U.S. $100,000,000
AMENDED AND RESTATED
SUBORDINATED CREDIT AGREEMENT
Dated as of September 28, 2001
by and between
National Steel Corporation
as Borrower
and
NUF LLC
as Lender
TABLE OF CONTENTS
Page
----
Article I
DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS
Section 1.1 Defined Terms ............................................. 2
Section 1.2 Accounting Terms and Principles ........................... 27
Section 1.3 Certain Terms and References .............................. 27
Section 1.4 Computation of Time Periods ............................... 28
Section 1.5 Quantities ................................................ 28
Section 1.6 Pronouns .................................................. 29
Section 1.7 Construction .............................................. 29
Article II
THE FACILITIES
Section 2.1 The Commitments ........................................... 29
Section 2.2 Borrowing Procedures ...................................... 29
Section 2.3 Reduction and Termination of the Commitments .............. 30
Section 2.4 Repayment of Loans ........................................ 30
Section 2.5 Evidence of Indebtedness .................................. 30
Section 2.6 Optional Prepayments ...................................... 31
Section 2.7 Mandatory Prepayments ..................................... 31
Section 2.8 Interest .................................................. 32
Section 2.9 Conversion and Continuation Options ....................... 33
Section 2.10 Fees ...................................................... 34
Section 2.11 Payments and Computations; Protective Advances ............ 34
Section 2.12 Special Provisions Governing Eurodollar Rate Loans ........ 35
Section 2.13 Capital Adequacy .......................................... 37
Section 2.14 Taxes ..................................................... 37
Section 2.15 Collateral Audits ......................................... 38
Article III
CONDITIONS PRECEDENT TO THE EFFECTIVENESS
OF THIS AGREEMENT AND TO LOANS
Section 3.1 Conditions Precedent to the Effectiveness of this Agreement 39
Section 3.2 Conditions Precedent to Each Loan ......................... 43
Section 3.3 Post Closing Conditions ................................... 44
Article IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Corporate Existence; Compliance with Law .................. 45
Section 4.2 Corporate Power; Authorization; Enforceable Obligations ... 45
Section 4.3 Financial Statements ...................................... 47
Section 4.4 Legal Proceedings ......................................... 47
Section 4.5 Material Adverse Change ................................... 47
Section 4.6 Solvency .................................................. 48
Section 4.7 Litigation ................................................ 48
Section 4.8 Taxes ..................................................... 48
Section 4.9 Full Disclosure ........................................... 49
Section 4.10 Margin Regulations ........................................ 49
Section 4.11 Ownership of the Material Subsidiaries and Certain Assets . 49
Section 4.12 ERISA ..................................................... 50
Section 4.13 Liens and Encumbrances .................................... 51
Section 4.14 Related Documents ......................................... 51
Section 4.15 No Burdensome Restrictions; No Defaults ................... 51
Section 4.16 No Other Ventures ......................................... 52
Section 4.17 Investment Company Act .................................... 52
Section 4.18 Public Utility Holding Company Act ........................ 53
Section 4.19 Insurance ................................................. 53
Section 4.20 Labor Matters ............................................. 53
Section 4.21 Use of Proceeds ........................................... 53
Section 4.22 Environmental Matters ..................................... 53
Section 4.23 Intellectual Property ..................................... 54
Section 4.24 Title; Real Estate ........................................ 55
Section 4.25 Existing Indebtedness ..................................... 56
Section 4.26 Deposit Accounts .......................................... 56
Article V
REPORTING COVENANTS
Section 5.1 Financial Statements ...................................... 56
Section 5.2 Default Notices ........................................... 59
Section 5.3 Expected Net Cash Proceeds ................................ 59
Section 5.4 ERISA Matters ............................................. 59
Section 5.5 Litigation ................................................ 60
Section 5.6 Notices under Related Documents ........................... 60
Section 5.7 SEC Filings; Press Releases ............................... 60
Section 5.8 Labor Relations ........................................... 60
Section 5.9 Insurance ................................................. 60
Section 5.10 Environmental Matters ..................................... 61
Section 5.11 Customer Contracts ........................................ 62
Section 5.12 Other Information ......................................... 62
Article VI
AFFIRMATIVE COVENANTS
Section 6.1 Preservation of Corporate Existence, Etc. ................. 62
Section 6.2 Compliance with Law, Etc. ................................. 62
Section 6.3 Conduct of Business ....................................... 63
Section 6.4 Payment of Taxes, Etc. .................................... 63
Section 6.5 Maintenance of Insurance .................................. 63
Section 6.6 Access .................................................... 63
Section 6.7 Keeping of Books .......................................... 64
Section 6.8 Maintenance of Properties, Etc. ........................... 64
Section 6.9 Maintenance of Contractual Obligations, Etc. .............. 64
Section 6.10 Application of Proceeds ................................... 64
Section 6.11 Fiscal Year ............................................... 64
Section 6.12 Environmental ............................................. 65
Section 6.13 Inventory ................................................. 65
Section 6.14 Additional Collateral and Guaranties ...................... 65
Section 6.15 Accounting Changes; Fiscal Year ........................... 66
Article VII
NEGATIVE COVENANTS
Section 7.1 Liens, Etc. ............................................... 66
Section 7.2 Indebtedness .............................................. 67
Section 7.3 Restrictions on Subsidiary Distributions; No New Negative
Pledge .................................................... 69
Section 7.4 Restricted Payments ....................................... 69
Section 7.5 Restriction on Fundamental Changes ........................ 69
Section 7.6 Sale of Assets ............................................ 70
Section 7.7 Investments in Other Persons .............................. 71
Section 7.8 Change in Nature of Business .............................. 72
Section 7.9 Compliance with ERISA ..................................... 72
Section 7.10 Modification of Related Documents ......................... 73
Section 7.11 Modification of Existing Indebtedness Agreements .......... 73
Section 7.12 Transactions with Affiliates .............................. 73
Section 7.13 Operating Leases; Sale and Leaseback Transactions ......... 75
Section 7.14 Cancellation of Indebtedness Owed to It ................... 75
Section 7.15 Material Subsidiaries ..................................... 75
Section 7.16 Capital Structure ......................................... 75
Section 7.17 No Speculative Transactions ............................... 76
Section 7.18 Margin Regulations ........................................ 76
Section 7.19 Control Accounts; Approved Deposit Accounts ............... 76
Article VIII
SUBORDINATION
Section 8.1 Obligations Subordinate to Senior Loan Obligations ........ 76
Article IX
EVENTS OF DEFAULT
Section 9.1 Events of Default ......................................... 82
Section 9.2 Remedies .................................................. 85
Article X
MISCELLANEOUS
Section 10.1 Amendments, Waivers, Etc. ................................. 86
Section 10.2 Assignment ................................................ 86
Section 10.3 Costs; Expenses; Indemnities .............................. 87
Section 10.4 Right of Set-off .......................................... 91
Section 10.5 Third Party Reliance ...................................... 91
Section 10.6 Independent of Representations and Warranties ............. 92
Section 10.7 Governing Law ............................................. 92
Section 10.8 Submission to Jurisdiction; Consent to Service of Process . 92
Section 10.9 Notices, Etc. ............................................. 93
Section 10.10 No Waiver; Remedies ....................................... 94
Section 10.11 Execution in Counterparts; Effectiveness; Assignments by
the Borrower .............................................. 94
Section 10.12 Entire Agreement .......................................... 95
Section 10.13 Further Assurances ........................................ 95
AMENDED AND RESTATED SUBORDINATED CREDIT AGREEMENT, dated as of
September 28, 2001 (this "Agreement"), by and between National Steel
Corporation, a Delaware corporation (the "Borrower"), and NUF LLC, a Delaware
limited liability company (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower and the Lender are parties to the Credit
Agreement dated as of February 28, 2001 (as amended to the date hereof, the
"Existing Subordinated Credit Agreement");
WHEREAS, National Steel Pellet Company, a Delaware corporation
("Pellet"), guaranteed the obligations of the Borrower under the Existing
Subordinated Credit Agreement;
WHEREAS, the Borrower has agreed, subject and subordinate to the
terms of (i) the Credit Agreement dated as of September 28, 2001, made between
the Borrower, the Lenders and Issuers defined therein, Citicorp USA, Inc., as
administrative agent, Fleet Capital Corporation and The CIT Group/Business
Credit, Inc., as documentation agents, ▇▇▇▇▇▇ Financial, Inc. and GMAC Business
Credit, LLC, as syndication agents, The Fuji Bank, Limited, as co-arranger, and
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., as sole book manager and sole lead arranger (the
"Senior Credit Agreement"), and (ii) the Pledge and Security Agreement dated as
of September 28, 2001 executed by the Borrower and Guarantors in favor of the
Senior Agent in connection therewith, to secure obligations to the Lender with
security interests in, and liens on, all of the Borrower's receivables,
inventory and other Collateral (as hereinafter defined), as provided for
hereinafter;
WHEREAS, at the request of the Borrower, the Lender and the Borrower
have agreed to amend and restate the Existing Subordinated Credit Agreement in
order to reflect certain of the terms of the Senior Credit Agreement;
WHEREAS, the Senior Agent, the Borrower, the Lender and the
Guarantors have entered into the Lien Subordination Agreement dated as of
September 28, 2001 in connection with the subordination of the Secured
Obligations to the Senior Loan Obligations (each as defined herein);
WHEREAS, the Lender is willing to make available to the Borrower the
revolving credit facility upon the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and obligations herein set forth and other good and valuable
consideration, the adequacy and receipt of which is hereby acknowledged, and in
reliance upon the representations, warranties and covenants herein contained,
the parties hereto, intending to be legally bound, hereby agree as follows:
Article I
DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS
Section 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 and, unless the context otherwise requires,
to all genders and all other grammatical forms of the terms defined):
"Account" has the meaning specified in the Subordinated Pledge and
Security Agreement.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with,
such Person and each officer, director, general partner or joint-venturer of
such Person. For the purposes of this definition, "control" means the possession
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.
"Affiliate Transaction" has the meaning specified in Section 7.12(a)
(General Limitation on Affiliate Transactions).
"Agreement" means this Amended and Restated Subordinated Credit
Agreement, together with all exhibits and schedules hereto, as the same may be
restated, amended, supplemented or otherwise modified from time to time.
"Applicable Margin" means with respect to the Loans maintained as
Eurodollar Rate Loans, a rate equal to 3.50% per annum, and with respect to
Loans maintained as Base Rate Loans, a rate equal to 2.5% per annum.
"Approved Deposit Account" has the meaning specified in the
Subordinated Pledge and Security Agreement.
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"Asset Sale" has the meaning specified in Section 7.6 (Sale of
Assets).
"Bailee's Letter" means a letter in form and substance acceptable to
the Lender and executed by any Person (other than the Borrower) that is in
possession of Inventory on behalf of the Borrower pursuant to which such Person
acknowledges, among other things, the Lender's lien with respect thereto or
shall be in the form attached hereto as Exhibit E-1.
"Bankruptcy Code" shall mean Title 11 of the United States Code (11
U.S.C. 101 et seq.), as amended from time to time and any successor statute.
"Base Rate" means, with respect to any period, a fluctuating
interest rate per annum as shall be in effect from time to time, which rate per
annum shall be equal at all times to the highest of:
(a) the rate of interest announced publicly by Citibank in New York,
New York, from time to time, as Citibank's base rate;
(b) the rate of interest announced publicly by The Fuji Bank,
Limited in New York from time to time, as its base rate; and
(c) the sum of (i) one-half of one percent (0.5%) per annum plus
(ii) the Federal Funds Rate.
"Base Rate Loan" means Loans the rate of interest applicable to
which is based upon the Base Rate.
"Blockage Notice" has the meaning specified in the Deposit Account
Control Agreement, dated December ___, 2001, among the Borrower and the Lender,
acknowledged and agreed to by Mellon Bank, N.A. and Mellon Financial Services
Corporation #1.
"Borrower" has the meaning specified in the preamble hereto.
"Borrower's Accountants" means Ernst & Young, LLP or any other
independent nationally-recognized public accountants acquitable to the Lender.
"Borrowing" means a borrowing consisting of Loan(s) hereunder.
3
"Borrowing Base Deficiency" means, at any time, the aggregate
principal amount of all Indebtedness under the Credit Facilities (as defined in
the Indenture) at any one time outstanding (less the sum of the aggregate amount
of all required payments of principal applied to reduce the aggregate amount
available to be borrowed under the Credit Facilities including pursuant to
Section 4.10 of the Indenture) exceeding the greater of (i) $350,000,000 and
(ii) the sum of the amounts equal to (x) 60% of the book value of the inventory
of the Borrower and the Restricted Subsidiaries (as defined in the Indenture)
and (y) 85% of the book value of the accounts receivable of the Borrower and the
Restricted Subsidiaries (as defined in the Indenture), in each case as of the
most recently ended quarter of the Borrower prior to the incurrence of any such
Indebtedness for which financial statements of the Borrower have been provided
to the Lender.
"Business Day" means a day of the year on which banks are not
required or authorized to close in New York City and, if the applicable Business
Day relates to notices, determinations, fundings and payments in connection with
the Eurodollar Rate or any Eurodollar Rate Loans, a day on which dealings in
Dollar deposits are also carried on in the London interbank market.
"Capital Lease" means, with respect to any Person, any lease of
property by such Person as lessee (or other arrangement conveying the right to
use) that would be accounted for as a capital lease on a balance sheet of such
Person prepared in conformity with GAAP.
"Capital Lease Obligations" means, with respect to any Person, the
capitalized amount of all obligations of such Person or any of its Subsidiaries
under Capital Leases, as determined to a consolidated basis in conformity with
GAAP.
"Cash Collateral Account" has the meaning specified in the
Subordinated Pledge and Security Agreement.
"Cash Equivalents" means (a) securities issued or fully guaranteed
or insured by the United States government or any agency thereof, (b)
certificates of deposit, eurodollar time deposits, overnight bank deposits and
bankers' acceptances of the Lender, any Senior Lender or any commercial bank
organized under the laws of the United States, any state thereof or the District
of Columbia or any foreign bank or its branches or agencies (fully protected
against currency fluctuations), which, at the time of acquisition, are rated at
least "A-1" by Standard & Poor's or "P-1" by Moody's, (c) commercial paper of an
issuer rated at least "A-1" by Standard & Poor's or "P-1" by Moody's and (d)
shares of any money market fund that (i) has at
4
least ninety-five percent (95%) of its assets invested continuously in the types
of investments referred to in clauses (a) through (c) above, (ii) has net assets
of not less than five hundred million Dollars ($500,000,000) and (iii) is rated
at least "A-1" by S&P or "P-1" by Moody's; provided, however, that the
maturities of all obligations of the type specified in clauses (a) through (c)
above shall not exceed one hundred and eighty (180) days.
"Change of Control" means any of the following. (a) NKK shall cease
to own and control, directly or indirectly, all of the voting rights associated
with a majority of the outstanding Stock and the outstanding Voting Stock of the
Borrower, (b) NKK shall cease to own and control all of the economic rights
associated with twenty five percent (25%) or more of the outstanding Stock of
the Borrower or (c) the Borrower shall cease to own and control, directly or
indirectly, all of the economic and voting rights associated with all of the
outstanding Stock of any of its Material Subsidiaries.
"Code" means the United States Internal Revenue Code of 1986 (or any
successor legislation thereto).
"Collateral" means all property and interests in property and
proceeds thereof now owned or hereafter acquired by Borrower or any other Loan
Party in or upon which a Lien is purported to be granted under any Collateral
Document.
"Collateral Account Control Agreement" has the meaning set forth in
the Subordinated Pledge and Security Agreement.
"Collateral Documents" means the Subordinated Pledge and Security
Agreement, the Collateral Account Control Agreements and any other document
permitted by the Senior Credit Agreement pursuant to which the Borrower or any
other Loan Party grants a Lien on any of its property to secure payment of the
Secured Obligations.
"Commitment" means the amount of $100,000,000.
"Constituent Documents" means, with respect to any Person, (a) the
articles of incorporation, certificate of incorporation or certificate of
formation (or the equivalent organizational documents) of such Person, (b) the
bylaws, operating agreement (or the equivalent governing documents) of such
Person and (c) any document setting forth the manner of election and duties of
the directors or managing
5
members of such Person (if any) and the designation, amount or relative rights,
limitations and preferences of any class or series of such Person's Stock.
"Contaminant" means any material, substance or waste that is
classified, regulated or otherwise characterized under any Environmental Law as
hazardous, toxic, a contaminant or a pollutant or by other words of similar
meaning or regulatory effect, including any petroleum or petroleum-derived
substance or waste, asbestos and polychlorinated biphenyls.
"Contractual Obligation" of any Person means any obligation,
promise, agreement (whether written or oral, express or implied and whether or
not legally binding), contract (including settlements and collective bargaining
agreements), 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 (excluding a Loan Document) to which such
Person is a party or by which it or any of its property is bound or to which
many of its properties is subject.
"Control Account" has the meaning specified in the Subordinated
Pledge and Security Agreement.
"Control Account Agreement" has the meaning specified in the Senior
Credit Agreement.
"Credit Event" has the meaning specified in Section 3.2 (Conditions
Precedent to Each Loan).
"Customary Permitted Liens" means, with respect to any Person, any
of the following Liens:
(a) Liens (excluding Environmental Liens) with respect to the
payment of taxes, assessments or governmental charges in all cases that are not
yet due or that are belong contested in good faith by appropriate proceedings
and with respect to which adequate reserves or other appropriate provisions are
being maintained to the extent required by GAAP to the extent that all such
Liens in the aggregate would, if all such contests were adversely determined,
have no Material Adverse Effect;
(b) Liens of landlords arising by statute and liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and other liens
imposed by law created in the ordinary course of business for amounts not yet
due or
6
that are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are being
maintained to the extent required by GAAP to the extent that all such Liens in
the aggregate would, if all such contests were adversely determined, have no
Material Adverse Effect;
(c) deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance or other types of social
security benefits or to secure the performance of bids, tenders, sales,
contracts (other than for the repayment of borrowed money) and surety, appeal,
customs or performance bonds;
(d) encumbrances arising by reason of zoning restrictions,
easements, licenses, reservations, covenants, rights-of-way, utility easements,
building restrictions and other similar encumbrances on the use of real property
not materially detracting from the value of such real property or not materially
interfering with the ordinary conduct of the business conducted and proposed to
be conducted at such real property;
(e) encumbrances arising under leases or subleases of real property
that do not, in the aggregate, materially detract from the value of such real
property or interfere with the ordinary conduct of the business conducted and
proposed to be conducted at such real property; and
(f) financing statements with respect to a lessor's rights in and to
personal property leased to such Person in the ordinary course of such Person's
business.
"Default" means any event that, with the passing of time or the
giving of notice or both, would become an Event of Default.
"Deposit Account" has the meaning specified in the Subordinated
Pledge and Security Agreement.
"Deposit Account Bank" has the meaning specified in the Subordinated
Pledge and Security Agreement.
"Deposit Account Control Agreement" has the meaning specified in the
Senior Credit Agreement.
7
"Dollars" and the sign "$" each mean the lawful money of the United
States of America.
"Effective Date" has the meaning specified in Section 3.1
(Conditions Precedent to the Effectiveness of this Agreement).
"Eleventh Supplemental Indenture" means the Eleventh Supplemental
Indenture by and among National Steel Corporation, the Chase Manhattan Bank and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as Trustees, dated as of March 31, 1999, to the Original
Indenture.
"Eligible Assignee" means (a) any Affiliate of the Lender or NKK
which the Lender confirms in writing to the Senior Agent and the Senior Lenders
is financially capable of performing the obligations of the Lender hereunder;
(b) any financial institution which has been pre-approved to be a Lender in
writing by the Borrower; (c) a commercial bank having total assets in excess of
five billion Dollars ($5,000,000,000) acceptable to the Borrower (which
acceptance may not be unreasonably withheld); or (d) a finance company,
insurance company, other financial institution or fund, reasonably acceptable to
the Senior Agent and the Borrower, that regularly is engaged in making,
purchasing or investing in loans; provided, however, that, the consent of the
Borrower required in clauses (c) and (d) above shall not be required during the
continuance of an Event of Default.
"Encumbrances" means, with respect to property, all Liens, leases,
options, preferences, priorities, rights of first refusal, easements,
servitudes, rights-of-way, licenses, securities purchase option, call or similar
right, restrictions under any shareholder agreement or any other Contractual
Obligation, encumbrance or any other restriction or limitation whatsoever on any
right incident to the ownership in fee of such property (including rights to
transfer, use or possess such property), whether contingent or non-contingent,
matured or unmatured, known or unknown.
"Environmental Laws" means all applicable Requirements of Law now or
hereafter in effect and as amended or supplemented from time to time, relating
to pollution or the regulation and protection of human health, safety, the
environment or natural resources, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. ss.9601
et seq.); the Hazardous Material Transportation Act, as amended (49 U.S.C.
ss.1801 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as
amended (7 U.S.C. ss.136 et seq.); the Resource Conservation and Recovery Act,
as amended (42 U.S.C. ss.6901 et seq.); the Toxic Substance Control Act, as
amended (42 U.S.C. ss.7401 et seq.); the Clean Air Act, as amended (42 U.S.C.
ss.740 et seq.); the Federal
8
Water Pollution Control Act, as amended (33 U.S.C. ss.1251 et seq.); the
Occupational Safety and Health Act, as amended (29 U.S.C. ss.651 et seq.); the
Safe Drinking Water Act, as amended (42 U.S.C. ss.300f et seq.); and each of
their state and local counterparts or equivalents and any transfer of ownership
notification or approval statute, including the Industrial Site Recovery Act
(N.J. Stat. ▇▇▇. ss.13:1K-6 et seq.).
"Environmental Liabilities and Costs" means, with respect to any
Person, all liabilities, obligations, responsibilities, Renedial Actions,
losses, damages, punitive damages, consequential damages, treble damages, costs
and expenses (including all fees, disbursements and expenses of counsel, experts
and consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand by
any other Person, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute, including any thereof arising under
any Environmental Law, Permit, Order or Contractual Obligation with any
Governmental Authority or other Person, relating to any environmental, health or
safety condition or a Release or threatened Release and result from the past,
present or future operations of, or ownership of property by, such Person or any
of its Subsidiaries.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" has the meaning specified in the Subordinated Pledge and
Security Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control or treated as a single employer with the
Borrower or any of its Subsidiaries within the meaning of Section 414 (b), (c),
(m) or (o) of the Code.
"ERISA Event" means (a) a reportable event described in Section
4043(b) or 4043(c)(1), (2), (3), (5), (6), (8) or (9) of ERISA with respect to a
Title IV Plan or a Multiemployer Plan; (b) the withdrawal of the Borrower, 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
9
4001(a)(2) of ERISA; (c) the complete or partial withdrawal of the Borrower,
any of its Subsidiaries or any ERISA Affiliate from any Multiemployer Plan; (d)
notice of reorganization or insolvency of a Multiemployer Plan; (e) 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; (f) the institution of
proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (g)
the failure to make any required contribution to a Title IV Plan or
Multiemployer Plan; (h) the imposition of a lien under Section 412 of the Code
or Section 302 of ERISA on the Borrower or any of its Subsidiaries or any ERISA
Affiliate; or (i) any other event or condition that 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 for PBGC
premiums due but not delinquent under Section 4007 of ERISA.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Federal Reserve Board.
"Eurodollar Base Rate" means (a) with respect to an Interest Period,
the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate
determined by Lender to be the offered rate which appears on the page of the
Telerate Screen which displays an average British Bankers Association Interest
Settlement Rate (such page currently being page number 3740 or 3750, as
applicable) for deposits (for delivery on the first day of such period) with a
term equivalent to such period in Dollars, determined as of approximately 11:00
a.m. (London, England time) on the day two (2) Business Days prior to the first
day of such Interest Period, or, at the option of the Lender, with notice to the
Borrower, (b) the rate of interest determined by the Lender to be the average
(rounded upward to the nearest whole multiple of one sixteenth of one percent
(0.0625%) per annum, if such average is not such a multiple) of the rates per
annum at which deposits in Dollars are offered by the principal office of the
Fuji Bank, Limited (or such other bank as the Lender may, with notice to the
Borrower, reasonably nominate) in London, England, to major banks in the London
interbank market at 11:00 A.M. (London time) two (2) Business Days before the
first day of such Interest Period in an amount substantially equal to the
Eurodollar Rate Loan for a period equal to such Interest Period.
"Eurodollar Borrowing Unit" means five million Dollars ($5,000,000).
"Eurodollar Rate" means, with respect to any Interest Period for any
Eurodollar Rate Loan, an interest rate per annum equal to the rate per annum
10
obtained by dividing (a) the Eurodollar Base Rate by (b) (i) a percentage equal
to one hundred percent (100%) minus (ii) the Eurodollar Rate Reserve Percentage.
"Eurodollar Rate Loan" means any Loan that, for an Interest Period,
bears interest based on the Eurodollar Rate.
"Eurodollar Rate Reserve Percentage" means with respect to any
Interest Period the reserve percentage applicable two Business Days before the
first day of such Interest Period under regulations issued from time to time by
the Federal Reserve Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve requirement)
for a member bank of the United States Federal Reserve System in New York City
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities which includes
deposits by reference to which the Eurodollar Base Rate is determined) having a
term equal to such Interest Period.
"Event of Default" has the meaning specified in Section 9.1 (Events
of Default).
"Existing Indebtedness" has the meaning specified in Section 7.2
(Indebtedness).
"Existing Subordinated Credit Agreement" has the meaning specified
in the recitals hereto.
"Existing Obligations" means all "Obligations" outstanding under and
as defined in the Existing Subordinated Credit Agreement.
"Fair Market Value" means (a) with respect to any asset or group of
assets (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; provided, however, that, if such asset shall
have been the subject of a relatively contemporaneous appraisal by an
independent third-party appraiser for which the basic underlying assumptions
have not materially changed since its date, the "Fair Market Value" of such
asset shall be the value set forth in such appraisal and (b) with respect to any
marketable Security at any date, the closing sale price of such Security on the
Business Day next preceding such date, as appearing in any published list of
11
any national securities exchange or the NASDAQ Stock Market or, if there is no
such closing sale price of such Security, the final price for the purchase of
such Security at face value quoted on such Business Day by a financial
institution of recognized standing regularly dealing in securities of such type
selected by the Lender.
"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 United
States 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 that is a Business Day, the average of the quotations
for such day on such transactions received by the Lender from three Federal
funds brokers of recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the United
States Federal Reserve System, or any successor thereto.
"Financial Covenant Debt" means, with respect to any Person at any
time, all Indebtedness that would be required to be reflected on a consolidated
balance sheet at such date of such Person and its Subsidiaries prepared in
conformity with GAAP.
"Financial Statements" means the financial statements of the
Borrower and its Subsidiaries delivered in accordance with Section 4.3
(Financial Statements) and Section 5.1 (Financial Statements).
"Fiscal Quarter" means each of the three month periods ending on
March 31, June 30, September 30 and December 31.
"Fiscal Year" means the twelve month period ending on December 31.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board, or in such other statements by such other
entity as
12
may be in general use by significant segments of the accounting profession,
which are applicable to the circumstances as of the date of determination.
"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 generally
pertaining to, a government, nation, state or other political subdivision
thereof, including any central bank, the PBGC or arbitrator.
"Guarantor" means, individually, Pellet, NSFC, ProCoil and NSH, and,
such entities collectively, the "Guarantors".
"Guaranty Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
Indebtedness of another Person, if the purpose or intent of such Person in
incurring the Guaranty Obligation is to provide assurance to the obligee of such
Indebtedness that such Indebtedness will be paid or discharged, that any
agreement relating thereto will be complied with or that any holder of such
Indebtedness will be protected (in whole or in part) against loss in respect
thereof including (a) the direct or indirect guaranty, 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 Indebtedness
of another Person and (b) any liability of such Person for Indebtedness of
another Person through any agreement (contingent or otherwise) (i) to purchase,
repurchase or otherwise acquire such Indebtedness or any Security therefor or to
provide funds for the payment or discharge of such Indebtedness (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 Indebtedness or to assure the holder of such
Indebtedness against loss or (v) to supply funds to or in any other manner
invest in such other Person (including 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 clause (b)(i), (ii),
(iii), (iv) or (v) above, the primary purpose or intent thereof is as described
in the preceding sentence. The amount of any Guaranty Obligation shall be equal
to the amount of the Indebtedness so guaranteed or otherwise supported.
13
"Hedging Contracts" means all Interest Rate Contracts, foreign
exchange contracts, currency swap or option agreements, forward contracts,
commodity swap, purchase or option agreements, other commodity price hedging
arrangements and all other similar agreements or arrangements designed to alter
the risks of any Person arising from fluctuations in interest rates, currency
values or commodity prices.
"Indebtedness" of any Person means without duplication (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person evidenced by notes, bonds, debentures or similar instruments or that bear
interest, (c) all reimbursement and all obligations with respect to letters of
credit, bankers' acceptances, surety bonds and performance bonds, whether or not
matured, (d) all indebtedness for the deferred purchase price of property or
services, other than trade payables incurred in the ordinary course of business
that are not overdue, (e) 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), (f) all Capital Lease Obligations of such Person and
the present value of future rental payments under all synthetic leases, (g) all
Guaranty Obligations of such Person, (h) all obligations of such Person to
purchase, redeem, retire, decease or otherwise acquire for value any Stock or
Stock Equivalents of such Person, valued, in these of redeemable preferred
stock, at the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends, (i) all payments that such Person would have
to make in the event of an early termination on the date Indebtedness of such
Person is being determined in respect of Hedging Contracts of such Person and
(j) all Indebtedness of the type referred to 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 Accounts and general
intangibles) owned by such Person, even though such Person has not assumed or
become liable for the payment of such Indebtedness.
"Indemnitee" has the meaning specified in Section 10.3 (Costs;
Expenses; Indemnities).
"Indemnified Matter" has the meaning specified in Section 10.3
(Costs; Expenses; Indemnities).
"Indenture" means the Original Indenture, as supplemented by all
instruments supplemental thereto, through and including the Eleventh
Supplemental
14
Indenture, dated as of March 31, 1999, to the Original Indenture, attached
hereto as Exhibit I (Indenture).
"Interest Period" means, in the case of any Eurodollar Rate Loan,
(x) initially, the period commencing on the date such Eurodollar Rate Loan is
made or on the date of conversion of a Base Rate Loan to such Eurodollar Rate
Loan and ending one (1), two (2), or three (3) months thereafter, as selected by
the Borrower in its Notice of Borrowing or Notice of Conversion or Continuation
given to the Lender pursuant to Section 2.2 (Borrowing Procedures) or Section
2.9 (Conversion and Continuation Options) and (y) thereafter, if such Eurodollar
Rate Loan is continued, in whole or in part, as a Eurodollar Rate Loan pursuant
to Section 2.9 (Conversion and Continuation Options), a period commencing on the
last day of the immediately preceding Interest Period therefor and ending one
(1), two (2) or three (3) months thereafter, as selected by the Borrower in its
Notice of Conversion or Continuation given to the Lender pursuant to Section 2.9
(Conversion and Continuation Options); provided, however, that all of the
foregoing provisions relating to Interest Periods in respect of Eurodollar Rate
Loans are subject to the following:
(a) if any Interest Period would otherwise end on a day that
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 that ends
after the Scheduled Termination Date;
(d) the Borrower may not select any Interest Period in respect
of Loans having an aggregate principal amount of less than five million Dollars
($5,000,000); and
(e) there shall be outstanding at any one time no more than
six (6) Interest Periods in the aggregate.
15
"Interest Rate Contracts" means all interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements and interest rate
insurance.
"Investment" means, with respect to any Person, (a) any purchase or
other acquisition by that Person of (i) any Security issued by, (ii) a
beneficial interest in any Security issued by, or (iii) any other equity
ownership interest in, any other Person, (b) any purchase by that Person of all
or a significant part of the assets of a business conducted by another Person,
(c) any loan, advance (other than deposits with financial institutions available
for withdrawal on demand, prepare expenses, accounts receivable and similar
items made or incurred in the ordinary course of business as presently
conducted), or capital contribution by that Person to any other Person,
including all Indebtedness of any other Person to that Person arising from a
sale of property by that Person other than in the ordinary course of its
business and (d) any Guaranty Obligation incurred by that Person in respect of
Indebtedness of any other Person.
"Inventory" has the meaning specified in the Subordinated Pledge and
Security Agreement.
"IRS" means the Internal Revenue Service of the United States or any
successor thereto.
"Legal Proceeding" means any judicial, administrative,
investigative, informal or arbitral action, arbitration, suit, claim, demand,
audit, investigation, litigation, hearing (public or private), including
proceedings of a Governmental Authority.
"Lender" means NUF LLC, a Delaware limited liability company and its
successors and permitted assignees in accordance with Section 10.2 (Assignment).
"Lien" means any lien (statutory or other), mortgage, deed of trust,
charge, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever intended to assure
payment of any Indebtedness or other obligation, including any conditional sale
or other title retention agreement, the interest of a lessor under a Capital
Lease and any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable
16
Requirement of Law naming the owner of the asset to which such Lien relates as
debtor.
"Lien Subordination Agreement" means the Lien Subordination
Agreement, dated as of September 28, 2001, and attached hereto as Exhibit D
among the Lender, Senior Agent, Borrower, each Guarantor and each other entity
that becomes a party thereto in accordance with the provisions thereof.
"Loan" means any loan made by the Lender pursuant hereto.
"Loan Documents" means, collectively, this Agreement, the
Subordinated Notes (if any), the Lien Subordination Agreement, the Subordinated
Guaranty, the Collateral Documents, and each agreement or document permitted by
the Senior Loan Documents, executed by the Borrower and delivered in connection
with or pursuant to any of the foregoing.
"Loan Party" means each of the Borrower, each Guarantor and each
other Subsidiary of Borrower that executes and delivers a Loan Document.
"Material Adverse Change" means a material adverse change in any of
(a) the condition (financial or otherwise), business, performance, prospects,
operations or properties of the Borrower or the Borrower and its Subsidiaries
taken as a whole, (b) the legality, validity or enforceability of any Loan
Document, (c) the perfection or priority of the Liens granted pursuant to the
Collateral Documents, (d) the ability of the Borrower to repay the Obligations
or of the Loan Parties to perform their obligations under the Loan Documents or
(e) the rights and remedies of the Lender under the Loan Documents.
"Material Adverse Effect" means an effect that results in or causes,
or could reasonably be expected to result in or cause, a Material Adverse
Change.
"Material Subsidiary" means (a) Pellet, ProCoil, NSFC and NSH and
(b) any other Subsidiary of the Borrower that (x) has assets with a book value
equal to or in excess of ten million Dollars ($10,000,000) that are not subject
to any Liens permitted under Section 7.1 or (y) the Borrower has designated to
the Lender and the Senior Agent as such.
"Mortgagee's Waiver" means a mortgagee's waiver in the form attached
hereto as Exhibit E-3.
17
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Borrower, any of its Subsidiaries or
any ERISA Affiliate has any obligation or liability, contingent or otherwise.
"NKK" means NKK Corporation, a company organized and existing under
the laws of Japan, and each and every successor thereto.
"Notice of Borrowing" has the meaning specified in Section 2.2(a)
(Form of Notice of Borrowing).
"Notice of Conversion or Continuation" has the meaning specified in
Section 2.9(a) (Delivery of Notice of Conversion or Continuation).
"NSFC" means National Steel Funding Corporation, a Delaware
corporation.
"NSH" means NS Holdings Corporation, a Delaware corporation.
"Obligations" means (a) the Loans, (b) all other amounts, advances,
debts, liabilities, obligations, covenants and duties owing by the Borrower to
the Lender, or any Indemnitee, of every type and description, present or future,
arising under this Agreement or the Subordinated Notes and (c) all other
amounts, obligations, covenants and duties owing by the Borrower to the Lender
under any other Loan Document, in each case whether or not for the payment of
money, whether by reason of an extension of credit, or any loan, guaranty,
indemnification, or in any other manner, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired and whether or not evidenced
by any note, guaranty or other instrument, including fees, interest, charges,
expenses, attorneys' fees and disbursements and other sums chargeable to the
Borrower under this Agreement or any other Loan Document.
"Order" means any order, award, injunction, judgment, decree,
settlement, process, ruling, subpoena, writ, assessment, arbitration award,
verdict (whether temporary, preliminary or permanent) or any determination or
pronouncement (whether or not such determination or pronouncement can be
appealed or otherwise modified) of any Governmental Authority reached as a
result of a Legal Proceeding.
18
"Original indenture" means the Indenture of Mortgage and Deed of
Trust, dated May 1, 1952, between the Borrower, Great Lakes Steel Corporation (a
predecessor-in-interest of the Borrower), and City Bank Farmers Trust Company
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as Trustees.
"Other Taxes" has the meaning specified in Section 2.14(b) (Stamp or
Documentary Taxes).
"Outstanding Amount" means, at any particular time, the sum of the
principal amount of the Loans outstanding at such time.
"paid in full" and "payment in full" shall have the meanings, with
respect to any and all Senior Loan Obligations, ascribed to such terms in the
Lien Subordination Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"Pellet" has the meaning specified in the recitals hereto.
"Permit" means any certificate, permit, franchise, approval,
authorization, license, variance, exemption, privilege, immunity, waiver, or
permission required from, or otherwise granted by, a Governmental Authority
under an applicable Requirement of Law or in connection with any Contractual
Obligation with a Governmental Authority.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, estate, trust, labor union, limited
liability company, unincorporated association, joint venture or other entity or
a Governmental Authority.
"Post-Commencement Interest" means all interest accrued or accruing
after the commencement of any Proceeding (and interest that would accrue but for
the commencement of any Proceeding) in accordance with and at the contract rate
(including, without limitation, any rate applicable upon default) specified in
the agreement or instrument creating, evidencing or governing any Senior Loan
Obligations, whether or not, pursuant to applicable law or otherwise, the claim
for such interest is allowed as a claim in such Proceeding.
"Proceeding" has the meaning specified in Section 8.1(a)(i).
19
"ProCoil" means ProCoil Corporation, a Delaware corporation.
"Property Loss Event" means any loss of or damage to property of the
Borrower or any of its Material Subsidiaries that results in the receipt by such
Person of proceeds of insurance in excess of twenty-five million Dollars
($25,000,000) or any taking of property of the Borrower or any of its Material
Subsidiaries that results in the receipt by such Person of a compensation
payment in respect thereof in excess of twenty-five million Dollars
($25,000,000).
"Real Estate" means all estate, right, title and interest of a Loan
Party in, to and under any of the following described property, whether now held
or hereafter acquired: (i) all real property owned in fee by such Loan Party, as
well as all of the easements, rights, privileges and appurtenances (including
air rights) thereunto belonging or in any way appertaining, and all of the
estate, right, title, interest, claim or demand whatsoever of such Loan Party
therein and in the streets and ways adjacent thereto, either at law or equity,
in possession or expectancy, now or hereafter acquired, and as used herein and
in any mortgages shall, unless the context otherwise requires, be deemed to
include improvements, fixtures and equipment of every kind and nature located in
or on, or attached to or usable in connection with, such real property; (ii) all
of such Loan Party's interests, if any, in and to all rents, royalties, issues,
profits, revenue, income and other benefits of the real property and all leases
of the real property or portions thereof, including, without limitation, cash or
securities deposited thereunder to secure performance by the lessees of their
obligations thereunder, including any guaranties of such leases; (iii) all of
such Loan Party's interests, if any, in and to all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash or liquidated
claims, including, without limitation, proceeds of insurance and condemnation
awards, and all rights of the Borrower to refunds of real estate taxes and
assessments; and (iv) the real property leased by such Loan Party.
"Receivables Purchase Agreement" means the Receivables Purchase
Agreement, dated as of May 16, 1994, among NSFC, the Borrower, as servicer, the
financial institutions listed therein, as buyers, ▇▇▇▇▇▇ Guaranty Trust Company
of New York, the Fuji Bank and Trust Company, The Mitsubishi Bank, Ltd. and
Comerica Bank, as letter of credit issuing banks, ▇.▇. ▇▇▇▇▇▇ Delaware, as
reserve letter of credit bank, ▇▇▇▇▇▇ Guaranty Trust Company of New York, as
Lender and ▇.▇. ▇▇▇▇▇▇ Delaware, as structuring and collateral agent.
20
"Receivables Purchase Facility" means the Receivables Purchase
Agreement, the Receivables Sale Agreement, and each other document and
instrument executed in respect thereof.
"Receivables Sale Agreement" means the Purchase and Sale Agreement,
dated as of May 16, 1994, between the Borrower, as seller, and NSFC, as
purchaser.
"Refinancing" means (i) the termination of, and the repurchase of
all Accounts remaining outstanding and sold under, the Receivables Purchase
Facility together with a termination of all Liens (if any) granted thereunder,
in each case in form and substance satisfactory to the Lender and (ii) the
refinancing of all Senior Existing Obligations; provided, however, that in the
case of those Senior Existing Obligations which relate to outstanding letters of
credit, Refinancing shall mean the cash collateralization or replacement thereof
or the acceptance by the issuer thereof of back-to-back Letters of Credit (as
defined in the Senior Credit Agreement).
"Related Documents" means the Indenture, the Senior Loan Documents
and each other document and instrument executed in respect thereof.
"Release" means, with respect to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration, in each case, of any Contaminant into the indoor or
outdoor environment or into or out of any property owned by such Person,
including the movement of Contaminants through or in the air, soil, surface
water, ground water or property.
"Remedial Action" means all actions required to (a) clean up,
remove, treat or in any other way address any Contaminant in the indoor or
outdoor environment, (b) prevent the Release or threat of Release or minimize
the further Release so that a Contaminant dues not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
"Requirement of Law" means, with respect to any Person, the common
law and all federal, state, local and foreign or international laws, treaties,
constitutions, equity principles, rules and regulations, Orders, judgments,
decrees and other determinations of any Governmental Authority or arbitrator,
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
21
"Responsible Officer" means, with respect to any Person, any
principal executive officer, managing member or general partner of such Person
but, in any event, with respect to financial matters (including matters relating
to the solvency of such Person or Financial Statements), the chief financial
officer, treasurer or controller of such Person.
"Restricted Payment" means (a) any dividend or other distribution,
direct or indirect, on account of any Stock or Stock Equivalents of the Borrower
or any of its Subsidiaries now or hereafter outstanding, except a dividend
payable solely in Stock or Stock Equivalents or a dividend or distribution
payable solely to the Borrower or Pellet, (b) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any Stock or Stock Equivalents of the Borrower or any of its
Subsidiaries now or hereafter outstanding other than one payable solely to the
Borrower and/or Pellet and (c) any payment or prepayment of principal, premium
(if any), interest, fees (including fees to obtain any waiver or consent in
connection with any Security) or other charges on, or redemption, purchase,
retirement, defeasance, sinking fund or similar payment with respect to, any
Indebtedness of the Borrower or any of its Subsidiaries or any other Loan Party
(other than the Senior Loan Obligations), other than any required payment,
prepayment, redemption, retirement, purchases or other payments, in each case to
the extent permitted to be made by the terms of such Indebtedness after giving
effect to any applicable subordination provisions; provided, however, that
payments or prepayments of fees in clause (c) above shall be permitted to the
extent that the Borrower represents and warrants to the Lender immediately prior
to the making thereof that such fee to be paid or prepaid is reasonable and
reflects market pricing under the conditions and circumstances existing at the
time of the payment or prepayment, as the case may be, of such fee.
"Sale and Leaseback Transaction" means any arrangement, directly or
indirectly, whereby a Person or its Subsidiary shall sell or transfer any
property, real or personal, and used or useful in its business, whether or not
owned or hereafter acquired, and thereafter rent or lease such property or other
property that such Person or its Subsidiary intends to use for substantially the
same purpose as the property being sold or transferred.
"Scheduled Termination Date" means February 25, 2002.
"Secured Obligations" means, in the case of the Borrower, the
Obligations and in the case of any other Loan Party, the obligations of such
Loan
22
Party under the Subordinated Guaranty and the other Loan Documents to which it
is a party.
"Secured Party" means the Lender and any other holder of any
Obligation.
"Security" means any Stock, Stock Equivalent, voting trust
certificate, bond, debenture, note, other evidence of Indebtedness, whether
secured, unsecured, convertible or subordinated, or any certificate of interest,
share or participation in, or any temporary or interim certificate in the
purchase or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing, but shall not include any evidence of the Obligations.
"Senior Agent" shall have the meaning ascribed to such term in the
Lien Subordination Agreement.
"Senior Collateral Documents" shall mean "Collateral Documents", as
defined in the Senior Credit Agreement.
"Senior Credit Agreement" has the meaning specified in the recitals
hereto.
"Senior Existing Credit Agreement" means the Credit Agreement, dated
as of November 19, 1999, among Citicorp USA, Inc., The Fuji Bank, Limited,
certain other financial institutions party thereto and the Borrower.
"Senior Existing Obligations" means all "Obligations" outstanding
under and as defined in the Senior Existing Credit Agreement.
"Senior Issuer" means an Issuer as defined in the Senior Credit
Agreement.
"Senior Lender" means a Lender as defined in the Senior Credit
Agreement.
"Senior Loan Documents" has the meaning ascribed to such term in the
Lien Subordination Agreement.
"Senior Loan Obligations" shall have the meaning ascribed to such
term in the Lien Subordination Agreement.
23
"Senior Loan Obligations Default" means any Default or Event of
Default under and as defined in any Senior Loan Document.
"Senior Secured Parties" shall mean the Senior Lenders, the Senior
Issuers, the Senior Agent and any other holder of any Senior Loan Obligation.
"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 contingent and unliquidated liabilities) of such Person as of such
date and that, as of such date, such Person is able to pay all liabilities of
such Person as such liabilities mature and does not have unreasonably small
capital. In computing the amount of contingent or unliquidated liabilities at
any time, such liabilities shall be computed at the amount that, 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.
"Standard & Poor's" means Standard & Poor's Rating Corp., a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies.
"Stock" means shares of capital stock (whether denominated as common
stock or preferred stock), beneficial, partnership or membership interests,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity,
whether voting or non-voting.
"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.
"Subordinated Guaranty" means a Guaranty, in substantially the form
of Exhibit F (Form of Subordinated Guaranty), executed by the Guarantors and
each other Material Subsidiary.
"Subordinated Indebtedness" shall have the meaning ascribed to such
term in Section 8.1 (Obligations Subordinate to Senior Loan Obligations).
"Subordinated Note" means a promissory note of the Borrower payable
to the order of the Lender in a principal amount equal to the amount of the
24
Lender's Commitment evidencing the aggregate Indebtedness of the Borrower to the
Lender resulting from the Loans owing to the Lender.
"Subordinated Pledge and Security Agreement" means the Subordinated
Pledge and Security Agreement, in substantially the form of Exhibit G (Form of
Subordinated Pledge and Security Agreement), executed by the Borrower and the
Guarantors.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company or other business entity of which an
aggregate of fifty percent (50%) or more of the outstanding Voting Stock is, at
the time, directly or indirectly, owned or controlled by such Person and/or one
or more Subsidiaries of such Person.
"Tax Affiliate" means, with respect to any Person, (a) any
Subsidiary of such Person and (b) any Affiliate of such Person with which such
Person files or is eligible to file consolidated, combined or unitary tax
returns.
"Tax Return" has the meaning specified in Section 4.8(a) (Timely
Filing of Tax Returns and Payment of Taxes).
"Taxes" has the meaning specified in Section 2.14(a) (Deduction of
Taxes).
"Termination Date" means the earliest of (a) the Scheduled
Termination Date, (b) the date of termination of the Commitment pursuant to the
terms hereof and (c) the date on which the Obligations become due and payable
pursuant to Section 9.2 (Remedies).
"Title IV Plan" means a pension plan, other than a Multiemployer
Plan, that is covered by Title IV of ERISA to which the Borrower, any of its
Subsidiaries or any ERISA Affiliate has any obligation or liability (contingent
or otherwise).
"Unencumbered Real Estate" means any and all Real Estate that is not
subject to an enforceable negative pledge provision that prohibits the pledge
and mortgaging of such Real Estate to a lender and is not subject to the Liens
set forth on Schedule 7.1.
"Uniform Commercial Code" means the Uniform Commercial Code as the
same may, from time to time, be in effect in the State of New York; provided,
25
however, that in the event that, by reason of any mandatory Requirement of Law,
any or all of the attachment, perfection or priority of any security interest
granted under the Subordinated Pledge and Security Agreement in any Collateral
is governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term "Uniform Commercial Code" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment, perfection or priority and
for purpose of definitions related to such provisions.
"United States" or "U.S." means the United States of America or any
political subdivision thereof.
"Unused Commitment Fee" has the meaning specified in Section 2.10
(Fees).
"Unused Commitment Fee Rate" means as of any date of determination,
a per annum rate equal to 0.5% per annum.
"Voting Stock" means Stock of any Person having ordinary power to
vote in the election of members of the board of directors, managers, trustees or
other controlling Persons, 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).
"Wholly-Owned Subsidiary" of any Person, means any other Person all
of the Stock of which (other than director's qualifying shares, as may be
required by law) is owned by such Person directly or by other Wholly-Owned
Subsidiaries of such Person.
"Withdrawal Liability" means, with respect to the Borrower at any
time, the aggregate liability incurred (whether or not assessed) with respect to
all Multiemployer Plans pursuant to Section 4201 of ERISA or for increases in
contributions required to be made pursuant to Section 4243 of ERISA.
"Year" means the calendar year.
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Section 1.2 Accounting Terms and Principles.
(a) Except as set forth below, all accounting terms not specifically
defined herein shall be construed in conformity with GAAP and all accounting
determinations required to be made pursuant hereto shall, unless expressly
otherwise provided herein, be made in conformity with GAAP.
(b) If any change in the accounting principles used in the
preparation of the most recent Financial Statements referred to in Section 5.1
(Financial Statements) is hereafter required or permitted by the rules,
regulations, pronouncements and opinions of the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or any
successors thereto) and such change is adopted by the Borrower with the
agreement of the Borrower's Accountants and results in a difference in any
calculation required by Article VII (Negative Covenants) or Article IX (Events
of Default) from that which would be obtained had such accounting change not
occurred, the parties hereto agree to enter into negotiations in order to amend
such provisions so as to equitably reflect such change with the desired result
that the criteria for evaluating compliance with such provisions by the Borrower
shall be the same after such change as if such change had not been made;
provided, however, that no change in GAAP that would affect a calculation that
measures compliance with any covenant contained in Article VII (Negative
Covenants) shall be given effect until such provisions are amended to reflect
such changes in GAAP.
Section 1.3 Certain Terms and References.
(a) The term "including" when used in any Loan Document means
"including without limitation" except when used in the computation of time
periods. When used in any Loan Document, the words "either" and "or" do not
refer to an exclusive choice.
(b) The words "herein," "hereof" and "hereunder" and similar words
used in any Loan Document refer to such Loan Document as a whole and not to any
particular Article, Section, subsection or clause in such Loan Document.
(c) Unless otherwise expressly indicated herein, (i) references in
any Loan Document to an Exhibit, Schedule, Article, Section, clause or
sub-clause refer to the appropriate Exhibit or Schedule to, or Article, Section,
clause or sub-clause in such Loan Document and (ii) the words "above" and
"below", when
27
following a reference to a clause or sub-clause of any Loan Document, refer to a
clause or sub-clause within, respectively, the same Section or clause.
(d) Table of Contents and Headings. The table of contents and
section titles of any Loan Document are and shall be without substantive meaning
or content of any kind whatsoever and are not a part of the agreement between
the parties hereto.
(e) The terms "Lender" and "Borrower," include, without limitation,
their respective successors and permitted assigns.
(f) References to Agreements. References to each agreement defined
in this Article I shall include, without limitation, all appendices, exhibits
and schedules thereto and, unless specifically stated otherwise, shall include,
without limitation, amendments, restatements supplements or other modifications
thereto and as the same may be in effect at any and all times such reference
becomes operative.
(g) References in this Agreement to any statute shall be to such
statute as amended or modified and in effect at the time any such reference is
operative.
(h) Reference to Indenture. Any reference herein to any numbered
section of the Indenture (but not any other reference to the Indenture) shall be
a reference to a section of the Eleventh Supplemental Indenture, as in effect on
the Effective Date.
Section 1.4 Computation of Time Periods. In this Agreement and any
other Loan Document, 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."
Section 1.5 Quantities. In any Loan Document, in all instances where
the same Dollar amount, time period, percentage or other quantity is expressed
both using numerals and fully written out, the latter expression shall prevail
over the expression using numerals in case of direct conflicts.
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Section 1.6 Pronouns. All pronouns contained in any Loan Document
and any variations thereof shall be deemed to refer to the masculine, feminine
or neuter, singular or plural, as the identity of the parties may require.
Section 1.7 Construction. The parties hereto acknowledge and agree
that they have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any of the provisions of this
Agreement.
Article II
THE FACILITIES
Section 2.1 The Commitments. On the terms and subject to the
conditions contained in this Agreement, the Lender agrees to make loans (each a
"Loan") to the Borrower from time to time on any Business Day until the
Termination Date in an aggregate principal amount at any time outstanding (for
all such loans by Lender) not to exceed the Commitment; provided, however, that
at no time shall Lender be obligated to make a Loan in excess of the Commitment.
Within the limits of Lender's Commitment, amounts of Loans repaid may be
reborrowed under this Section 2.1 on the terms and subject to the conditions
contained in this Section 2.1 and the remainder of this Agreement.
Section 2.2 Borrowing Procedures.
(a) Form of Notice of Borrowing. Each Borrowing shall be made on
notice given by the Borrower to the Lender not later than 1:00 P.M. (New York
City time) four (4) Business Days prior to the date of the proposed Borrowing.
Each such notice shall be in substantially the form of Exhibit B (Form of Notice
of Borrowing) (a "Notice of Borrowing"), specifying therein (A) the date of such
proposed Borrowing, (B) the aggregate amount of such proposed Borrowing and (C)
the initial Interest Period or Periods. The Loans shall be made as Eurodollar
Rate Loans unless the Scheduled Termination Date is within one month of the date
of the proposed Borrowing, in which case the Borrower shall request the proposed
Borrowing to be of Base Rate Loans. Each Borrowing of Eurodollar Rate Loans
shall be in an aggregate amount of two Eurodollar Borrowing Units or an integral
multiple of Eurodollar Borrowing Units in excess thereof; provided, however,
that the aggregate
29
amount of the Eurodollar Rate Loans for each Interest Period must be in an
amount of two Eurodollar Borrowing Units or an integral multiple of Eurodollar
Borrowing Units in excess thereof. The Borrower may not request more than five
(5) Borrowings per month without the consent of the Lender.
Section 2.3 Reduction and Termination if the Commitments. (a) To the
extent permitted by Section 8.5(b) of the Senior Credit Agreement, the Borrower
may, with the consent of the Lender, terminate in whole or reduce in part
ratably the unused portion of the Commitment of the Lender upon payment of a
corresponding amount of outstanding Loans in accordance with Section 2.6
(Optional Prepayments); provided, however, that each partial reduction shall,
unless otherwise agreed by the Lender, be in the aggregate amount of not less
than five million Dollars ($5,000,000) or an integral multiple of five million
Dollars ($5,000,000) in excess thereof.
(b) The Commitment of the Lender shall automatically reduce by the
amount of any equitable contribution made in cash to the Borrower or any
Guarantor by the Lender, NKK or any of their Affiliates (other than the Borrower
or any of its Subsidiaries).
Section 2.4 Repayment of Loans. The Borrower promises to repay the
entire unpaid amount of the Obligations on the Scheduled Termination Letter (it
being understood that other provisions of this Agreement may require all or part
of such Obligations to be repaid earlier).
Section 2.5 Evidence of Indebtedness.
(a) Maintenance of Accounts by Lender. The Lender shall maintain in
accordance with its usual practice an account or accounts evidencing
Indebtedness of the Borrower resulting from each Loan from time to time,
including the amounts of principal and interest payable and paid from time to
time under this Agreement.
(b) Accounts as Prima Facie Evidence. The entries made in the
accounts maintained pursuant to clause (a) above shall, to the extent permitted
by applicable law, be prima facie evidence of the existence and amounts of the
Obligations recorded therein; provided, however, that the failure of Lender to
maintain such accounts or any error therein shall not in any manner affect the
obligations of the Borrower to repay the Loans in accordance with their terms.
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(c) Prompt Execution of Subordinated Notes. Notwithstanding any
other provision of the Agreement, in the event that Lender requests that the
Borrower execute and deliver a promissory note or notes payable to Lender in
order to evidence the Indebtedness owing to Lender by the Borrower hereunder,
the Borrower shall promptly execute and deliver a Subordinated Note or
Subordinated Notes to Lender evidencing any Loans of Lender, substantially in
the form of Exhibit A (Form of Subordinated Credit Note), and the interests
evidenced by such note or notes shall at all times (including after assignment
of all or part of such interests) be evidenced by one or more Subordinated Notes
payable to the payee named therein.
Section 2.6 Optional Prepayments. Subject to the provisions of
Section 8.5 of the Senior Credit Agreement and Article VIII (Subordination)
hereof, the Borrower may, upon at least three (3) Business Days' prior notice to
the Lender and the Senior Agent, stating the proposed date and aggregate
principal amount of the prepayment, prepay the outstanding principal amount of
the Loans in whole or ratably in part at any time, together with accrued
interest to the date of such prepayment on the principal amount prepaid (but
shall have no right to prepay the principal amount of any Loan other than as
provided in this Section 2.6); provided, however, that if any prepayment of any
Eurodollar Rate Loan is made by the Borrower other than on the last day of an
Interest Period for such Loan, the Borrower shall also pay any amounts owing
pursuant to Section 10.3(c) (Eurodollar Loans); and, provided, further, unless
otherwise agreed by the Lender, that each partial prepayment shall be in an
aggregate principal amount not less than five million Dollars (S5,000,000) or
integral multiples of one million Dollars ($1,000,000) in excess thereof. Upon
the giving of such notice of prepayment, the principal amount of the Loans
specified to be prepaid shall become due and payable on the date specified for
such prepayment, unless the Borrower will not be in compliance with Section 8.5
of the Senior Credit Agreement on such date, in which case such notice shall be
null and void and of no further effect (in such circumstances, the
indemnification provisions, inter alia, of Section 2.12(e) (Breakage Costs)
shall apply).
Section 2.7 Mandatory Prepayments.
(a) Payment of Obligations. Upon the payment in full in cash and
discharge of all Senior Loan Obligations (as defined in the Senior Credit
Agreement), and the termination of the commitments of the Senior Lenders, the
Borrower shall forthwith prepay all Loans.
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(b) Excess Borrowing. To the extent permitted by the Senior Credit
Agreement and subject to Article VIII (Subordination) hereof, if at any time,
the aggregate principal amount of Loans exceed the Commitment the Borrower shall
forthwith (but after first making any payment required pursuant to Section 2.9
of the Senior Credit Agreement, and subject to Section 8.5 thereof), pay the
full amount of such excess or deficiency, as the case maybe, together with
accrued interest.
Section 2.8 Interest.
(a) Rate. All Loans and the outstanding principal balance of all
other Obligations shall bear interest on the unpaid principal amount thereof
from the date such Loans are made and such other Obligations are due and payable
until the date they are paid in full, except as otherwise provided in Section
2.8(c) (Default Rate), as follows:
(i) if a Base Rate Loan or such other Obligation, at a
rate per annum equal to the sum of (A) the Base Rate as in effect from
time to time as interest accrues, plus (B) the Applicable Margin; and
(ii) if a Eurodollar Rate Loan, at a rate per annum
equal to the sum of (A) the Eurodollar Rate determined for the applicable
Interest Period, plus (B) the Applicable Margin in effect from time to
time during such Eurodollar Interest Period.
(b) Interest Payments. (i) Interest accrued on each Eurodollar
Rate Loan shall be due and payable (A) on the last day of each Interest Period
applicable to such Loan, (B) won the payment or prepayment thereof in full or in
part and (C) if not previously paid in full, at maturity (whether by
acceleration or otherwise) of such Eurodollar Rate Loan; and (ii) interest
accrued on the principal balance of all other Obligations shall be due and
payable (A) on the first Business Day of each calendar month, commencing on the
first such Business Day following the incurrence of such Obligation, (B) upon
repayment thereof in full or in part and (C) if not theretofore paid in full, at
the time such other Obligation becomes due and payable (whether by acceleration
or otherwise).
(c) Default Interest Notwithstanding the rates of interest
specified in Section 2.8(a) (Rate) or elsewhere herein, effective immediately
upon the occurrence of an Event of Default and for as long thereafter as such
Event of Default shall be continuing, the principal balance of all Loans and the
amount of all other Obligations then due and payable shall bear interest at a
rate that is two percent (2%)
32
per annum in excess of the rate of interest applicable to such Obligations from
time to time, or if no rate is theretofore applicable, at the rate which is two
percent (2%) per annum above Base Rate, as in effect from time to time.
Section 2.9 Conversion and Continuation Options.
(a) Delivery of Notice of Conversion or Continuation. The Borrower
may elect at the end of any applicable Interest Period (i) which is within one
month of the Scheduled Termination Date to convert Eurodollar Rate Loans into
Base Rate Loans or (ii) to continue such Eurodollar Rate Loans or any portion
thereof for additional Interest Period; provided, however, that the aggregate
amount of the Eurodollar Rate Loans for each Interest Period must be in the
amount of two Eurodollar Borrowing Units or an integral multiple of Eurodollar
Borrowing Units in excess thereof. Each such election shall be made by giving
the Lender at least five (5) Business Days' prior written notice (a "Notice of
Conversion or Continuation"), which shall be substantially in the form of
Exhibit C (Form of Notice of Conversion or Continuation) hereto and shall
specify (A) the amount of the Eurodollar Rate Loan being converted or continued,
(B) in the case of a continuation of Eurodollar Rate Loans, the applicable
Interest Period and (C) 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 applicable Interest Period). Each
Notice of Conversion or Continuation shall be irrevocable and binding upon the
Borrower. The election of the Borrower made in accordance with this Section
2.9(a) shall be effective on the Relevant Date (as defined in the applicable
Notice of Conversion or Continuation), subject to Section 2.9(b) (Event of
Default; Failure to Give Appropriate Notice).
(b) Event of Default; Failure to Give Appropriate Notice.
Notwithstanding the foregoing, no continuation in whole or in part of Eurodollar
Rate Loans upon the expiration of any applicable Interest Period, shall be
permitted at any time at which (A) a Default or an Event of Default shall have
occurred and be continuing or (B) the continuation of, or conversion into, a
Eurodollar Rate Loan would violate any provision of Section 2.12 (Special
Provisions Governing Eurodollar Rate Loans). If, within the time period required
under the term of this Section 2.9, the Lender 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, then, upon the expiration of the applicable Interest
Period, such Loans shall be automatically continued with an Interest Period of
one month. Each Notice of Conversion or Continuation shall be irrevocable.
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Section 2.10 Fees.
Unused Commitment Fee. The Borrower agrees to pay to Lender a
commitment fee (the "Unused Commitment Fee") on the actual daily unused amount
of Lender's Commitment from the date hereof until the Termination Date at the
Unused Commitment Fee Rate, payable in arrears (i) on the first Business Day of
each calendar month, commencing on the first such Business Day following the
Effective Date and (ii) on the Termination Date.
Section 2.11 Payments and Computations; Protective Advances.
(a) Payment Procedures. The Borrower shall make each payment
hereunder (including interest, fees and expenses) not later than 11:00 A.M. (New
York City time) on the day when due and payable, in Dollars, to the account of
Lender (Account Number 001-008615) at The Fuji Bank and Trust Company (ABA
Number ▇▇▇▇▇▇▇▇▇) in immediately available funds without set-off or
counterclaim, together with a notice thereof to Lender at its address referred
to in Section 10.9 (Notices. Etc.). Payments received by the Lender after 11:00
A.M. (New York City time) shall be deemed to be received on the next Business
Day.
(b) Computations of Interest. All computations of interest and of
fees shall be made by the Lender on the basis of a year of three hundred and
sixty (360) days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest and fees are payable. Each determination by the Lender of an interest
rate hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(c) Payments on Business Days; Order. Whenever any payment hereunder
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 fees, 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 immediately preceding Business
Day. All repayments of any Loans shall be applied as follows: first, to repay
such Loans outstanding as Base Rate Loans and then to repay such Loans
outstanding as Eurodollar Rate Loans, with those Eurodollar Rate Loans having
earlier expiring Interest Periods being paid prior to those having later
expiring Interest Periods.
34
(d) Collateral Proceeds. After repayment in full in cash of all
Senior Loan Obligations and the termination of the commitments of the Senior
Lenders, the Borrower hereby irrevocably waives the right to direct, after the
occurrence and during the continuance of an Event of Default, the application of
any and all payments in respect of the Obligations and any proceeds of
Collateral, and agrees that the Lender may (i) deliver a Blockage Notice, a
Notice of Sole Control (as defined in Annex 1 to the Subordinated Pledge and
Security Agreement) or other similar notice, as applicable, to each Deposit
Account Bank and (ii) apply all payments in respect of any Obligations and all
funds on deposit in any Cash Collateral Account and all other proceeds of
Collateral to the payment in whole or in part of the Obligations in accordance
with provisions of this Agreement and the other Loan Documents.
Section 2.12 Special Provisions Governing Eurodollar Rate Loans.
(a) Determination of Interest Rate. The Eurodollar Rate for each
Interest Period for Eurodollar Rate Loans shall be determined by the Lender
pursuant to the procedures set forth in the definition of "Eurodollar Rate." The
Lender's determination shall be presumed to be correct, absent manifest error,
and shall be binding on the Borrower.
(b) Interest Rate Unascertainable, Inadequate or Unfair. In the
event that (i) the Lender determines that adequate and fair means do not exist
for ascertaining the applicable interest rates by reference to which the
Eurodollar Rate then being determined is to be fixed and (ii) the Lender
forthwith so notifies the Borrower, each Eurodollar Loan shall automatically, on
the last day of the current Interest Period for such Loan, convert into a Base
Rate Loan and the obligations of the Lender to make Eurodollar Rate Loans or to
convert Base Rate Loans into Eurodollar Rate Loans shall be suspended until the
Lender shall notify the Borrower that it has determined that the circumstances
causing such suspension no longer exist.
(c) Increased Costs. If at any time Lender shall determine that the
introduction of, or any change in or in the interpretation of, any law, treaty
or governmental rule, regulation or order (other than any change by way of
imposition or increase of reserve requirements included in determining the
Eurodollar Rate) or the compliance by Lender with any guideline, request or
directive promulgated or given on behalf of any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to Lender of agreeing to make or making, funding or
maintaining any Eurodollar Rate Loans, then the
35
Borrower shall from time to time, upon demand by Lender pay to the Lender
additional amounts sufficient to compensate Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to the Borrower
by Lender, shall be conclusive and binding for all purposes, absent manifest
error.
(d) Illegality. Notwithstanding any other provision of this
Agreement, if the Lender determines that the introduction of, or any change in
or in the interpretation of, any Requirement of Law shall make it unlawful, or
any central bank or other Governmental Authority shall assert that it is
unlawful, for the Lender to make Eurodollar Rate Loans or to continue to fund as
maintain Eurodollar Rate Loans, then, co notice thereof and demand therefor by
the Lender to the Borrower, (i) the obligation of the Lender to make or to
continue Eurodollar Rate Loans and to convert Base Rate Loans into Eurodollar
Rate Loans shall be suspended, and the Lender shall make a Base Rate Loan as
part of any requested Borrowing of Eurodollar Rate Loans and (ii) if the
affected Eurodollar Rate Loans are then outstanding, the Borrower shall
immediately convert each such Loan into a Base Rate Loan. If, at any time after
the Lender gives notice under this clause (d), the Lender determines that it may
lawfully make Eurodollar Rate Loans, the Lender shall promptly give notice of
that determination to the Borrower. The Borrower's right to request, and the
Lender's obligation, if any, to make Eurodollar Rate Loans, shall thereupon be
restored.
(e) Breakage Costs. In addition to all amounts otherwise required to
be paid by the Borrower pursuant to this Agreement, the Borrower shall
compensate Lender, upon demand, for all losses, expense and liabilities
(including any loss or expense incurred by reason of the borrowing, liquidation
or reemployment of deposits or other funds acquired by Lender to fund or
maintain Lender's Eurodollar Rate Loans to the Borrower but excluding any loss
of the Applicable Margin on the relevant Loans) that the Lender may sustain (i)
if for any reason a proposed Borrowing or continuation of Eurodollar Rate Loans
does not occur on a date specified therefor in a Notice of Borrowing or a Notice
of Conversion or Continuation given by Borrower or in a telephonic request by it
for borrowing or continuation or a successive Interest Period does not commence
after notice therefor is given pursuant to Section 2.9(a) (Delivery of Notice of
Conversion or Continuation), (ii) if for any reason any Eurodollar Rate Loan is
prepaid (including mandatorily pursuant to Section 2.7 (Mandatory Prepayments))
on a date that is not the last day of the applicable Interest Period, (iii) as a
consequence of a required conversion of a Eurodollar Rate Loan to a Base Rate
Loan as a result of any of the events indicated in clause (b) above or (iv) as a
consequence of any failure by a Borrower to repay or prepay Eurodollar Rate
Loans when required by the terms hereof, including, without
36
limitation following delivery of a prepayment notice pursuant to Section 2.6
(Optional Prepayments) in respect of which the notified prepayment is not in
fact made due to the prohibition in the final sentence of such Section 2.6
(Optional Prepayments). Lender shall deliver to the Borrower concurrently with
such demand a written statement as to such losses, expenses and liabilities, and
this statement shall be conclusive as to the amount of compensation due to
Lender, absent manifest error.
Section 2.13 Capital Adequacy. If at any time Lender determines that
(a) the adoption of, or any change in, or in the interpretation of, any
Requirement of Law regarding capital adequacy, (b) compliance with any such
Requirement of Law or (c) compliance with any guideline or request or directive
from any central bank or other Governmental Authority (whether or not having the
force of law) (and in each case whether in respect of the Lender itself or the
Lender's source of finds) shall have the effect of reducing the rate of return
on Lender's capital as a consequence of its obligations hereunder, to a level
below the level that the Lender could have achieved but for such adoption,
change, compliance or interpretation, then, upon demand from time to time by
Lender the Borrower shall, subject to Section 8.1(b)(i) hereof and Section
8.5(b) of the Senior Credit Agreement, pay to the Lender, from time to time as
specified by Lender, additional amounts sufficient to compensate Lender for such
reduction. A certificate as to such amounts submitted to the Borrower by Lender
shall be conclusive and binding for all purposes absent manifest error.
Section 2.14 Taxes.
(a) Deduction of Taxes. Any and all payments by the Borrower under
each Loan Document shall be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings and all liabilities with respect thereto, excluding, in the case of
Lender (i) taxes measured by its net income and franchise taxes imposed on it,
by the jurisdiction (or any political subdivision thereof) under the laws of
which Lender is organized, (ii) any United States withholding taxes payable with
respect to payments under the Loan Documents under Requirement of Laws in effect
on the date hereof (or, in the case of an Eligible Assignee, the date of the
Assignment and Acceptance) applicable to the Lender, but not excluding any
United States withholding taxes payable as a result of any change in such
Requirement of Laws occurring after the date hereof (or the date of such
Assignment and Acceptance) and (iii) taxes measured by its net income and
franchise taxes imposed on it, by the jurisdiction in which Lender's principal
place of business is located (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If any Taxes
37
shall be required by any Requirement of Law to be deducted from, or in respect
of, any sum payable under any Loan Document to Lender (w) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.14) the Lender receives an amount equal to the sum it would have received had
no such deductions been made, (x) the Borrower shall make such deductions, (y)
the Borrower shall pay the full amount deducted to the relevant taxing authority
or other authority in accordance with applicable Requirements of Law and (z) the
Borrower shall deliver to the Lender evidence of such payment.
(b) Stamp or Documentary Taxes. 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 applicable
foreign jurisdiction and all liabilities with respect thereto, arising from any
payment made under any Loan Document or from the execution, delivery or
registration of, or otherwise with respect to, any Loan Document (collectively,
"Other Taxes").
(c) Indemnification. The Borrower shall indemnify Lender for the
full amount of Taxes and Other Taxes (including any Taxes and Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.14) paid by
Lender and any liability (including 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 thirty (30) days from the date Lender makes written demand therefor.
(d) Survival. Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 2.14 shall survive the payment in full of the
Obligations.
Section 2.15 Collateral Audits. On and after the date hereof, the
Borrower shall promptly provide the Lender with copies of all collateral audits
conducted by the Senior Agent of which the Borrower has been provided a copy.
The Borrower shall notify the Lender promptly after the Borrower receives notice
of any collateral audit to be conducted by the Senior Agent.
38
Article III
CONDITIONS PRECEDENT TO THE EFFECTIVENESS
OF THIS AGREEMENT AND TO LOANS
Section 3.1 Conditions Precedent to the Effectiveness of this
Agreement. This Agreement shall become effective on the date (the "Effective
Date") on which the Lender shall have received each of the following, unless
otherwise indicated or agreed to by the Lender, each in form and substance
satisfactory to the Lender:
(a) (i) this Agreement, duly executed and delivered by the Borrower
and, for the account of Lender requesting the same, (ii) a Subordinated Note or
Subordinated Notes of the Borrower conforming to the requirements set forth
herein, and (iii) evidence satisfactory to the Lender that, as of the Effective
Date, the Senior Credit Agreement has been duly executed and delivered by the
Borrower;
(b) the Subordinated Pledge and Security Agreement, duly executed by
the Borrower, Pellet, NSFC and ProCoil and NSH, together with:
(i) evidence satisfactory to the Lender that, upon the filing
and recording of instruments delivered on or before the Effective Date,
the Lender shall have a valid and perfected security interest in the
Collateral, senior to all security interests in the Collateral except that
of the Senior Agent (for the benefit of the Senior Secured Parties)
including (A) such documents duly executed by each Loan Party as the
Lender may request with respect to the perfection of its security
interests in the Collateral (including evidence satisfactory to the Lender
that financing statements under the UCC, patent, trademark and copyright
security agreements suitable for filing with the Patent and Trademark
Office or the Copyright Office, as the case may be, and other applicable
documents under the laws of any jurisdiction have been appropriately filed
with respect to the perfection of Liens created by the Subordinated Pledge
and Security Agreement) and (B) copies of search reports pursuant to the
UCC as of a recent date listing all effective financing statements naming
any Loan Party as debtor, together with copies of such financing
statements, none of which shall cover the Collateral, except for those
that shall be terminated on the Effective Date;
(ii) evidence satisfactory to the Lender that share
certificates representing all certificated Stock being pledged pursuant to
such
39
Subordinated Pledge and Security Agreement and stock powers for such share
certificates duly executed in blank have been delivered to the Senior
Agent;
(iii) evidence satisfactory to the Lender that all instruments
representing notes being pledged pursuant to such Subordinated Pledge and
Security Agreement, duly endorsed in favor of the Senior Agent or in
blank, including without limitation Intercompany Notes (as defined in the
Subordinated Pledge and Security Agreement) between the Guarantors and the
Borrower, have been delivered to the Senior Agent;
(iv) evidence satisfactory to the Lender that duly executed
Deposit Account Control Agreements from all Deposit Account Banks have
been entered into with the Senior Agent;
(v) evidence satisfactory to the Lender that the Senior Agent
has received duly executed control account agreements from (A) all
securities intermediaries with respect to all securities accounts and
securities entitlements of the Borrower and Pellet and (B) all futures
commission agents and clearing houses with respect to all commodities
contracts and commodities accounts held by the Borrower and Pellet; and
(vi) (A) duly executed Collateral Account Control Agreements
from (x) all Deposit Account Banks and (y) all securities intermediaries
with respect to all securities accounts and securities entitlements of the
Borrower and Guarantors and (B) control account agreements, in form and
substance satisfactory to the Lender, from all futures commission agents
and clearing houses with respect to all commodities contracts and
commodities accounts held by the Borrower and the Guarantors.
(c) the Lien Subordination Agreement, duly executed by Senior Agent,
Lender, Borrower and each Guarantor.
(d) a favorable opinion of Yukevich, Marchetti, Liekar & ▇▇▇▇▇▇▇▇▇,
P.C., counsel to the Loan Parties, in substantially the form of Exhibit F (Form
of Opinion of Counsel for the Loan Parties), addressed to the Lender and
addressing such matters as Lender may reasonably request and a favorable opinion
of Klehr, Harrison, ▇▇▇▇▇▇, Branzburg & ▇▇▇▇▇▇ as to issues of perfection under
Delaware law;
40
(e) the Subordinated Guaranty duly executed by Pellet, NSFC,
ProCoil, NSH and any other Material Subsidiary.
(f) a copy of each Related Document as in effect on the Effective
Date certified as being complete and correct by a Responsible Officer of the
Borrower;
(g) a copy of the articles or certificate of incorporation (or
equivalent Constituent Document) of each Loan Party, certified as of a recent
date by the Secretary of State of the state of organization of such Loan Party,
together with certificates of such official attesting to the good standing of
each such Loan Party;
(h) a certificate of the Secretary or an Assistant Secretary of each
Loan Party certifying (i) the names and true signatures of each officer who has
been authorized to execute and deliver any Loan Document or other document
required hereunder to be executed and delivered by or on behalf of such Loan
Party, (ii) the by-laws (or equivalent Constituent Document) of such Loan Party
as in effect on the date of such certification, (iii) the resolutions of such
Loan Party's Board of Directors (or equivalent governing body) approving and
authorizing the execution, delivery and performance of the Agreement and the
other Loan Documents to which it is a party and (iv) that there have been no
changes in the certificate of incorporation (or equivalent Constituent Document)
of such Loan Party from the certificate of incorporation (or equivalent
Constituent Document) delivered pursuant to clause (g) above;
(i) a certificate of a Responsible Officer of the Borrower and the
Guarantors, stating that the Borrower and each Guarantor are Solvent as of the
Effective Date after giving effect to the payment of all estimated legal,
accounting and other fees related hereto;
(j) a copy of the latest Borrowing Base Certificate (as defined in
the Senior Credit Agreement) delivered to the Senior Agent;
(k) a certificate of a Responsible Officer of the Borrower to the
effect that (i) the conditions set forth in Section 3.2(b) (Representations and
Warranties; No Defaults) have been satisfied and (ii) no Legal Proceedings shall
have been initiated against Borrower or any of its Material Subsidiaries which,
if adversely determined, would have a Material Adverse Effect;
(l) evidence satisfactory to the Lender that the insurance policies
required by Section 6.5 (Maintenance of Insurance) and each Collateral Document
41
are in full force and effect, together with endorsements naming the Lender, on
behalf of the Secured Parties, as an additional insured or loss payee under all
insurance policies to be maintained with respect to the Collateral;
(m) a letter from the Borrower to its independent certified public
accountants authorizing such independent certified public accountants to
communicate with the Lender in accordance with Section 6.6 (Access);
(n) evidence satisfactory to the Lender that, as of the Effective
Date, the procedures with respect to cash management required by the Collateral
Documents and the Senior Collateral Documents have been established and are
currently being maintained by each Loan Party, together with copies of all
executed lockbox agreements and Deposit Account Control Agreements and
Collateral Account Control Agreements executed by such Loan Party in connection
therewith;
(o) evidence satisfactory to the Lender that, as of the Effective
Date, all costs accrued and unpaid fees and expenses due and payable on or
before the Effective Date required to be paid to the Lender on or before the
Effective Date have been paid;
(p) (i) evidence satisfactory to the Lender that, as of the
Effective Date, each of the Borrower and its Material Subsidiaries shall have
received all consents and authorizations required pursuant to any material
Contractual Obligation with any other Person and shall have obtained all Permits
of, and effected all notices to and filings with any Governmental Authority, in
each case, as may be necessary to allow each of the Borrower and its Material
Subsidiaries lawfully (A) to execute, deliver and perform, in all material
respects, their respective obligations hereunder, the Loan Documents to which
each of them, respectively, is, or shall be, a party and each other agreement or
instrument to be executed and delivered by each of them, respectively, pursuant
thereto or in connection therewith and (B) to create and perfect the Liens on
the Collateral to be owned by each of them in the manner and for the purpose
contemplated by the Loan Documents;
(ii) without prejudice to the generality of Subsection 3. 1(p)(i,),
approval of the Board of Directors of the Borrower and approval of the
independent directors of the Borrower acting as a special committee;
(q) evidence satisfactory to the Lender that, as of the Effective
Date, the Refinancing shall have occurred in form and substance reasonably
satisfactory to the Lender;
42
(r) a copy of the Borrower's Form l0-Q for the period ended
September 30, 2001, as filed with the Securities and Exchange Commission; and
(s) such other certificates, documents, agreements and information
with respect to Borrower and the Guarantors as the Lender may, in its sole
discretion, request.
Section 3.2 Conditions Precedent to Each Loan. The obligation of
Lender on any date (including the Effective Date) to make any Loan is subject to
the satisfaction of all of the following conditions precedent:
(a) Request for Borrowing. With respect to any Loan, the Lender
shall have received a duly executed Notice of Borrowing.
(b) Representations and Warranties; No Defaults. The following
statements shall be true on the date of such Loan, both before and after giving
effect thereto and, in the case of such Loan, to the application of the proceeds
therefrom:
(i) The representations and warranties set forth in Article IV
(Representations and Warranties) and in the other Loan Documents shall be
true and correct on and as of the Effective Date and shall be true and
correct in all material respects on and as of any such date after the
Effective Date with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly relate
to an earlier date;
(ii) no Borrowing Base Deficiency shall exist; and
(iii) no Event of Default shall have occurred and be
continuing.
(c) Borrowing Base. The Borrower shall have delivered to the Lender
a copy of all Borrowing Base Certificates (as defined in the Senior Credit
Agreement) required to be delivered by it to the Senior Agent pursuant to
Section 3.2(c) of the Senior Credit Agreement through the date of such Loan.
(d) No Legal Impediments. The making of such Loan on such date does
not violate any Requirement of Law on the date of or immediately following such
Loan and is not enjoined, temporarily, preliminarily or permanently.
43
(e) Indenture Provisions. The Lender shall have received evidence
and calculation reasonably satisfactory to it demonstrating that the making of
such Loan on such date does not violate any provision of the Indenture,
including without limitation, Section 4.05, and without limitation, that such
Loan will constitute "Permitted Debt" as defined in the Indenture.
(f) Additional Matters. The Lender shall have received such
additional documents, information and materials as Lender may reasonably
request.
Each submission by the Borrower to the Lender of a Notice of Borrowing and the
acceptance by the Borrower of the proceeds of each Loan requested therein (each
such event being a "Credit Event"), shall be deemed to constitute a
representation and warranty by the Borrower as to the matters specified in
clause (b) above on the date of the making of such Loan.
Section 3.3 Post Closing Conditions. Within the number of days set
forth below after the occurrence of the Effective Date or such other period of
time as determined by the Lender, acting reasonably, the Borrower shall deliver
to the Lender the following, each in form and substance satisfactory to the
Lender:
(a) within thirty (30) days, a Mortgagee's Waiver covering the Real
Estate mortgaged pursuant to the Indenture;
(b) within thirty (30) days, the Collateral Account Control
Agreement among the Borrower, the Lender, Mellon Bank, N.A. and Mellon Financial
Services Corporation #1; and
(c) within seventy-five (75) days, such duly executed Bailee's
Letters with respect to Inventory representing 50% (or such lesser percentage as
is satisfactory to the Lender) of the aggregate value of the Inventory of the
Borrower (valued at cost on a first-in, first-out basis) that, on the last
Business Day of the calendar month immediately preceding the Effective Date, was
located, stored, used or otherwise held at the premises of any third party.
44
Article IV
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement, the Borrower
represents and warrants to the Lender that, on and as of the Effective Date
(after giving effect to the making of any Loan or other financial accommodations
to be made on the Effective Date) and on and as of each date as required by
Section 3.2(b)(i):
Section 4.1 Corporate Existence; Compliance with Law. Each of the
Borrower and its Material Subsidiaries, (a) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
formation, as applicable, (b) is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction where such qualification is
necessary, except where the failure to be so qualified or in good standing would
not have a Material Adverse Effect, (c) has all requisite 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 is or
currently proposed to be conducted, (d) is in compliance with its Constituent
Documents, (e) is in compliance with all applicable Requirements of Law except
where the failure to be in compliance would not in the aggregate have a Material
Adverse Effect and (f) has obtained all Permits 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 Permits which can be obtained or
made by the taking of ministerial action to secure the grant or transfer thereof
or the failure to obtain or make would not in the aggregate have a Material
Adverse Effect.
Section 4.2 Corporate Power; Authorization; Enforceable Obligations.
(a) Noncontravention. The execution, delivery and performance by
Borrower of the Loan Documents to which it is a party and the consummation of
the transactions contemplated thereby:
(i) are within Borrower's corporate, limited liability
company, partnership or other powers;
(ii) have been, or at the time of delivery thereof pursuant to
Article III (Conditions Precedent to the Effectiveness of this Agreement
and
45
to Loans) will have been duly authorized by all necessary corporate
action, including the consent of shareholders where required;
(iii) do not and will not (A) contravene any Loan Party's or
any of the Borrower's Material Subsidiaries' respective Constituent
Documents, (B) violate any other Requirement of Law applicable to Borrower
(including under its Constituent Documents or Regulations T, U and X of
the Federal Reserve Board, as the same are from time to time in effect,
and all official rulings and interpretations thereunder) or any Order of
any Governmental Authority applicable to Borrower, (C) conflict with or
result in the breach of, or constitute or result in a default under, or
result in or permit the termination or acceleration of, any Contractual
Obligation of Borrower or any of its Material Subsidiaries (including,
without limitation, any provision in the Indenture) or (D) result in the
creation or imposition of any Lien or Encumbrance upon any property of
Borrower or any of its Material Subsidiaries, other than those in favor of
the Secured Parties pursuant to the Collateral Documents;
(iv) do not require obtaining any Permit from or filing or
registration with, any Governmental Authority or any other Person, other
than those listed on Schedule 4.2 (Permits) and which have been obtained
or made, copies of which have been or will be delivered to the Lender
pursuant to Section 3.1(p) and each of which on the Effective Date will be
in full force and effect and, with respect to the Collateral, filings
required to perfect the Liens created by the Collateral Documents; and
(b) Due Execution. This Agreement has been, and each of the other
Loan Documents will have been upon delivery thereof pursuant to the terms of
this Agreement, duly executed and delivered by Borrower. This Agreement is, and
the other Loan Documents will be, when delivered hereunder, the legal, valid and
binding obligation of each Loan Party party thereto, enforceable against such
Loan Party in accordance with its terms.
(c) Indenture. Without limiting any other representation or warranty
made by any Loan Party in any Loan Document, the obtaining of any Loan hereunder
will not result in any default under, and the provisions of Sections 7.4
(Restricted Payments) and 7.3 (Restrictions on Subsidiary Distributions; No New
Negative Pledge) do not conflict with, any provision of the Indenture as in
effect on the Effective Date, including, without limitation, Section 4.05 and
Section 4.11 of the Eleventh Supplemental Indenture as in effect on the
Effective Date.
46
Section 4.3 Financial Statements.
(a) Accuracy of Financial Statements. The consolidated balance sheet
of the Borrower and its Subsidiaries as at December 31, 2000 and December 31,
1999, and the related consolidated statements of income, retained earnings and
cash flows of the Borrower and its Subsidiaries for the Fiscal Years then ended,
certified by Ernst & Young, LLP, and the consolidated balance sheets of the
Borrower and its Subsidiaries as at September 30, 2001, and the related
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for the six (6) months then ended, certified by a
Responsible Officer of the Borrower, copies of which have been furnished to
Lender, fairly present, subject, in the case of said balance sheets as at
September 30, 2001, and said statements of income, retained earnings and cash
flows for the six (6) months then ended, to the absence of footnote disclosure
and normal recurring year-end audit adjustments, the consolidated financial
condition of the Borrower and its Subsidiaries as at such dates and the
consolidated results of the operations of the Borrower and its Subsidiaries for
the period ended on such dates, all in conformity with GAAP.
(b) No Additional Liability. Neither the Borrower nor any of its
Material Subsidiaries has any material obligation, contingent liability or
liability for taxes, long-term leases or unusual forward or long-term commitment
that is not reflected in the Financial Statements referred to in Section 4.3(a)
(Accuracy of Financial Statements) or in the notes thereto or otherwise
permitted by this Agreement.
Section 4.4 Legal Proceedings. There are no pending, or, to the
knowledge of the Borrower, threatened, Legal Proceedings that may affect the
Borrower or any of its Material Subsidiaries or their respective properties
before any Governmental Authority other than those that, if determined adversely
to Borrower, would not have a Material Adverse Effect. The performance of any
action by Borrower required or contemplated by any Loan Document is not
restrained or enjoined (either temporarily, preliminarily or permanently).
Section 4.5 Material Adverse Change. Since December 31, 2000, 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 other
than as has been disclosed in the Borrower's Form l0-Q for the period ended
September 30, 2001.
47
Section 4.6 Solvency. Both before and after giving effect to (a) the
Loans to be made or extended on the Effective Date or such other date as Loans
requested hereunder are made or extended, (b) the disbursement of the proceeds
of such Loans pursuant to the instructions of the Borrower, (c) the consummation
of the other financing transactions contemplated hereby and (d) the payment and
accrual of all transaction costs in connection with the foregoing, each Loan
Party is Solvent.
Section 4.7 Litigation. There are no pending or, to the knowledge of
the Borrower, threatened actions, investigations or proceedings affecting the
Borrower, or any of its Material Subsidiaries before any court, Governmental
Authority or arbitrator other than those that, in the aggregate, are not
reasonably likely to be determined adversely to any Loan Party and, if so
determined, would not have a Material Adverse Effect. The performance of any
action by any Loan Party required or contemplated by any Loan Document is not
restrained or enjoined (either temporarily, preliminarily or permanently).
Schedule 4.7 (Litigation) lists all litigation pending against any Loan Party at
the Effective Date that, if adversely determined, would have a Material Adverse
Effect.
Section 4.8 Taxes.
(a) Timely Filing of Tax Returns and Payment of Taxes. All federal,
state, local and foreign income and franchise and other material tax returns,
reports and statements (collectively, the "Tax Returns") required to be filed by
the Borrower or any of its Tax Affiliates have been filed with the appropriate
governmental agencies in all jurisdictions in which such Tax Returns are
required to be filed, all such Tax Returns are true and correct in all material
respects, and all taxes, charges and other impositions reflected therein or
otherwise due and payable have been paid prior to the date on which any fine,
penalty, interest, late charge or loss may be added thereto for non-payment
thereof, except when contested in good faith and by appropriate proceedings if
adequate reserves therefor have been established on the books of the Borrower or
such Tax Affiliate in conformity with GAAP. Except as disclosed to the Lender in
writing, no Tax Return is under audit or examination by any Governmental
Authority and no notice of such an audit or examination or any assertion of any
claim for Taxes has been given or made by any Governmental Authority. Proper and
accurate amounts have been withheld by the Borrower and each of its Tax
Affiliates from their respective employees for all periods in full and complete
compliance with the tax, social security and unemployment withholding provisions
of applicable Requirements of Law and such withholdings have been timely paid to
the respective Governmental Authorities.
48
(b) Tax-Sharing Agreements. None of the Borrower or any of its Tax
Affiliates has (i) executed or filed with the IRS or any other Governmental
Authority any agreement or other document extending, or having the effect of
extending, the period for filing of any Tax Return or the assessment or
collection of any charges, or (ii) any obligation under any tax sharing
agreement, arrangement or other Contractual Obligation other than those of which
the Lender has received a copy prior to the Effective Date, or (iii) been a
member of an affiliated, combined or unitary group other than the group of which
the Borrower (or its Tax Affiliate) is the common parent.
Section 4.9 Full Disclosure. The information prepared or furnished
by or on behalf of the Borrower in connection with this Agreement or the
consummation of the financing hereunder taken as a whole does not contain any
untrue statement of a material fact and does not omit to state a material fact
necessary to make the statements contained therein or herein not misleading. All
facts known to the Borrower that are material to an understanding of the
financial condition, business, properties or prospects of the Borrower and its
Material Subsidiaries taken as one enterprise have been disclosed to the Lender.
Section 4.10 Margin Regulations. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U of the Federal Reserve Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder), 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 T, U
or X of the Federal Reserve Board, as the same are from time to time in effect,
and all official rulings and interpretations thereunder.
Section 4.11 Ownership of the Material Subsidiaries and Certain
Assets. Set forth on Schedule 4.11 (Material Subsidiaries) is a true, complete
and accurate list showing, as of the Effective Date, all Material Subsidiaries
of the Borrower and, as to each such Material Subsidiary, the jurisdiction of
its incorporation, the number of shares of each class of Stock authorized (if
applicable), the number outstanding on the Effective Date and the percentage of
the outstanding shares of each such class owned (directly or indirectly) by the
Borrower and any other Stock and Stock Equivalents of such Material Subsidiary.
All of the outstanding Stock of each Material Subsidiary of the Borrower has
been validly issued, is fully paid and non-assessable and is owned by the
Borrower or a Material Subsidiary of the Borrower free and clear of all Liens
and Encumbrances (other than the Liens
49
created pursuant to the Senior Loan Documents and the Subordinated Pledge and
Security Agreement). Neither the Borrower nor any such Material Subsidiary is a
party to, or has knowledge of, any Contractual Obligation restricting the
transfer or hypothecation of any Stock or Stock Equivalent of any such Material
Subsidiary, other than the Loan Documents and the Senior Loan Documents. The
Borrower does not own or hold, directly or indirectly, any Securities of any
Person other than such Subsidiaries and Investments permitted by Section 7.7
(Investments in Other Persons). There are no Material Subsidiaries other than
Pellet, NSFC, ProCoil, and NSH on the Effective Date and thereafter no other
Material Subsidiaries that have not executed and delivered to the Lender a
Subordinated Guaranty, a Subordinated Pledge and Security Agreement and any
other Collateral Documents in connection therewith, and all documents and items
necessary to achieve a valid, second priority (behind only the Senior Secured
Parties) perfected security interest in the Collateral of such Material
Subsidiary as contemplated thereby. No Subsidiary of the Borrower other than
Pellet and NSFC owns any material amount of Accounts or Inventory.
Section 4.12 ERISA.
(a) List of Employee Benefit Plans. Schedule 4.12 (Employee Benefit
Plans) separately identifies, as of the Effective Date, all Title IV Plans, all
Multiemployer Plans and all of the employee benefit plans within the meaning of
Section 3(3) of ERISA to which the Borrower or any of its Material Subsidiaries
has any obligation or liability, contingent or otherwise.
(b) Tax Qualification. Each employee benefit plan of the Borrower or
any of its Material Subsidiaries which is intended to qualify under Section 401
of the Code does so qualify, and any trust created thereunder is exempt from tax
under the provisions of Section 501 of the Code, except where all such failures
have no Material Adverse Effect.
(c) Compliance with Requirements of Law. Each Title IV Plan is in
compliance in all material respects with applicable provisions of ERISA, the
Code and other Requirements of Law except for non-compliances that in the
aggregate would have no Material Adverse Effect.
(d) No Material Adverse Effect. There has been no, nor is there
reasonably expected to occur any, ERISA Event which will have a Material Adverse
Effect.
50
(e) No Withdrawal Liability. Except to the extent set forth on
Schedule 4.12 (Employee Benefit Plans), none of the Borrower or any Subsidiary
or any ERISA Affiliate thereof would have any Withdrawal Liability as a result
of a complete withdrawal as of the Effective Date from any Multiemployer Plan.
Section 4.13 Liens and Encumbrances. There are no Liens or
Encumbrances of any nature whatsoever on any properties of any Loan Party or any
of its Material Subsidiaries other than those permitted by Section 7.1 (Liens,
Etc.). The Liens granted by the Borrower to the Lender pursuant to the
Collateral Documents are fully perfected Liens in and to the Collateral, subject
only to timely filing with Governmental Authorities of the appropriate UCC-l and
UCC-3 financing statements. Schedules 7.1 (Existing Liens) and 7.3 (Existing
Negative Pledges) together encompass all Liens and Encumbrances of all Loan
Parties as of the Effective Date other than Permitted Customary Liens. On and
after September 28, 2001, there have been no Liens or Encumbrances granted by
the Borrower on any properties of any Loan Party or any of its Material
Subsidiaries other than the Liens granted under the Senior Loan Documents.
Section 4.14 Related Documents. Except as set forth on Schedule 4.14
(Amendments to Related Documents) and as permitted under Section 7.10
(Modification of Related Documents), none of the Related Documents has been
amended or modified in any respect and no provision therein has been waived.
Each of the representations and warranties in each of the Related Documents are
true and correct in all material respects, and no default or material breach (or
event which with the giving of notice or lapse of time or both would be a
default or a material breach) has occurred thereunder, except as duly waived, to
the extent such waiver is permitted under Section 7.10 (Modification of Related
Documents) and a copy of such waiver has been delivered to the Lender.
Section 4.15 No Burdensome Restrictions; No Defaults.
(a) Material Contracts. None of the Borrower or any of its Material
Subsidiaries (i) is a party to any Contractual Obligation the compliance with
which would have a Material Adverse Effect or the performance of which by any
thereof, either unconditionally or upon the happening of an event, would result
in the creation of a Lien or other Encumbrance (other than a Lien or Encumbrance
granted pursuant to a Loan Document or a Senior Loan Document or otherwise
permitted hereby) on the property or assets of any thereof or (ii) is subject to
any restriction under its Constituent Documents that would have a Material
Adverse Effect.
51
(b) No Default. None of the Borrower or any of its Material
Subsidiaries is in default under or with respect to any Contractual Obligation
owed by it and, to the knowledge of the Borrower, no other party is in default
under or with respect to any Contractual Obligation owed to Borrower or to any
Material Subsidiary of the Borrower, other than, in either case, those defaults
which in the aggregate would not have a Material Adverse Effect.
(c) No Default or Event of Default. No Default or Event of Default
has occurred and is continuing.
(d) Requirements of Law. To the best knowledge of the Borrower,
there is no Requirement of Law applicable to Borrower the compliance with which
by Borrower would have a Material Adverse Effect.
(e) Restrictions on Stock. No Material Subsidiary of the Borrower is
subject to any Contractual Obligation restricting or limiting its ability to
declare or make any dividend payment or other distribution on account of any
shares of any class of its Stock or its ability to purchase, redeem, or
otherwise acquire for value or make any payment in respect of, any such shares
or any shareholder rights, except pursuant to a Loan Document or any Senior Loan
Document.
Section 4.16 No Other Ventures. Except as set forth on Schedule 4.16
(Joint Ventures and Partnerships), none of the Borrower or any of its Material
Subsidiaries is engaged in any joint venture or partnership with any other
Person.
Section 4.17 Investment Company Act. None of the Borrower or any of
its Material Subsidiaries is 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. None
of the making of the Loans by the Lender, the application of the proceeds and
repayment thereof by the Borrower and the consummation of the transactions
contemplated by the Loan Documents will result in a violation by the Borrower or
any of its Material Subsidiaries of any provision of such act or any Requirement
of Law created by the Securities and Exchange Commission thereunder.
52
Section 4.18 Public Utility Holding Company Act. None of the
Borrower or any of its Material Subsidiaries is a "holding company," or an
"affiliate" or a "holding company" or a "subsidiary company" of a "holding
company," as each such term is defined and used in the Public Utility Holding
Act of 1935, as amended.
Section 4.19 Insurance. All policies of insurance of any kind or
nature of the Borrower and its Material Subsidiaries, including policies of
life, fire, theft, product liability, public liability, property damage, other
casualty, employee fidelity, workers' compensation and employee health and
welfare insurance, are in full force and effect and are of a nature and provide
such coverage (a) as is sufficient and as is customarily carried by businesses
of the size and character of such Person and (b) as is required under any of the
Related Documents or Loan Documents. Since June 30, 2001, none of the Borrower
or any of its Material Subsidiaries has had any material policy on insurance
terminated (other than at its request).
Section 4.20 Labor Matters.
(a) No Strikes. There are no strikes, work stoppages, slowdowns or
lockouts pending, threatened against or involving, the Borrower or any of its
Material Subsidiaries, other than those that in the aggregate would not have a
Material Adverse Effect.
(b) No Claims or Complaints. There are no unfair labor practices,
grievances or complaints pending, or, to the best of the Borrower's knowledge
after due inquiry, threatened, against or involving the Borrower or any of its
Material Subsidiaries, nor are there any arbitrations or grievances threatened
involving the Borrower or any of its Material Subsidiaries, other than those
that, in the aggregate, if resolved adversely to the Borrower or such Material
Subsidiary, would not have a Material Adverse Effect.
Section 4.21 Use of Proceeds. The proceeds of the Loans are being
used by the Borrower solely for general working capital and corporate purposes
and to repay or prepay any principal amount owing under any note issued under
the Indenture as long as permitted under the Senior Credit Agreement.
Section 4.22 Environmental Matters.
(a) Environmental Laws. The operations of the Borrower and each of
its Material Subsidiaries and their respective tenants have been and are in
compliance with all Environmental Laws, including obtaining and complying with
all
53
required environmental, health and safety Permits, other than non-compliances
that in the aggregate have no Material Adverse Effect or have been disclosed in
the Financial Statements delivered pursuant to Section 4.3(a) (Accuracy of
Financial Statements).
(b) No Threatened Legal Proceeding. None of the Borrower or any of
its Material Subsidiaries or any Real Estate currently (or, to the best of the
knowledge of the Borrower after due inquiry, previously) owned, operated or
leased by or for the Borrower or any of its Material Subsidiaries is subject to
any pending or, to the knowledge of the Borrower, threatened claim, Order,
Contractual Obligation, notice of violation or potential liability or is subject
to any pending, or, to the Borrower's knowledge, threatened, Legal Proceeding
with respect to (i) any Environmental Law, (ii) a Remedial Action or (iii)
Environmental Liabilities and Costs arising from a Release or threatened
Release, other than those that in the aggregate have no Material Adverse Effect.
(c) Disposal Facilities. Except as set forth on Schedule 4.22
(Disposal Facilities), none of the Borrower or any of its Material Subsidiaries
maintains a treatment, storage or disposal facility requiring a Permit under the
Resource Conservation and Recovery Act, 42 U.S.C.ss.6901 et seq., as amended,
the regulations thereunder or similar Requirement of Law.
(d) No Undisclosed Information. There are no facts, circumstances or
conditions arising out of or relating to the operations or ownership of real
property owned, operated or leased by the Borrower or any of its Material
Subsidiaries that are not specifically included in the financial information
furnished to the Lender other than those that in the aggregate have no Material
Adverse Affect.
(e) No Environmental Lien. As of the Effective Date, no
Environmental Lien has attached to any property of the Borrower or any of its
Material Subsidiaries.
Section 4.23 Intellectual Property. The Borrower and its Material
Subsidiaries own or license or otherwise have the right to use all license,
permits, patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, copyright applications, franchises,
authorizations and other intellectual property rights (including all
Intellectual Property as defined in the Subordinated Pledge and Security
Agreement) that are necessary for the operations of their respective businesses,
without infringement upon or conflict with the rights of any other Person with
respect thereto, including all trade names associated with any
54
private label brands of the Borrower or any of its Material Subsidiaries. To the
Borrower's knowledge, no slogan or other advertising device, product, process
method, substance, part or component, or other material now employed, or now
contemplated to be employed, by the Borrower or any of its Material 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. No
Subsidiary of the Borrower other than a Material Subsidiary owns any
Intellectual Property (as defined in the Subordinated Pledge and Security
Agreement) that is material to its business or that of the Borrower.
Section 4.24 Title; Real Estate.
(a) Title. Each of the Borrower and its Material Subsidiaries has
good and marketable title to, or valid leasehold interests in, all Real Estate
and good title to all personal property purported to be owned by it, including
those reflected on the most recent Financial Statements delivered by the
Borrower, and none of such properties and assets is subject to any Lien or other
Encumbrance, except Liens permitted under Section 7.1 (Liens, Etc.). The
Borrower and its Material 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 the Borrower's and its
Material Subsidiaries' right, title and interest in and to all such property.
(b) Permits. All Permits required to have been issued or appropriate
to enable all real property owned or leased by the Borrower and its Material
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 those that, in the aggregate, would not have a
Material Adverse Effect.
(c) No Condemnation Proceeding. None of the Borrower or any of its
Material Subsidiaries has received any notice, or has any knowledge, of any
pending, threatened or contemplated condemnation proceeding or other Legal
Proceeding affecting any Real Estate owned or leased by the Borrower or any of
its Material Subsidiaries or any part thereof, except those which, in the
aggregate, would not have a Material Adverse Effect.
(d) No Damage. No portion of any real property owned or leased by
the Borrower or any of its Material Subsidiaries has suffered any material
damage
55
by fire or other casualty loss which has not heretofore been completely repaired
and restored to its original condition.
Section 4.25 Existing Indebtedness. Schedule 4.25 (Existing
Indebtedness) separately identifies all Indebtedness as of the Effective Date of
the Borrower and its Subsidiaries which is to remain outstanding after the
Effective Date and is (a) for borrowed money, (b) incurred outside of the
ordinary course of the business and in a manner and to the extent consistent
with past practice or (c) material to the financial condition, business,
operations or prospects of the Borrower and its Subsidiaries, taken as a whole
(or will be material to the financial condition, business, operations or
prospects of the Borrower and its Subsidiaries, taken as a whole). For purposes
of clause (c) above, Indebtedness equal to or in excess of ten million Dollars
($10,000,000) shall be deemed material.
Section 4.26 Deposit Accounts. Schedule 4.26 (Deposit Accounts)
contains a complete and accurate list, as of the Effective Date, of each Deposit
Account of the Borrower and its Material Subsidiaries, specifying the nature of
such account and whether any proceeds of Collateral are deposited therein.
Article V
REPORTING COVENANTS
As long as any Obligation or the Commitment remains outstanding,
unless the Lender otherwise consents in writing, the Borrower agrees with the
Lender that:
Section 5.1 Financial Statements. The Borrower shall furnish to the
Lender the following Financial Statements and information:
(a) Monthly Reports. As soon as available and in any event within
thirty (30) days after the end of each fiscal month in each Fiscal Year (other
than any fiscal month ending on the last day of any Fiscal Quarter),
consolidated and consolidating unaudited balance sheets of the Borrower and its
Subsidiaries as of the close of such month and consolidated and consolidating
statements of income, retained earnings and cash flow of the Borrower and its
Subsidiaries for such month and that portion of the current Fiscal Year ending
as of the close of such month, in each case prepared in accordance with GAAP
(subject to the absence of footnote disclosure and normal recurring year-end
audit adjustments) together with (i) a
56
schedule of all monies advanced or loaned by the Borrower to any Guarantor, (ii)
a statement by a Responsible Officer of the Borrower that such financial
information presents fairly in accordance with GAAP (subject to the absence of
footnote disclosure and normal recurring year-end adjustments) the financial
position, results of operations and statements of cash flow of the Borrower and
its Subsidiaries, on both a consolidated and consolidating basis, as at the end
of such month and for the period then ended and (iii) a certificate of such
Responsible 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) Quarterly Financial Statements and Compliance Certificates. As
soon as available and in any event within fifty (50) days after the end of each
Fiscal Quarter of each Fiscal Year, consolidated and consolidating balance
sheets of the Borrower and its Subsidiaries as of the end of such quarter and
consolidated and consolidating statements of income, retained earnings and cash
flow of the Borrower and its Subsidiaries for the period commencing at the end
of the previous Fiscal Year and ending with the end of such Fiscal Quarter, all
prepared in conformity with GAAP and certified by the Responsible Officer of the
Borrower and a certificate of such Responsible 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;
(c) Annual Audited Financial Statements. As soon as available and in
any event within ninety-five (95) days after the end of each Fiscal Year,
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of the end of such year and consolidated and consolidating
statements of income, retained earnings and cash flows of the Borrower and its
Subsidiaries for such Fiscal Year, all prepared in conformity with GAAP and
certified, in the case of such consolidated financial statements, without
qualification as to the scope of the audit or as to the Borrower being a going
concern by the Borrower's Accountants, together with a certificate of such
accounting firm stating that in the course of the regular audit of the business
of the Borrower and its Subsidiaries, which audit was conducted by such
accounting firm in accordance with generally accepted auditing standards, such
accounting firm has obtained no knowledge that a Default or Event of Default has
occurred and is continuing or, if in the opinion of such accounting firm a
Default or Event of Default has occurred and is continuing, a statement as to
the nature thereof;
57
(d) Compliance Certificate. Promptly after delivery to the Senior
Agent, a copy of each Compliance Certificate (as defined in the Senior Credit
Agreement) delivered to the Senior Agent;
(e) Borrowing Base Certificate. Promptly after delivery to the
Senior Agent, a copy of each Borrowing Base Certificate (as defined in the
Senior Credit Agreement) delivered to the Senior Agent;
(f) Annual Operating Plans. Not later than thirty (30) days after
the end of each Fiscal Year beginning with the Fiscal Year ending December 31,
2001, an annual operating plan of the Borrower and its Subsidiaries for the
following Fiscal Year, approved by the Board of Directors of the Borrower, which
shall include, without limitation, a statement of all of the material
assumptions on which such plan is based, monthly balance sheets and a monthly
budget for the following year and which shall integrate sales, gross profits,
operating expenses, operating profit and cash flow projections all prepared on
the same basis and in similar detail as that on which operating results are
reported (and in the case of cash flow projections, representing management's
good faith estimates of future financial performance through the Fiscal Year
ending after the third (3rd) anniversary of the "Effective Date" (as defined in
the Senior Credit Agreement) based on historical performance);
(g) Changes in Bank Accounts. Prior written notice of any closing or
other change in the existing bank accounts of the Borrower or Pellet (or the
establishment of any new bank account by the Borrower or Pellet) or any
agreement relating thereto;
(h) Landlord's Waiver. Promptly after delivery to the Senior Agent,
a copy of each Landlord's Waiver (as defined in the Senior Credit Agreement)
delivered to the Senior Agent, and, if requested by the Lender, a corresponding
landlord's waiver in favor of the Lender; and
(i) Additional Information. Promptly, from time to time, such other
information regarding the operations, including information regarding specific
product categories and lines of business of the Borrower and its Subsidiaries,
the business affairs and financial condition (including financial controls and
accounting practices) of the Borrower or any of its Subsidiaries or compliance
by any Loan Party and its Subsidiaries with the terms of any Loan Document, as
the Lender may reasonably request.
58
Section 5.2 Default Notices. Promptly, and in any event within five
(5) Business Days after any Responsible Officer of the Borrower becomes aware of
any occurrence which it knows to constitute any Default or Event of Default, the
Borrower shall deliver to the Lender a certificate of a Responsible Officer
setting forth the details of such occurrence and the action which the Borrower
is taking or proposes to take with respect thereto.
Section 5.3 Expected Net Cash Proceeds. The Borrower shall promptly
furnish the Lender with a copy of each notice delivered to the Senior Agent
pursuant to Section 6.3 (Expected Net Cash Proceeds) of the Senior Credit
Agreement.
Section 5.4 ERISA Matters. The Borrower shall furnish the Lender:
(a) ERISA Event. Promptly and in any event within thirty (30) days
after the Borrower, any of its Subsidiaries or any ERISA Affiliate knows or has
reason to know that any ERISA Event has occurred, a written statement of a
Responsible Officer of the Borrower describing such ERISA Event and the action,
if any, that the Borrower, its Subsidiaries or its ERISA Affiliates propose to
take with respect thereto and a copy of any notice filed with any Governmental
Authority pertaining thereto;
(b) Request for Minimum Funding Waiver. Promptly and in any event
within ten (10) days after the Borrower, any of its Subsidiaries or any ERISA
Affiliate knows or has reason to know that a request for a minimum funding
waiver under Section 412 of the Code has been filed with respect to any Title IV
Plan or Multiemployer Plan, a written statement of a Responsible Officer of the
Borrower describing such waiver request and the action, if any, which the
Borrower, its Subsidiaries and ERISA Affiliates propose to take with respect
thereto and a copy of any notice filed with any Governmental Authority
pertaining thereto;
(c) Notice of Intent to Terminate. Simultaneously with the date that
the Borrower, any of its Subsidiaries or any ERISA Affiliate files a notice of
intent to terminate any Title IV Plan, if such termination would require
material additional contributions in order to be considered a standard
termination within the meaning of Section 4041(b) of ERISA, a copy of each
notice.
59
Section 5.5 Litigation. Promptly after the commencement thereof, the
Borrower shall give the Lender written notice of the commencement of any Legal
Proceeding that, if adversely determined, would have a Material Adverse Effect.
Not later than fifty (50) days after the end of each Fiscal Quarter, the
Borrower shall deliver to the Lender a written report describing any Legal
Proceeding that may affect the Borrower or any of its Subsidiaries and that, in
the reasonable judgment of the Borrower, exposes the Borrower or such Subsidiary
to liability in an amount aggregating two million Dollars ($2,000,000) or more.
Section 5.6 Notices under Related Documents. Promptly after the
sending or filing thereof, the Borrower shall send the Lender copies of all
material notices, certificates or reports delivered pursuant to or in connection
with any Related Document
Section 5.7 SEC Filings; Press Releases. Promptly after the sending
or filing thereof, the Borrower shall serve the Lender copies of (a) all reports
which the Borrower sends to its security holders generally or to the holders of
Securities issued under the Indenture, (b) all reports and registration
statements which the Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission or any national or foreign securities
exchange or the National Association of Securities Dealers, Inc., (c) all press
releases and (d) all other statements concerning material changes or
developments in the business of Borrower made available by Borrower to the
public.
Section 5.8 Labor Relations. Promptly after becoming aware of the
same, the Borrower shall give the Lender written notice of (a) any material
labor dispute to which the Borrower or any of its Material Subsidiaries is or
may become a party, including any strikes, lockouts or other disputes relating
to any of such Person's plants and other facilities and (b) any Worker
Adjustment and Retraining Notification Act or related liability incurred with
respect to the closing of any plant or other facility of any such Person.
Section 5.9 Insurance. As soon as is practicable and in any event
within thirty (30) days prior to the expiration or termination of any insurance
coverage for which the Borrower is required to name the Lender as additional
insured or loss payee hereunder or under any Loan Document, the Borrower shall
furnish the Lender a confirmation executed by the insurance company or the
Borrower's insurance broker and in form and substance satisfactory to the Lender
that such coverage has been continued.
60
Section 5.10 Environmental Matters. The Borrower shall provide the
Lender promptly and in any event within ten (10) days of the Borrower or any of
its Material Subsidiaries learning of any of the following, written notice of
each of the following:
(a) Environmental Lien. The receipt by Borrower of notification that
any real or personal property of Borrower is or is reasonably likely to be
subject to any Environmental Lien;
(b) Notice of Violation of an Environmental Law. The receipt by
Borrower of any notice of violation of or potential liability under, or
knowledge by such Borrower that there exists a condition that could reasonably
be expected to result in a violation of or liability under, any Environmental
Law, except for violations and liabilities the consequence of which, in the
aggregate, would not be reasonably likely to subject the Borrower and its
Subsidiaries collectively to Environmental Liabilities and Costs that have a
Material Adverse Effect;
(c) Commencement of a Legal Proceeding. The commencement of any
Legal Proceeding alleging a violation of or liability under any Environmental
Law, other than those the consequences of which in the aggregate would have no
reasonable likelihood of subjecting the Borrower and its Subsidiaries
collectively to Environmental Liabilities and Costs that have a Material Adverse
Effect;
(d) Property Acquisition. Any proposed acquisition of Securities,
assets or real estate, any proposed leasing of property or any other action of
the Borrower or any of its Material Subsidiaries, other than those the
consequences of which in the aggregate would have no reasonable likelihood of
subjecting the Borrower and its Subsidiaries collectively to Environmental
Liabilities and Costs that have a Material Adverse Effect; and
(e) Additional Permits; Additional Capital Improvements. Any
proposed action by the Borrower or any of its Material Subsidiaries or any
change in Environmental Laws that, in the aggregate, have a reasonable
likelihood of requiring the Borrower to obtain additional environmental, health
or safety Permits or make additional capital improvements to obtain compliance
with Environmental Laws that in the aggregate subject the Borrower to
Environmental Liabilities and Costs that have a Material Adverse Effect; and
(f) Status Report. Upon written request by Lender, a report
providing an update of the status of any environmental, health or safety
compliance,
61
hazard or liability issue identified in any notice or report delivered pursuant
to this Agreement.
Section 5.11 Customer Contracts. Promptly after becoming aware of
the same, the Borrower and each of its Subsidiaries shall give the Lender
written notice of any cancellation, termination or loss of any material
Contractual Obligation or other customer arrangement of the Borrower or any of
its Material Subsidiaries prior to the earlier of (i) the date of termination of
the Commitment pursuant to the terms of this Agreement and (ii) the date on
which the Obligations become due and payable pursuant to Section 9.2 (Remedies).
Section 5.12 Other Information. The Borrower shall provide the
Lender with such other information respecting the business, properties,
condition (financial or otherwise) or operations of the Borrower or any of its
Subsidiaries as Lender may from time to time reasonably request.
Article VI
AFFIRMATIVE COVENANTS
As long as any Obligation or the Commitment remains outstanding,
unless the Lender otherwise consents in writing, the Borrower agrees with the
Lender that:
Section 6.1 Preservation of Corporate Existence, Etc. The Borrower
shall, and shall cause each of its Material Subsidiaries to, preserve and
maintain, its corporate existence, rights (charter and statutory) and
franchises, except as permitted by Section 7.5 (Restriction on Fundamental
-----------
Changes).
Section 6.2 Compliance with Law, Etc. The Borrower shall, and shall
cause each of its Material Subsidiaries to, comply in all material respects with
all applicable Requirements of Law, Contractual Obligations and Permits, except
where the failure so to comply would not, in the aggregate, have a Material
Adverse Effect.
62
Section 6.3 Conduct of Business. The Borrower shall, and shall cause
each of its Material Subsidiaries to conduct its business in the ordinary course
consistent with past practice and 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 the Borrower or any of its Material Subsidiaries;
provided, however, that the Borrower shall not be deemed in default of this
Section 6.3 if all such failures to comply in the aggregate would have no
Material Adverse Effect.
Section 6.4 Payment of Taxes, Etc. The Borrower shall, and shall
cause each of its Material Subsidiaries to, pay and discharge before the same
shall become delinquent, all lawful claims, taxes, assessments, charges and
levies of a Governmental Authority, except where contested in good faith, by
proper proceedings and adequate reserves therefor have been established on the
books of the Borrower or the appropriate Subsidiary in conformity with GAAP.
Section 6.5 Maintenance of Insurance. The Borrower shall maintain,
and cause to be maintained for each of its Material Subsidiaries, insurance with
responsible and reputable insurance companies or associations in such amounts
and covering such risks as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas in which the
Borrower or such Material Subsidiary operates and, in any event, all insurance
required by any Collateral Documents.
Section 6.6 Access. The Borrower shall from time to time, permit the
Lender, and any of its agents or representatives, within five (5) Business Days
after written notification of the same (except that during the continuance of an
Event of Default, no such notice shall be required), on any Business Day, to (a)
examine and make copies of and abstracts from the records and books of account
of the Borrower and each of its Subsidiaries, (b) visit the properties of the
Borrower and each of its Subsidiaries, (c) discuss the affairs, finances and
accounts of the Borrower and each of its Subsidiaries with any of their
respective officers or directors and (d) communicate directly with the
Borrower's Accountants and any other certified public accountants. The Borrower
shall authorize its certified public accountants (including the Borrower's
Accountants) to disclose to the Lender any and all financial statements and
other information of any kind, as the Lender reasonably requests from the
Borrower and that such accountants may have with respect to the business,
financial condition, results of operations or other affairs of the Borrower or
any of its Subsidiaries.
63
Section 6.7 Keeping of Books. The Borrower shall, and shall cause
each of its Material Subsidiaries to, keep proper books of record and account,
in which full and correct entries shall be made in conformity with GAAP of all
financial transactions and the assets and business of the Borrower and each such
Material Subsidiary.
Section 6.8 Maintenance of Properties, Etc. The Borrower shall, and
shall cause each of its Material Subsidiaries to, maintain and preserve (a) in
good working order and condition all of its properties that are necessary in the
conduct of its business, (b) all rights, permits, licenses, approvals and
privileges (including all Permits) used or useful or necessary in the conduct of
its business and (c) all registered patents, trademarks, trade names, copyrights
and service marks with respect to its business except where failure to so
maintain and preserve the items set forth in clauses (a) through (c) above would
not, in the aggregate, have a Material Adverse Effect.
Section 6.9 Maintenance of Contractual Obligations, Etc. The
Borrower shall, and shall cause each of its Material Subsidiaries to, perform,
observe and comply with each of the covenants, conditions and agreements set
forth in the Related Documents (which in the case of the Senior Loan Documents,
shall be as such covenants, conditions and agreements are from time to time
waived or amended in accordance with the provisions thereof) and under each
other Contractual Obligation under which it or any of its Material Subsidiaries
may be bound (including to pay all rent and other charges payable under any
lease and all Indebtedness and other obligations as the same become due) and do
all things necessary to preserve and to keep unimpaired any rights the Borrower
or any of its Material Subsidiaries may have under any Contractual Obligation;
provided, however, that the Borrower shall not be deemed in default of this
Section 6.9 if all such failures in the aggregate would have no Material Adverse
Effect.
Section 6.10 Application of Proceeds. The Borrower shall use the
entire amount of the proceeds of the Loans as provided in Section 4.21 (Use of
Proceeds).
Section 6.11 Fiscal Year. The Borrower shall, and shall cause each
of its Material Subsidiaries to, maintain as its fiscal year the twelve month
period ending on the thirty-first (31st) of December of each year.
64
Section 6.12 Environmental. The Borrower shall, and shall cause each
Material Subsidiary to, comply in all material respects with Environmental Laws
and, without limiting the foregoing, the Borrower shall, at its sole cost and
expense, upon receipt of any notification or otherwise obtaining knowledge of
any Release or other event that has any reasonable likelihood of the Borrower
and its Material Subsidiaries incurring Environmental Liabilities and Costs that
have a Material Adverse Effect, promptly advise the Lender thereof and (a) if
requested by the Lender, conduct or pay for consultants to conduct, tests or
assessments of environmental conditions at such operations or properties,
including the investigation and testing of subsurface conditions and (b) take
such Remedial Action, make such investigation or take such other action as
required by Environmental Laws or other Requirements of Law or as any
Governmental Authority requires or as is appropriate and consistent with good
business practice to address the Release or event.
Section 6.13 Inventory.
(a) Appraisals and Investigations. The Borrower shall promptly
furnish to the Lender any information which Borrower furnishes to the Senior
Agent regarding the Collateral and its value, including without limitation all
information provided by the Borrower to the Senior Agent pursuant to Section
7.13 of the Senior Credit Agreement, and correct and complete copies of any
invoices, underlying agreements, instruments or other documents.
(b) Verifications. The Lender may, at the Borrower's sole cost and
expense, make physical or other forms of verifications of the Collateral at any
time and in any manner and through any medium that the Lender considers
advisable, and the Borrower and the Guarantors shall furnish, or shall cause to
be furnished, all such assistance and information as the Lender may require in
connection therewith.
Section 6.14 Additional Collateral and Guaranties. To the extent not
delivered to the Lender on or before the Effective Date, the Borrower agrees
promptly to (i) execute and deliver to the Lender such amendments and
supplements to the Collateral Documents and such additional Collateral Documents
as the Lender deems necessary or advisable in order to grant to the Lender a
perfected security interest, prior to all other security interests except that
of the Senior Agent, in the Stock and Stock Equivalents and debt Securities of
any Material Subsidiary that are owned by the Borrower or any of its
Subsidiaries and requested to be pledged by the Lender; provided, however, that
in no event shall the Borrower or any of its Subsidiaries be required to pledge
in excess of 65% of the outstanding Stock of any Material Subsidiary that is not
a Domestic Subsidiary or any of the stock of any
65
Subsidiary of such Material Subsidiary, (ii) in the case of any such Material
Subsidiary that is a Domestic Subsidiary cause such new Material Subsidiary (A)
to become a party to the Guaranty and the applicable Collateral Documents and
(B) to take such actions necessary or advisable to grant to the Lender a
perfected security interest in the Collateral described in the Collateral
Documents with respect to such new Material Subsidiary, including the filing of
UCC financing statements in such jurisdictions as may be required by the
Collateral Documents or by law or as may be reasonably requested by the Lender
and the execution and delivery of appropriate Intercompany Notes (as defined in
the Subordinated Pledge and Security Agreement) if not delivered to the Senior
Agent, (iii) execute, record and deliver to the Lender such mortgages on any now
or hereafter Unencumbered Real Estate owned by the Borrower, the Guarantors, or
any Subsidiary, as requested by the Lender in its sole discretion, in order to
grant to the Lender a perfected security interest, prior to all other security
interests except that of the Senior Agent, in such Unencumbered Real Estate, and
(iv) if requested by the Lender, deliver to the Lender legal opinions relating
to the matters described above, which opinions shall be in form and substance,
and from counsel, reasonably satisfactory to the Lender.
Section 6.15 Accounting Changes; Fiscal Year. The Borrower shall
disclose in writing to the Lender promptly after such change, any change in (a)
the accounting treatment, reporting practices or tax reporting treatment of the
Borrower or any of its Material Subsidiaries and (b) the fiscal year of the
Borrower or any of its Material Subsidiaries.
Article VII
NEGATIVE COVENANTS
As long as any Obligation or the Commitment remains outstanding and
unless the Lender otherwise consents in writing, the Borrower agrees with the
Lender that:
Section 7.1 Liens, Etc. The Borrower shall not, and shall not permit
any of its Subsidiaries to, create or suffer to exist, any Lien or other
Encumbrance upon, or with respect to, any of its properties or assets, whether
now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to
assign, any right to receive income, except for:
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(a) Liens created pursuant to the Loan Documents or the Senior Loan
Documents;
(b) Liens existing on the date of this Agreement and disclosed on
Schedule 7.1 (Existing Liens);
(c) Customary Permitted Liens of the Borrower and its Subsidiaries;
(d) purchase money Liens or purchase money security interests
granted by the Borrower or any Subsidiary of the Borrower (including the
interest of a lessor under a Capital Lease and Liens to which any property is
subject at the time of the Borrower's or such Subsidiary's acquisition thereof)
securing Indebtedness permitted under Section 7.2 (b) and (d) and limited in any
case to the property purchased with the proceeds of such purchase money
Indebtedness or subject to such Capital Lease;
(e) Liens securing the renewal, extension, refinancing or refunding
of any Indebtedness secured by any Lien permitted by clause (b) or (d) above
without any change in the assets subject to such Lien;
(f) Liens in favor of lessors securing operating leases; and
(g) pledges or deposits of cash or Cash Equivalents securing
judgment liens; provided, however, that all such Liens in the aggregate have no
Material Adverse Effect.
Section 7.2 Indebtedness. The Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly create, incur, assume,
maintain or otherwise become or remain directly or indirectly liable with
respect to any Indebtedness except:
(a) the Obligations and the Senior Loan Obligations;
(b) Indebtedness existing on the date of this Agreement and
disclosed on Schedule 4.25 (Existing Indebtedness) ("Existing Indebtedness");
(c) Guaranty Obligations incurred by the Borrower or a Guarantor in
respect of Indebtedness of the Borrower or a Guarantor otherwise permitted by
this Section 7.2;
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(d) Capital Lease Obligations and purchase money Indebtedness
incurred by the Borrower or a Subsidiary of the Borrower to finance the
acquisition of fixed assets in an aggregate outstanding principal amount not to
exceed at any time the Fair Market Value of such fixed assets and, in the
aggregate for all such Capital Lease Obligations and Indebtedness, fifty million
Dollars ($50,000,000); provided, however, that, in the case of Capital Lease
Obligations, the Capital Expenditure related thereto is otherwise permitted by
Section 5.1 (Capital Expenditures) of the Senior Credit Agreement; and provided,
further, that, if the corresponding Capital Lease is the result of the
conversion of an operating lease of the Borrower existing as of the Effective
Date, then the present value of all payments due under such Capital Lease shall
not be more than one hundred and five percent (105%) of the present value of all
payments due or that will become due under such operating lease;
(e) Renewals, extensions, refinancing and refundings of Indebtedness
permitted by clause (b) or (d) above; provided, however, that any such renewal,
extension, refinancing or refunding is in an aggregate principal amount not
greater than the principal amount of, and is on terms no less favorable to the
Borrower or such Subsidiary, including as to weighted average maturity, than,
the Indebtedness being renewed, extended, refinanced or refunded;
(f) Indebtedness arising from intercompany loans (i) from the
Borrower to a Guarantor or from any Guarantor to the Borrower and (ii) from the
Borrower or any Guarantor to any Subsidiary of the Borrower other than a
Guarantor; provided, however, that the Investment in the intercompany loan to
such Subsidiary is permitted under Section 7.7 (Investments in Other Persons);
(g) Indebtedness arising under any performance or surety bond
entered into in the ordinary course of business;
(h) Indebtedness evidenced by bonds issued pursuant to the Indenture
as in effect on the Effective Date, together with any supplements, amendments,
restatements or other modifications as may be approved by the Lender; and
(i) Indebtedness incurred after the Effective Date if otherwise
permitted to be incurred by Section 4.05 (Limitation on Debt and Restricted
Subsidiary Preferred Stock) of the Indenture; provided, however, that (x) no
Capital Lease Obligation or purchase money Indebtedness shall be permitted under
this clause (i) unless it is otherwise permitted under clause (d) or (e) above
and (y) no Indebtedness
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arising from intercompany loans shall be permitted under this clause (i) unless
it is otherwise permitted under clause (f) above.
Section 7.3 Restrictions on Subsidiary Distributions; No New
Negative Pledge. Other than pursuant to the Loan Documents and any agreements
governing any purchase money Indebtedness or Capital Lease Obligations permitted
by Section 7.2(b), (d) or (e) (Indebtedness) above (in which latter case, any
prohibition or limitation shall only be effective against the assets financed
thereby) and except for restrictions set forth in the Indenture and in the
Senior Loan Documents as of the Effective Date, the Borrower shall not, and
shall not permit any of its Material Subsidiaries to, (a) agree to enter into or
suffer to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of such Material Subsidiary to pay dividends or make any
other distribution or transfer of funds or assets or make loans or advances to
or other Investments in, or pay any Indebtedness owed to, the Borrower or any
other Material Subsidiary or (b) enter into or, other than pursuant to
agreements in effect on the date hereof, suffer to exist or become effective any
agreement prohibiting or limiting the ability of the Borrower or any Material
Subsidiary to create, incur, assume or suffer to exist any Lien or Encumbrance
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, to secure the Obligations, including any agreement requiring other
Indebtedness or Contractual Obligation to be equally and ratably secured with
the Obligations.
Section 7.4 Restricted Payments. The Borrower shall not, and shall
not permit any of its Material Subsidiaries to, directly or indirectly, declare,
order, pay, make or set apart any sum for any Restricted Payment; provided,
however, that any Material Subsidiary may make Restricted Payments to the
Borrower or Pellet; provided, further, that, the Borrower and its Material
Subsidiaries may make any Restricted Payment permitted under Section 4.06
(Limitation on Restricted Payments) of the Indenture and under Section 8.5
(Restricted Payments) of the Senior Credit Agreement.
Section 7.5 Restriction on Fundamental Changes. The Borrower shall
not, and shall not permit any of its Material Subsidiaries to, (a) merge with
any Person other than a Wholly-Owned Subsidiary of the Borrower that is a
Material Subsidiary, provided, however, that none of Pellet, NSFC, ProCoil and
NSH shall merge with any other Person, (b) consolidate with any Person other
than a Wholly-Owned Subsidiary of the Borrower that is a Material Subsidiary,
(c) acquire all or substantially all of the Stock or Stock Equivalents of any
Person, (d) acquire all or substantially all of the assets of any Person or all
or substantially all of the assets
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constituting the business of a division, branch or other unit operation of any
Person, (e) enter into any joint venture or partnership with any Person or (f)
acquire or create any Subsidiary, unless, in the case of clauses (e) and (f)
above, the Borrower is in compliance with Section 6.14 (Additional Collateral
and Guaranties) and the Investment in such Subsidiary or joint venture is
permitted under Sections 7.7 (e) or (h) (Investments in Other Persons));
provided, however, that the Borrower shall be authorized to consummate any
transaction described in clauses (a) through (d) above and Pellet shall be
authorized to consummate any transaction described in clauses (b) through (e)
above, in each ease to the extent the Stock, Stock Equivalents and assets that
are acquired do not have in the aggregate a Fair Market Value of more than fifty
million Dollars ($50,000,000) per Fiscal Year and, in the case of any
transaction described in clause (a) above and involving the Borrower, the
surviving corporation is the Borrower.
Section 7.6 Sale of Assets. The Borrower shall not, and shall not
permit any of its Subsidiaries to, sell, convey, transfer, lease or otherwise
dispose of, any of its assets or any interest therein (including the sale or
factoring at maturity or collection of any accounts) to any Person, or permit or
suffer any other Person to acquire any interest in any of its assets or, in the
case of any Subsidiary, issue or sell any shares of such Subsidiary's Stock or
Stock Equivalent (any such disposition being an "Asset Sale"), except:
(a) the sale or disposition of Inventory in the ordinary course of
business;
(b) the sale or disposition of Inventory in connection with the sale
of all of the fixed assets at the location where such Inventory is maintained;
provided, however, that the aggregate Fair Market Value of all such Inventory
disposed of in any Fiscal Year shall not exceed ten million Dollars
($10,000,000);
(c) the sale or disposition of Equipment that has become obsolete or
is replaced in the ordinary course of business; provided, however, that the
aggregate Fair Market Value of all such Equipment disposed of in any Fiscal Year
shall not exceed thirty million Dollars ($30,000,000);
(d) assignments and licenses of intellectual property of the
Borrower and its Subsidiaries in the ordinary course of business;
(e) any Asset Sale to the Borrower or Pellet;
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(f) subject to the consent of the Lender, which shall not be
unreasonably withheld, the sale of all of the assets or the Stock of Pellet,
ProCoil and Ingleside Holdings, L.P.;
(g) as long as no Default or Event of Default has occurred and is
continuing or would result therefrom, any other Asset Sale for Fair Market
Value, payable upon such sale; provided, however, that with respect to any such
sale pursuant to this clause (g), (i) the aggregate consideration received for
the sale of all assets sold during any Fiscal Year shall not exceed forty
million Dollars ($40,000,000) for non-real property assets and ten million
Dollars ($10,000,000) for real property assets and (ii) all proceeds received by
the Borrower or any of its Material Subsidiaries in cash or Cash Equivalents
from such Asset Sale under this clause (g), net of (x) the reasonable cash costs
of sale, assignment or other disposition, (y) taxes paid or payable as a result
thereof and (z) any amount required to be paid or prepaid on Indebtedness (other
than the Obligations) secured by the assets subject to such Asset Sale
(provided, however, that evidence of each of sub-clauses (x), (y) and (z) above
is provided to the Lender in form and substance satisfactory to it) are applied
to the prepayment of the Obligations to the extent required by Section 2.7
(Mandatory Prepayments); and
(h) as long as no Default or Event of Default has occurred and is
continuing or would result therefrom, any Asset Sale permitted under Section
4.08 (Limitation on Sale of Mortgaged Property) or (other than an Asset Sale
involving any Collateral) Section 4.10 (Limitation on Sale of Assets other Than
Mortgaged Property) of the Indenture.
Section 7.7 Investments in Other Persons. The Borrower shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly make or
maintain any Investment, except:
(a) Investments existing on the date of this Agreement and disclosed
on Schedule 7.7 (Existing Investments);
(b) Investments in cash and Cash Equivalents held in a Cash
Collateral Account or a Control Account with respect to which the Lender has a
perfected Lien or in the accounts permitted to be maintained pursuant to the
Subordinated Pledge and Security Agreement;
(c) Investments in accounts, contract rights and chattel paper (each
as defined in the UCC), notes receivable and similar items arising or acquired
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from the sale of Inventory in the ordinary course of business consistent with
the past practice of the Borrower and its Subsidiaries or a new practice
approved in writing by the Lender;
(d) Investments received in settlement of amounts due to the
Borrower or any Subsidiary of the Borrower effected in the ordinary course of
business;
(e) Investments by (i) the Borrower in Pellet, (ii) a Subsidiary of
the Borrower in the Borrower or any other Subsidiary of the Borrower, and (iii)
the Borrower or Pellet in any other Subsidiary of the Borrower that is not a
Material Subsidiary; provided, however, that the aggregate outstanding amount of
Investments permitted under clause (iii) above shall not exceed one million
Dollars ($1,000,000) at any time;
(f) Loans or advances to employees of the Borrower or any of its
Subsidiaries in the ordinary course of business, which loans and advances shall
not in the aggregate exceed the aggregate outstanding principal amount of one
million Dollars ($1,000,000) at any time;
(g) Investments constituting Guaranty Obligations permitted by
Section 7.2 (indebtedness); and
(h) Investments in joint ventures to the extent permitted under
clause (g) or (h) of the definition of "Permitted Investments" in Section 1.01
(Definitions) of the Indenture.
Section 7.8 Change in Nature of Business. The Borrower shall not,
and shall not permit any of its Material Subsidiaries to, make any material
change in the nature or conduct of its business as carried on at the date
hereof.
Section 7.9 Compliance with ERISA. The Borrower shall not, and
shall not permit any of its Subsidiaries to, or cause or permit any ERISA
Affiliate to, cause or permit to occur (a) an event that could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or (b) an ERISA Event that could have a Material Adverse Effect.
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Section 7.10 Modification of Related Documents. The Borrower shall
not, and shall not permit any of its Subsidiaries to, without the prior written
consent of the Lender, alter, rescind, terminate, amend, supplement, refinance,
refund, waive or otherwise modify any provision of any Related Document (other
than the Senior Loan Documents).
Section 7.11 Modification of Existing Indebtedness Agreements. Other
than the Senior Loan Documents and the Senior Loan Obligations, the Borrower
shall not, and shall not permit any of its Subsidiaries to, change or amend the
terms of any Existing Indebtedness if the effect of such amendment is to (a)
increase the interest rate on such Existing Indebtedness; (b) change the dates
upon which payments of principal or interest are due on such Existing
Indebtedness other than to extend such dates; (c) change any default or event
of default other than to delete or make less restrictive any default provision
therein or add any covenant with respect to such Existing Indebtedness; (d)
change the redemption or prepayment provisions of such Existing Indebtedness
other than to extend the dates therefor or to reduce the premiums payable in
connection therewith; (e) grant any security or collateral to secure payment of
such Existing Indebtedness; or (f) change or amend any other term if such change
or amendment would materially increase the obligations of the obligor or confer
additional material rights to the holder of such Existing Indebtedness in a
manner adverse to the Borrower, any of its Subsidiaries, or the Lender.
Section 7.12 Transactions with Affiliates.
(a) General Limitation on Affiliate Transactions. The Borrower shall
not, and shall not permit any of its Subsidiaries to, except as otherwise
expressly permitted herein, directly or indirectly, conduct any business or
enter into or suffer to exist any transaction or series of transactions
(including the purchase, sale, transfer, assignment, lease, conveyance or
exchange or the rendering of any service) (an "Affiliate Transaction") with, or
for the benefit of, any Affiliate of the Borrower unless (i) the terms of such
Affiliate Transaction are (A) set forth in writing and (B) not less favorable to
the Borrower or such Subsidiary, as the case may be, than those that could be
obtained in a comparable arm's-length transaction with a Person that is not an
Affiliate of the Borrower, (ii) if such Affiliate Transaction involves aggregate
payments or value in excess of ten million Dollars ($10,000,000), the board of
directors of the Borrower (including a majority of the disinterested members of
the board of directors of the Borrower) approves such Affiliate Transaction and,
in its good faith judgment, believes that such Affiliate Transaction complies
with clause (i) above as evidenced by a board resolution promptly delivered to
the Senior Agent and the Lender and (iii) if such Affiliate Transaction involves
aggregate payments or
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value in excess of twenty million Dollars ($20,000,000), the Borrower obtains a
written opinion from an independent financial advisor to the effect that such
Affiliate Transaction is fair, from a financial point of view, to the Borrower
or such Subsidiary, as the case may be.
(b) Approval of Specific Affiliate Transactions. Notwithstanding
clause (a) above the following Affiliate Transactions shall not be prohibited
under this Section 7.12:
(i) any Affiliate Transaction between the Borrower and any
Guarantor;
(ii) any Restricted Payment permitted to be made pursuant to
Section 7.4 (Restricted Payments);
(iii) any issuance of securities, or other payments, awards or
grants in securities or otherwise pursuant to, or the funding of,
employment arrangements, pension or other benefit plans, stock option and
stock ownership plans and other compensatory arrangements approved by the
board of directors of the Borrower;
(iv) the payment of reasonable fees to directors of the
Borrower or such Subsidiary who are not employees of the Borrower or any
of its Subsidiaries;
(v) loans and advances to employees made in the ordinary
course of business and consistent with the past practices of the Borrower
or such Subsidiary, as the case may be, provided, however, that such loans
and advances do not exceed five million Dollars ($5,000,000) in the
aggregate at any time outstanding;
(vi) any Affiliate Transaction between the Borrower or any
Subsidiary, on the one hand, and one or more joint ventures that are
Affiliates of the Borrower or any Subsidiary, on the other hand, that (A)
are on terms no less favorable to the Borrower or such Subsidiary, as the
case may be, than those that could be obtained in a comparable arm's
length transaction with a person that is not an Affiliate of the Borrower
and (B) if such Affiliate Transactions involve aggregate payments or value
in excess of ten million Dollars ($10,000,000), the board of directors of
the Borrower (including a majority of the disinterested members thereof)
approves such Affiliate
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Transaction and, in its good faith judgment, believes that such Affiliate
Transaction complies with clause (A) above; and
(vii) the execution, delivery and performance of obligations
under the Loan Documents.
Section 7.13 Operating Leases; Sale and Leaseback Transactions.
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, become or remain liable as lessee or guarantor or other surety
with respect to any operating lease, unless that aggregate amount of all rents
paid or accrued under all such operating leases shall not exceed one hundred
million Dollars ($100,000,000) in any Fiscal Year.
(b) The Borrower shall not, and shall not permit any of its
Subsidiaries to, enter into any Sale and Leaseback Transaction covering any
property with a Fair Market Value in excess of ninety million Dollars
($90,000,000) in the aggregate.
Section 7.14 Cancellation of Indebtedness Owed to It. The Borrower
shall not, and shall not permit any of its Subsidiaries to, cancel any claim or
Indebtedness owed to it except for reasonable consideration and in the ordinary
course of business consistent with the past practice.
Section 7.15 Material Subsidiaries. The Borrower shall not have any
Subsidiary other than Pellet, NSFC, ProCoil and NSH that is a Material
Subsidiary unless such Subsidiary has executed and delivered a Subordinated
Guaranty, a Subordinated Pledge and Security Agreement and any other Collateral
Documents and Collateral in connection therewith satisfactory to the Lender.
Section 7.16 Capital Structure. The Borrower will not, and will not
permit any of its Material Subsidiaries to, change its capital structure
(including in the terms of its outstanding Stock) or amend its Constituent
Documents other than for changes and amendments which in the aggregate have no
Material Adverse Effect and of which the Borrower has delivered advance notice
thereof to the Lender.
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Section 7.17 No Speculative Transactions. The Borrower shall not,
and shall not permit any of its Subsidiaries to, engage in any speculative
transaction or in any transaction involving Hedging Contracts except for the
sole purpose of hedging in the normal course of business and consistent with
industry practices.
Section 7.18 Margin Regulations. The Borrower shall not, and shall
not permit any of its Subsidiaries to, use all or any portion of the proceeds of
any credit extended hereunder to purchase or carry margin stock (within the
meaning of Regulation U of the Federal Reserve Board) in contravention of
Regulation U of the Federal Reserve Board.
Section 7.19 Control Accounts; Approved Deposit Accounts. The
Borrower shall not, and shall not permit any of its Subsidiaries to, (i) deposit
or cause to be deposited in any Deposit Account other than an Approved Deposit
Account any cash received by the Borrower or any of its Subsidiaries, except
that the Borrower and its Subsidiaries may establish and maintain one or more
Deposit Accounts with one or more financial institutions other than a Deposit
Account Bank, a Senior Lender or an Affiliate of a Senior Lender if the
aggregate balance in all such accounts does not exceed one million Dollars
($1,000,000) at any time or (ii) establish or maintain any securities account
that is not a Control Account.
Article VIII
SUBORDINATION
Section 8.1 Obligations Subordinate to Senior Loan Obligations. The
Borrower and the Lender, by the Lender's execution hereof, covenant and agree
that, to the extent and in the manner hereinafter set forth in this Section 8.1,
the Obligations (collectively, the "Subordinated Indebtedness") are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full in cash of all Senior Loan Obligations. This Section 8.1 constitutes a
continuing offer to all Persons who become holders of, or continue to hold,
Subordinated Indebtedness, each of whom is an obligee hereunder and is entitled
to enforce such holder's rights hereunder, subject to the provisions hereof,
without any act or notice of acceptance hereof or reliance hereon.
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(a) Payment Over of Proceeds Upon Bankruptcy, Etc.
(i) In the event of (A) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding in connection therewith, relative to the
Borrower or any Loan Party or its assets, (B) any liquidation, dissolution
or other winding up of the Borrower or any Loan Party, whether voluntary
or involuntary or whether or not involving insolvency or bankruptcy or (C)
any assignment for the benefit of creditors or any other marshalling of
assets or liabilities of the Borrower or any Loan Party (each such event,
if any, herein sometimes referred to as a "Proceeding'), then and in any
such event the holders of all Senior Loan Obligations shall first be paid
in full (including, without limitation, all Post-Commencement Interest) or
provision for such payment shall be made and agreed to in writing by the
holders of Senior Loan Obligations before the Lender is entitled to
receive any direct or indirect payment or distribution of any cash,
property or securities on account of or with respect to Subordinated
Indebtedness and to that end the holders of Senior Loan Obligations shall
be entitled to receive (pro rata on the basis of the respective amounts of
such Senior Loan Obligations held by them) directly, for application to
the payment thereof (to the extent necessary to pay all such Senior Loan
Obligations in full in cash, whether or not due, including specifically,
without limitation, all Post-Commencement Interest after giving effect to
any substantially concurrent payment or distribution to the holders of
such Senior Loan Obligations and any provision for such payment made and
agreed to in writing by the holders of Senior Loan Obligations), any and
all payments or distributions of any kind or character, whether in cash,
property or securities, which may be payable or deliverable in respect of
the Subordinated Indebtedness in any such Proceeding (including any
payment or distribution which may be payable or deliverable by reason of
the payment of any other Indebtedness of the Borrower being subordinated
to the payment of Subordinated Indebtedness). To the extent any payment of
Senior Loan Obligations (whether by or on behalf of the Borrower as
proceeds of security of enforcement of any right of setoff or otherwise)
is declared to be fraudulent or preferential, set aside or required to be
paid to a trustee, receiver or other similar party under any bankruptcy,
insolvency, receivership or similar law, then if such payment is recovered
by, or paid over to, such trustee, receiver or other similar party, the
Senior Loan Obligations or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding as if such
payment had not occurred.
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(ii) Notwithstanding the foregoing provisions of paragraph (i)
of this Section 8.1(a), if in the event of any Proceeding the Lender shall
have received any payment from or distribution of assets of the Borrower
or the estate created by the commencement of any such Proceeding of any
kind or character in respect of the Subordinated Indebtedness, whether in
cash, property or securities (including any payment or distribution which
may be payable or deliverable by reason of the payment of any other
indebtedness of the Borrower being subordinated to the payment of the
Subordinated Indebtedness) before all Senior Loan Obligations, whether or
not due and including specifically, without limitation, all
Post-Commencement Interest thereon, are paid in full or provision therefor
is made and agreed to in writing by the holders of Senior Loan
Obligations, then in such event, such payment or distribution shall be
received and held in trust for the benefit of and shall be paid over to
the holders of Senior Loan Obligations (pro rata, on the basis of the
respective amounts of such Senior Loan Obligations held by them) remaining
unpaid, to the extent necessary to pay all such Senior Loan Obligations in
full in cash including, without limitation, all Post-Commencement Interest
thereon, after giving effect to any substantially concurrent payment or
distribution to or for the holders of such Senior Loan Obligations, if
made in cash for application to (and if made other than in cash to be held
as collateral security for) the payment in full of the Senior Loan
Obligations.
(b) Default on Senior Loan Obligations.
(i) If any Senior Loan Obligations Default shall at any time
occur or exist, then at all times thereafter until such Senior Loan
Obligations Default shall have been cured or otherwise ceases to exist
pursuant to the terms of such Senior Loan Obligations, or the benefits of
this sentence shall have been waived in writing by or on behalf of, and at
the sole option of, the holders of a majority of the principal amount of
such Senior Loan Obligations, then and in such event (A) the Borrower may
not and shall not make any payment on account of or with respect to the
Subordinated Indebtedness which a holder of Subordinated Indebtedness
would be entitled to receive but for the provisions of this Section
8.1(b)(i) and (B) the Lender shall not be entitled, nor shall the Lender
have the right to, declare to be due and payable, demand prepayment of, or
take any action to collect, any principal outstanding hereunder, any
interest accrued thereon, or any other amount payable hereunder, and any
purported such declaration, demand or other action shall have no force or
effect.
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(ii) In the event that, notwithstanding the foregoing
provisions of this Section 8.1(b), any payment or distribution shall be
made by or on behalf of the Borrower from any of its assets and received
by the Lender at a time when such payment was prohibited by the provisions
of Section 8.1 (b)(i), then such payment or distribution shall be held in
trust for the benefit of, and shall be immediately paid over to, the
holders of Senior Loan Obligations (pro rata, on the basis of the
respective amount of such Senior Loan Obligations held by them) remaining
unpaid, if made in cash for application to (and if made other than in cash
to be held as collateral security for) the payment in full of all Senior
Loan Obligations in accordance with its terms (after giving effect to any
prior or substantially concurrent payment to the holders of such Senior
Loan Obligations).
(iii) The provisions of this Section 8.1(b) shall not modify
or limit in any way the application of Section 8.1(a).
(c) Subrogation to Rights of Lenders of Senior Loan Obligations.
After all amounts payable under or in respect of Senior Loan Obligations are
paid in full in cash, whether or not due, the Lender shall be subrogated to the
extent of the payments or distributions made to the holders of, or otherwise
applied to payment of, such Senior Loan Obligations pursuant to the provisions
of this Section 8.1 (equally and ratably with the holders of all Indebtedness of
the Borrower which by its express terms is subordinate and subject in right of
payment to Senior Loan Obligations to substantially the same extent as the
Subordinated Indebtedness is so subordinate and subject in right of payment and
which is entitled to like rights of subrogation), and to the rights of the
holders of such Senior Loan Obligations to receive payments and distributions of
cash, property and securities applicable to the Senior Loan Obligations until
the Subordinated Indebtedness shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior Loan
Obligations of any cash, property or securities to which the Lender would be
entitled except for the provisions of this Section 8.1, and no payments over
pursuant to the provisions of this Section 8.1 to the holders of Senior Loan
Obligations by the Lender shall, as among the Borrower and its creditors (other
than holders of Senior Loan Obligations and the Lender), be deemed to be a
payment or distribution by the Borrower to or on account of the Senior Loan
Obligations, it being understood that the provisions of this are solely for the
purpose of defining the relative rights of the holders of Senior Loan
Obligations on the one hand and the Lender on the other hand.
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(d) No Waiver of Subordination Provisions. No right of any holder of
any Senior Loan Obligations to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Borrower or by any act or failure to act by such holder or any
agent of such holder, or by any noncompliance by the Borrower with such terms,
provisions and covenants of this Agreement, regardless of any knowledge thereof
which any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of the Senior Loan Obligations may, at any time and from
time to time, without the consent of or notice to the Lender, incurring any
liabilities to the Lender and without impairing or releasing the subordination
and other benefits provided in this Section 8.1 or the obligations hereunder of
the Lender to the holders of the Senior Loan Obligations, even if any right of
reimbursement or subrogation or other right or remedy of the Lender is affected,
impaired or extinguished thereby, do any one or more of the following:
(i) change the manner, place or terms of payment or change or
extend the time of payment of, or renew, exchange, amend, increase or
alter, the terms of any Senior Loan Obligations, any security therefor or
guaranty thereof or any liability of the Borrower or any guarantor to any
holder of Senior Loan Obligations, or any liability incurred directly or
indirectly in respect thereof, or otherwise amend, renew, exchange,
extend, modify, increase or supplement in any manner Senior Loan
Obligations or any instrument evidencing or guaranteeing or securing the
same or any agreement under which Senior Loan Obligations are outstanding;
(ii) sell, exchange, release, surrender, realize upon, enforce
or otherwise deal with in any manner and in any order any property
pledged, mortgaged or otherwise securing Senior Loan Obligations or any
liability of the Borrower or any guarantor to such holder, or any
liability incurred directly or indirectly in respect thereof;
(iii) settle or compromise any Senior Loan Obligations or any
security therefor or any liability incurred directly or indirectly in
respect thereof and apply any sums by whomsoever paid and however realized
to the Senior Loan Obligations in any manner or order; and
(iv) fail to take or to record or otherwise perfect, for any
reason or for no reason, any lien or security interest securing Senior
Loan
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Obligations by whomsoever granted, exercise or delay in or refrain from
exercising any right or remedy against the Borrower or any security or any
guarantor or any other Person, elect any remedy and otherwise deal freely
with the Borrower and any security and any guarantor of the Senior Loan
Obligations or any liability of the Borrower or any guarantor to any
holder of Senior Loan Obligations or any liability incurred directly or
indirectly in respect thereof.
(e) Additional Documentation.
(i) The Lender by its acceptance and execution hereof agrees
that it takes this Agreement as an obligation subordinated to the Senior
Loan Obligations and agrees to execute any additional documentation that
may be necessary, in the reasonable opinion of the Senior Agent, to
evidence the subordination of the Lender to the holders of the Senior Loan
Obligations as provided in this Section 8.1.
(ii) The Senior Agent is hereby authorized, and shall have the
right (without any duty) to take such action as may be necessary or
appropriate to effectuate the sobordination provided for in this Section
8.1 including, without limitation, the timely filing of a claim or proof
of debt for the unpaid balance of the Subordinated Indebtedness in the
form required in any Proceeding.
(f) Agreements of Lender. So long as any Senior Loan Obligation is
outstanding, the Lender for itself and its successors and assigns, agrees that
it will not, except as permitted under the Senior Credit Agreement or the Lien
Subordination Agreement, without the prior written consent of a majority of the
holders of the Senior Loan Obligations, (i) modify or amend this Agreement, (ii)
cancel, waive, forgive, transfer or assign or subordinate the Subordinated
Indebtedness to any other Indebtedness of the Borrower or (iii) (A) initiate any
Proceeding involving the Borrower or any other Loan Party pursuant to which it
is sought to adjudicate the Borrower or any other Loan Party bankrupt or
insolvent or (B) exercise or assert any right or remedy, by suit or otherwise,
against the Borrower or any other Loan Party in respect of the Subordinated
Indebtedness (provided that nothing herein shall prevent the Lender from filing
a claim, proof of debt or statement of interest with respect to the Obligations
in any Proceeding).
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Article IX
EVENTS OF DEFAULT
Section 9.1 Events of Default. Each of the following events shall be
an Event of Default:
(a) Failure to Repay Principal. The Borrower shall fail to pay any
principal of any Loan when the same becomes due and payable; or
(b) Failure to Pay Interest. The Borrower shall fail to pay any
interest on any Loan, any fee under any Loan Document or any other Obligation
(other than those subject to Section 9.1(a) (Failure to Repay Principal)) and
such non-payment continues for a period of five (5) Business Days after the due
date therefor; or
(c) Borrowing Base Deficiency. A Borrowing Base Deficiency shall
exist and be continuing for a period of more than 30 days (or such other longer
grace period as is provided for such failure in the Indenture), after a
Responsible Officer of the Borrower first becomes aware of such Borrowing Base
Deficiency; or
(d) Representation and Warranties. 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
(e) Covenants. Any Loan Party shall fail to perform or observe (i)
any term, covenant or agreement contained in Section 5.1 (Financial Statements)
or Article VII (Negative Covenants), 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 (10) days after
the earlier of the date on which (A) a Responsible Officer of the Borrower
becomes aware of such failure or (B) written notice thereof shall have been
given to the Borrower by the Lender; or
(f) Unenforceability of Collateral Documents. Any material provision
of any Collateral Document or any Subordinated Guaranty after delivery thereof
pursuant to this Agreement or any other Loan Document shall for any reason cease
to be valid and binding on, or enforceable against, any Loan Party party
thereto, or any Loan Party shall so state in writing; or
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(g) Unenforceability of Liens. Any Lien purported to be created
pursuant to any Loan Document shall for any reason fail or cease to be created
thereby or, except as permitted by any Loan Document, such a Lien shall fail or
cease to be a perfected Lien or Borrower shall state in writing any of the
foregoing; or
(h) Default Under Other Indebtedness. (i) The Borrower or any of its
Material Subsidiaries shall fail to make any payment on any Indebtedness of the
Borrower or any such Material Subsidiary (other than the Obligations) or any
Guaranty Obligation in respect of Indebtedness of any other Person, and, in each
case, such failure relates to Indebtedness having a principal amount not less
than ten million Dollars ($10,000,000) (individually or in the aggregate with
other Indebtedness to which this clause (h) would otherwise apply), when the
same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise); or (ii) 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 (iii) any
such Indebtedness shall become or be declared to be due and payable, or required
to be prepaid or repurchased (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or (iv) there shall have been
a failure of any of the Obligations or the Senior Loan Obligations to be
permitted under the Indenture (without regard to any grace period provided for
such failure by the Indenture);
(i) Bankruptcy, Etc. (i) The Borrower or any of its Material
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 (ii) any proceeding shall be
instituted by or against the Borrower or any of its Material Subsidiaries
seeking to adjudicate it bankrupt or insolvent or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief or composition
of it or its debts under any Requirement of 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 custodian, receiver, trustee or other
similar official for it or for any substantial part of its property; provided,
however, that, in the case of any such proceeding instituted against the
Borrower or any of its Material Subsidiaries (but not instituted by the Borrower
or such Material Subsidiary), either such proceeding shall remain undismissed or
unstayed for a period of thirty (30) days or more or any of the actions sought
in such proceedings shall occur; or (iii) the Borrower or any of its Material
Subsidiaries shall take any corporate action to authorize any of the actions set
forth above in this subsection (i); or
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(j) Orders. One or more judgments or Orders (or other similar
process) involving, in any single case or in the aggregate, an amount in excess
of ten million Dollars ($10,000,000) in the case of a money judgment, if not
fully covered by insurance, shall be rendered against the Borrower or any of its
Material 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 thirty (30) consecutive days during which a stay of enforcement of
such judgment or Order, by reason of a pending appeal or otherwise, shall not be
in effect; or
(k) Event of Default. The Senior Agent shall declare an "Event of
Default" within the meaning specified in Article IX of the Senior Credit
Agreement and such "Event of Default" shall be continuing; or
(1) Material Adverse Change. There shall occur a Material Adverse
Change or any event or circumstances which could have a Material Adverse Effect;
or
(m) Change of Control. There shall occur any Change of Control; or
(n) ERISA Event. An ERISA Event shall occur and the amount of all
liabilities and deficiencies resulting therefrom, whether or not assessed, and
all waiver requests resulting therefrom, exceeds ten million Dollars
($10,000,000) in the aggregate; or
(o) Environmental Law Violation. The Borrower or any of its Material
Subsidiaries shall have entered into one or more consent or settlement decrees
or any Contractual Obligation, agreement or similar arrangement with a
Governmental Authority or any judgment, Order, decree or similar actions shall
have been entered against one or more of the Borrower or any of its Material
Subsidiaries, in either case based on or arising from the violation of or
pursuant to, any Environmental Law or the generation, storage, transportation,
treatment, disposal or Release of any Contaminant and, in correction with all of
the foregoing, the Borrower and its Material Subsidiaries are likely to incur
Environmental Liabilities and Costs in excess of twenty-five million Dollars
($25,000,000) in the aggregate in any Fiscal Year.
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Section 9.2 Remedies. Subject to the provisions of the Lien
Subordination Agreement and Article VIII (Subordination) hereof, during the
continuance of any Event of Default, the Lender (a) may, by notice to the
Borrower, declare that all or any portion of the Commitment be terminated,
whereupon the obligation of Lender to make any Loan shall immediately terminate
and (b) may, by notice to the Borrower, declare the Loans, all interest thereon
and all other amounts and Obligations payable under this Agreement to be
forthwith due and payable, whereupon the Loans, all such interest and all such
amounts and Obligations shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower; provided, however, that upon the
occurrence of any Event of Default specified in Section 9.1(i) (Bankruptcy,
Etc.), (x) the Commitment of Lender to make Loans shall automatically be
terminated and (y) the Loans, all interest thereon and all other amounts and
Obligations payable under this Agreement 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, but still subject to the provisions of the Lien
Subordination Agreement and Article VIII (Subordination) hereof, the Lender may
exercise any remedies provided for by the Collateral Documents in accordance
with the terms thereof or any other remedies provided by applicable Requirements
of Law.
Notwithstanding anything to the contrary in this Article IX, to the
extent the Borrower is prohibited pursuant to Section 8.5(b) of the Senior
Credit Agreement or Section 8.1(b)(i) hereof from paying any amount (other than
on the Scheduled Termination Date) otherwise due and payable under any Loan
Document, such failure to pay shall not constitute an Event of Default hereunder
until the earlier to occur of (i) three Business Days following the day such
prohibition ceases to exist and (ii) the Scheduled Termination Date. Interest
shall accrue on any such amounts, the payment of which is so prohibited, from
the date such amounts are otherwise due and payable hereunder to the date of
payment at the rate which is two percent (2%) per annum in excess of the rate of
interest otherwise applicable to such Obligations from time to time, or if no
rate is theretofore applicable, at the rate which is two percent (2%) per annum
above Base Rate.
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Article X
MISCELLANEOUS
Section 10.1 Amendments, Waivers, Etc. No amendment, restatement or
waiver of any provision of this Agreement or any other Loan Document nor consent
to any departure by Borrower therefrom shall in any event be effective unless
the same shall be in writing and signed by the Lender and, in the case of any
amendment, by the Borrower, and then any such waiver, restatement or consent
shall be effective only in the specific instance and for the specific purpose
for which given. Following notification by the Senior Agent that a waiver,
restatement or amendment is intended to be made to any of the definitions,
conditions precedent, conditions, representations and warranties, covenants or
events of defaults in the Senior Credit Agreement, the Lender and Borrower
shall, as appropriate, enter into a waiver or, as applicable, an amendment to or
restatement of this Agreement to effect such waiver, restatement or amendment to
the corresponding definitions, conditions precedent, conditions, representations
and warranties, covenants or events of defaults of this Agreement. Such waiver,
restatement or amendment shall become effective contemporaneously with the
waiver under, restatement or amendment of the Senior Credit Agreement. As
consideration for any such waiver, restatement or amendment, the Lender shall be
entitled to receive from the Borrower, prior to the effectiveness of any such
waiver, restatement or amendment, an amount equal to that portion of the
aggregate consideration paid or to be paid to the lenders and agents under the
Senior Credit Agreement in respect of such waiver, restatement or amendment
thereunder, which at such time is equal to the proportion that the Commitment
hereunder bears to the aggregate commitments under the Senior Credit Agreement.
In the event that the Lender fails to enter into any such waiver, restatement or
amendment which it is obligated to execute pursuant to this Section 10.1, the
Lender shall not be entitled to rely upon any provisions of this Agreement which
should have been so amended as giving rise to a Default or Event of Default
hereunder.
Section 10.2 Assignment.
Notwithstanding anything to the contrary herein, the Lender may
sell, transfer, negotiate or assign to one or more Eligible Assignees (of which
it has given prior written notice to the Borrower and Senior Agent) all or a
portion of its rights and obligations hereunder (including all of its rights and
obligations with respect to the Loans). Upon the assignment by Lender to an
Eligible Assignee, such Eligible Assignee shall thereupon succeed to, and become
vested with, all of the rights, powers, privileges and duties of the Lender
under this Agreement and the other Loan
86
Documents and expressly subject to the subordination provisions therein. After
any such assignment hereunder, the provisions of Article X shall inure to the
benefit of such assigning Lender, its Affiliates, and their respective
directors, officers, employees, agents and advisors as to any action taken, or
omitted to be taken, by such assigning Lender while such retiring assigning
Lender was Lender under this Agreement and the other Loan Documents. Any such
assignment to an Eligible Assignee, shall only become effective immediately
following such Eligible Assignee's agreement in writing delivered to the Senior
Agent to be bound by the terms of this Agreement, including, without limitation,
Article VIII hereof, and the Lien Subordination Agreement. Upon an assignment by
the Lender of all its rights and obligations hereunder, the Lender may transfer
all items of Collateral held under the Collateral Documents and execute and
deliver to such Eligible Assignee such amendments to financing statements, and
take such other actions as may be necessary or appropriate in connection with
the assignment to such Eligible Assignee of the security interests created under
the Collateral Documents.
Section 10.3 Costs; Expenses; Indemnities.
(a) Reimbursement of Costs and Expenses. The Borrower agrees upon
demand to pay, or reimburse the Lender for, all of its reasonable internal and
external audit, legal, appraisal, valuation, filing, document duplication and
reproduction and investigation expenses and for all other reasonable
out-of-pocket costs and expenses of every type and nature (including, without
limitation, the reasonable fees, expenses and disbursements of the Lender's
counsel, Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, local legal counsel,
auditors, accountants, appraisers, printers, insurance and environmental
advisers and other consultants and agents) incurred by the Lender in connection
with (i) the Lender's audit and investigation of the Borrower and its
Subsidiaries in connection with the preparation, negotiation and execution of
the Loan Documents and the Lender's periodic audits of the Borrower and its
Subsidiaries, as the case may be, (ii) the preparation, negotiation, execution
and interpretation of this Agreement (including, without limitation, the
satisfaction or attempted satisfaction of any of the conditions set forth in
Article III (Conditions Precedent to the Effectiveness of this Agreement and to
Loans)), the Loan Documents and any proposal letter or commitment letter issued
in connection therewith and the making of the Loans hereunder, (iii) the
creation, perfection or protection of the Liens under the Loan Documents
(including without limitation, any reasonable fees and expenses for local
counsel in various jurisdictions), (iv) the ongoing administration of this
Agreement and the Loans, including consultation with attorneys in connection
therewith and with respect to the Lender's rights and responsibilities hereunder
and under the other Loan Documents, (v) the repayment, financing or
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refinancing of any Borrowing hereunder (including, without limitation, any fees
or breakage costs in connection therewith), (vi) the protection, collection or
enforcement of any of the Obligations or the enforcement of any of the Loan
Documents, (vii) the commencement, defense or intervention in any court
proceeding relating in any way to the Obligations, any Loan Party, any of the
Borrower's Subsidiaries, the Related Documents, the Existing Subordinated Credit
Agreement, this Agreement or any of the other Loan Documents, (viii) the
response to, and preparation for, any subpoena or request for document
production with which the Lender is served or deposition or other proceeding in
which the Lender is called to testify, in each case, relating in any way to the
Obligations, any Loan Party, any of the Borrowers' Subsidiaries, the Related
Documents, the Existing Subordinated Credit Agreement, this Agreement or any of
the other Loan Documents and (ix) any amendments, consents, waivers,
assignments, restatements, or supplements to any of the Loan Documents and the
preparation, negotiation, and execution of the same. The Borrower further agrees
to pay or reimburse the Lender upon demand for all out-of-pocket costs and
expenses, including, without limitation, reasonable attorneys' fees (including,
without limitation, allocated costs of internal counsel and costs of
settlement), incurred by the Lender (A) in enforcing any Loan Document or
Obligation or any security therefor or exercising or enforcing any other right
or remedy available by reason of an Event of Default, (B) in connection with any
refinancing or restructuring of the credit arrangements provided hereunder in
the nature of a "work-out" or in any insolvency or bankruptcy proceeding, (C) in
commencing, defending or intervening in any litigation or in filing a petition,
complaint, answer, motion or other pleadings in any legal proceeding relating to
the Obligations, any Loan Party, any of the Borrowers' Subsidiaries and related
to or arising out of the transactions contemplated hereby or by any of the other
Loan Documents or Related Documents and (D) in taking any other action in or
with respect to any suit or proceeding (bankruptcy or otherwise) described in
clauses (A) through (C) above.
(b) Indemnification Against Third-Party Claims. The Borrower agrees
to indemnify and hold harmless the Lender and its Affiliates, and each of the
directors, officers, employees, agents, representatives, attorneys, consultants
and advisors of or to any of the foregoing (including those retained in
connection with the satisfaction or attempted satisfaction of any of the
conditions set forth in Article III (Conditions Precedent to the Effectiveness
of this Agreement and to Loans) (each such Person 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 fees and disbursements of counsel to any such
Indemnitee) that may be imposed on, incurred by or asserted against any such
Indemnitee in connection with or arising out of any investigation,
88
litigation or proceeding, whether or not any such Indemnitee is a party thereto,
whether direct, indirect, or consequential and whether based on any federal,
state or local law or other statutory regulation, securities or commercial law
or regulation, or under common law or in equity, or on contract, tort or
otherwise, in any manner relating to or arising out of the Existing Subordinated
Credit Agreement, this Agreement, any other Loan Document, any Obligation, any
Related Document, or any act, event or transaction related or attendant to any
thereof, or the financing or refinancing by the Lender of Borrowings hereunder,
the use or intended use of the proceeds of the Loans or in connection with any
investigation of any potential matter covered hereby, but not otherwise
-----------------
(collectively, the "Indemnified Matters"); provided, however, that the Borrower
shall not have any obligation under this Section 10.3(b) to an Indemnitee with
respect to any Indemnified Matter caused by or resulting from (i) the gross
negligence or willful misconduct of that Indemnitee, as determined by a court of
competent jurisdiction in a final non-appealable judgment or order or (ii) such
Indemnitee being an Affiliate of the Borrower. Without limiting the foregoing,
Indemnified Matters include (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 involving any property subject to a Collateral Document,
or damage to real or personal property or natural resources or harm or injury
alleged to have resulted from any Release of Contaminants on, upon or into such
property or any contiguous real estate; (ii) any costs or liabilities incurred
in connection with any Remedial Action concerning 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 under any Environmental Law, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 49 U.S.C. ss.
ss. 9601 et seq. and applicable state property transfer laws, whether, with
respect to any such matters, 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
property of the Borrower or any of its Subsidiaries by virtue of foreclosure,
except, with respect to those matters referred to in clauses (i), (ii), (iii)
and (iv) above, to the extent (A) incurred following foreclosure by the Lender,
the Lender having become the successor in interest to the Borrower or any of its
Subsidiaries and (B) attributable solely to acts of the Lender, or any agent on
behalf of the Lender.
(c) Eurodollar Loans. If Lender receives any payment of principal of
any Eurodollar Rate Loan other than on the last day of an Interest Period
relating to such Loan, whether as a result of any payment made by the Borrower
or acceleration of the maturity of the Loans pursuant to Section 9.2 (Remedies)
or for
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any other reason, the Borrower shall, upon demand by the Lender, pay to the
Lender all amounts required to compensate Lender for any additional losses,
costs or expenses which it may reasonably incur as a result of such payment or
conversion, including any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by Lender to
fund or maintain such Loan.
(d) Reimbursement of Brokerage Fees. The Borrower shall indemnify
the Lender for, and hold the Lender harmless from and against, any and all
claims for brokerage commissions, fees and other compensation made against the
Lender for any broker, finder or consultant with respect to any agreement,
arrangement or understanding made by or on behalf of Borrower or any of its
Material Subsidiaries in connection with the transactions contemplated by the
Existing Subordinated Credit Agreement and this Agreement.
(e) Notification of the Borrower. The Lender agrees that, in the
event that any such investigation, litigation or proceeding set forth in clause
(b) above is asserted or threatened in writing or instituted against it or any
other Indemnitee, or any Remedial Action is requested of it or any of its
officers, directors, employees and agents, for which any Indemnitee may desire
indemnity or defense hereunder, such Indemnitee shall promptly notify the
Borrower in writing.
(f) Defense of Proceedings. The Borrower, at the request of any
Indemnitee, shall have the obligation to defend against such investigation,
litigation or proceeding or requested Remedial Action and the Borrower, in any
event, may participate in the defense thereof with legal counsel of the
Borrower's choice. In the event that such Indemnitee requests the Borrower to
defend against such investigation, litigation or proceeding or requested
Remedial Action, the Borrower shall promptly do so and such Indemnitee shall
have the right to have legal counsel of its choice participate in such defense.
No action taken by legal counsel chosen by such Indemnitee in defending against
any such investigation, litigation or proceeding or requested Remedial Action,
shall vitiate or in any way impair the Borrower's obligation and duty hereunder
to indemnify and hold harmless such Indemnitee.
(g) Survival. The Borrower agrees that any indemnification or other
protection provided to any Indemnitee pursuant to this Agreement (including
pursuant to this Section 10.3) or any other Loan Document shall (i) survive
payment in full of the Obligations and (ii) inure to the benefit of any Person
who was at any time an Indemnitee under this Agreement or any other Loan
Document.
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(h) Limitation of Liability. The Borrower agrees that no Indemnitee
shall have any liability (whether direct or indirect, in contract, tort or
otherwise) to Borrower or any of its respective Subsidiaries or any of their
respective equity holders or creditors for, or in connection with the
transactions contemplated hereby and in the other Loan Documents and Related
Documents, except for direct damages (as opposed to special, indirect,
consequential or punitive damages, including, without limitation, any loss of
profits, business or anticipated savings) determined in a final non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnitee's gross negligence or willful misconduct. The Borrower hereby waives,
releases and agrees (for itself and on behalf of its Subsidiaries) not to ▇▇▇
upon any such claim for any special, indirect, consequential or punitive
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
Section 10.4 Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Lender and each Affiliate thereof is
hereby authorized at any time and from time to time, to the fullest extent
permitted by Requirements of Law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other Indebtedness at any time owing by the Lender or its Affiliates to or for
the credit or the account of the Borrower against any and all of the Obligations
now or hereafter existing whether or not the Lender shall have made any demand
under this Agreement or any other Loan Document and although such Obligations
may be unmatured. The Lender agrees promptly to notify the Borrower after any
such set-off and application made by the Lender or its Affiliates; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Lender under this Section 10.4
are in addition to the other rights and remedies (including other rights of
set-off) that the Lender may have; provided, however, that the terms of this
Section 10.4 are subject to the provisions of Article VIII hereof and of the
Lien Subordination Agreement.
Section 10.5 Third Party Reliance. The parties hereto understand and
agree that the provisions of Article VIII (Subordination) and Sections 10.2
(Assignment) and 10.9 (Notices, Etc.) are for the benefit of the Senior Agent,
Senior Lenders and Senior Issuers from time to time party to the Senior Credit
Agreement (in addition to the parties hereto), create independent rights thereof
and may be enforced independently thereby.
91
Section 10.6 Independence of Representations and Warranties. The
parties hereto intend that each representation, warranty and covenant contained
herein shall have independent significance. If the Borrower has breached any
representation, warranty or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) that the
Borrower has not breached shall not detract from or mitigate the fact that such
party is in breach of the first representation, warranty or covenant.
Section 10.7 Governing Law. This Agreement and the rights and
obligations of the parties hereto shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to the
conflict of law rules thereof other than Section 5-1401 of the New York General
Obligations Law.
Section 10.8 Submission to Jurisdiction; Consent to Service of
Process.
(a) Any legal action or proceeding arising out of, or in connection
with, this Agreement or any other Loan Document may be brought in the courts of
the State of New York (located in the Borough of Manhattan in the City 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 excepts
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 any objection to the laying of venue or based on
the grounds of forum non conveniens, that any of them may now or hereafter have
to the bringing of any such action or proceeding in such respective
jurisdictions.
(b) The Borrower hereby irrevocably consents to the service of any
and all legal process, summons, notices and documents in any suit, action or
proceeding brought in the United States of America arising out of or in
connection with this Agreement or any of the other Loan Documents by the mailing
(by registered or certified mail, postage prepaid) or delivering of a copy of
such process to the Borrower at its address specified in Section 10.9 (Notices,
Etc.). The Borrower agrees that a final judgment in any such suit, 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) Nothing contained in this Section 10.8 shall affect the right of
the Lender to serve process in any other manner permitted by law or commence
legal
92
proceedings or otherwise proceed against the Borrower or any other Loan Party in
any other jurisdiction.
(d) If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder in Dollars into another currency, the
parties hereto agree, to the fullest extent that they may effectively do so,
spot the rate of exchange used shall be that at which in accordance with normal
banking procedures the Lender could purchase Dollars with such other currency at
the spot rate of exchange quoted by the Lender at 11:00 a.m. (New York time) on
the Business Day preceding that on which final judgment is given, for the
purchase of Dollars, for delivery two Business Days thereafter.
(e) Waiver of Jury Trial. EACH OF THE LENDER AND THE BORROWER HEREBY
IRREVOCABLY WAIVES TRIAL BY JURY IN ANY LEGAL PROCEEDING OR OTHER ACTION OR
PROCEEDING WITH RESPECT TO, ARISING OUT OF, OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT.
Section 10.9 Notices, Etc. All notices, demands, requests and other
communications provided for in this Agreement shall be given in writing, or by
any telecommunication device capable of creating a written record (including
electronic mail), and addressed to the party to be notified as follows:
(a) if to the Borrower:
NATIONAL STEEL CORPORATION
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy no: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Addresses: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
----------------------------
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
---------------------------
93
(b) if to the Lender:
NUF LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Address: ▇▇▇▇▇▇_▇▇▇▇▇▇▇▇▇-▇@▇▇▇▇▇.▇▇▇▇▇.▇▇▇.▇▇.▇▇
with a copy to:
SKADDEN, ARPS, SLATE, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Address: ▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
or at such other address as shall be notified in writing (i) in the case of the
Borrower, to the Lender and (ii) in the case of the Lender, to the Borrower. All
such notices and communications shall be effective upon personal delivery (if
delivered by hand, including any overnight courier service), when deposited in
the mails (if sent by mail), or when properly transmitted (if sent by a
telecommunications device or through the Internet); provided, however, that
notices and communications to the Lender shall not be effective until received
by the Lender.
Section 10.10 No Waiver; Remedies. No failure on the part of Lender
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 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 under any Requirement of Law.
Section 10.11 Execution in Counterpart; Effectiveness; Assignments
by the Borrower.
(a) This Agreement may be executed in any number of counterparts and
by different parties in separate counterparts, each of which when so executed
shall be deemed to be an original, and all of which taken together shall
94
constitute one and the same agreement. Delivery of an executed signature page of
this Agreement by facsimile transmission shall be as effective as delivery of a
manually executed counterpart hereof. A set of the copies of this Agreement
signed by both parties shall be lodged with the Lender. Signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are attached to the same document.
(b) This Agreement shall become effective when it shall have been
executed by the Borrower and Lender aid when each of the conditions set forth in
Section 3.1 (Conditions Precedent to the Effectiveness of this Agreement) shall
have been satisfied (or satisfaction of such conditions shall have been duly
waived), and thereafter this Agreement shall be binding upon and inure to the
benefit of the Borrower, the Lender and their respective successors and
permitted assigns. The Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of Lender.
Section 10.12 Entire Agreement. This Agreement, together with all of
the other Loan Documents and all certificates and documents delivered hereunder
and thereunder, embodies the entire agreement of the parties and supersedes all
prior Contractual Obligations relating to the subject matter hereof (and any
such prior Contractual Obligations are hereby terminated and of no further force
and effect).
Section 10.13 Further Assurances. The Borrower and the Lender each
agrees to execute and deliver such other documents or agreements and to take
such other action as may be reasonably necessary or desirable for the
implementation of this Agreement and the consummation of the transactions
contemplated hereby.
[Signature Page Follows]
95
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, on this
___th of December 2001.
NATIONAL STEEL CORPORATION,
as Borrower
By:_______________________________
Title:
NUF LLC,
as Lender
By:_______________________________
Title:
SCHEDULES
---------
Schedule 1.1 - Non-Material Subsidiaries
Schedule 4.2 - Permits
Schedule 4.7 - Litigation
Schedule 4.11 - Material Subsidiaries
Schedule 4.12 - Employee Benefit Plans
Schedule 4.14 - Amendments to Related Documents
Schedule 4.16 - Joint Ventures and Partnerships
Schedule 4.22 - Disposal Facilities
Schedule 4.25 - Existing Indebtedness
Schedule 4.26 - Deposit Accounts
Schedule 7.1 - Existing Liens
Schedule 7.3 - Existing Negative Pledges
Schedule 7.7 - Existing Investments
Schedule 7.10 - Modification of Related Documents
EXHIBITS
--------
Exhibit A - Form of Subordinated Credit Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Conversion or Continuation
Exhibit D - Lien Subordination Agreement
Exhibit E-1 - Form of Bailee's Letter
Exhibit E-2 - Form of Landlord's Waiver
Exhibit E-3 - Form of Mortgagee's Waiver
Exhibit F - Form of Opinion of Counsel for the Loan Parties
Exhibit G - Form of Subordinated Pledge and Security Agreement
Exhibit H - Form of Subordinated Guaranty
Exhibit I - Indenture
EXHIBIT A
FORM OF
SUBORDINATED REVOLVING CREDIT NOTE
THIS NOTE AND THE INDEBTEDNESS EVIDENCED HEREBY IS SUBJECT TO A CERTAIN LIEN
SUBORDINATION AGREEMENT, DATED AS OF SEPTEMBER 28, 2001 BY AND AMONG CITICORP
USA, INC., NUF LLC, NATIONAL STEEL CORPORATION, NATIONAL STEEL PELLET COMPANY,
NS HOLDINGS CORPORATION, NATIONAL STEEL FUNDING CORPORATION, PROCOIL CORPORATION
AND EACH OTHER ENTITY WHICH BECOMES A PARTY THERETO PURSUANT TO THE TERMS
THEREOF ("SUBORDINATION AGREEMENT").
U.S. $100,000,000 Dated: September 28, 2001
FOR VALUE RECEIVED, the undersigned, NATIONAL STEEL CORPORATION, a
Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
--------
NUF LLC, a Delaware limited liability company (the "Lender") the principal sum
------
of one hundred million United States Dollars ($100,000,000), or, if less, the
aggregate unpaid principal amount of all Revolving Loans (as defined in the
Subordinated Credit Agreement referred to below) of the Lender to the Borrower,
payable at such times, and in such amounts, as are specified in the Subordinated
Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount
of the Revolving Loans from the date made until such principal amount is paid in
full, at such interest rates, and payable at such times, as are specified in the
Subordinated Credit Agreement.
Both principal and interest are payable in lawful money of the
United States of America to NUF LLC at Account Number 001-008615 at The Fuji
Bank and Trust Company (ABA Number ▇▇▇▇▇▇▇▇▇), in immediately available funds.
The Revolving Loans made by the Lender to the Borrower, and all payments made on
account of the principal thereof, shall be recorded by the Lender and, prior to
any transfer hereof, endorsed on this Subordinated Note.
This Subordinated Note is one of the Subordinated Revolving Credit
Notes referred to in, and is entitled to the benefits of, the Amended and
Restated Subordinated Credit Agreement, dated as of September 28, 2001, with the
Lender (said Amended and Restated Subordinated Credit Agreement, as it may be
amended or otherwise modified from time to time, being the "Subordinated Credit
-------------------
Agreement and capitalized terms used
---------
A-1
SUBORDINATED CREDIT AGREEMENT
NATIONAL STEEL CORPORATION
NUF LLC
EXHIBIT A
herein but not defined herein being used herein as defined in the Subordinated
Credit Agreement). The Subordinated Credit Agreement, among other things, (i)
provides for the making of Revolving Loans by the Lender to the Borrower in an
aggregate amount not to exceed at any time outstanding the United States dollar
amount first above mentioned, the indebtedness of the Borrower resulting from
such Revolving Loans being evidenced by this Subordinated Note and (ii) contains
provisions for acceleration of the maturity of the unpaid principal amount of
this Subordinated Note upon the happening of certain stated events and also for
prepayments on account of the principal hereof prior to the maturity hereof upon
the terms and conditions therein specified.
This Subordinated Note is entitled to the benefits of certain
guaranties and is secured as provided in the Loan Documents (as defined in the
Subordinated Credit Agreement), subject to the terms of the Subordination
Agreement.
Demand, presentment, protest and notice of nonpayment and protest
are hereby waived by the Borrower.
The Indebtedness evidenced by this Note is expressly subordinate and
subject in right of payment, on terms more specifically set out in the
Subordinated Credit Agreement and subject to the terms of the Subordination
Agreement, to the prior payment in full in cash of all Senior Indebtedness.
This Subordinated Note shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York, without regard
to any choice or conflict of law provision or rule thereof that would result in
the application of the law of any other jurisdiction.
NATIONAL STEEL CORPORATION
By: __________________________
Name:
Title:
A-2
SUBORDINATED CREDIT AGREEMENT
NATIONAL STEEL CORPORATION
NUF LLC
EXHIBIT A
LOANS AND PAYMENTS OF PRINCIPAL
Amount Amount of Principal Notation
Date of Loan Paid or Prepaid Made by
---- ------- --------------- -------
A-3
EXHIBIT B
---------
FORM OF
NOTICE OF BORROWING
NUF LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
[Date]
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
RE: NATIONAL STEEL CORPORATION
--------------------------
Gentlemen:
The undersigned, National Steel Corporation, refers to the Amended
and Restated Subordinated Credit Agreement, dated as of September 28, 2001,
between NATIONAL STEEL CORPORATION, a Delaware corporation (the "Borrower") and
--------
NUF LLC (the "Lender") (said Amended and Restated Subordinated Credit Agreement,
as it may be amended or otherwise modified from time to time, being the
"Subordinated Credit Agreement" and capitalized terms used herein but not
-----------------------------
defined herein being used herein as defined in the Subordinated Credit
Agreement) and hereby gives you notice, irrevocably, pursuant to Section 2.2
(Borrowing Procedures) of the Subordinated Credit Agreement that the undersigned
hereby requests a Borrowing under the Subordinated Credit Agreement and, in that
connection, sets forth below the information relating to such Borrowing (the
"Proposed Borrowing") as required by Section 2.2 of the Subordinated Credit
Agreement:
(i) The Business Day of the Proposed Borrowing is ________, __.
(ii) The aggregate amount of the Proposed Borrowing is $_____,
consisting of Eurodollar Rate Loans having an initial Interest Period
of [l] [2] [3] months] [or] [consisting of Base Rate Loans]/1/.
----------
/1/ Only if Scheduled Termination Date is within I month of date of Proposed
Borrowing.
B-1
SUBORDINATED CREDIT AGREEMENT
NATIONAL STEEL CORPORATION
NUF LLC
EXHIBIT B
The undersigned hereby certifies that as of the close of the
business on the Business Day immediately preceding the date hereof:
(a) the aggregate of outstanding loans under the Senior Credit
Agreement is $ _____; and
(c) the Available Credit (as defined in the Senior Credit
Agreement) is ______.
The following statements are true on the date hereof, and will be
true on the date of the Proposed Borrowing, before and after giving effect
thereto and to the application of the proceeds therefrom:
(A) the representations and warranties contained in Article IV
(Representations and Warranties) of the Subordinated Credit
Agreement and in each of the other Loan Documents are true and
correct as though made on and as of such date;
(B) no Borrowing Base Deficiency exists or will result from
the Proposed Borrowing;
(C) no Default or Event of Default exists or will result from
the Proposed Borrowing;
(D) in respect of the Senior Credit Agreement:
(1) a Cash Dominion Period is [not] continuing;
(2) a Reduced Availability Period is [not] continuing;
and
(3) no Default or Event of Default (as defined in the
Senior Credit Agreement) exists or will result
from the Proposed Borrowing;
(E) the Proposed Borrowing does not violate any Requirement of
Law;
B-2
SUBORDINATED CREDIT AGREEMENT
NATIONAL STEEL CORPORATION
NUF LLC
EXHIBIT B
(F) the Proposed Borrowing does not violate any provision of
the Indenture, including without limitation, Section 4.05 thereof
and the Proposed Borrowing will constitute "Permitted Debt" as
defined in the Indenture; and
(G) the proceeds of the Loans requested hereby are to be used
for general working capital and corporate purposes of the Borrower
and not to refinance existing Indebtedness of the Borrower or any of
---
its Subsidiaries nor for the payment of transaction costs, fees and
expenses related to any such refinancing.
Very truly yours,
NATIONAL STEEL CORPORATION
By:__________________________
Name:
Title:
copy to: Citicorp USA Inc., as Senior Agent
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
B-3
AMENDED AND RESTATED SUBORDINATED CREDIT AGREEMENT
NATIONAL STEEL CORPORATION
NUF LLC
EXHIBIT C
EXHIBIT C
---------
FORM OF
NOTICE OF CONVERSION OR CONTINUATION
NUF LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ [Date]
Re: NATIONAL STEEL CORPORATION
--------------------------
Gentlemen:
The undersigned, National Steel Corporation (the "Borrower"), refers
--------
to the Amended and Restated Subordinated Credit Agreement, dated as of September
28, 2001, with NUF LLC, a Delaware limited liability company, Lender (said
Amended and Restated Subordinated Credit Agreement, as it may be amended or
otherwise modified from time to time, being the "Subordinated Credit Agreement"
-----------------------------
and capitalized terms used herein but not defined herein being used herein as
defined in the Subordinated Credit Agreement) and hereby gives you notice
pursuant to Section 2.9 (Conversion/Continuation Option) of the Subordinated
Credit Agreement that the undersigned hereby requests a [conversion]/1/
[continuation] on _________ __, ____ (the "Relevant Date") of $__________ in
principal amount of presently outstanding Loans that are Eurodollar Rate Loans
having an Interest Period ending on __________ __, 200_ [to] [as] [Base Rate]
[Eurodollar Rate] Loans. The Interest Period for such amount requested to be
continued as Eurodollar Rate Loans is [1] [2] [3] months.
----------
/1/ Only applicable if Schedule Termination Date is within 1 month of proposed
conversion.
AMENDED AND RESTATED SUBORDINATED CREDIT AGREEMENT
NATIONAL STEEL CORPORATION
NUF LLC
EXHIBIT C
The undersigned hereby certifies that as of the close of the
business on the Business Day immediately preceding the date hereof:
(a) the aggregate of outstanding loans under the Senior Credit
Agreement is $ _______; and
(b) the Available Credit (as defined in the Senior Credit
Agreement) is $ _________.
The following statements are true on the date hereof, and will be
true on the Relevant Date (save as disclosed on the attached Schedule), before
and after giving effect to the continuation or conversion:
(A) the representations and warranties contained in Article IV
(Representations and Warranties) of the Subordinated Credit
Agreement and in each of the other Loan Documents are true and
correct as though made on and as of such date;
(B) no Borrowing Base Deficiency exists or will result from
the continuation or conversion;
(C) no Default or Event of Default exists or will result from
the continuation or conversion;
(D) no Material Adverse Change has occurred since the
Effective Date;
(E) in respect of the Senior Credit Agreement:
(1) a Cash Dominion Period is [not] continuing
(2) a Reduced Availability Period is [not] continuing
2
AMENDED AND RESTATED SUBORDINATED CREDIT AGREEMENT
NATIONAL STEEL CORPORATION
NUF LLC
EXHIBIT C
(3) no Default or Event of Default (as defined in the
Senior Credit Agreement) exists or will result from the
continuation or conversion.
(F) the proposed conversion or continuation would not violate:
(i) any Requirement of Law; (ii) any provision of the Indenture,
including without limitation, Section 4.05 thereof, and the Loans so
converted or continued would constitute "Permitted Debt" as defined
in the Indenture; and (iii) any of the provisions of Section 2.12
(Special Provisions Governing Eurodollar Rate Loans) of the
Subordinated Credit Agreement.
Very truly yours,
NATIONAL STEEL CORPORATION
By:__________________________
Name:
Title:
copy to: Citicorp USA Inc., as Senior Agent
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
3
EXHIBIT E-1 FORM OF BAILLE'S LETTER
[Letterhead of Company]
, 200
--------- -
[NAME AND ADDRESS OF BAILEE]
Re: National Steel Corporation
Ladies and Gentlemen:
This letter is to confirm that National Steel Corporation (the
"Company"), from time to time, delivers merchandise to you for processing or
warehousing storage (such merchandise heretofore or hereafter delivered to you
being referred to as "Bailed Goods") and that title to the Bailed Goods remains
with the Company at all times.
This letter is also to advise you that, pursuant to a certain
Subordinated Pledge and Security Agreement (the "Subordinated Pledge and
Security Agreement") executed by the Company, the Company has granted to NUF LLC
(the "Lender"), a security interest in, among other things, all of the Company's
inventory, including, without limitation, the Bailed Goods, to secure
obligations of the Company under a certain Amended and Restated Subordinated
Credit Agreement dated as of September 28, 2001 (the "Subordinated Credit
Agreement") between the Company and the Lender.
This letter serves as notice to you pursuant to Section 9-312(d) of
the Uniform Commercial Code of the Lender's interest in the Bailed Goods. In
order to protect the Company's ownership interest and the Lender's security
interests in the Bailed Goods, the Company asks that you execute this letter (i)
to acknowledge and confirm that you are holding the Bailed Goods on bailment for
processing or warehousing, that such Bailed Goods are the Company's property and
subject to the Lender's security interest, that such security interest in the
Bailed Goods shall be senior to all liens, claims and interests, including fees
charged by you for the actual processing or storage of the Bailed Goods and that
you will notify all of your successors and assigns of the existence of the
agreements contained herein and (ii) to evidence your agreement that if, at any
time hereafter, the Lender shall notify you in writing that the Company has
defaulted on its obligations under the Subordinated Credit Agreement, you will
comply with the Lender's written instructions as to the disposition of the
Bailed Goods. Until the Subordinated Credit Agreement has been terminated and
the Lender has been paid in full, you shall not deduct from or offset against
any amounts due and owing by the Company to you at any time hereafter by
applying any of the Bailed Goods in payment for processing or storage services
provided by you to the Company. We agree that you shall
have no liability to the Company if you comply with the Lender's written
directions and the Company agrees to reimburse you for all reasonable costs and
expenses incurred by you as a direct result of such compliance.
Very truly yours,
NATIONAL STEEL CORPORATION
By
---------------------------------
Name:
Title:
NUF LLC
By
---------------------------------
Name:
Title:
Acknowledged and agreed to this day of , 200
----- ---------- -
BAILEE:
By
----------------------------------
Name:
Title:
2
EXHIBIT E-2
FORM OF
LANDLORD'S WAIVER AND CONSENT
THIS LANDLORD'S WAIVER AND CONSENT (this "Consent"), made and entered
as of , 200 , by , (the "Landlord") in favor of NUF
------- - --------------------
LLC (the "Lender").
BACKGROUND:
A. National Steel Corporation (the "Lessee") is the lessee under that
certain lease dated (the "Lease") between the Landlord and the Lessee
---------
covering certain premises located at (the "Premises").
---------
B. Lessee has entered into an Amended and Restated Subordinated Credit
Agreement, dated as of September 28, 2001, with the Lender (the "Subordinated
Credit Agreement").
C. As a condition to extending such loans and other financial
accommodations, the Lender has required, among other things, that the Lessee
grant to the Lender security interests in and liens upon certain assets of the
Lessee, including without limitation all of the Lessee's accounts, inventory,
equipment, general intangibles, investment property, documents, instruments,
chattel paper, cash collateral accounts, blocked accounts, vehicles, book and
records and all other personal property of Lessee, in each case whether now or
hereafter existing or now owned or hereafter acquired (collectively, the
"Collateral"), a portion of which Collateral is and may hereafter be located on
or about the Premises.
NOW, THEREFORE, in order to induce the Lender to extend such loans and
other financial accommodations to the Lessee, which will aid the Lessee in
meeting its obligations to the Landlord, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord hereby agrees with the Lender as follows:
1. The Lender's security interests and liens in the Collateral shall
be superior to any title or interest which the Landlord may at any time have
therein, and, during the term of this Agreement, the Landlord will not assert
against any of the Collateral any title or any statutory, common law,
contractual or possessory lien, including, without limitation, rights of levy or
distraint for rent, all of which the Landlord hereby subordinates in favor of
the Lender.
2. The Landlord hereby agrees that none of the Collateral located on
the Premises shall be deemed to be fixtures and hereby disclaims any and all
right, title, interest or claim in or to the Collateral and any cash or non-cash
proceeds of the Collateral (except with respect to the subordinated landlord
lien referred to in Section 2 above).
---------
3. In the event that Lessee defaults in its obligations under the
Lease, Landlord hereby agrees to give the Lender written notice of default under
the Lease, at the same time and in the same manner as such notice is given to
the Lessee and further agrees that the Lender may, but shall not be obligated
to, cure such defaults, at its option, within the applicable notice and cure
periods.
4. If, for any reason whatsoever, the Landlord either deems itself
entitled to redeem or to take possession of the Premises during the term of the
Lease or intends to sell or otherwise transfer all or any part of its interest
in the Premises, the undersigned will notify the Lender thirty (30) days before
taking such action.
5. If the Lessee defaults on its obligations to the Lender, and, as a
result, the Lender undertakes to enforce its security interest in the
Collateral, the Landlord (a) will cooperate with the Lender in its efforts to
assemble all of the Collateral located on the Premises; (b) will permit the
Lender to remain on the Premises for forty-five (45) days after the Lender
notifies the undersigned of the default, or, at the Lender's option, to remove
the Collateral from the Premises within a reasonable time, not to exceed
forty-five (45) days after the Lender notifies the Landlord of the default,
provided the Lender pays the rental payments due under the Lease for the period
of time the Lender uses the Premises; and (c) will not hinder the Lender's
actions in enforcing its liens on the Collateral, it being agreed that use or
occupancy of the Premises by the Lender as set forth herein shall not constitute
an assumption by the Lender of the Lease or of any obligations thereunder.
6. The Landlord states that the Lease is presently in full force and
effect, that all rentals have been paid up to date, and that the Lease is not in
default.
7. This Consent shall remain in full force and effect until all
obligations of the Lessee to the Lender have been paid and satisfied in full and
the Lender has terminated its financing agreements with the Lessee pursuant to
the Subordinated Credit Agreement.
8. The provisions of this Consent may not be modified or terminated
orally, and shall be binding upon the successors and assigns of the Landlord,
and upon any successor owner or transferee of the Premises and shall inure to
the benefit of the Lender and its respective successors and assigns.
9. All notices shall be in writing and shall be mailed by first class
registered or certified mail, postage prepaid, as follows:
(a) If to the Lender:
NUF LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
2
email: ▇▇▇▇▇▇_▇▇▇▇▇▇▇▇▇-▇@▇▇▇▇▇.▇▇▇▇▇.▇▇▇.▇▇.▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
(b) If to the Landlord:
-----------------------------
-----------------------------
Attention:
------------------
10. This Consent may be executed in any number of counterparts and
shall in all respects be governed by and construed in accordance with the laws
of the State of New York.
[Signature page follows]
3
IN WITNESS WHEREOF, Landlord has executed this Landlord's Waiver and
Consent on the date first above written.
LANDLORD:
--------
By:
-----------------------------
Title:
-----------------------------
[OR]
[LIMITED PARTNERSHIP]
By:
-----------------------------
Its: General Partner
By:
-----------------------------
Title:
-----------------------------
[OR]
[INDIVIDUAL]
Landlord:
--------------------------
4
EXHBIT E-3
FORM OF Mortgagee's Waiver and Consent
THIS MORTGAGEE'S WAIVER AND CONSENT ("Consent"), made and entered into
this day of , 200 , by JPMorgan Chase Bank, successor to The
-------- --------- -
Chase Manhattan Bank, N.A., as Trustee ("Mortgagee") under that certain
Indenture of Mortgage and Deed of Trust, dated as of May 1, 1952 and as
supplemented through and including the Eleventh Supplemental Indenture dated as
of March 31, 1999 (the "Indenture"), in favor of NUF LLC, a Delaware limited
liability company ("NUF").
BACKGROUND:
A. National Steel Corporation ("National Steel") is the owner of
certain real property as described on Schedule A attached hereto, being more
particularly described in the Mortgage ((as defined below) such properties and
all works, plants, factories and structures thereon, collectively, the
"Premises").
B. National Steel has granted to the Mortgagee an interest in the
Premises by the Mortgages set forth on Schedule A attached hereto (collectively,
the "Mortgage"). National Steel also granted to the Mortgagee a security
interest in certain properties and securities as described on Schedule B
attached hereto (the "Mortgagee's Collateral").
C. National Steel has entered into a certain Amended and Restated
Subordinated Credit Agreement, dated as of September 28, 2001 (the "Credit
Agreement"), among National Steel, as Borrower, and NUF, as Lender.
D. As a condition to extending such loans and other financial
accommodations, NUF has required, among other things, that National Steel grant
to NUF a security interest in certain of National Steel's property, including,
without limitation, accounts, certain movable machinery and equipment,
inventory, and books and records related thereto, whether now owned or hereafter
acquired, as described on Schedule C attached hereto (the "NUF Collateral"), a
portion of which NUF Collateral is and may hereafter be located on or about the
Premises. Pursuant to a Lien Subordination Agreement, dated as of September 28,
2001, among Citicorp USA, Inc. ("CUSA"), NUF, National Steel, National Steel
Pellet Company, National Steel Funding Corporation, ProCoil Corporation and NS
Holdings Corporation (the "Lien Subordination Agreement"), NUF's security
interest in the NUF Collateral is subordinated to the security interest in such
collateral of CUSA, as administrative agent for certain lenders and issuers
party to the Credit Agreement, dated as of September 28, 2001, among CUSA,
National Steel and certain lenders and issuers and other parties party thereto.
All rights of NUF in the NUF Collateral are subject to the provisions of the
Lien Subordination Agreement and Article VIII of the Credit Agreement.
NOW, THEREFORE, in order to induce NUF to extend financial
accommodations to National Steel, which will aid National Steel in meeting its
obligations to Mortgagee, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Mortgagee hereby
agrees with NUF as follows:
1. (a) Mortgagee acknowledges NUF's second priority, perfected
security interest in the NUF Collateral. NUF's security interests and liens in
the NUF Collateral shall be superior to any title or interest which the
Mortgagee may at any time have in such NUF Collateral, and, during the term of
this Consent, Mortgagee will not assert against any of the NUF Collateral any
title or any statutory, common law, contractual or possessory lien, including,
without limitation, rights of levy or distraint, all of which (the "Subordinated
Mortgagee Lien") Mortgagee hereby subordinates in favor of NUF. Mortgagee
further agrees that it shall not (and hereby waives any right to) contest, or
support any other Person in contesting, in any proceeding (including, without
limitation, any bankruptcy, insolvency, liquidation or similar proceeding) the
priority, validity or enforceability of the security interest of NUF.
(b) NUF acknowledges the Mortgagee's first priority perfected security
interest in the Mortgagee's Collateral. Mortgagee's security interests and liens
in the Mortgagee's Collateral shall be superior to any title or interest which
NUF may at any time have in such Mortgagee's Collateral, and during the term of
this Consent, NUF further agrees that it shall not (and hereby waives any right
to) contest, or support any other Person in contesting, in any proceeding
(including, without limitation, any bankruptcy, insolvency, liquidation or
similar proceeding) the priority, validity or enforceability of the security
interest of the Mortgagee.
(c) NUF agrees that if and to the extent that NUF has a lien on
collateral that is also collateral secured by the Mortgagee's lien under the
Indenture, the Mortgagee's lien shall be prior and, pursuant to Section 9-611 of
the Uniform Commercial Code as in effect in New York State (the "UCC"), NUF
agrees to give the Mortgagee prior notice of any disposition of the NUF
Collateral effected by NUF. Both NUF and the Mortgagee hereto agree that to the
extent either party receives cash proceeds of disposition with respect to the
other's collateral under Section 9-610 of the UCC, upon notice and an
authenticated demand therefor, the receiving party shall deliver such proceeds
to the demanding party less all reasonable expenses under Section 9-615(a)(1) of
----
the UCC.
2. Mortgagee hereby disclaims any and all right, title, interest or
claim in or to the NUF Collateral and any cash or non-cash proceeds of the NUF
Collateral (except with respect to the Subordinated Mortgagee Lien referred to
in Section 1 above). The NUF Collateral may be non-permanently affixed to,
located on or used about the Premises, but shall remain National Steel's
personal property, subject to NUF's lien, at all times. Mortgagee agrees not to
impound, remove or prevent access to, any of the NUF Collateral from the
Premises as long as this Consent is in effect, except as set forth herein.
2
3. Mortgagee agrees that NUF and its representatives and invitees may
enter upon the Premises at any time or times, during normal business hours, with
reasonable advance notice to and granting of entry by: (i) National Steel and
(ii) during such time as the Mortgagee is in sole legal possession of the
Premises, the Mortgagee, to inspect, repossess, remove or otherwise deal with
the NUF Collateral, in accordance with any applicable rules and regulations,
without any liability of NUF to Mortgagee except for reimbursement for any
physical damage (except ordinary wear and tear) to the Premises caused by such
removal. Mortgagee shall not hinder NUF's actions in enforcing its liens and
remedies with respect to the NUF Collateral. NUF agrees that NUF, or its
representatives, shall not advertise or conduct public sales of the NUF
---
Collateral at the Premises. Mortgagee agrees, however, that NUF or its
representatives shall be permitted to conduct private sales of the NUF
Collateral on or from the Premises; provided, however, that no more than five
(5) persons shall be permitted on the Premises for such purpose at any one time
and that such private sale activity shall occur during normal business hours
only. NUF shall not be liable for any diminution in value of the Premises caused
by the absence of the NUF Collateral removed. Only National Steel and not NUF
shall have any duty or obligation to remove or dispose of any of the NUF
Collateral or any other property left on the Premises.
4. In the event that National Steel defaults in its obligations under
the Mortgage, Mortgagee hereby agrees it will endeavor to give NUF written
notice of default under the Mortgage, at the same time and in the same manner as
such notice is given to National Steel and further agrees that NUF may, but
shall not be obligated to, cure such default(s), at its option, within the
applicable notice and cure periods (the "NUF Cure Period"); provided, however,
that in the case of a monetary default, five (5) business days shall be added to
the NUF Cure Period.
5. Termination of Mortgage; Termination of National Steel's
--------------------------------------------------------
Possession. In the event the Mortgagee either (x) terminates the Mortgage on an
----------
accelerated basis (or otherwise) or (y) terminates National Steel's right of
possession prior to the expiry date set forth in the Mortgage, Mortgagee shall
endeavor to give NUF written notice thereof (the "Termination Notice").
Mortgagee agrees that, at NUF's option and upon written notice (the "NUF
Notice") delivered to Mortgagee within five (5) business days of Mortgagee's
delivery to NUF of the Termination Notice, the NUF Collateral may remain upon
the Premises for a period not to exceed one hundred and twenty (120) days
following Mortgagee's delivery to NUF of the Termination Notice (the "Carry-Over
Period") provided, that NUF: (a) complies with all of the obligations imposed
upon NUF in Section 3 above and (b) NUF pays such amounts, on a monthly basis,
that would otherwise be due and payable under the terms of the Mortgage had the
Mortgage remained in full force and effect. The first month's mortgage payment
shall be due from NUF simultaneously with NUF's delivery of the NUF Notice, and
on the first day of each successive month during the Carry-Over Period.
Mortgagee's agreement to "standstill" during the Carry-Over Period shall only
restrict Mortgagee's remedies with respect to the NUF Collateral; Mortgagee's
right to exercise all available remedies
3
against National Steel under the Mortgage and with respect to the Mortgagee's
Collateral, shall in no way be restricted or impeded by this Consent.
6. Mortgagee's Rights After Delivery of Termination Notice. If
-------------------------------------------------------
Mortgagee delivers a Termination Notice, (a) but NUF fails to either timely
deliver the NUF Notice or make the payments attributable to the Carry-Over
Period; or (b) NUF timely delivers the NUF Notice and makes the payments
attributable to the Carry-Over Period, but NUF then fails to remove the NUF
Collateral prior to the expiration of the Carry-Over Period, then, in either
event, Mortgagee shall thereafter be entitled, on an immediate basis, in
addition to any remedies which Mortgagee may have exercised against National
Steel already, to exercise any and all rights available to Mortgagee with
respect to the NUF Collateral, whether at law or in equity (including, but not
limited to, the right to remove National Steel's possessions and any NUF
Collateral from the Premises).
7. This Consent shall remain in full force and effect until all
obligations of National Steel to NUF have been paid and satisfied in full and
NUF has terminated its financing agreements with National Steel pursuant to the
Credit Agreement or upon the expiration or earlier termination of the Mortgage
(plus any applicable Carry-Over Period), whichever comes first.
8. The provisions of this Consent may only be modified or terminated
in a writing signed by all parties hereto, and shall be binding upon the
successors and assigns of the Mortgagee, and upon any successor owner or
transferee of the Premises and shall inure to the benefit of NUF and its
successors and assigns.
9. All notices and other communications hereunder shall be in writing
and deemed to be delivered (i) if by means of the United States Postal Service
(certified or registered) on the third business day following delivery thereof
to a United States Postal Service office or official depositary; (ii) if by
commercial overnight delivery service, on the next business day following
delivery to such service; (iii) if by telefacsimile transmission (confirmed by
first class mail), on the date received at the telefacsimile machine of the
recipient; and (iv) if by hand delivery (during regular business hours), on the
date delivered. All notices shall be in writing and shall be mailed by first
class registered or certified mail, postage prepaid, as follows:
If to NUF: NUF, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy no.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy no.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Mortgagee: JPMorgan Chase Bank
------------------------------
------------------------------
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy no.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy no: (▇▇▇) ▇▇▇-▇▇▇▇
10. This Consent shall in all respects be governed by and construed in
accordance with the laws of the State in which the Premises and the applicable
NUF Collateral are located.
5
IN WITNESS WHEREOF, the parties hereto have executed this Consent on
the date first above written.
MORTGAGEE:
----------
JPMORGAN CHASE BANK, a New York
State banking corporation
By:
--------------------------------
Title:
-----------------------------
MORTGAGOR:
----------
NATIONAL STEEL CORPORATION, a
Delaware corporation
By:
--------------------------------
NUF, LLC, a
Delaware limited liability company
By:
--------------------------------
6
SCHEDULE A
Description of Premises and Mortgages Thereon
7
SCHEDULE B
Description of Mortgagee's Collateral
[See the granting clauses
on pages 18 to 27 of the Indenture
as attached hereto]
8
SCHEDULE C
----------
Description of NUF Collateral
For the purposes of this Consent, the NUF Collateral shall constitute all of
National Steel's right, title and interest in and to the following, whether now
owned or at any time hereafter acquired by or arising, wherever located
(collectively, the "NUF Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Deposit Accounts;
(iv) all Documents;
(v) all Equipment which is not now or hereafter subject to the
---
perfected security interest of the Trustee and (1) affixed,
actually or constructively, to, or erected in or upon, the
Premises encumbered by the Indenture; (2) a physically integrated
part of the Premises; or (3) essential to the operation of the
plants on such Premises;
(vi) all General Intangibles except as excluded herein;
(vii) all Instruments;
(viii) all Inventory;
(ix) all Investment Property except as excluded herein;
(x) all Letter of Credit Rights;
(xi) all Commercial Tort Claims arising from damage to National
Steel's personal or real property, including inventory, in excess
of $2,000,000;
(xii) all other goods and personal property of National Steel whether
tangible or intangible wherever located;
(xiii) all property of National Steel held by the Senior Agent, any
other Senior Secured Party or NUF, including all property of
every description, in the possession or custody of or in transit
to the Senior Agent, any other Senior Secured Party or NUF for
any purpose, including safekeeping, collection or pledge, for the
account of National Steel or as to which National Steel may have
any right or power;
(xiv) to the extent not otherwise included, all Proceeds; and
(xv) all books and records pertaining to the foregoing;
9
provided, however, that the foregoing NUF Collateral shall not include Excluded
Property; and provided, further, that if and when any prohibition which prevents
the granting by National Steel to NUF of a security interest in such Excluded
Property is removed or otherwise terminated, the NUF Collateral shall be deemed
to include, and at all times from and after the date hereof to have included,
such Excluded Property, as the case may be, and that, notwithstanding anything
set forth herein to the contrary, NUF will be deemed to have, and at all times
from and after the date hereof to have had, included in this Schedule C a
description of such Excluded Property.
Definitions:
As used in this Schedule C, terms used herein that are defined in the UCC have
the meanings given to them in the UCC, including the following which are
capitalized herein:
"Accounts"
"Chattel Paper"
"Commercial Tort Claim"
"Commodity Account"
"Deposit Account"
"Documents"
"Equipment"
"General Intangibles"
"Instruments"
"Inventory"
"Investment Property"
"Letter of Credit Right"
"Proceeds"
The following capitalized terms have the meanings specified below
(such meanings being equally applicable to both the singular and plural forms of
the terms defined):
"Credit Agreement" means the Amended and Restated Subordinated Credit
Agreement, dated as of September 28, 2001, between National Steel and NUF, LLC
(as the same may be amended, restated, supplemented or otherwise modified from
time to time).
"Excluded Property" means Special Property other than the following:
(a) the right to receive any payment of money (including, without
limitation, general intangibles for money due or to become due); and
(b) any proceeds, products, offspring, accessions, rents, profits,
income, benefits, substitutions or replacements of any Special Property
(unless such proceeds, products, offspring, accessions, rents, profits,
income, benefits, substitutions or replacements itself would constitute
Special Property).
"Indenture" means the Original Indenture, as supplemented by all
instruments supplemental thereto, through and including the Eleventh
Supplemental Indenture, dated as of March 31, 1999, to the Original Indenture.
"National Steel" means National Steel Corporation, a Delaware
corporation.
10
"Original Indenture" means that certain Indenture of Mortgage and Deed
of Trust, dated May 1, 1952, between National Steel, Great Lakes Steel
Corporation (a predecessor-in-interest of the National Steel Corporation), and
City Bank Farmers Trust Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as Trustees.
"Senior Agent" means Citicorp USA, Inc., as administrative agent for
certain lenders and issuers party to the Senior Credit Agreement.
"Senior Credit Agreement" means the Credit Agreement, dated as of
September 28, 2001, among the Senior Agent, the Debtor and certain lenders and
issuers and other parties party thereto.
"Senior Secured Parties" means the lenders, issuers, administrative
agent and any other holder of an obligation in connection with the Senior Credit
Agreement.
"Special Property" means:
(a) any permit, lease or license held by National Steel that validly
prohibits the creation by National Steel of a security interest therein;
(b) any permit, lease or license held by National Steel (in each case
permitted by the Credit Agreement) to the extent that any law applicable
thereto prohibits the creation of a security interest therein; and
(c) Equipment owned by National Steel that is subject to a purchase
money lien or a capital lease obligation (in each case permitted by the
Credit Agreement) if the contract or other agreement in which such lien is
granted (or in the documentation providing for such capital lease
obligation) validly prohibits the creation of any other lien on such
Equipment;
(d) Investment Property and General Intangibles owned by National
Steel that are (i) subject to a negative pledge if the agreement in which
such negative pledge is contained validly prohibits the pledge of such
Investment Property or General Intangible, as the case may be, or (ii)
shares of capital stock and demand mortgage bonds subject to the perfected
lien of the Trustee;
in each case only to the extent, and for so long as, such permit, lease,
license, contract or other agreement, or law applicable thereto, validly
prohibits the creation of a lien in such property in favor of NUF (and upon the
termination of such prohibition (however occurring)) such permit, lease, license
or equipment shall cease to be "Special Property".
"Trustee" means JPMorgan Chase Bank, successor to The Chase Manhattan
Bank, N.A., as trustee under the Indenture, and any duly appointed successor
trustees.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the State of New York; provided, however, that in the event that, by reason
of mandatory provisions of law, any or all of the attachment, perfection or
priority of NUF's security interest in any NUF Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
New York, the term "UCC" shall mean the Uniform Commercial Code as
11
in effect in such other jurisdiction for purposes of the provisions hereof
relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
12
December 21, 2001
NUF LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: National Steel Corporation, et al.
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to National Steel Corporation (the
"Borrower"), National Steel Pellet Company, National Steel Funding Corporation,
NS Holdings Corporation, and ProCoil Corporation (together with the Borrower,
the "Loan Parties") in connection with the preparation, execution and delivery
of, and the consummation of the transactions contemplated by, the Subordinated
Credit Agreement, dated as of September 28, 2001 (the "Subordinated Credit
Agreement"), by and among the Borrower, and NUF LLC. This opinion is rendered to
you pursuant to Section 3.1(f) of the Subordinated Credit Agreement. Capitalized
terms defined in the Subordinated Credit Agreement, used herein, and not
otherwise defined herein, shall have the meanings given them in the Subordinated
Credit Agreement.
In so acting, we have examined originals or copies (certified or
otherwise identified to our satisfaction) of the following documents:
1. the Subordinated Credit Agreement;
2. the Subordinated Note to be issued by the Borrower on the date hereof;
3. the Subordinated Pledge and Security Agreement executed by each of the Loan
Parties;
4. the Subordinated Guaranty executed by [each of the Loan Parties] (other than
the Borrower);
5. the Lien Subordination Agreement;
6. the financing statements on Form UCC-1, each naming a Loan Party as debtor
and NUF, LLC, the Lender as secured party (the "Financing Statements") to be
filed in the Uniform
Commercial Code Filing Offices in the jurisdictions listed on Schedule I hereto
(each a "Relevant Jurisdiction").
The agreements specified in clauses (1) through (6) above are collectively
referred to as the "Agreements".
In addition, we have examined such corporate records, agreements,
documents and other instruments, and such certificates or comparable documents
of public officials and of officers and representative of the Loan Parties, and
have made such inquiries of such officers and representatives, as we have deemed
relevant and necessary as a basis for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, (other than the signatures of officers of the Loan Parties on
documents signed at closing) the legal capacity of all natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified, conformed or
photostatic copies and the authenticity of the originals of such latter
documents. As to all questions of fact material to these opinions that have not
been independently established, we have relied upon certificates or comparable
documents of officers and representatives of the Loan Parties and upon the
representations and warranties of the Loan Parties contained in the Agreements.
Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that:
(1) Each Loan Party is a corporation validly existing and in good
standing under the law of the State of Delaware and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
(2) Each Loan Party is duly qualified to transact business and is in
good standing as a foreign corporation in each jurisdiction set forth under its
name on Schedule II hereto.
(3) Each Loan Party has all requisite corporate power and authority to
execute, deliver and perform the Agreements to which it is a party. The
execution, delivery and performance by each Loan Party of the Agreements to
which it is a party have been duly authorized by all necessary corporate action
on the part of such Loan Party. Each Loan Party has duly executed and delivered
the Agreements to which it is a party and such Agreements constitute the legal,
valid and binding obligations of such Loan Party, enforceable against such Loan
Party in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(4) The execution, delivery and performance by each Loan Party of the
Agreements to which it is a party will not conflict with, constitute a default
under or violate (i)
2
any of the terms, conditions or provisions of the Constituent Documents of such
Loan Party, (ii) any of the terms, conditions or provisions of any material
Contractual Obligation of such Loan Party of which we are aware, (iii) any New
York, Delaware corporate or federal Requirement of Law or (iv) any judgment,
writ, injunction, decree, order or ruling of any court or Governmental Authority
of which we are aware binding on such Loan Party.
(5) No consent, approval, waiver, license or authorization or other
action by or filing with any New York, Delaware or federal Governmental
Authority is required in connection with the execution, delivery or performance
by any Loan Party of the Agreements to which it is a party except for the filing
of financing statements referred to below.
(6) The borrowings by and other financial accommodations provided to
the Borrower under the Agreements and the application of proceeds thereof as
provided in the Subordinated Credit Agreement will not violate Regulation T, U
or X of the Federal Reserve Board.
(7) Neither the Borrower nor any other Loan Party is an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or a "holding company" or a "subsidiary company" of a "holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
(8) To our knowledge, there is no action, suit, proceeding,
governmental investigation or arbitration, at law or in equity or before any
Governmental Authority, pending or overtly threatened against any Loan Party (i)
with respect to any Agreement or challenging any of NUF LLC's rights or remedies
thereunder or (ii) which, if adversely determined, could materially adversely
affect the ability of any Loan Party to perform its obligations under the
Agreements to which it is a party.
(9) All of the outstanding shares of the Pledged Stock (as defined in
the Subordinated Pledge and Security Agreement) of each Subsidiary of the
Borrower (each an "Issuing Subsidiary") is (i) owned of record and, to our
knowledge, beneficially by the Borrower or another Loan Party, free and clear of
all adverse claims except the security interest of the Administrative Agent
pursuant to the Pledge and Security Agreement dated September 28, 2001 between
the Grantors as defined therein and the Administrative Agent as defined therein
(ii) are duly authorized, validly issued, fully paid and nonassessable, and
(iii) have not been issued in violation of any preemptive rights granted by law
or the Constituent Documents of such Issuing Subsidiary. Upon filing of the
UCC-1 financing statements in the appropriate jurisdictions, the Lender shall
have a valid and perfected lien in said Stock which except for the lien of the
Administrative Agent is free of adverse claims.
(10) We have reviewed UCC lien Searches performed by Lexis Document
Searches ordered by Weil, Gotschal & ▇▇▇▇▇▇ LLP and furnished to us by it
("Searches") for the Borrower for the following jurisdictions bearing the dates
indicated below:
3
Jurisdiction Date of Search
------------ --------------
Pennsylvania Aug. 3 and July 16, 2001
Michigan August 9, 2001
Illinois Aug. 2 and Aug. 14, 2001
Delaware August 8, 2001
Indiana Aug. 6 and Aug. 15, 2001
We have also reviewed UCC lien Searches for National Steel Pellet Company for
the state of Minnesota dated August 7 and August 8, 2001.
Other than review of the above UCC lien Searches, we have made no
investigation of title to or encumbrances affecting the title to the Loan
Parties in their Accounts and Inventory (each as defined in the UCC) or for any
other Collateral of the Loan Parties.
We note from our review of the Searches that UCC filings have
been made in Illinois, Delaware, Michigan, Indiana and Minnesota by Citicorp
USA, Inc., as Administrative Agent and NUF LLC covering Collateral of the
Borrower and National Steel Pellet Company (Minnesota). Such Searches do not
disclose that termination statements have been filed terminating such UCC
filings.
Subject to the foregoing qualifications and limitations and the
priority of possessory liens arising by operation of law, we are of the opinion
that the Subordinated Pledge and Security Agreement creates in favor of NUF LLC,
as security for each Loan Party's Secured Obligations, a valid security interest
in all of the right, title and interest of such Loan Party in the Collateral its
Accounts and Inventory (each as defined in the UCC), as defined in the
Subordinated Pledge and Security Agreement which security interest, assuming the
filing of the applicable Financing Statements in the filing offices of the
Secretary of State of Delaware, will be duly perfected to the extent perfection
of a security interest in such Collateral, Accounts and Inventory may be
perfected by the filing of a financing statement under the Uniform Commercial
Code in effect in the State of Delaware.
The opinion in subparagraph 10 is subject to the following exceptions:
(i) to the extent that perfection of a lien or security interest in
any Collateral is governed by the law of any jurisdiction other than the States
of New York and Delaware, we express no opinion;
(ii) that with respect to any Collateral which is or may become
fixtures (within the meaning of Section 9-313 of the Uniform Commercial Code in
effect in the State of New York (the "UCC")) we express no opinion; and
(iii) that with respect to transactions excluded from Article 9 of the
UCC by Section 9-104 thereof, we express no opinion.
4
In addition, the opinion in subparagraph 10 is subject to Section 552
of Title 11 of the United States Code (the "Bankruptcy Code") with respect to
any Collateral acquired by any Loan Party subsequent to the commencement of a
case against or by such Loan Party under the Bankruptcy Code.
We are licensed to practice law only in the Commonwealth of
Pennsylvania. For purposes of rendering the opinions set forth herein we have
assumed that the laws of the State of New York are similar to the laws of the
Commonwealth of Pennsylvania. Our opinions expressed above are limited to the
laws of the Commonwealth of Pennsylvania, the General Corporation Law of the
State of Delaware and the federal laws of the United States. With respect to
other laws of the State of Delaware we are relying on the opinion of Klehr,
Harrison, ▇▇▇▇▇▇, Branzburg & ▇▇▇▇▇▇ LLP delivered to you on December 21, 2001.
The opinions expressed herein are rendered solely for your benefit in
connection with the transactions described herein. This opinion may not be used
or relied upon by any other person (except any Person who in the future becomes
a Lender), nor may this letter or any copies thereof be furnished to a third
party, filed with a governmental agency, quoted, cited or otherwise referred to
without our prior written consent, other than to bank regulatory authorities or
permitted assigns of any Lender or to any prospective Lender, and except as
required by any Governmental Authority or pursuant to legal process.
Very truly yours,
Yukevich, Marchetti, Liekar & ▇▇▇▇▇▇▇▇▇, P.C.
By:
----------------------------------------
5
PLEDGE AND SECURITY AGREEMENT
Dated as of September 28, 2001
among
National Steel Corporation
and Each Other Grantor
From Time to Time Party Hereto
and
NUF LLC
as Secured Party
TABLE OF CONTENTS
Page
----
ARTICLE I. Defined Terms................................................................................1
Section 1.1 Definitions..................................................................1
Section 1.2 Certain Other Terms..........................................................7
ARTICLE II. Grant of Security Interest..................................................................7
Section 2.1 Collateral...................................................................7
Section 2.2 Grant of Security Interest in Collateral.....................................8
Section 2.3 Cash Collateral Accounts.....................................................9
ARTICLE III. Representations And Warranties.............................................................9
Section 3.1 Title; No Other Liens........................................................9
Section 3.2 Perfection and Priority.....................................................10
Section 3.3 State of Incorporation; Chief Executive Office..............................10
Section 3.4 Inventory and Equipment.....................................................10
Section 3.5 Pledged Collateral..........................................................10
Section 3.6 Accounts....................................................................11
Section 3.7 No Other Names..............................................................11
Section 3.8 Intellectual Property.......................................................11
Section 3.9 Deposit Accounts; Control Accounts..........................................12
ARTICLE IV. Covenants..................................................................................12
Section 4.1 Generally...................................................................12
Section 4.2 Maintenance of Perfected Security Interest; Further Documentation...........12
Section 4.3 Changes in Locations, Name, Etc.............................................13
Section 4.4 Pledged Collateral..........................................................13
Section 4.5 Control Accounts; Approved Deposit Accounts.................................15
Section 4.6 Accounts....................................................................15
Section 4.7 Delivery of Instruments and Chattel Paper...................................16
Section 4.8 Intellectual Property.......................................................16
Section 4.9 Payment of Obligations......................................................18
Section 4.10 Special Property............................................................18
Section 4.11 Commercial Tort Claims......................................................18
i
ARTICLE V. Remedial Provisions.........................................................................19
Section 5.1 Code and Other Remedies.....................................................19
Section 5.2 Accounts and Payments in Respect of General Intangibles.....................20
Section 5.3 Pledged Collateral..........................................................21
Section 5.4 Proceeds to be Turned Over To Secured Party.................................23
Section 5.5 Registration Rights.........................................................24
Section 5.6 Waiver; Deficiency..........................................................23
ARTICLE VI. The secured party..........................................................................24
Section 6.1 Secured Party's Appointment as Attorney-in-Fact.............................24
Section 6.2 Duty of Secured Party.......................................................26
Section 6.3 Authorization of Financing Statements.......................................26
ARTICLE VII. Miscellaneous.............................................................................27
Section 7.1 Amendments in Writing.......................................................27
Section 7.2 Notices.....................................................................27
Section 7.3 No Waiver by Course of Conduct; Cumulative Remedies.........................27
Section 7.4 Successors and Assigns......................................................27
Section 7.5 Counterparts................................................................27
Section 7.6 Severability................................................................27
Section 7.7 Section Headings............................................................28
Section 7.8 Entire Agreement............................................................28
Section 7.9 Governing Law...............................................................28
Section 7.10 Additional Grantors.........................................................28
Section 7.11 Release of Collateral.......................................................28
Section 7.12 Reinstatement...............................................................29
ii
Annexes and Schedules
Annex 1 Collateral Account Control Agreement
Annex 2 Pledge Amendment
Annex 3 Joinder Agreement
Annex 4 Form of Copyright Security Agreement
Annex 5 Form of Patent Security Agreement
Annex 6 Form of Trademark Security Agreement
Schedule 1 State of Incorporation; Principal Executive Office
Schedule 2 Pledged Collateral
Schedule 3 Filings
Schedule 4 Location of Inventory and Equipment
Schedule 5 Intellectual Property
Schedule 6 Bank Accounts; Control Accounts
iii
PLEDGE AND SECURITY AGREEMENT
Pledge And Security Agreement, dated as of September 28, 2001 (this
"Security Agreement"), by National Steel Corporation, a Delaware corporation
(the "Borrower") and each of the other entities listed on the signature pages
hereof or which becomes a party hereto pursuant to Section 7.10 (each a
"Grantor" and, collectively, the "Grantors"), in favor of NUF LLC ("Secured
Party").
W i t n e s s e t h:
Whereas, pursuant to the Amended and Restated Subordinated Credit
Agreement, dated as of September 28, 2001 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Subordinated Credit
Agreement") between the Borrower and the Secured Party, the Secured Party has
agreed to make extensions of credit to the Borrower upon the terms and subject
to the conditions set forth therein; and
Whereas, the Grantors other than the Borrower are party to the
Subordinated Guaranty pursuant to which they have guaranteed the Obligations;
and
Whereas, it is a condition precedent to the obligation of the Secured
Party to make extensions of credit to the Borrower under the Subordinated Credit
Agreement that the Grantors shall have executed and delivered this Security
Agreement to the Secured Party;
Now, therefore, in consideration of the premises and to induce the
Secured Party to enter into the Subordinated Credit Agreement and to induce the
Secured Party to make extensions of credit to the Borrower thereunder, each
Grantor hereby agrees with the Secured Party as follows:
ARTICLE I. Defined Terms
Section 1.1 Definitions.
-----------
(a) Unless otherwise defined herein, terms defined in the Subordinated
Credit Agreement and used herein have the meanings given to them in the
Subordinated Credit Agreement.
(b) Terms used herein that are defined in the UCC have the meanings
given to them in the UCC, including the following which are capitalized herein:
"Account Debtor"
"Accounts"
"Chattel Paper"
"Commercial Tort Claim"
"Commodity Account"
"Commodity Intermediary"
"Deposit Account"
"Documents"
"Entitlement Holder"
"Entitlement Order"
"Equipment"
"Financial Asset"
"General Intangibles"
"Instruments"
"Inventory"
"Investment Property"
"Letter of Credit Right"
"Payment Intangible"
"Proceeds"
"Security"
"Securities Account"
"Securities Intermediary"
"Security Entitlement"
(c) The following terms shall have the following meanings:
"Additional Pledged Collateral" means all shares of, limited and/or
general partnership interests in, and limited liability company interests in,
and all securities convertible into, and warrants, options and other rights to
purchase or otherwise acquire, stock of, either (i) any Person that, after the
Execution Date of this Security Agreement, as a result of any occurrence,
becomes a direct Subsidiary of any Grantor or (ii) any issuer of Pledged Stock,
any Partnership or any LLC that are acquired by any Grantor after the Execution
Date; all certificates or other instruments representing any of the foregoing;
all Security Entitlements of any Grantor in respect of any of the foregoing; all
additional indebtedness from time to time owed to any Grantor by any obligor on
the Pledged Notes and the instruments evidencing such indebtedness; and all
interest, cash, instruments and other property or Proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the foregoing. Additional Pledged Collateral may be General
Intangibles or Investment Property.
"Approved Deposit Account" means a Deposit Account maintained by any
Grantor with a Deposit Account Bank which account is the subject of an effective
Collateral Account Control Agreement, and includes all monies on deposit therein
and all certificates and instruments, if any, representing or evidencing such
Approved Deposit Account.
"Approved Securities Intermediary" means a Securities Intermediary or
Commodity Intermediary selected or approved by the Senior Agent or, following
the payment in full of the Senior Loan Obligations and termination of the
commitments under the Senior Credit Agreement, the Secured Party, and with
respect to which a
2
Grantor has delivered to the Secured Party, an executed Collateral Account
Control Agreement.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor statute.
"Cash Collateral Account" means any Deposit Account or Securities
Account established by the Senior Agent or the Secured Party as provided in
Section 2.3 of this Security Agreement in which cash and Cash Equivalents may
from time to time be on deposit or held therein as provided in Section 5.2 or
5.4 of this Security Agreement, in the Senior Credit Agreement or in the
Subordinated Credit Agreement.
"Collateral" has the meaning specified in Section 2.1.
"Control Account" means a Securities Account or Commodity Account
maintained by any Grantor with an Approved Securities Intermediary which account
is the subject of an effective Collateral Account Control Agreement, and
includes all Financial Assets held therein and all certificates and instruments,
if any, representing or evidencing the Financial Assets contained therein.
"Collateral Account Control Agreement" means a letter agreement,
substantially in the form of Annex 1 hereto (with such changes as may be agreed
to by Secured Party), executed by the relevant Grantor, the Secured Party, and
the relevant Approved Securities Intermediary.
"Copyrights" means (a) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any foreign counterparts thereof and (b)
the right to obtain all renewals thereof.
"Copyright Licenses" means any written agreement naming any Grantor as
licensor or licensee granting any right under any Copyright, including the grant
of rights to copy, publicly perform, create derivative works, manufacture,
distribute, exploit and sell materials derived from any Copyright.
"Deposit Account Bank" means a financial institution, which shall be a
"Bank" as defined in section 9-102 of the UCC, selected or approved by the
Senior Agent or, following the payment in full of the Senior Loan Obligations
and termination of the commitments under the Senior Credit Agreement, the
Secured Party and with respect to which a Grantor has delivered to the Secured
Party, an executed Collateral Account Control Agreement.
"Excluded Property" means Special Property other than the following:
3
(a) the right to receive any payment of money (including, without
limitation, general intangibles for money due or to become due); and
(b) any proceeds, products, offspring, accessions, rents, profits,
income, benefits, substitutions or replacements of any Special Property
(unless such proceeds, products, offspring, accessions, rents, profits,
income, benefits, substitutions or replacements itself would constitute
Special Property).
"Execution Date" means the date of execution and delivery of this
Security Agreement, as set forth on the signature page hereto.
"Intellectual Property" means, collectively, all rights, priorities
and privileges of any Grantor relating to intellectual property, whether arising
under federal, state, multinational or foreign laws or otherwise, including
Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks, Trademark
Licenses and trade secrets, and all rights to ▇▇▇ at law or in equity for any
infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom.
"Intercompany Note" means any promissory note evidencing loans made by
any Grantor to any of its Subsidiaries or another Grantor.
"LLC" means each limited liability company in which a Grantor has an
interest, including those set forth on Schedule 2.
"LLC Agreement" means each operating agreement or similar constitutive
organizational document with respect to an LLC, as each agreement has heretofore
been and may hereafter be amended, restated, supplemented or otherwise modified
from time to time.
"Material Intellectual Property" means Intellectual Property owned by
or licensed to a Grantor which is material to its business.
"Partnership" means each partnership in which a Grantor has an
interest, including those set forth on Schedule 2.
"Partnership Agreement" means each partnership agreement governing a
Partnership, as each such agreement has heretofore been and may hereafter be
amended, restated, supplemented or otherwise modified.
"Patents" means (a) all letters patent of the United States, any other
country or any political subdivision thereof and all reissues and extensions
thereof, (b) all applications for letters patent of the United States or any
other country and all divisions, continuations and continuations-in-part
thereof, and (c) all rights to obtain any reissues or extensions of the
foregoing.
4
"Patent License" means all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to manufacture, use,
import, sell or offer for sale any invention covered in whole or in part by a
Patent.
"Pledged Collateral" means, collectively, the Pledged Notes, the
Pledged Stock, the Pledged Partnership Interests, the Pledged LLC Interests, any
other Investment Property of any Grantor in excess of $1,000,000, all
certificates or other instruments representing any of the foregoing and all
Security Entitlements of any Grantor in respect of any of the foregoing. Pledged
Collateral may be General Intangibles or Investment Property.
"Pledged LLC Interests" means all right, title and interest of any
Grantor as a member of any LLC and all right, title and interest of any Grantor
in, to and under any LLC Agreement to which it is a party; provided, however,
the interests in any LLC owned on the Effective Date as set forth on Schedule
4.16 of the Subordinated Credit Agreement are excluded so long as such LLC is
not a Material Subsidiary.
"Pledged Notes" means all right, title and interest of any Grantor in
the Instruments evidencing all Indebtedness owed to such Grantor, including all
Intercompany Notes and including all Indebtedness described on Schedule 2,
issued by the obligors named therein.
"Pledged Partnership Interests" means all right, title and interest of
any Grantor as a limited and/or general partner in all Partnerships and all
right, title and interest of any Grantor in, to and under any Partnership
Agreements to which it is a party; provided, however, the interests in
Partnerships owned on the Effective Date as set forth on Schedule 4.16 of the
Subordinated Credit Agreement are excluded so long as such Partnership is not a
Material Subsidiary.
"Pledged Stock" means the shares of capital stock owned by each
Grantor, including all shares of capital stock listed on Schedule 2; provided,
however, that only the outstanding capital stock of a subsidiary that is not a
Domestic Subsidiary possessing up to but not exceeding 65% of the voting power
of all classes of capital stock of such controlled foreign corporation entitled
to vote shall be deemed to be pledged hereunder; and, provided, further, that
the capital stock of the Subsidiaries listed on Schedule 1.1 of the Subordinated
Credit Agreement as non-Material Subsidiaries shall not be deemed to be pledged
hereunder for so long as such Subsidiaries are not Material Subsidiaries.
"Related Contract" means each security agreement, lease and other
contract securing or otherwise relating to any Account.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Pledge and Security Agreement" means the Pledge and Security
Agreement, dated as of September 28, 2001, by the Borrower and each of the other
5
entities listed on the signature pages thereof or which becomes a party thereto,
in favor of the Senior Agent, for the Secured Parties (as defined therein).
"Special Property" means:
(a) any permit, lease or license held by any Grantor that validly
prohibits the creation by such Grantor of a security interest therein;
(b) any permit, lease or license held by any Grantor to the extent
that any Requirement of Law applicable thereto prohibits the creation of a
security interest therein;
(c) Equipment owned by any Grantor on the Execution Date that is
subject to a purchase money Lien or a Capital Lease Obligation if the
contract or other agreement in which such Lien is granted (or in the
documentation providing for such Capital Lease Obligation) validly
prohibits the creation of any other Lien on such Equipment; and
(d) Investment Property and General Intangibles owned by any Grantor
on the Execution Date that is subject to a negative pledge if the agreement
in which such negative pledge is contained validly prohibits the pledge of
such Investment Property or General Intangible, as the case may be;
in each case, (i) other than to the extent that any such term would be rendered
ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any
successor provision or provisions) of any relevant jurisdiction, any other
applicable law (including the Bankruptcy Code) or principles of equity and (ii)
only to the extent, and for so long as, such permit, lease, license, contract or
other agreement, or Requirement of Law applicable thereto, validly prohibits the
creation of a Lien in such property in favor of the Secured Party (and upon the
termination of such prohibition (howsoever occurring)) such permit, lease,
license or equipment shall cease to be "Special Property".
"Subordinated Credit Agreement" has the meaning specified in the
recitals hereto.
"Trademarks" means (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, and (b) the right to obtain all renewals thereof.
"Trademark License" means any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any Trademark.
6
"UCC" means the Uniform Commercial Code as from time to time in effect
in the State of New York; provided, however, that in the event that, by reason
of mandatory provisions of law, any or all of the attachment, perfection or
priority of the Secured Party's security interest in any Collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other than the
State of New York, the term "UCC" shall mean the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such attachment, perfection or priority and for purposes of definitions
related to such provisions.
Section 1.2 Certain Other Terms.
-------------------
(a) The words "herein," "hereof" and "hereunder" and similar words
refer to this Security Agreement as a whole and not to any particular Article,
Section, clause or sub-clause in this Security Agreement.
(b) References herein to an Annex, Schedule, Article, Section,
subsection or clause refer to the appropriate Annex or Schedule to, or Article,
Section, subsection or clause in this Security Agreement.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(d) Where the context requires, provisions relating to the Collateral
or any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
(e) Any reference in this Security Agreement to a Loan Document shall
include all appendices, exhibits and schedules thereto, and, unless specifically
stated otherwise all amendments, restatements, supplements or other
modifications thereto, and as the same may be in effect at any and all times
such reference becomes operative.
(f) The term "including" means "including without limitation" except
when used in the computation of time periods.
(g) The term "Secured Party" includes its respective successors.
(h) References in this Security Agreement to any statute shall be to
such statute as amended or modified and in effect from time to time.
ARTICLE II. Grant of Security Interest
Section 2.1 Collateral. For the purposes of this Security Agreement,
----------
all of the following property now owned or at any time hereafter acquired by a
Grantor or in which a Grantor now has or at any time in the future may acquire
any right, title or interests is collectively referred to as the "Collateral":
7
(a) all Accounts;
(b) all Chattel Paper;
(c) all Deposit Accounts;
(d) all Documents;
(e) all Equipment which is not now or hereafter affixed, actually or
constructively, to, or erected in or upon, real property and plants encumbered
by the Indenture;
(f) all General Intangibles, except as excluded herein;
(g) all Instruments;
(h) all Inventory;
(i) all Investment Property, except as excluded herein;
(j) all Letter of Credit Rights;
(k) all Commercial Tort Claims arising from damage to such Grantor's
personal or real property, including inventory, in excess of $2,000,000;
(l) all other goods and personal property of such Grantor whether
tangible or intangible wherever located;
(m) all property of any Grantor held by the Senior Agent, any Senior
Secured Party or the Secured Party, including all property of every description,
in the possession or custody of or in transit to the Senior Agent, any Senior
Secured Party or the Secured Party for any purpose, including safekeeping,
collection or pledge, for the account of such Grantor or as to which such
Grantor may have any right or power;
(n) to the extent not otherwise included, all Proceeds; and
(o) all books and records pertaining to the foregoing.
Section 2.2 Grant of Security Interest in Collateral. Each Grantor, as
----------------------------------------
collateral security for the full, prompt and complete payment and performance
when due (whether at stated maturity, by acceleration or otherwise) of the
Secured Obligations of such Grantor, hereby collaterally assigns, mortgages,
pledges and hypothecates to the Secured Party, and grants to the Secured Party a
lien on and security interest in, all of its right, title and interest in, to
and under the Collateral of such Grantor; provided, however, that the foregoing
grant of a security interest shall not include a security interest in Excluded
Property and provided, further, that if and when the prohibition which prevents
the granting by such Grantor to the Secured Party of a security interest in such
Excluded
8
Property is removed or otherwise terminated, the Secured Party will be deemed to
have, and at all times from and after the date hereof to have had, a security
interest in such Excluded Property, as the case may be.
Section 2.3 Cash Collateral Accounts. The Senior Agent has established
------------------------
a Deposit Account at Citibank, designated as "Citicorp USA, Inc. - National
Steel Corporation Concentration Account". The Borrower agrees to promptly
provide notice to the Secured Party of any other Deposit Accounts established by
the Senior Agent. Following the payment in full of the Senior Loan Obligations
and termination of the commitments under the Senior Credit Agreement, the
Borrower agrees as follows: (i) the Secured Party may establish one or more
Deposit Accounts and one or more Securities Accounts with such depositaries and
Securities Intermediaries as it in its sole discretion shall determine; (ii)
each such account shall be in the name of the Secured Party (but may also have
words referring to the Borrower and the account's purpose); (iii) each such
account shall be under the sole dominion and control of the Secured Party; (iv)
the Secured Party shall be the entitlement holder with respect to each such
Securities Account and the only Person authorized to give entitlement orders
with respect thereto; and (v) without limiting the foregoing, funds on deposit
in any Cash Collateral Account may be invested in Cash Equivalents at the
direction of the Secured Party and, except during the continuance of an Event of
Default, the Secured Party agrees with the Borrower to issue entitlement orders
for such investments in Cash Equivalents as requested by the Borrower; provided,
however, that the Secured Party shall not have any responsibility for, or bear
any risk of loss of, any such investment or income thereon. Neither the Borrower
nor any other Loan Party or Person claiming on behalf of or through the Borrower
or any other Loan Party shall have any right to demand payment of any of the
funds held in any Cash Collateral Account at any time prior to the payment in
full of all then outstanding monetary Obligations then due and payable. The
Secured Party shall apply all funds on deposit in any Cash Collateral Account as
provided in the Subordinated Credit Agreement and except during the continuance
of an Event of Default agrees to cause any funds remaining on deposit therein
after all Obligations then due and payable have been satisfied to be paid at the
written direction of the Borrower.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
To induce the Secured Party to enter into the Subordinated Credit
Agreement, each Grantor hereby represents and warrants to the Secured Party
that:
Section 3.1 Title; No Other Liens. Except for the Lien granted to the
---------------------
Senior Agent pursuant to the Senior Pledge and Security Agreement, the Liens
granted to the Secured Party under this Security Agreement and the other Liens
permitted to exist on the Collateral under the Subordinated Credit Agreement,
such Grantor is the record and beneficial owner of the Pledged Collateral
pledged by it hereunder constituting Instruments or certificated securities, is
the entitlement holder of all such Pledged Collateral constituting Investment
Property held in a Securities Account and has rights in
9
or the power to transfer each other item of Collateral in which a Lien is
granted by it hereunder, free and clear of any and all Liens.
Section 3.2 Perfection and Priority. The security interest granted
-----------------------
pursuant to this Security Agreement will constitute a valid and continuing
perfected security interest in favor of the Secured Party in the Collateral for
which perfection is governed by the UCC or filing with the United States
Copyright Office upon (i) the completion of the filings and other actions
specified on Schedule 3 (which, in the case of all filings and other documents
referred to on such schedule, have been delivered to the Secured Party in
completed and duly executed form), (ii) the delivery to the Senior Agent of all
Collateral consisting of Instruments and certificated securities, in each case
properly endorsed for transfer to the Senior Agent or in blank, (iii) the
execution of Collateral Account Control Agreements with respect to Investment
Property not in certificated form, (iv) the execution of Collateral Account
Control Agreements with respect to all Deposit Accounts (other than the Cash
Collateral Account), and (v) all appropriate filings having been made with the
United States Copyright Office. Such security interest will be prior to all
other Liens on the Collateral except for (x) the Liens of the Senior Agent
securing the Senior Loan Obligations and (y) Customary Permitted Liens which
have priority over the Secured Party's Lien by operation of law or otherwise as
permitted under the Subordinated Credit Agreement.
Section 3.3 State of Incorporation; Chief Executive Office. On the
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Execution Date such Grantor's jurisdiction of organization, organizational
identification number, if any, and the location of such Grantor's chief
executive office or sole place of business is specified on Schedule 1.
Section 3.4 Inventory and Equipment. On the Execution Date, such
-----------------------
Grantor's Inventory and Equipment (other than mobile goods and Inventory or
Equipment in transit) are kept at the locations listed on Schedule 4.
Section 3.5 Pledged Collateral.
------------------
(a) The Pledged Stock, Pledged Partnership Interests and Pledged LLC
Interests pledged hereunder by such Grantor are listed on Schedule 2 and
constitute that percentage of the issued and outstanding equity of all classes
of each issuer thereof as set forth on Schedule 2.
(b) All of the Pledged Stock, Pledged Partnership Interests and
Pledged LLC Interests have been duly and validly issued and are fully paid and
nonassessable.
(c) Each of the Pledged Notes constitutes the legal, valid and binding
obligation of the obligor with respect thereto, enforceable in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, and general equitable principles (whether
considered in a proceeding in equity or at law).
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(d) All Pledged Collateral and, if applicable, any Additional Pledged
Collateral, consisting of certificated securities or Instruments has been
delivered to the Senior Agent in accordance with Section 4.4(a) of the Senior
Pledge and Security Agreement.
(e) All Pledged Collateral held by a Securities Intermediary in a
Securities Account is in a Control Account.
(f) Other than the Pledged Partnership Interests and the Pledged LLC
Interests that constitute General Intangibles, there is no Pledged Collateral
other than that represented by certificated securities or Instruments in the
possession of the Senior Agent or that consisting of Financial Assets held in a
Control Account.
Section 3.6 Accounts. No amount payable to such Grantor under or in
--------
connection with any Account is evidenced by any Instrument or Chattel Paper
which has not been delivered to the Senior Agent, properly endorsed for
transfer, to the extent delivery is required by Section 4.4 of the Senior Pledge
and Security Agreement.
Section 3.7 No Other Names. Except as set forth on Schedule 1, within
--------------
the five (5)-year period preceding the Execution Date such Grantor has not had,
or operated in any jurisdiction, under any trade name, fictitious name or other
name other than its legal name.
Section 3.8 Intellectual Property.
---------------------
(a) Schedule 5 lists all Material Intellectual Property of such
Grantor on the Execution Date, separately identifying that owned by such Grantor
and that licensed to such Grantor. The Material Intellectual Property set forth
on Schedule 5 for such Grantor constitutes all of the intellectual property
rights necessary to conduct its business.
(b) On the Execution Date, all Material Intellectual Property owned by
such Grantor is valid, subsisting, unexpired and enforceable, has not been
adjudged invalid and has not been abandoned and the use thereof in the business
of such Grantor does not infringe the intellectual property rights of any other
Person.
(c) Except as set forth in Schedule 5, on the Execution Date, none of
the Material Intellectual Property owned by such Grantor is the subject of any
licensing or franchise agreement pursuant to which such Grantor is the licensor
or franchisor.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority that would limit, cancel or question the validity of, or
such Grantor's rights in, any Material Intellectual Property.
(e) No action or proceeding seeking to limit, cancel or question the
validity of any Material Intellectual Property owned by such Grantor or such
Grantor's ownership interest therein is on the Execution Date pending or, to the
knowledge of such
11
Grantor, threatened. There are no claims, judgments or settlements to be paid by
such Grantor relating to the Material Intellectual Property.
Section 3.9 Deposit Accounts; Control Accounts. The only Deposit
----------------------------------
Accounts or Securities Accounts maintained by any Grantor on the Execution Date
are those listed on Schedule 6, which sets forth such information separately for
each Grantor.
ARTICLE IV. COVENANTS
As long as any of the Obligations or the Commitments remain
outstanding, unless the Secured Party otherwise consents in writing, each
Grantor agrees with the Secured Party that:
Section 4.1 Generally. Such Grantor shall (a) except for the security
---------
interest created by this Security Agreement, not create or suffer to exist any
Lien upon or with respect to any of the Collateral, except Liens permitted under
Section 7.1 of the Subordinated Credit Agreement; (b) not use or permit any
Collateral to be used unlawfully or in violation of any provision of this
Security Agreement, any other Loan Document, any Requirement of Law or any
policy of insurance covering the Collateral; (c) not sell, transfer or assign
(by operation of law or otherwise) any Collateral except as permitted under the
Senior Credit Agreement and the Subordinated Credit Agreement; (d) not enter
into any agreement or undertaking restricting the right or ability of such
Grantor or the Secured Party to sell, assign or transfer any of the Collateral
if such restriction would have a Material Adverse Effect; and (e) promptly
notify the Secured Party of its entry into any agreement or assumption of
undertaking that restricts the ability to sell, assign or transfer any of the
Collateral regardless of whether or not it has a Material Adverse Effect.
Section 4.2 Maintenance of Perfected Security Interest; Further
---------------------------------------------------
Documentation.
-------------
(a) Such Grantor will maintain the security interest created by this
Security Agreement as a perfected security interest having at least the priority
described in Section 3.2 and shall defend such security interest against the
claims and demands of all Persons.
(b) Such Grantor will furnish to the Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Secured Party may
reasonably request, all in reasonable detail.
(c) At any time and from time to time, upon the written request of the
Secured Party, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further action as the Secured Party may
reasonably request for the purpose of obtaining or preserving the full benefits
of this Security Agreement and of the rights and
12
powers herein granted, including (i) the filing of any financing or continuation
statement under the UCC (or other similar laws) in effect in any jurisdiction
with respect to the security interest created hereby, (ii) the execution and
delivery of Collateral Account Control Agreements, and (iii) all additional
documentation and filings with respect to hereafter arising Commercial Tort
Claims arising from damage to such Grantor's personal or real property,
including inventory, in excess of $2,000,000.
Section 4.3 Changes in Locations, Name, Etc.
-------------------------------
(a) Except upon fifteen (15) days' prior written notice to the Secured
Party and delivery to the Secured Party of (x) all additional authorized
financing statements and other documents reasonably requested by the Secured
Party to maintain the validity, perfection and priority of the security
interests provided for herein and (y) if applicable, a written supplement to
Schedule 4 showing any additional location at which Inventory or Equipment shall
be kept, such Grantor will not:
(i) permit any of the Inventory or Equipment to be kept at a location
other than those listed on Schedule 4;
(ii) change (x) its state of incorporation or organization or (y) the
location of its chief executive office or sole place of business from that
referred to in Section 3.3; or
(iii) change its name, identity or corporate structure to such an
extent that any financing statement filed in connection with this Security
Agreement would become misleading.
(b) Such Grantor will keep and maintain at its own cost and expense
complete records of the Collateral, including a record of all payments received
and all credits granted with respect to the Collateral and all other dealings
with the Collateral all in form and detail reasonably satisfactory to the
Secured Party.
Section 4.4 Pledged Collateral.
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(a) Such Grantor will (i) deliver to the Secured Party notice of all
certificates and Instruments representing or evidencing any Pledged Collateral
(including Additional Pledged Collateral) delivered to the Senior Agent,
together, in respect of any Additional Pledged Collateral, with a Pledge
Amendment, duly executed by the Grantor, in substantially the form of Annex 2 (a
"Pledge Amendment"), and authorizes the Secured Party to attach each Pledge
Amendment to this Security Agreement, (ii) following the payment in full of the
Senior Loan Obligations and termination of the Commitments under the Senior
Credit Agreement, deliver to the Secured Party all certificates and Instruments
representing or evidencing any Pledged Collateral (including Additional Pledged
Collateral), whether now existing or hereafter acquired, in suitable form for
transfer by delivery or, as applicable, accompanied by such Grantor's
endorsement, where necessary, or duly executed instruments of transfer or
assignment in blank, all in
13
form and substance satisfactory to the Secured Party, together, in respect of
any Additional Pledged Collateral, with a Pledge Amendment, duly executed by the
Grantor, or such other documentation acceptable to the Secured Party and (iii)
maintain all other Pledged Collateral constituting Investment Property in a
Control Account. Following the payment in full of the Senior Loan Obligations
and termination of the commitments under the Senior Credit Agreement, the
Secured Party shall have the right (i) at any time in its discretion and without
notice to the Grantor, to transfer to or to register in its name or in the name
of its nominees any or all of the Pledged Collateral and (ii) at any time to
exchange certificates or instruments representing or evidencing any of the
Pledged Collateral for certificates or instruments of smaller or larger
denominations.
(b) Except as provided in Article V, such Grantor shall be entitled to
receive all cash dividends paid in respect of the Pledged Collateral (other than
liquidating or distributing dividends) with respect to the Pledged Collateral.
Subject to the provisions of the Lien Subordination Agreement, any sums paid
upon or in respect of any of the Pledged Collateral upon the liquidation or
dissolution of any issuer of any of the Pledged Collateral, any distribution of
capital made on or in respect of any of the Pledged Collateral or any property
distributed upon or with respect to any of the Pledged Collateral pursuant to
the recapitalization or reclassification of the capital of any issuer of Pledged
Collateral or pursuant to the reorganization thereof shall unless otherwise
subject to a perfected security interest in favor of the Secured Party, be
delivered to the Secured Party to be held by it hereunder as additional
collateral security for the Secured Obligations. If any sums of money or
property so paid or distributed in respect of any of the Pledged Collateral
shall be received by such Grantor, such Grantor shall, until such money or
property is paid or delivered to the Secured Party, hold such money or property
in trust for the Secured Party, segregated from other funds of such Grantor, as
additional security for the Secured Obligations.
(c) Except as provided in Article V, and subject to the provisions of
the Lien Subordination Agreement, such Grantor will be entitled to exercise all
voting, consent and corporate rights with respect to the Pledged Collateral;
provided, however, that no vote shall be cast, consent given or right exercised
or other action taken by such Grantor which would impair the Collateral or which
would be inconsistent with or result in any violation of any provision of the
Subordinated Credit Agreement, this Security Agreement or any other Subordinated
Loan Document or, without prior notice to the Secured Party, to enable or take
any other action to permit any issuer of Pledged Collateral to issue any stock
or other equity securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any stock or
other equity securities of any nature of any issuer of Pledged Collateral.
(d) Such Grantor shall not grant control over any Investment Property
to any Person other than the Secured Party, other than (so long as the Senior
Loan Obligations remain outstanding) control granted in favor of the Senior
Agent in accordance with the Senior Pledge and Security Agreement.
14
(e) In the case of each Grantor which is an issuer of Pledged
Collateral, such Grantor agrees to be bound by the terms of this Agreement
relating to the Pledged Collateral issued by it and will comply with such terms
insofar as such terms are applicable to it. In the case of each Grantor which is
a partner in a Partnership, such Grantor hereby consents to the extent required
by the applicable Partnership Agreement to the pledge by each other Grantor,
pursuant to the terms hereof, of the Pledged Partnership Interests in such
Partnership and to the transfer of such Pledged Partnership Interests to the
Secured Party or its nominee and to the substitution of the Secured Party or its
nominee as a substituted partner in such Partnership with all the rights, powers
and duties of a general partner or a limited partner, as the case may be. In the
case of each Grantor which is a member of an LLC, such Grantor hereby consents
to the extent required by the applicable LLC Agreement to the pledge by each
other Grantor, pursuant to the terms hereof, of the Pledged LLC Interests in
such LLC and to the transfer of such Pledged LLC Interests to the Secured Party
or its nominee and to the substitution of the Secured Party or its nominee as a
substituted member of the LLC with all the rights, powers and duties of a member
of the LLC in question; provided, however, that the terms of this Section 4.4(e)
are subject to the provisions of the Lien Subordination Agreement.
(f) Such Grantor will not agree to any amendment of an LLC Agreement
or Partnership Agreement that in any way adversely affects the perfection of the
security interest of the Secured Party in the Pledged Partnership Interests or
Pledged LLC Interests pledged by such Grantor hereunder, including any amendment
electing to treat the membership interest or partnership interest of such
Grantor as a security under Section 8-103 of the UCC.
Section 4.5 Control Accounts; Approved Deposit Accounts. Subject to
-------------------------------------------
the provisions of the Lien Subordination Agreement, in the event (i) such
Grantor or any Approved Securities Intermediary or Deposit Account Bank shall,
after the Execution Date, terminate an agreement with respect to the maintenance
of a Control Account or Approved Deposit Account for any reason, (ii) the
Secured Party shall demand such termination as a result of the failure of an
Approved Securities Intermediary or Deposit Account Bank to comply with the
terms of the applicable Collateral Account Control Agreement, or (iii) the
Secured Party determines in its sole discretion that the financial condition of
an Approved Securities Intermediary or Deposit Account Bank, as the case may be,
has materially deteriorated, such Grantor agrees to notify all of its obligors
that were making payments to such terminated Control Account or Approved Deposit
Account, as the case may be, to make all future payments to another Control
Account or Approved Deposit Account, as the case may be.
Section 4.6 Accounts.
--------
(a) Such Grantor will not, other than in the ordinary course of
business consistent with its past practice, (i) grant any extension of the time
of payment of any Account, (ii) compromise or settle any Account for less than
the full amount thereof, (iii) release, wholly or partially, any Person liable
for the payment of any Account, (iv) allow
15
any credit or discount on any Account, or (v) amend, supplement or modify any
Account in any manner that could adversely affect the value thereof.
(b) At the sole cost and expense of the relevant Grantor, such Grantor
shall furnish to the Secured Party copies of each report provided to the Senior
Agent pursuant to Section 4.6 of the Senior Pledge and Security Agreement. The
Secured Party shall have the right (and, after the payment in full of the Senior
Obligations and termination of the commitments under the Senior Credit
Agreement, at the sole cost and expense of the relevant Grantor) to make test
verifications of the Accounts in any manner and through any medium that it
reasonably considers advisable, and such Grantor shall furnish all such
assistance and information as the Secured Party may reasonably require in
connection therewith. At any time and from time to time, upon the Secured
Party's request and at the expense of the relevant Grantor, such Grantor shall
cause independent public accountants or others satisfactory to the Secured Party
to furnish to the Secured Party reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts; provided, however, that
unless a Default or Event of Default shall be continuing, the Secured Party
shall request no more than four such reports during any calendar year.
Section 4.7 Delivery of Instruments and Chattel Paper. Following the
-----------------------------------------
payment in full of the Senior Loan Obligations and termination of the
commitments under the Senior Credit Agreement, if any amount in excess of
$100,000 payable under or in connection with any of the Collateral owned by such
Grantor shall be or become evidenced by an Instrument or Chattel Paper, such
Grantor shall immediately deliver such Instrument or Chattel Paper to the
Secured Party, duly indorsed in a manner satisfactory to the Secured Party, or,
if consented to by the Secured Party, shall ▇▇▇▇ all such Instruments and
Chattel Paper with the following legend: "This writing and the obligations
evidenced or secured hereby are subject to the security interest of NUF LLC".
Section 4.8 Intellectual Property.
---------------------
(a) Such Grantor (either itself or through licensees) will (i)
continue to use each Trademark that is Material Intellectual Property in order
to maintain such Trademark in full force and effect with respect to each class
of goods for which such Trademark is currently used, free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of products
and services offered under such Trademark, (iii) use such Trademark with the
appropriate notice of registration and all other notices and legends required by
applicable Requirements of Law, (iv) not adopt or use any ▇▇▇▇ which is
confusingly similar or a colorable imitation of such Trademark unless the
Secured Party shall obtain a perfected security interest in such ▇▇▇▇ pursuant
to this Security Agreement and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.
16
(b) Such Grantor (either itself or through licensees) will not do any
act, or omit to do any act, whereby any Patent which is Material Intellectual
Property may become forfeited, abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) will not
(and will not permit any licensee or sublicensee thereof to) do any act or omit
to do any act whereby any portion of the Copyrights which is Material
Intellectual Property may become invalidated or otherwise impaired and (ii) will
not (either itself or through licensees) do any act whereby any portion of the
Copyrights which is Material Intellectual Property may fall into the public
domain.
(d) Such Grantor (either itself or through licensees) will not do any
act, or omit to do any act, whereby any trade secret which is Material
Intellectual Property may become publicly available or otherwise unprotectable.
(e) Such Grantor (either itself or through licensees) will not do any
act that knowingly uses any Material Intellectual Property to infringe the
intellectual property rights of any other Person.
(f) Such Grantor will notify the Secured Party immediately if it
knows, or has reason to know, that any application or registration relating to
any Material Intellectual Property may become forfeited, abandoned or dedicated
to the public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court or tribunal in any country) regarding such Grantor's
ownership of, right to use, interest in, or the validity of, any Material
Intellectual Property or such Grantor's right to register the same or to own and
maintain the same.
(g) Whenever such Grantor, either by itself or through any agent,
licensee or designee, shall file an application for the registration of any
Intellectual Property with the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency within or outside
the United States, such Grantor shall report such filing to the Secured Party
within five Business Days after the last day of the fiscal quarter in which such
filing occurs. Upon request of the Secured Party, such Grantor shall execute and
deliver, and have recorded, any and all agreements, instruments, documents, and
papers as the Secured Party may request to evidence the Secured Party's security
interest in any Copyright, Patent or Trademark and the goodwill and general
intangibles of such Grantor relating thereto or represented thereby.
(h) Such Grantor will take all reasonable actions necessary or
requested by the Secured Party, including in any proceeding before the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency, to maintain and pursue each application (and to obtain
the relevant registration) and to maintain each registration of any Copyright,
Trademark or Patent that is Material Intellectual Property, including filing of
applications for renewal, affidavits of use,
17
affidavits of incontestability and opposition and interference and cancellation
proceedings.
(i) In the event that any Material Intellectual Property is infringed
upon or misappropriated or diluted by a third party, such Grantor shall notify
the Secured Party promptly after such Grantor learns thereof. Such Grantor shall
take appropriate action in response to such infringement, misappropriation of
dilution, including promptly bringing suit for infringement, misappropriation or
dilution and to recover any and all damages for such infringement,
misappropriation of dilution, and shall take such other actions may be
appropriate in its reasonable judgment under the circumstances to protect such
Material Intellectual Property.
(j) Unless otherwise agreed to by the Secured Party, such Grantor will
execute and deliver to the Secured Party for filing in (i) the United States
Copyright Office a short-form copyright security agreement in the form attached
hereto as Annex 4, (ii) in the United States Patent and Trademark Office a
short-form patent security agreement in the form attached hereto as Annex 5 and
(iii) the United States Patent and Trademark Office a short-form trademark
security agreement in form attached hereto as Annex 6.
Section 4.9 Payment of Obligations. Such Grantor will pay and
----------------------
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all taxes, assessments and governmental charges
or levies imposed upon the Collateral or in respect of income or profits
therefrom, as well as all claims of any kind (including claims for labor,
materials and supplies) against or with respect to the Collateral, except that
no such charge need be paid if the amount or validity thereof is currently being
contested in good faith by appropriate proceedings, reserves in conformity with
GAAP with respect thereto have been provided on the books of such Grantor and
such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any interest
therein.
Section 4.10 Special Property. Each Grantor shall from time to time at
----------------
the request of the Secured Party give written notice to the Secured Party
identifying in reasonable detail the Special Property (and stating in such
notice that such Special Property constitutes "Excluded Property") and shall
provide to the Secured Party such other information regarding the Special
Property as the Secured Party may reasonably request and, from and after the
Closing Date, no Grantor shall permit to become effective in any document a
provision that would prohibit the creation of a Lien on any permit, lease,
license or equipment in favor of the Secured Party.
Section 4.11 Commercial Tort Claims. Each Grantor shall upon knowledge
----------------------
of the existence of any hereafter arising Commercial Tort Claims arising from
damage to such Grantor's personal or real property, including inventory, in
excess of $2,000,000 give written notice to the Secured Party identifying in
reasonable detail such
18
Commercial Tort Claim and shall provide to the Secured Party such other
information regarding the Commercial Tort Claim as the Secured Party may
reasonably request.
ARTICLE V. REMEDIAL PROVISIONS
Section 5.1 Code and Other Remedies. During the continuance of an
-----------------------
Event of Default (and, if prior to the payment in full of the Senior Loan
Obligations and termination of the commitments under the Senior Credit
Agreement, only to the extent not expressly prohibited by the provisions of the
Senior Credit Agreement or Article VIII of the Subordinated Credit Agreement),
the Secured Party may exercise, in addition to all other rights and remedies
granted to them in this Security Agreement and in any other instrument or
agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the UCC or any other applicable
law. Without limiting the generality of the foregoing, the Secured Party (and,
if prior to the payment in full of the Senior Loan Obligations and termination
of the commitments under the Senior Credit Agreement, only to the extent not
expressly prohibited by the provisions of the Senior Credit Agreement or Article
VIII of the Subordinated Credit Agreement), without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind (except
any notice required by law referred to below) to or upon any Grantor or any
other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, grant options to purchase, or
otherwise dispose of and deliver the Collateral or any part thereof (or contract
to do any of the foregoing), in one or more parcels at public or private sale or
sales, at any exchange, broker's board or office of the Secured Party or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Secured Party shall have the right (and, if
prior to the payment in full of the Senior Loan Obligations and termination of
the commitments under the Senior Credit Agreement, only to the extent not
expressly prohibited by the provisions of the Senior Credit Agreement or Article
VIII of the Subordinated Credit Agreement) upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption in any Grantor, which right or equity is hereby waived and
released. Each Grantor further agrees (and, if prior to the payment in full of
the Senior Loan Obligations and termination of the commitments under the Senior
Credit Agreement, only to the extent not expressly prohibited by the provisions
of the Senior Credit Agreement or Article VIII of the Subordinated Credit
Agreement), at the Secured Party's request, to assemble the Collateral and make
it available to the Secured Party at places which the Secured Party shall
reasonably select, whether at such Grantor's premises or elsewhere. The Secured
Party shall apply the net proceeds of any action taken by it pursuant to this
Section 5.1, after deducting all reasonable costs and expenses of every kind
incurred in connection therewith or incidental to the care or safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Secured Party hereunder, including
19
reasonable attorneys' fees and disbursements, to the payment in whole or in part
of the Secured Obligations, in such order as the Subordinated Credit Agreement
shall prescribe, and only after such application and after the payment by the
Secured Party of any other amount required by any provision of law, need the
Secured Party account for the surplus, if any, to any Grantor. Each Grantor
shall, subject to the Lien Subordination Agreement and the subordination
provisions of Article VIII of the Subordinated Credit Agreement, remain liable
for any deficiency if the proceeds of any sale or disposition of the Collateral
are insufficient to pay all amounts to which the Secured Party is entitled, such
Grantor also being liable for the fees and expenses of any attorneys employed by
the Secured Party to collect such deficiency. To the extent permitted by
applicable law, each Grantor waives all claims, damages and demands it may
acquire against the Secured Party arising out of the exercise by them of any
rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least ten (10) days before such sale or other disposition.
Section 5.2 Accounts and Payments in Respect of General Intangibles.
-------------------------------------------------------
(a) If required by the Secured Party at any time during the
continuance of an Event of Default (and, if prior to the payment in full of the
Senior Loan Obligations and termination of the commitments under the Senior
Credit Agreement, only to the extent not expressly prohibited by the provisions
of the Senior Credit Agreement or Article VIII of the Subordinated Credit
Agreement), any payments of Accounts or payments in respect of General
Intangibles, when collected by any Grantor, shall be forthwith (and, in any
event, within two (2) Business Days) deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to the Secured Party if required, in a
Cash Collateral Account, subject to withdrawal by the Secured Party as provided
in Section 5.4. Until so turned over, such payments shall be held by such
Grantor in trust for the Secured Party, segregated from other funds of such
Grantor. Each such deposit of Proceeds of Accounts and payments in respect of
General Intangibles shall be accompanied by a report identifying in reasonable
detail the nature and source of the payments included in the deposit.
(b) Subject to the Lien Subordination Agreement, at the Secured
Party's request, during the continuance of an Event of Default, each Grantor
shall deliver to the Secured Party all original and other documents evidencing,
and relating to, the agreements and transactions which gave rise to the Accounts
or payments in respect of General Intangibles, including all original orders,
invoices and shipping receipts.
(c) Subject to the provisions of the Lien Subordination Agreement, the
Secured Party may, without notice, at any time during the continuance of an
Event of Default, limit or terminate the authority of a Grantor to collect its
Accounts or amounts due under General Intangibles or any thereof.
(d) The Secured Party in its own name or in the name of others may at
any time during the continuance of an Event of Default communicate with Account
Debtors
20
to verify with them to the Secured Party's satisfaction the existence, amount
and terms of any Accounts or amounts due under any General Intangibles.
(e) Upon the request of the Secured Party at any time during the
continuance of an Event of Default (and, if prior to the payment in full of the
Senior Loan Obligations and termination of the commitments under the Senior
Credit Agreement, only to the extent not expressly prohibited by the provisions
of the Senior Credit Agreement or Article VIII of the Subordinated Credit
Agreement), each Grantor shall notify Account Debtors that the Accounts or
General Intangibles have been collaterally assigned to the Secured Party and
that payments in respect thereof shall be made directly to the Secured Party. In
addition, subject to the provisions of the Lien Subordination Agreement, the
Secured Party may at any time during the continuance of an Event of Default
enforce such Grantor's rights against such Account Debtors and obligors of
General Intangibles.
(f) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Accounts and payments in respect of
General Intangibles to observe and perform all the conditions and obligations to
be observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise thereto. The Secured Party shall not have any
obligation or liability under any agreement giving rise to an Account or a
payment in respect of a General Intangible by reason of or arising out of this
Security Agreement or the receipt by the Secured Party of any payment relating
thereto, nor shall the Secured Party be obligated in any manner to perform any
of the obligations of any Grantor under or pursuant to any agreement giving rise
to an Account or a payment in respect of a General Intangible, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party
thereunder, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
Section 5.3 Pledged Collateral.
------------------
(a) Subject to the provisions of the Lien Subordination Agreement,
during the continuance of an Event of Default, upon notice by the Secured Party
to the relevant Grantor or Grantors, (i) the Secured Party shall have the right
to receive any and all Proceeds of the Pledged Collateral and make application
thereof to the Obligations in the order set forth in the Subordinated Credit
Agreement, and (ii) the Secured Party or its nominee may exercise (A) all
voting, consent, corporate and other rights pertaining to the Pledged Collateral
at any meeting of shareholders, partners or members, as the case may be, of the
relevant issuer or issuers of Pledged Collateral or otherwise and (B) any and
all rights of conversion, exchange and subscription and any other rights,
privileges or options pertaining to the Pledged Collateral as if it were the
absolute owner thereof (including the right to exchange at its discretion any
and all of the Pledged Collateral upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of any issuer of Pledged Securities, the right to deposit and deliver
any and all of the Pledged Collateral with any committee, depositary, transfer
21
agent, registrar or other designated agency upon such terms and conditions as
the Secured Party may determine), all without liability except to account for
property actually received by it, but the Secured Party shall have no duty to
any Grantor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
(b) Subject to the provisions of the Lien Subordination Agreement, in
order to permit the Secured Party to exercise the voting and other consensual
rights which it may be entitled to exercise pursuant hereto and to receive all
dividends and other distributions which it may be entitled to receive hereunder,
(i) each Grantor shall promptly execute and deliver (or cause to be executed and
delivered) to the Secured Party all such proxies, dividend payment orders and
other instruments as the Secured Party may from time to time reasonably request
and (ii) without limiting the effect of clause (i) above, such Grantor hereby
grants to the Secured Party an irrevocable proxy to vote all or any part of the
Pledged Collateral and to exercise all other rights, powers, privileges and
remedies to which a holder of the Pledged Collateral would be entitled
(including giving or withholding written consents of shareholders, partners or
members, as the case may be, calling special meetings of shareholders, partners
or members, as the case may be, and voting at such meetings), which proxy shall
be effective, automatically and without the necessity of any action (including
any transfer of any Pledged Collateral on the record books of the issuer
thereof) by any other person (including the issuer of such Pledged Collateral or
any officer or agent thereof) during the continuance of an Event of Default and
which proxy shall only terminate upon the payment in full of the Secured
Obligations.
(c) Subject to the provisions of the Lien Subordination Agreement,
each Grantor hereby expressly authorizes and instructs each issuer of any
Pledged Collateral pledged hereunder by such Grantor to (i) comply with any
instruction received by it from the Secured Party in writing that (A) states
that an Event of Default has occurred and is continuing and (B) is otherwise in
accordance with the terms of this Security Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that such issuer
shall be fully protected in so complying and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Pledged Collateral directly to the Secured Party.
Section 5.4 Proceeds to be Turned Over To Secured Party. Subject to
-------------------------------------------
the Lien Subordination Agreement, all Proceeds received by the Secured Party
hereunder shall be held by the Secured Party in a Cash Collateral Account. All
Proceeds while held by the Secured Party in a Cash Collateral Account (or by
such Grantor in trust for the Secured Party) shall continue to be held as
collateral security for the Secured Obligations and shall not constitute payment
thereof until applied as provided in the Subordinated Credit Agreement.
22
Section 5.5 Registration Rights.
-------------------
(a) If the Secured Party shall determine to exercise its right to sell
any or all of the Pledged Collateral pursuant to Section 5.1, and if in the
opinion of the Secured Party it is necessary or advisable to have the Pledged
Collateral, or any portion thereof to be registered under the provisions of the
Securities Act, the relevant Grantor will cause the issuer thereof to (i)
execute and deliver, and cause the directors and officers of such issuer to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts as may be, in the opinion of the Secured Party,
necessary or advisable to register the Pledged Collateral, or that portion
thereof to be sold, under the provisions of the Securities Act, (ii) use its
best efforts to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date of the
first public offering of the Pledged Collateral, or that portion thereof to be
sold and (iii) make all amendments thereto and/or to the related prospectus
which, in the opinion of the Secured Party, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. Each
Grantor agrees to cause such issuer to comply with the provisions of the
securities or "Blue Sky" laws of any and all jurisdictions which the Secured
Party shall designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Secured Party may be unable to
effect a public sale of any or all the Pledged Collateral by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise or may determine that a public sale is impracticable or not
commercially reasonable and, accordingly, may resort to one or more private
sales thereof to a restricted group of purchasers which will be obliged to
agree, among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Secured Party
shall be under no obligation to delay a sale of any of the Pledged Collateral
for the period of time necessary to permit the issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such issuer would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Collateral pursuant to this Section 5.5 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section
23
5.5 will cause irreparable injury to the Secured Party, that the Secured Party
has no adequate remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained in this Section 5.5 shall be specifically
enforceable against such Grantor, and such Grantor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred under the
Subordinated Credit Agreement.
Section 5.6 Waiver; Deficiency. Each Grantor shall remain liable for
------------------
any deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay the Secured Obligations and the fees and
disbursements of any attorneys employed by the Secured Party to collect such
deficiency.
ARTICLE VI. The secured party
Section 6.1 Secured Party's Appointment as Attorney-in-Fact.
-----------------------------------------------
(a) Subject to the provisions of the Lien Subordination Agreement,
each Grantor hereby irrevocably constitutes and appoints the Secured Party and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Grantor and in the name of such Grantor or in its own name,
for the purpose of carrying out the terms of this Security Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Security Agreement, and, without limiting the generality of the foregoing,
each Grantor hereby gives the Secured Party the power and right, on behalf of
such Grantor, without notice to or assent by such Grantor, to do any or all of
the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account or General Intangible or with respect to any other Collateral and
file any claim or take any other action or proceeding in any court of law
or equity or otherwise deemed appropriate by the Secured Party for the
purpose of collecting any and all such moneys due under any Account or
General Intangible or with respect to any other Collateral whenever
payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and
papers as the Secured Party may request to evidence the Secured Party's
security interest in such Intellectual Property and the goodwill and
General Intangibles of such Grantor relating thereto or represented
thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Security Agreement and pay all or any part
of the costs thereof and the premiums therefor;
24
(iv) execute, in connection with any sale provided for in Section 5.1
or 5.5, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(v) (A) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Secured Party or as the Secured Party shall
direct; (B) ask or demand for, collect, and receive payment of and receipt
for, any and all moneys, claims and other amounts due or to become due at
any time in respect of or arising out of any Collateral; (C) sign and
indorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications,
notices and other documents in connection with any of the Collateral; (D)
commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the Collateral or
any portion thereof and to enforce any other right in respect of any
Collateral; (E) defend any suit, action or proceeding brought against such
Grantor with respect to any Collateral; (F) settle, compromise or adjust
any such suit, action or proceeding and, in connection therewith, give such
discharges or releases as the Secured Party may deem appropriate; (G)
assign any Copyright, Patent or Trademark (along with the goodwill of the
business to which any such Trademark pertains), throughout the world for
such term or terms, on such conditions, and in such manner, as the Secured
Party shall in its sole discretion determine, including without limitation
the execution and filing of any documents necessary to effectuate and/or
record such assignment; and (H) generally, sell, transfer, pledge and make
any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Secured Party were the absolute owner
thereof for all purposes, and do, at the Secured Party's option and such
Grantor's expense, at any time, or from time to time, all acts and things
which the Secured Party deems necessary to protect, preserve or realize
upon the Collateral and the Secured Party's security interests therein and
to effect the intent of this Security Agreement, all as fully and
effectively as such Grantor might do.
Anything in this Section 6.1(a) to the contrary notwithstanding, the Secured
Party agrees that it will not exercise any rights under the power of attorney
provided for in this Section 6.1(a) unless an Event of Default shall be
continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Secured Party, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.
(c) The expenses of the Secured Party incurred in connection with
actions undertaken as provided in this Section 6.1, together with interest
thereon at a rate per annum equal to the default rate per annum above the
highest interest rate which would then be payable on Revolving Loans that are
Base Rate Loans under the Subordinated Credit Agreement, from the date of
payment by the Secured Party to the date reimbursed
25
by the relevant Grantor, shall be payable by such Grantor to the Secured Party
on demand.
(d) Each Grantor hereby ratifies all acts that the Secured Party shall
lawfully do or cause to be done by virtue of the powers, authorizations and
agencies contained herein. All powers, authorizations and agencies contained in
this Security Agreement are coupled with an interest and are irrevocable until
this Security Agreement is terminated and the security interests created hereby
are released.
Section 6.2 Duty of Secured Party. The Secured Party's sole duty with
---------------------
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession shall be to deal with it in the same manner as the Secured
Party deals with similar property for its own account. Neither the Secured Party
nor any of its officers, directors, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Grantor or any other Person or to take
any other action whatsoever with regard to the Collateral or any part thereof.
The powers conferred on the Secured Party hereunder are solely to protect the
Secured Party's interest in the Collateral and shall not impose any duty upon
the Secured Party to exercise any such powers. The Secured Party shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct in
dealing with the Collateral in their possession.
Section 6.3 Authorization of Financing Statements. Each Grantor
-------------------------------------
authorizes the Secured Party at any time and from time to time to file or record
financing statements and other filing or recording documents or instruments with
respect to the Collateral without the signature of such Grantor in such form and
in such offices as the Secured Party reasonably determines appropriate to
perfect the security interests granted to the Secured Party under this Security
Agreement. A photographic or other reproduction of this Security Agreement shall
be sufficient as a financing statement or other filing or recording document or
instrument for filing or recording in any jurisdiction. The Grantor hereby
authorizes the Secured Party to file a Record or Records (as defined in the
UCC), including, without limitation, financing or continuation statements, and
amendments thereto, in all jurisdictions and with all filing offices as the
Secured Party may determine, in its sole discretion, are necessary or advisable
to perfect the security interest granted to the Secured Party herein. Such
financing statements may describe the Collateral in the same manner as described
herein or may contain an indication or description of collateral that describes
such property in any other manner as the Secured Party may determine, in its
sole discretion, is necessary, advisable or prudent to ensure the perfection of
the security interest in the Collateral granted to the Secured Party herein,
including, without limitation, describing such property as "all assets" or "all
personal property." The Grantor shall furnish to the Secured Party from time to
time statements and schedules further identifying and describing the Collateral
and such other
26
reports in connection with the Collateral as the Secured Party may reasonably
request, all in reasonable detail.
ARTICLE VII. Miscellaneous
Section 7.1 Amendments in Writing. None of the terms or provisions of
---------------------
this Security Agreement may be waived, amended, supplemented or otherwise
modified except in accordance with Section 10.1 of the Subordinated Credit
Agreement.
Section 7.2 Notices. All notices, requests and demands to or upon the
-------
Secured Party or any Grantor hereunder shall be effected in the manner provided
for in Section 10.9 of the Subordinated Credit Agreement; provided, however,
that any such notice, request or demand to or upon any Grantor shall be
addressed in care of the Borrower at the Borrower's notice address set forth in
such Section 10.9.
Section 7.3 No Waiver by Course of Conduct; Cumulative Remedies. The
---------------------------------------------------
Secured Party shall not by any act (except by a written instrument pursuant to
Section 7.1), delay, indulgence, omission or otherwise, be deemed to have waived
any right or remedy hereunder or to have acquiesced in any Default or Event of
Default. No failure to exercise, nor any delay in exercising, on the part of the
Secured Party, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Secured Party of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Secured Party would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
Section 7.4 Successors and Assigns. This Security Agreement shall be
----------------------
binding upon the successors and assigns of each Grantor and shall inure to the
benefit of the Secured Party and its successors and assigns; provided, however,
that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Security Agreement without the prior written consent of
the Secured Party.
Section 7.5 Counterparts. This Security Agreement may be executed by
------------
one or more of the parties to this Security Agreement on any number of separate
counterparts (including by telecopy), and all of said counterparts taken
together shall be deemed to constitute one and the same agreement.
Section 7.6 Severability. Any provision of this Security Agreement
------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any
27
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 7.7 Section Headings. The Article and Section titles contained
----------------
in this Security Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not part of the agreement of the parties
hereto.
Section 7.8 Entire Agreement. This Security Agreement together with
----------------
the other Loan Documents represents the entire agreement of the parties and
supersedes all prior agreements and understandings relating to the subject
matter hereof.
Section 7.9 Governing Law. This Security Agreement and the rights and
-------------
obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
Section 7.10 Additional Grantors. If, pursuant to Section 6.14(ii) of
-------------------
the Subordinated Credit Agreement, the Borrower shall be required to cause any
Subsidiary that is not a Grantor to become a Grantor hereunder, such Subsidiary
shall execute and deliver to the Secured Party a Joinder Agreement in the form
of Annex 3 and shall thereafter for all purposes be a party hereto and have the
same rights, benefits and obligations as a Grantor party hereto on the Closing
Date.
Section 7.11 Release of Collateral.
---------------------
(a) Upon the termination of the Commitments and the indefeasible
payment and satisfaction in full of all Loans and all other Obligations, the
Collateral shall be released from the Lien created hereby and this Security
Agreement and all obligations (other than those expressly stated to survive such
termination) of the Secured Party and each Grantor hereunder shall terminate,
all without delivery of any instrument or performance of any act by any party,
and all rights to the Collateral shall revert to the Grantors. At the request
and sole expense of any Grantor following any such termination, the Secured
Party shall deliver to such Grantor any Collateral of such Grantor held by the
Secured Party hereunder and execute and deliver to such Grantor such documents
as such Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold or disposed of by any
Grantor in a transaction permitted by the Subordinated Credit Agreement, the
Collateral so sold or disposed of shall be released from the Lien created hereby
to the extent sold or disposed of, and, in connection therewith, the Secured
Party, at the request and sole expense of the Borrower, shall execute and
deliver to the Borrower all releases or other documents reasonably necessary or
desirable for the release of the Lien created hereby on such Collateral. At the
request and sole expense of the Borrower, a Grantor shall be released from its
obligations hereunder in the event that all the capital stock of such Grantor
shall be so sold or disposed; provided, however, that the Borrower shall have
delivered to the Secured Party, at least ten Business Days prior to the date of
the proposed release, a written request for release identifying the relevant
Grantor and the terms of the sale or
28
other disposition in reasonable detail, including the price thereof and any
expenses in connection therewith, together with a certification by the Borrower
stating that such transaction is in compliance with the Credit Agreement and the
other Loan Documents.
(c) If any of the Collateral shall be subject to a Lien permitted by
Section 7.1(d) or 7.1(e) of the Subordinated Credit Agreement, the Collateral so
subject to such a Lien shall be released from the Lien created hereby to the
extent subject to the Lien, and, in connection therewith, the Secured Party, at
the request and sole expense of the Borrower, shall execute and deliver to the
Borrower all releases or other documents reasonably necessary or desirable for
the release of the Lien created hereby on such Collateral.
Section 7.12 Reinstatement. Each Grantor further agrees that, if any
-------------
payment made by any Loan Party or other Person and applied to the Obligations is
at any time annulled, avoided, set aside, rescinded, invalidated, declared to be
fraudulent or preferential or otherwise required to be refunded or repaid, or
the proceeds of Collateral are required to be returned by any Secured Party to
such Loan Party, its estate, trustee, receiver or any other party, including any
Grantor, under any bankruptcy law, state or federal law, common law or equitable
cause, then, to the extent of such payment or repayment, any Lien or other
Collateral securing such liability shall be and remain in full force and effect,
as fully as if such payment had never been made or, if prior thereto the Lien
granted hereby or other Collateral securing such liability hereunder shall have
been released or terminated by virtue of such cancellation or surrender), such
Lien or other Collateral shall be reinstated in full force and effect, and such
prior cancellation or surrender shall not diminish, release, discharge, impair
or otherwise affect any Lien or other Collateral securing the obligations of any
Grantor in respect of the amount of such payment.
29
In WITNESS WHEREOF, each of the undersigned has caused this Pledge and
Security Agreement to be duly executed and delivered on this th of December
---
2001.
National Steel Corporation,
a Delaware corporation
By:
----------------------------------------
Name:
Title:
National Steel Pellet Company,
a Delaware corporation
By:
----------------------------------------
Name:
Title:
National Steel Funding Corporation,
a Delaware corporation
By:
----------------------------------------
Name:
Title:
NS Holdings Corporation,
a Delaware corporation
By:
----------------------------------------
Name:
Title:
Procoil Corporation,
a Delaware corporation
By:
----------------------------------------
Name:
Title:
30
ACCEPTED AND AGREED:
NUF LLC, as Secured Party
By:
-------------------------------
Name:
Title:
31
Annex 1
-------
COLLATERAL ACCOUNT CONTROL AGREEMENT
------------------------------------
This Collateral Account Control Agreement, dated as of , 200
------ -
among National Steel Corporation (the "Debtor"), NUF LLC, (the "Secured Party")
------ -------------
and in its capacity as a "securities intermediary" (as defined in
------------
Section 8-102 of the UCC and a "bank" as defined in Section 9-102 of the UCC (in
such capacities, the "Financial Institution"). Capitalized terms used but not
---------------------
defined herein shall have the meaning assigned in the Amended and Restated
Pledge and Security Agreement dated as of September 28, 2001 between the Debtor
and the Secured Party (the "Security Agreement"). All references herein to the
------------------
"UCC" shall mean the Uniform Commercial Code as in effect in the State of New
---
York.
Section 1. Establishment of Collateral Accounts. The Financial
------------------------------------
Institution hereby confirms and agrees that:
(a) The Financial Institution has established the following accounts:
i) the "[identify exact title of account]" with account number [ ]
-----
in the name "[ ]" in the name of "National Steel Corporation" (the
---------
" Account");
-------
ii) the "[identify exact title of account]" with account number
[ ] in the name "[identify exact title of account]" in the name of
-----
"National Steel Corporation" (the " Account"); and
-----
iii) the "[identify exact title of account]" with account number
[ ] in the name "[identify exact title of account]" in the name of
-----
"National Steel Corporation" (the " Account").
-----
Each such account and any successor account, being referred to herein
individually as a "Pledged Account" and collectively as the "Pledged Accounts."
The Financial Institution shall not change the name or account number of any
Pledged Account without the prior written consent of the Secured Party;
(b) Each of the Pledged Accounts are either a Securities Account (as
defined in Section 8-501 of the UCC) or a "Deposit Account" as defined in
Section 9-102(a)(29) of the UCC). The Financial Intermediary acknowledges and
agrees that the Accounts are intended to be deposit accounts and the
----
Accounts are intended to be securities accounts.
---------
(c) All securities or other property underlying any financial assets
credited to the Securities Account shall be registered in the name of the
Financial Institution, indorsed to the Financial Institution or in blank or
credited to another securities account
maintained in the name of the Financial Institution and in no case will any
financial asset credited to the Securities Account be registered in the name of
the Debtor, payable to the order of the Debtor or specially indorsed to the
Debtor except to the extent the foregoing have been specially indorsed to the
Financial Institution or in blank;
(d) All property delivered to the Financial Institution pursuant to
the Subordinated Pledge and Security Agreement will be promptly credited to one
of the Pledged Accounts.
Section 2. "Financial Assets" Election. The Financial Institution
----------------
hereby agrees that each item of property (whether investment property,
financial asset, security, instrument or cash) credited to any Pledged
Account that is a Securities Account shall be treated as a "financial
asset" within the meaning of Section 8-102(a)(9) of the UCC.
Section 3. Control of the Pledged Accounts. If at any time the
-------------------------------
Financial Institution shall receive any order from the Secured Party
directing transfer or redemption of any financial asset relating to a
Pledged Account or any instruction originated by the Secured Party
directing the disposition of funds in a Pledged Account, the Financial
Institution shall comply with such entitlement order or instruction without
further consent by the Debtor or any other person.
Section 4. Subordination of Lien; Waiver of Set-Off. In the event that
----------------------------------------
the Financial Institution has or subsequently obtains by agreement, by
operation of law or otherwise a security interest in any Pledged Account or
any security entitlement or cash credited thereto, the Financial
Institution hereby agrees that such security interest shall be subordinate
to the security interest of the Secured Party. The financial assets, money
and other items credited to either Account will not be subject to
deduction, set-off, banker's lien, or any other right in favor of any
person other than the Secured Party (except that the Financial Institution
may set off (i) all amounts due to the Financial Institution in respect of
customary fees and expenses for the routine maintenance and operation of
the respective Account and (ii) the face amount of any checks which have
been credited to such Account but are subsequently returned unpaid because
of uncollected or insufficient funds).
Section 5. Choice of Law. This Agreement shall each be governed by the
-------------
laws of the State of New York. Regardless of any provision in any other
agreement, for purposes of the UCC, New York shall be deemed to be the
Financial Institution's jurisdiction (within the meaning of Section 9-304
of the UCC and Section 8-110 of the UCC). The Pledged Accounts shall be
governed by the laws of the State of New York.
A1-2
Section 6. Conflict with Other Agreements.
------------------------------
(a) In the event of any conflict between this Agreement (or any
portion thereof) and any other agreement now existing or hereafter entered into,
the terms of this Agreement shall prevail;
(b) No amendment or modification of this Agreement or waiver of any
right hereunder shall be binding on any party hereto unless it is in writing and
is signed by all of the parties hereto;
(c) The Financial Institution hereby confirms and agrees that:
(i) There are no other agreements entered into between the Financial
Institution and the Debtor with respect to the Account [except for
[identify other agreements] (the "Account Agreements")];
(ii) It has not entered into, and until the termination of the this
agreement will not enter into, any agreement with any other person
relating the Pledged Accounts and/or any financial assets credited
thereto pursuant to which it has agreed to comply with entitlement
orders (as defined in Section 8-102(a)(8) of the UCC) or instructions
(within the meaning of Section 9-104 of the UCC) of such other person;
and
(iii) It has not entered into, and until the termination of this
agreement will not enter into, any agreement with the Debtor or the
Secured Party purporting to limit or condition the obligation of the
Financial Institution to comply with entitlement orders or
instructions.
Section 7. Adverse Claims. Except for the claims and interest of the
--------------
Secured Party and of the Debtor in the Pledged Accounts, the Financial
Institution does not know of any lien on or claim to, or interest in, the
Pledged Account or in any "financial asset" (as defined in Section 8-102(a)
of the UCC) credited thereto. If any person asserts any lien, encumbrance
or adverse claim (including any writ, garnishment, judgment, warrant of
attachment, execution or similar process) against the Pledged Accounts or
in any financial asset carried therein, the Financial Institution will
promptly notify the Secured Party and the Debtor thereof.
A1-3
Section 8. Maintenance of Accounts. In addition to, and not in lieu
-----------------------
of, the obligation of the Financial Institution to honor entitlement orders
and instructions as set forth in Section 3 hereof, the Financial
---------
Institution agrees to maintain the Securities Account and the Deposit
Account as follows:
(a) Notice of Sole Control. If at any time the Secured Party delivers
----------------------
to the Financial Institution a Notice of Sole Control in substantially the
form set forth in Exhibit A hereto, the Financial Institution agrees that
after receipt of such notice, it will take all instruction with respect to
the Pledged Accounts solely from the Secured Party.
(b) Statements and Confirmations. The Financial Institution will
----------------------------
promptly send copies of all statements, confirmations and other
correspondence concerning (i) the Securities Account and/or any financial
assets credited thereto and (ii) the Deposit Account, simultaneously to
each of the Debtor and the Secured Party at the address for each set forth
in Section 12 of this Agreement.
----------
(c) Tax Reporting. All items of income, gain, expense and loss
-------------
recognized in the Securities Account and all interest, if any, relating to
the Deposit Account, shall be reported to the Internal Revenue Service and
all state and local taxing authorities under the name and taxpayer
identification number of the Debtor.
(d) Voting Rights. Until such time as the Financial Institution
-------------
receives a Notice of Sole Control pursuant to subsection (a) of this
Section 8, the Debtor shall direct the Financial Institution with respect
---------
to the voting of any financial assets credited to the Pledged Accounts.
(e) Permitted Investments. Until such time as the Financial
---------------------
Institution receives a Notice of Sole Control signed by the Secured Party,
the Debtor shall direct the Financial Institution with respect to the
selection of investments to be made for any Pledged Account that is a
securities account; provided, however, that the Financial Institution shall
not honor any instruction to purchase any investments other than
investments of a type describe on Exhibit B hereto.
---------
Section 9. Representations, Warranties and Covenants of the Financial
----------------------------------------------------------
Institution. The Financial Institution hereby makes the following
-----------
representations, warranties and covenants:
(a) The Pledged Accounts have each been established as set forth in
Section 1 and such Accounts will be maintained in the manner set forth
---------
herein until termination of this Agreement; and
(b) This Collateral Account Control Agreement is the valid and legally
binding obligations of the Financial Institution.
A1-4
Section 10. Indemnification of Financial Institution. The Debtor and
----------------------------------------
the Secured Party hereby agree that (a) the Financial Institution is released
from any and all liabilities to the Debtor and the Secured Party arising from
the terms of this agreement and the compliance of the Financial Institution with
the terms hereof, except to the extent that such liabilities arise from the
Financial Institution's negligence and (b) the Debtor, its successors and
assigns shall at all times indemnify and save harmless the Financial Institution
from and against any and all claims, actions and suits of others arising out of
the terms of this agreement or the compliance of the Financial Institution with
the terms hereof, except to the extent that such arises from the Financial
Institution's negligence, and from and against any and all liabilities, losses,
damages, costs, charges, counsel fees and other expenses of every nature and
character arising by reason of the same, until the termination of this
agreement.
Section 11. Successors; Assignment. The terms of this Agreement shall
----------------------
be binding upon, and shall inure to the benefit of, the parties hereto and their
respective corporate successors or heirs and personal representatives who obtain
such rights solely by operation of law. The Secured Party may assign its rights
hereunder only with the express written consent of the Financial Institution and
by sending written notice of such assignment to the Debtor.
Section 12. Notices. Any notice, request or other communication
-------
required or permitted to be given under this Agreement shall be in writing and
deemed to have been properly given when delivered in person, or when sent by
telecopy or other electronic means and electronic confirmation of error free
receipt is received or two days after being sent by certified or registered
United States mail, return receipt requested, postage prepaid, addressed to the
party at the address set forth below.
Debtor: National Steel Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Addresses: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
----------------------------
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
---------------------------
Secured Party: NUF LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Address: ▇▇▇▇▇▇_▇▇▇▇▇▇▇▇▇-▇@▇▇▇▇▇.▇▇▇▇▇.▇▇▇.▇▇.▇▇
----------------------------------------
A1-5
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Address: ▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
------------------
Financial Institution: [contact information]
Any party may change his address for notices in the manner set forth
above.
Section 13. Termination. The obligations of the Financial Institution
-----------
to the Secured Party pursuant to this Control Agreement shall continue in effect
until the security interests of the Secured Party in each of the Pledged
Accounts have been terminated pursuant to the terms of the Subordinated Pledge
and Security Agreement and the Secured Party has notified the Financial
Institution of such termination in writing. The Secured Party agrees to provide
Notice of Termination in substantially the form of Exhibit C hereto to the
---------
Financial Institution upon the request of the Debtor on or after the termination
of the Secured Party's security interest in the Pledged Accounts pursuant to the
terms of the Subordinated Pledge and Security Agreement. The termination of this
Control Agreement shall not terminate the Pledged Accounts or alter the
obligations of the Financial Institution to the Debtor pursuant to any other
agreement with respect to the Pledged Accounts.
Section 14. Counterparts. This Agreement may be executed in any number
------------
of counterparts, all of which shall constitute one and the same instrument, and
any party hereto may execute this Agreement by signing and delivering one or
more counterparts.
NATIONAL STEEL CORPORATION
By:
----------------------------------------
Name:
Title:
A1-6
NATIONAL STEEL FUNDING CORPORATION
By:
----------------------------------------
Name:
Title:
NS HOLDINGS CORPORATION
By:
----------------------------------------
Name:
Title:
NATIONAL STEEL PELLET CORPORATION
By:
----------------------------------------
Name:
Title:
PROCOIL CORPORATION
By:
----------------------------------------
Name:
Title:
NUF LLC
By:
----------------------------------------
Name:
Title:
A1-7
[NAME OF INSTITUTION SERVING AS
FINANCIAL INSTITUTION]
By:
----------------------------------------
Name:
Title:
A1-8
Exhibit A to Annex 1
--------------------
[Letterhead of NUF LLC]
[Date]
[Name and Address of Financial Institution]
Attention:
------------------
Re: Notice of Sole Control
----------------------
Ladies and Gentlemen:
As referenced in the Collateral Account Control Agreement, dated
, 200 , among National Steel Corporation, you and the undersigned (a copy
------ -
of which is attached) we hereby give you notice of our sole control over each of
the Pledged Accounts and all financial assets or funds credited thereto. You are
hereby instructed not to accept any direction, instructions or entitlement
orders or instructions with respect to the Pledged Accounts or the financial
assets or funds credited thereto from any person other than the undersigned,
unless otherwise ordered by a court of competent jurisdiction.
You are instructed to deliver a copy of this notice by facsimile
transmission to National Steel Corporation.
Very truly yours,
NUF LLC
By:
----------------------------------------
Name:
Title:
cc: National Steel Corporation
A1-9
Exhibit B to Annex 1
--------------------
Permitted Investments
---------------------
A1-10
Exhibit C to Annex 1
--------------------
[Letterhead of NUF LLC]
[Date]
[Name and Address of Financial Institution]
Attention:
---------------
Re: Termination of Collateral Account
Control Agreement
-----------------
You are hereby notified that the Collateral Account Control Agreement
between you, National Steel Corporation and the undersigned (a copy of which is
attached) is terminated and you have no further obligations to the undersigned
pursuant to such Agreement. Notwithstanding any previous instructions to you,
you are hereby instructed to accept all future directions with respect to
account number(s) from National Steel Corporation. This notice
-----------
terminates any obligations you may have to the undersigned with respect to such
account, however nothing contained in this notice shall alter any obligations
which you may otherwise owe to National Steel Corporation pursuant to any other
agreement.
You are instructed to deliver a copy of this notice by facsimile
transmission to National Steel Corporation.
Very truly yours,
NUF LLC
By:
----------------------------------------
Name:
Title:
A1-11
Annex 2 to
Pledge and Security Agreement
PLEDGE AMENDMENT
This Pledge Amendment, dated as of , 200 , is delivered
---------- -
pursuant to Section 4.4(a) of the Pledge and Security Agreement dated September
28, 2001, by (the "Borrower"), the undersigned Grantor and the other
----------
Subsidiaries of the Borrower from time to time party thereto as Grantors in
favor of NUF LLC (the "Pledge and Security Agreement") and the undersigned
hereby agrees that this Pledge Amendment may be attached to the Pledge and
Security Agreement and that the Pledged Collateral listed on this Pledge
Amendment shall be and become part of the Collateral referred to in the Pledge
and Security Agreement and shall secure all Secured Obligations of the
undersigned. Capitalized terms used herein but not defined herein are used
herein with the meaning given them in the Pledge and Security Agreement.
[Grantor]
By:
----------------------------------------
Name:
Title:
Pledged Stock
-------------
Number of
Shares, Units or
Issuer Class Certificate No(s). Par Value Interests
------ -------------- ------------------ -------------- ----------------
Pledged Debt
------------
Description of Principal
Issuer Debt Certificate No(s). Final Maturity Amount
------ -------------- ------------------ -------------- ----------------
ACKNOWLEDGED AND AGREED
as of the date first above written
NUF LLC
By:
-------------------------------
Name:
Title:
A2-1
Annex 3 to
Pledge and Security Agreement
JOINDER AGREEMENT
This Joinder Agreement, dated as of , 200 , is delivered
------- -
pursuant to Section 7.10 of the Pledge and Security Agreement dated as of
September 28, 2001 (the "Pledge and Security Agreement") by National Steel
Corporation (the "Borrower") and the Subsidiaries of the Borrower listed on the
signature pages thereof in favor of NUF LLC (the "Secured Party"). Capitalized
terms used herein but not defined herein are used with the meanings given them
in the Pledge and Security Agreement.
By executing and delivering this Joinder Agreement, the undersigned,
as provided in Section 7.10 of the Pledge and Security Agreement, hereby becomes
a party to the Pledge and Security Agreement as a Grantor thereunder with the
same force and effect as if originally named as a Grantor therein and, without
limiting the generality of the foregoing, hereby grants to the Secured Party, as
collateral security for the full, prompt and complete payment and performance
when due (whether at stated maturity, by acceleration or otherwise) of the
Secured Obligations of the undersigned, hereby collaterally assigns, conveys,
mortgages, pledges, hypothecates and transfers to the Secured Party and grants
to the Secured Party a Lien on and security interest in, all of its right, title
and interest in, to and under the Collateral and expressly assumes all
obligations and liabilities of a Grantor thereunder.
The information set forth in Annex 1-A is hereby added to the
information set forth in Schedules 1 through 6 to the Pledge and Security
Agreement.
The undersigned hereby represents and warrants that each of the
representations and warranties contained in Article 3 of the Pledge and Security
Agreement applicable to it is true and correct on and as the date hereof as if
made on and as of such date.
In WITNESS WHEREOF, the undersigned has caused this Joinder Agreement
to be duly executed and delivered as of the date first above written.
[Additional Grantor]
By:
----------------------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED
as of the date first above written
NUF LLC
By:
----------------------------------------
Name:
Title:
A3-1
Annex 4 to
Pledge and Security Agreement
FORM OF
COPYRIGHT SECURITY AGREEMENT
Copyright Security Agreement, dated as of , 200 , by
--------- -- -
National Steel Corporation (the "Borrower") and each of the other entities
listed on the signature pages hereof or which becomes a party hereto pursuant to
Section 7.10 of the Security Agreement referred to below (each a "Grantor" and,
collectively, the "Grantors"), in favor of NUF LLC (the "Secured Party").
W i t n e s s e t h:
Whereas, pursuant to the Amended and Restated Subordinated Credit
Agreement, dated as of September 28, 2001 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement")
among the Borrower and Secured Party, the Secured Party has severally agreed to
make extensions of credit to the Borrower upon the terms and subject to the
conditions set forth therein; and
Whereas, the Grantors other than the Borrower are party to the
Subordinated Guaranty pursuant to which they have guaranteed the Obligations;
and
Whereas, all the Grantors are party to a Subordinated Pledge and
Security Agreement of even date herewith in favor of the Secured Party (the
"Security Agreement") pursuant to which the Grantors are required to execute and
deliver this Copyright Security Agreement;
Now, Therefore, in consideration of the premises and to induce the
Secured Party to enter into the Credit Agreement and to induce the Secured Party
to make extensions of credit to the Borrower thereunder, each Grantor hereby
agrees with the Secured Party as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, terms
-------------
defined in the Credit Agreement or in the Security Agreement and used herein
have the meaning given to them in the Credit Agreement or the Security
Agreement.
SECTION 2. Grant of Security Interest in Copyright Collateral. Each
--------------------------------------------------
Grantor, as collateral security for the full, prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or otherwise)
of the Secured Obligations of such Grantor, hereby collaterally assigns,
conveys, mortgages, pledges, hypothecates and transfers to the Secured Party,
and grants to the Secured Party a lien on and security interest in, all of its
right, title and interest in, to and under the following Collateral of such
Grantor (the "Copyright Collateral"):
(a) all of its Copyrights and Copyright Licenses to which it is a
party, including those referred to on Schedule I hereto;
(b) all reissues, continuations or extensions of the foregoing; and
(c) all Proceeds of the foregoing, including any claim by Grantor
against third parties for past, present, future infringement or dilution of any
Copyright or Copyright licensed under any Copyright License.
A4-1
SECTION 3. Security Agreement. The security interest granted pursuant
------------------
to this Copyright Security Agreement is granted in conjunction with the security
interest granted to the Secured Party pursuant to the Security Agreement and
each Grantor hereby acknowledges and affirms that the rights and remedies of the
Secured Party with respect to the security interest in the Copyright Collateral
made and granted hereby are more fully set forth in the Security Agreement, the
terms and provisions of which are incorporated by reference herein as if fully
set forth herein.
[signature page follows]
A4-2
In WITNESS WHEREOF, each Grantor has caused this Copyright Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.
Very truly yours,
[GRANTORS]
By:
----------------------------------------
Name:
Title:
Accepted and Agreed:
NUF LLC, as Secured Party
By:
----------------------------------------
Name:
Title:
A4-3
Acknowledgement of Grantor
--------------------------
State of )
----------------
) ss.
County of )
---------------
On this day of , before me personally appeared
--- -------- ----
, proved to me on the basis of satisfactory evidence to be
----------------------
the person who executed the foregoing instrument on behalf of ,
----------------
who being by me duly sworn did depose and say that he is a duly authorized
officer of said corporation, that the said instrument was signed on behalf of
said corporation as duly authorized by its Board of Directors and that he
acknowledged said instrument to be the free act and deed of said corporation.
----------------------------
Notary Public
A4-4
SCHEDULE I
to
COPYRIGHT SECURITY AGREEMENT
COPYRIGHT REGISTRATIONS
-----------------------
A. REGISTERED COPYRIGHTS
Including Copyright Reg. No. and Date
B. COPYRIGHT APPLICATIONS
C. COPYRIGHT LICENSES
Including Name of Agreement, Parties and Date of Agreement
A4-5
Annex 5 to
Pledge and Security Agreement
Form of Patent Security Agreement
Patent Security Agreement, dated as of , 2000 , by
--------- -- -
National Steel Corporation, a Delaware corporation (the "Borrower") and each of
the other entities listed on the signature pages hereof or which becomes a party
hereto pursuant to Section 7.10 of the Security Agreement referred to below
(each a "Grantor" and, collectively, the "Grantors"), in favor of NUF LLC (the
"Secured Party").
W i t n e s s e t h:
Whereas, pursuant to the Amended and Restated Subordinated Credit
Agreement, dated as of September 28, 2001 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement")
among the Borrower and the Secured Party, the Secured Party has agreed to make
extensions of credit to the Borrower upon the terms and subject to the
conditions set forth therein; and
Whereas, the Grantors other than the Borrower are party to the
Subordinated Guaranty pursuant to which they have guaranteed the Obligations;
and
Whereas, all the Grantors are party to a Subordinated Pledge and
Security Agreement of even date herewith in favor of the Secured Party (the
"Security Agreement") pursuant to which the Grantors are required to execute and
deliver this Patent Security Agreement;
Now, Therefore, in consideration of the premises and to induce the
Secured Party to enter into the Credit Agreement and to induce the Secured Party
to make extensions of credit to the Borrower thereunder, each Grantor hereby
agrees with the Secured Party as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, terms
-------------
defined in the Credit Agreement or in the Security Agreement and used herein
have the meaning given to them in the Credit Agreement or the Security
Agreement.
SECTION 2. Grant of Security Interest in Patent Collateral. Each
-----------------------------------------------
Grantor, as collateral security for the full, prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or otherwise)
of the Secured Obligations of such Grantor, hereby collaterally assigns,
conveys, mortgages, pledges, hypothecates and transfers to the Secured Party,
and grants to the Secured Party a lien on and security interest in, all of its
right, title and interest in, to and under the following Collateral of such
Grantor (the "Patent Collateral"):
(a) all of its Patents and Patent Licenses to which it is a party,
including those referred to on Schedule I hereto;
(b) all reissues, continuations or extensions of the foregoing; and
(c) all Proceeds of the foregoing, including any claim by Grantor
against third parties for past, present or future infringement or dilution of
any Patent or any Patent licensed under any Patent License.
SECTION 3. Security Agreement. The security interest granted pursuant
------------------
to this Patent Security Agreement is granted in conjunction with the security
interest granted to the Secured Party pursuant to the Security Agreement and
each Grantor hereby acknowledges and
A5-1
affirms that the rights and remedies of the Secured Party with respect to the
security interest in the Patent Collateral made and granted hereby are more
fully set forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
[signature page follows]
A5-2
In WITNESS WHEREOF, each Grantor has caused this Patent Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.
Very truly yours,
NATIONAL STEEL CORPORATION
By:
----------------------------------------
Name:
Title:
Accepted and Agreed:
NUF LLC, as Secured Party
By:
----------------------------------------
Name:
Title:
A5-3
Acknowledgement of Grantor
--------------------------
State of )
----------------
) ss.
County of )
---------------
On this day of , before me personally appeared
--- -------- ----
, proved to me on the basis of satisfactory evidence to be
----------------------
the person who executed the foregoing instrument on behalf of National Steel
Corporation, who being by me duly sworn did depose and say that he is a duly
authorized officer of said corporation, that the said instrument was signed on
behalf of said corporation as duly authorized by its Board of Directors and that
he acknowledged said instrument to be the free act and deed of said corporation.
-------------------------
Notary Public
A5-4
SCHEDULE I
to
PATENT SECURITY AGREEMENT
PATENT REGISTRATIONS
--------------------
A. REGISTERED PATENTS
National Steel Corporation:
--------------------------
Registration Number Date
------------------- ----
6,143,100 November 7, 2000
6,066,699 May 23, 2000
6,007,642 December 28, 1999
5,672,637 September 30, 1997
5,645,121 July 8, 1997
5,600,564 February 4, 1997
5,571,328 November 5, 1996
5,544,868 August 13, 1996
5,494,943 February 27, 1996
5,485,387 January 16, 1996
B. PATENT APPLICATIONS
C. PATENT LICENSES
Including Name of Agreement, Parties and Date of Agreement
A5-5
Annex 6 to
Pledge and Security Agreement
FORM OF
TRADEMARK SECURITY AGREEMENT
Trademark Security Agreement, dated as of , 200 , by
--------- -- -
National Steel Corporation, a Delaware corporation (the "Borrower") and each of
the other entities listed on the signature pages hereof or which becomes a party
hereto pursuant to Section 7.10 of the Security Agreement referred to below
(each a "Grantor" and, collectively, the "Grantors"), in favor of NUF LLC (the
"Secured Party").
W i t n e s s e t h:
Whereas, pursuant to the Amended and Restated Subordinated Credit
Agreement, dated as of September 28, 2001 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement")
among the Borrower and the Secured Party, the Secured Party has agreed to make
extensions of credit to the Borrower upon the terms and subject to the
conditions set forth therein; and
Whereas, the Grantors other than the Borrower are party to the
Subordinated Guaranty pursuant to which they have guaranteed the Obligations;
and
Whereas, all the Grantors are party to a Subordinated Pledge and
Security Agreement of even date herewith in favor of the Secured Party (the
"Security Agreement") pursuant to which the Grantors are required to execute and
deliver this Trademark Security Agreement;
Now, Therefore, in consideration of the premises and to induce the
Secured Party to enter into the Credit Agreement and to induce the Secured Party
to make extensions of credit to the Borrower thereunder, each Grantor hereby
agrees with the Secured Party as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, terms
-------------
defined in the Credit Agreement or in the Security Agreement and used herein
have the meaning given to them in the Credit Agreement or the Security
Agreement.
SECTION 2. Grant of Security Interest in Trademark Collateral. Each
--------------------------------------------------
Grantor, as collateral security for the full, prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or otherwise)
of the Secured Obligations of such Grantor, hereby collaterally assigns,
conveys, mortgages, pledges, hypothecates and transfers to the Secured Party,
and grants to the Secured Party a lien on and security interest in, all of its
right, title and interest in, to and under the following Collateral of such
Grantor (the "Trademark Collateral"):
(a) all of its Trademarks and Trademark Licenses to which it is a
party, including those referred to on Schedule I hereto;
(b) all reissues, continuations or extensions of the foregoing;
(c) all goodwill of the business connected with the use of, and
symbolized by, each Trademark and each Trademark License; and
A6-1
(d) all Proceeds of the foregoing, including any claim by Grantor
against third parties for past, present, future (i) infringement or dilution of
any Trademark or Trademark licensed under any Trademark License or (ii) injury
to the goodwill associated with any Trademark or any Trademark licensed under
any Trademark License.
SECTION 3. Security Agreement. The security interest granted pursuant
------------------
to this Trademark Security Agreement is granted in conjunction with the security
interest granted to the Secured Party pursuant to the Security Agreement and
each Grantor hereby acknowledges and affirms that the rights and remedies of the
Secured Party with respect to the security interest in the Trademark Collateral
made and granted hereby are more fully set forth in the Security Agreement, the
terms and provisions of which are incorporated by reference herein as if fully
set forth herein.
[signature page follows]
A6-2
In WITNESS WHEREOF, each Grantor has caused this Trademark Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.
Very truly yours,
NATIONAL STEEL CORPORATION
By:
----------------------------------------
Name:
Title:
Accepted and Agreed:
NUF LLC
By:
-------------------------------
Name:
Title:
A6-3
Acknowledgement of Grantor
--------------------------
State of )
----------------
) ss.
County of )
---------------
On this day of , before me personally appeared
--- -------- ----
, proved to me on the basis of satisfactory evidence to be
----------------------
the person who executed the foregoing instrument on behalf of National Steel
Corporation, who being by me duly sworn did depose and say that he is a duly
authorized officer of said corporation, that the said instrument was signed on
behalf of said corporation as duly authorized by its Board of Directors and that
he acknowledged said instrument to be the free act and deed of said corporation.
-------------------------
Notary Public
A6-4
SCHEDULE I
to
TRADEMARK SECURITY AGREEMENT
TRADEMARK REGISTRATIONS
-----------------------
A. REGISTERED TRADEMARKS
National Steel Corporation:
Serial Number Registration Number ▇▇▇▇
------------- ------------------- ----
7611891 N
76298749 NAX
76267862 NAAMS GLOBAL STANDARD
COMPONENTS
74549401 1921935 ACRGS ASSEMBLY COST
REDUCTION GROUP
STANDARDS
74547636 1931045 NORTH AMERICAN
AUTOMOTIVE METRIC
STANDARDS NAAMS
74086416 1676549 NAPAC-F
74086407 1672364 NSQ
74086406 1728868 NSQ K
74086391 1672363 NAPAC
73761689 1541216 NATEN
73759121 1543241 N NATIONAL STEEL
73697192 1500964 POWERPANEL
73414131 1304681 ▇▇▇▇▇▇▇▇▇▇▇
▇▇-▇
73362939 1268862 NATIONAL ALUMINUM
73250886 1246827 STRONGDRAIN
73104858 1066079 STRONGTRIM
73026816 1023121 NACOR
72331929 0912309 GCX
72273520 0876250 SUPER STRONG
72260875 0844863 WEIRCHROME
72240464 0827767 WEIRNAMEL
72233189 0818546 WEIRALLOY
72215434 0800903 NATIONAL STEEL
72215434 0797043 WEIRTON
72197706 0788378 HERCULES
72193032 0787426 WSX
72131308 0740445 SNO-MAN
72121287 0728430 GLX
B. TRADEMARK APPLICATIONS
C. TRADEMARK LICENSES
Including Name of Agreement, Parties and Date of Agreement
A6-6
NATIONAL STEEL CORPORATION
Subordinated Pledge & Security Agreement
Sch.1 - State of Incorporation and Principal Executive Office
Corporation State of Incorporation
----------- ----------------------
NATIONAL STEEL CORPORATION Delaware
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
NATIONAL STEEL PELLET COMPANY Delaware
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
NATIONAL STEEL FUNDING CORPORATION Delaware
▇▇▇▇ ▇.▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
NS HOLDINGS CORPORATION Delaware
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ProCOIL CORPORATION Delaware
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
NATIONAL STEEL CORPORATION
Subordinated Pledge & Security Agreement
Schedule 2: Pledged Collateral
Class of Stock Certificate Number of
Stock Issuer Stock Number Par Value Shares
------------ -------- ----------------- --------- ---------
NS Holdings
Corporation Common # 2 $ .0 1 500
ProCoil
Corporation # 16 $ 1.00 300
National Steel
Pellet Company Common # 4 $100.00 1,000
National Steel
Funding Corporation Capital # 1 $ 1.00 1,000
National Steel Corporation
Schedule 4 - Location of Inventory and Equipment
--------------------------------------------------------------------------------
10/31/2001
----------
FACILITY ADDRESS COUNTY TYPE TONS DIV
------------------------------------------------------------------------------------------------------------------------------------
▇.▇. ▇▇▇▇▇ - AOJZ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ EL PASO CONSIGNMENT 1,681 GC
AMERICAN BUILDINGS CO. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ JEFFERSON CONSIGNMENT 89 GL
AMERICAN BUILDINGS CO. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ JEFFERSON CONSIGNMENT 16 MW
ANCON TRANS ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ RIVERSIDE WAREHOUSE 40 GC
ANCON TRANSPORTATION ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ RIVERSIDE PROCESSOR 304 ▇▇
▇▇▇▇▇ METAL ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ PROCESSOR 1,595 ▇▇
▇▇▇▇▇ METAL ▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ PROCESSOR 1,570 ▇▇
▇▇▇▇▇ METAL PROCESS ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇
▇▇▇▇▇▇▇▇▇ METALS ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇ ▇▇▇▇ PROCESS/SLIT 43 GC
ARLINGTON METALS CORP.- SAWYER ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ BERRIEN SLIT ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇ METALS CORP.- SAWYER ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ BERRIEN PROCESSOR 689 MW
AUTO ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ GENESEE PROCESSOR 446 GL
AUTO ▇▇▇▇▇▇▇▇ - ▇▇▇▇▇ 1301 ALABAMA, FLINT, MI. 48505 ▇▇▇▇▇ PROCESSOR 125 ▇▇
▇▇▇▇▇▇▇ STEEL ▇▇▇▇ ▇▇▇ ▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ PROCESSOR 693 ▇▇
▇▇▇▇▇▇▇ STEEL ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ PROCESS/INSPECTION 51 ▇▇
▇▇▇▇▇▇▇ STEEL CO ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ PROCESSOR ▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ #▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ST. LOUIS WAREHOUSE 458 ▇▇
▇▇▇▇▇▇▇ RIVER TERMINAL INC. ▇ ▇ ▇▇▇▇▇▇ ▇▇., ▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ST. LOUIS PROCESSOR 104 ▇▇
▇▇▇▇▇▇▇▇ STANDARD ▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇- ▇▇▇▇ STORAGE 715 MW
▇▇▇▇
▇▇▇▇▇▇ RAIL BNSF/▇▇▇▇▇ YARD/SIDING 9101-9105, ▇▇▇▇▇, ▇▇
▇▇▇▇▇ MERCED WAREHOUSE 872 ▇▇
▇▇▇▇▇▇ - GALESBURG ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇ CONSIGNMENT 5,382 ▇▇
▇▇▇▇▇▇ - GALESBURG ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ CONSIGNMENT 1,576 ▇▇
▇▇▇▇▇▇ - SAN MARCO ▇▇▇▇ ▇ ▇-▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ CONSIGNMENT 657 ▇▇
▇▇▇▇▇▇ - SAN MARCO ▇▇▇▇ ▇. ▇-▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇ CONSIGNMENT 524 ▇▇
▇▇▇▇▇▇ - VISALIA ▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ TULARE CONSIGNMENT 479 ▇▇
▇▇▇▇▇▇ - VISALIA ▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ TULARE CONSIGNMENT 1,340 ▇▇
▇▇▇▇▇ STEEL CO. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ SLIT 5,120 ▇▇
▇▇▇▇▇ STEEL CO. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ PROCESSOR 408 MW
CENTRAL CAN CO.-CONSIGNMENT ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ CONSIGNMENT 939 MW
CHEMCOATERS PROCESSOR 136
CHICAGO COLD ROLLING ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ PROCESSOR 77 MW
CHICAGO STEEL & TINPLATE ▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇ LAKE WAREHOUSE 54 GC
CHICAGO STEEL & TINPLATE WAREHOUS ▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇, ▇▇ ▇▇▇▇▇ LAKE STORAGE 19 GL
CHICAGO STEEL-AL ▇▇▇ ▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ETOWAH PROCESS/LEVEL 37 GC
CHICAGO STEEL-PA #1 FAIRLESS WORKS, FAIRLESS HILLS PA 19030- BUCKS WAREHOUSE 7 GC
5001
CHICAGO TIN & STORAGE-STORAGE ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇. ▇▇▇▇▇ LAKE STORAGE 130 MW
COLORSTRIP/PREFINISH - RICHMOND ▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ CONTRA COSTA PROCESSOR 4 MW
CONSOLIDATED METAL PRODUCTS ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ STORAGE 84 GL
CONSOLIDATED METALS ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ PROCESSOR 410 MW
CONSOLIDATED METALS ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ WAREHOUSE 161 ▇▇
▇▇▇▇▇▇▇▇ STEEL CENTER 6837 WYOMING, DEARBORN, MI. 48126 ▇▇▇▇▇ STORAGE 17,694 ▇▇
▇▇▇▇▇▇▇▇ STEEL CENTER 6837 WYOMING, DEARBORN, MI. 48126 ▇▇▇▇▇ PROCESSOR 207 MW
DELACO STEEL CORP ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ PROCESSOR 1,300 ▇▇
▇▇▇▇▇▇ CORPORATION ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ BLANKING 306 GL
National Steel Corporation
Schedule 4 - Location of Inventory and Equipment
--------------------------------------------------------------------------------
10/31/2001
----------
FACILITY ADDRESS COUNTY TYPE TONS DIV
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ CORPORATION ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ BLANKING 255 ▇▇
▇▇▇▇▇▇ STEEL CORPORATION ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, SLIT 548 ▇▇
▇▇▇▇▇▇ STEEL CORPORATION ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, SLIT STORAGE 59 GL
DNN GALVANIZING CORP. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ GALVANIZE, SLIT 16,608 GL
DOUBLE G COATING ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ PROCESS/GALVANIZE 8,519 GC
DOUBLE G COATINGS INC. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ PROCESSOR 4,681 MW
DOUBLE G COATINGS INC. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ GALVANIZE 113 GL
DOUBLECOTE ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ PROCESSOR 6,196 MW
DOUBLECOTE ▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ PROCESS/PAINT 4,459 GC
DOUBLECOTE 951 ▇▇▇▇▇▇▇ ROAD, JACKSON, MS. 39282 ▇▇▇▇▇ STORAGE 2,155 GL
DSC Ltd. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Trenton PROCESSOR 158 GL
EAGLE STEEL PRODUCTS ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ JEFFERSON PROCESSOR 977 GL
EAGLE STEEL PRODUCTS ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ PROCESSOR 6 MW
FERALLOY ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ IL MADISON PROCESSOR 1,007 MW
FERALLOY CALIFORNIA ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ SAN JOANQUIN PROCESS/SLIT 124 GC
FERALLOY CORP. - NORTH AMERICAN 18030 RIULTO, MELVINDALE, MI. 48122 ▇▇▇▇▇ SLIT, LEVEL 1,780 GL
FERALLOY GC ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ MADISON WAREHOUSE 1,051 GC
FERALLOY NORTH AMERICAN STEEL ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ PROCESSOR 47 MW
FERALLOY PORTAGE ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ PROCESS/LEVEL 116 GC
FERROLUX METALS ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ PROCESSOR 391 GL
FERROUS METAL PROC ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ CUYAHOGA CONSIGNMENT 3,538 GC
FLAT ROCK METALS ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ PROCESSOR 923 MW
FLAT ROCK METALS ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ PROCESSOR 353 MW
FLAT ROCK METALS INC. ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ POLISH, CTL,▇▇▇▇▇,BLANK 5,496 GL
FLAT ROCK METALS INC.- PORTAGE ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ POLISH, CTL,▇▇▇▇▇,BLANK 157 ▇▇
▇▇▇▇ MOTOR COMPANY ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ PROCESSOR 330 GL
G.C. STEEL-MIDWEST DIVISION ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ PROCESSOR 65 GC
GENERAL STEVEDORES ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ WAREHOUSE 3,237 GC
GENERAL STEVEDORES ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ STORAGE 114 GL
GENERAL STEVEDORES INC. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ STORAGE 10,168 MW
GENERAL STEVEDORES INC. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ SLIT, CTL 1,073 MW
GLOBAL MATERIAL ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ PROCESSOR 74 MW
GRANITE CITY PICKLING ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ MADISON PROCESS/PICKLE 7,374 GC
GREAT LAKES PROCESS ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ PROCESS/CHEM TREAT 34 GC
GREAT LAKES PROCESSING ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ PROCESSOR 2,369 MW
GREAT LAKES STEEL ECORSE, MI STORAGE 104 ▇▇
▇▇▇▇▇ WAREHOUSE ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ PROCESS/SLIT 23 ▇▇
▇▇▇▇▇ - PEKIN ▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ TAZEWELL PROCESS/PAINT 5,645 ▇▇
▇▇▇▇▇ STEEL ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ JEFFERSON PROCESS/PAINT 10 ▇▇
▇▇▇▇▇ WHEEL INTERNATIONAL ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ PROCESSOR 18 GL
HEARTLAND STEEL ▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ VIGO PROCESS/PICKLE 6 ▇▇
▇▇▇▇▇▇▇▇ STEEL - BALTIMORE ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ BALTOMORE PROCESSOR 426 ▇▇
▇▇▇▇▇▇▇▇ STEEL - GC ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ MADISON PROCESSOR 78 GL
National Steel Corporation
Schedule 4 - Location of Inventory and Equipment
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10/31/2001
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FACILITY ADDRESS COUNTY TYPE TONS DIV
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▇▇▇▇▇▇▇▇ STEEL-▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ DEKALB PROCESS/PCKL, SLIT, SLIDE 76
▇▇
▇▇▇▇▇▇▇▇ STEEL-▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ MONTGOMERY PROCESS/PCKL, SLIT, SLIDE 88
▇▇
▇▇▇▇▇▇▇▇ STEEL-GC ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ MADISON PROCESS/PICKLE, SLIT, 14,905 ▇▇
▇▇▇▇▇-▇▇▇▇ ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇. ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ LOS ANGELES PROCESS/SLIT, C-T-L 110
GC
HS PROCESSING LP ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ DEKALB PROCESSOR 44 GL
HS PROCESSING, L.P. (NATL.GALV) 1500 TELB, MONROE, MI. 48161 ▇▇▇▇▇▇ ▇▇▇▇▇▇, SLIT, GALVANIZE 528 GL
HUNTCO STEEL INC #l HUNTCO DR, MADISON, IL, 62060 MADISON PROCESS/SLIT 973 GC
HUNTCO STEEL INC ▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ MADISON PROCESSOR 171 MW
HUNTCO STEEL INC-AR ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ MISSISSIPPI PROCESS/PICKLE, LEVEL 432 GC
INDIANA PICKLING & PROCESSING ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ PORTER PROCESSOR 324 GL
INTEGRATED TERMINALS ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ERIE STORAGE 83 MW
INTEGRATED TERMINALS-LACK ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ERIE WAREHOUSE 341 GL
INTEGRATED TERMINALS-WOOD ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ STORAGE 1,916 GL
INTERNATIONAL DIST. SERVICES ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ SUMMIT STORAGE 3,214 GL
INTL DIST SERVICES ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ SUMMIT STORAGE 431 MW
JIT TERMINAL ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ HAMILTON STORAGE 624 MW
JIT TERMINAL ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ CHATTANOOG WAREHOUSE 70
A ▇▇
▇▇▇▇▇ STEEL CORP. 4343 WYOMING, DEARBORN, MI. 48121 ▇▇▇▇▇ ▇▇▇▇▇▇ 6,274 ▇▇
▇▇▇▇▇▇ MFG CO ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ DUBUQUE PROCESSOR 5 ▇▇
▇▇▇▇▇▇▇▇▇ STEEL ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ PROCESSOR 1,340 ▇▇
▇▇▇▇▇▇▇▇▇ STEEL CO. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ PROCESSOR 2,143 ▇▇
▇▇▇▇▇, W.S. (▇▇▇▇ ▇▇▇▇▇) 19451 SHERWOOD, DETROIT, MI. 48234 ▇▇▇▇▇ ▇▇▇▇▇▇, SLIT 1,472 ▇▇
▇▇▇▇▇▇ WAREHOUSE ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ MADISON WAREHOUSE 27 ▇▇
▇▇▇▇▇▇ WAREHOUSING ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇. ▇▇▇▇▇ MADISON STORAGE 1,187 MW
LIVERPOOL COIL PROCESSING ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇ MEDINA SLIT, CTL, STORAGE 2,966 GL
LIVERPOOL COIL PROCESSING ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇ MEDINA PROCESSOR 1,619 MW
MAIN STEEL POLISHING CORP. ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇ POLISH 232 GL
MAKSTEEL ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ SCARBOROUGH PROCESSOR 575 GL
MARUBENI STEEL PROCESSOR 20
MATERIAL WORKS ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ RANDOLPH PROCESSOR 1,766 MW
MATERIAL WORKS ▇▇▇ ▇ & ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇ RANDOLPH PROCESS/CUT TO LENGTH 1,098 ▇▇
▇▇▇▇▇▇▇ METALS ▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ SAN CONSIGNMENT 11
BERNARDINO ▇▇
▇▇▇▇▇▇ BLANKING ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ BLANK 1,289 ▇▇
▇▇▇▇▇▇ BLANKING ▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇ CUYAHOGA PROCESSOR 1,218 MW
METAL BUILDING COMP - ARIZ ▇▇▇ ▇. ▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ MARICOPA CONSIGNMENT 163 GC
METAL BUILDING COMP-UTAH ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ SALT LAKE CONSIGNMENT 258 GC
METAL COATERS OF CA ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ CUCAMONGA PROCESS/PAINT 2,505 GC
METAL COATERS OF CALIFORNIA ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ CUCAMONGA PROCESSOR 1,436 MW
METAL COATERS OF CALIFORNIA ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ CUCAMONGA PROCESSOR ▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ PROCESS/PAINT 1,288 GC
National Steel Corporation
Schedule 4 - Location of Inventory and Equipment
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10/31/2001
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FACILITY ADDRESS COUNTY TYPE TONS DIV
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METAL COATERS OF GEORGIA ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇., ▇▇, ▇▇▇▇▇▇▇▇, ▇▇. 30062-2488 ▇▇▇▇ ▇▇▇▇▇▇▇ 114 GL
METAL COATERS OF GEORGIA ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇., ▇▇, ▇▇▇▇▇▇▇▇, ▇▇. 30062-2488 ▇▇▇▇ ▇▇▇▇▇▇▇ 4,536 MW
METAL COATERS OF GEORGIA #2 ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ 433 MW
METAL PREP - HOUSTON ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ WAREHOUSE 12,487 GC
METAL PREP - MEMPHIS ▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ SHELBY PROCESS/PAINT 14,787 GC
METAL PREP - MEMPHIS ▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ SHELBY PROCESSOR 86 GL
METAL PROCESSORS INC ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ PROCESS/SLIT 5,058 GC
METALS USA - FLAT ROLL ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ PROCESSOR 205 MW
METRO METALS CORP ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ PORTER PROCESSOR 114 GL
MICHIGAN STEEL PROCESSING ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇., ▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ SLIT, BLANK 2,420 GL
MICHIGAN STEEL PROCESSING ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇., ▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ PROCESSING 871 MW
MIDSOUTH TERMINAL PO BOX 13286, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ SHELBY WAREHOUSE 51 GC
MIDWEST METAL COATING #9 ▇▇▇▇▇▇ CT, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ MADISON PROCESS/PAINT 13,224 GC
MIDWEST METAL COATINGS ▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ MADISON PROCESSOR 251 ▇▇
▇▇▇▇▇▇ CAN ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ HAMILTON CONSIGNMENT 478 ▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ WATERLOO STORAGE 201 ▇▇
▇▇▇▇▇▇ AUTO STEEL CANADA INC. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇ PROCESSOR 3,347 GL
MSC LAMINATES & COMPOSITS - Wood ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ WOOD PROCESSOR 2,129 GL
NAMASCO LTD BLANKING CENTRE ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ PROCESSOR 82 GL
NATIONAL COMP. INC. NCI COMPONENTS, ▇/▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ MERCED CONSIGNMENT 830 GC
NATIONAL MATERIAL COMPANY ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ RICHlAND CONSIGNMENT 419 GL
NATIONAL PROCESSING ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇, ▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ LAKE WAREHOUSE 171 GC
NCI BUILDING-CONSIGNMENT ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ CONSIGNMENT 325 ▇▇
▇▇▇▇▇ METAL NORTH ▇▇▇▇▇▇, IN ▇▇▇▇▇ PROCESSOR 10 ▇▇
▇▇▇▇▇ METAL PROCESSING ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ PROCESSOR 88 ▇▇
▇▇▇▇▇ METAL PROCESSING CANADA ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇▇ ▇▇▇ ONTARIO 1,529 ▇▇
▇▇▇▇▇ METAL/UTILASE ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ PROCESSOR 2,717 MW
NOVA STEEL LEXINGTON, KY PROCESSOR 29 ▇▇
▇▇▇▇▇ TRANSFER ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ STORAGE 1,101 ▇▇
▇▇▇▇▇ TRANSFER ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, #▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ CLEARFIELD PROCESSOR 312 ▇▇
▇▇▇▇▇ TRANSFER FREEPORT CTR. BLDG. #Al5 ZTS ▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇ ▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ 8 ▇▇▇▇▇ WAREHOUSE 42 GC
OHIO PICKLING & PROCESSING ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ PROCESSOR 1,574 GL
OHIO STAMPING & MAINCNE, INC ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ PROCESSOR 28 GL
OHIO-KENTUCKY STEEL ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ WARREN STORAGE 82 MW
POLYMER COATERS ▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ JEFFERSON WAREHOUSE 4,185 GC
POLYMER COIL COATER INC ▇▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ JEFFERSON CONSIGNMENT 951 MW
PRECISION STRIP ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ PROCESSOR 138 GL
PRECISION STRIP ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ AUGLAIZE WAREHOUSE 23 GC
PRECISION STRIP - CONSIGNMENT ▇▇ ▇. ▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ AUGLAIZE CONSIGNMENT 757 MW
PRECOAT METALS - CHICAGO ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ PROCESSOR 400 MW
PRECOAT METALS - GRANITE ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇,
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ MADISON PROCESSOR 3,664 MW
PRECOAT METALS - GRANITE ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇,
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ MADISON PAINTER 2,206 GL
PRECOAT METALS - HOUSTON ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 2,003 GL
PRECOAT METALS - HOUSTON ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ PROCESSOR 1,534 MW
National Steel Corporation
Schedule 4 - Location of Inventory and Equipment
--------------------------------------------------------------------------------
10/31/2001
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FACILITY ADDRESS COUNTY TYPE TONS DIV
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PRECOAT METALS - JACKSON ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ PROCESSOR 5,917 MW
PRECOAT METALS - JACKSON ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇. 39212-9788 ▇▇▇▇▇ ▇▇▇▇▇▇▇ 220 GL
PRECOAT METALS - MADISON ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ MADISON PROCESSOR 3,207 MW
PRECOAT METALS - MCKEESPORT MCKEESPORT, PA ALLEGHENY PROCESSOR 704 MW
PRECOAT METALS - PORTAGE U.S. HIGHWAY 12 @ STATE ROAD 249, PORTAGE, IN. 46368-1281 PORTER PROCESSOR 5,319 MW
PRECOAT METALS - PORTAGE U.S. HIGHWAY 12 @ STATE ROAD 249, PORTAGE, IN. 46368-1281 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 11 GL
PRECOAT METALS-C ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ PROCESS/PAINT 611 GC
PRECOAT METALS-G ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇ ▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ MADISON PROCESS/PAINT 30,788 GC
PRECOAT METALS-H ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ PROCESS/PAINT 3,452 GC
PRECOAT METALS-J ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ PROCESS/PAINT 4,590 GC
PRECOAT METALS-MADISON ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ MADISON WAREHOUSE 5,399 GC
PRECOAT METALS-MCK ▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ALLEGHENY PROCESS/PAINT 1,976 GC
PRECOAT METALS-P U.S. ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ PORTER PROCESS/PAINT 7,578 GC
PREFINISH-MIDDLETOWN ▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ BUTLER PROCESSOR 16 GL
PROCESSING TECHNOLOGY -
PERRYSBU ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ PERRYSBURG PROCESSOR 545 GL
PROCESSING TECHNOLOGY-P ▇▇▇▇ ▇ ▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ PORTER STORAGE 7,654 MW
PROCESSING TECHNOLOGY-W ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ WOOD PROCESSOR 271 MW
PROCESSOR TECH ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ PORTER WAREHOUSE 246 GC
PROCESSOR TECHNOLOGY - ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇. ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ PORTER PROCESSOR 6 GL
PROCOIL DISTRIBUTION CENTER ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ STORAGE 12,829 GL
PROCOIL DISTRIBUTION CENTER ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ STORAGE 10,238 MW
PROCOIL LASER WELDING CENTER ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ PROCESSOR 1,160 MW
PROCOIL PROCESSING ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ SLIT, CTL, ▇▇▇▇▇ 11,577 GL
PROCOIL PROCESSING ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ PROCESSOR 3,057 ▇▇
▇▇▇▇▇▇ METALS ▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ DELAWARE SLIT, ▇▇▇▇▇ ▇▇▇ ▇▇
QUALITY COIL PROCESSING INC. ▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, SLIT, STORAGE 231 GL
QUALITY STEEL STORAGE ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ WOOD STORAGE 508 MW
ROLL & HOLD - CHARLOTTE ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ MECKLENBURG PROCESSOR 145 MW
ROLL & HOLD - ELDRIDGE ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ SCOTT PROCESSOR 1,610 MW
ROLL & HOLD - ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, IO 52748-9399 ▇▇▇▇▇ PROCESSOR 63 GL
ROLL & HOLD - HAMMOND 1745 165TH, HAMMOND, IN 46320-2822 LAKE STORAGE 685 MW
ROLL & HOLD - HAMMOND ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ LAKE STORAGE 49 GL
ROLL & HOLD - INDY ▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ STORAGE 435 GL
ROLL & HOLD - INDY ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ STORAGE 25 MW
ROLL & HOLD - LOUISVILLE ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇
▇▇▇▇ & ▇▇▇▇ - ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ SUMMIT STORAGE 1,542 GL
ROLL & HOLD - MACEDONIA ▇▇▇▇ ▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ SUMMIT STORAGE 1,304 MW
ROLL & HOLD - PORTAGE ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ PORTAGE STORAGE 1,952 MW
ROLL & HOLD - PORTAGE ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, STORAGE 13 GL
ROLL & HOLD-CHAR ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ MECKLENBURG WAREHOUSE 463 GC
ROLL & HOLD-DAV/ELD ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ WAREHOUSE 3,194 GC
ROLL & HOLD-MACEDONIA ▇▇▇▇ ▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ SUMMIT WAREHOUSE 273 GC
ROLL & HOLD-PORTAGE ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ WAREHOUSE 90 GC
National Steel Corporation
Schedule 4 - Location of Inventory and Equipment
--------------------------------------------------------------------------------
10/31/2001
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FACILITY ADDRESS COUNTY TYPE TONS DIV
------------------------------------------------------------------------------------------------------------------------------------
ROLL COATERS INC. - GP ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ PROCESSOR 290 MW
IN 46140
ROLL COATERS INC. - GREENFIELD ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, STORAGE 18 GL
ROLL COATERS INC. - K 2ND & ▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇ INDUSTRIAL PARK, LA PORTE PROCESSOR 1,570 ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ROLL COATERS INC. - KINGSBURY 2ND & ▇▇▇▇ ▇▇., KINGSBURY INDUSTRIAL PARK, LA PORTE PAINTER, STORAGE 252 ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ROLL COATERS INC. - W ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ PROCESSOR 82 MW
ROLL COATERS INC-H ▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇ PROCESSOR 175 MW
ROLLCOATER - ▇▇▇▇ 4502 FREEDOM WAY, WEIRTON, VW 26062-5269 ▇▇▇▇▇▇▇ PROCESS/PAINT 1,015 GC
ROLLCOATER-GRN ▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ PROCESS/PAINT 2,443 GC
ROLLCOATER-KING ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ LA PORTE PROCESS/PAINT 1,750 GC
RSDC OF MICHIGAN LLC ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ PROCESSOR 9,220 GL
RSDC OF MICHIGAN LLC ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ PROCESSOR 318 MW
SHILOH CORPORATION ▇▇▇ ▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ RICHLAND BLANKING ▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ PROCESSOR ▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ LLC ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ PROCESSOR ▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ INC ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ WASHINGTON PROCESSOR 347 ▇▇
▇▇▇▇▇ METALS ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ LOS ANGELES PROCESS/SLIT 23 GC
STEEL WHSE ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇, ▇▇ BEND, ST. ▇▇▇▇▇▇ PROCESS/SLIT, SHEAR 371 GC
IN 46624
STEEL WORKS CORP. ▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ PROCESS/SLIT, RECOIL, 3,759 GC
IL 62040
STEELOX SYSTEMS ▇▇▇▇ ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ STORAGE 251 MW
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
STORAGE SVCS ▇▇▇▇ ▇▇▇ ▇▇ ▇▇, ▇▇▇ ▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ WAREHOUSE 11 GC
SUN STEEL ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ PROCESSOR 299 ▇▇
▇▇▇▇▇▇ COIL PROCESS (36) STONEY CREEK, OH PROCESSOR 99 ▇▇
▇▇▇▇▇▇ COIL PROCESS (3H) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ TRUMBULL PROCESSOR 10 ▇▇
▇▇▇▇▇▇ COIL PROCESSING ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇▇▇, TRUMBULL PROCESSOR 315 GL
OH 44481-9264
▇▇▇▇▇▇ STEEL INC.-GREEN ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ WAREHOUSE 610 ▇▇
▇▇▇▇▇▇ STEEL INC.-GREEN ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ WAREHOUSE 296 GL
TIN PLATE PARTNERS ▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇, ▇▇ ▇▇▇▇▇ LAKE CONSIGNMENT 1,887 ▇▇
▇▇▇▇▇▇ BLANK INC. ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇. ▇, ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ BLANKING 718 ▇▇
▇▇▇▇▇▇ BLANK, INC ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇. ▇., ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ OTTOWA PROCESS/BLANKER 49 GC
TOYOTA TSUSHO AMERICA INC. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ STORAGE 7,680 GL
TOYOTA TSUSHO AMERICA INC. - ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇., ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ WAREHOUSE ▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.-STORAGE ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ STORAGE 3,956 MW
TRENTON STEEL PROCESSING & STORAGE ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ STORAGE 383 GL
US COATERS LLC #9 ▇▇▇▇▇▇ CT, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ MADISON PROCESS/COATER, SEALER 57 GC
VALLEY CITY STEEL ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ MEDINA PROCESSOR 75 ▇▇
▇▇▇▇▇▇▇ IND-NE ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇ ▇▇▇▇▇▇▇ CONSIGNMENT 8,310 GC
VALMONT IND-TX ▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ WASHINGTON CONSIGNMENT 1,402 GC
VALMONT INDUSTRIES CONSIGNMENT 182 MW
VERSATUBE CORP ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ OAKLAND PROCESSOR 61 GL
VERSITUBE CORP ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇ OAKLAND PROCESSOR 46 ▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ PROCESS/PICKLE, SLIT 484 ▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, SLIT 185 GL
National Steel Corporation
Schedule 4 - Location of Inventory and Equipment
--------------------------------------------------------------------------------
10/31/2001
----------
FACILITY ADDRESS COUNTRY TYPE TONS DIV
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▇▇▇▇ STEEL CO. - TAYLOR ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, SLIT 10,684 ▇▇
▇▇▇▇▇▇▇▇▇ CTG CONSIGNMENT 49 ▇▇
▇▇▇▇▇ INDUSTRIES-PROCESSOR ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ PROCESSOR 1,138 ▇▇
▇▇▇▇▇ STEEL DISTRIBUTION CENTER ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ STORAGE 23 GL
WESTERN INTERMODAL ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ CONTRA COSTA STORAGE 702 MW
WESTERN INTERMODAL SERVICES ▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ CONTRA COSTA STORAGE 4 GL
WESTERN INTMDL SVC ▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ CONTRA WAREHOUSE 242
COSTA ▇▇
▇▇▇▇▇▇▇▇▇▇▇ SPECIALITY PROCESSING ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ PROCESSOR 1,333 ▇▇
▇▇▇▇▇▇▇▇▇▇▇ STEEL ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ PORTER PROCESS/TEMP PICKL SPLIT 814
▇▇
▇▇▇▇▇▇▇▇▇▇▇ STEEL - PORTER ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇ PORTER PICKLE, SLIT, CTL 422 ▇▇
▇▇▇▇▇▇▇▇▇▇▇ STEEL - TAYLOR 11700 WORTHINGTON DRIVE, TAYLOR, MI. 48180 ▇▇▇▇▇ SLIT, CTL, LEVEL 1,835 ▇▇
▇▇▇▇▇▇▇▇▇▇▇ STEEL - WSDA ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ ▇ ▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ PROCESS/PICKLE 81
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Total OP&W Tons $476,941
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NATIONAL STEEL CORPORATION
Sch. 5 - Intellectual Property
Subordinated Pledge and Security Agreement
I. Registered Trademarks:
---------------------
Serial Number Registration Number ▇▇▇▇
------------- ------------------- ----
7611891 N
76298749 NAX
76267862 NAAMS GLOBAL STANDARD
COMPONENTS
74549401 1921935 ACRGS ASSEMBLY COST
REDUCTION GROUP
STANDARDS
74547636 1931045 NORTH AMERICAN AUTOMOTIVE
METRIC STANDARDS NAAMS
74086416 1676549 NAPAC-F
74086407 1672364 NSQ
74086406 1728868 NSQ K
74086391 1672363 NAPAC
73761689 1541216 NATEN
73759121 1543241 N NATIONAL STEEL
73697192 1500964 POWERPANEL
73414131 1304681 STRONGPANEL
73362939 1268862 NATIONAL ALUMINUM
73250886 1246827 STRONGDRAIN
73104858 1066079 STRONGTRIM
73026816 1023121 NACOR
72331929 0912309 GCX
72273520 0876250 SUPER STRONG
72260875 0844863 WEIRCHROME
72240464 0827767 WEIRNAMEL
72233189 0818546 WEIRALLOY
72215434 0800903 NATIONAL STEEL
72215434 0797043 WEIRTON
72197706 0788378 HERCULES
72193032 0787426 WSX
72131308 0740445 SNO-MAN
72121287 0728430 GLX
II. Registered Copyrights:
----------------------
Registration Number Date
------------------- ----
6,143,l00 November 7, 2000
6,066,699 May 23, 2000
6,007,642 December 28, 1999
5,672,637 September 30, 1997
5,645,121 July 8, 1997
5,600,564 February 4, 1997
5,571,328 November 5, 1996
5,544,868 August 13, 1996
5,494,943 February 27, 1996
5,485,387 January 16, ▇▇▇▇
-▇-
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Schedule 6 - Bank Accounts; Control Accounts
--------------------------------------------------------------------------------
DDA Box
Bank Number Number Location Description
Mellon Bank 021-7461 14048 Chicago Lockbox
Mellon Bank ▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ Dallas Lockbox
Mellon Bank ▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ Pittsburgh Lockbox
As of 12-21-01
TABLE OF CONTENTS
Section 1. Subordinated Guaranty.............................................1
Section 2. Limitation of Guaranty............................................2
Section 3. Contribution......................................................2
Section 4. Authorization; Other Agreements...................................2
Section 5. Guaranty Absolute and Unconditional...............................4
Section 6. Waivers...........................................................5
Section 7. Reliance..........................................................5
Section 8. Waiver of Subrogation and Contribution Rights.....................5
Section 9. Subordination.....................................................5
Section 10. Default; Remedies.................................................6
Section 11. Obligations Subordinate to Senior Loan Obligations................6
Section 12. Irrevocability...................................................10
Section 13. Setoff...........................................................10
Section 14. No Marshalling...................................................10
Section 15. Enforcement; Amendments; Waivers.................................10
Section 16. Successors and Assigns...........................................11
Section 17. Representations and Warranties; Covenants........................11
Section 18. Governing Law....................................................11
Section 19. Submission to Jurisdiction; Service of Process...................11
Section 20. Waiver of Jury Trial.............................................12
Section 21. Notices..........................................................12
Section 22. Severability.....................................................12
Section 23. Additional Guarantors............................................12
Section 24. Collateral.......................................................12
Section 25. Costs and Expenses...............................................12
Section 26. Waiver...........................................................12
Section 27. Entire Agreement.................................................13
Subordinated Guaranty
SUBORDINATED GUARANTY dated as of September 28, 2001 by National Steel
Pellet Company, a Delaware corporation ("Pellet"), National Steel Funding
Company, a Delaware corporation ("NSFC"), NS Holdings Corporation, a Delaware
corporation ("NS Holdings"), ProCoil Corporation, a Delaware corporation
("ProCoil"), and each of the other entities which becomes a party hereto
pursuant to Section 23 hereof (collectively, together with Pellet, NSFC, NS
Holdings and ProCoil, the "Guarantors" and, each individually, a "Guarantor"),
in favor of NUF LLC, a Delaware limited liability company (the "Lender") and
each other holder of an Obligation (as each such term is defined in the
Subordinated Credit Agreement referred to below) (each, a "Guaranteed Party"
and, collectively the "Guaranteed Parties").
W i t n e s s e t h:
Whereas, pursuant to the Amended and Restated Subordinated Credit
Agreement dated as of September 28, 2001 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Subordinated Credit
Agreement"; capitalized terms defined therein and used herein having the
meanings given to them in the Subordinated Credit Agreement) between National
Steel Corporation, a Delaware corporation (the "Borrower") and the Lender, the
Lender has agreed to make extensions of credit to the Borrower upon the terms
and subject to the conditions set forth therein; and
Whereas, each Guarantor will receive substantial direct and indirect
benefits from the making of the Loans and the granting of the other financial
accommodations to the Borrower under the Subordinated Credit Agreement; and
Whereas, it is a condition to the making of the Loans that each
Guarantor execute and deliver this Subordinated Guaranty for the benefit of the
Guaranteed Parties;
Now, Therefore, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. Subordinated Guaranty.
---------------------
(a) Subject to the provisions of the Lien Subordination Agreement, to
induce the Lender to make the Loans, each Guarantor hereby absolutely,
unconditionally and irrevocably guarantees, as primary obligor and not merely as
surety, the full and punctual payment when due, whether at stated maturity or
earlier, by reason of acceleration, mandatory prepayment or otherwise in
accordance herewith or any other Loan Document, of all the Obligations, whether
or not from time to time reduced or extinguished or hereafter increased or
incurred, whether or not recovery may be or hereafter may become barred by any
statute of limitations, and whether enforceable or unenforceable as against the
Borrower, now or hereafter existing, or due or to become due, including
principal, interest (including interest at the contract rate applicable upon
default accrued or accruing after the commencement of any proceeding under the
Bankruptcy Code, whether or not such interest is an allowed claim in such
proceeding), fees and costs of collection. This Subordinated Guaranty
constitutes an absolute guaranty of payment and performance and not of
collection.
(b) Each Guarantor further agrees that, if any payment made by
Borrower or any other person and applied to the Obligations is at any time
annulled, avoided, set aside, rescinded, invalidated, declared to be fraudulent
or preferential or otherwise required to be refunded or repaid, or the proceeds
of Collateral are required to be returned by any Guaranteed Party to the
Borrower, its estate, trustee, receiver or any other party, including any
Guarantor, under any bankruptcy law, state or federal law, common law or
equitable cause, then, to the extent of such payment or repayment, any such
Guarantor's liability hereunder (and any Lien or other Collateral securing such
liability) shall be and remain in full force and effect, as fully as if such
payment had never been made or, if prior thereto this Subordinated Guaranty
shall have been cancelled or surrendered (and if any Lien or other Collateral
securing such Guarantor's liability hereunder shall have been released or
terminated by virtue of such cancellation or surrender), this Subordinated
Guaranty (and such Lien or other Collateral) shall be reinstated in full force
and effect, and such prior cancellation or surrender shall not diminish,
release, discharge, impair or otherwise affect the obligations of any such
Guarantor in respect of the amount of such payment (or any Lien or other
Collateral securing such obligation).
Section 2. Limitation of Guaranty. Any term or provision of this
----------------------
Subordinated Guaranty or any other Loan Document to the contrary
notwithstanding, the maximum aggregate amount of the Obligations for which any
Guarantor shall be liable shall not exceed the maximum amount for which such
Guarantor can be liable without rendering this Subordinated Guaranty or any
other Loan Document, as it relates to such Guarantor, subject to avoidance under
applicable law relating to fraudulent conveyance or fraudulent transfer
(including section 548 of the Bankruptcy Code or any applicable provisions of
comparable state law) (collectively, "Fraudulent Transfer Laws"), in each case
after giving effect (a) to all other liabilities of such Guarantor, contingent
or otherwise, that are relevant under such Fraudulent Transfer Laws
(specifically excluding, however, any liabilities of such Guarantor in respect
of intercompany Indebtedness to the Borrower to the extent that such
Indebtedness would be discharged in an amount equal to the amount paid by such
Guarantor hereunder) and (b) to the value as assets of such Guarantor (as
determined under the applicable provisions of such Fraudulent Transfer Laws) of
any rights to subrogation, contribution, reimbursement, indemnity or similar
rights held by such Guarantor pursuant to (i) applicable law, (ii) Section 3 of
this Subordinated Guaranty or (iii) any other agreement providing for an
equitable allocation among such Guarantor and other Subsidiaries or Affiliates
of the Borrower of obligations arising under this Subordinated Guaranty or other
guaranties of the Obligations by such parties.
Section 3. Contribution. To the extent that any Guarantor shall be
------------
required hereunder to pay a portion of the Obligations which shall exceed the
greater of (i) the amount of the economic benefit actually received by such
Guarantor from the Loans and (ii) the amount which such Guarantor would
otherwise have paid if such Guarantor had paid the aggregate amount of the
Obligations (excluding the amount thereof repaid by the Borrower) in the same
proportion as such Guarantor's net worth at the date enforcement hereunder is
sought bears to the aggregate net worth of all the Guarantors at the date
enforcement hereunder is sought, then such Guarantor shall be reimbursed by such
other Guarantors for the amount of such excess, pro rata, based on the
respective net worths of such other Guarantors at the date enforcement hereunder
is sought.
Section 4. Authorization; Other Agreements. Subject to the provisions
-------------------------------
of the Lien Subordination Agreement, the Guaranteed Parties are hereby
authorized, without notice to or demand upon any Guarantor, which notice or
demand is expressly waived hereby,
2
and without discharging or otherwise affecting the obligations of any Guarantor
hereunder (which shall remain absolute and unconditional notwithstanding any
such action or omission to act), from time to time, to:
(a) supplement, renew, extend, accelerate or otherwise change the time
for payment of, or other terms relating to, the Obligations, or any part of
them, or otherwise modify, amend or change the terms of any promissory note or
other agreement, document or instrument (including, without limitation, the
other Loan Documents) now or hereafter executed by the Borrower and delivered to
the Guaranteed Parties or any of them, including, without limitation, any
increase or decrease of principal or the rate of interest thereon;
(b) waive or otherwise consent to noncompliance with any provision of
any instrument evidencing the Obligations, or any part thereof, or any other
instrument or agreement in respect of the Obligations (including the other Loan
Documents) now or hereafter executed by the Borrower and delivered to the
Guaranteed Parties or any of them;
(c) accept partial payments on the Obligations;
(d) receive, take and hold additional security or collateral for the
payment of the Obligations or any part of them and exchange, enforce, waive,
substitute, liquidate, terminate, abandon, fail to perfect, subordinate,
transfer, otherwise alter and release any such additional security or
collateral;
(e) settle, release, compromise, collect or otherwise liquidate the
Obligations or accept, substitute, release, exchange or otherwise alter, affect
or impair any security or collateral for the Obligations or any part of them or
any other guaranty therefor, in any manner;
(f) add, release or substitute any one or more other guarantors,
makers or endorsers of the Obligations or any part of them and otherwise deal
with the Borrower or any other guarantor, maker or endorser;
(g) apply to the Obligations any and all payments or recoveries from
the Borrower, from any other guarantor, maker or endorser of the Obligations or
any part of them or from any Guarantor to the Obligations in such order as
provided herein whether such Obligations are secured or unsecured or guaranteed
or not guaranteed by others;
(h) apply any and all payments or recoveries from any Guarantor of the
Obligations or sums realized from security furnished by such Guarantor upon its
indebtedness or obligations to the Guaranteed Parties, or any of them, whether
or not such indebtedness or obligations relate to the Obligations; and
(i) refund at any time any payment received by any Guaranteed Party in
respect of any of the Obligations, and payment to such Guaranteed Party of the
amount so refunded shall be fully guaranteed hereby even though prior thereto
this Subordinated Guaranty shall have been cancelled or surrendered (or any
release or termination of any Collateral by virtue thereof), and such prior
cancellation or surrender shall not diminish, release, discharge, impair or
otherwise affect the obligations of any Guarantor hereunder in respect of the
amount so refunded (and any Collateral so released or terminated shall be
reinstated with respect to such obligations);
3
even if any right of reimbursement or subrogation or other right or remedy of
any Guarantor is extinguished, affected or impaired by any of the foregoing
(including, without limitation, any election of remedies by reason of any
judicial, non-judicial or other proceeding in respect of the Obligations which
impairs any subrogation, reimbursement or other right of such Guarantor).
Section 5. Guaranty Absolute and Unconditional. Each Guarantor hereby
-----------------------------------
waives any defense of a surety or guarantor or any other obligor on any
obligations arising in connection with or in respect of any of the following and
hereby agrees, subject to the provisions of the Lien Subordination Agreement,
that its obligations under this Subordinated Guaranty are absolute and
unconditional and shall not be discharged or otherwise affected as a result of:
(a) the invalidity or unenforceability of any of the Borrower's
obligations under the Subordinated Credit Agreement or any other Loan Document
or any other agreement or instrument relating thereto, or any security for, or
other guaranty of the Obligations or any part of them, or the lack of perfection
or continuing perfection or failure of priority of any security for the
Obligations or any part of them;
(b) the absence of any attempt to collect the Obligations or any part
of them from the Borrower or other action to enforce the same;
(c) failure by any Guaranteed Party to take any steps to perfect and
maintain any Lien on, or to preserve any rights to, any Collateral;
(d) any Guaranteed Party's election, in any proceeding instituted
under chapter 11 of the Bankruptcy Code, of the application of Section
1111(b)(2) of the Bankruptcy Code;
(e) any borrowing or grant of a Lien by the Borrower, as
debtor-in-possession, or extension of credit, under Section 364 of the
Bankruptcy Code;
(f) the disallowance, under Section 502 of the Bankruptcy Code, of all
or any portion of any Guaranteed Party's claim (or claims) for repayment of the
Obligations;
(g) any use of cash collateral under Section 363 of the Bankruptcy
Code;
(h) any agreement or stipulation as to the provision of adequate
protection in any bankruptcy proceeding;
(i) the avoidance of any Lien in favor of the Guaranteed Parties or
any of them for any reason;
(j) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, liquidation or dissolution proceeding commenced by or
against the Borrower, any Guarantor or any of the Borrower's other Subsidiaries,
including without limitation, any discharge of, or bar or stay against
collecting, all or any of the Obligations (or any part of them or interest
thereon) in or as a result of any such proceeding;
(k) failure by any Guaranteed Party to file or enforce a claim against
the Borrower or its estate in any bankruptcy or insolvency case or proceeding;
4
(l) any action taken by any Guaranteed Party that is authorized
hereby;
(m) any election following the occurrence of an Event of Default by
any Guaranteed Party to proceed separately against the personal property
Collateral in accordance with such Guaranteed Party's rights under the UCC or,
if the Collateral consists of both personal and real property, to proceed
against such personal and real property in accordance with such Guaranteed
Party's rights with respect to such real property; or
(n) any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor or any other obligor on
any obligations, other than the payment in full of the Obligations.
Section 6. Waivers. Each Guarantor hereby waives diligence,
-------
promptness, presentment, demand for payment or performance and protest and
notice of protest, notice of acceptance and any other notice in respect of the
Obligations or any part of them, and any defense arising by reason of any
disability or other defense of the Borrower. Each Guarantor shall not, until the
Obligations are irrevocably paid in full and the Commitment has been terminated,
assert any claim or counterclaim it may have against the Borrower or set off any
of its obligations to the Borrower against any obligations of the Borrower to
it. In connection with the foregoing, each Guarantor covenants that its
obligations hereunder shall not be discharged, except by complete performance.
Section 7. Reliance. Each Guarantor hereby assumes responsibility for
--------
keeping itself informed of the financial condition of the Borrower and any and
all endorsers and/or other guarantors 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, and each
Guarantor hereby agrees that no Guaranteed Party shall have any duty to advise
any Guarantor of information known to it regarding such condition or any such
circumstances. In the event any Guaranteed Party, in its sole discretion,
undertakes at any time or from time to time to provide any such information to
any Guarantor, such Guaranteed 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 such Guaranteed Party, pursuant to accepted or
reasonable commercial finance or banking practices, wishes to maintain
confidential or (iii) to make any other or future disclosures of such
information or any other information to any Guarantor.
Section 8. Waiver of Subrogation and Contribution Rights. Until the
---------------------------------------------
Obligations have been irrevocably paid in full and the Commitment has been
terminated, the Guarantors shall not enforce or otherwise exercise any right of
subrogation to any of the rights of the Guaranteed Parties or any part of them
against the Borrower or any right of reimbursement or contribution or similar
right against the Borrower by reason of this Agreement or by any payment made by
any Guarantor in respect of the Obligations.
Section 9. Subordination. Each Guarantor hereby agrees that any
-------------
Indebtedness of the Borrower now or hereafter owing to any Guarantor, whether
heretofore, now or hereafter created (the "Guarantor Subordinated Debt"), is
hereby subordinated to all of the Obligations, and that, except as permitted
under Section 7.4 of the Subordinated Credit Agreement, the Guarantor
Subordinated Debt shall not be paid in whole or in part until the Obligations
have been paid in full and this Subordinated Guaranty is terminated and of no
further force or effect. No Guarantor shall accept any payment of or on account
of any Guarantor
5
Subordinated Debt at any time in contravention of the foregoing. Subject to the
Lien Subordination Agreement, upon the occurrence and during the continuance of
an Event of Default, the Borrower shall pay to the Lender any payment of all or
any part of the Guarantor Subordinated Debt and any amount so paid to the Lender
shall be applied to payment of the Obligations as provided in the Subordinated
Credit Agreement. Each payment on the Guarantor Subordinated Debt received in
violation of any of the provisions hereof shall be deemed to have been received
by such Guarantor as trustee for the Guaranteed Parties and, subject to the Lien
Subordination Agreement, shall be paid over to the Lender immediately on account
of the Obligations, but without otherwise affecting in any manner such
Guarantor's liability hereof. Each Guarantor agrees to file all claims against
the Borrower in any bankruptcy or other proceeding in which the filing of claims
is required by law in respect of any Guarantor Subordinated Debt, and, subject
to the Lien Subordination Agreement, the Lender shall be entitled to all of such
Guarantor's rights thereunder. If for any reason a Guarantor fails to file such
claim at least ten Business Days prior to the last date on which such claim
should be filed, such Guarantor hereby irrevocably appoints the Lender as its
true and lawful attorney-in-fact and is hereby authorized to act as
attorney-in-fact in such Guarantor's name to file such claim or, in the Lender's
discretion, to assign such claim to and cause proof of claim to be filed in the
name of the Lender or its nominee. In all such cases, whether in administration,
bankruptcy or otherwise, the person or persons authorized to pay such claim
shall, subject to the Lien Subordination Agreement, pay to the Lender the full
amount payable on the claim in the proceeding, and, to the full extent necessary
for that purpose, each Guarantor hereby assigns to the Lender all of such
Guarantor's rights to any payments or distributions to which such Guarantor
otherwise would be entitled. If the amount so paid is greater than such
Guarantor's liability hereunder, the Lender shall pay the excess amount to the
party entitled thereto. In addition, each Guarantor hereby irrevocably appoints
the Lender as its attorney-in-fact to exercise all of such Guarantor's voting
rights in connection with any bankruptcy proceeding or any plan for the
reorganization of the Borrower.
Section 10. Default; Remedies. The obligations of each Guarantor
-----------------
hereunder are independent of and separate from the Obligations. Subject to the
provisions of the Lien Subordination Agreement, if any of the Obligations is not
paid when due, or upon any default of a Guarantor hereunder, or upon any Event
of Default under the Subordinated Credit Agreement or upon any default by the
Borrower as provided in any other instrument or document evidencing all or any
part of the Obligations, the Lender may, at its sole election, proceed directly
and at once, without notice, against any Guarantor to collect and recover the
full amount or any portion of the Obligations then due, without first proceeding
against the Borrower or any other guarantor of the Obligations, or against any
Collateral under the Loan Documents or joining the Borrower or any other
guarantor in any proceeding against such Guarantor. Subject to the provisions of
the Lien Subordination Agreement, at any time after maturity of the Obligations,
the Lender may (unless the Obligations have been irrevocably paid in full),
without notice to any Guarantor and regardless of the acceptance of any
Collateral for the payment hereof, appropriate and apply toward the payment of
the Obligations (i) any indebtedness due or to become due from any Guaranteed
Party to such Guarantor and (ii) any moneys, credits or other property belonging
to such Guarantor at any time held by or coming into the possession of any
Guaranteed Party or any of its respective Affiliates.
Section 11. Obligations Subordinate to Senior Loan Obligations. Each
--------------------------------------------------
Guarantor and the Guaranteed Parties, by the Guaranteed Parties' acceptance
hereof, covenant and agree that, to the extent and in the manner hereinafter set
forth in this Section 11, each
6
Guarantor's obligations hereunder with respect to Indebtedness under the
Subordinated Credit Agreement (the "Subordinated Indebtedness") are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full in cash of all Senior Loan Obligations. This Section 11 constitutes a
continuing offer to all Persons who become holders of, or continue to hold,
Subordinated Indebtedness, each of whom is an obligee hereunder and is entitled
to enforce such holder's rights hereunder, subject to the provisions hereof,
without any act or notice of acceptance hereof or reliance hereon.
(a) Payment Over of Proceeds Upon Bankruptcy, Etc.
(i) In the event of (A) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to any Guarantor or any
Loan Party or its assets, (B) any liquidation, dissolution or other winding up
of any Guarantor or any Loan Party, whether voluntary or involuntary or whether
or not involving insolvency or bankruptcy or (C) any assignment for the benefit
of creditors or any other marshalling of assets or liabilities of any Guarantor
or any Loan Party (each such event, if any, herein sometimes referred to as a
"Proceeding"), then and in any such event the holders of all Senior Loan
Obligations shall first be paid in full (including, without limitation, all
Post-Commencement Interest) or provision for such payment shall be made and
agreed to in writing by the holders of Senior Loan Obligations before any
Guaranteed Party is entitled to receive any direct or indirect payment or
distribution of any cash, property or securities on account of or with respect
to Subordinated Indebtedness and to that end the holders of Senior Loan
Obligations shall be entitled to receive (pro rata on the basis of the
respective amounts of such Senior Loan Obligations held by them) directly, for
application to the payment thereof (to the extent necessary to pay all such
Senior Loan Obligations in full in cash, whether or not due, including
specifically, without limitation, all Post-Commencement Interest after giving
effect to any substantially concurrent payment or distribution to the holders of
such Senior Loan Obligations and any provision for such payment made and agreed
to in writing by the holders of Senior Loan Obligations), any and all payments
or distributions of any kind or character, whether in cash, property or
securities, which may be payable or deliverable in respect of the Subordinated
Indebtedness in any such Proceeding (including any payment or distribution which
may be payable or deliverable by reason of the payment of any other Indebtedness
of any Guarantor being subordinated to the payment of Subordinated
Indebtedness). To the extent any payment of Senior Loan Obligations (whether by
or on behalf of any Guarantor as proceeds of security of enforcement of any
right of setoff or otherwise) is declared to be fraudulent or preferential, set
aside or required to be paid to a trustee, receiver or other similar party under
any bankruptcy, insolvency, receivership or similar law, then if such payment is
recovered by, or paid over to, such trustee, receiver or other similar party,
the Senior Loan Obligations or part thereof originally intended to be satisfied
shall be deemed to be reinstated and outstanding as if such payment had not
occurred.
(ii) Notwithstanding the foregoing provisions of paragraph (i) of
this Section 11, if in the event of any Proceeding any Guaranteed Party shall
have received any payment from or distribution of assets of any Guarantor or the
estate created by the commencement of any such Proceeding of any kind or
character in respect of the Subordinated Indebtedness, whether in cash, property
or securities (including any payment or distribution which may be payable or
deliverable by reason of the payment of any other Indebtedness of any Guarantor
being subordinated to the payment of the Subordinated Indebtedness) before all
Senior Loan Obligations, whether or not due and including specifically, without
limitation, all Post-
7
Commencement Interest thereon, is paid in full or provision therefor is made and
agreed to in writing by the holders of Senior Loan Obligations, then in such
event, such payment or distribution shall be received and held in trust for the
benefit of and shall be paid over to the holders of Senior Loan Obligations (pro
rata, on the basis of the respective amounts of such Senior Loan Obligations
held by them) remaining unpaid, to the extent necessary to pay all such Senior
Loan Obligations in full in cash including, without limitation, all
Post-Commencement Interest thereon, after giving effect to any substantially
concurrent payment or distribution to or for the holders of such Senior Loan
Obligations, if made in cash for application to (and if made other than in cash
to be held as collateral security for) the payment in full of the Senior Loan
Obligations.
(b) Default on Senior Loan Obligations.
(i) If any Senior Loan Obligations Default shall at any time
occur or exist, then at all times thereafter until such Senior Loan Obligations
Default shall have been cured or otherwise ceases to exist pursuant to the terms
of such Senior Loan Obligations, or the benefits of this sentence shall have
been waived in writing by or on behalf of, and at the sole option of, the
holders of a majority of the principal amount of such Senior Loan Obligations,
then and in such event (A) no Guarantor may or shall make any payment on account
of or with respect to the Subordinated Indebtedness which a holder of
Subordinated Indebtedness would be entitled to receive but for the provisions of
this Section 11(b)(i) and (B) no Guaranteed Party shall be entitled, nor shall
any Guaranteed Party have the right to, declare to be due and payable, demand
prepayment of, or take any action to collect, any principal outstanding
hereunder, any interest accrued thereon, or any other amount payable hereunder,
and any purported such declaration, demand or other action shall have no force
or effect.
(ii) In the event that, notwithstanding the foregoing provisions
of this Section 11(b), any payment or distribution shall be made by or on behalf
of any Guarantor from any of its assets and received by any Guaranteed Party at
a time when such payment was prohibited by the provisions of Section 11(b)(i),
then such payment or distribution shall be held in trust for the benefit of, and
shall be immediately paid over to, the holders of Senior Loan Obligations (pro
rata, on the basis of the respective amount of such Senior Loan Obligations held
by them) remaining unpaid, if made in cash for application to (and if made other
than in cash to be held as collateral security for) the payment in full of all
Senior Loan Obligations in accordance with their terms (after giving effect to
any prior or substantially concurrent payment to the holders of such Senior Loan
Obligations).
(iii) The provisions of this Section 11(b) shall not modify or
limit in any way the application of Section 11(a).
(c) Subrogation to Rights of Guaranteed Parties of Senior Loan
Obligations. After all amounts payable under or in respect of Senior Loan
Obligations are paid in full in cash, whether or not due, each Guaranteed Party
shall be subrogated to the extent of the payments or distributions made to the
holders of, or otherwise applied to payment of, such Senior Loan Obligations
pursuant to the provisions of this Section 11 (equally and ratably with the
holders of all Indebtedness of any Guarantor which by its express terms is
subordinate and subject in right of payment to Senior Loan Obligations to
substantially the same extent as the Subordinated Indebtedness is so subordinate
and subject in right of payment and which is entitled to like rights of
subrogation), and to the rights of the holders of such Senior Loan Obligations
to receive
8
payments and distributions of cash, property and securities applicable to the
Senior Loan Obligations until the Subordinated Indebtedness shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of the Senior Loan Obligations of any cash, property or securities to
which any Guaranteed Party would be entitled except for the provisions of this
Section 11, and no payments over pursuant to the provisions of this Section 11
to the holders of Senior Loan Obligations by the Guaranteed Parties shall, as
among any Guarantor and its creditors (other than holders of Senior Loan
Obligations and the Guaranteed Parties), be deemed to be a payment or
distribution by any Guarantor to or on account of the Senior Loan Obligations,
it being understood that the provisions of this are solely for the purpose of
defining the relative rights of the holders of Senior Loan Obligations on the
one hand and the Guaranteed Parties on the other hand.
(d) No Waiver of Subordination Provisions. No right of any holder of
any Senior Loan Obligations to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of any Guarantor or by any act or failure to act by such holder or any
agent of such holder, or by any noncompliance by any Guarantor with such terms,
provisions and covenants of this Subordinated Guaranty, regardless of any
knowledge thereof which any such holder may have or be otherwise charged with.
(e) Additional Documentation.
(i) Each Guaranteed Party by its acceptance hereof agrees that it
takes this Subordinated Guaranty as an obligation subordinated to Senior Loan
Obligations and agrees to execute any additional documentation that may be
necessary, in the reasonable opinion of the holder of any Senior Loan
Obligations, to evidence the subordination between the Guaranteed Parties and
the holders of Senior Loan Obligations as provided in this Section 11.
(ii) The Senior Agent is hereby authorized, and shall have the
right (without any duty) to take such action as may be necessary or appropriate
to effectuate the subordination provided for in this Section 11 including,
without limitation, the timely filing of a claim or proof of debt for the unpaid
balance of the Subordinated Indebtedness in the form required in any Proceeding.
(f) Agreements of Guaranteed Parties. Each Guaranteed Party for itself
and its successors and assigns, agrees that it will not, except as permitted
under the Senior Credit Agreement, without the prior written consent of a
majority of the holders of the Senior Loan Obligations, (i) modify or amend this
Subordinated Guaranty except to the extent not prohibited by the Senior Credit
Agreement or the Lien Subordination Agreement, (ii) cancel, waive, forgive,
transfer or assign or subordinate the Subordinated Indebtedness to any other
Indebtedness of any Guarantor or (iii) so long as any Senior Loan Obligations
are outstanding, (A) initiate any Proceeding involving any Guarantor or any
other Loan Party pursuant to which it is sought to adjudicate any Guarantor or
any other Loan Party bankrupt or insolvent or (B) exercise or assert any right
or remedy, by suit or otherwise, against any Guarantor or any other Loan Party
in respect of the Subordinated Indebtedness except as permitted under the Senior
Credit Agreement (provided that nothing herein shall prevent any Guaranteed
Party from filing a claim or statement of interest with respect to the
Obligations in any Proceeding).
(g) Third Party Reliance. The parties hereto understand and agree that
the provisions of this Section 11 are for the benefit of the Senior Agent and
the Lenders and Issuers (as defined therein) from time to time party to the
Senior Credit Agreement (in addition to the
9
parties hereto), create independent rights thereof and may be enforced
independently thereby.
Section 12. Irrevocability. This Subordinated Guaranty shall be
--------------
irrevocable as to any and all of the Obligations until the Commitment has been
terminated and all monetary Obligations then outstanding have been irrevocably
repaid in cash, at which time this Subordinated Guaranty shall automatically be
cancelled. Upon such cancellation and at the written request of any Guarantor or
its successors or assigns, and at the cost and expense of such Guarantor or its
successors or assigns, the Lender shall execute in a timely manner a
satisfaction of this Subordinated Guaranty and such instruments, documents or
agreements as are necessary or desirable to evidence the termination of this
Subordinated Guaranty.
Section 13. Setoff. Subject to the provisions of the Lien
------
Subordination Agreement, upon the occurrence and during the continuance of an
Event of Default, each Guaranteed Party and each Affiliate of a Guaranteed Party
may, without notice to any Guarantor and regardless of the acceptance of any
security or collateral for the payment hereof, appropriate and apply toward the
payment of all or any part of the Obligations (i) any indebtedness due or to
become due from such Guaranteed Party or Affiliate to such Guarantor, and (ii)
any moneys, credits or other property belonging to such Guarantor, at any time
held by or coming into the possession of such Guaranteed Party or Affiliate.
Section 14. No Marshalling. Each Guarantor consents and agrees that no
--------------
Guaranteed Party or Person acting for or on behalf of any Guaranteed Party shall
be under any obligation to marshal any assets in favor of any Guarantor or
against or in payment of any or all of the Obligations.
Section 15. Enforcement; Amendments; Waivers. No delay on the part of
--------------------------------
any Guaranteed Party in the exercise of any right or remedy arising under this
Subordinated Guaranty, the Subordinated Credit Agreement, any of the other Loan
Documents or otherwise with respect to all or any part of the Obligations, the
Collateral or any other guaranty of or security for all or any part of the
Obligations shall operate as a waiver thereof, and no single or partial exercise
by any such Person of any such right or remedy shall preclude any further
exercise thereof. No modification or waiver of any of the provisions of this
Subordinated Guaranty shall be binding upon any Guaranteed Party, except as
expressly set forth in a writing duly signed and delivered by the party making
such modification or waiver. Failure by any Guaranteed Party at any time or
times hereafter to require strict performance by the Borrower, any Guarantor,
any other guarantor of all or any part of the Obligations or any other Person of
any of the provisions, warranties, terms and conditions contained in any of the
Loan Documents now or at any time or times hereafter executed by such Persons
and delivered to any Guaranteed Party shall not waive, affect or diminish any
right of any Guaranteed Party at any time or times hereafter to demand strict
performance thereof and such right shall not be deemed to have been waived by
any act or knowledge of any Guaranteed Party, or its respective agents, officers
or employees, unless such waiver is contained in an instrument in writing,
directed and delivered to the Borrower or such Guarantor, as applicable,
specifying such waiver, and is signed by the party or parties necessary to give
such waiver under the Subordinated Credit Agreement. No waiver of any Event of
Default by any Guaranteed Party shall operate as a waiver of any other Event of
Default or the same Event of Default on a future occasion, and no action by any
Guaranteed Party permitted hereunder shall in any way affect or impair any
Guaranteed Party's rights and remedies or the obligations of any Guarantor under
this Subordinated Guaranty. Any determination by a court of competent
jurisdiction of the amount of any principal and/or interest owing by the
10
Borrower to a Guaranteed Party shall be conclusive and binding on each Guarantor
irrespective of whether such Guarantor was a party to the suit or action in
which such determination was made.
Section 16. Successors and Assigns. This Subordinated Guaranty shall
----------------------
be binding upon each Guarantor and upon the successors and assigns of such
Guarantors and shall inure to the benefit of the Guaranteed Parties and their
respective successors and assigns; all references herein to the Borrower and to
the Guarantors shall be deemed to include their respective successors and
assigns. The successors and assigns of the Guarantors and the Borrower shall
include, without limitation, their respective receivers, trustees and
debtors-in-possession. All references to the singular shall be deemed to include
the plural where the context so requires.
Section 17. Representations and Warranties; Covenants. Each Guarantor
-----------------------------------------
hereby (a) represents and warrants that the representations and warranties as to
it made by the Borrower in Article IV of the Subordinated Credit Agreement are
true and correct on each date as required by Section 3.2(b)(i) of the
Subordinated Credit Agreement and (b) agrees to take, or refrain from taking, as
the case may be, each action that is necessary to be taken or not taken, as the
case may be, so that no Default or Event of Default is caused by the failure to
take such action or to refrain from taking such action by such Guarantor.
Section 18. Governing Law. This Subordinated Guaranty and the rights
-------------
and obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
Section 19. Submission to Jurisdiction; Service of Process.
----------------------------------------------
(a) Any legal action or proceeding with respect to this Subordinated
Guaranty, and any of the other Loan Documents, 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
Guarantor 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 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 Guarantor hereby irrevocably consents to the service of any
and all legal process, summons, notices and documents in any suit, action or
proceeding brought in the United States of America arising out of or in
connection with this Subordinated Guaranty or any of the other Loan Documents by
the mailing (by registered or certified mail, postage prepaid) or delivering of
a copy of such process to such Guarantor in care of the Borrower at the
Borrower's address specified in Section 10.9 of the Subordinated Credit
Agreement. Each Guarantor 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) Nothing contained in this Section 19 shall affect the right of the
Lender or any other Guaranteed Party to serve process in any other manner
permitted by law or commence legal proceedings or otherwise proceed against a
Guarantor in any other jurisdiction.
11
(d) If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder in Dollars into another currency, the
parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which in accordance with normal
banking procedures the Lender could purchase Dollars with such other currency at
the spot rate of exchange quoted by the Lender at 11:00 a.m. (New York time) on
the Business Day preceding that on which final judgment is given, for the
purchase of Dollars, for delivery two Business Days thereafter.
Section 20. Waiver of Jury Trial. Each of the Lender, the other
--------------------
Guaranteed Parties and each Guarantor irrevocably waives trial by jury in any
action or proceeding with respect to this Subordinated Guaranty and any of the
other Loan Documents.
Section 21. Notices. Any notice or other communication herein required
-------
or permitted shall be given as provided in Section 10.9 of the Subordinated
Credit Agreement and, in the case of any Guarantor, to such Guarantor in care of
the Borrower.
Section 22. Severability. Wherever possible, each provision of this
------------
Subordinated Guaranty shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Subordinated Guaranty
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Subordinated
Guaranty.
Section 23. Additional Guarantors. Each of the Guarantors agrees that,
---------------------
if pursuant to Section 6.14 of the Subordinated Credit Agreement the Borrower
shall be required to cause any Subsidiary that is not a Guarantor to become a
Guarantor hereunder, or if for any reason the Borrower desires any such
Subsidiary to become a Guarantor hereunder, such Subsidiary shall execute and
deliver to the Lender a Guaranty Supplement in substantially the form of Exhibit
A attached hereto and shall thereafter for all purposes be a party hereto and
have the same rights, benefits and obligations as a Guarantor party hereto on
the Effective Date.
Section 24. Collateral. Each Guarantor hereby acknowledges and agrees
----------
that its obligations under this Subordinated Guaranty are secured pursuant to
the terms and provisions of the Collateral Documents executed by it in favor of
the Guaranteed Parties, and covenants that it shall not grant any Lien with
respect to its Property in favor, or for the benefit, of any Person other than
the Guaranteed Parties.
Section 25. Costs and Expenses. Each Guarantor agrees to pay or
------------------
reimburse each of the Guaranteed Parties upon demand for all out-of-pocket costs
and expenses, including, without limitation, reasonable attorneys' fees
(including allocated costs of internal counsel and costs of settlement),
incurred by the Guaranteed Parties in enforcing this Subordinated Guaranty or
any security therefor or exercising or enforcing any other right or remedy
available in connection herewith or therewith.
Section 26. Waiver. Each Guarantor hereby irrevocably and
------
unconditionally waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover any special, exemplary, punitive or
consequential damage in any legal action or proceeding in respect of this
Subordinated Guaranty or any of the other Loan Documents.
12
Section 27. Entire Agreement. This Subordinated Guaranty, taken
----------------
together with all of the other Loan Documents executed and delivered by the
Guarantors, represents the entire agreement and understanding of the parties
hereto and supersedes all prior understandings, written and oral, relating to
the subject matter hereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
13
In WITNESS WHEREOF, this Subordinated Guaranty has been duly executed
by the Guarantors on this th of December 2001.
---
National Steel Pellet Company,
a Delaware corporation
By:
------------------------------------
Name:
Title:
National Steel Funding Corporation,
a Delaware corporation
By:
------------------------------------
Name:
Title:
Ns Holdings Corporation,
a Delaware corporation
By:
------------------------------------
Name:
Title:
Procoil Corporation,
a Delaware corporation
By:
------------------------------------
Name:
Title:
[Signature Page to Guaranty]
Acknowledged and agreed to:
NUF LLC
By:
----------------------------------
Name:
Title:
Exhibit A
Guaranty Supplement
The undersigned hereby agrees to be bound as a Guarantor for purposes
of the Subordinated Guaranty dated as of September 28, 2001 (the "Subordinated
Guaranty"), among National Steel Pellet Company, National Steel Funding
Corporation, NS Holdings Corporation, ProCoil Corporation and certain Material
Subsidiaries of National Steel Corporation listed on the signature pages thereof
and acknowledged by NUF LLC, and the undersigned hereby acknowledges receipt of
a copy of the Subordinated Guaranty. Capitalized terms used herein but not
defined herein are used with the meanings given them in the Subordinated
Guaranty.
Agreed to this day of , 200
-- ------------ -
[NAME OF GUARANTOR]
By:
------------------------------------
Name:
Title:
Acknowledged and agreed to:
NUF LLC
By:
----------------------------------
Name:
Title:
Guaranty Supplement
