EXHIBIT 10.2
SECURITY AGREEMENT
dated as of May 20, 2003
among
UNITED STATES STEEL CORPORATION
and
JPMORGAN CHASE BANK,
as Collateral Agent
TABLE OF CONTENTS
PAGE
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SECTION 1. Definitions .......................................................................... 1
SECTION 2. Grant of Transaction Liens ........................................................... 9
SECTION 3. General Representations and Warranties ............................................... 10
SECTION 4. Further Assurances; General Covenants ................................................ 12
SECTION 5. Cash Collateral Account .............................................................. 14
SECTION 6. Remedies upon Event of Default ....................................................... 16
SECTION 7. Application of Proceeds .............................................................. 17
SECTION 8. Fees and Expenses; Indemnification ................................................... 19
SECTION 9. Authority to Administer Collateral ................................................... 20
SECTION 10. Limitation on Duty in Respect of Collateral .......................................... 21
SECTION 11. General Provisions Concerning the Collateral Agent ................................... 21
SECTION 12. Termination of Transaction Liens; Release of Collateral .............................. 24
SECTION 13. Notices .............................................................................. 25
SECTION 14. No Implied Waivers; Remedies Not Exclusive ........................................... 27
SECTION 15. Successors and Assigns ............................................................... 27
SECTION 16. Amendments and Waivers ............................................................... 27
SECTION 17. Choice of Law ........................................................................ 27
SECTION 18. Waiver of Jury Trial ................................................................. 28
SECTION 19. Severability ......................................................................... 28
EXHIBITS:
EXHIBIT A Perfection Certificate
ii
SECURITY AGREEMENT
AGREEMENT (this "AGREEMENT") dated as of May 20, 2003 among United
States Steel Corporation, a Delaware corporation (together with its successors,
the "BORROWER") and JPMorgan Chase Bank, as Collateral Agent.
WHEREAS, the Borrower has entered into the Credit Agreement described
in Section 1 hereof, pursuant to which the Borrower intends to borrow funds and
obtain letters of credit for the purposes set forth therein;
WHEREAS, the Borrower is willing to secure (i) its obligations under
the Credit Agreement and the other Financing Documents and (ii) certain other
obligations, by granting Liens on certain of its assets to the Collateral Agent
as provided in the Security Documents;
WHEREAS, the Lenders are willing to make loans and issue or participate
in letters of credit under the Credit Agreement described in Section 1 hereof on
the terms set forth therein if the foregoing obligations of the Borrower are
secured as described above;
WHEREAS, upon any foreclosure or other enforcement of the Security
Documents, the net proceeds of the relevant Collateral are to be received by or
paid over to the Collateral Agent and applied as provided in Section 7 hereof;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions.
(a) Terms Defined in Credit Agreement. Terms defined in the Credit
Agreement and not otherwise defined in subsection 1(b) or 1(c) have, as used
herein, the respective meanings provided for therein.
(b) Terms Defined in UCC. As used herein, each of the following
terms has the meaning specified in the UCC:
TERM UCC
Account ......................................................... 9-102
Authenticate .................................................... 9-102
Chattel Paper ................................................... 9-102
Deposit Account ................................................. 9-102
General Intangibles ............................................. 9-102
TERM UCC
Instrument ..................................................... 9-102
Inventory ...................................................... 9-102
Letter-of-Credit Right ......................................... 9-102
(c) Additional Definitions. The following additional terms, as
used herein, have the following meanings:
"ACQUIRED NATIONAL STEEL LOCKBOX ACCOUNTS" means, collectively, (i)
Account No. 360964, (ii) Account No. 14048, (iii) Account No. 890957 and (iv)
Account No. 0296577, in each case held at Mellon Bank N.A. and acquired by the
Borrower pursuant to the National Steel Asset Purchase Agreement.
"ADDITIONAL SECURED OBLIGATIONS" means the Secured Derivative
Obligations.
"ADMINISTRATIVE AGENT" means JPMorgan Chase Bank, in its capacity as
administrative agent under the Loan Documents, and its successors in such
capacity.
" ARTICLE 9" means Article 9 of the UCC.
"BLOCKED ACCOUNT" means each of the accounts described in Section 5(d)
and any other lockbox, deposit, concentration or similar account that has been
subjected to a Blocked Account Agreement pursuant to Section 4(a).
"BLOCKED ACCOUNT AGREEMENT" means, with respect to any account, a
blocked account agreement in favor of the Collateral Agent, all in form and
substance satisfactory to the Administrative Agent, the Collateral Agent and the
Co-Collateral Agent.
" BORROWER" has the meaning set forth in the preamble to this
Agreement.
" CASH COLLATERAL ACCOUNT" has the meaning set forth in Section 5.
"COLLATERAL" means all property, whether now owned or hereafter
acquired, on which a Lien is granted or purports to be granted to the Collateral
Agent pursuant to the Security Documents.
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"COLLATERAL AGENT" means JPMorgan Chase Bank, in its capacity as
Collateral Agent for the Secured Parties under the Security Documents, and its
successors in such capacity.
"CONTRACTS" means all contracts for the sale, lease, exchange or other
disposition of Inventory, whether or not performed and whether or not subject to
termination upon a contingency or at the option of any party thereto.
"CREDIT AGREEMENT" means the Credit Agreement dated as of May 20, 2003
among the Borrower, the Lenders party thereto, the LC Issuing Banks party
thereto, JPMorgan Chase Bank, as Administrative Agent, Collateral Agent,
Co-Syndication Agent and Swingline Lender, and General Electric Capital
Corporation, as Co-Collateral Agent and Co-Syndication Agent, as amended,
restated or otherwise modified from time to time in accordance with the terms
thereof.
"DERIVATIVE OBLIGATIONS" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"EFFECTIVE DATE" means the Effective Date as defined in the Credit
Agreement.
"ELIGIBLE TRANSFEREE" means (a) a special-purpose company created and
used solely for purposes of effecting a Receivables Financing, whether or not a
Subsidiary of the Borrower, or (b) any other Person which is not a Subsidiary of
the Borrower.
"EVENT OF DEFAULT" means any Event of Default as defined in the Credit
Agreement and any similar event with respect to any Additional Secured
Obligation that permits the acceleration of the maturity thereof (or an
equivalent remedy).
"EXISTING RECEIVABLES SPV ACCOUNTS" has the meaning set forth in
Section 5(b).
"FIRST SECURED DERIVATIVE OBLIGATIONS" means the Secured Derivative
Obligations to the extent (but only to the extent) that the aggregate
Mark-to-
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Market Value of all such Secured Derivative Obligations does not exceed
$50,000,000.
"LIEN GRANTOR" means the Borrower.
"LIQUID INVESTMENT" means (i) direct obligations of the United States
or any agency thereof, (ii) obligations guaranteed by the United States or any
agency thereof, (iii) time deposits and money market deposit accounts issued by
or guaranteed by or placed with a Lender, and (iv) fully collateralized
repurchase agreements for securities described in clause (i) or (ii) above
entered into with a Lender, provided in each case that such Liquid Investment
(x) matures within 30 days after it is first included in the Collateral and (y)
is in a form, and is issued and held in a manner, that in the reasonable
judgment of the Collateral Agent permits appropriate measures to have been taken
to perfect security interests therein.
"LIQUIDATED SECURED OBLIGATION" means at any time any Secured
Obligation (or portion thereof) that is not an Unliquidated Secured Obligation
at such time.
" MARK-TO-MARKET VALUE" means, at any date with respect to any
Derivative Obligation, the termination value thereof (on a net basis),
calculated as if such Derivative Obligation had been terminated on such date by
reason of a default on the part of the Borrower.
"OPINION OF COUNSEL" means a written opinion of legal counsel (who may
be counsel to the Lien Grantor or other counsel, in either case approved by the
Administrative Agent in a writing delivered to the Collateral Agent, which
approval shall not be unreasonably withheld) addressed and delivered to the
Collateral Agent.
"OWN" refers to the possession of sufficient rights in property to
grant a security interest therein as contemplated by UCC Section 9-203, and
"ACQUIRE" refers to the acquisition of any such rights.
"PERFECTION CERTIFICATE" means a certificate from the Lien Grantor
substantially in the form of Exhibit A, completed and supplemented with the
schedules contemplated thereby to the reasonable satisfaction of the Collateral
Agent, and signed by an officer of the Lien Grantor.
"PERMITTED LIENS" means (i) the Transaction Liens and (ii) any other
Liens on the Collateral permitted to be created or assumed or to exist pursuant
to
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the Credit Agreement, including Liens arising in connection with Receivables
Financings (including the Effective Date Receivables Financing).
"PLEDGED", when used in conjunction with any type of asset, means at
any time an asset of such type that is included (or that creates rights that are
included) in the Collateral at such time. For example, "Pledged Inventory" means
Inventory that is included in the Collateral at such time.
"POST-PETITION INTEREST" means any interest that accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Lien Grantor (or would accrue but for the
operation of applicable bankruptcy or insolvency laws), whether or not such
interest is allowed or allowable as a claim in any such proceeding.
"PROCEEDS" means all proceeds of, and all other profits, products,
rents or receipts, in whatever form, arising from the collection, sale, lease,
exchange, assignment, licensing or other disposition of, or other realization
upon, any Collateral, including all claims of the Lien Grantor against third
parties for loss of, damage to or destruction of, or for proceeds payable under,
or unearned premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with respect to any
Collateral.
"RECEIVABLES" means all Accounts owned by the Lien Grantor and all
other rights, titles or interests which, in accordance with GAAP would be
included in receivables on its balance sheet (including any such Accounts and/or
rights, titles or interests that might be characterized as Chattel Paper,
Instruments or General Intangibles under the Uniform Commercial Code in effect
in any jurisdiction), in each case arising from the sale, lease, exchange or
other disposition of Inventory, and all of the Lien Grantor's rights to any
goods, services or other property related to any of the foregoing (including
returned or repossessed goods and unpaid seller's rights of rescission,
replevin, reclamation and rights to stoppage in transit), and all collateral
security and supporting obligations of any kind given by any Person with respect
to any of the foregoing.
"RECEIVABLES SPV" means U.S. Steel Receivables LLC, a Delaware limited
liability company and a wholly-owned Subsidiary of the Borrower.
"RELATED DOCUMENTS" means the Credit Agreement, any promissory notes
issued pursuant to Section 2.09(e) of the Credit Agreement, the Security
Documents and the documentation governing the Additional Secured Obligations.
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"RELATED PARTIES" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and its Affiliates.
"RELATED TRANSFERRED RIGHTS" has the meaning specified in Section 2(b)
hereof.
"RELEASE CONDITIONS" means the following conditions for terminating all
the Transaction Liens:
(i) all Commitments under the Credit Agreement shall have
expired or been terminated;
(ii) all Liquidated Secured Obligations shall have been
paid in full; and
(iii) no Unliquidated Secured Obligation shall remain
outstanding or such Unliquidated Secured Obligation shall be cash
collateralized to an extent and in a manner reasonably satisfactory to
each affected Secured Party.
"SECOND SECURED DERIVATIVE OBLIGATIONS" means all Secured Derivative
Obligations that are not First Secured Derivative Obligations.
" SECURED AGREEMENT", when used with respect to any Secured Obligation,
refers collectively to each instrument, agreement or other document that sets
forth obligations of the Lien Grantor and/or rights of the holder with respect
to such Secured Obligation.
"SECURED DERIVATIVE OBLIGATIONS" means Derivative Obligations of the
Borrower owing to any Person that was a Lender or Lender Affiliate on the trade
date for any such Derivative Obligation, or an assignee of such Person; provided
that (i) such Derivative Obligation is entered into in the course of the
ordinary business practice of the Borrower and not for speculative purposes,
(ii) at or prior to the time the written agreement evidencing such Derivative
Obligation (a "DERIVATIVE CONTRACT") is executed, the Borrower and the Lender or
Lender Affiliate party thereto shall have expressly agreed in writing that such
obligations constitute "Secured Derivative Obligations" entitled to the benefits
of the Security Documents, (iii) at or prior to the time such Derivative
Contract is executed, the Lender or Lender Affiliate party thereto shall have
delivered a notice to the Collateral Agent (or, in the case of a Lender
Affiliate, an instrument in form and substance satisfactory to the Collateral
Agent) to the effect set forth in clause (ii) of this proviso, and acknowledging
and agreeing to be bound by the terms of this
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Agreement with respect to such obligations and (iv) at the time such Derivative
Contract is executed, the Borrower shall have specified in writing to the
Collateral Agent whether or not, after giving effect to such Derivative
Contract, the aggregate Mark-to-Market Value of all Secured Derivative
Obligations as of such date will exceed $50,000,000 (and, in the event that such
aggregate Mark-to-Market Value will exceed $50,000,000 after giving effect to
such Derivative Contract, the Borrower and the Lender or Lender Affiliate party
thereto shall have expressly agreed that the Derivative Obligations arising
thereunder shall constitute Second Secured Derivative Obligations under this
Agreement at all times unless either (x) such aggregate Mark-to-Market Value
does not exceed $50,000,000 (as evidenced by the Borrowing Base Certificate then
most recently delivered by the Borrower pursuant to Section 5.01(b) of the
Credit Agreement, certifying that the aggregate Mark-to-Market Value of all
Secured Derivative Obligations is less than $50,000,000) or (y) together with
the Borrowing Base Certificate then most recently delivered by the Borrower
pursuant to Section 5.01(b) of the Credit Agreement, the Borrower shall have
delivered written notice to the Collateral Agent designating such Derivative
Obligations as First Secured Derivative Obligations, which written notice shall
include a list of all First Secured Derivative Obligations, the aggregate
Mark-to-Market Value of which will not exceed $50,000,000).
"SECURED LOAN OBLIGATIONS" means all principal of all Loans and LC
Reimbursement Obligations outstanding from time to time under the Credit
Agreement, all interest (including Post-Petition Interest) on such Loans and LC
Reimbursement Obligations and all other amounts now or hereafter payable by the
Borrower pursuant to the Loan Documents.
"SECURED OBLIGATIONS" means the Secured Loan Obligations and the
Additional Secured Obligations.
"SECURED PARTIES" means the holders from time to time of the Secured
Obligations, and "SECURED PARTY" means any of them as the context may require.
" SECURITY DOCUMENTS" means this Agreement, the Intercreditor Agreement
and all other supplemental or additional security agreements, control
agreements, or similar instruments delivered pursuant to the Loan Documents.
"SUPPORTING OBLIGATION" means a "supporting obligation" (as such term
is defined in UCC Section 9-102).
"SWEEP PERIOD" means (i) the period that begins on the first date on
which Facility Availability is less than or equal to $100,000,000 and ends on
the first date when all Release Conditions are satisfied and (ii) each period
that begins
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upon the occurrence of (x) an Event of Default described in Section 7(a),
Section 7(i), Section 7(j) or Section 7(k) of the Credit Agreement, or (y) an
Event of Default caused by the Borrower's failure to perform the covenant
contained in Section 6.13 of the Credit Agreement, and ends when no Event of
Default is continuing; provided that, except in the case of a Sweep Period that
begins upon the occurrence of any Event of Default described in Section 7(a),
Section 7(i), Section 7(j) or Section 7(k) of the Credit Agreement with respect
to the Borrower (which Sweep Period shall commence automatically upon the
occurrence of such Event of Default), no Sweep Period shall be deemed to have
commenced unless and until the Collateral Agent shall have so determined and
shall have so notified the Borrower.
"TRANSACTION LIENS" means the Liens granted by the Lien Grantor under
the Security Documents.
"TRANSFERRED RECEIVABLES" means any Receivables (including Receivables
acquired by the Borrower from National Steel Corporation and certain of its
subsidiaries and affiliates pursuant to the National Steel Asset Purchase
Agreement) that have been sold, contributed or otherwise transferred to an
Eligible Transferee in connection with a Receivables Financing that is not
prohibited under the Credit Agreement or this Agreement (including, without
limitation, the Effective Date Receivables Financing).
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of New York; provided that, if perfection or the effect of
perfection or non-perfection or the priority of any Transaction Lien on any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, "UCC" means the Uniform Commercial Code as in
effect from time to time in such other jurisdiction for purposes of the
provisions hereof relating to such perfection, effect of perfection or
non-perfection or priority.
"UNLIQUIDATED SECURED OBLIGATION" means, at any time, any Secured
Obligation (or portion thereof) that is contingent in nature or unliquidated at
such time, including any Secured Obligation that is:
(i) an obligation to reimburse a bank for drawings not
yet made under a letter of credit issued by it;
(ii) any other obligation (including any guarantee) that
is contingent in nature at such time; or
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(iii) an obligation to provide collateral to secure any of
the foregoing types of obligations.
(d) Terms Generally. The definitions of terms herein (including
those incorporated by reference to the UCC or to another document) apply equally
to the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun includes the corresponding masculine, feminine and neuter
forms. The words "INCLUDE", "INCLUDES" and "INCLUDING" shall be deemed to be
followed by the phrase "WITHOUT LIMITATION". The word "WILL" shall be construed
to have the same meaning and effect as the word "SHALL". Unless the context
requires otherwise, (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "HEREIN", "HEREOF" and "HEREUNDER", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Sections, Exhibits
and Schedules shall be construed to refer to Sections of, and Exhibits and
Schedules to, this Agreement and (e) the word "PROPERTY" shall be construed to
refer to any and all tangible and intangible assets and properties, including
cash, securities, accounts and contract rights.
SECTION 2. Grant of Transaction Liens.
(a) The Lien Grantor, in order to secure the Secured Obligations,
grants to the Collateral Agent for the benefit of the Secured Parties a
continuing security interest in all the following property of the Lien Grantor,
whether now owned or existing or hereafter acquired or arising and regardless of
where located, subject to the exceptions set forth in Section 2(b):
(i) all Inventory;
(ii) all Receivables;
(iii) all Contracts;
(iv) all Blocked Accounts and the Cash Collateral Account;
(v) all books and records (including customer lists,
credit files, computer programs, printouts and other computer materials
and records) of the Lien Grantor pertaining to any of its Collateral;
and
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(vi) all other Proceeds of the Collateral described in the
foregoing clauses (i) through (iv).
(b) The Collateral shall not include Transferred Receivables and
(i) rights to payment and collections in respect of such Transferred
Receivables, (ii) security interests or Liens and property subject thereto
purporting to secure or guarantee payment of such Transferred Receivables, (iii)
guarantees, letters of credit, acceptances, insurance and other arrangements
from time to time supporting or securing payment of such Transferred
Receivables, (iv) all invoices, documents, books, records and other information
with respect to such Transferred Receivables or the obligors thereon, (v) with
respect to any such Transferred Receivables, the transferee's interest in the
product (including returned product), the sale of which by such transferee gave
rise to such Transferred Receivables and (vi) all Proceeds of the items
described in subclauses 2(b)(i) through 2(b)(v) (preceding subclauses (b)(i)
through (b)(vi), collectively, the "RELATED TRANSFERRED RIGHTS").
(c) With respect to each right to payment or performance included
in the Collateral from time to time, the Transaction Lien granted therein
includes a continuing security interest in all right, title and interest of the
Lien Grantor in and to (i) any Supporting Obligation that supports such payment
or performance and (ii) any Lien that (x) secures such right to payment or
performance or (y) secures any such Supporting Obligation.
(d) The Transaction Liens are granted as security only and shall
not subject the Collateral Agent or any other Secured Party to, or transfer or
in any way affect or modify, any obligation or liability of the Lien Grantor
with respect to any of the Collateral or any transaction in connection
therewith.
SECTION 3. General Representations and Warranties. The Lien Grantor
represents and warrants that:
(a) The Lien Grantor is duly organized, validly existing and in
good standing under the laws of the jurisdiction identified as its jurisdiction
of organization in its Perfection Certificate.
(b) The Lien Grantor has good and marketable title to all its
Collateral (subject to exceptions that are, in the aggregate, not material),
free and clear of any Lien other than Permitted Liens.
(c) The Lien Grantor has not performed any acts that might prevent
the Collateral Agent from enforcing any of the provisions of the Security
Documents or that would limit the Collateral Agent in any such enforcement. No
financing
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statement, security agreement, mortgage or similar or equivalent document or
instrument covering all or part of the Collateral owned by such Lien Grantor is
on file or of record in any jurisdiction in which such filing or recording would
be effective to perfect or record a Lien on such Collateral, except (x)
financing statements with respect to the security agreement dated as of November
30, 2001 between the Borrower and the Collateral Agent and (y) financing
statements, mortgages or other similar or equivalent documents with respect to
Permitted Liens. After the Effective Date, no Collateral owned by such Lien
Grantor will be in the possession or under the control of any other Person
having a Lien thereon, other than a Permitted Lien.
(d) The Transaction Liens on all Collateral owned by the Lien
Grantor (i) have been validly created, (ii) will attach to each item of such
Collateral on the Effective Date (or, if such Lien Grantor first obtains rights
thereto on a later date, on such later date) and (iii) when so attached, will
secure all the Secured Obligations.
(e) The Lien Grantor has delivered a Perfection Certificate to the
Collateral Agent. The information set forth therein is correct and complete as
of the Effective Date. After the Effective Date, the Collateral Agent or the
Administrative Agent may obtain, at the Lien Grantor's expense, a file search
report from each UCC filing office listed in its Perfection Certificate, showing
the filing made at such filing office to perfect the Transaction Liens on the
Collateral.
(f) When UCC financing statements describing the Collateral as set
forth in the Lien Grantor's Perfection Certificate have been filed in the
offices specified in the Perfection Certificate, the Transaction Liens will
constitute perfected security interests in the Collateral owned by the Lien
Grantor to the extent that a security interest therein may be perfected by
filing pursuant to the UCC, prior to all Liens and rights of others therein
except Permitted Liens. Except for the filing of such UCC financing statements,
no registration, recordation or filing with any governmental body, agency or
official is required in connection with the execution or delivery of the
Security Documents or is necessary for the validity or enforceability thereof or
for the perfection of the Transaction Liens pursuant to the UCC or for the
enforcement of the Transaction Liens pursuant to the UCC.
(g) The Lien Grantor has taken, and will continue to take, all
actions necessary under the UCC to perfect its interest in any Receivables
purchased or otherwise acquired by it, as against its assignors and creditors of
its assignors.
(h) The Lien Grantor's Collateral is insured as required by the
Credit Agreement.
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(i) Any Inventory produced by the Lien Grantor has or will have
been produced in compliance with the applicable requirements of the Fair Labor
Standards Act, as amended.
(j) The Existing Receivables SPV Accounts are all of the accounts
owned by Receivables SPV. Other than (i) the Existing Receivables SPV Accounts,
(ii) the Cash Collateral Account, (iii) any Blocked Account and (iv) the
Acquired National Steel Lockbox Accounts, there are no accounts owned by the
Lien Grantor or Receivables SPV into which any collections or other payments or
proceeds in respect of Pledged Receivables may be deposited.
SECTION 4. Further Assurances; General Covenants. The Lien Grantor
covenants as follows:
(a) The Lien Grantor will, from time to time, at its own expense,
execute, deliver, authorize, file and record any statement, assignment,
instrument, document, agreement or other paper and take any other action
(including (x) any filing of financing or continuation statements under the UCC,
(y) at any time when the Effective Date Receivables Financing shall have
terminated and been paid in full and not been replaced with another Receivables
Financing on terms satisfactory to the Administrative Agent, causing any
lockbox, concentration or similar account into which payments with respect to
Receivables then owned by the Lien Grantor will be received to be subjected to
Blocked Account Agreements and (z) at any time when the Effective Date
Receivables Financing shall have terminated and been replaced with another
Receivables Financing on terms satisfactory to the Administrative Agent, causing
the appropriate parties to such replacement Receivables Financing to execute an
intercreditor agreement that is substantially identical to the Intercreditor
Agreement) that from time to time may be reasonably necessary or desirable, or
that the Collateral Agent may reasonably request, in order to:
(i) create, preserve, perfect, confirm or validate the
Transaction Liens on the Collateral;
(ii) enable the Collateral Agent and the other Secured
Parties to obtain the full benefits of the Security Documents; or
(iii) enable the Collateral Agent to exercise and enforce
any of its rights, powers and remedies with respect to any of the
Collateral.
To the extent permitted by applicable law, the Lien Grantor authorizes the
Collateral Agent to execute and file such financing statements or continuation
statements without the Lien Grantor's signature appearing thereon. The
Collateral Agent agrees to provide the Lien Grantor with copies of any such
financing
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statements and continuation statements. The Lien Grantor agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement to the extent
permitted by law. The Lien Grantor constitutes the Collateral Agent its
attorney-in-fact to execute and file all filings required or so requested for
the foregoing purposes, all acts of such attorney being hereby ratified and
confirmed; and such power, being coupled with an interest, shall be irrevocable
until all the Transaction Liens granted by the Lien Grantor terminate pursuant
to Section 12. The Borrower will pay the costs of, or incidental to, any
recording or filing of any financing or continuation statements or other
documents recorded or filed pursuant hereto.
(b) The Lien Grantor will not (i) change its name or structure as
a corporation, or (ii) change its location (determined as provided in UCC
Section 9-307) unless it shall have given the Collateral Agent prior notice
thereof and delivered an Opinion of Counsel with respect thereto in accordance
with Section 4(c).
(c) At least 30 days before it takes any action contemplated by
Section 4(b), the Lien Grantor, at its own expense, will cause to be delivered
to the Collateral Agent an Opinion of Counsel, in form and substance reasonably
satisfactory to the Collateral Agent, to the effect that (i) all financing
statements and amendments or supplements thereto, continuation statements and
other documents required to be filed or recorded in order to perfect and protect
the Transaction Liens against all creditors of and purchasers from the Lien
Grantor after it takes such action (except any applicable continuation
statements specified in such Opinion of Counsel that are to be filed more than
six months after the date thereof) have been filed or recorded in each office
necessary for such purpose, (ii) all fees and taxes, if any, payable in
connection with such filings or recordations have been paid in full and (iii)
except as otherwise agreed by the Required Lenders, such action will not
adversely affect the perfection or priority of the Transaction Lien on any
Collateral to be owned by the Lien Grantor after it takes such action or the
accuracy of the Lien Grantor's representations and warranties herein relating to
such Collateral.
(d) The Lien Grantor will not sell, lease, exchange, assign or
otherwise dispose of, or grant any option with respect to, any of its
Collateral; provided that the Lien Grantor may do any of the foregoing unless
(i) doing so would breach a covenant in the Credit Agreement or (ii) an Event of
Default shall have occurred and be continuing and the Collateral Agent shall
have notified the Lien Grantor that its right to do so is terminated, suspended
or otherwise limited. Concurrently with any sale or other disposition (except a
lease) permitted by the foregoing proviso, the Transaction Liens on the assets
sold or disposed of (but not in any Proceeds arising from such sale or
disposition) will cease immediately without any action by the Collateral Agent
or any other Secured Party. The Collateral
13
Agent will, at the Borrower's expense, execute and deliver to the Lien Grantor
such documents as the Lien Grantor shall reasonably request to evidence the fact
that any asset so sold or disposed of is no longer subject to a Transaction
Lien.
(e) The Lien Grantor will, promptly upon request, provide to the
Collateral Agent all information and evidence concerning the Collateral that the
Collateral Agent may reasonably request from time to time to enable it to
enforce the provisions of the Security Documents.
(f) From time to time upon request by the Collateral Agent, the
Lien Grantor will, at its own expense, cause to be delivered to the Secured
Parties an Opinion of Counsel satisfactory to the Collateral Agent as to such
matters relating to the transactions contemplated hereby as the Collateral Agent
may reasonably request.
SECTION 5. Cash Collateral Account. (a) If and when required for
purposes hereof, the Collateral Agent will establish an account (the "CASH
COLLATERAL ACCOUNT"), in the name and under the exclusive control of the
Collateral Agent, into which all amounts owned by the Lien Grantor that are to
be deposited therein pursuant to the Financing Documents shall be deposited from
time to time.
(b) Within 30 days following the Effective Date (or such longer
period as the Borrower, the Collateral Agent and the Co-Collateral Agent may
agree), the Lien Grantor will cause Receivables SPV to have subjected all of its
then existing accounts (collectively, the "EXISTING RECEIVABLES SPV ACCOUNTS")
to Blocked Account Agreements, each of which Blocked Account Agreements shall,
to the extent the account subject thereto is a "Lock-Box Account" or
"Concentration Account" (each as defined in the Receivables Purchase Agreement),
(i) by its terms, first become effective immediately upon receipt by the
"Lockbox Box" or "Concentration Account Bank" (each as defined in the
Receivables Purchase Agreement) or other depositary bank at which such account
is maintained (the "DEPOSITARY BANK") of written notice from The Bank of Nova
Scotia, as collateral agent under the Effective Date Receivables Financing (the
"RECEIVABLES COLLATERAL AGENT"), specifying that the Effective Date Receivables
Financing has terminated and all monetary obligations in respect thereof have
been satisfied in full and that the blocked account agreement in effect with
respect to such "Lockbox Account" or "Concentration Account" (each as defined in
the Receivables Purchase Agreement) in connection with the Effective Date
Receivables Financing shall be terminated in accordance with its terms (or upon
written notice from the Collateral Agent to such effect, if (x) the Receivables
Collateral Agent has failed to deliver such notice within five Business Days of
the date on which it is initially obligated to do so pursuant to the
Intercreditor
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Agreement, (y) the Collateral Agent shall have delivered a Final Notification
Request (as defined in the Intercreditor Agreement), and (z) the Funding Agents
(as defined in the Intercreditor Agreement) have failed to comply, or to cause
the Receivables Collateral Agent to comply, with such Final Notification Request
within three Business Days of the date on which such Final Notification Request
is effective under the Intercreditor Agreement), (ii) by its terms, terminate
upon receipt by the Depositary Bank of written notice from the Collateral Agent
to the effect that the Effective Date Receivables Financing has been replaced
with another Receivables Financing on terms satisfactory to the Administrative
Agent, such that the accounts of Receivables SPV and the lockbox accounts of the
Lien Grantor may be subjected to blocked account agreements in connection with
such replacement Receivables Financing and (iii) expressly provide that its
terms may not be amended or modified without the consent of the Receivables
Collateral Agent.
(c) If directed to do so by the Collateral Agent at any time
during a Sweep Period or when an Event of Default has occurred and is
continuing, the Borrower shall cause to be deposited in the account referred to
in clause (d) below, promptly upon receipt thereof, (i) all payments received in
respect of the Pledged Receivables and (ii) all other Proceeds of the
Collateral.
(d) Within 30 days after the Effective Date (or such longer period
as the Borrower, the Collateral Agent and the Co-Collateral Agent may agree),
the Borrower shall cause to be subjected to a Blocked Account Agreement any
lockbox and any corresponding deposit account, any concentration account and any
account into which payments from Receivables SPV to the Borrower in respect of
the purchase price of Transferred Receivables may be received (including any
such account acquired pursuant to the National Steel Acquisition).
(e) Unless (x) a Sweep Period shall have occurred and be
continuing, (y) an Event of Default shall have occurred and be continuing and
the Required Lenders shall have instructed the Collateral Agent to stop
withdrawing amounts from the Cash Collateral Account pursuant to this subsection
or (z) the maturity of the Loans (or other Secured Obligations) shall have been
accelerated pursuant to Article 7 of the Credit Agreement (or otherwise), the
Collateral Agent shall withdraw amounts from the Cash Collateral Account (other
than amounts required to be deposited in the Cash Collateral Account pursuant to
Section 2.10(b) or Section 5.12(b) of the Credit Agreement) and remit such
amounts to, or as directed by, the Borrower from time to time.
(f) If an Event of Default shall have occurred and be continuing,
the Collateral Agent may (i) retain all cash and investments then held in the
Cash Collateral Account, (ii) liquidate any or all investments held therein
and/or (iii) withdraw any amounts held therein and apply such amounts as
provided in
15
Section 7. Additionally, and without limiting the generality of the foregoing,
during any Sweep Period (i) all amounts held in the Cash Collateral Account
(other than amounts deposited therein pursuant to Section 2.05(j), Section
2.10(b) or Section 5.12(b) of the Credit Agreement as cash collateral for the LC
Exposure) shall be applied on a daily basis to the outstanding principal balance
of the Base Rate Loans or, if applicable, as provided in Section 7 and (ii)
following repayment in full of all outstanding Base Rate Loans pursuant to
clause (i), any remaining amounts held in the Cash Collateral Account shall
continue to be held in the Cash Collateral Account and (other than amounts
deposited therein pursuant to Section 2.05(j), Section 2.10(b) or Section
5.12(b) of the Credit Agreement as cash collateral for the LC Exposure) shall be
applied to the outstanding principal balance of maturing Eurodollar Loans upon
expiration of the Interest Periods applicable thereto.
(g) Funds held in the Cash Collateral Account may, until withdrawn
or otherwise applied pursuant hereto, be invested and reinvested in such Liquid
Investments as the Borrower shall request from time to time; provided that, if
an Event of Default shall have occurred and be continuing, the Collateral Agent
may select such Liquid Investments.
(h) If immediately available cash on deposit in the Cash
Collateral Account is not sufficient to make any distribution or withdrawal to
be made pursuant hereto, the Collateral Agent will cause to be liquidated, as
promptly as practicable, such investments held in or credited to the Cash
Collateral Account as shall be required to obtain sufficient cash to make such
distribution or withdrawal and, notwithstanding any other provision hereof, such
distribution or withdrawal shall not be made until such liquidation has taken
place.
SECTION 6. Remedies upon Event of Default. (a) If an Event of Default
shall have occurred and be continuing, the Collateral Agent may exercise (or
cause its sub-agents to exercise) any or all of the remedies available to it (or
to such sub-agents) under the Security Documents.
(b) Without limiting the generality of the foregoing, if an Event
of Default shall have occurred and be continuing, the Collateral Agent may
exercise on behalf of the Secured Parties all the rights of a secured party
under the UCC (whether or not in effect in the jurisdiction where such rights
are exercised) with respect to any Collateral and, in addition, the Collateral
Agent may, without being required to give any notice, except as herein provided
or as may be required by mandatory provisions of law, withdraw all cash held in
the Cash Collateral Account and apply such cash as provided in Section 7 and, if
there shall be no such cash or if such cash shall be insufficient to pay all the
Secured Obligations in full, sell, lease, license or otherwise dispose of the
Collateral or any part thereof.
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Notice of any such sale or other disposition shall be given to the Lien Grantor
as required by Section 9.
(c) Without limiting the generality of the foregoing, during any
Sweep Period, the Collateral Agent may (i) exercise all of the remedies
described in Section 5(f) and (ii) cause all amounts constituting Collateral
that are held in any lockbox, concentration or other account of the Lien Grantor
then subject to an effective Blocked Account Agreement (it being understood that
any Blocked Account Agreement with respect to an account that is a "Lockbox
Account" or "Concentration Account" (each as defined in the Receivables Purchase
Agreement) shall only become effective in accordance with Section 5(b)(i)) to be
transferred on a daily basis to the Cash Collateral Account.
SECTION 7. Application of Proceeds. (a) If an Event of Default shall
have occurred and be continuing, the Collateral Agent may apply (i) any cash
held in the Cash Collateral Account and (ii) the proceeds of any sale or other
disposition of all or any part of the Collateral, in the following order of
priorities:
first, to pay the expenses of such sale or other disposition,
including reasonable compensation to agents of and counsel for the
Collateral Agent, and all expenses, liabilities and advances incurred
or made by the Collateral Agent in connection with the Security
Documents, and any other amounts then due and payable to the Collateral
Agent pursuant to Section 8 or to any Agent pursuant to the Credit
Agreement;
second, to pay the unpaid principal of the Secured Obligations
(other than Second Secured Derivative Obligations) ratably (or provide
for the payment thereof pursuant to Section 7(b)), until payment in
full of the principal of all Secured Obligations (other than Second
Secured Derivative Obligations) shall have been made (or so provided
for);
third, to pay ratably all interest (including Post-Petition
Interest) on the Secured Obligations (other than Second Secured
Derivative Obligations) and all commitment and other fees payable under
the Related Documents, until payment in full of all such interest and
fees shall have been made;
fourth, to pay all other Secured Obligations (other than
Second Secured Derivative Obligations) ratably (or provide for the
payment thereof pursuant to Section 7(b)), until payment in full of all
such other Secured Obligations (other than Second Secured Derivative
Obligations) shall have been made (or so provided for);
17
fifth, to pay ratably the unpaid principal of the Second
Secured Derivative Obligations (or provide payment therefor pursuant to
Section 7(b)) until payment in full of the principal of all Second
Secured Derivative Obligations shall have been made (or so provided
for);
sixth, to pay ratably all interest (including Post-Petition
Interest) on the Second Secured Derivative Obligations, until payment
in full of all such interest shall have been made; and
finally, to pay to the Lien Grantor, or as a court of
competent jurisdiction may direct, any surplus then remaining from the
proceeds of the Collateral owned by it.
The Collateral Agent may make such distributions hereunder in cash or in kind
or, on a ratable basis, in any combination thereof.
(b) If at any time any portion of any monies collected or received
by the Collateral Agent would, but for the provisions of this Section 7(b), be
payable pursuant to Section 7(a) in respect of an Unliquidated Secured
Obligation, the Collateral Agent shall not apply any monies to pay such
Unliquidated Secured Obligation but instead shall request the holder thereof, at
least 10 days before each proposed distribution hereunder, to notify the
Collateral Agent as to the maximum amount of such Unliquidated Secured
Obligation if then ascertainable (e.g., in the case of a letter of credit, the
maximum amount available for subsequent drawings thereunder). If the holder of
such Unliquidated Secured Obligation does not notify the Collateral Agent of the
maximum ascertainable amount thereof at least two Domestic Business Days before
such distribution, such Unliquidated Secured Obligation will not be entitled to
share in such distribution. If such holder does so notify the Collateral Agent
as to the maximum ascertainable amount thereof, the Collateral Agent will
allocate to such holder a portion of the monies to be distributed in such
distribution, calculated as if such Unliquidated Secured Obligation were
outstanding in such maximum ascertainable amount. However, the Collateral Agent
will not apply such portion of such monies to pay such Unliquidated Secured
Obligation, but instead will hold such monies or invest such monies in Liquid
Investments. All such monies and Liquid Investments and all proceeds thereof
will constitute Collateral hereunder, but will be subject to distribution in
accordance with this Section 7(b) rather than Section 7(a). The Collateral Agent
will hold all such monies and Liquid Investments and the net proceeds thereof in
trust until all or part of such Unliquidated Secured Obligation becomes a
Liquidated Secured Obligation, whereupon the Collateral Agent at the request of
the relevant Secured Party will apply the amount so held in trust to pay such
Liquidated Secured Obligation; provided that, if the other Secured Obligations
theretofore paid pursuant to the same clause of Section 7(a) (i.e., clause
second, fourth or fifth) were not paid in full, the Collateral Agent will apply
18
the amount so held in trust to pay the same percentage of such Liquidated
Secured Obligation as the percentage of such other Secured Obligations
theretofore paid pursuant to the same clause of Section 7(a). If (i) the holder
of such Unliquidated Secured Obligation shall advise the Collateral Agent that
no portion thereof remains in the category of an Unliquidated Secured Obligation
and (ii) the Collateral Agent still holds any amount held in trust pursuant to
this Section 7(b) in respect of such Unliquidated Secured Obligation (after
paying all amounts payable pursuant to the preceding sentence with respect to
any portions thereof that became Liquidated Secured Obligations), such remaining
amount will be applied by the Collateral Agent in the order of priorities set
forth in Section 7(a).
(c) In making the payments and allocations required by this
Section, the Collateral Agent may rely upon information supplied to it pursuant
to Section 11(g). All distributions made by the Collateral Agent pursuant to
this Section shall be final (except in the event of manifest error) and the
Collateral Agent shall have no duty to inquire as to the application by any
Secured Party of any amount distributed to it.
SECTION 8. Fees and Expenses; Indemnification. (a) The Lien Grantor
will forthwith upon demand pay to the Collateral Agent:
(i) the amount of any taxes that the Collateral Agent may
have been required to pay by reason of the Transaction Liens or to free
any Collateral from any other Lien thereon;
(ii) the amount of any and all reasonable out-of-pocket
expenses, including transfer taxes and reasonable fees and expenses of
counsel and other experts, that the Collateral Agent may incur in
connection with (x) the administration or enforcement of the Security
Documents, including such expenses as are incurred to preserve the
value of the Collateral or the validity, perfection, rank or value of
any Transaction Lien, (y) the collection, sale or other disposition of
any Collateral or (z) the exercise by the Collateral Agent of any of
its rights or powers under the Security Documents;
(iii) the amount of any fees that the Lien Grantor shall
have agreed in writing to pay to the Collateral Agent and that shall
have become due and payable in accordance with such written agreement;
and
(iv) the amount required to indemnify the Collateral Agent
for, or hold it harmless and defend it against, any loss, liability or
expense (including the reasonable fees and expenses of its counsel and
any experts or sub-agents appointed by it hereunder) incurred or
suffered by the Collateral Agent in connection with the Security
Documents, except to the
19
extent that such loss, liability or expense arises from the Collateral
Agent's gross negligence or willful misconduct or a breach of any duty
that the Collateral Agent has under this Agreement (after giving effect
to Sections 10 and 11).
Any such amount not paid to the Collateral Agent on demand will bear interest
for each day thereafter until paid at a rate per annum equal to the sum of 2.00%
plus the Alternate Base Rate for such day plus the Applicable Rate that would,
in the absence of an Event of Default, be applicable to the Base Rate Loans for
such day.
(b) If any transfer tax, documentary stamp tax or other tax is
payable in connection with any transfer or other transaction provided for in the
Security Documents, the Lien Grantor will pay such tax and provide any required
tax stamps to the Collateral Agent or as otherwise required by law.
SECTION 9. Authority to Administer Collateral. The Lien Grantor
irrevocably appoints the Collateral Agent its true and lawful attorney, with
full power of substitution, in the name of the Lien Grantor, any Secured Party
or otherwise, for the sole use and benefit of the Secured Parties, but at the
Lien Grantor's expense, to the extent permitted by law to exercise, at any time
and from time to time while an Event of Default shall have occurred and be
continuing, all or any of the following powers with respect to all or any of the
Collateral (to the extent necessary to pay the Secured Obligations in full):
(a) to demand, sue for, collect, receive and give
acquittance for any and all monies due or to become due upon or by
virtue thereof,
(b) to settle, compromise, compound, prosecute or defend
any action or proceeding with respect thereto,
(c) to sell, lease, license or otherwise dispose of the
same or the proceeds or avails thereof, as fully and effectually as if
the Collateral Agent were the absolute owner thereof, and
(d) to extend the time of payment of any or all thereof
and to make any allowance or other adjustment with reference thereto;
provided that, except in the case of Collateral that is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market, the Collateral Agent will give the Lien Grantor at least ten days' prior
written notice of the time and place of any public sale thereof or the time
after which any private sale or other intended disposition thereof will be made.
Any such notice shall (i) contain the information specified in UCC Section
9-613, (ii) be Authenticated and (iii) be sent to the parties required to be
notified pursuant to
20
UCC Section 9-611(c); provided that, if the Collateral Agent fails to comply
with this sentence in any respect, its liability for such failure shall be
limited to the liability (if any) imposed on it as a matter of law under the
UCC.
SECTION 10. Limitation on Duty in Respect of Collateral. Beyond the
exercise of reasonable care in the custody and preservation thereof, the
Collateral Agent will have no duty as to any Collateral in its possession or
control or in the possession or control of any sub-agent or bailee or any income
therefrom or as to the preservation of rights against prior parties or any other
rights pertaining thereto. The Collateral Agent will be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession or control if such Collateral is accorded treatment substantially
equal to that which it accords its own property, and will not be liable or
responsible for any loss or damage to any Collateral, or for any diminution in
the value thereof, by reason of any act or omission of any sub-agent or bailee
selected by the Collateral Agent in good faith or by reason of any act or
omission by the Collateral Agent pursuant to instructions from the
Administrative Agent, except to the extent that such liability arises from the
Collateral Agent's gross negligence or willful misconduct.
SECTION 11. General Provisions Concerning the Collateral Agent. (a)
Authority. The Collateral Agent is authorized to take such actions and to
exercise such powers as are delegated to the Collateral Agent by the terms of
the Security Documents, together with such actions and powers as are reasonably
incidental thereto.
(b) Coordination with Secured Parties. To the extent requested to
do so by any Secured Party, the Collateral Agent will promptly notify such
Secured Party of each notice or other communication received by the Collateral
Agent hereunder and/or deliver a copy thereof to such Secured Party. As to any
matters not expressly provided for herein (including (i) the timing and methods
of realization upon the Collateral and (ii) the exercise of any power that the
Collateral Agent may, but is not expressly required to, exercise under any
Security Document), the Collateral Agent shall act or refrain from acting in
accordance with written instructions from the Required Lenders or, in the
absence of such instructions, in accordance with its discretion (subject to the
following provisions of this Section).
(c) Rights and Powers as a Secured Party. The Person serving as
the Collateral Agent shall, in its capacity as a Secured Party, have the same
rights and powers as any other Secured Party and may exercise the same as though
it were not the Collateral Agent. Such Person and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrower, any of its Subsidiaries or their respective Affiliates as if it
were not the Collateral Agent hereunder.
21
(d) Limited Duties and Responsibilities. The Collateral Agent
shall not have any duties or obligations under the Security Documents except
those expressly set forth therein. Without limiting the generality of the
foregoing, (a) the Collateral Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether an Event of Default has occurred and
is continuing, (b) the Collateral Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated by the Security Documents that the
Collateral Agent is required in writing to exercise by the Required Lenders, and
(c) except as expressly set forth in the Security Documents, the Collateral
Agent shall not have any duty to disclose, and shall not be liable for any
failure to disclose, any information relating to the Borrower or any of its
Subsidiaries that is communicated to or obtained by the bank serving as
Collateral Agent or any of its Affiliates in any capacity. The Collateral Agent
shall not be liable for any action taken or not taken by it with the consent or
at the request of the Required Lenders (or such other number or percentage of
the Lenders as shall be necessary under the circumstances as provided in Section
9.02 of the Credit Agreement) or in the absence of its own gross negligence or
willful misconduct. The Collateral Agent shall not be responsible for the
existence, genuineness or value of any Collateral or for the validity,
perfection, priority or enforceability of any Transaction Lien, whether impaired
by operation of law or by reason of any action or omission to act on its part
under the Security Documents. The Collateral Agent shall be deemed not to have
knowledge of any Event of Default unless and until written notice thereof is
given to the Collateral Agent by the Borrower or a Secured Party, and the
Collateral Agent shall not be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in
connection with any Security Document, (ii) the contents of any certificate,
report or other document delivered thereunder or in connection therewith, (iii)
the performance or observance of any of the covenants, agreements or other terms
or conditions set forth in any Security Document, (iv) the validity,
enforceability, effectiveness or genuineness of any Security Document or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in any Security Document.
(e) Authority to Rely on Certain Writings, Statements and Advice.
The Collateral Agent shall be entitled to rely on, and shall not incur any
liability for relying on, any notice, request, certificate, consent, statement,
instrument, document or other writing believed by it to be genuine and to have
been signed or sent by the proper Person. The Collateral Agent also may rely on
any statement made to it orally or by telephone and believed by it to be made by
the proper Person, and shall not incur any liability for relying thereon. The
Collateral Agent may consult with legal counsel (who may be counsel for the
Borrower or any of its Subsidiaries), independent accountants and other experts
selected by it, and
22
shall not be liable for any action taken or not taken by it in accordance with
the advice of any such counsel, accountant or expert. The Collateral Agent may
rely conclusively on advice from the Administrative Agent as to whether at any
time (i) an Event of Default under the Credit Agreement has occurred and is
continuing, (ii) the maturity of the Loans has been accelerated or (iii) any
proposed action is permitted or required by the Credit Agreement.
(f) Sub-Agents and Related Parties. The Collateral Agent may
perform any of its duties and exercise any of its rights and powers through one
or more sub-agents appointed by it. The Collateral Agent and any such sub-agent
may perform any of its duties and exercise any of its rights and powers through
its Related Parties. The exculpatory provisions of Section 10 and this Section
shall apply to any such sub-agent and to the Related Parties of the Collateral
Agent and any such sub-agent.
(g) Information as to Secured Obligations and Actions by Secured
Parties. For all purposes of the Security Documents, including determining the
amounts of the Secured Obligations and whether a Secured Obligation is an
Unliquidated Secured Obligation or not, or whether any action has been taken
under any Secured Agreement, the Collateral Agent will be entitled to rely on
information from (i) the Administrative Agent for information as to the Lenders,
the Administrative Agent or the Collateral Agent, their Secured Obligations and
actions taken by them, (ii) any Secured Party for information as to its Secured
Obligations and actions taken by it, to the extent that the Collateral Agent has
not obtained such information from the foregoing sources, and (iii) the
Borrower, to the extent that the Collateral Agent has not obtained information
from the foregoing sources.
(h) Within two Business Days after it receives or sends any notice
referred to in this subsection, the Collateral Agent shall send to the
Administrative Agent and each Secured Party requesting notice thereof, copies of
any notice given by the Collateral Agent to the Lien Grantor, or received by it
from the Lien Grantor, pursuant to Section 6, 7, 9, 11(j) or 12; provided that
such Secured Party has, at least five Domestic Business Days prior thereto,
delivered to the Collateral Agent a written notice (i) stating that it holds one
or more Secured Obligations and wishes to receive copies of such notices and
(ii) setting forth its address, facsimile number and e-mail address to which
copies of such notices should be sent.
(i) The Collateral Agent may refuse to act on any notice, consent,
direction or instruction from the Administrative Agent or any Secured Parties or
any agent, trustee or similar representative thereof that, in the Collateral
Agent's opinion, (i) is contrary to law or the provisions of any Security
Document, (ii) may expose the Collateral Agent to liability (unless the
Collateral Agent shall
23
have been indemnified, to its reasonable satisfaction, for such liability by the
Secured Parties that gave, or instructed the Agent to give, such notice,
consent, direction or instruction) or (iii) is unduly prejudicial to Secured
Parties not joining in such notice, consent, direction or instruction.
(j) Resignation; Successor Collateral Agent. Subject to the
appointment and acceptance of a successor Collateral Agent as provided in this
subsection, the Collateral Agent may resign at any time by notifying the Secured
Parties and the Borrower. Upon any such resignation, the Required Lenders shall
have the right, in consultation with the Lien Grantor, to appoint a successor
Collateral Agent. If no successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days after the
retiring Collateral Agent gives notice of its resignation, then the retiring
Collateral Agent may, on behalf of the Secured Parties, appoint a successor
Collateral Agent which shall be a bank with an office in the United States, or
an Affiliate of any such bank. Upon acceptance of its appointment as Collateral
Agent hereunder by a successor, such successor shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent hereunder, and the retiring Collateral Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Lien Grantor to a successor Collateral Agent shall be the same as those payable
to its predecessor unless otherwise agreed by the Lien Grantor and such
successor. After the Collateral Agent's resignation hereunder, the provisions of
this Section and Section 10 shall continue in effect for the benefit of such
retiring Collateral Agent, its sub-agents and their respective Related Parties
in respect of any actions taken or omitted to be taken by any of them while the
retiring Collateral Agent was acting as Collateral Agent.
SECTION 12. Termination of Transaction Liens; Release of Collateral.
(a) The Transaction Liens shall terminate when all the Release
Conditions are satisfied.
(b) The Transaction Liens (x) with respect to any Pledged
Receivables shall terminate when such Receivables have become Transferred
Receivables and (y) with respect to any other Collateral shall terminate upon
the sale of such Collateral to a Person other than the Lien Grantor in a
transaction not prohibited by the Credit Agreement. In each case, such
termination shall not require the consent of any Secured Party, and the
Collateral Agent and any third party shall be fully protected in relying on a
certificate of the Lien Grantor as to whether any Pledged Receivables qualify as
Transferred Receivables (including without limitation whether the transfer
thereof is permitted under the Credit Agreement and this Agreement).
24
(c) In the case of any Pledged Receivables, the Transaction Liens
with respect to the Related Transferred Rights shall terminate when such Pledged
Receivables become Transferred Receivables. Such termination shall not require
the consent of any Secured Party. If the Borrower delivers a certificate
pursuant to Section 12(b) stating that any Pledged Receivables qualify as
Transferred Receivables, the Collateral Agent and any third party shall be fully
protected in relying on such certificate as conclusive proof that the Related
Transferred Rights are not Collateral.
(d) At any time before the Transaction Liens terminate, the
Collateral Agent may, at the written request of the Lien Grantor, (i) release
any Collateral (but not all or any substantial portion of the Collateral) with
the prior written consent of the Required Lenders or (ii) release any
substantial portion of the Collateral with the prior written consent of all the
Lenders. For purposes hereof, a release of Collateral comprising 10% or more of
the Borrowing Base in effect on the date of such release shall constitute
release of a substantial portion of the Collateral.
(e) Upon any termination of a Transaction Lien or release of
Collateral, the Collateral Agent will, at the expense of the Lien Grantor,
execute and deliver to the Lien Grantor such documents as the Lien Grantor shall
reasonably request to evidence the termination of such Transaction Lien or the
release of such Collateral, as the case may be.
SECTION 13. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, each notice,
request or other communication given to any party hereunder shall be in writing
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy (or, in the case of any notice to a Secured
Party pursuant to Section 11(b) or Section 11(h), transmitted by e-mail), as
follows:
(a) in the case of the Lien Grantor:
ÁñÁ«ÊÓƵ
600 Grant Street
Room 1325
Pittsburgh, PA 15219
Attention: Treasurer
Facsimile: (412) 433-4567
E-mail: ltbrockway@uss.com
(b) in the case of the Collateral Agent:
J.P. Morgan Chase Bank
25
Mining and Metals Group
270 Park Avenue
New York, NY 10017
Attention: Carlos Morales
Facsimile: (212) 270-4724
E-mail: carlos.morales@chase.com
and with a copy to:
J.P. Morgan Chase Bank
270 Park Avenue
29th Floor
New York, NY 10017
Attention: Scott Troy
Facsimile: (212) 270-7449
E-mail: scott.troy@jpmorgan.com
with a copy to the Co-Collateral Agent:
General Electric Capital Corporation
500 West Monroe Street
12th Floor
Chicago, IL 60661
Attention: Account Manager - United States Steel
Facsimile: (312) 463-3889
(c) in the case of any Lender, to the Collateral Agent to
be forwarded to such Lender at its address or facsimile number
specified in or pursuant to Section 9.01 of the Credit Agreement; or
(d) in the case of any Secured Party requesting notice
under Section 11(h), such address, facsimile number or e-mail address
as such party may hereafter specify for the purpose by notice to the
Collateral Agent.
All notices and other communications given to any party hereto in accordance
with the terms of this Agreement shall be deemed to have been given on the date
of receipt. Any party may change its address, facsimile number and/or e-mail
address for purposes of this Section by giving notice of such change to the
Collateral Agent and the Lien Grantor in the manner specified above.
SECTION 14. No Implied Waivers; Remedies Not Exclusive. No failure by
the Collateral Agent or any Secured Party to exercise, and no delay in
exercising and no course of dealing with respect to, any right or remedy under
any Related
26
Document shall operate as a waiver thereof; nor shall any single or partial
exercise by the Collateral Agent or any Secured Party of any right or remedy
under any Related Document preclude any other or further exercise thereof or the
exercise of any other right or remedy. The rights and remedies specified in the
Related Documents are cumulative and are not exclusive of any other rights or
remedies provided by law.
SECTION 15. Successors and Assigns. This Agreement is for the benefit
of the Collateral Agent and the Secured Parties. If all or any part of any
Secured Party's interest in any Secured Obligation is assigned or otherwise
transferred, the transferor's rights hereunder, to the extent applicable to the
obligation so transferred, shall be automatically transferred with such
obligation. This Agreement shall be binding on the Lien Grantor and its
successors and assigns.
SECTION 16. Amendments and Waivers. Neither this Agreement nor any
provision hereof may be waived, amended, modified or terminated except pursuant
to an agreement or agreements in writing entered into by the parties hereto,
with the consent of such Lenders as are required to consent thereto under
Section 9.02(b) of the Credit Agreement.
SECTION 17. Choice of Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York, except as
otherwise required by mandatory provisions of law and except to the extent that
remedies provided by the laws of any jurisdiction other than the State of New
York are governed by the laws of such jurisdiction.
SECTION 18. Waiver of Jury Trial. EACH PARTY HERETO WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO ANY SECURITY DOCUMENT OR ANY TRANSACTION CONTEMPLATED THEREBY (WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 19. Severability. If any provision of any Security Document is
invalid or unenforceable in any jurisdiction, then, to the fullest extent
permitted by law, (i) the other provisions of the Security Documents shall
remain in full
27
force and effect in such jurisdiction and shall be liberally construed in favor
of the Collateral Agent and the Secured Parties in order to carry out the
intentions of the parties thereto as nearly as may be possible and (ii) the
invalidity or unenforceability of such provision in such jurisdiction shall not
affect the validity or enforceability thereof in any other jurisdiction.
28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
UNITED STATES STEEL CORPORATION
By: /s/ G.R. Haggerty
-----------------------------------------
Title: Executive Vice President, Treasurer
and Chief Financial Officer
29
JPMORGAN CHASE BANK, as Collateral Agent
By: /s/ James H. Ramage
----------------------------------------
Title: Managing Director
30
EXHIBIT A
TO SECURITY AGREEMENT
PERFECTION CERTIFICATE
The undersigned is a duly authorized officer of United States Steel
Corporation (the "LIEN GRANTOR"). With reference to the Security Agreement dated
as of May 20, 2003 between the Lien Grantor and JPMorgan Chase Bank, as
Collateral Agent (terms defined therein being used herein as therein defined),
the undersigned certifies to the Collateral Agent and each other Secured Party
as follows:
A. INFORMATION REQUIRED FOR FILINGS AND SEARCHES FOR PRIOR FILINGS.
1. Jurisdiction of Organization. The Lien Grantor is a
corporation organized under the laws of Delaware.
2. Name. The exact name of the Lien Grantor as it appears in its
certificate of incorporation is as follows: ÁñÁ«ÊÓƵ
3. Prior Names. (a) Set forth below is each other corporate (or
other organizational) name that the Lien Grantor has had since its organization,
together with the date of the relevant change:
(b) Except as set forth below, the Lien Grantor has not changed
its structure as a corporation.(1)
4. Filing Office. In order to perfect the Transaction Liens
granted by the Lien Grantor, a financing statement on Form UCC-1, with the
collateral described as set forth on Schedule I hereto, should be on file in the
office of ____________ in _________.(2)
___________________________________
(1) Changes in corporate structure would include mergers and
consolidations, as well as any change in the Lien Grantor's form of
organization. If any such change has occurred, include in Schedule II the
information required by Part A of this certificate as to each constituent party
to a merger or consolidation and any other predecessor organization.
(2) Insert Lien Grantor's "location" determined as provided in UCC
Section 9-307.
B. ADDITIONAL INFORMATION REQUIRED FOR SEARCHES FOR PRIOR FILINGS UNDER
OLD ARTICLE 9.
1. Current Locations. (a) The chief executive office of the Lien
Grantor is located at the following address:
MAILING ADDRESS COUNTY STATE
- --------------------------- ------------------------- ---------------
The Lien Grantor [does] [does not] have a place of business in another
county of the State listed above.
(b) The following are all locations not identified above
or in paragraph (c) below where the Lien Grantor maintains any
Inventory(3):
MAILING ADDRESS COUNTY STATE
- --------------------------- ------------------------- ---------------
(c) The following are the names and addresses of all
Persons (other than the Lien Grantor) that have possession of any of
the Lien Grantor's Inventory:
MAILING ADDRESS COUNTY STATE
- --------------------------- ------------------------- ---------------
- ---------------
(3) Should include information with respect to National Steel Assets.
A-2
IN WITNESS WHEREOF, I have hereunto set my hand this __ day of
_______________._____________.
____________________________________
Name:
Title:
A-3
SCHEDULE I
TO PERFECTION CERTIFICATE
DESCRIPTION OF COLLATERAL
All Inventory, Receivables, Contracts, Blocked Accounts and the Cash Collateral
Account and all books and records (including customer lists, credit files,
computer programs, printouts and other computer material and records) pertaining
to the foregoing, in each case whether now owned or hereafter acquired and
wherever located, and all proceeds thereof, but excluding all Transferred
Receivables and Related Transferred Rights (as each such term is defined on
Exhibit A attached hereto).*
*FORM OF EXHIBIT A TO UCC-1 FINANCING STATEMENTS IS ATTACHED HERETO.
-1
EXHIBIT A TO UCC-1 FINANCING STATEMENT
DEBTOR: SECURED PARTY:
UNITED STATES STEEL CORPORATION JPMorgan Chase Bank, as
600 Grant Street Collateral Agent
Pittsburgh, PA 15219 P.O. Box 2558 - Lien Perfection Unit
Houston, TX 77252
Capitalized terms used in the description of collateral set forth on
the face of the UCC-1 Financing Statement to which this Exhibit A pertains shall
have the following meanings:
"ACCOUNTS" has the meaning specified in Section 9-102 of the UCC.
"BLOCKED ACCOUNTS" means any lockbox, deposit, concentration or similar
account of United States Steel which is or becomes subject to a "Blocked Account
Agreement" pursuant to the Security Agreement.
"CASH COLLATERAL ACCOUNT" means an account in the name and under the
exclusive control of the Collateral Agent, into which all amounts owned by
United States Steel that are required to be deposited pursuant to the Credit
Agreement and related documents are deposited from time to time.
"CHATTEL PAPER" has the meaning specified in Section 9-102 of the UCC.
"CONTRACTS" means all contracts for the sale, lease, exchange or other
disposition of Inventory, whether or not performed and whether or not subject to
termination upon a contingency or at the option of any party thereto.
"CREDIT AGREEMENT" means the Credit Agreement dated as of May 20, 2003
among ÁñÁ«ÊÓƵ, the Lenders party thereto, the LC Issuing
Banks party thereto, JPMorgan Chase Bank, as Administrative Agent, Collateral
Agent, Co-Syndication Agent and Swingline Lender, and General Electric Capital
Corporation, as Co-Collateral Agent and Co-Syndication Agent.
"ELIGIBLE TRANSFEREE" means (a) a special-purpose company created and
used solely for purposes of effecting a Receivables Financing, whether or not a
subsidiary of United States Steel, or (b) any other person which is not a
subsidiary of United States Steel.
"GENERAL INTANGIBLES" has the meaning specified in Section 9-102 of the
UCC.
A-1
"INSTRUMENT" has the meaning specified in Section 9-102 of the UCC.
"INVENTORY" has the meaning specified in Section 9-102 of the UCC.
"RECEIVABLES" means, with respect to the Debtor, all Accounts owned by
it and all other rights, titles or interests which, in accordance with generally
accepted accounting principles in the United States of America, would be
included in receivables on its balance sheet (including any such Accounts and/or
rights, titles or interests that might be characterized as Chattel Paper,
Instruments or General Intangibles under the UCC), in each case arising from the
sale, lease, exchange or other disposition of Inventory, and all of the Debtor's
rights to any goods, services or other property related to any of the foregoing
(including returned or repossessed goods and unpaid seller's rights of
rescission, replevin, reclamation and rights to stoppage in transit), and all
collateral security and supporting obligations of any kind given by any person
with respect to any of the foregoing.
"RECEIVABLES FINANCING" means any receivables securitization program or
other type of accounts receivable financing transaction by United States Steel
or any of its subsidiaries (including, without limitation, the receivables
financing transaction effected pursuant to (x) the Purchase and Sale Agreement
dated as of November 28, 2001 among U.S. Steel Receivables LLC, the originators
named therein and United States Steel, as initial servicer, and (y) the Amended
and Restated Receivables Purchase Agreement dated as of November 28, 2001 among
U.S. Steel Receivables LLC, as seller, United States Steel, as initial servicer,
The Bank of Nova Scotia, as collateral agent, JPMorgan Chase Bank, as a
committed purchaser and a funding agent, and the various other persons from time
to time party thereto (as amended from time to time, the "INITIAL RECEIVABLES
FINANCING")).
"RELATED TRANSFERRED RIGHTS" means (a) rights to payment and
collections in respect of Transferred Receivables, (b) security interests or
liens and property subject thereto purporting to secure or guarantee payment of
Transferred Receivables, (c) guarantees, letters of credit, acceptances,
insurance and other arrangements from time to time supporting or securing
payment of Transferred Receivables, (d) all invoices, documents, books, records
and other information with respect to Transferred Receivables or the obligors
thereon, (e) with respect to any Transferred Receivables, the transferee's
interest in the product (including returned product), the sale of which by such
transferee gave rise to such Transferred Receivables and (f) all proceeds of the
items described in foregoing clauses (a) through (e).
A-2
"SECURITY AGREEMENT" means the Security Agreement dated as of May 20,
2003 among United States Steel and the Collateral Agent.
"TRANSFERRED RECEIVABLES" means any Receivables that have been sold,
contributed or otherwise transferred by the Debtor to an Eligible Transferee in
connection with a Receivables Financing that is not prohibited under the Credit
Agreement (including, without limitation, the Initial Receivables Financing
described above).
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of New York; provided that, if perfection or the effect of
perfection or non-perfection or the priority of any security interest in any
collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, "UCC" means the Uniform Commercial Code as in
effect from time to time in such other jurisdiction for purposes of the
provisions hereof relating to such perfection, effect of perfection or
non-perfection or priority.
"UNITED STATES STEEL" means ÁñÁ«ÊÓƵ, a Delaware
corporation, and its successors.
E-3