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Exhibit 10.1
AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT
July 31, 1999
Geneva Steel Company
00 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Ladies and Gentlemen:
Geneva Steel Company, Debtor and Debtor-in-Possession (together with
its successors and assigns, "Borrower") has entered into financing arrangements
with Congress Financial Corporation, a Delaware corporation (together with its
successors and assigns, "Lender") pursuant to which Lender may make loans and
advances and provide other financial accommodations to Borrower as set forth in
the Loan and Security Agreement, dated February 19, 1999, between Borrower and
Lender (as the same 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").
Borrower has requested that (i) Lender agree to amend the Loan
Agreement so as to permit Borrower to create an additional encumbrance and to
incur additional indebtedness under the Loan Agreement in connection with
entering into insurance premium financing arrangements and (ii) Lender consent
to the sale by Borrower to Mitsubishi International Corporation ("Purchaser") of
certain equipment as set forth in Schedule A annexed hereto (the "Pipe Mill
Equipment") pursuant to the Agreement for Purchase and Sale of Large Diameter
Pipe Mill, dated as of June 21, 1999, between Borrower and Purchaser (the
"Purchase Agreement"). Lender is willing to agree to such amendment and consent,
subject to the terms and conditions contained herein. By this Amendment,
Borrower and Lender intend to evidence such amendment and consent.
In consideration of the foregoing, and the agreements and covenants
contained herein, the parties hereto agree as follows:
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1. Definitions. For purposes of this Amendment, unless otherwise defined
herein, all terms used herein, including, but not limited to, those terms used
and/or defined in the recitals above, shall have the respective meanings
assigned to such terms in the Loan Agreement.
2. Amendments.
2.1. Encumbrances. Section 9.8 of the Loan Agreement is hereby
amended by adding a new Section 9.8(k) thereto as follows:
"(k) liens and security interests of AFCO Credit Corporation
("AFCO") on the unearned or returned premiums with respect to certain of
the insurance policies maintained by Borrower payable as a result of the
cancellation of such policies, provided, that, (i) Lender shall have
received a list and description, in form and substance satisfactory to
Lender, of the insurance policies, the unearned premiums for which are
subject to such liens and security interests and (ii) Lender shall have
received evidence, in form and substance satisfactory to Lender, that
AFCO does not have any security interest or other interest or claim in
or to any assets of Borrower other than claims to unearned or returned
premiums payable as a result of the cancellation of such policies."
2.2. Indebtedness. Section 9.9 of the Loan Agreement is hereby
amended by adding a new Section 9.9(h) thereto as follows:
"(h) Indebtedness of Borrower to AFCO in respect of unearned
premiums payable on certain insurance policies maintained by Borrower
pursuant to the terms of the Premium Finance Agreement, Disclosure
Statement and Security Agreement between Borrower and AFCO, provided,
that, (i) in no event shall the total amount of such Indebtedness
outstanding at any time exceed $3,000,000, (ii) Lender shall have
received true, correct and complete copies of all agreements, documents
and instruments evidencing or otherwise related to such Indebtedness, as
duly authorized, executed and delivered by the parties thereto, (iii)
Borrower shall not, directly or indirectly, (A) amend, modify, alter or
change the terms of the agreements with respect to such Indebtedness;
except, that, Borrower may, after prior written notice to Lender, amend,
modify, alter or change the terms thereof so as to extend the maturity
thereof to defer the timing of any payments in respect thereof, or to
forgive or cancel any portion of such Indebtedness (other than pursuant
to payments thereof), or to reduce the interest rate or any fees in
connection therewith, or (B) redeem, retire, defease, purchase or
otherwise deposit or invest any sums for such purpose and (iv) Borrower
shall furnish to Lender all notices or demands in connection with such
Indebtedness either received by Borrower or on its behalf after receipt
thereof, or sent by Borrower or on its behalf, concurrently with the
sending thereof, as the case may be."
3. Consent. In accordance with the request by Borrower, subject to the
terms and conditions contained herein, Lender hereby consents to the sale by
Borrower of the Pipe Mill Equipment in accordance with the terms of the Purchase
Agreement as in effect on the date
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hereof, and Lender hereby releases in favor of Borrower, as of the date hereof
all liens and security interests, to the extent held by Lender, in and to the
Pipe Mill Equipment, subject to the satisfaction of each of the conditions set
forth in Section 6 herein as determined by Lender. The amount received from the
sale of the Pipe Mill Equipment shall not be considered in the application of
the limitation on the amount of worn-out or obsolete Equipment which may be sold
by Borrower pursuant to Section 9.7(b)(ii) of the Loan Agreement.
4. Availability Reserve. In connection with the consent provided for
herein, Lender shall, upon the consummation of the sale of Pipe Mill Equipment
contemplated by the Purchase Agreement, establish an Availability Reserve equal
to $1,500,000 in accordance with Section 1.4 of the Loan Agreement to reduce the
amount of Supplemental Revolving Loans otherwise available to Borrower.
5. Representations, Warranties and Covenants. Borrower represents,
warrants and covenants with and to Lender 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 condition of the effectiveness of this Amendment and a
continuing condition of the making or providing of any Loans or Letter of Credit
Accommodations by Lender to Borrower:
5.1. This Amendment has been duly authorized, executed and
delivered by Borrower and is in full force and effect, and the agreements and
obligations of Borrower contained herein constitute legal, valid and binding
obligations of Borrower enforceable against Borrower in accordance with their
terms.
5.2. All of the representations and warranties set forth in the
Financing Agreements, as amended hereby, are true and correct in all material
respects after giving effect to the provisions of this Amendment, except to the
extent any such representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true and correct in
all material respects as of such specified date.
5.3. The failure of Borrower to comply with the covenants, conditions
and agreements contained herein or in any other agreement, document or
instrument at any time executed or delivered by Borrower or any other person
with, to or in favor of Lender shall constitute an Event of Default under the
Financing Agreements; provided, that, notwithstanding anything to the contrary
contained in Section 10.1(n) of the Loan Agreement, any default by Borrower
under its arrangements with AFCO shall only constitute an Event of Default if
such default by Borrower under its arrangements with AFCO continues for more
than ten (10) days.
5.4. On or about the date of this Amendment, Borrower has sold to
Purchaser all of the Pipe Mill Equipment pursuant to the Purchase Agreement as
in effect on the date hereof.
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5.5. After giving effect to the provisions herein, no Event of Default
or act, condition or event, which with notice or passage of time or both, would
constitute an Event of Default exists or has occurred.
5.6. On or before the date hereof, Borrower has delivered, or caused to
be delivered to Lender, a true, correct and complete copy of the Purchase
Agreement as executed by the parties thereto, together with all schedules and
exhibits thereto.
5.7. The security interests in and liens of Lender upon all assets and
properties of Borrower, other than the Pipe Mill Equipment, are and shall
continue to be in full force and effect, including but not limited to, all
amounts at any time payable to Borrower or any of its affiliates, and all
rights, benefits and remedies of Borrower, pursuant to the Purchase Agreement.
5.8. Borrower shall cause all amounts at any time payable to Borrower or
any of its affiliates pursuant to the Purchase Agreement or any related
agreements to be paid by Purchaser directly to Lender for application to the
Obligations.
5.9. In the event Borrower or any of its affiliates receives any amounts
at any time payable to Borrower or its affiliates pursuant to the Purchase
Agreements or any related agreements, documents and instruments, such amounts
shall be collected by Borrower or its affiliates as the property of Lender and
held by it or them in trust for Lender and shall on the day received be remitted
to Lender in the form received, with any necessary assignments or endorsements
for application to the Obligations of Borrower to Lender in such order and
manner as Lender may determine.
6. Conditions Precedent.
6.1. The effectiveness of the terms and conditions of this Amendment
shall only be effective upon the satisfaction of each of the following
conditions precedent:
6.2. the receipt by Lender in cash or other immediately available funds,
of all of the proceeds of the sale of the Pipe Mill Equipment by Borrower to
Purchaser pursuant to the Purchase Agreement for application by Lender to the
Obligations of Borrower in such order and manner as Lender may determine;
6.3. the receipt by Lender of a true, correct and complete copy of the
Purchase Agreement, together with all exhibits and schedules thereto.
6.4. the receipt by Lender of a certified copy of the signed Order as
duly entered by the Bankruptcy Court for the District of Utah in the Chapter 11
case approving the insurance premium financing as set forth herein;
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6.5. the receipt by Lender of an original of this Amendment, duly
authorized, executed and delivered by Borrower.
7. General.
7.1. 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. Any acknowledgment or consent contained herein shall not be
considered to constitute an acknowledgment or consent to any other or further
action by Borrower or to entitle Borrower to any other consent. To the extent of
conflict between the terms of this Amendment and the Financing Agreements, the
terms of this Amendment shall control.
7.2. Further Assurances. The parties hereto shall execute and deliver
such additional documents and take such additional action as may be necessary or
desirable to effectuate the provisions and purposes of this Amendment.
7.3. 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 conflicts of laws).
7.4. Binding Effect. This Amendment is binding upon and shall inure to
the benefit of Lender, Borrower and their respective successors and assigns.
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7.5. 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.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
By: \s\ Xxxxxx XxXxxxxx
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Title: Vice President
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ACKNOWLEDGED AND AGREED TO:
GENEVA STEEL COMPANY, Debtor and
Debtor-in-Possession
By: \s\ Xxx X. Xxxxxxx
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Title: Executive Vice President
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