EXHIBIT 10.3
LETTER OF CREDIT FACILITY AGREEMENT
between
OREGON STEEL MILLS, INC.,
as Applicant
and
U.S. BANK NATIONAL ASSOCIATION,
as Issuer
TOTAL COMMITMENT -- $25,000,000
MARCH 29, 2005
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CONTENTS
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ARTICLE I.
DEFINITIONS............................................................
1
1.1
DEFINED
TERMS..........................................................
1
1.2
HEADINGS...............................................................
7
1.3
GENERAL DEFINITIONAL
PROVISIONS........................................ 7
ARTICLE II. FACILITY; ISSUER
COMPENSATION.......................................... 8
2.1
LETTER OF CREDIT
FACILITY.............................................. 8
2.2
REIMBURSEMENT..........................................................
8
2.3
FEES;
INTEREST.........................................................
9
2.4
CHANGE OF
CIRCUMSTANCES................................................
9
2.5
TAXES;
PAYMENTS........................................................
11
2.6
DUTY TO
MITIGATE.......................................................
12
ARTICLE III. REPRESENTATIONS AND
WARRANTIES......................................... 12
3.1
LEGAL
STATUS...........................................................
12
3.2
DUE AUTHORIZATION; NO
VIOLATION........................................ 12
3.3
APPROVALS;
REGULATION..................................................
12
3.4
VALIDITY;
ENFORCEABILITY...............................................
13
3.5
TAXES..................................................................
13
3.6
LITIGATION, LABOR
CONTROVERSIES........................................ 13
3.7
ERISA
COMPLIANCE.......................................................
13
3.8
ENVIRONMENTAL
MATTERS..................................................
14
3.9
NO
DEFAULTS............................................................
14
3.10
SOLVENCY...............................................................
14
3.11
COMPLIANCE WITH
LAW....................................................
14
3.12
INSURANCE..............................................................
14
3.13
TRUTH, ACCURACY OF
INFORMATION......................................... 15
ARTICLE IV.
SECURITY...............................................................
15
4.1
THE
ACCOUNT............................................................
15
ARTICLE V.
CONDITIONS.............................................................
15
5.1
CONDITIONS OF INITIAL ISSUANCE OF LETTER OF
CREDIT..................... 15
5.2
CONDITIONS OF EACH EXTENSION OF
CREDIT................................. 16
ARTICLE VI.
COVENANTS..............................................................
17
6.1
PAYMENTS...............................................................
17
6.2
ACCOUNTING
RECORDS.....................................................
17
6.3
FINANCIAL INFORMATION AND
REPORTS...................................... 17
6.4
COMPLIANCE.............................................................
18
6.5
TAXES..................................................................
18
6.6 NOTICE TO
ISSUER.......................................................
18
6.7
FURTHER
ASSURANCES.....................................................
18
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ARTICLE VII. EVENTS OF
DEFAULT......................................................
18
7.1
EVENTS OF
DEFAULT......................................................
18
7.2
REMEDIES...............................................................
20
ARTICLE VIII.
MISCELLANEOUS..........................................................
20
8.1
NOTICES................................................................
20
8.2
EXPENSES; INDEMNITY; DAMAGE
WAIVER..................................... 21
8.3
SUCCESSORS AND
ASSIGNS.................................................
22
8.4
NO WAIVER; CUMULATIVE
REMEDIES......................................... 22
8.5
SETOFF.................................................................
22
8.6
AMENDMENT; COUNTERPARTS; INTEGRATION;
EFFECTIVENESS.................... 23
8.7
NO THIRD PARTY
BENEFICIARIES...........................................
23
8.8
TIME...................................................................
23
8.9
SEVERABILITY OF
PROVISIONS.............................................
23
8.10
CONFIDENTIALITY........................................................
23
8.11
GOVERNING
LAW..........................................................
24
8.12 USA
PATRIOT ACT NOTICE.................................................
24
8.13
SUBMISSION TO
JURISDICTION.............................................
25
8.14
WAIVER OF JURY
TRIAL...................................................
25
8.15
OREGON STATUTORY
NOTICE................................................ 25
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LETTER OF CREDIT FACILITY AGREEMENT
THIS LETTER OF CREDIT FACILITY AGREEMENT is entered into as of
March 29,
2005, by and between OREGON STEEL MILLS,
INC., a Delaware corporation
("Applicant") and U.S. BANK NATIONAL
ASSOCIATION ("Issuer").
RECITALS
Applicant has requested the letter of credit facility described
herein
from Issuer, and Issuer has agreed to
provide said letter of credit facility to
Applicant on the terms and conditions
contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and
promises of
the parties contained herein, Issuer and
Applicant hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1
DEFINED TERMS
All terms defined above shall have the meanings set forth above.
The
following terms shall have the meanings set
forth below:
"Account" means account no. 436000336 established by Applicant with
U.S.
Bank National Association acting through
its Money Center Department.
"Account Control Agreement" means that certain Account Control
Agreement
of even date herewith among Applicant,
Issuer and U.S. Bank National Association
acting through its Money Center Department
for the purpose of perfecting
Issuer's security interest in the Account
granted hereby.
"Agreement" means this Letter of Credit Facility Agreement as
amended,
modified or supplemented from time to
time.
"Applicable Rate" means, at any date, the lesser of (a) the
Highest
Lawful Rate or (b) a per annum rate equal
to the Base Rate in effect on such
date, plus, if an Event of Default is
continuing on such date, 250 basis points.
"Available Credit" means, at any time, the amount by which (a)
the
lesser of (i) 95% of the amount in the
Account or (ii) the Commitment Amount is
greater than (b) the total of the
Obligations.
"Bankruptcy Code" means the Bankruptcy Reform Act, Title 11 of
the
United States Code, as amended or
recodified from time to time, including
(unless the context otherwise requires) any
rules or regulations promulgated
thereunder.
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"Base Rate" means, for any day, an interest rate per annum equal to
the
rate of interest most recently announced by
Issuer at its principal office as
its prime rate, with each change in the
prime rate to be effective on the date
such change is publicly announced as
effective.
"Benefit Arrangement" means at an employee benefit plan within
the
meaning of Section 3(3) of ERISA that is
not a Plan or a Multiemployer Plan and
that is maintained or otherwise contributed
to by any member of the ERISA Group.
"Business Day" means any day other than a Saturday, Sunday or other
day
on which commercial banks are authorized or
required to be closed in Portland,
Oregon or New York, New York.
"Change in Law" means the occurrence, after the date of this
Agreement,
of any of the following: (a) the adoption
or taking effect of any Governmental
Rule, (b) any change in any Governmental
Rule or in the administration,
interpretation or application thereof by
any Governmental Authority or (c) the
making or issuance of any request,
guideline or directive (whether or not having
the force of law) by any Governmental
Authority.
"Change of Control" means the occurrence of any of the following
events:
(a) any "person" or
"group" (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of
1934, as amended), other than
Applicant's employee stock ownership plan,
is or becomes the beneficial owner,
directly or indirectly, of more than 30% of
the total voting stock of Applicant
(measured by voting power rather than
number of shares);
(b) Applicant
(whether in one transaction or a series of related
transactions) consolidates with, or merges
with or into, another person or
sells, assigns, conveys, transfers, leases
or otherwise disposes of all or
substantially all of the assets of
Applicant to any person, or any person
consolidates with, or merges with or into
Applicant, in any such event pursuant
to one transaction or a series of related
transactions in which the outstanding
voting stock of Applicant is converted into
or exchanged for cash, securities or
other property, other than any such
transaction where:
(i)
the outstanding voting stock of Applicant is converted
into or exchanged for voting stock (other than redeemable capital
stock)
of the surviving or transferee corporation, cash, securities and
other
property, or a combination thereof; and
(ii)
immediately after such transaction no "person" or
"group" (as such terms are used in Section 13(d) and 14(d) of
the
Securities Exchange Act of 1934, as amended), other than
Applicant's
employee stock ownership plan, is the beneficial owner, directly
or
indirectly, of more than 30% of the total voting stock of the
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surviving or transferee corporation (measured by voting power
rather
than number of shares); provided, however, that in the event of a
merger
in which the voting stock of Applicant in exchange for voting stock
of a
holding company which owns all of the outstanding capital stock
of
Applicant immediately after the merger, a Change of Control shall
not be
deemed to occur solely as a result of such ownership of the
Applicant by
such holding company and such holding company shall be deemed to be
the
surviving corporation in the merger for purposes of determining
whether
a Change of Control has occurred.
(c) at any time
during any consecutive two-year period, individuals who at
the beginning of such period constituted
the board of directors of Applicant
(together with any new directors whose
election by such board of directors or
whose nomination for election by the
stockholder of Applicant was approved by a
vote of 66 2/3% of the directors then still
in office who were either directors
at the beginning of such period or whose
election or nomination for election was
previously so approved) cease for any
reason to constitute a majority of the
board of directors of the Applicant then in
office; or
(d) Applicant is
liquidated or dissolved or adopts a plan of liquidation.
"Closing Date" means the date of this Agreement.
"Commitment Amount" means $25,000,000.
"Contaminant" means any pollutant, hazardous substance, toxic
substance,
hazardous waste or other substance
regulated or forming the basis of liability
under any Environmental Law.
"Default" means (i) an Event of Default, (ii) an event or condition
that
with the giving of notice or the passage of
time, or both, would constitute an
Event of Default, or (iii) the filing
against Applicant of a petition commencing
an involuntary case under the Bankruptcy
Code.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as
amended or recodified from time to time,
including (unless the context otherwise
requires) any rules or regulations
promulgated thereunder.
"ERISA Event" means (a) a Reportable Event with respect to a Plan;
(b) a
withdrawal by any member of the ERISA Group
from a Plan subject to Section 4063
of ERISA during a plan year in which it was
a substantial employer (as defined
in Section 4001(a)(2) of ERISA) or a
cessation of operations that is treated as
such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial
withdrawal by any member of the ERISA Group
from a Multiemployer Plan or
notification that a Multiemployer Plan is
in reorganization; (d) the filing of a
notice of intent to terminate, the
treatment of a Plan amendment as a
termination under Sections 4041 or 4041A of
ERISA, or the commencement of
proceedings by the PBGC to terminate a Plan
or Multiemployer Plan; (e) an event
or
PAGE 3
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condition which constitutes grounds under
Section 4042 of ERISA for the
termination of, or the appointment of a
trustee to administer, any Plan or
Multiemployer Plan; or (f) the imposition
of any liability under Title IV of
ERISA, other than for PBGC premiums due but
not delinquent under Section 4007 of
ERISA, upon any member of the ERISA
Group.
"ERISA Group" means Applicant and all members of a controlled group
of
corporations and all trades or businesses
(whether or not incorporated) under
common control which, together with
Applicant, are treated as a single employer
under Section 414 of the Code.
"Environmental Law" means all federal, state and local laws,
statutes,
common law duties, rules, regulations,
ordinances and codes, together with all
administrative orders, directed duties,
requests, licenses, authorizations and
permits of, and agreements with, any
Governmental Authorities, in each case
relating to the regulation or protection of
the environment.
"Event of Default" has the meaning set forth in Section 7.1
hereof.
"Excluded Taxes" means, with respect to Issuer or any other
recipient of
any payment to be made by or on account of
any obligation of Applicant
hereunder, taxes imposed on or measured by
its overall net income (however
denominated), and franchise taxes imposed
on it (in lieu of net income taxes),
by the jurisdiction (or any political
subdivision thereof) under the laws of
which such recipient is organized or in
which its principal office is located.
"Federal Funds Rate" means, for any day, the weighted average of
the per
annum rates on overnight Federal funds
transactions with member banks of the
Federal Reserve System arranged by Federal
funds brokers as published by the
Federal Reserve Bank of New York for such
day (or, if such rate is not so
published for any day, the average rate
quoted to Issuer on such day by three
Federal funds brokers of recognized
standing selected by Issuer).
"GAAP" means generally accepted accounting principles as in effect
in
the United States from time to time,
consistently applied.
"Governmental Authority" means the government of the United States
of
America or any other nation, or of any
political subdivision thereof, whether
state or local, and any agency, authority,
instrumentality, regulatory body,
court, central bank or other entity
exercising executive, legislative, judicial,
taxing, regulatory or administrative powers
or functions of or pertaining to
government (including any supra-national
bodies such as the European Union or
the European Central Bank).
"Governmental Rule" means any applicable law, rule, regulation,
treaty
ordinance, order, code interpretation,
judgment, decree, directive, guideline,
policy or similar form of decision of any
Governmental Authority.
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"Highest Lawful Rate" means, at the particular time in question,
the
maximum rate of interest which, under
applicable law, Issuer is then permitted
to charge Applicant on the applicable
Obligations, and if the maximum rate
changes at any time, the Highest Lawful
Rate shall increase or decrease, as the
case may be, as of the effective time of
each such change, without notice to
Applicant.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnitees" has the meaning set forth in Section 8.2(b)
hereof.
"Legal Fees" means expenses and reasonable fees of counsel for
Issuer or
any Indemnitee (including time charges and
disbursements for attorneys who are
employees of Issuer), whether incurred in
connection with document preparation,
negotiations, at the trial or appellate
level, in an arbitration or
administrative proceeding, in bankruptcy or
otherwise.
"Letter of Credit" means a letter of credit issued by Issuer
pursuant to
Section 2.1 hereof (as such letter of
credit may be amended, renewed and/or
extended by Issuer), and the terms of which
(unless Issuer otherwise elects) are
governed by the Uniform Customs and
Practice for Documentary Credits most
recently published by the International
Chamber of Commerce.
"Letter of Credit Documents" means this Agreement, the Account
Control
Agreement and each other agreement, note,
notice, document, contract or
instrument to which any Applicant now or
hereafter is a party and that is
required by Issuer in connection with the
Obligations.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation,
assignment, deposit arrangement,
encumbrance, lien (statutory or other),
security interest, priority or other
security agreement or preferential
arrangement of any kind or nature
whatsoever, including, without limitation, any
conditional sale or other title retention
agreement or the interest of a lessor
under a capital lease, synthetic lease, tax
retention operating lease, financing
lease or any lease having substantially the
same economic effect as a
conditional sale, title retention agreement
or similar arrangement.
"Material Adverse Effect" means a material adverse effect on (a)
the
condition (financial or otherwise),
business, performance, operations or
properties of Applicant and its
subsidiaries on a consolidated basis, (b) the
ability of Applicant to perform its
obligations under any of the Letter of
Credit Documents, or (c) the rights and
remedies of Issuer under any of the
Letter of Credit Documents.
"Maturity Date" means the first anniversary of the Closing
Date.
"Multiemployer Plan" means any employee pension benefit plan within
the
meaning of Section 4001(a)(3) of ERISA to
which any member of the ERISA Group is
then making or accruing an obligation to
make contributions or has within the
preceding five plan years made
contributions, including for these purposes any
Person which ceased to be a member of the
ERISA Group during such five year
period.
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"Obligations" means all of Applicant's obligations under the Letter
of
Credit Documents, whether direct or
indirect, absolute or contingent, due or to
become due, now existing or hereafter
arising, including, without limitation,
all interest that accrues after the
commencement of any case or proceeding by or
against Applicant under the Bankruptcy
Code, whether or not allowed in such case
or proceeding.
"Other Taxes" means all present or future stamp or documentary
taxes or
any other excise or property taxes, charges
or similar levies arising from any
payment made under any Letter of Credit
Document or from the execution, delivery
or enforcement of, or otherwise with
respect to, any Letter of Credit Document.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity
succeeding to any or all of its functions
under ERISA.
"Permit" means
any permit, approval, authorization, license, variance or
permission required from a Governmental
Authority under an applicable
Governmental Rule.
"Person" means an individual, partnership, corporation
(including,
without limitation, a business trust),
joint stock company, limited liability
company, trust, unincorporated association,
joint venture or other entity, or a
Governmental Authority.
"Plan" means at any time an employee pension benefit plan (other
than a
Multiemployer Plan) which is covered by
Title IV of ERISA or subject to the
minimum funding standards under Section 412
of the Code and either (i) is
maintained, or contributed to, by any
member of the ERISA Group for employees of
any member of the ERISA Group or (ii) has
at any time within the preceding five
years been maintained, or contributed to,
by any Person which was at such time a
member of the ERISA Group for employees of
any Person which was at such time a
member of the ERISA Group.
"Related Party" means, with respect to any Person, any affiliate of
such
Person or any partner, director, officer,
employee, agent or advisor of such
Person of any of such Person's
affiliates.
"Release" means, as to any Person, any unpermitted spill,
emission,
leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching
or migration of a Contaminant into the
environment and any "release" as defined
in the Comprehensive Environmental
Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. Section 9601 et
seq.).
"Remedial Action" means all actions required to clean up,
remove,
prevent or minimize a Release or threat of
Release or to perform pre-remedial
studies and investigations and
post-remedial monitoring and care.
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"Reportable Event" means any of the events set forth in Section
4043(c)
of ERISA, other than events for which the
30 day notice period has been waived.
"Responsible
Officer" means any one of Applicant's President and CEO, VP
Finance and CFO, Corporate Controller,
Treasurer or Assistant Treasurer.
"Taxes" means all present or future taxes, levies, imposts,
duties,
deductions, withholdings, assessments, fees
or other charges imposed by any
Governmental Authority, including any
interest, additions to tax or penalties
applicable thereto.
"Unfunded Pension Liability" means the excess of a Plan's
benefit
liabilities under Section 4001(a)(16) of
ERISA, over the current value of that
Plan's assets, determined in accordance
with the assumptions used for funding
the Plan pursuant to Section 412 of the
Code for the applicable plan year.
1.2
HEADINGS
Headings in this Agreement and each of the other Letter of
Credit
Documents are for convenience of reference
only and are not part of the
substance hereof or thereof.
1.3
GENERAL DEFINITIONAL PROVISIONS
The definitions of terms herein shall apply equally to the singular
and
plural forms of the terms defined. Whenever
the context may require, any pronoun
shall include 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 Articles,
Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections
of, and Exhibits and Schedules to,
this Agreement, (e) any reference to any
law or regulation herein shall, unless
otherwise specified, refer to such law or
regulation as amended, modified or
supplemented from time to time and (f) the
words "asset" and "property" shall be
construed to have the same meaning and
effect and to refer to any and all
tangible and intangible assets and
properties, including cash, securities,
accounts and contract rights.
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ARTICLE II. FACILITY; ISSUER
COMPENSATION
2.1
LETTER OF CREDIT FACILITY
(a)
On
the terms and subject to the conditions contained in this
Agreement, Issuer shall issue one or more
Letters of Credit before the Maturity
Date at the request of Applicant for the
account of Applicant from time to time;
provided, however, that Issuer shall not
issue any Letter of Credit if:
(i)
one or more of the applicable conditions contained in
Article V is not then satisfied;
(ii) the
face amount of the requested Letter of Credit
exceeds the Available Credit; or
(iii) any order,
judgment or decree of any Governmental
Authority or arbitrator of which Issuer is aware shall purport by
its
terms to enjoin or restrain Issuer from issuing such Letter of
Credit or
any Governmental Rule shall prohibit, or request that Issuer
refrain
from, the issuance of letters of credit generally or such Letter
of
Credit in particular or shall impose upon Issuer with respect to
such
Letter of Credit any restriction or reserve or capital requirement
(for
which Issuer is not otherwise compensated) not in effect on the
Closing
Date or result in any loss, cost or expense which (A) was not
applicable, in effect or known to Issuer on the Closing Date and
which
Issuer in good faith deems material to it, and (B) the
reimbursement of
which is not provided for hereunder.
(b)
Applicant may request that Issuer issue a Letter of Credit only
by submitting a letter of credit
application on Issuer's standard form not later
than 10:00 a.m. (Portland time) at least
two Business Days prior to the
requested date of issuance. In no event
shall the expiry date of any Letter of
Credit fall after the first anniversary of
the Maturity Date. The expiry date
for a standby Letter of Credit may not be
more than one year after its date of
issuance, and the expiry date for a
commercial (documentary) Letter of Credit
may not be more than 180 days after its
date of issuance.
2.2
REIMBURSEMENT
(a)
If Issuer makes a payment under a Letter of Credit and is not
reimbursed in the manner contemplated by
Section 2.2(b), Applicant shall
reimburse Issuer the amount so paid (even
if, under laws applicable to the
rights of the beneficiary of such Letter of
Credit, beneficiary's request for
payment was validly presented after expiry
of such Letter of Credit) in the
currency expressed in such Letter of
Credit, together with interest at the
Applicable Rate from the date Issuer made
such payment to the date Applicant
pays such reimbursement. Applicant shall
pay such reimbursement in immediately
available funds within three Business Days
of Issuer's demand for reimbursement.
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(b)
Upon issuance of a commercial (documentary) Letter of Credit,
Issuer may exercise its right under Section
3(c) of the Account Control
Agreement and instruct the "Holder" (as
defined in the Account Control
Agreement) to invest an amount equal to the
face amount of such Letter of Credit
in an U.S. Bank savings account ("Liquid
Investment"). Immediately upon a draw
being made under a commercial (documentary)
Letter of Credit, Issuer may
instruct the Holder to pay to Issuer from
the Liquid Investment an amount
sufficient to reimburse Issuer for the
amount paid by Issuer under such draw.
2.3
FEES; INTEREST
(a)
Applicant shall pay Issuer the following fees with respect to
standby Letters of Credit, each of which
shall be nonrefundable even if a
standby Letter of Credit is terminated or
canceled before its stated expiration
date:
(i)
upon the issuance of a standby Letter of Credit or the
issuance of an amendment increasing the face amount of a standby
Letter
of Credit, a letter of credit fronting fee equal to the greater of
(A)
$100 or (B) the face amount thereof (or, with respect to an
amendment
increasing the face amount, the increase in the face amount
only)
multiplied by 0.125%;
(ii)
quarterly, in arrears, on the first Business Day of each
calendar quarter and upon expiration, surrender or other
termination of
the last standby Letter of Credit outstanding, a letter of credit
fee
equal to the average, aggregate undrawn face amount of all
outstanding
Letters of Credit during the preceding calendar quarter multiplied
by
0.50% per annum; and
(iii) upon the
occurrence of any other activity with respect
to a standby Letter of Credit, a fee determined in accordance
with
Issuer's standard fees and charges then in effect for such
activity, and
such fees will be billed by Issuer to Applicant monthly and shall
be
payable in accordance with the terms stated on such billings.
(b)
Applicant shall pay Issuer fees with respect to commercial
(documentary) Letters of Credit determined
in accordance with Issuer's standard
fees and charges then in effect with
respect to commercial (documentary) letters
of credit.
(c)
All amounts payable by Applicant not paid when due shall bear
interest at the Applicable Rate from the
date due until paid in immediately
available funds.
(d)
All interest and per annum fees shall be computed on the basis
of a 360-day year, actual days elapsed.
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2.4
CHANGE OF CIRCUMSTANCES
(a)
Increased Costs Generally. If any Change in Law shall:
(i)
impose, modify or deem applicable any reser
