Exhibit 10.54
FORBEARANCE AND AMENDMENT NUMBER TWO TO
DEBTOR-IN-POSSESSION REVOLVING CREDIT AGREEMENT
FORBEARANCE AND AMENDMENT NUMBER TWO TO DEBTOR-IN-POSSESSION REVOLVING
CREDIT AGREEMENT, dated as of November 30, 2001 (this "Agreement"), by and among
(a) REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC, a debtor and debtor-in-possession
and a Delaware limited liability company (the "Borrower"), (b) REPUBLIC
TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC, a debtor and debtor-in-possession and
a Delaware limited liability company, RTI CAPITAL CORP., a debtor and
debtor-in-possession and a Delaware corporation, CANADIAN DRAWN STEEL COMPANY
INC., a Canadian corporation, and NIMISHILLEN AND TUSCARAWAS, LLC, a Delaware
limited liability company (collectively, the "GUARANTORS"), (c) FLEET CAPITAL
CORPORATION and the other lending institutions listed on the signature pages
hereof (collectively the "LENDERS"), (d) FLEET CAPITAL CORPORATION, as
Administrative Agent (in such capacity, the "ADMINISTRATIVE AGENT") for the
Lenders, (e) BANK OF AMERICA, N.A., as syndication agent (the "SYNDICATION
AGENT"), and (f) THE CHASE MANHATTAN BANK, as documentation agent (the
"DOCUMENTATION AGENT", and together with the Administrative Agent and the
Syndication Agent, the "AGENTS").
WHEREAS, the Borrower, the Guarantors, the Lenders, the Administrative
Agent, the Syndication Agent and the Documentation Agent are parties to that
certain Debtor-in-Possession Revolving Credit Agreement, dated as of April 3,
2001 (as amended and in effect from time to time, the "CREDIT AGREEMENT");
WHEREAS, the Borrower has informed the Agents and the Lenders that the
Borrower is likely to fail to comply with Section 10.3(a) of the Credit
Agreement for the periods from November 24, 2001 through December 29, 2001 and
perhaps thereafter, each such failure to comply, when occurring, and if
continuing uncured for more than five days, to constitute an Identified Event of
Default; and
WHEREAS, the Borrower has informed the Agents and the Lenders that the
Borrower is likely to fail to comply with the Maximum Amount limitation on
borrowings under the Credit Agreement for the period from November 30, 2001
through December 27, 2001, each such failure to comply, when occurring, to
constitute an Event of Default, and if continuing uncured for more than five
days, to constitute an Identified Event of Default (the Events of Default and
Identified Events of Default specified in these recitals being herein referred
to as the "SPECIFIED DEFAULTS"); and
WHEREAS, at the request of the Borrower, the Guarantors, the Agents and
the Lenders have agreed to continue to fund Loans and forbear from exercising
remedies until January 11, 2002, notwithstanding the occurrence of the Specified
Defaults, and to modify certain other terms and conditions of the Credit
Agreement, all as specifically set forth in this Agreement;
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NOW, THEREFORE, in consideration of the mutual agreements contained in
the Credit Agreement, herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. FORBEARANCE. Upon the effectiveness of this Agreement and
until the Forbearance Termination Date (defined below) (the "Forbearance
Period") the Administrative Agent and the Lenders shall forbear from making
demand upon the Notes or pursuing their remedies under the Credit Agreement, the
Security Documents or the other Loan Documents. Additionally, the Lenders shall
continue to advance Revolving Credit Loans to the Borrower, subject to the other
conditions contained in the Credit Agreement PROVIDED that during the period
from November 30, 2001 to December 14, 2001, the sum of the outstanding
Revolving Credit Loans, the Maximum Drawing Amount and the Unpaid Reimbursement
Obligations may exceed the Maximum Amount (but not any other component of
Adjusted Availability) so long as such sum does not exceed $350,000,000; from
December 15, 2001 to December 27, 2001, the sum of the outstanding Revolving
Credit Loans, the Maximum Drawing Amount and the Unpaid Reimbursement
Obligations may exceed the Maximum Amount (but not any other component of
Adjusted Availability) so long as such sum does not exceed $345,000,000; and
thereafter, the sum of the outstanding Revolving Credit Loans, the Maximum
Drawing Amount and the Unpaid Reimbursement Obligations may not exceed the
Maximum Amount (i.e. $337,000,000). If at any time the sum of the outstanding
Revolving Credit Loans, the Maximum Drawing Amount and the Unpaid Reimbursement
Obligations exceeds the Maximum Amount, notwithstanding the provisions hereof,
an Event of Default, and as applicable, an Identified Event of Default shall
have occurred. During the Forbearance Period, the Revolving Credit Loans will
bear interest at the rate specified in Section 5.10.2 of the Credit Agreement;
however, the Agents and the Lenders agree that such increase (2%) shall be fully
earned and accrue on a daily basis, but shall be payable on the earliest of (a)
Xxxxx 00, 0000, (x) the date of confirmation of a Reorganization Plan, (c) the
date the Agents and the Lenders, after stay termination exercise relief from
stay or otherwise pursue their remedies against their Collateral, or (d) the
date any of the Cases are converted to Chapter 7. Nothing contained in this
forbearance agreement shall be construed to imply a willingness on the part of
any Lender to grant any similar or other future forbearance or waiver of any of
the terms and conditions of the Credit Agreement or any other Loan Documents.
SECTION 2. OTHER DEFAULTS. The forbearance agreement set forth in
Section 1 shall apply only to the Specified Defaults. No forbearance or waiver
with respect to any other Default or Event of Default, whether presently
existing or hereafter arising, is granted hereby. Except to the extent
specifically modified by the forbearance agreement contained in Section 1
hereof, any obligation of the Lenders to make Revolving Credit Loans or of the
Issuing Bank to issue, extend or renew Letters of Credit shall at all times be
subject to the satisfaction of all of the terms and conditions of the Credit
Agreement, including, without limitation, the conditions precedent set forth in
the Credit Agreement. The Lenders and the Agents shall, at all times, retain all
of the rights and remedies in respect of any Default or Event of Default (other
than the Specified Defaults during the Forbearance Period) under the Credit
Agreement and the other Loan Documents.
SECTION 3. AMENDMENTS TO THE CREDIT AGREEMENT. The Credit Agreement is
hereby amended in the following respects:
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(a) Section 3.2 of the Credit Agreement is hereby amended by amending
the final sentence thereof to read as follows:
"Notwithstanding the foregoing, in the event that the sum of
the outstanding amount of the Revolving Credit Loans, the
Maximum Drawing Amount and all Unpaid Reimbursement
Obligations exceeds Adjusted Availability as a result of (i)
any reduction in the Maximum Amount, (ii) any decrease in the
maximum amount of the Borrowing Base allocable to Eligible
Inventory, or (iii) any failure to maintain the minimum
liquidity required by Section 10.4, then within five (5) days
from the date such event occurs the Borrower shall pay the
amount of such excess to the Administrative Agent for the
respective accounts of the Lenders."
(b) Section 10.3 of the Credit Agreement is hereby amended by deleting
it in its entirety and replacing it with the following:
"10.3. MINIMUM LIQUIDITY. In addition to, and not in
limitation of any other liquidity requirements herein, the
Borrower will not permit the sum of (i) (A) Availability LESS
(B) the sum of the outstanding amount of the Revolving Credit
Loans (after giving effect to all amounts requested) and the
Maximum Drawing Amount and all Unpaid Reimbursement
Obligations, PLUS (ii) 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 (iii) Unrestricted Cash to be less than
$5,000,000 at any time."
(c) Section 10 of the Credit Agreement is hereby amended by inserting
the following new Section 10.4:
"10.4. WEEKLY LIQUIDITY. The Borrower will not permit
the sum of (i) (A) Availability LESS (B) the sum of the
outstanding amount of the Revolving Credit Loans (after giving
effect to all amounts requested) and the Maximum Drawing
Amount and all Unpaid Reimbursement Obligations, PLUS (ii) 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 (iii) Unrestricted Cash
to be less than (A) as at the last Business Day of any week
ending during any period set forth in the table below, the
amount set forth opposite such week in such table, and (B) as
at the last Business Day of any week thereafter, eighty-five
percent (85%) of the projected liquidity of the Borrower set
forth in the 13-week rolling liquidity forecast to be
delivered by the Borrower to the Lenders prior to the
commencement of the applicable period of 13-weeks, such
forecast to be acceptable to the Lenders:
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WEEK ENDED: AMOUNT
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October 6, 2001 $11,000,000
October 13, 2001 $11,800,000
October 20, 2001 $10,975,000
October 27, 2001 $11,500,000
November 3, 2001 $10,350,000
November 10, 2001 $11,900,000
November 17, 2001 $14,650,000
November 24, 2001 $20,150,000
December 1, 2001 $21,700,000
December 8, 2001 $17,550,000
December 15, 2001 $12,950,000
December 22, 2001 $9,650,000
December 29, 2001 $12,700,000
Notwithstanding any provisions of Section 13.1(c) to
the contrary, any failure by the Borrower to comply with the
minimum weekly liquidity requirements of this Section 10.4 as
of the last Business Day of any week shall immediately
constitute an Event of Default under Section 13.1(c) hereof on
the fifth day after the occurrence thereof if such failure is
not cured within five (5) days of such occurrence."
SECTION 4. FORBEARANCE FEE. The Borrower hereby agrees to pay to the
Administrative Agent, for the ratable accounts of the Lenders, a forbearance fee
in the amount of $225,000 (the "FORBEARANCE FEE") on January 11, 2002. The
Forbearance Fee shall be fully earned on the date hereof and nonrefundable when
paid.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Borrower and each
Guarantor hereby represents and warrants to the Agents and the Lenders as
follows:
(a) Each of the representations and warranties of the Borrower or such
Guarantor contained in the Credit Agreement as modified hereby or in any
document or instrument delivered pursuant to or in connection with the Credit
Agreement as modified hereby are true as of the date hereof and except for the
Specified Defaults, no Default or Event of Default has occurred and is
continuing; and
(b) The execution, delivery and performance of this Agreement and the
transactions contemplated hereby (i) are within the corporate or limited
liability company authority of the Borrower or such Guarantor, (ii) have been
duly authorized by all necessary corporate or limited liability company
proceedings, (iii) do not conflict with or result in any material breach or
contravention of any provision of law, statute, rule or regulation to which the
Borrower or such Guarantor is subject or any judgment, order, writ, injunction,
license or permit applicable to the Borrower or such Guarantor so as to
materially adversely affect the assets, business or any activity of the Borrower
or such Guarantor, and (iv) do not conflict with any provision of the corporate
charter or bylaws of the Borrower or such Guarantor or any agreement or other
instrument binding upon it. The execution, delivery and performance of this
Agreement will
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result in valid and legally binding obligations of the Borrower or such
Guarantor enforceable against the Borrower or such Guarantor in accordance with
the respective terms and provisions hereof.
SECTION 6. COVENANTS. So long as this Agreement is in effect, the
Borrower and each Guarantor covenants and agrees as follows:
(a) The Borrower and the Guarantors shall comply and continue
to comply with all of the terms, covenants and provisions contained in
the Loan Documents, except to the extent such terms, covenants and
provisions are expressly modified by this Agreement.
(b) The Borrower shall deliver to the Agents and the Lenders
not later than December 28, 2001, a plan in form and substance
satisfactory to the Agents, providing for either the reorganization of
the Borrower or the orderly liquidation of the Lenders' Collateral.
(c) The Borrower and Nimishillen & Tuscarawas, LLC shall have
provided to the Administrative Agent, for the benefit of the Lenders
not later than December 28, 2001, a perfected mortgage and security
interest in all real property and fixtures associated with the railroad
operated by Nimishillen & Tuscarawas, LLC.
SECTION 7. CONDITIONS TO EFFECTIVENESS. This Agreement shall become
effective only upon the satisfaction of the following conditions:
(a) this Agreement shall have been executed and delivered by the
Borrower, each Guarantor and the Majority Lenders;
(b) the Borrower shall have paid all reasonable unpaid fees and
expenses of Xxxxxxx Xxxx LLP, Xxxxx & Xxxxx, E & E Corporation and all other
advisors and professionals retained by the Administrative Agent to the extent
that copies of invoices have been presented to the Borrower;
(c) The Borrower and the Guarantors shall have delivered to the
Administrative Agent and the Administrative Agent's Special Counsel, all closing
documents reasonably requested by the Administrative Agent, such documents to be
satisfactory in form and substance to the Administrative Agent and the
Administrative Agent's Special Counsel; and
(d) The Administrative Agent shall have received a signed copy of a
Bankruptcy Court order, satisfactory to the Administrative Agent, approving and
authorizing the Borrower and the Guarantors to enter into this Agreement, and
such order shall be in full force and effect and shall not have been reversed,
modified or amended in any respect.
SECTION 8. TERMINATION. This Agreement shall terminate on the date (the
"Forbearance Termination Date") which is the earliest to occur of (i) the date
on which any Default or Event
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of Default (other than a Specified Default) occurs, (ii) January 11, 2002, and
(iii) the date on which the Borrower fails to comply with any of its covenants
contained herein, at which time the Lenders and the Agents shall be relieved of
their forbearance obligations set forth herein, and, subject to obtaining relief
from the automatic stay where required under the Credit Agreement, shall be
entitled to pursue all remedies provided upon the occurrence of Events of
Default and Identified Events of Default under the Credit Agreement.
SECTION 9. RATIFICATION, ETC. The Borrower and each Guarantor hereby
adopts again, ratifies and confirms in all respects, as its own act and deed,
each of the Credit Agreement and the other Loan Documents to which such Person
is a party; the Borrower and each Guarantor hereby adopts again, ratifies and
confirms in all respects, as its own act and deed, the grant of a security
interest under the Security Agreement to which such Person is a party and, in
the case of the Borrower, the Mortgage, in all of the existing and
after-acquired or arising inventory, including raw materials, work in progress
and finished goods; accounts, including accounts receivable, chattel paper, and
insurance refund claims and all other insurance claims and proceeds to which the
Administrative Agent is entitled pursuant to the provisions of Section 8.7 of
the Credit Agreement; all general intangibles, including, without limitation,
all rights to the payment of money, to the extent relating to the Collateral
described above; all rights to all short term Investments described in Section
9.3 of the Credit Agreement constituting Collateral described above or proceeds
thereof, and to the extent such Investments do not constitute Collateral for the
Notes, together with all income therefrom and increases therein; the Canton
Fixed Assets and all insurance refund claims and all other insurance claims,
tort claims, chattel paper and all general intangibles related to the Canton
Fixed Assets; the Pledged Trademarks (as defined in the Trademark Agreement);
and all real and personal property, and any proceeds and products therefrom,
that was not encumbered as of the date on which the Borrower filed for
Bankruptcy under Chapter 11 of the Bankruptcy Code, together with any and all
Uniform Commercial Code financing statements and other instruments or documents
previously executed in connection therewith to create, evidence, perfect or
preserve the priority of such security interest in favor of the Administrative
Agent for the benefit of the Lenders and the Administrative Agent; the Borrower
and each Guarantor hereby adopts again, ratifies and confirms in all respects,
as its own act and deed, any and all Uniform Commercial Code financing
statements executed by the Administrative Agent in the name of such Person,
pursuant to the power of attorney provisions contained in the Security Agreement
to which such Person is a party, to perfect, preserve the perfection, or insure
the priority of such security interest in favor of the Administrative Agent for
the benefit of the Lenders and the Administrative Agent; the Borrower under the
Mortgage hereby adopts again, ratifies and confirms, as its own act and deed,
the mortgage of certain real estate assets in which the Borrower has an
ownership or other rights; each pledgor under the Master Pledge Agreement hereby
adopts again, ratifies and confirms in all respects, as its own act and deed,
each pledge granted by such pledgor thereunder; and the Borrower and each
Guarantor hereby adopts again, ratifies and confirms, as its own act and deed,
each of the other instruments or documents delivered in connection with the
Credit Agreement or any of the Loan Documents and purported to be executed by it
and acknowledges that all of the foregoing Loan Documents and other instruments,
documents, filings and recordings shall continue in full force and effect. To
the extent that it has not already done so, the Borrower and each Guarantor
hereby waives all suretyship defenses of whatsoever nature, whether arising out
of any Agents' or any Lender's dealings with the Borrower or any Guarantor, as
the case may be, in respect of the Credit Agreement, any other Loan Document or
otherwise. By its signature below, the
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Borrower and each Guarantor hereby consents to this Agreement, and after taking
into account this Agreement, acknowledges that this Agreement shall not alter,
release, discharge or otherwise affect any of its obligations under any Loan
Document.
SECTION 10. RELEASE. In order to induce the Agents and the Lenders to
enter into this Agreement, the Borrower and each Guarantor acknowledges and
agrees that: (a) neither the Borrower nor any Guarantor has any claim or cause
of action against any Agent or any Lender (or any of its respective directors,
officers, employees or agents); (b) neither the Borrower nor any Guarantor has
any offset right, counterclaim or defense of any kind against any of its
respective obligations, indebtedness or liabilities to any Agent or any Lender;
and (c) each of the Agents and the Lenders has heretofore properly performed and
satisfied in a timely manner all of its obligations to the Borrower and each
Guarantor. The Borrower and each Guarantor wishes to eliminate any possibility
that any past conditions, acts, omissions, events, circumstances or matters
would impair or otherwise adversely affect any of the Agents' and the Lenders'
rights, interests, contracts, collateral security or remedies. Therefore, the
Borrower and each Guarantor unconditionally releases, waives and forever
discharges (i) any and all liabilities, obligations, duties, promises or
indebtedness of any kind of any Agent or any Lender to the Borrower or such
Guarantor, except the obligations to be performed by any Agent or any Lender on
or after the date hereof as expressly stated in this Agreement, the Credit
Agreement and the other Loan Documents, and (ii) 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 any Agent, any Lender or any of its directors,
officers, employees or agent, in either case (i) or (ii), 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 11. EFFECT OF AGREEMENT. Except as expressly set forth herein,
this Agreement does not constitute an amendment or waiver of any term or
condition of the Credit Agreement or any other Loan Document, and all such terms
and conditions shall remain in full force and effect and are hereby ratified and
confirmed in all respects. Nothing contained in this Agreement shall be
construed to imply a willingness on the part of the Lenders to grant any similar
or other future waivers of any of the terms and conditions of the Credit
Agreement or the other Loan Documents. Nothing contained herein shall in any way
prejudice, impair or otherwise adversely affect any rights or remedies of the
Agents and the Lenders under the Credit Agreement, as amended, or any other Loan
Document. This Agreement shall constitute a Loan Document.
SECTION 12. REIMBURSEMENT OF EXPENSES. The Borrower acknowledges that
all reasonable out of pocket costs and expenses incurred by the Agents and the
Lenders in connection with (a) the preparation, negotiation, execution, delivery
and monitoring of this Agreement, and (b) the discussions and meetings that
preceded this Agreement (including, without limitation, the fees and
disbursements of any investment banker, consultant or appraiser retained by the
Administrative Agent, allocable costs of in-house counsel, and all legal and
other professional and consultant's fees and disbursements) shall constitute
Obligations and shall be due and payable by the Borrower upon presentation of
invoices therefor.
SECTION 13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.
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SECTION 14. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as a sealed instrument as of the date first above written.
REPUBLIC TECHNOLOGIES
INTERNATIONAL, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President & CEO
REPUBLIC TECHNOLOGIES
INTERNATIONAL HOLDINGS, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President & CEO
RTI CAPITAL CORP.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President & CEO
CANADIAN DRAWN STEEL COMPANY INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President & CEO
NIMISHILLEN & TUSCARAWAS, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President & CEO
FLEET CAPITAL CORPORATION,
individually and as Administrative Agent
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
-------------------------------------
Xxxxxx X. Xxxxxxx, Xx.
BANK OF AMERICA, N.A., individually
and as Syndication Agent
By:
Name:
Title:
THE CHASE MANHATTAN BANK,
individually and as Documentation Agent
By:
Name:
Title:
FOOTHILL CAPITAL CORPORATION
By:
Name:
Title:
XXXXXX FINANCIAL, INC.
By:
Name:
Title:
