EXHIBIT 10.4.16
AMENDMENT NO. 2 TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
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AMENDMENT NO. 2 TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT,
dated as of January 25, 2002 by and among WCI STEEL, INC., an Ohio corporation
("WCI Steel"), WCI STEEL SALES L.P., an Ohio limited partnership ("WCI Sales
LP", and together with WCI Steel, individually, each a "Borrower" and
collectively, "Borrowers"), CONGRESS FINANCIAL CORPORATION, a Delaware
corporation, as successor by merger to Congress Financial Corporation, a
California corporation (in its individual capacity "Congress"), BANK OF AMERICA,
N.A., as successor to BankAmerica National Trust & Savings Association ("Bank of
America", and together with Congress, collectively "Lenders"), and CONGRESS
FINANCIAL CORPORATION, as Agent for Lenders (in such capacity, "Agent").
W I T N E S S E T H
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WHEREAS, Borrowers have entered into financing arrangements with Lenders
and Agent pursuant to which Lenders (or Agent on behalf of Lenders) have made
loans and provided other financial accommodations to Borrowers as set forth in
the Second Amended and Restated Loan and Security Agreement, dated July 30,
1999, between Borrowers, Lenders and Agent as amended by Amendment No. 1 to
Second Amended and Restated Loan and Security Agreement, dated April 30, 2001
(as the same now exists and is amended hereby and may hereafter be further
amended, modified, supplemented, extended, renewed, restated or replaced, the
"Loan Agreement") and the other agreements, documents and instruments referred
to therein or at any time executed and/or delivered in connection therewith or
related thereto, including this Amendment (all of the foregoing, together with
the Loan Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, being collectively
referred to herein as the "Financing Agreements");
WHEREAS, Borrowers have requested that Lenders and Agent agree to certain
amendments to the Loan Agreement and Lenders and Agent are willing to agree to
such amendments, subject to the terms and conditions contained herein; and
WHEREAS, by this Amendment, Borrowers, Lenders and Agent intend to evidence
such amendments.
NOW, THEREFORE, in consideration of the foregoing, and the agreements and
covenants contained herein, the parties hereto agree as follows (with the
amendments to the Loan Agreement being effective as of the date hereof):
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1. DEFINITIONS.
(a) AMENDMENT TO DEFINITIONS.
(i) The definition of "Interest Rate" as set forth in Section 1.40(a) to
the Loan Agreement is hereby amended to delete such Section in its entirety and
replace it with the following:
"(a) as to Prime Rate Loans, a rate of one and one-half (1 1/2%)
percent per annum in excess of the Prime Rate; and"
(ii) The definition of "Interest Rate" as set forth in Section 1.40(b) to
the Loan Agreement is hereby amended to delete the reference to "two and
one-quarter (2 1/4%) percent" in such Section and replace it with the following:
"three and one-half (3 1/2%) percent."
(b) INTERPRETATION. For purposes of this Amendment, unless otherwise
defined herein, those terms used herein, including, but not limited to, those
terms used and/or defined in the recitals above, shall have the respective
meanings given to such terms in the Loan Agreement.
2. AMENDMENTS.
(a) LOANS, INVESTMENTS, GUARANTEES, ETC.
(i) Section 7.5(c) of the Loan Agreement is hereby amended to delete such
Section in its entirety and replace it with the following:
"(c) loans by WCI Steel to Renco Group or Affiliates of Renco Group in
any fiscal year of WCI Steel commencing with the fiscal year of WCI
Steel ending October 31, 2001; PROVIDED, THAT, as to each such loan,
all of the following conditions are satisfied:
(i) Excess Availability for WCI Steel shall have been not less
than $25,000,000 at all times during the ninety (90) consecutive day
period immediately prior to the date of making such loan,
(ii) after giving effect to the payment of any such loan as of
the date of such payment, Excess Availability for WCI Steel shall be
not less than $25,000,000,
(iii) the financial projections provided by WCI Steel to Agent
for the fiscal year of WCI Steel in which such loan is made, prior to
the commencement of such fiscal year, shall be in form and substance
satisfactory to Agent and reflect that Excess Availability for WCI
Steel is
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projected to be not less than $25,000,000 for the ninety (90) day
period immediately after (but not including) the date of the making of
such loan, PROVIDED, THAT, revised versions of such financial
projections may be provided by WCI Steel to Agent from time to time,
but for purposes of the conditions set forth in this clause (iii) the
Excess Availability for any period in such revised projections shall
only be effective if acceptable to Agent in its discretion,
(iv) as of the date of making of any such loan and after giving
effect thereto, no Event of Default, or act, condition or event which
with notice or passage of time or both would constitute an Event of
Default shall exist or have occurred and be continuing,
(v) Agent shall have received not less than ten (10) Business
Days prior written notice of the intention of WCI Steel to make any
such loans, and
(vi) such loans shall not exceed, in the aggregate, an amount
equal to: (A) fifty (50%) percent of (1) the cumulative After-Tax
Profits of WCI Steel (or if cumulative After-Tax Profits shall be a
loss, minus one hundred (100%) percent of such loss) earned subsequent
to October 31, 2001 and prior to the date such loan occurs (treating
such period as a single accounting period) MINUS (2) all payments to
Renco Steel Holdings in such period made pursuant to Section 7.7(c)
for federal, state and local income taxes, MINUS (B) the aggregate
amount of all dividends declared and paid by WCI Steel to Renco Steel
Holdings in such period, other than dividends made to Renco Steel
Holdings pursuant to Section 7.7(c) MINUS (C) the aggregate amount of
all management fees paid by WCI Steel to Renco Group and affiliates of
Renco Group in such period, other than the monthly management fees
under Section 7.6(b)(ii) below MINUS (D) the aggregate amount of all
loans made by WCI Steel to Renco Group and Affiliates of Renco Group
(other than Subsidiaries of WCI Steel) (net of repayments and
prepayments) in such period, and still outstanding;"
(ii) Section 7.5(h) of the Loan Agreement is hereby amended to
delete such Section in its entirety and replace it with the following:
"(h) Intentionally omitted."
(b) TRANSACTIONS WITH AFFILIATES. Section 7.6(b)(iii) of the Loan Agreement
is hereby amended to delete such Section in its entirety and replace it with the
following:
"(iii) WCI Steel may in any fiscal year of WCI Steel commencing
with the fiscal year of WCI Steel ending October 31, 2001 pay to Renco
Group management fees (in addition to those permitted to be
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paid under Section 7.6(b) (ii) above); PROVIDED, THAT, each of the
following conditions are satisfied:
(A) Excess Availability for WCI Steel shall have been not less
than $25,000,000 at all times during the ninety (90) consecutive day
period immediately prior to the date of the payment of any such
management fees,
(B) after giving effect to the payment of any such management
fees as of the date of such payment, Excess Availability for WCI Steel
shall not be less than $25,000,000,
(C) the financial projections provided by WCI Steel to Lender for
the fiscal year of WCI Steel in which such management fees are paid,
prior to the commencement of such fiscal year, shall be in form and
substance satisfactory to Agent and reflect that Excess Availability
for WCI Steel is projected to be not less than $25,000,000 for the
ninety (90) day period immediately after (but not including) the date
of the payment of such management fees, PROVIDED, THAT, revised
versions of such financial projections may be provided by WCI Steel to
Agent from time to time, but for purposes of this clause (C) the
Excess Availability for any period in such revised projections shall
only be effective if acceptable to Agent in its discretion,
(D) as of the date of the payment of such management fees and
after giving effect thereto, no Event of Default, or act, condition or
event which with notice or passage of time or both would constitute an
Event of Default shall exist or have occurred and be continuing,
(E) Agent shall have received not less than ten (10) Business
Days prior written notice of the intention of WCI Steel to pay such
management fees, and
(F) such management fees shall not exceed, in the aggregate, an
amount equal to: (1) fifty (50%) percent of (x) the cumulative
After-Tax Profits of WCI Steel (or if cumulative After-Tax Profits
shall be a loss, minus one hundred (100%) percent of such loss) earned
subsequent to October 31, 2001 and prior to the date the payment
occurs (treating such period as a single accounting period) MINUS (y)
all payments to Renco Steel Holdings in such period made pursuant to
Section 7.7(c) for federal, state and local income taxes MINUS (2) the
aggregate amount of all dividends declared and paid by WCI Steel to
Renco Steel Holdings in such period, other than dividends paid to
Renco Steel Holdings pursuant to Section 7.7(c) MINUS (3) the
aggregate amount of all loans made by WCI Steel to Renco Group and
Affiliates of Renco
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Group, (other than Subsidiaries of WCI Steel) (net of repayments and
prepayments) in such period and still outstanding MINUS (4) the
aggregate amount of all management fees paid by WCI Steel to Renco
Group in such period, other than the monthly management fees
contemplated under Section 7.6(b) (ii) above;"
(c) DIVIDENDS. Section 7.7(b) of the Loan Agreement is hereby amended to
delete all references to "October 31, 1996" in such Section and replace them
with "October 31, 2001" and to delete the reference to "November 1, 1996" in
such Section and replace it with "November 1, 2001".
(d) BORROWING BASE. Section 7.17(a)(ix) of the Loan Agreement is hereby
amended to delete such Section in its entirety and replace it with the
following:
"(ix) Each Borrower shall deliver to Agent a Borrowing Base
Certificate on a weekly basis calculating Revolving Loans and Letter
of Credit Accommodations available as of the last business day of the
immediately preceding week, duly completed and executed by the chief
financial officer or other appropriate financial officer of such
Borrower acceptable to Agent, together with all schedules required
pursuant to the terms of the Borrowing Base Certificate duly
completed.
(A) Notwithstanding anything to the contrary contained herein,
without limiting any other rights of Agent, upon Agent's request, each
Borrower shall provide Agent on a daily basis with a schedule of
Accounts, collections received and credits issued and on a daily basis
with an inventory report in the event that at any time either: (1) an
Event of Default or event which with notice or passage of time or both
would constitute an Event of Default, shall exist or have occurred and
be continuing, or (2) such Borrower shall have failed to deliver any
Borrowing Base Certificate in accordance with the terms hereof, or (3)
upon Agent's good faith belief, any information contained in any
Borrowing Base Certificate is incomplete, inaccurate or misleading.
(B) Nothing contained in any Borrowing Base Certificate shall be
deemed to limit, impair or otherwise affect the rights of Agent and
Lenders contained herein and in the event of any conflict or
inconsistency between the calculation of the Loans and Letter of
Credit Accommodations available to any Borrower as set forth in any
Borrowing Base Certificate and as determined by Lender, the
determination of Agent shall govern and be conclusive and binding upon
such Borrower. Without limiting the foregoing, each Borrower shall
furnish to Agent any information which Agent may reasonably request
regarding the determination and calculation of any of the amounts set
forth in the Borrowing Base Certificate.
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(C) If any of a Borrower's records or reports of the Collateral
are prepared or maintained by an accounting service, contractor,
shipper or other agent, such Borrower hereby irrevocably authorizes
such service, contractor, shipper or agent to deliver such records,
reports and related documents to Agent and to follow Agent's
instructions with respect to further services at any time that an
Event of Default exists or has occurred and is continuing."
(e) CONSOLIDATED ADJUSTED NET WORTH. Section 7.19 of the Loan Agreement is
hereby amended to delete such Section in its entirety and replace it with the
following:
"7.19 CONSOLIDATED ADJUSTED NET WORTH. WCI Steel and its Subsidiaries
shall, at all times, maintain a Consolidated Adjusted Net Worth of not
less than the following amounts during the periods indicated:
Period Amount
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through January 31, 2002 ($225,000,000)
from February 1, 2002 through and ($240,000,000)
including April 30, 2002
from May 1, 2002 through and ($255,000,000)
including July 31, 2002
from August 1, 2002 and at all times ($260,000,000)
thereafter
The use of parentheses with the numbers above indicates a negative
number."
(f) CAPITAL EXPENDITURES. Section 7.20 of the Loan Agreement is hereby
amended to delete such Section in its entirety and replace it with the
following:
"7.20 CAPITAL EXPENDITURES. The expenditures of WCI Steel and its
subsidiaries for fixed or capital assets (including, without
limitation, the principal component of capitalized lease obligations),
made in any fiscal year ending after October 31, 2001 shall not exceed
$30,000,000."
(g) EXCESS AVAILABILITY. Section 7 of the Loan Agreement is hereby amended
to add a new Section 7.22 as follows:
"7.22 EXCESS AVAILABILITY. Borrowers shall at all times have Excess
Availability of not less than $25,000,000."
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3. AMENDMENT FEE. In addition to all other fees, charges, interest and
expenses payable by Borrowers to Agent, Borrowers shall pay to Agent for the
ratable benefit of Lenders a fee for entering into this Amendment in an amount
equal to $XXX,XXX, which fee is fully earned as of the date hereof and due and
payable on the date hereof, and which Agent may, at its option, charge directly
to the loan account(s) of Borrowers.
4. EVENTS OF DEFAULT. Lenders and Agent have not waived and are not by this
Amendment waiving, and have no intention of waiving, any Event of Default, which
may have occurred prior to the date hereof, or may be continuing on the date
hereof or any Event of Default which may occur after the date hereof. Lenders
and Agent reserve the right, in their discretion, to exercise any or all rights
and remedies arising under the Financing Agreements, applicable law or otherwise
as a result of any Events of Default which may have occurred prior to the date
hereof, or are continuing on the date hereof, or any Event of Default which may
occur after the date hereof.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each Borrower represents,
warrants and covenants with and to Lenders and Agent as follows, which
representations, warranties and covenants are continuing and shall survive the
execution and delivery hereof, the truth and accuracy of, or compliance with
each, together with the representations, warranties and covenants in the other
Financing Agreements, being a continuing condition of the making or providing of
any Loans or Letter of Credit Accommodations by or on behalf of Lenders to
Borrowers:
(a) This Amendment has been duly authorized, executed and delivered by
each Borrower, and the agreements and obligations of each Borrower contained
herein constitutes legal, valid and binding obligations of such Borrower
enforceable against such Borrower in accordance with its terms.
(b) Neither the execution and delivery of this Amendment, or any other
agreements, documents or instruments in connection herewith, nor the
consummation of the transactions herein or therein contemplated, nor compliance
with the provisions hereof or thereof (i) is in contravention of any law or
regulation or any order or decree of any court or governmental instrumentality
applicable to Borrowers in any respect, or (ii) conflicts with or results in the
breach of, or constitutes a default in any respect under any mortgage, deed of
trust, security agreement, agreement or instrument to which either Borrower is a
party or may be bound, or (iii) violates any provision of the certificate of
incorporation or by-laws of WCI Steel or the partnership agreement of WCI Sales
L.P.
(c) After giving effect to the provisions of this Amendment, no Event
of Default or act, condition or event which with notice or passage or time or
both would constitute an Event of Default, exists or has occurred and is
continuing.
6. CONDITIONS PRECEDENT. The effectiveness of the terms and conditions of
this Amendment shall be effective upon the satisfaction of each of the following
conditions precedent in a manner satisfactory to Agent:
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(a) the receipt by Agent of an original of this Amendment, duly
authorized, executed and delivered by Borrowers;
(b) the receipt by Agent of the fee set forth in Section 3 hereof; and
(c) no Event of Default shall have occurred and be continuing and no
event shall have occurred or condition be existing and continuing which, with
notice or passage of time or both, would constitute an Event of Default.
7. GENERAL.
(a) EFFECT OF THIS AMENDMENT. Except as modified pursuant hereto, no
other changes or modifications to the Financing Agreements are intended or
implied and in all other respects the Financing Agreements are hereby
specifically ratified, restated and confirmed by all parties hereto as of the
date hereof. To the extent of conflict between the terms of this Amendment and
the Financing Agreements, the terms of this Amendment shall control.
(b) FURTHER ASSURANCES. The parties hereto shall execute and deliver
such additional documents and take such additional action as may be necessary to
effectuate the provisions and purposes of this Amendment.
(c) GOVERNING LAW. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the internal laws of the State of New York (without giving effect to
principles of conflict of laws).
(d) BINDING EFFECT. This Amendment is binding upon and shall inure to
the benefit of Agent, Lenders and Borrowers and their respective successors and
assigns.
(e) COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original
but all of which when taken together shall constitute one and the same
instrument. In making proof of this Amendment, it shall not be necessary to
produce or account for more than one counterpart thereof signed by each of the
parties hereto. This Amendment may be executed and delivered by telecopier with
the same force and effect as if it were a manually executed and delivered
counterpart.
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The parties hereto have caused this Amendment to be duly executed and
delivered by their duly authorized officers as of the day and year first above
written.
CONGRESS FINANCIAL CORPORATION,
as Lender
By: /S/ XXXX X. XXXXXX
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Title: VICE PRESIDENT
BANK OF AMERICA, N.A., as
successor to BankAmerica National
Trust & Savings Association,
as Lender
By: /S/ XXXXXXX XXXX
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Title: VICE PRESIDENT
WCI STEEL, INC.
By: /S/ XXXX X. XXXXXXXX
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Title: VICE PRESIDENT AND CFO
WCI STEEL SALES L.P.
By: /S/ XXXX X. XXXXXXXX
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Title: VICE PRESIDENT AND CFO
CONGRESS FINANCIAL CORPORATION,
as Agent
By: /S/ XXXX X. XXXXXX
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Title: VICE PRESIDENT
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