to the
Holders of the Old Notes, whether before or after any tender of the Old Notes.
Should the Company materially amend the terms of the Exchange Offer, (i) the
Company will file an amendment to the Registration which will reflect any
material changes to the Exchange Offer and (ii) all Holders will be resolicited
as may be required by applicable law.
PROCEDURES FOR TENDERING
The tender to the Company of Old Notes by a Holder thereof pursuant to
one of the procedures set forth below will constitute an agreement between such
Holder and the Company in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal signed by such
holder. A Holder of the Old Notes may tender such Old Notes by (i) properly
completing and signing a Letter of Transmittal or a facsimile thereof (all
references in this Prospectus to a Letter of Transmittal shall be deemed to
include a facsimile thereof) and delivering the same, together with any
corresponding certificate or certificates representing the Old Notes being
tendered (if in certificated form) and any required signature guarantees, to the
Exchange Agent at its address set forth in the
-24-
<PAGE>
Letter of Transmittal on or prior to the Expiration Date (or complying with the
procedure for book-entry transfer described below) or (ii) complying with the
guaranteed delivery procedures described below.
If tendered Old Notes are registered in the name of the signer of the
Letter of Transmittal and the New Notes to be issued in exchange therefor are to
be issued (and any untendered Old Notes are to be reissued) in the name of the
registered holder (which term, for the purposes described herein, shall include
any participant in DTC whose name appears on a security listing as the owner of
Old Notes), the signature of such signer need not be guaranteed. In any other
case, the tendered Old Notes must be endorsed or accompanied by written
instruments of transfer in form satisfactory to the Company and duly executed by
the registered Holder and the signature on the endorsement or instrument of
transfer must be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or an "eligible guarantor institution" as defined by Rule 17Ad-15 under
the Exchange Act (any of the foregoing hereinafter referred to as an "Eligible
Institution"). If the New Notes and/or the Old Notes not exchanged are to be
delivered to an address other than that of the registered Holder appearing on
the register for the Old Notes, the signature in the Letter of Transmittal must
be guaranteed by an Eligible Institution.
THE METHOD OF DELIVERY OF OLD NOTES, LETTER OF TRANSMITTAL AND ALL
OTHER DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SUCH DELIVERY IS
BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN
RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ASSURE TIMELY DELIVERY. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO
THE COMPANY.
The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish an account with respect
to the Old Notes at DTC for the purpose of facilitating the Exchange Offer, and
subject to the establishment thereof, any financial institution that is a
participant in DTC's system may make book-entry delivery of Old Notes by causing
DTC to transfer such Old Notes into the Exchange Agent's account with respect to
the Old Notes in accordance with DTC's procedure for such transfer. Although
delivery of the Old Notes may be effected through book-entry transfer into the
Exchange Agent's account at DTC, an appropriate Letter of Transmittal with any
required signature guarantee and all other revised documents must in each case
be transmitted to and received or confirmed by the Exchange Agent at the address
set forth in the Letter of Transmittal on or prior to the Expiration Date, or,
if the guaranteed delivery procedures described below are complied with, within
the time period provided under such procedures.
If the Holder desires to accept the Exchange Offer and time will not
permit a Letter of Transmittal or Old Notes to reach the Exchange Agent before
the Expiration Date or the procedure for book-entry transfer cannot be completed
on a timely basis, a tender may be effected if the Exchange Agent has received
at its office, on or prior to the Expiration Date, a letter, telegram or
facsimile transmission from an Eligible Institution setting forth the name and
address of the tendering Holder, the name(s) in which the Old Notes are
registered and the certificate number(s) of the Old Notes to be tendered, and
stating that the tender is being made thereby and guaranteeing that, within
three AMEX trading days after the date of execution of such letter, telegram or
facsimile transmission by the Eligible Institution, such Old Notes, in proper
form for transfer (or a confirmation of book-entry transfer of such Old Notes
into the Exchange Agent's account at DTC), will be delivered by such Eligible
Institution together with a properly completed and duly executed Letter of
Transmittal (and any other required documents). Unless Old Notes being tendered
by the above-described method are deposited with the Exchange Agent within the
time period set forth above (accompanied or preceded by a properly completed
Letter of Transmittal and any other required documents), the Company may, at its
option, reject the tender. Copies of a Notice of Guaranteed Delivery, which may
be used by Eligible Institutions for the purposes described in this paragraph,
are available from the Exchange Agent.
A tender will be deemed to have been received as of the date when (i)
the tendering Holder's properly completed and duly signed Letter of Transmittal
accompanied by the Old Notes (or a confirmation of book-entry transfer of such
Old Notes into the Exchange Agent's account at DTC), is received by the Exchange
Agent or (ii) a Notice of Guaranteed Delivery or letter, telegram or facsimile
transmission to similar effect (as provided above) from an Eligible Institution
is received by the Exchange Agent. Issuances of New Notes in exchange for Old
Notes
-25-
<PAGE>
tendered pursuant to a Notice of Guaranteed Delivery or letter, telegram or
facsimile transmission to similar effect (as provided above) by an Eligible
Institution will be made only against submission of a duly signed Letter of
Transmittal (and any other required documents) and deposit of the tendered Old
Notes.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Old Notes will be
determined by the Company, whose determination will be final and binding. The
Company reserves the absolute right to reject any or all tenders not in proper
form or the acceptance for exchange of which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Exchange Offer or any defect or irregularity
in the tender of any Old Notes. None of the Company, the Exchange Agent or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure to give any
such notification. Any Old Notes received by the Exchange Agent that are not
validly tendered and as to which the defects or irregularities have not been
cured or waived, or if Old Notes are submitted in an aggregate principal amount
greater than the aggregate principal amount of Old Notes being tendered by such
tendering Holder, will be returned by the Exchange Agent to the tendering
holders, unless otherwise provided in the Letter of Transmittal, as soon as
practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to
(a) purchase or make offers for any Old Notes that remain outstanding subsequent
to the Expiration Date and (b) to the extent permitted by applicable law,
purchase Old Notes in the open market, in privately negotiated transactions or
otherwise. The terms of any such purchases or offers will differ from the terms
of the Exchange Offer.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following
terms and conditions, which are part of the Exchange Offer.
The party tendering Old Notes for exchange (the "Transferor")
exchanges, assigns and transfers the Old Notes to the Company and irrevocably
constitutes and appoints the Exchange Agent as the Transferor's agent and
attorney-in-fact to cause the Old Notes to be assigned, transferred and
exchanged. The Transferor represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the Old Notes and to acquire
New Notes issuable upon the exchange of such tendered Old Notes, and that, when
the same are accepted for exchange, the Company will acquire good and
unencumbered title to the tendered Old Notes, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim. The
Transferor also warrants that it will, upon request, execute and deliver any
additional documents deemed by the Company to be necessary or desirable to
complete the exchange, assignment and transfer of tendered Old Notes or transfer
ownership of such Old Notes on the account books maintained by DTC. All
authority conferred by the Transferor will survive the death, bankruptcy or
incapacity of the Transferor and every obligation of the Transferor will be
binding upon the heirs, legal representatives, successors, assigns, executors
and administrators of such Transferor.
By executing a Letter of Transmittal, each Holder will make to the
Company the representations set forth above under the heading " -- Purpose and
Effect of the Exchange Offer."
WITHDRAWAL OF TENDERS
Tenders of Old Notes pursuant to the Exchange Offer are irrevocable,
except that Old Notes tendered pursuant to the Exchange Offer may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To be effective, a written, telegraphic or facsimile transmission
notice of withdrawal must be timely received by the Exchange Agent at the
address set forth in the Letter of Transmittal prior to 5:00 p.m., New York City
time on the Expiration Date. Any such notice of withdrawal must specify the
holder named in the Letter of Transmittal as having tendered Old Notes to be
withdrawn, the certificate numbers and designation of Old Notes to be withdrawn,
the principal amount of Old Notes delivered for exchange, a statement that such
Holder is withdrawing his election to have such Old Notes exchanged, and the
name of the registered Holder of such Old
-26-
<PAGE>
Notes, and must be signed by the Holder in the same manner as the original
signature on the Letter of Transmittal (including any required signature
guarantees) or be accompanied by evidence satisfactory to the Company that the
person withdrawing the tender has succeeded to the beneficial ownership of the
Old Notes being withdrawn. The Exchange Agent will return the properly withdrawn
Old Notes promptly following receipt of notice of withdrawal. If Old Notes have
been tendered pursuant to the procedure for book-entry transfer, any notice of
withdrawal must specify the name and number of the account at DTC to be credited
with the withdrawn Old Notes or otherwise comply with DTC procedure. All
questions as to the validity of notices of withdrawal, including time of
receipt, will be determined by the Company, and such determination will be final
and binding on all parties.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, or any
extension of the Exchange Offer, the Company will not be required to issue New
Notes in exchange for any properly tendered Old Notes not theretofore accepted
and may terminate the Exchange Offer, or, at its option, modify or otherwise
amend the Exchange Offer, if either of the following events occur:
(a) any statute, rule or regulation shall have been enacted, or any
action shall have been taken by any court or governmental authority
which, in the sole judgment of the Company, would prohibit, restrict or
otherwise render illegal consummation of the Exchange Offer, or
(b) there shall occur a change in the current interpretation by the
staff of the Commission which, in the Company's sole judgment, might
materially impair the Company's ability to proceed with the Exchange
Offer.
The Company expressly reserves the right to terminate the Exchange
Offer and not accept for exchange any Old Notes upon the occurrence of either of
the foregoing conditions (which represent all of the material conditions to the
acceptance by the Company of properly tendered Old Notes).
The foregoing conditions are for the sole benefit of the Company and
may be waived by the Company, in whole or in part, in its sole discretion. The
foregoing conditions must be either satisfied or waived prior to termination of
the Exchange Offer. Any determination made by the Company concerning an event,
development or circumstance described or referred to above will be final and
binding on all parties.
EXCHANGE AGENT
Bank One, N.A. has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
By Mail (registered or certified mail recommended):
Bank One, N.A.
100 E. Broad Street
Columbus, Ohio 43215-3607
By Overnight Courier:
Bank One, N.A.
100 E. Broad Street
Columbus, Ohio 43215-3607
By Hand Delivery:
Bank One, N.A.
100 E. Broad Street
Columbus, Ohio 43215-3607
-27-
<PAGE>
By Facsimile: (614) 248-2566 Confirm by Telephone: (614) 248-5811
(For Eligible Institutions Only)
FEES AND EXPENSES
The expense of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitations
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates. No additional compensation will be
paid to any such officers and employees who engage in soliciting tenders.
The Company has not retained any dealer-manager or other soliciting
agent in connection with the Exchange Offer and will not make any payments to
brokers, dealers or others soliciting acceptances of the Exchange Offer. The
Company, however, will pay the Exchange Agent reasonable and customary fees for
its services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith. The Company may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus, the Letter of
Transmittal and related documents to the beneficial owners of the Old Notes and
in handling or forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange Offer,
including fees and expenses of the Exchange Agent and Trustee and accounting and
legal fees of the Company, will be paid by the Company.
The Company will pay all transfer taxes, if any, applicable to the
exchange of Old Notes pursuant to the Exchange Offer. If, however, New Notes, or
Old Notes for principal amounts not tendered or accepted for exchange, are to be
delivered to, or are to be issued in the name of, any person other than the
registered Holder of the Old Notes tendered or if a transfer tax is imposed for
any reason other than the exchange of Old Notes pursuant to the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
Holder or any other persons) will be payable by the tendering Holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering Holder.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old
Notes as reflected in the Company's accounting records on the date of the
exchange because the exchange of the Old Notes for the New Notes is the
completion of the selling process contemplated in the issuance of the Old Notes.
Accordingly, no gain or loss for accounting purposes will be recognized. The
expenses of the Exchange Offer and the unamortized expenses related to the
issuance of the Old Notes will be amortized over the term of the New Notes.
OTHER
Participation in the Exchange Offer is voluntary and Holders should
carefully consider whether to accept. Holders of the Old Notes are urged to
consult their financial and tax advisors in making their own decisions on what
action to take.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any exchange made hereunder shall, under any
circumstances, shall create any implication that there has been no change in the
affairs of the Company since the respective dates as of which information is
given herein. The Exchange Offer is not being made to (nor will tenders be
accepted from or on behalf of) Holders of Old Notes in any jurisdiction in which
the making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, the Company may, at its
discretion, take such action as it may deem necessary to make the Exchange Offer
in any such jurisdiction and extend the Exchange Offer to Holders of Old Notes
in such jurisdiction.
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<PAGE>
As a result of the making of the Exchange Offer, the Company will have
fulfilled a covenant contained in the Registration Rights Agreement. Holders of
the Old Notes who do not tender their Old Notes in the Exchange Offer will
continue to hold such Old Notes and will be entitled to all the rights and
limitations applicable thereto under the Indenture except for any such rights
under the Registration Rights Agreement and except that the Old Notes will not
be entitled to the contingent increase in interest rate provided for in the Old
Notes. All untendered Old Notes will continue to be subject to the restrictions
on transfer set forth in the Indenture and the Old Notes. To the extent that Old
Notes are tendered and accepted in the Exchange Offer, the trading market, if
any, for untendered Old Notes could be adversely affected.
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the
New Notes offered hereby. In consideration for issuing the New Notes as
contemplated in this Prospectus, the Company will receive in exchange Old Notes
in like principal amount, the terms of which are identical in all material
respects to the New Notes, except that the offer and sale of such New Notes will
be registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof. Old Notes surrendered in exchange for New
Notes will be retired and canceled and cannot be reissued. Accordingly, issuance
of the New Notes will not result in a change in the indebtedness of the Company.
The Company received gross proceeds of approximately $275.0 million
from the November Offering. Additionally, the Company borrowed an aggregate of
$75.0 million pursuant to the Term Loan Agreement, the net proceeds of which
were, together with the proceeds of the November Offering, used to (i) defease
the outstanding 93/8% Notes, which 93/8% Notes have a maturity date of November
15, 2003, at a total cost of $298.8 million, and (ii) reduce by approximately
$51.0 million outstanding borrowings under the Revolving Credit Facility, which
matures on May 3, 1999 and bears interest at the Citibank prime rate plus 1.0%
and/or a Eurodollar rate margin plus 2.25%.
-29-
<PAGE>
CAPITALIZATION
The following table sets forth short-term debt and the current portion
of long-term debt and the consolidated capitalization of the Company as of
December 31, 1997 which gives effect to the November Offering and the
application of the net proceeds therefrom. See "Use of Proceeds," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Selected Consolidated Financial Data." This table should be read in conjunction
with the Consolidated Financial Statements included elsewhere in this
Prospectus.
As of December 31, 1997
-------------------------------
ACTUAL
(in thousands)
Short-term debt................................. $ 89,800
Current portion of long-term debt 199
Long-term debt:
9 1/4% Senior Notes offered hereby........ 273,966
Term Loan................................. 75,000
93/8% Senior Notes........................ --
Other debt................................ 938
--------
Total long-term debt................... 349,904
--------
Stockholder's equity:
Common stock................................... --
Additional paid-in capital...................... 272,065
Accumulated earnings (deficit)(1)............... (157,353)
--------
Total stockholder's equity............. 114,712
--------
Total capitalization............................ $554,615
========
___________________________
See Notes H and I of Notes to Consolidated Financial Statements.
(1) On a pro forma basis, if the borrowings under the Term Loan Agreement
had been incurred and the Old Notes had been issued as of January 1,
1997, the accumulated deficit in earnings would have been $5.9 million
higher and stockholder's equity would have been $5.9 million lower, due
to additional interest expense of $9.1 million (pre-tax).
-30-
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data of
the Company for each of the five years in the period ended December 31, 1997.
Such information is derived from the consolidated financial statements of the
Company which have been audited by Price Waterhouse LLP, independent
accountants. EBITDA is operating income plus depreciation, amortization and
special charges. The Company has included EBITDA because it is commonly used by
certain investors and analysts to analyze and compare companies on the basis of
operating performance, leverage and liquidity and to determine a company's
ability to service debt. EBITDA does not represent cash flows as defined by
generally accepted accounting principles and does not necessarily indicate that
cash flows are sufficient to fund all of the Company's cash needs. EBITDA should
not be considered in isolation or as a substitute for net income (loss), cash
flows from operating activities or other measures of liquidity determined in
accordance with generally accepted accounting principles. EBITDA measures
presented may not be comparable to similarly titled measures of other companies.
This information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and related consolidated notes thereto included elsewhere
herein.
<TABLE>
<CAPTION>
Fiscal Year Ended December 31,
-------------------------------------------------------------------------------
1993 1994 1995 1996 1997(6)
---- ---- ---- ---- ----
(in thousands)
<S> <C> <C> <C> <C> <C>
Net Sales................... $1,046,795 $1,193,878 $1,267,869 $1,110,684 $489,662
Cost of products sold (excluding
depreciation and profit sharing) 876,814 980,044 1,059,622 988,161 585,609
Depreciation............... 57,069 61,094 65,760 66,125 46,203
Profit sharing.............. 4,819 9,257 6,718 -- --
Selling, administrative and general
expenses................. 58,564 60,832 55,023 54,903 52,222
Special charges(1).......... -- -- -- -- 92,701
------- ------- ------- ------- --------
Operating income (loss)..... 49,529 82,651 80,746 1,495 (287,073)
Interest expense............ 21,373 22,581 22,431 23,763 27,204
Other income (expense)...... 11,965 6,731 3,234 9,476 (221)
B & LE lawsuit settlement... -- 36,091 -- -- --
------- ------- ------- ------- --------
Income (loss) before taxes,
extraordinary items and
cumulative effect of change in
accounting method........ 40,121 102,892 61,549 (12,792) (314,498)
Tax provision (benefit)..... 9,400 21,173 3,030 (7,509) (110,035)
------- ------- ------- -------- ---------
Income (loss) before extraordinary
items and cumulative effect of
change in accounting method(2) $ 30,721 $81,719 $ 58,519 $ (5,283) $ (204,463)
======== ======= ======== ========== ===========
FINANCIAL RATIOS AND OTHER DATA:
Cash flow from:
Operations............... $ (174,963) $ 162,600 $ 146,569 $ 92,282 $ (175,506)
Investing................ (88,991) (66,639) (86,407) (44,503) (37,188)
Financing................ 261,292 (89,179) (30,114) (54,655) 176,744
EBITDA, as adjusted for special
charges..................... 106,598 143,745 146,506 67,620 (148,169)
Capital expenditures........ 73,652 69,139 81,554 31,188 33,755
Depreciation................ 57,069 61,094 65,760 66,125 46,203
Ratio of earnings to fixed
charges(3)............... 2.0x 3.7x 2.5x -- --
SELECTED OPERATING DATA:
Tons shipped (000's)........ 2,251 2,397 2,385 2,105 851
Percent value-added products 67.9% 68.6% 70.1% 71.9% 67.9%
Dollars per shipped ton:
Sales.................... $465 $498 $532 $528 $576
Cost of products sold
(excluding depreciation and
profit sharing) 390 409 444 469 689
Gross profit............. 75 89 88 59 (113)
EBITDA, as adjusted for
special charges.......... 47 60 61 32 (174)
Operating income (loss).. 22 34 34 1 (338)
</TABLE>
-31-
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year Ended December 31,
-------------------------------------------------------------------------------
1993 1994 1995 1996 1997(6)
---- ---- ---- ---- ----
Average number of active
<S> <C> <C> <C> <C> <C>
employees(4)............. 5,381 5,402 5,333 5,228 3,878
Man-hours per net ton shipped(5) 4.91 4.58 4.62 4.54 4.95
Raw steel production (000's of
tons).................... 2,260 2,270 2,200 1,780 663
Capacity utilization........ 94% 95% 92% 74% 28%
</TABLE>
<TABLE>
<CAPTION>
As of December 31,
--------------------------------------------------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
(in thousands)
BALANCE SHEET DATA:
Cash, cash equivalents and
<S> <C> <C> <C> <C> <C>
short term investments...... $279,856 $12,778 $42,826 $35,950 $ 0
Working capital (excluding
cash, cash equivalents
and short-term
investments)............. 118,195 129,137 104,973 73,072 9,169
Property, plant and
equipment, net........... 748,673 732,615 748,999 710,999 694,108
Total assets................ 1,491,600 1,266,372 1,340,035 1,245,892 1,424,568
Total debt (including
current portion)......... 350,279 292,825 288,740 269,414 439,903
Stockholder's equity........ 432,283 246,194 343,770 338,487 114,712
</TABLE>
- -------------------
(1) Includes a special charge for benefits included in the New Labor
Agreement related to enhanced retirement benefits, 1997 bonuses and
special assistance payments for those not returning to work
immediately.
(2) The Company adopted Statement of Financial Accounting Standard No. 112,
"Accounting for Post-employment Benefits" in 1994 and recorded a charge
of $12.2 million ($10.0 million net of tax). These benefits include,
among others, disability, severance and workmen's compensation.
(3) For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of earnings before income taxes, extraordinary items
and fixed charges. Fixed charges consist of interest expense and the
portion of rental expense deemed representative of the interest factor.
For the years ended December 31, 1996 and December 31, 1997, earnings
were not sufficient to cover fixed charges. Additional earnings of
$24.8 million for 1996 and $315.5 for 1997 would have been required to
achieve a ratio of 1.0 for such periods.
(4) "Average number of active employees" is calculated for each period as
the quotient of: the sum of total salaried and hourly employees paid
for one pay period of each month, as determined from the mid-month
salaried and hourly payroll registers, divided by the total number of
months in the respective period.
(5) "Man-hours per net ton shipped" is calculated for each period as the
quotient of: the sum of total hours worked for all union and non-union
employees for the related period plus an estimated amount of 173 hours
worked per month for each of the Company's salaried employees, divided
by the sum of total tons.
(6) On a pro forma basis, if the borrowings under the Term Loan Agreement
had been incurred and the Old Notes had been issued as of January 1,
1997, the net loss would have increased by $5.9 million due to
additional interest expense of $9.1 million (pre-tax) and stockholder's
equity would have been $5.9 million less.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
INTRODUCTION
OVERVIEW
The Company was reorganized on January 3, 1991 with a business strategy
of shifting its product mix to value-added products through downstream expansion
and acquisitions. In July 1994, a new holding company, WHX, which separated the
steel related operations from non-steel related businesses, was created. The
Company comprises primarily all of the steel related operations of WHX.
On August 12, 1997, the Company and the USWA entered into the New Labor
Agreement which settled the Strike. The Strike directly affected facilities
accounting for approximately 80% of the Company's steel shipments on an annual
basis. The Company believes the five year term of the New Labor Agreement
provides the Company with a significant competitive advantage since a majority
of the Company's integrated steel competitors have labor contracts that expire
in 1999. The New Labor Agreement provides for a restructuring of work rules and
manning requirements and a reduction in the expense associated with retiree
healthcare costs. The improved work rules allow the Company to eliminate 850
hourly jobs (approximately 20% of the work force) which the Company believes
will materially reduce its labor costs. Partially offsetting these savings are
wage increases and the costs of the DB Plan, which includes a retirement
incentive. Based on actual wage and certain direct employee benefits costs
during the first nine months of 1996 for employees represented by the USWA, the
elimination of 850 USWA-represented employees working a standard number of hours
per year would have resulted in estimated annual labor cost savings of
approximately $45.0 million.
All of the Company's production facilities resumed operations as of
September 30, 1997. Raw steel production achieved 90% of capacity in the fourth
quarter of 1997. The Company expects to achieve pre-Strike levels of raw steel
production and increased shipments of a higher value-added product mix during
the first half of 1998.
1997 COMPARED TO 1996
Net sales for the year ended December 31, 1997 totaled $489.7 million
on shipments of 850.5 thousand tons of steel products, compared to $1,110.7
million on shipments of 2.1 million tons in the year ended December 31, 1996.
The decrease in sales and tons shipped is primarily attributable to the Strike
at eight plants located in Ohio, Pennsylvania and West Virginia. Production and
shipment of steel products at these plants ceased on October 1, 1996 and the
Strike continued to August 12, 1997. Average net sales per ton increased 9.1%
from $528 per ton shipped to $576 because higher value-added products continued
to be shipped during the strike from other locations.
Cost of products sold increased to $689 per ton shipped in 1997 from
$469 in 1996. This increase reflects the effect of high fixed cost and low
capacity utilization and higher levels of external steel purchases due to the
work stoppage, higher costs for natural gas and a higher value-added product
mix. In addition, cost of products sold were adversely affected by a door
rehabilitation program at the Company's number 8 coke battery. The operating
rate for 1997 was 27.6%. The operating rate for the nine months prior to the
Strike was 98.9%, but dropped to 74.0% for 1996. Raw steel production was 100%
continuous cast.
Depreciation expense decreased 30.1% to $46.2 million in 1997, compared
to $66.1 million in 1996, due to lower levels of raw steel production and its
effect on units of production depreciation methods. Raw steel production
decreased by 62.8%.
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<PAGE>
Selling, administrative and general expense decreased 4.9% to $52.2
million in 1997, from $54.9 million in 1996. The decrease is due to the reduced
level of operations.
In 1997 the Company recorded a special charge of $92.7 million related
to the New Labor Agreement. The special charge included $66.7 million for
enhanced retirements, $15.5 million for signing and retention bonuses, $3.8
million for special assistance payments and other employee benefits and $6.7
million for a grant of one million stock options to WPN Corp. ("WPN") for its
performance in negotiating the new labor agreement.
Interest expense increased to $27.2 million in 1997 from $23.8 million
in 1996. The increase is due primarily to higher levels of borrowings under the
Revolving Credit Facility.
Other income/expense decreased to expense of $.2 million in 1997 from
income of $9.5 million in 1996. The decrease is due to recognition of an equity
loss for the OCC joint venture in 1997 totaling $8.5 million. Equity losses on
joint ventures totaled $1.2 million in 1997 compared to income of $9.5 million
in 1996. Interest and investment income totaled $4.2 million in 1997 and $3.9
million in 1996. Accounts receivable securitization fees totaled $3.8 million in
1997 compared to $4.9 million in 1996 due to lower activity during the Strike
period.
The tax benefits for 1997 and 1996 were $110.0 million and $7.5
million, respectively, before recording a tax benefit related to extraordinary
charges in 1997.
Income (loss) before extraordinary items in 1997 totaled $(204.5)
million, compared to $(5.3) million in 1996.
The 1997 extraordinary charge of $40.0 million ($26.0 million net of
tax) reflects the premium and interest of $37.4 million on the legal defeasance
of long term debt, and $2.6 million for coal miner retiree medical expense
attributable to the allocation of additional retirees to the Company by the
Social Security Administration (SSA).
Net loss totaled $230.5 million in 1997, compared to net loss of $5.3
million in 1996.
1996 COMPARED TO 1995
Net sales for the year ended December 31, 1996 totaled $1,110.7 million
on shipments of 2.1 million tons of steel products. Net sales for the year ended
December 31, 1995 totaled $1,267.9 million on shipments of 2.4 million tons. The
decrease in sales and tons shipped is primarily attributable to the Strike at
eight plants located in Ohio, Pennsylvania and West Virginia. Production and
shipment of steel products at these plants ceased on October 1, 1996. Shipments
in the fourth quarter of 1996 decreased to 207,000 tons compared to 582,000 tons
shipped in the fourth quarter of 1995. Also, steel prices declined 3.8% in 1996
compared to the prior year, but were partially offset by a higher value-added
product mix. Average sale price per ton decreased to $528 per ton in the year
ended December 31, 1996 from $532 per ton in the year ended December 31, 1995.
Cost of products sold increased to $469 in the year ended December 31,
1996 from $444 per ton shipped in the year ended December 31, 1995. This
increase reflects the volume effect of lower production on fixed cost absorption
and higher levels of external steel purchases due to the Strike, higher costs
for coal, ore and natural gas and a higher value-added product mix. The
operating rate for the nine months prior to the Strike was 98.9%, but dropped to
74.0% for the full twelve months of 1996 compared to 91.6% in 1995. Raw steel
production is 100% continuous cast.
Depreciation expense increased to $66.1 million in the year ended
December 31, 1996 from $65.8 million in the year ended December 31, 1995.
Increased depreciation attributable to higher amounts of depreciable property
were partially offset by lower levels of raw steel production and its effect on
units of production depreciation method.
No profit sharing was earned in the year ended December 31, 1996 as a
result of the Strike and its impact on pre-tax income. Profit sharing totaled
$6.7 million in the year ended December 31, 1995.
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<PAGE>
Selling, administrative and general expense remained stable, decreasing
to $54.9 million in the year ended December 31, 1996 compared to $55.0 million
in the year ended December 31, 1995.
Interest expense increased to $23.8 million in the year ended December
31, 1996 from $22.4 million in the year ended December 31, 1995 due to a
reduction in capitalized interest from $6.4 million in the year ended December
31, 1995 to $2.5 million in the year ended December 31, 1996. The reduction in
capitalized interest reflects lower amounts of capital expenditures and shorter
construction periods in the year ended December 31, 1996.
Other income increased to $9.5 million in the year ended December 31,
1996 from $3.2 million in the year ended December 31, 1995. The increase is
principally due to a $4.6 million improvement in equity income from investments.
The tax provision for the year ended December 31, 1996 and the year
ended December 31, 1995 was a $7.5 million benefit and $3.0 million provision,
respectively, before recording a tax benefit related to extraordinary charges in
the year ended December 31, 1995. The tax provision (benefit) was calculated on
an alternative minimum tax basis. The 1995 provision includes the effect of
recognizing $58.0 million of deferred tax assets, but excludes the benefit of
applying $30.2 million of pre-reorganization tax benefits, which are direct
additions to paid-in-capital.
There were no pre-reorganization tax benefits applied in 1996.
Income before extraordinary charges in the year ended December 31, 1995
totaled $58.5 million. The 1995 extraordinary charge of $4.7 million ($3.0
million net of tax) reflects additional liability for coal miner retiree medical
expense attributable to the allocation of additional retirees to the Company by
the Social Security Administration.
Net loss in the year ended December 31, 1996 totaled $5.3 million. Net
income in the year ended December 31, 1995 totaled $55.5 million.
LIQUIDITY AND CAPITAL RESOURCES
The Company will require additional working capital to continue to fund
the re-start of its production facilities and its re-entry into the marketplace.
The Company expects that the sale during 1998 of the coke produced during the
Strike, the sale of receivables under the Receivables Facility and availability
under the Revolving Credit Facility will be adequate to fund such re-start. As
of December 31, 1997, the Company's liquidity from the above sources was in
excess of $120 million.
Net cash flow used in operating activities for 1997 totaled $175.5
million reflecting losses of $201.6 million before depreciation, taxes and a
special charge. Working capital accounts (excluding cash, short term borrowings
and current maturities of long-term debt) used $23.1 million of funds,
principally due to the prolonged Strike and related start-up cost resulting from
its labor settlement on August 12, 1997. Accounts receivable increased $19.8
million (excluding $24 million sale of trade receivables under the
securitization agreement) due to increased sales reflecting resolution of the
Strike. Inventories valued principally by the LIFO method for financial
reporting purposes, totaled $255.9 million at December 31, 1997, an increase of
$62.5 million from the prior year end. The increase in inventories is due to
increases in furnace coke (as a result of continuing coke production by salaried
workers during the Strike) and contractual commitments for iron ore pellets.
Trade payables and accruals increased $65.1 million due to higher operating
levels. Net cash flow used in investing activities for 1997 totaled $37.2
million including capital expenditures of $33.8 million. Net cash flow from
financing activities totaled $176.7 million including borrowings under the
Revolving Credit Facility of $89.8 million and net intercompany advances of
$30.6 million.
For the year ended December 31, 1997, the Company spent $33.8 million
(including capitalized interest) on capital improvements, including $12.4
million on environmental control projects. Capital expenditures were lower than
in recent years due to the Strike. Non-current accrued environmental liabilities
totaled $7.8 million at December 31, 1996 and $10.6 million at December 31,
1997. These liabilities were determined initially in January
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<PAGE>
1991, based on all available information, including information provided by
third parties, and existing laws and regulations then in effect, and are
reviewed and adjusted quarterly as new information becomes available. The
Company does not anticipate that assessment and remediation costs resulting from
the Company's status as a potentially responsible party will have a material
adverse effect on its financial condition or results of operations. However, as
further information comes into the Company's possession, it will continue to
reassess such evaluations. The Clean Air Act Amendment of 1990 is expected to
increase the Company's cost related to environmental compliance; however, such
an increase in cost is not reasonably estimable, but is not anticipated to have
a material adverse effect on the consolidated financial condition of the
Company.
Net cash flow from operating activities for 1996 totaled $92.3 million.
Working capital accounts (excluding cash, short term investments, short term
borrowings and current maturities of long-term debt) provided $42.6 million of
funds, principally due to the Strike at eight of the Company's facilities.
Accounts receivable decreased $50.1 million (excluding $22 million payment on
trade receivable securitization transactions) due to a lower level of sales
during the Strike. Inventories valued principally by the LIFO method for
financial reporting purposes, totaled $193.3 million at December 31, 1996, a
decrease of $73.2 million from the prior year end. Trade payables and accruals
decreased $64.5 million due to lower operating levels.
For the year ended December 31, 1996, the Company spent $31.2 million
(including capitalized interest) on capital improvements, including $6.8 million
on environmental control projects. Capital expenditures were lower than in prior
years due to the Strike. Non-current accrued environmental liabilities totaled
$7.3 million at December 31, 1995 and $7.8 million at December 31, 1996.
Continuous and substantial capital and maintenance expenditures will be
required to maintain and, where necessary, upgrade operating facilities to
remain competitive, and to comply with environmental control requirements. It is
anticipated that necessary capital expenditures, including required
environmental expenditures, in future years should approximate depreciation
expense and represent a material use of operating funds. The Company anticipates
funding its capital expenditures in 1998 from cash on hand, the sale of
receivables under the Receivables Facility, availability under the Revolving
Credit Facility, and funds generated from operations.
The Company has a commitment to fund the working capital requirements
of each of OCC and Wheeling-Nisshin in proportion to its ownership interest if
cash requirements of such joint ventures are in excess of internally-generated
and available borrowed funds. The Company anticipates that Wheeling-Nisshin will
not have such funding requirements for the foreseeable future. As of December
31, 1997, the Company's investment in OCC is $20.8 million, $7.2 million of
which was invested in 1997. The Company anticipates that through December 31,
1998 additional funding requirements from the Company will be between $5.0
million and $10.0 million. OCC may also require future working capital
contributions from its equity partners; however, the Company does not believe
that any such required funding will be material to the Company's liquidity.
In August 1994 the Company entered into the Receivables Facility,
whereby it agreed to sell up to $75 million on a revolving basis, an undivided
percentage ownership in a designated pool of accounts receivable generated by
WPSC and two of the Company's subsidiaries, Wheeling Construction Products, Inc.
("WCP") and Pittsburgh-Canfield Company ("PCC") (the "Receivables Facility").
The Receivables Facility expires in August 1999. In July 1995, WPSC amended such
agreement to sell an additional $20 million on similar terms and conditions. In
October 1995, WPSC entered into an agreement to include the receivables
generated by Unimast in the pool of accounts receivable sold. Accounts
receivable at December 31, 1997, exclude $69.0 million representing accounts
receivable sold with recourse limited to the extent of uncollectible balances.
Fees paid by WPSC under the Receivables Facility range from 5.76% to 8.50% of
the outstanding amount of receivables sold. Based on the Company's collection
history, the Company believes that credit risk associated with the above
arrangement is immaterial.
WPSC has a Revolving Credit Facility with Citibank, N.A. as agent. The
Revolving Credit Facility provides for borrowing for general corporate purposes
of up to $150 million, and with a $35 million sublimit for Letters of Credit.
Interest is calculated at a Citibank prime rate plus 1.0% and/or a Eurodollar
rate plus 2.25%. The Revolving Credit Facility expires May 3, 1999. Borrowings
under the Revolving Credit Facility are secured primarily by inventory of WPSC,
PCC and WCP, subsidiaries of the Company, and Unimast. The terms of the
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<PAGE>
Revolving Credit Facility contain various restrictive covenants, limiting among
other things, dividend payments or other distributions of assets, as defined in
the Revolving Credit Facility. Certain financial covenants associated with
leverage, net worth, capital spending, cash flow and interest coverage must also
be maintained. The Company, PCC, WCP and Unimast have each guaranteed all of the
obligations of WPSC under the Revolving Credit Facility. Borrowings outstanding
against the Revolving Credit Facility at December 31, 1997 totaled $89.8
million.
WPSC also has a separate facility with Citibank, N.A. for letters of
credit up to $50 million. At December 31, 1997 letters of credit totaling $9.3
million were outstanding under this facility. The letters of credit are
collateralized at 105% with U.S. Government securities owned by the Company, and
are subject to an administrative charge of .4% per annum on the amount of
outstanding letters of credit.
WPSC is the borrower under the Revolving Credit Facility, which is
guaranteed by WPC, two subsidiaries of the Company and Unimast, a wholly-owned
subsidiary of WHX. Unimast is also a participant in the Receivables Facility,
and its receivables are included in the pool of receivables sold. Unimast, WHX
and the Company entered into an intercreditor agreement upon the consummation of
the November Offering which provides, among other things, that Unimast and WHX
will be solely responsible for repayment of any of Unimast's borrowings under
the Revolving Credit Facility and have agreed to indemnify the Company if a
default occurs under the Revolving Credit Facility or if the Receivables
Facility is terminated as a result of a breach of either of such agreements by
Unimast. In addition, the Company is solely responsible for repayment of its
borrowings under the Revolving Credit Facility and has agreed to indemnify WHX
and Unimast if a default occurs under the Revolving Credit Facility or if the
Receivables Facility is terminated as a result of a breach of either of such
agreements by the Company. There can be no assurance, however, that in the event
of a default by Unimast or WHX, that either Unimast or WHX will be able to make
any payments to the Company required by such intercreditor agreement. In
addition, in the event Unimast causes a default under the Revolving Credit
Facility, the amounts due thereunder for all participants including the Company
could be accelerated (which could lead to an event of default under the Notes)
and the Company's ability to borrow additional funds under the Revolving Credit
Facility could be terminated. In the event such acceleration occurs, there can
be no assurance that the Company will be able to refinance such borrowings. A
failure by the Company to refinance such borrowings would have a material
adverse effect on the Company.
On November 20, 1997, the Company issued the Notes pursuant to the
November Offering. In addition, on November 20, 1997 the Company entered into
the Term Loan Agreement with DLJ Capital Funding Inc., as syndication agent,
pursuant to which the Company borrowed $75 million. Interest on the Term Loan
Agreement is payable on March 15, June 15, September 15 and December 15 as to
Base Rate Loans, and with respect to LIBOR loans on the last day of each
applicable interest period, and if such interest period shall exceed three
months, at intervals of three months after the first day of such interest
period. The Term Loan Agreement will mature on November 15, 2006. Amounts
outstanding under the Term Loan Agreement bear interest at the Base Rate (as
defined therein) plus 2.25% or the LIBOR Rate (as defined therein) plus 3.25%.
The Company's obligations under the Term Loan Agreement are guaranteed by its
operating subsidiaries. The Company may prepay the obligations under the Term
Loan Agreement beginning on November 15, 1998, subject to a premium of 2.0% of
the principal amount thereof. Such premium declines to 1.0% on November 15, 1999
with no premium on or after November 15, 2000.
The proceeds from the Notes and the Term Loan Agreement were used to
defease $266.2 million of 93/8% Notes and to pay down borrowings under the
Revolving Credit Facility.
The Company recorded an extraordinary charge of $40.0 million ($26.0
million net of tax) to cover the premium and interest of $37.4 million on the
legal defeasance of long term debt and $2.6 million for coal miner retiree
medical benefits.
Under the terms of the New Labor Agreement, the Company established a
DB Plan covering its hourly employees. In addition, the Company had recorded an
unfunded accumulated pension benefit obligation for the recently implemented DB
Plan of approximately $167.3 million, of which approximately 75% must be funded
over the next five years. In accordance with ERISA regulations, the Company does
not anticipate having to make significant contributions to fund the obligations
of the new plan in 1998, but will fund approximately $80 million
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<PAGE>
in 1999 ($40 million in the first quarter). As of December 31, 1997, the Company
had an unfunded accumulated postretirement benefit obligation for retiree health
care of approximately $301.0 million.
In 1997 the Company recorded a special charge of $92.7 million related
to the New Labor Agreement. The special charge included $66.7 million for
enhanced retirements, $15.5 million for signing and retention bonuses, $3.8
million for special assistance payments and other employee benefits and $6.7
million for a grant of one million stock options to WPN Corp. ("WPN") for its
performance in negotiating the new labor agreement.
The Company began a Year 2000 compliance project in July 1995. This
project encompasses business systems, mainframe processor systems, plant
operating systems, end-user computing systems, wide-area and voice networks, and
building and plant environmental systems. Included in the project plan is a
review of Year 2000 compliance assurance program with customers, suppliers, and
other constituents. System inventories for all affected systems are being
reviewed and work is in progress to ensure that such systems are Year 2000
compliant. Management believes, based on a current review and the ongoing
effort, that all relevant computer systems will be Year 2000 compliant by the
second quarter of 1999. Management believes that the cost of the Year 2000
project will not be material to the Company's financial position or results of
operations.
Short-term liquidity is dependent, in large part, on cash on hand,
investments, availability under the Revolving Credit Facility, sale of
receivables under the Receivables Facility, general economic conditions and
their effect on steel demand and prices. Long-term liquidity is dependent upon
the Company's ability to sustain profitable operations and control costs during
periods of low demand or pricing in order to sustain positive cash flow. The
Company believes that, based on current levels of operations and anticipated
improvements in operating results, cash flows from operations and borrowings
available under the Revolving Credit Facility will enable the Company to fund
its liquidity and capital expenditure requirements for the foreseeable future,
including scheduled payments of interest on the Notes and payments of interest
and principal on the Company's other indebtedness, including borrowings under
the Term Loan Agreement. However, external factors, such as worldwide steel
production and demand and currency exchange rates could materially affect the
Company's results of operations and financial condition. There can be no
assurance that the Company will be able to maintain its short-term and/or its
long-term liquidity. A failure by the Company to maintain its liquidity could
have a material adverse effect on the Company.
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<PAGE>
BUSINESS
GENERAL
The Company is a vertically integrated manufacturer of predominantly
value-added flat rolled steel products. The Company sells a broad array of
value-added products, including cold rolled steel, tin- and zinc-coated steels
and fabricated steel products. The Company's products are sold to steel service
centers, converters, processors, the construction industry, and the container,
automotive and appliance industries. During 1997 the Company had revenues of
approximately $489.7 million on shipments of 850.5 thousand tons of steel and an
operating loss of $287.1 million. These results reflect the effects of the
Strike.
The Company believes that it is one of the low cost domestic flat
rolled steel producers. The Company's low cost structure is the result of: (i)
the restructuring of its work rules and manning requirements under its five-year
New Labor Agreement with the USWA, which settled the Company's ten-month Strike
in August 1997; (ii) the strategic balance between its basic steel operations
and its finishing and fabricating facilities; and (iii) its efficient production
of low cost, high quality metallurgical coke.
The new work rule package affords the Company substantially greater
flexibility in down-sizing its overall workforce, and assigning and scheduling
work, thereby reducing costs and increasing efficiency. Furthermore, the Company
expects to maintain pre-Strike steel production levels with 850 fewer employees
(a reduction of approximately 20% in its hourly workforce). Finally, the Company
believes the five year term provides the Company with a significant advantage
since a majority of the Company's integrated steel competitors have labor
contracts that will expire in 1999.
The Company has structured its operations so that its hot strip mill
and downstream operations have greater capacity than do its raw steel making
operations. The Company therefore can purchase slabs and ship at greater than
100% of its internal production capacity in periods of high demand, while
maintaining the ability to curtail such purchases and still operate its basic
steel facilities at or near capacity during periods of lower demand. The Company
believes this flexibility results in enhanced profitability throughout an
economic cycle. The Company also believes that it produces metallurgical coke at
a substantially lower cost than do other coke manufacturers because of its
proximity to high quality coal reserves and its efficient coke producing plant.
This reduces the Company's costs and, if coke demand remains high, allows the
Company to sell coke profitably in the spot and contract markets.
The Company conducts its operations primarily through two business
units, the Steel Division and Wheeling Corrugating. The Steel Division sells
flat rolled steel products such as hot rolled, cold rolled, coated and tin mill
steel to third parties, representing 77.8% and 73.3% of the Company's net sales
in 1995 and 1996, respectively. The Steel Division sells cold rolled and coated
steel substrate to Wheeling Corrugating for further processing. Wheeling
Corrugating, the Company's primary downstream operation, is a fabricator of
roll-formed products primarily for the construction and agricultural industries.
As part of the Company's strategy to expand its downstream operations, the
Company has acquired several fabricating facilities to enhance profit margins
and reduce exposure to downturns in steel demand. Other important examples of
the Company's downstream operations are its joint venture interests in
Wheeling-Nisshin and OCC. Wheeling-Nisshin, in which the Company owns a 35.7%
interest, produces and ships from its state-of-the-art production facility a
diverse line of galvanized, galvannealed, galvalume and aluminized products,
principally to steel service centers and the construction and automotive
industries. OCC, in which the Company owns a 50% interest, operates a new tin
coating facility that commenced commercial production in January 1997. The
Company has long-term contracts to supply up to 75% of Wheeling-Nisshin's steel
requirements and almost 100% of OCC's. These downstream operations and joint
ventures are integral to the Company's strategy of increasing shipments of
higher value-added steel products while decreasing dependence on hot rolled
coils, a lower-margin commodity steel product.
All of the Company's raw steel producing facilities have been restarted
as of September 30, 1997, and the Company expects to be at pre-Strike production
and shipment levels during the first half of 1998 although the Company does not
anticipate the purchase and processing of steel slabs in 1998.
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<PAGE>
BUSINESS STRATEGY
The Company's business strategy includes the following initiatives:
IMPROVE COST STRUCTURE. The New Labor Agreement has allowed the Company
to eliminate 850 hourly positions (approximately 20% of its pre-Strike hourly
workforce). The Company believes that these reductions, combined with the
significantly more flexible work rules under the New Labor Agreement, will allow
it to operate at pre-Strike levels with 850 fewer employees. As a result, the
Company anticipates substantial cost savings and productivity improvements once
pre-Strike production levels are reached. In addition, the Company has directed
its capital expenditures towards upgrading and modernizing its steelmaking
facilities, with a goal toward increasing productivity. These expenditures
include modernization of its hot and cold rolling facilities and a major reline
in 1995 of its No. 5 blast furnace located in Steubenville, Ohio. This reline
increased productivity and provided the Company with the ability to produce 100%
of the hot metal necessary to satisfy caster production requirements from two
rather than three blast furnaces. The Company's ability to produce low cost,
high quality metallurgical coke, helps the Company maintain lower costs than
those of many of its competitors. In addition, during periods of high demand the
Company is able to profitably sell coke produced in excess of its internal
needs.
EXPAND PRODUCTION OF VALUE-ADDED PRODUCTS. The Company intends to
continue to expand its sale of value-added products such as coated and
fabricated steels in order to improve profit margins and reduce its exposure to
commodity steel market volatility. This strategy is evidenced by the Company's
expansion of Wheeling Corrugating and its emphasis on joint ventures, such as
Wheeling-Nisshin and OCC, which give the Company access to downstream markets
through long-term supply contracts. The Company will continue to target
strategic acquisitions and joint ventures that support the Company's sales of
value-added products.
PRODUCT MIX
The tables below reflect the historical product mix of the Company's
shipments, expressed in tons. The Company has realized increases in the
percentage of higher value products during the 1990's as (i) the operations of
Wheeling Corrugating were expanded and (ii) Wheeling-Nisshin's second coating
line increased its requirements for cold rolled coils from WPSC. Additionally,
the OCC joint venture should enable the Company to increase tin mill product
shipments up to an additional 91,000 tons compared to 1996 levels.
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HISTORICAL PRODUCT MIX
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1993 1994 1995 1996(1) 1997(1)
--------- --------- ----------- ------------- -------------
PRODUCT CATEGORY:
Higher Value-Added Products:
<S> <C> <C> <C> <C> <C>
Cold Rolled Products--Trade 11.1% 10.5% 7.9% 8.4% 5.6%
Cold Rolled Products--Wheeling-Nisshin 15.6 17.3 18.9 16.6 7.7
Coated Products 20.4 21.7 21.3 21.5 12.3
Tin Mill Products 8.8 7.2 7.1 7.5 3.3
12.0 11.9 14.9 17.9 39.0
Fabricated Products (Wheeling Corrugating) --------- -------- ----------- ------------- --------------
Higher Value-Added Products as a Percentage
of Total Shipments 67.9 68.6 70.1 71.9 67.9
Hot Rolled Products 31.2 31.4 29.9 28.1 20.0
0.9 -- -- -- 12.1
Semi-Finished ---------- --------- ----------- ------------- --------------
Total 100.0% 100.0% 100.0% 100.0% 100.0%
========== ========= =========== ============= ==============
Average Net Sales per Ton $ 465 $ 498 $ 532 $ 528 $ 576
</TABLE>
- ------------------
(1) The allocation among product categories was affected by the Strike at
eight of the Company's facilities.
STEEL DIVISION
The Steel Division is the Company's primary steelmaking operation.
Products produced by the Steel Division are described below. These products are
transferred to Wheeling Corrugating for further processing and are sold directly
to third party customers, and to Wheeling-Nisshin and OCC pursuant to long-term
supply agreements between the Company and such entities.
COLD ROLLED PRODUCTS. Cold rolled coils are manufactured from hot
rolled coils by employing a variety of processing techniques, including
pickling, cold reduction, annealing and temper rolling. Cold rolled processing
is designed to reduce the thickness and improve the shape, surface
characteristics and formability of the product. In its finished form, the
product may be sold to service centers and to a variety of end users such as
appliance or automotive manufacturers or further processed internally into
corrosion-resistant coated products including hot dipped galvanized,
electrogalvanized, or tin mill products. In recent years, the Company has
increased its cold rolled production to support increased sales to
Wheeling-Nisshin and the expansion of Wheeling Corrugating, which are labeled as
separate product categories above.
COATED PRODUCTS. The Company manufactures a number of
corrosion-resistant, zinc-coated products including hot dipped galvanized and
electrogalvanized sheets for resale to trade accounts and to support the
fabricating operations of Wheeling Corrugating. The coated products are
manufactured from a steel substrate of cold rolled or hot rolled pickled coils
by applying zinc to the surface of the material to enhance its corrosion
protection. The Company's trade sales of galvanized products are heavily
oriented to unexposed applications, principally in the appliance, construction,
service center and automotive markets. Typical industry applications include
auto underbody parts, culvert pipe, refrigerator backs and heating/air
conditioning ducts. Over 30% of hot dipped galvanized production tonnage is
transferred to Wheeling Corrugating for further processing and reported under
the fabricated products category. The Company sells electrogalvanized products
for application in the appliance and construction markets.
TIN MILL PRODUCTS. Tin mill products consist of blackplate and
tinplate. Blackplate is a cold rolled substrate (uncoated), the thickness of
which is less than .0142 inches, and is utilized in the manufacture of pails,
shelving and sold to OCC for the manufacture of tinplate products. Tinplate is
produced by the electro-deposition of tin to a blackplate substrate and is
utilized principally in the manufacture of food, beverage, general line and
aerosol containers. While the majority of the Company's sales of these products
is concentrated in a variety of container markets, the Company also markets
products for automotive applications, such as oil filters and gaskets. The
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Company has phased out its existing tin mill facilities and will produce all of
its tin coated products through OCC. The Company expects that its participation
in OCC will enable it to expand the Company's presence in the tin plate market.
OCC's $69 million tin coating mill, which commenced commercial operations in
January 1997, will have a nominal annual capacity of 250,000 net tons. The
Company will supply up to 230,000 tons of the substrate requirements of the
joint venture subject to quality requirements and competitive pricing. The
Company and Nittetsu Shoji America, a major Japanese trading company's U.S.
based operation, will act as the distributors of the joint venture's product,
with the Company selling between 81% and 85% of production based on volume.
HOT ROLLED PRODUCTS. Hot rolled coils represent the least processed of
the Company's finished goods. Approximately 68% of the Company's 1997 production
of hot rolled coils was further processed internally into value-added finished
products. The balance of the tonnage is sold as hot rolled black or pickled
(acid cleaned) coils to a variety of consumers such as converters/processors,
steel service centers and the automotive and appliance industries. The
converters/processors transform the hot rolled coil into a finished product such
as pipe and tubing, while the service centers typically slit or cut the material
to size for resale to the end user.
FABRICATED PRODUCTS
(WHEELING CORRUGATING)
Fabricated products represented 55.1% or $269.7 million of the
Company's net sales in 1997 and 26.7% or $296.7 million of the Company's net
sales in 1996. Fabricated products consist of cold rolled or coated products
further processed mainly via roll forming. The Company intends to increase sales
of fabricated products through expansion, selective acquisitions of fabricating
facilities and new product development. Wheeling Corrugating markets exclusively
value-added products.
Wheeling Corrugating is a fabricator of roll-formed products for the
construction, highway, and agricultural products industries. In conjunction with
the Company's business strategy of expanding its sales of higher value-added
products, Wheeling Corrugating has increased its shipments of fabricated
products by approximately 23% since 1993. Following the establishment of its
Lenexa, Kansas and Minneapolis, Minnesota locations, Wheeling Corrugating
expanded its regional operations, through acquisitions, in Wilmington, North
Carolina (1993), Gary, Indiana, Warren, Ohio (1994) and Brooks, Medford and
Klamath Falls, Oregon (1996). The regional presence of certain of these
facilities has enabled Wheeling Corrugating to take advantage of low-cost barge
freight from the Company's Ohio Valley plants and to provide customers in the
outlying areas with competitive services through "just-in-time delivery." In
some of its product lines, Wheeling Corrugating has substantial market share and
therefore has increased opportunity to pursue higher profit margins. The Company
believes that it would be difficult for a competitor to replicate Wheeling
Corrugating's geographical breadth.
The following table sets forth certain shipment information relating to
Wheeling Corrugating's product categories:
<TABLE>
<CAPTION>
NET TONS SHIPPED BY WHEELING CORRUGATING
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1993 1994 1995 1996 1997
----------- ----------- ----------- ----------- -----------
(TONS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Construction Products 146.2 151.7 205.6 213.5 198.1
Agricultural Products 100.7 113.6 125.7 142.8 122.4
Highway Products 19.5 16.4 20.0 16.8 11.4
Other 4.0 4.0 3.9 3.6 --
----------- ----------- ----------- ----------- -----------
Total Net Tons Shipped 270.4 285.7 355.2 376.7 331.9
=========== =========== =========== =========== ===========
</TABLE>
CONSTRUCTION PRODUCTS. Construction products consist of roll-formed
sheets, which are utilized in sectors of the non-residential building market
such as commercial, institutional and manufacturing. They are classified into
three basic categories: roof deck; form deck; and composite floor deck. Roof
deck is a formed steel sheet, painted
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<PAGE>
or galvanized, which provides structural support in non-residential roofing
systems. Form deck is a formed steel sheet, painted, galvanized or uncoated,
that provides structural form support for structural or insulating concrete
slabs in non-residential floor or roofing systems. Composite floor deck is a
formed steel sheet, painted, galvanized or uncoated, that provides structural
form support and positive reinforcement for structural concrete slabs in
non-residential floor systems.
AGRICULTURAL PRODUCTS. Agricultural products consist of roll-formed,
corrugated sheets which are used as roofing and siding in the construction of
barns, farm machinery enclosures and light commercial buildings and certain
residential roofing applications. These products can be manufactured from hot
dipped or painted hot dipped galvanized coils. Historically, these products have
been sold primarily in rural areas. In recent years, however, such products have
found increasing acceptance in light commercial buildings.
HIGHWAY PRODUCTS. Highway products consist of bridge form, which is
roll-formed corrugated sheets that are swedged on both ends and are utilized as
concrete support forms in the construction of highway bridges.
WHEELING-NISSHIN
The Company has a 35.7% equity interest in Wheeling-Nisshin, which is a
joint venture between the Company and Nisshin Holding, Incorporated, a
wholly-owned subsidiary of Nisshin Steel Co., Ltd. Wheeling-Nisshin is a
state-of-the-art processing facility located in Follansbee, West Virginia which
produces among the lightest gauge galvanized steel products available in the
United States. Shipments by Wheeling-Nisshin of hot dipped galvanized,
galvanneal, galvalume and aluminized products, principally to the construction
industry, have increased from 158,600 tons in 1988 to 686,100 tons in 1997.
Wheeling-Nisshin products are marketed through trading companies, and its
shipments are not consolidated into the Company's shipments.
Wheeling-Nisshin began commercial operations in 1988 with an initial
capacity of 360,000 tons. In March 1993, Wheeling-Nisshin added a second hot
dipped galvanizing line, which increased its capacity by approximately 80%, to
over 660,000 annual tons and allows Wheeling-Nisshin to offer the lightest-gauge
galvanized sheet products manufactured in the United States for construction,
heating, ventilation and air-conditioning and after-market automotive
applications. Wheeling-Nisshin has been profitable every year since inception.
Wheeling-Nisshin's results of operations for the years ended December 31, 1996
and 1997 were negatively impacted by the Strike, principally due to the
Company's inability to supply cold rolled coils to Wheeling-Nisshin during the
period of the Strike, which caused Wheeling-Nisshin to purchase cold rolled
coils in the spot market at higher prices.
The Company's amended and restated supply agreement with
Wheeling-Nisshin expires in 2013. Pursuant to the amended supply agreement, the
Company will provide not less than 75% of Wheeling-Nisshin's steel substrate
requirements, up to an aggregate maximum of 9,000 tons per week subject to
product quality requirements. Pricing under the supply agreement is negotiated
quarterly based on a formula which gives effect to competitive market prices.
Shipments of cold rolled steel in 1997 by the Company to Wheeling-Nisshin were
approximately 64,500 tons, or 7.8% of the Company's total tons shipped and
approximately 351,900 tons, or 16.8%, in 1996. This decrease reflects the effect
of the Strike on the Company's shipping level.
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<PAGE>
The following chart provides certain financial and operating data for
Wheeling-Nisshin:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1993 1994 1995 1996 1997
----------- ----------- ----------- ----------- -----------
(TONS IN THOUSANDS, DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Tons sold 467.2 628.8 651.2 665.8 686.1
Revenues $264.2 $374.6 $389.7 $375.7 $396.3
Cash flow provided (used) from
Operations 19.0 41.7 25.2 42.5 26.7
Investing (15.3) (.8) (1.0) (21.1) (9.6)
Financing 7.4 (34.0) (39.1) (18.4) (13.8)
EBITDA(1) 27.6 35.6 47.8 47.0 37.8
Net income 7.1 10.4 18.0 21.6 16.1
The Company's pro rata share:
Cash dividends received -- 2.5 2.5 2.5 2.5
Equity income 1.8 3.7 6.4 7.7 5.7
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------------------------------------------
1993 1994 1995 1996 1997
----------- ----------- ----------- ----------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Total assets $253.2 $241.4 $205.5 $219.4 $212.8
Total debt 95.7 68.7 36.7 25.3 18.5
Stockholders' equity 106.1 109.5 120.6 135.2 144.2
</TABLE>
(1) EBITDA is operating income plus depreciation and amortization. The
Company has included EBITDA because it is commonly used by certain
investors and analysts to analyze and compare companies on the basis of
operating performance, leverage and liquidity and to determine a
company's ability to service debt. EBITDA does not represent cash flows
as defined by generally accepted accounting principles and does not
necessarily indicate that cash flows are sufficient to fund all of the
Company's cash needs. EBITDA should not be considered in isolation or
as a substitute for net income (loss), cash flows from operating
activities or other measures of liquidity determined in accordance with
generally accepted accounting principles. EBITDA measures presented may
not be comparable to other similarly titled measures of other
companies.
OHIO COATINGS COMPANY
The Company has a 50% equity interest in OCC, which is a joint venture
between the Company and Dong Yang, a leading South Korea-based tin plate
producer. Nittetsu Shoji America ("Nittetsu"), a U.S. based tin plate importer,
holds non-voting preferred stock in OCC and will act, together with the Company,
as a distributor of OCC's products. OCC completed construction of a $69 million
state-of-the-art tin coating mill in 1996 and commenced commercial operations in
January 1997. The OCC tin- coating facility is the only domestic electro-tin
plating facility constructed in the last 30 years . The OCC tin coating line is
anticipated to have a nominal annual capacity of 250,000 net tons, and shipped
approximately 71,000 tons in 1997. The Company has phased out its existing tin
coating facilities and will produce all of its tin coated products through OCC.
The Company's participation in OCC will enable it to expand the Company's
presence in the tin plate market and convert more hot rolled sheet into tin mill
products. As part of the joint venture agreement, the Company has the right to
supply up to 230,000 tons of the substrate requirements of OCC, subject to
quality requirements and competitive pricing. The Company will market between
81% and 85% of OCC's products. In 1997, OCC had operating losses of $14.3
million, which were negatively impacted by the Strike.
-44-
<PAGE>
OTHER STEEL RELATED OPERATIONS OF THE COMPANY
The Company owns an electrogalvanizing facility which had revenues of
$34.8 million in 1997 and $47.1 million in 1996, while providing an outlet for
approximately 60,000 tons of steel in a normal year and a facility that produces
oxygen and other gases used in the Company's steel-making operations. The
Company is also a 12 1/2% equity partner in an iron ore mining partnership.
CUSTOMERS
The Company markets an extensive mix of products to a wide range of
manufacturers, converters and processors. The Company's 10 largest customers
(including Wheeling-Nisshin) accounted for approximately 35.4% of its net sales
in 1995, 34.9% in 1996, and 30.2% in 1997. Wheeling-Nisshin was the only
customer to account for more than 10% of net sales. Wheeling-Nisshin accounted
for 15.2% and 12.7% of net sales in 1995, and 1996, respectively.
Geographically, the majority of the Company's customers are located within a
350-mile radius of the Ohio Valley. However, the Company has taken advantage of
its river-oriented production facilities to market via barge into more distant
locations such as the Houston, Texas and St. Louis, Missouri areas. As discussed
above, Wheeling Corrugating has acquired regional facilities to service an even
broader geographical area.
The Company's shipments historically have been concentrated within
seven major market segments: construction industry, steel service centers,
converters/processors, agriculture, container, auto, and appliances. The
Company's overall participation in the construction and the
converters/processors markets substantially exceeds the industry average and its
reliance on automotive shipments as a percentage of total shipments is
substantially less than the industry average.
PERCENT OF TOTAL NET TONS SHIPPED
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------
Major Customer Category: 1993 1994 1995 1996 (1) 1997(1)
----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Steel Service Centers 33% 32% 29% 26% 32%
Converters/Processors(2) 26 28 28 25 16
Construction 18 18 18 22 31
Agriculture 5 5 6 7 14
Containers(2) 7 6 6 7 2
Automotive 6 6 5 5 2
Appliances 3 3 4 4 2
Exports -- -- 1 1 --
Other 2 2 3 3 1
----------- ----------- ----------- ------------- -------------
Total 100% 100% 100% 100% 100%
=========== =========== =========== ============= =============
</TABLE>
(1) The allocation among customer categories was affected by the Strike at
eight of the Company's facilities.
(2) Products shipped to Wheeling-Nisshin and OCC are included primarily in
the Converters/Processors and Containers markets, respectively.
Set forth below is a description of the Company's major customer
categories:
STEEL SERVICE CENTERS. The Company's shipments to steel service centers
are heavily concentrated in the areas of hot rolled and hot dipped galvanized
coils. Due to increased in-house costs to steel companies during the 1980's for
processing services such as slitting, shearing and blanking, steel service
centers have become a major factor in the distribution of hot rolled products to
ultimate end users. In addition, steel service centers have become a significant
factor in the sale of hot dipped galvanized products to a variety of small
consumers such as mechanical contractors, who desire not to be burdened with
large steel inventories.
-45-
<PAGE>
CONVERTERS/PROCESSORS. The growth of the Company's shipments to the
converters/processors market is principally attributable to the increase in
shipments of cold rolled products to Wheeling-Nisshin, which uses cold rolled
coils as a substrate to manufacture a variety of coated products, including hot
dipped galvanized and aluminized coils for the automotive, appliance and
construction markets. As a result of the second line expansion, the Company's
shipments to Wheeling-Nisshin increased significantly beginning in 1993. The
converters/processors industry also represents a major outlet for the Company's
hot rolled products, which are converted into finished commodities such as pipe,
tubing and cold rolled strip.
CONSTRUCTION. The Company's shipments to the construction industry are
heavily influenced by the sales of Wheeling Corrugating. Wheeling Corrugating
services the non-residential and agricultural building and highway industries,
principally through shipments of hot dipped galvanized and painted cold rolled
products. With its acquisitions during the 1980's and early 1990's of regional
facilities, Wheeling Corrugating has doubled its shipments and has been able to
market its products into broad geographical areas. The Company expects these
acquisitions will mitigate the effects of regional economic downturns in the
construction business. In December 1996 the Company, through Wheeling
Corrugating, acquired the assets of Champion Metal Co., a rollformer, which has
three locations in Oregon.
AGRICULTURE. The Company's shipments to the agricultural market are
principally sales of Wheeling Corrugating roll-formed, corrugated sheets which
are used as roofing and siding in the construction of barns, farm machinery
enclosures and light commercial buildings.
CONTAINERS. The vast majority of the Company's shipments to the
container market are concentrated in tin mill products, which are utilized
extensively in the manufacture of food, aerosol, beverage and general line cans.
The container industry has represented a stable market. The balance of the
Company's shipments to this market consists of cold rolled products for pails
and drums. As a result of the OCC joint venture, the Company phased out its
existing tin mill production facilities in 1996, and has begun to distribute
products produced by OCC. The Company has the right to supply up to 230,000 tons
of the substrate requirements of OCC until January 1, 2012.
AUTOMOTIVE. Unlike the majority of its competitors, the Company is not
heavily dependent on shipments to the automotive industry. However, the Company
has established a variety of higher value-added niches in this market,
particularly in the area of hot dipped galvanized products for deep drawn
automotive underbody parts. In addition, the Company has been a supplier of tin
mill products for automotive applications, such as oil filters and gaskets. A
third niche has been the Company's participation in painted electrogalvanized
products for auto draft stripping applications. As a result of the Strike, the
Company was unable to secure automotive contracts for 1998. The Company
anticipates it will be in a favorable position to compete for automotive
contracts in future periods.
APPLIANCE. The Company's shipments to the appliance market are
concentrated in hot dipped galvanized, electrogalvanized and hot rolled coils.
These products are furnished directly to appliance manufacturers as well as to
blanking, drawing and stamping companies. Additional shipments are furnished to
service centers and converters/processors for ultimate appliance applications.
The Company has concentrated on niche product applications primarily used in
washer/dryer, refrigerator/freezer and range appliances. The Company anticipates
that it will retain a portion of its appliance contracts for 1998. However, due
to the Strike, the Company will not be able to secure a full level of shipments
comparable to those achieved in 1996. The Company expects to be in a favorable
position to compete for contracts to supply appliance manufacturers in 1999.
MANUFACTURING PROCESS
In the Company's primary steelmaking process, iron ore pellets, coke,
limestone, sinter and other raw materials are consumed in the blast furnace to
produce hot metal. Hot metal is further converted into liquid steel through its
basic oxygen furnace ("BOF") process where impurities are removed, recycled
scrap is added and metallurgical properties for end use are determined on a
batch-by-batch (heat) basis. The Company's BOF has two vessels, each with a
steelmaking capacity of 285 tons per heat. From the BOF, the heats of steel are
sent to the ladle metallurgy facility ("LMF"), where the temperature and
chemistry of the steel are adjusted to precise tolerances. Liquid steel from the
LMF then is formed into slabs through the process of continuous casting. After
continuous casting, slabs are reheated, reduced and finished by extensive
rolling, shaping, tempering and, in certain cases, by
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<PAGE>
the application of coatings at the Company's downstream operations. Finished
products are normally shipped to customers in the form of coils or fabricated
products. The Company has linked its steelmaking and rolling equipment with a
computer based integrated manufacturing control system to coordinate production
tracking and sales activities.
RAW MATERIALS
The Company has a 12.5% ownership interest in Empire Iron Mining
Partnership ("Empire") which operates a mine located in Palmer, Michigan. The
Company is obligated to purchase approximately 12.5% or 1.0 million gross tons
per year (at current production levels) of the mine's annual ore output.
Interest in related ore reserves as of December 31, 1997, is estimated to be
21.1 million gross tons. The Company generally consumes approximately 2.4
million gross tons of iron ore pellets in its blast furnaces. The Company's pro
rata cash operating cost of Empire currently approximates the market price of
ore. The Company obtains approximately half of its iron ore from spot and
medium-term purchase agreements at prevailing world market prices. It has
commitments for the majority of its blast furnace iron ore pellet needs through
1999 from suppliers in North America.
In November 1993, the Company sold the operating assets of its coal
company to an unrelated third party. The Company also entered into a long-term
supply agreement with such third party to provide the Company with a substantial
portion of the Company's coal requirements at competitive prices. The Company's
operations require a substantial amount of coking coal.
The Company currently produces all of its coke requirements and
typically consumes generally all of the resultant by-product coke oven gas. In
1997, approximately .9 million tons of coking coal were consumed in the
production of blast furnace coke by the Company. The Company may continue to
sell its excess coke and coke oven by-products to third-party trade customers.
During the Strike, the Company continued to produce coke at its Follansbee
facility. The Company has entered into a contract with a major domestic
integrated steel producer for the sale of coke produced by the Company during
the Strike.
The Company's operations require material amounts of other raw
materials, including limestone, oxygen, natural gas and electricity. These raw
materials are readily available and are purchased on the open market. The
Company is presently dependent on external steel scrap for approximately 8% of
its steel melt. The cost of these materials has been susceptible in the past to
price fluctuations, but worldwide competition in the steel industry has
frequently limited the ability of steel producers to raise finished product
prices to recover higher material costs. Certain of the Company's raw material
supply contracts provide for price adjustments in the event of increased
commodity or energy prices.
BACKLOG
Order backlog was 368,025 net tons at December 31, 1997, compared to
158,751 net tons at December 31, 1996 and 400,624 tons at December 31, 1995. The
Company believes that the December 31, 1997 order backlog will be shipped by the
end of the 1998 first half. The Company is vigorously pursuing customers lost to
competitors during the Strike and anticipates rebuilding its order backlog to
historic levels.
CAPITAL INVESTMENTS
The Company believes that it must continuously strive to improve
productivity, product quality and control manufacturing costs in order to remain
competitive. Accordingly, the Company is committed to continuing to make
necessary capital investments with the objective of reducing manufacturing costs
per ton, improving the quality of steel produced and broadening the array of
products offered to the Company's served markets. The Company's capital
expenditures (including capitalized interest) for 1997 were approximately $33.8
million, including $12.4 million on environmental projects. Capital expenditures
in 1996 and 1997 were lower than in recent years due to the Strike. From 1993 to
1997, such expenditures aggregated approximately $289.3 million. This level of
capital expenditures was needed to maintain productive capacity, improve
productivity and upgrade selected facilities to meet competitive requirements
and maintain compliance with environmental laws and regulations. The capital
expenditure program has included improvements to the Company's infrastructure,
blast furnaces, steel-making facilities, 80-inch hot strip mill and finishing
operations, and has resulted in improved shape, gauge, surface and
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<PAGE>
physical characteristics for its products. In particular, the quality
improvements completed at the Allenport cold rolling facility in 1992 and the
installation of automatic gauge controls at the Yorkville tandem mill in 1993
have enhanced productivity and improved the quality of substrate provided to
Wheeling-Nisshin and other customers. Continuous and substantial capital and
maintenance expenditures will be required to maintain operating facilities,
modernize finishing facilities to remain competitive and to comply with
environmental control requirements. The Company anticipates funding its capital
expenditures in 1998 from cash on hand and funds generated by operations, sale
of receivables under the Receivables Facility and funds available under the
Revolving Credit Facility. During the Strike, the Company had delayed
substantially all capital expenditures at the Strike-affected plants. The
Company anticipates that capital expenditures will approximate depreciation on
average, over the next few years.
ENERGY REQUIREMENTS
During 1997 coal constituted approximately 76% of the Company's total
energy consumption, natural gas 20% and electricity 4%. Many of the Company's
major facilities that use natural gas have been equipped to use alternative
fuels. The Company continually monitors its operations regarding potential
equipment conversion and fuel substitution to reduce energy costs.
EMPLOYMENT
Total active employment of the Company at December 31, 1997 totaled
4,011 employees, of which 2,928 were represented by the USWA, and 114 by other
unions. The remainder consisted of 874 salaried employees and 95 non-union
operating employees.
On August 12, 1997, the Company and the USWA entered into the New Labor
Agreement. Set forth below is a summary of terms of the New Labor Agreement.
TERM
The contract has a five year term with no mid-term renegotiation
provisions ("reopeners").
WORK FORCE REDUCTION
The Company has implemented its immediate and unilateral right to
reduce its hourly work force by 850 employees (from its pre-Strike level of
approximately 4,090). The Company has no obligation to replace workers upon
retirement. The average all-in cost per job eliminated is $55,000 per year in
wages and benefits. Based on actual wage and certain direct employee benefit
costs during the first nine months of 1996 for employees represented by the
USWA, the elimination of 850 USWA-represented employees working a standard
number of hours per year would have resulted in estimated annual labor cost
savings of approximately $45 million.
WORK RULE MODERNIZATION
The above mentioned job reductions are made possible by a dramatic
restructuring of the Company's work rules, including, among other things,
provisions for: (i) mandatory multi-crafting which requires participation of all
hourly craftsmen under the age of 55 and is expected to result in a more highly
skilled and flexible work force; (ii) a new "equipment tender" position, which
allows for craftsmen to operate, maintain and repair their own equipment and is
expected to reduce the need for dedicated maintenance crews; and (iii) enhanced
maintenance flexibility, which allows for greater freedom in assignment of
non-craft jobs and permits craftsmen to assist each other in performing
maintenance functions.
WAGE AND BONUS
The Company paid a bonus of $2,000 per hourly employee upon
ratification of the New Labor Agreement. In addition, the Company agreed to
increase hourly wage rates (currently averaging $17.00/hour) as follows: (i)
25(cent) per hour on June 1, of each of 1998, 1999 and 2000; and (ii) 37.5(cent)
per hour on each of June 1, 2001 and March 1, 2002.
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<PAGE>
TRUST FOR RETIREE MEDICAL OBLIGATIONS
The New Labor Agreement gives the Company the right to pay up to $11
million of retiree medical expenses using previous contributions to a trust
established for the benefit of future retirees. Such payments would otherwise be
funded out of the Company's operating cash flows. Furthermore, the Company is
relieved of its obligation to make certain future annual contributions
(aggregating $16 million) to the trust. The Company will make one payment
(estimated to be $4 million) to the trust in July 2002. Finally, the Company's
obligation to pay retiree medical costs beyond the term of its pension agreement
is limited on a per capita basis.
PENSION PLAN (SUMMARY OF TERMS)
The Company agreed to provide a DB Plan for its hourly employees. The
DB Plan has an eight year term, without reopeners, and provides for monthly cash
benefits as follows: (i) for employees who retire prior to May 31, 2003, $40
times years of service; or (ii) for those who retire on or after May 31, 2003,
$44 times years of service.
The DB Plan has certain early retirement provisions which are either
similar to or less costly than those of the typical USWA-bargained plans. In
addition, the DB Plan provides for certain incentives to accelerate the rate of
retirement of hourly employees. The Company has offered to pay either a $25,000
lump sum, or $400 per month until age 62, to the first 818 eligible employees
who opt to retire.
The Company is no longer obliged to make contributions (which averaged
$9.2 million per year for the period from 1985 to 1996) to its Defined
Contribution Plan ("DC Plan") for USWA-represented employees. The approximately
$121.3 million in assets in the DC Plan (as of December 31, 1997) are available
to fund individuals' retirement benefits under the new DB Plan. The actuarially
determined unfunded accumulated benefit obligation for all benefits under the DB
Plan totals $167.3 million as of December 31, 1997. Under ERISA, the Company is
subject to annual minimum cash funding requirements to satisfy its obligations
under the DB Plan.
OTHER PROVISIONS
The requirement to have a USWA representative on the WHX board of
directors was eliminated and the number of representatives on the WPSC board of
directors was reduced from two to one. Certain aspects of the Company's Medical
Benefit Plans were amended with the effect of encouraging employees to elect the
Company's managed care medical plan option. A new gain sharing arrangement was
implemented which supplants profit sharing under certain circumstances.
COMPETITION
The steel industry is cyclical in nature and has been marked
historically by overcapacity, resulting in intense competition among domestic
integrated steel producers, minimills and processors. The market for flat rolled
steel in the United States is supplied principally by domestic integrated steel
producers, domestic steel minimills and processors and foreign steel producers.
Integrated producers produce steel from a combination of iron ore, coke and
steel scrap using blast furnaces and basic oxygen furnaces.
The Company faces increasing competitive pressures from other domestic
integrated producers, minimills and processors. Processors compete with the
Company in the areas of slitting, cold rolling and coating. Minimills are
generally smaller volume steel producers that use ferrous scrap metals as their
basic raw material. Compared to integrated producers, minimills, which rely on
less capital intensive hot metal sources, have certain advantages. Since
minimills typically are not unionized, they have more flexible work rules that
have resulted in lower employment costs per net ton shipped. Since 1989,
significant flat rolled minimill capacity has been constructed and these
minimills now compete with integrated producers in product areas that
traditionally have not faced significant competition from minimills. In
addition, there is significant additional flat rolled minimill capacity under
construction or announced with various planned commissioning dates in 1997
through 1999. Near term, these minimills are expected to compete with the
Company primarily in the commodity flat rolled steel market and processors are
expected to compete with the Company in the flat rolled and cold rolled steel
market. In the long-term, such minimills may also compete with the Company in
producing value-added products. In addition, the
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<PAGE>
increased competition in commodity product markets influence certain integrated
producers to increase product offerings to compete with the Company's custom
products.
As the single largest steel consuming country in the western world, the
United States has long been a favorite market of steel producers in Europe and
Japan. Steel producers from emerging economic powers such as Korea, Taiwan, and
Brazil, and non-market economies such as Russia and China, have also recognized
the United States as a target market.
Total annual steel consumption in the United States has fluctuated
between 88 million and slightly over 117 million tons since 1991. A number of
steel substitutes, including plastics, aluminum, composites and glass, have
reduced the growth of domestic steel consumption.
Steel imports of flat rolled products as a percentage of domestic
apparent consumption, excluding semi-finished steel, have been approximately 18%
in 1995, 19% in 1996, and 20.4% in 1997. World steel demand, world export
prices, U.S. dollar exchange rates and the international competitiveness of the
domestic steel industry have all been factors in these import levels.
PROPERTIES
The Company has one raw steel producing plant and various other
finishing and fabricating facilities. The Steubenville complex is an integrated
steel producing facility located at Steubenville and Mingo Junction, Ohio and
Follansbee, West Virginia. The Steubenville complex includes a sinter plant,
coke oven batteries that produce all coke requirements, three blast furnaces
(two operating), two basic oxygen furnaces, a two-strand continuous slab caster
with an annual slab production capacity of approximately 2.4 million tons, an
80-inch hot strip mill and pickling and coil finishing facilities. The Ohio and
West Virginia locations, which are separated by the Ohio River, are connected by
a railroad bridge owned by the Company. A pipeline is maintained for the
transfer of coke oven gas for use as fuel from the coke plant to several other
portions of the Steubenville complex. The Steubenville complex primarily
produces hot rolled products, which are either sold to third parties or shipped
to other of the Company's facilities for further processing into value-added
products.
The following table lists the other principal plants of the Company and
the annual capacity of the major products produced at each facility:
<TABLE>
<CAPTION>
OTHER MAJOR FACILITIES
LOCATION AND OPERATIONS CAPACITY TONS/YEAR MAJOR PRODUCTS
- ------------------------------------------------------- ---------------------- -----------------------------------
<S> <C> <C>
Allenport, Pennsylvania:
Continuous pickler, tandem mill, temper
mill and annealing 950,000 Cold rolled sheets
Beech Bottom, West Virginia:
Painted steel in coil form and
Paint line and roll-forming equipment 120,000 formed steel products
Canfield, Ohio:
Electrogalvanizing line, paint line, ribbon Electrolytic galvanized sheet and
and oscillating rewind slitters 65,000 strip
Martins Ferry, Ohio:
Temper mill, zinc coating lines and roll Hot dipped galvanized sheets and
forming equipment 750,000 coils and formed steel products
Yorkville, Ohio:
Continuous pickler, tandem mill, temper
mills and annealing lines 660,000 Black plate and cold rolled sheets
</TABLE>
Wheeling Corrugating fabricates products at Fort Payne, Alabama;
Houston, Texas; Lenexa, Kansas; Louisville, Kentucky; Minneapolis, Minnesota;
Warren, Ohio; Gary, Indiana; Wilmington, North Carolina and
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<PAGE>
Klamath Falls, Medford and Brooks, Oregon. The Fort Payne, Houston and
Wilmington facilities were acquired in 1986, 1989 and 1993, respectively. The
Gary facility was acquired in 1994. The Oregon facilities were acquired in 1996.
The Company maintains five regional sales offices for flat-rolled and
tin mill products and nine sales offices and/or warehouses for Wheeling
Corrugating products.
All of the above facilities currently owned by the Company are
regularly maintained in good operating condition. However, continuous and
substantial capital and maintenance expenditures are required to maintain the
operating facilities, to modernize finishing facilities in order to remain
competitive and to meet environmental control requirements.
All of the above facilities and substantially all of the other real
property of the Company are owned in fee by the Company (exclusive of coal lands
held by subsidiaries or corporations in which the Company has an interest) and
are subject to the first lien that secures the $9.2 million face amount (as of
December 31, 1997) of Tax Benefit Transfer Letters of Credit issued to support
the sale of tax benefits associated with the construction of the slab caster
located at the Company's Steubenville complex.
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<PAGE>
LEGAL PROCEEDINGS
ENVIRONMENTAL MATTERS
The Company, as are other industrial manufacturers, is subject to
increasingly stringent standards relating to the protection of the environment.
In order to facilitate compliance with these environmental standards, the
Company has incurred capital expenditures for environmental control projects
aggregating $5.9 million, $6.8 million and $12.4 million for 1995, 1996 and
1997, respectively. The Company anticipates spending approximately $41.3 million
in the aggregate on major environmental compliance projects through the year
2000, estimated to be spent as follows: $13.4 million in 1998, $15.9 million in
1999 and $12.0 million in 2000. Due to the possibility of unanticipated factual
or regulatory developments, the amount and timing of future expenditures may
vary substantially from such estimates.
The Company has been identified as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and Liability Act
("Superfund") or similar state statutes at several waste sites. The Company is
subject to strict, joint and several liability imposed by Superfund on
potentially responsible parties. Due to the technical and regulatory complexity
of remedial activities and the difficulties attendant to identifying potentially
responsible parties and allocating or determining liability among them, the
Company is unable to reasonably estimate the ultimate cost of liability under
Superfund . The Company believes, based upon information currently available,
that the Company's liability for remediation costs in connection with the
Buckeye Reclamation site will be between $3.0 and $4.0 million. At six other
sites (MIDC Glassport, United Scrap Lead, Tex-Tin, Breslube Penn, Four County
Landfill and Beazor) the Company estimates the liability to aggregate up to
$700,000.
The Company is currently funding its share of remediation costs.
The Clean Air Act Amendments of 1990 (the "Clean Air Act") directly
affect the operations of many of the Company's facilities, including coke ovens.
Under the Clean Air Act, coke ovens generally will be required to comply with
progressively more stringent standards which will result in an increase in
environmental capital expenditures and costs for environmental compliance. Most
of the forecasted environmental expenditures will be spent on projects relating
to compliance with these standards. Upon completion of the capital projects, the
Company anticipates that its facilities will meet the applicable Clean Air Act
standards.
In March 1993 , the United States Environmental Protection Agency
("EPA") notified the Company of Clean Air Act violations, alleging particulate
matter and hydrogen sulfide emissions in excess of allowable concentrations, at
the Company's Follansbee Coke Plant. The parties have entered into a consent
decree settling the civil penalties related to this matter for $700,000 and the
Company completed payment of all civil penalties in January 1997.
In an action brought in 1985 in the U.S. District Court for the
Northern District of West Virginia, the EPA claimed violations of the Solid
Waste Disposal Act at a surface impoundment area at the Follansbee facility. The
Company and the EPA entered into a consent decree in October 1989 whereby soil
and groundwater testing and monitoring have been implemented and the Company is
currently working with the EPA to close the surface impoundment.
In September 1996, the EPA issued a initial administrative order under
the Resource Conservation and Recovery Act ("RCRA") affecting other areas of the
Follansbee facility. The EPA is seeking to require the Company to perform a site
investigation of the Follansbee plant. The Company has actively contested the
EPA's jurisdiction to require a site investigation. One of two appeals was
dismissed by the court, but the Company is continuing with the second appeal.
On December 20, 1995, the Department of Justice notified the Company of
its intention to bring proceedings seeking civil penalties for alleged
violations of the Clean Water Act (1991-94) and RCRA (1990-91) at the Company's
Follansbee facility. Suit was filed February 5, 1996 in the U.S. District Court,
Eastern District of West Virginia (Civil Action #5-96CV20). A consent decree has
been entered and the matter has been settled for $200,000.
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<PAGE>
In addition, the West Virginia Department of Environmental Protection
("WVDEP") sought civil penalties for violations of a National Pollutant
Discharge Elimination System permit at the Company's Follansbee plant. A
settlement has been proposed by the WVDEP in which the Company would pay
approximately $100,000 in settlement of this matter.
By letter dated March 15, 1994 the Ohio Attorney General advised the
Company of its intention to file suit on behalf of the Ohio EPA for alleged
hazardous waste violations at the Company's Steubenville, Mingo Junction,
Martins Ferry and Yorkville facilities. In subsequent correspondence the State
of Ohio demanded a civil penalty of approximately $300,000 in addition to
injunctive relief. The demand for injunctive relief consists of remedial
activities at each facility aggregating less than $125,000, the initiation of a
waste minimization program at the affected facilities and a company wide
compliance assessment. The Company is in the process of conducting settlement
negotiations with the Ohio EPA.
In January 1998, the Ohio Attorney General notified the Company of a
draft consent order and initial civil penalties in the amount of $1.0 million
for various air violations at the Company's Steubenville and Mingo Junction
facilities occurring from 1992 through 1996. The Company anticipates entering
into discussions with the Ohio Environmental Enforcement Section to resolve
these issues.
The Company is currently operating in substantial compliance with three
consent decrees (two with the EPA and one with the Pennsylvania Department of
Environmental Resources) with respect to wastewater discharges at Allenport,
Pennsylvania and Mingo Junction, Steubenville, and Yorkville, Ohio. The Company
has completed all of the technical requirements of the consent decrees and is
evaluating filing petitions to terminate them.
As the Company becomes aware of potential environmental liabilities
resulting from its operations, such situations are assessed and remediated in
accordance with regulatory requirements.
Non-current accrued environmental liabilities totaled $7.8 million at
December 31, 1996 and $10.6 million at December 31, 1997. These accruals were
initially determined by the Company in January 1991, based on all then available
information. As new information becomes available, including information
provided by third parties, and changing laws and regulation, the liabilities are
reviewed and the accruals adjusted quarterly. Management believes, based on its
best estimate, that the Company has adequately provided for remediation costs
that might be incurred or penalties that might be imposed under present
environmental laws and regulations.
Based upon information currently available, including the Company's
prior capital expenditures, anticipated capital expenditures, consent agreements
negotiated with Federal and state agencies and information available to the
Company on pending judicial and administrative proceedings, the Company does not
expect its environmental compliance and liability costs, including the
incurrence of additional fines and penalties, if any, relating to the operation
of its facilities, to have a material adverse effect on the financial condition
or results of operations of the Company. However, as further information comes
into the Company's possession, it will continue to reassess such evaluations.
GENERAL LITIGATION
The Company is a party to various litigation matters including general
liability claims covered by insurance.
In the opinion of management, the litigation described herein is not
expected to have a material adverse effect on the financial condition or results
of operations of the Company.
-53-
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding the Company's
directors and executive officers:
Name Age Position
- ---------------------- ----- ------------------------------------------------
John R. Scheessele 50 President
Paul J. Mooney 46 Executive Vice President and Chief Financial
Officer
James T. Gibbons 46 Vice President--Mergers and Acquisitions
Thomas R. Notaro 47 Vice President--Comptroller
John W. Testa 61 Vice President, Assistant Secretary and
Treasurer
Ronald LaBow 63 Director
Robert A. Davidow 55 Director
Marvin L. Olshan 70 Director and Secretary
The business experience, principal occupations and employment as well
as the periods of service of each of the directors and executive officers of the
Company during the last five years are set forth below.
JOHN R. SCHEESSELE has been President of the Company, a Director and
President of WHX and Chairman of the Board, President and Chief Executive
Officer of WPSC since March 1997. Prior to such time, Mr. Scheessele was
President and Chief Executive Officer of The SKD Company, a privately held
supplier of original equipment to the automotive industry, from February 1996 to
February 1997. From October 1995 until January 1996, Mr. Scheessele was an
independent consultant. Prior to such time, Mr. Scheessele was President and
Chief Executive Officer of WCI Steel, Inc. ("WCI") from November 1994 to
September 1995, Executive Vice President and Chief Financial Officer of WCI from
November 1993 to November 1994 and Chief Financial Officer of WCI from October
1988 to November 1993.
PAUL J. MOONEY has been Executive Vice President and Chief Financial
Officer of WHX, the Company and WPSC since November 1997. Prior to joining the
Company, Mr. Mooney was a partner with Price Waterhouse LLP where he served in a
variety of positions including National Director of Cross Border Filing Services
with the Accounting, Auditing and SEC Services department since July 1, 1996,
Accounting and Business Advisory Services Department--Pittsburgh Site Leader
since 1988 and Client Service and Engagement Partner since 1985.
JAMES T. GIBBONS has been Vice President--Mergers and Acquisitions of
the Company since October 1997, and of WPSC since February 1994; Vice
President--Planning & Development of WPSC from April 1991 to February 1994;
Director--Reorganization Planning of WPSC from July 1987 to April 1991.
THOMAS R. NOTARO has been Vice President--Comptroller of the Company
since October 1997, and of WPSC since March 1997; Vice President--Information
Services and Assistant to the President of WPSC from February 1995 to March
1997; Vice President--Purchasing and Information Services of WPSC from February
1994 to February 1995; Vice President--Comptroller of WPSC from May 1993 to
February 1994; Comptroller of WPSC from July 1990 to May 1993.
JOHN W. TESTA has been Vice President, Assistant Secretary and
Treasurer of the Company since October 1997, and of WPSC since February 1994;
Vice President--Treasurer of WPSC since 1980.
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<PAGE>
RONALD LABOW has been a director of the Company since 1991. Mr. LaBow
has also been President of Stonehill Investment Corp. since February 1990. Mr.
LaBow is also a director of Regency Equities Corp., a real estate company, and
is Chairman of the Board of Directors of WHX.
ROBERT A. DAVIDOW has been a private investor since January 1990. Mr.
Davidow is also a director of Arden Group, Inc. and WHX.
MARVIN L. OLSHAN has been a director and Secretary of the Company since
1991 and a partner of Olshan Grundman Frome & Rosenzweig LLP since 1956. Mr.
Olshan is also a director of WHX.
The Company anticipates adding one independent director in the near
future, who will not be affiliated with WHX. Directors do not currently receive
any compensation for serving as directors.
In addition, the following table sets forth information regarding the
officers of WPSC:
Name Age Position
- -------------------- ------ -------------------------------------------------
John R. Scheessele 50 Chairman, President and Chief Executive Officer
Paul J. Mooney 46 Chief Financial Officer
James H. Bischoff 58 Vice President--Commercial
James E. Muldoon 54 Vice President--Purchasing
James T. Gibbons 46 Vice President--Mergers and Acquisitions
Daniel C. Keaton 47 Vice President--Human Resources
Paul K. Morrison 54 Vice President--Engineering and Environmental
Controls
Thomas R. Notaro 47 Vice President--Comptroller
Tom Patrick 58 Vice President--Wheeling Corrugating Company
John W. Testa 61 Vice President, Secretary and Treasurer
The business experience, principal occupations and employment as well
as the periods of service of each of the officers of WPSC during the last five
years, who are not also officers of WPC, are set forth below.
JAMES H. BISCHOFF has been Vice President--Commercial since August
1997. Mr. Bischoff was previously employed as Vice President--Sales and
Marketing for Quanex Corporation, a metal manufacturing and processing company,
since 1993. Prior to 1993, Mr. Bischoff was employed by Bethlehem Steel
Corporation for 32 years, most recently as District Sales Manager.
JAMES E. MULDOON has been Vice President--Purchasing since October
1997. Mr. Muldoon was previously employed with U.S. Steel Group of USX
Corporation for 34 years most recently as General Manager of Purchasing.
DANIEL C. KEATON has been Vice President--Human Resources since
February 1994; Vice President-- Employee Relations from April 1992 to February
1994; Director, Labor Relations from May 1991 to April 1992.
PAUL K. MORRISON has been Vice President--Engineering and Environmental
Controls since October 1990; Vice President--Engineering from February 1990 to
October 1990.
TOM PATRICK has been Vice President--Wheeling Corrugating since
February 1994; Vice President-- Operations from November 1992 to February 1994;
Vice President and General Manager--Finishing Operations from March 1990 to
November 1992.
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<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table.
The following table sets forth, for the fiscal years indicated, all
compensation awarded to, earned by or paid to (i) the chief executive officer
("CEO") of the Company for the fiscal year ended December 31, 1997 (Mr. James L.
Wareham, the President of the Company until February 1997 and Mr. John R.
Scheessele, the current President of the Company) and (ii) the four most highly
compensated executive officers of the Company other than the CEO whose salary
and bonus exceeded $100,000 with respect to the fiscal year ended December 31,
1997 and who were employed by the Company on December 31, 1997 (together with
the CEO, the "Named Executive Officers").
Summary Compensation Table(1)
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ----------------------
Other Annual Securities All other
Name and Principal Salary Bonus Compensation Underlying Compensation
Position Year ($) ($)(2) ($)(3) Options (#) ($)(4)
---------- ---- ----- ------ -------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
John R. Scheessele, 1997 358,974 -- 133,250(6) 240,000 49,333(7)
President (5) 1996 -- -- -- -- --
1995 -- -- -- -- --
James L. Wareham, 1997 66,667 -- 9,001(9) -- 4,260
President (8) 1996 400,000 -- -- -- 47,140(10)
1995 400,000 90,000 -- -- 46,825(10)
James G. Bradley, 1997 133,333 53,333(13) -- 65,000 5,260
Vice President(11) 1996 160,000 -- -- 10,000 2,922
1995 40,000(12) -- -- -- --
James T. Gibbons, 1997 101,200 25,300(13) -- -- 5,111
Vice President 1996 101,200 -- -- -- 3,613
1995 101,200 15,872 -- -- 3,421
John W. Testa, 1997 99,000 23,500(13) -- 15,000 18,040
Vice President 1996 94,000 -- -- -- 14,013
1995 94,000 14,742 -- -- 13,231
Thomas R. Notaro, 1997 95,700 23,925(13) -- 15,000 5,493
Vice President 1996 95,700 -- -- -- 5,354
1995 95,700 14,232 -- -- 3,622
</TABLE>
- ----------------------------
(1) All compensation data include compensation received by such executive
officer for services rendered to the Company, WHX and WPSC. Option
data reflect options to purchase shares of WHX Common Stock.
(2) Includes bonuses paid in 1996 for services rendered in the prior year
pursuant to the WPSC Management Incentive Program ("WPSC Management
Incentive Program") covering officers and salaried employees of WPSC.
Mr. Wareham was not eligible to participate in the WPSC Management
Incentive Program. Mr. Wareham's employment agreement provides for an
annual bonus to be awarded in the sole discretion of the Company. Mr.
Wareham was granted a bonus in 1996 for services rendered in the prior
year. All bonus amounts have been attributed to the year in which the
services were performed.
(3) Excludes perquisites and other personal benefits unless the aggregate
amount of such compensation exceeds the lesser of either $50,000 or
10% of the total of annual salary and bonus reported for such named
executive officer.
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<PAGE>
(4) Amounts shown, unless otherwise noted, reflect employer contributions
to WPSC Salaried Employees Pension Plan.
(5) Employment with the Company commenced in February 1997.
(6) Includes relocation allowance of $87,865 and membership dues of
$37,930.
(7) Includes insurance premiums paid by the Company in 1997 of $45,000.
(8) Resigned from employment with the Company in February 1997.
(9) Includes dues of $3,849 and financial planning fees of $4,081.
(10) Includes insurance premiums paid by the Company in 1996 and 1995 of
$40,000 annually.
(11) Resigned Chief Financial Officer position with the Company in October
1997.
(12) Employment with the Company commenced in October 1995.
(13) Represents retention bonus paid upon conclusion of the Strike.
Aggregated Option Exercises and Fiscal Year-End Option Value Table.
The following table sets forth certain information concerning
unexercised stock options held by the Named Executive Officers as of December
31, 1997.
OPTION GRANTS TABLE. The following table sets forth certain
information regarding stock option grants made to each of the Named Executive
Officers during the fiscal year ended December 31, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual Rates
of Stock Price Appreciation for
Individual Grants Option Term
----------------- -------------------------------
% of Total
Options
Number of Securities Granted to Exercise
Underlying Options Employees in Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date 5%($) 10%($)
---- ------------ ------------- ------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
John R. Scheessele 240,000 22.6% 13.8125 9/25/07 2,084,760 5,283,257
James L. Wareham 0 0% -- -- 0 0
James G. Bradley 65,000 6.1% 13.8125 9/25/07 564,623 1,430,882
James T. Gibbons 0 0% -- -- 0 0
John W. Testa 15,000 1.4% 13.8125 9/25/07 125,799 330,204
Thomas R. Notaro 15,000 1.4% 13.8125 9/25/07 125,799 330,204
</TABLE>
- -------------------
All options are to purchase shares of WHX Common Stock and were granted under
WHX's 1991 Incentive and Nonqualified Stock Option Plan and vest ratably over a
three-year period. This period commenced September 25, 1997.
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<PAGE>
Aggregated Option Exercises in Last Fiscal Year
And Fiscal Year-end Option Values(1)
------------------------------------
Number of Securities Value of Unexercised In-
Underlying Unexercised the-Money Options at
Options at 1997 Fiscal 1997 Fiscal Year-
Year-End(#) Exercisable/ End($)(1) Exercisable/
Unexercisable Unexercisable
NAME -------------------------- -------------------------
- ----
John R. Scheessele 0/240,000 0/0
James L. Wareham 0/0 0/0
James G. Bradley 0/65,000 0/0
James T. Gibbons 14,003/0 47,385/0
John W. Testa 8,753/15,000 28,447/0
Thomas R. Notaro 12,253/15,000 39,822/0
- ------------------
(1) On December 31, 1997, the last reported sales price of the Common
Stock of WHX as reported on the New York Stock Exchange Composite Tape
was $12.00.
Long-Term Incentive and Pension Plans.
The Company does not have any long-term incentive or defined benefit
pension plans.
Deferred Compensation Agreements.
Certain key employees of the Company were parties to deferred
compensation agreements and/or severance agreements. The deferred compensation
agreements generally provide that the employee is entitled to receive, over a
fifteen-year period commencing at the later of age 65 or termination of
employment, an amount equal to twice his base salary for the most recent
twelve-month period of his employment prior to January 3, 1996. The annual
benefits payable to Messrs. Gibbons, Testa and Notaro upon retirement was
$13,493, $12,533 and $12,760, respectively. Certain other deferred compensation
payments are payable by WPSC in certain circumstances, such as a demotion in job
status without good cause, death or as a result of a change of control of the
Company. Each of Messrs. Gibbons, Testa and Notaro is a party to a deferred
compensation agreement such as is described above. Except as described in this
paragraph, and in the next several paragraphs with respect to the employment
agreement of Messrs. Scheessele, Wareham and Mooney, no plan or arrangement
exists which results in compensation to a Named Executive Officer in excess of
$100,000 upon such officer's future termination of employment or upon a
change-of-control.
Employment Agreements.
Mr. John R. Scheessele commenced employment as President of the
Company, President of WHX and President, Chairman of the Board and Chief
Executive Officer of WPSC pursuant to a three-year employment agreement, dated
as of February 7, 1997, which is automatically extended for successive
three-year periods unless earlier terminated pursuant to the provisions of such
agreement. The agreement provides for an annual salary to Mr. Scheessele of
$400,000 and an annual bonus to be awarded in the sole discretion of the
Company. The Company will consider several factors in determining whether to pay
a bonus to Mr. Scheessele including the performance of Mr. Scheessele and the
resulting benefits to the Company and the overall performance of the Company as
measured by the guidelines specified in the employment agreement that are used
to determine the bonuses of other senior executives of the Company. In addition,
the employment agreement provides for Mr.
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<PAGE>
Scheessele to receive the cash surrender value of life insurance contracts
purchased by the Company upon termination of his employment. The employment
agreement provides that in the event Mr. Scheessele's employment is terminated
without cause or Mr. Scheessele voluntarily terminates his employment due to a
material change in the nature and scope of his authorities and duties after a
change in control of the Company occurs, he will be entitled to receive a
payment of $1,200,000, and other specified benefits for a period of one year
from the date of termination. Specified benefits under Mr. Scheessele's
employment agreement will be forfeited under certain circumstances.
Mr. Wareham was employed pursuant to an agreement that provided for an
annual salary to Mr. Wareham of $400,000 and an annual bonus awarded in the sole
discretion of the Company. In addition, the employment agreement provided for
Mr. Wareham to receive the cash surrender value of life insurance contracts
purchased by the Company upon termination of his employment. In February 1997,
Mr. Wareham resigned from his positions with the Company and was succeeded by
Mr. John R. Scheessele.
In November 1997, Mr. Frederick G. Chbosky resigned from his positions
as Chief Financial Officer of each of the Company, WHX and WPSC. In 1998, Mr.
Chbosky will receive from WPSC a severance payment of $128,100.
Mr. Paul J. Mooney commenced employment as Executive Vice President and
Chief Financial Officer of each of the Company, WHX and WPSC pursuant to a
three-year employment agreement, dated as of October 17, 1997, which is
automatically extended for successive three-year periods unless earlier
terminated pursuant to the provisions of such agreement. The agreement provides
for an annual salary to Mr. Mooney of $200,000 and an annual bonus to be awarded
in the sole discretion of the Company. The Company will consider several factors
in determining whether to pay a bonus to Mr. Mooney including the performance of
Mr. Mooney and the resulting benefits to the Company and the overall performance
of the Company as measured by the guidelines specified in the employment
agreement that are used to determine the bonuses of other senior executives of
the Company. In addition, the employment agreement provides for Mr. Mooney to
receive the cash surrender value of life insurance contracts purchased by the
Company upon termination of his employment. The employment agreement provides
that in the event Mr. Mooney's employment is terminated without cause or Mr.
Mooney voluntarily terminates his employment due to a material change in the
nature and scope of his authorities and duties after a change in control of the
Company occurs, he will be entitled to receive a payment of $600,000, and other
specified benefits for a period of one year from the date of termination.
Specified benefits under Mr. Mooney's employment agreement will be forfeited
under certain circumstances.
Compensation Committee Interlock and Insider Participation.
The Board of Directors of the Company is responsible for determining
compensation of the Company's executive officers. Mr. Olshan is a member of
Olshan Grundman Frome & Rosenzweig LLP, which has been retained as outside
general counsel to the Company since January 1991. Fees received from the
Company by such firm during the fiscal year ended December 31, 1997 did not
exceed 5% of the Company's or the firm's revenues.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS;
TRANSACTIONS BETWEEN THE COMPANY AND WHX
John R. Scheessele, President of the Company and WPSC and a director of
the Company and WPSC, and Akimune Takewaka, a director of WPSC, are directors of
Wheeling-Nisshin. Mr. Takewaka is also Chairman of the Board of
Wheeling-Nisshin. James D. Hesse, a former Vice President of the Company, is
President, Chief Executive Officer and a director of Wheeling-Nisshin. The
Company currently holds a 35.7% equity interest in Wheeling-Nisshin.
Marvin L. Olshan, a director and Secretary of the Company, is a member
of Olshan Grundman Frome & Rosenzweig LLP, which firm has been retained as
outside general counsel to the Company since January 1991. Fees received from
the Company by such firm during the fiscal year ended December 31, 1997 did not
exceed 5% of the Company's revenues.
The Company and WHX and WHX's affiliates have in the past entered into
intercompany transactions and agreements incident to their respective
businesses, and the Company and WHX may enter into material transactions and
agreements from time to time in the future. In connection with the November
Offering, the Company and WHX amended certain existing agreements, and also
entered into agreements with respect to the respective obligations that will be
assumed by each party. These agreements were not the result of arm's length
negotiations between the parties. It is possible that conflicts of interest
could arise between the Company and WHX in certain circumstances.
The following is a summary of certain agreements, arrangements and
transactions between the Company and WHX.
INDEMNIFICATION AND INTERCREDITOR AGREEMENT
Pursuant to the Indemnification Agreement (as defined), the Company has
agreed to indemnify WHX and hold WHX harmless from all liabilities relating to
the operations of the Company whether relating to or arising out of occurrences
prior to, on or after the closing ("Closing") of the November Offering, and
other obligations assumed at the Closing. Similarly, WHX has agreed to indemnify
the Company and hold the Company harmless from all liabilities relating to the
operations of the business of WHX, other than the business of the Company,
whether relating to or arising out of occurrences prior to, on or after the
Closing. To the extent WHX is called upon to make payments under its guarantees
of certain of the Company's indebtedness, the Company will indemnify it in
respect of such payments. To the extent the Company's actions cause a default
under the Revolving Credit Facility or the termination of the Receivables
Facility or a default under any other debt instrument of WHX or Unimast, the
Company will indemnify WHX and Unimast in respect of any incremental costs and
expenses suffered by WHX or Unimast on account thereof. The Company's
obligations under the Indemnification Agreement will be subordinate to the
Company's obligations under the Notes and the Term Loan Agreement. To the extent
WHX's or Unimast's actions cause a default under the Revolving Credit Facility
or the termination of the Receivables Facility or a default under any other debt
instrument of the Company, WHX and Unimast will indemnify the Company in respect
of any incremental costs and expenses and damages suffered by the Company on
account thereof. See "Indemnification and Intercreditor Agreement."
TAX SHARING AGREEMENT
The Company will be included in the consolidated federal income tax
returns filed by WHX during all periods in which it has been or will be a
wholly-owned subsidiary of WHX ("Affiliation Year"). The Company and WHX have
entered into an agreement (the "Tax Sharing Agreement") providing for the manner
of determining payments with respect to federal income tax liabilities and
benefits arising in Affiliation Years. Under the Tax Sharing Agreement, the
Company will pay to WHX an amount equal to the share of WHX's consolidated
federal income tax liability, generally determined on a separate return basis,
and WHX will pay the Company for any reduction in WHX's consolidated federal
income tax liability resulting from utilization or deemed utilization of
deductions, losses, and credits arising which are attributable to the Company,
in each case net of any amounts theretofore paid or credited by WHX or the
Company to the other with respect thereto. In the event that WHX's consolidated
federal income tax liability for any Affiliation Year is adjusted upon audit or
otherwise, the Company
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<PAGE>
will bear any additional liability or receive any refund which is attributable
to adjustments of items of income, deduction, gain, loss or credit of the
Company. WHX shall permit the Company to participate in any audits or litigation
with respect to Affiliation Years, but WHX will otherwise have exclusive and
sole responsibility and control over any such proceedings.
ADVANCES
From time to time WHX has made advances to the Company, principally to
fund working capital needs and interest payments on debt. The Company also has
made advances to WHX, from time to time, principally to fund the payment by WHX
of dividends on its outstanding preferred stock and the working capital needs of
Unimast. As of December 31, 1997, the Company had made advances to WHX in the
net amount of $28.0 million. All advances were repayable upon demand and did not
bear interest. To the extent the Company has net outstanding advances from WHX,
the Company's obligations to repay such advances will be subordinated to the
repayment obligations on the Notes.
MANAGEMENT AGREEMENT
Pursuant to a management agreement, as amended, between WHX and WPN, of
which Ronald LaBow, the Chairman of the Board of the Company is the sole
stockholder and an officer and director, WPN provides financial, management,
advisory and consulting services to WHX and the Company, subject to the
supervision and control of the independent directors of WHX. In 1996 and 1997,
WPN received a monthly fee of $458,333.33, with total payments of $5,500,000 in
1996 and 1997. Commencing on January 1, 1998, the Company has agreed to
contribute $2.5 million towards the payment of such annual fee in consideration
of services to be rendered to the Company.
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DESCRIPTION OF PRINCIPAL INDEBTEDNESS
REVOLVING CREDIT FACILITY
WPSC has a Revolving Credit Facility with Citibank, N.A. as agent. The
Revolving Credit Facility provides for borrowing for general corporate purposes
of up to $150 million, and with a $35 million sublimit for Letters of Credit.
The Revolving Credit Facility expires May 3, 1999. Borrowings under the
Revolving Credit Facility are secured primarily by inventory of the Company,
WPSC, PCC and WCP, subsidiaries of the Company, and Unimast. The terms of the
Revolving Credit Facility contain various restrictive covenants, limiting among
other things, dividend payments or other distributions of assets, as defined in
the Revolving Credit Facility. Certain financial covenants associated with
leverage, net worth, capital spending, cash flow and interest coverage must also
be maintained. The Company, PCC, WCP and Unimast have each guaranteed all of the
obligations of WPSC under the Revolving Credit Facility. Borrowings outstanding
against the Revolving Credit Facility at December 31, 1997 totaled $89.8
million.
The Revolving Credit Facility bears interest, payable monthly in
arrears, at the Citibank prime rate plus 1.0% and/or a Eurodollar rate margin
plus 2.25%, but the margin over the prime rate and the Eurodollar rate can
fluctuate up or down based upon performance. The maximum prime rate margin is
1.00% and the maximum Eurodollar margin is 2.25%. The letter of credit fee is
2.25% and is also performance-based.
WPSC also has a separate facility with Citibank, N.A. for letters of
credit up to $50 million. At December 31, 1997 letters of credit totaling $9.3
million were outstanding under this facility. The letters of credit are
collateralized at 105% with U.S. Government securities owned by the Company, and
are subject to an administrative charge of .4% per annum on the amount of
outstanding letters of credit.
TERM LOAN AGREEMENT
The Company entered into the Term Loan Agreement with DLJ Capital
Funding, Inc., as syndication agent, Donaldson, Lufkin & Jenrette Securities
Corporation, as arranger, Citicorp USA, Inc., as documentation agent, a
financial institution to be named as administrative agent and the lenders party
thereto on November 20, 1997, pursuant to which the Company borrowed $75.0
million. The net proceeds of the Term Loan Agreement were used, together with
the net proceeds of the November Offering, to defease the Old Notes and to
reduce borrowings under the Revolving Credit Facility.
The Term Loan Agreement matures on November 15, 2006. Amounts
outstanding under the Term Loan Agreement are expected to bear interest at
either (i) the Alternate Base Rate (as defined therein) plus 2.25% or (ii) the
LIBOR Rate (as defined therein) plus 3.25%, determined at the Company's option.
The Company's obligations under the Term Loan Agreement will be guaranteed by
the Company's Restricted Subsidiaries. The Company may prepay the obligations
under the Term Loan Agreement beginning on November 15, 1998, subject to a
premium of 2.0% of the principal amount thereof. Such premium declines to 1.0%
on November 15, 1999 with no premium on or after November 15, 2000.
The Term Loan Agreement contains customary representations and
warranties. Covenants and events of default under the Term Loan Agreement are
substantially similar to those described under "Description of the New
Notes--Certain Covenants" and "--Events of Default and Remedies." Lenders under
the Term Loan Agreement have customary voting, participation and assignment
rights.
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DESCRIPTION OF RECEIVABLES FACILITY
In August 1994 WPSC entered into an agreement to sell, up to $75
million on a revolving basis, an undivided percentage ownership in a designated
pool of accounts receivable generated by WPSC and two of its affiliates, WCP and
PCC. The agreement expires in August 1999. In July 1995, WPSC amended such
agreement to sell an additional $20 million on similar terms and conditions. In
October 1995, WPSC entered into an agreement to include the receivables
generated by Unimast, in the pool of accounts receivable sold. Accounts
receivable at December 31, 1996, exclude $45 million representing accounts
receivable sold with recourse limited to the extent of uncollectible balances.
As of December 31, 1997, fees paid by the Company ranged from 7.42% to 8.50% of
the outstanding amount of receivables sold. Based on the Company's collection
history, the Company believes that credit risk associated with the above
arrangement is immaterial. Accounts receivable sold pursuant to the Receivables
Facility at December 31, 1997 aggregated $69.0 million.
INDEMNIFICATION AND INTERCREDITOR AGREEMENT
Unimast, WHX and the Company entered into an intercreditor,
indemnification and subordination agreement (the "Indemnification Agreement")
upon the consummation of the November Offering which provides, among other
things, that Unimast and WHX will be responsible to the Company for repayment of
any of Unimast's borrowings under the Revolving Credit Facility and have agreed
to indemnify the Company if a default occurs under the Revolving Credit Facility
or if the Receivables Facility is terminated as a result of a breach of either
of such agreements by Unimast. In addition, the Company is solely responsible
for repayment of its borrowings under the Revolving Credit Facility and has
agreed to indemnify WHX and Unimast if a default occurs under the Revolving
Credit Facility or if the Receivables Facility is terminated as a result of a
breach of either of such agreements by the Company. The Company's obligations
under the Indemnification Agreement will be subordinate to the Company's
obligations under the Notes. See "Risk Factors--Cross-default Provisions."
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DESCRIPTION OF THE NEW NOTES
The Old Notes were issued under the Indenture among the Company, the
Guarantors and Bank One, N.A., as Trustee (in such capacity, the "Trustee"). The
New Notes will be issued under the Indenture, which will be qualified under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), upon the
effectiveness of the Registration Statement of which this Prospectus is a part.
The form and terms of the New Notes are the same in all material respects as the
form and terms of the Old Notes, except that the offer and sale of the New Notes
will have been registered under the Securities Act and, therefore, the New Notes
will not bear legends restricting transfer thereof. Upon the consummation of the
Exchange Offer, Holders of Notes will not be entitled to registration rights
under, or the contingent increase in interest rate provided pursuant to, the
Registration Rights Agreement. The New Notes will evidence the same debt as the
Old Notes and will be treated as a single class under the Indenture with any Old
Notes that remain outstanding.
The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act as in effect
on the date of the Indenture. The Notes are subject to all such terms and
reference is made to the Indenture and the Trust Indenture Act for a statement
thereof. A copy of the Indenture has been filed with the Commission as an
exhibit to the Registration Statement of which this Prospectus forms a part. The
following summary, which describes certain provisions of the Indenture and the
Notes, does not purport to be complete, although all material terms of such
documents are set forth herein, and is subject to, and is qualified in its
entirety by reference to, the Indenture and the Notes, including the definitions
therein of terms not defined herein and those terms made a part thereof by the
Trust Indenture Act. Whenever particular defined terms of the Indenture not
otherwise defined herein are referred to, such defined terms are incorporated
herein by reference.
PRINCIPAL, MATURITY AND INTEREST
The Notes are or will be senior unsecured obligations of the Company,
limited in aggregate principal amount to $275,000,000 and will mature on
November 15, 2007. Interest on the Notes will accrue at the rate of 9 1/4% per
annum and will be payable semi-annually in arrears on May 15 and November 15
(each, an "Interest Payment Date"), commencing on May 15, 1998, to holders of
record on the immediately preceding May 1 and November 1. Interest on the Notes
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of original issuance. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
Principal of and interest, premium (if any) and Liquidated Damages (if any) on
the Notes will be payable at the office or agency of the Company maintained for
such purpose or, at the option of the Company, payment may be made by check
mailed to holders of the Notes at their respective addresses set forth in the
register of holders; provided, however, that all payments with respect to Notes
the holders of which have given wire transfer instructions to the Company will
be required to be made by wire transfer of immediately available funds to the
accounts specified by the holders thereof. Until otherwise designated by the
Company, the Company's office or agency will be the office of the Trustee
maintained for such purpose. The Notes will be issued in denominations of $1,000
and integral multiples thereof.
RANKING
The Notes are or will be unsecured obligations of the Company, ranking
senior in right of payment to all existing and future subordinated indebtedness
of the Company and pari passu with all existing and future senior unsecured
indebtedness of the Company, including borrowings under the Term Loan Agreement.
The Notes will be effectively junior to secured indebtedness of the Company to
the extent of the assets securing the indebtedness, and to secured indebtedness
of Subsidiaries of the Company, to the extent of the assets of such
subsidiaries. See "--Guarantees." At December 31, 1997, the borrowings under the
Term Loan Agreement and the use of proceeds therefrom, there would have been an
aggregate of $56.8 million of indebtedness of Subsidiaries of the Company. In
addition, the Company would have had the ability to borrow an additional
approximately $94.5 million under the Revolving Credit Facility at December 31,
1997. Except to the extent of the Subsidiary Guarantees, holders of the Notes
would have been effectively subordinated to all such indebtedness of
Subsidiaries and trade payables of WPSC.
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GUARANTEES
The Company's payment obligations under the Notes are jointly and
severally guaranteed on a senior basis by all of the Company's present and
future Subsidiaries (excluding Unrestricted Subsidiaries) (the "Guarantors")
pursuant to the Subsidiary Guarantees. The Subsidiary Guarantees rank pari passu
in right of payment to all existing and future senior Indebtedness of the
Guarantors, including the Guarantors' obligations under the Revolving Credit
Facility, any successor credit facility and the Term Loan Agreement. Each
Subsidiary Guarantee is an unconditional and irrevocable guarantee of the
obligations of the Company under the Notes and the Indenture. The obligations of
each Guarantor under its Subsidiary Guarantee is limited to the maximum amount
that may be paid thereunder without resulting in such Subsidiary Guarantee being
deemed to constitute a fraudulent conveyance or a fraudulent transfer under
applicable law. See "Risk Factors--Fraudulent Conveyances; Possible Invalidity
of Subsidiary Guarantees." Each Guarantor that makes a payment or distribution
under its Subsidiary Guarantee shall be entitled to a contribution from each
other Guarantor so long as exercise of such right does not impair the rights of
holders of Notes under any Subsidiary Guarantee.
The Indenture provides that no Guarantor may consolidate with or merge
with or into (whether or not such Guarantor is the surviving person) or sell all
or substantially all of its assets to, another corporation, person or entity
whether or not affiliated with such Guarantor unless (a) subject to the
provisions of the following paragraph, the person formed by or surviving any
such consolidation or merger (if other than such Guarantor) assumes all of the
obligations of such Guarantor, pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee, under the Subsidiary Guarantee
of such Guarantor and the Indenture; (b) immediately after giving effect to such
transaction, no Default or Event of Default exists; (c) such Guarantor, or any
Person formed by or surviving any such consolidation or merger, would have
Consolidated Net Worth (immediately after giving effect to such transaction),
equal to or greater than the Consolidated Net Worth of the Guarantor immediately
preceding the transaction; and (d) the Company would be permitted, immediately
after giving effect to such transaction, to incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth
in the covenant described under the caption "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock." Notwithstanding the provisions of
this paragraph, the Indenture will not prohibit the merger of two of the
Guarantors or the merger of a Guarantor into the Company.
The Indenture provides that, in the event of a sale or other
disposition of all of the capital stock of any Guarantor (including by way of
merger or consolidation) or all of the assets of such Guarantor, then such
Guarantor (in the event of a sale or other disposition of all of the capital
stock of such Guarantor) or the corporation acquiring the property (in the event
of a sale or other disposition of all of the assets of such Guarantor) will be
released and relieved of any obligations under its Subsidiary Guarantee;
provided, however, that the Net Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of the Indenture. See
"--Repurchase at the Option of Holders--Asset Sales." In addition, the Indenture
will provide that, in the event the Board of Directors of the Company designates
a Guarantor to be an Unrestricted Subsidiary, then such Guarantor will be
released and relieved of any obligations under its Subsidiary Guarantee;
provided, however, that such designation is conducted in accordance with the
applicable provisions of the Indenture.
OPTIONAL REDEMPTION
The Notes will not be redeemable at the Company's option prior to
November 15, 2002. Thereafter, the Notes will be subject to redemption at any
time at the option of the Company, in whole or in part, upon not less than 30 or
more than 60 days' notice to each holder of Notes to be redeemed, at the
redemption prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest and Liquidated Damages, if any, thereon
to the applicable redemption date, if redeemed during the 12-month period
beginning on November 15 of the years indicated below:
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Year Percentage
---- ----------
2002...................... 104.625%
2003...................... 103.083%
2004...................... 101.542%
2005 and thereafter....... 100.000%
Notwithstanding the foregoing, on or prior to November 15, 2000, the
Company may redeem up to 35% of the aggregate principal amount of Notes
originally issued at a redemption price (expressed as a percentage of principal
amount) of 109.25% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the redemption date, with
the net cash proceeds of one or more Public Equity Offerings; provided, however,
that (a) at least 65% of the aggregate principal amount of Notes initially
issued remains outstanding immediately after the occurrence of each such
redemption and (b) such redemption occurs no later than 30 days following the
date of the consummation of such Public Equity Offering.
At any time prior to November 15, 2002, the Notes may also be redeemed
as a whole but not in part at the option of the Company, upon not less than 30
nor more than 60 days prior notice mailed by first-class mail to each Holder's
registered address, at a redemption price equal to 100% of the principal amount
thereof plus the Applicable Premium, accrued interest and Liquidated Damages, if
any, thereon to the redemption date (subject to the right of Holders of record
on the relevant record date to receive interest due on the relevant interest
payment date).
"Applicable Premium" means, with respect to a Note at any redemption
date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the
excess of (A) the present value at such time of (1) the redemption price of such
Note at November 15, 2002 plus (2) all required interest payments due on such
Note through November 15, 2002, computed using a discount rate equal to the
Treasury Rate plus 50 basis points, over (B) the then outstanding principal
amount of such Note.
"Treasury Rate" means the yield to maturity at the time of computation
of United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) most nearly equal to the
period from the redemption date to November 15, 2002; provided, however, that if
the period from the redemption date to November 15, 2002 is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the redemption date to November 15, 2002
is less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
SELECTION AND NOTICE
In the event that less than all of the Notes are to be redeemed at any
time, selection of Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed, or, if the Notes are not so listed, on a
pro rata basis, by lot or by such method as the Trustee shall deem fair and
appropriate; provided, however, that no Note shall be redeemed in a principal
amount that is less than $1,000. Notices of redemption shall be mailed by first
class mail at least 30 but not more than 60 days before the redemption date to
each holder of Notes to be redeemed at its registered address. If any Note is to
be redeemed in part only, the notice of redemption that relates to such Note
shall state the portion of the principal amount thereof to be redeemed and a new
Note in principal amount equal to the unredeemed portion of the original Note
shall be issued in the name of the holder thereof upon cancellation of the
original Note. On and after the redemption date, interest ceases to accrue on
Notes or portions of them called for redemption.
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MANDATORY REDEMPTION
Except as set forth below under "--Repurchase at the Option of
Holders," the Company is not required to make any mandatory redemption of or
sinking fund payments with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company will be
required to make an offer (a "Change of Control Offer") to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each holder's Notes at
an offer price in cash equal to 101% of the aggregate principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
date of repurchase (the "Change of Control Payment"). Within 30 days following a
Change of Control, the Company will mail a notice to each holder of Notes
describing the transaction that constitutes the Change of Control and offering
to repurchase Notes on the date specified in such notice, which date shall be no
earlier than 30 days and no later than 60 days from the date such notice is
mailed (the "Change of Control Payment Date"), pursuant to the procedures
required by the Indenture and described in such notice. The Company will comply
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of Notes as a
result of a Change of Control.
On or before the Change of Control Payment Date, the Company will, to
the extent lawful, (a) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (b) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (c) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an officer's certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided, however, that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that permit the holders of the Notes to
require that the Company repurchase or redeem the Notes in the event of a
takeover, recapitalization or similar transaction. In addition, the Company
could enter into certain transactions, including acquisitions, refinancings or
other recapitalizations, that could affect the Company's capital structure or
the value of the Notes, but that would not constitute a Change of Control. The
Company's ability to repurchase Notes following a Change of Control may also be
limited by the Company's then existing financial resources.
The Company will not be required to make a Change of Control Offer
following a Change of Control if a third party makes the Change of Control Offer
in the manner, at the times and otherwise in compliance with the requirements
set forth in the Indenture applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
A "Change of Control" will be deemed to have occurred upon the
occurrence of any of the following: (a) the sale, lease, transfer, conveyance or
other disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the assets of the
Company and its Restricted Subsidiaries, taken as a whole, to any person (as
such term in used in Section 13(d)(3) of the Exchange Act), (b) the adoption of
a plan relating to the liquidation or dissolution of the Company, (c) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" or "group" (as such
terms are used in Section 13(d)(3) of the Exchange Act) other than WHX or an
underwriter or group of underwriters in an underwritten public offering becomes
the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5
under the Exchange Act), directly or indirectly through one or more
intermediaries, of at least 50% of the voting power of the outstanding voting
stock of the Company, (d) the merger or consolidation
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of the Company with or into another corporation with the effect that the then
existing stockholders of the Company hold less than 50% of the combined voting
power of the then outstanding voting securities of the surviving corporation of
such merger or the corporation resulting from such consolidation or (e) the
first day on which more than a majority of the members of the Board of Directors
of the Company are not Continuing Directors.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (a) was a member of the
Board of Directors of the Company on the date of original issuance of the Notes
or (b) was nominated for election to the Board of Directors of the Company with
the approval of, or whose election to the Board of Directors of the Company was
ratified by, at least a majority of the Continuing Directors who were members of
the Board of Directors of the Company at the time of such nomination or election
or by WHX so long as WHX owns a majority of the Capital Stock of the Company.
ASSET SALES
The Indenture provides that the Company will not, and will not permit
any of its Restricted Subsidiaries to, consummate an Asset Sale unless (a) the
Company or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors of the Company set
forth in an officer's certificate delivered to the Trustee) of the assets or
Equity Interests issued or sold or otherwise disposed of and (b) at least 80% of
the consideration therefor received by the Company or such Restricted Subsidiary
is in the form of cash; provided, however, that the amount of (i) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet) of the Company or such Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Notes or any guarantee thereof) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases the Company
or such Restricted Subsidiary from further liability and (ii) any securities,
notes or other obligations received by the Company or such Restricted Subsidiary
from such transferee that are converted by the Company or such Restricted
Subsidiary within 30 days of receipt into cash (to the extent of the cash
received) shall be deemed to be cash for purposes of this provision.
Within 270 days after the receipt of any Net Proceeds from an Asset
Sale, the Company or any such Restricted Subsidiary shall apply such Net
Proceeds to reduce Indebtedness under the Revolving Credit Facility or other
pari passu Indebtedness (and, in the case of such other pari passu Indebtedness,
to correspondingly reduce commitments with respect thereto). To the extent such
Net Proceeds are not utilized as contemplated in the preceding sentence, such
Net Proceeds may, within 270 days after receipt thereof, be utilized to acquire
Replacement Assets. Pending the final application of any such Net Proceeds, the
Company or any such Restricted Subsidiary may otherwise invest such Net Proceeds
in any manner that is not prohibited by the Indenture. Any Net Proceeds from
Asset Sales that are not applied or invested as provided in this paragraph will
be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $20 million, the
Company will be required to make an offer to all holders of Notes (an "Asset
Sale Offer") to purchase the maximum principal amount of Notes that may be
purchased out of the Note Pro Rata Share of Excess Proceeds at an offer price in
cash in an amount equal to 100% of the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages, if any, thereon to the date of
purchase, in accordance with the procedures set forth in the Indenture. To the
extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the amount that the Company is required to repurchase, the
Company may use any remaining Excess Proceeds for general corporate purposes. If
the aggregate amount of Notes surrendered by holders thereof exceeds the amount
that the Company is required to repurchase, the Trustee shall select the Notes
to be purchased on a pro rata basis. Upon completion of such offer to purchase,
the amount of Excess Proceeds shall be reset at zero.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Indenture provides that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, (a) declare or
pay any dividend or make any other payment or distribution on account of
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the Company's or any of its Restricted Subsidiaries' Equity Interests
(including, without limitation, any payment in connection with any merger or
consolidation involving the Company) or to the direct or indirect holders of the
Company's Equity Interests in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of the
Company); (b) purchase, redeem or otherwise acquire or retire for value
(including without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company (other than any such
Equity Interests owned by the Company or any Wholly Owned Restricted Subsidiary
of the Company); (c) make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value, any Indebtedness that
is subordinated in right of payment to the Notes, except a payment of interest
or principal at Stated Maturity; or (d) make any Restricted Investment (all such
payments and other actions set forth in clauses (a) through (d) above being
collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment:
(i) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(ii) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the applicable four-quarter period,
have been permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Consolidated Interest Coverage Ratio test set forth in
the first paragraph of the covenant described under the caption "--
Incurrence of Indebtedness and Issuance of Preferred Stock"; and
(iii) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Company and its
Restricted Subsidiaries after the date of the Indenture, is less than
the sum of (A) 50% of the Consolidated Net Income of the Company for
the period (taken as one accounting period) commencing April 1, 1998 to
the end of the Company's most recently ended fiscal quarter for which
internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such period
is a deficit, less 100% of such deficit), plus (B) 100% of the
aggregate Net Cash Proceeds received by the Company from the issue or
sale since the date of the Indenture of Equity Interests of the Company
(other than Disqualified Stock) or of Disqualified Stock or debt
securities of the Company that have been converted into such Equity
Interests (other than any such Equity Interests, Disqualified Stock or
convertible debt securities sold to a Restricted Subsidiary of the
Company and other than Disqualified Stock or convertible debt
securities that have been converted into Disqualified Stock), plus (C)
to the extent that any Restricted Investment that was made after the
date of the Indenture is sold for cash or otherwise liquidated or
repaid for cash, the sum of (x) the initial amount of such Restricted
Investment and (y) 50% of the aggregate Net Proceeds received by the
Company or any Restricted Subsidiary in excess of the initial amount of
such Restricted Investment, plus (D) $10 million.
The foregoing provisions do not prohibit (a) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of the
Indenture; (b) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Restricted Subsidiary of the Company) of, other Equity
Interests of the Company (other than any Disqualified Stock); provided that the
amount of any such Net Cash Proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition shall be excluded from
clause (iii) (B) of the preceding paragraph; (c) the defeasance, redemption,
repurchase, retirement or other acquisition of subordinated Indebtedness with
the Net Cash Proceeds from an incurrence of, or in exchange for, Permitted
Refinancing Indebtedness; (d) the payment of any dividend by a Restricted
Subsidiary of the Company to the holders of its Equity Interests on a pro rata
basis; (e) so long as no Default or Event of Default shall have occurred and be
continuing, the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company held by any member of the Company's
or any of its Restricted Subsidiaries' management upon the death, disability or
termination of employment of such member of management; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $500,000 in any calendar year and $2.5 million
in the aggregate; (f) loans or advances to Unimast by the Company or WPSC prior
to the first anniversary of the date of the Indenture of amounts borrowed by
WPSC under the Revolving Credit Facility provided (i) such loans or advances do
not exceed $40 million at any time outstanding, (ii) Unimast pays interest
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to WPSC on such loans or advances in an amount equal to the interest payable by
WPSC on such amounts pursuant to the Revolving Credit Facility and (iii) such
loans and advances are repaid in full on or prior to the first anniversary of
the date of the Indenture; (g) the payment by the Company of management fees to
WHX not to exceed $2.5 million in any calendar year, in exchange for services
provided to it by WPN pursuant to the management agreement between WHX and WPN;
and (h) payments permitted under the WHX Agreements.
In determining the amount of Restricted Payments permissible under
clause (iii) of the first paragraph of this covenant, amounts expended pursuant
to clauses (a) and (e) of the immediately preceding paragraph shall be included
as Restricted Payments for purposes of such clause (iii).
The Board of Directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not cause
a Default. For purposes of making such determination, all outstanding
Investments by the Company and its Restricted Subsidiaries (except to the extent
repaid in cash) in the Subsidiary so designated will be deemed to be Restricted
Payments at the time of such designation. All such outstanding Investments will
be deemed to constitute Investments in an amount equal to the greater of (a) the
net book value of such Investments at the time of such designation and (b) the
fair market value of such Investments at the time of such designation. Such
designation will be permitted only if such Restricted Payment would be permitted
at such time and if such Restricted Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined by
the Board of Directors of the Company whose resolution with respect thereto
shall be delivered to the Trustee. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an officer's
certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by the covenant described in this
section were computed.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Indenture provides that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, incur,
issue, assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Indebtedness) and that the Company will not
permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company may incur Indebtedness if the
Consolidated Interest Coverage Ratio for the Company's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
would have been at least 2.00 to 1, on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred at the beginning of such four-quarter period.
Notwithstanding the foregoing, the Company and, to the extent set forth
below, its Restricted Subsidiaries may incur the following (each of which shall
be given independent effect):
(a) Indebtedness of the Company under the Notes and the
Indenture;
(b) Permitted Working Capital Indebtedness of the Company and
its Restricted Subsidiaries;
(c) Existing Indebtedness (other than Permitted Working
Capital Indebtedness and Indebtedness under the Letter of Credit
Facility);
(d) Indebtedness of the Company and its Restricted
Subsidiaries under the Letter of Credit Facility;
(e) Capital Expenditure Indebtedness, Capitalized Lease
Obligations and purchase money Indebtedness of the Company and its
Restricted Subsidiaries in an aggregate principal amount not to exceed
$50 million at any time outstanding;
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(f) (i) Hedging Obligations of the Company and its Restricted
Subsidiaries covering Indebtedness of the Company or such Restricted
Subsidiary (which Indebtedness is otherwise permitted to be incurred
under this covenant) to the extent the notional principal amount of any
such Hedging Obligation does not exceed the principal amount of the
Indebtedness to which such Hedging Obligation relates; or (ii)
repurchase agreements, reverse repurchase agreements or similar
agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by
any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition; provided that the terms of such agreements comply with the
guidelines set forth in Federal--Financial Agreements of Depository
Institutions with Securities and Others (or any successor guidelines),
as adopted by the Comptroller of the Currency;
(g) Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $30 million
at any time outstanding;
(h) Indebtedness of the Company representing guarantees of
Indebtedness incurred by one of its Restricted Subsidiaries pursuant
to, and in compliance with, another provision of this covenant;
(i) Indebtedness of the Company or any of its Restricted
Subsidiaries representing guarantees of a portion of the Indebtedness
of Wheeling-Nisshin which is not greater than the Company's or such
Restricted Subsidiary's pro rata ownership of the outstanding Equity
Interests in Wheeling-Nisshin; provided, however, that (i) such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all Obligations with respect to the Notes and (ii) at the time
of incurrence and after giving effect to the Indebtedness of
Wheeling-Nisshin which is being guaranteed, the Consolidated Interest
Coverage Ratio of Wheeling-Nisshin for its most recently ended four
full fiscal quarters for which internal financial statements are
available would have been at least 2.00 to 1, determined on a pro forma
basis as if any additional Indebtedness had been incurred at the
beginning of such four quarter period;
(j) Indebtedness of the Company or its Restricted Subsidiaries
representing guarantees of Indebtedness of Wheeling-Nisshin required to
be made pursuant to the Letter of Undertaking not to exceed $10
million;
(k) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company
and any of its Wholly Owned Restricted Subsidiaries; provided, however,
that (i) if the Company is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all Obligations with respect to the Notes and (ii) (A) any
subsequent issuance or transfer of Equity Interests that results in any
such Indebtedness being held by a Person other than the Company or a
Wholly Owned Restricted Subsidiary and (B) any sale or other transfer
of any such Indebtedness to a Person that is not either the Company or
a Wholly Owned Restricted Subsidiary shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be;
(l) Indebtedness under the Term Loan Agreement; and
(m) any Permitted Refinancing Indebtedness representing a
replacement, renewal, refinancing or extension of Indebtedness
permitted under the first paragraph and clauses (c) and (l) of this
covenant.
LIENS
The Indenture provides that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or suffer to exist any Lien on any asset now owned or hereafter acquired,
or any income or profits therefrom or assign or convey any right to receive
income therefrom, without making effective provision for all payments due under
the Indenture and the Notes and the Subsidiary Guarantees to be directly secured
on an equal and ratable basis with the obligations so secured or, in the event
such Indebtedness is subordinate in right of payment to the Notes or the
Subsidiary Guarantees, prior to such Indebtedness, in each case until such time
as such obligations are no longer secured by a Lien.
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Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries may create, incur, assume or suffer to exist (each of which shall
be given independent effect):
(a) Permitted Liens;
(b) Liens to secure the payment of Capital Expenditure
Indebtedness and Capitalized Lease Obligations, provided that (i) the
aggregate principal amount of Indebtedness secured by such Liens shall
not exceed the lesser of cost or Fair Market Value of the assets or
property acquired, constructed or improved with the proceeds of such
Indebtedness and (ii) such Liens shall not encumber any other assets or
property of the company and its Subsidiaries;
(c) Liens secured by the Capital Stock or assets of
Wheeling-Nisshin or Ohio Coatings Company to the extent required under
agreements as existing on the date of the Indenture; and
(d) Liens on accounts receivable, inventory, intangibles
necessary or useful for the sale of such inventory, and other current
assets of the Company or any Restricted Subsidiary or on Capital Stock
of Subsidiaries, in each case incurred to secure Permitted Working
Capital Indebtedness.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Indenture provides that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary to (a) (i) pay dividends
or make any other distributions to the Company or any of its Restricted
Subsidiaries on its Capital Stock or with respect to any other interest or
participation in, or measured by, its profits, or (ii) pay any indebtedness owed
to the Company or any of its Restricted Subsidiaries, (b) make loans or advances
to the Company or any of its Restricted Subsidiaries or (c) transfer any of its
properties or assets to the Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (1)
Existing Indebtedness as in effect on the date of the Indenture including,
without limitation, restrictions under the Revolving Credit Facility, as in
effect on the date of the Indenture and any refinancings, amendments,
restatements, renewals or replacements thereof; provided, however, that the
agreements governing such contain restrictions that are not more restrictive,
taken as a whole, than those contained in the agreement governing the
Indebtedness being so refinanced, amended, restated, renewed or replaced (2) the
Indenture, the Notes and the Subsidiary Guarantees, (3) applicable law, (4) any
instrument governing Indebtedness or Capital Stock of a person acquired by the
Company or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such acquisition), which encumbrance or restriction
is not applicable to any person, or the properties or assets of any person,
other than the person, or the property or assets of the person, so acquired,
provided that, in the case of Indebtedness, such Indebtedness was permitted by
the terms of the Indenture to be incurred, (5) customary non-assignment
provisions in leases entered into in the ordinary course of business and
consistent with past practices, (6) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in clause (c) above on the property so acquired, (7) customary
provisions in bona fide contracts for the sale of property or assets, or (8)
Permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are not more
restrictive, taken as a whole, than those contained in the agreements governing
the Indebtedness being refinanced.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indenture provides that the Company may not consolidate or merge
with or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions, to another
corporation, person or entity unless (a) the Company is the surviving
corporation or the entity or the person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia, (b) the entity or person formed
by or surviving any
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such consolidation or merger (if other than the Company) or the entity or person
to which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the Notes
and the Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee, (c) immediately after such transaction no Default
or Event of Default exists and (d) except in the case of a merger of the Company
with or into a Wholly Owned Restricted Subsidiary of the Company, the Company or
the entity or person formed by or surviving any such consolidation or merger (if
other than the Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (A) will have Consolidated
Net Worth immediately after the transaction equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the transaction and
(B) will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth
in the first paragraph of the covenant described above under the caption
"--Incurrence of Indebtedness and Issuance of Preferred Stock."
TRANSACTIONS WITH AFFILIATES
The Indenture provides that the Company will not, and will not permit
any of its Restricted Subsidiaries to, make any payment to, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or purchase
any property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate or any officer, director or employee of the Company
(each of the foregoing, an "Affiliate Transaction"), unless (a) such Affiliate
Transaction is on terms that are no less favorable to the Company or the
relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated person or, if there is no such comparable transaction, on terms that
are fair and reasonable to the Company, and (b) the Company delivers to the
Trustee (i) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $2.0
million, either (A) a resolution of the Board of Directors of the Company set
forth in an officer's certificate certifying that such Affiliate Transaction
complies with clause (a) above and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of Directors of
the Company or (B) if there are no disinterested members of the Board of
Directors of the Company, an opinion as to the fairness to the Company of such
Affiliate Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing and (ii) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $5.0 million, an opinion as to
the fairness to the Company of such Affiliate Transaction from a financial point
of view issued by an accounting, appraisal or investment banking firm of
national standing; provided, however, that the following shall be deemed not to
be Affiliate Transactions: (v) customary directors' fees, indemnification or
similar arrangements or any employment agreement or other compensation plan or
arrangement entered into by the Company or any of its Restricted Subsidiaries in
the ordinary course of business and consistent with the past practice of the
Company or such Restricted Subsidiary; (w) transactions between or among the
Company and/or its Wholly-Owned Restricted Subsidiaries; (x) transactions
pursuant to the WHX Agreements or agreements with or applicable to any of
Wheeling-Nisshin, Ohio Coatings Company, the Empire-Iron Mining Partnership or
W-P Coal Company, in each case as in effect on the date of the Indenture; (y)
the purchase of accounts receivable from Unimast for immediate resale on the
same terms pursuant to the Receivables Facility; and (z) Restricted Payments
that are permitted pursuant to clauses (e), (f), (g) and (h) of the second
paragraph of the covenant described under the heading "--Restricted Payments"
and Indebtedness permitted to be incurred pursuant to clauses (i) and (j) of the
second paragraph of the covenant described under the heading "--Incurrence of
Indebtedness and Issuance of Preferred Stock."
SALE AND LEASEBACK TRANSACTIONS
The Indenture provides that the Company will not, and will not permit
any of its Restricted Subsidiaries to, enter into any sale and leaseback
transaction; provided, however, that the Company may enter into a sale and
leaseback transaction if (a) the Company could have (i) incurred Indebtedness in
an amount equal to the Attributable Indebtedness relating to such sale and
leaseback transaction pursuant to the Consolidated Interest Coverage Ratio test
set forth in the first paragraph of the covenant described under the heading
"--Incurrence of Indebtedness and Issuance of Preferred Stock" and (ii) incurred
a Lien to secure such Indebtedness pursuant to the covenant described
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above under the heading "--Liens," (b) the gross cash proceeds of such sale and
leaseback transaction are at least equal to the fair market value (as determined
in good faith by the Board of Directors of the Company and set forth in an
officer's certificate delivered to the Trustee) of the property that is the
subject of such sale and leaseback transaction and (c) the transfer of assets in
such sale and leaseback transaction is permitted by, and the Company applies the
Net Cash Proceeds of such transaction in compliance with, the covenant described
under the heading "--Repurchase at the Option of Holders--Asset Sales."
ISSUANCES AND SALES OF CAPITAL STOCK OF SUBSIDIARIES
The Indenture provides that the Company (a) will not permit any Wholly
Owned Restricted Subsidiary of the Company to issue any of its Equity Interests
to any person other than to the Company or a Wholly Owned Restricted Subsidiary
of the Company, and (b) will not, and will not permit any Wholly Owned
Restricted Subsidiary of the Company to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Wholly Owned Restricted Subsidiary
of the Company to any person (other than the Company or any Wholly Owned
Restricted Subsidiary of the Company) unless (i) such transfer, conveyance,
sale, lease or other disposition is of all of the Capital Stock of such Wholly
Owned Restricted Subsidiary and (ii) the Net Proceeds from such transfer,
conveyance, sale, lease or other disposition are applied in accordance with the
covenant described under the caption "--Repurchase at the Option of
Holders--Asset Sales"; provided that this clause (b) shall not apply to any
pledge of Capital Stock of any Wholly Owned Restricted Subsidiary of the Company
permitted pursuant to clause (d) of the covenant described under the caption
"--Liens."
ADDITIONAL SUBSIDIARY GUARANTEES
The Indenture provides that if the Company or any of its Restricted
Subsidiaries shall, after the date of the Indenture, acquire, create or
designate another Restricted Subsidiary, then such newly acquired, created or
designated Restricted Subsidiary shall execute a Subsidiary Guarantee and
deliver an opinion of counsel in accordance with the terms of the Indenture.
PAYMENT FOR CONSENT
The Indenture provides that neither the Company nor any of its
Restricted Subsidiaries will, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any holder
of any Notes for or as an inducement to any consent, waiver or amendment of any
of the terms or provisions of the Indenture or the Notes unless such
consideration is offered to be paid or is paid to all holders of the Notes that
consent, waive or agree to amend in the timeframe set forth in the solicitation
statement documents relating to such consent, waiver or agreement.
REPORTS
The Indenture provides that, whether or not the Company is required to
do so by the rules and regulations of the Commission, the Company will file with
the Commission (unless the Commission will not accept such a filing) and, within
15 days of filing, or attempting to file, the same with the Commission, furnish
to the holders of the Notes (a) all quarterly and annual financial and other
information with respect to the Company and its Subsidiaries that would be
required to be contained in a filing with the Commission on Forms 10-Q and 10-K
if the Company were required to file such forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by the Company's
certified independent accountants, and (b) all current reports that would be
required to be filed with the Commission on Form 8-K if the Company were
required to file such reports. In addition, the Company and the Guarantors will
furnish to the holders of the Notes, prospective purchasers of the Notes and
securities analysts, upon their request, the information, if any, required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event
of Default: (a) default in the payment when due of interest or Liquidated
Damages on the Notes and such default continues for 30 days; (b) default in
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payment when due of the principal of or premium (if any) on the Notes; (c)
failure by the Company to comply with the provisions described under the
captions "--Repurchase at the Option of Holders--Change of Control," "--Asset
Sales," "--Certain Covenants--Restricted Payments," "--Incurrence of
Indebtedness and Issuance of Preferred Stock" or "--Merger, Consolidation or
Sale of Assets"; (d) failure by the Company for 30 days after notice to comply
with any of its other agreements in the Indenture or the Notes; (e) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries), whether such
Indebtedness or guarantee now exists or is created after the date of the
Indenture, which default (i) is caused by a failure to pay principal of or
premium (if any) or interest on such Indebtedness prior to the expiration of any
grace period provided in such Indebtedness (a "Payment Default") or (ii) results
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$10.0 million or more; (f) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments aggregating in excess of $10.0 million,
which judgments are not paid, discharged or stayed for a period of 60 days; (g)
failure by any Guarantor to perform any covenant set forth in its Subsidiary
Guarantee, or the repudiation by any Guarantor of its obligations under its
Subsidiary Guarantee or the unenforceability of any Subsidiary Guarantee against
a Guarantor for any reason, unless, in each such case, such Guarantor and its
Subsidiaries have no Indebtedness outstanding at such time or at any time
thereafter; and (h) certain events of bankruptcy or insolvency with respect to
the Company or any of its Restricted Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Company, any Significant Subsidiary
or any group of Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding Notes will become due and payable
without further action or notice. Holders of the Notes may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to
November 15, 2002 by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to such date, then the premium
specified in the Indenture shall also become immediately due and payable to the
extent permitted by law upon the acceleration of the Notes.
The holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of the principal of or interest or Liquidated Damages on the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the
Company, as such, shall have any liability for any obligations of the Company
under the Notes or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each holder of Notes by accepting
a Note waives and releases all such liability. The waiver and release are part
of the consideration for issuance of the Notes. Such waiver may
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not be effective to waive liabilities under the federal securities laws and it
is the view of the Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of
its obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for (a) the rights of holders of outstanding Notes to
receive payments in respect of the principal of and interest, premium (if any)
and Liquidated Damages (if any) on such Notes when such payments are due from
the trust referred to below, (b) the Company's obligations with respect to the
Notes concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or agency for
payment and money for security payments held in trust, (c) the rights, powers,
trusts, duties and immunities of the Trustee, and the Company's obligations in
connection therewith and (d) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the
obligations of the Company released with respect to certain covenants that are
described in the Indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "--Events of Default and
Remedies" will no longer constitute an Event of Default with respect to the
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance,
(i) the Company must irrevocably deposit with the Trustee, in trust, for the
benefit of the holders of the Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of and interest, premium (if any) and
Liquidated Damages (if any) on the outstanding Notes on the stated maturity or
on the applicable redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
redemption date, (ii) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that (A) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or (B) since
the date of the Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
opinion of counsel shall confirm that, the holders of the outstanding Notes will
not recognize income, gain or loss for federal income tax purposes as a result
of such Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred, (iii) in the case of Covenant
Defeasance, the Company shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to the Trustee confirming
that the holders of the outstanding Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Covenant Defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Covenant Defeasance
had not occurred, (iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit), (v) such
Legal Defeasance or Covenant Defeasance will not result in a breach or violation
of, or constitute a default under any material agreement or instrument (other
than the Indenture) to which the Company or any of its Restricted Subsidiaries
is a party or by which the Company or any of its Restricted Subsidiaries is
bound, (vi) the Company must have delivered to the Trustee an opinion of counsel
to the effect that the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (vii) the Company must deliver to the Trustee an
officer's certificate stating that the deposit was not made by the Company with
the intent of preferring the holders of Notes over the other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others and (viii) the Company must deliver to the
Trustee an officer's certificate and an opinion of counsel, each stating that
all conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A holder of Notes may transfer or exchange Notes in accordance with the
Indenture. The registrar and the Trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a holder to pay any taxes and fees required by law or
permitted by the Indenture. The
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Company is not required to transfer or exchange any Note selected for
redemption. Also, the Company is not required to transfer or exchange any Note
for a period of 15 days before a selection of Notes to be redeemed.
The registered holder of a Note will be treated as the owner of it for
all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided below, the Indenture or the Notes may be amended or
supplemented with the consent of the holders of at least a majority in principal
amount of the Notes then outstanding (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Notes), and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes).
Without the consent of each holder affected, an amendment or waiver may
not (with respect to any Notes held by a non-consenting Holder): (a) reduce the
principal amount of Notes whose holders must consent to an amendment, supplement
or waiver, (b) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (including
as described under the caption "--Repurchase at the Option of Holders"), (c)
reduce the rate of or change the time for payment of interest on any Note, (d)
waive a Default or Event of Default in the payment of principal of or interest,
premium (if any) or Liquidated Damages (if any) on the Notes (except a
rescission of acceleration of the Notes by the holders of at least a majority in
aggregate principal amount of the Notes and a waiver of the payment default that
resulted from such acceleration), (e) make any Note payable in money other than
that stated in the Notes, (f) make any change in the provisions of the Indenture
relating to waivers of past Defaults or the rights of holders of Notes to
receive payments of principal of or interest, premium (if any) or Liquidated
Damages (if any) on the Notes, (g) waive a redemption payment with respect to
any Note (including a payment as described under the caption "--Repurchase of
the Option of Holders"), (h) make any change in the foregoing amendment and
waiver provisions, (i) modify the ranking or priority of the Notes or the
Subsidiary Guarantees in any manner adverse to the Holders or (j) except as
provided in the Indenture, release any Guarantor from its obligations under its
Subsidiary Guarantee, or change any Subsidiary Guarantee in any manner that
would adversely affect the Holders.
Notwithstanding the foregoing, without the consent of any holder of
Notes, the Company and the Trustee may amend or supplement the Indenture or the
Notes to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to holders of Notes in
the case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the holders of Notes or that does not adversely
affect the legal rights under the Indenture of any such holder, or to comply
with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the
Trustee, should it become a creditor of the Company, to obtain payment of claims
in certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions; however, if it acquires any conflicting interest it must
eliminate such conflict within 90 days and apply to the Commission for
permission to continue or resign.
The holders of a majority in principal amount of the then outstanding
Notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any holder of Notes, unless such holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
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ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the form of
Indenture and Registration Rights Agreement without charge by writing to
Wheeling-Pittsburgh Corporation, attention: Treasurer.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture.
Reference is made to the Indenture for a full disclosure of all such terms, as
well as any other capitalized terms used herein for which no definition is
provided.
"Acquired Indebtedness" means, with respect to any specified person,
(i) Indebtedness of any other person existing at the time such other person is
merged with or into or became a Restricted Subsidiary of such specified person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other person merging with or into or becoming a
Restricted Subsidiary of such specified person, and (ii) Indebtedness secured by
a Lien encumbering an asset acquired by such specified person at the time such
asset is acquired by such specified person.
"Affiliate" of any specified Person means any other Person which,
directly or indirectly, controls, is controlled by or is under direct or
indirect common control with, such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
provided that beneficial ownership of 10% or more of the voting securities of a
person shall be deemed to be control, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Asset Sale" means the sale, lease, conveyance, disposition or other
transfer (a "disposition") of any properties, assets or rights (including,
without limitation, a sale and leaseback transaction or the issuance, sale or
transfer by the Company of Equity Interests of a Restricted Subsidiary) whether
in a single transaction or a series of related transactions; provided, however,
that the following transactions will be deemed not to be Asset Sales: (a) sales
of inventory in the ordinary course of business; (b) a disposition of assets by
the Company to a Wholly Owned Restricted Subsidiary or by a Wholly Owned
Restricted Subsidiary of the Company to the Company or to another Wholly Owned
Restricted Subsidiary of the Company; (c) a disposition of Equity Interests by a
Wholly Owned Restricted Subsidiary of the Company to the Company or to another
Wholly Owned Restricted Subsidiary of the Company; (d) a Permitted Investment or
Restricted Payment that is permitted by the Indenture; (e) the issuance by the
Company of Equity Interests; (f) the disposition of properties, assets or rights
in any fiscal year the aggregate Net Proceeds of which are less than $1 million;
and (g) the sale of accounts receivable pursuant to the Receivables Facility.
"Attributable Indebtedness" in respect of a sale and leaseback
transaction means, at the time of determination, the present value (discounted
at the rate of interest implicit in such transaction, determined in accordance
with GAAP) of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended).
"Capital Expenditure Indebtedness" means Indebtedness incurred by any
Person to finance the purchase or construction of any property or assets
acquired or constructed by such Person which have a useful life of more than one
year so long as (a) the purchase or construction price for such property or
assets is included in "addition to property, plant or equipment" in accordance
with GAAP, (b) the acquisition or construction of such property or assets is not
part of any acquisition of a Person or line of business and (c) such
Indebtedness is incurred within 90 days of the acquisition or completion of
construction of such property or assets.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
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"Capital Stock" means (a) in the case of a corporation, corporate
stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (d) any
other interest or participation that confers on a person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
person.
"Cash Equivalents" means (a) United States dollars, (b) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (c) certificates of deposit
and eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any domestic commercial bank
having capital and surplus in excess of $500 million, (d) repurchase obligations
with a term of not more than thirty days for underlying securities of the types
described in clauses (b) and (c) above entered into with any financial
institution meeting the qualifications specified in clause (c) above, (d)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Rating Service and in each case maturing
within six months after the date of acquisition and (e) money market mutual
funds substantially all of the assets of which are invested primarily of the
type described in the foregoing clauses (a) through (d).
"Consolidated Cash Flow" means, with respect to any person for any
period, the Consolidated Net Income of such person for such period plus, without
duplication (a) provision for taxes based on income or profits of such person
and its Restricted Subsidiaries, to the extent that such provision for taxes was
included in computing Consolidated Net Income, plus (b) Consolidated Interest
Expense of such person and its Restricted Subsidiaries for such period, whether
paid or accrued and whether or not capitalized (including, without limitation,
amortization of debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, commissions discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), to the extent that any such expense
was deducted in computing Consolidated Net Income, plus (c) depreciation and
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid, outside of the
ordinary course of business, in a prior period) and other non-cash charges of
such person and its Restricted Subsidiaries for such period, to the extent that
such depreciation, amortization and other non-cash charges were deducted in
computing Consolidated Net Income, minus (d) non-cash items increasing
consolidated revenues in determining Consolidated Net Income for such period to
the extent not already reflected as an expense in computing Consolidated Net
Income, minus (e) all cash payments during such period relating to non-cash
charges and other non-cash items that were or would have been added back in
determining Consolidated Cash Flow for any prior period, in each case, on a
consolidated basis and determined in accordance with GAAP.
"Consolidated Interest Coverage Ratio" means with respect to any person
for any period, the ratio of the Consolidated Cash Flow of such person for such
period to the Consolidated Interest Expense of such person for such period;
provided, however, that the Consolidated Interest Coverage Ratio shall be
calculated giving pro forma effect to each of the following transactions as if
each such transaction had occurred at the beginning of the applicable
four-quarter reference period: (a) any incurrence, assumption, guarantee or
redemption by the Company or any of its Restricted Subsidiaries of any
Indebtedness (including revolving credit borrowings based on the average daily
balance outstanding during the relevant period) subsequent to the commencement
of the period for which the Consolidated Interest Coverage Ratio is being
calculated but prior to the date on which the event for which the calculation of
the Consolidated Interest Coverage Ratio is made (the "Calculation Date"); (b)
any acquisition that has been made by the Company or any of its Restricted
Subsidiaries, or approved and expected to be consummated within 30 days of the
Calculation Date, including, in each case, through a merger or consolidation,
and including any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior to the
Calculation Date (in which case Consolidated Cash Flow for such reference period
shall be calculated to include the Consolidated Cash Flow of the acquired
entities and without giving effect to clause (c) of the proviso set forth in the
definition of Consolidated Net Income); and (c) any other transaction that may
be given pro forma effect in accordance with Article 11 of Regulation S-X as in
effect from time to time; and provided, further, that (i) the Consolidated Cash
Flow attributable to discontinued operations, as determined in accordance with
GAAP, and operations or businesses disposed of prior to the Calculation Date,
shall be excluded and (ii) the
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Consolidated Interest Expense attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Consolidated Interest Expense will not be
obligations of the referent person or any of its Restricted Subsidiaries
following the Calculation Date.
"Consolidated Interest Expense" means, with respect to any person for
any period, the sum, without duplication, of (a) the consolidated interest
expense of such person and its Restricted Subsidiaries for such period, whether
paid or accrued (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations), (b) any interest expense on Indebtedness of another person that is
guaranteed by such person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such person or one of its Restricted Subsidiaries (whether or
not such guarantee of Lien is called upon), (c) the consolidated interest
expense of such person and its Restricted Subsidiaries that was capitalized
during such period and (d) the product of (i) all cash dividend payments on any
series of preferred stock of such person, times (ii) a fraction, the numerator
of which is one and the denominator of which is one minus the then current
combined federal, state and local statutory tax rates of such person, expressed
as a decimal, in each case, on a consolidated basis and in accordance with GAAP.
"Consolidated Net Income" means, with respect to any person for any
period, the aggregate of the Net Income of such person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (a) the Net Income (but not loss) of any person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent person or a Wholly Owned Restricted
Subsidiary thereof, (b) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Restricted Subsidiary or its
stockholders, (c) the Net Income of any person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded and (d) the cumulative effect of a change in accounting principles
shall be excluded.
"Consolidated Net Worth" means, with respect to any person as of any
date, the sum of (a) the consolidated equity of the common stockholders of such
person and its consolidated Restricted Subsidiaries as of such date plus (b) the
respective amounts reported on such person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
person upon issuance of such preferred stock, less (i) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of the Indenture in the book value of
any asset owned by such person or a consolidated Restricted Subsidiary of such
person, (ii) all investments as of such date in unconsolidated Restricted
Subsidiaries and in persons that are not Subsidiaries and (iii) all unamortized
debt discount and expense and unamortized deferred charges as of such date, in
each case determined in accordance with GAAP; provided, however, that any
changes after the date of the Indenture in the liabilities of such person and
its Restricted Subsidiaries in respect of other post-retirement employee
benefits or pension benefits that would be reflected on a consolidated balance
sheet of such person and its Restricted Subsidiaries in accordance with GAAP
shall be excluded.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures (excluding any
maturity as a result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or
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prior to the date that is 91 days after the date on which the Notes mature or
are redeemed or retired in full; provided, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof (or of any
security into which it is convertible or for which it is exchangeable) have the
right to require the issuer to repurchase such Capital Stock (or such security
into which it is convertible or for which it is exchangeable) upon the
occurrence of an Asset Sale or a Change of Control shall not constitute
Disqualified Stock if such Capital Stock (and all such securities into which it
is convertible or for which it is exchangeable) provides that the issuer thereof
will not repurchase or redeem any such Capital Stock (or any such security into
which it is convertible or for which it is exchangeable) pursuant to such
provisions prior to compliance by the Company with the provisions of the
Indenture described under the caption "--Repurchase at the Option of
Holders--Change of Control" or "--Asset Sales," as the case may be.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries in existence on the date of the Indenture, including,
without limitation, the Obligations of the Company and its Restricted
Subsidiaries under (i) the Close Corporation and Shareholders Agreement of Ohio
Coatings Company as existing on the date of the Indenture and the guarantee by
the Company or any Restricted Subsidiary of up to $20 million of Indebtedness of
Ohio Coatings Company under the Credit Agreement between Ohio Coatings Company
and National City Bank, Northeast, or (ii) the Keepwell Agreement, dated
December 28, 1995, between the Company, WPSC, WHX and the lenders party thereto
as existing on the date of the Indenture to the extent permitted by the WHX
Agreements, until such amounts are repaid.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any person, the
obligations of such person under interest rate swap agreements, interest rate
cap agreements, interest rate collar agreements and other agreements or
arrangements designed to protect such person against fluctuations in interest
rates.
"Indebtedness" means, with respect to any person, any indebtedness of
such person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such person prepared in accordance with GAAP, as well as Indebtedness of
others secured by a Lien on any asset of such person (whether or not such
Indebtedness is assumed by such person) and, to the extent not otherwise
included, the guarantee by such person of any Indebtedness of any other person.
The amount of any Indebtedness outstanding as of any data shall be (a) the
accreted value thereof, in the case of any Indebtedness that does not require
current payments of interest and (b) the principal amount thereof, in the case
of any other Indebtedness.
"Investments" means, with respect to any person, all investments by
such person in other persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees by the referent person of, and Liens on any
assets of the referent person securing, Indebtedness or other obligations of
other persons), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in
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accordance with GAAP. If the Company or any Restricted Subsidiary of the Company
sells or otherwise disposes of any Equity Interests of any direct or indirect
Restricted Subsidiary of the Company such that, after giving effect to any such
sale or disposition, such person is no longer a Restricted Subsidiary of the
Company, the Company shall be deemed to have made an Investment on the date of
any such sale or disposition equal to the fair market value of the Equity
Interests of such Restricted Subsidiary not sold or disposed of in an amount
determined as provided in the final paragraph of the covenant described above
under the caption "--Certain Covenants--Restricted Payments."
"Letter of Credit Facility" means the Letter of Credit Agreement, dated
as of August 22, 1994, among WPSC and Citibank, N.A., as the same may be
amended, supplemented or otherwise modified including any refinancing,
refunding, replacement or extension thereof and whether by the same or any other
lender or group of lenders, provided, that the aggregate amount of letters of
credit available may not exceed $50,000,000.
"Letter of Undertaking" means that certain letter of undertaking dated
July 21, 1997 from WHX to The Sanwa Bank, Limited, as existing on the date of
the Indenture.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Net Cash Proceeds" means, with respect to any issuance or sale of
common stock of the Company, means the cash proceeds of such issuance or sale
net of attorneys' fees, accountants' fees, underwriters' fees, broker's
commissions and consultant and any other fees actually incurred in connection
with such issuance or sale.
"Net Income" means, with respect to any person, the net income (loss)
of such person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (a) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (i) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (ii)
the disposition of any securities by such person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such person or any of
its Restricted Subsidiaries and (b) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
(without duplication) (a) the direct costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees,
sales commissions, recording fees, title transfer fees, title insurance
premiums, appraiser fees and costs incurred in connection with preparing such
asset for sale) and any relocation expenses incurred as a result thereof, (b)
taxes paid or estimated to be payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), (c) amounts required to be applied to the repayment of
Indebtedness (other than Permitted Working Capital Indebtedness) secured by a
Lien on the asset or assets that were the subject of such Asset Sale, (d) any
reserve established in accordance with GAAP or any amount placed in escrow, in
either case for adjustment in respect of the sale price of such asset or assets,
until such time as such reserve is reversed or such escrow arrangement is
terminated, in which case Net Proceeds shall include only the amount of the
reserve so reversed or the amount returned to the Company or its Restricted
Subsidiaries from such escrow arrangement, as the case may be.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise) or (c) constitutes the lender, and (ii) with respect to which no
default (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other
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Indebtedness of the Company or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity.
"Note Pro Rata Share" means with respect to Excess Proceeds, the amount
equal to the product of (a) Excess Proceeds and (b) the fraction determined by
dividing (i) the aggregate principal amount of Notes then outstanding by (ii)
the sum of the aggregate principal amount of Notes then outstanding and the
aggregate amount of borrowings under the Term Loan Agreement then outstanding.
"Obligations" means any principal, interest, penalties, fees,
indemnification, reimbursements, damages and other liabilities payable under the
documentation governing any Indebtedness.
"Permitted Investments" means (a) any Investment in the Company or in a
Wholly Owned Restricted Subsidiary of the Company, (b) any Investment in Cash
Equivalents, (c) any Investment by the Company or any Restricted Subsidiary of
the Company in a person that is engaged in the same line of business as the
Company and its Restricted Subsidiaries were engaged in on the date of the
Indenture or a line of business or manufacturing or fabricating operation
reasonably related thereto (including any downstream steel manufacturing or
processing operation or manufacturing or fabricating operation in the
construction products business) if as a result of such Investment (i) such
person becomes a Wholly Owned Restricted Subsidiary of the Company and a
Guarantor or (ii) such person is merged, consolidated or amalgamated with or
into, or transfers of conveys substantially all of its assets to, or is
liquidated into, the Company or a Wholly Owned Restricted Subsidiary of the
Company, (d) any Investment made as a result of the receipt of non-cash
consideration from (i) an Asset Sale that was made pursuant to and in compliance
with the covenant described above under the caption "--Repurchase at the Option
of Holders-- Asset Sales" or (ii) a disposition of assets that does not
constitute an Asset Sale, (e) any Investment acquired solely in exchange for
Equity Interests (other than Disqualified Stock) of the Company, (f) Investments
existing as of the date of the Indenture and (g) other Investments in any person
that is engaged in the same line of business as the Company and its Restricted
Subsidiaries were engaged in on the date of the Indenture or a line of business
or manufacturing or fabricating operation reasonably related thereto (including
any downstream steel manufacturing or processing operation or manufacturing or
fabricating operation in the construction products business) which Investment
has a fair market value (as determined by a resolution of the Board of Directors
of the Company and set forth in an officer's certificate delivered to the
Trustee), when taken together with all other investments made pursuant to this
clause (g) that are at the time outstanding, not to exceed $10.0 million.
"Permitted Liens" means (a) Liens existing as of the date of the
Indenture; (b) Liens in favor of the Company and its Subsidiaries; (c) Liens on
property of a person existing at the time such person is merged into or
consolidated with the Company or any Subsidiary of the Company, provided that
such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the person
merged into or consolidated with the Company or any of its Subsidiaries; (d)
Liens on property existing at the time of acquisition thereof by the Company or
any Subsidiary of the Company, provided that such Liens were in existence prior
to the contemplation of such acquisition; (e) pledges or deposits under
workmen's compensation laws, unemployment insurance laws or similar legislation,
or good faith deposits in connection with bids, tenders, contracts (other than
for the payment of Indebtedness) or leases to which such person is a party, or
deposits to secure public statutory obligations of such person or deposits of
cash or United States Government bonds to secure surety or appeal bonds to which
such person is a party, or deposits as security for contested taxes or import
duties or for the payment of rent in each case incurred in the ordinary course
of business (f) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently pursued, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (g) Liens incurred in the
ordinary course of business of the Company or any Restricted Subsidiary of the
Company with respect to obligations that do not exceed $10.0 million at any one
time outstanding and that (1) are not incurred in connection with the borrowing
of money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (2) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Company or such Restricted Subsidiary; (h) Liens
securing Permitted Refinancing Indebtedness, provided that the Company was
permitted to incur such Liens with respect to the Indebtedness so refinanced;
and (i) minor encroachments, encumbrances, easements or reservations of, or
rights of others for, rights-of-way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other
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restrictions as to the use of real properties all of which do not materially
impair the value or utility for its intended purposes of the real property to
which they relate or Liens incidental to the conduct of the business of such
Person or to the ownership of its properties.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness (other than Indebtedness under the Revolving Credit
Agreement) of the Company or any of its Restricted Subsidiaries; provided that
(a) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or accreted
value, if applicable), plus premium, if any, and accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith), (b)
such Permitted Refinancing Indebtedness has a final maturity date no earlier
than the final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded, (c) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Notes, such
Permitted Refinancing Indebtedness is subordinated in right of payment to the
Notes on terms at least as favorable, taken as a whole, to the holders of Notes
as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded and such
Indebtedness shall not have any scheduled principal payment prior to the 91st
day after the final maturity date of the Notes and (d) such Indebtedness is
incurred either by the Company or by the Restricted Subsidiary who is the
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; provided, however, that a Restricted Subsidiary may
guarantee Permitted Refinancing Indebtedness incurred by the Company, whether or
not such Restricted Subsidiary was an obligor or guarantor of the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded; and
provided, further, that if such Permitted Refinancing Indebtedness is
subordinated to the Notes, such guarantee shall be subordinated to such
Restricted Subsidiary's Subsidiary Guarantee to at least the same extent.
"Permitted Working Capital Indebtedness" means Indebtedness of the
Company and its Restricted Subsidiaries under the Revolving Credit Facility and
under any other agreement, instrument, facility or arrangement that is intended
to provide working capital financing or financing for general corporate purposes
(including any asset securitization facility involving the sale of accounts
receivable); provided that the aggregate outstanding amount of such Indebtedness
of the Company and its Restricted Subsidiaries, at the time of incurrence, shall
not exceed greater of (a) the sum of (i) 50% of the net aggregate book value of
all inventory of the Company and its Restricted Subsidiaries at such time and
(ii) 80% of the net aggregate book value of all accounts receivable (net of bad
debt expense) of the Company and its Restricted Subsidiaries at such time and
(b) $175 million.
"Public Equity Offering" means an underwritten offering of common stock
of the Company meeting the registration requirements of the Securities Act.
"Receivables Facility" means the program for the issuance and placement
from time to time of trade receivable backed adjustable rate securities, all as
contemplated by that certain Pooling and Servicing Agreement, dated as of August
1, 1994, between Wheeling-Pittsburgh Funding, Inc., WPSC, Bank One, Columbus,
N.A. and Wheeling-Pittsburgh Trade Receivable Master Trust and that certain
Receivables Purchase Agreement, dated as of August 1, 1994, between WPSC and
Wheeling-Pittsburgh Funding, Inc., as each may be amended, supplemented or
otherwise modified including any refunding, replacement or extension thereof.
"Replacement Assets" means (x) properties and assets (other than cash
or any Capital Stock or other security) that will be used in a business of the
Company and its Subsidiaries conducted on the date of the Indenture or in a line
of business or manufacturing or fabricating operation reasonably related thereto
(including any downstream steel processing or manufacturing operation or
manufacturing or fabricating operation in the construction products business) or
(y) Capital Stock of any person that will become on the date of the acquisition
thereof a Wholly Owned Restricted Subsidiary of the Company as a result of such
acquisition.
"Restricted Investment" means an Investment other than a Permitted
Investment.
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"Restricted Subsidiary" of a person means any Subsidiary of such person
that is not an Unrestricted Subsidiary.
"Revolving Credit Facility" means the Second Amended and Restated
Credit Agreement, dated as of December 28, 1995, among WPSC, the lenders party
thereto and Citibank, N.A. as agent, as the same may be amended, supplemented or
otherwise modified including any refinancing, refunding, replacement or
extension thereof and whether by the same or any other lender or groups of
lenders.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any person, (a) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person or one or more of the other Subsidiaries of that person (or a combination
thereof) and (b) any partnership (i) the sole general partner or the managing
general partner of which is such person or a Subsidiary of such person or (ii)
the only general partners of which are such person or of one or more
Subsidiaries of such person (or any combination thereof).
"Tax Sharing Agreement" means the Tax Sharing Agreement between the
Company and WHX as in effect on the date of the Indenture.
"Term Loan Agreement" means the Term Loan Agreement dated as of the
date of the Indenture, between the Company, DLJ Capital Funding, Inc., as
syndication agent, Donaldson, Lufkin & Jenrette Securities Corporation, as
arranger, Citicorp USA, Inc., as documentation agent, a financial institution to
be determined as administrative agent and the lenders party thereto.
"Unimast" means Unimast, Inc., an Ohio corporation.
"Unrestricted Subsidiary" means any Subsidiary that is designated by
the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to
a resolution of the Board of Directors of the Company, but only to the extent
that such Subsidiary (a) has no Indebtedness other than Non-Recourse Debt, (b)
is not party to any agreement, contract, arrangement or understanding with the
Company or any Restricted Subsidiary of the Company unless such agreement,
contract, arrangement or understanding does not violate the terms of the
Indenture described under the caption "--Certain Covenants--Transactions with
Affiliates," (c) is a person with respect to which neither the Company nor any
of its Restricted Subsidiaries has any direct or indirect obligation (i) to
subscribe for additional Equity Interests or (ii) to maintain or preserve such
person's financial condition or to cause such person to achieve any specified
levels of operating results, in each case, except to the extent otherwise
permitted by the Indenture. Any such designation by the Board of Directors of
the Company shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the resolution giving effect to such designation and an
officers' certificate certifying that such designation complied with the
foregoing conditions and was permitted by the covenant described above under the
caption "--Certain Covenants--Restricted Payments." If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of the Company as of
such date (and, if such Indebtedness is not permitted to be incurred as of such
date under the covenant described under the caption "--Incurrence of
Indebtedness and Issuance of Preferred Stock," the Company shall be in default
of such covenant). The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any
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outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (A) such Indebtedness is permitted under the covenant
described under the caption "--Incurrence of Indebtedness and Issuance of
Preferred Stock," calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period, and (B) no
Default or Event of Default would be in existence following such designation.
"U.S. Government Obligations" means direct, fixed-rate obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged, which are not callable and which mature (or may be put to the issuer
by the holder at no less than par) no later than the maturity date of the Notes.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
"Wheeling-Nisshin" means Wheeling-Nisshin, Inc., a Delaware
corporation.
"Wholly Owned Restricted Subsidiary" of any person means a Restricted
Subsidiary of such person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such person or by one or more Wholly Owned Restricted
Subsidiaries of such person.
"WHX" means WHX Corporation, a Delaware corporation.
"WHX Agreements" mean (i) the Intercreditor, Indemnification and
Subordination Agreement by and among the Company, WHX, WPSC and Unimast and (ii)
the Tax Sharing Agreement, in each case as in effect on the date of this
Indenture.
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the Notes are issued in fully registered
form without interest coupons. Notes sold in offshore transactions in reliance
on Regulation S under the Securities Act will initially be represented by one or
more temporary global Notes in definitive, fully registered form without
interest coupons (each a "Temporary Regulation S Global Note") and will be
deposited with the Trustee as custodian for, and registered in the name of a
nominee of, DTC for the accounts of Euroclear and Cedel Bank. The Temporary
Regulation S Global Note will be exchangeable for one or more permanent global
Notes (each a "Permanent Regulation S Global Note"; and together with the
Temporary Regulation S Global Notes, the "Regulation S Global Note") on or after
the 40th day following the Closing Date upon certification that the beneficial
interests in such global Note are owned by non-U.S. persons. Prior to the 40th
day after the Closing Date, beneficial interests in the Temporary Regulation S
Global Note may be held only through Euroclear or Cedel Bank and any resale or
other transfer of such interests to U.S. persons shall not be permitted during
such period unless such resale or transfer is made pursuant to Rule 144A or
Regulation S and in accordance with the requirements described below.
Notes sold in reliance on Rule 144A will be represented by one or more
permanent global Notes in definitive, fully registered form without interest
coupons (each a "Restricted Global Note"; and together with the Regulation S
Global Note, the "Global Notes") and will be deposited with the Trustee as
custodian for, and registered in the name of a nominee of, DTC.
Each Global Note (and any Notes issued for exchange therefor) will be
subject to certain restrictions on transfer set forth therein as described under
"Transfer Restrictions."
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Notes originally purchased by or transferred to Institutional
Accredited Investors who are not qualified institutional buyers ("Non-Global
Purchasers") will be issued Notes in registered form without interest coupons
("Certificated Notes"). Upon the transfer of Certificated Notes initially issued
to a Non-Global Purchaser to a qualified institutional buyer or in accordance
with Regulation S, such Certificated Notes will, unless the relevant Global Note
has previously been exchanged in whole for Certificated Notes, be exchanged for
an interest in a Global Note. For a description of the restrictions on the
transfer of Certificated Notes, see "Transfer Restrictions."
The Global Notes. Ownership of beneficial interests in a Global Note
will be limited to persons who have accounts with DTC ("participants") or
persons who hold interests through participants. Ownership of beneficial
interests in a Global Note will be shown on, and the transfer of that ownership
will be effected only through, records maintained by DTC or its nominee (with
respect to interests of participants) and the records of participants (with
respect to interests of persons other than participants). Qualified
institutional buyers may hold their interests in a Restricted Global Note
directly through DTC if they are participants in such system, or indirectly
through organizations which are participants in such system.
Investors may hold their interests in a Regulation S Global Note
directly through Cedel Bank or Euroclear, if they are participants in such
systems, or indirectly through organizations that are participants in such
system. Cedel Bank and Euroclear will hold interests in the Regulation S Global
Notes on behalf of their participants through DTC.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Notes represented by such Global Note for all
purposes under the Indenture and the Notes. No beneficial owner of an interest
in a Global Note will be able to transfer that interest except in accordance
with the applicable procedures of DTC, in addition to those provided for under
the Indenture and, if applicable, those of Euroclear and Cedel Bank.
Payments of the principal of, and interest on, a Global Note will be
made to DTC or its nominee, as the case may be, as the registered owner thereof.
Neither the Issuer, the Trustee nor any Paying Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Note or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Issuer expects that DTC or its nominee, upon receipt of any payment
of principal or interest in respect of a Global Note, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Note as shown on the records of
DTC or its nominee. The Issuer also expects that payments by participants to
owners of beneficial interests in such Global Note held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in the names of nominees for such customers. Such payments will be the
responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary
way in accordance with DTC rules and will be settled in same-day funds.
Transfers between participants in Euroclear and Cedel Bank will be effected in
the ordinary way in accordance with their respective rules and operating
procedures.
The Issuer expects that DTC will take any action permitted to be taken
by a holder of Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more participants to whose
account the DTC interests in a Global Note is credited and only in respect of
such portion of the aggregate principal amount of Notes as to which such
participant or participants has or have given such direction. However, if there
is an Event of Default under the Notes, DTC will exchange the applicable Global
Note for Certificated Notes, which it will distribute to its participants and
which may be legended as set forth under the heading "Transfer Restrictions."
The Issuer understands that: DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "Clearing
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Agency" registered pursuant to the provisions of Section 17A under the Exchange
Act. DTC was created to hold securities for its participants and facilitate the
clearance and settlement of securities transactions between participants through
electronic book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of certificates and certain other
organizations. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly
("indirect participants").
Although DTC, Euroclear and Cedel Bank are expected to follow the
foregoing procedures in order to facilitate transfers of interests in a Global
Note among participants of DTC, Euroclear and Cedel Bank, they are under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither the Issuer nor the Trustee
will have any responsibility for the performance by DTC, Euroclear or Cedel Bank
or their respective participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
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CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
While all material tax consequences of the Notes are discussed below,
persons considering the purchase of Notes should consult their own tax advisors
concerning the application of United States federal income tax laws, as well as
the laws of any state, local, or other taxing jurisdiction applicable to their
particular situations.
In the opinion of Olshan Grundman Frome & Rosenzweig LLP, the United
States tax counsel to the Company, subject to the limitations set forth herein,
the following is an accurate summary of the material United States federal
income tax consequences of the purchase, ownership and disposition of the Notes.
The discussion below is based upon the provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), and regulations, rulings and judicial
decisions thereunder as of the date hereunder, and such authorities may be
repealed, revoked or modified so as to result in U.S. federal income tax
consequences different from those discussed below.
NON-U.S. HOLDERS
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of a Note that is not (i) a citizen or
resident of the United States, (ii) a corporation organized under the laws of
the United States or any political subdivision thereof or therein, (iii) an
estate, the income of which is subject to U.S. federal income tax regardless of
the source, or (iv) a trust if a court within the United States is able to
exercise primary supervision of the administration of the trust and one or more
U.S. persons have the authority to control all substantial decisions of the
trust (a "Non-U.S. Holder").
The discussion does not consider all aspects of U.S. federal income and
estate taxation that may be relevant to the purchase, ownership or disposition
of the Notes by a particular Non-U.S. Holder in light of such Holder's personal
circumstances, including holding the Notes through a partnership. For example,
persons who are partners in foreign partnerships and beneficiaries of foreign
trusts or estates who are subject to U.S. federal income tax because of their
own status, such as United States residents or foreign persons engaged in a
trade or business in the United States, may be subject to U.S. federal income
tax even though the entity is not subject to income tax on the disposition of
its Note.
For purposes of the following discussion, interest and gain on the
sale, exchange or other disposition of a Note will be considered "U.S. trade or
business income" if such income or gain is (i) effectively connected with the
conduct of a U.S. trade or business or (ii) in the case of a treaty resident,
attributable to a U.S. permanent establishment (or to a fixed base) in the
United States.
Stated Interest. Generally, any interest paid to a Non-U.S. Holder of a
Note that is not U.S. trade or business income will not be subject to United
States tax if the interest qualified as "portfolio interest." Generally,
interest on the Notes will qualify as portfolio interest if (i) the Non-U.S.
Holder does not actually or constructively own 10% or more of the total voting
power of all voting stock of the Company and is not a "controlled foreign
corporation" with respect to which the Company is a "related person" within the
meaning of the Code, (ii) the beneficial owner, under penalty of perjury,
certifies that the beneficial owner is not a United States person and such
certificate provides the beneficial owner's name and address on Form W-8 or, at
the option of the withholding agent, on a substitute form substantially similar
to Form W-8, and (iii) the Non-U.S. Holder is not a bank receiving interest on
an extension of credit made pursuant to a loan agreement entered into in the
ordinary course of its trade or business. A holder must notify the Company in
writing on a timely basis of any change affecting the validity of the Form W-8.
The gross amount of payments to a Non-U.S. Holder of interest that do
not qualify for the portfolio interest exception and that are not U.S. trade or
business income will be subject to U.S. federal income tax at the rate of 30%,
unless a U.S. income tax treaty applies to reduce or eliminate withholding. U.S.
trade or business income will be taxed on a net basis at regular U.S. rates
rather than the 30% gross rate. To claim the benefit of a tax treaty or to claim
exemption from withholding because the income is U.S. trade or business income,
the Non-U.S. Holder must provide a properly executed Internal Revenue Service
Form 1001 or 4224 (or such successor forms as the United States Internal Revenue
Service designates), as applicable, prior to the payment of interest. These
forms must be periodically updated. Recently adopted Treasury Regulations which
are not yet in effect (the "Final Regulations")
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would alter the foregoing rules in certain respects. In general, the Final
Regulations are effective January 1, 1999. Under the Final Regulations, a
Non-U.S. Holder that is seeking an exemption from withholding tax on account of
a treaty or on account of the Notes being held in connection with a U.S. trade
or business generally would be required to provide Internal Revenue Service Form
W-8. If the Notes are not actively traded, the Non-U.S. Holder also would be
required to provide a taxpayer identification number, and may be required to
provide other documentary evidence of foreign status. The Final Regulations also
contain rules concerning payments through intermediaries. Non-U.S. Holders
should consult their tax advisors concerning the application of the Final
Regulations in light of their own circumstances.
Sale, Exchange or Redemption of Notes. Except as described below and
subject to the discussion concerning backup withholding, any gain realized by a
Non-U.S. Holder on the sale, exchange or redemption of a Note generally will not
be subject to U.S. federal income tax, unless (i) such gain is U.S. trade or
business income, (ii) subject to certain exceptions, the Non-U.S. Holder is an
individual who holds the Note as a capital asset and is present in the United
States for 183 days or more in the taxable year of the disposition, or (iii) the
Non-U.S. Holder is subject to tax pursuant to the provisions of U.S. tax law
applicable to certain U.S. expatriates.
Federal Estate Tax. Notes held (or treated as held) by an individual
who is a Non-U.S. Holder at the time of his or her death will not be subject to
U.S. federal estate tax, provided that the individual does not actually or
constructively own 10% or more of the total voting power of all voting stock of
the Company and income on the Notes was not U.S. trade or business income.
Information Reporting and Backup Withholding. The Company must report
annually to the United States Internal Revenue Service and to each Non-U.S.
Holder any interest that is subject to withholding or that is exempt from U.S.
withholding tax pursuant to a tax treaty or the portfolio interest exception.
Copies of these information returns may also be made available under the
provisions of a specific treaty or agreement to the tax authorities of the
country in which the Non-U.S. Holder resides.
Under certain circumstances, the United States Internal Revenue Service
requires information reporting and backup withholding of United States federal
income tax at a rate of 31% with respect to payments to certain non-corporate
Non-U.S. Holders (including individuals). Information reporting and backup
withholding will apply unless such non-corporate Non-U.S. Holders certify to the
withholding agent that the beneficial owner of the Note is not a U.S. Holder.
This certification requirement will generally be satisfied by the certification
provided to avoid the 30% withholding tax (described above).
The payment of the proceeds of a disposition of a Note by a Non-U.S.
Holder to or through the United States office of a broker or through a
non-United States branch of a United States broker generally will be subject to
information reporting and backup withholding at a rate equal to 31% of the gross
proceeds unless the Non-U.S. Holder certifies on Internal Revenue Service Form
W-8 that the beneficial owner of the Note is not a U.S. Holder or otherwise
establishes an exemption. The payment of the proceeds of a disposition of a Note
by a Non-U.S. Holder to or through a non-United States office of a non-United
States broker will not be subject to backup withholding or information reporting
unless the non-United States broker has certain United States relationships or
connections.
In the case of the payment of proceeds from the disposition of Notes to
or through a non-U.S. office of a broker that is either a U.S. person or a U.S.
related person, the regulations require information reporting on the payment
unless the broker has documentary evidence in its files that the owner is a
Non-U.S. Holder and the broker has no knowledge to the contrary. Backup
withholding will not apply to payments made through foreign offices of a broker
that is a U.S. person or a U.S. related person (absent actual knowledge that the
payee is a U.S. person).
Any amount withheld under the backup withholding rules from a payment
to a Non-U.S. Holder will be allowed as a refund or a credit against such
Non-U.S. Holder's U.S. federal income tax liability, provided that the requisite
procedures are followed.
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U.S. HOLDERS
Subject to the discussion below, stated interest payable on to the
Notes will be taxable to a U.S. Holder as ordinary income when received or
accrued in accordance with such holder's regular method of tax accounting.
Market Discount. If a U.S. Holder purchases a Note for an amount that
is less than its stated principal amount, the amount of such difference will be
treated as "market discount" for U.S. federal income tax purposes, unless such
difference is less than a specified de minimis amount. Under the market discount
rules, a U.S. Holder will be required to treat any principal payment on, or any
gain on the sale, exchange, retirement or other disposition of, a Note as
ordinary income to the extent of the market discount which has not previously
been included in income and is treated as having accrued on such Note at the
time of such payment or disposition. If a U.S. Holder makes a gift of a Note,
accrued market discount, if any, will be recognized as if such U.S. Holder had
sold such Note for a price equal to its fair market value. In addition, the U.S.
Holder may be required to defer, until the maturity of the Note or, in certain
circumstances, the earlier disposition of the Note in a taxable transaction, the
deduction of a portion of the interest expense on any indebtedness incurred or
continued to purchase or carry such Note.
Any market discount will be considered to accrue on a straight-line
basis during the period from the date of acquisition to the maturity date of the
Note, unless the U.S. Holder elects to accrue market discount on a constant
interest method. A U.S. Holder of a Note may elect to include market discount in
income currently as it accrues (on either a straight-line basis or constant
interest method), in which case the rules described above regarding the deferral
of interest deductions will not apply. This election to include market discount
in income currently, once made, is irrevocable and applies to all market
discount obligations acquired on or after the first day of the first taxable
year to which the election applies and may not be revoked without the consent of
the Service.
Amortizable Bond Premium. A U.S. Holder that purchases a Note for an
amount in excess of the sum of all amounts payable on the Note after the
purchase date other than stated interest will be considered to have purchased
the Note at a "premium." A U.S. Holder may generally elect to amortize the
premium over the remaining term of the Note on a constant yield method. The
amount amortized in any year will be treated as a reduction of the U.S. Holder's
interest income from the Note. A U.S. Holder who elects to amortize bond premium
must reduce its tax basis in the related obligation by the amount of premium
amortized during its holding period. Bond premium on a Note held by a U.S.
Holder that does not make such an election will decrease the gain or increase
the loss otherwise recognized on disposition of the Note. The election to
amortize premium on a constant yield method once made applies to all debt
obligations held or subsequently acquired by the electing U.S. Holder on or
after the first day of the first taxable year to which the election applies and
may not be revoked without the consent of the IRS.
Treasury regulations recently have been issued that require a U.S.
Holder that purchases a Note on or after March 2, 1998, or any subsequent
taxable year, at a premium, and elects to amortize such premium, must amortize
such premium under a constant yield method. However, a U.S. Holder may elect to
apply the new rules to all Notes held on or after the first day of the taxable
year containing March 2, 1998.
Sale or Other Disposition. In general, a U.S. Holder of Notes will
recognize gain or loss upon the sale, exchange, redemption, or other taxable
disposition of such Notes measured by the difference between (a) the amount of
cash and the fair market value of property received (except to the extent
attributable to accrued interest on the Notes previously taken into account) and
(b) the U.S. Holder's tax basis in the Notes, and market discount previously
included in income by the U.S. Holder and decreased by amortizable bond premium,
if any, deducted over the term of the Notes. Subject to the market discount
rules discussed above, any such gain or loss will generally be (x) long-term
capital gain or loss, provided the Notes have been held for more than 18 months,
(y) mid-term capital gain or loss, provided the Notes have been held for more
than 12 months but not more than 18 months and (z) short-term capital gain or
loss, provided the Notes have been held for not more than 12 months. The excess
of net long-term capital gains over net short-term capital losses is taxed at a
lower rate than ordinary income for certain non-corporate taxpayer. The
distinction between capital gain or loss and ordinary income or loss is also
relevant for purposes of, among other things, limitations on the deductibility
of capital losses.
In general, an exchange of outstanding bonds such as the Old Notes for
newly issued bonds such as the New Notes is treated as tax free to exchanging
creditors and the debtor. In this case, a U.S. Holder's basis in the
-91-
<PAGE>
New Notes is generally the same as his basis in the Old Notes and the U.S.
Holder's holding period in the New Notes includes the period for which the Old
Notes had been held. Although no gain or loss would be recognized to an
exchanging U.S. Holder under these circumstances, if the exchange of the Old
Notes for the New Notes were deemed to constitute an exchange of a debt
instrument for a modified debt instrument that differed materially in kind or in
extent, and the issue price of the New Notes (which would be their
publicly-traded fair market value on the date on which a substantial amount of
the New Notes is issued) was less than that of the Old Notes, original issue
discount could arise to a U.S. Holder.
Backup Withholding. "Backup" withholding and information reporting
requirements may apply to certain payments of principal and interest on a Note
and to certain payments of proceeds of the sale or retirement of a Note. The
Company, any agent thereof, a broker, the Trustee or any paying agent, as the
case may be, will be required to withhold tax from any payment that is subject
to backup withholding at a rate of 31% of such payment if the U.S. Holder fails
to furnish his taxpayer identification number (social security number or
employer identification number), to certify that such U.S. Holder is not subject
to backup withholding, or to otherwise comply with the applicable requirements
of the backup withholding rules. Certain U.S. Holders (including, among others,
all corporations) are not subject to the backup withholding and reporting
requirements.
-92-
<PAGE>
PLAN OF DISTRIBUTION
Except as described below, (i) a broker-dealer may not participate in
the Exchange Offer in connection with a distribution of the New Notes, (ii) such
broker-dealer would be deemed an underwriter in connection with such
distribution and (iii) such broker-dealer would be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transactions. A broker-dealer may, however,
receive New Notes for its own account pursuant to the Exchange Offer in exchange
for Old Notes when such Old Notes were acquired as a result of market-making
activities or other trading activities. Each such broker-dealer must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes. This Prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer (other than an "affiliate" of the Company) in
connection with resales of such New Notes. The Company has agreed that for a
period of 180 days after the Expiration Date, it will make this Prospectus, as
amended or supplemented, available to any such broker-dealer for use in
connection with any such resale.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in a Letter of Transmittal. The Company has agreed to pay all expenses incident
to the Exchange Offer other than commissions or concessions of any brokers or
dealers and transfer taxes and will indemnify the Holders of the Old Notes
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
The Initial Purchasers have indicated to the Company that they intend
to effect offers and sales of the New Notes in market-making transactions at
negotiated prices related to prevailing market prices at the time of sale, but
is not obligated to do so and such market-making activities may be discontinued
at any time. The Initial Purchasers may act as principal or agent in such
transactions. There can be no assurance that an active market for the New Notes
will develop.
LEGAL MATTERS
Certain legal matters in connection with the Notes offered hereby will
be passed upon for the Company by Olshan Grundman Frome & Rosenzweig LLP, New
York, New York. Marvin L. Olshan, a member of Olshan Grundman Frome & Rosenzweig
LLP, is a director and Secretary of the Company.
EXPERTS
The consolidated financial statements of Wheeling-Pittsburgh
Corporation and its subsidiaries as of December 31, 1997 and 1996 and for each
of the three years in the period ended December 31, 1997, included in this
Prospectus have been so included in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
-93-
<PAGE>
The financial statements of Wheeling-Nisshin as of December 31, 1997
and 1996, and for each of the three years ended December 31, 1997 included in
this Prospectus have been audited by Coopers & Lybrand L.L.P., independent
accountants, as stated in their report appearing herein.
-94-
<PAGE>
<TABLE>
<CAPTION>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
----
<S> <C>
Report of Price Waterhouse LLP, Independent Accountants.........................................................F-2
Consolidated Statements of Operations of WPC for the years ended December 31,
1997, 1996 and 1995........................................................................................F-3
Consolidated Balance Sheets of WPC as of December 31, 1997 and 1996.............................................F-4
Consolidated Statements of Cash Flows of WPC for the years ended December 31,
1997, 1996 and 1995........................................................................................F-5
Notes to Consolidated Financial Statements of WPC...............................................................F-6
Report of Coopers & Lybrand L.L.P., Independent Accountants...................................................F-25
Financial Statements of Wheeling-Nisshin, Inc..................................................................F-26
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholders of Wheeling-Pittsburgh Corporation (a wholly-owned subsidiary of
WHX Corporation)
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and of cash flows present fairly,
in all material respects, the financial position of Wheeling-Pittsburgh
Corporation and its subsidiaries (the "Company") at December 31, 1997 and 1996,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and the significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Pittsburgh, Pennsylvania
February 10, 1998
F-2
<PAGE>
WHEELING-PITTSBURGH CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF WHX CORPORATION)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1995 1996 1997
(DOLLARS IN THOUSANDS)
----------------------------------------------------
REVENUES:
<S> <C> <C> <C>
Net sales..................................................... $ 1,267,869 $ 1,110,684 $ 489,662
COST AND EXPENSES:
Cost of products sold, excluding
depreciation and profit sharing............................. 1,059,622 988,161 585,609
Depreciation.................................................. 65,760 66,125 46,203
Profit sharing................................................ 6,718 -- --
Selling, administrative and general expense................... 55,023 54,903 52,222
Special charge................................................ -- -- 92,701
----------------- ----------------- -----------------
1,187,123 1,109,189 776,735
----------------- ----------------- -----------------
Operating income (loss)....................................... 80,746 1,495 (287,073)
Interest expense on debt...................................... 22,431 23,763 27,204
Other income (loss)........................................... 3,234 9,476 (221)
----------------- ----------------- -----------------
Income (loss) before taxes
and extraordinary item...................................... 61,549 (12,792) (314,498)
Tax provision (benefit)....................................... 3,030 (7,509) (110,035)
----------------- ----------------- -----------------
Income (loss) before
extraordinary item.......................................... 58,519 (5,283) (204,463)
Extraordinary charge--net of tax............................. (3,043) -- (25,990)
----------------- ----------------- -----------------
Net income (loss) ............................................ $ 55,476 $ (5,283) $ (230,453)
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements
F-3
<PAGE>
WHEELING-PITTSBURGH CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF WHX CORPORATION)
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31,
------------
1996 1997
(Dollars in thousands)
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents..................................................... $ 35,950 $ 0
Trade receivables, less allowances for doubtful
accounts of $1,149 and $1,108............................................... 24,789 44,569
Inventories................................................................... 193,329 255,857
Prepaid expenses and deferred charges......................................... 13,366 24,938
----------------- -----------------
Total current assets.................................................... 267,434 325,364
Investment in associated companies............................................. 65,297 68,742
Property, plant and equipment, at cost less
accumulated depreciation and amortization..................................... 710,999 694,108
Deferred income taxes........................................................... 100,157 196,966
Intangible asset-pension........................................................ -- 76,714
Due from affiliates............................................................. 58,522 27,955
Deferred charges and other assets............................................... 43,483 34,719
----------------- -----------------
$ 1,245,892 $ 1,424,568
================= =================
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
<S> <C> <C>
Trade payables................................................................ $ 51,500 $ 116,559
Short term borrowings......................................................... -- 89,800
Payroll and employee benefits................................................. 57,094 56,212
Federal, state and local taxes................................................ 9,083 11,875
Deferred income taxes--current................................................ 30,649 32,196
Interest and other............................................................ 8,067 9,354
Long-term debt due in one year................................................ 2,019 199
----------------- -----------------
Total current liabilities............................................... 158,412 316,195
Long-term debt.................................................................. 267,395 349,904
Other employee benefit liabilities.............................................. 435,502 427,125
Pension liability............................................................... -- 166,652
Other liabilities............................................................... 46,096 49,980
----------------- -----------------
907,405 1,309,856
================= =================
STOCKHOLDER'S EQUITY:
Common Stock $.01 par value; 100 shares issued and outstanding.................. -- --
Additional paid-in capital...................................................... 265,387 272,065
Accumulated earnings (deficit)................................................. 73,100 (157,353)
----------------- -----------------
338,487 114,712
----------------- -----------------
$ 1,245,892 $ 1,424,568
================= =================
</TABLE>
See Notes to Consolidated Financial Statements
F-4
<PAGE>
WHEELING-PITTSBURGH CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF WHX CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------------------
1995 1996 1997
(DOLLARS IN THOUSANDS)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (loss)............................................. $ 55,476 $ (5,283) $ (230,453)
Items not affecting cash from operating activities:
Depreciation and amortization............................... 65,760 66,125 46,203
Other postretirement benefits............................... 5,522 3,505 2,322
Coal retirees' medical benefits, net of tax................. 3,043 -- 1,700
Premium on early debt retirement, net of tax................ -- -- 24,290
Income taxes................................................ (5,530) (6,572) (94,029)
Special charges, net of current portion..................... -- -- 69,137
Pension expense............................................. -- -- 9,327
Equity (income) loss in affiliated companies................ (4,845) (9,495) 1,206
Decrease (increase) in working capital elements:
Trade receivables........................................... 33,365 50,061 (43,780)
Trade receivables sold...................................... 22,000 (22,000) 24,000
Inventories................................................. (5,412) 73,247 (62,528)
Trade payables.............................................. (10,736) (48,721) 65,059
Other current assets........................................ (6,311) 4,033 (11,572)
Other current liabilities................................... (10,060) (13,973) 4,744
Other items--net.............................................. 4,297 1,355 18,868
----------------- ----------------- -----------------
Net cash flow provided by (used in) operating activities...... 146,569 92,282 (175,506)
----------------- ----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Plant additions and improvements............................ (81,554) (31,188) (33,755)
Investments in affiliates................................... (7,353) (17,240) (7,150)
Proceeds from sales of assets............................... -- 1,425 1,217
Dividends from affiliated companies......................... 2,500 2,500 2,500
----------------- ----------------- -----------------
Net cash used in investing activities......................... (86,407) (44,503) (37,188)
----------------- ----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt proceeds, net of issuance cost............... -- -- 340,270
Long-term debt retirement................................... (4,085) (15,153) (268,277)
Premium on early debt retirement............................ -- -- (32,600)
Short term debt borrowings.................................. -- -- 89,800
Letter of credit collateralization.......................... 1,094 384 16,984
Receivables from affiliates................................. (27,123) (39,886) 30,567
----------------- ----------------- -----------------
Net cash provided by (used in) financing activities........... (30,114) (54,655) 176,744
----------------- ----------------- -----------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.............. 30,048 (6,876) (35,950)
Cash and cash equivalents at beginning of year................ 12,778 42,826 35,950
----------------- ----------------- -----------------
Cash and cash equivalents at end of year...................... $ 42,826 $ 35,950 $ --
================- ================= =================
</TABLE>
See Notes to Consolidated Financial Statements
F-5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES
The accounting policies presented below have been followed in preparing
the accompanying consolidated financial statements.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of all
subsidiary companies. All significant intercompany accounts and transactions are
eliminated in consolidation. The Company uses the equity method of accounting
for investments in unconsolidated companies owned 20% or more.
EARNINGS PER SHARE
Presentation of earnings per share is not meaningful since the Company
is a wholly owned subsidiary of WHX Corporation. See Note A--Corporate
Reorganization.
BUSINESS SEGMENT
The Company is primarily engaged in one line of business and has one
industry segment, which is the making, processing and fabricating of steel and
steel products. The Company's products include hot rolled and cold rolled sheet,
and coated products such as galvanized, prepainted and tin mill sheet. The
Company also manufactures a variety of fabricated steel products including roll
formed corrugated roofing, roof deck, form deck, floor deck, culvert, bridge
form and other products used primarily by the construction, highway and
agricultural markets.
Through an extensive mix of products, the Company markets to a wide
range of manufacturers, converters and processors. The Company's 10 largest
customers (including Wheeling-Nisshin) accounted for approximately 35.4% of its
net sales in 1995, 34.9% in 1996 and 30.2% in 1997. Wheeling-Nisshin was the
only customer to account for more than 10% of net sales in 1995 and 1996. No
single customer accounted for more than 10% of net sales in 1997.
Wheeling-Nisshin accounted for 15.2% and 12.7% of net sales in 1995 and 1996,
respectively. Geographically, the majority of the Company's customers are
located within a 350-mile radius of the Ohio Valley.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand and on deposit and
highly liquid debt instruments with original maturities of three months or less.
INVENTORIES
Inventories are stated at cost which is lower than market. Cost is
determined by the last-in first-out ("LIFO") method for substantially all
inventories.
F-6
<PAGE>
PROPERTY, PLANT AND EQUIPMENT
Depreciation is computed on the straight line and the modified units of
production methods for financial statement purposes and accelerated methods for
income tax purposes. The modified units of production method adjusts the
straight line method based on an activity factor for operating assets. Adjusted
annual depreciation is not less than 60% nor more than 110% of straight line
depreciation. Accumulated depreciation after adjustment is not less than 75% nor
more than 110% of straight line depreciation. Interest cost is capitalized for
qualifying assets during the assets' acquisition period. Capitalized interest
cost is amortized over the life of the related asset.
Maintenance and repairs are charged to income. Renewals and betterments
made through replacements are capitalized. Profit or loss on property
dispositions is credited or charged to income.
PENSIONS, OTHER POSTRETIREMENT AND POSTEMPLOYMENT PLANS
The Company has a tax qualified defined benefit pension plan covering
USWA - represented hourly employees and a tax qualified defined contribution
pension plan covering substantially all salaried employees. The defined benefit
plan provides for a defined monthly benefit based on years of service. The
defined contribution plan provides for contributions based on a percentage of
compensation for salaried employees. Costs for the defined contribution plan are
being funded currently. Unfunded accumulated benefit obligations under the
defined benefit plan are subject to annual minimum cash funding requirements
under the Employees Retirement Income Security Act ("ERISA").
The Company sponsors medical and life insurance programs for
substantially all employees. Similar group medical programs extend to pensioners
and dependents. The management plan provides basic medical and major medical
benefits on a non-contributory basis through age 65.
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 ("SFAS 109"), Accounting for Income
Taxes. Recognition is given in the accounts for the income tax effect of
temporary differences in reporting transactions for financial and tax purposes
using the deferred liability method. Tax provisions and the related tax payments
or refunds have been reflected in the Company's financial statements in
accordance with a tax sharing agreement between WHX and the Company.
ENVIRONMENTAL MATTERS
The Company accrues for losses associated with environmental
remediation obligations when such losses are probable and reasonably estimable.
Accruals for estimated losses from environmental remediation obligations
generally are recognized no later than completion of the remedial feasibility
study.
Such accruals are adjusted as further information develops or
circumstances change. Costs of future expenditures for environmental remediation
obligations are not discounted to their present value. Recoveries of
environmental remediation costs from other parties are recorded as assets when
their receipt is deemed probable.
F-7
<PAGE>
NOTE A--CORPORATE REORGANIZATION
FORMATION OF WHX CORPORATION
On July 26, 1994 the Company and its subsidiaries were reorganized and
a new holding company, WHX Corporation ("WHX"), was formed. Upon effectiveness
of the merger each share of Wheeling-Pittsburgh Corporation ("WPC"), WPC Series
A Preferred Stock and each WPC Warrant were converted into a share of WHX Common
Stock, WHX Series A Preferred Stock and a WHX Warrant, respectively. WHX also
assumed the obligation to purchase the Redeemable Common Stock of the ESOP and
guaranteed substantially all of the Company's outstanding indebtedness. See Note
H. The merger was a change in legal organization and the assets and liabilities
transferred were accounted for at historical cost with carryover basis.
The merger was accounted for as a reorganization of entities under
common control whereby the basis of assets and liabilities were unchanged.
Pursuant to the merger agreement the Company contributed the capital stock of
the following subsidiaries to WHX: WP Land Company, Wheeling-Pittsburgh Radio
Corporation (and its subsidiaries) and Wheeling-Pittsburgh Capital Corporation.
Additionally, the Company contributed the cash and marketable securities and
certain real property and leasehold interests to WHX. WPC retained the capital
stock of the remaining steel-related subsidiaries and equity investments.
Prior to the Corporate Reorganization, the operations of the non-steel
subsidiaries, and the income and gains and losses from the cash, marketable
securities and real estate were included in the consolidated results of
operations of the Company. Following the Corporate Reorganization, such results
were included only in the consolidated results of WHX.
At December 31, 1996 and 1997, amounts due from affiliates totaled
$58.5 million and $28.0 million, respectively. These amounts reflect cash
advances between affiliates, dividends paid by WPC on behalf of WHX,
intercompany tax allocations and Unimast working capital advances.
NOTE B -- COLLECTIVE BARGAINING AGREEMENT
The Company's prior labor agreement with the USWA expired on October 1,
1996. On August 1, 1997 the Company and the USWA announced that they had reached
a tentative agreement on the terms of a new collective bargaining agreement. The
tentative agreement was ratified on August 12, 1997 by USWA-represented
employees, ending a ten month strike. The new collective bargaining agreement
provides for a defined benefit pension plan, a retirement enhancement program,
short-term bonuses and special assistance payments for employees not immediately
recalled to work and $1.50 in hourly wage increases over its term of not less
than five years. It also provides for the reduction of 850 jobs, mandatory
multicrafting as well as modification of certain work practices.
NOTE C -- SPECIAL CHARGE - NEW LABOR AGREEMENT
The Company recorded a special charge of $92.7 million in 1997. The
special charge is primarily related to certain benefits included in its new
collective bargaining agreement .
The special charges include enhanced retirement benefits to be paid
under the defined benefit pension program which totaled $66.7 million and were
recorded under the provisions of Statement of Financial Accounting Standard
No.88, Employers' Accounting For Settlements and Curtailments of Defined Benefit
Pension Plans and for Termination Benefits, and various other charges which
totaled $26.0 million. These charges include $15.5 million for signing and
retention bonuses, $3.8 million for special assistance payments to laid-off
employees and other employee benefits and $6.7 million for the fair value of a
stock option grant to WPN Corp. for its performance in negotiating a new labor
agreement.
F-8
<PAGE>
NOTE D--PENSIONS, OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
PENSION PROGRAMS
The Company provides defined contribution pension programs for both
hourly and salaried employees, and prior to August 12, 1997 also provided a
defined contribution pension program for USWA-represented employees. Tax
qualified defined contribution plans provide in the case of hourly employees an
increasing company contribution per hour worked based on the age of its
employees. A similar tax qualified plan for salaried employees provides defined
company contributions based on a percentage of compensation.
On August 12, 1997 the Company established a defined benefit pension
plan for USWA - represented employees pursuant to a new labor agreement. The
plan includes individual participant accounts of USWA represented employees from
the hourly defined contribution plan and merges the assets of those accounts
into the defined benefit plan.
As of December 31, 1997, $127.0 million of fully vested funds are held
in trust for benefits earned under the hourly defined contribution pension plan.
Approximately 59% of the trust assets are invested in equities and 41% in fixed
income investments.
As of December 31, 1997, $35.0 million of fully vested funds are held
in trust for benefits earned under the salaried employees defined contribution
plan. Approximately 57% of the assets are invested in equities and 43% are in
fixed income investments. All plan assets are invested by professional
investment managers.
All pension provisions charged against income totaled $10.8 million,
$9.3 million and $12.6 million in 1995, 1996 and 1997, respectively. In 1997,
the Company also recorded a $66.7 million charge for enhanced retirement
benefits paid under the defined benefit pension plan, pursuant to a new labor
agreement.
DEFINED BENEFIT PLAN
The plan was established pursuant to a collective bargaining agreement
ratified on August 12, 1997. Prior to that date, benefits were provided through
a defined contribution plan, the Wheeling-Pittsburgh Steel Corporation
Retirement Security Plan ("Retirement Security Plan").
The defined benefit pension plan covers employees represented by the
USWA. The plan also includes individual participant accounts from the Retirement
Security Plan. The assets of the Retirement Security Plan were merged into this
Bargaining Unit Pension Plan as of December 1, 1997.
Since the plan includes the account balances from the Retirement
Security Plan, the plan includes both defined benefit and defined contribution
features. The gross benefit, before offsets, is calculated based on years of
service and the current benefit multiplier under the plan. This gross amount is
then offset for benefits payable from the Retirement Security Plan and benefits
payable by the Pension Benefit Guaranty Corporation from previously terminated
plans. Individual employee accounts established under the Retirement Security
Plan are maintained until retirement. Upon retirement, the account balances are
converted into monthly benefits that serve as an offset to the gross benefit, as
described above. Aggregate account balances held in trust at December 31, 1997
total $121.3 million.
As part of the bargaining agreement, the Company offered a limited
program of Retirement Enhancements. The Retirement Enhancement program provides
for unreduced retirement benefits to the first 850 employees who retire after
October 1, 1996. In addition, each retiring participant can elect a lump sum
payment of $25,000 or a $400 monthly supplement payable until age 62. More than
850 employees applied for retirement under this program prior to December 31,
1997.
F-9
<PAGE>
The Retirement Enhancement program represented a Curtailment and
Special Termination Benefits under SFAS No. 88. The Company recorded a charge of
$66.7 million in 1997 to cover the retirement enhancement program.
The Company's funding policy is to contribute annually an amount that
satisfies the minimum funding standards of ERISA.
The following table sets forth the reconciliation of the projected
benefit obligation ("PBO") to the accrued obligation included in the Company's
consolidated balance sheet at December 31, 1997.
December 31,
1997
----
(Dollars in thousands)
Vested benefit obligation $(127,457)
Non-vested benefit (44,974)
---------
Projected benefit obligation (172,431)
Plan assets at fair value 5,179
----------
Obligations in excess of plan assets (167,252)
Unrecognized prior service cost 76,714
---------
Accrued pension costs (90,538)
Additional minimum pension liability (76,714)
---------
Total pension liability $(167,252)
=========
Net Periodic Pension Cost:
Service cost $2,278
Interest cost 4,172
Return on assets --
Amortization of prior service cost 2,877
--------
Net periodic pension cost 9,327
Recognition of retirement enhancement program 66,676
Total pension cost $76,003
Assumptions and Methods
Discount Rate: 7%
Long Term Rate of Return on Plan Assets: 8%
Assets: Market Value
Participant Census: Projected from January 1, 1997
401-K PLAN
Effective January 1, 1994 the Company began matching salaried employee
contributions to the 401(K) plan with shares of the Company's Common Stock. The
Company matches 50% of the employees contributions. The employer contribution is
limited to a maximum of 3% of an employee's salary. Matching contributions of
WHX Common Stock pursuant to the 401(k) plan are charged to WPC at market value
through the intercompany accounts. At December 31, 1995, 1996 and 1997, the
401(K) plan held 115,151 shares, 190,111 shares and 275,537 shares of WHX Common
Stock, respectively.
F-10
<PAGE>
POSTEMPLOYMENT BENEFITS
The Company provides benefits to former or inactive employees after
employment but before retirement. Those benefits include, among others,
disability, severance and workers' compensation. The assumed discount rate used
to measure the benefit liability was 7.5% at December 31, 1996 and 7.0% at
December 31, 1997.
OTHER POSTRETIREMENT BENEFITS
The Company sponsors postretirement benefit plans that cover both
management and hourly retirees and dependents. The plans provide medical
benefits including hospital, physicians' services and major medical expense
benefits and a life insurance benefit. The hourly employees' plans provide
non-contributory basic medical and a supplement to Medicare benefits, and major
medical coverage to which the Company contributes 50% of the insurance premium
cost. The management plan has provided basic medical and major medical benefits
on a non-contributory basis through age 65.
The Company accounts for these benefits in accordance with SFAS No.
106. The cost of postretirement medical and life benefits for eligible employees
are accrued during the employee's service period through the date the employee
reaches full benefit eligibility. The Company defers and amortizes recognition
of changes to the unfunded obligation that arise from the effects of current
actuarial gains and losses and the effects of changes in assumptions. The
Company funds the plans as current benefit obligations are paid. Additionally,
in 1994 the Company began funding a qualified trust in accordance with its
collective bargaining agreement. The new collective bargaining agreement
provides for the use of those funds to pay current benefit obligations and
suspends additional funding until 2002. The following table sets forth the
reconciliation of the Accumulated Postretirement Benefit Obligation ("APBO") to
the accrued obligation included in the Company's consolidated balance sheet at
December 31, 1996 and 1997.
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1996 1997
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Active employees not eligible for retirement.................................... $ 85,030 $ 54,443
Active employees eligible to retire............................................. 68,300 51,841
Retirees and beneficiaries...................................................... 208,011 202,528
----------------- -----------------
Accumulated postretirement benefit obligation.................................. 361,341 308,812
Plan assets at fair market value................................................ 13,010 7,795
----------------- -----------------
Obligations in excess of plan assets............................................ 348,331 301,017
Unamortized reduction in prior service cost..................................... 1,806 40,486
Unamortized gain................................................................ 64,303 71,942
----------------- -----------------
Accrued postretirement benefit obligation....................................... $ 414,440 $ 413,445
================= =================
</TABLE>
At December 31, 1997 plan assets consisted primarily of short term
corporate notes.
F-11
<PAGE>
The following table sets forth the components of the recorded net
periodic postretirement benefit costs.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1995 1996 1997
(DOLLARS IN THOUSANDS)
Net periodic postretirement benefit cost:
<S> <C> <C> <C>
Service cost.................................................. $ 3,563 $ 3,953 $ 2,488
Interest cost................................................. 26,757 23,982 20,950
Other......................................................... (3,570) (3,888) (7,490)
----------------- ----------------- -----------------
Total........................................................ $ 26,750 $ 24,047 $ 15,948
================= ================= =================
Assumptions:
Discount rate................................................. 7.0% 7.0% 7.0%
Health care cost trend rate.................................. 10.5% 9.5% 9.0%
Return on assets.............................................. 8.0% 8.0% 8.0%
</TABLE>
For measurement purposes, medical costs are assumed to increase at
annual rates as stated above and declining gradually to 4.5% in 2004 and beyond.
The health care cost trend rate assumption has significant effect on the costs
and obligation reported. A 1% increase in the health care cost trend rate in
each year would result in approximate increases in the accumulated
postretirement benefit obligation of $25.1 million, and net periodic benefit
cost of $4.3 million.
COAL INDUSTRY RETIREE HEALTH BENEFIT ACT
The Coal Industry Retiree Health Benefit Act of 1992 (the "Act")
created a new United Mine Workers of America postretirement medical and death
benefit plan to replace two existing plans which had developed significant
deficits. The Act assigns companies the remaining benefit obligations for former
employees and beneficiaries, and a pro rata allocation of benefits related to
unassigned beneficiaries ("orphans"). The Company's obligation under the Act
relates to its previous ownership of coal mining operations.
In 1995 the Social Security Administration (SSA) assigned additional
retirees and orphans to the Company. Based on the information obtained over the
past several years the Company believed the liability had been reasonably
determined and valued the liability at its net present value using a 7.5%
discount rate. After discounting the liability to present value, the net charge
to income in 1995 totaled $3.0 million. At December 31, 1997 the actuarially
determined accrued liability discounted at 7% covering 532 assigned retirees and
dependents and 133 orphans, totaled $10.8 million. The Company recorded an
extraordinary charge of $1.7 million (net of tax) in 1997 related to assignment
of additional orphans.
NOTE E--INCOME TAXES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1995 1996 1997
(DOLLARS IN THOUSANDS)
INCOME TAXES BEFORE EXTRAORDINARY ITEMS
Current
<S> <C> <C> <C>
Federal tax provision....................................... $ 7,810 $ (1,317) $ 0
State tax provision......................................... 750 380 460
----------------- ----------------- -----------------
Total income taxes current.................................... 8,560 (937) 460
----------------- ----------------- -----------------
</TABLE>
F-12
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1995 1996 1997
(DOLLARS IN THOUSANDS)
Deferred
<S> <C> <C> <C>
Federal tax provision (benefit)............................. (35,684) (6,572) (110,495)
Pre-reorganization tax benefits 30,154 -- --
recorded directly to equity............................... ----------------- ----------------- -----------------
Income tax provision (benefit)................................ $ 3,030 $ (7,509) $ (110,035)
================= ================= =================
TOTAL INCOME TAXES
Current
Federal tax provision....................................... $ 7,810 $ (1,317) $ --
State tax provision......................................... 750 380 460
----------------- ----------------- -----------------
Total income taxes current.................................... 8,560 (937) 460
----------------- ----------------- -----------------
Deferred
Federal tax provision (benefit)............................. (37,322) (6,572) (124,490)
Pre-reorganization tax benefits 30,154 -- --
recorded directly to equity............................... ----------------- ----------------- -----------------
Income tax provision (benefit)................................ $ 1,392 $ (7,509) $ (124,030)
================= ================= =================
COMPONENTS OF TOTAL INCOME TAXES
Operations................................................... $ 3,030 $ (7,509) $ (110,035)
Extraordinary items........................................... (1,638) -- (13,995)
----------------- ----------------- -----------------
Income tax provision (benefit)................................ $ 1,392 $ (7,509) $ (124,030)
================= ================= =================
</TABLE>
Deferred income taxes result from temporary differences in the financial basis
and tax basis of assets and liabilities. Deferred taxes for WHX as common parent
and all subsidiaries at least 80% owned (the "Consolidated Group") are recorded
on the books of WPC. Deferred tax assets and/or liabilities attributable to WHX
are not material for the periods presented. The type of differences that give
rise to deferred income tax liabilities or assets are shown in the following
table:
DEFERRED INCOME TAX SOURCES
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1996 1997
(DOLLARS IN MILLIONS)
ASSETS
<S> <C> <C>
Postretirement and postemployment employee benefits............................. $ 147.1 $ 147.7
Operating loss carryforward (expiring in 2005 to 2012).......................... 8.0 76.7
Minimum tax credit carryforwards (indefinite carryforward)...................... 49.5 49.5
Provision for expenses and losses............................................... 43.3 87.0
Leasing activities.............................................................. 25.2 23.8
State income taxes.............................................................. 6.0 1.4
Miscellaneous other............................................................. 7.7 7.5
----------------- -----------------
Deferred tax assets........................................................ 286.8 393.6
----------------- -----------------
LIABILITIES
Property plant and equipment.................................................... (157.1) (166.1)
Inventory...................................................................... (34.4) (34.9)
State income taxes.............................................................. (4.9) (1.0)
Miscellaneous other............................................................. (.9) (6.8)
----------------- -----------------
Deferred tax liability..................................................... (197.3) (208.8)
Valuation allowance............................................................. (20.0) (20.0)
----------------- -----------------
Deferred income tax asset--net.................................................. $ 69.5 $ 164.8
================= =================
</TABLE>
As of December 31, 1997, for financial statement reporting purposes a
balance of approximately $29.0 million of prereorganization tax benefits exist.
These benefits will be reported as a direct addition to equity as they are
recognized. In 1995 tax benefits of $42.1 million were recognized as a direct
addition to equity of which $30.2 million was recognized by the Company and
$11.9 million was recognized by the common parent of the Consolidated Group.
This $11.9 million was charged to the common parent pursuant to the tax sharing
agreement and is part of the "Due From Affiliate". The decrease in the valuation
allowance in 1995 reflects the recognition of these tax benefits. No
prereorganization tax benefits were recognized in 1996 and 1997.
During 1994, the Company experienced an ownership change as defined by
Section 382 of the Internal Revenue Code. As the result of this event, the
Company will be limited in its ability to use net operating loss carryforwards
and certain other tax attributes to reduce subsequent tax liabilities. The
amount of taxable income that can be offset by pre-change tax attributes in any
annual period is limited to approximately $32 million per year.
A tax sharing agreement between the Company and WHX determines the tax
provision and related tax payments or refunds allocated to the Company in years
in which they are combined in a consolidated federal income tax return. The tax
sharing agreement stipulates that Wheeling-Pittsburgh Steel Corporation
("WPSC"), a wholly-owned subsidiary (and principal operating subsidiary) of
Wheeling-Pittsburgh Corporation ("WPC") shall be deemed to have succeeded to the
portion of the net operating loss and credit carryovers attributable to the
steel group on December 31, 1990.
Total federal and state income taxes paid in 1995, 1996 and 1997 were
$18.0 million, $3.5 million and $0.7 million, respectively.
Federal tax returns have been examined by the Internal Revenue Service
("IRS") through 1987. The statute of limitations has expired for years through
1993; however, the IRS can review prior years to adjust any NOL's incurred in
such years and carried forward to offset income in subsequent open years.
Management believes it has adequately provided for all taxes on income.
The provision for income taxes differs from the amount of income tax
determined by applying the applicable U.S. statutory federal income tax rate to
pretax income as follows:
F-13
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------
1995 1996 1997
(DOLLARS IN THOUSANDS)
Income (loss) before taxes and extraordinary
<S> <C> <C> <C>
item........................................................ $ 61,549 $ (12,792) $ (314,498)
=============== =============== ================
Tax provision (benefit) at statutory rate..................... $ 21,542 $ (4,477) $ (110,074)
Increase (reduction) in tax due to:
Percentage depletion........................................ (973) (1,027) (1,092)
Equity earnings............................................. (1,288) (2,408) 338
State income tax net of federal effect...................... 1,624 260 299
Alternative minimum tax rate differential................... -- -- --
Reduction in valuation allowance net of
equity adjustment......................................... (16,300) -- --
(1,575) 143 494
Other miscellaneous......................................... ----------------- ----------------- -----------------
Tax provision (benefit) $ 3,030 $ (7,509) $ (110,035)
================= ================= =================
</TABLE>
NOTE F--INVENTORIES
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1996 1997
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Finished products............................................................... $ 44,621 $ 42,810
In-process...................................................................... 59,984 106,740
Raw materials................................................................... 80,147 103,735
Other materials and supplies................................................... 19,476 19,811
----------------- -----------------
204,228 273,096
LIFO reserve.................................................................... (10,899) (17,239)
----------------- -----------------
$ 193,329 $ 255,857
================= =================
</TABLE>
During 1996 and 1997, certain inventory quantities were reduced,
resulting in liquidations of LIFO inventories, the effect of which decreased
income by approximately $1.2 million in 1996, and increased income by
approximately $0.6 million in 1997.
NOTE G--PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1996 1997
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Land and mineral properties..................................................... $ 7,121 $ 7,071
Buildings, machinery and equipment.............................................. 1,021,435 1,034,189
Construction in progress........................................................ 18,023 21,741
----------------- -----------------
1,046,579 1,063,001
</TABLE>
F-14
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Accumulated depreciation and amortization...................................... 335,580 368,893
----------------- -----------------
$ 710,999 $ 694,108
================= =================
</TABLE>
The Company utilizes the modified units of production method of
depreciation which recognizes that the depreciation of steelmaking machinery is
related to the physical wear of the equipment as well as a time factor. The
modified units of production method provides for straight line depreciation
charges modified (adjusted) by the level of raw steel production. In 1996 and
1997 depreciation under the modified units of production method was $7.6 million
or 13.4% and $21.6 million or 40.0%, respectively, less than straight line
depreciation. The 1996 and 1997 reductions in depreciation primarily reflect the
ten-month strike which began October 1, 1996.
NOTE H--LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1996 1997
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Senior Unsecured Notes due 2007, 9 1/4%......................................... $ -- $ 273,966
Term Loan Agreement due 2006, floating rate..................................... -- 75,000
Senior Unsecured Notes due 2003, 93/8%:......................................... 266,155 --
IRS pension tax note due 1997, 8%............................................... 1,833 --
Other........................................................................... 1,426 1,137
----------------- -----------------
269,414 350,103
Less portion due within one year............................................... 2,019 199
----------------- -----------------
Total Long-Term Debt(1).................................................... $ 267,395 $ 349,904
================= =================
</TABLE>
(1) The fair value of long-term debt at December 31, 1996 and December 31,
1997 was $269.1 million and $350.1 million, respectively. Fair value of
long-term debt is estimated based on trading in the public market.
Long-term debt maturing in each of the next five years is as follows:
1998, $199; 1999, $219; 2000, $217; 2001, $233 and 2002, $259.
A summary of the financial agreements at December 31, 1997 follows:
REVOLVING CREDIT FACILITY:
On December 28, 1995, WPSC entered into a Second Amended and Restated
Revolving Credit Facility ("RCF") with Citibank, N.A. as agent. The RCF provides
for borrowings for general corporate purposes up to $150 million and a $35
million sub-limit for Letters of Credit.
The Credit Agreement expires May 3, 1999. Interest rates are based on
the Citibank prime rate plus 1.0% and/or a Eurodollar rate plus 2.25%, but, the
margin over the prime rate and the Eurodollar rate can fluctuate based upon
performance. A commitment fee of .5% is charged on the unused portion. The
letter of credit fee is 2.25% and is also performance based.
Borrowings are secured primarily by 100% of the eligible inventory of
WPSC, Pittsburgh-Canfield Corporation ("PCC"), Wheeling Construction Products,
Inc. ("WCPI") and Unimast, and the terms of the RCF contain various restrictive
covenants, limiting among other things dividend payments or other distribution
of assets,
F-15
<PAGE>
as defined in the RCF. The Company and Unimast, Inc., are wholly-owned
subsidiaries of WHX. WPSC, PCC and WCPI are wholly-owned subsidiaries of the
Company. Certain financial covenants associated with leverage, net worth,
capital spending, cash flow and interest coverage must be maintained. WPC, PCC,
WCPI and Unimast have each guaranteed all of the obligation's of WPSC under the
Revolving Credit Facility ("RCF"). See Note J. Borrowings outstanding against
the RCF at December 31, 1997 totaled $89.8 million. No letters of credit were
outstanding under the RCF.
In August 1994 WPSC entered into a separate facility for letters of
credit up to $50 million. At December 31, 1997 letters of credit totaling $9.3
million were outstanding under this facility. The letters of credit are
collateralized at 105% with U.S. Government securities owned by the Company, and
are subject to an administrative charge of .4% per annum on the amount of
outstanding letters of credit.
9 3/8% SENIOR NOTES DUE 2003:
On November 23, 1993 WPC issued $325.0 million of 9 3/8% Senior Notes.
Interest on the Senior Notes is payable semiannually on May 15 and November 15
of each year, commencing May 15, 1994. The Senior Notes mature on November 15,
2003. During 1994, the Company repurchased $54.3 million of its outstanding 9
3/8% Senior Notes at an average price of 94% of the related outstanding
principal amount.
During 1996, $4.2 million of the Senior Notes were retired via the
issuance by WHX Corporation shares of its common stock pursuant to the terms of
the Senior Notes Indenture agreement. The Company issued warrants to its common
shareholders in 1991. The warrants expired on January 3, 1996. Pursuant to the
Corporate Reorganization, WHX became the publicly-held issuer of the common and
preferred stock and the warrants. The warrants provided that holders could
tender lawful debt of the Company at face value to pay for exercise of warrants.
Certain investors bought the notes at a discount and used them to exercise
warrants.
The surrender of the notes and reduction of WPC debt was charged to WPC
through the intercompany account.
On November 26, 1997, the Company, under the terms of the 9 3/8%
Indenture, defeased the remaining $266.2 million 93/8% Senior Notes outstanding
at a total cost of $298.8 million. The 93/8% Senior Notes were placed into
trusteeship where they will be held until the November 15, 2000 redemption.
9 1/4% SENIOR NOTES DUE 2007:
On November 26, 1997 the Company issued $274 million of 9 1/4% Senior
Notes. Interest on the Senior Notes is payable semi-annually on May 15 and
November 15 of each year, commencing May 15, 1998. The Senior Notes mature on
November 15, 2007.
The 9 1/4% Senior Notes are redeemable at the option of the Company, in
whole or in part, on or after November 15, 2002 at specified redemption prices,
plus accrued interest and liquidated damages, if any, thereon to the date of
redemption.
Upon the occurrence of a Change of Control (as defined), the Company
will be required to make an offer to repurchase all or any part of each holder's
Notes at 101% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon to the date of repurchase.
The 9 1/4% Senior Notes are unsecured obligations of the Company,
ranking senior in right of payment to all existing and future subordinated
indebtedness of the Company, and pari passu with all existing and future senior
unsecured indebtedness of the Company, including borrowings under the Term Loan
Agreement.
F-16
<PAGE>
The 9 1/4% Senior Notes are fully and unconditionally guaranteed on a
joint and several and senior basis by the guarantors, which consist of all of
the Company's present and future operating subsidiaries. Summarized combined
financial information of the subsidiary guarantors is presented in Note N.
Neither Wheeling-Nisshin (as defined) nor Ohio Coatings Company ("OCC") are
guarantors of the 9 1/4% Senior Notes. Neither the non- guarantor subsidiaries
nor OCC are material to the financial statements of the Company. Audited
financial statements of Wheeling-Nisshin are presented at page F-25 because it
is considered a significant subsidiary of the Company under SEC regulations.
The 9 1/4% Senior Notes indenture contains certain covenants,
including, but not limited to, covenants with respect to: (i) limitations on
indebtedness; (ii) limitations on restricted payments; (iii) limitations on
transactions with affiliates; (iv) limitations on liens; (v) limitations on sale
of assets; (vi) limitations on issuance and sale of capital stock of
subsidiaries; (vii) limitations on dividends and other payment restrictions
affecting subsidiaries; and (viii) restrictions on consolidations, mergers and
sales of assets.
The Company has agreed to file a registration statement relating to an
exchange offer for the 9 1/4% Senior Notes under the Securities Act of 1993, as
amended. The Notes are eligible for trading in the Private Offerings, Resales
and Trading through Automated Linkages ("PORTAL") market.
TERM LOAN AGREEMENT
On November 26, 1997 the Company entered into the Term Loan Agreement
with DLJ Capital Funding, Inc., as syndication agent pursuant to which the
Company borrowed $75 million.
Interest on the term loan is payable on March 15, June 15, September 15
and December 15 as to Base Rate Loans, and with respect to LIBOR loans on the
last day of each applicable interest period, and if such interest period shall
exceed three months, at intervals of three months after the first day of such
interest period. Amounts outstanding under the Term Loan Agreement bear interest
at the Base Rate (as defined therein) plus 2.25% or the LIBOR Rate (as defined
therein) plus 3.25%.
The Company's obligations under the Term Loan Agreement are guaranteed
by its present and future operating subsidiaries. The Company may prepay the
obligations under the Term Loan Agreement beginning on November 15, 1998,
subject to a premium of 2.0% of the principal amount thereof. Such premium
declines to 1.0% on November 15, 1999 with no premium on or after November 15,
2000.
INTEREST COST
Aggregate interest costs on long-term debt and amounts capitalized
during the three years ended December 31, 1997, are as follows:
<TABLE>
<CAPTION>
1995 1996 1997
(Dollars in thousands)
<S> <C> <C> <C>
Aggregate interest expense on long-term debt............. $28,793 $26,263 $29,431
Less: Capitalized interest............................... 6,362 2,500 2,227
----------------- ----------------- -----------------
Interest expense......................................... $22,431 $23,763 $27,204
================= ================= =================
Interest Paid............................................ $27,873 $27,660 $29,515
================= ================= =================
</TABLE>
F-17
<PAGE>
NOTE I--STOCKHOLDER'S EQUITY
Prior to the Corporate Reorganization discussed in Note A, the
authorized capital stock of WPC consisted of 60,000,000 shares of Common Stock,
$.01 par value and 10,000,000 shares of Preferred Stock, $0.10 par value.
Pursuant to a reorganization of the Company effective on July 26, 1994, WPC
became a wholly-owned subsidiary of WHX. WHX, a new holding company, became the
publicly held issuer for all of the outstanding Common and Preferred Stock and
outstanding warrants of WPC and assumed WPC's rights and obligations with
respect to WPC's option plans, all as described below.
Changes in capital accounts are as follows:
<TABLE>
<CAPTION>
CONVERTIBLE
COMMON STOCK PREFERRED ACCUMULATED CAPITAL IN
EARNINGS EXCESS OF PAR
SHARES AMOUNT SHARES AMOUNT (DEFICIT) VALUE
------------ ------------ -------- ---------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance January 1, 1995.......... 100 $0 0 $0 $ 22,907 $223,287
Pre-reorg. tax benefits......... -- -- -- -- -- 42,100
Net income....................... -- -- -- -- 55,476 --
------------ ------------ -------- ---------- ------------- -------------
Balance December 31, 1995........ 100 0 0 0 78,383 265,387
Net income (loss)................ -- -- -- -- (5,283) --
------------ ------------ -------- ---------- ------------- -------------
Balance December 31, 1996....... 100 0 0 0 73,100 265,387
Net income (loss)................ -- -- -- -- (230,453) --
WPN stock option................. -- -- -- -- -- 6,678
------------ ------------ -------- ---------- ------------- -------------
Balance December 31, 1997........ 100 $ 0 0 $ 0 $(157,353) $272,065
============ ============ ======== ========== ============= =============
</TABLE>
Pursuant to a corporate reorganization of the Company effective July
26, 1994, WHX assumed the rights and obligations of WPC under WPC's stock option
plans and WHX Common Stock is issuable in lieu of each share of WPC Common Stock
required by the plans. The Company accounts for grants of options to purchase
WHX Common Stock in accordance with interpretation 1 to APB 25. Options to
purchase WHX Common Stock are granted at market value and cash is paid to WHX
when the option is exercised. No employee compensation amounts are recorded upon
the issuance of options to purchase WHX Common Stock.
On August 4, 1997 the compensation committee of the Board of Directors
of WHX granted an option to purchase 1,000,000 shares of WHX Common Stock to WPN
Corp, at the then market price per share, subject to stockholder approval, for
its performance in negotiating a five year labor agreement. The Board of
Directors approved such grant on September 25, 1997, and the stockholders
approved it on December 1, 1997 (measurement date).
The WPN options are exercisable with respect to one-third of the shares
of Common Stock issuable upon the exercise thereunder at any time on or after
the date of stockholder approval of the Option Grants. The options with respect
to an additional one-third of the shares of Common Stock may be exercised on the
first and second anniversaries of the Approval Date, respectively. The options,
to the extent not previously exercised, will expire on August 4, 2007.
The Company is required to record a charge for the fair value of the
1997 option grants under SFAS 123. The fair value of the option grant is
estimated on the measurement date using the Black--Scholes option-pricing
model. The following assumptions were used in the Black--Scholes calculation:
expected volatility of 48.3%, risk- free interest rate of 5.83%, an expected
life of 5 years and a dividend yield of zero. The resulting estimated fair value
of the shares granted in 1997 was $6.7 million which was recorded as part of the
special charge related to the new labor agreement.
F-18
<PAGE>
NOTE J --RELATED PARTY TRANSACTION
The Chairman of the Board of WHX is the President and sole shareholder
of WPN Corp. Pursuant to a management agreement effective as of January 3, 1991,
as amended January 1, 1993 and April 11, 1994, approved by a majority of the
disinterested directors of WHX, WPN Corp. provides certain financial, management
advisory and consulting services to WHX. Such services include, among others,
identification, evaluation and negotiation of acquisitions, responsibility for
financing matters for WHX and its subsidiaries, review of annual and quarterly
budgets, supervision and administration, as appropriate, of all WHX's accounting
and financial functions and review and supervision of reporting obligations
under Federal and state securities laws. In exchange for such services, WPN
Corp. received a fixed monthly fee of $458,333 in 1996 and 1997 from WHX. In
1998, the Company will pay a monthly fee of $208,333 and WHX will pay $250,000
per month for these services. In addition to the fixed monthly fee, WHX paid a
$300,000 bonus to WPN Corp. for its services in obtaining a new five-year labor
contract with significant job reductions. The Management Agreement has a two
year term and is renewable automatically for successive one year periods, unless
terminated by either party upon 60 day's prior written notice.
The WHX stockholders approved a grant of an option to purchase
1,000,000 shares of Common Stock to WPN Corp. for their performance in obtaining
a new labor agreement. The options were valued using the Black--Scholes formula
at $6.7 million and recorded as a special charge related to the labor contract.
Pursuant to an indemnification agreement, the Company has agreed to
indemnify WHX and hold WHX harmless from all liabilities relating to the
operations of the Company whether relating to or arising out of occurrences
prior to, on or after the closing of the November Offering, and other
obligations assumed at the Closing. Similarly, WHX has agreed to indemnify the
Company and hold the Company harmless from all liabilities relating to the
operations of the business of WHX, other than the business of the Company,
whether relating to or arising out of occurrences prior to, on or after the
closing of the November Offering. To the extent WHX is called upon to make
payments under its guarantees of certain of the Company's indebtedness, the
Company will indemnify it in respect of such payments. To the extent the
Company's actions cause a default under the Revolving Credit Facility or the
termination of the Receivables Facility or a default under any other debt
instrument of WHX or Unimast, the Company will indemnify WHX and Unimast in
respect of any incremental costs and expenses suffered by WHX or Unimast on
account thereof. The Company's obligations under the Indemnification Agreement
will be subordinate to the Company's obligations under the 9 1/4% Senior Notes
and the Term Loan Agreement. To the extent WHX's or Unimast's actions cause a
default under the Revolving Credit Facility or the termination of the
Receivables Facility or a default under any other debt instrument of the
Company, WHX and Unimast will indemnify the Company in respect of any
incremental costs and expenses and damages suffered by the Company on account
thereof.
NOTE K-COMMITMENTS AND CONTINGENCIES
ENVIRONMENTAL MATTERS
The Company has been identified as a potentially responsible party
under the Comprehensive Environmental Response, Compensation and Liability Act
("Superfund") or similar state statues at several waste sites. The Company is
subject to joint and several liability imposed by Superfund on potentially
responsible parties. Due to the technical and regulatory complexity of remedial
activities and the difficulties attendant to identifying potentially responsible
parties and allocating or determining liability among them, the Company is
unable to reasonably estimate the ultimate cost of compliance with Superfund
laws. The Company believes, based upon information currently available, that the
Company's liability for clean up and remediation costs in connection with the
Buckeye reclamation will be between $3.0 and $4.0 million. At six other sites
(MIDC Glassport, United Scrap Lead, Tex- Tin, Breslube Penn, Four County
Landfill and Beazor) the Company estimates costs to aggregate up to $700,000.
The Company is currently funding its share of remediation costs.
F-19
<PAGE>
The Company, as are other industrial manufacturers, is subject to
increasingly stringent standards relating to the protection of the environment.
In order to facilitate compliance with these environmental standards, the
Company has incurred capital expenditures for environmental control projects
aggregating $5.9 million, $6.8 million and $12.4 million for 1995, 1996 and
1997, respectively. The Company anticipates spending approximately $41.3 million
in the aggregate on major environmental compliance projects through the year
2000, estimated to be spent as follows: $13.4 million in 1998, $15.9 million in
1999 and $12.0 million in 2000. Due to the possibility of unanticipated factual
or regulatory developments, the amount of future expenditures may vary
substantially from such estimates.
Non-current accrued environmental liabilities totaled $7.8 million at
December 31, 1996 and $10.6 million at December 31, 1997. These accruals were
initially determined by the Company in January 1991, based on all then available
information. As new information becomes available, including information
provided by third parties, and changing laws and regulations, the liabilities
are reviewed and the accruals adjusted quarterly. Management believes, based on
its best estimate, that the Company has adequately provided for remediation
costs that might be incurred or penalties that might be imposed under present
environmental laws and regulations. Based upon information currently available,
including the Company's prior capital expenditures, anticipated capital
expenditures, consent agreements negotiated with Federal and state agencies and
information available to the Company on pending judicial and administrative
proceedings, the Company does not expect its environmental compliance costs and
liability costs, including the incurrence of additional fines and penalties, if
any, relating to the operation of its facilities, to have a material adverse
effect on the financial condition or results of operations of the Company.
However, as further information comes into the Company's possession, it will
continue to reassess such evaluations.
NOTE L--OTHER INCOME
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------
1995 1996 1997
----------------- ------------------- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Interest and investment income........................... $ 3,106 $ 3,948 $ 4,189
Equity income (loss)..................................... 4,845 9,495 (1,206)
Receivables securitization fees.......................... (4,283) (4,934) (3,826)
Other, net.............................................. (434) 967 622
----------------- ------------------- -------------------
$3,234 $9,476 $ (221)
================= =================== ===================
</TABLE>
NOTE M--SALE OF RECEIVABLES
In 1994, a special purpose wholly-owned subsidiary of WPSC, entered
into an agreement to sell (up to $75 million on a revolving basis) an undivided
percentage ownership in a designated pool of accounts receivable generated by
WPSC, WCPI and PCC. The agreement expires in August 1999. In July 1995 WPSC
amended such agreement to sell an additional $20 million on similar terms and
conditions. In October 1995 WPSC entered into an agreement to include the
receivable generated by Unimast, in the pool of accounts receivable sold.
Accounts receivable at December 31, 1996 and 1997 exclude $45 million and $69
million, respectively, representing uncollected accounts receivable sold with
recourse limited to the extent of uncollectible balances. Fees paid by WPSC
under this agreement range from 5.76% to 8.50% of the outstanding amount of
receivables sold. Based on the Company's collection history, the Company
believes that credit risk associated with the above arrangement is immaterial.
The Company adopted Statement of Financial Accounting Standards No. 125
Accounting for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities (SFAS 125), effective January 1, 1997. The
F-20
<PAGE>
adoption of SFAS 125 did not have a material effect on the Company's financial
position or results of operations for the year ended December 31, 1997.
NOTE N - SUMMARIZED COMBINED FINANCIAL INFORMATION OF THE SUBSIDIARY GUARANTORS
OF THE 9 1/4% SENIOR NOTES
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------
1995 1996 1997
---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C>
INCOME DATA
Net sales $1,267,869 $1,110,684 $489,662
Cost of products sold, excluding depreciation 1,061,452 987,528 585,609
Depreciation 65,760 66,125 46,203
Selling, general and administrative expense 61,653 54,740 52,294
Special charge -- -- 92,701
----------- ---------- -----------
Operating income (loss) 79,004 2,291 (287,145)
Interest expense 21,643 22,983 26,071
Other income (loss) (3,179) (973) (1,280)
----------- ---------- -----------
Income (loss) before tax 54,182 (21,665) (314,496)
Tax provision (benefit) 1,418 (10,615) (110,034)
----------- ---------- -----------
Net income (loss) $52,764 ($11,050) ($204,462)
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------
1995 1996 1997
---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C>
BALANCE SHEET DATA
Assets
Current assets $379,677 $267,055 $324,813
Non-current assets 910,512 926,386 990,435
--------- ---------- ----------
Total assets $1,290,189 $1,193,441 $1,315,248
========== ========== ==========
Liabilities and stockholder's equity
Current liabilities $222,930 $152,385 $311,723
Non-current liabilities 754,914 739,762 935,834
Stockholder's equity 312,345 301,294 67,691
---------- ---------- ----------
Total liabilities and stockholder's equity $1,290,189 $1,193,441 $1,315,248
========== ========== ==========
</TABLE>
NOTE O--SEPARATE FINANCIAL STATEMENTS OF SUBSIDIARIES NOT CONSOLIDATED AND 50
PERCENT OR LESS OWNED PERSONS.
The Company owns 35.7% of Wheeling-Nisshin, Inc. (Wheeling-Nisshin").
Wheeling-Nisshin had total debt outstanding at December 31, 1996 and 1997 of
approximately $25.3 million and $18.5 million, respectively. The Company derived
approximately 15.2% and 12.7%of its revenues from sale of steel to
Wheeling-Nisshin in 1995 and 1996, respectively. The decrease in revenue
reflects the effect of the Strike on Company shipments to Wheeling-Nisshin. The
Company received dividends of $2.5 million annually from Wheeling-Nisshin from
1995 through 1997. Audited financial statements of Wheeling-Nisshin are
presented at page F-25 because it is considered a significant subsidiary of the
Company under SEC regulations.
NOTE P -- EXTRAORDINARY CHARGES
1995 1996 1997
---- ---- ----
(DOLLARS IN THOUSANDS)
Premium on early debt retirement $ -- -- $32,600
Unamortized debt issuance cost -- -- 4,770
Coal retiree medical benefits 4,681 -- 2,615
Income tax effect (1,638) -- (13,995)
------- --- --------
$3,043 -- $25,990
======= === ========
In November 1997 the Company paid a premium of $32.6 million to defease
the remaining $266.2 million of the 93/8 Senior Notes at a total cost of $298.8
million.
In 1997, a 7% discount rate was used to calculate the actuarially
determined coal retiree medical benefits liability. In 1996 and 1995 the
discount rate was 7.5%. In 1997 the Company also incurred higher premiums for
additional retirees and orphans assigned in 1995. See Note D.
F-21
<PAGE>
NOTE Q-QUARTERLY INFORMATION (UNAUDITED)
Financial results by quarter for the two fiscal years ended December
31, 1996 and 1997 are as follows:
<TABLE>
<CAPTION>
EARNINGS (LOSS)
PER SHARE BEFORE EARNINGS
GROSS PROFIT EXTRAORDINARY NET INCOME EXTRAORDINARY (LOSS) PER
NET SALES (LOSS) CHARGE (LOSS) (LOSS) CHARGE SHARE
----------- ----------- ----------------- ------------ ----------------- -----------
(DOLLARS IN THOUSANDS)
1996:
<S> <C> <C> <C> <C> <C> <C> <C>
1st Quarter............... $287,846 $ 38,720 -- $ 1,389 * *
2nd Quarter............... 328,457 55,342 -- 11,020
3rd Quarter............... 359,906 57,986 -- 13,223
4th Quarter(1)............ 134,475 (29,525) -- (30,915)
1997(1):
1st Quarter............... 79,014 (34,139) -- (40,251) * *
2nd Quarter............... 87,878 (20,825) -- (34,584)
3rd Quarter............... 103,217 (31,621) -- (96,785)
4th Quarter............... 219,553 (9,362) (25,990) (58,833 )
</TABLE>
* Earnings per share are not meaningful because the Company is a
wholly-owned subsidiary of WHX Corporation.
(1) The financial results of the Company for the fourth quarter of 1996 and
all four quarters of 1997 were adversely affected by the Strike.
Negative impacts of the Strike included the volume effect of lower
production on fixed cost absorption, higher levels of external steel
purchases, start-up costs and a higher- cost mix of products shipped.
F-22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Wheeling-Nisshin, Inc.:
We have audited the accompanying balance sheets of Wheeling-Nisshin,
Inc. (the Company) as of December 31, 1997 and 1996, and the related statements
of income, shareholders' equity and cash flows for each of the three years in
the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Wheeling-Nisshin,
Inc. as of December 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1997 in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Pittsburgh, Pennsylvania
February 12, 1998
F-23
<PAGE>
WHEELING-NISSHIN, INC.
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
----------------- -----------------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents..................................................... $ 22,313 $ 19,017
Investments................................................................... 28,500 19,900
Trade accounts receivable, net of allowance for
bad debts of $250 in 1997 and 1996.......................................... 16,364 19,765
Inventories (Note 3).......................................................... 16,793 22,233
Prepaid income taxes.......................................................... 139 --
Deferred income taxes (Note 6)................................................ 2,342 2,337
622 819
Other current assets.......................................................... ----------------- -----------------
Total current assets.................................................... 87,073 84,071
Property, plant and equipment, net (Note 4)..................................... 124,787 134,174
Debt issuance costs, net of accumulated amortization
of $1,704 in 1997 and $1,617 in 1996.......................................... 197 284
719 851
Other assets.................................................................... ----------------- -----------------
Total assets........................................................... $ 212,776 $ 219,380
================= =================
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
<S> <C> <C>
Accounts payable.............................................................. $ 10,684 $ 21,226
Due to affiliates (Note 8).................................................... 3,356 --
Accrued interest.............................................................. 367 497
Accrued income taxes.......................................................... -- 3,183
Other accrued liabilities..................................................... 3,260 3,388
Accrued profit sharing........................................................ 4,644 6,505
6,835 6,828
Current portion of long-term debt (Note 5).................................... ----------------- -----------------
Total current liabilities............................................... 29,146 41,627
Long-term debt, less current portion (Note 5).................................. 11,645 18,487
Deferred income taxes (Note 6).................................................. 25,262 24,116
2,500 --
Other long-term liabilities (Note 9)............................................ ----------------- -----------------
Total liabilities...................................................... 68,553 84,230
----------------- -----------------
Contingencies (Note 9)..........................................................
Shareholders' equity:
Common stock, no par value; authorized, issued
and outstanding, 7,000 shares............................................... 71,588 71,588
Retained earnings............................................................. 72,635 63,562
----------------- -----------------
Total shareholders' equity................................................. 144,223 135,150
----------------- -----------------
Total liabilities and shareholders' equity............................. $ 212,776 $ 219,380
================= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-24
<PAGE>
WHEELING-NISSHIN, INC.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
<S> <C> <C> <C>
Net Sales..................................................... $396,278 $375,658 $389,704
Cost of goods sold (Note 8)................................... 365,967 335,071 349,429
----------------- ----------------- -----------------
Gross profit.............................................. 30,311 40,587 40,275
Selling, general and administrative expenses................. 5,608 6,546 8,676
----------------- ----------------- -----------------
Operating profit.......................................... 24,703 34,041 31,599
----------------- ----------------- -----------------
Other income (expense):
Interest and other income................................... 2,203 2,539 1,717
Interest expense............................................ (1,398) (1,909) (3,729)
----------------- ----------------- -----------------
805 630 (2,012)
----------------- ----------------- -----------------
Income before income taxes................................ 25,508 29,587
34,671
Provision for income taxes (Note 6)........................... 9,435 13,110 11,538
----------------- ----------------- -----------------
Net income................................................ $16,073 $21,561 $18,049
================= ================= =================
Earnings per share (Note 2)................................... $2.30 $3.03 $2.58
================= ================= =================
</TABLE>
The accompanying notes are a integral part of the financial statements.
F-25
<PAGE>
WHEELING-NISSHIN, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON RETAINED
STOCK EARNINGS TOTAL
----------------- ----------------- -----------------
<S> <C> <C> <C>
Balance at December 31, 1994.................................. $ 71,588 $ 37,952 $ 109,540
Net income................................................... -- 18,049 18,049
Cash dividends ($1 per share)................................. -- (7,000) (7,000)
----------------- ----------------- -----------------
Balance at December 31, 1995.................................. 71,588 49,001 120,589
Net income.................................................... -- 21,561 21,561
-- (7,000) (7,000)
Cash dividends ($1 per share)................................. ----------------- ----------------- -----------------
Balance at December 31, 1996................................. 71,588 63,562 135,150
Net income.................................................... -- 16,073 16,073
Cash dividends ($1 per share)................................. -- (7,000) (7,000)
----------------- ----------------- -----------------
Balance at December 31, 1997.................................. $ 71,588 $ 72,635 $ 144,223
================= ================= =================
</TABLE>
The accompanying notes are a integral part of the financial statements.
F-26
<PAGE>
WHEELING-NISSHIN, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income.................................................. $ 16,073 $ 21,561 $ 18,049
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization............................. 13,065 12,952 16,210
Deferred income taxes..................................... 1,141 5,330 5,449
Net change in operating assets and liabilities:
Decrease (increase) in trade accounts receivable........ 3,401 (730) (602)
Decrease (increase) in inventories...................... 5,440 (3,467) 5,161
(Increase) decrease in prepaid and accrued
income taxes ......................................... (3,322) (51) 1,368
Decrease (increase) in other assets..................... 197 (636) 42
(Decrease) Increase in accounts payable................. (10,542) 12,846 179
Increase (decrease) in due to affiliates................ 3,356 (6,036) (25,233)
Decrease in accrued interest............................ (130) (173) (312)
(Decrease) increase in other accrued liabilities........ (1,989) 945 4,843
---------------- ----------------- -----------------
Net cash provided by operating activities............. 26,690 42,541 25,154
----------------- ----------------- -----------------
Cash flows from investing activities:
Capital expenditures, net................................... (959) (1,173) (1,029)
Purchase of investments..................................... (43,700) (19,900) --
Sale of investments......................................... 35,100 -- --
----------------- ----------------- -----------------
Net cash used in investing activities................. (9,559) (21,073) (1,029)
----------------- ----------------- -----------------
Cash flows from financing activities:
Payments on long-term debt.................................. (6,835) (11,361) (32,145)
(7,000) (7,000) (7,000 )
Payment of dividends........................................ ----------------- ----------------- -----------------
Net cash used in financing activities................. (13,835) (18,361) (39,145)
----------------- ----------------- -----------------
Net increase (decrease) in cash and
cash equivalents............................................ 3,296 3,107 (15,020)
Cash and cash equivalents:
Beginning of the year....................................... 19,017 15,910 30,930
----------------- ----------------- -----------------
End of the year............................................. $ 22,313 $ 19,017 $ 15,910
================= ================= =================
Supplemental cash flow disclosures:
Cash paid during the year for:
Interest.................................................. $ 1,528 $ 2,082 $ 4,041
================= ================= =================
Income taxes.............................................. $ 11,616 $ 7,831 $ 4,968
================= ================= =================
Supplemental schedule of noncash investing
and financing activities:
Acquisition of property, plant and equipment
included in other long-term liabilities (Note 9).......... $ 2,500 $ -- $ 290
================= ================= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-27
<PAGE>
WHEELING-NISSHIN, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. DESCRIPTION OF BUSINESS
Wheeling-Nisshin, Inc. (the Company) is engaged in the production and
marketing of galvanized and aluminized steel products at a manufacturing
facility in Follansbee, West Virginia. Principally all of the Company's sales
are to ten trading companies located primarily in the United States. At December
31, 1997, Nisshin Holding Incorporated, a wholly-owned subsidiary of Nisshin
Steel Co., Ltd.,(Nisshin) and Wheeling-Pittsburgh Corporation
(Wheeling-Pittsburgh) owned 64.3% and 35.7% of the outstanding common stock of
the Company, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. Estimates also affect the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS:
Cash and cash equivalents consist of general cash accounts and highly
liquid debt instruments with maturities of three months or less when purchased.
Substantially all of the Company's cash and cash equivalents are maintained at
one financial institution. No collateral or other security is provided on these
deposits, other than $100 of deposits insured by the Federal Deposit Insurance
Corporation.
INVESTMENTS:
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt
and Equity Securities." This statement requires that securities be classified as
trading, held-to-maturity, or available-for-sale. The Company's investments,
which consist of certificates of deposit and commercial paper, are classified as
held-to-maturity and are recorded at cost. The certificates of deposit amounted
to $28,500 and $15,000 at December 31, 1997 and 1996, respectively, and are
maintained at one financial institution. Commercial paper amounted to $4,900 at
December 31, 1996.
INVENTORIES:
Inventories are stated at the lower of cost or market. Cost is
determined by the last-in, first-out (LIFO) method.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment is stated at cost less accumulated
depreciation and amortization.
Major renewals and improvements are charged to the property accounts,
while replacements, maintenance and repairs which do not improve or extend the
useful lives of the respective assets are expensed. Upon disposition or
retirement of property, plant and equipment, the cost and the related
accumulated depreciation or amortization are removed from the accounts. Gains or
losses on sales are reflected in other income.
F-28
<PAGE>
Depreciation and amortization are provided using the straight-line
method over the estimated useful lives of the assets.
DEFERRED PRE-OPERATING COSTS:
Certain costs directly related and incremental to the Company's second
production line were deferred until commencement of commercial operations in
March 1993. These costs, which were an integral part of the process of bringing
the new line into commercial production and, therefore, benefited future
periods, were being amortized using the straight-line method over a three-year
period. In 1995, management determined that they had fully recovered the
deferred pre-operating costs related to the new production line. Accordingly,
the remaining unamortized cost at December 31, 1995 of $390 was charged to
operations in 1995.
DEBT ISSUANCE COSTS:
Debt issuance costs associated with long-term debt secured to finance
the construction of the Company's original manufacturing facility and the second
production line were capitalized and are being amortized using the effective
interest method over the term of the related debt.
INCOME TAXES:
The Company uses SFAS 109, "Accounting for Income Taxes" to recognize
deferred tax liabilities and assets for the difference between the financial
statement carrying amounts and the tax basis of assets and liabilities using
enacted tax rates in effect in the years in which the differences are expected
to reverse. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized.
EARNINGS PER SHARE:
The Company has adopted SFAS No. 128, "Earnings Per Share" issued in
February 1997. This statement requires the disclosure of basic and diluted
earnings per share and revises the method required to calculate these amounts.
The adoption of this standard did not impact previously reported earnings per
share amounts.
Earnings per share is calculated by dividing net income by the weighted
average number of shares of common stock outstanding during each period.
RECLASSIFICATION:
In 1997, the Company reclassified cash discounts previously reported
within selling, general and administrative expense to net sales. Previous years
financial statements have been restated to conform to 1997 presentation. Cash
discounts were approximately, $1,917, $1,842, and $1,873 in 1997, 1996 and 1995,
respectively.
3. INVENTORIES
Inventories consist of the following at December 31:
1997 1996
----------------- -----------------
Raw materials...................... $ 6,089 $ 10,645
Finished goods..................... 10,704 11,588
----------------- -----------------
$ 16,793 $ 22,233
================= =================
Had the Company used the first-in, first-out (FIFO) method to value
inventories, the cost of inventories would have been $1,343 lower than the LIFO
value at December 31, 1997 and $12 lower than the LIFO value at
F-29
<PAGE>
December 31, 1996. During 1997, certain inventory quantities were reduced,
resulting in liquidation of LIFO inventories, the effect of which increased net
income by approximately $839.
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
----------------- -----------------
<S> <C> <C>
Buildings.......................................$ 34,665 $ 34,665
Land improvements............................... 3,097 3,097
Machinery and equipment........................ 164,893 161,723
Office equipment................................ 3,725 3,436
----------------- -----------------
206,380 202,921
Less accumulated depreciation and amortization.. (82,625) (69,779)
----------------- -----------------
123,755 133,142
Land............................................ 1,032 1,032
----------------- -----------------
$ 124,787 $ 134,174
================= =================
</TABLE>
Depreciation expense was $12,846, $12,715 and $13,651 in 1997, 1996,
and 1995, respectively.
5. LONG-TERM DEBT
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
---------------- -----------------
Industrial revenue bonds for the second production line accruing interest at
.625% over the LIBOR rate, as adjusted for periods ranging from three months
to one year, as elected by the Company. The interest rate on the bonds at
December 31, 1997 was 6.53%. The bonds are payable in 17 equal semi-annual
installments of $3,353 plus interest
<S> <C> <C>
through March 2000............................................................$ 18,235 $ 24,941
West Virginia Economic Development Authority
(WVEDA) loan accruing interest at 4%, payable in
monthly installments of $2 including interest through January 2001............ 67 90
Capital lease obligations accruing interest at rates
ranging from 10% to 13.8%, payable in monthly
installments through January 2000............................................. 178 284
----------------- -----------------
18,480 25,315
Less current portion............................................................ 6,835 6,828
----------------- -----------------
11,645 $ 18,487
================= =================
</TABLE>
The industrial revenue bonds are collateralized by substantially all
property, plant and equipment and are guaranteed by Nisshin. In addition, the
industrial revenue bonds provide that dividends may not be declared or paid
without the prior written consent of the lender. Such approval was obtained for
the dividends paid in years 1997, 1996 and 1995.
F-30
<PAGE>
The annual maturities on all long-term debt for each of the five years
ending December 31 are: $6,835 in 1998; $6,784 in 1999; $4,848 in 2000; $13 in
2001 and $0 in 2002.
F-31
<PAGE>
6. INCOME TAXES
The provision for income taxes for the years ended December 31 consist
of:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
Current:
<S> <C> <C> <C>
U.S. Federal................. $ 7,771 $ 7,366 $ 5,838
State........................ 523 414 251
Deferred....................... 1,141 5,330 5,449
----------------- ----------------- -----------------
$ 9,435 $ 13,110 $ 11,538
================= ================= =================
</TABLE>
Reconciliation of the federal statutory and effective tax rates for
1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
<S> <C> <C> <C>
Federal statutory rate........................................ 35.0% 35.0% 35.0%
State income taxes............................................ 1.5 1.2 0.8
Other, net.................................................... 0.5 1.6 3.2
----------------- ----------------- -----------------
37.0% 37.8% 39.0%
================= ================= =================
</TABLE>
The deferred tax assets and liabilities recorded on the balance sheets
as of December 31 are as follows:
<TABLE>
<CAPTION>
1997 1996
----------------- -----------------
Deferred tax assets:
<S> <C> <C>
Accrued expenses.............................................................. $ 1,120 $ 1,376
Other......................................................................... 1,222 961
----------------- -----------------
2,342 2,337
----------------- -----------------
Deferred tax liabilities:
Depreciation and amortization................................................. 23,781 22,491
Other......................................................................... 1,481 1,625
----------------- -----------------
25,262 24,116
----------------- -----------------
$ 22,920 $ 21,779
================= =================
</TABLE>
The Company has available tax credit carryforwards of approximately
$60,000 which may be used to offset up to 80% of future West Virginia state
income tax liabilities through 2003. A valuation allowance for the entire amount
of the credit has been recognized in the accompanying financial statements.
Accordingly, as the credit is utilized, a benefit is recognized through a
reduction of the current state income tax provision. Such benefit amounted to
approximately $864 in 1997, $998 in 1996 and $640 in 1995.
7. EMPLOYEE BENEFIT PLANS
Retirement Plan:
The Company has a noncontributory, defined contribution plan which
covers eligible employees. The plan provides for Company contributions ranging
from 2% to 6% of the participant's annual compensation based on their years of
service. The Company's contribution to the plan was $415 in 1997, $336 in 1996
and $266 in 1995.
F-32
<PAGE>
Profit-Sharing Plan:
The Company has a nonqualified profit-sharing plan for eligible
employees, providing for cash distributions to the participants in years when
income before income taxes is in excess of $500. These contributions are based
on an escalating scale from 5% to 15% of income before income taxes.
Profit-sharing expense was $4,644 in 1997, $6,505 in 1996 and $5,546 in 1995.
Postretirement Benefits:
In December 1996, the Company adopted a defined benefit postretirement
plan which covers eligible employees. Generally, the plan calls for a stated
percentage of medical expenses reduced by deductibles and other coverages. The
plan is currently unfunded. The postretirement benefit expense was $68 for 1997
and 1996. Accrued postretirement benefits was approximately $144 and $68 at
December 31, 1997 and 1996, respectively.
8. RELATED PARTY TRANSACTIONS
The Company has an agreement with Wheeling-Pittsburgh under which the
Company has agreed to purchase a specified portion of its required raw materials
through the year 2013. The Company purchased $24,533, $161,380 and $187,548 of
raw materials and processing services from Wheeling-Pittsburgh in 1997, 1996 and
1995, respectively. The amounts due Wheeling-Pittsburgh for such purchases are
included in due to affiliates in the accompanying balance sheets.
The Company sells products to Wheeling-Pittsburgh. Such sales totaled
$6,408, $6,511, and $5,693 in 1997, 1996, and 1995, respectively, of which $880
and $901 remained unpaid at December 31, 1997 and 1996, respectively, and are
included in trade accounts receivable in the accompanying balance sheets. The
Company also sells product to Unimast, Inc., an affiliate of
Wheeling-Pittsburgh. Such sales totaled $435, $1,537 and $1,389 in 1997, 1996
and 1995, respectively, of which $10 and $358 remained unpaid at December 31,
1997 and 1996, respectively, and were included in trade accounts receivable in
the accompanying balance sheets.
9. LEGAL MATTERS
The Company is a party to a dispute for final settlement of charges
related to the construction of its second production line. The Company had
claims asserted against it in the amount of approximately $6,900 emerging from
civil actions alleging delays on the project. In connection with the dispute,
the Company filed a separate claim for alleged damages that it had sustained in
the amount of approximately $400.
The claims were litigated in the Court of Common Pleas of Allegheny
County, Pennsylvania in a jury trial, which commenced on January 5, 1996. A
verdict in the amount of $6,700 plus interest of $1,900 was entered against the
Company on October 2, 1996. After the verdict, the plaintiffs requested the
trial court to award counsel fees in the amount of $2,422 against the Company.
The motions for counsel fees plus interest were granted by the court to the
plaintiffs in June 1997.
The Company filed appeals from the judgments to the Superior Court of
Pennsylvania in 1997. Post- judgment interest will accrue during the appeal
period. Additionally, the Company has posted a bond in the amount approximating
$12,000 that will be held by the court pending the appeals. Although the Company
has been advised by its Special Counsel that it has various legal bases for
relief, litigation is subject to many uncertainties and, as such, the Company is
presently unable to predict the outcome of its appeals. The Company has recorded
a liability in the amount of $2,500 at December 31, 1997 related to these
matters, which has been capitalized in property, plant and equipment as cost
overruns in the accompanying 1997 balance sheet. If the Company is unsuccessful
in these appeals, it is at least reasonably possible that the ultimate
resolution of these matters may have a material effect on the Company's results
of operations or cash flows in the year of final determination. Any portion of
the ultimate resolution for interest, penalties and counsel fees will be charged
to results of operations.
F-33
<PAGE>
10. FAIR VALUE OF FINANCIAL INVESTMENTS
The estimated fair values and the methods used to estimate those values
are disclosed below:
Investments:
The fair values of commercial paper and certificates of deposit were
$28,890 and $20,145 at December 31, 1997 and 1996, respectively. These amounts
were determined based on the investment cost plus interest receivable at
December 31, 1997 and 1996.
Long-Term Debt:
Based on borrowing rates currently available to the Company for bank
loans with similar terms and maturities, fair value approximates the carrying
value.
F-34
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The General Corporation Law of the State of Delaware (the "Delaware
Law") permits indemnification of directors, employees and agents of corporations
under certain conditions and subject to certain limitations. Pursuant to the
Delaware Law, the Company has included in its Certificate of Incorporation and
bylaws a provision to eliminate the personal liability of its directors for
monetary damages for breach or alleged breach of their duty of care to the
fullest extent permitted by the Delaware Law and to provide that the Company
shall indemnify its directors and officers to the fullest extent permitted by
the Delaware Law.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following is a complete list of Exhibits filed as a part of this
Registration Statement, which are incorporated herein:
**1 Purchase Agreement dated November 20, 1997, by and among
the Company, and the Initial Purchasers.
**3.1 Certificate of Incorporation of the Company.
**3.2 By-laws of the Company.
**3.3 Certificate of Incorporation of Wheeling-Pittsburgh Steel
Corporation.
**3.4 By-laws of Wheeling-Pittsburgh Steel Corporation.
**3.5 Certificate of Incorporation of Consumers Mining
Corporation.
**3.6 By-laws of Consumers Mining Corporation.
**3.7 Certificate of Incorporation of Wheeling-Empire Company.
**3.8 By-laws of Wheeling-Empire Company.
**3.9 Certificate of Incorporation of Mingo Oxygen Company.
**3.10 By-laws of Mingo Oxygen Company.
**3.11 Certificate of Incorporation of Pittsburgh-Canfield
Company.
**3.12 By-laws of Pittsburgh-Canfield Company.
**3.13 Certificate of Incorporation of Wheeling Construction
Products, Inc.
**3.14 By-laws of Wheeling Construction Products, Inc.
**3.15 Certificate of Incorporation of WP Steel Venture
Corporation.
**3.16 By-laws of WP Steel Venture Corporation.
II-1
<PAGE>
**3.17 Certificate of Incorporation of Champion Metal Products,
Inc.
**3.18 By-laws of Champion Metal Products, Inc.
**4.1 Indenture dated as of November 26, 1997, by and among the
Company and Bank One, N.A.
*4.2 Term Loan Agreement dated as of November 26, 1997, by and
among the Company, various financial Institutions as
Lenders, DLJ Capital Funding, Inc. as Syndication Agent
and Citicorp USA, Inc. as Documentation Agent.
*4.3 Amendment No. 1 to Term Loan Agreement dated as of
December 31, 1997, between the Company, various financial
Institutions as Lenders, DLJ Capital Funding, Inc. as
Syndication Agent and Citicorp USA, Inc. as Documentation
Agent.
*4.4 Keepwell Agreement dated December 28, 1995, by WPSC and
WHX.
*4.5 Amendment to Keepwell Agreement dated November 28, 1997 by
WPSC, the Company, the Lenders, WHX and Citibank N.A.
*4.6 Second Amended and Restated Credit Agreement dated
December 28, 1995 among WPSC, the Lenders party thereto
and Citibank N.A., as Agent.
*4.7 Amendment No. 1 to the Second Amended and Restated Credit
Agreement dated as of December 30, 1996, among WPSC, the
Lenders party thereto and Citibank N.A., as Agent.
*4.8 Amendment No. 2 to the Second Amended and Restated Credit
Agreement dated as of June 30, 1997, among WPSC, the
Lenders party thereto and Citibank N.A., as Agent.
*4.9 Amendment No. 3 to the Second Amended and Restated Credit
Agreement dated as of September 30, 1997, among WPSC, the
Lenders party thereto and Citibank N.A., as Agent.
*4.10 Amendment No. 4 to the Second Amended and Restated Credit
Agreement dated as of November 19, 1997, among WPSC, the
Lenders party thereto and Citibank N.A., as Agent.
*4.11 Amendment No. 5 to the Second Amended and Restated Credit
Agreement dated as of November 28, 1997, among WPSC, the
Lenders party thereto and Citibank N.A., as Agent.
*5 Opinion of Olshan Grundman Frome & Rosenzweig LLP.
**8 Opinion of Olshan Grundman Frome & Rosenzweig LLP
(included in Exhibit 5 to this Registration Statement).
*10.1 Employment Agreement by and between the Company and John
R. Scheessele, dated February 7, 1997.
*10.2 Employment Agreement by and between the Company and Paul
J. Mooney, dated October 17, 1997.
*10.3 1991 Incentive and Nonqualified Stock Option Plan.
*10.4 Pooling and Servicing Agreement dated as of August 1,
1994, among Wheeling-Pittsburgh Funding, Inc., WPSC and
Bank One, Columbus, N.A.
**10.5 Amended and Restated Shareholders Agreement dated as of
November 12, 1995, between Nisshin Steel Co., Ltd. and
Wheeling-Pittsburgh Steel Corporation.
II-2
<PAGE>
**10.6 Close Corporation and Shareholder's Agreement effective as
of March 24, 1994, by and among Dong Yang Tinplate America
Corp., the Company, Nittetsu Shoji America, Inc. and Ohio
Coatings Company.
*21.1 Subsidiaries of Registrant.,
*23.1 Consent by Price Waterhouse LLP.
*23.2 Consent by Coopers & Lybrand L.L.P.
**23.4 Consent of Olshan Grundman Frome & Rosenzweig LLP
(included in Exhibit 5 to this Registration Statement).
**25 Statement of eligibility of trustee.
**99.1 Registration Rights Agreement dated November 26, 1997, by
and among the Company and the Initial Purchasers.
**99.3 Form of Letter of Transmittal for Tender of all
outstanding 9 1/4% Senior Notes Due 2007 in exchange for 9
1/4% Senior Exchange Notes Due 2007 of the Company.
**99.4 Form of Tender for all outstanding 9 1/4% Senior Notes Due
2007 in exchange for 9 1/4% Senior Exchange Notes Due 2007
of the Company.
**99.5 Form of Instruction to Registered Holder from Beneficial
Owner of 9 1/4% Senior Notes due 2007 of the Company.
**99.6 Form of Notice of Guaranteed Delivery for outstanding 9
1/4% Senior Notes Due 2007 in exchange for 9 1/4% Senior
Exchange Notes Due 2007 of the Company.
_____________________
* Filed herewith.
** Previously filed.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrants hereby undertake:
(1) That prior to any public reoffering of the securities registered
hereunder through the use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) under the Securities Act of 1933, as amended (the
"Securities Act"), the issuer undertakes that such reoffering prospectus will
contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other Items of the applicable form.
(2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of section
10(a)(3) of the Securities Act and is used in connection with an offering of
securities subject to Rule 415 under the Securities Act, will be filed as a part
of an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
II-3
<PAGE>
have been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
enforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrants of expenses incurred or
paid by a director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceedings) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
(c) The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(d) The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(e) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of the
registrants' annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Wheeling-Pittsburgh Corporation has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Wheeling, State of West Virginia on March 23, 1998.
WHEELING-PITTSBURGH CORPORATION
By: /S/ JOHN R. SCHEESSELE
--------------------------
John R. Scheessele
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act, as amended, this
Registration Statement has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/S/ JOHN R. SCHEESSELE President and Chief Executive March 23, 1998
- ---------------------- Officer (Principal Executive
John R. Scheessele Officer)
/S/ PAUL J. MOONEY Executive Vice President and March 23, 1998
- ---------------------- Chief Financial Officer
Paul J. Mooney (Principal Financial Officer
and Principal Accounting
Officer)
/S/ RONALD LABOW* Director March 23, 1998
- --------------------
Ronald LaBow
/S/ ROBERT A. DAVIDOW* Director March 23, 1998
- ----------------------
Robert A. Davidow
/S/ MARVIN L. OLSHAN* Director March 23, 1998
- -----------------------
Marvin L. Olshan
- ----------------------
* By Power of Attorney
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Wheeling-Pittsburgh Steel Corporation has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Wheeling, State of West Virginia on March 23, 1998.
WHEELING-PITTSBURGH STEEL CORPORATION
By: /S/ JOHN R. SCHEESSELE
--------------------------
John R. Scheessele
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act, as amended, this
Registration Statement has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/S/ JOHN R. SCHEESSELE President and Chief Executive March 23, 1998
- ------------------------- Officer (Principal Executive
John R. Scheessele Officer)
/S/ PAUL J. MOONEY Executive Vice President and March 23, 1998
- ------------------------- Chief Financial Officer
Paul J. Mooney (Principal Financial Officer
and Principal Accounting
Officer)
- ------------------------- Director
Robert L. Dobson
/S/ RONALD LABOW Director March 23, 1998
- ------------------------
Ronald LaBow
- ------------------------ Director
Keith K. Kappmeyer
/S/ STEWART E. TABIN* Director March 23, 1998
- ------------------------
Stewart E. Tabin
/S/ AKIMUNE TAKEWAKA* Director March 23, 1998
- ------------------------
Akimune Takewaka
/S/ NEALE X. TRANGUCCI* Director March 23, 1998
- ------------------------
Neale X. Trangucci
- ----------------------
* By Power of Attorney
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Consumers Mining Corporation has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Wheeling, State of West Virginia on March 23, 1998.
CONSUMERS MINING CORPORATION
By: /S/ JOHN R. SCHEESSELE
-------------------------------------
John R. Scheessele
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act, as amended, this
Registration Statement has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/S/ JOHN R. SCHEESSELE President and Chief Executive March 23, 1998
- -------------------------- Officer (Principal Executive
John R. Scheessele Officer)
/S/ PAUL J. MOONEY Executive Vice President and March 23, 1998
- -------------------------- Chief Financial Officer
Paul J. Mooney (Principal Financial Officer
and Principal Accounting
Officer)
/S/ JAMES E. MULDOON* Director March 23, 1998
- -------------------------
James E. Muldoon
- ----------------------
* By Power of Attorney
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Wheeling Empire Company has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Wheeling, State of West Virginia on March 23, 1998.
WHEELING EMPIRE COMPANY
By: /S/ JOHN R. SCHEESSELE
--------------------------
John R. Scheessele
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act, as amended, this
Registration Statement has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/S/ JOHN R. SCHEESSELE President and Chief Executive March 23, 1998
- ------------------------------ Officer (Principal Executive
John R. Scheessele Officer)
/S/ PAUL J. MOONEY Executive Vice President and March 23, 1998
- ------------------------------ Chief Financial Officer
Paul J. Mooney (Principal Financial Officer
and Principal Accounting
Officer)
/S/ JAMES E. MULDOON* Director March 23, 1998
- ------------------------------
James E. Muldoon
- ----------------------
* By Power of Attorney
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Mingo Oxygen Company has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Wheeling, State of West Virginia on March 23, 1998.
MINGO OXYGEN COMPANY
By: /S/ JOHN R. SCHEESSELE
--------------------------
John R. Scheessele
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act, as amended, this
Registration Statement has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/S/ JOHN R. SCHEESSELE President and Chief Executive March 23, 1998
- ----------------------------- Officer (Principal Executive
John R. Scheessele Officer)
/S/ PAUL J. MOONEY Executive Vice President and March 23, 1998
- ----------------------------- Chief Financial Officer
Paul J. Mooney (Principal Financial Officer
and Principal Accounting
Officer)
/S/ JAMES E. MULDOON* Director March 23, 1998
- -----------------------------
James E. Muldoon
/S/ THOMAS A. HELINSKI* Director March 23, 1998
- -----------------------------
Thomas A. Helinski
/S/ JOHN W. TESTA* Director March 23, 1998
- -----------------------------
John W. Testa
- ----------------------
* By Power of Attorney
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Pittsburgh-Canfield Company has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Wheeling, State of West Virginia on March 23, 1998.
PITTSBURGH-CANFIELD COMPANY
By: /S/ JOHN R. SCHEESSELE
--------------------------
John R. Scheessele
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act, as amended, this
Registration Statement has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/S/ JOHN R. SCHEESSELE President and Chief Executive March 23, 1998
- ------------------------------ Officer (Principal Executive
John R. Scheessele Officer)
/S/ PAUL J. MOONEY Executive Vice President and March 23, 1998
- ------------------------------ Chief Financial Officer
Paul J. Mooney (Principal Financial Officer
and Principal Accounting
Officer)
/S/ JAMES E. MULDOON* Director March 23, 1998
- -----------------------------
James E. Muldoon
/S/ JOHN W. TESTA* Director March 23, 1998
- -----------------------------
John W. Testa
- ----------------------
* By Power of Attorney
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Wheeling-Construction Products, Inc. has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Wheeling, State of West Virginia on March 23, 1998.
WHEELING-CONSTRUCTION PRODUCTS, INC.
By: /S/ JOHN R. SCHEESSELE
--------------------------
John R. Scheessele
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act, as amended, this
Registration Statement has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/S/ JOHN R. SCHEESSELE President and Chief Executive March 23, 1998
- --------------------------- Officer (Principal Executive
John R. Scheessele Officer)
/S/ PAUL J. MOONEY Executive Vice President and March 23, 1998
- --------------------------- Chief Financial Officer
Paul J. Mooney (Principal Financial Officer
and Principal
Accounting Officer)
/S/ TOM PATRICK* Director March 23, 1998
- ---------------------------
Tom Patrick
- ----------------------
* By Power of Attorney
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
WP Steel Venture Corporation has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Wheeling, State of West Virginia on March 23, 1998.
WP STEEL VENTURE CORPORATION
By:/S/ JOHN R. SCHEESSELE
--------------------------
John R. Scheessele
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act, as amended, this
Registration Statement has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/S/ JOHN R. SCHEESSELE President and Chief Executive March 23, 1998
- --------------------------- Officer (Principal Executive
John R. Scheessele Officer)
/S/ PAUL J. MOONEY Executive Vice President and March 23, 1998
- --------------------------- Chief Financial Officer
Paul J. Mooney (Principal Financial
Officer and Principal
Accounting Officer)
/S/ JAMES E. MULDOON* Director March 23, 1998
- --------------------------
James E. Muldoon
- ----------------------
* By Power of Attorney
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Champion Metal Products, Inc. has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Wheeling, State of West Virginia on March 23, 1998.
CHAMPION METAL PRODUCTS, INC.
By:/S/ JOHN R. SCHEESSELE
-------------------------------------
John R. Scheessele
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act, as amended, this
Registration Statement has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/S/ JOHN R. SCHEESSELE President and Chief Executive March 23, 1998
- ----------------------------- Officer (Principal
John R. Scheessele Executive Officer)
/S/ PAUL J. MOONEY Executive Vice President and March 23, 1998
- ----------------------------- Chief Financial Officer
Paul J. Mooney (Principal Financial
Officer and Principal
Accounting Officer)
/S/ TOM PATRICK* Director March 23, 1998
- ----------------------------
Tom Patrick
- ----------------------
* By Power of Attorney
II-13
TERM LOAN AGREEMENT,
dated as of November 26, 1997,
among
WHEELING-PITTSBURGH CORPORATION,
as the Borrower,
VARIOUS FINANCIAL INSTITUTIONS,
as the Lenders,
DLJ CAPITAL FUNDING, INC.,
as the Syndication Agent and
the Administrative Agent for the Lenders,
and
CITICORP USA, INC.,
as the Documentation Agent for the Lenders,
ARRANGED BY
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
ARTICLE IDEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms.........................................................1
1.2. Use of Defined Terms.................................................22
1.3. Cross-References.....................................................22
1.4. Accounting and Financial Determinations..............................22
1.5. Officers' Certificates and Opinions..................................23
ARTICLE IICOMMITMENTS, BORROWING PROCEDURES AND TERM NOTES
2.1. Commitments..........................................................23
2.1.1. Term Loan Commitments................................................23
2.1.2. Lenders Not Permitted or Required to Make the Term Loans.............23
2.2. Borrowing Procedures and Funding Maintenance.........................24
2.3. Continuation and Conversion Elections................................24
2.4. Funding..............................................................24
2.5. Term Notes...........................................................24
ARTICLE IIIREPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1. Repayments and Prepayments; Application..............................25
3.1.1. Repayments and Prepayments...........................................25
3.1.2. Application..........................................................26
3.2. Interest Provisions..................................................27
3.2.1. Rates................................................................27
3.2.2. Post-Maturity Rates..................................................27
3.2.3. Payment Dates........................................................27
3.3. Fees.................................................................28
3.3.1. Arrangement, Structuring and Commitment Fees.........................28
3.3.2. Administrative Agent Fee.............................................28
ARTICLE IVCERTAIN LIBO RATE AND OTHER PROVISIONS
4.1. LIBO Rate Lending Unlawful...........................................28
4.2. Deposits Unavailable.................................................28
4.3. Increased LIBO Rate Loan Costs, etc..................................29
4.4. Funding Losses.......................................................29
4.5. Increased Capital Costs..............................................29
4.6. Taxes................................................................30
4.7. Payments, Computations, etc..........................................30
4.8. Sharing of Payments..................................................31
4.9. Setoff...............................................................31
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ARTICLE VCONDITIONS TO TERM LOANS
5.1. Resolutions, etc.....................................................32
5.2. Delivery of Term Note................................................32
5.3. Subsidiary Guaranty..................................................32
5.4. Closing Date Certificate; Transaction Documents......................32
5.5. Existing Senior Note Defeasance......................................32
5.6. Issuance of the 1997 Senior Notes....................................33
5.7. Litigation...........................................................33
5.8. Material Adverse Change..............................................33
5.9. Opinions of Counsel..................................................33
5.10. Closing Fees, Expenses, etc..........................................33
5.11. Satisfactory Legal Form..............................................33
ARTICLE VIREPRESENTATIONS AND WARRANTIES
6.1. Organization; Due Authorization, etc.................................33
6.2. Capital Stock of the Borrower........................................34
6.3. Subsidiaries.........................................................34
6.4. No Conflicts.........................................................34
6.5. Validity and Binding Effect..........................................35
6.6. Tax Sharing Agreement, etc...........................................35
6.7. Litigation...........................................................35
Environmental Laws and ERISA.........................................35
6.9. Financial Statements.................................................36
6.10. Investment Company Act...............................................37
6.11. Regulations G, T, U and X............................................37
6.12. Material Adverse Change..............................................37
6.13. Property, etc........................................................37
6.14. Taxes................................................................37
6.15. Solvency.............................................................37
6.16. Accuracy of Information..............................................38
ARTICLE VIICOVENANTS
7.1. Affirmative Covenants................................................38
7.1.1. Financial Information, Reports, Notices, etc.........................38
7.1.2. Corporate Existence..................................................39
7.1.3. Stay, Extension and Usury Laws.......................................39
7.1.4. Insurance............................................................40
7.1.5. Taxes................................................................40
7.1.6. Books and Records....................................................40
7.1.7. Use of Proceeds, etc.................................................40
7.1.8. Additional Subsidiary Guarantors.....................................40
7.2. Negative Covenants...................................................40
7.2.1. Incurrence of Indebtedness and Issuance of Preferred
Stock................................................................40
7.2.2. Liens................................................................42
7.2.3. Restricted Payments..................................................43
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7.2.4. Dividend and Other Payment Restrictions Affecting
Subsidiaries.........................................................45
7.2.5. Merger, Consolidation, or Sale of Assets.............................46
7.2.6. Asset Sales..........................................................46
7.2.7. Modification of Certain Agreements...................................47
7.2.8. Transactions with Affiliates. .................47
7.2.9. Issuances and Sales of Capital Stock of Subsidiaries.................48
7.2.10. Sale and Leaseback Transactions......................................48
ARTICLE VIII EVENTS OF DEFAULT
8.1. Listing of Events of Default.........................................48
8.1.2. Breach of Warranty...................................................49
8.2. Acceleration.........................................................50
ARTICLE IX THE AGENTS
9.1. Appointment of Agents................................................51
9.2. Nature of Duties of the Agents.......................................51
9.3. General Immunity.....................................................51
9.4. Successor............................................................52
9.5. Agents in their Capacity as Lenders..................................52
9.6. Actions by Each Agent................................................53
9.7. Right to Indemnity...................................................53
9.8. Credit Decisions.....................................................53
9.9. Copies, etc..........................................................54
9.10. The Syndication Agent, the Documentation Agent and the
Administrative Agent.................................................54
9.11. Agreement to Cooperate...............................................54
ARTICLE X MISCELLANEOUS PROVISIONS
10.1. Waivers, Amendments, etc.............................................54
10.2. Notices..............................................................55
10.3. Payment of Costs and Expenses........................................55
10.4. Indemnification......................................................56
10.5. Survival.............................................................57
10.6. Severability.........................................................57
10.7. Headings.............................................................57
10.8. Execution in Counterparts, Effectiveness, etc........................57
10.9. Governing Law; Entire Agreement......................................57
10.10. Successors and Assigns...............................................58
10.11. Sale and Transfer of Term Loans and Term Notes;
Participations in Term
Loans and Term Notes.................................................58
10.11.1.Assignments..........................................................58
10.11.3.Assignments to Federal Reserve Banks.................................59
10.11.5.Representations of Lenders...........................................60
10.12. Other Transactions...................................................60
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10.13. Forum Selection and Consent to Jurisdiction..........................60
10.14. Waiver of Jury Trial.................................................61
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SCHEDULE I - Disclosure Schedule
SCHEDULE II - Percentages and Administrative Information
EXHIBIT A - Form of Term Note
EXHIBIT B - Form of Borrowing Request
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Subsidiary Guaranty
EXHIBIT E - Form of Closing Date Certificate
EXHIBIT F - Form of Lender Assignment Agreement
EXHIBIT G-1 - Form of Opinion of New York Counsel to the
Obligors
EXHIBIT G-2 - Form of Opinion of Pennsylvania Counsel to
the Obligors
EXHIBIT G-3 - Form of Opinion of Ohio Counsel to the
Obligors
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TERM LOAN AGREEMENT
This TERM LOAN AGREEMENT, dated as of November 26, 1997, is among
WHEELING-PITTSBURGH CORPORATION, a Delaware corporation (the "BORROWER"), the
various financial institutions as are or may become parties hereto as provided
herein (collectively, the "LENDERS"), DLJ CAPITAL FUNDING, INC. ("DLJ"), as
syndication agent (the "SYNDICATION AGENT"), and as administrative agent (the
"ADMINISTRATIVE AGENT") for the Lenders, and CITICORP USA, INC., as
documentation agent (the "DOCUMENTATION AGENT") for the Lenders.
W I T N E S S E T H:
WHEREAS, the Borrower is engaged directly and through its various
Subsidiaries (such capitalized term, and other capitalized terms used herein, to
have the meanings provided in SECTION 1.1) in the manufacture and sale of flat
rolled steel products;
WHEREAS, the Borrower desires to obtain from the Lenders a Commitment
to provide $75,000,000 in Term Loans, the proceeds of which will be used to
defease the Existing Senior Notes, reduce existing Indebtedness under the
Revolving Credit Facility and to pay the costs and expenses associated with this
transaction and issuance of the 1997 Senior Notes (the "1997 SENIOR NOTE
OFFERING"); and
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including ARTICLE V), to extend the
Commitments and make the Term Loans described herein to the Borrower;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. DEFINED TERMS. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"ACQUIRED INDEBTEDNESS" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted
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Subsidiary of such specified Person, including Indebtedness incurred in
connection with, or in contemplation of, such other Person merging with or into
or becoming a Restricted Subsidiary of such specified Person, and (ii)
Indebtedness secured by a Lien encumbering an asset acquired by such specified
Person at the time such asset is acquired by such specified Person.
"ADMINISTRATIVE AGENT" is defined in the PREAMBLE and includes each
other Person as shall have subsequently been appointed as the successor
Administrative Agent pursuant to SECTION 9.4.
"AFFILIATE" of any specified Person means any other Person which,
directly or indirectly, controls, is controlled by or is under direct or
indirect common control with, such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
provided that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AGENTS" means, collectively, the Administrative Agent, the Syndication
Agent and the Documentation Agent.
"AGREEMENT" means, on any date, this Term Loan Agreement as originally
in effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"ALTERNATE BASE RATE" means, for any day and with respect to all Base
Rate Loans, a fluctuating rate of interest per annum equal to the higher of: (a)
0.50% per annum above the Federal Funds Rate most recently determined by the
Administrative Agent; and (b) the rate of interest in effect for such day as
most recently publicly announced or established by the Administrative Agent at
its Domestic Office as its "reference rate." (The "reference rate" is a rate set
by the Administrative Agent based upon various factors including the
Administrative Agent's costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above or below such announced rate.) Any change in the
reference rate announced by the Administrative Agent shall take effect at the
opening of business on the day of such establishment or announcement.
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"APPLICABLE MARGIN" means (i) with respect to the unpaid principal
amount of each Term Loan maintained as a Base Rate Loan, 2.25% per annum and
(ii) with respect to the unpaid principal amount of each Term Loan maintained as
a LIBO Rate Loan, 3.25% per annum.
"ARRANGER" means Donaldson, Lufkin & Jenrette Securities Corporation, a
Delaware corporation.
"ASSET SALE" means the sale, lease, conveyance, disposition or other
transfer (a "DISPOSITION") of any properties, assets or rights (including a sale
and leaseback transaction or the issuance, sale or transfer by the Borrower of
Equity Interests of a Restricted Subsidiary) whether in a single transaction or
a series of related transactions; PROVIDED, HOWEVER, that the following
transactions will be deemed not to be Asset Sales: (a) sales of inventory in the
ordinary course of business; (b) a disposition of assets by the Borrower to a
Wholly Owned Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary of
the Borrower to the Borrower or to another Wholly Owned Restricted Subsidiary of
the Borrower; (c) a disposition of Equity Interests by a Wholly Owned Restricted
Subsidiary of the Borrower to the Borrower or to another Wholly Owned Restricted
Subsidiary of the Borrower; (d) a Permitted Investment or Restricted Payment
that is permitted by this Agreement; (e) the issuance by the Borrower of Equity
Interests; (f) the disposition of properties, assets or rights in any fiscal
year the aggregate Net Proceeds of which are less than $1,000,000; and (g) the
sale of accounts receivable pursuant to the Receivables Facility. The fair
market value of any non-cash proceeds of a sale of assets shall be determined by
the Board of Directors of the Borrower, whose resolution with respect thereto
shall be delivered to the Administrative Agent.
"ASSET SALE AMOUNT" means, on any date in respect of any Term Loan, an
amount which is the product of (a) a fraction (expressed as a percentage), the
numerator of which is the aggregate outstanding principal amount of Term Loans
and the denominator of which is the sum of the aggregate outstanding principal
amount of Term Loans PLUS the aggregate outstanding principal amount of 1997
Senior Notes MULTIPLIED BY (b) the aggregate amount of Excess Proceeds from
Asset Sales required to be applied pursuant to SECTION 7.2.6 to prepay Term
Loans.
"ASSET SALE PREPAYMENT DATE" means a date that is within 30 days
following delivery by the Borrower of a notice to the Administrative Agent and
each Lender of the prepayment of Term Loans from Excess Proceeds from Asset
Sales pursuant to SECTION 7.2.6.
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"ASSIGNEE LENDER" is defined in SECTION 10.11.1.
"ATTRIBUTABLE INDEBTEDNESS" in respect of a sale and leaseback
transaction means, at the time of determination, the present value (discounted
at the rate of interest implicit in such transaction, determined in accordance
with GAAP) of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended).
"AUTHORIZED OFFICER" means, relative to any Obligor, those of its
officers whose signatures and incumbency shall have been certified to the
Administrative Agent and the Lenders pursuant to SECTION 5.1.1.
"BANKRUPTCY LAW" means Title 11, United States Code, or any similar
federal or state law for the relief of debtors.
"BASE RATE LOAN" means a Term Loan bearing interest at a fluctuating
rate determined by reference to the Alternate Base Rate.
"BOARD OF DIRECTORS" means, with respect to any Person, the Board of
Directors of such Person, or any authorized committee of the Board of Directors
of such Person.
"BORROWER" is defined in the PREAMBLE.
"BORROWING" means Term Loans of the same type and, in the case of LIBO
Rate Loans, having the same Interest Period made by all Lenders on the same
Business Day.
"BORROWING REQUEST" means a loan request and certificate duly executed
by an Authorized Officer of the Borrower, substantially in the form of EXHIBIT B
hereto.
"BUSINESS DAY" means any day which is neither a Saturday or Sunday nor
a legal holiday on which banks are authorized or required to be closed in New
York City and, with respect to Borrowings of, Interest Periods with respect to,
payments of principal and interest in respect of, continuations or conversions
of Base Rate Loans into, LIBO Rate Loans, on which dealings in Dollars are
carried on in the London interbank market.
"CAPITAL EXPENDITURE INDEBTEDNESS" means Indebtedness incurred by any
Person to finance the purchase or construction of any property or assets
acquired or constructed by such Person
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which have a useful life of more than one year so long as (a) the purchase or
construction price for such property or assets is included in "addition to
property, plant or equipment" in accordance with GAAP, (b) the acquisition or
construction of such property or assets is not part of any acquisition of a
Person or line of business and (c) such Indebtedness is incurred within 90 days
of the acquisition or completion of construction of such property or assets.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"CAPITAL STOCK" means (a) in the case of a corporation, corporate
stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (d) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.
"CASH EQUIVALENTS" means (a) United States dollars, (b) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (c) certificates of deposit
and eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any domestic commercial bank
having capital and surplus in excess of $500,000,000, (d) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in CLAUSES (B) and (C) above entered into with any financial
institution meeting the qualifications specified in CLAUSE (C) above, (d)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Rating Service and in each case maturing
within six months after the date of acquisition and (e) money market mutual
funds substantially all of the assets of which are of the type described in the
foregoing CLAUSES (A) through (D).
"CHANGE OF CONTROL" means any of the following: (a) the sale, lease,
transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Borrower and its Restricted Subsidiaries,
taken as a
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whole, to any Person (as such term in used in Section 13(d)(3) of the Exchange
Act), (b) the adoption of a plan relating to the liquidation or dissolution of
the Borrower, (c) the consummation of any transaction (including any merger or
consolidation) the result of which is that (i) any "Person" or "group" (as such
terms are used in Section 13(d)(3) of the Exchange Act) other than the Parent or
an underwriter or group of underwriters in an underwritten public offering
becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act), directly or indirectly through one or more
intermediaries, of at least 50% of the voting power of the outstanding voting
stock of the Borrower, (d) the merger or consolidation of the Borrower with or
into another corporation with the effect that the existing stockholders of the
Borrower hold less than 50% of the combined voting power of the then outstanding
voting securities of the surviving corporation of such merger or the corporation
resulting from such consolidation or (e) the first day on which more than a
majority of the members of the Board of Directors of the Borrower are not
Continuing Directors.
"CHANGE OF CONTROL PREPAYMENT DATE" means a date that is within 37 days
following the occurrence of any Change of Control.
"CHANGE OF CONTROL PREPAYMENT EVENT" is defined in CLAUSE (B) of
SECTION 3.1.2.
"CHANGE OF CONTROL PREPAYMENT NOTICE" means a notice delivered to the
Administrative Agent and each Lender in connection with a Change of Control
Prepayment Event stating that (i) a Change of Control has occurred and that each
Lender is entitled to have its Term Loans prepaid, (ii) the Change of Control
Prepayment Price and the Change of Control Prepayment Date, (iii) any Term Loan
not prepaid shall remain outstanding, (iv) unless the Borrower defaults in the
payment of the Change of Control Prepayment Price, all Term Loans prepaid in
full pursuant to the Change of Control Prepayment Event shall cease to be
outstanding after the Change of Control Prepayment Date, (v) Lenders electing to
have their Term Loans prepaid in full pursuant to a Change of Control Prepayment
Event shall surrender their Term Notes marked "Canceled" to the Administrative
Agent at the address specified in the Change of Control Prepayment Notice prior
to the close of business on the third Business Day preceding the Change of
Control Prepayment Date, (vi) any Lender shall be entitled to withdraw its
prepayment election if the Administrative Agent receives, not later than the
close of business on the second Business Day preceding the Change of Control
Prepayment Date, a telegram, telex, facsimile transmission or letter from such
Lender setting forth the name of
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such Lender, the outstanding principal amount of such Lender's Term Loans and a
statement that such Lender is withdrawing its prepayment election and (vii) any
Lender electing to have its Term Loans partially prepaid shall be issued new
Term Notes in a principal amount equal to the amount of Term Loans not prepaid.
"CHANGE OF CONTROL PREPAYMENT PRICE" is defined in CLAUSE (B) of
SECTION 3.1.2.
"CITICORP" is defined in this PREAMBLE.
"CLOSING DATE" means the date of the initial Borrowing, not to be later
than November 26, 1997.
"CLOSING DATE CERTIFICATE" means a certificate of an Authorized Officer
of the Borrower substantially in the form of EXHIBIT E hereto, delivered
pursuant to SECTION 5.4.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified.
"COMMITMENT TERMINATION EVENT" means (i) the occurrence of any Event of
Default described in SECTION 8.1.8, or (ii) the occurrence and continuance of
any other Event of Default and either (x) the declaration of the Term Loans to
be due and payable pursuant to SECTION 8.2, or (y) in the absence of such
declaration, the giving of notice to the Borrower by the Administrative Agent,
acting at the direction of the Required Lenders, that the Term Loan Commitments
have been terminated.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (a)
provision for taxes based on income or profits of such Person and its Restricted
Subsidiaries, to the extent that such provision for taxes was included in
computing Consolidated Net Income, plus (b) Consolidated Interest Expense of
such Person and its Restricted Subsidiaries for such period, whether paid or
accrued and whether or not capitalized (including amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, commissions discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations), to the extent that any such expense was deducted in computing
Consolidated Net Income, plus (c) depreciation and amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior
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period) and other non-cash charges of such Person and its Restricted
Subsidiaries for such period, to the extent that such depreciation, amortization
and other non-cash charges were deducted in computing Consolidated Net Income,
minus (d) non-cash items increasing consolidated revenues in determining
Consolidated Net Income for such period to the extent not already reflected as
an expense in computing Consolidated Net Income, minus (e) all cash payments
during such period relating to non-cash charges and other non-cash items that
were or would have been added back in determining Consolidated Cash Flow for any
prior period, in each case, on a consolidated basis and determined in accordance
with GAAP.
"CONSOLIDATED INTEREST COVERAGE RATIO" means with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Consolidated Interest Expense of such Person for such period;
PROVIDED, HOWEVER, that the Consolidated Interest Coverage Ratio shall be
calculated giving pro forma effect to each of the following transactions as if
each such transaction had occurred at the beginning of the applicable
four-quarter reference period: (a) any incurrence, assumption, guarantee or
redemption by the Borrower or any of its Restricted Subsidiaries of any
Indebtedness (including revolving credit borrowings based on the average daily
balance outstanding during the relevant period) subsequent to the commencement
of the period for which the Consolidated Interest Coverage Ratio is being
calculated but prior to the date on which the event for which the calculation of
the Consolidated Interest Coverage Ratio is made (the "CALCULATION DATE"); (b)
any acquisition that has been made by the Borrower or any of its Restricted
Subsidiaries, or approved and expected to be consummated within 30 days of the
Calculation Date, including, in each case, through a merger or consolidation,
and including any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior to the
Calculation Date (in which case Consolidated Cash Flow for such reference period
shall be calculated to include the Consolidated Cash Flow of the acquired
entities and without giving effect to CLAUSE (C) of the proviso set forth in the
definition of Consolidated Net Income); and (c) any other transaction that may
be given pro forma effect in accordance with Article 11 of Regulation S-X as in
effect from time to time; and PROVIDED, FURTHER, that (i) the Consolidated Cash
Flow attributable to discontinued operations, as determined in accordance with
GAAP, and operations or businesses disposed of prior to the Calculation Date,
shall be excluded and (ii) the Consolidated Interest Expense attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise
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to such Consolidated Interest Expense will not be obligations of the referent
Person or any of its Restricted Subsidiaries following the Calculation Date.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person for
any period, the sum, without duplication, of (a) the consolidated interest
expense of such Person and its Restricted Subsidiaries for such period, whether
paid or accrued (including amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments associated
with Capital Lease Obligations, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations), (b) any
interest expense on Indebtedness of another Person that is guaranteed by such
Person or one of its Subsidiaries or secured by a Lien on assets of such Person
or one of its Restricted Subsidiaries (whether or not such guarantee of Lien is
called upon), (c) the consolidated interest expense of such Person and its
Restricted Subsidiaries that was capitalized during such period and (d) the
product of (i) all cash dividend payments on any series of preferred stock of
such Person, times (ii) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rates of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; PROVIDED, that (a) the Net Income (but not loss) of any Person that
is not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof, (b) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Restricted Subsidiary or its
stockholders, (c) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the
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date of such acquisition shall be excluded and (d) the cumulative effect of a
change in accounting principles shall be excluded.
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any
date, the sum of (a) the consolidated equity of the common stockholders of such
Person and its consolidated Restricted Subsidiaries as of such date plus (b) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (i) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of this Agreement in the book value of
any asset owned by such Person or a consolidated Restricted Subsidiary of such
Person, (ii) all investments as of such date in unconsolidated Restricted
Subsidiaries and in Persons that are not Subsidiaries and (iii) all unamortized
debt discount and expense and unamortized deferred charges as of such date, in
each case determined in accordance with GAAP; PROVIDED, HOWEVER, that any
changes after the date of this Agreement in the liabilities of such Person and
its Restricted Subsidiaries in respect of other post-retirement employee
benefits or pension benefits that would be reflected on a consolidated balance
sheet of such Person and its Restricted Subsidiaries in accordance with GAAP
shall be excluded.
"CONTINUATION/CONVERSION NOTICE" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of EXHIBIT C hereto.
"CONTINUING DIRECTORS" means, as of any date of determination, any
member of the Board of Directors of the Borrower who (a) was a member of the
Board of Directors of the Borrower on the Closing Date or (b) was nominated for
election to the Board of Directors of the Borrower with the approval of, or
whose election to the Board of Directors of the Borrower was ratified by, at
least two-thirds of the Continuing Directors who were members of the Board of
Directors of the Borrower at the time of such nomination or election or by the
Parent so long as the Parent owns a majority of the Capital Stock of the
Borrower.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
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"DEFAULT" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would, unless cured or
waived, constitute an Event of Default.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached hereto as
SCHEDULE I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Agents and the Required
Lenders.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures (excluding any
maturity as a result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or prior
to the date that is 91 days after the Final Maturity Date or the Obligations are
otherwise paid in full; PROVIDED, that any Capital Stock that would constitute
Disqualified Stock solely because the holders thereof (or of any security into
which it is convertible or for which it is exchangeable) have the right to
require the issuer to repurchase such Capital Stock (or such security into which
it is convertible or for which it is exchangeable) upon the occurrence of an
Asset Sale or a Change of Control shall not constitute Disqualified Stock if
such Capital Stock (and all such securities into which it is convertible or for
which it is exchangeable) provides that the issuer thereof will not repurchase
or redeem any such Capital Stock (or any such security into which it is
convertible or for which it is exchangeable) pursuant to such provisions prior
to compliance by the Borrower with SECTION 7.2.6, as the case may be.
"DLJ" is defined in the PREAMBLE.
"DOCUMENTATION AGENT" is defined in the PREAMBLE and includes each
other Person as shall have subsequently been appointed as the successor
Documentation Agent pursuant to SECTION 9.4.
"DOLLAR" and the sign "$" mean lawful money of the United States.
"DOMESTIC OFFICE" means, relative to any Lender, the office of such
Lender designated as such in SCHEDULE II hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by notice from such Lender, as the case may be, to each other
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Person party hereto. A Lender may have separate Domestic Offices for purposes of
making, maintaining or continuing, as the case may be, Base Rate Loans.
"EFFECTIVE DATE" means the date this Agreement becomes effective
pursuant to SECTION 10.8.
"ENVIRONMENTAL LAWS" is defined in SECTION 6.7.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ERISA"is defined in SECTION 6.7 .
"ERISA AFFILIATE" means any corporation, partnership, or other trade or
business (whether or not incorporated) that is, along with the Borrower, a
member of a controlled group of corporations or a controlled group of trades or
businesses, as described in Section 414(b) and 414(c), respectively, of the Code
or Section 4001 of ERISA, or a member of the same affiliated service group
within the meaning of Section 414(m) of the Code.
"EVENT OF DEFAULT" is defined in SECTION 8.1.
"EXCESS PROCEEDS" is defined in CLAUSE (B) of SECTION 7.2.6.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXISTING INDEBTEDNESS" means Indebtedness of the Borrower and its
Subsidiaries in existence on the date of this Agreement including the
Obligations of the Borrower and its Restricted Subsidiaries under (i) the Close
Corporation and Shareholders Agreement of Ohio Coatings Company as existing on
the date of this Agreement and the guarantee by the Borrower or any Restricted
Subsidiary of up to $20,000,000 of Indebtedness of Ohio Coatings Company under
the Credit Agreement between Ohio Coatings Company and National City Bank,
Northeast, or (ii) the Keepwell Agreement, dated December 28, 1995, between the
Borrower, WPSC, the Parent and the lenders party thereto as existing on the date
of this Agreement to the extent permitted by the WHX Agreements, until such
amounts are repaid.
"EXISTING SENIOR NOTE DEFEASANCE" means the discharge of all of the
Borrower's obligations (monetary and otherwise) with respect to the outstanding
Existing Senior Notes and release of the Borrower with respect to the covenants
that are described in
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the Existing Senior Note Indenture, pursuant to the terms of the Existing Senior
Note Indenture.
"EXISTING SENIOR NOTE INDENTURE" means the Indenture dated November 15,
1993, among the Borrower and Bank One, Columbus N.A., as trustee, as the same
may be amended, restated, amended and restated or otherwise modified from time
to time in
accordance with the terms hereof and thereof.
"EXISTING SENIOR NOTES" means the 93/8% Senior Notes due 2003 of the
Borrower issued pursuant to the Senior Note Indenture, including any senior
secured notes of the Borrower with substantially identical terms exchanged
therefor pursuant to a registration statement under the Securities Act of 1933,
as amended.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to (i) the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or (ii) if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it.
"FEE LETTER" means the confidential fee letter, dated as of November
20, 1997, among the Borrower, the Arranger and the Syndication Agent.
"FINAL MATURITY DATE" means November 15, 2006.
"FISCAL YEAR" means any period of twelve consecutive months ending on
December 31; references to a Fiscal Year with a numbering corresponding to any
calendar year refer to the fiscal year ending on the 31st of December during
such calender year.
"F.R.S. BOARD" means the Board of Governors of the Federal Reserve
System or any successor thereto.
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"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any party of any
Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under interest rate swap agreements, interest rate
cap agreements, interest rate collar agreements and other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"HEREIN", "HEREOF", "HERETO", "HEREUNDER" and similar terms contained
in this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.
"INCLUDING" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of EJUSDEM GENERIS
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"INCUR" has the meaning ascribed in SECTION 7.2.1. The term
"incurrence" has a corresponding meaning.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with
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GAAP, as well as Indebtedness of others secured by a Lien on any asset of such
Person (whether or not such Indebtedness is assumed by such Person) and, to the
extent not otherwise included, the guarantee by such Person of any Indebtedness
of any other Person. The amount of any Indebtedness outstanding as of any date
shall be (a) the accreted value thereof, in the case of any Indebtedness that
does not require current payments of interest and (b) the principal amount
thereof, in the case of any other Indebtedness.
"INDEMNIFIED LIABILITIES" is defined in SECTION 10.4.
"INDEMNIFIED PARTIES" is defined in SECTION 10.4.
"INTERCREDITOR AGREEMENT" means the Intercreditor, Indemnification and
Subordination Agreement, dated as of November 26, 1997, among the Borrower, the
Parent, WPSC and Unimast as in effect on the Closing Date.
"INTEREST PERIOD" means, as to any LIBO Rate Loan, the period
commencing on the Borrowing date of such Term Loan or on the date on which any
Term Loan is converted into or continued as a LIBO Rate Loan, and ending on the
date one, two, three, six or, if available, in the Administrative Agent's
reasonable determination, nine or twelve months thereafter as selected by the
Borrower in its Borrowing Request or its Conversion/Continuation Notice;
PROVIDED HOWEVER that:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period;
(iii) no Interest Period for any Term Loan shall extend beyond
the Final Maturity Date for such Term Loan;
(iv) no Interest Period applicable to a Term Loan or portion
thereof shall extend beyond any date upon which is due any scheduled
principal payment in respect of the Term Loans unless the aggregate
principal amount of Term Loans
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represented by Base Rate Loans, or by LIBO Rate Loans having Interest
Periods that will expire on or before such date, equals or exceeds the
amount of such principal payment; and
(v) there shall be no more than five Interest Periods in
effect at any one time.
"INVESTMENTS" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees by the referent Person of, and Liens on any
assets of the referent Person securing, Indebtedness or other obligations of
other Persons), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP. If the Borrower or any Restricted Subsidiary of the Borrower sells or
otherwise disposes of any Equity Interests of any direct or indirect Restricted
Subsidiary of the Borrower such that, after giving effect to any such sale or
disposition, such Person is no longer a Restricted Subsidiary of the Borrower,
the Borrower shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Equity Interests of
such Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the final paragraph of SECTION 7.2.3.
"KEEPWELL AGREEMENT" means the Keepwell Agreement, dated December 28,
1995, between the Borrower, WPSC, the Parent and the lenders party thereto.
"LENDER ASSIGNMENT AGREEMENT" means a Lender Assignment Agreement
substantially in the form of EXHIBIT F hereto.
"LENDERS" is defined in the PREAMBLE.
"LETTER OF CREDIT FACILITY" means the Letter of Credit Agreement, dated
as of August 22, 1994, among WPSC and Citibank, N.A., as the same may be
amended, supplemented or otherwise modified including any refinancing,
refunding, replacement or extension thereof and whether by the same or any other
lender or group of lenders, provided, that the aggregate amount of letters of
credit available thereunder may not exceed $50,000,000.
"LETTER OF UNDERTAKING" means that certain letter of undertaking dated
July 21, 1997 from the Parent to The Sanwa Bank, Limited, as existing on the
date of this Agreement.
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"LIBO RATE" means, relative to any Interest Period for LIBO Rate Loans,
the rate of interest per annum determined by the Administrative Agent to be the
arithmetic mean (rounded upward to the next 1/16th of 1%) of the rates of
interest per annum at which Dollar deposits in the approximate amount of the
Term Loan to be made or continued as, or converted into, a LIBO Rate Loan by the
Administrative Agent and having a maturity comparable to such Interest Period
would be offered to the Administrative Agent in the London interbank market at
its request at approximately 11:00 a.m. (London time) two Business Days prior to
the commencement of such Interest Period.
"LIBO RATE LOAN" means a Term Loan bearing interest, at all times
during an Interest Period applicable to such Term Loan, at a fixed rate of
interest determined by reference to the LIBO Rate (Reserve Adjusted).
"LIBO RATE (RESERVE ADJUSTED)" means, relative to any Term Loan to be
made, continued or maintained as, or converted into, a LIBO Rate Loan for any
Interest Period, the rate of interest per annum (rounded upwards to the next
1/100th of 1%) determined by the Administrative Agent as follows:
LIBO Rate = LIBO RATE
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate
Loans will be adjusted automatically as to all LIBO Rate Loans then outstanding
as of the effective date of any change in the LIBOR Reserve Percentage.
"LIBOR OFFICE" means, relative to any Lender, the office of such Lender
designated as such in SCHEDULE II hereto or designated in the Lender Assignment
Agreement or such other office of a Lender as shall be so designated from time
to time by notice from such Lender to the Borrower and the Administrative Agent,
whether or not outside the United States, which shall be making or maintaining
LIBO Rate Loans of such Lender hereunder.
"LIBOR RESERVE PERCENTAGE" means, relative to any Interest Period for
LIBO Rate Loans, the reserve percentage (expressed as a decimal) equal to the
maximum aggregate reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
specified under regulations issued from time to time by the F.R.S. Board and
then applicable to assets or liabilities consisting of and including
"Eurocurrency Liabilities", as currently defined in Regulation D
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of the F.R.S. Board, having a term approximately equal or comparable to such
Interest Period.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"LOAN DOCUMENT" means this Agreement, the Term Notes, the Subsidiary
Guaranty, each Borrowing Request, the Fee Letter, and each other agreement,
document or instrument delivered in connection with this Agreement or any other
Loan Document, whether or not specifically mentioned herein or therein.
"MANAGEMENT AGREEMENT" means the Management Agreement between the
Parent and WPN Corp., as in effect on the Closing Date.
"MARGIN STOCK" has the meaning ascribed to such term in Regulation U of
the Federal Reserve Board or any regulation substituted therefor, as in effect
from time to time.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, prospects, financial condition or results of operations of the
Borrower and its Subsidiaries, taken as a whole.
"MOODY'S" means Moody's Investors Service, Inc.
"NET CASH PROCEEDS" means with respect to any issuance or sale of
common stock of the Borrower, the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' fees, broker's commissions and
consultant and any other fees actually incurred in connection with such issuance
or sale.
"NET INCOME" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (a) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (i) any Asset Sale (including dispositions
pursuant to sale and leaseback transactions) or (ii) the disposition of any
securities by such Person or any of its
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Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person
or any of its Restricted Subsidiaries and (b) any extraordinary or nonrecurring
gain (but not loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by the
Borrower or any of its Restricted Subsidiaries in respect of any Asset Sale
(including any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of (without duplication) (a) the
direct costs relating to such Asset Sale (including legal, accounting and
investment banking fees, sales commissions, recording fees, title transfer fees,
title insurance premiums, appraiser fees and costs incurred in connection with
preparing such asset for sale) and any relocation expenses incurred as a result
thereof, (b) taxes paid or estimated to be payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), (c) amounts required to be applied to the repayment of
Indebtedness (other than Permitted Working Capital Indebtedness) secured by a
Lien on the asset or assets that were the subject of such Asset Sale and (d) any
reserve established in accordance with GAAP or any amount placed in escrow, in
either case for adjustment in respect of the sale price of such asset or assets,
until such time as such reserve is reversed or such escrow arrangement is
terminated, in which case Net Proceeds shall include only the amount of the
reserve so reversed or the amount returned to the Borrower or its Restricted
Subsidiaries from such escrow arrangement, as the case may be.
"1997 SENIOR NOTE INDENTURE" means the Indenture, dated as of November
26, 1997, among the Borrower, the Subsidiary Guarantors, and Bank One, N.A., as
trustee, as the same may be amended, restated, amended and restated or otherwise
modified form time to time in accordance with the terms hereof and thereof.
"1997 SENIOR NOTE OFFERING" is defined in the SECOND RECITAL.
"1997 SENIOR NOTES" means, collectively, the 9 1/4% Series A Senior
Notes due 2007 and the 9 1/4% Series B Senior Notes due 2007 of the Borrower
issued pursuant to the 1997 Senior Note Indenture, including any senior notes of
the Borrower with substantially identical terms exchanged therefor pursuant to a
registration statement under the Securities Act of 1933.
NON-RECOURSE DEBT" means Indebtedness (i) as to which neither the
Borrower nor any of its Restricted Subsidiaries (a)
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provides credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness), (b) is directly or indirectly
liable (as a guarantor or otherwise) or (c) constitutes the lender, and (ii)
with respect to which no default (including any rights that the holders thereof
may have to take enforcement action against an Unrestricted Subsidiary) would
permit (upon notice, lapse of time or both) any holder of any other Indebtedness
of the Borrower or any of its Restricted Subsidiaries to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity.
"NON-U.S. LENDER" means any Lender (including each Assignee Lender)
that is not (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any state thereof, or (iii) an estate or trust that is subject
to U.S. Federal income taxation regardless of the source of its income.
"OBLIGATIONS" means all obligations (monetary or otherwise) of the
Borrower and each other Obligor arising under or in connection with this
Agreement, the Term Notes, and each other Loan Document.
"OBLIGOR" means the Borrower or any other Person (other than any Agent,
the Arranger, or any Lender) obligated under any Loan Document.
"OCC" means Ohio Coatings Company, a Ohio corporation, and its
successors and permitted assigns.
"OFFERING MEMORANDUM" means the offering memorandum of the Borrower,
dated November 20, 1997, in connection with the offer and sale of the 1997
Senior Notes.
"OFFICER" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"OFFICER'S CERTIFICATE" means a certificate signed on behalf of the
Borrower by the principal executive officer, the principal financial officer,
the treasurer or the principal accounting officer of the Borrower, that meets
the requirements of SECTION 5.1.
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"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Administrative Agent that meets the requirements of
SECTION 5.9. The counsel may be an employee of or counsel to the Borrower, any
Restricted Subsidiary of the Borrower or the Administrative Agent.
"ORGANIC DOCUMENT" means, relative to any Obligor, its certificate of
incorporation, its by-laws and all shareholder agreements, voting trusts and
similar arrangements to which such Obligor is a party applicable to any of its
authorized shares of Capital Stock.
"PARENT" means WHX Corporation, a Delaware corporation, and its
successors and permitted assigns.
"PARTICIPANT" is defined in SECTION 10.11.2.
"PCC" means Pittsburgh-Canfield Corporation, a Pennsylvania
corporation, and its successors and permitted assigns.
"PERCENTAGE" means, relative to any Lender, the applicable percentage
relating to Term Loans, as set forth in SCHEDULE II hereto or set forth in the
Lender Assignment Agreement as such percentage may be adjusted from time to time
pursuant to Lender Assignment Agreement(s) executed by such Lender and its
Assignee Lender(s) and delivered pursuant to SECTION 10.11.
"PERMITTED INVESTMENTS" means (a) any Investment in the Borrower or in
a Wholly Owned Restricted Subsidiary of the Borrower, (b) any Investment in Cash
Equivalents, (c) any Investment by the Borrower or any Restricted Subsidiary of
the Borrower in a Person that is engaged in the same line of business as the
Borrower and its Restricted Subsidiaries were engaged in on the date of this
Agreement or a line of business or manufacturing or fabricating operation
reasonably related thereto (including any downstream steel manufacturing or
processing operation or manufacturing or fabricating operation in the
construction products business) if as a result of such Investment (i) such
Person becomes a Wholly Owned Restricted Subsidiary of the Borrower and a
Guarantor or (ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Borrower or a Wholly Owned Restricted Subsidiary of the
Borrower, (d) any Investment made as a result of the receipt of non-cash
consideration from (i) an Asset Sale that was made pursuant to and in compliance
with SECTION 7.2.6 or (ii) a disposition of assets that does not constitute an
Asset Sale, (e) any Investment acquired solely in exchange for Equity Interests
(other than Disqualified Stock) of the Borrower, (f) Investments existing as
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of the date of this Agreement and (g) other Investments in any Person that is
engaged in the same line of business as the Borrower and its Restricted
Subsidiaries were engaged in on the date of this Agreement or a line of business
or manufacturing or fabricating operation reasonably related thereto (including
any downstream steel manufacturing or processing operation or manufacturing or
fabricating operation in the construction products business) which Investment
has a fair market value (as determined by a resolution of the Board of Directors
of the Borrower and set forth in an officer's certificate delivered to the
Administrative Agent), when taken together with all other investments made
pursuant to this clause (g) that are at the time outstanding, not to exceed
$10,000,000.
"PERMITTED LIENS" means (a) Liens existing as of the date of this
Agreement; (b) Liens in favor of the Borrower and its Subsidiaries; (c) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with the Borrower or any Subsidiary of the Borrower, PROVIDED that
such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Borrower or any of its Restricted
Subsidiaries; (d) Liens on property existing at the time of acquisition thereof
by the Borrower or any Restricted Subsidiary of the Borrower, PROVIDED that such
Liens were in existence prior to the contemplation of such acquisition; (e)
pledges or deposits under workmen's compensation laws, unemployment insurance
laws or similar legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of Indebtedness) or leases to
which such Person is a party, or deposits to secure public statutory obligations
of such Person or deposits of cash or United States Government bonds to secure
surety or appeal bonds to which such Person is a party, or deposits as security
for contested taxes or import duties or for the payment of rent in each case
incurred in the ordinary course of business (f) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently pursued, PROVIDED that any reserve or other appropriate provision as
shall be required in conformity with GAAP shall have been made therefor, (g)
Liens incurred in the ordinary course of business of the Borrower or any
Restricted Subsidiary of the Borrower with respect to obligations that do not
exceed $10,000,000 at any one time outstanding and that (1) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (2) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of
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business by the Borrower or such Restricted Subsidiary; (h) Liens securing
Permitted Refinancing Indebtedness, PROVIDED that the Borrower was permitted to
incur such Liens with respect to the Indebtedness so refinanced; and (i) minor
encroachments, encumbrances, easements or reservations of, or rights of others
for, rights-of-way, sewers, electric lines, telegraph and telephone lines and
other similar purposes, or zoning or other restrictions as to the use of real
properties all of which do not materially impair the value or utility for its
intended purposes of the real property to which they relate or Liens incidental
to the conduct of the business of such Person or to the ownership of its
properties.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the
Borrower or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness (other than Indebtedness under the Revolving Credit
Facility) of the Borrower or any of its Restricted Subsidiaries; PROVIDED that
(a) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or accreted
value, if applicable), plus premium, if any, and accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith); (b)
such Permitted Refinancing Indebtedness has a final maturity date no earlier
than the final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (c) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Term Loans, such
Permitted Refinancing Indebtedness is subordinated in right of payment to the
Term Loans, on terms at least as favorable, taken as a whole, to the Lenders as
those contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded and such Indebtedness shall
not have any scheduled principal payment prior to the 91st day after the Final
Maturity Date and (d) such Indebtedness is incurred either by the Borrower or by
the Restricted Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; PROVIDED, HOWEVER, that a
Restricted Subsidiary may guarantee Permitted Refinancing Indebtedness incurred
by the Borrower, whether or not such Restricted Subsidiary was an obligor or
guarantor of the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and PROVIDED, FURTHER, that if such Permitted Refinancing
Indebtedness is subordinated to the Term Loans, such guarantee
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shall be subordinated to such Restricted Subsidiary's Subsidiary Guaranty to at
least the same extent.
"PERMITTED WORKING CAPITAL INDEBTEDNESS" means Indebtedness of the
Borrower and its Restricted Subsidiaries under the Revolving Credit Facility and
under any other agreement, instrument, facility or arrangement that is intended
to provide working capital financing or financing for general corporate purposes
(including any asset securitization facility involving the sale of accounts
receivable); PROVIDED that the aggregate outstanding amount of such Indebtedness
of the Borrower and its Restricted Subsidiaries, at the time of incurrence,
shall not exceed greater of (a) the sum of (i) 50% of the net aggregate book
value of all inventory of the Borrower and its Restricted Subsidiaries at such
time and (ii) 80% of the net aggregate book value of all accounts receivable
(net of bad debt expense) of the Borrower and its Restricted Subsidiaries at
such time and (b) $175,000,000.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"PREFERRED STOCK" means, as applied to the Equity Interests of any
corporation, stock of any class or classes (however designated) which is
preferred over shares of stock of any other class of such corporation as to the
distribution of assets on any voluntary or involuntary liquidation or
dissolution of such corporation or as to dividends.
"PUBLIC EQUITY OFFERING" means an underwritten offering of common stock
of the Borrower registered under of the Securities Act.
"QUARTERLY PAYMENT DATE" means the fifteenth day of each March, June,
September and December, or, if such day is not a Business Day, the next
succeeding Business Day, commencing with December 15, 1997.
"RECEIVABLES FACILITY" means the program for the issuance and placement
from time to time of trade receivable-backed adjustable rate securities, all as
contemplated by that certain Pooling and Servicing Agreement, dated as of August
1, 1994, between Wheeling-Pittsburgh Funding, Inc., WPSC, Bank One, Columbus,
N.A. and Wheeling-Pittsburgh Trade Receivable Master
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Trust and that certain Receivables Purchase Agreement, dated as of August 1,
1994, between WPSC and Wheeling-Pittsburgh Funding, Inc., as each may be
amended, supplemented or otherwise modified including any refunding, replacement
or extension thereof.
"REPLACEMENT ASSETS" means (x) properties and assets (other than cash
or any Capital Stock or other security) that will be used in a business of the
Borrower and its Subsidiaries conducted on the date of this Agreement or in a
line of business or manufacturing or fabricating operation reasonably related
thereto (including any downstream steel processing or manufacturing operation or
manufacturing or fabricating operation in the construction products business) or
(y) Capital Stock of any Person that will become on the date of the acquisition
thereof a Wholly Owned Restricted Subsidiary of the Borrower as a result of such
acquisition.
"REQUIRED LENDERS" means, at any time, (i) prior to the Closing Date
hereunder, Lenders having at least 51% of the sum of the Term Loan Commitments
and (ii) on and after the Closing Date, Lenders holding at least 51% of the
principal amount of the Term Loans.
"RESTRICTED PAYMENT" is defined in SECTION 7.2.3.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of such Person
that is not an Unrestricted Subsidiary.
"REVOLVING CREDIT FACILITY" means the Second Amended and Restated
Credit Agreement, dated as of December 28, 1995, among WPSC, the lenders party
thereto and Citibank, N.A. as agent, as the same may be amended, supplemented or
otherwise modified including any refinancing, refunding, replacement or
extension thereof and whether by the same or any other lender or groups of
lenders.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary that would be
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
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"STATED MATURITY" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"STRIKE" is defined in SECTION 5.8.
"SUBSIDIARY" means, with respect to any Person, (a) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (b) any partnership (i) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (ii)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"SUBSIDIARY GUARANTORS" means, collectively, WPSC, PCC, WCP, Consumers
Mining Company, Wheeling-Empire Company, Mingo Oxygen Company, WP Steel Venture
Corporation, Champion Metal Products, Inc., and each other Subsidiary that
becomes (or is required pursuant to the terms of this Agreement to become) a
guarantor
under the Subsidiary Guaranty.
"SUBSIDIARY GUARANTY" means the Guaranty executed and delivered by an
Authorized Officer of each Subsidiary Guarantor pursuant to SECTION 5.3,
substantially in the form of EXHIBIT D attached hereto, as amended,
supplemented, amended and restated or otherwise modified from time to time.
"SYNDICATION AGENT" is defined in the PREAMBLE and includes each other
Person as shall have subsequently been appointed as the successor Syndication
Agent pursuant to SECTION 9.4.
"TAX SHARING AGREEMENT" means the Tax Sharing Agreement between the
Borrower and the Parent as in effect on the Closing Date.
"TAXES" is defined in SECTION 4.6.
"TERM FACILITY" is defined in the FOURTH RECITAL.
"TERM LOAN" is defined in SECTION 2.1.1.
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"TERM LOAN COMMITMENT" is defined in SECTION 2.1.1.
"TERM LOAN COMMITMENT AMOUNT" means $75,000,000.
"TERM LOAN COMMITMENT TERMINATION DATE" means the earliest of (i)
November 30, 1997, if the Term Loans have not been made on or prior to such
date, (ii) the Closing Date (immediately after the making of the Term Loans on
such date), and (iii) the date on which any Commitment Termination Event occurs.
"TERM NOTE" means a promissory note of the Borrower payable to the
order of any Lender, in the form of EXHIBIT A hereto (as such promissory note
may be amended, endorsed or otherwise modified from time to time), evidencing
the aggregate Indebtedness of the Borrower to such Lender resulting from
outstanding Term Loans, and also means all other promissory notes accepted from
time to time in substitution therefor or renewal thereof.
"TRANSACTION DOCUMENTS" means the Revolving Credit Facility, the
Keepwell Agreement, the Management Agreement, each WHX Agreement, each agreement
pertaining to the Receivables Facility and the Letter of Credit Facility, the
Letter of Undertaking, the 1997 Senior Note Indenture, the 1997 Senior Notes and
all other agreements, documents, instruments, certificates, filings, consents,
approvals, board of directors resolutions and opinions furnished pursuant to or
in connection with the Existing Senior Note Defeasance and the transactions
contemplated hereby or thereby, each as amended, supplemented, amended and
restated or otherwise modified from time to time as permitted in accordance with
the terms hereof or of any other Loan Document.
"TYPE" means, relative to any Term Loan, the portion thereof, if any,
being maintained as a Base Rate Loan or a LIBO Rate Loan.
"UNIMAST" means Unimast Incorporated, an Ohio corporation and its
successors and permitted assigns.
"UNITED STATES" or "U.S." means the United States of America, its fifty
states and the District of Columbia.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary that is designated by
the Board of Directors of the Borrower as an Unrestricted Subsidiary pursuant to
a resolution of the Board of Directors of the Borrower, but only to the extent
that such Subsidiary (a) has no Indebtedness other than Non-Recourse Debt, (b)
is not party to any agreement, contract, arrangement or understanding with the
Borrower or any Restricted Subsidiary of
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the Borrower unless such agreement, contract, arrangement or understanding does
not violate the terms of SECTION 7.2.8, (c) is a Person with respect to which
neither the Borrower nor any of its Restricted Subsidiaries has any direct or
indirect obligation (i) to subscribe for additional Equity Interests or (ii) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results, in each case, except to
the extent otherwise permitted by this Agreement. Any such designation by the
Board of Directors of the Borrower shall be evidenced to the Administrative
Agent by filing with the Administrative Agent a certified copy of the resolution
giving effect to such designation and an officers' certificate certifying that
such designation complied with the foregoing conditions and was permitted under
SECTION 7.2.3. If, at any time, any Unrestricted Subsidiary would fail to meet
the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter
cease to be an Unrestricted Subsidiary for purposes of this Agreement and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Borrower as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under SECTION 7.2.1, the Borrower shall
be in default of such covenant). The Board of Directors of the Borrower may at
any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
PROVIDED, HOWEVER, that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Borrower of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (A) such Indebtedness is permitted under the covenant described
under SECTION 7.2.1, hereof, calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period,
and (B) no Default or Event of Default would be in existence following such
designation.
"U.S. GOVERNMENT OBLIGATIONS" means direct, fixed-rate obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged, which are not callable and which mature (or may be put to the issuer
by the holder at no less than par) no later than the Final Maturity Date of the
Term Loans.
"WCP" means Wheeling Construction Products, Inc., a Delaware
corporation and its successors and permitted assigns.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by
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dividing (a) the sum of the products obtained by multiplying (i) the amount of
each then remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect thereof,
by (ii) the number of years (calculated to the nearest one-twelfth) that will
elapse between such date and the making of such payment, by (b) the then
outstanding principal amount of such Indebtedness.
"WHEELING-NISSHIN" means Wheeling-Nisshin, Inc., a Delaware corporation
and its successors and permitted assigns..
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person.
"WPSC" means Wheeling-Pittsburgh Steel Corporation, a Delaware
corporation.
"WHX AGREEMENTS" mean (i) the Intercreditor Agreement and (ii) the Tax
Sharing Agreement, in each case as in effect on the date of this Agreement.
SECTION 1.2. USE OF DEFINED TERMS. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each other Loan Document, notice and other communication delivered from time to
time in connection with this Agreement or any other Loan Document.
SECTION 1.3. CROSS-REFERENCES. Unless otherwise specified, references
in this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4. ACCOUNTING AND FINANCIAL DETERMINATIONS. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder shall be made, and all financial statements required to be delivered
hereunder or thereunder shall be prepared in accordance with, GAAP and, unless
otherwise expressly provided herein, shall be
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computed or determined on a consolidated basis and without duplication.
SECTION 1.5. OFFICERS' CERTIFICATES AND OPINIONS. Every Officers'
Certificate or Opinion of Counsel with respect to compliance with a condition or
covenant provided for in this Agreement or any other Loan Document shall be
addressed to the Administrative Agent and each of the Lenders and shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinion
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Absent any actual knowledge to the contrary, the Administrative Agent may rely
on any such certificate without further inquiry.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND TERM NOTES
SECTION 2.1. COMMITMENTS. On the terms and subject to the conditions of
this Agreement (including ARTICLE V), each Lender severally agrees to make Term
Loans pursuant to the Term Loan Commitments described in this Section.
SECTION 2.1.1. TERM LOAN COMMITMENTS. In a single Borrowing on the
Closing Date, which shall be a Business Day occurring prior to the Term Loan
Commitment Termination Date, each Lender will make loans (relative to such
Lender, its "TERM LOANS") to the Borrower equal to such Lender's Percentage of
the aggregate amount of the Borrowing of Term Loans requested by the Borrower to
be made on such day with the commitment of each such Lender to make the Term
Loans described in this Section referred
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to as its "TERM LOAN COMMITMENT". No amounts paid or prepaid with respect to any
Term Loans may be reborrowed.
SECTION 2.1.2. LENDERS NOT PERMITTED OR REQUIRED TO MAKE THE TERM
LOANS. No Lender shall be permitted or required to, and the Borrower shall not
request any Lender to, make any Term Loan on the Closing Date if, after giving
effect thereto, the aggregate original principal amount of all the Term Loans
(a) of all Lenders would exceed the Term Loan Commitment
Amount; or
(b) of such Lender would exceed such Lender's Percentage of
the Term Loan Commitment Amount.
SECTION 2.2. BORROWING PROCEDURES AND FUNDING MAINTENANCE. By
delivering a Borrowing Request to the Administrative Agent on or before 10:00
a.m. (New York City time) on a Business Day, the Borrower may request, on not
less than one Business Day's notice (in the case of Base Rate Loans) or three
Business Days' notice (in the case of LIBO Rate Loans), that a Borrowing be made
on the Closing Date. On the terms and subject to the conditions of this
Agreement, each Borrowing shall be comprised of the type of Term Loans, and
shall be made on the Business Day, specified in such Borrowing Request. On or
before 11:00 a.m. (New York City time) on such Business Day each Lender shall
deposit with the Administrative Agent same day funds in an amount equal to such
Lender's Percentage of the requested Borrowing. Such deposit will be made to an
account which the Administrative Agent shall specify from time to time by notice
to the Lenders. To the extent funds are received from the Lenders, the
Administrative Agent shall make such funds available to the Borrower by wire
transfer to the accounts the Borrower shall have specified in its Borrowing
Request. No Lender's obligation to make any Term Loan shall be affected by any
other Lender's failure to make any Term Loan.
SECTION 2.3. CONTINUATION AND CONVERSION ELECTIONS. By delivering a
Continuation/Conversion Notice to the Administrative Agent on or before 10:00
a.m. (New York City time) on a Business Day, the Borrower may from time to time
irrevocably elect, on not less than one Business Day's notice (in the case of a
conversion of LIBO Rate Loans to Base Rate Loans) or three Business Days' notice
(in the case of a continuation of LIBO Rate Loans or a conversion of Base Rate
Loans into LIBO Rate Loans) nor more than five Business Days' notice that all,
or any portion in a minimum amount of $5,000,000 or any larger integral multiple
of $1,000,000, be, in the case of Base Rate Loans, converted into LIBO Rate
Loans or a minimum amount of $5,000,000 or any larger
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integral multiple of $1,000,000, in the case of LIBO Rate Loans, converted into
Base Rate Loans or continued as LIBO Rate Loans (in the absence of delivery of a
Continuation/Conversion Notice with respect to any LIBO Rate Loan at least three
Business Days before the last day of the then current Interest Period with
respect thereto, such LIBO Rate Loan shall, on such last day, automatically
convert to a Base Rate Loan); PROVIDED, HOWEVER, that (x) each such conversion
or continuation shall be pro rated among the applicable outstanding Term Loans
of all Lenders, and (y) no portion of the outstanding principal amount of any
Term Loans may be continued as, or be converted into, LIBO Rate Loans when any
Default has occurred and is continuing.
SECTION 2.4. FUNDING. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing one
of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan; PROVIDED,
HOWEVER, that such LIBO Rate Loan shall nonetheless be deemed to have been made
and to be held by such Lender, and the obligation of the Borrower to repay such
LIBO Rate Loan shall nevertheless be to such Lender for the account of such
foreign branch, Affiliate or international banking facility. In addition, the
Borrower hereby consents and agrees that, for purposes of any determination to
be made for purposes of SECTION 4.1, 4.2, 4.3 or 4.4, it shall be conclusively
assumed that each Lender elected to fund all LIBO Rate Loans by purchasing
Dollar deposits in its LIBOR Office's interbank eurodollar market.
SECTION 2.5. TERM NOTES. Each Lender's Term Loans under its Term Loan
Commitment shall be evidenced by a Term Note payable to the order of such Lender
in a maximum principal amount equal to such Lender's Percentage of the original
Term Loan Commitment Amount. The Borrower hereby irrevocably authorizes each
Lender to make (or cause to be made) appropriate notations on the grid attached
to such Lender's Term Note (or on any continuation of such grid), which
notations, if made, shall evidence, INTER ALIA, the date of, the outstanding
principal amount of, and the interest rate and Interest Period applicable to the
Term Loans evidenced thereby. Such notations shall be conclusive and binding on
the Borrower absent manifest error; PROVIDED, HOWEVER, that the failure of any
Lender to make any such notations shall not limit or otherwise affect any
Obligations of the Borrower or any other Obligor.
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ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. REPAYMENTS AND PREPAYMENTS; APPLICATION.
SECTION 3.1.1. REPAYMENTS AND PREPAYMENTS. The Borrower shall repay in
full the unpaid principal amount of each Term Loan upon the Final Maturity Date
therefor. Prior thereto, the Borrower that:
(a) may, from time to time on any Business Day occurring after
November 15, 1998 (it being acknowledged and agreed that the Borrower
shall not have the right, directly or indirectly, to voluntarily prepay
the Term Loans prior to November 15, 1998), make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of
any Term Loans; PROVIDED, HOWEVER, that
(i) any such prepayment shall be made PRO RATA among
Term Loans of the same type and, if applicable, having the
same Interest Period of all Lenders;
(ii) the Borrower shall comply with SECTION 4.4 in
the event that any LIBO Rate Loan is prepaid on any day other
than the last day of the Interest Period for such Term Loan;
(iii) all such voluntary prepayments shall require at
least one Business Day's notice in the case of Base Rate Loans
and three Business Days' notice in the case of LIBO Rate
Loans, but no more than five Business Days' notice, in each
case in writing to the Administrative Agent;
(iv) all such voluntary partial prepayments shall be,
in the case of LIBO Rate Loans, in an aggregate minimum amount
of $5,000,000 or any larger integral multiple of $1,000,000
and, in the case of Base Rate Loans, in an aggregate minimum
amount of $5,000,000 or any larger integral multiple of
$1,000,000 or in the aggregate principal amount of all Term
Loans of the type then outstanding; and
(v) any voluntary prepayment of Term Loans made prior
to November 15, 2000 shall be subject to the payment of a
premium, as set forth below:
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(A) 2.0% of the principal amount of Term
Loans prepaid pursuant to this CLAUSE (A) of this
Section on and subsequent to November 15, 1998 and
prior to November 15, 1999; and
(B) 1.0% of the principal amount of Term
Loans prepaid pursuant to this CLAUSE (A) of this
Section on and subsequent to November 15, 1999 and
prior to November 15, 2000;
(b) may, notwithstanding the provisions of CLAUSE (A) of this
Section, from time to time on any Business Day prior to or on November
15, 1998, make a voluntary prepayment of up to 35% of the outstanding
principal amount of all Term Loans with net cash proceeds of one or
more Public Equity Offerings at 109.25% of the principal amount
thereof, plus accrued and unpaid interest and prepayment premium, if
any, thereon to the date of such prepayment; PROVIDED, HOWEVER, that
(i) immediately after giving effect to such prepayment, at least 65% of
the aggregate original principal amount of Term Loans shall remain
outstanding and (ii) such prepayment shall occur no later than 30 days
following the date of the consummation of such Public Equity Offering;
(c) shall, no later than 30 days from any date on which the
aggregate amount of Excess Proceeds from Asset Sales not used to reduce
Indebtedness or acquire Replacement Assets pursuant to SECTION 7.2.6
exceeds $20,000,000, apply (subject to SECTION 3.1.2), the Asset Sale
Amount to prepay the Term Loans;
(d) shall, subject to SECTION 3.1.2, on each Change of Control
Prepayment Date, make a mandatory prepayment of the Term Loans in
connection with the occurrence of any Change of Control Prepayment
Event in the principal amount required to be prepaid in respect of such
Change of Control Prepayment Event; and
(e) shall, immediately upon the acceleration of the Final
Maturity Date of any Term Loans pursuant to SECTION 8.2, repay all
outstanding Term Loans, unless, pursuant to SECTION 8.2, only a portion
of all Term Loans are so accelerated (in which case the portion so
accelerated shall be so prepaid).
Each prepayment of any Term Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by CLAUSES (A)(V), (B) and (D) of
this Section and/or SECTION 4.4.
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SECTION 3.1.2. APPLICATION. Amounts prepaid and repaid shall be applied
as set forth in this Section.
(a) Each prepayment or repayment of principal of the Term
Loans shall be applied, to the extent of such prepayment or repayment,
FIRST, to the principal amount thereof being maintained as Base Rate
Loans, and SECOND, to the principal amount thereof being maintained as
LIBO Rate Loans.
(b) Each prepayment of Term Loans made pursuant to CLAUSE (D)
of SECTION 3.1.1 (a "CHANGE OF CONTROL PREPAYMENT EVENT") shall be
applied to all or any portion (in an integral multiple of $1,000,000)
of such Lender's Term Loans at a cash price equal to 101% of the
principal amount of such Lender's Term Loans, plus accrued and unpaid
interest and prepayment premium, if any, thereon to the date of
prepayment (the "CHANGE OF CONTROL PREPAYMENT PRICE").
(c) Each Lender will have the right to refuse any prepayment
of Term Loans made pursuant to CLAUSES (C) or (D) of SECTION 3.1.1 by
giving written notice of such refusal to the Administrative Agent
(which the Administrative Agent shall promptly deliver to the Borrower)
no later than the close of business on the second Business Day
preceding the Asset Sale Prepayment Date or Change of Control
Prepayment Date, as the case may be (and unless such notice is received
by the Administrative Agent, each Lender will be required to have its
Term Loans prepaid, and the Borrower's obligation to prepay such
Lender's Term Loans shall be discharged with the Administrative Agent's
delivery of such notice to the Borrower).
SECTION 3.2. INTEREST PROVISIONS. Interest on the outstanding principal
amount of the Term Loans shall accrue and be payable in accordance with this
Section.
SECTION 3.2.1. RATES. Each Base Rate Loan shall accrue interest on the
unpaid principal amount thereof for each day from and including the day upon
which such was made or converted to a Base Rate Loan to but excluding the date
such Term Loan is repaid or converted to a LIBO Rate Loan at a rate per annum
equal to the sum of the Alternate Base Rate for such day plus the Applicable
Margin for such Term Loan on such day. Each LIBO Rate Loan shall accrue interest
on the unpaid principal amount thereof for each day during each Interest Period
applicable thereto at a rate per annum equal to the sum of the LIBO Rate
(Reserve Adjusted) for such Interest Period plus the Applicable Margin for such
Term Loan on such day. All LIBO Rate Loans shall bear interest from
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and including the first day of the applicable Interest Period to (but not
including) the last day of such Interest Period at the interest rate determined
as applicable to such LIBO Rate Loan.
SECTION 3.2.2. POST-MATURITY RATES. After the date any principal amount
of any Term Loan is due and payable (whether on the Final Maturity Date, upon
acceleration or otherwise), or after any other monetary Obligation of the
Borrower shall have become due and payable, the Borrower shall pay, but only to
the extent permitted by law, interest (after as well as before judgment) on such
amounts at a rate per annum equal to the rate that would otherwise have been
applicable to Base Rate Loans plus 2%.
SECTION 3.2.3. PAYMENT DATES. Interest accrued on each Term Loan shall
be payable, without duplication:
(a) on the Final Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole or in
part, of principal outstanding on such Term Loan;
(c) with respect to Base Rate Loans, on each Quarterly Payment
Date occurring after the Closing Date;
(d) with respect to LIBO Rate Loans, on the last day of each
applicable Interest Period (and, if such Interest Period shall exceed
three months, at intervals of three months after the first day of such
Interest Period);
(e) with respect to the principal amount of any Base Rate
Loans converted into LIBO Rate Loans on a day when interest would not
otherwise have been payable pursuant to CLAUSE (C), on the date of such
conversion; and
(f) on that portion of any Term Loans the Final Maturity Date
of which is accelerated pursuant to SECTION 8.2, immediately upon such
acceleration.
Interest accrued on Term Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Final Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.3. FEES. The Borrower agrees to pay the fees set forth in
this Section. All such fees shall be non-refundable.
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SECTION 3.3.1. ARRANGEMENT, STRUCTURING AND COMMITMENT FEES. In
accordance with the Fee Letter, the Borrower shall pay on the Effective Date to
each of the Arranger and the Syndication Agent and the Documentation Agent for
its account their applicable portion of the arrangement and structuring fee
referred to therein and, for the account of the Arranger, the commitment fee
referred to therein.
SECTION 3.3.2. ADMINISTRATIVE AGENT FEE. The Borrower agrees to pay an
annual administration fee to the Administrative Agent, for its own account, in
the amounts mutually agreed to between the Borrower and the Administrative
Agent, payable in advance on the Closing Date and annually thereafter.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. LIBO RATE LENDING UNLAWFUL. If any Lender shall determine
(which determination shall, upon notice thereof to the Borrower and the Lenders,
be conclusive and binding on the Borrower) that the introduction of or any
change in or in the interpretation of any law makes it unlawful, or any central
bank or other governmental authority asserts that it is unlawful, for such
Lender to make, continue or maintain any Term Loan as, or to convert any Term
Loan into, a LIBO Rate Loan of a certain type, the obligations of all Lenders to
make, continue, maintain or convert any such Term Loans shall, upon such
determination, forthwith be suspended until such Lender shall notify the
Administrative Agent that the circumstances causing such suspension no longer
exist, and all LIBO Rate Loans of such type shall automatically convert into
Base Rate Loans at the end of the then current Interest Periods with respect
thereto or sooner, if required by such law or assertion.
SECTION 4.2. DEPOSITS UNAVAILABLE. If the Administrative Agent shall
have determined that (i) Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to the Administrative Agent in its
relevant market, or (ii) by reason of circumstances affecting the Administrative
Agent's relevant market, adequate means do not exist for ascertaining the
interest rate applicable hereunder to LIBO Rate Loans, then, upon notice from
the Administrative Agent to the Borrower and the Lenders, the obligations of all
Lenders under SECTION 2.3 and SECTION 2.4 to make or continue any Term Loans as,
or to convert any Term Loans into, LIBO Rate Loans shall forthwith be suspended
until the Administrative Agent shall
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notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist.
SECTION 4.3. INCREASED LIBO RATE LOAN COSTS, ETC. The Borrower agrees
to reimburse each Lender for any actual increase to such Lender in the cost to
such Lender of, or any reduction in the amount of any sum receivable by such
Lender in respect of, making, continuing or maintaining (or of its obligation to
make, continue or maintain) any Term Loans as, or of converting (or of its
obligation to convert) any Term Loans into, LIBO Rate Loans. Such Lender shall
promptly notify the Administrative Agent and the Borrower in writing of the
occurrence of any such event, such notice to state, in reasonable detail, the
reasons therefor and the additional amount required fully to compensate such
Lender for such increased cost or reduced amount. Such additional amounts shall
be payable by the Borrower directly to such Lender within five days of its
receipt of such notice, and such notice shall, in the absence of manifest error,
be conclusive and binding on the Borrower.
SECTION 4.4. FUNDING LOSSES. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Term
Loan as, or to convert any portion of the principal amount of any Term Loan
into, a LIBO Rate Loan) as a result of (i) any conversion or repayment or
prepayment of the principal amount of any LIBO Rate Loans on a date other than
the scheduled last day of the Interest Period applicable thereto, whether
pursuant to SECTION 3.1 or otherwise, (ii) Borrower's failure to borrow any Term
Loans as LIBO Rate Loans in accordance with the Borrowing Request therefor, or
(iii) Borrower's failure to continue, or to convert Base Rate Loans into LIBO
Rate Loans in accordance with the Continuation/Conversion Notice therefor, then,
upon the written notice of such Lender to the Borrower (with a copy to the
Administrative Agent), the Borrower shall, within five days of its receipt
thereof, pay directly to such Lender such amount as will (in the reasonable
determination of such Lender) reimburse such Lender for such loss or expense.
Such written notice (which shall include calculations in reasonable detail)
shall, in the absence of manifest error, be conclusive and binding on the
Borrower.
SECTION 4.5. INCREASED CAPITAL COSTS. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other
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governmental authority affects or would affect the amount of capital required or
expected to be maintained by any Lender or any Person controlling such Lender,
and such Lender determines (in its sole and absolute discretion) that the rate
of return on its or such controlling Person's capital as a consequence of its
Term Loan Commitment or the Term Loans made by such Lender is reduced to a level
below that which such Lender or such controlling Person could have achieved but
for the occurrence of any such circumstance, then, in any such case upon notice
from time to time by such Lender to the Borrower, the Borrower shall immediately
pay directly to such Lender additional amounts sufficient to compensate such
Lender or such controlling Person for such reduction in rate of return. A
certificate of such Lender as to any such additional amount or amounts
(including calculations thereof in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on the Borrower. In determining such
amount, such Lender may use any method of averaging and attribution that it (in
its sole and absolute discretion) shall deem applicable.
SECTION 4.6. TAXES. All payments by the Borrower of principal of, and
interest on, the Term Loans and all other amounts payable hereunder shall be
made free and clear of and without deduction for any present or future income,
excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding franchise taxes and taxes imposed on or measured by any Lender's net
income or receipts (such non- excluded items being called "TAXES"). In the event
that any withholding or deduction from any payment to be made by the Borrower
hereunder is required in respect of any Taxes pursuant to any applicable law,
rule or regulation, then the Borrower will
(a) pay directly to the relevant authority the full
amount required to be so withheld or deducted;
(b) promptly forward to the Administrative Agent an official
receipt or other documentation satisfactory to the Administrative Agent
evidencing such payment to such authority; and
(c) pay to the Administrative Agent for the account of the
Lenders such additional amount or amounts as is necessary to ensure
that the net amount actually received by each Lender will equal the
full amount such Lender would have received had no such withholding or
deduction been required.
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Moreover, if any Taxes are directly asserted against the Administrative Agent or
any Lender with respect to any payment received by the Administrative Agent or
such Lender hereunder, the Administrative Agent or such Lender may pay such
Taxes and the Borrower will promptly pay such additional amounts (including any
penalties, interest or expenses) as is necessary in order that the net amount
received by such person after the payment of such Taxes (including any Taxes on
such additional amount) shall equal the amount such person would have received
had not such Taxes been asserted.
If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent, for the account
of the respective Lenders, the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result of any
such failure. For purposes of this Section, a distribution hereunder by the
Administrative Agent or any Lender to or for the account of any Lender shall be
deemed a payment by the Borrower.
Upon the request of the Borrower or the Administrative Agent, each
Lender that is organized under the laws of a jurisdiction other than the United
States shall, prior to the due date of any payments under the Term Notes,
execute and deliver to the Borrower and the Administrative Agent, on or about
the first scheduled payment date in each Fiscal Year, one or more (as the
Borrower or the Administrative Agent may reasonably request) United States
Internal Revenue Service Forms 4224 or Forms 1001 or such other forms or
documents (or successor forms or documents), appropriately completed, as may be
applicable to establish the extent, if any, to which a payment to such Lender is
exempt from withholding or deduction of Taxes.
SECTION 4.7. PAYMENTS, COMPUTATIONS, ETC. Unless otherwise expressly
provided, all payments by or on behalf of the Borrower pursuant to this
Agreement, the Term Notes or any other Loan Document shall be made by the
Borrower to the Administrative Agent for the PRO RATA account of the Lenders,
Agents or Arranger, as applicable, entitled to receive such payment. All such
payments required to be made to the Administrative Agent shall be made, without
setoff, deduction or counterclaim, not later than 11:00 a.m. (New York City
time) on the date due, in same day or immediately available funds, to such
account as the Administrative Agent shall specify from time to time by notice to
the Borrower. Funds received after that time shall be deemed to have been
received by the Administrative Agent on the next succeeding Business Day. The
Administrative Agent shall promptly
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remit in same day funds to each Lender, Agent or Arranger, as the case may be,
its share, if any, of such payments received by the Administrative Agent for the
account of such Lender, Agent or Arranger, as the case may be. All interest and
fees shall be computed on the basis of the actual number of days (including the
first day but excluding the last day) occurring during the period for which such
interest or fee is payable over a year comprised of 360 days (or, in the case of
interest on a Base Rate Loan that is not calculated at the Federal Funds Rate,
365 days or, if appropriate, 366 days). Whenever any payment to be made shall
otherwise be due on a day which is not a Business Day, such payment shall
(except as otherwise required by CLAUSE (I) of the definition of the term
"INTEREST PERIOD" with respect to LIBO Rate Loans) be made on the next
succeeding Business Day and such extension of time shall be included in
computing interest and fees, if any, in connection with such payment.
SECTION 4.8. SHARING OF PAYMENTS. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Term Loan (other than pursuant to the
terms of SECTIONS 4.3, 4.4 and 4.5) in excess of its PRO RATA share of payments
then or therewith obtained by all Lenders entitled thereto, such Lender shall
purchase from the other Lenders such participations in the Term Loans made by
them as shall be necessary to cause such purchasing Lender to share the excess
payment or other recovery ratably with each of them; PROVIDED, HOWEVER, that if
all or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing Lender, the purchase shall be rescinded and each
Lender which has sold a participation to the purchasing Lender shall repay to
the purchasing Lender the purchase price to the ratable extent of such recovery
together with an amount equal to such selling Lender's ratable share (according
to the proportion of (i) the amount of such selling Lender's required repayment
to the purchasing Lender in respect of such recovery, TO (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section may, to the fullest extent permitted by law,
exercise all its rights of payment (including pursuant to SECTION 4.9) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section applies, such Lender
shall, to the extent practicable, exercise its rights in respect of such secured
claim in a manner consistent with the rights of the Lenders entitled
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under this Section to share in the benefits of any recovery on such secured
claim.
SECTION 4.9. SETOFF. Each Lender shall, upon the occurrence of any
Event of Default described in SECTION 8.1.8 or, with the consent of the Required
Lenders, upon the occurrence of any other Event of Default, to the fullest
extent permitted by law, have the right to appropriate and apply to the payment
of the Obligations then owing to it (whether or not then due), and (as security
for such Obligations) the Borrower hereby grants to each Lender a continuing
security interest in, any and all balances, credits, deposits, accounts or
moneys of the Borrower then or thereafter maintained with or otherwise held by
such Lender; PROVIDED, HOWEVER, that any such appropriation and application
shall be subject to the provisions of SECTION 4.8. Each Lender agrees promptly
to notify the Borrower and the Administrative Agent after any such setoff and
application made by such Lender; PROVIDED, HOWEVER, that the failure to give
such notice shall not affect the validity of such setoff and application. The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff under applicable law or otherwise)
which such Lender may have.
ARTICLE V
CONDITIONS TO TERM LOANS
The obligation of each Lender to fund its Term Loans shall be subject
to the prior or concurrent satisfaction of each of the conditions precedent set
forth in this ARTICLE V.
SECTION 5.1. RESOLUTIONS, ETC. The Arranger, the Syndication Agent and
the Administrative Agent shall have received from each Obligor a certificate,
dated the Closing Date, of its Secretary or Assistant Secretary as to (i)
resolutions of its Board of Directors then in full force and effect authorizing
the execution, delivery and performance of each Loan Document to be executed by
it, and (ii) the incumbency and signatures of those of its officers authorized
to act with respect to each Loan Document executed by it, upon which certificate
each Agent and each Lender may conclusively rely until it shall have received a
further certificate of the Secretary or Assistant Secretary of such Obligor
canceling or amending such prior certificate.
SECTION 5.2. DELIVERY OF TERM NOTE. Each Lender shall have received its
Term Note duly executed and delivered by the Borrower.
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SECTION 5.3. SUBSIDIARY GUARANTY. The Syndication Agent shall have
received the Subsidiary Guaranty, dated the date hereof, duly executed by each
Subsidiary Guarantor.
SECTION 5.4. CLOSING DATE CERTIFICATE; TRANSACTION DOCUMENTS. The
Arranger, the Syndication Agent and the Documentation Agent shall have received,
with counterparts for each Lender, the Closing Date Certificate, substantially
in the form of EXHIBIT E hereto, dated the date hereof and duly executed and
delivered by the chief executive or financial (or equivalent) Authorized Officer
of the Borrower, in which certificate the Borrower shall agree and acknowledge
that the statements made therein shall be deemed to be true and correct
representations and warranties of the Borrower made as of such date under this
Agreement, and, at the time such certificate is delivered, such statements shall
in fact be true and correct, and which shall have attached thereto fully
executed versions of all other Transaction Documents, certified to be true and
complete copies thereof by an Authorized Officer of the Borrower, and the Agents
shall be satisfied with the terms of all such agreements and documents.
SECTION 5.5. EXISTING SENIOR NOTE DEFEASANCE. The Arranger, the
Syndication Agent and the Documentation Agent shall have received evidence
satisfactory to each of them that the Existing Senior Note Defeasance has
occurred (or contemporaneously with the initial Borrowing, will occur) in
accordance with the terms of the Existing Senior Note Indenture.
SECTION 5.6. ISSUANCE OF THE 1997 SENIOR NOTES. The Arranger, the
Syndication Agent and the Documentation Agent shall have received evidence
satisfactory to each of them that the Borrower shall have received (or
contemporaneously with the initial Borrowing, will receive) gross proceeds from
the issuance of the 1997 Senior Notes which, when added to the aggregate
principal amount of Term Loans to be borrowed hereunder, does not exceed
$350,000,000, and the Arranger, the Syndication Agent and the Documentation
Agent shall be satisfied with all terms and provisions of all documentation
relating to such 1997 Senior Notes.
SECTION 5.7. LITIGATION. There shall exist no pending or threatened
material litigation, proceedings or investigations which could reasonably be
expected to have a Material Adverse Effect.
SECTION 5.8. MATERIAL ADVERSE CHANGE. Other than the ten-month strike
against the Borrower which commenced October 1, 1996 and was settled August 12,
1997 (the "STRIKE") and losses
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relating to the resumption of operations at pre-Strike levels as disclosed in
the Offering Memorandum, since December 31, 1996, there shall not have occurred
or arisen any event or condition which has had or is reasonably likely to have a
Material Adverse Effect.
SECTION 5.9. OPINIONS OF COUNSEL. The Syndication Agent, the
Administrative Agent and the Documentation Agent shall have received opinions,
dated the Closing Date and addressed to the Agents and all Lenders, from (i)
Olshan Grundman Frome & Rosenzweig, LLP, special New York counsel for the
Obligors, in substantially the form of EXHIBIT G-1, (ii) Kirkpatrick & Lockhart,
special Pennsylvania counsel to the Obligors, in substantially the form of
EXHIBIT G-2 and (iii) Vorys, Sater, Seymour and Pease, special Ohio counsel to
the Obligors, in substantially the form of EXHIBIT G-3.
SECTION 5.10. CLOSING FEES, EXPENSES, ETC. The Agents and the Arranger
shall have received, each for their own respective accounts (including in their
capacity as a Lender), as the case may be, all fees, costs and expenses due and
payable pursuant to SECTION 3.3).
SECTION 5.11. SATISFACTORY LEGAL FORM. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any of the
Subsidiaries or any other Obligors shall be reasonably satisfactory in form and
substance to the Arranger, the Syndication Agent and the Documentation Agent and
their counsel; the Arranger, the Syndication Agent and the Documentation Agent
and their counsel shall have received all information, approvals, opinions,
documents or instruments as the Arranger, the Syndication Agent and the
Documentation Agent or their counsel may reasonably request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agents to enter into this
Agreement and to make the Term Loans hereunder, the Borrower represents and
warrants unto the Agents and each Lender as set forth in this ARTICLE VI.
SECTION 6.1. ORGANIZATION; DUE AUTHORIZATION, ETC.
(a) Each of the Borrower and its Subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation and
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has the corporate power and authority to carry on its business as conducted on
the Closing Date and to own, lease and operate its properties, and each is duly
qualified or licensed and is in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such qualification or
license, except where the failure to be so qualified or licensed would not have
a Material Adverse Effect.
(b) The execution, delivery and performance by the Borrower of this
Agreement and each other Loan Document executed or to be executed by it, the
execution, delivery and performance by each other Obligor of each Loan Document
executed or to be executed by it, the Borrower's and each such other Obligor's
participation in the consummation of all aspects of the transactions
contemplated hereby and thereby, and the execution, delivery and performance by
the Borrower of the agreements executed and delivered in connection with such
transactions are in each case within each such Person's corporate powers and
have been duly authorized by all necessary corporate action.
(c) This Agreement and each other Loan Document has been duly executed
and delivered by the Borrower and each other Obligor, as applicable.
SECTION 6.2. CAPITAL STOCK OF THE BORROWER. All outstanding shares of
Capital Stock of the Borrower have been duly authorized and validly issued and
are fully paid, non-assessable and not subject to any preemptive or similar
rights.
SECTION 6.3. SUBSIDIARIES. The entities listed in ITEM 6.3(A)
("SUBSIDIARIES") of the Disclosure Schedule are the only Subsidiaries of the
Borrower as of the Closing Date. All of the outstanding shares of capital stock
of each of the Borrower's Subsidiaries have been duly authorized and validly
issued and are fully paid and non-assessable, and are owned by the Borrower,
directly or indirectly through one or more Subsidiaries, free and clear of any
Lien, except as set forth in a footnote to ITEM 6.3(A) ("SUBSIDIARIES") of the
Disclosure Schedule. The entities listed in such ITEM 6.3(A) are the only other
entities in which the Borrower has a direct or indirect equity interest as of
the Closing Date. The number of shares or other equity interests owned by the
Borrower representing the percentage interests each as listed across from each
entity on the Disclosure Schedule have been duly authorized and validly issued
and are fully paid and non-assessable, and are owned by the Borrower, directly
or indirectly, through one or more Subsidiaries free and clear of any Liens.
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SECTION 6.4. NO CONFLICTS.
(a) Neither the Borrower nor any of its Subsidiaries is in violation of
its respective charter or bylaws or in default in the performance of any
obligation, agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Borrower and its Subsidiaries, taken as a whole, (i) to which the Borrower
or any of its subsidiaries is a party or (ii) by which the Borrower or any of
its Subsidiaries or their respective property is bound.
(b) The execution, delivery and performance by the Borrower of this
Agreement, the Term Notes and each other Loan Document to which it is a party
and by each Subsidiary Guarantor of the Subsidiary Guaranty and each other Loan
Document to which it is a party , and the consummation of the transactions
contemplated herein and therein, do not and will not (i) require any consent,
approval, authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the charter or
bylaws of the Borrower or any of its Subsidiaries or any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Borrower and its Subsidiaries, taken as a whole, to which the Borrower or
any of its Subsidiaries is a party or by which the Borrower or any of its
Subsidiaries or their respective property is bound, (iii) violate or conflict
with any applicable law or any rule, regulation, judgment, order or decree of
any court or any governmental body or agency having jurisdiction over the
Borrower, any of its Subsidiaries or their respective property, (iv) result in
the imposition or creation of (or the obligation to create or impose) a Lien
under, any agreement or instrument to which the Borrower or any of its
Subsidiaries is a party or by which the Borrower or any of its Subsidiaries or
their respective property is bound, or (v) result in the termination, suspension
or revocation of any Authorization (as defined below) of the Borrower or any of
its Subsidiaries or result in any other impairment of the rights of the holder
of any such Authorization.
SECTION 6.5. VALIDITY AND BINDING EFFECT. This Agreement, the Term
Notes and each other Loan Document, when duly executed and delivered, will be
legal, valid and binding obligations of the Borrower and each Subsidiary party
thereto, as applicable, enforceable against the Borrower and each such
Subsidiary in accordance with their respective terms except as (i) the
enforceability thereof may be limited by the effect of applicable
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bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration, if applicable, and the availability of equitable or
other remedies may be limited by equitable principles of general applicability.
SECTION 6.6. TAX SHARING AGREEMENT, ETC. The Tax Sharing Agreement has
been duly authorized by the Borrower and has been duly executed and delivered by
the Borrower. The Tax Sharing Agreement is a valid and binding agreement of the
Borrower, enforceable against the Borrower in accordance with its terms except
as (i) the enforceability thereof may be limited by the effect of applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration, if applicable, and the availability of equitable or
other remedies may be limited by equitable principles of general applicability.
The Intercreditor Agreement has been duly authorized by the Borrower and WPSC
and has been duly executed and delivered by the Borrower and WPSC. The
Intercreditor Agreement is a valid and binding agreement of the Borrower and
WPSC, enforceable against the Borrower and WPSC in accordance with its terms
except as (i) the enforceability thereof may be limited by the effect of
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration, if applicable, and the availability
of equitable or other remedies may be limited by equitable principles of general
applicability.
SECTION 6.7. LITIGATION. As of the date hereof, except as disclosed in
the Offering Memorandum, there are no legal or governmental proceedings pending
or to the best of the Borrower's knowledge, threatened to which the Borrower or
any of its Subsidiaries is or could be a party or to which any of their
respective property is or could be subject, which might result, singly or in the
aggregate, in a Material Adverse Effect.
SECTION 6.8. ENVIRONMENTAL LAWS AND ERISA.
(a) Except as disclosed in the Offering Memorandum, neither the
Borrower nor any of its Subsidiaries has violated any foreign, federal, state or
local law or regulation relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS") or any provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or the rules and regulations
promulgated thereunder, except for such violations which would not have a
Material Adverse Effect.
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(b) Except as disclosed in the Offering Memorandum, there are no costs
or liabilities associated with Environmental Laws (including any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any Authorization, any related constraints
on operating activities and any potential liabilities to third parties) which
would, singly or in the aggregate, have a Material Adverse Effect.
(c) Each of the Borrower and its Restricted Subsidiaries has such
permits, licenses, consents, exemptions, franchises, authorizations and other
approvals (each, an "AUTHORIZATION") of, and has made all filings with and
notices to, all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including without limitation,
under any applicable Environmental Laws, as are necessary to own, lease, license
and operate its respective properties and to conduct its business, except where
the failure to have any such Authorization or to make any such filing or notice
would not, singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and each of the Borrower and
its Subsidiaries is in compliance with all the terms and conditions thereof and
with the rules and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; and no event has occurred (including the
receipt of any notice from any authority or governing body) which allows or,
after notice or lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or lapse of
time or both, would result in any other impairment of the rights of the holder
of any such Authorization; and such Authorizations contain no restrictions that
are burdensome to the Borrower or any of its Subsidiaries; except where such
failure to be valid and in full force and effect or to be in compliance, the
occurrence of any such event or the presence of any such restriction would not,
singly or in the aggregate, have a Material Adverse Effect.
SECTION 6.9. FINANCIAL STATEMENTS.
(a) The historical financial statements, together with related
schedules and notes referred to in the Offering Memorandum, present fairly the
consolidated financial position, results of operations and changes in financial
position of the Borrower and its Subsidiaries on the basis stated in the
Offering Memorandum at the respective dates or for the respective periods to
which they apply, but do not contain year-end adjustments or notes to quarterly
financial statements; such statements and related schedules and notes have been
prepared in accordance with
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generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; and the other financial and
statistical information and data referred to in the Offering Memorandum are, in
all material respects, accurately presented and prepared on a basis consistent
with such financial statements and the books and records of the Borrower.
(b) The "as adjusted" financial information and data referred to in the
Offering Memorandum are, in all material respects, accurately presented and
prepared on a basis consistent with the historical financial statements.
SECTION 6.10. INVESTMENT COMPANY ACT. Each of the Borrower and its
Subsidiaries is not and, after giving effect to the making of the Term Loans and
the application of the proceeds thereof as described herein, will not be, an
"investment company," as such term is defined in the Investment Company Act of
1940, as amended.
SECTION 6.11. REGULATIONS G, T, U AND X. Neither the Borrower nor any
of its Subsidiaries nor any agent thereof acting on the behalf of them has
taken, and none of them will take, any action that might cause this Agreement or
the making of the Term Loans to violate Regulation G (12 C.F.R. Part 207),
Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System.
SECTION 6.12. MATERIAL ADVERSE CHANGE. Other than the Strike and losses
incurred through the Closing Date relating to resumption of operations at
pre-Strike levels as disclosed in the Offering Memorandum, since December 31,
1996, (i) there has not occurred any material adverse change or any development
involving a prospective material adverse change in the condition, financial or
otherwise, or the earnings, business, management or operations of the Borrower
and its Subsidiaries, taken as a whole, (ii) there has not been any material
adverse change or any development involving a prospective material adverse
change in the capital stock or in the long-term debt of the Borrower or any of
its Subsidiaries and (iii) neither the Borrower nor any of its Subsidiaries has
incurred any material liability or obligation, direct or contingent.
SECTION 6.13. PROPERTY, ETC. The Borrower and its Restricted
Subsidiaries have good and marketable title in fee simple to all real property
and good and marketable title to all personal property owned by them which is
material to the business of the Borrower and its Subsidiaries, in each case free
and clear of all Liens and defects, except such as are described in the
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Offering Memorandum or such as do not materially affect the value of such
property and do not interfere in any material respect with the use made and
proposed to be made of such property by the Borrower and its Subsidiaries; and
any material real property and buildings held under lease by the Borrower and
its Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere in any material
respect with the use made and proposed to be made of such property and buildings
by the Borrower and its Restricted Subsidiaries, in each case except as
described in the Offering Memorandum.
SECTION 6.14. TAXES. All material tax returns required to be filed by
the Borrower and each of its Subsidiaries in any jurisdiction have been filed,
other than those filings being contested in good faith, and all material taxes,
including withholding taxes, penalties and interest, assessments, fees and other
charges due pursuant to such returns or pursuant to any assessment received by
the Borrower or any of its Subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.
SECTION 6.15. SOLVENCY. Each of the Borrower and the Subsidiary
Guarantors, immediately after giving effect to the Borrowings on the Closing
Date, will be Solvent. As used herein, the term "SOLVENT" means, with respect to
any such entity on a particular date (i) the fair value of the property of such
entity is greater than the total amount of liabilities (including contingent
liabilities) of such entity, (ii) the present fair saleable value of the assets
of such entity is greater than the probable liability of such entity on its
total existing debts (including contingent liabilities) as they become absolute
and matured, (iii) such entity will be able to pay its debts and liabilities as
they mature and (iv) such entity will not have unreasonably small capital for
the business in which it is engaged, as now conducted and as proposed to be
conducted following the consummation of the transactions contemplated in this
Agreement (including the making of the Term Loans on the Closing Date.)
SECTION 6.16. ACCURACY OF INFORMATION. All factual information set
forth in the Offering Memorandum is, and all other such factual information
hereafter furnished by or on behalf of the Borrower to the Agents, the Arrangers
or any Lender will be, taken as a whole, true and accurate in every material
respect on the date as of which such information is dated or certified and as of
the date of execution and delivery of this Agreement by the Agents and each such
Lender, and such information is not, or shall not be, as the case may be, taken
as
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a whole, incomplete by omitting to state any material fact necessary to make
such information not misleading.
ARTICLE VII
COVENANTS
SECTION 7.1. AFFIRMATIVE COVENANTS. The Borrower agrees with the Agents
and each Lender that, until all Term Loan Commitments have terminated and all
Obligations have been paid and performed in full, the Borrower will perform the
obligations set forth in this Section.
SECTION 7.1.1. FINANCIAL INFORMATION, REPORTS, NOTICES, ETC. The
Borrower will furnish, or will cause to be furnished, to each Lender and each
Agent copies of the following financial statements, reports, notices and
information (except to the extent any such Lender shall have provided written
notice to the Borrower and the Administrative Agent that it is not to receive
any of the following statements, reports, notices and information):
(a) Whether or not the Borrower is required to do so by the
rules and regulations of the SEC, the Borrower will file with the SEC
(unless the SEC will not accept such a filing) and, within 15 days of
filing, or attempting to file, the same with the SEC, furnish to the
Lenders (i) all quarterly and annual financial and other information
with respect to the Borrower and its Subsidiaries that would be
required to be contained in a filing with the SEC on Forms 10-Q and
10-K if the Borrower were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information
only, a report thereon by the Borrower's certified independent
accountants, and (ii) all current reports that would be required to be
filed with the SEC on Form 8-K if the Borrower were required to file
such reports.
(b) The Borrower shall deliver to the Administrative Agent,
within 90 days after the end of each fiscal year, an Officer's
Certificate stating that a review of the activities of the Borrower and
its Subsidiaries during the preceding fiscal year has been made under
the supervision of the signing Officers with a view to determining
whether the Borrower has kept, observed, performed and fulfilled its
obligations under this Agreement, and further stating, as to each such
Officer signing such certificate, that to the best
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of his or her knowledge the Borrower has kept, observed, performed and
fulfilled each and every covenant contained in this Agreement and is
not in default in the performance or observance of any of the terms,
provisions and conditions of this Agreement (or, if a Default or Event
of Default shall have occurred, describing all such Defaults or Events
of Default of which he or she may have knowledge and what action the
Borrower is taking or proposes to take with respect thereto) and that
to the best of his or her knowledge no event has occurred and remains
in existence by reason of which payments on account of the principal of
or interest, if any, on the Term Loans is prohibited or if such event
has occurred, a description of the event and what action the Borrower
is taking or proposes to take with respect thereto.
(c) So long as not contrary to the then current
recommendations of the American Institute of Certified Public
Accountants, the year-end financial statements delivered pursuant to
CLAUSE (B) above shall be accompanied by a written statement of the
Borrower's independent public accountants (who shall be a firm of
established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has
come to their attention that would lead them to believe that the
Borrower has violated any provisions of ARTICLE VII hereof or, if any
such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not
be liable directly or indirectly to any Person for any failure to
obtain knowledge of any such violation.
(d) The Borrower shall, so long as any of the Term Loans are
outstanding, deliver to the Administrative Agent, forthwith upon any
Officer becoming aware of any Default or Event of Default, an Officer's
Certificate specifying such Default or Event of Default and what action
the Borrower is taking or proposes to take with respect thereto.
(e) The Borrower shall so long as any of the Term Loans are
outstanding, promptly notify the Administrative Agent and each Lender
of the occurrence of any Change of Control and, within 30 days of any
Change of Control, deliver to the Administrative Agent and each Lender
a Change of Control Prepayment Notice.
(f) Any information required to be provided pursuant to other
provisions of this Agreement, and such other
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reports or information from time to time reasonably requested by the
Agents on behalf of itself or any Lender.
SECTION 7.1.2. CORPORATE EXISTENCE. Subject to SECTION 7.2.5, hereof,
the Borrower shall do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence, and the corporate,
partnership or other existence of each of its Restricted Subsidiaries, in
accordance with the respective organizational documents (as the same may be
amended from time to time) of the Borrower or any such Restricted Subsidiary;
PROVIDED, HOWEVER, that the Borrower shall not be required to preserve the
existence of any of its Restricted Subsidiaries, if the Board of Directors of
the Borrower shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Borrower and its Restricted
Subsidiaries, taken as a whole.
SECTION 7.1.3. STAY, EXTENSION AND USURY LAWS. The Borrower covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Agreement; and the Borrower (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Agents or the Lenders, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
SECTION 7.1.4. INSURANCE. The Borrower shall, and shall cause the
Restricted Subsidiaries to, maintain liability, casualty and other insurance
(subject to the customary deductibles and retentions) with responsible insurance
companies in such amounts and against such risks as it customarily carried by
responsible companies engaged in similar businesses and owning similar assets in
the general areas in which the Borrower and the Restricted Subsidiaries operate
(which may include self-insurance in comparable form to that maintained by such
responsible companies).
SECTION 7.1.5. TAXES. The Borrower shall pay, and shall cause each of
its Subsidiaries to pay, prior to delinquency, all material taxes, assessments,
and governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Lenders or Agents.
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SECTION 7.1.6. BOOKS AND RECORDS. The Borrower will, and will cause
each of its Subsidiaries to, keep books and records which accurately reflect in
all material respects all of its business affairs and transactions and permit
the Agents and each Lender or any of their respective representatives, at
reasonable times and intervals, and upon reasonable notice, to visit all of its
offices, to discuss its financial matters with its officers and, after notice to
the Borrower and provision of an opportunity for the Borrower to participate in
such discussion, its independent public accountant (and the Borrower hereby
authorizes such independent public accountant to discuss the Borrower's
financial matters with each Lender or its representatives whether or not any
representative of the Borrower is present, so long as the Borrower has been
afforded a reasonable opportunity to be present) and to examine, and photocopy
extracts from, any of its books or other corporate records. The cost and expense
of each such visit shall be borne by the applicable Agent or Lender, except that
the Administrative Agent may make one such visit each Fiscal Year and the cost
and expense thereof shall be borne by the Borrower.
SECTION 7.1.7. USE OF PROCEEDS, ETC. The Borrower shall apply the
proceeds of the Term Loans to defease the Existing Senior Notes and reduce
existing Indebtedness under the Revolving Credit Facility and to pay the costs
and expenses associated with this transaction and the 1997 Senior Note Offering.
SECTION 7.1.8. ADDITIONAL SUBSIDIARY GUARANTORS. If the Borrower or any
of its Restricted Subsidiaries shall, after the date of this Agreement, acquire,
create or designate another Restricted Subsidiary, then such newly acquired,
created or designated Restricted Subsidiary shall execute a Subsidiary Guaranty
or supplement to the Subsidiary Guaranty delivered on the Effective Date in form
satisfactory to the Administrative Agent and deliver an opinion of counsel
reasonably satisfactory to the Administrative Agent.
SECTION 7.2. NEGATIVE COVENANTS. The Borrower agrees with the Agents
and each Lender that, until the Term Loan Commitments have terminated, and all
Obligations have been paid and performed in full, the Borrower will perform the
obligations set forth in this Section.
SECTION 7.2.1. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED
STOCK. The Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "INCUR") any Indebtedness (including
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Acquired Indebtedness) and that the Borrower will not permit any of its
Restricted Subsidiaries to issue any shares of preferred stock; PROVIDED,
HOWEVER, that the Borrower may incur Indebtedness if the Consolidated Interest
Coverage Ratio for the Borrower's most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred would have been at least
2.0 to 1.0 on a PRO FORMA basis (including a PRO FORMA application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred at the
beginning of such four-quarter period.
Notwithstanding the foregoing, the Borrower and, to the extent set
forth below, its Restricted Subsidiaries may incur the following (each of which
shall be given independent effect):
(a) Indebtedness of the Borrower and its Subsidiaries in
respect of the Term Loans and the Subsidiary Guaranty and all other
Obligations;
(b) Permitted Working Capital Indebtedness of the Borrower and
its Restricted Subsidiaries;
(c) Existing Indebtedness (other than Permitted Working
Capital Indebtedness or Indebtedness under the Letter of Credit
Facility);
(d) Indebtedness of the Borrower and its Restricted
Subsidiaries under the Letter of Credit Facility;
(e) Capital Expenditure Indebtedness, Capital Lease
Obligations and purchase money Indebtedness of the Borrower and its
Restricted Subsidiaries in an aggregate principal amount not to exceed
$50,000,000 at any time outstanding;
(f) (i) Hedging Obligations of the Borrower and its Restricted
Subsidiaries covering Indebtedness of the Borrower or such Restricted
Subsidiary (which Indebtedness is otherwise permitted to be incurred
under this covenant) to the extent the notional principal amount of any
such Hedging Obligation does not exceed the principal amount of the
Indebtedness to which such Hedging Obligation relates; or (ii)
repurchase agreements, reverse repurchase agreements or similar
agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by
any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition; provided that the terms of such agreements
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comply with the guidelines set forth in Federal-Financial Agreements of
Depository Institutions with Securities and Others (or any successor
guidelines), as adopted by the
Comptroller of the Currency;
(g) Indebtedness of the Borrower and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $30,000,000
at any time outstanding;
(h) Indebtedness of the Borrower representing guarantees of
Indebtedness incurred by one of its Restricted Subsidiaries pursuant
to, and in compliance with, another provision of this covenant;
(i) Indebtedness of the Borrower or any of its Restricted
Subsidiaries representing guarantees of a portion of the Indebtedness
of Wheeling-Nisshin which is not greater than the Borrower's or such
Restricted Subsidiary's PRO RATA ownership of the outstanding Equity
Interests in Wheeling- Nisshin; PROVIDED, HOWEVER, that (i) such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all Obligations with respect to the Term Loans and (ii) at the
time of incurrence and after giving effect to the Indebtedness of
Wheeling-Nisshin which is being guaranteed, the Consolidated Interest
Coverage Ratio of Wheeling-Nisshin for its most recently ended four
full fiscal quarters for which internal financial statements are
available would have been at least 2.0 to 1.0, determined on a PRO
FORMA basis as if any additional Indebtedness had been incurred at the
beginning of such four-quarter period;
(j) Indebtedness of the Borrower or its Restricted
Subsidiaries representing guarantees of Indebtedness of
Wheeling-Nisshin required to be made pursuant to the Letter of
Undertaking not to exceed $10,000,000;
(k) the incurrence by the Borrower or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Borrower
and any of its Wholly Owned Restricted Subsidiaries; PROVIDED, HOWEVER,
that (i) if the Borrower is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all Obligations and (ii) (A) any subsequent issuance or
transfer of Equity Interests that results in any such Indebtedness
being held by a Person other than the Borrower or a Wholly Owned
Restricted Subsidiary and (B) any sale or other transfer of any such
Indebtedness to a Person that is not either the Borrower or a Wholly
Owned Restricted Subsidiary shall be deemed, in each case, to
constitute an
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incurrence of such Indebtedness by the Borrower or such Restricted
Subsidiary, as the case may be;
(l) Indebtedness of the Borrower evidenced by the 1997 Senior
Notes and the Indebtedness of the Subsidiary Guarantors in respect of
guarantees of such 1997 Senior Notes; and
.
(m) any Permitted Refinancing Indebtedness representing a
replacement, renewal, refinancing or extension of Indebtedness
permitted under the first sentence of this Section and CLAUSES (C) and
(L) of this Section.
In the event that the incurrence of any Indebtedness would be permitted by this
Section, the Borrower may designate (in the form of an officer's certificate
delivered to the Administrative Agent) the particular clause of this Section
pursuant to which it is incurring such Indebtedness.
SECTION 7.2.2. LIENS. The Borrower shall not, and shall not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Lien on any asset now owned or hereafter acquired, or any
income or profits therefrom or assign or convey any right to receive income
therefrom, without making effective provision for all payments due under this
Agreement and the Term Notes and the Subsidiary Guaranty to be directly secured
on an equal and ratable basis with the obligations so secured or, in the event
such Indebtedness is subordinate in right of payment to the Term Notes or the
Subsidiary Guaranty, prior to such Indebtedness, in each case until such time as
such obligations are no longer secured by a Lien. Notwithstanding the foregoing,
the Borrower and its Restricted Subsidiaries may create, incur, assume or suffer
to exist (each of which shall be given independent effect):
(a) Permitted Liens;
(b) Liens to secure the payment of Capital Expenditure
Indebtedness and Capital Lease Obligations, provided that (i) the
aggregate principal amount of Indebtedness secured by such Liens shall
not exceed the lesser of cost or Fair Market Value of the assets or
property acquired, constructed or improved with the proceeds of such
Indebtedness and (ii) such Liens shall not encumber any other assets or
property of the Borrower and its Subsidiaries;
(c) Liens secured by the Capital Stock or assets of
Wheeling-Nisshin or OCC to the extent required under agreements as
existing on the date of this Agreement; and
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(d) Liens on accounts receivable, inventory, intangibles
necessary or useful for the sale of such inventory and other current
assets of the Borrower or any Restricted Subsidiary or on Capital Stock
Subsidiaries, in each case incurred to secure Permitted Working Capital
Indebtedness.
SECTION 7.2.3. RESTRICTED PAYMENTS. The Borrower shall not, and shall
not permit any of its Restricted Subsidiaries to, directly or indirectly, (a)
declare or pay any dividend or make any other payment or distribution on account
of the Borrower's or any of its Restricted Subsidiaries' Equity Interests
(including any payment in connection with any merger or consolidation involving
the Borrower) or to the direct or indirect holders of the Borrower's Equity
Interests in their capacity as such (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Borrower);
(b) purchase, redeem or otherwise acquire or retire for value (including in
connection with any merger or consolidation involving the Borrower) any Equity
Interests of the Borrower (other than any such Equity Interests owned by the
Borrower or any Wholly Owned Restricted Subsidiary of the Borrower); (c) make
any payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value, any Indebtedness that is subordinated in right of
payment to the Term Loans, except a payment of interest or principal at Stated
Maturity; or (d) make any Restricted Investment (all such payments and other
actions set forth in clauses (a) through (d) above being collectively referred
to as "RESTRICTED PAYMENTS"), unless, at the time of and after giving effect to
such Restricted Payment:
(i) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(ii) the Borrower would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such Restricted
Payment had been made at the beginning of the applicable four-quarter
period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Interest Coverage Ratio test
set forth in the first paragraph of SECTION 7.2.1 hereof; and
(iii) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Borrower and its
Restricted Subsidiaries after the date of this Agreement, is less than
the sum of (A) 50% of the Consolidated Net Income of the Borrower for
the period (taken as one accounting period) commencing April 1, 1998 to
the end of the Borrower's most recently ended fiscal quarter
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for which internal financial statements are available at the time of
such Restricted Payment (or, if such Consolidated Net Income for such
period is a deficit, less 100% of such deficit), plus (B) 100% of the
aggregate Net Cash Proceeds received by the Borrower from the issue or
sale since the date of this Agreement of Equity Interests of the
Borrower (other than Disqualified Stock) or of Disqualified Stock or
debt securities of the Borrower that have been converted into such
Equity Interests (other than any such Equity Interests, Disqualified
Stock or convertible debt securities sold to a Restricted Subsidiary of
the Borrower and other than Disqualified Stock or convertible debt
securities that have been converted into Disqualified Stock), plus (C)
to the extent that any Restricted Investment that was made after the
date of this Agreement is sold for cash or otherwise liquidated or
repaid for cash, the sum of (x) the initial amount of such Restricted
Investment and (y) 50% of the aggregate Net Proceeds received by the
Borrower or any Restricted Subsidiary in excess of the initial amount
of such Restricted Investment, plus (D) $10,000,000.
The foregoing provisions will not prohibit (a) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Agreement; (b) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Borrower
in exchange for, or out of the Net Cash Proceeds of the substantially concurrent
sale (other than to a Restricted Subsidiary of the Borrower) of, other Equity
Interests of the Borrower (other than any Disqualified Stock); PROVIDED that the
amount of any such Net Cash Proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition shall be excluded from
CLAUSE (III) (B) of the preceding paragraph; (c) the defeasance, redemption,
repurchase, retirement or other acquisition of subordinated Indebtedness with
the net cash proceeds from an incurrence of, or in exchange for, Permitted
Refinancing Indebtedness; (d) the payment of any dividend by a Restricted
Subsidiary of the Borrower to the holders of its Equity Interests on a pro rata
basis; (e) so long as no Default or Event of Default shall have occurred and be
continuing, the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Borrower held by any member of the
Borrower's or any of its Restricted Subsidiaries' management upon the death,
disability or termination of employment of such member of management; PROVIDED
that the aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests shall not exceed $500,000 in any calendar year and
$2,500,000 in the aggregate; (f) loans or
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advances to Unimast by the Borrower or WPSC prior to the first anniversary of
the date of this Agreement of amounts borrowed by WPSC under the Revolving
Credit Facility provided (i) such loans or advances do not exceed $40,000,000 at
any time outstanding, (ii) Unimast pays interest to the Borrower or WPSC on such
loans or advances in an amount equal to the interest payable by WPSC on such
amounts pursuant to the Revolving Credit Facility and (iii) such loans and
advances are repaid in full on or prior to the first anniversary of the date of
this Agreement; (g) the payment by the Borrower of management fees to the Parent
not to exceed $2,500,000 in any calendar year, in exchange for services provided
to it by WPN Corp. pursuant to the management agreement between the Parent and
WPN Corp.; and (h) payments permitted under the WHX Agreements.
In determining the amount of Restricted Payments permissible under
clause (iii) of the first paragraph of this Section, amounts expended pursuant
to CLAUSES (A) and (E) of the immediately preceding paragraph shall be included
as Restricted Payments for purposes of such CLAUSE (III).
The Board of Directors of the Borrower may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not cause
a Default. For purposes of making such determination, all outstanding
Investments by the Borrower and its Restricted Subsidiaries (except to the
extent repaid in cash) in the Subsidiary so designated will be deemed to be
Restricted Payments at the time of such designation. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
greater of (a) the net book value of such Investments at the time of such
designation and (b) the fair market value of such Investments at the time of
such designation. Such designation will be permitted only if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Borrower or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined by
the Board of Directors of the Borrower whose resolution with respect thereto
shall be delivered to the Administrative Agent. Not later than the date of
making any Restricted Payment, the Borrower shall deliver to the Administrative
Agent an officer's certificate stating that such Restricted Payment is permitted
and
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setting forth the basis upon which the calculations required by this Section
were computed.
SECTION 7.2.4. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES. The Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) (i) pay dividends or make any other distributions
to the Borrower or any of its Restricted Subsidiaries on its Capital Stock or
with respect to any other interest or participation in, or measured by, its
profits, or (ii) pay any indebtedness owed to the Borrower or any of its
Restricted Subsidiaries, (b) make loans or advances to the Borrower or any of
its Restricted Subsidiaries or (c) transfer any of its properties or assets to
the Borrower or any of its Restricted Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (1) Existing Indebtedness as in
effect on the date hereof, including restrictions under the Revolving Credit
Facility, as in effect on the date hereof and any refinancings, amendments,
restatements, renewals or replacements thereof; PROVIDED, HOWEVER, that the
agreements governing such contain restrictions that are not more restrictive,
taken as a whole, than those contained in the agreement governing the
Indebtedness being so refinanced, amended, restated, renewed or replaced, (2)
this Agreement, the Term Notes and the Subsidiary Guaranty, (3) applicable law,
(4) any instrument governing Indebtedness or Capital Stock of a Person acquired
by the Borrower or any of its Restricted Subsidiaries as in effect at the time
of such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, PROVIDED that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Agreement to be incurred, (5) customary non-
assignment provisions in leases entered into in the ordinary course of business
and consistent with past practices, (6) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in CLAUSE (C) above on the property so acquired, (7) customary
provisions in bona fide contracts for the sale of property or assets, or (8)
Permitted Refinancing Indebtedness, PROVIDED that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are not more
restrictive, taken as a whole, than those contained in the agreements governing
the Indebtedness being refinanced.
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SECTION 7.2.5. MERGER, CONSOLIDATION, OR SALE OF ASSETS. The Borrower
shall not consolidate or merge with or into (whether or not the Borrower is the
surviving corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or more
related transactions, to another corporation, Person or entity unless (a) the
Borrower is the surviving corporation or the entity or the Person formed by or
surviving any such consolidation or merger (if other than the Borrower) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia, (b) the entity
or Person formed by or surviving any such consolidation or merger (if other than
the Borrower) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Borrower under the Term Loans, the Term Notes, this Agreement
and each other Loan Document to which it is a party pursuant to an assumption
agreement in a form reasonably satisfactory to the Administrative Agent, (c)
immediately after such transaction no Default or Event of Default exists and (d)
except in the case of a merger of the Borrower with or into a Wholly Owned
Restricted Subsidiary of the Borrower, the Borrower or the entity or Person
formed by or surviving any such consolidation or merger (if other than the
Borrower), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (A) will have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated Net
Worth of the Borrower immediately preceding the transaction and (B) will, at the
time of such transaction and after giving PRO FORMA effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Interest Coverage Ratio test set forth in the first sentence of
SECTION 7.2.1 hereof.
SECTION 7.2.6. ASSET SALES.
(a) The Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Borrower or such
Restricted Subsidiary, as the case may be, receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors of the Borrower set forth in an officer's
certificate delivered to the Administrative Agent) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 80% of the
consideration therefor received by the Borrower or such Restricted Subsidiary is
in the form of cash;
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PROVIDED, HOWEVER, that the amount of (A) any liabilities (as shown on the
Borrower's or such Restricted Subsidiary's most recent balance sheet) of the
Borrower or such Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Term Loans or any
guarantee thereof) that are assumed by the transferee of any such assets
pursuant to a customary novation agreement that releases the Borrower or such
Restricted Subsidiary from further liability and (B) any securities, notes or
other obligations received by the Borrower or such Restricted Subsidiary from
such transferee that are converted by the Borrower or such Restricted Subsidiary
within 30 days of receipt into cash (to the extent of the cash received) shall
be deemed to be cash for purposes of this provision.
(b) Within 270 days after the receipt of any Net Proceeds from an Asset
Sale, the Borrower or any such Restricted Subsidiary may apply such Net Proceeds
to reduce Indebtedness under the Revolving Credit Facility or other PARI PASSU
Indebtedness (and in the case of such PARI PASSU Indebtedness, to
correspondingly reduce commitments with respect thereto). To the extent such Net
Proceeds are not utilized as contemplated in the preceding sentence, such Net
Proceeds may, within 270 days after receipt thereof, be utilized to acquire
Replacement Assets. Pending the final application of any such Net Proceeds, the
Borrower or any Restricted Subsidiary may otherwise invest such Net Proceeds in
any manner that is not prohibited by this Agreement. Any Net Proceeds from Asset
Sales that are not applied or invested as provided in the first two sentences of
this clause will be deemed to constitute "EXCESS PROCEEDS" and shall be applied
as set forth in SECTION 3.1.1. To the extent that the aggregate amount of Term
Loans prepaid pursuant to an Asset Sale Offer is less than the amount that the
Borrower is required to prepay (as a result of a Lender declining to have its
Term Loans prepaid pursuant to SECTION 3.1.1), the Borrower may use any
remaining Excess Proceeds for general corporate purposes. Upon completion of the
prepayment of all Term Loans in connection with a particular Asset Sale,
pursuant to the terms of this Agreement, the amount of Excess Proceeds shall be
reset at zero.
SECTION 7.2.7. [INTENTIONALLY OMITTED].
SECTION 7.2.8. TRANSACTIONS WITH AFFILIATES. The Borrower shall not,
and shall not permit any of its Restricted Subsidiaries to, make any payment to,
or sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate
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(each of the foregoing, an "AFFILIATE TRANSACTION"), unless (a) such Affiliate
Transaction is on terms that are no less favorable to the Borrower or the
relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Borrower or such Restricted Subsidiary with an
unrelated Person or, if there is no such comparable transaction, on terms that
are fair and reasonable to the Borrower, and (b) the Borrower delivers to the
Administrative Agent (i) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$2,000,000, either (A) a resolution of the Board of Directors of the Borrower
set forth in an Officer's Certificate certifying that such Affiliate Transaction
complies with CLAUSE (A) above and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of Directors of
the Borrower or (B) if there are no disinterested members of the Board of
Directors of the Borrower, an opinion as to the fairness to the Borrower of such
Affiliate Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing and (ii) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $5,000,000, an opinion as to the
fairness to the Borrower of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing; PROVIDED, HOWEVER, that the following shall be deemed not to be
Affiliate Transactions: (v) customary directors' fees, indemnification or
similar arrangements or any employment agreement or other compensation plan or
arrangement entered into by the Borrower or any of its Restricted Subsidiaries
in the ordinary course of business and consistent with the past practice of the
Borrower or such Restricted Subsidiary; (w) transactions between or among the
Borrower and/or its Wholly Owned Restricted Subsidiaries; (x) transactions
pursuant to the WHX Agreements or agreements with or applicable to any of
Wheeling-Nisshin, OCC, the Empire-Iron Mining Partnership or W-P Coal Company,
in each case as in effect on the date hereof; (y) the purchase of accounts
receivable from Unimast for immediate resale on the same terms pursuant to the
Receivables Facility; and (z) Restricted Payments that are permitted pursuant to
CLAUSES (E), (F) and (G) of the second paragraph of SECTION 7.2.3 and
Indebtedness permitted to be incurred pursuant to CLAUSES (I) and (J) the second
paragraph of SECTION 7.2.1.
SECTION 7.2.9. ISSUANCES AND SALES OF CAPITAL STOCK OF SUBSIDIARIES.
The Borrower (a) shall not permit any Wholly Owned Restricted Subsidiary of the
Borrower to issue any of its Equity Interests to any Person other than to the
Borrower or a Wholly Owned Restricted Subsidiary of the Borrower, and (b) shall
not,
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and shall not permit any Wholly Owned Restricted Subsidiary of the Borrower to,
transfer, convey, sell, lease or otherwise dispose of any Capital Stock of any
Wholly Owned Restricted Subsidiary of the Borrower to any Person (other than the
Borrower or any Wholly Owned Restricted Subsidiary of the Borrower) unless (i)
such transfer, conveyance, sale, lease or other disposition is of all of the
Capital Stock of such Wholly Owned Restricted Subsidiary and (ii) the Net
Proceeds from such transfer, conveyance, sale, lease or other disposition are
applied in accordance with SECTION 7.2.6, PROVIDED that this CLAUSE (B) shall
not apply to any pledge of Capital Stock of any Wholly Owned Restricted
Subsidiary of the Borrower permitted pursuant to CLAUSE (D) of SECTION 7.2.2.
The Borrower shall not, and shall not permit any of its Subsidiaries to, engage,
directly or indirectly, in any business other than a business of the Borrower or
its Subsidiaries conducted on the date of the Agreement or in a line of business
or manufacturing or processing operation reasonably related thereto (including
any downstream steel manufacturing or processing operation or manufacturing or
fabricating operation in the construction products business).
SECTION 7.2.10. SALE AND LEASEBACK TRANSACTIONS. The Borrower shall
not, and will not permit any of its Restricted Subsidiaries to, enter into any
sale and leaseback transaction; PROVIDED, HOWEVER, that the Borrower may enter
into a sale and leaseback transaction if (a) the Borrower could have (i)
incurred Indebtedness in an amount equal to the Attributable Indebtedness
relating to such sale and leaseback transaction pursuant to the Consolidated
Interest Coverage Ratio test set forth in the first sentence of SECTION 7.2.1
and (ii) incurred a Lien to secure such Indebtedness pursuant to SECTION 7.2.2,
(b) the gross cash proceeds of such sale and leaseback transaction are at least
equal to the fair market value (as determined in good faith by the Board of
Directors of the Borrower and set forth in an Officer's Certificate delivered to
the Administrative Agent) of the property that is the subject of such sale and
leaseback transaction and (c) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Borrower applies the Net Cash Proceeds of
such transaction in compliance with, SECTION 7.2.6.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. LISTING OF EVENTS OF DEFAULT. Each of the following events
or occurrences described in this Section shall constitute an "EVENT OF DEFAULT".
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SECTION 8.1.1. NON-PAYMENT OF OBLIGATIONS. (a) The Borrower shall
default in the payment when due of interest with respect to the Term Loans or
other monetary Obligations, and such default continues for a period of 30 days,
or (b) the Borrower shall default in the payment or prepayment when due of any
principal of or premium, if any, on any Term Loan when the same becomes due and
payable at maturity, upon acceleration (including in connection with a Change of
Control Prepayment Event) or otherwise.
SECTION 8.1.2. BREACH OF WARRANTY. Any representation or warranty of
the Borrower, any other Obligor or the Parent made or deemed to be made
hereunder or in any other Loan Document executed by it or any other writing or
certificate (including the Closing Date Certificate) furnished by or on behalf
of the Borrower, any other Obligor or Parent to any Agent, the Arranger or any
Lender for the purposes of or in connection with this Agreement or any such
other Loan Document (including any certificates delivered pursuant to ARTICLE V)
is or shall be incorrect when made in any material respect.
SECTION 8.1.3. NON-PERFORMANCE OF CERTAIN COVENANTS AND OBLIGATIONS.
The Borrower shall fail to comply with any of the provisions of SECTIONS
7.1.1(E), 7.2.1, 7.2.3, 7.2.5 or 7.2.6.
SECTION 8.1.4. NON-PERFORMANCE OF OTHER COVENANTS AND OBLIGATIONS. The
Borrower shall fail to observe or perform any other covenant or other agreement
in this Agreement or in any other Loan Document executed by it, and such default
shall continue unremedied for a period of 30 days after notice thereof shall
have been given to the Borrower by the Administrative Agent at the direction of
the Required Lenders.
SECTION 8.1.5. DEFAULT ON OTHER INDEBTEDNESS. A default shall occur
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Borrower or any of its Restricted Subsidiaries (or the payment of which
is guaranteed by the Borrower or any of its Restricted Subsidiaries), whether
such Indebtedness or guarantee now exists, or is created after the date of this
Agreement, which default (i) is caused by a failure to pay principal of or
premium or interest on such Indebtedness prior to the expiration of any grace
period provided in such Indebtedness (a "PAYMENT DEFAULT") or (ii) results in
the acceleration of such Indebtedness prior to its express maturity and, in each
case, the principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $10,000,000
or more.
SECTION 8.1.6. JUDGMENTS. A final judgment or final judgments for the
payment of money are entered by a court or courts of competent jurisdiction
against the Borrower or any of its Subsidiaries and such judgment or judgments
are not paid or discharged for a period (during which execution shall not be
effectively stayed by reason of pending appeal or otherwise) of 60 days,
PROVIDED that the aggregate of all such undischarged judgments exceeds
$10,000,000.
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SECTION 8.1.7. NON-PERFORMANCE AND ENFORCEABILITY OF SUBSIDIARY
GUARANTY. The failure of any Guarantor to perform any covenant set forth in the
Subsidiary Guaranty or the repudiation by any Guarantor of its obligations under
the Subsidiary Guaranty or the unenforceability of the Subsidiary Guaranty
against a Guarantor for any reason, unless, in each such case, such Guarantor
and its Subsidiaries have no Indebtedness outstanding at such time or at any
time thereafter.
SECTION 8.1.8. BANKRUPTCY, INSOLVENCY, ETC.
(a) The Borrower or any of its Restricted Subsidiaries pursuant to or
within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(b) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Borrower or any of its
Restricted Subsidiaries in an involuntary case;
(ii) appoints a Custodian of the Borrower or any of its
Restricted Subsidiaries or for all or substantially all of the property
of the Borrower or any of its Restricted Subsidiaries; or
(iii) orders the liquidation of the Borrower or any of its
Restricted Subsidiaries;
and the order or decree remains unstayed and in effect for 60 consecutive days;
PROVIDED, HOWEVER, that if the entry of such order or decree is appealed and
dismissed on appeal then the Event of Default hereunder by reason of the entry
of such order or decree shall be deemed to have been cured.
SECTION 8.2. ACCELERATION. If any Event of Default occurs and is
continuing, the Administrative Agent, upon the direction of the Required
Lenders, shall by notice to the Borrower declare all or any portion of the
outstanding principal amount of the Term Loans and other Obligations to be due
and payable immediately and/or the Term Loan Commitments (if not theretofore
terminated) to be terminated. Upon any such declaration, the Term Loans and
other Obligations shall become due and payable immediately, without further
notice, demand or presentment and/or, as the case may be, the Term Loan
Commitments shall
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terminate. Notwithstanding the foregoing, if an Event of Default specified in
SECTION 8.1.8 occurs with respect to the Borrower, any of its Significant
Subsidiaries or any group of Restricted Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary, all outstanding Term Loans and all
other Obligations shall be due and payable immediately without further action or
notice. If an Event of Default occurs by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Borrower with the
intention of avoiding payment of the premium that the Borrower would have had to
pay if the Borrower then had elected to prepay the Term Loans pursuant to
SECTION 3.1.1, then, upon acceleration of the Term Loans, an equivalent premium
shall also become and be immediately due and payable, to the extent permitted by
law, anything in this Agreement or any other Loan Document to the contrary
notwithstanding.
ARTICLE IX
THE AGENTS
SECTION 9.1. APPOINTMENT OF AGENTS. Each Lender hereby irrevocably
appoints DLJ as Syndication Agent and Administrative Agent and Citicorp as
Documentation Agent under and for purposes of this Agreement, the Term Notes and
each other Loan Document. Each Lender authorizes the Administrative Agent to act
on behalf of such Lender under this Agreement, the Term Notes and each other
Loan Document and, in the absence of other written instructions from the
Required Lenders received from time to time by the Administrative Agent (with
respect to which the Administrative Agent agrees that it will comply, except as
otherwise provided in this Section or as otherwise advised by counsel), to
exercise such powers hereunder and thereunder as are specifically delegated to
or required of the Administrative Agent by the terms hereof and thereof,
together with such powers as may be reasonably incidental thereto. The
provisions of this Article are solely for the benefit of the Agents and Lenders,
and neither the Borrower nor any other Obligor shall have any rights as a
third-party beneficiary of any of the provisions hereof other than with respect
to an Agent's resignation. In performing their functions and duties under this
Agreement and each other Loan Document, the Agents shall act solely as agents of
the Lenders and do not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for the Borrower or
any other Obligor.
SECTION 9.2. NATURE OF DUTIES OF THE AGENTS. The Agents shall have no
duties, obligations or responsibilities except those expressly set forth in this
Agreement and each other Loan Document. Neither the Agents nor any of their
officers, directors, employees or agents shall be liable for any action taken or
omitted by it as such hereunder or under each other Loan Document or in
connection herewith or therewith, unless caused by its or their gross negligence
or willful misconduct. The duties of the Agents shall be mechanical and
administrative in nature; the Agents shall not have by reason of this Agreement
or any other Loan Document a fiduciary relationship in respect of any Lender;
and nothing in this Agreement or any other Loan Document, expressed or implied,
is intended to or shall be so construed as to impose upon the Agents any
obligations in respect of this Agreement or any other Loan Document except as
expressly set forth herein or therein. No duty to act, or refrain from acting,
and no other obligation whatsoever, shall be implied on the basis of or imputed
in respect of any right, power or authority granted to any Agent or shall become
effective in the event of any temporary or partial exercise of such rights,
power or authority.
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SECTION 9.3. GENERAL IMMUNITY. Neither the Agents, the Arranger nor any
of their directors, officers, agents, attorneys or employees shall be liable to
any Lender for any action taken or omitted to be taken by it or them under this
Agreement or any other Loan Document or in connection herewith or therewith
except for its or their own willful misconduct or gross negligence. Without
limiting the generality of the foregoing, the Agents and the Arranger: (i) shall
not be responsible to the Lenders for any recitals, statements, warranties or
representations under this Agreement or any other Loan Document or any agreement
or document relative hereto or thereto or for the financial or other condition
of any Obligor, (ii) shall not be responsible for the authenticity, accuracy,
completeness, value, validity, effectiveness, due execution, legality,
genuineness, enforceability, collectibility or sufficiency of this Agreement or
any other Loan Document or any other agreements or any assignments,
certificates, requests, financial statements, projections, notices, schedules or
opinions of counsel executed and delivered pursuant hereto or thereto, (iii)
shall not be bound to ascertain or inquire as to the performance or observance
of any of the terms, covenants or conditions of this Agreement or any other Loan
Document on the part of Obligors or of any of the terms of any such agreement by
any party hereto or thereto and shall have no duty to inspect the property
(including the books and records) of any Obligor and (iv) shall incur no
liability under or in respect of this Agreement or any other Loan Document or
any other document by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, cable, telex, telecopier or
similar form of facsimile transmission) believed by the Agents to be genuine and
signed or sent by the proper party. The Agents may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by the Agents and shall not be liable for any action taken or
omitted to be taken in good faith in accordance with the advice of such counsel,
accountants or experts.
SECTION 9.4. SUCCESSOR. Each of the Syndication Agent and the
Documentation Agent may resign as such upon one Business Day's notice to the
Borrower and the Administrative Agent. The Administrative Agent may resign as
such at any time upon at least 30 days' prior notice to the Borrower and all
Lenders. If the Administrative Agent at any time shall resign, the Required
Lenders may, with the prior consent of the Borrower (which consent shall not be
unreasonably withheld), appoint another Lender as a successor Administrative
Agent which shall thereupon become the Administrative Agent hereunder. If no
successor Administrative Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 20 days after the
retiring Administrative Agent's giving notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be one of the Lenders or a commercial banking
institution organized under the laws of the United States or a United States
branch or agency of a commercial banking institution, and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall be entitled to receive from the
retiring Administrative Agent such documents of transfer and assignment as such
successor Administrative Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations under this Agreement. After any
retiring Administrative Agent's resignation hereunder as the Administrative
Agent, the provisions of (i) this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Administrative Agent
under this Agreement, and (ii) SECTION 10.3 and SECTION 10.4 shall continue to
inure to its benefit.
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SECTION 9.5. AGENTS IN THEIR CAPACITY AS LENDERS. With respect to their
obligation (if any) to lend under this Agreement and each other Loan Document,
the Agents shall have the same rights and powers under this Agreement and each
other Loan Document as any Lender and may exercise the same as though it were
not an Agent. "Lender" or "Lenders" shall, unless the context otherwise
indicates, include each Agent in its capacity as a Lender hereunder. The Agents,
any Lender and their respective affiliates may accept deposits from, lend money
to, and generally engage in any kind of banking or trust business with the
Borrower or any other Obligor, as if it were not an Agent or as if it or they
were not a Lender hereunder and without any duty to account therefor to the
other parties to this Agreement.
SECTION 9.6. ACTIONS BY EACH AGENT.
(a) Each Agent may assume that no Event of Default has occurred and is
continuing, unless such Agent has actual knowledge of the Event of Default, has
received notice from the Borrower or the Borrower's independent certified public
accountants stating the nature of the Event of Default, or has received notice
from a Lender stating the nature of the Event of Default and that such Lender
considers the Event of Default to have occurred and to be continuing.
(b) Each Agent shall have the right to request instructions from the
Required Lenders by notice to each Lender. If such Agent shall request
instructions from the Required Lenders with respect to any act or action
(including the failure to act) in connection with this Agreement or any other
Loan Document, such Agent shall be entitled to refrain from such act or taking
such action unless and until it shall have received instructions from the
Required Lenders, and such Agent shall not incur liability to any Person by
reason of so refraining. Without limiting the foregoing, no Lender shall have
any right of action whatsoever against any Agent as a result of such Agent
acting or refraining from acting hereunder or under any other Loan Document in
accordance with the instructions of the Required Lenders. Each Agent may give
any notice required under ARTICLE VIII hereof without the consent of any of the
Lenders unless otherwise directed by the Required Lenders in writing and will,
at the direction of the Required Lenders, give any such notice required under
ARTICLE VIII. Except for any obligation expressly set forth in this Agreement or
any other Loan Document, each Agent may, but shall not be required to, exercise
its discretion to act or not act, except that such Agent shall be required to
act or not act upon the instructions of the Required Lenders (unless all of the
Lenders are required to provide such instructions as provided in SECTION 10.1)
and those instructions shall be binding upon each Agent and all Lenders;
PROVIDED, HOWEVER, that each Agent shall not be required to act or not act if to
do so would expose such Agent to liability or would be contrary to this
Agreement or any other Loan Document or to applicable law.
SECTION 9.7. RIGHT TO INDEMNITY. Each Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document or in relation hereto or thereto unless it shall first be indemnified
(upon requesting such indemnification) to its satisfaction by the Lenders
against any and all liability and expense which it may incur by reason of taking
or continuing to take any such action. The Lenders further agree to indemnify
each Agent ratably in accordance with their Percentages for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or
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asserted against such Agent in any way relating to or arising out of this
Agreement or the other Loan Documents or the transactions contemplated hereby or
thereby, or the enforcement of any of the terms hereof or thereof or of any
other documents, and either not indemnified by the Borrower pursuant to SECTION
10.4 or with respect to which the Borrower has failed to fully honor its
indemnification obligations under SECTION 10.4; PROVIDED, HOWEVER, that no such
liability, obligation, loss, damage, penalty, action, judgment, suit, cost,
expense or disbursement results from such Agent's gross negligence or willful
misconduct. Each Lender agrees to reimburse each Agent in the amount of its PRO
RATA share of any out-of-pocket expenses for which such Agent is entitled to
receive, but has not received, reimbursement pursuant to this Agreement. The
agreements in this Section shall survive the payment and fulfillment of the
Obligations and termination of this Agreement.
SECTION 9.8. CREDIT DECISIONS. Each Lender acknowledges that it has,
independently of and without reliance upon each Agent, the Arranger and each
other Lender, and based on such Lender's review of the financial information of
the Borrower and each other Obligor, this Agreement, the other Loan Documents
(the terms and provisions of which being satisfactory to such Lender) and such
other documents, information and investigations as such Lender has deemed
appropriate, made its own credit decision to extend its . Each Lender also
acknowledges that it will, independently of and without reliance upon each
Agent, the Arranger and each other Lender, and based on such other documents,
information and investigations as it shall deem appropriate at any time,
continue to make its own credit decisions as to exercising or not exercising
from time to time any rights and privileges available to it under this Agreement
or any other Loan Document. Except as otherwise expressly provided for herein,
the Agents shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the affairs, financial condition,
litigation, liabilities or business of the Parent, the Borrower or any other
Obligor.
SECTION 9.9. COPIES, ETC. The Administrative Agent shall give prompt
notice to each Lender of each notice or request required or permitted to be
given to the Administrative Agent by the Borrower pursuant to the terms of this
Agreement (unless concurrently delivered to the Lenders by the Borrower). The
Administrative Agent will distribute to each Lender each document or instrument
received for such Lender's account and copies of all other communications
received by the Administrative Agent from the Borrower for distribution to the
Lenders by the Administrative Agent in accordance with the terms of this
Agreement (except to the extent any such Lender shall have provided written
notice to the Administrative Agent that it is not to receive any such documents,
instruments or communications). In the event such information is so furnished by
any Agent, such Agent shall have no duty to confirm or verify its accuracy or
completeness and shall have no liability whatsoever with respect thereto.
SECTION 9.10. THE SYNDICATION AGENT, THE DOCUMENTATION AGENT AND THE
ADMINISTRATIVE AGENT. Notwithstanding anything else to the contrary contained in
this Agreement or any other Loan Document, the Agents, in their respective
capacities as such, each in such capacity, shall have no duties or
responsibilities under this Agreement or any other Loan Document nor any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Syndication Agent, the Documentation
Agent or the Administrative Agent, as applicable, in such capacity except as are
explicitly set forth herein or in the other Loan Documents.
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SECTION 9.11. AGREEMENT TO COOPERATE. Each Lender agrees to cooperate
to the end that the terms and provisions of this Agreement may be promptly and
fully carried out. The Lenders also agree, from time to time, at the request of
the Agents, to execute and deliver any and all other agreements, documents or
instruments and to take such other actions, all as may be reasonably necessary
or desirable to effectuate the terms, provisions and intent of this Agreement
and the other Loan Documents.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. WAIVERS, AMENDMENTS, ETC. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
consented to by the Borrower and the Required Lenders; PROVIDED, HOWEVER, that
no such amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular
action be taken by all the Lenders or by the Required Lenders shall be
effective unless consented to by each Lender;
(b) modify this Section, or CLAUSE (A) of SECTION 10.10,
change the definition of "Required Lenders", increase the Term Loan
Commitment Amount or the Percentage of any Lender, reduce any fees
described in SECTION 3.3, release any Subsidiary Guarantor from its
obligations under the Subsidiary Guaranty (except in each case as
otherwise specifically provided in this Agreement or such Subsidiary
Guaranty) or extend the Term Loan Commitment Termination Date shall be
made without the consent of each Lender adversely affected thereby;
(c) extend the due date for, or reduce the amount of, any
scheduled repayment or prepayment of principal of or premium (if any)
or interest on or fees payable in respect of any Term Loan or reduce
the principal amount of or rate of interest on any Term Loan shall be
made without the consent of the holder of the Term Note evidencing such
Term Loan; or
(d) affect adversely the interests, rights or obligations of
any Agent or Arranger (in its capacity as Agent or Arranger), unless
consented to by such Agent or Arranger, as the case may be.
No failure or delay on the part of any Agent, any Lender or the holder of any
Term Note in exercising any power or right under this Agreement or any other
Loan Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by any Agent, any Lender or the
holder of any Term Note under this Agreement or any other Loan Document shall,
except as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions.
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No waiver or approval hereunder shall require any similar or dissimilar waiver
or approval thereafter to be granted hereunder.
SECTION 10.2. NOTICES. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address or facsimile number set forth in SCHEDULE II hereto or, in the case
of a Lender that becomes a party hereto after the date hereof, as set forth in
the Lender Assignment Agreement pursuant to which such Lender becomes a Lender
hereunder or at such other address or facsimile number as may be designated by
such party in a notice to the other parties. Any notice, if mailed and properly
addressed with postage prepaid or if properly addressed and sent by pre-paid
courier service, shall be deemed given when received; any notice, if transmitted
by facsimile, shall be deemed given when transmitted (and electronic
confirmation of receipt thereof has been received).
SECTION 10.3. PAYMENT OF COSTS AND EXPENSES. The Borrower agrees to
pay, and to save the Agents and the Lenders harmless from all liability for, any
stamp or other similar taxes which may be payable in connection with the
execution or delivery of this Agreement, the Term Loans made hereunder or the
issuance of the Term Notes or any other Loan Documents.
SECTION 10.4. INDEMNIFICATION. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Term Loan
Commitments, the Borrower hereby, to the fullest extent permitted under
applicable law, indemnifies, exonerates and holds each Agent, the Arranger and
each Lender and each of their respective Affiliates, and each of their
respective partners, officers, directors, employees and agents, and each other
Person controlling any of the foregoing within the meaning of either Section 15
of the Securities Act of 1933, as amended, or Section 20 of the Securities
Exchange Act of 1934, as amended (collectively, the "INDEMNIFIED PARTIES"), free
and harmless from and against any and all actions, causes of action, suits,
losses, costs, liabilities and damages, and expenses incurred in connection
therewith (irrespective of whether any such Indemnified Party is a party to the
action for which indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements (including those of internal counsel)
(collectively, the "INDEMNIFIED LIABILITIES"), incurred by the Indemnified
Parties or any of them as a result of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Term Loan;
(b) the entering into and performance of this Agreement and
any other Loan Document by any of the Indemnified Parties (including
any action brought by or on behalf of the Borrower as the result of any
determination by the Required Lenders pursuant to ARTICLE V not to fund
any Borrowing); or
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower or any of its
Subsidiaries of all or any portion of the stock or assets of any
Person, whether or not such Agent, such Arranger or such Lender is
party thereto;
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except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or willful misconduct If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
SECTION 10.5. SURVIVAL. The obligations of the Borrower under SECTIONS
4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders under
SECTION 9.1, shall in each case survive any termination of this Agreement, the
payment in full of all Obligations and the termination of all Term Loan
Commitments. The representations and warranties made by the Borrower and each
other Obligor in this Agreement and in each other Loan Document shall survive
the execution and delivery of this Agreement and each such other Loan Document.
SECTION 10.6. SEVERABILITY. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such other Loan Document or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 10.7. HEADINGS. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION 10.8. EXECUTION IN COUNTERPARTS, EFFECTIVENESS, ETC. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SECTION 10.9. GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT, THE TERM
NOTES AND, EXCEPT TO THE EXTENT OTHERWISE EXPRESSLY PROVIDED THEREIN, EACH OTHER
LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement, the Term Notes and
the other Loan Documents constitute the entire understanding among the parties
hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto. Upon the execution and
delivery of this Agreement by the parties hereto, all obligations and
liabilities of the Arranger under or relating or with respect to the Commitment
Letter shall be terminated and of no further force or effect.
SECTION 10.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that (i) the Borrower may not assign
or transfer its rights or obligations hereunder without the prior written
consent of each of the Agents and all Lenders, and (ii) the rights of sale,
assignment and transfer of the Lenders are subject to SECTION 10.11.
SECTION 10.11. SALE AND TRANSFER OF TERM LOANS AND TERM NOTES;
PARTICIPATIONS IN TERM LOANS AND TERM NOTES. Subject to SECTION 10.11.1, each
Lender shall have the right at any time to (i) sell, assign or transfer to any
of its Affiliates or to any other Lender or to any Person (each such Person to
whom such sale, assignment or transfer is to be made being
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hereinafter referred to as an "ASSIGNEE LENDER"), or (ii) sell participations to
any Person in, all or any part of its Term Loan Commitment or the Term Loan made
by it or any other interest herein or in any other Obligations owed to it;
PROVIDED that no such sale, assignment, transfer or participation shall, without
the consent of the Borrower, require the Borrower to file a registration
statement with the SEC or apply to qualify such sale, assignment, transfer or
participation under the securities laws of any state; and PROVIDED FURTHER that
no such sale, assignment or transfer described in CLAUSE (I) above shall be
effective unless and until a Lender Assignment Agreement effecting such sale,
assignment or transfer shall have been delivered to the Administrative Agent and
the Borrower and recorded as provided in CLAUSE (B) of SECTION 10.11.1. Except
as otherwise expressly provided in this Section, no Lender shall, as between the
Borrower and such Lender, be relieved of any of its obligations hereunder as a
result of any sale, assignment or transfer of, or any granting of participations
in, all or any part of its Term Loan Commitment or the Term Loan or other
Obligations owed to such Lender.
SECTION 10.11.1. ASSIGNMENTS.
(a) AMOUNTS AND TERMS OF ASSIGNMENTS. With notice to the Borrower and
the Administrative Agent, each Term Loan Commitment, Term Loan or other
Obligation may be assigned in any amount to another Lender, an Affiliate of the
assigning Lender or another Lender, any other Person or to any other Assignee
Lender (treating any two or more investment funds that invest in commercial
loans and that are managed or advised by the same investment advisor or by an
Affiliate of such investment advisor as a single Assignee Lender). To the extent
of any such assignment, the assigning Lender shall be relieved of its
obligations with respect to its Term Loan Commitment, Term Loan or other
Obligations or the portion thereof so assigned. The parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording and delivery to the Borrower, a Lender Assignment
Agreement and such forms, certificates or other evidence, if any, with respect
to United States federal income tax withholding matters as the assignee under
such Lender Assignment Agreement may be required to deliver to the
Administrative Agent pursuant to SECTION 4.6. Upon such execution, delivery,
acceptance and recordation, from and after the effective date specified in such
Lender Assignment Agreement, (y) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and (z) the assigning Lender thereunder shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to such Lender Assignment Agreement relinquish its rights (other than
any rights which survive the termination of this Agreement under SECTION 10.4)
and be released from its obligations under this Agreement (and, in the case of a
Lender Assignment Agreement covering all or the remaining portion of an
assigning Lenders' rights and obligations under this Agreement, such Lender
shall cease to be a party hereto). The Term Loan Commitments hereunder shall be
modified to reflect the Term Loan Commitment of such assignee and any remaining
Term Loan Commitment of such assigning Lender and, if any such assignment occurs
after the issuance of the Term Notes hereunder, the assigning Lender shall, upon
the effectiveness of such assignment or as promptly thereafter as practicable,
surrender its Term Note to the Administrative Agent for cancellation, and
thereupon new Term Notes shall be issued to the assignee and to the assigning
Lender, with appropriate insertions, to reflect the outstanding Term Loans of
the assignee and/or the assigning Lender.
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(b) ACCEPTANCE BY ADMINISTRATIVE AGENT; RECORDATION IN REGISTER. Upon
its receipt of a Lender Assignment Agreement executed by an assigning Lender and
an assignee representing that it is an Assignee Lender, together with any forms,
certificates or other evidence with respect to United States federal income tax
withholding matters that such assignee may be required to deliver to the
Administrative Agent pursuant to SECTION 4.6, the Administrative Agent shall (i)
accept such Lender Assignment Agreement by executing a counterpart thereof as
provided therein, (ii) record the information contained therein in the records
maintained by the Administrative Agent relating to this Agreement, and (iii)
give prompt notice thereof to the Borrower. The Administrative Agent shall
maintain a copy of each Lender Assignment Agreement delivered to any accepted by
it as provided in this CLAUSE(B)(II).
SECTION 10.11.2. PARTICIPATIONS. The holder of any participation, other
than an Affiliate of the Lender granting such participation, shall not be
entitled to require such Lender to take or omit to take any action hereunder
except action directly affecting (i) the extension of the regularly scheduled
maturity of any portion of the principal amount of or interest on any Term Loan
allocated to such participation or (ii) a reduction of the principal amount of
or the rate of interest payable on any Term Loan allocated to such
participation, and all amounts payable by the Borrower hereunder shall be
determined as if such Lender had not sold such participation. The Borrower and
each Lender hereby acknowledge and agree that, solely for purposes of SECTION
10.4, (a) any participation will give rise to a direct obligation of the
Borrower to the participant and (b) the participant shall be considered to be a
"Lender".
SECTION 10.11.3. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to
the assignments and participations permitted under the foregoing provisions of
this Section, any Lender may assign and pledge all or any portion of its Term
Loan, the other Obligations owed to such Lender, and its Term Note to any
Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any operating circular
issued by such Federal Reserve Bank, and with the consent of the Borrower and
the Administrative Agent, any Lender which is an investment fund may pledge all
or any portion of its Term Notes or Term Loans to its trustee in support of its
obligations to such trustee; PROVIDED that (i) no Lender shall, as between the
Borrower and such Lender, be relieved of any of its obligations hereunder as a
result of any such assignment and pledge and (ii) in no event shall such Federal
Reserve Bank or trustee be considered to be a "Lender" or be entitled to require
the assigning Lender to take or omit to take any action hereunder.
SECTION 10.11.4. INFORMATION. Each Lender may furnish any information
concerning the Borrower and its Subsidiaries in the possession of that Lender
from time to time to assignees and participants (including prospective assignees
and participants).
SECTION 10.11.5. REPRESENTATIONS OF LENDERS. Each Lender listed on the
signature pages hereof hereby represents and warrants that (i) it is a
commercial lender, other financial institution or other "accredited investor"
(as defined in Regulation D of the Securities Act), (ii) it has experience and
expertise in the making of loans such as the Term Loans and (iii) it will make
its Term Loan for its own account in the ordinary course of its business and
without a view to distribution of such Term Loan within the meaning of the
Securities Act of 1933 or the Exchange Act or other federal securities laws (it
being understood that, subject to the provisions of this Section, the
disposition of such Term Loan or any interests therein shall at all times remain
within its exclusive control). Each Lender that becomes a party herein
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pursuant to a Lender Assignment Agreement shall be deemed to agree that the
representations and warranties of such Lender contained in such Lender
Assignment Agreement are incorporated herein by this Agreement.
SECTION 10.12. OTHER TRANSACTIONS. Nothing contained herein shall
preclude any Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
SECTION 10.13. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENTS, THE
LENDERS OR THE BORROWER RELATING THERETO SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY (TO THE EXTENT PERMITTED UNDER APPLICABLE LAW) IN THE COURTS OF THE
STATE OF NEW YORK, NEW YORK COUNTY, OR IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, NEW YORK
COUNTY, AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH
LITIGATION. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF NEW YORK. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER
MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER
HEREBY IRREVOCABLY WAIVES (TO THE EXTENT PERMITTED UNDER APPLICABLE LAW) SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
SECTION 10.14. WAIVER OF JURY TRIAL. THE AGENTS, THE LENDERS AND THE
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
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STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENTS, THE LENDERS OR
THE BORROWER RELATING THERETO. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER
PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENTS AND THE LENDERS ENTERING INTO
THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
WHEELING-PITTSBURGH
CORPORATION
By:
Title:
DLJ CAPITAL FUNDING, INC., as
Syndication Agent, as Administrative
Agent and as a Lender
By:
Title:
CITICORP USA, INC.
as Documentation Agent and as a Lender
By:
Title:
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SCHEDULE I
DISCLOSURE SCHEDULE
SUBSIDIARIES
WHEELING-PITTSBURGH CORPORATION SUBSIDIARIES:
Wheeling-Pittsburgh Steel Corporation
Consumers Mining Company
Wheeling-Empire Company
Monessen Southwestern Railway Company
Mingo Oxygen Company
Pittsburgh-Canfield Corporation
Wheeling Construction Products, Inc.
WHEELING-PITTSBURGH STEEL CORPORATION SUBSIDIARIES:
Wheeling Pittsburgh Funding, Inc.
WP Steel Venture Corp.
CONSUMERS MINING COMPANY SUBSIDIARY:
W-P Coal Company
WHEELING-CONSTRUCTION PRODUCTS, INC. SUBSIDIARY:
Champion Metal Products, Inc.
I-1
<PAGE>
SCHEDULE II
to Credit Agreement
PERCENTAGES
TERM LOAN
DLJ Capital Funding, Inc. 80%
Citicorp USA, Inc. 20%
||
ADMINISTRATIVE INFORMATION
NOTICE INFORMATION
Wheeling-Pittsburgh
Corporation WHEELING-PITTSBURGH CORPORATION
1134 MARKET STREET
WHEELING, WEST VIRGINIA 26003
FAX:
ATTENTION: CHIEF FINANCIAL OFFICER
WHEELING-PITTSBURGH CORPORATION
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
ATTENTION: SECRETARY
WITH COPIES TO:
OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
505 PARK AVENUE
NEW YORK, NEW YORK 10022
FAX: (212) 755-1467
ATTENTION: STEVEN WOLOSKY, ESQ.
DLJ Capital Funding, Inc.,
as Syndication Agent 277 Park Avenue
and Administrative Agent New York, New York 10172
Contact: Sheila O'Sullivan
Fax: 212-892-5286
Citicorp USA, Inc., 2 Penn's Way
as Documentation Agent Suite 200
Newcastle, Delaware 19721
Contact: Daniel Krauss
Fax: 302-894-6120
II-1
<PAGE>
LENDERS' DOMESTIC AND LIBOR OFFICES
DLJ Capital Funding, Inc. 525 Washington Blvd.
Jersey City, New Jersey 07310
Contact: Ed Vowinkel
Fax: 201-610-1965
Citicorp USA, INC. 2 Penn's Way
Suite 200
Newcastle, Delaware 19721
Contact: Daniel Krauss
Fax: 302-894-6120
II-2
AMENDMENT NO. 1 TO TERM LOAN AGREEMENT
THIS AMENDMENT NO. 1 TO TERM LOAN AGREEMENT (this "AMENDMENT NO. 1"),
dated as of December 31, 1997, among Wheeling-Pittsburgh Corporation, a Delaware
corporation (the "BORROWER"), the various financial institutions from time to
time parties thereto (collectively, the "LENDERS"), DLJ Capital Funding, Inc.,
as syndication agent (the "SYNDICATION AGENT") and administrative agent (the
"ADMINISTRATIVE AGENT") for the Lenders, and Citicorp USA, Inc., as
documentation agent (the "DOCUMENTATION AGENT") for the Lenders.
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, the Syndication Agent, the
Administrative Agent and the Documentation Agent are parties to a Term Loan
Agreement, dated as of November 26, 1997 (as heretofore modified and
supplemented and in effect from time to time, the "TERM LOAN AGREEMENT"); and
WHEREAS, the Borrower has requested the Lenders to amend the Term Loan
Agreement to appoint a successor Administrative Agent; and
WHEREAS, the Borrower desires, and the Lenders are willing, upon the
terms and conditions hereinafter set forth, to amend the Term Loan Agreement as
set forth herein;
NOW, THEREFORE, in consideration of the agreements herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. CERTAIN DEFINITIONS. Unless otherwise defined herein or
the context otherwise requires, terms used in this Amendment No. 1, including
its preamble and recitals, have the following meanings (such meanings to be
equally applicable to the singular and plural forms thereof):
"ADMINISTRATIVE AGENT" is defined in the PREAMBLE.
"AMENDMENT NO. 1" is defined in the PREAMBLE.
"AMENDMENT EFFECTIVE DATE" is defined in SUBPART 3.1.
"BORROWER" is defined in the PREAMBLE.
"DOCUMENTATION AGENT" is defined in the PREAMBLE.
"LENDERS" is defined in the PREAMBLE.
"SYNDICATION AGENT" is defined in the PREAMBLE.
"TERM LOAN AGREEMENT" is defined in the FIRST RECITAL.
SUBPART 1.2. OTHER DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment No. 1, including its
preamble and recitals, have the meanings ascribed thereto in the Term Loan
Agreement.
<PAGE>
PART II
AMENDMENTS TO TERM LOAN AGREEMENT
Effective on (and subject to the occurrence of) the Amendment Effective
Date, the Term Loan Agreement is hereby amended in accordance with this PART II.
Except to the extent amended by this Amendment No. 1, the Term Loan Agreement is
and shall continue to be in full force and effect and is hereby
ratified and confirmed in all respects.
SUBPART 2.1. AMENDMENT TO COVER PAGE. The cover page of the Term Loan
Agreement is hereby amended to (i) delete the words "and the Administrative
Agent" from the caption for "DLJ CAPITAL FUNDING, INC." and (ii) insert
immediately after such caption a new caption entitled "NATIONAL CITY BANK, as
the Administrative Agent for the Lenders,".
SUBPART 2.2. AMENDMENT TO PREAMBLE. The PREAMBLE of the Term Loan
Agreement is hereby amended to (i) delete the word "and" immediately following
the underscored parenthetical reference to Syndication Agent appearing in the
fifth line thereof and (ii) insert in lieu thereof the following words:
"NATIONAL CITY BANK, acting through its Corporate Trust Department ("NATIONAL
CITY"),".
SUBPART 2.3. AMENDMENT TO SECTION 1.1. Section 1.1 of the Term Loan
Agreement is amended to add the following new definition thereto in its
appropriate alphabetical order:
"NATIONAL CITY" is defined in the PREAMBLE.
SUBPART 2.4. AMENDMENT TO SECTION 9.1. Section 9.1 of the Term Loan
Agreement is hereby amended to (i) delete the word "and" immediately following
the words "Syndication Agent" appearing in the second line of such Section and
(ii) insert immediately thereafter the following words: ", National City as".
SUBPART 2.5. AMENDMENT TO ADMINISTRATIVE AGENT REFERENCES. References
to DLJ in its capacity as "the Administrative Agent" contained in each other
Loan Document shall in each instance be replaced with a reference to "National
City".
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. EFFECTIVE DATE. This Amendment No. 1 shall be and become
effective upon the prior or concurrent satisfaction of each of the conditions
precedent set forth in this SUBPART 3.1 (the "AMENDMENT EFFECTIVE DATE").
SUBPART 3.1.1. EXECUTION OF COUNTERPARTS. The Agents shall have
received counterparts of this Amendment No. 1 duly executed by the Borrower, the
Syndication Agent, the Administrative Agent and the Lenders (or evidence thereof
satisfactory to the Agents).
SUBPART 3.2. LIMITATION. Except as expressly provided hereby, all of
the representations, warranties, terms, covenants and conditions of the Term
Loan Agreement and each other Loan Document shall remain unamended and unwaived
and shall continue to be, and shall remain, in full force and effect in
accordance with their respective terms. The amendments, modifications and
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<PAGE>
consents set forth herein shall be limited precisely as provided for herein, and
shall not be deemed to be a waiver of, amendment of, consent to or modification
of any other term or provision of the Term Loan Agreement or of any term or
provision of any other Loan Document or other instrument referred to therein or
herein, or of any transaction or further or future action on the part of the
Borrower or any other Person which would require the consent of the Agents or
any of the Lenders under the Term Loan Agreement or any such other Loan Document
or instrument.
PART IV
MISCELLANEOUS
SUBPART 4.1. CROSS-REFERENCES. References in this Amendment No. 1 to
any Part or Subpart are, unless otherwise specified, to such Part or Subpart of
this Amendment No. 1. References in this Amendment No. 1 to any Article or
Section are, unless otherwise specified, to such Article or Section of the Term
Loan Agreement.
SUBPART 4.2. LOAN DOCUMENT PURSUANT TO TERM LOAN AGREEMENT. This
Amendment No. 1 is a Loan Document executed pursuant to the Term Loan Agreement
and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with the terms and provisions of the Term
Loan Agreement, as amended hereby, including Article X thereof.
SUBPART 4.3. COUNTERPARTS, ETC. This Amendment No. 1 may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
Agreement.
SUBPART 4.4. GOVERNING LAW. THIS AMENDMENT NO. 1 SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SUBPART 4.5. SUCCESSORS AND ASSIGNS. This Amendment No. 1 shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to be executed by their respective officers hereunto duly authorized as of the
day and year first above written.
WHEELING-PITTSBURGH
CORPORATION
By_________________________________
Title:
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<PAGE>
DLJ CAPITAL FUNDING, INC.,
as the Syndication Agent and
as Lender
By________________________________
Title:
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<PAGE>
NATIONAL CITY BANK, acting
through its Corporate Trust
Department, as the
Administrative Agent
By________________________________
Title:
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<PAGE>
BANK OF MONTREAL
By_______________________________
Title:
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<PAGE>
ING BARING (U.S.) CAPITAL
CORPORATION
By:___________________________
Title:
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<PAGE>
MERRILL LYNCH DEBT STRATEGIES
PORTFOLIO
By: Merrill Lynch Asset
Management, L.P., as
Investment Advisor
By:___________________________
Title:
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<PAGE>
SENIOR HIGH INCOME PORTFOLIO,
INC.
By:___________________________
Title:
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<PAGE>
AMERICAN LIFE & CASUALTY
INSURANCE
By:___________________________
Title:
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<PAGE>
CONSECO LIFE INSURANCE COMPANY
By:___________________________
Title:
-12-
<PAGE>
KZH HOLDING CORPORATION III
By:___________________________
Title:
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<PAGE>
FRANKLIN PRINCIPAL MATURITY
TRUST
By:___________________________
Title:
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<PAGE>
PAMCO CAYMAN LTD.
By:___________________________
Title:
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<PAGE>
THE CHASE MANHATTAN BANK
By:___________________________
Title:
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<PAGE>
ML CBO IV (CAYMAN LTD.)
By:___________________________
Title:
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<PAGE>
TCW LEVERAGED INCOME TRUST
By:___________________________
Title:
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EXECUTION COPY
KEEPWELL AGREEMENT
KEEPWELL AGREEMENT (this "AGREEMENT"), dated December 28,
1995, made by Wheeling-Pittsburgh Steel Corporation, a Delaware corporation (the
"BORROWER"), Wheeling-Pittsburgh Corporation, a Delaware corporation
("HOLDINGS"), and WHX Corporation, a Delaware corporation ("WHX" and, together
with Holdings, the "OBLIGORS"), in favor of the Lender Parties referred to
below.
PRELIMINARY STATEMENTS:
1. The Borrower has entered into a Second Amended and Restated
Credit Agreement, dated as of December 28, 1995, with the financial institutions
party thereto and Citibank, N.A., as agent for said financial institutions (said
Agreement, as it may be amended or otherwise modified from time to time, being
the "CREDIT AGREEMENT").
2. Holdings owns beneficially and of record 100% of the
capital stock of the Borrower and WHX owns beneficially and of record 100% of
the capital stock of Holdings.
3. WHX and Holdings have agreed to provide certain assurances
to the Lender Parties with respect to the financial condition of the Borrower.
4. It is a condition precedent to the effectiveness of the
Credit Agreement and to the making of Loans and the issuance of Letters of
Credit that the Obligors shall have executed and delivered this Agreement.
NOW, THEREFORE, in consideration of the premises and to induce
the Lenders to make Loans and the Issuers to issue Letters of Credit, the
Obligors hereby agree as follows:
SECTION 1. CAPITALIZED TERMS. Capitalized terms used herein
and not otherwise defined herein, have the meanings specified in the Credit
Agreement. As used in this Agreement, the following terms shall mean:
"BANKRUPTCY CODE" means Title 11 of the United States Code,
any successor statute thereto or any similar United States federal or state law
for the relief of debtors.
"KEEPWELL PAYMENTS" has the meaning specified in Section 2.
<PAGE>
SECTION 2. AGREEMENT. If the Loan Party Consolidated Group
maintains for any month included in each Fiscal Quarter set forth below
Cumulative Cash Flow for the period beginning on January 1, 1995 and ending on
the date of determination in an amount less than the amount set forth below:
MINIMUM
FOR THE PERIOD ENDING REQUIRED AMOUNT
- --------------------- ---------------
March 31, 1996 $ (35,000,000)
June 30, 1996 (45,000,000)
September 30, 1996 (55,000,000)
December 31, 1996 (65,000,000)
March 31, 1997 (75,000,000)
June 30, 1997 (85,000,000)
September 30, 1997 (90,000,000)
December 31, 1997 (90,000,000)
March 31, 1998 (100,000,000)
June 30, 1998 (105,000,000)
September 30, 1998 (110,000,000)
December 31, 1998 (110,000,000)
March 31, 1999 (110,000,000)
June 30, 1999 (110,000,000)
then each Obligor hereby, jointly and severally, unconditionally and irrevocably
promises to pay to the Agent, as a loan, capital contribution or advance to the
Borrower (such loans, capital contributions or advances being "KEEPWELL
PAYMENTS"), within three Business Days of the Agent's demand therefor, cash
funds in an amount such that, after giving effect to such Keepwell Payment, the
Loan Party Consolidated Group so maintains such amount of Cumulative Cash Flow.
Keepwell Payments shall be applied by the Agent to the Obligations in accordance
with Section 2.7(d) of the Credit Agreement.
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<PAGE>
SECTION 3. REPAYMENT OF KEEPWELL PAYMENTS. The Borrower hereby
agrees to repay to WHX the Keepwell Payments only in accordance with the terms
and conditions of the Holdings Intercreditor Agreement and the Credit Agreement.
SECTION 4. AGREEMENT ABSOLUTE. The liability of each Obligor
under this Agreement shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of
any other Loan Document or any other agreement or instrument relating to any
Loan Document, or avoidance or subordination of any of the Obligations;
(b) any change in the time, manner or place of payment of, or
in any other term of, or any increase in the amount of, all or any of the
Obligations, or any other amendment or waiver of any term of, or any consent to
departure from any requirement of, the Credit Agreement or any of the other Loan
Documents;
(c) any exchange, release or non-perfection of any Lien on any
Collateral for, or any release or amendment or waiver of any term of any other
guaranty of, or any consent to departure from any requirement of any other
guaranty of, all or any of the Obligations;
(d) the absence of any attempt to collect any of the
Obligations from the Borrower or for any other guarantor or any other action to
enforce the same or the election of any remedy by any of the Lender Parties;
(e) any waiver, consent, extension, forbearance or granting of
any indulgence by any of the Lender Parties with respect to any provision of any
other Loan Document;
(f) the election by any of the Lender Parties in any
proceeding under chapter 11 of the Bankruptcy Code of the application of section
1111(b)(2) of the Bankruptcy Code;
(g) any borrowing or grant of a security interest by the
Borrower, as debtor- in-possession, under section 364 of the Bankruptcy Code;
(h) the disallowance, under section 502 of the Bankruptcy
Code, of all or any portion of the claims of any of the Lender Parties for
payment of any of the Obligations; or
(i) any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a borrower or a guarantor.
SECTION 5. WAIVER. (a) Each Obligor hereby (i) waives (A)
promptness, diligence, notice of acceptance and any and all other notices with
respect to any of the Obligations or this Agreement, (B) any requirement that
any of the Lender Parties protect, secure, perfect or insure any security
interest in or other Lien on any property subject thereto
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<PAGE>
or exhaust any right or take any action against any Borrower or any other Person
or any Collateral, (C) the filing of any claim with a court in the event of
receivership or bankruptcy of any Borrower, (D) protest or notice with respect
to nonpayment of all or any of the Obligations, (E) the benefit of any statute
of limitation, (F) all demands whatsoever (and any requirement that same be made
on the Borrower as a condition precedent to such Obligor's obligations
hereunder); and (ii) covenants and agrees that this Agreement will not be
discharged except by complete performance of the Obligations and any other
obligations of such Obligor contained herein, except as otherwise provided in
Section 12.
(b) If, in the exercise of any of its rights and remedies, any
of the Lender Parties shall forfeit any of its rights or remedies, including,
without limitation, its right to enter a deficiency judgment against the
Borrower or any other Person, whether because of any applicable law pertaining
to "election of remedies" or the like, each Obligor hereby consents to such
action by such Lender Party and waives any claim based upon such action. Any
election of remedies which results in the denial or impairment of the right of
such Lender Party to seek a deficiency judgment against the Borrower shall not
impair any obligation of either Obligor contained herein.
(c) Each Obligor hereby assumes responsibility for keeping
itself informed of the financial condition of the Borrower and of each other
guarantor of all or any part of the Obligations, and of all other circumstances
bearing upon the risk of nonpayment of the Obligations or any part thereof, that
diligent inquiry would reveal. Each Obligor hereby agrees that the Lender
Parties shall have no duty to advise such Obligor of information known to any of
the Lender Parties regarding such condition or any such circumstance. In the
event that any of the Lender Parties in its sole discretion undertakes at any
time or from time to time to provide any such information to any Obligor, such
Lender Party shall be under no obligation (i) to undertake any investigation not
a part of its regular business routine, (ii) to disclose any information which,
pursuant to accepted or reasonable banking or commercial finance practice, such
Lender Party wishes to maintain confidential or (iii) to make any other or
future disclosure of such information or any other information to such Obligor.
SECTION 6. NO SUBROGATION, ETC. Each Obligor waives and
relinquishes any and all rights which it may acquire by way of subrogation,
contribution or reimbursement by reason of this Agreement or by any payment made
hereunder.
SECTION 7. REPRESENTATIONS AND WARRANTIES. To induce the
Lender Parties and the Agent to enter into the Credit Agreement, each Obligor
represents and warrants to the Lender Parties and the Agent that:
(a) CORPORATE EXISTENCE; COMPLIANCE WITH THE LAW. Each Obligor
(i) is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation; (ii) is duly qualified as a
foreign corporation and in good standing under the laws of each jurisdiction,
except for failures which in the aggregate would
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<PAGE>
have no Material Adverse Effect; (iii) 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; (iv) is in compliance
with its certificate of incorporation and by-laws; (v) is in compliance with all
other applicable Requirements of Law, except for such non-compliances as would
in the aggregate have no Material Adverse Effect; and (vi) 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.
(b) CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
(i) The execution, delivery and performance by each Obligor of the Loan
Documents to which it is a party and the consummation of the transactions
related to the financing contemplated hereby:
(A) are within such Obligor's corporate powers;
(B) have been duly authorized by all necessary corporate
action, including, without limitation, the consent of stockholders
where required; and
(C) do not (I) contravene such Obligor's certificate of
incorporation or by-laws or other comparable governing documents, (II)
as to such Obligor, 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, (III) 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 such
Obligor, or (IV) result in the creation or imposition of any Lien upon
any of the property of such Obligor.
(ii) No authorization by, approval of, notice to, or filing or
registration with, any Governmental Authority or any other Person, other than
those which have been obtained or made and copies of which in the case of those
involving a Governmental Authority have been delivered to the Agent, is required
for the due execution, delivery, recordation, filing or performance by either
Obligor of this Agreement or any other Loan Document to which it is or is to be
a party, or for the consummation of the transactions contemplated hereby.
(iii) This Agreement has been and each of the other Loan
Documents to which it is a party will have been upon delivery thereof, duly
executed and delivered by each Obligor. This Agreement is, and each other Loan
Document to which it is a party will be when delivered, the legal, valid and
binding obligation of each Obligor, enforceable against it in accordance with
its terms subject to applicable bankruptcy, insolvency, moratorium or
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similar laws affecting creditors' rights generally and subject to general
principles of equity regardless of whether enforcement is sought in a proceeding
in equity or at law.
SECTION 8. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement nor consent to any departure by any Obligor herefrom
shall in any event be effective unless the same shall be in writing, approved by
the Majority Lenders and signed by the Agent, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION 9. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telex, telecopy or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered by hand, if to either Obligor,
addressed to it at the address of such Obligor specified on the signature pages
hereof, if to any Lender Party, addressed to it at the address specified in the
Credit Agreement, or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party complying as to
delivery with the terms of this Section. All such notices and other
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.
SECTION 10. NO WAIVER; REMEDIES. (a) No failure on the part of
any Lender Party 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 or any of the other Loan Documents.
(b) Failure by any of the Lender Parties at any time or times
hereafter to require strict performance by the Borrower, the Obligors or any
other Person of any of the provisions, warranties, terms or conditions contained
in any of the Loan Documents now or at any time or times hereafter executed by
the Borrower, the Obligors or such other Person and delivered to any of the
Lender Parties shall not waive, affect or diminish any right of any of the
Lender Parties at any time or times hereafter to demand strict performance
thereof, and such right shall not be deemed to have been modified or waived by
any course of conduct or knowledge of any of the Lender Parties or any agent,
officer, employee of any of the Lender Parties.
(c) No waiver by the Lender Parties of any default shall
operate as a waiver of any other default or the same default on a future
occasion, and no action by any of the Lender Parties permitted hereunder shall
in any way affect or impair any of the rights of the Lender Parties or the
obligations of the Obligors under this Agreement or under any of the other Loan
Documents. Any determination by a court of competent jurisdiction of the
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<PAGE>
amount of any principal and/or interest or other amount constituting any of the
Obligations shall be conclusive and binding on the Obligors irrespective of
whether either Obligor was a party to the suit or action in which such
determination was made, as long as the Borrower was a party to such suit or
action.
SECTION 11. RIGHT OF SET-OFF. Upon the occurrence and during
the continuance of any Event of Default, each Lender Party and each of its
respective 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
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender Party or such Affiliate to
or for the credit or the account of either Obligor against any and all of the
obligations of such Obligor to make Keepwell Payments now or hereafter existing
irrespective of whether or not such Lender Party shall have made any demand
under this Agreement or any other Loan Document and although such obligations
may be unmatured. Each Lender Party agrees promptly to notify the Obligors after
any such set-off and application made by such Lender Party or its Affiliate;
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 Party and
its respective Affiliates under this Section are in addition to the other rights
and remedies (including, without limitation, other rights of set-off) which such
Lender Party and its respective Affiliates may have.
SECTION 12. CONTINUING AGREEMENT; TRANSFER OF LOANS. This
Agreement is a continuing guaranty and shall (i) remain in full force and effect
(a) with respect to WHX until the earlier of (1) the occurrence of the Holdings
IPO Threshold and (2) the later of (x) the indefeasible payment in full of the
Obligations and (y) the Termination Date and (b) with respect to Holdings until
the later of (1) the indefeasible payment in full of the Obligations and (2) the
Termination Date, (ii) be binding upon both Obligors, their successors and
assigns, and (iii) inure to the benefit of and be enforceable by the Lender
Parties and their respective successors, transferees, and assigns. Without
limiting the generality of the foregoing clause (iii), any of the Lender Parties
may assign or otherwise transfer any Loans held by it or Obligations owing to it
to any other Person to the extent provided in the Credit Agreement, and such
other Person shall thereupon become vested with all the rights in respect
thereof granted to such Lender Party herein or otherwise with respect to such of
the Loans and Obligations so transferred or assigned, subject, however, to
compliance with the provisions of Section 10.7 of the Credit Agreement in
respect of assignments.
SECTION 13. REINSTATEMENT. This Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against any Loan Party for liquidation or reorganization, should any Loan Party
become insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of any Loan
Party's assets, and shall, to the fullest extent permitted by law, continue to
be effective or be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned
by any obligee of the
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<PAGE>
Obligations or such part thereof, whether as a "voidable preference",
"fraudulent transfer", or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall, to the fullest
extent permitted by law, be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.
SECTION 14. GOVERNING LAW; SEVERABILITY. This Agreement 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 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 only to the extent of such
prohibition or invalidity and without invalidating the remaining provisions of
this Agreement.
SECTION 15. SUBMISSION TO JURISDICTION. (a) Any legal action
or proceeding with respect to this Agreement 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, each Obligor hereby accepts for itself and 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) Each Obligor irrevocably consents to the service of
process of any of the aforesaid courts in any such action or proceeding by the
mailing of a copy thereof by registered or certified mail, postage prepaid, to
such Obligor at its address provided herein.
(c) Nothing contained in this Section 15 shall affect the
right of the Agent or any Lender Party or any holder of a Revolving Credit Note
to serve process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against any Obligor in any other jurisdiction.
SECTION 16. THIRD PARTY BENEFICIARY. This Agreement is
intended for the benefit of the Agent, the Issuers and the Lenders and their
respective successors and assigns and they shall be able to enforce any and all
rights and remedies under this Agreement.
SECTION 17. 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 this Agreement.
SECTION 18. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each
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<PAGE>
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.
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<PAGE>
SECTION 19. MISCELLANEOUS. All references herein to the
Borrower or to an Obligor shall include their respective successors and assigns,
including, without limitation, a receiver, trustee or debtor-in-possession of or
for the Borrower or such Obligor. All references to the singular shall be deemed
to include the plural where the context so requires.
SECTION 20. WAIVER OF JURY TRIAL. Each of the Obligors and the
Borrower irrevocably waives all right to trial by jury in any action, proceeding
or counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Agreement, another Loan Document or the actions of the Agent or
any Lender Party in the negotiation, administration, performance or enforcement
thereof.
IN WITNESS WHEREOF, the Borrower and the Obligors have caused
this Agreement to be duly executed and delivered by its duly authorized officer
on the date first above written.
WHEELING- PITTSBURGH
STEEL CORPORATION
By:_________________________
Title: Vice President
Address: 1134 Market Street
Wheeling, West Virginia 26003
WHEELING-PITTSBURGH
CORPORATION
By:_________________________
Title: Vice President and Special Counsel
Address: 1134 Market Street
Wheeling, West Virginia 26003
WHX CORPORATION
By:_________________________
Title: Vice President and Special Counsel
Address: 110 East 59th Street
New York, New York 10022
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<PAGE>
EXHIBIT M
FORM OF KEEPWELL AGREEMENT
KEEPWELL AGREEMENT (this "AGREEMENT"), dated December 28,
1995, made by Wheeling-Pittsburgh Steel Corporation, a Delaware corporation (the
"BORROWER"), Wheeling-Pittsburgh Corporation, a Delaware corporation
("HOLDINGS"), and WHX Corporation, a Delaware corporation ("WHX" and, together
with Holdings, the "OBLIGORS"), in favor of the Lender Parties referred to
below.
PRELIMINARY STATEMENTS:
1. The Borrower has entered into a Second Amended and Restated
Credit Agreement, dated as of December 28, 1995, with the financial institutions
party thereto and Citibank, N.A., as agent for said financial institutions (said
Agreement, as it may be amended or otherwise modified from time to time, being
the "CREDIT AGREEMENT").
2. Holdings owns beneficially and of record 100% of the
capital stock of the Borrower and WHX owns beneficially and of record 100% of
the capital stock of Holdings.
3. WHX and Holdings have agreed to provide certain assurances
to the Lender Parties with respect to the financial condition of the Borrower.
4. It is a condition precedent to the effectiveness of the
Credit Agreement and to the making of Loans and the issuance of Letters of
Credit that the Obligors shall have executed and delivered this Agreement.
NOW, THEREFORE, in consideration of the premises and to induce
the Lenders to make Loans and the Issuers to issue Letters of Credit, the
Obligors hereby agree as follows:
SECTION 1. CAPITALIZED TERMS. Capitalized terms used herein
and not otherwise defined herein, have the meanings specified in the Credit
Agreement. As used in this Agreement, the following terms shall mean:
"BANKRUPTCY CODE" means Title 11 of the United States Code,
any successor statute thereto or any similar United States federal or state law
for the relief of debtors.
"KEEPWELL PAYMENTS" has the meaning specified in Section 2.
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EXECUTION COPY
AMENDMENT NO. 2 TO THE KEEPWELL
AGREEMENT
Dated as of November 28, 1997
AMENDMENT NO. 2 TO THE KEEPWELL AGREEMENT (this "AMENDMENT")
is entered into by WHEELING-PITTSBURGH STEEL COMPANY, a Delaware corporation
(the "BORROWER"), the banks, financial institutions and other institutional
lenders parties to the Credit Agreement referred to below (collectively, the
"LENDERS"), WHEELING-PITTSBURGH CORPORATION, a Delaware corporation
("HOLDINGS"), WHX CORPORATION, a Delaware corporation ("WHX"), and CITIBANK,
N.A., as agent (the "AGENT").
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders, Agent and Issuing Bank have
entered into a Second Amended and Restated Credit Agreement dated as of December
28, 1995 (as amended, supplemented or otherwise modified through the date
hereof, the "CREDIT AGREEMENT"). Capitalized terms not otherwise defined in this
Amendment have the meanings specified in the Credit Agreement.
(2) The Borrower, Holdings and WHX have entered into a
Keepwell Agreement dated as of December 28, 1995 (as amended, supplemented or
otherwise modified through the date hereof, the "KEEPWELL AGREEMENT") in favor
of the Lender Parties.
(3) The Borrower, Holdings, WHX and the Lenders have agreed to
amend the Keepwell Agreement as hereinafter set forth.
SECTION 1. AMENDMENTS TO KEEPWELL AGREEMENT. Section 2 of the
Keepwell Agreement is, effective as of the date hereof and subject to the
satisfaction of the conditions precedent set forth in Section 2, hereby amended
by (i) deleting the words "Fiscal Quarter" and substituting therefor the words
"Fiscal Month" and (ii) by substituting for the dates "December 31, 1997"
through "March 31, 1999" the amount set forth below opposite each such date:
<PAGE>
November 30, 1997 (105,000,000)
December 31, 1997 (105,000,000)
January 31, 1998 (115,000,000)
February 28, 1998 (140,000,000)
March 31, 1998 (140,000,000)
April 30, 1998 (140,000,000)
May 31, 1998 (140,000,000)
June 30, 1998 (140,000,000)
July 31, 1998 (135,000,000)
August 31, 1998 (135,000,000)
September 30, 1998 (125,000,000)
October 31, 1998 (125,000,000)
November 30, 1998 (115,000,000)
December 31, 1998 (110,000,000)
January 31, 1999 (115,000,000)
February 28, 1999 (115,000,000)
March 31, 1999 (120,000,000)
SECTION 2. CONDITIONS OF EFFECTIVENESS. This Amendment shall
become effective as of the date first above written on the Business Day when,
and only when, the following conditions shall have been satisfied:
(a) The Agent shall have received counterparts of this
Amendment executed by the Borrower, each other Loan Party and the
Majority Lenders or, as to any of the Lenders, advice satisfactory to
the Agent that such Lenders have executed this Amendment.
(b) The Agent shall have received a certificate signed by a
duly authorized officer of the Borrower stating that:
(i) The representations and warranties contained in
the Credit Agreement and each Loan Document are correct on and
as of the date of such certificate as though made on and as of
the date hereof other than any such representations or
warranties that, by their terms, refer to a date other than
the date of such certificate; and
(ii) No event has occurred and is continuing that
constitutes a Default or an Event of Default.
The effectiveness of this Amendment is conditioned upon the accuracy of the
factual matters described herein. This Amendment is subject to the provisions of
Section 10.1 of the Credit Agreement.
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<PAGE>
SECTION 3. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. (a)
On and after the effectiveness of this Amendment, each reference in the Keepwell
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Keepwell Agreement, and each reference in each of the Loan
Documents to "the Keepwell Agreement", "thereunder", "thereof" or words of like
import referring to the Keepwell Agreement, shall mean and be a reference to the
Keepwell Agreement, as amended by this Amendment.
(b) The Keepwell Agreement and each of the Loan Documents, as
specifically amended by this Amendment, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender, the Agent, or the Issuing Bank under
the Keepwell Agreement or any Loan Document, nor constitute a waiver of any
provision of the Keepwell Agreement or any Loan Document.
SECTION 4. COSTS AND EXPENSES. The Borrower agrees to pay on
demand all costs and expenses of the Agent in connection with the preparation,
execution, delivery and administration, modification and amendment of this
Amendment and the other instruments and documents to be delivered hereunder
(including, without limitation, the reasonable fees and expenses of counsel for
the Agent) in accordance with the terms of Section 10.4(a) of the Credit
Agreement.
SECTION 5. EXECUTION IN COUNTERPARTS. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.
SECTION 6. GOVERNING LAW. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
BORROWER
WHEELING-PITTSBURGH STEEL
CORPORATION
By:_______________________________
Name:
Title:
WHX CORPORATION
By _______________________________
Name:
Title:
AGENT
CITIBANK, N.A., as Agent
By:_______________________________
Name:
Title:
LENDERS
CITICORP USA, INC.
By:_______________________________
Name:
Title:
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<PAGE>
CORESTATES BANK, N.A.
By:_______________________________
Name:
Title:
BANKAMERICA BUSINESS CREDIT, INC.
By:_______________________________
Name:
Title:
STAR BANK, N.A.
By:_______________________________
Name:
Title:
NATIONSBANK, N.A.
By:_______________________________
Name:
Title:
NATIONAL CITY COMMERCIAL
FINANCE, INC.
By:_______________________________
Name:
Title:
<PAGE>
CONSENTED TO AND ACKNOWLEDGED:
WHEELING-PITTSBURGH CORPORATION
By:_______________________________
Name:
Title:
WHEELING CONSTRUCTION PRODUCTS,
INC.
By:_______________________________
Name:
Title:
PITTSBURGH-CANFIELD CORPORATION
By:_______________________________
Name:
Title:
UNIMAST INCORPORATED
By:_______________________________
Name:
Title:
EXECUTION COPY
U.S. $125,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of December 28, 1995
Among
WHEELING-PITTSBURGH STEEL CORPORATION
AS BORROWER
and
THE LENDERS PARTY HERETO
AS LENDERS
and
CITIBANK, N.A.
AS AGENT AND AS INITIAL ISSUING BANK
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
December 28, 1995, among Wheeling-Pittsburgh Steel Corporation, a Delaware
corporation (the "BORROWER"), the financial institutions listed on the signature
pages hereof (each individually a "LENDER" and collectively the "LENDERS"), and
Citibank, N.A. ("CITIBANK"), as agent hereunder for the Lenders (in such
capacity, together with any successor appointed pursuant to Article IX, the
"AGENT"), and as issuer of letters of credit (the "INITIAL ISSUING BANK").
PRELIMINARY STATEMENTS.
1. The Borrower is a party to an Amended and Restated Credit
Agreement, dated as of October 24, 1994, as amended by Amendment No. 1, dated as
of October 13, 1995 (as amended, the "1994 CREDIT AGREEMENT"), with the
financial institutions party thereto and Citibank, as agent.
2. Wheeling-Pittsburgh Corporation, a Delaware corporation
("HOLDINGS"), is the direct parent of the Borrower and WHX Corporation, a
Delaware corporation ("WHX") is the direct parent of Holdings.
3. The Borrower and Holdings have requested that the Lenders,
the Issuers (as hereinafter defined) and the Agent amend and restate the 1994
Credit Agreement to, among other things, increase the Commitments and extend the
Termination Date (as such terms are defined in the 1994 Credit Agreement).
4. The Lender Parties (as hereinafter defined) have indicated
their willingness to agree to amend and restate the 1994 Credit Agreement on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements contained herein, the parties hereto agree that the
1994 Credit Agreement is hereby amended and restated as follows:
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):
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<PAGE>
"ACCOUNTS" has the meaning specified in the Borrower Security
Agreement and in the Guarantor Security Agreement.
"ADJUSTED EBITDA" means, for any Person for any period, the
EBITDA for such Person for such period PLUS any increase in the long term
liability in respect of other post-employment benefits that would be reflected
on a consolidated balance sheet of such Person and its Subsidiaries (the
"EMPLOYEE LIABILITY") for such period LESS any decrease in the Employee
Liability for such period.
"ADJUSTED NET WORTH" means, as to any Guarantor at the
Effective Date, the lesser of (x) the amount by which the book value of the
property of such Guarantor exceeds the total amount of liabilities on its
existing "Debt" (as such term is defined in Section 270 of the New York Debtor
Creditor Law), including, without limitation, probable contingent liabilities,
but excluding liabilities under the Guaranty, of such Guarantor at such date and
(y) the amount by which the book value of the assets of such Guarantor at such
date exceeds the amount that will be required to pay the probable liability of
such Guarantor on its Debt, excluding Debt in respect of the Guaranty, as they
become absolute and matured.
"AFFILIATE" means, as to any Person, any Subsidiary of such
Person and any other 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 direct or indirect beneficial owner of 15% or more of any class of voting
Stock of such Person or, with respect to the Borrower, of Holdings or WHX. 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.
"AGENT" has the meaning specified in the recital of parties to
this Agreement.
"AGENT'S ACCOUNT" means the account of the Agent maintained by
the Agent at Citibank at its office at 399 Park Avenue, New York, New York
10043, Account No. 3682 2248, Attention: Alexandra Lozovsky.
"AGREEMENT" means this Second Amended and Restated Credit
Agreement, together with all Exhibits and Schedules hereto, as the same may be
amended, supplemented or otherwise modified from time to time.
"APPLICABLE LENDING OFFICE" means, with respect to each Lender
Party, 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.
"APPLICABLE MARGIN" means, as of any date, a percentage per
annum determined by reference to the Performance Level in effect on such date as
set forth below:
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<PAGE>
<TABLE>
<CAPTION>
Applicable Margin Applicable Margin Applicable Margin for
Performance Level for Base Rate Loans for Eurodollar Letter of Credit Fees
Rate Loans
<S> <C> <C> <C>
I 0.00% 1.25% 0.875%
II 0.25% 1.50% 1.125%
III 0.50% 1.75% 1.375%
IV 0.75% 2.00% 1.625%
V 1.00% 2.25% 1.875%
</TABLE>
provided that, for the period commencing on the Effective Date and ending on
December 31, 1996, the Applicable Margin shall be as set forth opposite
Performance Level III.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the Agent in
accordance with Section 10.7 and in substantially the form of Exhibit E.
"AVAILABLE CREDIT" means, at any time, an amount equal to (i)
the lower of (a) the Revolving Credit Commitments outstanding at such time, and
(b) the Borrowing Base at such time MINUS (ii) the aggregate principal amount of
the Revolving Credit Loans outstanding at such time and the outstanding 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; and
(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 (adjusted
to the basis of a year of 360 days) 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
-3-
<PAGE>
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
annual assessment rates estimated by Citibank for determining the then current
annual assessment payable by Citibank to the Federal Deposit Insurance
Corporation (or any successor) for insuring U.S.
dollar deposits of Citibank 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 the
Loans of any Lender Party that bears interest with reference to the Base Rate.
"BLOCKED ACCOUNT" has the meaning specified in Section 2.19.
"BLOCKED ACCOUNT LETTER" means the letter agreement, dated
August 17, 1994, executed by the Borrower and the Agent and acknowledged and
agreed to by PNC Bank, National Association, as such letter agreement may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof.
"BORROWER PLEDGE AGREEMENT" means the pledge agreement, dated
as of August 17, 1994, as amended by Amendment No. 1, dated as of December 28,
1995, executed by the Borrower, substantially in the form of Exhibit H, as such
agreement may be further amended, supplemented or otherwise modified from time
to time.
"BORROWER SECURITY AGREEMENT" means the security agreement,
dated as of April 12, 1991 and as amended by Amendment No. 1, dated as of August
17, 1994, and Amendment No. 2, dated as of December 28, 1995, executed by the
Borrower, substantially in the form of Exhibit G, as such agreement may be
further amended, supplemented or otherwise modified from time to time.
"BORROWING" means each of a Revolving Credit Borrowing and a
Swing Loan Borrowing.
"BORROWING BASE" means, at any time, an amount up to a
percentage of the value of various categories of Eligible Inventory at such
time, as set forth on Schedule IV hereto; PROVIDED that with respect to the
Eligible Inventory of any Guarantor, such amount shall not exceed such
Guarantor's Adjusted Net Worth at the Effective Date; PROVIDED, HOWEVER, that
such advance rates may be adjusted by the Agent from time to time to conform
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<PAGE>
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;
PROVIDED FURTHER, HOWEVER, that such advance rates may not be adjusted above
those set forth on Schedule IV hereto without the consent of all of the Lenders.
The Agent shall provide the Borrower with two Business Days' prior written
notice of any such change.
"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 by law to close in New York City 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 Subsidiaries, except
interest capitalized during construction, during such period for property, plant
or equipment, 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 Subsidiaries prepared in accordance with GAAP, but not including any
Investments permitted pursuant to Section 7.6. For the purpose of this
definition, the purchase price of equipment which is acquired simultaneously
with the trade-in of existing equipment owned by such Person or any of its
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 amount of the credit granted by the seller of such equipment being traded in
at such time or the amount of such proceeds, as the case may be.
"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 or any of its Subsidiaries
under Capitalized Leases, as determined on a consolidated basis in accordance
with GAAP.
"CASH COLLATERAL ACCOUNT" has the meaning specified in the
Cash Collateral Account Agreement.
"CASH COLLATERAL ACCOUNT AGREEMENT" means the Amended and
Restated Cash Collateral Agreement, dated as of December 28, 1995, executed by
the Borrower and the Agent, substantially in the form of Exhibit Q, as such
agreement may be further amended, supplemented or modified from time to time.
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<PAGE>
"CASH EQUIVALENTS" means (i) 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, (ii) certificates of deposit, eurodollar
time deposits, overnight bank deposits and bankers' acceptances of any Lender
Party having maturities of one year or less from the date of acquisition, (iii)
commercial paper of an issuer rated at least A-1 by Standard & Poor's Ratings
Group or P-1 by Moody's Investors Service, 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, and (iv) repurchase agreements
and reverse repurchase agreements relating to marketable direct obligations
issued or unconditionally guaranteed by the United States Government or issued
by any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition,
PROVIDED that (x) the terms of such agreements comply with the guidelines set
forth in the Federal Financial Agreements of Depository Institutions with
Securities and Others, as adopted by the Comptroller of the Currency and (y)
such agreements are entered into with the Agent or any Lender Party.
"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.
"CITIBANK" has the meaning specified in the recital of parties
to this Agreement.
"CITICORP" means Citicorp USA, Inc.
"CODE" means the Internal Revenue Code of 1986 (or any
successor legislation thereto), as amended from time to time.
"CO-GENERATION AGREEMENT" means that certain Energy Services
Agreement dated as of October 3, 1994 by and between National Power Exchange
Group, Inc. and the Borrower, as the same may be amended, modified or
supplemented from time to time.
"COLLATERAL" means all "Collateral" referred to in the
Collateral Documents and all other property and interests in property and
proceeds thereof that is or is intended to be subject to a Lien in favor of the
Agent for the benefit of the Secured Parties.
"COLLATERAL DOCUMENTS" means the Borrower Security Agreement,
the Borrower Pledge Agreement, the Holdings Pledge Agreement, the Guarantor
Security Agreement, the Cash Collateral Account Agreement, the Blocked Account
Letter and any other document that creates or purports to create a Lien in favor
of the Agent for the benefit of the Secured Parties in connection with the Loan
Documents.
-6-
<PAGE>
"COMMITMENT" means as to any Lender, such Lender's Revolving
Credit Commitment and "COMMITMENTS" means the aggregate Revolving Credit
Commitments of all Lenders.
"COMMITMENT FEE" has the meaning specified in Section 2.4(a).
"COMPUTATION DATE" has the meaning assigned to it in Section
2.18.
"CONSOLIDATED" refers to the consolidation of accounts in
accordance with GAAP.
"CONTAMINANT" means any substance regulated or forming the
basis of liability under any Environmental Law, including, without limitation,
any waste, pollutant, hazardous substance, toxic substance, hazardous waste,
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 relating thereto will be complied with, or that any holder of
such Indebtedness or Contractual Obligation will be protected (in whole or in
part) 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 (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 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. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported, except to the extent exposure of the
contingent obligor is expressly limited to a lesser amount.
-7-
<PAGE>
"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.
"CUMULATIVE CASH FLOW" means "net cash flow from operations"
(as such term is construed in accordance with GAAP and as such term is included
in the Projections) of the Loan Party Consolidated Group PLUS (a) advances made
to any Loan Party by WHX and (b) increases in the aggregate "Trust Invested
Amount" (under and as defined in the Securitization Documents) (in each case, to
the extent that such amounts have not been included in the calculation of "net
cash flow from operations") MINUS (a) "net cash flow from investing activities"
(as such term is construed in accordance with GAAP and as such term is included
in the Projections) of the Loan Party Consolidated Group, (b) payments made by
any Loan Party to WHX in respect of Keepwell Payments or otherwise, (c)
reductions in the aggregate "Trust Invested Amount" (under and as defined in the
Securitization Documents) and (d) repayments of the principal amount of any Debt
of the Loan Party Consolidated Group other than Debt under the Loan Documents
(in each case, to the extent that such amounts have not been included in the
calculation of "net cash flow from operations").
"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
Party, the office of such Lender Party specified as its "Domestic Lending
Office" opposite its name on Schedule III or in the Assignment and Acceptance
pursuant to which it became a Lender Party, as the case may be, or such other
office of such Lender Party as such Lender Party may from time to time specify
in writing to the Borrower and the Agent.
"EBITDA" means, for any Person for any period, the Net Income
(Loss) of such Person for such period taken as a single accounting period, PLUS
(a) the sum of the following amounts of such Person and its Subsidiaries for
such period determined on a consolidated basis in accordance with GAAP to the
extent included in the determination of such Net Income (Loss): (i) depreciation
expense, (ii) amortization expense, (iii) Net Interest Expense, (iv) income tax
expense, (v) extraordinary losses and (vi) the amount of cash dividends or
distributions paid to such Person; LESS (b) the sum of the following amounts of
such Person and its Subsidiaries determined on a consolidated basis in
accordance with GAAP to the extent included in the determination of such Net
Income (Loss):
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<PAGE>
(i) extraordinary gains, (ii) the Net Income (Loss) of any other Person that is
accounted for by the equity method of accounting and (iii) the Net Income (Loss)
of any other Person acquired by such Person or a Subsidiary of such Person in a
transaction accounted for as a pooling of interests for any period prior to the
date of such acquisition.
"EFFECTIVE DATE" means the first date that all of the
conditions contained in Article III are satisfied.
"ELIGIBLE ASSIGNEE" means (i) a commercial bank organized
under the laws of the United States of America, or any state thereof, and having
total assets in excess of $1,000,000,000; (ii) a commercial bank organized under
the laws of any other country which is a member of the Organization for Economic
Cooperation and Development ("OECD"), or a political subdivision of any such
country, and having total assets in excess of $3,000,000,000, PROVIDED that such
bank is acting though a branch or agency located in the country in which it is
organized or another country which is a member of the OECD; (iii) the central
bank of any country which is a member of the OECD; and (iv) any other financial
institution 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 unreasonably withheld. Without limitation on the foregoing, the
Borrower may withhold its consent of any such other financial institution if the
proposed assignment of any portion of any Lender Party's rights and obligations
under this Agreement to such other financial institution would materially
increase the amount of Taxes required to be deducted by the Borrower from or in
respect of any sum payable under the Loan Documents (determined as of the date
on which such other financial institution is proposed to become a Lender Party
hereunder).
"ELIGIBLE INVENTORY" means such of the Inventory of the
Borrower and the Guarantors valued at the lower of market or cost on a first in
first out basis as the Agent, in its sole discretion consistent with its
customary business practices and generally applicable criteria for comparable
secured financings, deems eligible, less all reserves as the Agent, in its sole
discretion consistent with its customary business practices and generally
applicable criteria for comparable secured financings, from time to time deems
appropriate. For the purposes of this definition, the Agent does not intend to
treat the following Inventory as eligible: (a) Inventory in transit, (b)
Inventory held by a bailee or Inventory held on leased premises where the
landlord thereof has not executed a waiver and financing statement in form and
substance satisfactory to the Agent and (c) Inventory subject to a Lien prior in
right to that of the Lien in favor of the Secured Parties or subject to any
other Lien not permitted by Section 7.1. Nothing contained in the preceding
sentence shall limit the Agent's right, in its sole discretion consistent with
its customary business practices and generally applicable criteria for
comparable secured financings, to treat any item of Inventory as ineligible.
"ENVIRONMENTAL LAWS" 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
judicial or administrative order, consent decree or judgment
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relating to the regulation and protection of human health, safety, the
environment or natural resources (including, without limitation, ambient air,
surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation).
"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 (either as an
expense or other charge or as would be included on the liabilities side of the
consolidated balance sheet of such Person and its Subsidiaries or, if the amount
and the liability is fixed, in a footnote thereto) or reserved against 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,
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, and result from the past, present or future operations of
such Person or any of its Subsidiaries.
"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, and
the regulations promulgated and rulings issued thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with any Loan Party or any of its
Subsidiaries within the meaning of Section 414 (b), (c), (m) or (o) of the Code.
"ERISA EVENT" means (i) a Reportable Event with respect to a
Title IV Plan or a Multiemployer Plan; (ii) the withdrawal of any Loan Party or
any of its Subsidiaries 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; (iii) the complete or partial
withdrawal of any Loan Party or any of its Subsidiaries or any ERISA Affiliate
from any Multiemployer Plan; (iv) 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; (v) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (vi) the failure to make required
contributions to a Qualified Plan; (vii) 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, excluding any such event or condition to the extent that the PBGC
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has, prior to the date hereof, (A) waived any such termination, appointment or
imposition as a result of such event or condition and each of the Loan Parties
and their respective Subsidiaries and each of the ERISA Affiliates are in
compliance with all applicable requirements of any such waiver or (B) consented
to the occurrence of such event or the existence of such condition in
circumstances that could not reasonably be expected to result in any liability
of any Loan Party or any of its Subsidiaries or any ERISA Affiliate after the
date hereof; (viii) a prohibited transaction (as described in Section 4975 of
the Code or Section 406 of ERISA) that occurs with respect to any Plan; or (ix)
the request by any Loan Party, any of its Subsidiaries or any ERISA Affiliate
for a minimum funding waiver from the IRS with respect to any Pension Plan.
"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
Party, the office of such Lender specified as its "Eurodollar Lending Office"
below its name on Schedule III or in the Assignment and Acceptance pursuant to
which it became a Lender Party, as the case may be (or, if no such office is
specified, its Domestic Lending Office), or such other office of such Lender
Party as such Lender Party may from time to time specify in writing to the
Borrower and the Agent.
"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 for such Interest Period in an amount substantially equal to the Eurodollar
Rate Loan of Citicorp 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 Loans of any Lender Party that, for an Interest Period, bears interest at
a rate determined with reference to the Eurodollar Rate.
"EURODOLLAR RATE RESERVE PERCENTAGE" for any Interest Period
means 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 (or any successor) 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
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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.
"FABRICATING JOINT VENTURES" means, collectively, the joint
ventures, corporations or partnerships owned by Holdings, the Borrower or any
Guarantor (or a wholly owned Subsidiary of Holdings, the Borrower or any
Guarantor ) to make acquisitions of businesses whose primary operations are
fabricating, coating and other processing of steel products.
"FAIR MARKET VALUE" means (i) 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 (ii) 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 average of the asked and bid prices 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.
"FIRST MORTGAGE INDENTURE" means, the indenture, dated as of
November 15, 1991, between Holdings and Chemical Bank, as trustee, pursuant to
which the First Mortgage Notes have been issued, as the same may be amended,
supplemented or modified from time to time.
"FIRST MORTGAGE NOTES" means Holdings' 12 1/4% First Mortgage
Notes due 2000 issued pursuant to the First Mortgage Indenture, as amended prior
to the Effective Date.
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"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 December 31.
"FUNDING" means Wheeling-Pittsburgh Funding, Inc., a Delaware
special purpose corporation and 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 as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board, which are applicable to the
circumstances as of the date of determination except that, for purposes of
Article V, 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.
"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.
"GUARANTOR" means any of PCC, Wheeling Construction or
Unimast, and such other permitted Subsidiaries of the Borrower or any other
Guarantor that may become a party to the Guaranty in the future, as required by
the Agent in accordance with Section 7.13.
"GUARANTOR INTERCOMPANY NOTES" means intercompany notes made
by the Guarantors in favor of the Borrower in substantially the form of Exhibit
P.
"GUARANTOR SECURITY AGREEMENT" means the security agreement,
executed by each of the Guarantors, substantially in the form of Exhibit L, as
such Agreement may be amended, supplemented or otherwise modified from time to
time.
"GUARANTY" means the guaranty executed by each of the
Guarantors, substantially in the form of Exhibit K, as such guaranty may be
amended, supplemented or otherwise modified from time to time.
"HOLDINGS" has the meaning specified in the Preliminary
Statements.
"HOLDINGS GUARANTY" means the guaranty executed by Holdings,
substantially in the form of Exhibit I, as such guaranty may be amended,
supplemented or otherwise modified from time to time.
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"HOLDINGS INTERCREDITOR AGREEMENT" means the amended and
restated intercreditor agreement executed by WHX, Holdings, the Borrower and the
Agent, in substantially the form of Exhibit N as such agreement may be amended,
supplemented or otherwise modified from time to time.
"HOLDINGS IPO" means the initial public offering of Stock of
Holdings.
"HOLDINGS IPO THRESHOLD" means that not less than 50% of the
issued and outstanding Stock of Holdings shall have been sold to Persons other
than WHX and its Affiliates pursuant to the Holdings IPO.
"HOLDINGS NOTE" means those certain notes, each dated as of
October 24, 1994, of the Borrower in favor of Holdings in the aggregate
principal amount of $287,387,926 (as of November 30, 1995).
"HOLDINGS PLEDGE AGREEMENT" means the pledge agreement
executed by Holdings, substantially in the form of Exhibit J, as such pledge
agreement may be amended, supplemented or otherwise modified from time to time.
"INDEBTEDNESS" of any Person means (i) 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, (ii) all obligations of such Person evidenced by notes,
bonds, debentures or similar instruments, (iii) 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), (iv) all Capitalized
Lease Obligations of such Person, (v) all Contingent Obligations of such Person,
(vi) all obligations of such Person to purchase, redeem, retire, defease or
otherwise acquire for value any Stock or Stock Equivalent 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, (vii) all obligations of such Person under any interest rate
contract, (viii) all Indebtedness referred to in clause (i), (ii), (iii), (iv),
(v), (vi) or (vii) 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, and (ix) in the
case of the Borrower, the Obligations.
"INDEMNITEE" has the meaning specified in Section 10.4.
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"INDENTURES" means, collectively, (i) the Permanent Financing
Indenture and (ii) the First Mortgage Indenture.
"INTEREST COVERAGE RATIO" means, for each Fiscal Quarter and
determined on the basis of the four Fiscal Quarters ending on the date of
determination, a ratio of (a) Adjusted EBITDA of the Loan Party Consolidated
Group plus any noncash net periodic pension costs (to the extent not added back
to Net Income (Loss) in the calculation of EBITDA) of the Loan Party
Consolidated Group for such period to (b) Cash Interest Expense of the Loan
Party Consolidated Group plus the aggregate "Discount Amount" (under and as
defined in each Supplement included in the Securitization Documents) for such
period.
"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 a Eurodollar Rate Loan and ending three months thereafter and
(b) thereafter, if such Loan is continued, in whole or in part, as a Eurodollar
Rate Loan pursuant to Section 2.9, the period commencing on the last day of the
immediately preceding Interest Period therefor and ending three months
thereafter; PROVIDED, HOWEVER, that:
(A) 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;
(B) 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;
(C) the Borrower may not select any Interest Period which ends
after the Termination Date;
(D) the Borrower may not select any Interest Period in respect
of Loans having an aggregate principal amount of less than $5,000,000;
and
(E) there shall be outstanding at any one time no more than
seven Interest Periods in the aggregate.
"INTEREST RATE CONTRACT" means interest rate swap, cap or
collar agreements and interest rate future or option contracts and similar
agreements.
"INVENTORY" has the meaning specified in the Borrower Security
Agreement.
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"INVESTMENT" has the meaning specified in Section 7.6.
"IRS" means the Internal Revenue Service, or any successor
thereto.
"ISPAT" has the meaning specified in Section 7.5(a).
"ISSUER" means each Person listed on Schedule I.
"KEEPWELL AGREEMENT" means the amended and restated agreement,
executed by each of WHX, Holdings and the Borrower, substantially in the form of
Exhibit M, as such agreement may be amended, supplemented or otherwise modified
from time to time.
"KEEPWELL PAYMENTS" has the meaning specified in the Keepwell
Agreement.
"L/C CASH COLLATERAL ACCOUNT" has the meaning specified in
Section 8.3.
"LEASES" means, with respect to the Borrower, any Guarantor or
any of their Subsidiaries, all of those leasehold estates in real property now
owned as lessee or hereafter acquired including, without limitation, those
listed on Schedule 4.21(b), as such may be amended, supplemented or otherwise
modified from time to time to the extent permitted by this Agreement.
"LENDER PARTY" means any Lender, any Issuer or the Swing Bank.
"LETTER OF CREDIT" means any letter of credit issued for the
account of the Borrower or any of its Subsidiaries by an Issuer pursuant to
Section 2.17.
"LETTER OF CREDIT AGREEMENT" means the agreement, dated as of
August 24, 1994, among the Borrower and Citibank, as issuer, as such agreement
may be amended, supplemented or otherwise modified from time to time.
"LETTER OF CREDIT OBLIGATIONS" means, at any time, all
liabilities at such time of the Borrower to all Issuers with respect to Letters
of Credit, whether or not any such liability is contingent, and includes the sum
of (i) the Reimbursement Obligations at such time and (ii) the Letter of Credit
Undrawn Amounts at such time.
"LETTER OF CREDIT REIMBURSEMENT AGREEMENT" has the meaning
specified in Section 2.17(c).
"LETTER OF CREDIT REQUEST" has the meaning specified in
Section 2.17(d).
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"LETTER OF CREDIT UNDRAWN AMOUNTS" means, at any time, the
aggregate undrawn face amount of 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 other similar kind of preference, priority or
security agreement or preferential arrangement, including, without limitation,
any conditional sale or other title retention agreement, the interest of a
lessor under a Capitalized Lease Obligation, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing,
under the UCC or comparable law of any jurisdiction, of any financing statement
naming the owner of the asset to which such Lien relates as debtor (other than a
filing which does not evidence an outstanding secured obligation, a commitment
to make advances, incur obligations or otherwise give value).
"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
Revolving Credit Notes, the Keepwell Agreement, each Letter of Credit
Reimbursement Agreement, the Holdings Intercreditor Agreement, the Guarantor
Intercompany Notes, the Borrower Intercompany Notes and the Collateral
Documents.
"LOAN PARTY" means each of the Borrower, each Guarantor,
Holdings and each Subsidiary or Affiliate of the Borrower (other than WHX) which
executes and delivers a Loan Document.
"LOAN PARTY CONSOLIDATED GROUP" means each Loan Party and its
Subsidiaries.
"MAJORITY LENDERS" means, at any time, Lenders holding at
least 51% of the aggregate of the Revolving Credit Commitments at such time.
"MATERIAL ADVERSE CHANGE" means a material adverse change in
any of (i) the condition (financial or otherwise), business, performance,
prospects, operations or properties of Holdings, the Borrower, the Guarantors
and their respective Subsidiaries taken as one enterprise, (ii) the legality,
validity or enforceability of any Loan Document, (iii) the perfection or
priority of the Liens granted pursuant to the Collateral Documents, other than
solely by reason of action by the Agent or the Lender Parties, (iv) the ability
of the Borrower to repay the Obligations or of any Loan Party to perform its
obligations under any Loan Document in any material respects or (v) the rights
and remedies of the Lender Parties or the Agent under the Loan Documents;
PROVIDED that any such change related to matters described in Section 4.16(a),
(b), (e), (f) and (g) shall not constitute a Material Adverse Change at any time
that the excess of (i) the lesser of the Revolving Credit Commitments and
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the Borrowing Base over (ii) (A) the sum of the aggregate principal amount of
Revolving Credit Loans, Letter of Credit Obligations and Swing Loans then
outstanding minus (B) the aggregate amount then on deposit in the Cash
Collateral Account and the Letter of Credit Cash Collateral Account, is equal to
or greater than $50,000,000.
"MATERIAL ADVERSE EFFECT" means an effect that has a
reasonable likelihood of resulting in or causing a material adverse change in
any of (i) the condition (financial or otherwise), business, performance,
prospects, operations or properties of Holdings, the Borrower, the Guarantor and
their respective Subsidiaries taken as one enterprise, (ii) the legality,
validity or enforceability of any Loan Document, (iii) the perfection or
priority of the Liens granted pursuant to the Collateral Documents, other than
solely by reason of action by the Agent or the Lender Parties, (iv) the ability
of the Borrower to repay the Obligations or of any Loan Party to perform its
obligations under any Loan Document in any material respects or (v) the rights
and remedies of the Lender Parties or the Agent under the Loan Documents;
PROVIDED that any such effect related to matters described in Section 4.16(a),
(b), (e), (f) and (g) shall not constitute a Material Adverse Effect at any time
that the excess of (i) the lesser of the Revolving Credit Commitments and the
Borrowing Base over (ii) (A) the sum of the aggregate principal amount of
Revolving Credit Loans, Letter of Credit Obligations and Swing Loans then
outstanding minus (B) the aggregate amount then on deposit in the Cash
Collateral Account and the Letter of Credit Cash Collateral Account, is equal to
or greater than $50,000,000.
"MATERIAL CONTRACTUAL OBLIGATION" of any Person means such
Person's Contractual Obligations in respect of Indebtedness of the types
described in clauses (i) and (ii) of the definition of "Indebtedness" and each
other Contractual Obligation that is material to the business, prospects,
operations or financial condition of such Person.
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, and to which the Borrower, any of its Subsidiaries
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 net income (or loss) from continuing operations of such Person and its
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP.
"NET INTEREST EXPENSE" means, for any Person for any period,
(i) gross interest expense of such Person and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, LESS (ii) the
following for such Person and its Subsidiaries determined on a consolidated
basis determined in accordance with GAAP: the sum of (1) interest capitalized
during construction for such period,
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(2) interest income for such period, and (3) 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), PLUS
(iii) the following for such Person and its Subsidiaries determined on a
consolidated basis in accordance with GAAP: the sum of (1) losses for such
period on Interest Rate Contracts (to the extent not included in gross interest
expense), (2) upfront costs or fees for such period associated with Interest
Rate Contracts (to the extent not included in gross interest expense) and (3)
the aggregate "Discount Amount" (under and as defined in each Supplement
included in the Securitization Documents) for such period.
"NET WORTH" of any Person means, at any date, the excess of
the Total Assets of such Person at such date over the Total Liabilities of such
Person at such date.
"1994 CREDIT AGREEMENT" has the meaning specified in the
recitals hereto.
"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: (i) the amount of amortized debt
discount and (ii) charges relating to write-ups or write-downs in the book or
carrying value of existing Indebtedness.
"NOTICE OF BORROWING" has the meaning specified in Section
2.3(a).
"NOTICE OF CONTINUATION OR CONVERSION" has the meaning
specified in Section 2.8.
"OBLIGATIONS" means the Loans, the Letter of Credit
Obligations and, all other advances, debts, liabilities, obligations, covenants
and duties owing by the Borrower to the Agent, any Lender Party, 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,
arising under this Agreement, under any other Loan Document or under any
agreement of the type described in clause (iv) of the definition of Cash
Equivalents, whether or not for the payment of money, whether arising by reason
of an extension of credit, opening or amendment of a Letter of Credit or payment
of any draft drawn thereunder, loan, guaranty, indemnification, foreign exchange
transaction, interest rate contract, 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, charges, expenses, fees, attorneys' fees and
disbursements and any other sum chargeable to the Borrower under this Agreement
or any other Loan Document.
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"OTHER TAXES" has the meaning specified in Section 2.15(b).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PCC" means Pittsburgh-Canfield Corporation, a Pennsylvania
corporation wholly owned by Holdings.
"PENSION PLAN" means an employee pension benefit plan, as
defined in Section 3(2) of ERISA, which is not an individual account plan, as
defined in Section 3(34) of ERISA, and which the Borrower or any of its
Subsidiaries or, if a Title IV Plan, 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.
"PERFORMANCE LEVEL" means, as of any date, the level set forth
below then in effect, as determined in accordance with the following provisions
of this definition:
Performance Level Interest Coverage Ratio
I Greater than 5.25:1.00
II Less than or equal to
5.25:1.00 but greater
than 4.75:1.00
III Less than or equal to
4.75:1.00 but greater
than 3.75:1.00
IV Less than or equal to
3.75:1.00 but greater
than 2.75:1.00
V Less than or equal to 2.75:1.00
For the purposes of this definition, the Performance Level shall be determined
by reference to the financial statements delivered pursuant to Sections 6.10(b)
or (c); changes in the Performance Level shall become effective on the first day
of the month next succeeding the date on which such financial statements are
delivered to the Lender Parties and shall remain in effect until the next change
to be effected pursuant to this definition.
"PERMANENT FINANCING INDENTURE" means the indenture, dated as
of November 15, 1993, between Holdings and Bank One, Columbus, N.A., as trustee,
pursuant to which the Permanent Financing Notes were issued, as the same may be
amended, modified or supplemented from time to time.
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"PERMANENT FINANCING NOTES" means Holdings' 9 3/8% Senior
Notes due 2003 issued pursuant to the Permanent Financing Indenture.
"PERMIT" means any permit, approval, authorization, license,
variance or permission required from a Governmental Authority under an
applicable Requirement of Law.
"PERMITTED LIENS" means Liens permitted by Section 7.1(a),
(d), (e) and, to the extent that any Lien described in Section 7.1(f) secures
Indebtedness referred to in clause (e) of such Section 7.1, Section 7.1(f).
"PERSON" means an individual, partnership, corporation
(including, without limitation, a business trust), limited liability company,
joint stock 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 the Borrower or any of its Subsidiaries maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"PROJECTIONS" means those financial projections dated October
24, 1995, covering the fourth Fiscal Quarter of 1995 and the Fiscal Years ending
in 1996, 1997, 1998, 1999 and 2000, delivered to the Lender Parties by the
Borrower.
"QUALIFIED PLAN" means an employee pension benefit plan, as
defined in Section 3(2) of ERISA, which is intended to be tax-qualified under
Section 401(a) of the Code, and which the Borrower, any of its Subsidiaries or
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
Party, the following: (i) in the case of principal and interest, the quotient
obtained by dividing the aggregate principal amount of all Loans held by such
Lender Party by the aggregate principal amount of all Loans held by all Lender
Parties and (ii) in all other cases, the quotient obtained by dividing the
principal amount of the Revolving Credit Commitment of such Lender by the
aggregate principal amount of all Revolving Credit Commitments of all Lenders.
"REAL ESTATE" means all of those plots, pieces or parcels of
land now owned or hereafter acquired by the Borrower, any Guarantor or any of
their Subsidiaries (the "LAND"), including, without limitation, those listed on
Schedule 4.21(a), together with the right, title and interest of the Borrower,
such Guarantor or such Subsidiary, if any, in and to the streets, the land lying
in the bed of any streets,
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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, together with all of the buildings
and other improvements now or hereafter erected on the Land, and any fixtures
appurtenant thereto.
"RECEIVABLES SECURITIZATION" means the program pursuant to
which the Borrower sells, transfers or otherwise conveys certain of its accounts
receivables, together with the accounts receivables of the Guarantors and
certain other Affiliates of the Borrower from time to time, to Funding for
inclusion in Funding's receivables securitization program.
"REGISTER" has the meaning specified in Section 10.7.
"REIMBURSEMENT OBLIGATIONS" means all reimbursement or
repayment obligations of the Borrower to Issuers with respect to Letters of
Credit pursuant to Letter of Credit Reimbursement Agreements.
"RELEASE" means, as to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment or into or out of
any property owned 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 to (i) clean up,
remove, treat or in any other way address Contaminants in the indoor or outdoor
environment, (ii) 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
(iii) perform pre-remedial studies and investigations and post-remedial
monitoring and care.
"REPORTABLE EVENT" means any event described in Section
4043(c) of ERISA.
"REQUIREMENT OF LAW" means, as to any Person, the certificate
of incorporation and by-laws or other organizational or governing documents of
such Person, and all federal, state and local laws, rules and regulations,
including, without limitation, federal, state or local securities laws, ERISA
and Environmental Laws, and the disclosure requirements thereof and all orders,
judgments, decrees or other determinations of any Governmental Authority or
arbitrator, applicable to or binding
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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 any Person, any
of the principal executive officers of such Person.
"REVOLVING CREDIT BORROWING" means a borrowing consisting of
Revolving Credit Loans made on the same day by the Lenders ratably according to
their respective Revolving Credit Commitments.
"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 in the aggregate principal amount outstanding not to
exceed the amount set forth opposite such Lender's name on Schedule II under the
caption "Revolving Credit Commitment" or, if such Lender has entered into one or
more Assignments and Acceptances, set forth in the Register maintained by the
Agent pursuant to Section 10.7 as such Lender's "Revolving Credit Commitment",
as such amount may be reduced or modified pursuant to this Agreement.
"REVOLVING CREDIT LOAN" means a Loan made by a Lender to the
Borrower pursuant to Section 2.1.
"REVOLVING CREDIT NOTE" means a promissory note of the
Borrower payable to the order of any Lender in a principal amount equal to the
amount of such Lender's Revolving Credit Commitment as originally in effect, in
substantially the form of Exhibit A, evidencing the aggregate Indebtedness of
the Borrower to such Lender resulting from the Revolving Credit Loans made by
such Lender.
"SECURED PARTIES" means the Lender Parties and the Agent.
"SECURITIZATION DOCUMENTS" means each agreement, document and
instrument entered into by the Borrower, any Guarantor or Funding in connection
with the Receivables Securitization, including without limitation, the
Receivables Purchase Agreement executed by the Borrower and Funding and the
subordinated promissory note of Funding in favor of the Borrower made in
connection therewith.
"SETTLEMENT DATE" has the meaning assigned to it in Section
2.18.
"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
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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, limited liability company, or other business entity of
which an aggregate of more than 50% 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
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 Citicorp or such other Lender who shall
also be the Agent or who shall 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 2.2.
"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 (i) any noncash effects of adopting
the accounting principles described in FAS No. 87, FAS No. 88 and any subsequent
FAS promulgated by the Financial Accounting Standards Board addressing pensions,
(ii) all unamortized financing costs or unamortized debt discount and expense
and (iii) all intangibles and deferred charges other than for taxes, pensions
and cash escrow.
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"TAX AFFILIATE" means, as to any Person, (i) any Subsidiary of
such Person, and (ii) any Affiliate of such Person with which such Person filed,
files or is eligible to file consolidated, combined or unitary tax returns.
"TAX RETURN" has the meaning specified in Section 4.3.
"TAX SHARING AGREEMENT" means the agreement, dated as of April
12, 1991, between the Borrower and Holdings, as modified by the Contribution and
Assumption Agreement, dated as of July 26, 1994, between WHX and Holdings, as
such agreement may be further amended, supplemented or otherwise modified from
time to time.
"TAXES" has the meaning specified in Section 2.15(a).
"TERMINATION DATE" means the earlier of (i) May 3, 1999 and
(ii) the date of termination in whole of the Revolving Credit Commitments
pursuant to Section 2.5 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 Subsidiaries at such date, determined on a
consolidated basis in accordance with GAAP.
"TOTAL LIABILITIES" of any Person means, at any date, all
obligations which in accordance with GAAP would be included in determining total
liabilities as shown on the liabilities side of a consolidated balance sheet of
such Person and its Subsidiaries at such date.
"TRIGGERING CONDITION" means the occurrence of any of the
following: (i) the aggregate outstanding principal amount of the Swing Loans and
Revolving Credit Loans and the outstanding Letter of Credit Obligations exceeds
$50,000,000 for a period of five consecutive Business Days, (ii) the aggregate
outstanding principal amount of the Swing Loans and Revolving Credit Loans and
the outstanding Letter of Credit Obligations exceeds $70,000,000 on any Business
Day and (iii) there has occurred any Default or Event of Default.
"TRIGGERING CONDITION UNWIND" means the aggregate outstanding
principal amount of the Swing Loans and Revolving Credit Loans and outstanding
Letter of Credit Obligations is less than or equal to $25,000,000 for a period
of ten consecutive Business Days and no Default or Event of Default has occurred
and is continuing.
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"UCC" shall have the meaning assigned to it in the Borrower
Security Agreement.
"UNFUNDED PENSION LIABILITY" means, as to the Borrower at any
time, the aggregate amount, if any, of the sum of (i) 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, and (ii) for a period of five years following a
transaction reasonably likely to be covered by Section 4069 of ERISA, the
liabilities (whether or not accrued) that could be avoided by the Borrower, the
Borrower's Subsidiaries and all ERISA Affiliates as a result of such
transaction.
"UNIMAST" means Unimast Incorporated, an Ohio corporation
wholly owned on the Effective Date by WHX.
"USWA RIGHT OF FIRST REFUSAL" shall mean the right of first
refusal granted by Holdings and the Borrower pursuant to an agreement, dated as
of December 19, 1990, between Holdings, the Borrower and the United Steelworkers
of America, AFL-CIO-CLC and any agreements ancillary thereto or amendments,
renewals or modifications thereof.
"WELFARE BENEFIT PLAN" means an employee welfare benefit plan,
as defined in Section 3(1) of ERISA, which the Borrower or any of its
Subsidiaries maintains, contributes to, has contributed to within the six year
period preceding the Effective Date or has an obligation to contribute to on
behalf of their respective former or active employees (or their beneficiaries).
"WHEELING CONSTRUCTION" means Wheeling Construction Products,
Inc., a Delaware corporation wholly owned by Holdings.
"WHEELING-NISSHIN" means Wheeling-Nisshin, Inc., a Delaware
corporation, all the outstanding Stock and Stock Equivalents of which is owned
by Holdings and Nisshin Steel Co., Ltd.
"WHX" has the meaning specified in the Preliminary Statements.
"WITHDRAWAL LIABILITY" means, as to the Borrower, at any time,
the aggregate amount of the liabilities of the Borrower, the Borrower's
Subsidiaries or any ERISA Affiliate pursuant to Section 4201 of ERISA, and any
increase in contributions required to be made pursuant to Section 4243 of ERISA,
with respect to all Multiemployer Plans.
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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.
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
2.1. THE REVOLVING CREDIT LOANS. On the terms and subject to
the conditions contained in this Agreement, each Lender severally agrees to make
Revolving Credit Loans to the Borrower from time to time on any Business Day
during the period from the Effective Date 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 2.14(c), shall any Lender be obligated to make a Revolving Credit Loan
in excess of such Lender's Ratable Portion of the Available Credit. In addition,
each Lender agrees to make Revolving Credit Loans in accordance with Section
2.18. Within the limits of each Lender's Revolving Credit Commitment, amounts
prepaid pursuant to Section 2.7(c) may be reborrowed under this Section 2.1. The
Revolving Credit Loans of each Lender shall be evidenced by a Revolving Credit
Note to the order of such Lender.
2.2. 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 in an
aggregate amount not to exceed at any time outstanding, except pursuant to
Section 2.14(c), the
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lesser of (a) the Swing Loan Available Credit or (b) the excess of the Swing
Bank's Revolving Credit Commitment over the sum of the aggregate outstanding
principal amount of the Swing Loans and Revolving Credit Loans made by it 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.
2.3. MAKING THE LOANS. (a) Except as provided for in Sections
2.4(a), 2.9(b), 2.17(h) and 2.18, each Revolving Credit Borrowing shall be made
on notice, given by the Borrower to the Agent (x) in the case of a Revolving
Credit Borrowing requested to refinance a Swing Loan, not later than 12:00 P.M.
(New York City time) on one Business Day prior to the date of the proposed
Revolving Credit Borrowing and (y) in the case of a Revolving Credit Borrowing
requested as a direct advance to the Borrower, not later than 11:00 A.M. (New
York City time) on the date of the proposed Revolving Credit Borrowing. Each
such notice shall be executed by an officer of the Borrower indicated on
Schedule 2.3 or such other persons as agreed to, in writing, by the Agent (a
"NOTICE OF BORROWING"), which notice shall be in substantially the form of
Exhibit B, specifying therein (i) the date of such proposed Borrowing, (ii) the
aggregate amount of such proposed Borrowing and (iii) a statement that the
proposed Borrowing does not exceed the Available Credit. The Revolving Credit
Loans shall be made as Base Rate Loans.
(b) Each Swing Loan Borrowing shall be made on notice, given
by the Borrower to the Swing Bank not later than 12:00 P.M. (New York City time)
on the Business Day of the proposed Swing Loan Borrowing. All Swing Loans 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. Each Lender shall, (x) in the case of
a Revolving Credit Borrowing requested to refinance a Swing Loan, before 12:00
P.M. (New York City time) and (y) in the case of a Revolving Credit Loan
requested as a direct advance to the Borrower, before 2:00 P.M. (New York City
time), in each case on the date of the proposed Borrowing, make available for
the account of its Applicable Lending Office to the Agent's Account, in
immediately available funds, such Lender's Ratable Portion of such proposed
Revolving Credit Borrowing. After the Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article III, the Agent
will promptly make such funds available to the Borrower at the Agent's aforesaid
address. In determining whether such applicable conditions have been satisfied,
the Agent shall be entitled to rely on the most recent Borrowing Base
Certificate received from the Borrower.
(d) Each Revolving Credit Borrowing shall be in an aggregate
amount of not less than $100,000. Each Swing Loan shall be in the amount of not
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less than $100,000 unless a lower amount is permitted by the Swing Bank in its
sole discretion from time to time.
(e) Each Notice of Borrowing shall be irrevocable and binding
on the Borrower.
(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 of the proposed Revolving Credit Borrowing available to the
Agent on the date of such Borrowing in accordance with this Section 2.3 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 portion available to the Agent, such Lender and the
Borrower severally agree to repay to the Agent forthwith on the next Business
Day following the day on which the Lender does not make such portion available
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 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 Loan as part of such 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 Loan to be made by
it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Loan on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Loan to be made by such other Lender on the date of any Borrowing.
2.4. FEES. (a) The Borrower agrees to pay to the Agent for the
benefit of each Lender a commitment fee (the "COMMITMENT FEE") on the daily
unused portion of such Lender's Revolving Credit Commitment from the date hereof
until the Termination Date at the rate of 1/2 of 1% per annum, payable in
arrears on (i) the first day of each month during the term of such Lender's
Revolving Credit Commitment and (ii) the Termination Date. If the Borrower fails
to pay (either from the proceeds of a Borrowing or otherwise) any Commitment Fee
when due, such Commitment Fee shall immediately constitute, without necessity of
further act or evidence, a Revolving Credit Loan to the Borrower. All Revolving
Credit Loans made pursuant to this Section 2.4 shall be made as Base Rate Loans.
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(b) The Borrower has agreed to pay to Citibank additional
fees, the amount and dates of payment of which are embodied in a separate
agreement by and between the Borrower and Citibank dated September 18, 1995.
2.5. REDUCTION AND TERMINATION OF THE REVOLVING CREDIT
COMMITMENTS. The Borrower may, upon at least three Business Days' prior notice
to the Agent, terminate in whole or reduce ratably in part the unused portions
of the respective Revolving Credit Commitments of the Lenders; PROVIDED,
HOWEVER, that each partial reduction shall be in the aggregate amount of not
less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof.
2.6. REPAYMENT. The Borrower shall repay the entire unpaid
principal amount of the Loans on the Termination Date.
2.7. PREPAYMENTS. (a) The Borrower shall have no right to
prepay the principal amount of any Revolving Credit Loan or any Swing Loan other
than as provided in this Section 2.7.
(b) The Borrower may at any time prepay the outstanding
principal amount of the Swing Loans in whole or ratably in part.
(c) (i) The Borrower may at any time prepay the outstanding
principal amount of the Loans in whole or ratably in part with the proceeds of
Collateral.
(ii) The Borrower may, upon at least one Business Day's prior
notice to the Agent stating the proposed date of the prepayment, prepay the
outstanding principal amount of the Loans in whole (together with accrued
interest to the date of such prepayment) or ratably in part. 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 each such
prepayment.
(iii) The Borrower shall, on each Business Day, prepay an
aggregate principal amount of the Revolving Credit Loans comprising part of the
same Borrowing and Swing Loans equal to the amount by which (A) (I) the sum of
the aggregate principal amount of Revolving Credit Loans, Letter of Credit
Obligations and Swing Loans then outstanding MINUS (II) the aggregate amount
then on deposit in the Cash Collateral Account and the L/C Cash Collateral
Account exceeds (B) the lesser of the Revolving Credit Commitments and the
Borrowing Base.
(iv) Any prepayment made pursuant to this Section 2.7(c) shall
be applied first to the Swing Loans outstanding and, if no Swing Loans are
outstanding, then, to the Revolving Credit Loans outstanding. If (A) the only
Loans outstanding are Eurodollar Rate Loans, (B) there are no Letter of Credit
Obligations immediately
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due and payable, (C) the application of such immediately available funds will
cause the Borrower to incur an obligation under Section 10.4 and (D) there is no
Default or Event of Default then continuing, then such prepayment shall be
deposited into the Cash Collateral Account and shall be retained therein until
one of the conditions set forth in clauses (A) through (D) are no longer met, in
which case such funds shall be applied as provided in this Section 2.7(c);
PROVIDED, HOWEVER, that at any time the only condition not met is the condition
specified in clause (B), then such funds shall be applied to fund the L/C Cash
Collateral Account.
(d) After the occurrence of a Default, an Event of Default or
a Triggering Condition and until such Default or Event of Default has been cured
or waived or the occurrence of a Triggering Condition Unwind, all immediately
available funds in the Concentration 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, and next to the other Obligations (other than any Letter of Credit
Obligations), as more fully described in Section 5 of the Cash Collateral
Account Agreement. Thereafter, the Borrower may direct the disposition of any
funds remaining in the Concentration Account and the Investment Account;
PROVIDED that, if a Default or an Event of Default shall have occurred and be
continuing, then such funds in the Concentration Account and the Investment
Account shall be used to cash collateralize the Letter of Credit Obligations,
and thereafter, the Borrower shall direct the disposition of such remaining
funds.
(e) All proceeds of Collateral received by the Secured Parties
after the giving of notice to the Borrower pursuant to clause (i) or (ii) of the
first sentence of Section 8.2 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 repay any Swing Loans then outstanding together with
accrued interest thereon, and if no Swing Loans or accrued interest are
outstanding, ratably, to repay all other Loans outstanding together with accrued
interest thereon, and if no such Loans or accrued interest are outstanding, then
to repay the Secured Parties, ratably, in respect of all other Obligations
hereunder.
2.8. CONVERSION/CONTINUATION OPTION. The Borrower may elect
(i) at any time to convert Base Rate Loans or any portion thereof to Eurodollar
Rate Loans or (ii) at the end of any Interest Period with respect thereto, to
convert Eurodollar Rate Loans or any portion thereof into Base Rate Loans, or to
continue such Eurodollar Rate Loans or any portion thereof for an additional
Interest Period; 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 D hereto (a
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"NOTICE OF CONVERSION OR CONTINUATION") and shall be made by giving the Agent at
least three Business Days' prior written notice thereof specifying (A) the
amount and type of conversion or continuation, and (B) 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 from a Base 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 2.8, 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
Loans, or on any date the aggregate unpaid principal amount of Eurodollar Rate
Loans comprising any Borrowing is reduced, by payment or prepayment or
otherwise, to less than $5,000,000, then, upon the expiration of the Interest
Period therefor, such Loans will be automatically converted to Base Rate Loans.
Each Notice of Conversion or Continuation shall be irrevocable.
2.9. INTEREST. (a) The Borrower shall pay interest on the
unpaid principal amount of each Loan from the date thereof until the principal
amount thereof shall be paid in full, at the following rates per annum:
(i) BASE RATE LOANS. For Base Rate Loans, at a rate per annum
equal at all times to the Applicable Margin PLUS the Base Rate in
effect from time to time, payable in arrears monthly on the first day
of each month and on the Termination Date; PROVIDED, HOWEVER, that
during the continuance of an Event of Default, Base Rate Loans shall
bear interest, payable on demand, at a rate per annum equal at all
times to 2% per annum above the Base Rate in effect from time to time
plus the Applicable Margin.
(ii) EURODOLLAR RATE LOANS. For Eurodollar Rate Loans, at a
rate per annum equal at all times to the sum of the Eurodollar Rate for
the applicable Interest Period for such Eurodollar Rate Loan PLUS the
Applicable Margin in effect from time to time, payable in arrears on
each day during such Interest Period which occurs on the first day of a
month and 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% above the Eurodollar Rate for such Eurodollar Rate
Loan plus the Applicable Margin.
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(b) If the Borrower fails to pay any interest when due, such
interest shall immediately constitute, without necessity of further act or
evidence, a Revolving Credit Loan to the Borrower.
2.10. INTEREST RATE DETERMINATION. (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.
(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 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 Rate Loan 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.
2.11. INCREASED COSTS. If, due to either (i) the introduction
of or any change in or in the interpretation of any law or regulation (other
than any change by way of imposition or increase of reserve requirements
included in determining the Eurodollar Rate Reserve Percentage) or (ii)
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender Party of agreeing to make or making,
funding or maintaining any Eurodollar Rate Loans or of agreeing to issue or of
issuing or maintaining Letters of Credit, then the Borrower shall from time to
time, upon demand by such Lender Party (with a copy of such demand to the
Agent), pay to the Agent for the account of such Lender Party additional amounts
sufficient to compensate such Lender Party for such increased cost. A
certificate as to the amount of such increased cost, submitted to the Borrower
and the Agent by such Lender Party, 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 Party notifies the Borrower of any increased
cost pursuant to the foregoing provisions of this Section 2.11, the Borrower may
convert all Eurodollar Rate Loans of all Lenders then outstanding into Base Rate
Loans, in accordance with Section 2.8 and,
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additionally, reimburse such Lender Party for such increased cost in accordance
with this Section 2.11.
2.12. ILLEGALITY. Notwithstanding any other provision of this
Agreement, if the introduction of, or any change in, or any change in the
interpretation of, any law or regulation shall make it unlawful, or any central
bank or other Governmental Authority shall 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, then, on notice thereof and
demand therefor by such Lender to the Borrower through the Agent, (i) the
obligation of such Lender to make or to continue Eurodollar Rate Loans and to
convert Base Rate Loans into Eurodollar Rate Loans shall terminate and (ii) the
Borrower shall forthwith prepay in full all Eurodollar Rate Loans of such Lender
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.
2.13. CAPITAL ADEQUACY. If (i) the introduction of, or any
change in or in the interpretation of, any law or regulation, (ii) the
compliance with any law or regulation, or (iii) compliance with any guideline or
request from any central bank or other Governmental Authority (whether or not
having the force of law), affects or would affect the amount of capital required
or expected to be maintained by any Lender Party or any corporation controlling
any Lender Party and such Lender Party reasonably determines that such amount is
based upon the existence of such Lender Party's Commitment and Loans and other
commitments and loans of this type including, without limitation, such Lender
Party's commitments in respect of Letters of Credit (or similar contingent
obligations), then, upon demand by such Lender Party (with a copy of such demand
to the Agent), the Borrower shall pay to the Agent for the account of such
Lender Party, from time to time as specified by such Lender Party, additional
amounts sufficient to compensate such Lender Party in the light of such
circumstances, to the extent that such Lender Party reasonably determines such
increase in capital to be allocable to the existence of such Lender Party's
Commitment or Loans and such Lender Party's agreements herein with respect to
the issuance or maintenance of Letters of Credit. A certificate as to such
amounts submitted to the Borrower and the Agent by such Lender Party shall be
conclusive and binding for all purposes absent manifest error.
2.14. PAYMENTS AND COMPUTATIONS. (a) The Borrower shall make
each payment hereunder and under the Revolving Credit Notes not later than 12:00
P.M. (New York City time) (except for payments made pursuant to Section 2.7(e)
which shall be credited no later than when received by the Agent) 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, on
the Business Day of its receipt thereof, cause to be distributed like funds
relating to the payment of
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principal of or interest on the Loans (other than Swing Loans) or fees with
respect to any Loans (other than amounts payable pursuant to Section 2.11, 2.12,
2.13, 2.15, or 2.17(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 Party to such Lender Party 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 of the Swing Loans
pursuant to Section 2.7(e) need not be distributed by the Agent prior to the
Settlement Date referred to in Section 2.18. With respect to the Swing Loans,
the Agent will promptly thereafter cause to be distributed like funds relating
to the payment of principal of or interest on the Swing Loans to the Swing Bank
for the account of its Applicable Lending Office. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 10.7, from and after the effective date of such
Assignment and Acceptance, the Agent shall make all payments hereunder and under
the Revolving Credit Notes in respect of the interest assigned thereby to the
Lender Party assignee thereunder, and the parties to such Assignment and
Acceptance shall make all appropriate adjustments in such payments for periods
prior to such effective date directly between themselves. Payment received by
the Agent after 12:00 P.M. (New York City time) shall be deemed to be received
on the next Business Day (except for payments made pursuant to Section 2.7(e)
which shall be credited no later than when received by the Agent). Prior to the
distribution of any funds to any Lender Party pursuant to this Section 2.14, the
Agent shall use its best efforts to notify such Lender Party of such
distribution.
(b) Upon the occurrence of a Default, an Event of Default or a
Triggering Condition, all amounts on deposit in each of the Blocked Account and
the Cash Collateral Account shall be applied by the Agent against the
outstanding balance of the Obligations in accordance with Section 2.7(d);
PROVIDED, HOWEVER, that in no event shall any 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 Party, if and
to the extent payment owed to such Lender Party is not made when due hereunder,
to charge from time to time against any or all of the Borrower's accounts with
such Lender Party 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 Lender Parties hereby authorize the Swing Bank to pay directly any amount
due hereunder and to treat such payment as a Swing Loan.
(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
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fees are payable. Each determination by the Agent of an interest rate hereunder
shall be conclusive and binding for all purposes, absent manifest error.
(e) Whenever any payment hereunder or under the 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 any Lender
Party hereunder 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 such Lender Party on such due date an amount equal to the
amount then due such Lender Party. If and to the extent the Borrower shall not
have so made such payment in full to the Agent, each such Lender Party shall
repay to the Agent forthwith on demand such amount distributed to such Lender
Party together with interest thereon, for each day from the date such amount is
distributed to such Lender Party until the date such Lender Party repays such
amount to the Agent, at the Federal Funds Rate.
2.15. TAXES. (a) Any and all payments by the Borrower
hereunder, under the Revolving Credit Notes and under the Letter of Credit
Reimbursement Agreements shall be made, in accordance with Section 2.14, 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 Party 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 Party or the Agent (as the case
may be) is organized or any political subdivision thereof, (ii) in the case of
each Lender Party, taxes (including, but not limited to, the Branch Profits Tax
under Section 884 of the Code) measured by its net income, and franchise taxes
imposed on it, by the jurisdiction of such Lender Party's Applicable Lending
Office or any political subdivision thereof and (iii) in the case of each Lender
Party organized under the laws of a jurisdiction outside the United States,
United States federal withholding tax payable with respect to payments by the
Borrower which would not have been imposed had such Lender Party, to the extent
then required thereunder, delivered to the Borrower and the Agent the forms
prescribed by Section 2.15(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 Party or the Agent, (i)
the sum payable shall be increased as may be necessary so that after making all
required deductions (including, without
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limitation, deductions applicable to additional sums payable under this Section
2.15) such Lender Party 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, (iii) the Borrower shall pay the full
amount deducted to the relevant taxing authority or other authority in
accordance with applicable law, and (iv) the Borrower shall deliver to the Agent
evidence of such payment to the relevant taxation or other authority.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
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 from
the execution, delivery or registration of, or otherwise with respect to, any
Loan Document (hereinafter referred to as "OTHER TAXES").
(c) The Borrower agrees to indemnify each Lender Party 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 2.15) imposed on or paid by such Lender Party 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.
This indemnification shall be made within 30 days from the date such Lender
Party or the Agent (as the case may be) makes written demand therefor. Any such
demand shall show in reasonable detail the amount payable and the calculations
used to determine, in good faith, such amount and shall provide reasonably
acceptable proof of payment of such Tax or Other Tax.
(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. If no Taxes are payable in respect of any payment hereunder
made (i) by or on behalf of the Borrower other than by a "UNITED STATES PERSON"
within the meaning of Section 7701(a)(30) of the Code or (ii) out of funds from
an account outside the United States, the Borrower will furnish to the Agent a
certificate from each appropriate taxing authority, or an opinion of counsel
acceptable to the Agent, in either case stating that such payment is exempt from
or not subject to Taxes. For purposes of this subsection (d) and subsection (f),
the term "UNITED STATES" shall have the meaning specified in Section 7701 of the
Code.
(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 2.15 shall survive the payment in full of principal
and interest hereunder and the termination of the Revolving Credit Commitments.
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(f) Each Lender Party organized under the laws of a
jurisdiction outside the United States, on or prior to the Effective Date in the
case of each Lender Party listed on the signature pages hereof, and on the date
of the Assignment and Acceptance pursuant to which it becomes a Lender Party in
the case of each other Lender Party, and from time to time thereafter if
reasonably requested by the Borrower or the Agent (unless such Lender Party is
unable to do so by reason of a change in law (including, without limitation, any
statute, treaty, ruling, determination or regulation) occurring subsequent to
the Effective Date or date of Assignment and Acceptance, as the case may be),
each Lender Party organized under the laws of a jurisdiction outside the United
States shall provide the Agent and the Borrower with two original IRS Forms 4224
or 1001, as appropriate, or other applicable form, certificate or document
prescribed by the IRS, certifying that such Lender Party is exempt from or
entitled to a reduced rate of United States withholding tax with respect to all
payments to be made to such Lender Party hereunder, under any Revolving Credit
Note and under any Letter of Credit Reimbursement Agreement. If any form or
document referred to in this subsection (f) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service Form 1001 or
4224 that the Lender Party reasonably considers to be confidential, the Lender
Party shall give notice thereof to the Borrower and shall not be obligated to
include in such form or document such confidential information. Unless the
Borrower and the Agent have received forms or other documents satisfactory to
them indicating that payments hereunder, under any Revolving Credit Note or
under any Letter of Credit Reimbursement Agreement are not subject to United
States withholding tax, the Borrower or the Agent shall, in the case of payments
to or for any Lender Party organized under the laws of a jurisdiction outside
the United States, (i) withhold taxes from 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
Party such payment net of any taxes withheld; PROVIDED, HOWEVER, that should a
Lender Party become subject to Taxes because of its failure to deliver a form
required hereunder, the Borrower shall take such steps as such Lender Party
shall reasonably request to assist such Lender Party to recover such Taxes.
2.16. SHARING OF PAYMENTS, ETC. If any Lender Party shall
obtain any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) on account of the Loans (other than Swing Loans)
made by it (other than pursuant to Section 2.7, 2.11, 2.12, 2.13, 2.14 or
2.17(h)) in excess of its Ratable Portion of payments on account of the Loans
(other than Swing Loans) obtained by all the Lender Parties, such Lender Party
shall forthwith purchase from the other Lender Parties such participations in
their Loans (other than Swing Loans) as shall be necessary to cause such
purchasing Lender Party 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 Party, such purchase
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from each Lender Party shall be rescinded and such Lender Party shall repay to
the purchasing Lender Party the purchase price to the extent of such recovery
together with an amount equal to such Lender Party's ratable share (according to
the proportion of (i) the amount of such Lender Party's required repayment to
(ii) the total amount so recovered from the purchasing Lender Party) of any
interest or other amount paid or payable by the purchasing Lender Party in
respect of the total amount so recovered. The Borrower agrees that any Lender
Party so purchasing a participation from another Lender Party pursuant to this
Section 2.16 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 Party were the direct
creditor of the Borrower in the amount of such participation.
2.17. LETTER OF CREDIT FACILITY. (a) On the terms and subject
to the conditions contained in this Agreement, each Issuer agrees 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 on 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 shall purport by its terms to enjoin or
restrain such Issuer from issuing such Letter of Credit or any
Requirement of Law applicable to such Issuer or any request or
directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over such Issuer shall
prohibit, or request that such Issuer refrain from, the issuance of
letters of credit generally or such Letter of Credit in particular or
shall impose upon such Issuer with respect to such Letter of Credit any
restriction or reserve or capital requirement (for which such Issuer is
not otherwise compensated) not in effect on the date hereof or result
in any unreimbursed loss, cost or expense which was not applicable, in
effect or known to such Issuer as of the date hereof and which such
Issuer in good faith deems material to it;
(ii) such Issuer shall have received written notice from any
Lender Party 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;
(iii) the amount of the Letter of Credit requested exceeds the
Available Credit or, upon the issuance of the requested Letter of
Credit, the Letter of Credit Undrawn Amounts would exceed $35,000,000;
or
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(iv) fees due in connection with a requested issuance have not
been paid.
None of the Lender Parties (other than the Issuers) 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
one year after the date of issuance thereof, nor shall the expiration
date of any Letter of Credit fall after the date that is 60 days prior
to the Termination Date; except that any such Letter of Credit may also
be on the following terms: such Letter of Credit shall have an initial
one year term which shall be automatically extended for successive
one-year terms (but in no case may such Letter of Credit be extended
such that its expiration date falls after the date that is 60 days
prior to the Termination Date); PROVIDED, HOWEVER, that such a Letter
of Credit shall not be automatically extended if either (A) the
beneficiary of such Letter of Credit is sent a notice that an Event of
Default shall have occurred and be continuing at any time prior to the
date that is 30 days prior to the date of such extension or (B) the
Borrower requests in writing no later than 40 days prior to the date of
such extension that the term of such Letter of Credit shall not be
extended; or
(ii) any Issuer issue any Letter of Credit for the purpose of
supporting the issuance of any letter of credit by any other Person
except with the prior written consent of the Agent.
(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 thereof) in the Letter of Credit Obligations arising with respect
thereto, the Borrower shall have delivered to the Issuer thereof a letter of
credit reimbursement agreement, in a form satisfactory to the Issuer (as the
same as may be amended or otherwise modified, 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 or otherwise reasonably required by the
Issuer. 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 thereof and the Agent at least two Business
Days' prior written notice of its requested issuance of a Letter of Credit in
substantially the form of Exhibit C (a "LETTER OF CREDIT REQUEST"). Such notice
shall be irrevocable and shall specify the stated amount of the Letter of Credit
requested, which stated amount shall not be less than $50,000, the date of
issuance of such requested Letter of Credit
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(which day shall be a Business Day), the date on which such Letter of Credit is
to expire, and the Person for whose benefit the requested Letter of Credit is to
be issued. 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 or prior to the last
Business Day on which notice can be given under the immediately preceding
sentence. Prior to the close of business on the Business Day following the
Business Day on which the Agent first receives such notice, the Agent shall
confirm to the Issuer of the requested Letter of Credit whether the applicable
conditions in Article III are satisfied as of such date.
(e) Subject to the terms and conditions of this Section 2.17
and provided that the applicable conditions set forth in Article III have been
satisfied, such Issuer shall, on the requested date, issue a Letter of Credit on
behalf of the Borrower in accordance with the Issuer's usual and customary
business practices.
(f) Immediately upon the issuance by an Issuer of a Letter of
Credit in accordance with the terms and conditions of this Agreement, such
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 such 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,
no Issuer shall 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 any Issuer under or in connection with any Letter of Credit, if taken
or omitted in the absence of gross negligence or willful misconduct, shall not
put such Issuer under any resulting liability to any Lender, or diminish the
Agent's or any Lender's obligations hereunder to the Issuer.
(h) In the event that any Issuer makes any payment under any
Letter of Credit and the Borrower shall not have repaid such amount to such
Issuer pursuant to Section 2.17(l), such Issuer shall promptly notify the Agent,
which shall promptly notify each Lender of such failure, and each Lender shall
promptly and unconditionally pay to the Agent for the account of such 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); PROVIDED, HOWEVER, 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
failure, and the Swing Bank shall pay to the
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Agent for the account of such Issuer the amount of such payment in Dollars and
in same day funds. This Revolving Credit Loan shall be made, or the Swing Loan
may be made, notwithstanding the Borrower's failure to satisfy the conditions
set forth in Section 3.3. 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 such 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 such 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 such Issuer, at
the Federal Funds Rate. The failure of any Lender to make available to the Agent
for the account of such 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 such 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
any Issuer such other Lender's Ratable Portion of any such payment.
(i) Whenever any Issuer receives a payment of a Reimbursement
Obligation as to which the Agent has received for the account of such Issuer any
payment from a Lender pursuant to Section 2.17(h) (and such amount has been paid
to such Issuer), the Issuer shall pay to the Agent such amount so received 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 Lender's Ratable
Portion thereof.
(j) Upon the request of any Lender, each Issuer shall furnish
to such Lender copies of any Letter of Credit Reimbursement Agreement to which
such 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 each 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 2.17(g)),
including, without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the Collateral 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
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Credit, any transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), the Agent, any Lender Party 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.
(l) The Borrower agrees to pay to each Issuer the amount of
all Reimbursement Obligations owing to such Issuer under any Letter of Credit
immediately when due, irrespective of any claim, set-off, defense or other right
which the Borrower may have at any time against such Issuer or any other Person.
The Borrower agrees to reimburse each Issuer for all amounts which such Issuer
pays under such Letter of Credit no later than the time specified in such Letter
of Credit Reimbursement Agreement. If the Borrower does not pay (either from the
proceeds of a Borrowing or otherwise) any such Reimbursement Obligation when
due, such Reimbursement Obligation shall immediately constitute, without
necessity of further act or evidence, a Loan made by the relevant Issuer payable
on demand or, to the extent the Agent has received any payments from Lenders for
the account of such Issuer pursuant to Section 2.17(h), Revolving Credit Loans
made by such Lenders (which, in the case of each Lender, shall be to the extent
of such Lender's Ratable Portion of such Reimbursement Obligation) to the
Borrower, in an aggregate principal amount equal to such Reimbursement
Obligation remaining unpaid, or, to the extent the Agent has received any
payments from the Swing Bank for the account of such Issuer pursuant to Section
2.17(h), Swing Loans made by the Swing Bank, computed from the date on which
such Reimbursement Obligation arose to the date of repayment in full thereof at
the rate of interest applicable to past due Revolving Credit Loans at a rate
based on the Base Rate during such period. If any payment made by or on behalf
of the Borrower and received by any Issuer with respect to any Letter of Credit
is rescinded or must otherwise be returned by such Issuer for any reason, each
Lender shall, upon notice by such Issuer, forthwith pay over to such Issuer an
amount equal to such Lender's Ratable Portion of the amount which must be so
returned by such Issuer or the Swing Bank may, upon notice to the Issuer,
forthwith pay over to such Issuer an amount equal to the amount which must be
returned by such Issuer.
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(m) The Borrower agrees to pay the following amounts with
respect to Letters of Credit issued for it:
(i) to the Agent, for the benefit of each Lender who has
purchased or has been deemed to have purchased participations in the
Letters of Credit, with respect to each standby Letter of Credit or
documentary Letter of Credit, an administrative fee equal to a rate per
annum equal at all times to the Applicable Margin for Letter of Credit
Fees multiplied by the average daily maximum amount available from time
to time to be drawn under such Letter of Credit, payable monthly in
arrears and on the termination of such Letter of Credit, and, in each
case, calculated on the basis of a 360-day year and the actual number
of days elapsed; PROVIDED, HOWEVER, that, during the continuance of an
Event of Default, such administrative fee shall increase by 2% per
annum and shall be payable on demand;
(ii) to each Issuer, with respect to each standby Letter of
Credit or documentary Letter of Credit issued by such Issuer, 0.375%
per annum of the average daily maximum amount available from time to
time to be drawn under such Letter of Credit, payable monthly in
arrears and on the termination of such Letter of Credit, and, in each
case calculated on the basis of a 360-day year and the actual number of
days elapsed; and
(iii) to each Issuer, with respect to the issuance, amendment
or transfer of each Letter of Credit and each drawing made thereunder,
issuance, documentary, processing and other charges in accordance with
such Issuer's standard schedule for such charges in effect at the time
of issuance, amendment, transfer or drawing, as the case may be.
2.18. 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 1:00 P.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 to the Borrower, notwithstanding any
failure by the Borrower to satisfy the conditions in Section 3.3. 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 2.9 and 2.14.
2.19. THE BLOCKED ACCOUNT. (a) The Borrower has established
and shall maintain, pursuant to the Blocked Account Letter, an account with PNC
Bank,
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N.A., account number 0002881016, in the name and under the sole dominion and
control of the Agent (the "BLOCKED ACCOUNT").
(b) As collateral security for the Obligations, the Borrower
hereby transfers, assigns and pledges to the Agent and grants to the Agent a
Lien on and security interest in, for the benefit of the Secured Parties on a
first priority basis, all of the right, title and interest of the Borrower in
the Blocked Account and all cash, deposits, Cash Equivalents and other
instruments held in the Blocked Account, as security for the Obligations. The
Agent shall possess sole dominion and control over the Blocked Account as
provided in the Blocked Account Letter. Except as provided in Section 2.7(d) and
the Blocked Account Letter, as long as any of the Obligations remain unpaid or
any of the Commitments are outstanding, the Borrower agrees that neither the
Borrower nor any Person or entity claiming by, through or under the Borrower
shall have any control over the use of, or any right to effect a withdrawal
from, the Blocked Account. All amounts in the Blocked Account shall be applied
to the Obligations by the Agent as specified in Section 2.7(d).
(c) Except for the funds held in the bank accounts otherwise
permitted by Section 7.17, 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 pursuant to
the Receivables Securitization, including, without limitation, all intercompany
receivables and (ii) proceeds of all other Collateral to be deposited on the
date of receipt thereof or the next Business Day following receipt thereof in
the Blocked Account.
ARTICLE III
CONDITIONS PRECEDENT
3.1. CONDITIONS PRECEDENT TO THE EFFECTIVE DATE. The
effectiveness of this Agreement is subject to satisfaction of the conditions
precedent that the Agent shall have received, on or before the Effective Date,
the following, each dated as of the Effective Date unless otherwise indicated,
in form and substance satisfactory to the Agent and (except for the Revolving
Credit Notes) in sufficient copies for each Lender Party:
(a) The Revolving Credit Notes to the order of each Lender,
respectively.
(b) Certified copies of (i) the resolutions of the Board of
Directors of each Loan Party approving each Loan Document to which it is a
party, and (ii) all documents evidencing other necessary corporate action and
required governmental and third party approvals, licenses and consents to the
transactions contemplated hereby.
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(c) A copy of the articles or certificate of incorporation of
each Loan Party and of each of the Borrower's Subsidiaries which is not a Loan
Party certified as of a recent date by the Secretary of State of the state of
incorporation of such Loan Party or Subsidiary, together with certificates of
such official attesting to the good standing of each such Loan Party and
Subsidiary, and a copy of the certificate of incorporation and the By-Laws of
each Loan Party and of each of the Borrower's Subsidiaries certified as of the
Effective Date by the Secretary or an Assistant Secretary of each Loan Party or
Subsidiary.
(d) A certificate of the Secretary or an Assistant Secretary
of each Loan Party certifying the names and true signatures of each officer of
such Loan Party who have been authorized to execute and deliver any Loan
Document or other document required to be executed and delivered hereunder by or
on behalf of such Loan Party.
(e) Amendment No. 3 to the Borrower Security Agreement, duly
executed by the Borrower, together with:
(A) acknowledgment copies of proper termination
statements (Form UCC-3 or a comparable form), duly filed on or before
the Effective Date under the Uniform Commercial Code of the States
listed on Schedule 3.1 and all other jurisdictions that the Agent may
deem necessary or desirable in order to terminate the Liens (other than
the Liens created by the Borrower Security Agreement) covering the
Collateral described in the Borrower Security Agreement,
(B) acknowledgment copies of proper financing
statements (Form UCC-1), duly filed on or before the Effective Date
under the Uniform Commercial Code of all jurisdictions that may be
necessary or that the Agent may deem desirable in order to perfect and
protect the Liens created by the Borrower Security Agreement, covering
the Collateral described in the Borrower Security Agreement,
(C) evidence of the insurance required by the terms
of the Borrower Security Agreement,
(D) copies of the Assigned Agreements, if any,
referred to in the Borrower Security Agreement, together with a consent
to such assignment, duly executed by each party to such Assigned
Agreements other than the Borrower,
(E) the Blocked Account Letters referred to therein,
duly executed by PNC Bank, and
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(F) evidence that all other action that the Agent may
deem necessary or desirable in order to perfect and protect the Liens
created under the Borrower Security Agreement has been taken or will be
taken in accordance with the terms of the Loan Documents.
(f) Amendment No. 1 to the Borrower Pledge Agreement, duly
executed by the Borrower, together with:
(A) certificates representing the Pledged Shares
referred to therein accompanied by undated stock powers executed in
blank and instruments, if any, evidencing the Pledged Debt referred to
therein indorsed in blank, and
(B) evidence that all other action that the Agent may
deem necessary or desirable in order to perfect and protect the Liens
created under the Borrower Pledge Agreement has been taken or will be
taken in accordance with the terms of the Loan Documents.
(g) The Holdings Guaranty, duly executed by Holdings.
(h) The Holdings Pledge Agreement, duly executed by Holdings,
together with:
(A) certificates representing the Pledged Shares
referred to therein accompanied by undated stock powers executed in
blank; and
(B) evidence that all other action that the Agent may
deem necessary or desirable in order to perfect and protect the Liens
created under the Holdings Pledge Agreement has been taken or will be
taken in accordance with the terms of the Loan Documents.
(i) The Guaranty, duly executed by the Guarantors.
(j) The Guarantor Security Agreement, duly executed by each
Guarantor, together with:
(A) acknowledgment copies of proper termination
statements (Form UCC-3 or a comparable form), duly filed on or before
the Effective Date under the Uniform Commercial Code of the States
listed on Schedule 3.1 and all other jurisdictions that the Agent may
deem necessary or desirable in order to terminate the Liens (other than
the Liens created by the Guarantor Security Agreement) covering the
Collateral described in the Guarantor Security Agreement,
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(B) acknowledgment copies of proper financing
statements (Form UCC-1), duly filed on or before the Effective Date
under the Uniform Commercial Code of all jurisdictions that may be
necessary or that the Agent may deem desirable in order to perfect and
protect the Liens created by the Guarantor Security Agreement, covering
the Collateral described in the Guarantor Security Agreement,
(C) evidence of the completion of all other
recordings and filings of or with respect to the Guarantor Security
Agreement that the Agent may deem necessary or appropriate in order to
perfect and protect the Liens created thereby,
(D) evidence of the insurance required by the terms
of the Guarantor Security Agreement,
(E) copies of the Assigned Agreements, if any,
referred to in the Guarantor Security Agreement, together with a
consent to such assignment, duly executed by each party to such
Assigned Agreements other than the Borrower,
(F) the Blocked Account Letters referred to therein,
duly executed by PNC Bank, and
(G) evidence that all other action that the Agent may
deem necessary or desirable in order to perfect and protect the Liens
created under the Guarantor Security Agreement has been taken or will
be taken in accordance with the terms of the Loan Documents.
(k) The Keepwell Agreement, duly executed by WHX and Holdings.
(l) The Holdings Intercreditor Agreement, duly executed by
WHX, Holdings and the Borrower.
(m) The Cash Collateral Account Agreement, duly executed by
the Borrower.
(n) A favorable opinion of (i) Olshan, Grundman, Frome &
Rosenzweig LLP, outside general counsel to Holdings, the Borrower and the
Guarantors, and (ii) Kirkpatrick and Lockhart LLP, special counsel to the
Borrower in Pennsylvania, Ohio and West Virginia, each in substantially the form
of Exhibit O-1 or O-2, respectively, and as to such other matters as any Lender
through the Agent may reasonably request.
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(o) A certificate, signed by a Responsible Officer of the
Borrower, stating that the conditions specified in Sections 3.2(a), (b) and (f)
and 3.3(a)(i) have been met.
(p) A certificate of the chief financial officer of the
Borrower in form and substance satisfactory to the Lender Parties, attesting to
(i) the Solvency of each Loan Party after giving effect to the transactions
contemplated hereby and (ii) the amount of "Adjusted Net Assets" (as defined in
the Guaranty) of each Guarantor on the Effective Date.
(q) Such additional documents, information and materials as
any Lender Party, through the Agent, may reasonably request.
3.2. ADDITIONAL CONDITIONS PRECEDENT TO THE EFFECTIVE DATE.
The effectiveness of this Agreement is subject to the further conditions
precedent that:
(a) On the Effective Date, the following statements shall be
true:
(i) All necessary governmental and third party approvals
required to be obtained by any Loan Party, in connection with the
transactions contemplated hereby, including, without limitation, the
obtaining of the 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;
(ii) There exists no claim, action, suit, investigation or
proceeding 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 those which, if adversely
determined, would have a Material Adverse Effect;
(iii) There exists no default under the 1994 Credit Agreement
or any loan documents executed in connection with the 1994 Credit
Agreement; and
(iv) There exists no default under any Indenture, the First
Mortgage Notes or the Permanent Financing Notes.
(b) All costs and accrued and unpaid fees (including, without
limitation, all upfront fees) and expenses (including, without limitation, the
legal fees and expenses of the Agent) required to be paid to the Lender Parties
or the Agent on or before the Effective Date, including, without limitation,
those referred to in Sections 2.4, 2.17 and 10.4, to the extent then due and
payable, shall have been paid.
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(c) Nothing contained in any public disclosure made by the
Borrower or any of its Subsidiaries shall lead any Lender Party, in its sole
judgment, exercised reasonably, to determine that any Loan Party's or any of its
Subsidiaries' condition (financial or otherwise), operations, performance,
properties or prospects is different in any material and adverse respect from
that contained in public filings since January 1, 1994, except to the extent
that subsequent filings have updated, amended or supplemented such information
(and other documents delivered to the Agent prior to the date hereof) of any
Loan Party or its Subsidiaries prior to such date.
(d) No Lender Party, 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 against any Loan
Party in any court or before any arbitrator or Governmental Authority which, if
adversely determined, would have a Material Adverse Effect.
(e) Each Lender Party shall be satisfied, in its sole
judgment, exercised reasonably, with all tax aspects of the transactions
contemplated hereby, and with the corporate, capital, tax, legal and management
structure of the Loan Parties and their Subsidiaries, and shall be satisfied, in
its sole judgment exercised reasonably, with the nature and status of all
Contractual Obligations, securities, labor, tax, ERISA, employee benefit,
environmental, health and safety matters, in each case, involving or affecting
any Loan Party or any of its Subsidiaries.
(f) The Tangible Net Worth of the Borrower as of the Effective
Date is at least $255,000,000 and the Consolidated Tangible Net Worth of the
Loan Party Consolidated Group as of the Effective Date is at least $355,000,000.
3.3. CONDITIONS PRECEDENT TO EACH LOAN AND LETTER OF CREDIT.
The obligation of each Lender to make any Loan or of each 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, before and after giving effect thereto and to the application
of the proceeds therefrom and to such issuance (and the acceptance by the
Borrower of the proceeds of such Loan or of the issuance by such Issuer of such
Letter of Credit shall constitute a representation and warranty by the Borrower
that on the date of such Loan or 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 except insofar as such representations and warranties
speak only as of a prior date or reflect
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transactions and events after the Effective Date permitted by the Loan
Documents; and
(ii) No Default or Event of Default has occurred and is
continuing or would result from the Loans being made or any Letter of
Credit being issued on such date.
(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 to repay in full the Swing Loans or the Swing Bank otherwise consents.
(d) The Agent shall have received such additional documents,
information and materials as any Lender Party, through the Agent, may reasonably
request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lender Parties and the Agent to enter into this
Agreement, the Borrower represents and warrants to the Lender Parties and the
Agent that:
4.1. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each Loan Party
and each of its Subsidiaries (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation; (ii) is duly qualified or licensed as a foreign corporation and
in good standing under the laws of each jurisdiction in which it is required to
so qualify or be licensed, except for failures which in the aggregate would have
no Material Adverse Effect; (iii) 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; (iv) is in compliance
with its certificate of incorporation and by-laws; (v) is in compliance with all
other applicable Requirements of Law, except for such non-compliances as would
in the aggregate have no Material Adverse Effect; and (vi) except as disclosed
on Schedule 4.19, 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
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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.
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; and
(iii) do not (A) contravene any Loan Party's or any of its
Subsidiaries' respective certificates of incorporation or by-laws or
other comparable governing documents, (B) as to any Loan Party, 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 Material Contractual Obligation of any Loan Party
or any of its Subsidiaries, or (D) result in the creation or imposition
of any Lien upon any of the property of any Loan Party or any of its
Subsidiaries, other than those in favor of the Agent pursuant to the
Collateral Documents.
(b) No authorization by, approval of, notice to, or filing or
registration with, any Governmental Authority or any other Person, other than
those which have been obtained or made and copies of which in the case of those
involving a Governmental Authority have been delivered to the Agent, is required
for (i) the due execution, delivery, recordation, filing or performance by any
Loan Party of this Agreement, the Revolving Credit Notes or any other Loan
Document to which it is or is to be a party, or for the consummation of the
transactions contemplated hereby, (ii) the grant by any Loan Party of the Liens
granted by it pursuant to the Collateral Documents, (iii) the perfection or
maintenance of the Liens created by the Collateral Documents (including, as of
the Effective Date, the first priority nature thereof (subject to Permitted
Liens)) or (iv) the exercise by the Agent or any Lender Party of its rights
under the Loan Documents or the remedies in respect of the Collateral pursuant
to the Collateral Documents. On any date after the Effective Date, no
authorization by, approval of, notice to, or filing or registration with, any
Governmental Authority or any other Person, other than those which have been (x)
obtained or made and copies of which in the case of those involving a
Governmental Authority have been delivered to the Agent or (y) disclosed to the
Agent in accordance with Section 6.11(n), is required for the perfection or
maintenance of the
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Liens created by the Collateral Documents (including the first priority thereof
(subject to Permitted Liens)).
(c) This Agreement has been and each of the other Loan
Documents will have been upon delivery thereof pursuant to Section 3.1, duly
executed and delivered by each Loan Party party thereto. This Agreement is, and
each other Loan Document will be when delivered hereunder, the legal, valid and
binding obligation of each Loan Party party thereto, enforceable against it in
accordance with its terms subject to applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally and to general
principles of equity regardless of whether enforcement is sought in a proceeding
in equity or at law.
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 any Loan Party or any of their 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 taxes, charges and other
impositions due and payable have been timely paid prior to the date on which any
fine, penalty, interest, late charge or loss may be added thereto for
non-payment thereof, except where contested in good faith and by appropriate
proceedings if adequate reserves therefor have been established on the books of
such Loan Party or such Tax Affiliate in accordance with GAAP and all such
non-payments, in the aggregate, if adversely determined would have no Material
Adverse Effect. Proper and accurate amounts have been withheld by each Loan
Party and each of their Tax Affiliates from their respective employees for all
periods in material 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. No Loan Party or any of their Tax Affiliates has (i) except as set
forth on Schedule 4.3, executed or filed with the IRS or any other Governmental
Authority any agreement or other document (which agreement or other document is
presently in effect) extending, or having the effect of extending, the period
for assessment or collection of any charges, or 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 which will result in any material aggregate tax
liability for the three taxable years beginning with the year of adjustment; or
(ii) except as set forth on Schedule 4.3, any obligation under any written or
oral tax sharing agreement other than the Tax Sharing Agreement.
4.4. FULL DISCLOSURE. No written statement prepared or
furnished by or on behalf of 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, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading, if, in either case, such fact is material to an
understanding of the financial condition, business, properties or
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prospects of any Loan Party or any of its Affiliates or the ability of such
Persons to fulfill its obligations under any Loan Document to which it is a
party.
4.5. FINANCIAL MATTERS. (a) The Consolidated balance sheet of
WHX and its Consolidated Subsidiaries as at December 31, 1994, and the related
Consolidated statements of income, retained earnings and cash flow of WHX and
its Subsidiaries for the fiscal year then ended, certified by Price Waterhouse,
and the Consolidated balance sheet of the Loan Party Consolidated Group as at
September 30, 1995, and the related Consolidated statements of income, retained
earnings and cash flow of the Loan Party Consolidated Group for the nine months
then ended, duly certified by the chief financial officer of Holdings, copies of
which have been furnished to each Lender Party, fairly present, subject, in the
case of said balance sheets as at September 30, 1995, and said statements of
income and cash flow for the nine months then ended, to year-end audit
adjustments, the Consolidated financial condition of such Person and its
Subsidiaries as at such dates and the Consolidated results of the operations of
such Person and its Subsidiaries for the period ended on such date, all in
conformity with GAAP.
(b) Since December 31, 1994 and through the Effective Date,
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) None of the Loan Parties or any of its Subsidiaries had at
December 31, 1994 any material obligation, contingent liability or liability for
taxes, long-term leases or unusual forward or long-term commitment that is
required by GAAP to be included in a balance sheet which is not reflected in the
balance sheet referred to in subsection (a) above or in the notes thereto (other
than in connection with the Receivables Securitization).
(d) As of the Effective Date, each Loan Party is, and each
Loan Party and its Subsidiaries are, on a consolidated basis, Solvent.
(e) The unaudited pro forma consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries, a copy of which has been delivered
to each Lender Party, has been prepared as of December 31, 1995 and reflects as
of such date, on a pro forma basis, the projected Consolidated financial
condition of the Borrower and its Subsidiaries. Such pro forma financial
statements (including any related schedules and notes) have been prepared in
accordance with GAAP on the basis of the statements and assumptions set forth in
the respective notes thereto. The Projections and assumptions expressed therein
were reasonably based on the information available to the Borrower at the time
so furnished and on the Effective Date, including, without limitation, the
DRI/McGraw Hill Steel Industry Review 3rd Quarter 1995. The Lender Parties
hereby acknowledge as reasonable the economic
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forecast contained in such Industry Review and the Loan Party Consolidated
Group's reliance thereon.
4.6. LITIGATION. Except as set forth in Schedule 4.6, there
are no pending or, to the knowledge of the Borrower, threatened actions,
investigations or proceedings affecting any Loan Party or any of its
Subsidiaries before any Governmental Authority or arbitrator which, in the
aggregate, would have a Material Adverse Effect. The performance of any action
by any Loan Party required or contemplated by any of the Loan Documents 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. No Loan Party is engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve System), and no proceeds of any 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 in contravention of Regulation G, T,
U or X of the Board of Governors of the Federal Reserve System.
4.8. OWNERSHIP OF THE BORROWER AND SUBSIDIARIES. (a) Set forth
on Schedule 4.8 hereto as may be supplemented from time to time pursuant to
Section 6.11(n), is a complete and accurate list showing, as to the Borrower and
each Guarantor, the jurisdiction of its incorporation, the number of shares of
each class of Stock authorized, the number outstanding on the date hereof and
the ownership of the outstanding shares of each class. No authorized but
unissued shares, no treasury shares and, to the best knowledge of the Borrower
and each Guarantor, no other outstanding shares of capital stock of the Borrower
or such Guarantor are subject to any option, warrant, right of conversion or
purchase or any similar right. There are no agreements or understandings with
respect to the voting, sale or transfer of any shares of capital stock of the
Borrower or any Guarantor or, to the best knowledge of the Borrower or such
Guarantor, any agreement restricting the transfer or hypothecation of any such
shares, except, in the case of the Borrower, for the USWA Right of First Refusal
and, in the case of PCC and Wheeling Construction, under the Holdings Pledge
Agreement.
(b) Set forth on Schedule 4.8 hereto, as may be supplemented
from time to time pursuant to Section 6.11(n), is a complete and accurate list
showing all direct and indirect Subsidiaries of the Borrower and, as to each
such Subsidiary, the jurisdiction of its incorporation, the number of shares of
each class of Stock authorized, the number outstanding on the date hereof and
the percentage of the outstanding shares of each such class owned (directly or
indirectly) by the Borrower. No Stock of any Subsidiary of the Borrower is
subject to any outstanding option,
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warrant, right of conversion or purchase or any similar right. All of the
outstanding Stock of each such Subsidiary has been validly issued, is fully paid
and non-assessable and is owned by the Borrower, free and clear of all Liens
other than the Liens granted to the Agent pursuant to the Borrower Security
Agreement. Neither the Borrower nor any such Subsidiary is a party to, or has
knowledge of, any agreement restricting the transfer or hypothecation of any
Stock of any such Subsidiary. The Borrower does not own or hold, directly or
indirectly, any capital stock or equity security of, or any equity interest in,
any Person other than such Subsidiaries.
4.9. ERISA. (a) Schedule 4.9 separately identifies, as of the
Effective Date, all Plans, all Qualified Plans, all Title IV Plans, all
Multiemployer Plans, all unfunded Pension Plans and all Welfare Benefit Plans
that provide retiree benefits.
(b) Except as set forth on Schedule 4.9, as may be
supplemented from time to time pursuant to Section 6.11(n), each Qualified Plan
has been determined by the IRS to qualify under Section 401 of the Code, and the
trusts created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the Code, and to the best knowledge of the
Borrower, nothing has occurred which would cause the loss of such qualification
or tax-exempt status.
(c) Except as set forth on Schedule 4.9, as may be
supplemented from time to time pursuant to Section 6.11(n), each 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 Plan (other than a Qualified Plan), all
required contributions and benefits have been paid in accordance with the
provisions of each such Plan.
(d) No Loan Party or any of its Subsidiaries or any ERISA
Affiliate, with respect to any Qualified Plan, has failed to make any
contribution or pay any amount due as required by Section 412 of the Code or
Section 302 of ERISA or the terms of any such Qualified Plan.
(e) Except as set forth on Schedule 4.9, as may be
supplemented from time to time pursuant to Section 6.11(n), there has been no,
nor is there reasonably expected to occur any, ERISA Event or event described in
Section 4068 of ERISA with respect to any Title IV Plan.
(f) Except as set forth on Schedule 4.9, as may be
supplemented from time to time pursuant to Section 6.11(n), there are no pending
or, to the knowledge of the Borrower, threatened claims, actions or lawsuits
(other than claims for benefits in the normal course), asserted or instituted
against (i) any Plan or its assets, (ii) any fiduciary with respect to any Plan
or (iii) any Loan Party, any of its Subsidiaries or any ERISA Affiliate with
respect to any Plan.
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(g) Except as set forth on Schedule 4.9, as may be
supplemented from time to time pursuant to Section 6.11(n), none of the
Borrower, any of its Subsidiaries or any ERISA Affiliate has incurred, or has
any reasonable likelihood of incurring, any Withdrawal Liability under Section
4201 of ERISA as a result of a complete or partial withdrawal from a
Multiemployer Plan (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in any such liability).
(h) Except as set forth on Schedule 4.9, as may be
supplemented from time to time pursuant to Section 6.11(n), within the last five
years none of any Loan Party, any of its Subsidiaries or any ERISA Affiliate has
engaged in a transaction which resulted in a Title IV Plan with Unfunded Pension
Liabilities being transferred outside of the "controlled group" (within the
meaning of Section 4001(a)(14) of ERISA) of any such entity.
4.10. LIENS. There are no Liens of any nature whatsoever on
any properties of any Loan Party or any of their Subsidiaries other than those
permitted by Section 7.1 and as described on Schedule 4.10, as may be
supplemented from time to time pursuant to Section 6.11(n). The Liens granted by
the Loan Parties to the Agent pursuant to the Collateral Documents are fully
perfected first priority Liens in and to the Collateral (subject to Permitted
Liens).
4.11. FIRST MORTGAGE NOTES; PERMANENT FINANCING NOTES. No
Indenture has been amended or modified in any respect and no provision therein
has been waived and no event has occurred or condition exists under the First
Mortgage Notes or the Permanent Financing Notes, the effect of such event or
condition is to accelerate or permit the acceleration of, the maturity of the
First Mortgage Notes or the Permanent Financing Notes.
4.12. NO BURDENSOME RESTRICTIONS; NO DEFAULTS. (a) No Loan
Party or any of its Subsidiaries (i) is a party to any Contractual Obligation
which would have a Material Adverse Effect or the performance of which by any
thereof, either unconditionally or upon the happening of an event, will result
in the creation of a Lien (other than a Lien permitted by Section 7.1) on the
property or assets of any thereof, (ii) is subject to a charter or corporate
restriction that would have a Material Adverse Effect, or (iii) is, to the
knowledge of the Borrower, in default (except a non-payment default on any of
the First Mortgage Notes or the Permanent Financing Notes, the effect of which
is not to accelerate or permit the acceleration of the maturity of any of the
First Mortgage Notes or the Permanent Financing Notes) under or with respect to
any Contractual Obligation other than those defaults which in the aggregate
would have no Material Adverse Effect.
(b) No Event of Default has occurred and is continuing.
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(c) No Requirement of Law has a Material Adverse Effect.
(d) Except as provided in the Indentures, none of the Loan
Parties' Subsidiaries is subject to any restriction or limitation on its ability
to declare or make any dividend payment or other distribution on account of any
shares of any class of its Stock or on its ability to purchase, redeem, or
otherwise acquire for value or make any payment in respect of any such shares or
any shareholder rights.
4.13. NO OTHER VENTURES. Except as listed on Schedule 4.13, as
may be supplemented from time to time pursuant to Section 6.11(n), or otherwise
permitted under Section 7.6, no Loan Party or any of its Subsidiaries is engaged
in any joint venture or partnership with any other Person.
4.14. INVESTMENT COMPANY ACT. The Borrower 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 of 1940, as amended. The making of the Loans and the
issuance of the Letters of Credit by the Lender Parties, the application of the
proceeds and repayment thereof by the Borrower and the consummation of the
transactions contemplated by the Loan Documents on the part of any Loan Party
will not violate any provision of such Act or any rule, regulation or order
issued by the Securities and Exchange Commission thereunder.
4.15. INSURANCE. As of the Effective Date, all policies of
insurance of any kind or nature owned by or issued to any Loan Party or any of
its Subsidiaries, including, without limitation, policies of life, fire, theft,
product liability, public liability, property damage, other casualty, employee
fidelity, workers' compensation, employee health and welfare, title and property
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 the Borrower and its Subsidiaries.
4.16. LABOR MATTERS. (a) Except as set forth on Schedule 4.16,
there are no strikes, work stoppages, slowdowns or lockouts pending, or
reasonably likely to occur in the immediate future, against or involving any
Loan Party or any of its Subsidiaries, other than those which in the aggregate
would have no Material Adverse Effect.
(b) Except as set forth on Schedule 4.16, there are no
arbitrations or grievances pending against or involving any Loan Party or any of
its Subsidiaries, nor, to the best knowledge of the Loan Parties and their
Subsidiaries, are there any arbitrations or grievances threatened involving any
Loan Party or any of its Subsidiaries, other than those which in the aggregate
would have no Material Adverse Effect.
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(c) Except as set forth on Schedule 4.16, as of the Effective
Date, no Loan Party or any of its Subsidiaries are parties to, or have any
obligations under, any collective bargaining agreement.
(d) Except as set forth on Schedule 4.16, as of the Effective
Date, there are no representation proceedings pending or, to the best knowledge
of the Borrower, threatened with the National Labor Relations Board, and no
labor organization or group of employees of any Loan Party or any of its
Subsidiaries have made a pending demand for recognition.
(e) There are no unfair labor practice charges, grievances or
complaints pending or in process or, to the best knowledge of the Borrower,
threatened by or on behalf of any employee or group of employees of any Loan
Party or any of its Subsidiaries other than those which in the aggregate would
have no Material Adverse Effect.
(f) Except as set forth on Schedule 4.16, there are no
complaints or charges against any Loan Party or any of its Subsidiaries pending
or, to the best knowledge of the Borrower, threatened to be filed with any
Governmental Authority or arbitrator based on, arising out of, in connection
with, or otherwise relating to the employment by any Loan Party or any of its
Subsidiaries of any individual, other than those which in the aggregate would
have no Material Adverse Effect.
(g) Each Loan Party and each of its Subsidiaries are in
compliance with all laws, and all orders of any court, governmental agency 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 such non-compliances as in the aggregate would have no Material Adverse
Effect.
4.17. FORCE MAJEURE. Neither the business nor the properties
of any Loan Party or any of its Subsidiaries is currently suffering from the
effects of any fire, explosion, accident, 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 which in the aggregate would have no
Material Adverse Effect.
4.18. USE OF PROCEEDS. The proceeds of the Loans and the
Letters of Credit are being used solely (i) for the payment of related
transaction costs, fees and expenses and (ii) for general working capital
purposes and other general corporate purposes of the Loan Parties, including,
without limitation, Investments permitted under Section 7.6.
4.19. ENVIRONMENTAL PROTECTION. Except as disclosed on
Schedule 4.19:
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(a) The operations of each Loan Party and each of its
Subsidiaries or tenants comply with all Environmental Laws, other than such
non-compliance as in the aggregate would have no Material Adverse Effect;
(b) Each Loan Party and each of its Subsidiaries have obtained
all environmental, health and safety Permits necessary for their operations
other than those failures which in the aggregate would have no Material Adverse
Effect, and all such Permits are in good standing, except where such failure
would have no Material Adverse Effect, and each Loan Party and each of its
Subsidiaries are in compliance with the terms and conditions of such Permits
other than for such non-compliance which in the aggregate would have no Material
Adverse Effect;
(c) Neither any Loan Party nor any of its Subsidiaries have
any currently or previously owned or leased property or operations subject to
any threatened or outstanding order from or agreement 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)
Environmental Liabilities and Costs, other than those which in the aggregate
would have no Material Adverse Effect;
(d) As of the Effective Date, no Loan Party and none of their
Subsidiaries 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 and, as of the Effective
Date, each Loan Party and each of its Subsidiaries 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, 265 and
280, subparts H, and any state equivalents, other than those that in the
aggregate would have no Material Adverse Effect;
(e) No Loan Party and none of their Subsidiaries has filed or
failed to file any notice required under any applicable Environmental Law
reporting a Release other than those which in the aggregate would have no
Material Adverse Effect;
(f) There are not now nor have there been in the past any
events, conditions or circumstances associated with or arising from currently
owned or leased properties or current operations of any Loan Party or any of its
Subsidiaries or, to the best of the Borrower's knowledge, tenants or, to the
best of the Borrower's knowledge, any events, conditions or circumstances
associated with or arising from any previously owned or leased properties or the
previous operations of any Loan Party or any of its Subsidiaries or, to the best
of the Borrower's knowledge, tenants, which may give rise to any Environmental
Liabilities and Costs other than those in the aggregate that would have no
Material Adverse Effect. There are not now nor have there been in the past, any
events, conditions or circumstances with or arising
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from currently or previously owned or leased properties or current or previous
operations of any Loan Party or any of its Subsidiaries or, to the best of the
Borrower's knowledge, tenants, which may give rise to Environmental Costs and
Liabilities other than those which in the aggregate would have no Material
Adverse Effect;
(g) As of the Effective Date, no Environmental Lien and no
unrecorded Environmental Lien has attached to any property of any Loan Party or
any of its Subsidiaries and, as of any date after the Effective Date, no
Environmental Lien and no unrecorded Environmental Lien has attached to any
property of any Loan Party or any of its Subsidiaries other than those that in
the aggregate would have no Material Adverse Effect; and
(h) With respect to any property owned, leased or operated by
any Loan Party or any of its Subsidiaries: (i) there are no underground storage
tanks or surface impoundments, (ii) except to the extent that the presence
thereof, in the aggregate, would not have a Material Adverse Effect, there is
not any asbestos- containing material in friable form or any airborne asbestos
containing material in excess of amounts proscribed by Environmental Laws, or
(iii) there is not any polychlorinated biphenyls ("PCBS") other than those used,
maintained or disposed of in compliance with all applicable Environmental Laws
or the removal of which would have a Material Adverse Effect.
4.20. INTELLECTUAL PROPERTY. The Loan Parties and their
Subsidiaries own or license or otherwise have 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 operation of their respective businesses, without infringement
upon or conflict with the rights of any other Person with respect thereto,
including, without limitation, all trade names, except where such failure would
have no Material Adverse Effect. To the best 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 or any of its Subsidiaries 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 threatened, other than those which in the aggregate
would have no Material Adverse Effect. No patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
relating thereto is pending or, to the knowledge of the Borrower, proposed,
other than those the consequences of which, in the aggregate would have no
Material Adverse Effect.
4.21. TITLE. (a) The Loan Parties and their Subsidiaries own
fee simple absolute title to all of the Real Estate described in Schedule
4.21(a), as may be supplemented from time to time pursuant to Section 6.11(n),
and marketable title to,
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or valid leasehold interests pursuant to the Leases in, all other properties and
assets purported to be owned by any Loan Party or any of their Subsidiaries,
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),
except for such failures which in the aggregate would have no Material Adverse
Effect. None of such properties and assets, including, without limitation, the
Real Estate and the Leases, is subject to any Lien, except Liens permitted
hereunder. The Loan Parties and their Subsidiaries have received all deeds,
assignments, waivers, consents, non-disturbance and recognition or similar
agreements, bills of sale and other documents, and have duly effected all
recordings, filings and other actions necessary to establish, protect and
perfect such Loan Parties and its Subsidiaries' right, title and interest in and
to all such property except for such failures which would in the aggregate have
no Material Adverse Effect.
(b) All real property leased, with an annual base rent of at
least $100,000, at the date of this Agreement by any Loan Party or any of its
Subsidiaries is listed on Schedule 4.21(b), as may be supplemented from time to
time pursuant to Section 6.11(n), setting forth information regarding the
commencement date, termination date, renewal options and purchase options (if
any) and annual base rents as specified therein. Each of such leases is valid
and enforceable in accordance with its terms and is in full force and effect
other than those leases which if not valid and enforceable, would in the
aggregate have no Material Adverse Effect. None of any Loan Party or any of its
Subsidiaries or, to the knowledge of the Borrower, any other party to any such
lease is in default of its obligations thereunder or has delivered or received
any notice of default under any such lease and no event has occurred which, with
the giving of notice, the passage of time or both, would constitute a default
under any such lease, except, in either case, for defaults the consequence of
which in the aggregate would have no Material Adverse Effect.
(c) Except as listed on Schedule 4.21(c), as may be
supplemented from time to time pursuant to Section 6.11(n), neither any Loan
Party nor any of its Subsidiaries 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 Loan Party or any of its Subsidiaries.
(d) All components of all improvements included within the
real property owned or leased by any Loan Party or any of its Subsidiaries
(collectively, "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, are in good working
order and repair other than such failures the consequences of which in the
aggregate would have no 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
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or leased by any Loan Party or any of its Subsidiaries are installed and
operating and are sufficient to enable the real property owned or leased by such
Loan Party and its Subsidiaries to continue to be used and operated in the
manner currently being used and operated other than such failures which in the
aggregate would have no Material Adverse Effect, and neither any Loan Party nor
any of its Subsidiaries has any knowledge of any fact or condition that could
result in the termination or material impairment of the furnishing thereof,
other than such failures which in the aggregate would have no Material Adverse
Effect. No Improvement or portion thereof is dependent for its access, operation
or utility on any land, building or other Improvement not included in the real
property owned or leased by any Loan Party or any of its Subsidiaries except
where the consequences of such in the aggregate would have no Material Adverse
Effect.
(e) All Permits required to have been issued or appropriate to
enable all real property owned or leased by any Loan Party or any of its
Subsidiaries to be lawfully occupied and 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) Neither any Loan Party nor any of its Subsidiaries has
received any notice, nor has any knowledge, of any pending, threatened or
contemplated condemnation proceeding affecting any real property owned or leased
by such Loan Party or any of its Subsidiaries or any part thereof, or any
proposed termination or impairment of any parking at any such owned or leased
real property or of any sale or other disposition of any real property owned or
leased by such Loan Party or any of its Subsidiaries or any part thereof in lieu
of condemnation, except for notices affecting real property which in the
aggregate, if lost, would have no Material Adverse Effect.
(g) No portion of any real property owned or leased by any
Loan Party or any of its Subsidiaries has suffered any material damage by fire
or other casualty loss which has not heretofore been completely replaced,
repaired and restored to its original condition, except to the extent that the
failure to replace, repair or restore such real property would in the aggregate
have no Material Adverse Effect.
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:
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5.1. MAINTENANCE OF TANGIBLE NET WORTH. The Loan Party
Consolidated Group shall maintain for each Fiscal Quarter ending on the dates
set forth below a Tangible Net Worth of the Loan Party Consolidated Group of not
less than the minimum amount set forth below for such period:
FOR THE PERIOD ENDING MINIMUM REQUIRED AMOUNT
--------------------- -----------------------
December 31, 1995 $328,000,000
March 31, 1996 325,000,000
June 30, 1996 325,000,000
September 30, 1996 320,000,000
December 31, 1996 317,000,000
March 31, 1997 310,000,000
June 30, 1997 305,000,000
September 30, 1997 300,000,000
December 31, 1997 291,000,000
March 31, 1998 290,000,000
June 30, 1998 290,000,000
September 30, 1998 290,000,000
December 31, 1998 289,000,000
March 31, 1999 289,000,000
June 30, 1999 289,000,000
and thereafter
5.2. MAINTENANCE OF LEVERAGE RATIO. The Loan Party
Consolidated Group shall maintain for each month included in each Fiscal Quarter
set forth below, a ratio of (a) the sum of Total Liabilities MINUS pension plan
liabilities (in each case, of the Loan Party Consolidated Group) PLUS the
aggregate "Trust Invested Amount" (under and as defined in the Securitization
Documents) to (b) Tangible Net Worth of the Loan Party Consolidated Group, not
more than the ratio set forth below for such period:
FOR THE PERIOD ENDING MAXIMUM LEVERAGE RATIO
December 31, 1995 3.25: 1.00
March 31, 1996 3.25: 1.00
June 30, 1996 3.30: 1.00
September 30, 1996 3.30: 1.00
December 31, 1996 3.35: 1.00
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March 31, 1997 3.50: 1.00
June 30, 1997 3.65: 1.00
September 30, 1997 3.80: 1.00
December 31, 1997 3.90: 1.00
March 31, 1998 3.90: 1.00
June 30, 1998 4.00: 1.00
September 30, 1998 4.00: 1.00
December 31, 1998 4.00: 1.00
March 31, 1999 4.00: 1.00
June 30, 1999 4.00: 1.00
and thereafter
5.3. MAINTENANCE OF INTEREST COVERAGE RATIO. The Loan Party
Consolidated Group shall maintain for each Fiscal Quarter an Interest Coverage
Ratio for such period not less than the ratio set forth below:
For the Fiscal Minimum Ratio
Quarter Ending Required
-------------- -------------
December 31, 1995 4.00:1.00
March 31, 1996 3.25:1.00
June 30, 1996 3.25:1.00
September 30, 1996 3.00:1.00
December 31, 1996 2.85:1.00
March 31, 1997 2.50:1.00
June 30, 1997 2.25:1.00
September 30, 1997 2.00:1.00
December 31, 1997 1.83:1.00
March 31, 1998 2.00:1.00
June 30, 1998 2.25:1.00
September 30, 1998 2.45:1.00
December 31, 1998 2.74:1.00
March 31, 1999 2.80:1.00
June 30, 1999 2.80:1.00
and thereafter
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5.4. MAINTENANCE OF CUMULATIVE CASH FLOW. The Loan Party
Consolidated Group shall maintain for each month included in each Fiscal Quarter
set forth below, Cumulative Cash Flow for the period beginning on January 1,
1995 and ending on the date of determination of not less than the amount set
forth below:
Minimum
For the Period Ending Required Amount
--------------------- ---------------
March 31, 1996 $(45,000,000)
June 30, 1996 (55,000,000)
September 30, 1996 (65,000,000)
December 31, 1996 (75,000,000)
March 31, 1997 (85,000,000)
June 30, 1997 (95,000,000)
September 30, 1997 (100,000,000)
December 31, 1997 (100,000,000)
March 31, 1998 (110,000,000)
June 30, 1998 (115,000,000)
September 30, 1998 (120,000,000)
December 31, 1998 (120,000,000)
March 31, 1999 (120,000,000)
June 30, 1999 (120,000,000)
and thereafter
5.5. LIMITATION ON CAPITAL EXPENDITURES. The Loan Party
Consolidated Group shall not make, or permit any of their Subsidiaries to make,
Capital Expenditures for the period from January 1, 1996 through the last day of
each month included in each Fiscal Quarter set forth below in excess of the
amount set forth opposite such date:
Maximum Amount of
For the Period Ending Capital Expenditures
--------------------- --------------------
March 31, 1996 $ 30,000,000
June 30, 1996 60,000,000
September 30, 1996 80,000,000
December 31, 1996 80,000,000
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March 31, 1997 110,000,000
June 30, 1997 140,000,000
September 30, 1997 160,000,000
December 31, 1997 170,000,000
March 31, 1998 200,000,000
June 30, 1998 230,000,000
September 30, 1998 250,000,000
December 31, 1998 260,000,000
March 31, 1999 280,000,000
and thereafter
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 Loan Parties shall comply,
and shall cause each of their Subsidiaries to comply, 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 Loan Parties shall (a) conduct,
and shall cause each of their Subsidiaries to conduct, its business in a regular
manner consistent with sound business practice in such Loan Party's or such
Subsidiary's industry; (b) use, and cause each of their Subsidiaries to use, its
reasonable efforts, in the ordinary course and consistent with past practice, to
preserve its business and the goodwill and business of the customers,
advertisers, suppliers and others having business relations with any Loan Party
or any of their Subsidiaries; (c) preserve, and cause each of their Subsidiaries
to preserve, all registered patents, trademarks, trade names, copyrights and
service marks necessary for the conduct of its business; and (d) perform and
observe, and cause each of their 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 to pay all other payables and
obligations as they become due), and do, and cause their Subsidiaries to do, all
things necessary to preserve and to keep unimpaired its rights under such
Contractual Obligations, other
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than, in the case of (a) through (d), such failures the consequences of which in
the aggregate would have no Material Adverse Effect.
6.3. PAYMENT OF TAXES, ETC. The Loan Parties shall pay and
discharge, and shall cause each of their Subsidiaries to pay and discharge,
before the same shall become delinquent, all lawful governmental claims, taxes,
assessments and charges or levies against it or any of its Subsidiaries or for
which its or any of its Subsidiaries assets may be subject, except where
contested in good faith, by proper proceedings, if adequate reserves therefor
have been established on the books of such Loan Party or such Subsidiary in
conformity with GAAP and where the consequence of all such non-payments in the
aggregate would have no Material Adverse Effect. To the extent such claims,
taxes, assessments, charges or levies are computed on a consolidated, combined
or unitary basis, any payments by any Loan Party and its Subsidiaries shall not
exceed their allocable share thereof.
6.4. MAINTENANCE OF INSURANCE. The Loan Parties shall
maintain, and shall cause each of their 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 such
Loan Party or such Subsidiary operates and as otherwise satisfactory to the
Agent, in its sole judgment exercised reasonably, and, in any event, all
insurance required by any Collateral Document. All insurance required by any
Collateral Document shall name the Agent as additional insured or loss payee, as
the Agent shall determine. Each Loan Party will furnish to the Agent (together
with copies for each Lender) from time to time such information as may be
reasonably requested by the Agent as to such insurance.
6.5. PRESERVATION OF CORPORATE EXISTENCE, ETC. Each Loan Party
shall preserve and maintain, and shall cause each of their Subsidiaries to
preserve and maintain, its corporate existence and, except for failures which in
the aggregate would have no Material Adverse Effect, all rights (charter and
statutory) and franchises, except as permitted by Section 7.5.
6.6. ACCESS. Each Loan Party shall, at any reasonable time and
from time to time, upon reasonable prior notice, (i) permit the Agent, any
agents and any representatives thereof, to (A) examine and make copies of and
abstracts from the records and books of account of such Loan Party and each of
its Subsidiaries, (B) visit the properties of such Loan Party and each of its
Subsidiaries and (C) communicate directly with such Loan Party's independent
certified public accountants, and (ii) permit the Agent, any agents and any
representatives thereof, to discuss the affairs, finances and accounts of such
Loan Party each of its Subsidiaries with any of their respective officers or
directors. Each Loan Party hereby authorizes its independent certified public
accountants to disclose to the Agent, any agents and any representatives
thereof, which authorization shall be confirmed at
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the request of the Agent, any and all financial statements and other information
of any kind, including, without limitation, to furnish 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 such Loan Party or any of its Subsidiaries, except that such
accountants shall not be obligated to disclose to the Agent or any agents and
any representatives thereof its work papers or other confidential information,
in each case relating to either (1) any preliminary reports or studies conducted
by such accountants unrelated to any information previously disclosed to the
Agent, any agents or any representatives thereof, (2) information provided by
the attorneys of any Loan Party with respect to litigation matters if such
information is confidential by reason of the applicable attorney work product
doctrine or (3) any reports or communications concerning the negotiations of the
collective bargaining agreements with any Loan Party's unions at any time prior
to the execution of such agreements.
6.7. KEEPING OF BOOKS. Each Loan Party shall keep, and shall
cause each of its Subsidiaries to keep, proper books of record and account, in
which full and correct entries shall be made of all financial transactions and
the assets and business of such Loan Party and each such Subsidiary in
conformity with GAAP and applicable law, rules and regulations.
6.8. MAINTENANCE OF PROPERTIES, ETC. Each Loan Party shall
maintain and preserve, and shall cause each of its Subsidiaries to maintain and
preserve, (i) all of its properties which are useful or necessary in the conduct
of its business in good working order and condition, and (ii) all rights,
permits, licenses, approvals and privileges (including, without limitation, all
Permits) which are used or useful or necessary in the conduct of its business,
other than those which the failure to maintain and preserve would in the
aggregate have no Material Adverse Effect.
6.9. APPLICATION OF PROCEEDS. The Borrower and the Guarantors
shall use the entire amount of the proceeds of the Loans as provided in Section
4.18.
6.10. FINANCIAL STATEMENTS. The Loan Parties shall furnish to
the Lender Parties:
(a) as soon as available and in any event within 30 days after
the end of each month, the Consolidated balance sheet without footnotes of the
Loan Party Consolidated Group and the balance sheet without footnotes of the
Borrower as of the end of such month and the Consolidated statements of income
and cash flow of the Loan Party Consolidated Group and the statement of income
and cash flow of the Borrower 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 Holdings as fairly presenting the financial condition
and results of operations of the Loan Party Consolidated Group and the Borrower,
respectively, at such date and for such period
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subject to normal year end audit adjustments, together with (A) 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, (B) 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 (C) a
written discussion and analysis by the management of the Borrower of the
financial statements furnished in respect of such month;
(b) (i) prior to the occurrence of the Holdings IPO Threshold,
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, the Consolidated balance
sheets of WHX and its Subsidiaries and the consolidating balance sheets of the
Loan Party Consolidated Group as of the end of such quarter and the Consolidated
statements of income, retained earnings and cash flow of WHX and its
Subsidiaries and the consolidating statements of income, retained earnings and
cash flow of the Loan Party Consolidated Group 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 Holdings as fairly presenting the
financial condition and results of operations of WHX and its Subsidiaries and of
the Loan Party Consolidated Group, respectively, at such date and for such
period subject to normal year end audit adjustments, together with (A) 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, (B) 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 (C) a
written discussion and analysis by the management of the Borrower of the
financial statements furnished in respect of such Fiscal Quarter;
(ii) after the occurrence of the Holdings IPO Threshold, 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 Loan Party Consolidated Group as of the end of such
quarter and Consolidated and consolidating statements of income, retained
earnings and cash flow of the Loan Party Consolidated Group 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 Holdings as
fairly presenting the financial condition and results of operations of the Loan
Party Consolidated Group at such date and for such period subject to normal year
end audit adjustments, together with (A) 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, (B) a schedule in form satisfactory to the Agent of the
computations used by the Borrower
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in determining compliance with all financial covenants contained herein, and (C)
a written discussion and analysis by the management of the Borrower of the
financial statements furnished in respect of such Fiscal Quarter;
(c) (i) prior to the occurrence of the Holdings IPO Threshold,
as soon as available and in any event within 90 days after the end of each
Fiscal Year, the Consolidated balance sheet of WHX and its Subsidiaries and the
consolidating balance sheets of the Loan Party Consolidated Group as of the end
of such year and the Consolidated statements of income, retained earnings and
cash flow of WHX and its Subsidiaries and the consolidating statements of
income, retained earnings and cash flow of the Loan Party Consolidated Group for
the period commencing at the end of the previous Fiscal Year and ending with the
end of such Fiscal Year, certified in the case of such Consolidated financial
statements without qualification as to the scope of the audit by Price
Waterhouse, any other "Big Six" accounting firm or other independent public
accountants acceptable to the Majority Lenders, together with (A) a certificate
of such accounting firm stating that in the course of the regular audit of the
business of WHX and its Subsidiaries, which audit was conducted by such
accounting firm in accordance with generally accepted auditing standards, such
accounting firm 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, (B) 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, and (C) a written discussion and analysis by the management of the
Borrower of the financial statements furnished in respect of such Fiscal Year;
(ii) after the occurrence of the Holdings IPO Threshold, 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 Loan Party
Consolidated Group as of the end of such year and Consolidated and consolidating
statements of income, retained earnings and cash flow of the Loan Party
Consolidated Group for the period commencing at the end of the previous Fiscal
Year and ending with the end of such Fiscal Year, certified in the case of such
Consolidated financial statements without qualification as to the scope of the
audit by Price Waterhouse, any other "Big Six" accounting firm or other
independent public accountants acceptable to the Majority Lenders, together with
(A) a certificate of such accounting firm stating that in the course of the
regular audit of the business of the Loan Party Consolidated Group, which audit
was conducted by such accounting firm in accordance with generally accepted
auditing standards, such accounting firm 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, (B) a schedule in form satisfactory to the
Agent of the computations used by such accountants in determining, as of the end
of such
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Fiscal Year, the Borrower's compliance with all financial covenants contained
herein, and (C) a written discussion and analysis by the management of the
Borrower of the financial statements furnished in respect of such Fiscal Year;
(d) not later than the date on which the Loan Parties shall
deliver to the Lender Parties the financial statements referred to in Section
6.10(c) for any Fiscal Year, a letter from the Loan Parties' independent public
accountants in form and substance satisfactory to the Agent;
(e) promptly after the same are received by the Loan Parties,
a copy of each management letter provided to the Loan Party Consolidated Group
by its independent certified public accountants which refers in whole or in part
to any material inadequacy, defect, problem, qualification or other lack of
fully satisfactory accounting controls utilized by the Loan Party Consolidated
Group; and
(f) monthly, or more frequently as the Agent may require in
its sole discretion, a Borrowing Base Certificate executed by an officer of
Holdings listed on Schedule 2.3 or by such other Person as otherwise agreed to
by the Agent, in writing, as of the end of the preceding month.
6.11. REPORTING REQUIREMENTS. The Loan Parties shall furnish
to the Lender Parties:
(a) as soon as available and in any event no later than 30
days after the end of each Fiscal Year, an annual budget (subject to
finalization by the Borrower) of the Loan Party Consolidated Group for the
current Fiscal Year, displaying on a monthly and quarterly basis anticipated
balance sheets, forecasted revenues, net income and cash flow, all on a
consolidated basis, and EBITDA and sales on a consolidating basis;
(b) as soon as available and in any event no later than 30
days after the end of each Fiscal Year, a forecast (subject to finalization by
the Borrower) of annual sales, EBITDA, Capital Expenditures, working capital
requirements and projected cash flow results of the Loan Party Consolidated
Group on a Consolidated and consolidating basis through the Fiscal Year ending
in 1999;
(c) 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 (a) and (b) above;
(d) promptly and in any event within three Business Days after
any Loan Party, any of their Subsidiaries or any ERISA Affiliate knows or has
reason to know that any ERISA Event has occurred or is threatened, a written
statement of the chief financial officer or other appropriate officer of the
Borrower describing such
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ERISA Event or waiver request and the action, if any, which the Borrower, the
Guarantors, their Subsidiaries and ERISA Affiliates propose to take with respect
thereto and a copy of any notice filed with the PBGC or the IRS pertaining
thereto;
(e) promptly and in any event within three days after receipt
thereof, a copy of any adverse notice, determination letter, ruling or opinion
any Loan Party, any of their Subsidiaries or any ERISA Affiliate receives from
the PBGC, DOL or IRS with respect to any Qualified Plan and, at the request of
any Lender, a copy of any favorable notice, determination letter, ruling or
opinion with respect thereto from any Governmental Authority;
(f) promptly after the commencement thereof, notice of all
actions, suits and proceedings before any domestic or foreign Governmental
Authority or arbitrator, affecting any Loan Party or any of their Subsidiaries,
except those which, individually or in the aggregate, if adversely determined,
would have no Material Adverse Effect;
(g) promptly and in any event within three Business Days after
any Loan Party becomes aware of the existence of (i) any Default or Event of
Default, (ii) any material breach or material non-performance of, or any default
under, any Contractual Obligation which is material to the business, prospects,
operations or financial condition of the Loan Party Consolidated Group, (iii)
any breach or non-performance of, or any default under, any Lease of property
where Inventory is located or any other material Lease, or (iv) any Material
Adverse Effect or any Material Adverse Change, or any development or other
information, including, without limitation, any development or information of a
type described in Section 4.16, which has any reasonable likelihood of resulting
in a Material Adverse Change, telephonic or telegraphic notice in reasonable
detail specifying the nature of the Event of Default, Default, development or
information, including, without limitation, the anticipated effect thereof,
which notice shall be promptly confirmed in writing within five days;
(h) promptly after the sending or filing thereof, copies of
all notices, certificates or reports delivered by Holdings pursuant to the
Indentures or to the holders of the First Mortgage Notes and the Permanent
Financing Notes;
(i) promptly after the sending or filing thereof, copies of
all reports which Holdings sends to its security holders generally, and copies
of all reports and registration statements which WHX, Holdings or any of its
Subsidiaries files with the Securities and Exchange Commission, any national
securities exchange or the National Association of Securities Dealers, Inc.;
(j) upon the request of any Lender Party, through the Agent,
copies of all federal, state and local tax returns and reports filed by any Loan
Party or any of
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their Subsidiaries (including consolidated, combined or unitary returns filed
with any of the Borrower's Tax Affiliates) and governmental audit reports issued
to the Borrower, any Guarantor or any of their Tax Affiliates in respect of
taxes measured by income of any Loan Party or any of their Subsidiaries
(excluding sales, use and like taxes);
(k) promptly upon, and in any event within 30 days of any Loan
Party or any of their Subsidiaries learning of any of the following, written
notice of:
(i) the receipt by any Loan Party or any of their Subsidiaries
of written notice of or a claim to the effect that any Loan Party or
any of their Subsidiaries is or may be liable to any Person as a result
of a Release or threatened Release which could reasonably be expected
to subject the Loan Parties and their Subsidiaries to Environmental
Liabilities and Costs of $5,000,000 or more;
(ii) the receipt by any Loan Party or any of their
Subsidiaries of notification that any real or personal property of any
Loan Party or any of their Subsidiaries is subject to any Environmental
Lien;
(iii) the receipt by any Loan Party or any of their
Subsidiaries of any notice of violation of, or knowledge by any Loan
Party or any of their Subsidiaries that there exists a condition which
might reasonably result in a violation by any Loan Party or any of
their Subsidiaries of, any Requirement of Law involving environmental,
health or safety matters, except for violations, the consequences of
which in the aggregate would have no reasonable likelihood of
subjecting the Loan Parties and their Subsidiaries to Environmental
Liabilities and Costs of $5,000,000 or more;
(iv) the commencement of any judicial or administrative
proceeding or investigation alleging a violation of any Requirement of
Law involving environmental, health or safety matters other than those
the consequence of which in the aggregate would have no reasonable
likelihood of subjecting the Loan Parties and their Subsidiaries to
Environmental Liabilities and Costs of $5,000,000 or more;
(v) any proposed acquisition of stock, assets or real estate,
or any proposed leasing of property, or any other similar action by any
Loan Party or any of their Subsidiaries, other than those the
consequences of which in the aggregate have no reasonable likelihood of
subjecting the Loan Parties and their Subsidiaries to Environmental
Liabilities and Costs of $5,000,000 or more;
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(vi) any proposed action taken by any Loan Party or any of
their Subsidiaries 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 any
Loan Party or any of their Subsidiaries to obtain additional
environmental, health or safety Permits that require the expenditure of
$5,000,000 or more or becoming subject to additional Environmental
Liabilities and Costs of $5,000,000 or more; and
(vii) any of the items referred to in (i) through (vi) above
regardless of the amount of Environmental Liabilities and Costs to the
extent not already reported pursuant to this Section 6.11(k), if the
aggregate Environmental Liabilities and Costs for such items would
exceed $10,000,000 in any Fiscal Year;
(l) upon written request by any Lender Party through 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 6.11 and any other environmental,
health or safety compliance obligation, remedial obligation or liability, other
than those which in the aggregate have no reasonable likelihood of subjecting
the Loan Parties and their Subsidiaries to Environmental Liabilities and Costs
of $5,000,000 or more;
(m) promptly upon any Loan Party or any of their Subsidiaries
being 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;
(n) promptly and in any event within 45 days of the end of
each Fiscal Quarter and together with any amendment, waiver or other
modification of any of the Loan Documents, amendments and supplements to all of
the Schedules to the Loan Documents so as to ensure that, at the time of the
delivery of such amendments and supplements, such Schedules are accurate and
complete in all material respects as to the subject matter thereof; and
(o) such other information respecting the business,
properties, condition, financial or otherwise, or operations of any Loan Party
or any of their Subsidiaries as any Lender Party through the Agent may from time
to time reasonably request.
6.12. EMPLOYEE PLANS. With respect to other than a
Multiemployer Plan, for each Qualified Plan hereafter adopted or maintained by
any Loan Party, any of their Subsidiaries or any ERISA Affiliate, such Loan
Party shall (i) seek, and cause such of their Subsidiaries and 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
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such Qualified Plan, cause such plan to be qualified within the meaning of
Section 401(a) of the Code and to be administered in all material respects in
accordance with the requirements of ERISA and Section 401(a) of the Code.
6.13. FISCAL YEAR. Each Loan Party shall maintain as its
Fiscal Year the twelve month period ending on December 31 of each year.
6.14. BORROWING BASE DETERMINATION. (a) The Borrower and each
Guarantor shall conduct, or shall cause to be conducted, at its expense, and
upon request of the Agent, and present to the Agent for approval, such
appraisals, investigations or reviews as the Agent shall reasonably request for
the purpose of determining the Borrowing Base, all upon reasonable notice and at
such reasonable times during normal business hours and as often as may be
reasonably requested. The Borrower and each Guarantor shall furnish to the Agent
any information which the Agent may reasonably request regarding the
determination and calculation of the Borrowing Base including, without
limitation, correct and complete copies of any invoices, underlying agreements,
instruments or other documents and the identity of all obligors.
(b) The Borrower shall promptly notify the Agent in writing in
the event that at any time the Borrower, any Guarantor or any of their
Subsidiaries receives or otherwise gains knowledge that the Borrowing Base is
less than 110% of the Revolving Credit Commitments.
6.15. ENVIRONMENTAL. Upon receipt of any notification or
otherwise obtaining knowledge of any Release or Environmental Liabilities and
Costs in connection with any property or operations of any Loan Party or any of
their Subsidiaries, the Borrower shall, at its cost, conduct, or pay for
consultants to conduct, appropriate (as reasonably determined by the Borrower)
tests or assessments, if any, at such time and in such manner as Borrower shall
reasonably determine, of environmental conditions at such operations or
properties including, without limitation, investigation and testing of
subsurface conditions, and shall take such remedial, investigational or other
action as any Governmental Authority lawfully requires or, if there is no such
Governmental Authority requirement, as is appropriate and consistent with good
business practice (as reasonably determined by the Borrower).
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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 (or the Agent, as provided in this Article VII):
7.1. LIENS, ETC. No Loan Party shall create or suffer to
exist, or permit any of its Subsidiaries to create or suffer to exist, any Lien
upon or with respect to any of its or such Subsidiary's properties, whether now
owned or hereafter acquired, or assign, or permit any of its Subsidiaries to
assign, any right to receive income, except for the following (each of which
will be given independent effect); PROVIDED, HOWEVER, no such Liens permitted by
this Section 7.1 (other than Permitted Liens) shall be Liens on any property
constituting Collateral:
(a) Liens created pursuant to the Loan Documents;
(b) Capitalized Lease Obligations, purchase money Liens or
purchase money security interests upon or in any property of, or owned, acquired
or held by such Loan Party or any Subsidiary of such Loan Party or any Person
acquired by such Loan Party or any of their Subsidiaries in accordance with
Section 7.5, in the ordinary course of business to secure the purchase price of
such property and Liens existing on such property at the time of its direct or
indirect acquisition by such Loan Party or such Subsidiary (other than any such
Lien created in contemplation of anticipation of such acquisition); PROVIDED,
HOWEVER, that (i) any such Lien is created solely for the purpose of securing
Indebtedness representing, or incurred to acquire, finance, refinance or refund,
the cost (including, without limitation, the cost of construction) of the
property subject thereto, (ii) the principal amount of the Indebtedness secured
by such Lien does not exceed 100% of such cost, (iii) any such Lien on property
owned by any Person that is acquired by a Loan Party is on terms that are
commercially reasonable, (iv) such Lien does not extend to or cover any property
other than such item of property and any improvements on such item and (v) the
incurrence of such Indebtedness is permitted by Section 7.2(g);
(c) Liens on the Collateral (as defined in each of the
Indentures) securing the guaranty by the Borrower of the First Mortgage Notes or
the Permanent Financing Notes, as the case may be;
(d) Liens created pursuant to the Letter of Credit Agreement;
(e) Liens, if any, on Accounts and proceeds thereof of
Funding, the Borrower and the Guarantors in connection with the Receivables
Securitization;
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(f) Any Lien securing the renewal, extension, refinancing or
refunding of any Indebtedness or other obligation secured by any Lien permitted
by subsections (b), (c), (d), (e), (l), (m) or (n) of this Section 7.1 without
any increase in the amount secured thereby or in the assets subject to such
Lien;
(g) Liens arising by operation of law in favor of materialmen,
mechanics, warehousemen, carriers, lessors or other similar Persons incurred by
the Borrower, any Guarantor or any of their Subsidiaries in the ordinary course
of business which secure its obligations to such Person; PROVIDED, HOWEVER, that
the Borrower, such Guarantor or such Subsidiary (i) is not in default with
respect to such payment obligation to such Person or (ii) is in good faith and
by appropriate proceedings diligently contesting such obligation and adequate
provision is made for the payment thereof and the consequences of all such liens
in the aggregate would have no Material Adverse Effect;
(h) Liens (excluding Environmental Liens) securing taxes,
assessments or governmental charges or levies; PROVIDED, HOWEVER, that (i) none
of the Borrower, any Guarantor or any of their Subsidiaries is in default in
respect of any payment obligation with respect thereto and adequate provision is
made for the payment thereof or (ii) the Borrower, such Guarantor or such
Subsidiary is in good faith and by appropriate proceedings diligently contesting
such obligation, adequate provision is made for the payment thereof and the
consequence of all such failures in the aggregate would have no Material Adverse
Effect;
(i) 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 or welfare
benefits;
(j) Liens securing 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
liens; PROVIDED, HOWEVER, that all such Liens in the aggregate (i) would have in
the aggregate no Material Adverse Effect and (ii) do not secure directly or
indirectly judgments in excess of $5,000,000;
(k) Zoning restrictions, easements, licenses, reservations,
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, the Guarantors and their Subsidiaries
taken as a whole;
(l) Liens existing on the date of this Agreement and disclosed
on Schedule 7.1;
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(m) Liens on fixtures in connection with existing mortgages on
real property or mortgages on real property permitted hereunder;
(n) Liens on property (not constituting Collateral) of the
Borrower or any Guarantor to secure certain accumulated post-employment benefit
and related obligations of the Borrower or any Guarantor for current and future
retirees represented by the United Steelworkers of America;
(o) Liens securing non-recourse project financing Indebtedness
incurred by any member of the Loan Party Consolidated Group or against any
property of any member of the Loan Party Consolidated Group solely for the
purpose of financing the acquisition, construction or improvement of property
acquired, owned, held, controlled or used by, or contributed to a joint venture
by, any Loan Party or any of their respective Subsidiaries, including, without
limitation, in connection with the development of the Borrower's Steubenville
South Oxygen plant; PROVIDED, HOWEVER, such Indebtedness shall be on competitive
terms and conditions and in any event no less favorable than those available to
companies similar to such Loan Party; and PROVIDED FURTHER that such
Indebtedness shall not exceed $25,000,000 in the aggregate at any time;
(p) Liens incurred in connection with transactions of the type
described in clause (iv) of the definition of Cash Equivalents; and
(q) other Liens to the extent not included in (a) through (o)
above PROVIDED that the Indebtedness secured by such Liens shall not have been
incurred prior to the Effective Date and shall not exceed $50,000,000 in the
aggregate at any time.
7.2. INDEBTEDNESS. No Loan Party shall create or suffer to
exist, or permit any of its Subsidiaries to create or suffer to exist, any
Indebtedness except (each of which will be given independent effect):
(a) the Obligations;
(b) Indebtedness with respect to Contingent Obligations
permitted by Section 7.10;
(c) current liabilities in respect of taxes, assessments and
governmental charges or levies incurred, or claims for labor, materials,
inventory, services, supplies and rentals incurred, or for goods or services
purchased, in the ordinary course of business consistent with the past practice
of such Loan Party and its Subsidiaries;
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(d) Indebtedness of such Loan Party or any of its Subsidiaries
outstanding on the Effective Date and reflected on Schedule 7.2;
(e) Indebtedness owing to such Loan Party by any of their
respective Subsidiaries;
(f) Indebtedness arising under any surety, payment or
performance bond reimbursement obligation entered into in the ordinary course of
such Loan Party's business and consistent with the past practice of such Loan
Party;
(g) Indebtedness of any Loan Party or any of their
Subsidiaries under Capitalized Lease Obligations and Indebtedness secured by
Liens permitted by Section 7.1(b), PROVIDED, HOWEVER, that the sum of (i) the
aggregate principal amount of Capitalized Lease Obligations incurred under this
clause (g) by the Loan Parties and their Subsidiaries (and not pursuant to
clause 7.1(b) above) and (ii) the aggregate principal amount of Indebtedness
incurred pursuant to clause 7.1(b) above by the Loan Parties and their
Subsidiaries, shall not exceed $50,000,000 at any one time outstanding;
(h) Indebtedness evidenced by the Holdings Note or the
Keepwell Payments made to the Borrower by WHX and/or Holdings pursuant to the
Keepwell Agreement;
(i) Indebtedness arising under any appeal bond reimbursement
obligation entered into with respect to any judgment;
(j) Indebtedness secured by Liens permitted under Section
7.1(o) and (q);
(k) Indebtedness of the Borrower arising under the Letter of
Credit Agreement;
(l) Indebtedness constituting a renewal, extension,
refinancing or refunding of Indebtedness described in Sections 7.2(d) and (g),
(i) for a principal amount not in excess of the principal amount of such
Indebtedness and (ii) on other terms and conditions as or more favorable to the
Borrower, any Guarantor and their Subsidiaries than the terms of the
Indebtedness being renewed, extended or refunded; PROVIDED, HOWEVER, that the
aggregate principal amount of all such Indebtedness incurred by Holdings shall
not exceed the then outstanding amount of the Holdings Note; and
(m) Indebtedness incurred in connection with transactions
described in clause (iv) of Cash Equivalents.
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7.3. LEASE OBLIGATIONS. (a) Except for existing or proposed
leases listed on Schedule 7.3 or as permitted by Section 7.5(c), no Loan Party
shall create or suffer to exist, or permit any of its Subsidiaries to create or
suffer to exist, any obligations as lessee for the rental or hire of real or
personal property in connection with any sale and leaseback transaction or for
the rental or hire of real or personal property of any kind under other leases
or agreements to lease having an original term of one year or more which would
cause the direct or contingent liabilities of the Loan Parties and their
Subsidiaries, on a consolidated basis, in respect of all such obligations (other
than any such liabilities in respect of renewals or replacements of existing
leases in amounts not in excess of those payable under existing leases) to
exceed $15,000,000 payable in any period of 12 consecutive months.
(b) Except for any lease or agreement authorized or permitted
pursuant to Section 7.3(a), no Loan Party shall, or permit any of its
Subsidiaries to, 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 (whether real or personal or mixed), whether now owned or hereafter
acquired, which (i) such Loan Party or any of its respective Subsidiaries has
sold or transferred or is to sell or transfer to any other Person, or (ii) such
Loan Party or any of its respective Subsidiaries intends to use for
substantially the same purposes as any other 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. No Loan Party shall (a) declare or
make, and shall not permit any of its Subsidiaries to 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 (i) dividends paid to a Loan Party or any wholly owned
Subsidiary of a Loan Party by any Loan Party or any of its Subsidiaries, (ii)
payments to WHX in an aggregate amount not to exceed the aggregate amount of
capital contributions made to the Loan Parties prior to the date of this
Agreement as set forth on Schedule 7.4, (iii) payments to WHX in an aggregate
amount not to exceed the aggregate amount of capital contributions made to any
Loan Party subsequent to the date of this Agreement and (iv) any payments made
to WHX pursuant to the Tax Sharing Agreement; PROVIDED, that with respect to any
payments made pursuant to clauses (a)(ii), (iii) or (iv) above (A) no Default or
Event of Default shall have occurred and be continuing or would result from such
payment and (B) such payment shall not result in a condition that would require
Keepwell Payments, 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 (or permit any of its Subsidiaries to do so) any principal amount of
Indebtedness for borrowed money, including, without limitation, interest, now or
hereafter outstanding, except (i) the Loans, (ii) payments made by a Loan Party
or its Subsidiary to any other Loan Party on account of any Indebtedness owing
to a Loan Party by such other Loan Party or Subsidiary, (iii) in connection with
Indebtedness being refinanced in
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accordance with Section 7.2(l), (iv) payments made to repay the Holdings Note
and not otherwise prohibited by the Holdings Intercreditor Agreement, and loans
or advances made prior to the date of this Agreement as set forth on Schedule
7.4, (v) on account of any loans or advances in the form of Keepwell Payments
made to a Loan Party pursuant to the Keepwell Agreement or other loans or
advances made by WHX to any Loan Party subsequent to the date of this Agreement,
(vi) any repurchase or redemption of the First Mortgage Notes at a price not in
excess of the then applicable redemption price as provided in the First Mortgage
Indenture and (vii) any repayments of any "Series" that has a variable "Invested
Amount" (under and as defined in the Securitization Documents); PROVIDED, that
with respect to any repayments, repurchases or redemptions made (x) pursuant to
clauses (b)(iv) (other than with respect to the Holdings Note), (v), (vi) or
(vii) above (A) no Default or Event of Default shall have occurred and be
continuing or would result from such payment, (B) such repayment, repurchase or
redemption shall not result in a condition that would require Keepwell Payments
and (C) in the event of a repayment of any Keepwell Payments, such repayment may
only be made after the end of a period of six months commencing on the last day
of the calendar month in which the immediately preceding Keepwell Payment was
made or (y) pursuant to clause (b)(iv) above with respect to the Holdings Note,
no Default or Event of Default shall have occurred and be continuing or would
result from such payment.
7.5. MERGERS, STOCK ISSUANCES, SALE OF ASSETS, ETC. (a) No
Loan Party shall, or permit any of its Subsidiaries to (i) merge with any
Person, (ii) consolidate with any Person, (iii) acquire all or substantially all
of the Stock or Stock Equivalents of any Person other than as permitted by
Section 7.6(f), (iv) acquire all or substantially all of the assets of any
Person other than as permitted by Section 7.6(f), (v) enter into any joint
venture or transaction with any Person, or (vi) sell, lease, transfer or
otherwise dispose of, whether in one transaction or in a series of transactions,
all or substantially all of its assets; PROVIDED that with respect to (iii),
(iv) and (v) above, (1) the Borrower or any Guarantor may enter into any joint
venture or transaction permitted by Section 7.6(f) and (2) with prior written
notice to the Agent, the Borrower or any Guarantor may enter into any other
joint venture or transaction requiring an aggregate Investment of cash or assets
of not more than $3,000,000.
(b) No Loan Party shall (i) issue or transfer, or permit any
of its Subsidiaries to issue or transfer, any Stock or Stock Equivalents other
than any such issuance or transfer (A) by a Subsidiary of the Borrower to the
Borrower or a wholly owned Subsidiary of the Borrower or (B) by a direct wholly
owned Subsidiary of a Guarantor to such Guarantor or (C) in connection with
transactions permitted by Section 7.5(a), 7.5(c) (other than with respect to a
Loan Party) or 7.6(f), or (ii) sell, convey, transfer, lease or otherwise
dispose of, or from and after the Effective Date permit any of its Subsidiaries
to sell, convey, transfer, lease or otherwise dispose of, any Stock or Stock
Equivalents of any of such Loan Party's Subsidiaries unless, in any such case,
both there is transferred all of the Stock and Stock Equivalents of such
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Subsidiary owned by such Loan Party and their Subsidiaries and such issuance,
sale, conveyance, transfer, lease or disposition would be permitted by Section
7.5(c).
(c) No Loan Party shall, or permit any of its Subsidiaries to,
sell, convey, transfer, lease or otherwise dispose of any of its assets or any
interest therein to any Person or permit or suffer any other Person to acquire
any interest in any of assets of such Loan Party or any such Subsidiary, except
(i) the sale or disposition of inventory in the ordinary course of business or
assets which have become obsolete, (ii) leases of personal property by the
Borrower or any wholly owned Subsidiary of the Borrower to the Borrower or to
any wholly owned Subsidiary of the Borrower, (iii) the lease or sublease of real
property not constituting a sale and leaseback, to the extent not otherwise
prohibited by this Agreement, (iv) any such sale, conveyance, transfer, lease or
other disposition to the Borrower, (v) as long as no Default or Event of Default
is continuing or would result therefrom, any such sale of any assets (other than
assets constituting Collateral) for the Fair Market Value thereof and, in the
case of any such sales that are not related to trade-ins for replacements of
existing assets, in an aggregate amount not to exceed $10,000,000 in any Fiscal
Year, PLUS, for each Fiscal Year, an amount equal to 50% of the excess of such
amount over the Fair Market Value of such assets actually sold in the
immediately preceding Fiscal Year, payable in cash or in notes upon such sale;
PROVIDED, that such notes shall not exceed 50% of the aggregate consideration
per Fiscal Year; and PROVIDED FURTHER that no such sale shall include assets
which are necessary to the continuing operations of any Loan Party and its
Subsidiaries, (vi) sales of accounts receivable of the Borrower and the
Guarantors permitted by Section 7.5(d), (vii) so long as no Default or Event of
Default is continuing or would result therefrom, sale and leaseback transactions
involving property having a Fair Market Value at the time of such sale and
leaseback transaction in an aggregate amount not to exceed $10,000,000 in any
Fiscal Year, (viii) sales of assets incurred in connection with transactions of
the type described in clause (iv) of the definition of Cash Equivalents and (ix)
transfers of assets permitted under Section 7.6(f).
(d) No Loan Party shall sell or otherwise dispose of, or
factor at maturity or collection, or permit any of its Subsidiaries to sell or
otherwise dispose of, or factor at maturity or collection, any of their
respective accounts receivables, except that the Borrower, the Guarantors and
their Subsidiaries may sell, transfer, pledge or otherwise convey accounts
receivables in connection with the Receivables Securitization; PROVIDED,
HOWEVER, that no Loan Party or any of their Subsidiaries shall sell, transfer,
pledge or otherwise convey accounts receivables at any time an event occurs
under any Securitization Document which results in either the termination of, or
relieves the Borrower of, its obligation to do so.
7.6. INVESTMENTS IN OTHER PERSONS. No Loan Party shall,
directly or indirectly, make or maintain, or permit any of its Subsidiaries to
make or maintain, any loan or advance to any Person or own, purchase or
otherwise acquire, or permit
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any of its Subsidiaries to own, purchase or otherwise acquire, any Stock, Stock
Equivalents, other equity interest, obligations or other securities of, or any
assets constituting the purchase of a business or line of business, or make or
maintain, or permit any of its Subsidiaries to make or maintain, any capital
contribution to, 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 UCC), notes receivable and similar items arising or
acquired in the ordinary course of business consistent with the past practice of
the Borrower, such Guarantor and their Subsidiaries;
(b) Investments in a Subsidiary permitted by Section 7.13;
PROVIDED, HOWEVER, that no Default or Event of Default has occurred and is
continuing or would result therefrom and the aggregate amount of Investments in
such Subsidiary do not exceed (i) with respect to Funding, the amount necessary
from time to time to consummate the transactions contemplated by the Receivables
Securitization, including any repayments of any "Series" that has a variable
"Invested Amount" (under and as defined in the Securitization Documents) and
(ii) with respect to all other permitted Subsidiaries that are not parties to
the Guaranty, $1,000,000;
(c) Investments in Subsidiaries of such Loan Party (in
existence as of the Effective Date) in the ordinary course of business of such
Loan Party and its Subsidiaries;
(d) loans or advances to employees of the Borrower, such
Guarantor or any of their Subsidiaries, which loans and advances shall not in
the aggregate exceed $2,000,000 outstanding at any time; PROVIDED, HOWEVER, that
such loans or advances in respect of relocation expenses shall not in the
aggregate exceed $1,000,000;
(e) Investments in Cash Equivalents;
(f) Investments in (i) the Fabricating Joint Ventures, (ii)
Ohio Coatings Company, (iii) the joint venture with ISPAT, (iv) the
Co-Generation Agreement, (v) contemplated cold-rolling joint ventures and (vi)
other joint ventures as set forth on Schedule 7.6; PROVIDED that no Default or
Event of Default has occurred and is continuing or would result therefrom and
the amount of such Investments permitted pursuant to this clause (f) made from
and after the Effective Date shall not exceed in the aggregate at any time the
sum of (A) $30,000,000 and (B) all cash loans, contributions and advances, other
than Keepwell Payments, made after the Effective Date by WHX to the Loan Party
Consolidated Group;
(g) Investments in joint ventures or other entities permitted
by Section 7.5 and not otherwise described in clause (f) above; PROVIDED that no
Default
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or Event of Default has occurred and is continuing or would result therefrom and
the amount of such Investment shall not exceed $3,000,000 in the aggregate at
any time;
(h) Investments existing on the date hereof and set forth on
Schedule 7.6; and
(i) advances by the Borrower to the Guarantors under the
Guarantor Intercompany Notes.
7.7. CHANGE IN NATURE OF BUSINESS. No Loan Party shall,
directly or indirectly, make, or permit any of its Subsidiaries to make, any
material change in the nature or conduct of its business as carried on at the
date hereof, except as otherwise expressly permitted herein or to the extent
necessary or appropriate to adapt to changes or anticipated changes in the
business environment or otherwise deemed appropriate by management for the
manufacturing and sale of steel and steel-related products.
7.8. MATERIAL AGREEMENTS. No Loan Party shall, or permit any
of its Subsidiaries to, alter, amend, modify, rescind, terminate or waive any of
their respective rights under, or fail to comply in all respects with all of
their respective Contractual Obligations; PROVIDED, HOWEVER, that, with respect
to any Contractual Obligations (other than the Loan Documents, the First
Mortgage Notes, the Permanent Financing Notes, the Securitization Documents and
the Tax Sharing Agreement), the Borrower, the Guarantors and their Subsidiaries
may do so if the consequences thereof in the aggregate have no Material Adverse
Effect and, with respect to any Contractual Obligations under the First Mortgage
Notes, the Permanent Financing Notes, the Securitization Documents and the Tax
Sharing Agreement, the Borrower, the Guarantors and their Subsidiaries may do so
with the Agent's consent if the effect of such action is not adverse to the Loan
Parties and the Lender Parties; and PROVIDED FURTHER that in the event of any
breach or event of default by a Person other than the Borrower, any Guarantor or
any of their Subsidiaries, 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 endeavor to cause such breach or event of default to be
cured unless the failure to do so would have no Material Adverse Effect.
7.9. ACCOUNTING CHANGES. No Loan Party shall make, or permit
any of its Subsidiaries to make, any change in accounting treatment and
reporting practices or tax reporting treatment, except as required by GAAP or
law, rule or regulation and disclosed to the Lender Parties and the Agent.
7.10. CONTINGENT OBLIGATIONS. No Loan Party shall, or permit
any of its Subsidiaries to, incur, assume, endorse, be or become liable for, or
guarantee, directly or indirectly, or permit or suffer to exist, any Contingent
Obligation, except for:
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(a) Contingent Obligations evidenced by a Loan Document;
(b) the guaranty by the Borrower of the First Mortgage Notes,
the Permanent Financing Notes or any renewal, extension, refinancing or
refunding thereof for a principal amount not in excess of the First Mortgage
Notes or the Permanent Financing Notes outstanding at such time and on other
terms and conditions as or more favorable to Holdings, the Borrower and its
Subsidiaries;
(c) guaranties by any Loan Party of Indebtedness of any of its
Subsidiaries to the extent such underlying Indebtedness is permitted to be
incurred hereunder;
(d) guaranties by Subsidiaries of Indebtedness of any Loan
Party or other Subsidiaries of such Loan Party, to the extent such underlying
Indebtedness is permitted to be incurred hereunder;
(e) Contingent Obligations existing or proposed on the date
hereof and listed on Schedule 7.10;
(f) Contingent Obligations incurred in connection with
transactions of the type described in clause (iv) of the definition of Cash
Equivalents: and
(g) Contingent Obligations incurred in connection with
transactions permitted under Section 7.5(a) and 7.6(f).
7.11. TRANSACTIONS WITH AFFILIATES. No Loan Party shall, or
permit any of its Subsidiaries to, except as otherwise expressly permitted
herein, do any of the following: (i) make any Investment in an Affiliate of such
Loan Party not a wholly owned Subsidiary of such Loan Party; (ii) transfer,
sell, lease, assign or otherwise dispose of any asset to any Affiliate of such
Loan Party not a wholly owned Subsidiary of such Loan Party; (iii) merge into or
consolidate with or purchase or acquire assets from any Affiliate of such Loan
Party other than a wholly owned Subsidiary of such Loan Party; (iv) repay any
Indebtedness to any Affiliate of such Loan Party; or (v) enter into any other
transaction directly or indirectly with or for the benefit of any Affiliate of
such Loan Party not a wholly owned Subsidiary of such Loan Party (including,
without limitation, guaranties and assumptions of obligations of any such
Affiliate) except for (A) transactions in the ordinary course of business on a
basis no less favorable to such Loan Party or such Subsidiary as would be
obtained in a comparable arm's length transaction with a Person not an
Affiliate, (B) reasonable salaries and other employee compensation, including,
without limitation, any profit sharing and other established bonus or deferred
compensation plans, to officers or directors of such Loan Party or any of its
Subsidiaries commensurate with current compensation levels; PROVIDED, HOWEVER
that such Loan Party may pay salaries or other employee compensation at levels
commensurate with
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industry practice to new employees who are not Affiliates of the such Loan Party
immediately prior to the date of hire, (C) any transaction required or otherwise
permitted by this Agreement, (D) fees paid to WHX by the Borrower not in excess
of $5,000,000 per Fiscal Year to pay management fees, the proceeds of which are
then used by WHX solely to (1) pay management fees pursuant to the management
agreement between WHX and WPN Corp. in effect on the Effective Date and (2) pay
bonuses to management of the Borrower; PROVIDED, HOWEVER, that no such loans,
advances or management fees may be paid if there has occurred and is continuing
a Default or Event of Default, or a Default or an Event of Default would occur
as a result of the payment of such management fee, (E) those transactions listed
on Schedule 7.11, (F) transactions with Ohio Coatings Company, Wheeling-Nisshin,
Dong Yang and ISPAT previously disclosed in writing to the Agent and the Lender
Parties on a basis no less favorable to the Borrower or such Subsidiary as would
be obtained in a comparable arm's-length transaction with a Person not an
Affiliate, (G) payments under the Tax Sharing Agreement, (H) advances of cash by
the Borrower to the Guarantors under the Guarantor Intercompany Notes or (I)
other transactions with Affiliates to the extent not included in (A) through (H)
PROVIDED that the amounts payable by the Borrower and the Guarantors in
connection with such transactions shall not in the aggregate exceed $2,000,000
per Fiscal Year.
7.12. CANCELLATION OF INDEBTEDNESS OWED TO IT. No Loan Party
shall cancel, or permit any of its Subsidiaries to cancel, any claim or
Indebtedness owed to it except for adequate consideration and in the ordinary
course of business, except to the extent that such cancellation occurs in
connection with the consummation of a plan of reorganization or liquidation of
the obligor under such Indebtedness and such cancellation would not have a
Material Adverse Effect.
7.13. NO NEW SUBSIDIARIES. No Loan Party shall, or permit any
of its Subsidiaries to, incorporate or otherwise organize any Subsidiary which
was not in existence on the Effective Date (a "NEW SUBSIDIARY") without the
prior written consent of the Majority Lenders except as otherwise permitted
pursuant to Sections 7.5 and 7.6; PROVIDED that only the prior written consent
of the Agent shall be necessary in connection with any New Subsidiary of the
Borrower or any Guarantor if such New Subsidiary's Net Worth is not in excess of
$1,000,000; PROVIDED FURTHER that, in any case, the Stock of any such New
Subsidiary is pledged to the Agent for the benefit of the Secured Parties
pursuant to a pledge agreement in form and substance satisfactory to the Agent.
7.14. CAPITAL STRUCTURE. Except as otherwise permitted
hereunder, no Loan Party shall make, or permit any of its Subsidiaries to make,
any change in its capital structure (including, without limitation, in the terms
of its outstanding Stock) or amend its certificate of incorporation or by-laws,
other than those changes which, in the aggregate, would have no Material Adverse
Effect.
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7.15. NO SPECULATIVE TRANSACTIONS. No Loan Party shall, or
permit any of its Subsidiaries to, engage in any speculative transaction or,
except for the sole purpose of hedging in the normal course of business and
consistent with industry practices, engage in any transaction involving
commodity options or futures contracts.
7.16. MARGIN REGULATIONS. The Loan Parties shall not use the
proceeds of any Loans to purchase or carry any margin stock.
7.17. BANK ACCOUNTS. None of the Borrower or any Guarantor
shall maintain any bank account other than those provided in Section 2.19, the
Cash Collateral Account, the collateral accounts required to be maintained by
the Borrower pursuant to the Letter of Credit Agreement, those listed on
Schedule 7.17 for the purposes listed thereon and other operational accounts
with the prior written consent of the Agent; PROVIDED 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, the Borrower and the Guarantors shall be entitled to open new
accounts (i) in replacement of those identified on Schedule 7.17 having the same
purposes and (ii) for specified purposes including employee payroll, trustee and
escrow accounts and if approved by the Agent, for new Subsidiaries, so long as
the Agent receives prior written notification of each such new account and a
blocked account letter, in form and substance satisfactory to the Agent.
7.18. ENVIRONMENTAL RELEASE. No Loan Party shall, or permit
any of its Subsidiaries to, or allow any lessee or other Person to, effect or
suffer to occur, from and after the Effective Date, any Release in respect of,
or dispose of, from and after the Effective Date, any Contaminant which creates
liability under or is in violation of any Environmental Law if the consequence
of all such Releases and disposals in the aggregate would result in a Material
Adverse Effect.
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 of any Loan
(including, without limitation, mandatory prepayments of principal) or any fee
due any Lender Party or the Agent, other amount due hereunder or under the other
Loan Documents or other of the Obligations when the same becomes due and payable
(except for interest on any Loan) or the Borrower shall fail to pay interest on
any Loan within three days after the same becomes due and payable; or
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(b) Any representation or warranty made or deemed made by any
Loan Party in any Loan Document or by any Loan Party (or any of its officers) in
connection with any Loan Document shall prove to have been incorrect in any
material respect when made or deemed made; or
(c) Any Loan Party shall fail to perform or observe (i) any
term, covenant or agreement contained in Articles V, VI or VII, in any
Collateral Document or in the Keepwell Agreement or (ii) any other term,
covenant or agreement contained in this Agreement or in any other Loan Document
if such failure under this clause (ii) shall remain unremedied for ten Business
Days after the earlier of the date on which (A) a Responsible Officer of any
Loan Party becomes aware of such failure or (B) written notice thereof shall
have been given to the Borrower by the Agent or any Lender Party; or
(d) Any Loan Party or any of its Subsidiaries shall fail to
pay any principal of or premium or interest on any Indebtedness for borrowed
money of such Loan Party or Subsidiary that is outstanding in a principal amount
of at least $1,000,000 (excluding Indebtedness evidenced by the Revolving Credit
Notes), when the same becomes due and payable after, in the case all such
Indebtedness, any applicable period of grace (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 such Indebtedness, 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), prior to
the stated maturity thereof; or
(e) Any Loan Party or any of its Subsidiaries 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 or any of its Subsidiaries seeking to adjudicate it a bankrupt or as
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 or any of its Subsidiaries (but not instituted by it), either such
proceedings shall remain undismissed or unstayed for a period of 30 days or any
of the actions sought in such proceedings shall occur; or any Loan Party or any
of its Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this subsection (e); or
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(f) Any final judgment or order for the payment of money in
excess of $100,000 shall be rendered against any Loan Party or any of its
Subsidiaries and either (i) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order, or (ii) there shall be any period of
10 consecutive days following entry of such judgment or order (or, in the event
that the terms of such judgment or order do not require immediate payment,
following the date or dates on which such payment is to be made) during which
such judgment or order shall not have been paid, compromised or otherwise
satisfied and a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; PROVIDED, HOWEVER, that
such final judgment or order shall not be deemed an Event of Default if (x) such
final judgment or order is less than $1,000,000, (y) such final judgment or
order is fully covered by insurance carried by any Loan Party and (z) such
non-payment, non-compromise or non-satisfaction is solely the result of the
insurance company's tardiness in payment; or
(g) an ERISA Event shall occur which, in the reasonable
determination of the Majority Lenders, has a reasonable possibility of a
liability, deficiency or waiver request of the Borrower or any ERISA Affiliate,
whether or not assessed, exceeding $5,000,000; or
(h) Any material provision of any Collateral Document, the
Keepwell Agreement prior to the release thereof in accordance with its terms or
the Holdings Intercreditor Agreement after delivery thereof shall for any reason
cease to be valid and binding on any Loan Party thereto, or any such Loan Party
shall so state in writing; or
(i) At any time prior to the consummation of the Holdings IPO,
WHX shall fail to own of record and beneficially all of the outstanding Stock
and Stock Equivalents of Holdings (other than non-voting, non-participating
perpetual preferred Stock that satisfies the requirements of Section 1504(a)(4)
of the Code), free and clear of all Liens; or
(j) Holdings shall fail to own of record and beneficially all
of the outstanding Stock and Stock Equivalents of each of the Borrower, PCC and
Wheeling Construction (other than non-voting, non-participating perpetual
preferred Stock that satisfies the requirements of Section 1504(a)(4) of the
Code), free and clear of all Liens except those Liens created under the
Collateral Documents; or
(k) Any of WHX (prior to the Holdings IPO) or any other Loan
Party shall fail to own of record and beneficially all of the outstanding stock
and Stock Equivalents of Unimast (other than non-voting, non-participating
perpetual preferred Stock that satisfies the requirements of Section 1504(a)(4)
of the Code) free and clear of all Liens: or
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(l) There shall occur a Material Adverse Change or an event
which would have a Material Adverse Effect; or
(m) At any time on or after (i) a majority of the members of
the Board of Directors of Holdings shall be replaced over a two-year period,
from the directors who constituted the Board of Directors at the Effective Date,
and such replacement shall not have been approved by the Board of Directors of
Holdings as constituted at the Effective Date (or its replacements approved by
the Board of Directors of Holdings) or (ii) a Person or group of Persons acting
in concert as a partnership or other group (other than WHX) shall, as a result
of a tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise, have become the beneficial owner (within the meaning of
Rule 13d-3 under the Securities and Exchange Act of 1934, as amended) of
securities of Holdings representing 20% or more of the combined voting power of
the then outstanding securities of WHX ordinarily (and apart from rights
accruing under special circumstances) having the right to vote in the election
of directors; or
(n) A "termination event" (other than an "early amortization
event") (as such terms are defined in the Securitization Documents) shall occur
and be continuing and shall not have been rescinded in accordance with the terms
of the Securitization Documents; or
(o) Holdings or the Borrower shall, or shall permit any of the
Borrower's Subsidiaries to, (i) alter, rescind, terminate, amend, supplement,
waive or otherwise modify any provision of or permit any breach or default or
other event to exist under the First Mortgage Notes, the Permanent Financing
Notes or the Holdings Note, or take or fail to take any action thereunder,
unless any of the foregoing would not in the aggregate have a Material Adverse
Effect; or (ii) amend, modify or change, or consent or agree to any amendment,
modification or change to, any of the terms relating to the payment or
prepayment of principal of, or premium or interest on, any First Mortgage Note,
any Permanent Financing Note or the Holdings Note (other than any such
amendment, modification or change which would extend the maturity or reduce the
amount of any payment of principal thereof or which would reduce the rate or
extend the date for payment of interest thereon).
8.2. REMEDIES. If there shall occur and be continuing an Event
of Default, the Agent (i) shall at the request, or may with the consent, of the
Majority Lenders, by notice to the Borrower, terminate the obligation of each
Lender to make Loans and of each Issuer to issue Letters of Credit, whereupon
the same shall forthwith terminate, and (ii) 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 Obligations payable under this
Agreement to be forthwith due and payable, whereupon the Revolving Credit Notes,
all such interest and all such Obligations shall become and be forthwith due and
payable, without presentment,
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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 subparagraph (e) above, (A) the obligation of each
Lender to make Loans and of each Issuer to issue Letters of Credit shall
automatically be terminated and (B) the Revolving Credit Notes, all such
interest and all such 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, or at the request of the Majority Lenders shall,
after the giving of notice as provided in clause (ii) above, 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) If any Event
of Default shall have occurred and be continuing, the Agent may, from time to
time, irrespective of whether it is taking any of the actions described in
Section 8.2 or otherwise, make demand upon the Borrower to, and forthwith upon
such demand the Borrower will, pay to the Agent on behalf of the Lender Parties
in same day funds at the Agent's office, for deposit in a special cash
collateral account (Account #40688567) maintained in the name of the Agent on
behalf of the Secured Parties at Citibank (the "L/C CASH COLLATERAL ACCOUNT"),
an amount equal to all outstanding Letter of Credit Obligations. In the Agent's
discretion, the L/C Cash Collateral Account may be an interest or a non-interest
bearing account.
(b) The Borrower hereby pledges, and grants to the Agent a
Lien on and security interest in, all of its right, title and interest in and to
the L/C Cash Collateral Account, all funds held in the L/C Cash Collateral
Account from time to time and all proceeds thereof, as security for the payment
of all amounts due and to become due from the Borrower to the Secured Parties
under the Loan Documents.
(c) 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 Issuer for the payment of any Reimbursement
Obligations owing to it and then in such order as the Agent shall determine, as
shall have become or shall become due and payable by the Borrower to the Secured
Parties in respect of the Obligations.
(d) 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.
(e) 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
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Account or any funds held therein, except as provided in or contemplated by this
Agreement.
(f) 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 UCC 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.
(g) 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 realization upon all or any part of the L/C Cash Collateral Account,
may, in the discretion of the Agent, then or at any time thereafter be applied
(after the expiration of all outstanding Letters of Credit and the payment of
any amounts payable pursuant to Sections 8.3(c) and 10.4) in whole or in part by
the Agent against all or any part of the Obligations now or hereafter existing
under any of the Loan Documents 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 Party (in its
capacities as a Lender, the Swing Bank and an Issuer, as applicable) hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers and discretion under this Agreement and the other Loan
Documents as are delegated to the Agent by the terms hereof and thereof,
together with such powers and discretion as are reasonably incidental thereto.
As to any matters not expressly provided for by this Agreement and the other
Loan Documents (including, without limitation,
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enforcement or collection of the 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 Lender Parties and all holders of
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 Party prompt notice of each notice given to it by any
Loan Party 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 willful
misconduct. Without limitation of the generality of the foregoing, the Agent (i)
may treat the payee of any Revolving Credit Note as the holder thereof until
such Note has been assigned in accordance with Section 10.7; (ii) may rely on
the Register to the extent set forth in Section 10.7(c), (iii) may consult with
legal counsel (including, without limitation, counsel to the Borrower or any
other Loan Party), independent 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; (iv) makes no warranty or representation to any Lender Party and shall
not be responsible to any Lender Party for any statement, warranty or
representation (whether written or oral) made in or in connection with this
Agreement or any of the other Loan Documents; (v) 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 the Borrower or any other Loan Party or to inspect the property
(including, without limitation, the books and records) of the Borrower or any
other Loan Party; (vi) shall not be responsible to any Lender Party for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the perfection or priority of any lien or security interest created or
purported to be created under or in connection with any Loan Document, of this
Agreement or any of the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; and (vii) 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, telecopy, cable or telex) believed by it to be genuine and
signed or sent by the proper party or parties.
9.3. CITIBANK, CITICORP AND AFFILIATES. With respect to its
Revolving Credit Commitment, the Loans (including, without limitation, the
Revolving Credit Loans and Swing Loans) made by it, any each Revolving Credit
Note and any Letters
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of Credit issued by it, Citicorp shall have the same rights and powers under
this Agreement as any other Lender Party and may exercise the same as though it
were not an Affiliate of the Agent; and the term "Lender Party" or "Lender
Parties" shall, unless otherwise expressly indicated, include Citicorp in its
individual capacity. Citibank and its Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, the Borrower
or any other Loan Party or any of their respective Subsidiaries and any Person
who may do business with or own securities of the Borrower or any other Loan
Party or any of their respective Subsidiaries, all as if Citibank were not the
Agent and without any duty to account therefor to the Lender Parties.
9.4. LENDER PARTY CREDIT DECISION. Each Lender Party
acknowledges that it has, independently and without reliance upon the Agent or
any other Lender Party 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 Party also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender Party 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 other Loan Documents.
9.5. INDEMNIFICATION. (a) The Lender Parties severally agree
to indemnify the Agent, its Affiliates and their respective directors, officers,
employees, agents and advisors (to the extent not reimbursed by the Borrower or
other Loan Parties), from and against such Lender Party's ratable share
(determined as provided below) of 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
any of the other Loan Documents or any action taken or omitted by the Agent
under this Agreement or any of the other Loan Documents including, without
limitation, the preparation of reports with respect to the Collateral; PROVIDED,
HOWEVER, that no Lender Party 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 (or any of its
agent's) gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender Party 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 (including,
without limitation, field examinations of Collateral), 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 any of the other Loan Documents, to the
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extent that the Agent is not reimbursed for such expenses by the Borrower or
another Loan Party except to the extent such expenses result from the Agent's
(or any of its agent's) gross negligence or willful misconduct. For purposes of
this Section 9.5, the Lender Parties' respective ratable shares of any amount
shall be determined, at any time, according to the sum of (a) the aggregate
principal amount of the Loans outstanding at such time and owing to the
respective Lender Parties, (b) their respective Ratable Portions of the
aggregate Letter of Credit Obligations outstanding at such time PLUS (c) their
respective Ratable Portions of the Available Credit at such time. The failure of
any Lender Party to reimburse the Agent promptly upon demand for its ratable
share of any amount required to be paid by the Lender Party to the Agent as
provided herein shall not relieve any other Lender Party of its obligation
hereunder to reimburse the Agent for its ratable share of such amount, but no
Lender Party shall be responsible for the failure of any other Lender Party to
reimburse the Agent for such other Lender Party's ratable share of such amount.
Without prejudice to the survival of any other agreement of any Lender Party
hereunder, the agreement and obligations of each Lender Party contained in this
Section 9.5(a) shall survive the payment in full of principal, interest and all
other amounts payable hereunder and under the other Loan Documents.
(b) Each Lender Party severally agrees to indemnify each
Issuer (to the extent not promptly reimbursed by the Borrower) from and against
such Lender Party's ratable share (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against such Issuer in any way relating to
or arising out of the Loan Documents or any action taken or omitted by such
Issuer under the Loan Documents; PROVIDED, HOWEVER, that no Lender Party shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from such Issuer's (or any of its agent's) gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender Party agrees to
reimburse such Issuer promptly upon demand for its ratable share of any costs
and expenses (including, without limitation, fees and expenses of counsel)
payable by the Borrower under Section 10.4, to the extent that such Issuer is
not promptly reimbursed for such costs and expenses by the Borrower except to
the extent such expenses result form such Issuer's (or any of its agent's) gross
negligence or willful misconduct. For purposes of this Section 9.5(b), the
Lender Parties' respective ratable shares of any amount shall be determined, at
any time, according to the sum of (a) the aggregate principal amount of the
Loans outstanding at such time and owing to the respective Lender Parties, (b)
their respective Ratable Portions of the aggregate Letter of Credit Obligations
outstanding at such time PLUS (c) their respective Ratable Portions of the
Available Credit at such time. The failure of any Lender Party to reimburse such
Issuer promptly upon demand for its ratable share of any amount required to be
paid by the Lender Parties to such Issuer as provided herein shall not relieve
any other Lender Party of its obligation hereunder to reimburse such Issuer for
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its ratable share of such amount, but no Lender Party shall be responsible for
the failure of any other Lender Party to reimburse such Issuer for such other
Lender Party's ratable share of such amount. Without prejudice to the survival
of any other agreement of any Lender Party hereunder, the agreement and
obligations of each Lender Party contained in this Section 9.5(b) shall survive
the payment in full of principal, interest and all other amounts payable
hereunder and under the other Loan Documents.
9.6. SUCCESSOR AGENT. The Agent may resign at any time by
giving written notice thereof to the Lender Parties and the Borrower. Upon any
such resignation, the Majority Lenders shall have the right to appoint a
successor Agent; PROVIDED, that if no Default or Event of Default shall have
occurred and be continuing, such successor Agent shall be reasonably
satisfactory to the Borrower, which shall be (a) a commercial bank organized
under the laws of the United States of America or any State thereof and having
total assets of at least $1,000,000,000 and a combined capital and surplus of at
least $50,000,000 or (b) a Lender as of the Effective Date. If no successor
Agent shall have been so appointed by the Majority Lenders, and shall have
accepted such appointment, within 30 days after the retiring Agent's giving of
notice of resignation or the removal of the retiring Agent at the request of all
of the Lenders (other than the Agent and its Affiliates), then the retiring
Agent may, on behalf of the Lender Parties, appoint a successor Agent approved,
as long as no Default or Event of Default has occurred and is continuing, by the
Borrower, such approval not be unreasonably withheld or delayed, which successor
shall be (a) a commercial bank organized under the laws of the United States of
America or of any State thereof and having total assets of at least
$1,000,000,000 and a combined capital and surplus of at least $50,000,000 or (b)
a Lender as of the Effective Date. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent and upon the execution and filing or
recording of such financing statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Majority
Lenders may request, in order to continue the perfection of the Liens granted or
purported to be granted by the Collateral Documents, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, discretions,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its 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 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.
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ARTICLE X
MISCELLANEOUS
10.1. AMENDMENTS, ETC. (a) No amendment or waiver of any
provision of this Agreement or any other Loan Document (including, without
limitation, the waiver of any Default or Event of Default) nor consent to any
departure by the Borrower or any other Loan Party therefrom shall in any event
be effective unless the same shall be in writing and signed (or, in the case of
the Collateral Documents, consented to) by the Borrower and 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 at any time: (i) waive any of
the conditions specified in Sections 3.1 or 3.2 except as otherwise provided
therein; (ii) increase, or extend the expiration date of, the Revolving Credit
Commitments of the Lenders or subject the Lenders to any additional obligations;
(iii) reduce (A) the amount of any payment of any principal of, or interest on,
the Loans due under this Agreement, (B) the stated rate of any interest payable
hereunder or (C) the amount of any fees or other amounts payable hereunder; (iv)
postpone any date fixed for any payment of principal of, or interest on, the
Loans or any fees or other amounts payable hereunder; (v) change the percentage
of the Revolving Credit Commitments, the aggregate unpaid principal amount of
the Loans or the Letter of Credit Obligations, or the number of Lenders which
shall be required for the Lenders or any of them to take any action hereunder;
(vi) release any of the Collateral except that, so long as no Default or Event
of Default has occurred and is continuing or would result therefrom, (A) as
shall otherwise be provided in the Collateral Documents and Section 7.5(d) and
(B) in any Fiscal Year, Collateral having an aggregate Fair Market Value not in
excess of $25,000,000 shall require only the consent of the Agent; (vii) amend
this Section 10.1; (viii) amend the definition of Majority Lenders; (ix)
terminate the Keepwell Agreement (except pursuant to its terms), the Holdings
Guaranty, the Guaranty or any other keepwell agreement or guaranty delivered
pursuant to the Loan Documents; or (x) increase the advance rates above those
set forth on Schedule IV hereto for Eligible Inventory; PROVIDED FURTHER that no
amendment, waiver or consent shall, unless in writing and signed by the Swing
Bank or each Issuer, as the case may be, in addition to the Lenders required
above to take such action, affect the rights or obligations of the Swing Bank or
of the Issuers, as the case may be, under this Agreement, and PROVIDED FURTHER
that no amendment, waiver or consent shall, unless in writing and signed by the
Agent in addition to the Lenders required above to take such action, affect the
rights or duties of the Agent under this Agreement or the other Loan Documents.
(b) Each Lender Party grants (x) to the Agent the right to
purchase all (but not less than all) of such Lender Party's Commitments and
Loans owing to it and the Notes held by it and all of its rights and obligations
hereunder and under the
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other Loan Documents at a price equal to the aggregate amount of outstanding
Loans owed to such Lender Party (together with all accrued and unpaid interest
and fees owed to such Lender), and (y) to the Borrower the right to cause an
assignment of all (but not less than all) of such Lender Party's Commitments and
Loans owing to it and the Notes held by it and all of its rights and obligations
hereunder and under the other Loan Documents, which right may be exercised by
the Agent or the Borrower, as the case may be, if such Lender Party refuses to
execute any amendment, waiver or consent which requires the written consent of
all the Lenders and to which the Agent and the Borrower have agreed. Each Lender
Party agrees that if the Agent or the Borrower, as the case may be, exercises
its option hereunder, it shall promptly execute and deliver all agreements and
documentation necessary to effectuate such assignment as set forth in Section
10.7. Any purchase of such Lender Party's Commitments and Loans owing to it and
the Notes held by it must (i) occur within 30 Business Days from the date that
such Lender Party refuses to execute any amendment, waiver or consent which
requires the written consent of all the Lenders and to which the Agent and the
Borrower have agreed and (ii) include an amount payable to such Lender Party
which is sufficient to compensate such Lender Party for any loss, expense, or
liability as a result of any purchase of such Lender Party's Commitments and
Loans owing to it and the Notes held by it under this Section 10.1(b) which
arises out of, or is in connection with, any funds acquired by such Lender Party
to make, continue, or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a
Eurodollar Rate Loan.
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 1134 Market Street, Wheeling, West Virginia 26003, Attention: Chief
Financial Officer with copy to WHX or WPN Corp. at 110 East 59th Street, New
York, New York 10022, Attention: Mr. Stewart Tabin; if to any Lender, at its
Domestic Lending Office specified opposite its name on Schedule III hereto; and
if to the Agent, at its address at 399 Park Avenue, 6th Floor, Zone 4, New York,
New York 10043, Attention: Keith R. Karako; 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.
Delivery by telecopier of an executed counterpart of any
amendment or waiver of any provision of this Agreement or the Revolving Credit
Notes or of any
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Exhibit hereto to be executed and delivered hereunder shall be effective as
delivery of a manually executed counterpart thereof.
10.3. NO WAIVER; REMEDIES. No failure on the part of any
Lender Party or the Agent to exercise, and no delay in exercising, any right
hereunder or under any 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) the reasonable costs and expenses of the Agent in connection
with the preparation, execution, delivery, administration, modification and
amendment of this Agreement, each of the other Loan Documents and each of the
other documents to be delivered hereunder and thereunder, including, without
limitation, (A) all due diligence, collateral review, syndication,
transportation, computer, duplication, appraisal, audit, insurance, consultant,
search, filing and recording fees and expenses and (B) the reasonable fees and
out-of-pocket expenses of counsel to the Agent with respect thereto and with
respect to advising the Agent as to its rights and responsibilities or the
perfection, protection or preservation of rights or interests under this
Agreement and the other Loan Documents with respect to negotiations with any
Loan Party or with other creditors of any Loan Party or any of its Subsidiaries
arising out of any Default or Event of Default or any events or circumstances
that may give rise thereto and with respect to presenting claims in or otherwise
participating in or monitoring any bankruptcy, insolvency or other similar
proceeding involving creditors rights generally and any proceeding ancillary
thereto, (ii) the per diem cost of any audit or collateral evaluation (of not
more than $500 per day) of the Agent and (iii) the reasonable costs and expenses
of the Lender Parties (including, without limitation, reasonable counsel fees
and expenses) in connection with the 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 indemnify and hold harmless the
Agent, each Lender Party 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, reasonable 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,
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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 or in connection with any
investigation by any Governmental Authority of any potential matter covered
hereby or thereby (collectively, the "INDEMNIFIED MATTERS"), including, without
limitation, (i) all Environmental Liabilities and Costs arising from or
connected with the past, present or future operations of the Borrower or any of
its Subsidiaries, or damage to real or personal property or natural resources or
harm or injury alleged to have resulted from any Release; (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 any of its Subsidiaries; (iii) any costs or
liabilities incurred in connection with any Environmental Lien; (iv) any costs
or liabilities incurred in connection with any other matter affecting any
facility pursuant to Environmental Laws, including, without limitation, CERCLA
and applicable state property transfer laws, including, without limitation,
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 attributable solely to acts of the
Agent or such Indemnitee or any agent on behalf of the Agent or such Lender
following (x) foreclosure by the Agent or any Indemnitee, or (y) the Agent or
any Lender having become the successor in interest to the Borrower or any of its
Subsidiaries; (v) the management of the Loans and Letters of Credit, or (vi) the
use or intended use of the proceeds of the Loans or Letters of Credit; PROVIDED,
HOWEVER, 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.
(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 (other than a payment made to the Agent pursuant
to Section 2.3(f)) or acceleration of the maturity of the Revolving Credit Notes
pursuant to Section 8.2 or for any other reason or a conversion of a Eurodollar
Rate Loan does not occur by reason of the fourth sentence of Section 2.8, 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 have incurred or in the future incur as a result of such payment or
conversion, including, without limitation, any actual out-of-pocket loss, cost
or expense incurred by reason of the liquidation or
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reemployment of deposits or other funds acquired by such Lender to fund or
maintain such Loan.
(d) The Agent and each Lender 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.
(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 control 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
at such Indemnitee's expense. If, without the Borrower's prior written consent
which consent shall not be unreasonably withheld, an Indemnitee shall settle any
such investigation, litigation, proceeding or other action, such Indemnitee
shall be deemed to have waived its rights to indemnity and defense hereunder.
(f) The obligations of the Borrower under this Section 10.4
and under Sections 2.10 and 2.12 shall survive the repayment of the 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 Party and each of its
respective 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
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender Party or such Affiliate 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
Party shall have made any demand under this Agreement, any Revolving Credit Note
or any Reimbursement Agreement or any other Loan Document and although such
Obligations may be unmatured. Each Lender Party agrees promptly to notify the
Borrower after any such set-off and application made by such Lender Party or its
Affiliate; 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
Party and its respective Affiliates under this Section are in addition to the
other rights and remedies (including, without limitation, other rights of
set-off) which such Lender Party and its respective Affiliates may have.
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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 been notified by each Lender Party that such Lender Party has
executed it and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Agent and each Lender Party 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 Lender
Parties.
10.7. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender 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 and the Loans and Letter of Credit Obligations owing to
it and 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) if such an assignment is of Revolving Credit Loans and
Revolving Credit Commitments, each such assignment shall be of a constant, and
not a varying, percentage of the assigning Lender's rights and obligations under
this Agreement with respect to Revolving Credit Loans, Letters of Credit and
Revolving Credit Commitments, (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 $5,000,000, in the case of an assignment to a Lender Party, or
$15,000,000, in the case of an assignment to a Person that is not a Lender
Party, or, in each case, an integral multiple of $1,000,000 in excess thereof,
unless such assignment is of the Lender's entire Revolving Credit Commitment,
and (iii) each assignee hereunder shall 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 with a fee of
$3,500 and the Revolving Credit Note (or an affidavit of loss and indemnity with
respect to such Revolving Credit Note, satisfactory to the Agent) 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, and if such Lender was an Issuer, of an Issuer
hereunder and thereunder with respect to Letters of Credit issued after such
effective date, 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 (except for those rights which
survive the payment in full of principal and interest hereunder) 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 or
Issuer's rights and obligations under the Loan Documents, such Lender or Issuer
shall cease to be a party hereto).
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(b) By executing and delivering an Assignment and Acceptance,
the Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or any instrument or other document
furnished pursuant hereto or thereto or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, this Agreement or any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Loan Party or the
performance or observance by any Loan Party 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 other Loan Documents together
with a copy of any 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 Party or any other Lender Party,
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 and discretion under
this Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof and thereof, together with such powers and discretion 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 and, if
appropriate, an Issuer.
(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
Lender Parties and the Revolving Credit Commitments of, Letter of Credit
Obligations owing to, and principal amount of the Loans owing to each Lender
Party from time to time (the "REGISTER"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the Loan
Parties, the Agent and the Lender Parties may treat each Person whose name is
recorded in the Register as a Lender Party for all purposes of this Agreement.
The Register shall be available for inspection by the Borrower, the Agent or any
Lender Party at any reasonable time and from time to time upon reasonable prior
notice.
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(d) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender Party and an assignee representing that it is an Eligible
Assignee, together with the Revolving Credit Note 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 Revolving Credit Note, a new Revolving Credit Note 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 Party has retained a Revolving Credit Commitment hereunder, a new
Revolving Credit Note to the order of the assigning Lender Party in an amount
equal to the Revolving Credit Commitment retained by it hereunder. Such new
Revolving Credit Note shall be dated the same date as the surrendered Revolving
Credit Note and be in substantially the form of Exhibit A hereto.
(e) Each Lender Party 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, the Letter of Credit Obligations owing to it and
the Loans owing to it and the Revolving Credit Note held by it). The terms of
such participation shall not, in any event, require the participant's consent to
any amendment, waiver or other modification of any provision of any Loan
Document, the consent to any departure by any Loan Party therefrom, or to the
exercising or refraining from the exercise of any powers or rights which such
Lender Party may have under or in respect of the Loan Documents (including,
without limitation, the right to enforce the obligations of the Loan Parties),
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 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 any of the Collateral, except (A)
as shall otherwise be provided in the Collateral Documents and (B) Collateral
having an aggregate Fair Market Value not in excess of $25,000,000 in any Fiscal
Year. In the event of the sale of any participation by any Lender Party, (i)
such Lender Party's obligations under the Loan Documents (including, without
limitation, its Revolving Credit Commitment) shall remain unchanged, (ii) such
Lender Party shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender Party shall remain the holder
of such Revolving Credit Note and Obligations for all purposes of this
Agreement, (iv) such Lender Party shall disclose to the Agent the identity of
each bank or other entity purchasing a participation and the principal amount of
such participation within five Business Days after the sale and purchase of such
participation, and (v) the Borrower, the Agent and the other Lender
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Parties shall continue to deal solely and directly with such Lender in
connection with such Lender Party's rights and obligations under this Agreement.
(f) 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
Loans owing to it and the Note or Notes 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.
10.8. GOVERNING LAW. This Agreement and the Revolving Credit
Notes and the rights and obligations of the parties hereto and thereto shall be
governed by, and construed in accordance with, the law of the State of New York.
10.9. SUBMISSION TO JURISDICTION. (a) Any legal action or
proceeding with respect to this Agreement or the 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 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 a copy 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 or any Lender Party or any holder of a Revolving Credit Note
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 among 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.
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10.12. NO LIABILITY OF THE ISSUERS. The Borrower assumes all
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither any Issuer nor
any of its officers or directors shall be liable or responsible for: (a) the use
that may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith; (b) the validity, sufficiency
or genuineness of documents, or of any endorsement thereon, even if such
documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by such Issuer against presentation of
documents that do not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
Letter of Credit; or (d) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit, EXCEPT that the Borrower shall have
a claim against such Issuer, and such Issuer shall be liable to the Borrower, to
the extent of any direct, but not consequential, damages suffered by the
Borrower that the Borrower prove were caused by (i) such Issuer's willful
misconduct or gross negligence in determining whether documents presented under
any Letter of Credit comply with the terms of the Letter of Credit or (ii) such
Issuer's willful failure to make lawful payment under a Letter of Credit after
the presentation to it of a draft and certificates strictly complying with the
terms and conditions of the Letter of Credit. In furtherance and not in
limitation of the foregoing, such Issuer may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
10.13. ENTIRE AGREEMENT. This Agreement, together with all of
the other Loan Documents and all certificates and documents delivered hereunder
or thereunder, and the fee letter by and between the Borrower and each of the
Lender Parties embody the entire agreement of the parties and supersedes all
prior agreements and understandings relating to the subject matter hereof.
10.14. CONFIDENTIALITY. Each Lender Party and the Agent agree
to keep information obtained by it pursuant hereto and the other Loan Documents
confidential in accordance with such Lender Party'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 (i) to such Lender Party's or the Agent's, as
the case may be, Affiliates, 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, (ii) to the extent such information
presently is or hereafter becomes available to such Lender Party or the Agent,
as the case may be, on a non- confidential basis from a source other than the
Borrower, (iii) 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
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auditors, or (iv) to assignees or participants or potential assignees or
participants who agree to be bound by the provisions of this Section.
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10.15. WAIVER OF JURY TRIAL. Each of the Borrower, the Agent
and the Lender Parties irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to any of the Loan Documents, the Loans or
the actions of the Agent or any Lender Party in the negotiation, administration,
performance or enforcement thereof.
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.
BORROWER
WHEELING-PITTSBURGH STEEL
CORPORATION
By:_______________________________
Name: John Testa
Title: Vice President
AGENT
CITIBANK, N.A.,
as Agent
By:_______________________________
Name:
Title:
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LENDERS
CITICORP USA, INC.
By:_______________________________
Name:
Title:
CORESTATES BANK, N.A.
By:_______________________________
Name:
Title:
BANKAMERICA BUSINESS CREDIT,
INC.
By:_______________________________
Name:
Title:
STAR BANK, N.A.
By:_______________________________
Name:
Title:
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NATIONSBANK, N.A.
By:_______________________________
Name:
Title:
NATIONAL CITY COMMERCIAL
FINANCE, INC.
By:_______________________________
Name:
Title:
ISSUER (AND NOT LENDER)
CITIBANK, N.A.
By:_________________________________
Name:
Title:
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T A B L E O F C O N T E N T S
Section Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. DEFINED TERMS........................................................ 2
1.2. COMPUTATION OF TIME PERIODS.......................................... 30
1.3. ACCOUNTING TERMS..................................................... 30
1.4. CERTAIN TERMS........................................................ 30
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
2.1. THE REVOLVING CREDIT LOANS........................................... 30
2.2. THE SWING LOANS...................................................... 31
2.3. MAKING THE LOANS..................................................... 31
2.4. FEES................................................................. 33
2.5. REDUCTION AND TERMINATION OF THE REVOLVING CREDIT COMMITMENTS........ 33
2.6. REPAYMENT............................................................ 33
2.7. PREPAYMENTS.......................................................... 33
2.8. CONVERSION/CONTINUATION OPTION....................................... 35
2.9. INTEREST............................................................. 36
2.10. INTEREST RATE DETERMINATION......................................... 36
2.11. INCREASED COSTS..................................................... 37
2.12. ILLEGALITY.......................................................... 37
2.13. CAPITAL ADEQUACY.................................................... 38
2.14. PAYMENTS AND COMPUTATIONS........................................... 38
2.15. TAXES............................................................... 40
2.16. SHARING OF PAYMENTS, ETC............................................ 42
2.17. LETTER OF CREDIT FACILITY........................................... 43
2.18. SETTLEMENT OF ACCOUNTS.............................................. 49
2.19. THE BLOCKED ACCOUNT................................................. 49
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SECTION PAGE
ARTICLE III
CONDITIONS PRECEDENT
3.1. CONDITIONS PRECEDENT TO THE EFFECTIVE DATE........................... 50
3.2. ADDITIONAL CONDITIONS PRECEDENT TO THE EFFECTIVE DATE................ 54
3.3. CONDITIONS PRECEDENT TO EACH LOAN AND LETTER OF CREDIT............... 55
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1. CORPORATE EXISTENCE; COMPLIANCE WITH LAW............................. 56
4.2. CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.............. 57
4.3. TAXES................................................................ 58
4.4. FULL DISCLOSURE...................................................... 58
4.5. FINANCIAL MATTERS.................................................... 59
4.6. LITIGATION........................................................... 60
4.7. MARGIN REGULATIONS................................................... 60
4.8. OWNERSHIP OF THE BORROWER AND SUBSIDIARIES........................... 60
4.9. ERISA................................................................ 61
4.10. LIENS................................................................62
4.11. FIRST MORTGAGE NOTES; PERMANENT FINANCING NOTES......................62
4.12. NO BURDENSOME RESTRICTIONS; NO DEFAULTS..............................63
4.13. NO OTHER VENTURES....................................................63
4.14. INVESTMENT COMPANY ACT...............................................63
4.15. INSURANCE............................................................63
4.16. LABOR MATTERS........................................................64
4.17. FORCE MAJEURE........................................................65
4.18. USE OF PROCEEDS......................................................65
4.19. ENVIRONMENTAL PROTECTION.............................................65
4.20. INTELLECTUAL PROPERTY................................................67
4.21. TITLE................................................................67
ARTICLE V
FINANCIAL COVENANTS
5.1. MAINTENANCE OF TANGIBLE NET WORTH.................................... 69
5.2. MAINTENANCE OF LEVERAGE RATIO........................................ 70
5.3. MAINTENANCE OF INTEREST COVERAGE RATIO............................... 71
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SECTION PAGE
5.4. MAINTENANCE OF CUMULATIVE CASH FLOW.................................. 72
5.5. LIMITATION ON CAPITAL EXPENDITURES................................... 72
ARTICLE VI
ADDITIONAL AFFIRMATIVE COVENANTS
6.1. COMPLIANCE WITH LAWS, ETC............................................ 73
6.2. CONDUCT OF BUSINESS.................................................. 73
6.3. PAYMENT OF TAXES, ETC................................................ 74
6.4. MAINTENANCE OF INSURANCE............................................. 74
6.5. PRESERVATION OF CORPORATE EXISTENCE, ETC............................. 74
6.6. ACCESS............................................................... 74
6.7. KEEPING OF BOOKS..................................................... 75
6.8. MAINTENANCE OF PROPERTIES, ETC....................................... 75
6.9. APPLICATION OF PROCEEDS.............................................. 75
6.10. FINANCIAL STATEMENTS................................................ 75
6.11. REPORTING REQUIREMENTS.............................................. 78
6.12. EMPLOYEE PLANS...................................................... 82
6.13. FISCAL YEAR......................................................... 82
6.14. BORROWING BASE DETERMINATION........................................ 82
6.15. ENVIRONMENTAL....................................................... 83
ARTICLE VII
NEGATIVE COVENANTS
7.1. LIENS, ETC.......................................................... 83
7.2. INDEBTEDNESS........................................................ 86
7.3. LEASE OBLIGATIONS................................................... 87
7.4. RESTRICTED PAYMENTS................................................. 88
7.5. MERGERS, STOCK ISSUANCES, SALE OF ASSETS, ETC....................... 89
7.6. INVESTMENTS IN OTHER PERSONS........................................ 91
7.7. CHANGE IN NATURE OF BUSINESS........................................ 92
7.8. MATERIAL AGREEMENTS................................................. 92
7.9. ACCOUNTING CHANGES.................................................. 93
7.10. CONTINGENT OBLIGATIONS.............................................. 93
7.11. TRANSACTIONS WITH AFFILIATES........................................ 93
7.12. CANCELLATION OF INDEBTEDNESS OWED TO IT............................. 94
7.13. NO NEW SUBSIDIARIES................................................. 95
7.14. CAPITAL STRUCTURE................................................... 95
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SECTION PAGE
7.15. NO SPECULATIVE TRANSACTIONS....................................... 95
7.16. MARGIN REGULATIONS................................................ 95
7.17. BANK ACCOUNTS..................................................... 95
7.18. ENVIRONMENTAL RELEASE............................................. 96
ARTICLE VIII
EVENTS OF DEFAULT
8.1. EVENTS OF DEFAULT.................................................. 96
8.2. REMEDIES........................................................... 99
8.3. ACTIONS IN RESPECT OF LETTERS OF CREDIT............................100
ARTICLE IX
THE AGENT
9.1. AUTHORIZATION AND ACTION............................................101
9.2. AGENT'S RELIANCE, ETC...............................................102
9.3. CITIBANK, CITICORP AND AFFILIATES...................................102
9.4. LENDER PARTY CREDIT DECISION........................................103
9.5. INDEMNIFICATION.....................................................103
9.6. SUCCESSOR AGENT.....................................................105
ARTICLE X
MISCELLANEOUS
10.1. AMENDMENTS, ETC...................................................106
10.2. NOTICES, ETC......................................................107
10.3. NO WAIVER; REMEDIES...............................................108
10.4. COSTS; EXPENSES; INDEMNITIES......................................108
10.5. RIGHT OF SET-OFF..................................................111
10.6. BINDING EFFECT....................................................111
10.7. ASSIGNMENTS AND PARTICIPATIONS....................................111
10.8. GOVERNING LAW.....................................................114
10.9. SUBMISSION TO JURISDICTION........................................114
10.10. SECTION TITLES....................................................115
10.11. EXECUTION IN COUNTERPARTS.........................................115
10.12. NO LIABILITY OF THE ISSUERS.......................................115
10.13. ENTIRE AGREEMENT..................................................116
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SECTION PAGE
10.14. CONFIDENTIALITY..................................................116
10.15. WAIVER OF JURY TRIAL.............................................116
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SCHEDULES
Schedule I - List of Issuers
Schedule II - Commitments
Schedule III - List of Applicable Lending Offices and Addresses for
Notices
Schedule IV - Borrowing Base Advance Rates
Schedule 2.3 - List of Eligible Signatories
Schedule 3.1 - UCC Termination Statements
Schedule 4.3 - Taxes
Schedule 4.6 - Litigation
Schedule 4.8 - List of Subsidiaries
Schedule 4.9 - List of Plans
Schedule 4.10 - List of Liens
Schedule 4.13 - Joint Ventures
Schedule 4.16 - Labor
Schedule 4.19 - Environmental Protection
Schedule 4.21(a) - List of Owned Real Estate
Schedule 4.21(b) - List of Leased Real Estate
Schedule 4.21(c) - Existing Options
Schedule 7.1 - Existing Liens
Schedule 7.2 - Existing Indebtedness
Schedule 7.3 - Leases
Schedule 7.4 - Restricted Payments
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Schedule 7.6 - Existing Investments
Schedule 7.10 - Contingent Obligations
Schedule 7.11 - Transactions with Affiliates
Schedule 7.17 - Permitted Bank Accounts
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EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Letter of Credit Request
Exhibit D - Form of Notice of Conversion or Continuation
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Form of Borrowing Base Certificate
Exhibit G - Form of Borrower Security Agreement
Exhibit H - Form of Borrower Pledge Agreement
Exhibit I - Form of Holdings Guaranty
Exhibit J - Form of Holdings Pledge Agreement
Exhibit K - Form of Guaranty
Exhibit L - Form of Guarantor Security Agreement
Exhibit M - Form of Keepwell Agreement
Exhibit N - Form of Holdings Intercreditor Agreement
Exhibit O-1 - Opinion of Olshan Grundman Frome & Rosenzweig
-- Outside Counsel for the Borrower
Exhibit O-2 - Opinion of Kirkpatrick & Lockhart
-- Local Counsel for the Borrower
Exhibit P - Form of Guarantor Intercompany Notes
Exhibit Q - Form of Cash Collateral Account Agreement
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SCHEDULE I
LIST OF ISSUERS
NAME OF ISSUER
Citibank, N.A.
-I-
<PAGE>
SCHEDULE II
COMMITMENTS
NAME OF LENDER COMMITMENT
Citicorp USA, Inc. $27,500,000
BankAmerica Business Credit, Inc. $27,500,000
CoreStates Bank, N.A. $25,000,000
Star Bank, N.A. $15,000,000
NationsBank, N.A. $15,000,000
National City Commercial Finance, Inc. $15,000,000
-II-
<PAGE>
SCHEDULE III
LIST OF APPLICABLE LENDING OFFICES AND ADDRESSES FOR NOTICES
<TABLE>
<CAPTION>
NAME OF LENDER DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE
- -------------- ----------------------- -------------------------
<S> <C> <C>
Citicorp USA, Inc. 399 Park Avenue 399 Park Avenue
New York, NY 10043 New York, NY 10043
Attn: Keith Karako Attn: Keith Karako
Phone: (212) 599-3149 Phone: (212) 599-3149
Fax: (212) 793-1290 Fax: (212) 793-1290
BankAmerica Business Credit, Inc. 40 E. 52nd Street 40 E. 52nd Street
New York, NY 10022 New York, NY 10022
Attn: Walter T. Shellman Attn: Walter T. Shellman
Phone: (212) 836-5254 Phone: (212) 836-5254
Fax: (212) 836-5169 Fax: (212) 836-5169
CoreStates Bank, N.A. 1339 Chestnut Street 1339 Chestnut Street
E.C. 1-8-4-26 E.C. 1-8-4-26
Philadelphia, PA 19107 Philadelphia, PA 19107
Attn: Michele A. Walcoff Attn: Michele A. Walcoff
Phone: (215) 973-8068 Phone: (215) 973-8068
Fax: (215) 973-2633 Fax: (215) 973-2633
Star Bank, N.A. 425 Walnut Street 425 Walnut Street
ML# 9220 ML# 9220
Cincinnati, OH 45202 Cincinnati, OH 45202
Attn: Michael McCullough Attn: Michael McCullough
Phone: (513) 287-8328 Phone: (513) 287-8328
Fax: (513) 632-2040 Fax: (513) 632-2040
NationsBank, N.A. 101 N. Tryon Street 101 N. Tryon Street
NC1-001-15.03 NC1-001-15.03
Charlotte, NC 28255 Charlotte, NC 28255
Attn: Charlie Franklin Attn: Charlie Franklin
Phone: (704) 386-4199 Phone: (704) 386-4199
Fax: (704) 386-8694 Fax: (704) 386-8694
National City Commercial 1965 East Sixth Street 1965 East Sixth Street
Finance, Inc. Suite 400, Locator #3049 Suite 400, Locator #3049
Cleveland, OH 44114-2214 Cleveland, OH 44114-2214
Attn: Lee K. Mosby Attn: Lee K. Mosby
Phone: (216) 575-2847 Phone: (216) 575-2847
Fax: (216) 575-9555 Fax: (216) 575-9555
</TABLE>
-III-
EXECUTION COPY
AMENDMENT NO. 1 TO THE
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of December 30, 1996
AMENDMENT NO. 1 TO THE SECOND AMENDED AND RESTATED CREDIT AGREEMENT
among WHEELING-PITTSBURGH STEEL COMPANY, a Delaware corporation (the
"BORROWER"), the banks, financial institutions and other institutional lenders
parties to the Credit Agreement referred to below (collectively, the "LENDERS")
and CITIBANK, N.A., as agent (the "AGENT"), and as issuing agent (the "ISSUING
AGENT").
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders, the Agent and the Issuing Agent have
entered into a Second Amended and Restated Credit Agreement dated as of December
28, 1995 (as amended, supplemented or otherwise modified through the date
hereof, the "CREDIT AGREEMENT"). Capitalized terms not otherwise defined in this
Amendment have the meanings specified in the Credit Agreement.
(2) The Borrower and the Lenders have agreed to amend the Credit
Agreement as hereinafter set forth.
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 2, hereby amended as follows:
(a) Section 1.01 is amended as follows:
(i) Section 1.01 is amended by adding the following new defined
term in appropriate alphabetical order:
"PARENT LOANS" means intercompany loans in the form of
cash advances made by WHX from time to time, since September
30, 1996, to the Borrower or any of the Guarantors.
<PAGE>
(ii) Section 1.01 is further amended by deleting the defined term
"Net Worth" and substituting therefor the following defined term:
"NET WORTH of any Person means, at any date, the excess
of (a) the Total Assets of such Person at such date OVER (b)
the Total Liabilities of such Person at such date MINUS the
aggregate principal amount of Parent Loans received by such
Person and outstanding at such date MINUS, in the case of the
Borrower, the aggregate amount of Keepwell Payments that are
designated as loans or advances made on behalf of such Person
on or prior to such date."
(b) Schedule 4.16 is amended to include the following:
"A worker stoppage began and has continued to date by
the USWA at eight plants operated by the Borrower in
Ohio, Pennsylvania and West Virginia."
(c) Section 5.1 is amended by deleting the amounts set
opposite the following dates and substituting therefor the amount set
forth below opposite each such date:
"March 31, 1997 300,000,000
June 30, 1997 290,000,000"
(d) Section 5.3 is amended by deleting the ratios set opposite
the dates December 31, 1996, March 31, 1997 and June 30, 1997 and
substituting therefor the word "none".
(e) Section 7.2(h) is amended in full to read as follows:
"(h) Indebtedness (i) evidenced by the Holdings Note,
(ii) under the Keepwell Payments made to the Borrower by WHX
and/or Holdings pursuant to the Keepwell Agreement and (iii)
under Parent Loans;"
(f) Section 7.4 is amended as follows:
(i) Section 7.4(b)(v) is amended by inserting after
the phrase "or other Loans or Advances" thereof the phrase
"(other than Parent Loans)".
(ii) Section 7.4(b) is amended by deleting the word
"and" at the end of subsection (vi) thereof, by redesignating
subsection "(vii)" thereof as subsection "(viii)" and by
adding a new subsection (vii) to read as follows:
-2-
<PAGE>
"(vii) with the consent of the Agent,
payments made by a Loan Party to repay Parent Loans
and".
(iii) Section 7.4(b) is further amended by deleting
the phrase "(v), (vi) or (vii) above" from the proviso at the
end thereof and substituting therefor the phrase "(v), (vi),
(vii) or (viii) above".
(iv) Section 7.4(b) is further amended by inserting
after the phrase "Keepwell Payment was made" in clause (C) of
the proviso at the end thereof the phrase "and only so long as
no Parent Loans are outstanding".
SECTION 2. CONDITIONS OF EFFECTIVENESS. This Amendment shall
become effective as of the date first above written on the Business Day when,
and only when, on or before March 4, 1997 (or such later date as the Agent shall
agree), the following conditions shall have been satisfied:
(a) The Agent shall have received counterparts of this
Amendment executed by the Borrower, each other Loan Party and the
Majority Lenders or, as to any of the Lenders, advice satisfactory to
the Agent that such Lenders have executed this Amendment.
(b) The Agent shall have received a certificate signed by a
duly authorized officer of the Borrower stating that:
(i) The representations and warranties contained in
the Credit Agreement and each Loan Document are correct on and
as of the date of such certificate as though made on and as of
the date hereof other than any such representations or
warranties that, by their terms, refer to a date other than
the date of such certificate; and
(ii) No event has occurred and is continuing that
constitutes a Default or an Event of Default.
The effectiveness of this Amendment is conditioned upon the accuracy of the
factual matters described herein. This Amendment is subject to the provisions of
Section 10.1 of the Credit Agreement.
SECTION 3. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND
THE NOTES. (a) On and after the effectiveness of this Amendment, each reference
in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of
like import referring to the Credit Agreement, and each reference in each of the
Loan Documents to "the Credit Agreement",
-3-
<PAGE>
"thereunder", "thereof" or words of like import referring to the Credit
Agreement, shall mean and be a reference to the Credit Agreement, as amended by
this Amendment.
(b) The Credit Agreement and each of the Loan Documents, as
specifically amended by this Amendment, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender, the Agent, or the Issuing Agent under
the Credit Agreement or any Loan Document, nor constitute a waiver of any
provision of the Credit Agreement or any Loan Document.
SECTION 4. COSTS AND EXPENSES. The Borrower agrees to pay on
demand all costs and expenses of the Agent and the Issuing Agent in connection
with the preparation, execution, delivery and administration, modification and
amendment of this Amendment and the other instruments and documents to be
delivered hereunder (including, without limitation, the reasonable fees and
expenses of counsel for the Agent and the Issuing Agent) in accordance with the
terms of Section 10.4(a) of the Credit Agreement.
SECTION 5. EXECUTION IN COUNTERPARTS. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.
-4-
<PAGE>
SECTION 6. GOVERNING LAW. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
BORROWER
WHEELING-PITTSBURGH STEEL
CORPORATION
By: /s/ F.G. Chbosky
-----------------------------
Name: F.G. Chbosky
Title:Executive Vice President
Chief Financial Officer
AGENT
CITIBANK, N.A.,
as Agent
By: /s/ Keith P. Karako
--------------------
Name: Keith P. Karako
Title: Vice President
LENDERS
CITICORP USA, INC.
By: /s/ Keith P. Karako
--------------------
Name: Keith P. Karako
Title: Vice President
-5-
<PAGE>
CORESTATES BANK, N.A.
By: /s/ Myron Landau
----------------
Name: Myron Landau
Title: Vice President
BANKAMERICA BUSINESS CREDIT, INC.
By:_______________________________
Name:
Title:
STAR BANK, N.A.
By: /s/ Mike Ellert
------------------------------
Name: Mike Ellert
Title:Vice President
-6-
<PAGE>
NATIONSBANK, N.A.
By:_______________________________
Name:
Title:
NATIONAL CITY COMMERCIAL
FINANCE, INC.
By: /s/ Joseph L. White
-----------------------------
Name: Joseph L. White
Title: Vice President
ISSUER (AND NOT LENDER)
CITIBANK, N.A.
By:/s/ Keith P. Karako
-------------------------
Name: Keith P. Karako
Title: Vice President
-7-
<PAGE>
CONSENTED TO AND ACKNOWLEDGED:
WHEELING-PITTSBURGH CORPORATION
By: /s/ F. G. Chbosky
------------------------------
Title: Chief Financial Officer
WHEELING CONSTRUCTION PRODUCTS, INC.
By: /s/ F. G. Chbosky
------------------------------
Title: Treasurer
PITTSBURGH-CANFIELD CORPORATION
By: /s/ F. G. Chbosky
------------------------------
Title: Treasurer
UNIMAST INCORPORATED
By: /s/ Arthur L. Whitman
------------------------------
Title: Vice President/Secretary
-8-
Execution Copy
AMENDMENT NO. 2 TO THE
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of June 30, 1997
AMENDMENT NO. 2 TO THE SECOND AMENDED AND RESTATED CREDIT
AGREEMENT among WHEELING-PITTSBURGH STEEL COMPANY, a Delaware corporation (the
"BORROWER"), the banks, financial institutions and other institutional lenders
parties to the Credit Agreement referred to below (collectively, the "LENDERS")
and CITIBANK, N.A., as agent (the "AGENT"), and as issuing agent (the "ISSUING
AGENT").
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders, the Agent and the Issuing Agent
have entered into a Second Amended and Restated Credit Agreement dated as of
December 28, 1995 (as amended, supplemented or otherwise modified through the
date hereof, the "CREDIT AGREEMENT"). Capitalized terms not otherwise defined in
this Amendment have the meanings specified in the Credit Agreement.
(2) The Borrower and the Lenders have agreed to amend the
Credit Agreement as hereinafter set forth.
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit
Agreement is, effective as of the date hereof and subject to the satisfaction of
the conditions precedent set forth in Section 2, hereby amended as follows:
(a) Section 1.01 is amended by adding the following defined
terms in appropriate alphabetical order:
"AMENDMENT TERMINATION DATE" means the earlier of (a)
the date that is 30 days after the Plant Restart Date and (b)
October 30, 1997.
"PLANT RESTART DATE" means 60 days after hourly
workers formerly covered by the labor agreement with the USWA
which expired on October 1, 1996 return to work.
<PAGE>
(b) Section 3.3 is amended by adding a new subsection (e) to
read as follows:
(e) For any Loan made or Letter of Credit issued
during the period starting June 30, 1997 and ending on the
Amendment Termination Date, WHX shall have made Parent Loans
to the Borrower during such period in an amount not less than
the requested Loan or the stated amount of the requested
Letter of Credit, PROVIDED that the aggregate amount of such
Parent Loans required to be made during such period shall not
exceed the cumulative amount set forth below for each of the
months set forth:
Period from
June 30, 1997 Through Cumulative Amount
--------------------- -----------------
July 31, 1997 $ 6,000,000
August 31, 1997 11,000,000
September 30,1997 16,000,000
October 31, 1997 22,000,000
(c) Section 5.1 is amended (i) by deleting the words "shall
maintain for" and substituting therefor the words "shall maintain as of
the last day of" and (ii) by adding after the amount set opposite the
date September 30, 1997 the words "or, if the Amendment Termination
Date has not occurred, $285,000,000".
(d) Section 5.2 is amended (i) by deleting the words "shall
maintain for" and substituting therefor the words "shall maintain as of
the last day of"and (ii) by adding after the ratio set opposite the
date September 30, 1997 the words "or, if the Amendment Termination
Date has not occurred, 4.20: 1.00".
(e) Section 5.3 is amended (i) by deleting the words "shall
maintain for" and substituting therefor the words "shall maintain as of
the last day of" and (ii) by adding after the amount set opposite the
date September 30, 1997 the words "or, if the Amendment Termination
Date has not occurred, none".
(f) Section 5.4 is amended (i) by deleting the words "shall
maintain for" and substituting therefor the words "shall maintain as of
the last day of" and (ii) by adding after the amount set opposite the
date September 30, 1997 the words "or, if the Amendment Termination
Date has not occurred, $(115,000,000)".
SECTION 2. CONDITIONS OF EFFECTIVENESS. This Amendment shall
become effective as of the date first above written on the Business Day when,
and only when, the following conditions shall have been satisfied:
(a) The Agent shall have received counterparts of this
Amendment executed by the Borrower, each other Loan Party and the
Majority Lenders or, as to
-2-
<PAGE>
any of the Lenders, advice satisfactory to the Agent that such Lenders
have executed this Amendment.
(b) The Agent shall have received a certificate signed by a
duly authorized officer of the Borrower stating that:
(i) The representations and warranties contained in
the Credit Agreement and each Loan Document are correct on and
as of the date of such certificate as though made on and as of
the date hereof other than any such representations or
warranties that, by their terms, refer to a date other than
the date of such certificate; and
(ii) No event has occurred and is continuing that
constitutes a Default or an Event of Default.
The effectiveness of this Amendment is conditioned upon the accuracy of the
factual matters described herein. This Amendment is subject to the provisions of
Section 10.1 of the Credit Agreement.
SECTION 3. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND
THE NOTES. (a) On and after the effectiveness of this Amendment, each reference
in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of
like import referring to the Credit Agreement, and each reference in each of the
Loan Documents to "the Credit Agreement", "thereunder", "thereof" or words of
like import referring to the Credit Agreement, shall mean and be a reference to
the Credit Agreement, as amended by this Amendment.
(b) The Credit Agreement and each of the Loan Documents, as
specifically amended by this Amendment, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender, the Agent, or the Issuing Agent under
the Credit Agreement or any Loan Document, nor constitute a waiver of any
provision of the Credit Agreement or any Loan Document.
SECTION 4. COSTS AND EXPENSES. The Borrower agrees to pay on
demand all costs and expenses of the Agent and the Issuing Agent in connection
with the preparation, execution, delivery and administration, modification and
amendment of this Amendment and the other instruments and documents to be
delivered hereunder (including, without limitation, the reasonable fees and
expenses of counsel for the Agent and the Issuing Agent) in accordance with the
terms of Section 10.4(a) of the Credit Agreement.
-3-
<PAGE>
SECTION 5. EXECUTION IN COUNTERPARTS. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.
SECTION 6. GOVERNING LAW. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
BORROWER
WHEELING-PITTSBURGH STEEL
CORPORATION
By:_______________________________
Name:
Title:
AGENT
CITIBANK, N.A., as Agent
By:_______________________________
Name:
Title:
-4-
<PAGE>
LENDERS
CITICORP USA, INC.
By:_______________________________
Name:
Title:
CORESTATES BANK, N.A.
By:_______________________________
Name:
Title:
BANKAMERICA BUSINESS CREDIT, INC.
By:_______________________________
Name:
Title:
STAR BANK, N.A.
By:_______________________________
Name:
Title:
-5-
<PAGE>
NATIONSBANK, N.A.
By:_______________________________
Name:
Title:
NATIONAL CITY COMMERCIAL
FINANCE, INC.
By:_______________________________
Name:
Title:
ISSUER (AND NOT LENDER)
CITIBANK, N.A.
By:_________________________________
Name:
Title:
-6-
<PAGE>
CONSENTED TO AND ACKNOWLEDGED:
WHEELING-PITTSBURGH CORPORATION
By:_______________________________________________
Title:
WHEELING CONSTRUCTION PRODUCTS, INC.
By:_______________________________________________
Title:
PITTSBURGH-CANFIELD CORPORATION
By:_______________________________________________
Title:
UNIMAST INCORPORATED
By:_______________________________________________
Title:
-7-
EXECUTION COPY
WAIVER, CONSENT AND
AMENDMENT NO. 3 TO THE
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of September 30, 1997
WAIVER, CONSENT AND AMENDMENT NO. 3 TO THE SECOND AMENDED AND
RESTATED CREDIT AGREEMENT (this "AMENDMENT") is entered into by
WHEELING-PITTSBURGH STEEL COMPANY, a Delaware corporation (the "BORROWER"), the
banks, financial institutions and other institutional lenders parties to the
Credit Agreement referred to below (collectively, the "LENDERS") and CITIBANK,
N.A., as agent (the "AGENT").
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders, Agent and Issuing Bank have
entered into a Second Amended and Restated Credit Agreement dated as of December
28, 1995 (as amended, supplemented or otherwise modified through the date
hereof, the "CREDIT AGREEMENT"). Capitalized terms not otherwise defined in this
Amendment have the meanings specified in the Credit Agreement.
(2) Wheeling-Pittsburgh Corporation, a Delaware corporation
("HOLDINGS"), has entered into negotiations to refund and replace the Permanent
Financing Notes as more particularly described in Exhibit A hereto (the
"REPLACEMENT TRANSACTION").
(3) The Borrower and the Lenders have agreed to amend the
Credit Agreement as hereinafter set forth to, among other things, permit the
Replacement Transaction, as hereinafter set forth.
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit
Agreement is, effective as of the date hereof and subject to the satisfaction of
the conditions precedent set forth in Section 2, hereby amended as follows:
(a) Section 1.1 is amended by (i) amending the definition of
"EBITDA" in full to read as follows:
"EBITDA" means, for any Person for any
period, the EBITDA for such Person for such period PLUS (a)
any increase in the long term liability in respect of other
post-employment benefit or pension benefit that would be
reflected on a consolidated balance sheet of such Person and
its Subsidiaries (the "EMPLOYEE LIABILITY") for such period
and (b) any decrease in pension
<PAGE>
asset that would be reflected on a consolidated balance sheet
of such Person and its Subsidiaries (the "PENSION ASSET") for
such period LESS (a) any decrease in the Employee Liability
for such period and (b) any increase in the Pension Asset for
such period.
(ii) amending the definition of "INDENTURES" in full to read
as follows:
"INDENTURES" means the Replacement Indenture.
(iii) adding the following definitions in proper alphabetical
sequence:
"REPLACEMENT INDENTURE" means the indenture
incorporating terms and conditions no less favorable to
Holdings than those terms and conditions set forth in Exhibit
S hereto to be entered into to refinance the Permanent
Financing Notes, between Holdings and the trustee thereunder,
pursuant to which the Replacement Notes are issued, as the
same may be amended, supplemented or modified from time to
time.
"REPLACEMENT NOTES" means Holding's market
rate senior notes with a term of not less than five years,
issued pursuant to the Replacement Indenture.
(b) Section 3.3(e) is amended by deleting the date October 31,
1997 and the amount set opposite such date.
(c) Section 4.11 is amended in full to read as follows:
4.11. REPLACEMENT NOTES. The Replacement
Indenture has not been amended or modified since its effective
date in any respect that imposes terms and conditions less
favorable to Holdings that the description of the terms and
conditions set forth on Exhibit S hereto and no provision
therein has been waived and no event has occurred or condition
exists under the Replacement Notes, the effect of such event
or condition is to accelerate or permit the acceleration of
the maturity of the Replacement Notes.
(d) Section 4.12 (a) is amended by deleting the parenthetical
phrase in clause (iii) thereof and replacing it with the following:
(except a non-payment default on any of the Replacement Notes,
the effect of which is not to accelerate or permit the
acceleration of the maturity of the Replacement Notes)
-2-
<PAGE>
(e) Section 5.1 is amended by deleting the amounts set
opposite the following dates and substituting therefor the amount set
forth below opposite each such date:
September 30, 1997 315,000,000
December 31, 1997 320,000,000
March 31, 1998 320,000,000
June 30, 1998 325,000,000
September 30, 1998 330,000,000
December 31, 1998 330,000,000
(f) Section 5.2 is amended by deleting the ratios set opposite
the following dates and substituting therefor the ratio set forth below
opposite each such date:
September 30, 1997 4.00:1.00
December 31, 1997 4.00:1.00
March 31, 1998 3.90:1.00
June 30, 1998 3.90:1.00
September 30, 1998 3.80:1.00
December 31, 1998 3.80:1.00
(g) Section 5.3 is amended by deleting the ratios set opposite
the following dates and substituting therefor the word or ratio set
forth below opposite each such date:
September 30, 1997 none
December 31, 1997 none
March 31, 1998 none
June 30, 1998 0.05:1.00
September 30, 1998 1.70:1.00
December 31, 1998 1.40:1.00
(h) Section 5.4 is amended by deleting the amounts set
opposite the following dates and substituting therefor the amount set
forth below opposite each such date:
September 30, 1997 (125,000,000)
December 31, 1997 (130,000,000)
March 31, 1998 (120,000,000)
June 30, 1998 (115,000,000)
September 30, 1998 (100,000,000)
-3-
<PAGE>
December 31, 1998 (100,000,000)
(i) Section 5.5 is amended by deleting the amounts set
opposite the following dates and substituting therefor the amount set
forth below opposite each such date:
September 30, 1997 75,000,000
December 31, 1997 85,000,000
March 31, 1998 95,000,000
June 30, 1998 105,000,000
September 30, 1998 130,000,000
December 31, 1998 150,000,000
(j) Section 6.11(h) is amended in full to read as follows:
(h) promptly after the sending or filing
thereof, copies of all notices, certificates or report
delivered by Holdings pursuant to the Indentures or to holders
of the Replacement Notes;
(k) Section 7.1(c) is amended in full to read as follows:
(c) Liens on the Collateral (as defined in
each of the Indentures) securing the guaranty, if any, by any
Loan Party under the Replacement Notes;
(l) Section 7.2 is amended by (i) amending clause (l) in full
to read as follows:
(l) Indebtedness constituting a renewal,
extension, refinancing or refunding of Indebtedness described
in Sections 7.2(d), (g) and (n), (i) for a principal amount
not in excess of the principal amount of such Indebtedness,
(ii) in the case of Indebtedness described in Sections 7.2(d)
and 7.2(g), on other terms and conditions as or more favorable
to the Borrower, any Guarantor and their Subsidiaries than the
terms of the indebtedness being renewed, extended or refunded
and (iii) in the case of Indebtedness described in Section
7.2(n), on other terms and conditions as or more favorable to
the Borrower, any Guarantor and their Subsidiaries than those
set forth in Exhibit S hereto; PROVIDED, HOWEVER, that the
aggregate principal amount of all such Indebtedness incurred
by Holdings shall not exceed $350,000,000; and
(ii) inserting immediately after clause (m)
a new clause (n) to read "(n) Indebtedness of
Holdings arising under the Replacement Notes".
-4-
<PAGE>
(m) Section 7.10(b) is amended in full to read as follows:
(b) the guaranty, if any, by any Loan Party
of the Replacement Notes or any renewal, extension,
refinancing or refunding thereof for a principal amount not in
excess of the Replacement Notes outstanding at such time and
on the terms and conditions as or more favorable to Holdings,
the Borrowers and it Subsidiaries;
(n) Section 8.1(o) is amended by (i) deleting from clause (i)
thereof the words "the First Mortgage Notes, the Permanent Financing
Notes" and substituting therefor the words "the Replacement Notes" and
(ii) deleting from clause (iii) thereof the words "any First Mortgage
Note, any Permanent Financing Note" and substituting therefor the words
"any Replacement Note".
(o) Schedule II to the Credit Agreement is amended by deleting
the amounts set opposite the following Lenders and substituting
therefor the commitment amounts set forth below opposite each such
Lender:
Name of Lender Commitment
-------------- ----------
Citicorp USA, Inc. $29,000,000
BankAmerica Business Credit, Inc. $29,000,000
CoreStates Bank, N.A. $29,000,000
Star Bank, N.A. $20,000,000
NationsBank, N.A. $25,000,000
National City Commercial Finance, Inc. $18,000,000
(p) A new Exhibit S is added to the Credit Agreement to read
as set forth as Exhibit B to this Amendment.
SECTION 2. WAIVER AND CONSENT. Subject to the satisfaction of
the conditions precedent set forth in Section 3, the Majority Lenders hereby
consent to the repayment of the Holdings Note and other intercompany
Indebtedness in an aggregate amount not to exceed the excess of the net cash
proceeds of the Replacement Notes over the aggregate amount of Indebtedness
outstanding under the Permanent Financing Notes and, in furtherance thereof,
agree to waive Section 2 of the Holdings Intercreditor Agreement and Section
7.11 of the Credit Agreement, in each case to the extent required to permit such
repayments.
SECTION 3. CONDITIONS OF EFFECTIVENESS. This Amendment shall
become effective as of the date first above written on the Business Day when,
and only when, the following conditions shall have been satisfied:
-5-
<PAGE>
(a) The Agent shall have received counterparts of this
Amendment executed by the Borrower, each other Loan Party, each Lender
with an increased commitment as set forth in Section 1(o) above and the
Majority Lenders or, as to any of the Lenders, advice satisfactory to
the Agent that such Lenders have executed this Amendment.
(b) The Agent shall have received a certificate signed by a
duly authorized officer of the Borrower stating that:
(i) The representations and warranties contained in
the Credit Agreement and each Loan Document are correct on and
as of the date of such certificate as though made on and as of
the date hereof other than any such representations or
warranties that, by their terms, refer to a date other than
the date of such certificate; and
(ii) No event has occurred and is continuing that
constitutes a Default or an Event of Default.
(c) The Borrower shall have paid to the Agent for the ratable
benefit of the Lenders an amendment fee equal to 0.125% of the
aggregate Revolving Credit Commitments of all Lenders, calculated
without giving effect to Section 1(h) of this Amendment.
The effectiveness of this Amendment is conditioned upon the accuracy of the
factual matters described herein. This Amendment is subject to the provisions of
Section 10.1 of the Credit Agreement.
SECTION 4. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. (a)
On and after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in each of the Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement shall mean and be a reference to the
Credit Agreement, as amended by this Amendment.
(b) The Credit Agreement and each of the Loan Documents, as
specifically amended by this Amendment, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender, the Agent, or the Issuing Bank under
the Credit Agreement or any Loan Document, nor constitute a waiver of any
provision of the Credit Agreement or any Loan Document.
-6-
<PAGE>
SECTION 5. COSTS AND EXPENSES. The Borrower agrees to pay on
demand all costs and expenses of the Agent in connection with the preparation,
execution, delivery and administration, modification and amendment of this
Amendment and the other instruments and documents to be delivered hereunder
(including, without limitation, the reasonable fees and expenses of counsel for
the Agent) in accordance with the terms of Section 10.4(a) of the Credit
Agreement.
SECTION 6. EXECUTION IN COUNTERPARTS. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.
SECTION 7. GOVERNING LAW. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
BORROWER
WHEELING-PITTSBURGH STEEL
CORPORATION
By:_______________________________
Name:
Title:
AGENT
CITIBANK, N.A., as Agent
By:_______________________________
Name:
Title:
LENDERS
CITICORP USA, INC.
By:_______________________________
Name:
Title:
CORESTATES BANK, N.A.
By:_______________________________
Name:
Title:
-8-
<PAGE>
BANKAMERICA BUSINESS CREDIT, INC.
By:_______________________________
Name:
Title:
STAR BANK, N.A.
By:_______________________________
Name:
Title:
NATIONSBANK, N.A.
By:_______________________________
Name:
Title:
NATIONAL CITY COMMERCIAL
FINANCE, INC.
By:_______________________________
Name:
Title:
-9-
<PAGE>
CONSENTED TO AND ACKNOWLEDGED:
WHEELING-PITTSBURGH CORPORATION
By:_______________________________
Name:
Title:
WHEELING CONSTRUCTION PRODUCTS,
INC.
By:_______________________________
Name:
Title:
PITTSBURGH-CANFIELD CORPORATION
By:_______________________________
Name:
Title:
UNIMAST INCORPORATED
By:_______________________________
Name:
Title:
-10-
EXECUTION COPY
AMENDMENT NO. 4 TO THE
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of November 19, 1997
AMENDMENT NO. 4 TO THE SECOND AMENDED AND RESTATED CREDIT
AGREEMENT (this "AMENDMENT") is entered into by WHEELING- PITTSBURGH STEEL
COMPANY, a Delaware corporation (the "BORROWER"), the banks, financial
institutions and other institutional lenders parties to the Credit Agreement
referred to below (collectively, the "LENDERS") and CITIBANK, N.A., as agent
(the "AGENT").
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders, Agent and Issuing Bank have
entered into a Second Amended and Restated Credit Agreement dated as of December
28, 1995 (as amended, supplemented or otherwise modified through the date
hereof, the "CREDIT AGREEMENT"). Capitalized terms not otherwise defined in this
Amendment have the meanings specified in the Credit Agreement.
(2) Pursuant to a waiver, consent and amendment to the Credit
Agreement dated as of September 30, 1997 ("AMENDMENT NO. 3"), the Lenders
agreed, among other things, to amend certain provisions of the Credit Agreement
to permit the Replacement Transaction (as defined in Amendment No. 3).
(3) The Borrower has requested that the Lenders agree to an
increase in the aggregate principal amount of the Replacement Notes and to
correct a drafting error in Amendment No. 3.
(4) The Lenders have agreed to amend Amendment No. 3 to the
Credit Agreement as hereinafter set forth.
SECTION 1. AMENDMENTS TO AMENDMENT NO. 3. Amendment No. 3 is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 3, hereby amended as follows:
(a) Section 1(a)(i) is deleted in full, resulting in a
definition of "EBITDA" that is unchanged from such definition as in
effect prior to the effectiveness of Amendment No. 3.
(b) Exhibit A to Amendment No. 3 is amended by deleting the
figure "$350 million" and substituting therefor the figure "$450
million".
<PAGE>
(c) Section 1(l) is amended by deleting the figure "$350
million" and substituting therefor the figure "$450 million".
SECTION 2. AMENDMENTS TO CREDIT AGREEMENT. The Credit
Agreement is, effective as of the date hereof and subject to the satisfaction of
the conditions precedent set forth in Section 3, hereby amended as follows:
(a) by amending the definition of "ADJUSTED EBITDA" in Section
1.1 in full to read as follows:
"ADJUSTED EBITDA" means, for any Person for
any period, the EBITDA for such Person for such period PLUS
(a) any increase in the long term liability in respect of
other post-employment benefit or pension benefit that would be
reflected on a consolidated balance sheet of such Person and
its Subsidiaries (the "EMPLOYEE LIABILITY") for such period
and (b) any decrease in pension asset that would be reflected
on a consolidated balance sheet of such Person and its
Subsidiaries (the "PENSION ASSET") for such period LESS (a)
any decrease in the Employee Liability for such period and (b)
any increase in the Pension Asset for such period.
(b) by amending the definition of "INDENTURES" in Section 1.1
in full to read as follows:
"INDENTURES" means, (a) until the issuance
of the Replacement Notes, collectively, (i) the Permanent
Financing Indenture and (ii) the First Mortgage Indenture, and
(b) after the issuance of the Replacement Notes, (i) the
Replacement Indenture and (ii) the Term Loan Agreement, if
any.
(c) by amending the definition of "REPLACEMENT INDENTURE" in
Section 1.1 in full to read as follows:
"REPLACEMENT INDENTURE" means the indenture
incorporating terms and conditions no less favorable to
Holdings than those terms and conditions set forth in Exhibit
S hereto to be entered into to refinance the Permanent
Financing Notes, between Holdings and the trustee thereunder,
pursuant to which the Replacement Notes are issued, as the
same may be amended, supplemented or modified from time to
time; PROVIDED, HOWEVER, that the aggregate principal amount
of Replacement Notes that may be issued pursuant to the
Replacement Indenture and the Term Loan Agreement shall not
exceed in the aggregate $450,000,000.
(d) by amending the definition of "REPLACEMENT NOTES" in
Section 1.1 in full to read as follows:
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<PAGE>
"REPLACEMENT NOTES" means Holdings market
rate senior notes, whether fixed rate or floating, issued in
one or more series, with a term of not less than five years,
issued pursuant to the Replacement Indenture, the Term Loan
Agreement, or a combination thereof.
(e) by adding the following definition to Section 1.1:
"TERM LOAN AGREEMENT" means the term loan
agreement, if any, incorporating terms and conditions no less
favorable to Holdings than those terms and conditions set
forth in Exhibit S hereto (other than a floating interest rate
and an optional call provision one year from issuance) to be
entered into to refinance the Permanent Financing Notes,
between Holdings and the purchasers under the foregoing term
loan agreement, pursuant to which the Replacement Notes are
issued, as the same may be amended, supplemented or otherwise
modified from time to time; PROVIDED, HOWEVER, that the
aggregate principal amount of Replacement Notes that may be
issued pursuant to the Replacement Indenture and the Term Loan
Agreement shall not exceed in the aggregate $450,000,000.
(f) by amending Section 4.11 in full to read as follows:
4.11. REPLACEMENT NOTES. Neither the
Replacement Indenture nor the Term Loan Agreement has been
amended or modified since its effective date in any respect
that imposes terms and conditions less favorable to Holdings
that the description of the terms and conditions set forth on
Exhibit S hereto (other than (a) a floating interest rate and
an optional call provision one year from issuance for
Replacement Notes issued pursuant to the Term Loan Agreement
and (b) that the aggregate principal amount of the Replacement
Notes shall not exceed $450,000,000) and no provision therein
has been waived and no event has occurred or condition exists
under any of the Replacement Notes, the effect of such event
or condition is to accelerate or permit the acceleration of
the maturity of any of the Replacement Notes.
(g) by amending Section 4.12(a) by deleting the parenthetical
phrase in clause (iii) thereof and replacing it with the following:
(except a non-payment default on any of the Replacement Notes,
the effect of which is not to accelerate or permit the
acceleration of the maturity of any of the Replacement Notes)
SECTION 3. CONDITIONS OF EFFECTIVENESS. This Amendment shall
become effective as of the date first above written on the Business Day when,
and only when, the following conditions shall have been satisfied:
-3-
<PAGE>
(a) the Agent shall have received counterparts of this
Amendment executed by the Borrower, each other Loan Party and the
Majority Lenders or, as to any of the Lenders, advice satisfactory to
the Agent that such Lenders have executed this Amendment; and
(b) the Agent shall have received a certificate signed by a
duly authorized officer of the Borrower stating that:
(i) The representations and warranties contained in
the Credit Agreement and each Loan Document are correct on and
as of the date of such certificate as though made on and as of
the date hereof other than any such representations or
warranties that, by their terms, refer to a date other than
the date of such certificate; and
(ii) words of like import referring to the Credit
Agreement, and each reference in each of the Loan Documents to
"the Credit Agreement", "thereunder", "thereof" or words of
like import referring to the Credit Agreement shall mean and
be a reference to the Credit Agreement, as amended by this
Amendment.
(b) The Credit Agreement and each of the Loan Documents, as
specifically amended by this Amendment, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender, the Agent, or the Issuing Bank under
the Credit Agreement or any Loan Document, nor constitute a waiver of any
provision of the Credit Agreement or any Loan Document.
SECTION 5. COSTS AND EXPENSES. The Borrower agrees to pay on
demand all costs and expenses of the Agent in connection with the preparation,
execution, delivery and administration, modification and amendment of this
Amendment and the other instruments and documents to be delivered hereunder
(including, without limitation, the reasonable fees and expenses of counsel for
the Agent) in accordance with the terms of Section 10.4(a) of the Credit
Agreement.
SECTION 6. EXECUTION IN COUNTERPARTS. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.
-4-
<PAGE>
SECTION 7. GOVERNING LAW. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
BORROWER
WHEELING-PITTSBURGH STEEL
CORPORATION
By:_______________________________
Name:
Title:
AGENT
CITIBANK, N.A., as Agent
By:_______________________________
Name:
Title:
LENDERS
CITICORP USA, INC.
By:_______________________________
Name:
Title:
-5-
<PAGE>
CORESTATES BANK, N.A.
By:_______________________________
Name:
Title:
BANKAMERICA BUSINESS CREDIT, INC.
By:_______________________________
Name:
Title:
STAR BANK, N.A.
By:_______________________________
Name:
Title:
NATIONSBANK, N.A.
By:_______________________________
Name:
Title:
NATIONAL CITY COMMERCIAL
FINANCE, INC.
By:_______________________________
Name:
Title:
-6-
<PAGE>
CONSENTED TO AND ACKNOWLEDGED:
WHEELING-PITTSBURGH CORPORATION
By:_______________________________
Name:
Title:
WHEELING CONSTRUCTION PRODUCTS,
INC.
By:_______________________________
Name:
Title:
PITTSBURGH-CANFIELD CORPORATION
By:_______________________________
Name:
Title:
UNIMAST INCORPORATED
By:_______________________________
Name:
Title:
-7-
EXECUTION COPY
AMENDMENT NO. 5 TO THE
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of November 28, 1997
AMENDMENT NO. 5 TO THE SECOND AMENDED AND RESTATED CREDIT
AGREEMENT (this "AMENDMENT") is entered into by WHEELING- PITTSBURGH STEEL
CORPORATION, a Delaware corporation (the "BORROWER"), the banks, financial
institutions and other institutional lenders parties to the Credit Agreement
referred to below (collectively, the "LENDERS") and CITIBANK, N.A., as agent
(the "AGENT").
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders, Agent and Issuing Bank have
entered into a Second Amended and Restated Credit Agreement dated as of December
28, 1995 (as amended, supplemented or otherwise modified through the date
hereof, the "CREDIT AGREEMENT"). Capitalized terms not otherwise defined in this
Amendment have the meanings specified in the Credit Agreement.
(2) The Borrower and the Lenders have agreed to amend the
Credit Agreement as hereinafter set forth.
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit
Agreement is, effective as of the date hereof and subject to the satisfaction of
the conditions precedent set forth in Section 2, hereby amended as follows:
(a) Section 1.1 is amended by amending the definition of
"Cumulative Cash Flow" in full to read as follows:
"CUMULATIVE CASH FLOW" means "net cash flow from
operations" (as such term is construed in accordance with GAAP and as
such term is included in the Projections) of the Loan Party
Consolidated Group PLUS (a) advances made to any Loan Party by WHX, (b)
increases in the aggregate "Trust Invested Amount" (under and as
defined in the Securitization Documents) (in each case, to the extent
that such amounts have not been included in the calculation of "net
cash flow from operations") and (c) $41,500,000 MINUS (a) "net cash
flow from investing activities" (as such term is construed in
accordance with GAAP and as such term is included in the Projections)
of the Loan Party Consolidated Group, (b) payments made by any Loan
Party to WHX in respect of Keepwell Payments or otherwise, (c)
reductions in the
<PAGE>
aggregate "Trust Invested Amount" (under and as defined in the
Securitization Documents) and (d) repayments of the principal amount of
any Debt of the Loan Party Consolidated Group other than Debt under the
Loan Documents (in each case, to the extent that such amounts have not
been included in the calculation of "net cash flow from operations").
(b) Section 1.1 is amended by adding the following defined
term in appropriate alphabetical order:
"FISCAL MONTH" means one calendar month.
(c) Section 5.1 is amended by deleting the amounts set
opposite the following dates and substituting therefor the amount set
forth below opposite each such date:
December 31, 1997 250,000,000
March 31, 1998 245,000,000
June 30, 1998 245,000,000
September 30, 1998 245,000,000
December 31, 1998 245,000,000
March 31, 1999 210,000,000
(d) Section 5.2 is amended by deleting the ratios set opposite
the following dates and substituting therefor the ratio set forth below
opposite each such date:
December 31, 1997 5.25:1.00
March 31, 1998 5.5:1.00
June 30, 1998 5.6:1.00
September 30, 1998 5.5:1.00
December 31, 1998 5.5:1.00
March 31, 1999 6.6:1.00
-2-
<PAGE>
(e) Section 5.3 is amended by deleting the ratios set opposite
the following dates and substituting therefor the word or ratio set
forth below opposite each such date:
December 31, 1997 N/A
March 31, 1998 N/A
June 30, 1998 N/A
September 30, 1998 N/A
December 31, 1998 N/A
March 31, 1999 0.5:1.00
(f) Section 5.4 is amended by (i) by deleting the words
"Fiscal Quarter" and substituting therefor the words "Fiscal Month" and
(ii) by substituting for the dates "December 31, 1997" through "March
31, 1999" the amount set forth below opposite each such date:
November 30, 1997 (110,000,000)
December 31, 1997 (110,000,000)
January 31, 1998 (120,000,000)
February 28, 1998 (145,000,000)
March 31, 1998 (145,000,000)
April 30, 1998 (145,000,000)
May 31, 1998 (145,000,000)
June 30, 1998 (145,000,000)
July 31, 1998 (140,000,000)
August 31, 1998 (140,000,000)
September 30, 1998 (130,000,000)
October 31, 1998 (130,000,000)
November 30, 1998 (120,000,000)
December 31, 1998 (115,000,000)
January 31, 1999 (120,000,000)
February 28, 1999 (120,000,000)
March 31, 1999 (125,000,000)
(g) Section 5.5 is amended by deleting the amounts set
opposite the following dates and substituting therefor the amount set
forth below opposite each such date:
December 31, 1997 85,000,000
-3-
<PAGE>
March 31, 1998 95,000,000
June 30, 1998 115,000,000
September 30, 1998 130,000,000
December 31, 1998 145,000,000
March 31, 1999 155,000,000
(h) Section 7.6 is amended by (i) deleting clause (ii) from
subsection (f) and substituting therefor the phrase "Intentionally
omitted"
(ii) deleting the word "and" after the semicolon in subsection
(h);
(iii) deleting the period at the end of subsection (i) and
inserting in place thereof a semicolon followed by the word "and"; and
(iv) adding as subsection (j) the following language:
"(j) (i) Investments in or advances to Ohio Coating Company
made through December 31, 1997 and (ii) Investments or advances from
and after December 31, 1997; PROVIDED that no Default or Event of
Default has occurred and is continuing or would result therefrom and
the amount of such Investments or advances permitted pursuant to this
subsection (j) made from and after December 31, 1997 shall not exceed
in the aggregate $10,000,000."
SECTION 2. CONDITIONS OF EFFECTIVENESS. This Amendment shall
become effective as of the date first above written on the Business Day when,
and only when, the following conditions shall have been satisfied:
(a) The Agent shall have received counterparts of this
Amendment executed by the Borrower, each other Loan Party and the
Majority Lenders or, as to any of the Lenders, advice satisfactory to
the Agent that such Lenders have executed this Amendment.
(b) The Agent shall have received a certificate signed by a
duly authorized officer of the Borrower stating that:
(i) The representations and warranties contained in
the Credit Agreement and each Loan Document are correct on and
as of the date of such certificate as though made on and as of
the date hereof other than any such representations or
warranties that, by their terms, refer to a date other than
the date of such certificate; and
(ii) No event has occurred and is continuing that
constitutes a Default or an Event of Default.
-4-
<PAGE>
The effectiveness of this Amendment is conditioned upon the accuracy of the
factual matters described herein. This Amendment is subject to the provisions of
Section 10.1 of the Credit Agreement.
SECTION 3. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. (a)
On and after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in each of the Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement shall mean and be a reference to the
Credit Agreement, as amended by this Amendment.
(b) The Credit Agreement and each of the Loan Documents, as
specifically amended by this Amendment, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender, the Agent, or the Issuing Bank under
the Credit Agreement or any Loan Document, nor constitute a waiver of any
provision of the Credit Agreement or any Loan Document.
SECTION 4. COSTS AND EXPENSES. The Borrower agrees to pay on
demand all costs and expenses of the Agent in connection with the preparation,
execution, delivery and administration, modification and amendment of this
Amendment and the other instruments and documents to be delivered hereunder
(including, without limitation, the reasonable fees and expenses of counsel for
the Agent) in accordance with the terms of Section 10.4(a) of the Credit
Agreement.
SECTION 5. EXECUTION IN COUNTERPARTS. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.
SECTION 6. GOVERNING LAW. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
BORROWER
WHEELING-PITTSBURGH STEEL
CORPORATION
By:______________________
Name:
Title:
AGENT
CITIBANK, N.A., as Agent
By:_____________________
Name:
Title:
-6-
<PAGE>
LENDERS
CITICORP USA, INC.
By:_____________________
Name:
Title:
CORESTATES BANK, N.A.
By:_____________________
Name:
Title:
BANKAMERICA BUSINESS CREDIT, INC.
By:_____________________
Name:
Title:
STAR BANK, N.A.
By:_____________________
Name:
Title:
-7-
NATIONSBANK, N.A.
By:_____________________
Name:
Title:
NATIONAL CITY COMMERCIAL
FINANCE, INC.
By:_____________________
Name:
Title:
-8-
<PAGE>
CONSENTED TO AND ACKNOWLEDGED:
WHEELING-PITTSBURGH CORPORATION
By:_______________________________
Name:
Title:
WHEELING CONSTRUCTION PRODUCTS,
INC.
By:_______________________________
Name:
Title:
PITTSBURGH-CANFIELD CORPORATION
By:_______________________________
Name:
Title:
UNIMAST INCORPORATED
By:_______________________________
Name:
Title:
-9-
OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
505 PARK AVENUE
NEW YORK, NEW YORK 10022
TELEPHONE: (212) 753-7200
March 23, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: WHEELING-PITTSBURGH CORPORATION
WHEELING-PITTSBURGH STEEL CORPORATION
CONSUMERS MINING CORPORATION
WHEELING-EMPIRE COMPANY
MINGO OXYGEN COMPANY
PITTSBURGH-CANFIELD COMPANY
WHEELING CONSTRUCTION PRODUCTS, INC.
WP STEEL VENTURE CORPORATION
CHAMPION METAL PRODUCTS, INC.
Registration Statement on Form S-4 (333-43867)
----------------------------------------------
Ladies and Gentlemen:
Reference is made to above-referenced Registration Statement
on Form S-4 (the "Registration Statement") filed with the Securities and
Exchange Commission by Wheeling-Pittsburgh Corporation ("WPC"),
Wheeling-Pittsburgh Steel Corporation ("WPSC"), Consumers Mining Corporation
("Consumers"), Wheeling- Empire Company ("Wheeling-Empire"), Mingo Oxygen
Company ("Mingo"), Pittsburgh-Canfield Company ("PCC"), Wheeling Construction
Products, Inc. ("WCP"), WP Steel Venture Corporation ("WPSV"), and Champion
Metal Products, Inc. ("Champion" and together with WPSC, Consumers,
Wheeling-Empire, Mingo, PCC, WCP, WPSV, the "Subsidiary Guarantors") and the
prospectus forming a part thereof (the "Prospectus"). The Registration Statement
relates to an offer with respect to the exchange (the "Exchange Offer") of 9
1/4% Senior Notes due 2007 of WPC, which are fully and unconditionally
guaranteed by all of the present and future operating subsidiaries of WPC for 9
1/4% Senior Exchange Notes due 2007 of WPC (the "New Notes"), which are fully
and unconditionally guaranteed by all of
<PAGE>
Securities and Exchange Commission
March 20, 1998
Page -2-
the present and future operating subsidiaries of WPC (the "New Subsidiary
Guarantees").
We advise you that we have examined originals or copies
certified or otherwise identified to our satisfaction of the Certificate of
Incorporation and By-laws of WPC and the Articles of Incorporation and By-laws
of and each of the Subsidiary Guarantors, each as amended to date, corporate
proceedings of WPC and the Subsidiary Guarantors, the Indenture dated as of
November 26 1997, by and among WPC and Bank One, N.A., as Trustee, and such
other documents, instruments and certificates of officers and representatives of
WPC and the Subsidiary Guarantors and public officials, and we have made such
examination of the law, as we have deemed appropriate as the basis for the
opinion hereinafter expressed. In making such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, and the conformity to original documents of documents submitted to
us as certified or photostatic copies.
Based upon the foregoing, we are of the opinion that the New
Notes and the New Subsidiary Guarantees, upon issuance in accordance with the
terms and conditions of the Exchange Offer, will have been duly and validly
issued, and will constitute legal, valid and binding obligations of WPC and the
Subsidiary Guarantors, respectively, enforceable against WPC and the Subsidiary
Guarantors, respectively, in accordance with their terms, except as such
enforceability may be limited or affected by (i) any applicable bankruptcy,
insolvency, moratorium or other similar law affecting generally the rights of
creditors, now or hereafter in effect, and (ii) the fact that equitable remedies
or relief (including but not limited to the remedy of specific performance) are
subject to the discretion of the court from which such relief may be sought.
Our opinion with respect to the material United States federal
income tax consequences of the purchase, ownership and disposition of the New
Notes is set forth in full under the caption "Certain U.S. Federal Income Tax
Consequences" in the Prospectus.
We are members of the Bar of the State of New York and, except
as stated below, we express no opinion as to the laws of any jurisdiction other
than the State of New York and the federal laws of the United States of America.
We advise you that Marvin L. Olshan, a Director and the Secretary of
WPC and WHX Corporation ("WHX"), of which WPC is a wholly-owned subsidiary,
holds shares of Common Stock of WHX and options to purchase same, and Steven
Wolosky, Assistant Secretary of WHX and WPC, holds options to purchase shares of
Common Stock of WHX, and are each members of this firm.
<PAGE>
Securities and Exchange Commission
March 20, 1998
Page -3-
We consent to the reference to this firm under the captions
"Legal Matters" and "Certain United States Federal Income
Tax Considerations" in the Prospectus.
Very truly yours,
/s/ OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
------------------------------------------
OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT effective as of the 7th day of February, 1997, by
and between WHEELING-PITTSBURGH STEEL CORPORATION ("WPSC"), a Delaware
corporation with a principal place of business at 1134 Market Street, Wheeling,
West Virginia, 26003, WHX CORPORATION ("WHX"), a Delaware corporation with a
principal place of business at 110 East 59th Street, New York, New York, 10022
and WHEELING-PITTSBURGH CORPORATION ("WPC"), a Delaware corporation with a
principal place of business at 1134 Market Street, Wheeling, West Virginia,
26003 (WPSC, WHX and WPC are collectively referred to as the "Company") and JOHN
R. SCHEESSELE (the "Executive").
WHEREAS, the Company desires to employ the Executive as the President,
Chairman of the Board and Chief Executive Officer of WPSC, the President of WHX
and the President of WPC and the Executive desires to be employed by the Company
upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties hereto do agree as follows:
1. EMPLOYMENT.
(a) The Company hereby employs the Executive, and the
Executive hereby accepts such employment, as President, Chairman of the Board
and Chief Executive Officer of WPSC, as President of WPC and as President of WHX
upon the terms and subject to the
<PAGE>
conditions contained herein. Immediately following the execution of this
Agreement and at all other appropriate times thereafter, WHX, WPC and WPSC shall
take all action to elect the Executive as Chairman of the Board, President and
Chief Executive Officer of WPSC, President of WHX and President of WPC.
(b) WHX agrees that immediately following the execution of
this Agreement and at each election of directors of WHX, to the extent such
subsequent election coincides with the expiration of Executive's term as
director, to nominate Executive as a director of WHX, and, immediately following
the execution of this Agreement and at each election of directors of WPSC, to
nominate Executive as a director and as Chairman of the Board of Directors of
WPSC. Executive agrees that subsequent to an Initial Public Offering (as
hereinafter defined) of WPC or a "spin-off" of any portion of the shares of
Common Stock of WPC, Executive will resign as an officer and director of WHX or
in the case of an Initial Public Offering by WPSC or a "spin-off" of any portion
of the shares of Common Stock of WPSC, as an officer of WPC also.
(c) WPSC, WPC and WHX represent and warrant to Executive that this
Agreement has been duly and validly authorized and executed by and on behalf of
each of them in accordance with their respective Certificate of Incorporation
and By-Laws and that this Agreement constitutes the lawful and valid obligation
of WPSC, WPC and WHX enforceable against each of WPSC, WPC and WHX in accordance
with its terms.
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<PAGE>
2. DUTIES.
(a) The Executive shall perform all duties of the positions
referenced in paragraph 1 of this Agreement consistent with the powers and
duties of such offices set forth in WPSC's, WPC's or WHX's, as appropriate,
By-Laws, as well as any other duties, commensurate with the Executive's
positions that are assigned by the Board of Directors of WPSC, WPC or WHX.
(b) Throughout his employment hereunder, Executive shall
devote his full time, attention, knowledge and skills during reasonable business
hours in furtherance of the business of the Company and will faithfully,
diligently and to the best of his ability perform the duties described above and
further the best interests of the Company. During his employment, the Executive
shall not engage, and shall not solicit any employees of the Company to engage,
in any commercial activities which are in any way in competition with the
activities of the Company, or which may in any way interfere with the
performance of his duties or responsibilities to the Company.
(c) The Executive shall at all times be subject to, observe
and carry out such rules, regulations, policies, directions and restrictions as
the Company, consistent with Executive's rights and duties under this Agreement,
may from time to time establish and those imposed by law.
3. EXECUTIVE COVENANTS. In order to induce the Company to
enter into this Employment Agreement, the Executive hereby agrees
as follows:
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(a) Except when disclosure is in the interest of the Company
or is compelled by law, or disclosure is consented to or directed by the
Chairman or the Board of Directors of WPC, WHX or WPSC, the Executive shall keep
confidential and shall not divulge to any other person or entity, during the
term of the Executive's employment or thereafter, any of the business secrets or
other confidential information regarding the Company or the Company's other
subsidiaries which have not otherwise become public knowledge.
(b) All papers, books and records of every kind and
description relating to the business and affairs of the Company, whether or not
prepared by the Executive, shall be the sole and exclusive property of the
Company, and the Executive shall surrender them to the Company at any time upon
request by the Chairman or the Board of WPC, WHX or WPSC.
(c) During the term of employment hereunder, and, if his
employment is terminated by the Company pursuant to Section 9 hereof, for a
period of one (1) year thereafter, the Executive shall not, without the prior
written consent of the Board of WHX (i) participate as a director, stockholder
or partner, or have any direct or indirect financial interest as creditor, in
any business which directly or indirectly competes, within the United States of
America, with the Company or the Company's other subsidiaries which exist as of
the date of the termination of this Agreement (the "Existing Subsidiaries");
provided, however, that nothing in this Agreement shall restrict the Executive
from
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<PAGE>
holding up to two (2%) percent of the outstanding capital stock or other
securities of any publicly traded entity; (ii) solicit any customers of the
Company or its Existing Subsidiaries on behalf of himself, or any other person,
firm or company; or (iii) directly or indirectly, act in the capacity of an
executive officer, employee or in any other capacity for any company or other
entity which competes with WPSC in the carbon steel manufacturing industry and
which has at least 5% of its annual dollar sales comprised of products which
directly compete with the Company's or its subsidiaries' products; provided,
however, that nothing in this paragraph 3(c) shall prevent the Executive from
holding or maintaining any positions or interests presently held by him and
disclosed to the Board of WHX, or, held by him subsequent hereto with the
consent of the Board of WHX, including, but not limited to, the Executive's
interest in the Net Worth Participation Agreement with Warren Consolidated
Industries.
(d) The parties agree that the Executive's services are unique
and that any breach or threatened breach of the provisions of this Section 3
will cause irreparable injury to the Company and that money damages will not
provide an adequate remedy. Accordingly, the Company shall, in addition to other
remedies provided by law, be entitled to such equitable and injunctive relief as
may be necessary to enforce the provisions of this Section 3 against the
Executive or any other person or entity participating in such breach or
threatened breach.
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<PAGE>
Nothing contained herein shall be construed as prohibiting the Company from
pursuing any other and additional remedies available to it, at law or in equity,
for such breach or threatened breach including any recovery of damages from the
Executive or termination of his employment as provided in Paragraph 9(b).
4. BASE SALARY AND BONUSES. As full compensation for Executive's
services hereunder and in exchange for his promises contained herein, the
Company shall compensate the Executive in the following manner (subject to
Paragraph 4(c)):
(a) BASE SALARY. The Company shall compensate Executive at the
base salary rate of Four Hundred Thousand United States Dollars ($400,000 U.S.)
per annum, payable in equal installments on the same basis as other senior
salaried officers of the Company. Such annual salary may be increased in the
future by such amounts and at such times as the Board of WHX or the Compensation
Committee thereof shall deem appropriate in its sole discretion.
(b) ANNUAL BONUSES. Beginning with the calendar year 1997 and
in each year or portion thereof thereafter during the term of this Agreement,
the Board of WHX or the Compensation Committee of WHX shall consider the
Executive for a cash performance bonus in accordance with the following terms:
The actual amount and timing of such bonus, if any, shall be determined in good
faith based on criteria reasonably deemed to be relevant to such determination
including, without limitation, bonuses paid to other senior executives of the
Company, the
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<PAGE>
overall performance of the Company as measured by guidelines used to determine
the bonuses of other senior executives of the Company and transactions effected
for the benefit of the Company that are outside of the ordinary course of
business and directly or indirectly accomplished through the efforts of the
Executive (e.g., business combinations, corporate partnering and other similar
transactions).
(c) WITHHOLDINGS. The amounts set forth in subparagraphs (a)
and (b) above shall be subject to appropriate payroll withholding and any
similar deductions required by law.
(d) INITIAL PUBLIC OFFERING. Upon the consummation of an
underwritten initial public offering under the Securities Act of 1933, as
amended (an "Initial Public Offering") by WPC or WPSC (or any successor or
assign of either entity) during the term of this Agreement, the Executive and
certain other senior executives of the Company selected by the Board of WHX
shall be granted options to purchase, if all of the options are exercised, 15%
of the Common Stock of the public company outstanding immediately following the
Initial Public Offering, at an exercise price equal to 85% of the Initial Public
Offering price (such options are herein referred to as the "Option Pool"). To
the extent allowable under the Internal Revenue Code of 1986, as amended, such
options shall be "incentive stock options." Executive shall receive not less
than 331/3% of the Option Pool and not greater than 662/3% of the Option Pool,
to be determined by the Board of WHX in its sole discretion. From and after the
consummation of
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<PAGE>
the Initial Public Offering or a "spin-off" of any portion of the shares of
Common Stock of WPC or WPSC, WHX shall be relieved of all obligations under this
Agreement, with no further action required by WHX to terminate its obligations
hereunder.
5. LONG-TERM INCENTIVE PLAN. The Executive shall be entitled to
participate, to the extent he is eligible under the terms and conditions
thereof, in any stock option plan, stock award plan, omnibus stock plan, or
similar incentive plan currently in existence or hereafter established by the
Company, in the manner and to the same extent as the Company's other senior
executive officers. Awards to the Executive under any such plan shall be made as
provided in such plans and at such times and in such amounts as shall be
determined in the sole discretion reasonably exercised of the Board of WHX
subject to confirmation by the Board of WHX or the Compensation Committee of
WHX. Except as provided above, the Executive shall not be entitled to
participate in the Incentive Plan or in any bonus incentive or similar plan for
salaried employees of the Company and Executive's right to receive a bonus shall
be exclusively determined by the provisions of Paragraph 4(b) hereof.
6. BENEFIT PLANS. During the term of his employment, the Executive
shall be entitled to participate in the Company's management employee benefits
and retirement plans, as they are in existence on the date of this Agreement, or
as they may be amended or added hereafter, to the same extent as the Company's
other senior executive officers. The Company shall be under no
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<PAGE>
obligation solely as a result of this Agreement to institute or continue the
existence of any employee benefit plan.
7. OTHER BENEFITS. The Executive shall be provided the following
additional benefits:
(a) LEASED AUTOMOBILE. A leased Buick, Cadillac, Continental
or comparable automobile of United States manufacture for his business and
personal use. The Company shall keep such automobile adequately insured and will
pay or reimburse the Executive for the cost of maintenance, repair and gasoline
for such automobile.
(b) CLUB MEMBERSHIPS. Reimbursement of the Executive for the
cost of his and his immediate family's membership in one country club and his
membership in one business club, and for his business-related use thereof.
(c) LEGAL AND TAX ADVICE. In recognition of the Executive's
need to carefully consider the terms herein, the reimbursement of Executive for
reasonable legal and tax advice, sought by him relative to this Agreement, which
is incurred prior to his execution of this Agreement, up to a maximum of Fifteen
Thousand United States Dollars ($15,000 U.S.).
(d) BUSINESS EXPENSE. Reimbursement of the Executive, upon
proper accounting, for reasonable expenses and disbursements incurred by him in
the course of the performance of his duties hereunder.
(e) VACATION. The Executive shall be entitled to four (4)
weeks of vacation each year of this Agreement or such longer
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<PAGE>
period as shall be provided to senior executives of the Company, without
reduction in salary.
(f) ANNUAL PHYSICAL. The Company shall pay the cost, or
reimburse Executive for any cost not covered by health insurance, of one
comprehensive physical examination during each year of this Agreement.
8. SUPPLEMENTAL PENSION. As additional compensation, the Company will
provide nonqualified deferred compensation to the Executive after termination of
his employment. The amount of the deferred compensation will be measured solely
by the cash surrender value, at the time payment of the deferred compensation is
due, of one or more life insurance contracts (as defined in Internal Revenue
Code Section 7702) on the life of the Executive, purchased by or on behalf of
the Company solely with the annual premiums described below. Such life insurance
contracts shall provide such insurance coverage and contract terms (consistent
with the premium limits described below), and shall be purchased from such one
or more insurance companies, as shall be acceptable to the Executive.
On the first business day of each calendar year (or the date of the
execution of this Agreement in the case of 1997) during the Executive's service
under this Agreement, the Company shall provide for the payment of total
premiums, under all such life insurance contracts in the aggregate, equal to the
sum of:
1. Fifty Thousand Dollars ($50,000) annual lump sum (or a
pro-rated portion for 1997) provided by the Company
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<PAGE>
without reduction of the Executive's regular salary or
performance bonus otherwise payable under this Agreement
during the calendar year.
2. An additional annual amount equal to the amount, if any, by
which the Executive has elected to have his regular salary,
otherwise payable in cash during the calendar year, reduced
for this purpose.
3. An additional annual amount equal to the amount, if any, by
which the Executive has elected to have his performance bonus
(if any), otherwise payable in cash during the calendar year,
reduced for this purpose.
The Executive shall elect in writing, no later than the end of the
preceding calendar year, the specific amounts (or definite formula to determine
the specific amounts) of additional premiums to be paid for in each calendar
year by reduction of his regular salary or bonus payments. However, such
additional premium amounts shall be limited in the aggregate (or, at the
Executive's election, insurance coverage shall be augmented as necessary) so
that the additional premium amount applied to any insurance contract in any
calendar year is less than the amount that would cause such contract to be
classified as a modified endowment contract under Internal Revenue Code Section
7702A.
The Company or the Deferred Compensation Trust described hereinafter
(the "Deferred Compensation Trust" or "Trust") shall be the sole owner of all
such life insurance contracts, except
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<PAGE>
that the Executive, at his election, shall have the right to designate the
beneficiary of death benefits under the contracts.
In the event of the Executive's death while the life insurance
contracts are in force and owned by the Company or the Deferred Compensation
Trust, the insurance companies' payment of death benefits thereunder to the
Executive's designated beneficiary (the "Beneficiary") shall totally discharge
the Company's obligation under this Section 8, except that the Company or the
Trust shall pay to such Beneficiary any salary or bonus reduction amounts
elected by the Executive for the calendar year in which his death occurs to the
extent that such amounts have not been paid to insurance companies as additional
premiums during that calendar year.
The Company will set aside assets in the Deferred Compensation Trust to
provide for the systematic funding, during the Executive's period of active
service, of the deferred compensation promised to the Executive under this
Agreement. Such Deferred Compensation Trust (which may also include assets set
aside to fund other similar deferred compensation obligations of the Company)
shall be irrevocable except in the event of the Company's subsequent bankruptcy
or insolvency, in which case the assets of the Trust shall be subject to the
claims of the Company's general creditors, including the Executive. The Company
intends, and the Executive acknowledges, that the Executive's rights under this
Agreement shall be solely those of a general creditor of the Company, and
nothing in this Agreement
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<PAGE>
nor in any instruments creating the Deferred Compensation Trust nor in any life
insurance contract, shall be construed to create any rights in the Executive
superior to those of other general creditors of the Company.
The Company intends that the Deferred Compensation Trust shall make all
payments due under this Agreement to the Executive or his Beneficiary, to the
extent the Trust is funded. The Executive acknowledges, on behalf of himself and
any Beneficiary claiming under him, that the Company is absolved of any
liability or responsibility for any payment due hereunder to the extent such
payment shall have been duly made to the Executive (or Beneficiary, as the case
may be) by the Deferred Compensation Trust.
The deferred compensation provided hereunder shall be paid to the
Executive in accordance with the life insurance contracts obtained pursuant to
the first paragraph of this Section 8.
9. DURATION AND TERMINATION.
(a) DURATION. The term of this Agreement shall commence on the
date hereof and shall terminate on the third anniversary hereof and shall
automatically be extended for successive three-year terms unless earlier
terminated pursuant to the provisions hereof, provided that the Executive shall
have the right to terminate this Agreement at the end of the initial term or any
succeeding term on not less than six (6) months prior written notice to the
Company (in which event all rights and benefits of Executive hereunder other
than the supplemental
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<PAGE>
pension benefit under Section 8 shall cease upon such termination's effective
date).
(b) TERMINATION AT ANY TIME BY COMPANY. This Agreement shall
be terminable by the Company at any time for any reason, including death or
Disability (as hereinafter defined) of the Executive, upon not less than 30
days' prior written notice to the Executive and all rights and benefits of the
Executive hereunder (other than those arising under Section 10 hereof) shall
cease, except that the Executive will have the right to receive from the Company
(i) a payment of One Million and Two Hundred Thousand Dollars ($1,200,000) (less
an amount equal to the portion of the Fifty Thousand ($50,000) Dollar per annum
payment made pursuant to Section 8 for the calendar year in which termination of
employment occurred which represents the pro-rata portion of the payment for the
balance of such calendar year, I.E., if the last date of employment is July 1,
then Twenty-Five Thousand ($25,000) Dollars shall be deducted from the One
Million and Two Hundred Thousand ($1,200,000) Dollars payment obligation) within
thirty (30) days of delivery of the notice of termination or within sixty (60)
days of the date of death or Disability of the Executive (the "Termination
Payment"), (ii) all amounts accrued but unpaid hereunder up to and including the
date of termination including, without limitation, any pro rata portion of the
Executive's salary or bonus remaining unpaid as of the date of termination,
(iii) all of the supplemental pension benefits accrued under Section 8 and (iv)
the continuation of all
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medical insurance provided to the Executive as contemplated by Section 6 hereof
for a period of one (1) year following the termination date. Notwithstanding the
foregoing, if the Company terminated this Agreement "for cause", then no
Termination Payment shall be made to the Executive and all rights, benefits and
obligations of the Executive under this Agreement, except the Executive's rights
under Sections 8, 9(b)(ii) and (iii) and 10 hereof, shall cease. "For cause"
shall mean: (i) the Executive's willful and material breach in respect of his
duties under this Agreement if such breach continues unremedied for thirty (30)
days after written notice thereof from the Board of WPC, WHX or WPSC to the
Executive specifying the acts constituting the breach and requesting that they
be remedied; or (ii) the Executive is convicted or pleads guilty to a felony,
during the employment period other than for conduct undertaken in good faith in
furtherance of the interests of the Company. "Disability" shall mean that due to
illness, accident or other physical or mental incapacity, the Board of WPC, WHX
or WPSC has in good faith determined that the Executive is unable to
substantially perform his usual and customary duties under this Agreement for
more than four (4) consecutive months or six (6) months in any calendar year.
During any period that the Executive fails to perform his duties hereunder as a
result of incapacity due to Disability prior to the Executive's termination, the
Executive shall continue to receive his full
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<PAGE>
base salary, together with all benefits provided in this Agreement.
(c) RIGHTS OF TERMINATION BY EXECUTIVE. The Executive shall
have the right, by written notice to the Company, to elect to terminate this
Agreement within sixty (60) days following a Change of Control (as defined
below) or if the Executive is (i) demoted, (ii) no longer holds the office of
the President, Chairman or Chief Executive Officer or serves as a director of
WPSC, (iii) no longer holds the office of President of WPC (except following an
Initial Public Offering of WPSC or a "spin-off" of any portion of the shares of
Common Stock of WPSC), or (iv) no longer holds the office of President or serves
as a director of WHX (except following an Initial Public Offering of WPC or WPSC
or a "spin-off" of any portion of the shares of Common Stock of WPC or WPSC). In
the event that Executive makes such election, the Executive shall be entitled to
receive from the Company the items set forth in Paragraph 9(b)(i) through
9(b)(iv) within sixty (60) days of receipt by the Company of a written notice of
Executive's election.
(d) CHANGE IN CONTROL. For the purposes of this Agreement, a
"Change in Control" means (i) the, direct or indirect, sale, lease, exchange or
other transfer of all or substantially all (50% or more) of the assets of WPC,
WHX or WPSC to any individual, corporation, partnership, trust or other entity
or organization (a "Person") or group of Persons acting in concert as a
partnership or other group (a "Group of Persons")
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other than a Person (an "Affiliate") controlling, controlled by or under common
control with, any of WPC, WHX or WPSC, as the case may be, (ii) the merger,
consolidation or other business combination of WPC, WHX or WPSC with or into
another corporation with the effect that the shareholders of WPC, WHX or WPSC,
as the case may be, immediately prior to the business combination hold 50% or
less of the combined voting power of the then outstanding securities of the
surviving Person of such merger ordinarily (and apart from rights accruing under
special circumstances) having the right to vote in the election of directors,
(iii) the replacement of a majority of the Board of WPC, WHX or WPSC, over any
period of two years or less, from the directors who constituted the Board of
WPC, WHX or WPSC, as the case may be, at the beginning of such period, and such
replacement(s) shall not have been approved by the Board of WPC, WHX or WPSC, as
the case may be, as constituted at the beginning of such period, (iv) a Person
or Group of Persons shall, as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases or otherwise, have become the
beneficial owner (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") of securities
of WHX, or of WPC or WPSC following an Initial public Offering by such company,
representing 50% or more of the combined voting power of the then outstanding
securities of WHX, WPC or WPSC, as the case may be, ordinarily (and apart from
rights accruing under special circumstances) having the right to
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vote in the election of directors. Notwithstanding the foregoing, an Initial
Public Offering or a "spin-off" of any portion of the shares of Common Stock of
WPC or WPSC shall not constitute a Change in Control under this Agreement.
10. INDEMNIFICATION. The Company shall defend and hold the Executive
harmless to the fullest extent permitted by applicable law and the Company's
By-Laws and Certificate of Incorporation in connection with any claim, action,
suit, investigation or proceeding arising out of or relating to performance by
the Executive of services for, or action of the Executive as, or arising by
reason of the fact that the Executive is or was, a Director, officer, employee
or agent of the Company or any parent, subsidiary or affiliate of the Company,
or of any other person or enterprise at the Company's request. Expenses incurred
by the Executive in defending a claim, action, suit or investigation or
proceeding shall be paid by the Company in advance of the final disposition
thereof upon the receipt by the Company of any undertaking by or on behalf of
the Executive to repay such amount if it shall ultimately be determined that he
is not entitled to be indemnified hereunder. The foregoing rights are not
exclusive and do not limit any rights accruing to the Executive under any other
agreement or contract or under applicable law.
11. SUCCESSORS AND ASSIGNS. The rights and obligations of the Company
hereunder shall run in favor and be obligations of the Company, its successors
and assigns. The rights of the
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Executive hereunder shall inure to the benefit of the Executive's legal
representatives, executors, heirs and beneficiaries. Termination of Executive's
employment shall not operate to relieve him of any remaining obligations under
Section 3 hereof. The Company shall require any successor or assign (whether
direct or indirect, by purchase, merger, reorganization, consolidation,
acquisition of property or stock, liquidation or otherwise) to all or a
significant portion of the assets of the Company, by agreement in form and
substance satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place.
Regardless of whether such agreement is executed by a successor, this Agreement
shall be binding upon any successor and assign in accordance with the operation
of law and such successor and assign shall be deemed the "Company" for purposes
of this Agreement.
12. ARBITRATION OF ALL DISPUTES.
(a) Any controversy or claim arising out of or relating to
this Agreement or the breach thereof (including the arbitrability of any
controversy or claim), shall be settled by arbitration in the City of
Pittsburgh, Commonwealth of Pennsylvania, by three arbitrators, one of whom
shall be appointed by the Company, one by the Executive and the third of whom
shall be appointed by the first two arbitrators. If the first two arbitrators
cannot agree on the appointment of a third arbitrator, then the third arbitrator
shall be appointed by the
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American Arbitration Association. The arbitration shall be conducted in
accordance with the rules of the American Arbitration Association, except with
respect to the selection of arbitrators which shall be as provided in this
Section 12. The cost of any arbitration proceeding hereunder shall be borne
equally by the Company and the Executive. The award of the arbitrators shall be
binding upon the parties. Judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof.
(b) In the event that it shall be necessary or desirable for
the Executive to retain legal counsel and/or incur other costs and expenses in
connection with the enforcement of any or all of his rights under this
Agreement, and provided that the Executive substantially prevails in the
enforcement of such rights, the Company shall pay (or the Executive shall be
entitled to recover from the Company, as the case may be) the Executive's
reasonable attorneys' fees and costs and expenses in connection with the
enforcement of his rights, including the enforcement of any arbitration award,
up to $50,000 in the aggregate.
13. NOTICES. All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly given upon
receipt if delivered by hand, sent by telecopier or courier, and three (3) days
after such communication is mailed within the continental United States by first
class certified mail, return receipt requested, postage prepaid, to the other
party, in each case addressed as follows:
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(a) if to WHX, WPC or WPSC, as the case may be:
WHX Corporation
110 East 59th Street
New York, New York 10022
Attn: Corporate Secretary
Wheeling-Pittsburgh Corporation
1134 Market Street
Wheeling, West Virginia 26003
Attn: Corporate Secretary
Wheeling-Pittsburgh Steel Corporation
1134 Market Street
Wheeling, West Virginia 26003
Attn: Corporate Secretary
With a copy (which shall not constitute notice) to:
Steven Wolosky, Esquire
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
(b) if to the Executive:
John R. Scheessele
78 Cohasset Drive
Hudson, Ohio 44236
with a copy (which shall not constitute notice) to:
William H. Schorling, Esquire
Klett Lieber Rooney & Schorling
40th Floor, One Oxford Centre
Pittsburgh, Pennsylvania 15219-6498
Addresses may be changed by written notice sent to the other party at the last
recorded address of that party.
14. SEVERABILITY. If any provision of this Agreement shall be adjudged
by any court of competent jurisdiction to be invalid or unenforceable for any
reason, such judgment shall not affect, impair or invalidate the remainder of
this Agreement.
15. PRIOR UNDERSTANDING. This Agreement embodies the entire
understanding of the parties hereto, and supersedes all
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other oral or written agreements or understandings between them regarding the
subject matter hereof. No change, alteration or modification hereof may be made
except in a writing, signed by all parties hereto. The headings in this
Agreement are for convenience and reference only and shall not be construed as
part of this Agreement or to limit or otherwise affect the meaning hereof.
16. EXECUTION IN COUNTERPARTS. This Agreement may be executed by the
parties hereto in counterparts, each of which shall be deemed to be original,
but all such counterparts shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart.
17. CHOICE OF LAWS. Subject to the provisions of Paragraph 12 and
without regard to the effect of principles of conflicts of laws thereof,
jurisdiction over disputes with regard to this Agreement shall be exclusively in
the courts of the Commonwealth of Pennsylvania, and this Agreement shall be
construed in accordance with and governed by the laws of the Commonwealth of
Pennsylvania.
18. THIRD PARTY BENEFICIARY. The provisions of this Agreement as to the
Company shall also be binding upon and inure to the benefit of WPSC.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
WHEELING-PITTSBURGH STEEL CORPORATION
By:/S/ Frederick Chbosky
------------------------------
Name: Frederick Chbosky
Title: Chief Financial Officer
WHX CORPORATION
By:/S/ Ronald LaBow
------------------------------
Name: Ronald LaBow
Title: Chairman of the Board
WHEELING-PITTSBURGH CORPORATION
By: /S/ Ronald LaBow
-----------------------------
Name: Ronald LaBow
Title: Chairman of the Board
/S/ John R. Scheessele
----------------------------------
John R. Scheessele
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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT effective as of the 17th day of October, 1997, by
and between WHEELING-PITTSBURGH STEEL CORPORATION ("WPSC"), a Delaware
corporation with a principal place of business at 1134 Market Street, Wheeling,
West Virginia, 26003, WHX CORPORATION ("WHX"), a Delaware corporation with a
principal place of business at 110 East 59th Street, New York, New York, 10022
and WHEELING-PITTSBURGH CORPORATION ("WPC"), a Delaware corporation with a
principal place of business at 1134 Market Street, Wheeling, West Virginia,
26003 (WPSC, WHX and WPC are collectively referred to as the "Company") and Paul
J. Mooney (the "Executive").
WHEREAS, the Company desires to employ the Executive as Executive Vice
President and Chief Financial Officer of each of WPSC, WHX and WPC and the
Executive desires to be employed by the Company upon the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties hereto do agree as follows:
1. EMPLOYMENT.
(a) The Company hereby employs the Executive, and the
Executive hereby accepts such employment, as Executive Vice President and Chief
Financial Officer of each of WPSC, WHX and WPC, with his principal office being
located in either Pittsburgh, Pennsylvania, Wheeling, West Virginia or in a
<PAGE>
geographic area around the Pittsburgh, Pennsylvania area no farther in distance
than Wheeling, West Virginia, upon the terms and subject to the conditions
contained herein. Immediately following the execution of this Agreement and at
all other appropriate times thereafter, WHX, WPC and WPSC shall take all action
to elect the Executive as Executive Vice President and Chief Financial Officer
of each of WPSC, WHX and WPC.
(b) Executive agrees that subsequent to an Initial Public
Offering (as hereinafter defined) of WPC or a "spin-off" of any portion of the
shares of Common Stock of WPC, Executive will resign as an officer of WHX or in
the case of an Initial Public Offering by WPSC or a "spin-off" of any portion of
the shares of Common Stock of WPSC, as an officer of WPC also.
(c) WPSC, WPC and WHX represent and warrant to Executive that this
Agreement has been duly and validly authorized and executed by and on behalf of
each of them in accordance with their respective Certificate of Incorporation
and By-Laws and that this Agreement constitutes the lawful and valid obligation
of WPSC, WPC and WHX enforceable against each of WPSC, WPC and WHX in accordance
with its terms.
2. DUTIES.
(a) The Executive shall perform all duties of the positions
referenced in paragraph 1 of this Agreement consistent with the powers and
duties of such offices set forth in WPSC's, WPC's or WHX's, as appropriate,
By-Laws, as well as any other
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duties, commensurate with the Executive's positions that are assigned by the
Board of Directors of WPSC, WPC or WHX.
(b) Throughout his employment hereunder, Executive shall
devote his full time, attention, knowledge and skills during reasonable business
hours in furtherance of the business of the Company and will faithfully,
diligently and to the best of his ability perform the duties described above and
further the best interests of the Company. During his employment, the Executive
shall not engage, and shall not solicit any employees of the Company to engage,
in any commercial activities which are in any way in competition with the
activities of the Company, or which may in any way interfere with the
performance of his duties or responsibilities to the Company.
(c) The Executive shall at all times be subject to, observe
and carry out such rules, regulations, policies, directions and restrictions as
the Company, consistent with Executive's rights and duties under this Agreement,
may from time to time establish and those imposed by law.
3. EXECUTIVE COVENANTS. In order to induce the Company to
enter into this Employment Agreement, the Executive hereby agrees
as follows:
(a) Except when disclosure is in the interest of the Company
or is compelled by law, or disclosure is consented to or directed by the
Chairman or the Board of Directors of WPC, WHX or WPSC, the Executive shall keep
confidential and shall not divulge to any other person or entity, during the
term of the Executive's
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employment or thereafter, any of the business secrets or other confidential
information regarding the Company or the Company's other subsidiaries which have
not otherwise become public knowledge.
(b) All papers, books and records of every kind and
description relating to the business and affairs of the Company, whether or not
prepared by the Executive, shall be the sole and exclusive property of the
Company, and the Executive shall surrender them to the Company at any time upon
request by the Chairman or the Board of WPC, WHX or WPSC.
(c) During the term of employment hereunder, and, if his
employment is terminated by the Company pursuant to Section 9 hereof, for a
period of one (1) year thereafter, the Executive shall not, without the prior
written consent of the Board of WHX (i) participate as a director, stockholder
or partner, or have any direct or indirect financial interest as creditor, in
any business which directly or indirectly competes, within the United States of
America, with the Company or the Company's other subsidiaries which exist as of
the date of the termination of this Agreement (the "Existing Subsidiaries");
provided, however, that nothing in this Agreement shall restrict the Executive
from holding up to two (2%) percent of the outstanding capital stock or other
securities of any publicly traded entity; (ii) solicit any customers of the
Company or its Existing Subsidiaries on behalf of himself, or any other person,
firm or company; or (iii) directly or indirectly, act in the capacity of an
executive
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officer, employee or in any other capacity for any company or other entity which
competes with WPSC in the carbon steel manufacturing industry and which has at
least 5% of its annual dollar sales comprised of products which directly compete
with the Company's or its subsidiaries' products; provided, however, that
nothing in this paragraph 3(c) shall prevent the Executive from holding or
maintaining any positions or interests held by him subsequent hereto with the
consent of the Board of WHX (or the Board of WPC from and after the consummation
of the Initial Public Offering (as hereinafter defined) or a "spin-off" of any
portion of the shares of Common Stock of WPC or WPSC).
(d) The parties agree that the Executive's services are unique
and that any breach or threatened breach of the provisions of this Section 3
will cause irreparable injury to the Company and that money damages will not
provide an adequate remedy. Accordingly, the Company shall, in addition to other
remedies provided by law, be entitled to such equitable and injunctive relief as
may be necessary to enforce the provisions of this Section 3 against the
Executive or any other person or entity participating in such breach or
threatened breach. Nothing contained herein shall be construed as prohibiting
the Company from pursuing any other and additional remedies available to it, at
law or in equity, for such breach or threatened breach including any recovery of
damages from the Executive or termination of his employment as provided in
Paragraph 9(b).
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4. BASE SALARY AND BONUSES. As full compensation for Executive's
services hereunder and in exchange for his promises contained herein, the
Company shall compensate the Executive in the following manner (subject to
Paragraph 4(c)):
(a) BASE SALARY. The Company shall compensate Executive at the
base salary rate of Two Hundred Thousand United States Dollars ($200,000 U.S.)
per annum, payable in equal installments on the same basis as other senior
salaried officers of the Company. Such annual salary may be increased in the
future by such amounts and at such times as the Board of WHX or the Compensation
Committee thereof (or the Board or Compensation Committee of WPC from and after
the consummation of the Initial Public Offering or a "spin-off" of any portion
of the shares of Common Stock of WPC or WPSC) shall deem appropriate in its sole
discretion.
(b) BONUSES.
(i) SIGNING BONUS: The Executive shall receive a
signing bonus of One Hundred Twenty Thousand United
States Dollars ($120,000 U.S.) payable in three
installments as follows: $50,000 on January 1, 1998;
$40,000 upon the first anniversary of the
effectiveness of this Agreement; and $30,000 upon the
second anniversary of the effectiveness of this
Agreement. (ii) ANNUAL BONUSES: Beginning with the
calendar year 1998 and in each year or portion
thereof
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thereafter during the term of this Agreement, the
Board of WHX or the Compensation Committee of WHX (or
the Board or Compensation Committee of WPC from and
after the consummation of the Initial Public Offering
or a "spin-off" of any portion of the shares of
Common Stock of WPC or WPSC) shall grant the
Executive a bonus in accordance with the terms of
WPSC's Management Incentive Program.
(c) WITHHOLDINGS. The amounts set forth in subparagraphs (a)
and (b) above shall be subject to appropriate payroll withholding and any
similar deductions required by law.
(d) INITIAL PUBLIC OFFERING. Upon the consummation of an
underwritten initial public offering under the Securities Act of 1933, as
amended (an "Initial Public Offering," including for this purpose a "spin-off"
that creates publicly traded securities) by WPC or WPSC (or any successor or
assign of either entity) during the term of this Agreement, the Executive and
certain other senior executives of the Company selected by the Board of WHX
shall be granted options to purchase, if all of the options are exercised, 15%
of the Common Stock of the public company outstanding immediately following the
Initial Public Offering, at an exercise price equal to 85% of the Initial Public
Offering price (such options are herein referred to as the "Option Pool"). To
the extent allowable under the Internal Revenue Code of 1986, as amended, such
options shall be "incentive stock options." Executive shall receive not less
than
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10% of the Option Pool, the specific percentage to be determined by the Board of
WHX in its sole discretion; PROVIDED, HOWEVER, that if the Underwriters of the
Initial Public Offering determine to "cut-back" the Option Pool, the Executive's
share of the Option Pool shall be reduced to no less than the largest amount
granted to any officer of the Company other than John R. Scheessele. From and
after the consummation of the Initial Public Offering or a "spin-off" of any
portion of the shares of Common Stock of WPC or WPSC, WHX shall be relieved of
all obligations under this Agreement, with no further action required by WHX to
terminate its obligations hereunder.
5. LONG-TERM INCENTIVE PLAN. The Executive shall be entitled to
participate, to the extent he is eligible under the terms and conditions
thereof, in any stock option plan, stock award plan, omnibus stock plan, or
similar incentive plan currently in existence or hereafter established by the
Company, in the manner and to the same extent as the Company's other senior
executive officers, such participation to include 40,000 options that are
reserved for the Chief Financial Officer under the 1991 WPC Incentive and
Nonqualified Stock Option Plan, which options will be granted upon the
effectiveness of this Agreement, in accordance with the provisions of the 1991
WPC Incentive and Nonqualified Stock Option Plan. Awards to the Executive under
any such plan shall be made as provided in such plans and at such times and in
such amounts as shall be determined in the sole discretion reasonably exercised
of the Board of WHX subject to
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confirmation by the Board of WHX or the Compensation Committee of WHX (or the
Board or Compensation Committee of WPC from and after the consummation of the
Initial Public Offering or a "spin-off" of any portion of the shares of Common
Stock of WPC or WPSC). Except as provided above, the Executive shall not be
entitled to participate in the Incentive Plan or in any bonus incentive or
similar plan for salaried employees of the Company and Executive's right to
receive a bonus shall be exclusively determined by the provisions of Paragraph
4(b) hereof.
6. BENEFIT PLANS. During the term of his employment, the Executive
shall be entitled to participate in the Company's management employee benefits
and retirement plans, as they are in existence on the date of this Agreement, or
as they may be amended or added hereafter, to the same extent as the Company's
other senior executive officers. The Company shall be under no obligation solely
as a result of this Agreement to institute or continue the existence of any
employee benefit plan.
7. OTHER BENEFITS. The Executive shall be provided the following
additional benefits:
(a) LEASED AUTOMOBILE. A leased Buick, Oldsmobile, Mercury or
comparable automobile of United States manufacture for his business and personal
use. The Company shall keep such automobile adequately insured and will pay or
reimburse the Executive for the cost of maintenance, repair and gasoline for
such automobile.
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(b) CLUB MEMBERSHIPS. Reimbursement of the Executive for the
cost of his and his immediate family's membership in one country club, including
reimbursement of a $10,000 voting transfer fee to be paid or payable by the
Executive, and his membership in one business club, and for his business-related
use for both clubs.
(c) LEGAL AND TAX ADVICE. In recognition of the Executive's
need to carefully consider the terms herein, the reimbursement of Executive for
reasonable legal and tax advice, sought by him relative to this Agreement, which
is incurred prior to his execution of this Agreement, up to a maximum of Five
Thousand United States Dollars ($5,000 U.S.).
(d) BUSINESS EXPENSE. Reimbursement of the Executive, upon
proper accounting, for reasonable expenses and disbursements incurred by him in
the course of the performance of his duties hereunder.
(e) VACATION. The Executive shall be entitled to four (4)
weeks of vacation each year of this Agreement or such longer period as shall be
provided to senior executives of the Company, without reduction in salary.
(f) ANNUAL PHYSICAL. The Company shall pay the cost, or
reimburse Executive for any cost not covered by health insurance, of one
comprehensive physical examination during each year of this Agreement.
(g) RELOCATION COSTS. The Company shall pay reasonable
relocation costs incurred by the Executive, including
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the assumption of obligations of the Executive under an existing lease for
housing not to exceed an aggregate of $25,000.
8. SUPPLEMENTAL PENSION. As additional compensation, the Company will
provide nonqualified deferred compensation to the Executive after termination of
his employment. The amount of the deferred compensation will be measured solely
by the cash surrender value, at the time payment of the deferred compensation is
due, of one or more life insurance contracts (as defined in Internal Revenue
Code Section 7702) on the life of the Executive, purchased by or on behalf of
the Company solely with the annual premiums described below. Such life insurance
contracts shall provide such insurance coverage and contract terms (consistent
with the premium limits described below), and shall be purchased from such one
or more insurance companies, as shall be acceptable to the Executive.
On the first business day of each calendar year (or the date of the
execution of this Agreement in the case of 1997) during the Executive's service
under this Agreement, the Company shall provide for the payment of total
premiums, under all such life insurance contracts in the aggregate, equal to the
sum of:
1. Twenty-Five Thousand Dollars ($25,000) annual lump sum (or a
pro-rated portion for 1997) provided by the Company without
reduction of the Executive's regular salary or performance
bonus otherwise payable under this Agreement during the
calendar year.
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2. An additional annual amount equal to the amount, if any, by
which the Executive has elected to have his regular salary,
otherwise payable in cash during the calendar year, reduced
for this purpose.
3. An additional annual amount equal to the amount, if any, by
which the Executive has elected to have his performance bonus
(if any), otherwise payable in cash during the calendar year,
reduced for this purpose.
The Executive shall elect in writing, no later than the end of the
preceding calendar year, the specific amounts (or definite formula to determine
the specific amounts) of additional premiums to be paid for in each calendar
year by reduction of his regular salary or bonus payments. However, such
additional premium amounts shall be limited in the aggregate (or, at the
Executive's election, insurance coverage shall be augmented as necessary) so
that the additional premium amount applied to any insurance contract in any
calendar year is less than the amount that would cause such contract to be
classified as a modified endowment contract under Internal Revenue Code Section
7702A.
The Company or the Deferred Compensation Trust described hereinafter
(the "Deferred Compensation Trust" or "Trust") shall be the sole owner of all
such life insurance contracts, except that the Executive, at his election, shall
have the right to designate the beneficiary of death benefits under the
contracts.
In the event of the Executive's death while the life insurance
contracts are in force and owned by the Company or the
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Deferred Compensation Trust, the insurance companies' payment of death benefits
thereunder to the Executive's designated beneficiary (the "Beneficiary") shall
totally discharge the Company's obligation under this Section 8, except that the
Company or the Trust shall pay to such Beneficiary any salary or bonus reduction
amounts elected by the Executive for the calendar year in which his death occurs
to the extent that such amounts have not been paid to insurance companies as
additional premiums during that calendar year.
The Company will set aside assets in the Deferred Compensation Trust to
provide for the systematic funding, during the Executive's period of active
service, of the deferred compensation promised to the Executive under this
Agreement. Such Deferred Compensation Trust (which may also include assets set
aside to fund other similar deferred compensation obligations of the Company)
shall be irrevocable except in the event of the Company's subsequent bankruptcy
or insolvency, in which case the assets of the Trust shall be subject to the
claims of the Company's general creditors, including the Executive. The Company
intends, and the Executive acknowledges, that the Executive's rights under this
Agreement shall be solely those of a general creditor of the Company, and
nothing in this Agreement nor in any instruments creating the Deferred
Compensation Trust nor in any life insurance contract, shall be construed to
create any rights in the Executive superior to those of other general creditors
of the Company.
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The Company intends that the Deferred Compensation Trust shall make all
payments due under this Agreement to the Executive or his Beneficiary, to the
extent the Trust is funded. The Executive acknowledges, on behalf of himself and
any Beneficiary claiming under him, that the Company is absolved of any
liability or responsibility for any payment due hereunder to the extent such
payment shall have been duly made to the Executive (or Beneficiary, as the case
may be) by the Deferred Compensation Trust.
The deferred compensation provided hereunder shall be paid to the
Executive in accordance with the life insurance contracts obtained pursuant to
the first paragraph of this Section 8.
9. DURATION AND TERMINATION.
(a) DURATION. The term of this Agreement shall commence on a
date mutually agreed upon by the Company and the Executive after the Executive
gives notice of termination of employment to his then-current employer, with
Executive using his best efforts to commence employment no later than November
1, 1997, and shall terminate on the third anniversary hereof and shall
automatically be extended for successive three-year terms unless earlier
terminated pursuant to the provisions hereof, provided that the Executive shall
have the right to terminate this Agreement at the end of the initial term or any
succeeding term on not less than six (6) months prior written notice to the
Company (in which event all rights and benefits of Executive
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hereunder other than the supplemental pension benefit under Section 8 shall
cease upon such termination's effective date).
(b) TERMINATION AT ANY TIME BY COMPANY. This Agreement shall
be terminable by the Company at any time for any reason, including death or
Disability (as hereinafter defined) of the Executive, upon not less than 30
days' prior written notice to the Executive and all rights and benefits of the
Executive hereunder (other than those arising under Section 10 hereof) shall
cease, except that the Executive will have the right to receive from the Company
(i) a payment of Six Hundred Thousand Dollars ($600,000) (less an amount equal
to the portion of the Twenty-Five Thousand ($25,000) Dollar per annum payment
made pursuant to Section 8 for the calendar year in which termination of
employment occurred which represents the pro-rata portion of the payment for the
balance of such calendar year, I.E., if the last date of employment is July 1,
then Twelve Thousand and Five Hundred ($12,500) Dollars shall be deducted from
the Six Hundred Thousand ($600,000) Dollars payment obligation) within thirty
(30) days of delivery of the notice of termination or within sixty (60) days of
the date of death or Disability of the Executive (the "Termination Payment"),
(ii) all amounts accrued but unpaid hereunder up to and including the date of
termination including, without limitation, any pro rata portion of the
Executive's salary or bonus remaining unpaid as of the date of termination,
(iii) all of the supplemental pension benefits accrued under Section 8 and (iv)
the continuation of all medical
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insurance provided to the Executive as contemplated by Section 6 hereof for a
period of one (1) year following the termination date. Notwithstanding the
foregoing, if the Company terminated this Agreement "for cause", then no
Termination Payment shall be made to the Executive and all rights, benefits and
obligations of the Executive under this Agreement, except the Executive's rights
under Sections 8, 9(b)(ii) and (iii) and 10 hereof, shall cease. "For cause"
shall mean: (i) the Executive's willful and material breach in respect of his
duties under this Agreement if such breach continues unremedied for thirty (30)
days after written notice thereof from the Board of WPC, WHX or WPSC to the
Executive specifying the acts constituting the breach and requesting that they
be remedied; or (ii) the Executive is convicted or pleads guilty to a felony,
during the employment period other than for conduct undertaken in good faith in
furtherance of the interests of the Company. "Disability" shall mean that due to
illness, accident or other physical or mental incapacity, the Board of WPC, WHX
or WPSC has in good faith determined that the Executive is unable to
substantially perform his usual and customary duties under this Agreement for
more than four (4) consecutive months or six (6) months in any calendar year.
During any period that the Executive fails to perform his duties hereunder as a
result of incapacity due to Disability prior to the Executive's termination, the
Executive shall continue to receive his full base salary, together with all
benefits provided in this Agreement.
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(c) RIGHTS OF TERMINATION BY EXECUTIVE. The Executive shall
have the right, by written notice to the Company, to elect to terminate this
Agreement within sixty (60) days following a Change of Control (as defined
below), or if the Executive is (i) demoted, (ii) no longer holds the office of
the Executive Vice President or Chief Financial Officer of WPSC, (iii) no longer
holds the office of Executive Vice President or Chief Financial Officer of WPC
(except following an Initial Public Offering of WPSC or a "spin-off" of any
portion of the shares of Common Stock of WPSC), or (iv) no longer holds the
office of Executive Vice President or Chief Financial Officer of WHX (except
following an Initial Public Offering of WPC or WPSC or a "spin-off" of any
portion of the shares of Common Stock of WPC or WPSC). In the event that
Executive makes such election, the Executive shall be entitled to receive from
the Company the items set forth in Paragraph 9(b)(i) through 9(b)(iv) within
sixty (60) days of receipt by the Company of a written notice of Executive's
election.
(d) CHANGE IN CONTROL. For the purposes of this Agreement, a
"Change in Control" means (i) the, direct or indirect, sale, lease, exchange or
other transfer of all or substantially all (50% or more) of the assets of WPC,
WHX or WPSC to any individual, corporation, partnership, trust or other entity
or organization (a "Person") or group of Persons acting in concert as a
partnership or other group (a "Group of Persons") other than a Person (an
"Affiliate") controlling, controlled by
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or under common control with, any of WPC, WHX or WPSC, as the case may be, (ii)
the merger, consolidation or other business combination of WPC, WHX or WPSC with
or into another corporation with the effect that the shareholders of WPC, WHX or
WPSC, as the case may be, immediately prior to the business combination hold 50%
or less of the combined voting power of the then outstanding securities of the
surviving Person of such merger ordinarily (and apart from rights accruing under
special circumstances) having the right to vote in the election of directors,
(iii) the replacement of a majority of the Board of WPC, WHX or WPSC, over any
period of two years or less, from the directors who constituted the Board of
WPC, WHX or WPSC, as the case may be, at the beginning of such period, and such
replacement(s) shall not have been approved by the Board of WPC, WHX or WPSC, as
the case may be, as constituted at the beginning of such period, (iv) a Person
or Group of Persons shall, as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases or otherwise, have become the
beneficial owner (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") of securities
of WHX, or of WPC or WPSC following an Initial Public Offering or "spin-off" by
such company, representing 50% or more of the combined voting power of the then
outstanding securities of WHX, WPC or WPSC, as the case may be, ordinarily (and
apart from rights accruing under special circumstances) having the right to vote
in the election of directors. Notwithstanding the
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foregoing, an Initial Public Offering or a "spin-off" that creates publicly
traded securities of any portion of the shares of Common Stock of WPC or WPSC
shall not constitute a Change in Control under this Agreement.
10. INDEMNIFICATION. The Company shall defend and hold the Executive
harmless to the fullest extent permitted by applicable law and the Company's
By-Laws and Certificate of Incorporation in connection with any claim, action,
suit, investigation or proceeding arising out of or relating to performance by
the Executive of services for, or action of the Executive as, or arising by
reason of the fact that the Executive is or was, a Director, officer, employee
or agent of the Company or any parent, subsidiary or affiliate of the Company,
or of any other person or enterprise at the Company's request. Expenses incurred
by the Executive in defending a claim, action, suit or investigation or
proceeding shall be paid by the Company in advance of the final disposition
thereof upon the receipt by the Company of any undertaking by or on behalf of
the Executive to repay such amount if it shall ultimately be determined that he
is not entitled to be indemnified hereunder. The foregoing rights are not
exclusive and do not limit any rights accruing to the Executive under any other
agreement or contract or under applicable law.
11. SUCCESSORS AND ASSIGNS. The rights and obligations of the Company
hereunder shall run in favor and be obligations of the Company, its successors
and assigns. The rights of the
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Executive hereunder shall inure to the benefit of the Executive's legal
representatives, executors, heirs and beneficiaries. Termination of Executive's
employment shall not operate to relieve him of any remaining obligations under
Section 3 hereof. The Company shall require any successor or assign (whether
direct or indirect, by purchase, merger, reorganization, consolidation,
acquisition of property or stock, liquidation or otherwise) to all or a
significant portion of the assets of the Company, by agreement in form and
substance satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place.
Regardless of whether such agreement is executed by a successor, this Agreement
shall be binding upon any successor and assign in accordance with the operation
of law and such successor and assign shall be deemed the "Company" for purposes
of this Agreement.
12. ARBITRATION OF ALL DISPUTES.
(a) Any controversy or claim arising out of or relating to
this Agreement or the breach thereof (including the arbitrability of any
controversy or claim), shall be settled by arbitration in the City of
Pittsburgh, Commonwealth of Pennsylvania, by three arbitrators, one of whom
shall be appointed by the Company, one by the Executive and the third of whom
shall be appointed by the first two arbitrators. If the first two arbitrators
cannot agree on the appointment of a third arbitrator, then the third arbitrator
shall be appointed by the
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American Arbitration Association. The arbitration shall be conducted in
accordance with the rules of the American Arbitration Association, except with
respect to the selection of arbitrators which shall be as provided in this
Section 12. The cost of any arbitration proceeding hereunder shall be borne
equally by the Company and the Executive. The award of the arbitrators shall be
binding upon the parties. Judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof.
(b) In the event that it shall be necessary or desirable for
the Executive to retain legal counsel and/or incur other costs and expenses in
connection with the enforcement of any or all of his rights under this
Agreement, and provided that the Executive substantially prevails in the
enforcement of such rights, the Company shall pay (or the Executive shall be
entitled to recover from the Company, as the case may be) the Executive's
reasonable attorneys' fees and costs and expenses in connection with the
enforcement of his rights, including the enforcement of any arbitration award,
up to $50,000 in the aggregate.
13. NOTICES. All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly given upon
receipt if delivered by hand, sent by telecopier or courier, and three (3) days
after such communication is mailed within the continental United States by first
class certified mail, return receipt requested, postage prepaid, to the other
party, in each case addressed as follows:
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<PAGE>
(a) if to WHX, WPC or WPSC, as the case may be:
WHX Corporation
110 East 59th Street
New York, New York 10022
Attn: Stewart E. Tabin, Assistant Treasurer
Wheeling-Pittsburgh Corporation
1134 Market Street
Wheeling, West Virginia 26003
Attn: Corporate Secretary
Wheeling-Pittsburgh Steel Corporation
1134 Market Street
Wheeling, West Virginia 26003
Attn: Corporate Secretary
With a copy (which shall not constitute notice) to:
Steven Wolosky, Esquire
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
(b) if to the Executive:
Paul J. Mooney
323 Parkway Drive
Pittsburgh, Pennsylvania 15228
with a copy (which shall not constitute notice) to:
Dennis R. Bonessa, Esquire
Reed Smith Shaw & McClay
435 6th Avenue
Pittsburgh, PA 15219
Addresses may be changed by written notice sent to the other party at the last
recorded address of that party.
14. SEVERABILITY. If any provision of this Agreement shall be adjudged
by any court of competent jurisdiction to be invalid or unenforceable for any
reason, such judgment shall not affect, impair or invalidate the remainder of
this Agreement.
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<PAGE>
15. PRIOR UNDERSTANDING. This Agreement embodies the entire
understanding of the parties hereto, and supersedes all other oral or written
agreements or understandings between them regarding the subject matter hereof.
No change, alteration or modification hereof may be made except in a writing,
signed by all parties hereto. The headings in this Agreement are for convenience
and reference only and shall not be construed as part of this Agreement or to
limit or otherwise affect the meaning hereof.
16. EXECUTION IN COUNTERPARTS. This Agreement may be executed by the
parties hereto in counterparts, each of which shall be deemed to be original,
but all such counterparts shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart.
17. CHOICE OF LAWS. Subject to the provisions of Paragraph 12 and
without regard to the effect of principles of conflicts of laws thereof,
jurisdiction over disputes with regard to this Agreement shall be exclusively in
the courts of the Commonwealth of Pennsylvania, and this Agreement shall be
construed in accordance with and governed by the laws of the Commonwealth of
Pennsylvania.
18. THIRD PARTY BENEFICIARY. The provisions of this Agreement as to the
Company shall also be binding upon and inure to the benefit of WPSC.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
WHEELING-PITTSBURGH STEEL CORPORATION
By: /s/ John R. Scheessele
--------------------------
Name: John R. Scheessele
Title: President and Chief
Executive Officer
WHX CORPORATION
By: /s/ John R. Scheessele
--------------------------
Name: John R. Scheessele
Title: President and Chief
Executive Officer
WHEELING-PITTSBURGH CORPORATION
By: /s/ John R. Scheessele
--------------------------
Name: John R. Scheessele
Title: President and Chief
Executive Officer
------------------------------
Paul J. Mooney
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1991 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
OF
WHEELING-PITTSBURGH CORPORATION, AS AMENDED
April 28, 1994
1. PURPOSE OF THE PLAN
This 1991 Incentive and Nonqualified Stock Option Plan (the "Plan") is
intended as an incentive, to retain in the employ of Wheeling-Pittsburgh
Corporation (the "Company") and any Subsidiary of the Company (within the
meaning of Section 424(f) of the Internal Revenue Code of 1986, as amended (the
"Code")), persons of training, experience and ability, to attract new employees
whose services are considered valuable, to encourage the sense of proprietorship
and to stimulate the active interest of such persons in the development and
financial success of the Company and its Subsidiaries.
It is further intended that certain options granted pursuant to the
Plan shall constitute incentive stock options within the meaning of Section 422
of the Code ("Incentive Options") while certain other options granted pursuant
to the Plan will be nonqualified stock options ("Nonqualified Options").
Incentive Options and the Nonqualified Options are hereinafter referred to
collectively as "Options".
2. ADMINISTRATION OF THE PLAN
The Board of Directors of the Company (the "Board") shall appoint and
maintain as administrator of the Plan a Committee (the "Committee") consisting
of three or more directors of the Company. No person shall be eligible to serve
on the Committee unless he is then a "disinterested person" within the meaning
of
<PAGE>
Rule 16b-3 of the Securities and Exchange Commission ("Rule 16b- 3") promulgated
under the Securities Exchange Act of 1934, as amended (the "Act"), if and as
Rule 16b-3 is then in effect. The members of the Committee, which initially
shall be Ronald LaBow, Robert Davidow and Marvin Olshan, shall serve at the
pleasure of the Board.
The Committee, subject to Section 3 hereof, shall have full power and
authority to designate recipients of Options, to determine the terms and
conditions of respective Option agreements (which need not be identical) and to
interpret the provisions and supervise the administration of the Plan. Subject
to Section 7 hereof, the Committee shall have the authority, without limitation,
to designate which Options granted under the Plan shall be Incentive Options and
which shall be Nonqualified Options. To the extent any Option does not qualify
as an Incentive Option, it shall constitute a separate Nonqualified Option.
Notwithstanding any provision in the Plan to the contrary, no Options may be
granted under the Plan to any member of the Committee during the term of his
membership on the Committee.
Subject to the provisions of the Plan, the Committee shall interpret
the Plan and all Options granted under the Plan, shall make such rules as it
deems necessary for the proper administration of the Plan, shall make all other
determinations necessary or advisable for the administration of the Plan and
shall correct any defects or supply any omission or reconcile any
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<PAGE>
inconsistency in the Plan or in any Options granted under the Plan in the manner
and to the extent that the Committee deems desirable to carry the Plan or any
Options into effect. The act or determination of a majority of the Committee
shall be deemed to be the act or determination of the Committee and any decision
reduced to writing and signed by all of the members of the Committee shall be
fully effective as if it had been made by a majority at a meeting duly held.
Subject to the provisions of the Plan, any action taken or determination made by
the Committee pursuant to this and the other paragraphs of the Plan shall be
conclusive on all parties.
3. DESIGNATION OF OPTIONEES.
The persons eligible for participation in the Plan as recipients of
Options ("Optionees") shall include only full-time key employees (including
full-time key employees who also serve as directors) of the Company or any
Subsidiary. The grant of an Option to a full-time employee who is an executive
officer of the Company, as well as the terms and provisions of such Option,
shall require the prior approval of a majority of the members of the Board who
are "disinterested persons." In selecting Optionees, and in determining the
number of shares to be covered by each Option granted to Optionees, the
Committee may consider the office or position held by the Optionee, the
Optionee's degree of responsibility for and contribution to the growth and
success of the Company or any Subsidiary, the Optionee's length of service, age,
promotions, potential and any other factors
-3-
<PAGE>
which the Committee may consider relevant. Subject to the next sentence, an
employee who has been granted an Option hereunder may be granted an additional
Option or Options, if the Committee shall so determine. Notwithstanding anything
contained in the Plan to the contrary, no recipient of Options may be granted
Options to purchase in excess of twenty percent of the maximum number of shares
of Stock (as hereinafter defined) authorized to be issued under the Plan.
4. STOCK RESERVED FOR THE PLAN.
Subject to adjustment as provided in Section 7 hereof, a total of two
and one-half million (2,500,000) shares of common stock, $.01 par value
("Stock"), of the Company shall be subject to the Plan. The shares of Stock
subject to the Plan shall consist of unissued shares or previously issued shares
reacquired and held by the Company or any Subsidiary of the Company, and such
amount of shares of Stock shall be and is hereby reserved for such purpose. Any
of such shares of Stock which may remain unsold and which are not subject to
outstanding Options at the termination of the Plan shall cease to be reserved
for the purpose of the Plan, but until termination of the Plan the Company shall
at all times reserve a sufficient number of shares of Stock to meet the
requirements of the Plan. Should any Option expire or be cancelled prior to its
exercise in full or should the number of shares of Stock to be delivered upon
the exercise in full of an Option be reduced for any reason, the shares of
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<PAGE>
Stock theretofore subject to such Option may again be subject to an Option under
the Plan.
5. TERMS AND CONDITIONS OF OPTIONS.
Options granted under the Plan shall be subject to the following
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) OPTION PRICE. The purchase price of each share of Stock purchasable
under an Option shall be determined by the Committee at the time of grant but
shall not be less than 100% of the fair market value of such share of Stock on
the date the Option is granted; PROVIDED, HOWEVER, that with respect to an
Incentive Option, in the case of an Optionee who, at the time such Option is
granted, owns (within the meaning of Section 424(d) of the Code) more than 10%
of the total combined voting power of all classes of stock of the Company or of
any Subsidiary, then the purchase price per share of Stock shall be at least
110% of the Fair Market Value (as defined below) per share of Stock at the time
of grant. The exercise price for each incentive stock option shall be subject to
adjustment as provided in Section 7 below. The fair market value ("Fair Market
Value") of a share of Stock on a particular date shall be deemed to be the
closing price of the Stock on such date (or if no transactions were reported on
such date, on the next preceding date on which transactions were so reported) on
the New York Stock Exchange Composite Tape or, if the Stock is not on such
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<PAGE>
date listed on the New York Stock Exchange, in the principal market in which
such Stock is traded on such date.
(b) OPTION TERM. The term of each Option shall be fixed by the
Committee, but no Option shall be exercisable more than ten years after the date
such Option is granted; PROVIDED, HOWEVER, that in the case of an Optionee who,
at the time such Option is granted, owns more than 10% of the total combined
voting power of all classes of stock of the Company or any Subsidiary, then such
Option shall not be exercisable with respect to any of the shares subject to
such Option later than the date which is five years after the date of grant.
(c) EXERCISABILITY. Subject to paragraph (j) of this Section 5, Options
shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee at grant, provided, however,
that except as provided in paragraphs (f) and (g) of this Section 5, unless a
longer vesting period is otherwise determined by the Committee at grant, Options
shall be exercisable as follows: up to one-third of the aggregate shares of
Stock purchasable under an Option shall be exercisable commencing one year after
the date of grant, an additional one-third of the aggregate shares of Stock
purchasable under an Option shall be exercisable commencing two years after the
date of grant and the balance commencing on the third anniversary from the date
of grant. The Committee may waive such installment exercise provision at any
time in whole or in part based on performance and/or such other factors as the
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<PAGE>
Committee may determine in its sole discretion, however no Options shall be
exercisable until after six months from the date of grant.
(d) METHOD OF EXERCISE. Options may be exercised in whole or in part at
any time during the option period, by giving written notice to the Company
specifying the number of shares to be purchased, accompanied by payment in full
of the purchase price, in cash, by check or such other instrument as may be
acceptable to the Committee. As determined by the Committee, in its sole
discretion, at or after grant, payment in full or in part may also be made in
the form of Stock owned by the Optionee (based on the Fair Market Value of the
Stock on the trading day before the Option is exercised); provided, however,
that if such Stock was issued pursuant to the exercise of an Incentive Option
under the Plan, the holding requirements for such Stock under the Code shall
first have been satisfied. An Optionee shall have the rights to dividends or
other rights of a stockholder with respect to shares subject to the Option after
(i) the Optionee has given written notice of exercise and has paid in full for
such shares and (ii) becomes a stockholder of record.
(e) NON-TRANSFERABILITY OF OPTIONS. Options are not transferable and
may be exercised solely by the Optionee during his lifetime or after his death
by the person or persons entitled thereto under his will or the laws of descent
and distribution. Any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of, or to subject to execution, attachment or similar
-7-
<PAGE>
process, any Option contrary to the provisions hereof shall be void and
ineffective and shall give no right to the purported transferee.
(f) TERMINATION BY DEATH. Unless otherwise determined by the Committee
at grant, if any Optionee's employment with the Company or any Subsidiary
terminates by reason of death, the Option may thereafter be immediately
exercised, to the extent then exercisable (or on such accelerated basis as the
Committee shall determine at or after grant), by the legal representative of the
estate or by the legatee of the Optionee under the will of the Optionee, for a
period of one year from the date of such death or until the expiration of the
stated term of such Option, whichever period is shorter.
(g) TERMINATION BY REASON OF DISABILITY. Unless otherwise determined by
the Committee at grant, if any Optionee's employment with the Company or any
Subsidiary terminates by reason of total and permanent disability as determined
under the Company's long term disability policy ("Disability"), any Option held
by such Optionee may thereafter be exercised, to the extent it was exercisable
at the time of termination due to Disability (or on such accelerated basis as
the Committee shall determine at or after grant), but may not be exercised after
one year from the date of such termination of employment or the expiration of
the stated term of such Option, whichever period is shorter; provided, however,
that, if the Optionee dies within such one-year period, any unexercised Option
held by such Optionee shall
-8-
<PAGE>
thereafter be exercisable to the extent to which it was exercisable at the time
of death for a period of one year from the date of such death or for the stated
term of such Option, whichever period is shorter.
(h) TERMINATION BY REASON OF RETIREMENT. Unless otherwise determined by
the Committee at grant, if any Optionee's employment with the Company or any
Subsidiary terminates by reason of Normal or Early Retirement (as such terms are
defined below), any Option held by such Optionee may thereafter be exercised to
the extent it was exercisable at the time of such Retirement (as defined below)
(or on such accelerated basis as the Committee shall determine at or after
grant), but may not be exercised after three months from the date of such
termination of employment or the expiration of the stated term of such Option,
whichever period is shorter; provided, however, that, if the Optionee dies
within such three-month period, any unexercised Option held by such Optionee
shall thereafter be exercisable, to the extent to which it was exercisable at
the time of death, for a period of one year from the date of such death or for
the stated term of such Option, whichever period is shorter.
For purposes of this paragraph (h), Normal Retirement shall mean
retirement from active employment with the Company or any Subsidiary on or after
the normal retirement date specified in the applicable Company or Subsidiary
pension plan. Early Retirement shall mean retirement from active employment with
the Company or any Subsidiary pursuant to the early retirement
-9-
<PAGE>
provisions of the applicable Company or Subsidiary pension plan. Retirement
shall mean Normal or Early Retirement.
(i) OTHER TERMINATION. Unless otherwise determined by the Committee at
grant, if any Optionee's employment with the Company or any Subsidiary
terminates for any reason other than death, Disability or Retirement, the Option
shall thereupon terminate, except that the exercisable portion of any Option
which was exercisable on the date of such termination of employment may be
exercised for the lesser of three months from the date of termination or the
balance of such Option's term if the Optionee's employment with the Company or
any Subsidiary is involuntarily terminated by the Optionee's employer without
Cause. Cause shall mean a felony conviction or the failure of an Optionee to
contest prosecution for a felony or an Optionee's willful misconduct or
dishonesty, any of which is harmful to the business or reputation of the Company
or any Subsidiary. The transfer of an Optionee from the employ of the Company to
a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be
deemed to constitute a termination of employment for purposes of the Plan.
(j) LIMIT ON VALUE OF INCENTIVE OPTION. The aggregate Fair Market
Value, determined as of the date the Option is granted, of the Stock for which
Incentive Options are exercisable for the first time by any Optionee during any
calendar year under the Plan (and/or any other stock option plans of the Company
or any Subsidiary) shall not exceed $100,000.
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<PAGE>
(k) TRANSFER OF INCENTIVE OPTION SHARES. The stock option agreement
evidencing any Incentive Options granted under this Plan shall provide that if
the Optionee makes a disposition, within the meaning of Section 424(c) of the
Code and regulations promulgated thereunder, of any share or shares of Stock
issued to him pursuant to his exercise of an Incentive Option granted under the
Plan within the two-year period commencing on the day after the date of the
grant of such Incentive Option or within a one-year period commencing on the day
after the date of transfer of the share or shares to him pursuant to the
exercise of such Incentive Option, he shall, within ten days of such
disposition, notify the Company thereof and immediately deliver to the Company
any amount of federal income tax withholding required by law.
(l) LOANS TO OPTIONEES. Subject to compliance with all applicable law,
with the consent of the Committee, the Company in its sole and absolute
discretion, may make, arrange for, or guarantee a loan or loans to an Optionee
with respect to the exercise of any Option granted under the Plan. The Committee
shall have full authority to decide whether to make a loan or loans hereunder,
or to guarantee any loan or loans, and to determine the amount, term and
provisions of any such loan or loans, including the interest rate to be charged
in respect of any such loan or loans, whether the loan or loans are to be with
or without recourse against the Optionee, the terms on which the
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<PAGE>
loan is to be repaid and the conditions, if any, under which the loan or loans
may be forgiven, and the terms and conditions of any guarantee.
6. TERM OF PLAN.
No Option shall be granted pursuant to the Plan on or after the tenth
anniversary of the date the Plan is approved by the Board, but Options granted
may extend beyond that date.
7. CAPITAL CHANGE OF THE COMPANY.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure
affecting the Stock, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares reserved for issuance under the Plan
and in the number and option price of shares subject to outstanding Options
granted under the Plan, to the end that after such event each Optionee's
proportionate interest shall be maintained as immediately before the occurrence
of such event.
8. PURCHASE OF INVESTMENT.
Unless the Options and shares covered by the Plan have been registered
under the Securities Act of 1933, as amended, or the Company has determined that
such registration is unnecessary, each person exercising an Option under the
Plan may be required by the Company to give a representation in writing that he
is acquiring the shares for his own account for investment and not
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<PAGE>
with a view to, or for sale in connection with, the distribution of any part
thereof.
9. TAXES.
The Company may make such provisions as it may deem appropriate,
consistent with applicable law, in connection with any Options granted under the
Plan with respect to the withholding of any taxes or any other tax matters.
10. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date it is approved by the Board,
provided however that the Plan shall subsequently be approved by majority vote
of the Company's stockholders in the manner contemplated by Rule 16b-3 of the
Act within one (1) year from the date approved by the Board.
11. AMENDMENT AND TERMINATION.
The Board may amend, suspend, or terminate the Plan, except that no
amendment shall be made which would impair the right of any Optionee under any
Option theretofore granted without his consent, and except that no amendment
shall be made which, without the approval of the stockholders in the manner
provided in Rule 16b-3 of the Act, would:
(a) materially increase the number of shares which may be
issued under the Plan, except as is provided in Section 7;
(b) materially increase the benefits accruing to the Optionees
under the Plan;
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<PAGE>
(c) materially modify the requirements as to eligibility for
participation in the Plan;
(d) decrease the Option exercise price to less than 100% of
the Fair Market Value on the date of grant thereof; or
(e) extend the Option term provided for in Section 5(b). The
Committee may amend the terms of any Option theretofore
granted, prospectively or retroactively, but no such amendment shall impair the
rights of any Optionee without his consent. The Committee may also substitute
new Options for previously granted Options, including options granted under
other plans applicable to the participant and previously granted Options having
higher option prices, upon such terms as the Committee may deem appropriate.
12. GOVERNMENT REGULATIONS.
The Plan, and the granting and exercise of Options hereunder, and the
obligation of the Company to sell and deliver shares under such Options, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required.
13. RULE 16B-3 COMPLIANCE.
The Company intends that the Plan meet the requirements of Rule 16b-3
and that transactions of the type specified in subparagraphs (c) and (f) of Rule
16b-3 by officers of the
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<PAGE>
Company (whether or not they are directors) pursuant to the Plan will be exempt
from the operation of Section 16(b) of the Act. In all cases, the terms,
provisions, conditions and limitations of the Plan shall be construed and
interpreted consistent with the Company's intent as stated in this Section 13.
14. GENERAL PROVISIONS.
(a) CERTIFICATES. All certificates for shares of Stock delivered under
the Plan shall be subject to such stock transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed, and any applicable Federal or state securities
law, and the Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions.
(b) EMPLOYMENT MATTERS. The adoption of the Plan shall not confer upon
any Optionee of the Company or any Subsidiary, any right to continued employment
(or, in case the Optionee is also a director, continued retention as a director)
with the Company or a Subsidiary, as the case may be, nor shall it interfere in
any way with the right of the Company or any Subsidiary to terminate the
employment of any of its employees at any time.
(c) LIMITATION OF LIABILITY. No member of the Board or the Committee,
or any officer or employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable
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<PAGE>
for any action, determination, or interpretation taken or made in good faith
with respect to the Plan, and all members of the Board or the Committee and each
and any officer or employee of the Company acting on their behalf shall, to the
extent permitted by law, be fully indemnified and protected by the Company in
respect of any such action, determination or interpretation.
WHEELING-PITTSBURGH CORPORATION
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EXECUTION COPY
WHEELING-PITTSBURGH FUNDING, INC., Transferor
WHEELING-PITTSBURGH STEEL CORPORATION, Servicer and
BANK ONE, COLUMBUS, NA, Trustee
WHEELING-PITTSBURGH TRADE RECEIVABLES MASTER TRUST
POOLING AND SERVICING AGREEMENT
Dated as of August 1, 1994
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.................................................. 1
SECTION 1.02. Other Definitional Provisions................................ 21
ARTICLE II
TRANSFER OF RECEIVABLES
SECTION 2.01. Transfer of Receivables...................................... 23
SECTION 2.02. Acceptance by Trustee........................................ 24
SECTION 2.03. Representations and Warranties of the
Transferor Relating to the Transferor....................... 25
SECTION 2.04. Representations and Warranties of the
Transferor Relating to the Trust Assets..................... 29
SECTION 2.05. Affirmative Covenants of the Transferor...................... 33
SECTION 2.06. Negative Covenants of the Transferor......................... 36
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 3.01. Acceptance of Appointment and Other
Matters Relating to the Servicer............................ 42
SECTION 3.02. Servicing Compensation; Servicer's Expenses.................. 43
SECTION 3.03. Representations and Warranties of the Servicer............... 44
SECTION 3.04. Covenants of the Servicer.................................... 47
SECTION 3.05. Reports and Records for the Trustee.......................... 51
SECTION 3.06. Annual Certificate of Servicer............................... 51
SECTION 3.07. Annual Servicing Report of Independent
Public Accountants.......................................... 52
SECTION 3.08. Tax and Usury Treatment...................................... 53
SECTION 3.09. Notices to W-P Steel......................................... 53
SECTION 3.10. Adjustments.................................................. 53
SECTION 3.11. Securities and Exchange Commission Filings................... 53
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.01. Rights of Certificateholders................................. 54
SECTION 4.02. Establishment of Wheeling-Pittsburgh
Collection Accounts and Concentration
Account..................................................... 55
51685.
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<PAGE>
TABLE OF CONTENTS (CONT'D)
PAGE
SECTION 4.03. Allocation of Collections.................................... 57
ARTICLE V
DISTRIBUTIONS AND REPORTS TO CERTIFICATEHOLDERS............................ 59
ARTICLE VI
THE CERTIFICATES
SECTION 6.01. The Certificates............................................. 60
SECTION 6.02. Authentication of Certificates............................... 60
SECTION 6.03. Registration of Transfer and Exchange of
Certificates................................................ 61
SECTION 6.04. Mutilated, Destroyed, Lost or Stolen
Certificates................................................ 63
SECTION 6.05. Persons Deemed Owners........................................ 63
SECTION 6.06. Appointment of Paying Agent.................................. 64
SECTION 6.07. Access to List of Certificateholders'
Names and Addresses......................................... 65
SECTION 6.08. Authenticating Agent......................................... 65
SECTION 6.09. New Issuances................................................ 66
ARTICLE VII
OTHER MATTERS RELATING TO THE TRANSFEROR
SECTION 7.01. Obligations not Assignable................................... 69
SECTION 7.02. Limitations on Liability..................................... 69
SECTION 7.03. Indemnification of the Trustee, the Trust
and the Investor Certificateholders......................... 69
ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER
SECTION 8.01. Liability of the Servicer.................................... 72
SECTION 8.02. Merger or Consolidation of, or Assumption
of the Obligations of, the Servicer......................... 72
SECTION 8.03. Limitations on Liability..................................... 72
SECTION 8.04. Servicer Indemnification..................................... 73
SECTION 8.05. The Servicer Not to Resign................................... 74
51685.
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<PAGE>
TABLE OF CONTENTS (CONT'D)
PAGE
SECTION 8.06. Examination of Records....................................... 74
ARTICLE IX
EARLY AMORTIZATION EVENTS
SECTION 9.01. Early Amortization Events.................................... 75
SECTION 9.02. Additional Rights Upon the Occurrence
of any Early Amortization Event............................. 76
ARTICLE X
SERVICER DEFAULTS
SECTION 10.01. Servicer Defaults........................................... 77
SECTION 10.02. Trustee to Act; Appointment of Successor
Servicer................................................... 80
SECTION 10.03. Notification to Certificateholders.......................... 82
ARTICLE XI
THE TRUSTEE
SECTION 11.01. Duties of Trustee........................................... 83
SECTION 11.02. Certain Matters Affecting the Trustee....................... 85
SECTION 11.03. Trustee Not Liable for Recitals in
Certificates............................................... 86
SECTION 11.04. Trustee May Own Certificates................................ 86
SECTION 11.05. Compensation; Trustee's Expenses............................ 86
SECTION 11.06. Eligibility Requirements for Trustee........................ 87
SECTION 11.07. Resignation or Removal of Trustee........................... 88
SECTION 11.08. Successor Trustee........................................... 88
SECTION 11.09. Merger or Consolidation of Trustee.......................... 89
SECTION 11.10. Appointment of Co-Trustee or Separate
Trustee.................................................... 89
SECTION 11.11. Tax Returns................................................. 91
SECTION 11.12. Trustee May Enforce Claims Without
Possession of Certificates................................. 91
SECTION 11.13. Suits for Enforcement....................................... 91
SECTION 11.14. Rights of Certificateholders to Direct
Trustee.................................................... 92
SECTION 11.15. Representations and Warranties of Trustee................... 92
SECTION 11.16. Maintenance of Office or Agency............................. 93
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ARTICLE XII
TERMINATION
SECTION 12.01. Termination of Trust........................................ 94
SECTION 12.02. Final Distribution.......................................... 94
SECTION 12.03. Transferor's Termination Rights............................. 95
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Amendment; Waiver of Early Amortization
Events..................................................... 96
SECTION 13.02. Protection of Right, Title and Interest to
Trust...................................................... 97
SECTION 13.03. Limitation on Rights of Certificateholders.................. 98
SECTION 13.04. Governing Law; Jurisdiction; Consent to
Service of Process......................................... 99
SECTION 13.05. Notices; Payments...........................................100
SECTION 13.06. Rule 144A Information.......................................101
SECTION 13.07. Severability of Provisions..................................101
SECTION 13.08. Assignment..................................................101
SECTION 13.09. Certificates Nonassessable and Fully Paid...................101
SECTION 13.10. Further Assurances..........................................101
SECTION 13.11. Nonpetition Covenant........................................101
SECTION 13.12. No Waiver; Cumulative Remedies..............................102
SECTION 13.13. Counterparts................................................102
SECTION 13.14. Third-Party Beneficiaries...................................102
SECTION 13.15. Actions by Certificateholders...............................102
SECTION 13.16. Merger and Integration......................................103
SECTION 13.17. Headings....................................................103
SECTION 13.18. Construction of Agreement...................................103
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EXHIBITS
Exhibit A Form of Transferor Certificate
Exhibit B Form of Annual Servicer's Certificate
Exhibit C Form of Wheeling-Pittsburgh Collection
Account Letter
Exhibit D Form of Rule 144A and Non-Rule 144A Letters
SCHEDULES
Schedule I Wheeling-Pittsburgh Collection Accounts
Schedule II Information specified in Section 2.03(n)
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POOLING AND SERVICING AGREEMENT, dated as of August 1, 1994
among WHEELING-PITTSBURGH FUNDING, INC. ("W-P Funding"), a Delaware special
purpose corporation, as Transferor (the "Transferor"), WHEELING-PITTSBURGH STEEL
CORPORATION ("W-P Steel"), a Delaware corporation, as Servicer (the "Servicer"),
and BANK ONE, COLUMBUS, NA, 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. Whenever used in this Agreement,
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. All capitalized terms used herein but not defined shall
have the meanings ascribed to them in the related Series Supplement.
"ACT" shall mean the Securities Act of 1933, as amended from
time to time.
"ADDITIONAL ORIGINATOR" shall have the meaning specified in
Section 2.07(a).
"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.
<PAGE>
"AGGREGATE CERTIFICATEHOLDERS' INTEREST" shall mean the
aggregate of the Certificateholders' Interests for each Series as defined in
Section 4.01(a).
"AGREEMENT" shall mean this Pooling and Servicing Agreement,
as the same may from time to time be amended, modified or otherwise
supplemented, including, with respect to any Series or Class, the related
Supplement.
"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 payment in full to the
Investor Certificateholders of such Series of the Invested Amount with respect
to such Series, all accrued and unpaid interest thereon and all other amounts
owed to the Investor Certificateholders hereunder.
"APRIL 1 PROGRAM" shall mean a program for aging Receivables
originated by Wheeling Corrugating wherein invoices, which are dated the date of
shipment during a period of up to 120 days prior to April 1 of any year, are
identified on the computer records of the Servicer as having an invoice date of
April 1 for purposes of the payment terms of the related Receivables.
"BENEFICIARY" shall mean, as of any date of determination, any
of the then holders of the Investor Certificates and any Enhancement Provider.
"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, Wheeling, West Virginia 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 and, with respect to
non-financial reporting requirements of the Servicer or the Transferor, any day
on which the Servicer or the Transferor is closed.
"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 RATE" shall mean, with respect to any Series or
Class, the certificate rate specified therefor in the related Supplement.
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"CERTIFICATE REGISTER" shall have the meaning specified in
Section 6.03(a).
"CERTIFICATEHOLDER" or "HOLDER" shall mean an Investor
Certificateholder or the Person in whose name the Transferor Certificate is
registered in the Certificate Register.
"CERTIFICATEHOLDERS' INTEREST" shall have the meaning
specified in Section 4.01(a).
"CLASS" shall mean, with respect to any Series, 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 the date of this Agreement 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 Wheeling-Pittsburgh Collection Account or
Concentration Account, or received by the Servicer, in respect of 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 4.01.
"CONCENTRATION ACCOUNT" shall have the meaning speci- fied in
Section 4.02.
"CONCENTRATION ACCOUNT BANK" shall initially be Bank One,
Columbus, NA, and shall have the meaning specified in Section 4.02.
"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 owned by the Trust.
"CONCENTRATION LIMIT" shall mean, with respect to the
following types of Receivables, the percentages of the aggregate amount of
Eligible Receivables owned by the Trust set forth as follows: (a) Receivables of
any single Obligor rated at least "A-1" or its equivalent by the Rating Agency,
6%; (b) Receivables of any single Obligor rated below "A-1", but at least "A-2"
or its equivalent by the Rating Agency, 5%; (c) Receivables of any
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single Obligor rated below "A-2" but at least "A-3" or its equivalent by the
Rating Agency, 4%; (d) Receivables of the five largest Obligors (by Receivables
balance) not rated or rated below investment grade on their short-term debt, in
aggregate, 15%; (e) Receivables of the two largest Obligors (by Receivables
balance) not rated on their short-term debt, each 4%; (f) Receivables of any
other single Obligor not rated on its short-term debt, 3%; (g) in addition to
the limits in clauses (a)-(f), (h),(i),(j) and (k), Receivables of Obligors
which are non-Controlled Affiliates of W-P Steel or the Transferor, 15%; (h)
Receivables the Obligors of which are state or municipal governments, in
aggregate, 1%; (i) Government Receivables, 1%; (j) Receivables included in the
April 1 Progam, 10%; and (k) in addition to the limits in clauses (a)-(j),
Receivables of Wheeling-Nisshin, Inc., 4%; 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 the aggregate balance of Eligible
Receivables the Obligors of which are residents of Canada or Puerto Rico shall
not exceed $2,000,000 in aggregate at any time.
"CONFIDENTIAL INFORMATION" shall mean, in relation to any
Person, any written information delivered or made available by or on behalf of
W-P 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 and clearly marked or
identified in writing as being confidential information, other than information
(i) which was publicly known, or otherwise known to such Person, at the time of
disclosure (except pursuant to disclosure in connection with this Agreement),
(ii) which subsequently becomes publicly known through no act or omission by
such Person, or (iii) which otherwise becomes known to such Person other than
through disclosure by W-P Steel or the Transferor.
"CONTRACT" shall mean an agreement between an Originator and a
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.
"CONTROLLED AFFILIATE" shall mean any specified Person
controlled by or under common control with W-P Steel or the Transferor and as to
which W-P Steel or the Transferor beneficially owns or holds more than 50% of
any class of voting securities of such Person or more than 50% of the equity
interest in such Person. For the purposes of this definition, "control" when
used with respect to any specified Person shall mean the
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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.
"CORPORATE TRUST OFFICE" shall have the meaning specified in
Section 11.16.
"CREDIT POLICY AND PROCEDURES MANUAL" shall mean those credit
and collection policies and practices of W-P Steel described in the credit
policy and procedures 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).
"CURE FUNDS" shall have the meaning specified in the
definition of the term "Cure Period" contained in this Section 1.01.
"CURE PERIOD" shall mean the period beginning on a Pool
Non-compliance Date if the Transferor shall begin depositing Collections pro
rata (by (Floating Allocation Percentage or Fixed Allocation Percentage, as
applicable) 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 tenth
consecutive day following the commencement of such Pool Non-compliance Date;
PROVIDED, HOWEVER, that, with the consent of 33.33% or more of the
Certificateholders (by Invested Amount) of all outstanding Series (provided to
the Trustee on or before such tenth day), such Cure Period shall continue until
the earlier of (x) the fifth consecutive day following such tenth day or (y) the
day on which the Net Receivables Balance equals or exceeds the Required Net
Receivables Balance. Notwithstanding the foregoing, the Transferor may not
deposit any Cure Funds to the Reserve Accounts at any time if such amount,
together with the aggregate amount of Cure Funds previously deposited by the
Transferor and held in the Reserve Accounts at such time, would exceed 20% of
the Trust Invested Amount at such time, unless the Transferor has obtained the
prior written consent of the Majority in Interest.
"CUT-OFF DATE" shall mean August 17, 1994.
"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 Receivables that were 61-90 days past due at the
end of each such month plus Receivables which were charged off as uncollectible
during the current month which were less than 91 days past due when charged
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off to (ii) aggregate Receivables that were acquired by the Trust during the
fourth month preceding such date.
"DEFAULTED RECEIVABLE" shall mean a 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 91 days or more from the
original due date for such payment specified in the relevant invoice, or (iii)
which, consistent with the Credit Policy and Procedures Manual, would be written
off as uncollectible.
"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 cancelled as a result of (i) any
failure by any Originator to deliver any merchandise or provide any services or
otherwise to perform under the underlying Contract or invoice, (ii) any change
in the terms of, or cancellation of, a Contract or invoice or any other
adjustment by W-P 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 on
the related Receivable 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 are calculated
assuming that all chargebacks are resolved in the Obligor's favor and do not
include 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.
"DILUTION RATIO" shall mean as of any date, the average of the
ratios for each of the two most recently ended months (expressed as a
percentage) of (i) the aggregate balance of Diluted Receivables at the end of
such month to (ii) the aggregate balance of all Receivables acquired by the
Trust during the month second preceding such date of calculation.
"DILUTION VOLATILITY FACTOR" shall mean as of any date a
percentage equal to the product of (a) the amount by which (i)
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the highest Dilution Ratio during the most recently ended twelve-month period
exceeds (ii) the average of the Dilution Ratios during such twelve-month period
and (b)(i) the highest Dilution Ratio during such twelve-month period divided by
(ii) 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 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.
"DUFF & PHELPS" shall mean Duff & Phelps Credit Rating Co. or
its successor.
"EARLY AMORTIZATION EVENT" shall have the meaning specified in
Section 9.01 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 the 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, (b) the Termination Date with respect to such Series and (c) if
such Early Amortization Period has resulted from the occurrence of an Early
Amortization Event described in Section 9.01(i), the end of the first Collection
Period during which an Early Amortization Event would no longer be deemed to
exist pursuant to Section 9.01(i), so long as no other Early Amortization Event
with respect to such Series shall have occurred and the scheduled termination of
the Revolving Period with respect to such Series shall not have occurred.
"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-l 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-l by S&P and (iii) has
(A) a
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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.
"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, 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 and
Moody's;
(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 and Moody's;
(d) investments in no load money market funds having a rating
from each rating agency rating such fund in its highest investment
category;
(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; or
(f) The One Group Family of Mutual Funds of Bank One,
Columbus, NA, so long as it shall be rated by S&P and Moody's as either
AAAm, 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.
"ELIGIBLE RECEIVABLE" shall mean each Receivable or portion
thereof:
(i) as to which, 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
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from Liens except as created hereunder, 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 hereunder) therein (and in the proceeds thereof);
(ii) which is not a Defaulted Receivable or a Diluted
Receivable;
(iii) which arose in the ordinary course of business of W-P
Steel or any of the Originators 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;
(iv) 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 hereunder);
(v) which is denominated and payable only in United States
dollars in the United States;
(vi) the Obligor of which is a United States, Canadian or
Puerto Rican resident;
(vii) which will at all times be 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, moratorium 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);
(viii) which was created in 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;
(ix) which satisfies in all material respects all material
applicable requirements of the Credit Policy and Procedures Manual;
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(x) 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;
(xi) 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 and
Procedures Manual and which waiver or modification is reflected in the
Servicer's records and computer files relating thereto;
(xii) which is not subject to any enforceable provision
prohibiting the transfer or assignment by the Originator or W-P Steel
of such payment obligation;
(xiii) the payment terms of which conform in all material
respects to the provisions of the Credit Policy and Procedures Manual
of W-P Steel; and
(xiv) the Obligor of which is not a Controlled Affiliate of
W-P Steel or the Transferor;
provided, that Receivables as to which Wheeling-Nisshin, Inc. is the Obligor,
which satisfy the other conditions of this definition, shall be Eligible
Receivables.
"ELIGIBLE SERVICER" shall mean W-P 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 agreement or other similar arrangement. The subordination of any Series or
Class to any other Series or Class or of the Trans- feror'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.
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"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.
"EXPECTED FINAL PAYMENT DATE" with respect to any Series shall
have the meaning specified in the related Supplement.
"FDIC" shall mean the Federal Deposit Insurance Corporation or
any successor.
"FIXED ALLOCATION PERCENTAGE" with respect to each Series,
shall have the meaning specified in the related Supplement.
"FLOATING ALLOCATION PERCENTAGE" with respect to each Series,
shall have the meaning specified in the related Supplement; PROVIDED, HOWEVER,
that the aggregate of the Floating Allocation Percentages with respect to all
outstanding Series shall not exceed 100%.
"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.
"INDEMNIFIED AMOUNTS" shall have the meaning specified in
Section 7.03.
"INDEMNIFIED PARTY" shall have the meaning specified in
Section 7.03.
"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.
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"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.
"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 such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (b) the commencement by such Person or by a Controlled
Affiliate of 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.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
"INVESTED AMOUNT" shall mean, with respect to any Series and
for any date, an amount equal to the invested amount specified 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.
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"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, encumbrance, lien (statutory or other), 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, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the UCC or comparable law of any jurisdiction to
evidence any of the foregoing.
"LOSS AND DILUTION RESERVE" shall mean, with respect to any
Series, the amount set forth in the related Supplement.
"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 and Procedures Manual by W-P 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 51% or more of the aggregate
Certificateholders' Interest in such outstanding Series.
"MOODY'S" shall mean Moody's Investors Service, Inc. or its
successor.
"NET RECEIVABLES BALANCE" shall mean at any time the excess of
(a) the aggregate Outstanding Balance of Receivables over (b) the sum of (i) the
aggregate Outstanding Balance of Receivables that are not Eligible Receivables
at such time plus (ii) the Overconcentration Amount at such time, plus (iii) the
aggregate amount of Collections that have not been applied to the corresponding
Receivables on the records of the Servicer.
"NOTICES" shall have the meaning specified in Section
13.05(a).
"OBLIGOR" shall mean each Person who is obligated to pay for
goods or services provided by W-P Steel or any of the
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other Originators which gave rise to a Receivable, including any guarantor of
such Person's obligations.
"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 be reasonably acceptable to the Trustee.
"ORIGINATORS" shall mean Wheeling-Pittsburgh Steel
Corporation, Pittsburgh-Canfield Corporation, Wheeling Construction Products,
Inc. and any other Person designated from time to time as an Originator pursuant
to the terms of Section 2.07 and the Receivables Purchase Agreement.
"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 (j) of the definition
of Concentration Limit owned by the Trust exceeds the aggregate of the
respective Concentration Amounts.
"PARTIAL AMORTIZATION PERIOD" shall mean, 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 Noncompliance Date and continuing each day thereafter until the
earlier of (a) the date on which the Net Receivables Balance shall be equal to
or greater than the Required Net Receivables Balance and (b) the tenth
consecutive day following such Pool Non-compliance Date; PROVIDED, HOWEVER,
that, with the consent of 33.33% or more of the Certificateholders (by Invested
Amount) of all outstanding Series (provided to the Trustee on or before such
tenth day), such Partial Amortization Period shall continue until the earlier of
(x) the fifth consecutive day following such tenth day and (y) the day on which
the Net Receivables Balance equals or exceeds the Required Net Receivables
Balance.
"PAYING AGENT" shall mean any paying agent appointed pursuant
to Section 6.06.
"PERSON" shall mean any individual, corporation, part-
nership, joint venture, association, joint-stock company, trust,
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unincorporated organization, Governmental Authority or any other entity of
similar nature.
"POOL NON-COMPLIANCE DATE" shall mean any day on which the Net
Receivables Balance falls below the Required Net Receivables Balance.
"PRINCIPAL TERMS" shall mean, with respect to any Series: (a)
the name or designation; (b) the initial 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) 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 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 PRICE" shall have the meaning specified in the
Receivables Purchase Agreement.
"RATING AGENCY" shall mean each such nationally recognized
rating agency which, at the request of the Transferor, has rated any Series of
Certificates.
"RATING AGENCY CONDITION" shall mean, with respect to any
action, that each Rating Agency, upon the written request of the Transferor, the
Servicer or the Trustee, 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 any Originator as of the Cut-Off Date, and from time to time
thereafter, arising from the delivery of merchandise or providing of services by
any Originator in the ordinary course of business of such Originator, 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 on the
Receivables transferred hereunder) thereof and "Receivables" shall mean all such
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Receivables; PROVIDED, HOWEVER, that the term "Receivable" shall not include (a)
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 (v) and (vi)
of the definition of Eligible Receivable, (b) Receivables as to which the
Obligor is a joint venture or partnership relating to the production of hot
rolled products between W-P Steel and ISPAT Mexicana, S.A. DE C.V. or its
Affiliates and (c) Receivables as to which the Obligor is a wholly-owned
subsidiary of W-P Steel or the Transferor.
"RECEIVABLES PURCHASE AGREEMENT" shall mean the agreement
between W-P Steel and the Transferor, dated as of the date hereof, governing the
terms and conditions upon which the Transferor shall have acquired the
Receivables transferred to the Trust on the Closing Date and all Receivables
transferred to the Trust from time to time thereafter, as the same may from time
to time be amended, modified or otherwise supplemented (a) with the consent of
the Majority in Interest of each adversely affected Series if such amendment,
modification or supplement would materially and adversely affect the interests
of such Series or (b) without the consent of any of the Investor
Certificateholders as evidenced by an Opinion of Counsel that such amendment,
modification or supplement will not materially adversely affect the interests of
any Certificateholders.
"RECONVEYED RECEIVABLE" shall have the meaning specified in
Section 2.04.
"RECORD DATE" shall mean, with respect to any Distribution
Date, the last day of the preceding calendar month.
"REMOVED ORIGINATOR" shall have the meaning specified in
Section 2.07(b).
"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 at such time in the Concentration
Account allocated to the Trust Partial Amortization Amount.
"REQUIREMENTS OF LAW" shall mean any law, treaty, rule or
regulation, or final 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.
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"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 department of the Trustee
including any vice president, assistant vice president, secretary, assistant
secretary, treasurer, assistant treasurer, trust officer 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, any of the President, Chief Executive Officer, Treasurer, Executive
Vice President-Finance and Chief Financial Officer, Executive Vice
President-Manufacturing and Executive Vice President-Commercial and Chief
Operating Officer or when used with respect to the Servicer, any of the
President, Chief Financial Officer or Treasurer.
"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.
"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) the Invested Amount for such Series (computed as if reduced by (A)
the amount of Cure Funds held in the Reserve Account for such Series and (B) the
cumulative amount of funds held at such time in the Concentration Account
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.
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"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 and the related Supplement.
"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.
"SERVICER" initially shall mean W-P Steel in its capacity as
Servicer pursuant to this Agreement, and after any Service Transfer shall mean
the Successor Servicer.
"SERVICER DEFAULT" shall have the meaning specified in Section
10.01.
"SERVICING FEE" shall have the meaning specified in Section
3.02(a).
"SERVICING OFFICER" shall mean any officer or other employee
of the Servicer or other agent of the Servicer who in any case 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.
"SUCCESSOR SERVICER" shall have the meaning specified in
Section 10.02(a).
"SUPPLEMENT" shall mean, with respect to any Series, a
supplement to this Agreement, executed and delivered in connection with the
original issuance of the Investor Certificates of such Series pursuant to
Article VI, and all amendments, modifications or supplements to this Agreement.
"SUPPLEMENTAL CERTIFICATE" shall have the meaning specified in
Section 6.09(c).
"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 West Virginia (and any other
State where substantial servicing activities in respect of Receivables are
conducted by the Transferor or the Servicer if there is a substantial change
from
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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 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), the Investor Certificates of the new Series will be characterized as
debt.
"TERMINATION DATE" shall mean, with respect to any Series, the
termination date specified in the related Supplement.
"TERMINATION NOTICE" shall have the meaning specified in
Section 10.01.
"TRANSFER" shall have the meanings specified in Section 2.01,
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.
"TRANSFER AGENT AND REGISTRAR" shall have the meaning
specified in Section 6.03.
"TRANSFEROR" shall mean Wheeling-Pittsburgh Funding, Inc., a
Delaware special purpose corporation.
"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 hereto.
"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 times (ii) the
aggregate amount of such Collections.
"TRANSFEROR INTEREST" shall have the meaning specified in
Section 4.01(a).
"TRANSFEROR PERCENTAGE" shall mean at any time 100% minus the
aggregate of the Floating Allocation Percentages or Fixed Allocation
Percentages, as applicable, of all outstanding Series at such time.
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"TRANSFEROR RECEIVABLE" shall mean a Receivable acquired by
the Transferor pursuant to the Receivables Purchase Agreement.
"TRANSFEROR'S ACCOUNT" shall mean the special account (account
number 0219934), under the dominion and control of the Transferor, for deposits
by the Servicer pursuant to the applicable Supplement, maintained at the office
of the Trustee in Columbus, Ohio, 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 Wheeling-Pittsburgh Trade Receivables
Master Trust created by this Agreement.
"TRUST ASSETS" shall have the meaning specified in Section
2.01.
"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 Amortization Period the amount by
which the Net Receivables Balance is less than the Required Net Receivables
Balance.
"TRUSTEE" shall mean Bank One, Columbus, NA, 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.
"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 the Originators 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.
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"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 sum 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) TIMES (ii)
the payment term (in days) for each such Receivable, and the denominator of
which is the aggregate outstanding balance of such Receivables (at the time such
Receivable is transferred to the Trust); PROVIDED, HOWEVER, (x) that if more
than 10% of the aggregate principal balance of Receivables transferred to the
Trust during such preceding month are not Eligible Receivables (at the time such
Receivables were transferred to the Trust), then the "Weighted Average Term"
shall be recalculated on such date excluding the balances of all such
non-Eligible Receivables transferred to the Trust during the preceding month;
(y) that for purposes of clause (ii) above, the "term" of all Receivables in the
April 1 Program shall be deemed to begin on the invoice date for each such
Receivable which is not April 1st; and (z) that the amount in clauses (i) and
(x) shall not include the balances of Receivables as to which Wheeling-Nisshin,
Inc. is the Obligor.
"WHEELING CORRUGATING" shall mean Wheeling Corrugating, an
operating division of W-P Steel.
"WHEELING-PITTSBURGH COLLECTION ACCOUNT" shall have the
meaning specified in Section 4.02.
"WHEELING-PITTSBURGH COLLECTION ACCOUNT BANK" shall have the
meaning specified in Section 4.02.
"WHEELING-PITTSBURGH COLLECTION ACCOUNT LETTER" shall have the
meaning specified in Section 4.02.
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 generally accepted accounting principles 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 generally
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accepted accounting principles 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".
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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 Trust, for the benefit of the Certificate- holders:
(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, 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, W-P 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 foregoing Transfer to the Trust
shall be made to the Trustee, on behalf of the Trust, and each reference in this
Agreement to such Transfer shall be construed accordingly.
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
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Receivables and the other Trust Assets now existing and hereafter created
meeting the requirements of applicable law in such manner and in such
jurisdictions as are necessary to perfect, and maintain perfection of, the
Transfers of the 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 such financing
statements, documents, amendments, assignments or continuation statements, or to
make any other filing under the UCC in connection with such Transfer.
W-P Steel and the Transferor further agree, at their own
expense, on or prior to the Closing Date to mark their computer records in a
manner reasonably calculated to indicate that the Receivables have been
conveyed, in the case of W-P Steel, to the Transferor in accordance with the
Receivables Purchase Agreement and, in the case of the Transferor, to 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 except (i) to a Successor Servicer or as required by
a Requirement of Law applicable to the Trustee, (ii) as required in the
performance of the Trustee's duties hereunder, (iii) as required in enforcing
the rights of the Certificateholders hereunder or (iv) as provided in any
Supplement. 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 and, in connection therewith, will allow the
Transferor to inspect the Trustee's security and confidentiality arrangements
from time to time during normal business hours. The Trustee shall use its best
efforts to provide the Transferor written notice at least five Business Days
prior 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.
(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.
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SECTION 2.03. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR
RELATING TO THE TRANSFEROR. The Transferor hereby represents and warrants to the
Trust 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 Delaware and has full corporate power, authority and legal right
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 to the Trustee
pursuant hereto the Certificates.
(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 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
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). The Receivables Purchase
Agreement is in full force and effect, and is not subject, as to any party
thereto, to any specific dispute, offset, counterclaim or defense of such party.
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(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, violate any provision of, or require any filing (except for the
filings under the UCC required by this Agreement, each of which has been or is
being duly made and will be in full force and effect on the applicable Closing
Date), registration, consent or approval under, any Requirement of Law presently
in effect having applicability to the Transferor, except for such filings,
registrations, consents or approvals as have already been obtained and are in
full force and effect, 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, or result in, or require, the creation or imposition
of any lien upon or with respect to any of the properties now owned or hereafter
acquired by the Transferor other than as specifically contemplated by this
Agreement.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the best knowledge of the Trans- feror, threatened against the
Transferor before any Governmental Authority.
(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
Receivables Purchase Agreement, the transfer of the Trust Assets to the Trust
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 and the
fulfillment by the Transferor of the terms hereof, 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, and except
for Liens that will be terminated prior to the initial Transfer of Receivables
on the Closing Date, there are no Liens of any nature whatsoever on any
Receivable. The Transferor is
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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
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, or a company controlled by, an "investment company", within
the meaning of and 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 2.03(j) 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 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 II hereto
regarding the Transferor provided by the Transferor to Investor
Certificateholders is accurate in all material respects as of its date 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.
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(o) SOLVENCY. The Transferor is solvent and will not become
insolvent after giving effect to the transactions contemplated by this
Agreement; the Transferor is currently repaying all of its indebtedness as such
indebtedness becomes due; and, after giving effect to the transactions
contemplated by this Agreement, the Transferor will have adequate capital to
conduct its business as presently conducted and as contemplated by this
Agreement.
(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.
(q) TAXES. The Transferor has filed all material tax returns
(federal, state and local) which it reasonably believes are required to be filed
and has paid or made adequate provision for the payment of all taxes,
assessments and other governmental charges due from the Transferor or is
contesting any such tax, assessment or other governmental charge in good faith
through appropriate proceedings. The Transferor knows of no basis for any
material additional tax assessment for any fiscal year for which adequate
reserves have not been established.
(r) USE OF PROCEEDS. No proceeds of the issuance of any
Certificate will be used by the Transferor to acquire any security in a
transaction that is subject to sections 13 and 14 of the Securities Exchange Act
of 1934, as amended, or to purchase or carry any margin security in violation of
any applicable law or regulation.
(s) WHEELING-PITTSBURGH COLLECTION ACCOUNTS. The
Wheeling-Pittsburgh Collection Account Banks are the only institutions holding
any lock-box accounts for the receipt of payments from Obligors in respect of
Receivables (subject to such changes as may be made from time to time in
accordance with Section 4.02) and all Obligors, and only such Obligors, have
been or will be instructed to make payments only to Wheeling- Pittsburgh
Collection Accounts and such instructions have not been modified or revoked by
Transferor and such instructions are, to the best knowledge of the Transferor,
in full force and effect.
(t) EARLY AMORTIZATION EVENT. As of the Closing Date, no Early
Amortization Event and no condition that with the giving of notice and/or the
passage of time would constitute an Early Amortization Event, has occurred and
is continuing.
(u) ERISA. No Plan maintained by the Transferor or any of its
ERISA Affiliates has any accumulated funding deficiency (within the meaning of
Section 302 of ERISA or Section 412 of the Internal Revenue Code), whether or
not waived. The
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Transferor and each ERISA Affiliate of the Transferor has timely made all
contributions required to be made by it to any Plan and Multiemployer Plan to
which contributions are or have been required to be made since January 3, 1991
by the Transferor or such ERISA Affiliate, and no event requiring notice to the
PBGC under Section 302(f) of ERISA has occurred and is continuing or could
reasonably be expected to occur with respect to any such Plan, in any case, that
could reasonably be expected to result, directly or indirectly, in any lien
being imposed on the property of the Transferor or the payment of any material
amount to avoid such lien. No Plan Event with respect to the Transferor or any
of its ERISA Affiliates has occurred or could reasonably be expected to occur
that could reasonably be expected to result, directly or indirectly, in any Lien
being imposed on the property of the Transferor or the payment of any material
amount to avoid such Lien.
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 THE TRUST ASSETS. The Transferor hereby represents and warrants to
the Trust 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, in
the case of the representations and warranties contained in Sections 2.04(a),
(b), (c), (d), (e) and (f) 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. 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 W-P Steel
in and to the Receivables now existing and hereafter-created during the
Revolving Period and the proceeds thereof. This Agreement constitutes a valid
transfer and assignment to the Trust of all right, title and interest of the
Transferor in and to the 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 and such funds as are
required to be deposited pursuant to this
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Agreement from time to time in the Wheeling-Pittsburgh Collection Account, the
Concentration Account and any Series Account, 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 Receivables and other Trust Assets created hereunder) in all right, title
and interest of the Transferor in and to the 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 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 of law or in equity) by the Trustee upon
execution and delivery of this Agreement, and which, in the case of the
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 of law or in equity) by the Trustee upon such
creation. Upon the filing of the financing statements and, in the case of the
Receivables hereafter created and the proceeds thereof, upon the creation
thereof and payment therefor, 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 Receivables as the
property 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
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 Trans- feror has any claim to or interest in the
Concentration Account or any Series Account. Each such Receivable and
Collections with respect thereto has been or will be transferred to the Trust
free and clear of any adverse claim or interest of any other Person (other than
disputes with Obligors in the ordinary course of business or in connection with
an Insolvency Event of the related Obligor) not holding through the Trust.
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(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
out- standing Series and (iii) the Trust Invested Amount (computed as if reduced
by (A) the aggregate amount of Cure Funds held in the Reserve Accounts of all
outstanding Series and (B) funds allocated to the Trust Partial Amortization
Amount and held in the Concentration Account).
(d) LIENS. Each 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) ELIGIBILITY. (i) On the Closing Date each Receivable then
existing and transferred to the Trust pursuant to Section 2.01 hereof satisfies
the conditions in clauses (v) and (vi) of the definition of Eligible Receivable
and as of the date of Transfer to the Trust hereunder of each Receivable
hereafter created, such Receivable will satisfy the conditions in clauses (v)
and (vi) of the definition of Eligible Receivable.
(ii) Each such Receivable was purchased in accordance
with the terms of the Receivables Purchase Agreement, which is
in full force and effect.
(iii) Each Receivable classified as an "Eligible
Receivable" by the Transferor in any document or report
delivered hereunder will satisfy the requirements of
eligibility contained in the definition of Eligible
Receivable.
(f) INVESTMENT COMPANY ACT. Each Transfer of 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.
(g) 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 Act or to the qualification provisions of any
securities or blue sky law of any applicable jurisdiction.
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In the event of a breach with respect to any Receivables of the
representation and warranty set forth in Section 2.04(e)(iii) above (a) which
cannot be cured by the Business Day following the first day on which a
Responsible Officer of the Transferor has knowledge thereof and (b) which 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. As payment for each such Reconveyed
Receivable the Transferor shall make or cause to be made a deposit pro rata (by
Floating Allocation Percentage or Fixed Allocation Percentage, as applicable) in
the Reserve Accounts of each outstanding Series in immediately available funds
in an amount equal to the aggregate of the unpaid principal balances of such
Reconveyed Receivables. 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 existence
of such Reconveyed 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
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. The Trustee 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 2.04. The obligation of the
Transferor set forth in this Section 2.04 shall constitute the sole remedy
respecting any breach of the representations and warranties set forth in this
Section 2.04 with respect to such Receivable available to the Investor
Certificateholders or the Trustee on behalf of the Investor Certificateholders.
The representations and warranties set forth in this Section
2.04 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
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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. During
the term of this Agreement, the Transferor hereby covenants and agrees that,
until all Series are no longer outstanding under the related Supplement:
(a) COMPLIANCE WITH LAW. The Transferor shall duly satisfy all
obligations on its part to be fulfilled under or in connection with the
Receivables, will maintain in effect all qualifications required under
Requirements of Law in order to properly purchase and convey the Receivables and
other Trust Assets to the Trust and 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 would have a
material adverse effect on the Trust Assets or the ability of the Transferor to
perform in any material respects its obligations hereunder or under the
Receivables Purchase Agreement.
(b) PRESERVATION OF CORPORATE EXISTENCE. The Trans- feror will
preserve and maintain its corporate existence, rights, franchises and privileges
in the jurisdiction of its formation, 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 Trustee or of the Investor Certificateholders hereunder or in
the Trust Assets, (ii) the collectability of the Receivables or (iii) the
ability of the Transferor or the Servicer to perform its obligations hereunder
or under the Receivables Purchase Agreement in any material respects.
The Transferor shall provide to the Trustee access to the
documentation regarding the 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, (iii) subject to the written
Transferor's normal security and confidentiality procedures and (iv) at
reasonably accessible offices in the continental United States designated by the
Transferor.
(c) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Transferor
will (i) keep proper books of record and account,
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which shall be maintained or caused to 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 generally accepted
accounting principles consistently applied, and (ii) maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Receivables in the event of the
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 Receivables (including, without limitation, records adequate
to permit the daily identification of each new Receivable and all Collections of
and adjustments to each existing Receivable).
(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 45 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) W-P Steel or (ii) any Affiliate, 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 10 Business Days to replace that
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
non-payment could not 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 generally
accepted accounting principles.
(g) REPORTING REQUIREMENTS. The Transferor will:
(i) within one Business Day after a Responsible
Officer becomes aware of the occurrence of any Early Amortization
Event, the commencement of a Partial
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Amortization Period or Cure Period and any 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 three
Business Days after a Responsible Officer becomes aware of the
occurrence of any Early Amortization Event, the commencement of a
Partial Amortization Period or Cure Period, and any 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
or 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 three 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 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
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 and invoices giving rise to Receivables. The Transferor shall promptly
give the Trustee copies of any notices, reports or certificates given or
delivered to the Transferor under the Receivables Purchase Agreement.
(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 Trustee, Transferor or any of the Certifi- cateholders hereunder in and
to the Receivables.
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(j) RATING MAINTENANCE. For so long as the Investor
Certificates of any Series are outstanding, the Transferor shall use its best
efforts to cause each Rating Agency to maintain its rating of the Investor
Certificates of each such Series.
(k) FURTHER ACTION. The Transferor shall, from time to time,
execute and deliver to the Trustee any instruments, financing or continuation
statements or other writings reasonably necessary to maintain the perfection or
priority of the Trustee's ownership or security interest in the Receivables and
the Collections under the UCC or other applicable law. The Transferor shall,
from time to time, execute and deliver to the Obligors on the Receivables any
bills, statements and letters or other writings necessary to carry out the terms
and provisions of this Agreement and to facilitate the collection of the
Receivables in a manner consistent with the Credit Policy and Procedures Manual.
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, 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(b), the Transferor will not
sell, pledge, assign or transfer any 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.
(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, the Transferor will not create, incur or assume
any indebtedness (other than operating expenses incurred in the performance of
or incidental to its obligations
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under this Agreement which shall not exceed $50,000 per annum) 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
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 RECEIVABLES. The Transferor will
not extend, amend or otherwise modify (or consent or fail to object to any such
extension, amendment or modifica- tion by W-P Steel), except as permitted in
Section 3.01(c), the terms of any Receivable, or amend, modify or waive (or
consent or fail to object to any such amendment, modification or waiver by W-P
Steel) any payment term or condition of any invoice related thereto (other than
(i) as provided in the Credit Policy and Procedures Manual and (ii) Receivables
of Wheeling Corrugating in the April 1 Program) if the effect of such amendment,
modification or waiver would impair the collectibility or delay the payment of
any then existing Receivable beyond 60 days from the date of the invoice. The
Transferor will not rescind or cancel, or permit the rescission or cancellation
of, any Receivable except as ordered by a court of competent jurisdiction or
other Governmental Authority. Notwithstanding the foregoing provisions of this
Section 2.06(f), each of the Transferor and W-P Steel may extend, amend, modify,
cancel or rescind (and the Transferor need not object to any such action by W-P
Steel) 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.
(g) CHANGE IN CORPORATE NAME. The Transferor will not (i) make
any change to its corporate name, identity or corporate structure in any manner
or 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 name
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change, change in principal place of business, or use, the Transferor delivers
to the Trustee such financing statements (Forms UCC-l and UCC-3) executed by the
Transferor which the Trustee may reasonably request to reflect such name change
or use, together with such other documents and instruments that the Trustee may
reasonably request 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 90 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 and the Transferor's valid existence and good standing and as to
the matters referred to in the first sentence of Section 2.04(a).
(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 respects 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(k), the
Transferor will not amend its certificate 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 W-P Steel and any Affiliate of W-P Steel, and any
Affiliate of the Transferor including, without limitation, conducting business
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 own 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 own 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; (iii) fail to (A) maintain or cause to be maintained
by an agent of the Transferor under the Transferor's control physical possession
of all its books and records, (B) maintain capitalization adequate for the
conduct of its business, (C)
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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
W-P Steel and any Affiliates of W-P 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
fair share of such costs and expenses); (iv) commingle its funds with those of
W-P Steel and or any Affiliate of W-P Steel or any Affiliates of the Transferor,
or use its funds for other than the Transferor's uses; PROVIDED, HOWEVER, that
collections on certain accounts receivable belonging to W-P Steel may from time
to time be deposited into the Wheeling-Pittsburgh Collection Accounts or the
Concentration Account; (v) fail to (A) maintain the Transferor's books,
financial statements, accounting records and other corporate documents and
records separate from those of W-P Steel or any other entity, (B) act solely in
its corporate name and through its own authorized officers and agents, (C) make
investments directly or by brokers engaged and paid by the Transferor or its
agents (provided that if any such agent is an Affiliate of the Transferor it
shall be compensated at a fair market rate for its services), (D) separately
manage the Transferor's liabilities from those of W-P Steel or any Affiliates of
W-P Steel and pay its own liabilities, including all administrative expenses,
from its own separate assets, except that W-P Steel may pay the organizational
expenses of the Transferor, (E) pay from the Transferor's assets all obligations
and indebtedness of any kind incurred by the Transferor and (F) abide by all
corporate formalities, including the maintenance of current minute books; (vi)
not assume the liabilities of W-P Steel or any Affiliate of W-P Steel; and (vii)
not guarantee the liabilities of W-P Steel or any Affiliate of W-P Steel.
(k) OWNERSHIP; MERGER. The Transferor will not (i) sell any
shares of any class of its capital stock to any Person (other than W-P 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) acquire
or be acquired by any Person, except indirectly in connection with a
consolidation or merger of W-P Steel (which consolidation or merger shall be
permitted by Section 8.02 if W-P 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 W-P Steel or any of its Affiliates, that
such
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consolidation or merger does not affect the separate existence of Transferor.
(l) ERISA. The Transferor shall promptly give the Trustee
notice of the following events, as soon as possible 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 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 since January 3, 1991 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.
SECTION 2.07. ADDITION AND REMOVAL OF ORIGINATORS. (a) At any
time following the Closing Date, the Transferor may designate any Affiliate of
WP-Steel as an Originator (an "Additional Originator") provided that either of
the following conditions is satisfied: (i) the average of the aggregate
principal balance of Receivables generated by such Additional Originator as of
the last day of each of the immediately preceding twelve months does not exceed
5% of the average of the aggregate principal balance of Eligible Receivables
owned by the Trust as of the last day of each of such twelve months or (ii) the
Rating Agency Condition shall have been satisfied.
(b) The Transferor may cause any Originator (other than WP
Steel) to no longer be designated as an "Originator" (a "Removed Originator"),
and W-P Steel shall cease purchasing Receivables from such Removed Obligor,
provided that (i) the average of the aggregate principal balance of Receivables
generated by such Removed Originator as of the last day of each of the
immediately preceding twelve months does not exceed 5% of the average of the
aggregate principal balance of Eligible Receivables owned by the Trust as of the
last day of each of such twelve months, (ii) the Transferor provides timely
written notice of such change in designation to the Rating Agency, (iii) the
Rating Agency Condition shall have been satisfied and (iv) the Transferor shall
have delivered to the Trustee and any Enhancement Provider an Officer's
Certificate stating that the Transferor reasonably believes that the removal of
such Removed Originator will not result in the occurrence of an Early
Amortization Event.
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(c) Notwithstanding anything in this Section 2.07 to the
contrary, no Originator shall be designated as an Additional Originator or a
Removed Originator on any day if, as of such day, the aggregate cumulative
amount of Receivables generated by Additional Originators or Removed
Originators, including any Originator to be designated as an Additional
Originator or a Removed Originator on such day, is greater or less than the
aggregate principal balance of Eligible Receivables as of the Closing Date by
10% or more.
(d) Notwithstanding anything in this Section 2.07 to the
contrary, a Majority in Interest may consent to changes in the foregoing
subsections (a), (b) and (c) hereof, provided that the Rating Agency Condition
has been satisfied.
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ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 3.01. ACCEPTANCE OF APPOINTMENT AND OTHER MATTERS
RELATING TO THE SERVICER. (a) W-P Steel agrees to act as the Servicer for the
benefit of the Certificateholders under this Agreement (subject to Article X)
and the Certificateholders by their acceptance of the Certificates consent to
W-P Steel so acting as Servicer.
(b) The Servicer shall (subject to Article X) enforce its
respective rights and interests in, to and under the Receivables and the other
Trust Assets on behalf of the Trust. The Servicer shall service, administer and
collect the Receivables and, in connection therewith, the Servicer shall take or
cause to be taken all such actions as may be necessary or advisable to collect
each 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 and Procedures 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 invoice related thereto, all as it may
determine to be appropriate to maximize Collections thereof, PROVIDED that, for
all purposes hereunder, any such 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
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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 requirements, and (v) only (A) with the prior
consent of a Majority in Interest of the Investor Certificateholders of each
Series and (B) upon satisfaction of the Rating Agency Condition, to subcontract
with any other Person (at Servicer's expense) for servicing, administering or
collecting the 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 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 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 as servicer under this Agreement) to the Trustee under this
Agreement is intended by the parties to be that of an independent contractor to
or with 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 vicariously
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), in an amount equal to the aggregate of the Series Servicing
Fees specified in the Supplements. In the case of any Servicer other than W-P
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
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a per annum fee equal to the product of 1.00% and the Trust Invested Amount. The
Servicing Fee shall be payable only from Investor 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 (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) of the Trust not expressly stated herein to be
for the account of the Certificateholders, including without limitation expenses
related to enforcement of the Receivables and the other amounts due to the
Trustee pursuant to Section 11.05, the reasonable fees and disbursements of
independent accountants, and other fees and documented expenses including but
not limited to the costs of filing UCC continuation statements; provided that,
in no event shall the Servicer be liable for any federal, state or local income
or franchise 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, and the Servicer shall not
be entitled to any payment for any such expenses other than the Servicing Fee
and reimbursement from the Transferor. In addition, to the extent not paid from
the Servicing Fee, the Transferor shall pay for its own account, and, if the
Transferor fails to do so, the Servicer will pay, 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
Receivables and the costs of a Service Transfer) or otherwise in connection
herewith (including without limitation the fees and expenses set forth above),
and the Servicer will not be entitled to any fee or other payment from, or claim
on, any of the Trust Assets (other than the Servicing Fee and reimbursement from
the Transferor). The Transferor's and Servicer's covenant 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.
W-P Steel, as initial Servicer, 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 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
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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 is a
corporation or national banking association duly organized, validly existing and
in good standing under the applicable laws of its jurisdiction of organization
or incorporation and has, in all material respects, full power, authority and
legal right to own its properties and conduct its business including its
receivables servicing business as such properties are presently owned and as
such business is presently conducted and as is proposed to be conducted under
this Agreement and the Receivables Purchase Agreement, and to execute, deliver
and perform its obligations under this Agreement and the applicable Supplement.
(b) DUE QUALIFICATION. The Servicer 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 upon the Certificateholders or on its ability
to perform its obligations as Servicer 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 the consummation of the transactions provided in this
Agreement and any Supplement, have been duly authorized by all necessary
corporate action on the part of the Servicer.
(d) BINDING OBLIGATION. This Agreement and the applicable
Supplement constitute 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 material terms
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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.
(f) NO PROCEEDINGS. There are no proceedings or,
investigations pending or to the best knowledge of the Servicer, threatened
against the Servicer before any Governmental Authority (i) asserting the
illegality, invalidity or unenforceability or seeking any determination or
ruling that would affect the legality, binding effect, validity or
enforceability, of this Agreement and the applicable Supplement, (ii) seeking to
prevent the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement and the applicable Supplement, or
(iii) seeking any determination or ruling that is reasonably likely to
materially and adversely affect the financial condition or operations of the
Servicer or the 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 Person or 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) WHEELING-PITTSBURGH COLLECTION ACCOUNTS. The names,
addresses and ABA numbers of all the Wheeling-Pittsburgh Collection Account
Banks, together with the account numbers of the Wheeling-Pittsburgh Collection
Accounts and the name of a contact person at such Wheeling-Pittsburgh Collection
Account Bank, are specified in Schedule I hereto as of the Closing Date. Also
specified in Schedule I hereto are the name, address and ABA numbers of the
Concentration Account Bank, together with the account number and the name of a
contact person for the Concentration Account as of the Closing Date.
(i) PAYMENT INSTRUCTIONS. The Servicer has notified the
Obligor on each Receivable to make payments on such Receivable to one of the
Wheeling-Pittsburgh 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 or is
continuing.
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(l) EARLY AMORTIZATION EVENT. No Early Amortization Event has
occurred or 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 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 hereby
covenants that, until the termination of the Amortization Period:
(a) CHANGE IN ACCOUNTS. The Servicer will not (i) terminate or
substitute any Concentration Account (or make any change in its instructions to
Wheeling-Pittsburgh 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 Wheeling-Pittsburgh Collection Account
Bank from those listed in Schedule I hereto, except as otherwise permitted
pursuant to Section 4.02 and unless the Trustee shall have received notice of
such addition, termination or change and executed copies of Wheeling-Pittsburgh
Collection Account Notices to each new Wheeling-Pittsburgh 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 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 Receivable, will maintain in effect
all qualifications required under Requirements of Law in order to service
properly each Receivable and will comply in all material respects with all other
Requirements of Law in connection with servicing each Receivable.
(d) EXTENSION OR AMENDMENT OF RECEIVABLES. The Servicer will
not extend, amend or otherwise modify (or consent or fail to object to any such
extension, amendment or modification by W-P Steel), except as permitted in
Section 3.01(c), the terms of
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any Receivable, or amend, modify or waive (or consent or fail to object to any
such amendment, modification or waiver by W-P Steel) any payment term or
condition of any invoice related thereto (other than (i) as provided in the
Credit Policy and Procedures Manual and (ii) Receivables of Wheeling Corrugating
in the April 1 Program) if the effect of such amendment, modification or waiver
would impair the collectibility or delay the payment of any then existing
Receivable beyond 60 days from the date of the invoice (or 60 days from April 1
in the case of the April 1 Program). The Servicer will not rescind or cancel, or
permit the rescission or cancellation of, any Receivable except as ordered by a
court of competent jurisdiction or other Governmental Authority. Notwithstanding
the foregoing provisions of this Section 3.04(d), each of the Servicer and W-P
Steel may extend, amend, modify, cancel or rescind (and the Servicer need not
object to any such action by W-P Steel) 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. The Servicer
will take no action which would impair the rights of Certificateholders in any
Receivable or Trust Asset, except as provided in this Agreement.
(f) DEPOSITS TO CONCENTRATION ACCOUNT OR ANY SERIES ACCOUNT OR
ANY WHEELING-PITTSBURGH 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 known to it, cash or cash proceeds other
than Collections to the Concentration Account, any Wheeling-Pittsburgh
Collection Account or any Series Account.
(g) RECEIVABLES NOT TO BE EVIDENCED BY PROMISSORY NOTES. The
Servicer will take no action to cause any 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 becomes aware of the occurrence of a Servicer Default, an Early
Amortization Event, the commencement of a Partial Amortization Period
or Cure Period and any event which, with the giving of notice or lapse
of time or both, would constitute an Early Amortization Event,
notification of such occurrence;
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(ii) as soon as possible and in any event (A) within
three Business Days after a Responsible Officer becomes aware of the
occurrence of a Servicer Default, any Early Amortization Event, the
commencement of a Partial Amortization Period or Cure Period, and any
event which, with the giving of notice or lapse of time or both, would
constitute a Servicer Default or an Early Amortization Event, 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 or commencement or event and the action which the Servicer
has taken and proposes to take with respect thereto, and (B) within
three 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
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 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, (iii) subject to the Servicer's normal security
and confidentiality procedures and (iv) at reasonably accessible offices in the
continental United States designated by the Servicer.
(i) FILING OF CONTINUATION STATEMENTS. The Servicer shall
prepare and file such continuation statements and any 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
Receivables.
(j) CHANGE IN ITS CREDIT POLICY AND PROCEDURES MANUAL. The
Servicer shall comply with and perform its servicing obligations with respect to
the Receivables in accordance with the Credit Policy and Procedures Manual,
except insofar as any failure to so comply or perform would not adversely affect
the Certificateholders in any material respects. 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 and Procedures Manual provided,
however, that (i) with respect to a material change of
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collection policies, the Rating Agency Condition is satisfied with respect
thereto and (ii) with respect to a material change of collection procedures, no
material and adverse effect on any Series of Certificate would result.
(k) CHANGE IN CORPORATE NAME. The Servicer will not (i) (if
the Servicer is W-P 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 unless, prior
to the effective date of any such name change, change in principal place of
business, or use, the Servicer delivers to the Trustee such financing statements
(Forms UCC-l and UCC-3) executed by the Servicer which the Trustee may
reasonably request to reflect such name change 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
20 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 and as to the matters referred to in the first sentence of Section
2.04(a).
(l) CREDIT AND COLLECTION POLICIES. The Servicer will comply
in all material respects with the Credit Policy Manual in regard to each
Receivable.
(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) NOTIFICATION OF OBLIGORS. The Servicer will notify the
Obligor on each Receivable purchased by the Trust on or after the Closing Date
to make payments on such Receivable to one of the Wheeling-Pittsburgh Collection
Accounts.
(o) MODIFICATION OF SYSTEMS. The Servicer agrees, promptly
after the replacement or any material modification of any computer, automation
or other operating systems (in respect of hardware or software) used to provide
the Servicer's services as Servicer or to make any calculations or reports
hereunder, to give notice of any such material replacement or modification to
the Trustee.
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(p) BUSINESS DAYS. No later than December 1 of each year, the
Servicer shall furnish the Trustee with a list of days other than Saturday and
Sunday, on which the Servicer shall be closed during the immediately succeeding
year, except that with respect to the calendar year 1994, the Servicer shall
furnish such list to the Trustee on or before the Initial Closing Date.
(q) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Servicer
shall maintain and implement administrative and operating procedures (including,
without limitation, the ability to recreate records evidencing the Receivables
in the event of the destruction of the originals thereof), and keep and maintain
all documents, books, microfiche, computer records and other information
reasonably necessary or advisable for the collection of all the Receivables.
Such books, microfiche, and computer records shall reflect all customary facts
giving rise to the Receivables, all payments and credits with respect thereto,
and the computer records shall be clearly marked to show the interests of the
Trust in the Receivables. The Servicer shall hold on behalf of the Trust (to the
extent of its interest therein) any document evidencing or securing a Receivable
and any Contract related to such Receivable and necessary to the servicing of
such Receivable and the collection thereof in accordance with the terms of this
Agreement. Such holding by the Servicer shall be in trust and shall be deemed to
be the holding thereof by the Trustee for purposes of perfecting the Trust's
rights therein as provided in the UCC.
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 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 Alloca- tion 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 and the Trustee and the Trustee shall
deliver to each Investor Certificate- holder 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
March 31 of each calendar year, beginning with March 31, 1995, the Servicer
shall deliver to the Trustee, each Rating Agency 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.
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SECTION 3.07. ANNUAL SERVICING REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS. (a) On or before March 31 of each calendar year, beginning with
March 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 and each Enhancement Provider substantially to the
effect that (i) such accountants have examined certain documents and records
relating to the servicing of 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 (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, the Servicer and the Transferor shall deliver
to each Rating Agency their annual audited financial statements (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 generally accepted accounting
principles; PROVIDED, that the financial statements of the Transferor and the
Servicer will appear as a part of the consolidated annual audited financial
statements of the ultimate parent of the Servicer and the Transferor. Only the
consolidated financial statements of the ultimate parent of the Transferor and
Servicer will be audited. In addition, the Servicer shall deliver its unaudited
annual and quarterly financial statements in the form delivered to its board of
directors.
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
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a partnership) secured by the 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 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).
SECTION 3.09. NOTICES TO W-P STEEL. In the event that W-P
Steel is no longer acting as Servicer, any Successor Servicer shall deliver or
make available to W-P Steel and the Transferor each certificate and report
required to be delivered thereafter pursuant to Sections 3.05(b), 3.06 and 3.07.
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 subsequently deposited into the Trustee's
Account or Transferor's Account or paid to reflect such mistake and send written
notice thereof to the Trustee. Any 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 W-P Steel is the Servicer, the Servicer shall deliver to the Trustee
copies of each report of WHX Corporation 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.
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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 (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 and 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 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, 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, which
is the percentage that determines the portion of the Aggregate
Certificateholders' Interest allocable to such Series, and the Transferor
Percentage, which is the percentage that determines the Transferor Interest,
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 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
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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 Business Day
immediately preceding the commencement of the Amortization Period or Partial
Amortization Period, shall remain constant at all times during the Amortization
Period or a Partial Amortization Period.
SECTION 4.02. ESTABLISHMENT OF WHEELING-PITTSBURGH 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 in the name of the Trustee,
on behalf of the Trust, with an Eligible Institution a segregated trust account
accessible by the Trustee (such account being the "Concentration Account" and
such institution holding such account being the "Concentration Account Bank"),
such account bearing 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. The Servicer shall cause to be deposited Collections into
the Concentration Account by the close of business on the day of receipt thereof
as available funds in a Wheeling-Pittsburgh Collection Account. W-P Steel will,
and will cause the other Originators to, deposit any Collections received by any
of them into a Wheeling-Pittsburgh Collection Account within one Business Day
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. 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
withdraw such funds from the Concentration Account.
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
Wheeling-Pittsburgh Collection Account Banks new Wheeling-Pittsburgh Collection
Account Notices (with copies thereof to the Trustee) referring to such new
Concentration Account, and from the date such new Concentration
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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 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)
(or if not so instructed, then invested by the Trustee or the Eligible
Institution maintaining such accounts in any Eligible Investments listed in
clause (a) of the definition of Eligible Investment in Section 1.01). All such
Eligible Investments shall be held by the Trustee or the Eligible Institution
maintaining such accounts for the benefit of the Certificateholders. Such funds
shall be invested in Eligible Investments that will mature so that such funds
will be available in amounts sufficient for the Servicer to make each
distributions 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. 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 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.
(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 segregated accounts accessible by the Trustee (each
such account, a "Wheeling-Pittsburgh Collection Account") to which Collections,
are to be remitted directly by Obligors. The Wheeling-Pittsburgh Collection
Accounts shall be under the sole dominion and control of the Trustee for the
benefit of the Certificateholders; PROVIDED, HOWEVER, that each
Wheeling-Pittsburgh 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
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account number of each Wheeling-Pittsburgh Collection Account is attached to
this Agreement on Schedule I attached hereto. Each Wheeling-Pittsburgh
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. W-P Steel shall not without the prior
written consent of the Trustee (i) change any Wheeling-Pittsburgh Collection
Account, or establish any additional Wheeling- Pittsburgh Collection Account or
(ii) change such instructions or documentation at any time so long as the
Trustee has any interest in the Receivables.
(c) W-P Steel hereby agrees and acknowledges that (i) W-P Steel has
executed and delivered to the Trustee a letter and executed acknowledgement
thereto substantially in the form of Exhibit C hereto, addressed to each banking
institution with which the Wheeling-Pittsburgh Collection Account is maintained
(each, a "Wheeling-Pittsburgh Collection Account Letter") and (ii) W-P Steel
shall execute and deliver a substantially similar Wheeling-Pittsburgh Collection
Account Letter prior to the establishment by W-P Steel of any additional or
alternative Wheeling-Pittsburgh Collection Account. W-P 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 Wheeling-Pittsburgh
Collection Account to the Trustee. W-P Steel agrees to execute such further
documents and take such other actions as may 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
Certifi- cateholders of any other Series. Allocations thereof 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 sum of the fixed allocation percentages and
floating allocation percentages, as applicable, for all outstanding Series
exceeds 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 such Series; PROVIDED; HOWEVER, that
if on any day 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 rate
among all outstanding Series on the basis of a fraction, for each Series,
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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 $250,000 and in
integral multiples of $1,000 in excess thereof (except that one Certificate may
be issued in a denomination that includes any residual amount), and shall be
issued upon initial issuance as one or more Investor Certificates in an
aggregate original principal amount equal to the Initial 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 the President, any Vice President, the Chief Administrative and
Credit Officer, Treasurer or the Secretary of the Transferor, or by any other
officer or assistant officer duly authorized to execute such Certificate on
behalf of the Trans- feror. 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 conclusive evidence, and the
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 Class, and, in
the
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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
operations office in Columbus, Ohio, such office or agency to be maintained in
accordance with the provisions of 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 of
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 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' (60 days' during an Amortization Period) written notice
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 Certificate- holders' 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
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Trustee or the Transfer Agent and Registrar duly executed by the
Certificateholder thereof or his attorney-in-fact duly authorized in writing.
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 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 cancelled 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,
substantially in the form attached as Exhibit D to this Pooling and Servicing
Agreement 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 (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
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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, in lieu
of such representation letter described in (c)(i)(A) above, may represent that
the source of funds from which its investment is to be made is a general account
of such insurance company.
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 W-P Steel such indemnity (provided, that a letter of indemnity
from (i) an insurance company or (ii) an institutional investor of investment
grade credit rating shall satisfy such requirement) as may be required by them
to save each of them harmless, 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 for the purpose of receiving distributions pursuant to the
terms of the applicable Supplement and for all other purposes whatsoever and
neither the Trustee, the Paying Agent, the Transfer Agent and Registrar nor 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 Transferor, the Servicer or
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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 the Trustee 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 from the Trustee's Account pursuant to the applicable Supplement and
shall report the amounts of such distributions to the Trustee. Any Paying Agent
shall have the power, revocable by the Trustee, to withdraw funds from the
Trustee's Account for the purpose of making the distributions referred to above.
The Trustee may revoke such power and remove the Paying Agent if the Trustee
determines in its sole discretion that the Paying Agent shall have failed to
perform its obligations under this Agreement in any material respect. 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, as Paying Agent, such successor Paying Agent or additional
Paying Agent will hold all sums, if any, held by it for payment to the
Certificateholders, the Servicer or the Trustee 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 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,
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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, respectively, a list of the names and addresses of the
Certificateholders.
Every Certificateholder, by receiving and holding a
Certificate, agrees that neither the Trustee, the Transfer Agent and Registrar,
the Transferor, the Servicer, W-P Steel, nor 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
shall be authorized to act on behalf of the Trustee in authenticating the
Certificates in connection with the issuance, delivery, registration of
transfer, exchange or repayment of 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 and a
certificate of authentication executed 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 or any further act on the part of
the Trustee or such authenticating 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 in case at
any time an authenticating agent shall cease to be acceptable to the Trustee or
the Transferor, the Trustee may 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.
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(e) The provisions of Sections 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 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 Signer
SECTION 6.09. NEW ISSUANCES. (a) The Transferor may from time
to time direct the Trustee, on behalf of the Trust, to issue one or more new
Series of Investor Certificates pursuant to a Supplement. The Investor
Certificates of all outstanding Series shall be equally and ratably entitled as
provided herein 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, with respect to any Series or
Class, 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 and any Enhancement Provider written
notice of such issuance and the Series Issuance Date;
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(ii) the Transferor shall have delivered to the Trustee the related
Supplement, in form satisfactory to the Trustee, executed by each party
hereto other than the Trustee;
(iii) the Transferor shall have delivered to the Trustee any related
Enhancement Agreement executed by each party hereto other than the
Trustee;
(iv) 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, other than the
Series 1994-2 Certificates (if the Series 1994-2 Certificates are
issued within ninety days of the Initial Closing Date), 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;
(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 at any time in the future;
(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), and
(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 of the
Floating Allocation Percentages for all outstanding Series (after
giving effect to such new issuance) exceeding 100%.
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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 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 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) each Rating Agency Condition shall have been satisfied
with respect such exchange (or transfer or exchange as provided below);
and
(iii) the Transferor shall have delivered to the Trustee, any
Agent and any Enhancement Provider a Tax Opinion, date the date of such
exchange (or transfer or exchange as provided below), with respect
thereto.
The Transferor Certificate will at all times be beneficially owned by
the Transferor. Any Supplemental Certificate may be transferred or exchanged
only upon satisfaction of the conditions set forth in clauses (ii) and (iii)
above.
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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, employees or agents of the 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 for refraining from the taking of any
action in such capacities pursuant to this Agreement or for any obligation or
covenant under this Agreement; PROVIDED, HOWEVER, that this provision shall not
protect any such Person against any liability which would otherwise be imposed
by reason of willful misconduct or bad faith, in the performance by such Person
of such Person's duties or the reckless disregard by such Person of any of his,
her or its 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, 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
and liabilities (including reasonable attorneys' fees and other reasonable fees
as permitted herein, as and when incurred) (all of the foregoing being
collectively referred to as "Indemnified Amounts") arising out of or resulting
from this Agreement, 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 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 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 Receivable or the Receivables Purchase
Agreement. Without
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limiting or being limited by 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 under or in connection
with this Agreement or the Receivables Purchase Agreement which shall
have been incorrect in any material respect when made;
(ii) the failure by the Transferor to comply with this
Agreement or the Receivables Purchase Agreement, or the failure by the
Transferor to comply with any applicable Requirement of Law with
respect to any Receivable or the related invoice or the Receivables
Purchase Agreement, or the nonconformity of any Receivable or the
related invoice or the Receivables Purchase Agreement with any
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
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 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 Receivable or invoice, other than any litigation or
proceeding between W-P 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
W-P 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 Receivables at any
time with other funds prior to distribution under the applicable
Supplement; or
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(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 Receivables or other Trust Assets by the Trustee.
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 reasonable 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 or potential 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 provides timely notice to 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 distributed to the Holder of the Transferor Certificate).
The agreement contained in this Section 7.03 shall survive the collection of all
Receivables, the termination of this Agreement and the payment of all amounts
otherwise payable hereunder.
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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 in its capacity as Servicer.
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 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 and 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;
and
(b) if the Servicer is W-P 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
Receivables, 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, 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 for refraining from the taking of any
action in
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such capacities pursuant to this Agreement or for any obligation or covenant
under this Agreement, it being understood that, with respect to the Servicer,
that 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 which
would otherwise be imposed by reason of willful misconduct, bad faith, gross
negligence or the reckless disregard by such Person of any of his, her or its
obligations and duties. The Servicer and any director or officer or 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 his, her or its obligations and duties or breach of
fiduciary duty on the part of such Indemnified Party, (ii) recourse for
uncollectible 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 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 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 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 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 reasonable fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (i) the Servicer and the Indemnified
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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 or potential differing
interests between them. It is understood that the Servicer 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.
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 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, 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.
SECTION 8.06. EXAMINATION OF RECORDS. The Servicer shall mark
its computer records that the 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
Receivable.
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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) an Insolvency Event shall occur with respect to the
Transferor, the Servicer (provided the Servicer is W-P Steel or any Affiliate
thereof) or any Originator of 10% or greater of the Net Receivables Pool or the
Trust; or
(b) the SEC or other regulatory body reaches a final
determination that the Trust is an "investment company" within the meaning of
the Investment Company Act; or
(c) (i) 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
W-P Steel in and to such Receivables and the proceeds thereof; or (ii) any
Transfer of any 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 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 Receivables created hereunder) in such 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, 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 Receivables and the other Trust Assets now existing and
hereafter arising and the proceeds thereof to the extent of their respective
Undivided Fractional Interests; or
(d) 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;
then, in the case of any event as described herein, 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 one Business Day 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
two
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Business Days after the Trustee becomes aware of any Early Amortization Event,
the Trustee shall notify in writing each Rating Agency of the occurrence of such
Early Amortization Event.
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
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 10
Business 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
Receivables, the Trustee shall promptly proceed to sell, dispose of, or
otherwise liquidate the 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 principal 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 the Majority in Interest of each outstanding Series have
consented in writing thereto. The proceeds from such sale, disposition or
liquidation of the Receivables shall be treated as Collections on the
Receivables and shall be distributed in accordance with the terms of this
Agreement after being deposited in the Concentration Account.
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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 three Business Days, in the case of payments of principal and interest
to the Certificateholders, or five Business Days, in the case of any other
payment, 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;
(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 30 days (or, with
respect to any covenant contained in Sections 3.04(a), 3.04(b), 3.04(h) and
3.04(i), continues unremedied for five days) after the earlier of (i) knowledge
of such failure by a Responsible Officer of the Servicer and (ii) the date on
which written notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Trustee, or to the Servicer and the
Trustee by the Holders of Investor Certificates evidencing not less than 25% of
the Invested Amount of any Series; or the Servicer shall assign its duties under
this Agreement, except as permitted by Section 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 30 days (or, with
respect to any representation and warranty made in Sections 2.03(g) and 2.03(h),
continues for five days) after the earlier of (i) knowledge of such
incorrectness by a Responsible Officer of the Servicer and (ii) the date on
which written notice thereof, requiring the same to be remedied, shall have been
given (i) to the Servicer by the Trustee or (ii) to the Servicer and the Trustee
by any Investor Certificateholder (or, with respect to any such representation,
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warranty or certification that does not relate to all Series, the Majority in
Interest of all Series to which such representation, warranty or certification
relates); 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 it has actual knowledge or if a Responsible
Officer 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 by the Trustee
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 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 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
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deposit to any Wheeling-Pittsburgh Collection Account, the Concentration
Account, the Trustee's Account or the Transferor's Account, or which have been
deposited by the Servicer to any Wheeling-Pittsburgh Collection Account, the
Concentration Account, or any other account, or which shall thereafter be
received with respect to the 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 Receivables and the other Trust Assets, and which are
necessary or desirable to collect the 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 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
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 direct the
Obligors of Receivables, or any of them, that payment of all amounts
payable under any such 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 three Business Days after such request, (x)
assemble such documents, instruments and other records (including,
without limitation, computer tapes and disks) which evidence the
Receivables and the other Trust Assets, and which are necessary or
desirable to collect the 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
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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 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 Certificate-
holder hereby authorizes the Trustee to take any and all steps in the
Transferor's name and on behalf of the Trans- feror and the
Certificateholders necessary or desirable, in the determination of the
Trustee, to collect all amounts due under any and all Receivables,
including, without limitation, endorsing the Transferor's name on
checks and other instruments representing Collections in respect of
such Receivables and enforcing such Receivables.
Notwithstanding the foregoing, a delay in or failure of
performance referred to in Section 10.01(a) for a period of ten Business Days
after the applicable grace period, or under Section 10.01(b) for a period of
fifteen 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 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
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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 at 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, 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 and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on 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 the 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. 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
will 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, unless
the Trustee shall agree to pay the excess over the Servicing Fee of the
compensation of any such Successor Servicer.
(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
and, without limitation, the Transferor is hereby authorized and empowered to
execute and
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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 responsibilities and rights of the Successor
Servicer to conduct servicing of the Receivables. The Successor Servicer shall
transfer its electronic records relating to the 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 and 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 W-P Steel all documents, instruments and records in its possession
which evidence or relate to receivables owned by W-P 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 two Business 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. 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) Other than while acting
in its capacity as Successor Servicer, the Trustee, prior to the occurrence of a
Servicer Default of which it has actual knowledge and after the curing 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 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 their 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
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 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
negligent action, its own negligent failure to act or its own 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 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 Majority in Interest
of 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, if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it, and none of the provisions contained in this Agreement
shall in any event 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 Receivable now existing or hereafter created or to impair the
value of any 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 from the
Trust any Receivable.
(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 performed by the Paying Agent or the
Transfer Agent and Registrar, as the case may be, 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
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
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such or as a Beneficiary, and the Trustee's sole responsibility with respect to
any such Enhancement Provider shall be to perform 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 rely on and shall be 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 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 as a condition to
taking, suffering or omitting to take any action in any demand an Opinion of
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
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; PROVIDED, HOWEVER, that nothing
contained herein shall relieve the Trustee of the obligations, upon the
occurrence of a Servicer Default (which has not been cured or waived), 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 their 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 or other paper
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or document, unless requested in writing so to do by Holders of Investor
Certificates evidencing more than 25% of any Series Invested Amount;
(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, and the Trustee shall not be responsible for
any misconduct or negligence on the part of any such agent, attorney or
custodian appointed with due care by it hereunder;
(g) except as required by Section 11.01(b), the Trustee shall
not be required to make any initial or periodic examination of any documents or
records related to the 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
(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.
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 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 Wheeling- Pittsburgh 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.
SECTION 11.05. COMPENSATION; TRUSTEE'S EXPENSES. (a) The
Trustee shall be entitled to receive a monthly Trustee's 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
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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 5.01 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. The Transferor will pay or reimburse the Trustee
upon its request, and if the Transferor shall fail to do so, W-P Steel 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 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
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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 which instrument shall be delivered to the
resigning Trustee and one copy 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 Certificate- holders of all
outstanding Series by written instrument, in duplicate, one copy of which
instrument 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 which instrument shall be delivered to the
Trustee so removed and one copy 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 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, 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
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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.
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 the time be located, the Trustee shall have the power and
may execute and deliver all instruments 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, and 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 other provisions of this Section 11.10, such
powers, duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable. 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.
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(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.
(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.
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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. 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 such returns after signature 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 the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of 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 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
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other legal, equitable or other remedy as the Trustee, being 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
the Trustee in good faith shall, by a Responsible Officer or Responsible
Officers of the Trustee, determine that the proceedings so directed would be
illegal or involve it 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 national banking association duly
organized, validly existing and in good standing under the laws of the United
States of America, and has the power to own its assets and to transact the
business in which it is presently engaged;
(b) the Trustee has full power, authority and right to
execute, deliver and perform this Agreement, and has taken all 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,
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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 Bank One, Columbus, NA, c/o First Chicago Trust Company, 14 Wall
Street, 8th Floor, Suite 4607, New York, New York 10002 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.
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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) December 31, 2014 and (ii) the day
following the Distribution Date on which the Invested Amount for each Series is
zero.
SECTION 12.02. FINAL DISTRIBUTION. (a) The Servicer shall give
the Trustee and the Trustee shall give each Certificateholder at least twenty
days' prior written notice of the date on which (i) the Trust is expected to
terminate in accordance with subsection 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 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 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
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(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 Trans-
feror, Investor Certificateholders entitled to the money must look to the
Transferor for payment as general creditors unless an applicable abandoned
property law designates another person.
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 Certificate- holders, payment of Trustee's fees and
expenses and 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 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 Receivables
and all other Trust Assets.
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ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. AMENDMENT; WAIVER OF EARLY AMORTIZATION EVENTS.
(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 the Agreement or any Supplement which are not
inconsistent with the provisions of the Agreement or such Supplement; PROVIDED,
that any amendment pursuant to this clause (a) shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect 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 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, W-P Steel 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
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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 Certificate- holders
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
adversely affect in any material respect 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 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 Certificateholders' and the Trustee's right, title and
interest in and to the Trust to be 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 Certificateholders and 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 Section 13.02(a).
(b) Within 30 days after the Transferor makes any change in
its name, identity or corporate structure which would
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make any financing statement or continuation statement filed in accordance with
the terms of this Agreement seriously misleading within the meaning of Section
9-402(7) (or any comparable provision) of the UCC as in effect in the
jurisdiction the law of which governs the perfection of the interest in the
Trust Assets created hereunder, the Transferor shall give the Trustee notice of
such change and shall file such financing statements or amendments as may be
necessary to continue the perfection of the Trust's interest in the Trust Assets
and the proceeds thereof contemplated by Section 2.01 hereof.
(c) The Transferor and 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 Receivables and the other Trust Assets and the proceeds thereof contemplated
by Section 2.01 hereof. The Transferor and 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 CERTIFICATE- HOLDERS.
(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, nor 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.
(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
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at law upon or under or 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 Certificate- holder and the Trustee, that no
one or more Certificateholders shall have any right in any manner whatever by
virtue 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 Certificate- holder, 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
Pooling and Servicing 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.
SECTION 13.04. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE
OF PROCESS. (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, 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 New
York State court or federal court of the United States of America sitting in New
York City, and any appellate court from any thereof, in any action or proceeding
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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. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(c) CONSENT TO SERVICE OF PROCESS. 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 Wheeling-Pittsburgh Funding, Inc., 1134 Market
Street, Wheeling, West Virginia 26003, Attention: Treasurer, (ii) in the case of
the Servicer (if the Servicer is W-P Steel) to W-P Steel, 1134 Market Street,
Wheeling, West Virginia 26003, Attention: Treasurer, (iii) in the case of the
Trustee, to Bank One, Columbus, NA, 100 East Broad Street, Columbus, Ohio
43271-0181, Attention: Corporate Trust Administration, and (iv) in the case of
the Paying Agent or the Transfer Agent and Registrar, to Bank One, Columbus, NA,
100 East Broad Street, Columbus, Ohio 43271-0181, Attention: Corporate Trust
Administration, 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 W-P Steel, notices shall be given to the Servicer at the
address designated by such Servicer, with a copy to W-P 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 shall be entitled to
receive all notices which the Investor
Certificateholders receive.
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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, (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 Receivables for filing under the
provisions of the UCC of any applicable jurisdiction.
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
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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; nor
shall any single or partial exercise of any right, remedy, power or privilege
under this Agreement 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
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 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 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
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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 a security interest in all of the Transferor's
right, title and interest in, to and under the 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 Servicer's obligations hereunder, including,
without limitation, the Transferor's obligation to sell or transfer to the Trust
all Receivables existing on the date hereof or hereafter created and transferred
to the Trans- feror from time to time under the Receivables Purchase Agreement.
This Agreement shall constitute a security agreement under applicable law.
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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.
WHEELING-PITTSBURGH FUNDING, INC.,
Transferor
By:_______________________________
Name:
Title:
WHEELING-PITTSBURGH STEEL
CORPORATION, Servicer
By:________________________________
Name:
Title:
BANK ONE, COLUMBUS, NA,
Trustee
By:________________________________
Name:
Authorized Signer:
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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. NEITHER THIS CERTIFICATE NOR ANY PORTION
HEREOF MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION PROVISIONS OF SUCH ACT.
WHEELING-PITTSBURGH TRADE RECEIVABLES MASTER TRUST
TRANSFEROR CERTIFICATE
THIS CERTIFICATE REPRESENTS AN UNDIVIDED INTEREST
IN CERTAIN ASSETS OF THE WHEELING-PITTSBURGH TRADE RECEIVABLES
MASTER TRUST
the corpus of which consists primarily of certain receivables generated from
time to time by Wheeling-Pittsburgh Steel Corporation, Pittsburgh-Canfield
Corporation and Wheeling Construction Products, Inc. (the "Originators") and any
other entities designated in the future as "Originators" pursuant to the terms
of the Pooling and Servicing Agreement, and transferred by the other Originators
to Wheeling-Pittsburgh Steel Corporation ("W-P Steel") and purchased by
Wheeling-Pittsburgh Funding, Inc. (the "Transferor"), which in turn transfers
and assigns such receivables to the Wheeling-Pittsburgh Trade Receivables Master
Trust. This certificate does not represent any recourse obligation of, and is
not guaranteed by, the Transferor, W-P Steel or any Affiliate of any of them.
This certifies that ___________________________ is the
registered owner of the fractional undivided interest (the "Transferor
Interest") in the assets of the Wheeling-Pittsburgh Trade Receivables Master
Trust (the "Trust") not represented by the Investor Certificates pursuant to
that certain Pooling and Servicing Agreement, dated August 1, 1994 (as
supplemented or modified, the "Agreement"), by and among the Transferor, W-P
Steel, as Servicer, and Bank One, Columbus, NA (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
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"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.
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 the
Concentration Account or other account or 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) December 31, 2014, and (ii) 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.
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 subsection 12.02(b) of the Agreement. The Trustee shall execute and
deliver such instruments of transfer and assignment, in each
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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.
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:
WHEELING-PITTSBURGH FUNDING, INC.
By:_________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates described in the
within-mentioned Pooling and Servicing Agreement.
Dated:_______________, 1994
BANK ONE, COLUMBUS, NA
not in its individual capacity but
solely as Trustee
By:_____________________________ OR
Authorized Signer
----------------------------
Authenticating Agent for the
Trustee
By:_________________________
Authorized Signer
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EXHIBIT B
FORM OF ANNUAL SERVICER'S CERTIFICATE
(As required to be delivered on or before _________ of each
calendar year beginning with ________, 1995, pursuant to
Section 3.06 of the Pooling and Servicing Agreement)
Wheeling-Pittsburgh Steel Corporation
---------------------------------------
WHEELING-PITTSBURGH TRADE RECEIVABLES MASTER TRUST
---------------------------------------
The undersigned, chief financial officer of Wheeling- Pittsburgh Steel
Corporation ("W-P Steel"), as Servicer, pursuant to the Pooling and Servicing
Agreement, dated August 1, 1994 (as amended and supplemented, the "Agreement"),
by and among Wheeling-Pittsburgh Funding Inc., as transferor, W-P Steel, as
servicer, and Bank One, Columbus, NA, as trustee, do hereby certify that:
1. W-P 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
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of such material default, (b) the action taken by the Servicer, if any,
to remedy each such material default 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
this ____ day of ___________, ____.
By:_____________________________
Name:
Title:
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EXHIBIT C
FORM OF WHEELING-PITTSBURGH COLLECTION ACCOUNT LETTER
[Wheeling-Pittsburgh Collection Account Bank]
Re: Lock Box No.
Lock Box Account No.
Ladies and Gentlemen:
We hereby notify you that we have transferred exclusive ownership and
control of our lock-box number (the "Lock-Box") and the corresponding lock-box
account no. (the "Lock-Box Account") maintained with [Wheeling-Pittsburgh
Collection Account Bank] to _______________________________, as trustee for
Wheeling-Pittsburgh Trade Receivables Master Trust, established pursuant to a
pooling and servicing agreement, dated August 1, 1994, among Wheeling-Pittsburgh
Funding, Inc., as transferror, Wheeling-Pittsburgh Steel Corporation ("W-P
Steel") as Servicer, and Bank One, Columbus, NA, as trustee (the "Trustee").
We hereby irrevocably instruct you to collect the monies, checks,
instruments and other items of payment mailed to the Lock-Box 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
Wheeling-Pittsburgh Trade Receivables Master Trust Concentration Account,
account no. 6801337000, such account being in the name of the Trustee at Bank
One, Columbus, NA, 100 East Broad Street, Columbus, Ohio 43271-0181, Attention
Corporate Trust Administration, for the account of the Trustee. We hereby notify
you that we will from time to time access the Lock-Box Account for the sole
purpose of facilitating the transfer of funds therein to the Wheeling-Pittsburgh
Trade Receivables Master Trust Concentration Account pursuant to standing
instructions from the Trustee or if so directed by 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
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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-Box 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-Box
and the Lock-Box Account. The monies, checks, instruments and other items of
payment mailed to the Lock-Box 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 [
] and in the event the amounts in the Lock-Box Account are
insufficient to reimburse you for the same, Wheeling- Pittsburgh agrees to
reimburse you for such interest, costs, fees and/or expenses immediately upon
you demand therefor in immediately available funds. In the event
Wheeling-Pittsburgh 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 gross
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 and
the (ii) the Trustee may terminate this letter agreement and the
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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 given to
Wheeling-Pittsburgh and you. Notice hereunder shall be delivered to each party
hereto at the address and to the attention of the person set forth below, 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 t 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,
WHEELING-PITTSBURGH STEEL
CORPORATION
By: __________________
Name:
Title:
Acknowledged and agreed to this
day of ___________, 1994
[Wheeling-Pittsburgh Collection Account Bank]
By: _____________________
Name:
Title:
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ACKNOWLEDGMENT AND AUTHORIZATION
Bank One, Columbus, NA, as trustee (the "Trustee") for the
Wheeling-Pittsburgh Trade Receivables Master Trust, referenced in the attached
letter executed by Wheeling-Pittsburgh Corporation and acknowledged by
[Wheeling-Pittsburgh Collection Account Bank] and the Trustee (the "Lock-Box
Notice"), hereby acknowledges the transfer of exclusive ownership and control of
the "Lock-Box" and the "Lock-Box Account", in each case, as defined in and
pursuant to the Lock-Box Notice. The Trustee hereby acknowledges that the
Servicer shall have such access to the Lock-Box Account and shall only transfer
funds therein to the Wheeling-Pittsburgh Trade Receivables Master Trust
Concentration Account if the Servicer has standing instructions from the Trustee
as to how to affect such transfers or if so specifically directed to transfer
funds by the Trustee.
Very truly yours,
BANK ONE, COLUMBUS, NA
as Trustee
By: _____________________
Name:
Title:
Agreed and Acknowledged:
[Wheeling-Pittsburgh Collection Account Bank]
By:__________________________
Name:
Title:
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WHEELING-PITTSBURGH SUBSIDIARIES
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CONSUMERS MINING COMPANY, a Pennsylvania corporation
CHAMPION METAL PRODUCTS, INC., a Delaware corporation
MINGO OXYGEN COMPANY, an Ohio corporation
PITTSBURGH-CANFIELD CORPORATION, a Pennsylvania corporation
WHEELING-PITTSBURGH STEEL CORPORATION, a Delaware corporation
WHEELING-CONSTRUCTION PRODUCTS, INC., a Delaware corporation
WHEELING-EMPIRE COMPANY, a Delaware corporation
WP STEEL VENTURE CORPORATION, a Delaware corporation
WHEELING-PITTSBURGH FUNDING, INC., a Delaware corporation
W-P COAL COMPANY, a West Virginia corporation
MONESSEN SOUTHWESTERN RAILWAY COMPANY, a Pennsylvania corporation
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of Wheeling-Pittsburgh Corporation of our
report dated February 10, 1998 relating to the financial statements of
Wheeling-Pittsburgh Corporation and its subsidiaries, which appears in such
Prospectus. We also consent to the reference to us under the headings "Experts,"
"Summary Consolidated Financial Data," and "Selected Consolidated Financial
Data" in such Prospectus. However, it should be noted that Price Waterhouse LLP
has not prepared or certified such "Summary Consolidated Financial Data" or such
"Selected Consolidated Financial Data."
Price Waterhouse LLP
Pittsburgh, Pennsylvania
March 24, 1998
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Amendment No. 2 to
Form S-4 (File No. 333-43867) for Wheeling-Pittsburgh Corporation $275 million
9.25% Senior Notes of our report dated February 12, 1998, on our audits of the
financial statements of Wheeling- Nisshin, Inc. We also consent to the
references to our firm under the caption "Experts."
Coopers & Lybrand L.L.P.
Pittsburgh, Pennsylvania
March 23, 1998
