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EXHIBIT 10.2
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of July 23,
1999 (this "Amendment"), is among ROUGE INDUSTRIES, INC., a Delaware corporation
("Holdings"), ROUGE STEEL COMPANY, a Delaware corporation (the "Borrower"), the
financial institutions party hereto (the "Banks") and BANK ONE, MICHIGAN,
formerly known as NBD Bank, a Michigan banking corporation, as agent for the
Banks (in such capacity, the "Agent").
RECITALS
A. Holdings, the Borrower, the Agent and the Banks are
parties to a Credit Agreement dated as of December 16, 1997 (the "Credit
Agreement").
B. Holdings and the Borrower desire to amend the Credit
Agreement, and the Agent and the Banks are willing to do so strictly in
accordance with the terms hereof.
TERMS
In consideration of the premises and of the mutual agreements
herein contained, the parties agree as follows:
ARTICLE I.
AMENDMENTS
Upon fulfillment of the conditions set forth in Article III
hereof, the Credit Agreement shall be amended as follows:
1.1 The definition of "Applicable Margin" contained in
Section 1.1 is restated as follows:
"Applicable Margin" shall mean (i) with respect to Base
Rate Loans, 0% and (ii) with respect to LIBOR Loans, the Letter of
Credit fees payable under Section 2A.4(b) and the facility fees and
usage fees payable under Section 2.16, the applicable margin set forth
opposite the Debt to Capitalization Ratio set forth below:
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Debt to Capitalization Applicable Margin for Applicable Margin
Ratio LIBOR Loans and for Facility Fees
----- Letter of Credit Fees -----------------
---------------------
Greater than 0.35 0.80% 0.20%
Equal to or less than 0.35 but
Greater than 0.25 0.60% 0.15%
Equal to or less than 0.25 0.50% 0.125%
For purposes of determining the Applicable Margin, the Debt to
Capitalization Ratio will be determined at the end of each fiscal
quarter of the Borrower (a "Margin Determination Date"). Such
Applicable Margin determined on a Margin Determination Date will be
effective (a "Margin Adjustment Date") commencing on the fifth day
after Agent's receipt of the financial statements delivered pursuant
to Section 5.1(a) or (b) and the compliance certificate executed and
delivered by an Authorized Officer pursuant to Section 5.1(e)
certifying the Debt to Capitalization Ratio for the previous fiscal
quarter, and shall be effective with respect to all LIBOR Loans made,
continued or converted on or after such Margin Adjustment Date and
shall be effective with respect to all Letter of Credit fees payable
under Section 2A.4(b) and facility fees payable under Section 2.16 on
or after such Margin Adjustment Date. Notwithstanding the foregoing,
if a lower Applicable Margin would be effective on any Margin
Adjustment Date and a Default or Event of Default exists on such date
or Holdings and/or the Borrower has failed to deliver the financial
statements and compliance certificate described in Section 5.1(a) or
(b) or 5.1(e), respectively, with respect to a fiscal quarter or
fiscal year in accordance with the provisions thereof, then such
Applicable Margin shall not be so reduced until such Default or Event
of Default shall be cured or waived or Holdings and/or the Borrower
shall have delivered such financial statements and compliance
certificate in accordance with the provisions of Section 5.1(a) or
(b) and 5.1(e), as the case may be. Notwithstanding anything herein
to the contrary, for the period from the First Amendment Effective
Date to, but not including, the Margin Adjustment Date occurring
after the date the aggregate Revolving Loan Commitments of all Banks
is equal to or less than $100,000,000, the Applicable Margin for
LIBOR Loans and Letter of Credit Fees shall not be less than 0.60%
and for facility fees shall not be less than 0.15%.
1.2 The following new definitions are hereby added to
Section 1.1 in appropriate alphabetical order:
"EBITDA" shall mean, for any period, EBIT for such
period minus, to the extent deducted in determining such EBIT,
depreciation and amortization expense, all determined in
accordance with GAAP.
"First Amendment" shall mean the First Amendment to this
Agreement dated July 23, 1999.
"First Amendment Effective Date" shall mean the
effective date of the First Amendment.
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1.3 Section 2.16 is amended by adding the following to the
end thereof:
For each day on which the aggregate principal amount of
the outstanding Revolving Loans exceeds 50% of the aggregate
amount of the Revolving Loan Commitments of all of the Banks,
the Borrower further agrees to pay to the Agent for the
account of each Bank a usage fee at a per annum rate equal to
0.125% on the aggregate principal amount of the outstanding
Revolving Loans, payable quarterly in arrears on each Payment
Date and on the Maturity Date or such earlier date, if any, on
which the Revolving Loan Commitments shall terminate in
accordance with the terms hereof. Such fees shall be computed
on the basis of a 360-day year.
1.4 Section 6.1(c) is restated as follows:
(c) Interest Coverage Ratio. Holdings shall not, as of
the end of each fiscal quarter (other than the fiscal quarters
ending June 30, 1999, September 30, 1999 and December 31, 1999),
permit the Interest Coverage Ratio for such fiscal quarter to be
less than 3.0:1.0, in each case as calculated for the four
consecutive fiscal quarters then ending, provided that (i) for the
fiscal quarter ending March 31, 2000, the Interest Coverage Ratio
shall be calculated for the one fiscal quarter then ending, (ii)
for the fiscal quarter ending June 30, 2000, the Interest Coverage
Ratio shall be calculated for the two fiscal quarters then ending
and (iii) for the fiscal quarter ending September 30, 2000, the
Interest Coverage Ratio shall be calculated for the three fiscal
quarters then ending.
1.5 A new Section 6.1(d) is hereby added as follows:
(d) EBITDA to Interest Expense Ratio. Holdings shall
not, as of the end of each of the fiscal quarters ending September
30, 1999 or December 31, 1999, permit the ratio of EBITDA as of the
end of such fiscal quarter to Interest Expense as of the end of
such fiscal quarter to be less than 4.0 to 1.0, as calculated (i)
in the case of the fiscal quarter ending September 30, 1999, for
the one fiscal quarter then ending, and (ii) in the case of the
fiscal quarter ending December 31, 1999, for the two consecutive
quarters then ending.
1.6 Annex 1 attached hereto is hereby substituted for Annex
1 attached to the Credit Agreement.
ARTICLE II.
REPRESENTATIONS
Each of Holdings and the Borrower represents and warrants to
the Agent and the Banks that:
2.1 The execution, delivery and performance of this
Amendment and the New Revolving Notes are within its powers, have been duly
authorized and are not in contravention with any law, of the terms of its
Articles of Incorporation or By-Laws, or any undertaking to which it is a party
or by which it is bound.
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2.2 This Amendment and the New Revolving Notes are the
legal, valid and binding obligation of the Borrower enforceable against it in
accordance with the terms hereof.
2.3 After giving effect to the amendments herein contained,
the representations and warranties contained in Section 4 of the Credit
Agreement and the representations and warranties contained in the other Loan
Documents are true on and as of the date hereof with the same force and effect
as if made on and as of the date hereof.
2.4 After giving effect to the waiver contained in Section
4.1, no Event of Default or Default exists or has occurred and is continuing on
the date hereof.
ARTICLE III.
CONDITIONS OF EFFECTIVENESS
This Amendment shall not become effective until each of the
following has been satisfied.
3.1 This Amendment shall be signed by Holdings, the Borrower
and the Banks.
3.2 The Borrower shall deliver new Revolving Notes (the "New
Revolving Notes") in the amount of the revised Revolving Loan Commitments of
each Bank, and such New Revolving Notes are issued in exchange and substitution
for the existing Revolving Notes and shall evidence the same, plus additional
obligations as evidenced by the existing Revolving Notes.
3.3 Holdings and the Borrower shall have delivered a
certified board resolution approving the execution, delivery and performance of
this Amendment and the New Revolving Notes and shall have delivered such
opinions of counsel as may be required by the Agent.
3.4 The Borrower shall deliver such other agreements and
documents requested by the Agent.
ARTICLE IV.
MISCELLANEOUS.
4.1 Holdings and the Borrower have informed the Banks and
the Agent that an Event of Default has occurred due to a breach of Section
6.1(c) (the "Existing Default"), and Holdings and the Borrower have requested
that the Banks and the Agent waive the Existing Default subject to this
Amendment becoming effective pursuant to Article III hereof and the terms and
conditions set forth herein. Pursuant to such request, the Banks and the Agent
hereby waive the Existing Default for the period prior to the effectiveness of
this Amendment, but not at any time thereafter. The Borrower acknowledges and
agrees that the waiver contained herein is a limited waiver, limited to the
specific one time waiver described above. Such limited waiver (a) shall not
modify or waive any other term, covenant or agreement of the Loan Documents, and
(b) shall not be deemed to have prejudiced any present or future right or rights
which the Agent or the Banks now have or may have under the Loan documents.
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4.2 Holdings and the Borrower jointly and severally agree to
pay each Bank which signs this Amendment on or before July 23, 1999 an amendment
fee equal to 0.10% on the amount of such Bank's Revolving Loan Commitment after
giving effect to this Amendment.
4.3 References in the Credit Agreement or in any other Loan
to the Credit Agreement shall be deemed to be references to the Credit
Agreement as amended hereby and as further amended from time to time.
4.4 The Borrower agrees to pay and to save the Agent
harmless for the payment of all costs and expenses arising in connection with
this Amendment, including the reasonable fees of counsel to the Agent in
connection with preparing this Amendment and the related documents.
4.5 Except as expressly amended hereby, the Borrower agrees
that the Credit Agreement and all other Loan Documents are ratified and
confirmed and shall remain in full force and effect and that it has no set off,
counterclaim, defense or other claim or dispute with respect to any of the
foregoing. Terms used but not defined herein shall have the respective meanings
ascribed thereto in the Credit Agreement.
4.6 This Amendment may be signed upon any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
IN WITNESS WHEREOF, the parties signing this Amendment have
caused this Amendment to be executed and delivered as of the day and year first
above written.
ROUGE INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxxxxxxxxx
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Title: Vice Chairman and Chief Financial Officer
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ROUGE STEEL COMPANY
By: /s/ Xxxx X. Xxxxxxxxxxx
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Title: Vice Chairman and Chief Financial Officer
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BANK ONE, MICHIGAN, as Agent,
as Issuing Bank, and individually as a Bank
By: /s/ Xxxxxxx X. Xxxxxx
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Title: Vice President
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COMERICA BANK
By: /s/ Xxxxxx XxXxxxxxx
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Title: Account Officer
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NATIONAL CITY BANK
By: /s/ Xxxx X. XxXxxxxxxxx
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Title: Vice President
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ANNEX 1
REVOLVING LOAN COMMITMENTS
REVOLVING LOAN COMMITMENTS FOR THE PERIOD FROM AND INCLUDING THE FIRST AMENDMENT
EFFECTIVE DATE TO BUT EXCLUDING JUNE 30, 2000:
Name of Bank Amount of Revolving Loan Commitment
------------ -----------------------------------
NBD Bank $50,000,000
Comerica Bank $37,500,000
National City Bank $37,500,000
REVOLVING LOAN COMMITMENTS FOR THE PERIOD FROM AND INCLUDING JUNE 30, 2000 TO
BUT EXCLUDING THE MATURITY DATE:
Name of Bank Amount of Revolving Loan Commitment
------------ -----------------------------------
NBD Bank $40,000,000
Comerica Bank $30,000,000
National City Bank $30,000,000
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