AMENDMENT NUMBER FOUR TO
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This AMENDMENT NUMBER FOUR TO AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT (this "Amendment") is entered into as of March 8, 1999, by
and between Foothill Capital Corporation, a California corporation ("Foothill"),
on the one hand, and National-Standard Company, an Indiana corporation
("Borrower"), with reference to the following facts:
A. Foothill and Borrower heretofore have entered into that
certain Amended and Restated Loan and Security Agreement,
dated as of September 17, 1997, as amended by that certain
Amendment Number One to Amended and Restated Loan and Security
Agreement, dated as of June 30, 1998, that certain Amendment
Number Two to Amended and Restated Loan and Security
Agreement, dated as of September 30, 1998, and that certain
Amendment Number Three to Amended and Restated Loan and
Security Agreement, dated as of February 19, 1999 (as so
modified and as otherwise heretofore modified or supplemented
from time to time, the "Agreement");
B. Borrower has requested Foothill to amend the Agreement, as set
forth in this Amendment;
C. Foothill is willing to so amend the Agreement in accordance
with the terms and conditions hereof; and
D. Unless the context requires otherwise, all capitalized terms
used herein and not defined herein shall have the meanings
ascribed to them in the Agreement, as amended hereby.
NOW, THEREFORE, in consideration of the above recitals and the
mutual promises contained herein, Foothill and Borrower hereby agree as follows:
1. Amendments to the Agreement.
a. Section 1.1 of the Agreement hereby is amended by adding the
following new defined terms in alphabetical order:
"Fourth Amendment" means that certain Amendment Number Four to
Amended and Restated Loan and Security Agreement, dated as of March 8,
1999, between Foothill and Borrower.
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"Fourth Amendment Effective Date" means the date, if ever,
that all of the conditions set forth in Section 4 of the Third
Amendment shall be satisfied (or waived by Foothill in its sole
discretion).
"NS Peterlee" means National-Standard (Peterlee) Limited, a
company incorporated under the laws of England (registered number
3676371).
"NS Peterlee Conditions" means, collectively, each of the
conditions set forth in Section 5 of the Fourth Amendment.
"NS Peterlee Conditions Date" means the first date, if ever,
that all NS Peterlee Conditions have been fully satisfied.
"NS Peterlee Guaranty/Debenture" means a Guarantee and
Debenture executed by NS Peterlee in favor of Foothill and governed by
the laws of England, in form (including in registerable form) and
substance satisfactory to Foothill and its English counsel, pursuant to
which NS Peterlee guarantees the payment and performance of all
Obligations of Borrower to Foothill and grants fixed and floating
charges in favor of Foothill on all property and assets of NS Peterlee
to secure all present and future Obligations of NS Peterlee to
Foothill.
"NS Peterlee Subordination Agreement" means a written
subordination agreement entered into between Borrower and Foothill, and
acknowledged and consented to by NS Peterlee, and governed by the laws
of California, in form and substance satisfactory to Foothill and its
California counsel, pursuant to which the payment of all present and
future obligations of NS Peterlee to Borrower is expressly subordinated
to the payment and performance of present and future Obligations of NS
Peterlee to Foothill, and pursuant to which Borrower agrees that the
present and future obligations of NS Peterlee to Borrower shall be and
remain unsecured, evidenced by book account entries, and not evidenced
by a promissory note or negotiable instrument.
"NSC-UK Purchaser" means 68 VSQ Limited, a company
incorporated under the laws of England (registered number 3668640).
"NSC-UK Share Purchase Agreement" means that certain Share
Transfer Agreement for the Acquisition of the Entire Issued Share
Capital of National-Standard Company Limited, dated as of March 12,
1999, between Borrower and NSC-UK Purchaser.
"UK Share Pledge Agreement" means a Share Pledge Agreement,
executed by Borrower in favor of Foothill and governed by the laws of
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England, in form (including in registerable form) and substance
satisfactory to Foothill and its English counsel, pursuant to which
Borrower pledges to Foothill all of the issued share capital of NS
Peterlee.
b. The following defined terms set forth in Section 1.1 of the
Agreement hereby are amended and restated in their entirety to read,
respectively, as follows:
"Borrowing Base" has the meaning set forth in Section 2.1(a).
For purposes of this definition, (a) any amount that is denominated in
a currency other than Dollars shall be valued in Dollars based on the
applicable Exchange Rate for such currency as of the date one day prior
to the date of determination, and (b) any amount that is denominated in
Dollars shall be valued in Dollars.
"Eligible UK Foreign Account" means any Account of NS
Peterlee: (a) that does not qualify as an Eligible Domestic Account
solely because of one or more of the following three reasons: (x) such
Account is an Account of NS Peterlee rather than of Borrower; (y) such
Account is payable other than in Dollars; or (z) such Account is
excluded from "Eligible Domestic Accounts" by virtue of the exclusion
contained in clause (d) of such definition; and (b) with respect to
which one or more of the following is applicable: (i) both (A) the
Account Debtor is a resident of the United States of America, England,
Scotland, Wales, Northern Ireland, or the Republic of Ireland, and (B)
the obligations of the Account Debtor thereunder are payable in the
official currency of one or more of the United States of America,
England, Scotland, Wales, Northern Ireland, or the Republic of Ireland;
(ii) such Account is supported by one or more letters of credit
satisfactory to Foothill in its sole discretion which letters of credit
have been assigned and delivered to Foothill in a manner acceptable to
Foothill in its sole discretion; (iii) such Account is supported by
credit insurance satisfactory to Foothill in its sole discretion which
credit insurance has been assigned to Foothill by means of an
assignment satisfactory to Foothill in its sole discretion; or (iv)
such Account otherwise has been determined by Foothill to be acceptable
to Foothill as an Eligible UK Foreign Account in Foothill's sole
discretion.
"Guarantor" means Canadian Guarantor and NS Peterlee, and each
of them, and any one or more of them, jointly and severally, and their
successors and permitted assigns.
"Guaranty" means the Canadian Guaranty and the NS Peterlee
Guaranty/Debenture, collectively and individually.
"Loan Documents" means this Agreement, the Lockbox Agreements,
the Mortgages, the Patent Collateral Assignment, the Trademark Security
Agreement, the Copyright Security Agreement, the Stock Pledge
Agreement, the Equipment/Real Property Term Note, the New Equipment
Term Note, any other note or notes executed by Borrower and payable to
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Foothill, the Canadian Guaranty, the Security Agreement, the NS
Peterlee/Debenture, the NS Peterlee Subordination Agreement, the UK
Share Pledge Agreement, the Warrant, the Reaffirmation Agreement, and
any other agreement entered into in connection with this Agreement.
"Relevant Closing Date" means, with respect to Borrower and
Canadian Guarantor, the Original Closing Date, and, with respect to NS
Peterlee, the NS Peterlee Conditions Date.
"UK Borrowing Base Component" means, as of any date of
determination, an amount equal to: (a) if and so long as each of the NS
Peterlee Conditions is and remains fully satisfied, the lower of (i)
eighty-five percent (85%) of the amount of Eligible UK Foreign
Accounts, and (ii) One Million Dollars ($1,000,000); and (b) at all
other times, zero (-0-).
"UK Collateral" means all property and assets of NS Peterlee
subject to charges in favor of Foothill pursuant to the NS Peterlee.
"UK Lockbox Bank" means Midland or such other bank in England
that is mutually acceptable to NS Peterlee, Borrower, and Foothill,
with which a Lockbox Account is maintained, and that is a party to the
UK Lockbox Agreement.
"UK Lockbox Agreement" means an agreement among Foothill, the
UK Lockbox Bank, and NS Peterlee, in form and substance satisfactory to
each of them, with respect to the establishment and maintenance of a
Lockbox Account for Foothill with respect to NS Peterlee.
c. Section 1.1 of the Agreement hereby is amended by deleting therefrom
the following defined terms: Midland Bank Payoff Amount; Midland Bank Payoff
Letter; NSC-UK Guaranty/Debenture; NSC-UK Subordination Agreement; NSPFTL;
NSPFTL Intercreditor Agreement; Old Fourth Amendment Closing Date; Old Fourth
Amendment Closing Date Midland Bank Disbursement Instruction Letter; Original
Closing Date UK Investment Amount; Pound Advance Supplement; Pound Advances.
d. Section 2.1(e) of the Agreement hereby is deleted in its entirety.
e. Section 2.5(a) of the Agreement hereby is amended and restated in
its entirety as follows:
(a) Interest Rate.
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(i) Adjusted Base Rate. All Obligations,
except for undrawn L/Cs and L/C Guarantees, shall bear interest, on
the average Daily Balance, at the then extant Adjusted Base Rate.
(ii) Adjusted Net LIBOR Rate. With
respect to all Obligations other than undrawn L/Cs and L/C Guarantees
and in lieu of having interest charged a the Adjusted Base Rate,
Borrower shall have the "LIBOR Option", as defined in, and subject to
the terms and conditions of, the LIBOR Supplement, which by this
reference hereby is incorporated herein in full and made a part
hereof.
f. Section 2.5(b) of the Agreement hereby is amended and restated in
its entirety as follows:
(b) Default Rate. (i) All Obligations, except for
undrawn L/Cs and L/C Guarantees, shall bear interest, from and after
the occurrence and during the continuance of an Event of Default, at a
rate equal to three (3.00) percentage points above (x) the then extant
Adjusted Base Rate, or (y) in the case of any "Adjusted Net LIBOR Rate
Loan" (as defined in the LIBOR Supplement), the then extant "Adjusted
Net LIBOR Rate" (as defined in the LIBOR Supplement), or (z)
[intentionally omitted]. (ii) From and after the occurrence and during
the continuance of an Event of Default, the fee provided in Section
2.2(d) shall be increased to a fee equal to four percent (4.00%) per
annum times the average Daily Balance of the undrawn L/Cs and L/C
Guarantees that were outstanding during the immediately preceding
month.
g. Section 5.7 of the Agreement hereby is amended and restated in its
entirety as follows:
5.7 Due Organization and Qualification; Subsidiaries. Borrower
is duly organized and existing and in good standing under the laws of
the state of its incorporation and qualified and licensed to do
business in, and in good standing in, any state where the failure to be
so licensed or qualified could reasonably be expected to have a
material adverse effect on the business, operations, condition
(financial or otherwise), finances, or prospects of Borrower or on the
value of the Collateral or the Real Property to Foothill. Borrower has
no subsidiaries other than Canadian Guarantor, National-Standard Export
Corp., and NS Peterlee.
h. Section 7.14 of the Agreement hereby is amended and restated in its
entirety as follows:
7.14 Investments. Directly or indirectly make or acquire any
beneficial interest in (including stock, partnership interest, or other
securities of), or make any loan, advance, or capital contribution to,
any Person; provided, however that the foregoing shall not prohibit:
(a) the maintenance of Borrower's existing beneficial interests in, or
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loans, advances, or capital contributions to, the Joint Venture, which
as of the November 12, 1996 do not exceed Three Hundred Thousand
Dollars ($300,000); (b) the making or acquisition of additional
beneficial interests in, or the making of additional loans, advances,
or capital contributions to, the Joint Venture; provided, however, that
the aggregate amount of all such investments made by Borrower during
the term of this Agreement shall not exceed Six Hundred Thousand
Dollars ($600,000) at any one time outstanding; provided, however,
that, if the amount of Borrower's investments in the Joint Venture and
guaranties on it behalf would, after giving effect to any proposed
investment or guaranty, exceed Two Million Dollars ($2,000,000) then,
before making such additional investment or guaranty, Borrower shall
grant security interests to Foothill, pursuant to agreements in form
and substance satisfactory to Foothill, in all of Borrower's
investments (including, if applicable, the investment to be acquired)
in the Joint Venture; (c) the maintenance of Borrower's existing
beneficial interests in, or loans, advances, or capital contributions
to, NS Peterlee, which as of the Fourth Amendment Effective Date do not
exceed $469,000; and (d) the making or acquisition of additional
beneficial interests in, or the making of additional loans, advances,
or capital contributions to, NS Peterlee; provided, however, that (i)
the aggregate outstanding amount of all such investments (including
loans, advances, and capital contributions) made by Borrower in NS
Peterlee, whether as of the Fourth Amendment Effective Date or during
the term of this Agreement, shall not at any time exceed $250,000, and
(ii) all claims of Borrower against NS Peterlee with respect to any
such investments shall be unsecured, shall be evidenced by book
entries, shall not be evidenced by promissory notes or negotiable
instruments, and shall be subordinated to the Obligations of NS
Peterlee to Foothill pursuant to the NS Peterlee Subordination
Agreement.
i. Section 7.17 of the Agreement hereby is amended and restated in its
entirety as follows:
7.17 Use of Proceeds. Use the proceeds of the advances made
hereunder for any purpose other than: (a) to pay transactional costs
and expenses incurred in connection with this Agreement; (b) consistent
with the terms and conditions hereof, for its lawful and permitted
corporate purposes.
j. Exhibit P-2 (Form of Pound Advance Supplement) of the Agreement
hereby is deleted from the Agreement.
2. Limited Consent; Release of Certain Liens. Initially effective upon the
Fourth Amendment Effective Date, Foothill hereby:
a. consents to the sale by Borrower to NSC-UK Purchaser of all of the
issued share capital of NSC-UK in accordance with the terms and conditions of
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the NSC-UK Share Purchase Agreement, which sale shall be free and clear of
Foothill's Liens thereon (provided that Foothill's Liens shall be, and shall
continue to be, attached to all proceeds thereof). Such consent is specific in
time and in intent and does not constitute, nor should it be construed as
constituting, except to the extent expressly set forth herein, a waiver or
modification of any term of, or right, power, or privilege under, the Agreement,
the other Loan Documents, or any agreement, contract, indenture, document, or
instrument mentioned therein.
b. releases, without recourse to, or representation or warranty by,
Foothill, its Liens on all of the issued share capital of NSC-UK and all of the
assets of NSC-UK (other than such assets transferred by NSC-UK to NS Peterlee).
3. Representations and Warranties. Borrower hereby represents and warrants to
Foothill that (a) the execution, delivery, and performance of this Amendment and
of the Agreement, as amended by this Amendment, are within its corporate powers,
have been duly authorized by all necessary corporate action, and are not in
contravention of any law, rule, or regulation, or any order, judgment, decree,
writ, injunction, or award of any arbitrator, court, or governmental authority,
or of the terms of its charter or bylaws, or of any contract or undertaking to
which it is a party or by which any of its properties may be bound or affected,
and (b) this Amendment and the Agreement, as amended by this Amendment,
constitute Borrower's legal, valid, and binding obligation, enforceable against
Borrower in accordance with its terms.
4. Conditions Precedent to Amendment. The satisfaction of each of the following,
unless waived or deferred by Foothill in its sole discretion, shall constitute
conditions precedent to the effectiveness of this Amendment:
a. Foothill shall have received each of the following documents,
duly executed, and each such document shall be in full force
and effect:
i) an indemnification agreement, in form and substance
satisfactory to Foothill, by The Bank of New York in
favor of Foothill relative to the Lockbox Account
maintained pursuant to the UK Lockbox Agreement (as
such term is defined in the Agreement without giving
effect to this Amendment) with Midland;
ii) the reaffirmation and consent of Guarantor attached
hereto as Exhibit A;
b. Foothill shall have received not less than $3,425,000 in
immediately available funds via wire-transfer by NSC-UK
Purchaser or Borrower to the following account of Foothill for
the account of Borrower:
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FOOTHILL CAPITAL CORPORATION:
The Chase Manhattan Bank
New York, NY
ABA 000000000
Credit: Foothill Capital Corporation
Account: 323-266193
Re: National-Standard Company
c. Foothill shall have received a certificate from the Secretary
of Borrower attesting to the incumbency and signatures of
authorized officers of Borrower and to the resolutions of
Borrower's Board of Directors authorizing its execution and
delivery of this Amendment and the other Loan Documents to
which it is a party and contemplated in this Amendment and the
performance of this Amendment, the Agreement as amended by
this Amendment, and such other Loan Documents, and authorizing
specific officers of Borrower to execute and deliver the same;
d. Foothill shall have received true, correct, and complete
copies of the NSC-UK Purchase Agreement and all material
agreements, instruments, and documents executed and delivered
in connection therewith (including relative to the Peterlee
Hive Across (as such term is defined in the NSC-UK Purchase
Agreement)), certified by a director of Borrower, and all such
documents shall be in form and substance satisfactory to
Foothill and its counsel;
e. Foothill shall have received all required consents of
Foothill's participants in the Obligations to Foothill's
execution, delivery, and performance of this Amendment, in
each case duly executed, in full force and effect, and in form
and substance satisfactory to Foothill;
f. The representations and warranties in this Amendment, the
Agreement as amended by this Amendment, and the other Loan
Documents shall be true and correct in all respects on and as
of the date hereof, as though made on such date (except to the
extent that such representations and warranties relate solely
to an earlier date);
g. No Event of Default or event which with the giving of notice
or passage of time would constitute an Event of Default shall
have occurred and be continuing on the date hereof, nor shall
result from the consummation of the transactions contemplated
herein;
h. No injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the consummation
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of the transactions contemplated herein shall have been issued
and remain in force by any governmental authority against
Borrower, Foothill, or any of their Affiliates; and
i. All other documents and legal matters in connection with the
transactions contemplated by this Amendment shall have been
delivered or executed or recorded and shall be in form and
substance satisfactory to Foothill and its counsel.
5. Condition Subsequent. As conditions subsequent hereunder, Borrower shall
perform or cause to be performed each of the following on a timely basis, and
the failure by Borrower to perform or cause to be performed any of the following
conditions shall constitute an Event of Default:
a. Within 30 days following the Fourth Amendment Effective Date,
Foothill shall have received each of the following documents,
duly executed, and each such document from and after such
receipt shall be in full force and effect:
i) the NS Peterlee Guaranty/Debenture;
ii) the NS Peterlee Subordination Agreement;
iii) the UK Share Pledge Agreement;
iv) the UK Lockbox Agreement; and
v) amendments of or supplements to such other Loan
Documents (including the Stock Pledge Agreement),
financing statements (including a UCC-1 Financing
Statement listing Canadian Guarantor as debtor and
Foothill as secured party and to be filed with the
appropriate filing office in Oklahoma; it being
understood and agreed that, notwithstanding anything
in the Agreement or the other Loan Documents to the
contrary, no revolving advances may be made against
Eligible Canadian Inventory located in the United
States unless and until Foothill has received
searches reflecting the filing of its financing
statements with the applicable filing offices
relative to such locations), fixture filings, and
landlord waivers or bailee agreements, as Foothill
may require, in each case, in form and substance
satisfactory to Foothill;
b. Concurrently with the execution and delivery of the UK Share
Pledge Agreement and the amendment of or supplement to the
Stock Pledge Agreement, and in any event within 30 days
following the Fourth Amendment Effective Date, Foothill shall
have received originals of all share certificates evidencing
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all of the issued share capital of NS Peterlee, together with
stock powers, duly executed in blank relative thereto;
c. Within 30 days following the Fourth Amendment Effective Date,
Foothill shall have received: (i) a certificate from an
authorized official of NS Peterlee attesting to the incumbency
and signatures of authorized officials of NS Peterlee and to
the resolutions of NS Peterlee's Board of Directors
authorizing its execution and delivery of the Loan Documents
to which it is a party and the performance of such Loan
Documents, and authorizing specific officials of NS Peterlee
to execute and deliver the same; and (ii) if and to the extent
the same was not delivered under Section 4(c) above, a
certificate from the Secretary of Borrower attesting to the
incumbency and signatures of authorized officers of Borrower
and to the resolutions of Borrower's Board of Directors
authorizing its execution and delivery of the Loan Documents
described in Section 5(a) above to which it is a party and
contemplated in this Amendment and the performance of such
Loan Documents, and authorizing specific officers of Borrower
to execute and deliver the same; and
d. Within 30 days following the Fourth Amendment Effective Date,
Foothill shall have received true, correct, and complete
copies of NS Peterlee's By-laws and Articles or Certificate of
Incorporation (or British equivalent), as amended, modified,
or supplemented to the Fourth Amendment Effective Date,
certified by a director of NS Peterlee.
6. Effect on Agreement. The Agreement, as amended hereby, shall be and remain in
full force and effect in accordance with its respective terms and hereby is
ratified and confirmed in all respects. The execution, delivery, and performance
of this Amendment shall not operate as a waiver of or, except as expressly set
forth herein, as an amendment, of any right, power, or remedy of Foothill under
the Agreement, as in effect prior to the date hereof.
7. Miscellaneous.
a. Upon the effectiveness of this Amendment, each reference in
the Agreement to "this Agreement", "hereunder", "herein",
"hereof" or words of like import referring to the Agreement
shall mean and refer to the Agreement as amended by this
Amendment.
b. Upon the effectiveness of this Amendment, each reference in
the Loan Documents to the "Loan Agreement", "thereunder",
"therein", "thereof" or words of like import referring to the
Agreement shall mean and refer to the Agreement as amended by
this Amendment.
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c. This Amendment shall be governed by and construed in
accordance with the laws of the State of California.
d. This Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this
Amendment by signing any such counterpart. Delivery of an
executed counterpart of this Amendment by telefacsimile shall
be equally as effective as delivery of an original executed
counterpart of this Amendment. Any party delivering an
executed counterpart of this Amendment by telefacsimile also
shall deliver an original executed counterpart of this
Amendment but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and
binding effect of this Amendment.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first written above.
FOOTHILL CAPITAL CORPORATION,
a California corporation
By____________________________
Title:________________________
NATIONAL-STANDARD COMPANY, an Indiana corporation
By____________________________
Title:________________________
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EXHIBIT A
---------
Reaffirmation and Consent
All capitalized terms used herein but not otherwise defined
herein shall have the meanings ascribed to them in that certain Amendment Number
Four to Amended and Restated Loan and Security Agreement, dated as of March 8,
1999 (the "Amendment"). The undersigned hereby jointly and severally (a)
represent and warrant to Foothill that the execution, delivery, and performance
of this Reaffirmation and Consent (and, in the case of NS Peterlee, of all Loan
Documents to which it is party, including the NS Peterlee Guaranty/Debenture)
are within each of their corporate or organizational powers, have been duly
authorized by all necessary corporate or other organizational action, and are
not in contravention of any law, rule, or regulation, or any order, judgment,
decree, writ, injunction, or award of any arbitrator, court, or governmental
authority, or of the terms of its charter or bylaws, or of any contract or
undertaking to which either of them is a party or by which any of their
properties may be bound or affected; (b) consents to the amendment of the
Agreement by the Amendment; (c) acknowledges and reaffirms its obligations owing
to Foothill under its respective guaranty and each of the other Loan Documents
to which it is party; and (d) agrees that each of the guaranties and the other
Loan Documents to which they are parties is and shall remain in full force and
effect. Although the undersigned have been informed of the matters set forth
herein and have acknowledged and agreed to same, they understand that Foothill
has no obligation to inform it of such matters in the future or to seek its
acknowledgement or agreement to future amendments, and nothing herein shall
create such a duty.
NATIONAL-STANDARD COMPANY OF CANADA, LIMITED,
a Canadian corporation
By ___________________________
Title:________________________
NATIONAL-STANDARD (PETERLEE) LIMITED,
a company organized under the laws of England
By ___________________________
Title:________________________
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