RELIANCE STEEL & ALUMINUM CO. RSAC MANAGEMENT CORP. FIRST AMENDMENT TO CREDIT AGREEMENT AND MASTER SUBSIDIARY GUARANTY
Exhibit 4.2
RELIANCE STEEL & ALUMINUM CO.
RSAC MANAGEMENT CORP.
RSAC MANAGEMENT CORP.
FIRST AMENDMENT
TO CREDIT AGREEMENT AND MASTER SUBSIDIARY GUARANTY
TO CREDIT AGREEMENT AND MASTER SUBSIDIARY GUARANTY
This FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as of February 16, 2006
and entered into by and among Reliance Steel & Aluminum Co., a California corporation (“RSA”), RSAC
Management Corp., a California corporation (“RSAC Management” and together with RSA, jointly and
severally, “Borrowers” and individually, a “Borrower”), the lenders party to the Credit Agreement
(the “Lenders”) and Bank of America, N.A., as administrative agent for the Lenders (“Administrative
Agent”), and, for purposes of Section 1.8 and Section 4 hereof, each of the
Guarantors, and is made with reference to that certain Credit Agreement dated as of June 13, 2005
(the “Credit Agreement”), by and among Borrowers, Lenders and Administrative Agent. Capitalized
terms used herein without definition shall have the same meanings herein as set forth in the Credit
Agreement.
RECITALS
WHEREAS, Borrowers desire to consummate the EMJ Acquisition (as defined below) and desire to
pay a portion of the consideration payable for the EMJ Acquisition from the proceeds of Loans
borrowed under the Credit Agreement;
WHEREAS, EMJ (as defined below) has a revolving credit facility that allows maximum borrowing
of $300 million and that is secured by a lien on all domestic inventory and accounts receivables of
the EMJ Companies, which credit facility Borrowers intend to pay off in full and terminate as of
the First Amendment Effective Date (as defined below);
WHEREAS, EMJ has issued certain Senior Secured Notes in the principal amount of $250 million,
that will remain outstanding under the EMJ Indenture (each as defined below), that are secured by
existing and future acquired unencumbered real property, plant and equipment of the EMJ Companies,
which security interest would remain in effect after the EMJ Acquisition, and that are callable on
or about June 2007 and the EMJ Indenture prohibits the EMJ Companies from guaranteeing certain
other debt and limits the payment of dividends by EMJ;
WHEREAS, EMJ assumed, as of September 21, 1993, obligations under those Industrial Revenue
Refunding Bonds in the original aggregate principal amount of $4,300,000 in favor of The
Mecklenburg County Industrial Facilities and Pollution Control Financing Authority and NationsBank
of North Carolina, N.A. as trustee, which would remain in effect after the EMJ Acquisition;
WHEREAS, EMJ’s Canadian subsidiary maintains a separate credit facility allowing borrowings of
up to C$12 million and term financial instruments totaling C$10 million which is secured by the
Canadian assets of such Canadian subsidiary;
WHEREAS, EMJ has borrowed against the cash surrender value of certain life insurance policies
(which borrowings are non-recourse to Borrowers, EMJ and their respective Subsidiaries), which EMJ
intends to maintain for the life of such policies;
WHEREAS, Borrowers and Lenders desire to amend the Credit Agreement to (i) permit the EMJ
Acquisition, (ii) increase the Aggregate Commitments to $700,000,000, and (iii) make certain other
amendments as set forth below;
WHEREAS, Guarantors and Lenders desire to amend the Master Subsidiary Guaranty dated as of
June 13, 2005, by and among Guarantors and Administrative Agent on behalf of Lenders (the “Master
Subsidiary Guaranty”);
NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants
herein contained, the parties hereto agree as follows:
Section 1. AMENDMENTS TO THE CREDIT AGREEMENT AND MASTER SUBSIDIARY GUARANTY
1.1 Amendments to Section 1: Definitions and Accounting Terms.
A. Section 1.1 of the Credit Agreement is hereby amended by adding the following definitions
in alphabetical order:
‘“Adjusted Acquired Business EBITDA’ means for any period ending on or before
the date of any Acquisition of an Acquired Business (other than the EMJ Companies if
the EMJ Guaranty Event has not occurred on or prior to the last day of such period) the
sum of items (a) through (f) of the definition of EBITDA with respect
to such Acquired Business.”
‘“Adjusted EBITDA’ means, with respect to any Person and with respect to any
fiscal period, the sum of (a) Net Income of that Person for that
period, plus (b) any non-operating non-recurring loss reflected in such Net
Income, minus (c) any non-operating non-recurring gain reflected in such Net
Income, plus (d) Interest Expense of that Person for that period, plus
(e) the aggregate amount of federal and state taxes on or measured by income of that
Person for that period (whether or not payable during that period), plus (f)
depreciation, amortization and all other non-cash expenses of that Person for that
period, plus (g) Adjusted Acquired Business EBITDA, in each case as determined
in accordance with GAAP, and adjusted by subtracting equity in earnings in 50% or less
owned companies and joint ventures and, to the extent approved by Administrative Agent
(which approval shall not be unreasonably withheld), any other companies not
consolidated with Borrowers, and
| 2 | First Amendment |
by adding Cash dividends received from 50% or less owned companies and joint ventures
and, to the extent approved by Administrative Agent (which approval shall not be
unreasonably withheld), any other companies not consolidated with Borrowers;
provided that Adjusted Acquired Business EBITDA with respect to any Acquired
Business shall only be included in Adjusted EBITDA if such Adjusted Acquired Business
EBITDA is shown on the financial statements of such Acquired Business either (i)
audited by an independent accounting firm, (ii) reviewed by an independent accounting
firm as long as such reviewed and unaudited Adjusted Acquired Business EBITDA does not
exceed 10% of the total audited Adjusted EBITDA of RSA and its Subsidiaries (excluding
EMJ Companies) or, (iii) subject to consent of the Requisite Lenders, unaudited or
reviewed by an independent accounting firm.”
‘“Adjusted Funded Debt’ means, as of the date of determination, without
duplication, the sum of (a) all principal Indebtedness of RSA and its
Subsidiaries for borrowed money (including debt securities issued by RSA or any of its
Subsidiaries but, to the extent such date of determination occurs prior to the
occurrence of the EMJ Guaranty Event, excluding such Indebtedness of EMJ Companies) on
that date, plus (b) Guaranty Obligations in connection with Synthetic Leases,
plus (c) the aggregate amount of all Capital Lease Obligations of RSA and its
Subsidiaries (excluding such Capital Lease Obligations of EMJ Companies to the extent
such date of determination occurs prior to the occurrence of the EMJ Guaranty Event) on
that date, plus (d) all Letter of Credit Usage and the face amount of, and
reimbursement obligations with respect to, any other letters of credit issued for the
account of RSA or its Subsidiaries.”
‘“Adjusted Leverage Ratio’ means, as at any date of determination, the ratio of
(a) Adjusted Funded Debt as of such date of determination to (b) Adjusted EBITDA of RSA
and its Subsidiaries (excluding EMJ Companies to the extent such date of determination
occurs prior to the occurrence of the EMJ Guaranty Event) on a consolidated basis for
the fiscal period consisting of the four Fiscal Quarters ended on or immediately prior
to such date.”
‘“EMJ’ means, before the EMJ Merger, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Company, a Delaware
corporation and, on and after the EMJ Merger, EMJ Acquisition Sub, the surviving entity
of the EMJ Merger.”
‘“EMJ Acquisition’ means the Acquisition of the EMJ Companies as contemplated
by and in accordance with the EMJ Transaction Documents.”
‘“EMJ Acquisition Sub’ means RSAC Acquisition Corp., a Delaware corporation,
which will be renamed ‘▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Company’ upon the EMJ Merger.”
‘“EMJ Certificate of Merger’ means that certificate of merger executed by EMJ
Acquisition Sub filed with the Delaware Secretary of State to effect the EMJ Merger.”
| 3 | First Amendment |
‘“EMJ COLI’ means those certain life insurance policies obtained in 1984, 1985
and 1986 by ▇▇▇▇▇▇-▇▇▇▇▇▇▇ Holding Co. (‘KR’) from Phoenix Mutual Life Insurance
Company covering participants in the KR employee stock ownership plan and certain other
KR executives, owned by EMJ, each of which policies has EMJ as its sole beneficiary.”
‘“EMJ Companies’ means EMJ and its Subsidiaries.”
‘“EMJ Guaranty Event’ means (i) the occurrence of the EMJ Guaranty Requirement
Date and (ii) the execution and delivery of the Material Subsidiary Guaranty and
certificates and other documents and opinions by EMJ and each of the EMJ Material
Subsidiaries in accordance with Section 6.3.”
‘“EMJ Guaranty Requirement Date’ means the earliest of (i) the date on which
the EMJ Senior Secured Notes are no longer outstanding under the EMJ Indenture, (ii)
the date on which the EMJ Indenture Documents no longer prohibit the execution of the
Material Subsidiary Guaranty by EMJ and EMJ Material Subsidiaries, including, without
limitation, as a result of a redemption, repayment, prepayment, repurchase,
satisfaction and discharge or defeasance of the EMJ Senior Secured Notes, and (iii) the
date on which any EMJ Company executes a guaranty with respect to any of the note
purchase agreements described in Schedule 7.3 or with respect to any
Indebtedness issued pursuant to Section 7.3(a) or Section 7.3(f).”
‘“EMJ Indenture’ means that certain Indenture dated as of May 22, 2002, by and
between EMJ and The Bank of New York, a New York banking corporation, relating to
$250,000,000 of 93/4% Senior Secured Notes due 2012, as amended on or before the First
Amendment Effective Date (to the extent copies of such amendments, if any, have been
delivered to Lenders prior thereto) and as further amended from time to time thereafter
in accordance with Section 7.19.”
‘“EMJ Indenture Documents’ means the EMJ Indenture, the EMJ Indenture
Supplement, the EMJ Senior Secured Notes and each of the other ‘Note Documents’ (as
such term is defined in the EMJ Indenture), in each case as amended on or before the
First Amendment Effective Date (to the extent copies of such amendments, if any, have
been delivered to Lenders prior thereto) and as further amended from time to time
thereafter in accordance with Section 7.19.”
‘“EMJ Indenture Supplement’ means that certain supplement to the EMJ Indenture
dated as of a date that is after the date hereof and on or before the First Amendment
Effective Date, by and between EMJ and The Bank of New York, a New York banking
corporation, relating to $250,000,000 of 93/4% Senior Secured Notes due 2012, which
supplement shall be in form and substance satisfactory to Administrative Agent.”
‘“EMJ Material Subsidiary’ means a Subsidiary of EMJ which is a Material
Domestic Subsidiary, or which would be a Material Domestic Subsidiary if the definition
of Material Domestic Subsidiary did not exclude EMJ Companies.”
| 4 | First Amendment |
‘“EMJ Merger’ means the merger of EMJ with and into EMJ Acquisition Sub, with
EMJ Acquisition Sub surviving, on the First Amendment Effective Date in accordance
with, and as contemplated by, the EMJ Merger Agreement.”
‘“EMJ Merger Agreement’ means that certain Agreement and Plan of Merger dated
as of January 17, 2006, by and between EMJ, RSA and EMJ Acquisition Sub, as amended
from time to time in accordance with Section 7.19.”
‘“EMJ Senior Secured Notes’ means the senior secured notes issued pursuant to
the EMJ Indenture, as amended prior to the First Amendment Effective Date (to the
extent copies of such amendments, if any, have been delivered to Lenders prior thereto)
and as such notes are further amended from time to time thereafter in accordance with
Section 7.19, in an aggregate principal amount not exceeding $250,000,000, as
such amount is reduced from time to time by any payment, prepayment, repurchase,
redemption, satisfaction and discharge or defeasance thereof on or after the First
Amendment Effective Date.”
‘“EMJ Transaction Documents’ means (i) the EMJ Merger Agreement, (ii) the
Voting Agreement dated as of January 17, 2006, by and among Company and each of the
stockholders of EMJ listed on the signature pages thereof, (iii) the Registration
Rights Agreement dated as of January 17, 2006, by and among Company and each of the
stockholders of EMJ listed on the signature pages thereof, (iv) the Exchange Agreement
described in Section 2.02(a) of the EMJ Merger Agreement, (v) the Officer’s Tax
Certificate of RSA and EMJ Acquisition Sub dated on or about the First Amendment
Effective Date in connection with certain federal income tax consequences of the EMJ
Merger, (vi) the EMJ Certificate of Merger, (vii) the Company Proxy Statement (as
defined in the EMJ Merger Agreement) and the Form S-4 filed with the Securities and
Exchange Commission that includes the Company Proxy Statement and RSA’s prospectus
relating to the issuance by RSA of shares of common stock, no par value per share, of
RSA and (viii) the other documents and agreements executed and delivered in connection
with the EMJ Acquisition, in each case as amended from time to time in accordance with
Section 7.19.”
‘“First Amendment Effective Date’ shall have the meaning given to such term in
Section 2 of the First Amendment to Credit Agreement and shall be concurrent with the
effective date of the EMJ Merger.”
‘“First Amendment to Credit Agreement’ means that certain First Amendment to
this Agreement dated as of February 16, 2006, by and among Borrowers, the Guarantors,
Lenders party thereto and Administrative Agent.”
‘“Life Insurance Policy Loans’ means obligations in respect of money borrowed by
EMJ against the available cash surrender value of any EMJ COLI policy in accordance with
the terms of such policy, which obligations shall be nonrecourse to Borrowers, EMJ and
their respective Subsidiaries.”
| 5 | First Amendment |
B. Section 1.1 of the Credit Agreement is hereby further amended by amending the definition of
“Applicable Margin” by deleting it in its entirety and substituting the following in lieu thereof.
“‘Applicable Margin’ means, for any Pricing Period, the per annum amounts set
forth below (in basis points per annum) opposite the applicable Pricing Level for the
applicable Adjusted Leverage Ratio (or, if applicable, the Leverage Ratio);
provided, however, that until Administrative Agent’s receipt of the
second quarterly Compliance Certificate after the Closing Date required under
Section 6.2(a), such amounts shall be those indicated for Pricing Level 2;
provided, further, that for any date from the First Amendment Effective
Date until the Pricing Level Change Date immediately following the date the quarterly
Compliance Certificate required under Section 6.2(a) with respect to the Fiscal
Quarter ended June 30, 2006 is delivered or is required to be delivered, such amounts
for any such date during such period shall be those indicated for Pricing ▇▇▇▇▇ ▇ to the
extent the Applicable Margin for such date determined after giving effect to this
proviso is equal to or greater than the Applicable Margin for such date calculated
without giving effect to this proviso (it being understood that to the extent the
Applicable Margin for any such date during such period determined after giving effect to
this proviso is less than the Applicable Margin for such date calculated without giving
effect to this proviso, then this proviso shall not be given effect for calculation of
the Applicable Margin for such date); provided, further, that if at any
time, the Applicable Margin is lower when the Adjusted Leverage Ratio is used than when
the Leverage Ratio is used, then Leverage Ratio shall be used in determining the
Applicable Margin:
| 6 | First Amendment |
| Adjusted Leverage | ||||||||
| Pricing | Ratio or Leverage | Letters of Credit | ||||||
| Level | Ratio, as applicable | Commitment Fee | Eurodollar Rate + | Base Rate + | ||||
1 |
£1.00:1 | 10.0 | 50.0 | 0.0 | ||||
2 |
£1.75:1 but > 1.00:1 | 12.5 | 62.5 | 0.0 | ||||
3 |
£2.25:1 but > 1.75:1 | 15.0 | 75.0 | 0.0 | ||||
4 |
£2.75:1 but > 2.25:1 | 20.0 | 100.0 | 0.0 | ||||
5 |
>2.75:1 | 25.0 | 125.0 | 0.0 |
‘Pricing Level’ means, for each period, the pricing level set forth above
opposite the Adjusted Leverage Ratio (or, if applicable, the Leverage Ratio) achieved
by RSA and its Subsidiaries as of the first day of that Pricing Period.
‘Pricing Level Change Date’ means, with respect to any change in the Pricing
Level which results in a change in the Applicable Margin, the earlier of (a) 5 Business
Days after the date upon which Borrowers deliver a Compliance Certificate to
Administrative Agent reflecting such changed Pricing Level and (b) 5 Business Days
after the date upon which Borrowers are required by Section 6.2(a), to deliver
such Compliance Certificate; provided, however, that if the Compliance
Certificate is not delivered by the date required by the Section 6.2(a), then,
subject to the other provisions of this Agreement, commencing on the date such
Compliance Certificate was required until such Compliance Certificate is delivered, the
Applicable Margin shall be based on the next higher level than the one previously in
effect, and from and after the date such Compliance Certificate is thereafter received,
the Applicable Margin shall be as determined from such Compliance Certificate.
‘Pricing Period’ means (a) the period commencing on the Closing Date and ending
on the first Pricing Level Change Date to occur thereafter and (b) each subsequent
period commencing on each Pricing Level Change Date and ending the day prior to the
next Pricing Level Change Date.”
| 7 | First Amendment |
C. Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of
“Commitment” therefrom in its entirety and substituting the following therefor:
“‘Commitment’ means, for each Lender, (i) prior to the First Amendment
Effective Date, the amount set forth as such opposite such Lender’s name on
Schedule 2.1A,
and (ii) on or after First Amendment Effective Date, the amount set forth as such
opposite such Lender’s name on Schedule 2.1B, in each case as such amount may
be increased, reduced or adjusted from time to time pursuant to the terms of this
Agreement (collectively, the ‘Aggregate Commitments’). The respective Pro Rata Shares
of Lenders as of the date hereof and as of the First Amendment Effective Date are set
forth in Schedule 2.1A and Schedule 2.1B, respectively.”
D. Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of
“Consolidated Net Worth” therefrom in its entirety and substituting the following therefor:
“‘Consolidated Net Worth’ means, as of the date of any determination thereof, the
total consolidated assets of RSA and its Subsidiaries (excluding EMJ Companies to the
extent such date of determination occurs prior to the occurrence of the EMJ Guaranty Event)
less the total consolidated liabilities of RSA and its Subsidiaries (excluding EMJ
Companies to the extent such date of determination occurs prior to the occurrence of the
EMJ Guaranty Event) determined in accordance with GAAP.”
E. Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of
“Consolidated Tangible Net Worth” therefrom in its entirety and substituting the following
therefor:
“‘Consolidated Tangible Net Worth’ means, as of any date of determination, for RSA
and its Subsidiaries on a consolidated basis, Shareholders’ Equity of RSA and its
Subsidiaries (excluding EMJ Companies to the extent such date of determination occurs prior
to the occurrence of the EMJ Guaranty Event) on that date minus the Intangible
Assets of RSA and its Subsidiaries (excluding EMJ Companies to the extent such date of
determination occurs prior to the occurrence of the EMJ Guaranty Event) on that date.”
F. Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of “Fee
Letter” therefrom in its entirety and substituting the following therefor:
“‘Fee Letter’ means (i) the letter agreement dated April 25, 2005, among
Borrowers, Administrative Agent and Arranger, and (ii) the letter agreement dated
January 20, 2006 among Borrowers and Arranger.”
G. Section 1.1 of the Credit Agreement is hereby amended by adding at the end of the
definition of “Indebtedness” the following sentence:
“Notwithstanding the foregoing, Life Insurance Policy Loans shall not constitute
Indebtedness so long as (1) such obligations are nonrecourse to RSA, EMJ and their
respective Subsidiaries, (2) each EMJ COLI policy is owned by EMJ and has EMJ as its
| 8 | First Amendment |
sole
beneficiary, (3) the aggregate amount of such obligations outstanding thereunder at any
time does not exceed the cash surrender value of the EMJ COLI policies at such time, (4)
the proceeds of such loans incurred after the First Amendment Effective Date are not used
for any purpose other than to pay the premiums, taxes and expenses related to the EMJ COLI
policies.”
H. Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of
“Interest Coverage Ratio” therefrom in its entirety and substituting the following therefor:
“‘Interest Coverage Ratio’ means, as of the last day of any Fiscal Quarter
(including the last day of a Fiscal Quarter which is also the last day of a Fiscal
Year), the ratio of (a) EBIT of RSA and its Subsidiaries (excluding EMJ Companies if
the EMJ Guaranty Event has not occurred on or prior to the last day of such Fiscal
Quarter) on a consolidated basis for the fiscal period consisting of that Fiscal
Quarter and the three immediately preceding Fiscal Quarters, excluding any portion of
EBIT allocable to any Person acquired by RSA and any of its Subsidiaries for any fiscal
period prior to the Acquisition to (b) Interest Expense of RSA and its Subsidiaries
(excluding EMJ Companies if the EMJ Guaranty Event has not occurred on or prior to the
last day of such Fiscal Quarter) on a consolidated basis for such fiscal period.”
I. Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of
“Interest Expense” in its entirety and substituting therefor the following:
“‘Interest Expense’ means, with respect to any Person and as of the last day of any
fiscal period, the sum of (a) all interest, fees, charges and related
expenses paid or payable (without duplication) for that fiscal period by that Person to a
lender in connection with borrowed money (including any obligations for fees, charges and
related expenses payable to the issuer of any letter of credit) or the deferred purchase
price of assets that are considered ‘interest expense’ under GAAP (excluding therefrom (to
the extent it would have otherwise been included to reduce ‘Interest Expense’) any interest
income of RSA and its Subsidiaries from any Investments made in (including loans made to)
EMJ Companies if the EMJ Guaranty Event has not occurred on or prior to the last day of such
fiscal period) plus (b) the portion of rent paid or payable (without duplication)
for that fiscal period by that Person under Capital Lease Obligations that should be treated
as interest in accordance with Financial Accounting Standards Board Statement No. 13.”
J. Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of
“Material Domestic Subsidiary” therefrom in its entirety and substituting the following therefor:
“‘Material Domestic Subsidiary’ means, at any time, each Subsidiary of RSA
which is created, organized or domesticated in the United States or under the laws of
the United States or any state thereof, and (i) is a first-tier Subsidiary of RSA
(other than any EMJ Company prior to the EMJ Guaranty Requirement Date), or (ii) the
aggregate amount of its Tangible Assets exceeds $20,000,000 (other than any EMJ Company
prior to the EMJ Guaranty Requirement Date), or (iii) any Subsidiary
| 9 | First Amendment |
which is a
guarantor or obligor with respect to any of the note purchase agreements described in
Schedule 7.3 or with respect to any Indebtedness issued pursuant to Section
7.3(a) or Section 7.3(f).”
K. Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of “Net
Income” in its entirety and substituting therefor the following:
“‘Net Income’ means, with respect to any fiscal period, the consolidated net income
of RSA and its Subsidiaries for that period, determined in accordance with GAAP,
consistently applied (excluding therefrom (i) any interest income of RSA and its
Subsidiaries from any Investments made in (including loans made to) EMJ Companies if the EMJ
Guaranty Event has not occurred on or prior to the last day of such fiscal period and (ii)
any income (including dividend income) of RSA and its Subsidiaries from the EMJ COLI
policies; provided that the amount in clause (ii) shall not be excluded when
calculating Net Income for purposes of Section 7.11).”
L. Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of “Pro
Rata Share” in its entirety and substituting therefor the following:
“‘Pro Rata Share’ means, with respect to each Lender, the percentage of the
Aggregate Commitments set forth opposite the name of that Lender (i) prior to the First
Amendment Effective Date, on Schedule 2.1A and (ii) on or after the First
Amendment Effective Date, on Schedule 2.1B, in each case as such share may be
adjusted as contemplated herein.”
1.2 Amendments to Section 5: Representations and Warranties
A. Subsection (c) of Section 5.7 of the Credit Agreement is hereby amended by deleting the
reference to “$5,000,000” contained therein and substituting “$15,000,000” therefor.
B. Section 5.12 of the Credit Agreement is hereby amended by adding the following subsections:
“(c) (i) The consolidated pro forma balance sheets of RSA and its Subsidiaries
(after giving effect to the EMJ Acquisition) as at December 31, 2004 and September 30,
2005, and the related consolidated pro forma statements of income of RSA and its
Subsidiaries (after giving effect to the EMJ Acquisition) for the twelve months and
nine months, respectively, then ended as set forth in the Form S-4 filed with the
Securities and Exchange Commission by RSA on or about February 7, 2006, in connection
with the EMJ Acquisition, certified by the chief financial officer of RSA, copies of
which have been furnished to each Lender, fairly present the consolidated pro forma
financial condition of RSA and its Subsidiaries (after giving effect to the EMJ
Acquisition) as at each such date and the consolidated pro forma results of operations
of RSA and its Subsidiaries (after giving effect to the EMJ Acquisition) for the
applicable period ended on each such date, all in accordance with GAAP, and (ii) the
consolidated pro forma balance sheet of RSA and its Subsidiaries (after giving effect
to the EMJ Acquisition) as at December 31,
| 10 | First Amendment |
2005, and the related consolidated pro forma statement of income of RSA and
its Subsidiaries (after giving effect to the EMJ Acquisition) for the twelve months
then ended, certified by the chief financial officer of RSA, copies of which will have
been furnished to each Lender at least 10 Business Days prior to the First Amendment
Effective Date, when delivered to Lenders will fairly present the consolidated pro
forma financial condition of RSA and its Subsidiaries (after giving effect to the EMJ
Acquisition) as at such date and the consolidated pro forma results of operations of
RSA and its Subsidiaries (after giving effect to the EMJ Acquisition) for the period
ended on such date, all in accordance with GAAP.
(d) The consolidated forecasted balance sheets and statements of income and cash
flows of RSA and its Subsidiaries (after giving effect to the EMJ Acquisition) as of
the end of Fiscal Year 2006 and as of the end of the next four succeeding Fiscal Years,
and for Fiscal Year 2006 and the next four succeeding Fiscal Years, as the case may be,
copies of which have been furnished to each Lender, were prepared in good faith on the
basis of the assumptions stated therein, which assumptions were fair in light of the
conditions existing at the time of delivery of such forecasts, and represented, at the
time of delivery, the Borrowers’ best estimate of their future financial performance.”
C. Section 5 of the Credit Agreement is hereby amended by adding the following at the end
thereof:
“5.18 Certain Tax Matters. Except as set forth on Schedule 5.18,
(a) The EMJ Acquisition consummated pursuant to the EMJ Merger Agreement will
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended.
(b) Following the EMJ Acquisition, none of RSA or any of its affiliates (other
than EMJ Acquisition Sub), will have any liability for any taxes incurred by the EMJ
Companies in the EMJ Acquisition or for the historic or future taxes of the EMJ
Companies, other than taxes of the EMJ Companies that are reported on a consolidated or
combined tax return that includes the EMJ Companies and RSA (or such affiliate of RSA).
(c) Following the EMJ Acquisition, there will be no tax allocation or sharing
agreements between any of the EMJ Companies, on the one hand, and RSA or any of its
affiliates (other than the EMJ Companies), on the other hand, other than any such tax
allocation or sharing agreements provided to Lenders prior to the First Amendment
Effective Date.
(d) To the knowledge of the Borrowers, neither EMJ nor any of its Subsidiaries has
engaged in a ‘reportable transaction,’ as set forth in Treasury Regulation Section
1.6011-4(b), or any transaction that is the same as or substantially similar to one of
the types of transactions that the IRS has determined to be a tax avoidance transaction
and identified by notice, regulation, or other form
| 11 | First Amendment |
of published guidance as a ‘listed transaction,’ as set forth in Treasury
Regulation Section 1.6011-4(b)(2).
(e) (i) No audit or other examination of any tax return of EMJ or any of its
Subsidiaries by any governmental authority is presently in progress, nor has EMJ or any of
its Subsidiaries been notified in writing of any request for such an audit or other
examination and no adjustment relating to any tax returns filed or required to be filed by
EMJ or any of its Subsidiaries has been proposed in writing by any governmental authority to
EMJ or any of its Subsidiaries, (ii) EMJ has provided adequate accruals in accordance with
GAAP in its most recently published consolidated financial statements for any taxes for the
period covered by such financial statements that have not been paid, whether or not shown as
being due on any tax returns, and (iii) Borrowers are not aware of any position that EMJ or
any of its Subsidiaries has taken on any of EMJ’s or its Subsidiaries’ tax returns that may
require any additional or new accrual on EMJ’s or any of its Subsidiaries’ financial
statements in accordance with GAAP prior to the consummation of the EMJ Acquisition.
5.19 EMJ Transaction Documents. Each Borrower Party and EMJ Acquisition Sub has all
requisite corporate power and authority to enter into the EMJ Transaction Documents to
which it is a party and to carry out the transactions contemplated thereby. The
execution and delivery of the EMJ Transaction Documents to which it is a party, the
performance of the EMJ Transaction Documents to which it is a party have been duly
authorized by all necessary corporate action on the part of each Borrower Party and EMJ
Acquisition Sub. The execution and delivery by each Borrower Party and EMJ Acquisition
Sub of the EMJ Transaction Documents to which it is a party and the performance of the
EMJ Transaction Documents by such Borrower Party and EMJ Acquisition Sub and the
consummation of the transactions contemplated thereby do not and will not (i) violate
any provision of any law or any governmental rule or regulation applicable to such
Borrower Party or any of its Subsidiaries (including each EMJ Company after the EMJ
Merger and including EMJ Acquisition Sub before, on or after the EMJ Merger), the
certificate or articles of incorporation or bylaws of such Borrower Party or any of its
Subsidiaries (including each EMJ Company after the EMJ Merger and including EMJ
Acquisition Sub before, on or after the EMJ Merger) or any order, judgment or decree of
any court or other agency of government binding on such Borrower Party or any of its
Subsidiaries (including each EMJ Company after the EMJ Merger and including EMJ
Acquisition Sub before, on or after the EMJ Merger), (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation to which such Borrower Party or any of its Subsidiaries
(including each EMJ Company after the EMJ Merger and including EMJ Acquisition Sub
before, on or after the EMJ Merger) is a party or by which such Borrower Party or such
Subsidiary (including each EMJ Company after the EMJ Merger and including EMJ
Acquisition Sub before, on or after the EMJ Merger) or any of its Property is bound or
affected (including without limitation the Loan Documents, as amended by the First
Amendment to Credit Agreement, the EMJ Indenture Documents, the EMJ Transaction
Documents, the documents related to the Canadian
| 12 | First Amendment |
credit facility for EMJ’s Canadian subsidiary and the Note Purchase Documents (as
defined in the First Amendment to Credit Agreement), as amended by omnibus amendments
No. 1 and No 2 thereto (collectively, the “Specified Documents”)), other than (1)
conflicts that will be resolved on or before the First Amendment Effective Date or (2)
conflicts (other than conflicts with or among the Specified Documents) that could not
reasonably be expected to have a Material Adverse Effect, (iii) result in or require
the creation or imposition of any Lien upon any of the properties or assets of such
Borrower Party or any of its Subsidiaries (including each EMJ Company after the EMJ
Merger and including EMJ Acquisition Sub before, on or after the EMJ Merger) (other
than the continuation of Liens on the assets of the EMJ Companies which existed prior
to the First Amendment Effective Date), or (iv) require any approval of stockholders or
any approval or consent of any Person under any Contractual Obligation of such Borrower
Party or any of its Subsidiaries (including each EMJ Company after the EMJ Merger and
including EMJ Acquisition Sub before, on or after the EMJ Merger), except such approval
and consent which have been obtained on or prior to the First Amendment Effective Date.
The execution and delivery by each Borrower Party and EMJ Acquisition Sub of the EMJ
Transaction Documents to which it is a party and the performance by such Borrower Party
and EMJ Acquisition Sub of such EMJ Transaction Documents do not and will not require
any registration with, consent or approval of, or notice to, or other action to, with
or by, any federal, state or other Governmental Authority or regulatory body, except
such consent and approval which have been obtained on or prior to the First Amendment
Effective Date and, with respect to Canadian filings related to the Canadian subsidiary
of EMJ, notices which are required to be filed within 30 days following the First
Amendment Effective Date (which Canadian filing will be made within such 30-day
period). All applicable waiting periods required with respect to the EMJ Acquisition
have expired without any action being taken or threatened by any competent authority
that would restrain, prevent or otherwise impose adverse conditions on the transactions
contemplated by the EMJ Transaction Documents or the financing thereof. The EMJ
Transaction Documents to which it is a party have been duly executed and delivered by
each Borrower Party and EMJ Acquisition Sub party thereto and the EMJ Transaction
Documents are the legally valid and binding obligations of such Borrower Party and such
Subsidiary, enforceable against such Borrower Party and such Subsidiary in accordance
with their respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’ rights
generally or by equitable principles relating to enforceability. On the First
Amendment Effective Date, the EMJ Merger has become effective and EMJ has become a
Wholly-Owned Subsidiary of RSA. Except as specifically stated, representations
regarding the EMJ Companies (other than EMJ Acquisition Sub) are being made only with
respect to matters arising on or after the First Amendment Effective Date when such EMJ
Companies have become Subsidiaries of Borrowers.”
| 13 | First Amendment |
1.3 Amendments to Section 6: Affirmative Covenants
A. Subsection (a) of Section 6.1 of the Credit Agreement is hereby amended by (1)
deleting the word “and” after the clause (i) and substituting in lieu thereof a comma, (2)
deleting the period at the end of the clause (ii) and substituting in lieu thereof the word “and”,
and (3) adding the following clause (iii) at the end of first sentence of subsection (a):
“and (iii) prior to the occurrence of the EMJ Guaranty Event, the consolidated balance
sheet of RSA and its Subsidiaries (excluding EMJ Companies) as at the end of such
Fiscal Year and the consolidated statements of operations, Shareholders’ Equity and
cash flows, in each case of RSA and its Subsidiaries (excluding EMJ Companies) for such
Fiscal Year.”
B. Subsection (b) of Section 6.1 of the Credit Agreement is hereby amended by deleting it
therefrom in its entirety and substituting the following therefor:
“As soon as practicable, and in any event within 50 days after the end of each Fiscal
Quarter (other than the fourth Fiscal Quarter in any Fiscal Year), (i) the consolidated
balance sheet of RSA and its Subsidiaries as at the end of such Fiscal Quarter and the
consolidated statement of operations for such Fiscal Quarter, and its statement of cash
flows for the portion of the Fiscal Year ended with such Fiscal Quarter, all in
reasonable detail, and (ii) prior to the occurrence of the EMJ Guaranty Event, the
consolidated balance sheet of RSA and its Subsidiaries (excluding EMJ Companies) as at
the end of such Fiscal Quarter and the consolidated statement of operations for such
Fiscal Quarter, and its statement of cash flows for the portion of the Fiscal Year
ended with such Fiscal Quarter, all in reasonable detail.”
C. Subsection (e) of Section 6.2 of the Credit Agreement is hereby amended by deleting the
reference to “$5,000,000” contained therein and substituting “$20,000,000” therefor.
D. Section 6.2 of the Credit Agreement is hereby amended by (1) deleting the period at
the end of subsection (j) and substituting in lieu thereof a semi-colon followed by the word “and,”
and (2) adding the following subsection (k):
| “(k) | As soon as practicable, (i) notice of the occurrence of any ‘Default,’ ‘Event of Default’ (in each case as defined in the EMJ Indenture) or any other default by any EMJ Company in the performance of any covenant, agreement or condition contained in any EMJ Indenture Document, or of the occurrence or existence of any event or circumstances that foreseeably will become such ‘Default,’ ‘Event of Default’ or default thereunder (including without limitation any notice received by RSA or any of its Subsidiaries from the trustee under the EMJ Indenture or from the holders of the EMJ Senior Secured Notes relating to any ‘Default’ or ‘Event of Default,’ or any purported ‘Default’ or ‘Event of Default’ under any EMJ Indenture Document), in each case specifying the nature and period of existence thereof and specifying what action Borrowers are taking or propose to take with respect thereto, (ii) notice of any prepayment, repayment, repurchase, |
| 14 | First Amendment |
| redemption, satisfaction and discharge or defeasance of the EMJ Senior Secured Notes or of any notices given to the trustee under the EMJ Indenture or the holders of the EMJ Senior Secured Notes with respect thereto, together with a copy thereof, (iii) notice of any amendment, waiver or modification to any EMJ Indenture Document or any EMJ Transaction Document, together with a copy thereof, (iv) five Business Days before sending the ‘Change of Control Offer’ (as defined in the EMJ Indenture) to the holders of the EMJ Senior Secured Notes, a copy of such offer, and (v) within five Business Days of the ‘Repurchase Date’ (as defined in the EMJ Indenture), notice of the aggregate amount of EMJ Senior Secured Notes that have given proper and timely notice to participate in the applicable Change of Control Offer.” |
E. Section 6.3 of the Credit Agreement is hereby amended by adding the following sentence at
the end thereof:
“Notwithstanding anything to the contrary contained herein or in any other Loan
Document, Borrowers will cause EMJ and each of the EMJ Material Subsidiaries to become
a Guarantor under the Master Subsidiary Guaranty and to deliver to Administrative Agent
the certificates and documents with respect to such entities described in the foregoing
clauses (i) and (ii), together with opinions of counsel substantially in the form of
Exhibit D-1 and Exhibit D-2 attached to the First Amendment to Credit
Agreement (or with such changes thereto as is reasonably satisfactory to Administrative
Agent), in each case on or before the earliest of (a) the EMJ Guaranty Requirement
Date, (b) the date on which any EMJ Company becomes a guarantor or obligor with respect
to any of the note purchase agreements described in Schedule 7.3 or with
respect to any Indebtedness issued pursuant to Section 7.3(a) or Section
7.3(f), and (c) December 31, 2007.”
F. Section 6 of the Credit Agreement is hereby amended by adding a new Section 6.17 at
the end thereof:
“Section 6.17: Cause EMJ and its Wholly-Owned Subsidiaries to remain at all
times Wholly-Owned Subsidiaries of RSA or RSAC.”
1.4 Amendments to Section 7: Negative Covenants
A. Section 7.1 of the Credit Agreement is hereby amended by (1) deleting the word
“and” at the end of subsection (e), (2) deleting the period at the end of subsection (f)
and substituting in lieu thereof a semi-colon, and (3) adding the following subsections (g)
through (i):
| “(g) | Liens to the extent granted for the benefit of the holders of the EMJ Senior Secured Notes on the assets of the EMJ Companies pursuant to the Security Documents (as defined in the EMJ Indenture) in accordance with the EMJ Indenture as in effect on the First Amendment Effective Date and Negative Pledges with respect to the assets of the EMJ Companies to the extent set forth in the EMJ Indenture Documents as in effect on the First Amendment Effective Date; |
| 15 | First Amendment |
| (h) | Liens solely on the assets of foreign Subsidiaries of RSA securing Indebtedness of such foreign Subsidiaries of RSA not exceeding $25,000,000 in the aggregate at any time; and | ||
| (i) | Liens on the EMJ COLI policies (but on no other assets of RSA, EMJ or any of their respective Subsidiaries) to the extent granted for the benefit of the holders of the Life Insurance Policy Loans that comply with the requirements of clauses (1) through (4) of the last sentence of the definition of the term ‘Indebtedness’ to secure EMJ’s obligations under such Life Insurance Policy Loans pursuant to documents as in effect on the date of the EMJ Indenture.” |
B. Subsection (f) of Section 7.3 of the Credit Agreement is hereby amended by deleting it in
its entirety and substituting therefor the following:
| “(f) | Unsecured indebtedness for borrowed money of Borrowers (which may be guaranteed by Subsidiaries of RSA which are party to the Master Subsidiary Guaranty) issued after the Closing Date (i) in the aggregate principal amount of not more than $250,000,000 at any time and (ii) in the amount required to repay the EMJ Senior Secured Notes not to exceed $275,000,000 at any time so long as the proceeds of such amount described in this clause (ii) are concurrently used solely to repay or redeem the EMJ Senior Secured Notes in full and to pay any accrued interest thereon and any premiums relating thereto; provided, however, that the documentation evidencing such indebtedness described in clause (i) and clause (ii) above shall contain covenants no more restrictive than in this Agreement and shall be on terms and conditions (including the maturity date and amortization schedule) acceptable to Administrative Agent;” |
C. Subsection (g) of Section 7.3 of the Credit Agreement is hereby amended by deleting the
reference to “$10,000,000” contained therein and substituting “$25,000,000” therefor.
D. Section 7.3 of the Credit Agreement is hereby further amended by (1) deleting the
word “and” at the end of subsection (f), (2) deleting the period at the end of subsection
(g) and substituting in lieu thereof an “and,” and (3) adding the following subsection (h):
| “(h) | Indebtedness of EMJ under the EMJ Senior Secured Notes issued prior to the First Amendment Effective Date (but not any extensions, refundings, replacements or refinancing thereof, it being understood that the foregoing language is not intended to prohibit the incurrence of Indebtedness permitted under Section 7.3(f)(ii)) in an aggregate principal amount not exceeding the amount outstanding on the First Amendment Effective Date (which amount Borrowers hereby represent as being $250,000,000) minus the aggregate principal amount thereof from time to time repaid, prepaid, redeemed, repurchased, satisfied and discharged, or defeased.” |
| 16 | First Amendment |
E. Section 7.7 of the Credit Agreement is hereby amended by (1) deleting the phrase
“Wholly-Owned Subsidiary” (but not the phrase “Wholly-Owned Subsidiary Guarantor”) therefrom in
each instance such phrase is used in subsection (a) thereof and substituting the phrase
“Wholly-Owned Subsidiary Guarantor”, (2) by deleting the word “and” at the end of
subsection (a), (3) deleting the period at the end of subsection (b) thereof, and
(4) adding the following subsection (c) at the end thereof:
| “(c) | a merger of EMJ with and into EMJ Acquisition Sub on the First Amendment Effective Date pursuant to the EMJ Merger Agreement.” |
F. Section 7.9 of the Credit Agreement is hereby amended by adding the following sentence at
end thereof:
“Notwithstanding the foregoing, RSA may consummate the EMJ Acquisition on the First
Amendment Effective Date so long as (i) such Acquisition is consummated on or before
June 30, 2006 substantially in accordance with and as contemplated by the EMJ Merger
Agreement and the other EMJ Transaction Documents, (ii) Lenders shall have received the
Requisite Information relating to the EMJ Acquisition at least ten Business Days prior
to the First Amendment Effective Date, (iii) the aggregate cash consideration paid or
payable by RSA and its Subsidiaries in connection with the EMJ Acquisition (including
without limitation for the Dissenter Shares and the Holding Stock Options (each as
defined in the EMJ Merger Agreement)) does not exceed $500,000,000 in the aggregate,
and (iv) the non-cash consideration (including in the form of Common Stock) paid or
payable by RSA and its Subsidiaries in connection with the EMJ Acquisition (including
without limitation for such Dissenter Shares and such Holding Stock Options) shall have
a value not to exceed $500,000,000 in the aggregate.”
G. Section 7.11 of the Credit Agreement is hereby amended by deleting it therefrom in its
entirety and substituting the following therefor:
“7.11. Net Worth. Permit Consolidated Net Worth, as of the last day of any
Fiscal Quarter ending after the Closing Date, to be less than the sum of (a)
$700,000,000 plus (b) an amount equal to 50% of the Net Income of RSA and its
Subsidiaries (excluding EMJ Companies if the EMJ Guaranty Event has not occurred on or
prior to such last day), earned in each Fiscal Quarter ending after December 31, 2004 in
each case with no deduction for a net loss in any such Fiscal Quarter plus (c)
an amount equal to 100% of the aggregate increases in Shareholders’ Equity of RSA and
its Subsidiaries after the Closing Date by reason of the issuance and sale of capital
stock of RSA or any Subsidiary thereof (including upon any conversion of debt securities
of RSA or any Subsidiary thereof into such capital stock), it being understood that the
aggregate increase in Shareholders’ Equity of RSA and its Subsidiaries on the First
Amendment Effective Date by reason of the issuance and sale of capital stock of RSA or
any Subsidiary in connection with the EMJ Acquisition shall not be less than
$200,000,000.”
| 17 | First Amendment |
H. Section 7.13 of the Credit Agreement is hereby amended by deleting the phrase “Leverage
Ratio” therefrom and substituting the phrase “Adjusted Leverage Ratio” in lieu thereof.
I. Section 7.16 of the Credit Agreement is hereby amended by deleting subsection (c) therefrom
in its entirety and substituting the following therefore:
“(c) cash dividends payable by RSA to RSA stockholders not exceeding in any Fiscal
Year an amount equal to the greater of (i) 50% of Net Income earned in the immediately
preceding Fiscal Year (or, (1) in the case of any Fiscal Year ending after the First
Amendment Effective Date and before the EMJ Guaranty Event, an amount equal to 50% of the
Net Income of RSA and its Subsidiaries (excluding the EMJ Companies) for such Fiscal Year,
or (2) in the case of any Fiscal Year ending after the First Amendment Effective Date and
during which the EMJ Guaranty Event occurs, an amount equal to 50% of the Net Income of RSA
and its Subsidiaries (excluding the EMJ Companies) for the portion of such Fiscal Year that
occurs before the EMJ Guaranty Event plus 50% of the Net Income of RSA and its Subsidiaries
for the portion of such Fiscal Year that occurs after the EMJ Guaranty Event, in each case
determined in accordance with GAAP, consistently applied) and (ii) $35,000,000;
provided that immediately after giving effect to any such proposed dividends, no
Default or Event of Default would exist; and”
J. Section 7.17 of the Credit Agreement is hereby amended by adding the phrase “(other than
EMJ Companies prior to the EMJ Guaranty Requirement Date)” after the phrase “owned by any
Subsidiaries.”
K. Section 7 of the Credit Agreement is hereby amended by adding the following Sections
7.18 and 7.19 at the end thereof:
“7.18. Transactions with EMJ Companies. Notwithstanding anything to the contrary
contain herein or in the other Loan Documents, prior to the EMJ Guaranty Event:
(a) Borrowers shall not, and shall not permit any of their respective Subsidiaries
(excluding EMJ Companies), to directly or indirectly:
| (i) | make any Investments in any EMJ Company, except as permitted by Section 7.2 (other than Section 7.2(e)), which permitted Investments shall include intercompany loans to any EMJ Company to the extent permitted by Section 7.2(f); | ||
| (ii) | merge or consolidate with or into any EMJ Company (other than the EMJ Merger on the First Amendment Effective Date); | ||
| (iii) | make any Dispositions of its Property to any EMJ Company; |
| 18 | First Amendment |
| (iv) | enter into any transaction of any kind with any EMJ Company, except transactions permitted under subsection (a) or (d) of Section 7.15 or transactions on overall terms at least as favorable to each Borrower and its Subsidiaries (other than EMJ Companies) in an arm’s-length transaction between unrelated parties of equal bargaining power; | ||
| (v) | make any Distributions, whether from capital, income or otherwise, and whether in Cash or other Property, to any EMJ Company; | ||
| (vi) | guaranty or assume any obligation or Indebtedness of EMJ Companies, except such obligations of EMJ Companies assumed by Borrowers and its Subsidiaries pursuant to Sections of the EMJ Merger Agreement; or | ||
| (vii) | enter into any sale and leaseback transactions with any EMJ Company. |
(b) Borrowers shall not permit any EMJ Company to acquire or create any new
Subsidiaries or make any Acquisitions.
(c) Borrowers shall not permit any EMJ Company to become a guarantor under any of
the note purchase agreements listed in Schedule 7.3 or under any agreements
entered into in connection with Indebtedness incurred pursuant to Section 7.3(a) or
7.3(f) prior to the EMJ Guaranty Event.
(d) Notwithstanding anything to the contrary in this Agreement, prior to the date
that the EMJ Senior Secured Notes are no longer outstanding, this Agreement shall not
restrict any Restricted Subsidiary (as defined in the EMJ Indenture) of EMJ from (i)
paying dividends or making any other distributions in respect of such Restricted
Subsidiary’s capital stock or otherwise transferring cash or assets or making loans or
advances to EMJ or any other Restricted Subsidiary of EMJ, (ii) making any loans or
advances to EMJ or any Restricted Subsidiary of EMJ, or (iii) transferring any of its
property or cash to EMJ or any Restricted Subsidiary of EMJ, other than as permitted by
the EMJ Indenture.
7.19 Amendments or Waivers of Certain Agreements. The Borrowers shall not,
and shall not permit any of their respective Subsidiaries to, agree to any material
amendment to, or waive any of its material rights under, any EMJ Transaction Documents
after the applicable execution of such documents or any EMJ Indenture Documents after
the First Amendment Effective Date without in each case obtaining the prior written
consent of Requisite Lenders to such amendment or waiver (it being understood that any
amendment or waiver that changes any provisions in the EMJ Indenture Documents relating
to any collateral (other than to release such collateral) shall be deemed to be
material).”
| 19 | First Amendment |
1.5 Amendment to Section 8: Events of Default and Remedies Upon Event of Default
Subsection (j) of Section 8.1 of the Credit Agreement is hereby amended by deleting the
reference to “$5,000,000” contained in clause (ii) thereof and substituting “$15,000,000” therefor.
1.6 Amendments to Schedules
A. Schedule 2.1 of the Credit Agreement is hereby amended by deleting it in its entirety and
substituting therefor the schedules in the form of Schedule 2.1A and Schedule 2.1B
attached hereto.
B. Schedule 5.5 of the Credit Agreement is hereby amended by deleting it in its entirety and
substituting therefor the schedule in the form of Schedule 5.5 attached hereto.
C. Schedule 5.15 of the Credit Agreement is hereby amended by deleting it in its entirety and
substituting therefor the schedule in the form of Schedule 5.15 attached hereto.
D. Schedule 7.2 of the Credit Agreement is hereby amended by deleting it in its entirety and
substituting therefor the schedule in the form of Schedule 7.2 attached hereto.
E. Schedule 7.3 of the Credit Agreement is hereby amended by deleting it in its entirety and
substituting therefor the schedule in the form of Schedule 7.3 attached hereto.
F. The Credit Agreement is hereby amended by adding thereto Schedule 5.18 in the form of
Schedule 5.18 attached hereto.
1.7 Amendments to Exhibit B: Compliance Certificate
A. Exhibit B of the Credit Agreement is hereby amended by deleting it in its entirety and
substituting therefor the compliance certificate in the form of Exhibit A attached hereto.
1.8 Amendments to Master Subsidiary Guaranty
A. Section 14 of the Master Subsidiary Guaranty is hereby amended by deleting the phrase “and
10.14” therefrom and substituting the phrase “, 10.14, 10.15 and 10.16” therefor.
Section 2. CONDITIONS TO EFFECTIVENESS
This Amendment shall become effective only upon the satisfaction of all of the conditions set
forth in Section 4.2 of the Credit Agreement in connection with the Extension of Credit being made
on the date of the EMJ Merger to consummate the EMJ Acquisition and all of the following conditions
precedent (the date of satisfaction of such conditions being referred to herein as the “First
Amendment Effective Date”):
A. On or before the First Amendment Effective Date (or such earlier date explicitly set forth
herein), Administrative Agent shall have received all of the following, and each in form and
substance satisfactory to Administrative Agent:
| 20 | First Amendment |
(i) at least one original counterpart of this Amendment executed by Borrowers and
Guarantors, together with arrangements satisfactory to Administrative Agent for additional
executed counterpart of this Amendment, sufficient in number for distribution to each Lender
and Borrowers, and a counterpart of this Amendment executed by Administrative Agent and each
Lender;
(ii) new Committed Loan Notes originally executed by Borrowers in favor of each Lender
whose Commitment is being increased on the First Amendment Effective Date (the “New Notes”),
each in a principal amount equal to that Lender’s increased Commitment;
(iii) (a) opinions of Lord Bissell & Brook LLP, counsel of Borrower Parties, and of ▇▇▇
▇▇▇▇▇▇▇, general counsel of Borrower Parties, each addressed to Administrative Agent and
Lenders substantially in the form of Exhibit B-1 and Exhibit B-2 attached
hereto (or with such changes thereto as is reasonably satisfactory to Administrative Agent),
and (b) copies of each of the opinions (including the tax opinion) delivered by counsel to
the Borrower Parties (including the Borrower Parties’ general counsel and outside counsel)
delivered in connection with the EMJ Transaction Documents and the transactions contemplated
thereby, together with a letter from each such counsel authorizing Administrative Agent and
Lenders to rely upon such opinion to the same extent as though it were addressed to Lenders,
together with a certificate of a Responsible Officer of Borrowers certifying that such
opinions constitute all of the opinions that are delivered in connection with the EMJ
Transaction Documents and the transactions contemplated thereby;
(iv) a duly completed Compliance Certificate (in the form of Compliance Certificate
attached hereto as Exhibit A) as of the last day of the fiscal quarter of RSA and
its Subsidiaries on a consolidated basis (after giving pro forma effect to the EMJ
Acquisition and the other transactions contemplated by this Amendment and assuming that the
Loans made on the First Amendment Effective Date were incurred on the first day of the
twelve month period covered by such Compliance Certificate and outstanding throughout such
twelve month period) ended on December 31, 2005, signed by a Responsible Officer of RSA,
which Compliance Certificate shall show that Borrowers are in pro forma compliance in all
respects;
(v) each of the items set forth in Exhibit C attached hereto; and
(vi) such other assurances, certificates, documents, consents or opinions as
Administrative Agent may reasonably require.
B. Borrowers shall have executed a fee letter with Arranger and Arranger shall have received
(on account of Lenders) the fees that are due and payable thereunder on or before the First
Amendment Effective Date.
C. Borrowers shall have prepaid any Committed Loans outstanding on the First Amendment
Effective Date (and pay any additional amounts required pursuant to Section 3.6 of the
Credit Agreement) to the extent necessary to keep the outstanding Committed Loans ratable
| 21 | First Amendment |
with any revised Pro Rata Shares arising from any nonratable increase in the Commitments on
the First Amendment Effective Date.
D. Attorney Costs of Bank of America to the extent invoiced prior to or on the First Amendment
Effective Date, plus such additional amounts of Attorney Costs as shall constitute Bank of
America’s reasonable estimate of Attorney Costs incurred or to be incurred by it through the
closing proceedings (provided that such estimate shall not hereafter preclude final settling of
accounts between Borrowers and Bank of America) shall have been paid.
E. On or before the First Amendment Effective Date, all corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all documents incidental
thereto not previously found acceptable by Administrative Agent, acting on behalf of Lenders, and
its counsel shall be reasonably satisfactory in form and substance to Administrative Agent and such
counsel, and Administrative Agent and such counsel shall have received all such counterpart
originals or certified copies of such documents as Administrative Agent may reasonably request.
Section 3. BORROWERS’ REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend the Credit Agreement in
the manner provided herein, Borrowers, jointly and severally, represent and warrant to each Lender
that the following statements are true, correct and complete (both before and after giving effect
to the EMJ Merger; for purposes of this Section 3, references to Borrower Parties shall be deemed
to include EMJ Acquisition Sub):
3.1 Corporate Power and Authority. Each Borrower Party has all requisite corporate power and
authority to enter into this Amendment, the New Notes to which it is a party and the EMJ
Transaction Documents to which it is a party and to carry out the transactions contemplated by, and
perform its obligations under, the Credit Agreement as amended by this Amendment (the “Amended
Agreement”), the Master Subsidiary Guaranty as amended by this Amendment (the “Amended Master
Subsidiary Guaranty”), the New Notes, the other Loan Documents, and the EMJ Transaction Documents.
3.2 Authorization of Agreements. The execution and delivery of this Amendment, the New Notes to
which it is a party and the EMJ Transaction Documents to which it is a party and the performance of
the Amended Agreement, the Amended Master Subsidiary Guaranty, the New Notes to which it is a party
and the EMJ Transaction Documents to which it is a party have been duly authorized by all necessary
corporate action on the part of each Borrower Party party thereto.
3.3 No Conflict. The execution and delivery by each Borrower Party of this Amendment, the New
Notes to which it is a party and the EMJ Transaction Documents to which it is a party, the
performance by such Borrower Party of the Amended Agreement, the Amended Master Subsidiary
Guaranty, the New Notes to which it is a party, the other Loan Documents, and the EMJ Transaction
Documents, and the consummation of the transactions contemplated thereby (including the assumption
of EMJ’s obligations under the EMJ indenture by EMJ Acquisition
| 22 | First Amendment |
Sub) do not and will not (i) violate any provision of any law or any governmental rule or
regulation applicable to such Borrower Party or any of its Subsidiaries (including each EMJ
Company), the certificate or articles of incorporation or bylaws of such Borrower Party or any of
its Subsidiaries (including each EMJ Company) or any order, judgment or decree of any court or
other agency of government binding on such Borrower Party or any of its Subsidiaries (including
each EMJ Company), (ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any Contractual Obligation to which such Borrower Party or
any of its Subsidiaries (including each EMJ Company) is a party or by which such Borrower Party or
such Subsidiary (or such EMJ Company) or any of its Property is bound or affected (including
without limitation the Loan Documents as amended hereby, the EMJ Indenture Documents, the EMJ
Transaction Documents, the documents related to the Canadian credit facility for EMJ’s Canadian
subsidiary and the Note Purchase Documents, as amended by omnibus amendments No. 1 and No. 2
thereto (collectively, the “Specified Documents”)), other than (1) conflicts that will be resolved
on or before the First Amendment Effective Date or (2) conflicts (other than conflicts with or
among the Specified Documents) that could not reasonably be expected to have a Material Adverse
Effect, (iii) result in or require the creation or imposition of any Lien upon any of the
properties or assets of such Borrower Party or any of its Subsidiaries (including each EMJ Company)
(other than Liens created under any of the Loan Documents in favor of Administrative Agent on
behalf of Lenders and other than continuation of Liens on the assets of the EMJ Companies which
existed prior to the First Amendment Effective Date (including Liens on future acquired property)),
or (iv) require any approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of such Borrower Party or any of its Subsidiaries (including each EMJ
Company), except such approval and consent which have been obtained on or prior to the First
Amendment Effective Date.
3.4 Governmental Consents. The execution and delivery by each Borrower Party of this Amendment,
the New Notes to which it is a party and the EMJ Transaction Documents to which it is a party and
the performance by such Borrower Party of the Amended Agreement, the Amended Master Subsidiary
Guaranty, the New Notes to which it is a party, the other Loan Documents, and the EMJ Transaction
Documents do not and will not require any registration with, consent or approval of, or notice to,
or other action to, with or by, any federal, state or other Governmental Authority or regulatory
body, except such consent and approval which have been obtained on or prior to the First Amendment
Effective Date or registration or notice which have been made on or prior to the First Amendment
Effective Date, or with respect to Canadian filings related to the Canadian subsidiary of EMJ,
notices to be provided within 30 days after the First Amendment Effective Date. All applicable
waiting periods required with respect to the EMJ Acquisition have expired without any action being
taken or threatened by any competent authority that would restrain, prevent or otherwise impose
adverse conditions on the transactions contemplated by the EMJ Transaction Documents or the
financing thereof.
3.5 Binding Obligation. This Amendment, each New Note and the EMJ Transaction Documents to which
it is a party has been duly executed and delivered by each Borrower Party party thereto and this
Amendment, the New Notes, the Amended Agreement, the Amended Master Subsidiary Guaranty, the other
Loan Documents, and the EMJ Transaction Documents are the legally valid and binding obligations of
such Borrower Party, enforceable against such Borrower Party in accordance with their respective
terms, except as may be limited by
| 23 | First Amendment |
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors’ rights generally or by equitable principles relating to enforceability.
3.6 Incorporation of Representations and Warranties From Credit Agreement and Master Subsidiary
Guaranty. The representations and warranties contained in Section 5 of the Amended Credit
Agreement and in the Amended Master Subsidiary Guaranty are and will be true, correct and complete
in all material respects on and as of the First Amendment Effective Date (both before and after
giving effect to the EMJ Acquisition, the other transactions contemplated by this Amendment and the
Loans requested to be made under the Credit Agreement on the First Amendment Effective Date) to the
same extent as though made on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case they were true, correct and
complete in all material respects on and as of such earlier date.
3.7 Absence of Default. No event has occurred and is continuing or will result from the
consummation of the transactions contemplated by this Amendment or the EMJ Transaction Documents
that would constitute a Default or an Event of Default.
Section 4. ACKNOWLEDGEMENT AND CONSENT
Each Guarantor listed on the signature pages hereto hereby acknowledges and agrees that the
Amended Master Subsidiary Guaranty and any other Loan Documents (each, a “Credit Support Document”)
to which it is a party or otherwise bound shall continue in full force and effect and that all of
its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by
the execution or effectiveness of this Amendment. Each Guarantor represents and warrants that all
representations and warranties contained in the Amended Agreement and the Credit Support Documents
to which it is a party or otherwise bound are true, correct and complete in all material respects
on and as of the First Amendment Effective Date to the same extent as though made on and as of that
date, except to the extent such representations and warranties specifically relate to an earlier
date, in which case they were true, correct and complete in all material respects on and as of such
earlier date.
Each Guarantor acknowledges and agrees that (i) notwithstanding the conditions to
effectiveness set forth in this Amendment, such Guarantor is not required by the terms of the
Credit Agreement or any other Loan Document to consent to the amendments to the Credit Agreement
effected pursuant to this Amendment and (ii) nothing in the Credit Agreement, this Amendment or any
other Loan Document shall be deemed to require the consent of such Guarantor to any future
amendments to the Credit Agreement.
Section 5. MISCELLANEOUS
5.1 Reference to and Effect on the Credit Agreement and the Other Loan Documents.
A. On and after the First Amendment Effective Date, each reference in the Credit Agreement to
“this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Credit
Agreement, and each reference in the other Loan Documents to the “Credit Agreement”, “thereunder”,
“thereof” or words of like import referring to the Credit
| 24 | First Amendment |
Agreement shall mean and be a reference to the Amended Agreement. On and after the First
Amendment Effective Date, each reference in the Master Subsidiary Guaranty to “this Guaranty”,
“hereunder”, “hereof”, “herein” or words of like import referring to the Master Subsidiary
Guaranty, and each reference in the other Loan Documents to the “Master Subsidiary Guaranty”,
“thereunder”, “thereof” or words of like import referring to the Master Subsidiary Guaranty shall
mean and be a reference to the Amended Master Subsidiary Guaranty.
B. Except as specifically amended by this Amendment, the Credit Agreement, the Master
Subsidiary Guaranty and the other Loan Documents shall remain in full force and effect and are
hereby ratified and confirmed.
C. The execution, delivery and performance of this Amendment shall not, except as expressly
provided herein, constitute a waiver of any provision of, or operate as a waiver of any right,
power or remedy of Administrative Agent or any Lender under, the Credit Agreement, the Master
Subsidiary Guaranty or any of the other Loan Documents.
5.2 Fees and Expenses. Borrowers acknowledge that all costs, fees and expenses as described in
Section10.4 of the Credit Agreement incurred by Administrative Agent and its counsel with respect
to this Amendment and the documents and transactions contemplated hereby shall be for the account
of Borrowers.
5.3 Headings. Section and subsection headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment for any other
purpose or be given any substantive effect.
5.4 Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
5.5 Counterparts; Effectiveness. This Amendment may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to the same document.
This Amendment (other than the provisions of Section 1 hereof, the effectiveness of which
is governed by Section 2 hereof) shall become effective upon the execution of a counterpart
hereof by Borrowers, each Lender and each of the Guarantors and receipt by Borrowers and
Administrative Agent of written or telephonic notification of such execution and authorization of
delivery thereof.
[Remainder of page intentionally left blank]
| 25 | First Amendment |
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered by their respective officers thereunto duly authorized as of the date first written
above.
| BORROWERS: | ||||||
| RELIANCE STEEL & ALUMINUM CO., a California corporation |
||||||
| By: | ||||||
| Name: | ||||||
| Title: | Chief Executive Officer | |||||
| By: | ||||||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇ | |||||
| Title: | Executive Vice President and Chief Financial Officer | |||||
| RSAC MANAGEMENT CORP., a California corporation |
||||||
| By: | ||||||
| Name: | ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||
| Title: | Chief Executive Officer | |||||
| By: | ||||||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇ | |||||
| Title: | Executive Vice President and Chief Financial Officer | |||||
S-1
|
First Amendment |
| GUARANTORS (for purposes of Section 1.8 and Section 4 only): | ||
| ALLEGHENY STEEL DISTRIBUTORS, INC. | ||
| ALUMINUM AND STAINLESS, INC. | ||
| CHAPEL STEEL CORP. | ||
| CCC STEEL, INC. | ||
| CHATHAM STEEL CORPORATION | ||
| ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ STEEL CO., INC. | ||
| PACIFIC METAL COMPANY | ||
| PDM STEEL SERVICE CENTERS, INC. | ||
| PHOENIX CORPORATION | ||
| TOMA METALS, INC. | ||
| VALEX CORP. | ||
| VIKING MATERIALS, INC. |
| By: | ||||||
| Name: | ||||||
| Title: | Vice President and Secretary of each of the foregoing | |||||
| PRECISION STRIP, INC. SISKIN STEEL & SUPPLY COMPANY, INC. |
||||||
| By: | ||||||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇ | |||||
| Title: | Vice President and Assistant Secretary of each of the foregoing | |||||
| ▇▇▇▇ METALS SERVICE STEEL AEROSPACE CORP |
||||||
| By: | ||||||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇ | |||||
| Title: | Chief Financial Officer and Secretary of each of the foregoing | |||||
S-2
|
First Amendment |
| AMERICAN METALS CORPORATION | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | Vice President, Chief Financial Officer and Assistant Secretary of the foregoing | |||||
| AMERICAN STEEL, L.L.C. | ||||||
| By: | ||||||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇ | |||||
| Title: | Chief Financial Officer, Treasurer and Assistant Secretary of the foregoing | |||||
| AMI METALS, INC. | ||||||
| By: | ||||||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇ | |||||
| Title: | Vice President, Chief Financial Officer and Secretary of the foregoing | |||||
| CENTRAL PLAINS STEEL CO. | ||||||
| By: | ||||||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇ | |||||
| Title: | Vice President, Treasurer and Secretary of the foregoing | |||||
| LIEBOVICH BROS., INC. | ||||||
| By: | ||||||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇ | |||||
| Title: | Vice President, Assistant Treasurer and Assistant Secretary of the foregoing | |||||
S-3
|
First Amendment |
| ADMINISTRATIVE AGENT | ||||||
| BANK OF AMERICA, N.A. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
S-4
|
First Amendment |
| LENDERS: | ||||||
| BANK OF AMERICA, N.A. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
S-5
|
First Amendment |
| WACHOVIA BANK, N.A., as Syndication Agent and a Lender |
||
| By: | ||
| Name: | ||
| Title: | ||
| If the above-signing Lender initials immediately below, such Lender is a party to this Amendment but does not agree to increase its Commitments. | ||
| The above signing Lender’s execution of this Amendment signifies only such Lender’s consent to this Amendment, and does not constitute an agreement to increase its Commitments. | ||
| If the above-signing Lender initials below, such Lender is a party to this Amendment and agrees to increase its Commitments. | ||
| The above-signing Lender hereby agrees to increase such Lender’s Commitment as set forth on Schedule 2.1B. |
S-6
|
First Amendment |
| JPMORGAN CHASE BANK, N.A., as Documentation Agent and a Lender |
||
| By: | ||
| Name: | ||
| Title: | ||
| If the above-signing Lender initials immediately below, such Lender is a party to this Amendment but does not agree to increase its Commitments. | ||
| The above signing Lender’s execution of this Amendment signifies only such Lender’s consent to this Amendment, and does not constitute an agreement to increase its Commitments. | ||
| If the above-signing Lender initials below, such Lender is a party to this Amendment and agrees to increase its Commitments. | ||
| The above-signing Lender hereby agrees to increase such Lender’s Commitment as set forth on Schedule 2.1B. |
S-7
|
First Amendment |
| U.S. BANK NATIONAL ASSOCIATION, as a Lender |
||
| By: | ||
| Name: | ||
| Title: | ||
| If the above-signing Lender initials immediately below, such Lender is a party to this Amendment but does not agree to increase its Commitments. | ||
| The above signing Lender’s execution of this Amendment signifies only such Lender’s consent to this Amendment, and does not constitute an agreement to increase its Commitments. | ||
| If the above-signing Lender initials below, such Lender is a party to this Amendment and agrees to increase its Commitments. | ||
| The above-signing Lender hereby agrees to increase such Lender’s Commitment as set forth on Schedule 2.1B. |
S-8
|
First Amendment |
| UNION BANK OF CALIFORNIA, N.A., | ||||||||
| as a Lender | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| If the above-signing Lender initials immediately below, such Lender is a party to this Amendment but does not agree to increase its Commitments. | ||||||||
| _______ The above signing Lender’s execution of this Amendment signifies only such Lender’s consent to this Amendment, and does not constitute an agreement to increase its Commitments. | ||||||||
| If the above-signing Lender initials below, such Lender is a party to this Amendment and agrees to increase its Commitments. | ||||||||
| _______ The above-signing Lender hereby agrees to increase such Lender’s Commitment as set forth on Schedule 2.1B. | ||||||||
| S-9 | First Amendment |
| ▇▇▇▇▇ FARGO BANK, N.A., | ||||||||
| as a Lender | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| If the above-signing Lender initials immediately below, such Lender is a party to this Amendment but does not agree to increase its Commitments. | ||||||||
| _______ The above signing Lender’s execution of this Amendment signifies only such Lender’s consent to this Amendment, and does not constitute an agreement to increase its Commitments. | ||||||||
| If the above-signing Lender initials below, such Lender is a party to this Amendment and agrees to increase its Commitments. | ||||||||
| _______ The above-signing Lender hereby agrees to increase such Lender’s Commitment as set forth on Schedule 2.1B. | ||||||||
| S-10 | First Amendment |
| COMERICA BANK, | ||||||||
| as a Lender | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| If the above-signing Lender initials immediately below, such Lender is a party to this Amendment but does not agree to increase its Commitments. | ||||||||
| _______ The above signing Lender’s execution of this Amendment signifies only such Lender’s consent to this Amendment, and does not constitute an agreement to increase its Commitments. | ||||||||
| If the above-signing Lender initials below, such Lender is a party to this Amendment and agrees to increase its Commitments. | ||||||||
| _______ The above-signing Lender hereby agrees to increase such Lender’s Commitment as set forth on Schedule 2.1B. | ||||||||
| S-11 | First Amendment |
| CITICORP NORTH AMERICA, INC., | ||||||||
| as a Lender | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| If the above-signing Lender initials immediately below, such Lender is a party to this Amendment but does not agree to increase its Commitments. | ||||||||
| _______ The above signing Lender’s execution of this Amendment signifies only such Lender’s consent to this Amendment, and does not constitute an agreement to increase its Commitments. | ||||||||
| If the above-signing Lender initials below, such Lender is a party to this Amendment and agrees to increase its Commitments. | ||||||||
| _______ The above-signing Lender hereby agrees to increase such Lender’s Commitment as set forth on Schedule 2.1B. | ||||||||
| S-12 | First Amendment |
| CREDIT SUISSE, CAYMAN ISLANDS BRANCH, | ||||||||
| as a Lender | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| If the above-signing Lender initials immediately below, such Lender is a party to this Amendment but does not agree to increase its Commitments. | ||||||||
| _______ The above signing Lender’s execution of this Amendment signifies only such Lender’s consent to this Amendment, and does not constitute an agreement to increase its Commitments. | ||||||||
| If the above-signing Lender initials below, such Lender is a party to this Amendment and agrees to increase its Commitments. | ||||||||
| _______ The above-signing Lender hereby agrees to increase such Lender’s Commitment as set forth on Schedule 2.1B. | ||||||||
| S-13 | First Amendment |
| FIFTH THIRD BANK, | ||||||||
| as a Lender | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| If the above-signing Lender initials immediately below, such Lender is a party to this Amendment but does not agree to increase its Commitments. | ||||||||
| _______ The above signing Lender’s execution of this Amendment signifies only such Lender’s consent to this Amendment, and does not constitute an agreement to increase its Commitments. | ||||||||
| If the above-signing Lender initials below, such Lender is a party to this Amendment and agrees to increase its Commitments. | ||||||||
| _______ The above-signing Lender hereby agrees to increase such Lender’s Commitment as set forth on Schedule 2.1B. | ||||||||
| S-14 | First Amendment |
| KEYBANK NATIONAL ASSOCIATION, | ||||||||
| as a Lender | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| If the above-signing Lender initials immediately below, such Lender is a party to this Amendment but does not agree to increase its Commitments. | ||||||||
| _______ The above signing Lender’s execution of this Amendment signifies only such Lender’s consent to this Amendment, and does not constitute an agreement to increase its Commitments. | ||||||||
| If the above-signing Lender initials below, such Lender is a party to this Amendment and agrees to increase its Commitments. | ||||||||
| _______ The above-signing Lender hereby agrees to increase such Lender’s Commitment as set forth on Schedule 2.1B. | ||||||||
| S-15 | First Amendment |
| MIZUHO CORPORATE BANK, LTD., | ||||||||
| as a Lender | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| If the above-signing Lender initials immediately below, such Lender is a party to this Amendment but does not agree to increase its Commitments. | ||||||||
| _______ The above signing Lender’s execution of this Amendment signifies only such Lender’s consent to this Amendment, and does not constitute an agreement to increase its Commitments. | ||||||||
| If the above-signing Lender initials below, such Lender is a party to this Amendment and agrees to increase its Commitments. | ||||||||
| _______ The above-signing Lender hereby agrees to increase such Lender’s Commitment as set forth on Schedule 2.1B. | ||||||||
| S-16 | First Amendment |
| PNC BANK, NATIONAL ASSOCIATION, | ||||||||
| as a Lender | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| If the above-signing Lender initials immediately below, such Lender is a party to this Amendment but does not agree to increase its Commitments. | ||||||||
| _______ The above signing Lender’s execution of this Amendment signifies only such Lender’s consent to this Amendment, and does not constitute an agreement to increase its Commitments. | ||||||||
| If the above-signing Lender initials below, such Lender is a party to this Amendment and agrees to increase its Commitments. | ||||||||
| _______ The above-signing Lender hereby agrees to increase such Lender’s Commitment as set forth on Schedule 2.1B. | ||||||||
| S-17 | First Amendment |
| THE NORTHERN TRUST COMPANY, | ||||||||
| as a Lender | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| If the above-signing Lender initials immediately below, such Lender is a party to this Amendment but does not agree to increase its Commitments. | ||||||||
| _______ The above signing Lender’s execution of this Amendment signifies only such Lender’s consent to this Amendment, and does not constitute an agreement to increase its Commitments. | ||||||||
| If the above-signing Lender initials below, such Lender is a party to this Amendment and agrees to increase its Commitments. | ||||||||
| _______ The above-signing Lender hereby agrees to increase such Lender’s Commitment as set forth on Schedule 2.1B. | ||||||||
| S-18 | First Amendment |
| UBS LOAN FINANCE LLC, | ||||||||
| as a Lender | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| If the above-signing Lender initials immediately below, such Lender is a party to this Amendment but does not agree to increase its Commitments. | ||||||||
| _______ The above signing Lender’s execution of this Amendment signifies only such Lender’s consent to this Amendment, and does not constitute an agreement to increase its Commitments. | ||||||||
| If the above-signing Lender initials below, such Lender is a party to this Amendment and agrees to increase its Commitments. | ||||||||
| _______ The above-signing Lender hereby agrees to increase such Lender’s Commitment as set forth on Schedule 2.1B. | ||||||||
| S-19 | First Amendment |
SCHEDULE 2.1A
COMMITMENTS
AND PRO RATA SHARES
AND PRO RATA SHARES
| Lender | Commitment | Pro Rata Share | ||||||
Bank of America, N.A. |
$ | 115,000,000 | 19.166666667 | % | ||||
Wachovia Bank, N.A. |
$ | 65,000,000 | 10.833333333 | % | ||||
JPMorgan Chase Bank, N.A. |
$ | 65,000,000 | 10.833333333 | % | ||||
U.S. Bank National Association |
$ | 50,000,000 | 8.333333333 | % | ||||
Union Bank of California, N.A. |
$ | 45,000,000 | 7.500000000 | % | ||||
▇▇▇▇▇ Fargo Bank, N.A. |
$ | 40,000,000 | 6.666666667 | % | ||||
Comerica Bank |
$ | 30,000,000 | 5.000000000 | % | ||||
Citicorp North America, Inc. |
$ | 25,000,000 | 4.166666667 | % | ||||
Credit Suisse, Cayman Islands Branch |
$ | 25,000,000 | 4.166666667 | % | ||||
Fifth Third Bank |
$ | 25,000,000 | 4.166666667 | % | ||||
KeyBank National Association |
$ | 25,000,000 | 4.166666667 | % | ||||
Mizuho Corporate Bank, Ltd. |
$ | 25,000,000 | 4.166666667 | % | ||||
PNC Bank, National Association |
$ | 25,000,000 | 4.166666667 | % | ||||
The Northern Trust Company |
$ | 20,000,000 | 3.333333333 | % | ||||
UBS Loan Finance LLC |
$ | 20,000,000 | 3.333333333 | % | ||||
TOTAL |
$ | 600,000,000 | 100.00 | % | ||||
| 2.1-1 | First Amendment |
SCHEDULE 2.1B
COMMITMENTS
AND PRO RATA SHARES
AND PRO RATA SHARES
| Lender | Commitment | Pro Rata Share | ||||||
Bank of America, N.A. |
$ | 136,388,888.89 | 19.484126984 | % | ||||
Wachovia Bank, N.A. |
$ | 75,833,333.33 | 10.833333333 | % | ||||
JPMorgan Chase Bank, N.A. |
$ | 75,833,333.33 | 10.833333333 | % | ||||
U.S. Bank National Association |
$ | 58,333,333.33 | 8.333333333 | % | ||||
Union Bank of California, N.A. |
$ | 50,000,000.00 | 7.142857143 | % | ||||
▇▇▇▇▇ Fargo Bank, N.A. |
$ | 48,888,888.89 | 6.984126984 | % | ||||
Comerica Bank |
$ | 35,000,000.00 | 5.000000000 | % | ||||
Citicorp North America, Inc. |
$ | 25,000,000.00 | 3.571428571 | % | ||||
Credit Suisse, Cayman Islands Branch |
$ | 29,166,666.67 | 4.166666667 | % | ||||
Fifth Third Bank |
$ | 29,166,666.67 | 4.166666667 | % | ||||
KeyBank National Association |
$ | 31,388,888.89 | 4.484126984 | % | ||||
Mizuho Corporate Bank, Ltd. |
$ | 29,166,666.67 | 4.166666667 | % | ||||
PNC Bank, National Association |
$ | 29,166,666.67 | 4.166666667 | % | ||||
The Northern Trust Company |
$ | 23,333,333.33 | 3.333333333 | % | ||||
UBS Loan Finance LLC |
$ | 23,333,333.33 | 3.333333333 | % | ||||
TOTAL |
$ | 700,000,000 | 100.00 | % | ||||
| 2.1-1 | First Amendment |
SCHEDULE 5.5
CERTAIN LITIGATION
| 5.5-1 | First Amendment |
SCHEDULE 5.15
SUBSIDIARIES
| 5.15-1 | First Amendment |
SCHEDULE 5.18
CERTAIN TAX MATTERS
| 5.18-1 | First Amendment |
SCHEDULE 7.2
INVESTMENTS
| 7.2-1 | First Amendment |
SCHEDULE 7.3
EXISTING INDEBTEDNESS
| 7.3-1 | First Amendment |
EXHIBIT A
[Form of Compliance Certificate]
| A-1 | First Amendment |
EXHIBIT B-1
[Form of Opinion of Lord Bissell &Brook LLP, Counsel to Borrower Parties]
| B-1 | First Amendment |
EXHIBIT B-2
[Form of Opinion of General Counsel]
| B-1 | First Amendment |
EXHIBIT C
ITEMS TO BE DELIVERED ON OR BEFORE
THE FIRST AMENDMENT EFFECTIVE DATE
THE FIRST AMENDMENT EFFECTIVE DATE
(i) (a) a copy of the EMJ Merger Agreement as executed by all parties and each of the other
EMJ Transaction Documents described in clauses (i) through (vi) of the definition of such term and
(b) any amendments, supplements or modifications thereto, in each case not including their
respective schedules and exhibits, will be provided within 10 days after the later of (x) the date
of the First Amendment to Credit Agreement and (y) the date of execution thereof (other than the
unamended EMJ Transaction Documents described in clause (i), (ii), (iii), (v) and (vi) of the
definition of such term, which were delivered to Lenders prior to the date of the First Amendment
to Credit Agreement), which copies shall be certified by Borrowers when being delivered as being
true and correct copies of such documents;
(ii) on or before the First Amendment Effective Date, a copy of the certificate of merger as
executed relating to the EMJ Merger (file stamped by the Secretary of State of the State of
Delaware or, at the discretion of Administrative Agent, written confirmation that such certificate
has been filed and accepted by such Secretary of State) and the certificate of incorporation and
bylaws of EMJ that have become effective after the EMJ Merger, which certificate of incorporation
and bylaws shall be certified by Borrowers as being true, correct and complete copies and as being
in full force and effect);
(iii) on or before the First Amendment Effective Date, a certificate signed by a Responsible
Officer of Borrowers addressed to Administrative Agent and Lenders certifying that:
(a) the EMJ Acquisition and the EMJ Merger have been consummated in accordance with the
EMJ Transaction Documents concurrently with the funding of the Loans on the First Amendment
Effective Date and no term or condition of the EMJ Transaction Documents has been amended,
supplemented, waived or otherwise modified in any respect determined by Administrative Agent
to be material without the prior written consent of Administrative Agent;
(b) all conditions to the EMJ Acquisition and the EMJ Merger set forth in the EMJ
Transaction Documents have been satisfied or the fulfillment of any such conditions
reasonably determined by Administrative Agent to be material have been waived with the
consent of Administrative Agent, except for those conditions that by their terms are to be
fulfilled after the effectiveness of the EMJ Merger;
(c) the total aggregate cash consideration paid or payable by RSA and its Subsidiaries
in connection with the EMJ Acquisition (including without limitation for any dissenters’ shares and stock options) is not in excess of $500,000,000 and the total non-cash
consideration (including in the form of Common Stock) paid or payable by RSA and its
Subsidiaries in connection with the EMJ Acquisition (including without
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limitation for any dissenters’ shares and stock options) has a value that is not in
excess of $500,000,000;
(d) the EMJ Acquisition and the EMJ Merger have concurrently with the funding of the
Loans on the First Amendment Effective Date become effective in accordance with the terms of
the EMJ Transaction Documents and the laws of the State of Delaware;
(e) EMJ Companies have concurrently with the funding of the Loans on the First
Amendment Effective Date become Wholly-Owned Subsidiaries of RSA and EMJ Companies
(including EMJ Acquisition Sub) have been designated as “Restricted Subsidiaries” under the
note purchase agreements described in Schedule 7.3 of the Credit Agreement;
(f) the existing credit agreement of EMJ Companies with Deutsche Bank Trust Company
Americas and related loan documents (including guaranties and collateral documents) are
concurrently with the funding of the Loans on the First Amendment Effective Date being paid
in full and terminated, that all Liens relating thereto have been or shall be promptly
released, and Administrative Agent has been furnished with a payoff letter (which payoff
letter shall be in form and substance satisfactory to Administrative Agent) effectuating the
foregoing matters described in this clause (f);
(g) a credit facility has been executed and delivered between RSA and EMJ pursuant to
which RSA can make loans to EMJ and such credit facility constitutes, and qualifies as, the
“Revolver Credit Facility” (as such term is defined in the EMJ Indenture);
(h) (1) both before and after giving effect to the EMJ Acquisition, the Loans made
under the Credit Agreement on the First Amendment Effective Date and the other transactions
contemplated by the EMJ Transaction Documents, (A) no Default or Event of Default under the
Loan Documents has occurred and is continuing or results from the consummation of the EMJ
Acquisition, the other transactions contemplated by the EMJ Transaction Documents or the
making of the Loans under the Credit Agreement on the First Amendment Effective Date, (B)
the representations and warranties contained in Section 5 of the Credit Agreement as amended
by the First Amendment to Credit Agreement are and will be true, correct and complete in all
material respects on and as of the First Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct and complete
in all material respects on and as of such earlier date, and (C) no “Default” or “Event of
Default” (as each such term is defined in the applicable note purchase agreements described
in Schedule 7.3 of the Credit Agreement, the EMJ Indenture or the EMJ Merger
Agreement, as the case may be) under such note purchase agreements and the related documents
(collectively, the “Note Purchase Documents”), the EMJ Indenture Documents or the EMJ
Transaction Documents, as applicable, has occurred and is continuing or results from the
consummation of the EMJ Acquisition, the other transactions contemplated by the EMJ
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Transaction Documents or the making of the Loans under the Credit Agreement on the
First Amendment Effective Date, (2) there are no material pending or, to the knowledge of
Borrowers, threatened litigation or other action relating to the EMJ Acquisition, (3) EMJ
and EMJ Acquisition Sub have complied with all of the provisions of Article V of the EMJ
Indenture in respect of the EMJ Merger (including the requirement for delivery of the
officers’ certificate and opinion of counsel required under Section 501 of the EMJ Indenture
and the officers’ certificate required to be delivered under Section 502 of the EMJ
Indenture, a copy of each of which is attached hereto as Annex B), (4) an omnibus
amendment to each of the note purchase agreements listed on Schedule 7.3 to the
Credit Agreement has been executed and delivered by RSA and the Required Holders (as defined
in each such note purchase agreement) thereof and consented to by each Material Domestic
Subsidiary and any other guarantor of the obligations under any such note purchase agreement
and each condition to effectiveness of such omnibus amendment has been fulfilled or waived
and such omnibus amendment has become effective, and (5) EMJ Acquisition Sub and each EMJ
Company (including EMJ before and after the EMJ Merger) are not guarantors under the note
purchase agreements listed on Schedule 7.3 to the Credit Agreement;
(i) as of the First Amendment Effective Date, immediately after giving effect to EMJ
Acquisition, Consolidated Net Worth has increased by not less than $200,000,000 as a result
of the EMJ Acquisition. The aggregate increase in Shareholders’ Equity of RSA and its
Subsidiaries on the First Amendment Effective Date by reason of the issuance and sale of
capital stock of RSA or any of its Subsidiaries in connection with the EMJ Acquisition is
not less than $200,000,000. As of the First Amendment Effective Date, after giving effect
to the EMJ Acquisition and the transactions contemplated by the EMJ Transaction Documents,
the aggregate amount of outstanding Indebtedness and Life Insurance Policy Loans of EMJ
Companies does not exceed $600,000,000 and is as set forth on Annex A attached
hereto; and
(j) as of the First Amendment Effective Date, the EMJ Indenture Documents have not been
amended, supplemented or otherwise modified other than pursuant to (1) the supplemental
indenture required pursuant to Section 501(a)(ii) of the EMJ Indenture and (2) any other
amendment or supplement thereto, including without limitation, changes in Fiscal Year and
other administrative matters not materially adverse to Lenders, in each case a copy of which
has been furnished to Lenders.
(iv) on or before March 15, 2006, the results of a recent search, by a Person satisfactory to
Administrative Agent, of UCC financing statements and fixture filings and judgment and tax lien
filings which may have been made with respect to any personal or mixed property of the EMJ
Companies, together with copies of all such filings disclosed by such search and UCC termination
statements for filing in all applicable jurisdictions as may be necessary to terminate such UCC
financing statements or fixture filings to the extent such filings and the Liens related thereto
are not permitted under the Credit Agreement and reasonably requested by Administrative Agent;
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(v) at least 10 Business Days prior to the First Amendment Effective Date, an omnibus
amendment to each of the note purchase agreements listed on Schedule 7.3 to the Credit
Agreement, in form and substance reasonably satisfactory to Administrative Agent, executed by RSA
and the Required Holders (as defined in each such note purchase agreement) thereof and consented to
by each Material Domestic Subsidiary and any other guarantor of the obligations under any such note
purchase agreement;
(vi) on or before the First Amendment Effective Date, an executed copy of the EMJ Indenture,
together with an executed copy of the supplemental indenture required pursuant to Section
501(a)(ii) of the EMJ Indenture in form and substance reasonably satisfactory to Administrative
Agent;
(vii) at least 10 Business Days prior to the First Amendment Effective Date, the consolidated
pro forma balance sheet of RSA and its Subsidiaries (after giving effect to the EMJ Acquisition) as
at December 31, 2005, and the related consolidated pro forma statement of income of RSA and its
Subsidiaries (after giving effect to the EMJ Acquisition) for the twelve months then ended,
certified by the chief financial officer of RSA;
(viii) on or before the First Amendment Effective Date, with respect to the Borrower Parties,
such documentation as may be required to establish the due organization, valid existence and good
standing of each Borrower Party in the jurisdiction in which it is organized, its authority to
execute, deliver and perform this Amendment, the New Notes and any other Loan Documents to which it
is a party, the identity, authority and capacity of each Responsible Officer thereof authorized to
act on their behalf, including certified copies of articles or certificate of incorporation and
amendments thereto, bylaws and amendments thereto, certificates of good standing, certificates of
corporate resolutions, incumbency certificates, certificates of Responsible Officers, and the like
(it being understood that (i) with respect to the articles or certificate of incorporation, bylaws
and other charter documents of the Borrower Parties, copies of such documents shall not be required
to be delivered so long as Borrowers deliver a certificate of a Responsible Officer of Borrowers
certifying that (a) a true, correct and complete copy of such documents were delivered to Lenders
on the Closing Date and (b) such documents have not been amended, rescinded or modified since the
Closing Date and each such document remains in full force and effect, and (ii) with respect to
certificates of good standing of any Borrower Party, Borrowers shall not be required to deliver
such certificates for any jurisdiction for such Borrower Party other than the jurisdictions of
organization of such Borrower Party); and
(ix) on or before the First Amendment Effective Date, with respect to EMJ Acquisition Sub and
EMJ Companies, such documentation as may be required to establish the due organization, valid
existence and good standing of EMJ Acquisition Sub and each EMJ Company, its qualification to
engage in business in each jurisdiction in which it is engaged in business or required to be so
qualified (where failure to be qualified could reasonably be expected to result in a Material
Adverse Effect), including certified copies of articles or certificate of incorporation and
amendments thereto, bylaws and amendments thereto, certificates of good standing and/or
qualification to engage in business, certificates of corporate resolutions, incumbency
certificates, certificates of Responsible Officers, and the like (it being understood that with
respect to certificates of good standing and/or qualification of EMJ Acquisition Sub or
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any EMJ Company, Borrowers shall not be required to deliver such certificates for any
jurisdictions for EMJ Acquisition Sub or such EMJ Company, as applicable, other than the
jurisdictions set forth in an exhibit attached thereto so long as Borrowers deliver a certificate
of a Responsible Officer of Borrowers certifying that (a) EMJ Acquisition Sub’s or such EMJ
Company’s jurisdiction of organization, as the case may be, is as set forth in such exhibit, and
(b) such jurisdictions listed on such exhibit are all of the jurisdictions in which EMJ Acquisition
Sub or such EMJ Company, as the case may be, is either organized or is required to be qualified
(where failure to be qualified could reasonably be expected to result in a Material Adverse
Effect)).
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EXHIBIT D-1
[Form of Opinion of Outside Counsel to Borrower Parties
with respect to the Master Subsidiary Guaranty]
with respect to the Master Subsidiary Guaranty]
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EXHIBIT D-2
[Form of Opinion of General Counsel with respect to the Master Subsidiary Guaranty]
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