EXHIBIT 10(y)
FIRST AMENDMENT TO
REVOLVING CREDIT AND GUARANTY AGREEMENT
This FIRST AMENDMENT TO REVOLVING CREDIT AND GUARANTY AGREEMENT dated as of August 2, 2001 (the "FIRST AMENDMENT"), is entered into by and among USG CORPORATION, a Delaware corporation, and each of its subsidiaries party to the Agreement (as defined below), as borrowers (each, individually, a "BORROWER" and collectively, the "BORROWERS"), USG FOREIGN INVESTMENTS, LTD., a Delaware corporation, as guarantor (the "GUARANTOR"), THE CHASE MANHATTAN BANK, a New York banking corporation, and each of the other commercial banks, finance companies, insurance companies or other financial institutions or funds from time to time party to the Agreement (as defined below) (the "LENDERS"), and THE CHASE MANHATTAN BANK, as administrative agent (the "ADMINISTRATIVE AGENT").
WITNESSETH:
WHEREAS, the Borrowers, the Guarantor, the Lenders and the Administrative Agent are parties to that certain Revolving Credit and Guaranty Agreement dated as of June 25, 2001 (the "AGREEMENT"), pursuant to which the Administrative Agent has made available to the Borrowers a revolving credit and letter of credit facility in an aggregate principal amount not to exceed $350,000,000; and
WHEREAS, the Borrowers, the Guarantor and the Lenders desire to amend and supplement the Agreement to reflect certain modifications to the Agreement regarding Borrowing Base calculations; and
WHEREAS, subject to the terms and conditions set forth in Section 10.3 of the Agreement, each Lender is entitled to assign to one or more Eligible Assignees all or a ratable portion of its interests, rights and obligations under the Agreement (including, without limitation, all or a portion of its Commitment and the same portion of the related Loans at the time owing to it) by executing and delivering an Assignment and Acceptance between such Lender and such Eligible Assignee substantially in the form of Exhibit D to the Agreement; and
WHEREAS, pursuant hereto, Chase, the sole Lender party to the Agreement immediately prior to the effective date of this First Amendment (in such capacity, the "ORIGINAL LENDER") wishes to assign to each of the financial institutions (other than itself) that is named on the Commitment Schedule hereto (such financial institutions other than the Original Lender, collectively the "NEW LENDERS"), and each of the New Lenders wishes to assume, a portion of the Original Lender's interests, rights and obligations under the Agreement so that, after giving effect to this First Amendment, the respective Commitments of the Original Lender and the New Lenders will be as set forth in such Commitment Schedule; and
WHEREAS, the Borrowers, the Original Lender, the New Lenders and the Administrative Agent have determined that the execution and delivery of this First Amendment to, among other things, effectuate a reallocation of the Total Commitment among the Original Lender and the New Lenders will be more expeditious and administratively efficient than the execution
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and delivery of separate Assignments and Acceptances between the Original Lender and each of the New Lenders; and
WHEREAS, upon the occurrence of the Effective Date (as hereinafter defined), each of the New Lenders shall become a party to the Agreement as a Lender and shall have the rights and obligations of a Lender thereunder, and the respective Commitments of the Original Lender and each New Lender under the Agreement shall be in the amount set forth opposite its name on the Commitment Schedule hereto, as such amount may be reduced from time to time pursuant to the Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. Capitalized terms used and not otherwise defined in this First Amendment are used as defined in the Agreement.
Section 2. Amendments to Agreement. Subject to the conditions set forth in Section 6 hereof, the Agreement is hereby amended as follows:
2.1 Clause "(f)" of the Introductory Statement of the Agreement is hereby amended by deleting the word "Borrowers" from the parenthetical phrase thereof and substituting therefor the word "Guarantor".
2.2 Section 1.1 of the Agreement is hereby amended by (A) adding the following defined terms in proper alphabetical order:
"ACCOUNT DEBTOR" means, with respect to any Account, the
obligor with respect to such Account.
"ADJUSTED ELIGIBLE ACCOUNTS RECEIVABLE" shall mean the product
of Eligible Accounts Receivable, minus the Dilution Reserve,
minus the NSF Check Reserve, and minus the Contra Reserve.
"CONTRA RESERVE" shall mean, at any date, a reserve determined
in the Administrative Agent's sole discretion, based upon the
estimated amount of Accounts wherein the Account Debtor (i) is
a creditor of a Borrower, (ii) has or has asserted or is
reasonably expected to assert a right of set-off against a
Borrower or (iii) has disputed or is reasonably expected to
dispute its liability (whether by chargeback or otherwise) or
made or is reasonably expected to make any claim with respect
to the Account or any other Account of a Borrower which has
not been resolved, in each case, without duplication, to the
extent of the amount owed by such Borrower to the Account
Debtor, the amount of such actual or asserted right of
set-off, or the amount of such dispute or claim, as the case
may be.
"DILUTION FACTORS" shall mean, without duplication, with
respect to any period, the aggregate amount of all deductions,
credit memos, returns, adjustments, allowances,
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bad debt write-offs and other non-cash credits which are
recorded to reduce accounts receivable in a manner consistent
with current and historical accounting practices of the
Borrowers.
"DILUTION RATIO" shall mean, at any date, the amount
(expressed as a percentage) equal to (a) the aggregate amount
of the applicable Dilution Factors for the six (6) most
recently ended fiscal months divided by (b) total gross sales
for the six (6) most recently ended fiscal months.
"DILUTION RESERVE" shall mean, at any date, the applicable
Dilution Ratio multiplied by the Eligible Accounts Receivable
on such date.
"ELIGIBLE ACCOUNTS RECEIVABLE" means, at the time of any
determination thereof, each Account that satisfies the
following criteria at the time of creation and continues to
meet the same at the time of such determination: such Account
(i) has been invoiced to, and represents the bona fide amounts
due to the Borrowers from, the purchaser of goods or services,
in each case originated in the ordinary course of business of
the Borrowers and (ii) is not ineligible for inclusion in the
calculation of the Borrowing Base pursuant to any of clauses
(a) through (o) below or otherwise deemed by the
Administrative Agent in good faith to be ineligible for
inclusion in the calculation of the Borrowing Base as
described below. Without limiting the foregoing, to qualify as
Eligible Accounts Receivable, an Account shall indicate no
person other than a Borrower as payee or remittance party. In
determining the amount to be so included, the face amount of
an Account shall be reduced by, without duplication, to the
extent not reflected in such face amount, (i) the amount of
all accrued and actual discounts, claims, credits or credits
pending, promotional program allowances, price adjustments,
finance charges or other allowances (including any amount that
the Borrowers, as applicable, may be obligated to rebate to a
customer pursuant to the terms of any agreement or
understanding (written or oral)), (ii) the aggregate amount of
all limits and deductions provided for in this definition and
elsewhere in this Agreement and (iii) the aggregate amount of
all cash received in respect of such Account but not yet
applied by the Borrowers to reduce the amount of such Account.
Unless otherwise approved from time to time in writing by the
Administrative Agent (subject to the limitations and
requirements set forth in Section 10.10(a) of the Agreement),
no Account shall be an Eligible Account Receivable if, without
duplication:
(a) the relevant Borrower does not have sole lawful and
absolute title to such Account; or
(b) (i) it is unpaid more than 90 days from the original
date of invoice or 60 days from the original due date
or (ii) it has been written off the books of the
Borrowers or has been otherwise designated on such
books as uncollectible; or
(c) more than 50% in face amount of all Accounts of the
same Account Debtor are ineligible pursuant to clause
(b) above; or
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(d) the Account Debtor is insolvent or the subject of any
bankruptcy case or insolvency proceeding of any kind;
or
(e) the Account is not payable in Dollars or the Account
Debtor is either not organized under the laws of the
United States of America, any State thereof, or the
District of Columbia or is located outside or has its
principal place of business or substantially all of
its assets outside the United States, except to the
extent the Account is supported by an irrevocable
letter of credit satisfactory to the Administrative
Agent (as to form, substance and issuer) and assigned
to and directly drawable by the Administrative Agent;
or
(f) the Account Debtor is the United States of America or
any department, agency or instrumentality thereof,
unless the relevant Borrower duly assigns its rights
to payment of such Account to the Administrative
Agent pursuant to the Assignment of Claims Act of
1940, as amended, which assignment and related
documents and filings shall be in form, and substance
satisfactory to the Administrative Agent; or
(g) the Account is supported by a security deposit (to
the extent received from the applicable Account
Debtor), progress payment, retainage or other similar
advance made by or for the benefit of the applicable
Account Debtor, in each case to the extent thereof;
or
(h) (i) it is not subject to a valid and perfected first
priority Lien in favor of the Administrative Agent
for the benefit of the Secured Parties, subject to no
other Liens other than Liens (if any) permitted by
the Loan Documents or (ii) it does not otherwise
conform in all material respects to the
representations and warranties contained in the Loan
Documents relating to Accounts; or
(i) such Account was invoiced (i) in advance of goods or
services provided, or (ii) twice, or (iii) the
associated income has not been earned; or
(j) such Account arises from the sale of unused natural
gas by the Borrowers (in which event 50% of the
amount of such Account may constitute an Eligible
Account Receivable, subject to satisfaction of the
other clauses of this definition); or
(k) such Account is classified as a suspense account or a
note receivable by the Borrowers in accordance with
the Borrowers' current and historical practices; or
(l) the sale to the Account Debtor is on a bill-and-hold,
guaranteed sale, sale-and-return, ship-and-return,
sale on approval or consignment or other similar
basis or made pursuant to any other written agreement
providing for repurchase or return of any merchandise
which has been claimed to be defective or otherwise
unsatisfactory; or
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(m) the Account represents a progress-billing or
otherwise does not represent a completed sale; or
(n) the Account Debtor is an Affiliate of the Borrowers;
or
(o) such Account was not paid in full, and the Borrower
created a new receivable for the unpaid portion of
the Account, without the agreement of the customer,
and other Accounts constituting chargebacks, debit
memos and other adjustments for unauthorized
deductions.
Notwithstanding the foregoing, all Accounts of any single
Account Debtor and its Affiliates which, in the aggregate
exceed (i) 20% in respect of Account Debtors whose securities
are rated Investment Grade by any of Moody's or S&P or (ii) 5%
in respect of all other Account Debtors, of the total amount
of all Eligible Accounts Receivable at the time of any
determination shall be deemed not to be Eligible Accounts
Receivable to the extent of such excess. In determining the
aggregate amount of Accounts from the same Account Debtor that
are unpaid more than 90 days from the date of invoice or more
than 60 days from the due date pursuant to clause (b) above,
there shall be excluded the amount of any net credit balances
relating to Accounts with invoice dates more than 90 days
prior to the date of determination or more than 60 days from
the due date. Furthermore, no Account shall be an Eligible
Account Receivable if it is for goods that have been sold
under a purchase order or pursuant to the terms of a contract
or other agreement or understanding (written or oral) that
indicates that any Person other than a Borrower has or has had
or has purported to have or have had an ownership interest in
such goods.
"ELIGIBLE FINISHED GOODS" shall mean, on any date, Eligible
Inventory composed of Finished Goods on such date as shown on
the Borrowers' perpetual inventory records in accordance with
their current and historical accounting practices, minus
Inventory Reserves.
"ELIGIBLE GROSS COMMODITY RAW MATERIALS" shall mean, on any
date, Eligible Inventory composed of commodity type materials,
as determined by the Administrative Agent, and categorized as
rock, paper or steel on the Borrowers' perpetual inventory
records in accordance with current and historical accounting
practices, and any other commodity type material, as
determined by the Administrative Agent from time to time, in
the Administrative Agent's sole discretion, minus Inventory
Reserves.
"ELIGIBLE INVENTORY" shall mean, on any date, the Inventory
Value of the Borrowers on such date deemed by the
Administrative Agent in good faith to be eligible for
inclusion in the calculation of the Borrowing Base. Without
limiting the foregoing, to qualify as "Eligible Inventory", no
Person other than the Borrowers shall have any direct or
indirect ownership interest or title to such Inventory. Unless
otherwise from time to time approved in writing by the
Administrative Agent (subject to the limitations and
requirements set forth in Section 10.10(a) of
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the Agreement), no Inventory shall be deemed Eligible
Inventory if (and without duplication):
(a) it is not owned solely by the Borrowers or the Borrowers
do not have sole and good, valid and unencumbered title
thereto; or
(b) it is not located in the United States; or
(c) it is not located on property owned or leased by the
Borrowers or in a contract warehouse specified on a schedule
attached to the Security and Pledge Agreement and segregated
or otherwise separately identifiable from goods of all others,
if any, stored on the premises; or
(d) it is not subject to a valid and perfected first priority
Lien in favor of the Administrative Agent, except, with
respect to Inventory stored at sites described in clause (c)
above, for Liens for unpaid rent or normal and customary
warehousing charges, in each case, not yet paid, to the extent
of such unpaid rent or charges; or
(e) it is goods returned or rejected due to quality issues by
the Borrowers' customers or goods in transit to third parties
(other than to warehouse sites described in clause (c) above);
or
(f) it is seconds or thirds or stale or is obsolete or slow
moving or unmerchantable, or does not otherwise conform to the
representations and warranties contained in the Loan
Documents; or
(g) it is located at any operating facility that the Borrowers
plan to close, or at any operating facility that is closed,
within thirty (30) days from the date of determination of the
most recent Borrowing Base, except in the case of Finished
Goods to be sold in the ordinary course of business with a
remaining shelf life of at least 120 days until expiration
date; or
(h) any portion of its value is attributable to capitalized
overhead costs, with the exception of Fixed Overhead and
Depreciation; or
(i) it is comprised of film, pallets, and/or other shipping
materials or supplies, repair parts, fuel, cartons used in
production or other containers, and any other such material
not considered used for sale by the Administrative Agent from
time to time, in the Administrative Agent's sole discretion;
or
(j) the Borrowers classify such item as a sample item on their
perpetual inventory records, or the Borrowers use such item
for display; or
(k) it is a discontinued product or component thereof; or
(l) any portion of the Inventory Value thereof is attributable
to intercompany profit among the Borrowers or their
Affiliates; or
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(m) any Inventory that is damaged or marked for return to
vendor.
"ELIGIBLE OTHER RAW MATERIALS" shall mean, on any date, the
Inventory Value of Raw Materials of the Borrowers on such date
as shown on the Borrowers' perpetual inventory records or
equivalent reporting in accordance with their current and
historical classification of raw materials, excluding Supplies
to the extent deemed Eligible Inventory, minus Inventory
Reserves.
"FINISHED GOODS" shall mean packaged goods to be sold by the
Borrowers in the ordinary course of business.
"FIXED OVERHEAD AND DEPRECIATION" shall mean indirect
manufacturing costs and mobile plant equipment depreciation as
classified by the Borrowers in accordance with their current
and historical accounting practices.
"INVENTORY" shall mean all Raw Materials, Work-in-Process, and
Finished Goods held by the Borrowers in the normal course of
business.
"INVENTORY RESERVES" means the following, each as determined
by the Administrative Agent from time to time:
(a) a reserve for shrink, or discrepancies that arise
pertaining to inventory quantities on hand between the
Borrowers perpetual accounting system, and physical counts of
the inventory; or
(b) a reserve for Finished Goods which are deemed to be
greater than six (6) months old, or that have not turned in
six (6) months; or
(c) a reserve for Finished Goods which are designated to be
returned to the vendor, or are recognized as damaged by the
Borrower; or
(d) a reserve for amounts owing to landlords or warehousemen
for Inventory stored at leased facilities or public warehouses
in the amount of (i) to the extent Borrowers' are able to
determine the Borrowers' average rental expense for such
facility, three (3) times the Borrower's average monthly
rental expense for such facility plus (ii) in all other
events, the Inventory Value of the Inventory stored at such
leased facilities or public warehouses; or
(e) a reserve for Inventory located at contractors' or
vendors' facilities in the amount of the Inventory Value of
such Inventory; or
(f) any other reserve as deemed appropriate by the
Administrative Agent in its sole discretion, from time to
time.
"INVENTORY VALUE" shall mean a dollar amount equal to the
lesser of (i) the actual cost of Inventory determined on a
basis consistent with GAAP and with the
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Borrowers' current and historical accounting practice or (ii)
the market value of such Inventory.
"INVESTMENT GRADE" shall mean either (i) at least Baa3 by
Moody's (or the then equivalent) or (ii) at least BBB- by S&P
(or the then equivalent).
"LENDER AFFILIATE" shall mean, (a) with respect to any Lender,
(i) an Affiliate of such Lender or (ii) any entity (whether a
corporation, partnership, trust or otherwise) that is engaged
in making, purchasing, holding or otherwise investing in loans
and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an
Affiliate of such Lender and (b) with respect to any Lender
that is a fund which invests in loans and similar extensions
of credit, any other fund that invests in loans and similar
extensions of credit and is managed by the same investment
advisor as such Lender or by an Affiliate of such investment
advisor.
"MOODY'S" shall mean Moody's Investors Service, Inc. or any
successor to the rating agency business
thereof.
"NSF CHECK RESERVE" shall mean, at any date, a reserve
determined in the Administrative Agent's sole discretion,
based upon estimated amounts of checks,
Promissory Notes drafts, trade acceptances or other instruments for the payment
of money which have been received, presented for payment and
returned uncollected for any reason.
"PP&E COMPONENT" shall mean, at the time of any determination,
an amount equal to the lesser of (i) 50% of the liquidation
value in place of certain machinery and equipment ...