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EXHIBIT 10.41
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AMENDMENT NO. 3
TO
REVOLVING CREDIT AGREEMENT
This Amendment (this "AMENDMENT") dated as of July 17, 2000, among (a)
Republic Technologies International, LLC, a Delaware limited liability company
(the "BORROWER"), (b) the Guarantors (as defined in the Credit Agreement, as
defined herein), (c) Fleet National Bank (f/k/a BankBoston, N.A. and referred to
herein as "FLEET"), Bank of America, N.A. ("B OF A"), The Chase Manhattan Bank
("CHASE") and the other Banks party hereto, (d) B of A as Syndication Agent,
Co-book manager, and Co-Agent, (e) Chase as Documentation Agent, Co-Book Manager
and Co-Agent and (f) Fleet as administrative agent for the Banks (as such, the
"AGENT") amends the Revolving Credit Agreement dated as of August 13, 1999 (as
amended, the "CREDIT AGREEMENT"), among the Borrower, the Guarantors, the Banks,
the Syndication Agent, the Documentation Agent, the Co-Book Managers, the
Co-Agents and the Agent. Terms not otherwise defined herein which are defined in
the Credit Agreement shall have the respective meanings herein assigned to such
terms in the Credit Agreement.
WHEREAS, the Borrower and the Guarantors have requested that the Agent,
the other Co-Agents and the Super-Majority Banks agree to amend the terms of the
Credit Agreement, such amendments to include, without limitation, amendments to
permit the New Subordinated Indebtedness (as defined below) to replace the
Commitments under the Credit Agreement in the aggregate amount of $30,000,000;
and
WHEREAS, the Agent, the other Co-Agents and the Super-Majority Banks
are willing to amend the terms of the Credit Agreement as hereinafter more fully
set forth, upon the terms and subject to the conditions contained herein;
NOW, THEREFORE, in consideration of the mutual agreements contained in
the Credit Agreement, herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
SECTION 1.1 AMENDMENTS TO SECTION 1.1 OF THE CREDIT AGREEMENT. Section
1.1 of the Credit Agreement is hereby amended as follows:
(a) The definition of "Applicable Margin" is hereby amended and
restated as follows:
"APPLICABLE MARGIN. On any date, Applicable Margin
shall be the applicable margin set forth below with respect to
the Borrower's Excess Availability on such date:
-------------------------------- ----------------- ------------------------ ---------------------
Letter of Credit
Base Rate Eurodollar Rate Fee
Applicable Applicable Applicable
Excess Availability Margin Margin Margin
-------------------------------- ----------------- ------------------------ ---------------------
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-------------------------------- ----------------- ------------------------ ---------------------
Excess Availability is greater 1.25% 3.25% 3.25%
than or equal to $45,000,000
-------------------------------- ----------------- ------------------------ ---------------------
Excess Availability is less
than $45,000,000 1.50% 3.50% 3.50%"
-------------------------------- ----------------- ------------------------ ---------------------
(b) The definition of "Availability Block" is hereby amended and
restated as follows:
"AVAILABILITY BLOCK. $15,000,000 until such time as
the Borrower receives aggregate Net Cash Proceeds from the New
Subordinated Indebtedness in an aggregate amount of not less
than $30,000,000, and $0 upon and after such time as the
Borrower receives aggregate Net Cash Proceeds from the New
Subordinated Indebtedness in an amount of not less than
$30,000,000."
(c) The definition of "Availability Block Cap" is hereby deleted
from the Credit Agreement.
(d) The definition of "Borrowing Base" is hereby amended by
restating clause (c) of such definition in its entirety as
follows:
"(c) 48.9% of Eligible Fixed Assets;
PROVIDED, that in no event shall the amount of the
Borrowing Base allocable to Eligible Fixed Assets
exceed the Eligible Fixed Asset Cap; MINUS"
(e) The following new definition is hereby inserted in Section 1.1
of the Credit Agreement in the appropriate alphabetical order:
"BUSINESS PLAN. The business plan delivered to the
Banks entitled "Republic Technologies International, Inc.
[sic] Liquidity Enhancement Proposal" dated June 2000 as
updated on July 13, 2000."
(f) The following new definition is hereby inserted in Section 1.1
of the Credit Agreement in the appropriate alphabetical order:
"CANTON MOLDS PROJECT. The construction of the large
bloom molds at the Canton Cast Roll Facility."
(g) The following new definition is hereby inserted in Section 1.1
of the Credit Agreement in the appropriate alphabetical order:
"COLD FINISHED PROJECT. The construction of the cold
finished coil to bar line in Michigan."
(h) The definition of "Consolidated Earnings Before Interest,
Taxes, Depreciation and Amortization or EBITDA" is hereby
amended and restated in its entirety as follows:
"CONSOLIDATED EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION OR EBITDA. With respect to the
Borrower and its Subsidiaries for any period, the Consolidated
Net Income of the Borrower and its Subsidiaries for such
period, after all expenses and other proper charges, PLUS,
without duplication and to the extent deducted
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from the calculation of Consolidated Net Income for such
period (a) payment or provision for any income and other taxes
based on income for such period, (b) interest expense for such
period, (c) depreciation and amortization for such period, (d)
pension curtailment and severance expenses and other pension
and post-retirement benefit expenses, (e) professional fees
related to the Third Amendment, the Subordinated Loan
Documents and all transactions contemplated thereby (including
the transactions described in the closing conditions thereto)
and (f) losses from the sale of non-operating assets permitted
under the Credit Agreement, MINUS without duplication and to
the extent included in the calculation of Consolidated Net
Income for such period gains from the sale of non-operating
losses permitted under the Credit Agreement, in each case
determined on a consolidated basis for the Borrower and its
Subsidiaries in accordance with generally accepted accounting
principles."
(i) The definition of "Eligible Fixed Asset Cap" is hereby amended
and restated in its entirety as follows:
"ELIGIBLE FIXED ASSET CAP. With respect to any
period, the amount set forth below opposite such period,
PROVIDED, HOWEVER that (a) the Eligible Fixed Asset Cap may be
permanently reduced to $0 as provided in Sections 2.11,
3.2(b), 9.1(q) of the Credit Agreement or otherwise pursuant
to the terms of the Credit Agreement and (b) the Eligible
Fixed Asset Cap may be permanently reduced during one of the
periods set forth below by such amounts as are provided in
Section 3.2(b) of the Credit Agreement, in which case the
amount set forth below opposite such period and each other
amount set forth below opposite each subsequent period shall
be reduced by an amount equal to such reduction.
----------------------------------------------------------- -------------------------
PERIOD: ELIGIBLE FIXED
ASSET CAP:
----------------------------------------------------------- -------------------------
August 13, 1999 - Third Amendment Effective Date $125,000,000
----------------------------------------------------------- -------------------------
Third Amendment Effective Date - December 31, 2001 $92,000,000
----------------------------------------------------------- -------------------------
January 1, 2002 - March 31, 2002 $84,500,000
----------------------------------------------------------- -------------------------
April 1, 2002 - June 30, 2002 $75,000,000
----------------------------------------------------------- -------------------------
July 1, 2002 - September 30, 2002 $67,500,000
----------------------------------------------------------- -------------------------
October 1, 2002 - December 31, 2002 $60,000,000
----------------------------------------------------------- -------------------------
January 1, 2003 - March 31, 2003 $52,500,000
----------------------------------------------------------- -------------------------
April 1, 2003 - June 30, 2003 $45,000,000
----------------------------------------------------------- -------------------------
July 1, 2003 - September 30, 2003 $37,500,000
----------------------------------------------------------- -------------------------
October 1, 2003 - December 31, 2003 $30,000,000
----------------------------------------------------------- -------------------------
January 1, 2004 - March 31, 2004 $22,500,000
----------------------------------------------------------- -------------------------
April 1, 2004 - June 30, 2004 $15,000,000
----------------------------------------------------------- -------------------------
July 1, 2004 - Maturity Date $7,500,000
----------------------------------------------------------- -------------------------
No reduction of the Eligible Fixed Asset Cap pursuant to this
definition or otherwise may be reinstated.
(j) The following new definition is hereby inserted in Section 1.1
of the Credit Agreement in the appropriate alphabetical order:
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"THE 4-STAND PROJECT. The construction of the Lorain
plant 4 stand mill and Lorain plant large bar
finishing/inspection equipment."
(k) The definition of "Net Cash Proceeds" in the Section 1.1 of
the Credit Agreement is hereby amended by inserting the words
", any incurrence of New Permitted Off-Balance Sheet
Financing" after the words "any issuance of equity" therein.
(l) The following definition of "Net Capital Expenditures" is
hereby inserted into Section 1.1 of the Credit Agreement in
the appropriate alphabetical order:
"NET CAPITAL EXPENDITURES. Capital Expenditures that
are not made from the proceeds of Indebtedness permitted by
Section 9.1 or from the proceeds New Permitted Off-Balance
Sheet Financing."
(m) The following new definition is hereby inserted in Section 1.1
of the Credit Agreement in the appropriate alphabetical order:
"NEW BAR MILL PROJECT. The construction of the
greenfield bar rolling mill in Canton, Ohio or another
location determined by the Borrower."
(n) The following definition of "New Permitted Off-Balance Sheet
Financing" is hereby inserted into Section 1.1 of the Credit
Agreement in the appropriate alphabetical order:
"NEW PERMITTED OFF-BALANCE SHEET FINANCING. Rental
Obligations or any other obligation incurred by the Borrower
or any of the Guarantors pursuant to any operating lease
(whether or not after the sale of the assets subject to such
lease) and other similar "off-balance sheet" financing the Net
Cash Proceeds of which are immediately invested in a Permitted
Project, PROVIDED, HOWEVER, that (a) prior to the incurrence
of any New Permitted Off-Balance Sheet Financing for the New
Bar Mill Project, the Co-Agents shall have received a report
in form and substance satisfactory to the Co-Agents from Hatch
Engineering or such other consultant as is satisfactory to the
Co-Agents (PROVIDED that any such report shall be made at the
Borrower's expense) confirming the viability of the New Bar
Mill Project, (b) any such New Permitted Off-Balance Sheet
Financing shall be subject to an intercreditor agreement in
form and substance satisfactory to the Co-Agents and (c) the
aggregate net present value of the Rental Obligations (using
the discount rate implicit in the applicable lease) and other
obligations represented by any New Permitted Off-Balance Sheet
Financing in connection with any Permitted Project shall not
at any time exceed the amounts set forth below opposite such
Permitted Project:
-------------------------------------------- ------------------------------------
PROJECT MAXIMUM CUMULATIVE NEW
PERMITTED OFF-BALANCE
SHEET FINANCING
-------------------------------------------- ------------------------------------
4-Stand Project $ 50,600,000
-------------------------------------------- ------------------------------------
Canton Molds Project $ 5,900,000
-------------------------------------------- ------------------------------------
New Bar Mill Project $110,000,000
-------------------------------------------- ------------------------------------
Cold Finished Project $ 9,500,000"
-------------------------------------------- ------------------------------------
(o) The following new definition is hereby inserted in Section 1.1
of the Credit Agreement in the appropriate alphabetical order:
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"NEW SUBORDINATED INDEBTEDNESS. Indebtedness incurred
pursuant to the Subordinated Loan Documents, and subject to
subordination provisions satisfactory to the Co-Agents, and
otherwise to contain terms not in conflict with the provisions
of the Loan Documents after giving effect to the Third
Amendment, and secured only by a silent subordinated lien on
the Canton Cast Roll Facility pursuant to the Subordinated
Mortgage, to the extent permitted by other applicable
agreements and subject to documentation satisfactory to the
Co-Agents."
(p) The following new definition is hereby inserted in Section 1.1
of the Credit Agreement in the appropriate alphabetical order:
"PERMITTED PROJECTS. The 4-Stand Project, the Canton
Molds Project, the New Bar Mill Project and the Cold Finished
Project."
(q) The following new definitions are hereby inserted in Section
1.1 of the Credit Agreement in the appropriate alphabetical
order:
"SUBORDINATED CREDIT AGREEMENT" The Subordinated
Credit Agreement, dated as of July 17, 2000, among the
Borrower, the lenders party thereto and the agent party
thereto in the form delivered to the Co-Agents on the Third
Amendment Effective Date and as thereafter amended or modified
in a manner satisfactory to the Co-Agents."
"SUBORDINATED MORTGAGE" The Open-End Mortgage,
Security Agreement, Assignment of Rents, Income and Proceeds
pursuant to which the Borrower grants to the holders of the
New Subordinated Indebtedness a silent subordinated lien on
the Canton Cast Roll Facility in the form delivered to the
Co-Agents on the Third Amendment Effective Date and as
thereafter amended or modified in a manner satisfactory to the
Co-Agents."
"SUBORDINATED LOAN DOCUMENTS." The Subordinated
Credit Agreement and related "Notes", "Guaranty" and
"Collateral Documents" (each as defined in the Subordinated
Credit Agreement), pursuant to which the New Subordinated
Indebtedness is issued and including, without limitation, the
Subordinated Mortgage securing the New Subordinated
Indebtedness, each in the form delivered to the Co-Agents on
the Third Amendment Effective Date and as thereafter amended
or modified in a manner satisfactory to the Co-Agents."
(r) The following new definitions are hereby inserted in Section
1.1 of the Credit Agreement in the appropriate alphabetical
order:
"THIRD AMENDMENT. The Amendment No. 3 to Revolving
Credit Agreement, dated as of the Third Amendment Effective
Date, among the Borrower, the Guarantors, the Administrative
Agent, the Co-Agents, the Banks party thereto and the other
parties thereto."
"THIRD AMENDMENT EFFECTIVE DATE. The date on which
the Third Amendment becomes effective."
(s) The definition of "Total Commitment" is hereby amended and
restated in its entirety as follows:
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"TOTAL COMMITMENT. The sum of the Commitments of the
Banks, as in effect from time to time. The Total Commitment as
of the Effective Date is $425,000,000. The Total Commitment
shall be automatically reduced to $395,000,000 on the Third
Amendment Effective Date, and shall be further automatically
reduced by the following amounts on the following date, in
each case without any further action by the Borrower, the
Administrative Agent, any Bank or any other Person:
-------------------------------------------- ------------------------------------
DATE REDUCTION
-------------------------------------------- ------------------------------------
April 1, 2001 $20,000,000
-------------------------------------------- ------------------------------------
October 1, 2001 $25,000,000
-------------------------------------------- ------------------------------------
January 1, 2002 $25,000,000
-------------------------------------------- ------------------------------------
Each reduction in the Total Commitment described in this
definition shall result in a simultaneous pro rata reduction
in the Commitments of the Banks in accordance with their
respective Commitment Percentages in an amount equal to such
reduction in the Total Commitment. Upon the effective date of
any such reduction or termination, the Borrower shall pay to
the Agent for the respective accounts of the Banks the full
amount of any commitment fee then accrued on the amount of the
reduction. To the extent that any reduction in the Total
Commitment shall result in the sum of the outstanding amount
of the Revolving Credit Loans, the Maximum Drawing Amount and
all Unpaid Reimbursement Obligations being greater than the
Availability, the Borrower shall repay such excess in
accordance with Section 3.2(a) hereof."
SECTION 1.2 NEW SECTION 2.11 OF THE CREDIT AGREEMENT. The following new
Section 2.11 is hereby inserted in the Credit Agreement after Section 2.10
thereof:
"SECTION 2.11. REDUCTION OF ELIGIBLE FIXED ASSET CAP. The
Borrower shall have the right at any time upon three (3) Business Days'
prior written notice to the Agent to reduce the Eligible Fixed Asset
Cap to $0 if, after giving effect to such reduction, the sum of the
Revolving Credit Loans, the Maximum Drawing Amount and all Unpaid
Reimbursement Obligations does not exceed the Borrowing Base EXCLUDING
the lesser of 48.9% Eligible Fixed Assets and the Eligible Fixed Asset
Cap immediately prior to such reduction. Upon the reduction of the
Eligible Fixed Asset Cap to $0 pursuant to this Section 2.11 or
pursuant to Section 3.2, Section 9.1(q) or otherwise pursuant to the
terms of this Credit Agreement:
(a) The Total Commitment shall be immediately and
automatically reduced by an amount equal to the greater of (i)
$100,000,000 and (ii) 90% of the sum of (A) Net Cash Proceeds
from the sale of the Canton Cast-Roll Facility or any
substantial portion thereof PLUS (B) the amount of any Canton
Indebtedness; and
(b) The Agent shall release its security interest in
the Canton Cast-Roll Facility, and the Banks and the Co-Agent
shall, without any further action on their part, be deemed to
have consented to such release.
SECTION 1.3 AMENDMENT TO SECTION 8 OF THE CREDIT AGREEMENT. The
following new Sections 8.16 and 8.17 are hereby inserted into the Credit
Agreement after Section 8.15 thereof:
"SECTION 8.16. FINANCING OF 4-STAND PROJECT. The Borrower
shall deliver to the Co-Agents on or before September 30, 2000 either
(a) a written commitment from a third party to provide New
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Permitted Off-Balance Sheet Financing for the construction of the
4-Stand Project or (b) a written commitment reasonably satisfactory to
the Co-Agents from a third party relating to the financing of a project
which would accomplish similar operating objectives and financial
returns as the 4-Stand Project by alternative means together with a
report in form and substance satisfactory to the Co-Agents from Hatch
Engineering or such other consultant as is satisfactory to the
Co-Agents regarding the effect on EBITDA of such proposal. The
commitments required pursuant to this Section 8.16 shall be from a
funding source capable, in the reasonable opinion of the Co-Agents, to
provide the requisite funding, and shall otherwise be consistent with
the Borrower's construction plan and shall in all other respects be in
form and substance satisfactory to the Co-Agents."
"SECTION 8.17. ACTUARIAL REPORTS. The Borrower shall provide
to the Co-Agents on or before August 15, 2000 actuarial reports
estimating the PBGC "minimum" funding required for 2000, 2001 and 2002,
which amounts shall be reasonably satisfactory to the Co-Agents."
SECTION 1.4 AMENDMENTS TO SECTION 9.1 OF THE CREDIT AGREEMENT.
(a) Section 9.1(f) of the Credit Agreement is hereby amended
by adding the words "not consisting of New Permitted Off-Balance Sheet
Financing" after the words "Indebtedness of the Borrower and its
Subsidiaries consisting of Rental Obligations under operating leases",
and by substituting the amount $20,000,000 for the amount "$36,000,000"
therein.
(b) Section 9.1 of the Credit Agreement is hereby amended by
deleting the word "and" at the end of clause (s) of Section 9.1,
replacing the period at the end of clause (t) of Section 9.1 with a
semi-colon and inserting the following new clauses (u) and (v) after
clause (t) thereof
(u) Indebtedness consisting of New Permitted
Off-Balance Sheet Financing; and
(v) Indebtedness consisting of New Subordinated
Indebtedness in the aggregate principal amount not to exceed
$30,000,000, plus accrued interest thereon.
SECTION 1.5 AMENDMENT TO SECTION 9.2 OF THE CREDIT AGREEMENT.
(a) Section 9.2 of the Credit Agreement is hereby amended by
deleting the word "and" at the end of clause (xvii) of Section 9.2,
replacing the period at the end of clause (xviii) of Section 9.2 with a
semi-colon and by inserting the following new clauses (xix) and (xx)
after clause (xviii) thereof
"(xix) Liens on assets acquired or constructed
entirely from the Net Cash Proceeds of any New Permitted
Off-Balance Sheet Financing securing such New Permitted
Off-Balance Sheet Financing, PROVIDED, that if any such liens
cover property on which any Collateral is located, the holders
of such liens shall, if reasonably requested by the Agent,
have entered into an intercreditor agreement with the Agent to
protect the Agent's remaining Collateral, such intercreditor
agreement to be in form and substance reasonably satisfactory
to the Co-Agents; and
(x) Liens on the Canton Cast-Roll Facility securing
the New Subordinated Indebtedness subordinate to the liens of
the Banks and the Agent thereon pursuant to the Subordinated
Mortgage and otherwise on terms and conditions satisfactory to
the Co-Agents."
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SECTION 1.6 AMENDMENT TO SECTION 9.4 OF THE CREDIT AGREEMENT. Clause
(f) of Section 9.4 of the Credit Agreement is hereby amended by inserting the
following text immediately prior to the final semi-colon of such clause:
"and PROVIDED, FURTHER, that no such Distributions shall be
paid during the period beginning on June 30, 2000 and ending on July 1,
2002."
SECTION 1.7 AMENDMENT TO SECTION 9.6 OF THE CREDIT AGREEMENT. Section
9.6 of the Credit Agreement is hereby amended by replacing the text "and (v)"
with the text ", (v)" and by inserting the following new text after clause (v)
thereof:
"and (vi) the disposition of assets acquired or constructed in
connection with a Permitted Project in order then or immediately
thereafter to lease such assets pursuant to a New Permitted Off-Balance
Sheet Financing"
SECTION 1.8 AMENDMENTS TO SECTION 10 OF THE CREDIT AGREEMENT. Sections
10.1 and 10.2 of the Credit Agreement are hereby replaced in their entirety with
the following new Sections 10.1, 10.2 and 10.3:
"SECTION 10.1 MAXIMUM NET CAPITAL EXPENDITURES. The Borrower
will not make, or permit any Subsidiary of the Borrower to make, Net
Capital Expenditures during any of the periods set forth below that
exceed, in the aggregate for the Borrower and its Subsidiaries, the
amounts set forth below opposite such periods, PROVIDED, however, that
if, at the end of any of the periods listed below, the amount of Net
Capital Expenditures permitted for such period is not fully utilized,
the lesser of (i) 25% of maximum Net Capital Expenditures for such
period as set forth below and (ii) the difference between such maximum
Net Capital Expenditures and actual Net Capital Expenditures for such
fiscal period may be carried over and utilized in any succeeding period
listed below, PROVIDED FURTHER, that if, at the end of Fiscal Year 2001
or any subsequent period listed below, the amount of Net Capital
Expenditures permitted for such period is not fully utilized and EBITDA
for such period is equal to or greater than 90% of projected EBITDA for
such period as set forth in the Business Plan, the lesser of (i) 50% of
maximum Net Capital Expenditures for such period and (ii) the
difference between maximum Net Capital Expenditures and actual Net
Capital Expenditures for such fiscal period may be carried over and
utilized in the any succeeding period listed below:
-------------------------------------------- ------------------------------------
FISCAL YEAR MAXIMUM NET CAPITAL EXPENDITURES
-------------------------------------------- ------------------------------------
2000 $19,000,000
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2001 $24,000,000
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2002 $27,000,000
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2003 $33,500,000
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2004 $23,000,000
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SECTION 10.2 MINIMUM EBITDA.
SECTION 10.2.1. MINIMUM QUARTERLY EBITDA. The
Borrower will not cause or permit EBITDA for any period of one
fiscal quarter ending during a month set forth below to be
less than the amount set forth below opposite such month:
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FISCAL QUARTER PERIOD ENDING MINIMUM EBITDA
-------------------------------------------- ------------------------------------
September, 2000 $17,338,000
-------------------------------------------- ------------------------------------
December, 2000 $29,071,000
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March, 2001 $30,234,000
-------------------------------------------- ------------------------------------
SECTION 10.2.2. MINIMUM TRAILING 12-MONTH EBITDA. The
Borrower will not cause or permit EBITDA for any period of
twelve consecutive fiscal months ending during a month set
forth below to be less than the amount set forth below
opposite such month:
-------------------------------------------- ------------------------------------
FISCAL QUARTER ENDING: MINIMUM TRAILING 12-MONTH EBITDA
-------------------------------------------- ------------------------------------
June, 2001 $119,609,000
-------------------------------------------- ------------------------------------
September 2001 $136,763,000
-------------------------------------------- ------------------------------------
December 2001 $136,842,000
-------------------------------------------- ------------------------------------
March 2002 $149,389,000
-------------------------------------------- ------------------------------------
June 2002 $160,050,000
-------------------------------------------- ------------------------------------
September 2002 $167,751,000
-------------------------------------------- ------------------------------------
December 2002 $175,333,000
-------------------------------------------- ------------------------------------
March 2003 $181,660,000
-------------------------------------------- ------------------------------------
June 2003 $189,020,000
-------------------------------------------- ------------------------------------
September 2003 $197,329,000
-------------------------------------------- ------------------------------------
December 2003 $205,614,000
-------------------------------------------- ------------------------------------
March 2004 $215,317,000
-------------------------------------------- ------------------------------------
June 2004 $224,454,000
-------------------------------------------- ------------------------------------
SECTION 10.3 MINIMUM LIQUIDITY. The Borrower will not at any
time permit the sum of (a) (i)Availability LESS (ii) the sum of the
outstanding amount of the Revolving Credit Loans (after giving effect
to all amounts requested) PLUS the Maximum Drawing Amount and all
Unpaid Reimbursement Obligations, PLUS (b) the Net Cash Proceeds from
the permitted sale or other disposition of assets constituting
Collateral where such Net Cash Proceeds are deposited in a Swept
Account, PLUS (c) in the sole and absolute discretion of the Co-Agents,
firmly committed new cash investments and/or deferrals of otherwise
required payments having terms and conditions and occurring in a time
frame satisfactory to the Co-Agents, to be less than $3,000,000."
SECTION 1.9 AMENDMENT TO SECTION 13.1 OF THE CREDIT AGREEMENT. Section
13.1 of the Credit Agreement is hereby amended by inserting the following new
clause (s) after clause (r) thereof:
"(s) the Borrower shall not have received on or before the day
that is 14 days after the Third Amendment Effective Date aggregate Net
Cash Proceeds from the New Subordinated Indebtedness in amount of not
less than $30,000,000."
SECTION 2. FEES. The Borrower hereby agrees to pay the following fees,
each of such fees to constitute "Obligations" under the Credit Agreement:
(a) AMENDMENT FEE 1. The Borrower hereby agrees to pay to the Agent,
for the account of each Bank that executes this Amendment, a fee of $3,950,000
(such fee referred to herein as "AMENDMENT
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FEE 1"), such Amendment Fee 1 to be fully earned and payable on the Third
Amendment Effective Date and to be shared PRO RATA by the Banks party to this
Amendment in accordance with their Commitments.
(b) AMENDMENT FEE 2. The Borrower hereby agrees to pay to the Agent,
for the account of each Bank that executes this Amendment, a fee of $1,975,000
(such fee referred to herein as "AMENDMENT FEE 2"), such Amendment Fee 2 to be
fully earned on the Third Amendment Effective Date and to be shared PRO RATA by
the Banks party to this Amendment in accordance with their Commitments. A
portion of Amendment Fee 2 equal to $987,500 shall be payable on October 1, 2001
and the remaining portion of Amendment Fee 2 shall be payable on March 31, 2002.
If on any date on or prior to September 30, 2001 the Eligible Fixed Asset Cap is
reduced to $0 in accordance with Section 2.11 of the Credit Agreement, Amendment
Fee 2 shall be forgiven on such date.
(c) STRUCTURING FEE. The Borrower hereby agrees to pay to the Agent,
for the account of the Co-Agents, a fee of $531,250 (such amount referred to
herein as the "STRUCTURING FEE"), such Structuring Fee to be fully earned on the
Third Amendment Effective Date and to be shared equally by the Co-Agents. A
portion of the Structuring Fee equal to $265,625 shall be payable on the Third
Amendment Effective Date and the remaining portion of the Structuring Fee shall
be payable on March 31, 2002.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS; NO DEFAULT;
AUTHORIZATION. The Borrower (and, where applicable, the Parent) hereby
represents, warrants and covenants to the Agent and the Banks as follows:
(a) Each of the representations and warranties of the Borrower and the
Parent contained in the Credit Agreement was true as of the date as of which it
was made and is true as and at the date of this Amendment, and no Default or
Event of Default has occurred and is continuing as of the date of this
Amendment;
(b) This Amendment has been duly authorized, executed and delivered by
the Borrower and each of the Guarantors and is in full force and effect; and
(c) Upon the execution and delivery of this Amendment by the respective
parties hereto, this Amendment shall constitute the legal, valid and binding
obligation of the Borrower and each of the Guarantors, enforceable in accordance
with its terms, except that the enforceability thereof may be subject to any
applicable bankruptcy, reorganization, insolvency or other laws affecting
creditors' rights generally.
SECTION 4. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Amendment shall be subject to the satisfaction of the following conditions:
(a) All proceedings in connection with the transactions contemplated by
this Amendment and all other documents incident thereto shall be satisfactory in
substance and in form to the Co-Agents and this Amendment shall have been
executed and delivered by the Co-Agents, the Super-Majority Banks, the Borrower
and the Guarantors;
(b) All corporate action or limited liability company action, as
applicable, necessary for the valid execution, delivery and performance by the
Borrower and the Guarantors of this Amendment and each of the related documents
to which the Borrower or the Guarantors is or is to become a party shall have
been duly and effectively taken, and evidence thereof satisfactory to the Agent
shall have been provided to the Agent;
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(d) The Agent shall have received the full amount of Amendment Fee 1
and such portions of the Structuring Fee payable on the Third Amendment
Effective Date for the account of the Co-Agents, and all expenses of the
Co-Agents, their counsel and their professional advisors for which invoices have
been rendered shall have been paid.
(e) The Borrower shall have received (i) Net Cash Proceeds of at least
$24,000,000 from the New Subordinated Indebtedness and (ii) a commitment for
additional New Subordinated Indebtedness to be incurred on or before the date
that is 14 days after the Third Amendment Effective Date such that the aggregate
Net Cash Proceeds of all New Subordinated Indebtedness incurred on or before
such date shall be not less than $30,000,000, with all such Indebtedness to be
on terms and conditions, and subject to subordination provisions in form and
substance reasonably satisfactory to the Co-Agents, and otherwise to contain
terms not in conflict with the provisions of the Loan Documents after giving
effect to the Amendment.
(f) The Borrower and the Pension Benefit Guaranty Corporation ("PBGC")
shall have executed and delivered an agreement, reasonably satisfactory in form
and substance to the Co-Agents, by which the PBGC will defer the funding
obligations of the Borrower and its Subsidiaries relating to the Republic
Technologies International, LLC USWA Defined Benefit Plan in the amount of at
least $22,125,000 contractually due by December 31, 2000 (including the current
PBGC deferral of approximately $11,000,000), and in the amount of at least
$23,950,000 contractually due during 2001 with (i) the payments deferred being
amortized by no more than $5,760,000 in the first quarter of 2002 and each
fiscal quarter thereafter until fully amortized, (ii) further amortization and
maturity being reasonably satisfactory to the Co-Agents and (iii) any other
funding requirements for those plans being set forth in such agreement.
(g) The Borrower and USX Corporation ("USX") shall have executed and
delivered an agreement, reasonably satisfactory in form and substance to the
Co-Agents, by which USX will (i) defer the $30,000,000 payment, together with
accrued interest, due to USX in July, 2001, until July, 2003, on substantially
the same terms (other than maturity) as the deferral currently in place for that
amount, and (ii) provide liquidity enhancements at least equivalent in dollar
value to those described in the Business Plan. Any modification of the USX
semi-finished steel off-take agreement shall be satisfactory in form and
substance to the Agent.
(h) The Borrower shall have presented to the Co-Agents the Borrower's
plan for the 4-Stand Project targeted to be constructed and operational on or
before May 1, 2001 (with contract penalties applicable to the builder if the
4-Stand Project is not operational on or before July 1, 2001), and the Co-Agents
shall have received a report from Hatch Engineering, in form and substance
satisfactory to the Co-Agents, as to the feasibility of that plan.
(i) The Co-Agents and the Super-Majority Banks shall be satisfied with
the results of the due diligence investigations by Ernst & Young LLP with
respect to the Borrower's business plan.
(j) The Co-Agents shall have received a legal opinion from Weil,
Gotshal & ▇▇▇▇▇▇ LLP in form and substance satisfactory to the Co-Agents as to
the New Subordinated Indebtedness.
SECTION 5. RATIFICATION, ETC. Except as expressly amended hereby, the
Credit Agreement, the other Loan Documents and all documents, instruments and
agreements related thereto are hereby ratified and confirmed in all respects.
All references in the Credit Agreement, any other Loan Document or any related
agreement or instrument to the Credit Agreement shall hereafter refer to the
Credit Agreement as amended hereby.
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SECTION 6. INDEMNITY. The Borrower hereby acknowledges that, solely for
the purposes of Section 17 of the Credit Agreement, ▇▇▇▇▇▇▇ ▇▇▇▇ LLP ("B&D"),
Ernst & Young LLP ("E&Y") and Hatch Engineering ("Hatch") and each of their
respective employees, partners, officers, agents and affiliates (collectively
for the purpose of this Section 6, the "INDEMNIFIED PARTIES") are "agents" of
the Agent as such term is used in the first sentence of such Section 17 of the
Credit Agreement and that, accordingly, without limiting the provisions of such
Section 17 of the Credit Agreement or any other provisions thereof, the Borrower
hereby and thereby indemnifies each of the Indemnified Parties from and against
any and all claims, actions and suits whether groundless or otherwise, and from
and against any and all liabilities, losses, damages and expenses of every
nature and character arising out of the Credit Agreement or any of the other
Loan Documents or the transactions contemplated thereby including, without
limitation, (a) the provision of consulting, legal or other services by any
Indemnified Party to the Agent, any Co-Agent or any Bank, (b) any statements
made by any Indemnified Party in connection therewith, and (c) B&D, the Agent,
any other Co-Agent or any Bank following the advice of E&Y or Hatch in
connection with the provision of such services or failure to follow such advice,
in each case including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such matters.
SECTION 7. RELEASE. In order to induce the Agent, the other Co-Agents
and the Banks to enter into this Amendment, each of the Borrower and the
Guarantors acknowledges and agrees that: (i) neither the Borrower nor any
Guarantor has any claim or cause of action against the Agent, any Co-Agent or
any Bank (or any of its respective directors, officers, employees or agents);
(ii) neither the Borrower nor any Guarantor has any offset right, counterclaim
or defense of any kind against any of their respective obligations, indebtedness
or liabilities to the Agent, any Co-Agent or any Bank; and (iii) each of the
Agent, each Co-Agent and the Banks has heretofore properly performed and
satisfied in a timely manner all of its obligations to the Borrower and each
Guarantor. The Borrower and the Guarantors wish to eliminate any possibility
that any past conditions, acts, omissions, events, circumstances or matters
would impair or otherwise adversely affect any of the Agent's, the Co-Agents'
and the Banks' rights, interests, contracts, collateral security or remedies.
Therefore, each of the Borrower and the Guarantors unconditionally releases,
waives and forever discharges (A) any and all liabilities, obligations, duties,
promises or indebtedness of any kind of the Agent, any Co-Agent or any Bank to
the Borrower and/or any Guarantor, except the obligations to be performed by the
Agent, any Co-Agent or any Bank on or after the date hereof as expressly stated
in this Amendment, the Credit Agreement and the other Loan Documents, and (B)
all claims, offsets, causes of action, suits or defenses of any kind whatsoever
(if any), whether arising at law or in equity, whether known or unknown, which
the Borrower or any Guarantor might otherwise have against the Agent, any
Co-Agent, any Bank or any of its directors, officers, employees or agents, in
either case (A) or (B), on account of any past or presently existing condition,
act, omission, event, contract, liability, obligation, indebtedness, claim,
cause of action, defense, circumstance or matter of any kind.
SECTION 8. NO IMPLIED WAIVER. Except as expressly provided herein,
nothing contained herein shall constitute a waiver of, impair or otherwise
affect any Obligations, any other obligations of the Borrower or any Guarantor
or any right of the Agent or any Bank consequent thereon.
SECTION 9. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
SECTION 10. GOVERNING LAW. THIS AMENDMENT SHALL FOR ALL PURPOSES BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICTS OF LAW).
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SECTION 11. EXPENSES. The Borrower hereby agrees to pay to the Agent,
on demand, all reasonable out of pocket expenses incurred or sustained by the
Agent and each of the other Co-Agents in connection with this Amendment
(including reasonable legal fees and disbursements).
14
IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
THE BORROWER:
REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC
By:______________________________________
Name:
Title:
15
THE GUARANTORS:
REPUBLIC TECHNOLOGIES INTERNATIONAL
HOLDINGS, LLC
By:______________________________________
Name:
Title:
RTI CAPITAL CORP.
By:______________________________________
Name:
Title:
BLISS & ▇▇▇▇▇▇▇▇, LLC
By:______________________________________
Name:
Title:
16
CANADIAN DRAWN STEEL COMPANY INC.
By:______________________________________
Name:
Title:
NIMISHILLEN & TUSCARAWAS, LLC
By:______________________________________
Name:
Title:
17
THE BANKS AND THE CO-AGENTS:
FLEET NATIONAL BANK (F/K/A BANKBOSTON, N.A.),
individually, as Administrative Agent
and Co-Book Manager
By:______________________________________
Name:
Title:
▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇.▇., individually, as
Syndication Agent and Co-Book Manager
By:_______________________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
individually, as Documentation Agent
and Co-Book Manager
By:_______________________________________
Name:
Title:
FOOTHILL CAPITAL CORPORATION
By:_______________________________________
Name:
Title:
▇▇▇▇▇▇ FINANCIAL, INC.
By:_______________________________________
Name:
Title:
19
CONGRESS FINANCIAL CORPORATION
By:_______________________________________
Name:
Title:
THE CIT GROUP / BUSINESS CREDIT, INC.
By:_______________________________________
Name:
Title:
LASALLE BUSINESS CREDIT, INC.
By:_______________________________________
Name:
Title:
MELLON BANK, N.A.
By:_______________________________________
Name:
Title:
DIME COMMERCIAL CORP.
By:_______________________________________
Name:
Title:
GREEN TREE FINANCIAL CORPORATION
By:_______________________________________
Name:
Title:
20
ORIX BUSINESS CREDIT, INC.
By:_______________________________________
Name:
Title:
SUNROCK CAPITAL CORP.
By:_______________________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By:_______________________________________
Name:
Title:
GMAC BUSINESS CREDIT, LLC
By:_______________________________________
Name:
Title:
GUARANTY BUSINESS CREDIT
CORPORATION, doing business as
Fidelity Funding
By:_______________________________________
Name:
Title: