EXHIBIT 10.1
RELIANCE STEEL & ALUMINUM CO.
RSAC MANAGEMENT CORP.
THIRD AMENDMENT
TO CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT (this "THIRD
AMENDMENT") is dated as of July 1, 2003 and entered into by and among Reliance
Steel & Aluminum Co., a California corporation ("RSA"), RSAC Management Corp., a
California corporation ("RSAC MANAGEMENT" and together with RSA, jointly and
severally, the "BORROWERS" and individually, a "BORROWER") the financial
institutions listed on the signature pages hereof (the "LENDERS") and Bank of
America, N.A., as administrative agent for Lenders (the "ADMINISTRATIVE AGENT"),
and, for purposes of Section 5 hereof, the Guarantors (as defined in Section 5
hereof) listed on the signature pages hereof, and is made with reference to that
certain Credit Agreement dated as of October 24, 2001, as amended by the First
Amendment to Credit Agreement dated as of April 1, 2002 and the Second Amendment
to Credit Agreement dated as of February 19, 2003 (as amended, the "CREDIT
AGREEMENT"), by and among the Borrowers, Lenders and Administrative Agent.
Capitalized terms used herein without definition shall have the same meanings
herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, the Borrowers and the Lenders desire to amend the
Credit Agreement as set forth below upon satisfaction of the conditions
precedent set forth in Section 2 herein;
WHEREAS, in exchange for amending the Credit Agreement as
provided herein, the Obligations of the Borrowers will be secured by the
Collateral pursuant to the Security Agreement;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENTS TO SECTION 1: DEFINITIONS AND ACCOUNTING TERMS.
A. Subsection 1.1 of the Credit Agreement is hereby
amended by adding thereto the following definitions, which shall be
inserted in proper alphabetical order:
"CAPITAL STOCK" means the capital stock or other equity interests of a
Person.
"COLLATERAL" means, collectively, all of the personal property
(including all of the Capital Stock of Material Domestic Subsidiaries) in which
Liens are purported to be granted by the Security Agreement.
"COLLATERAL AGENT" shall mean Bank of America, N.A, or its successors
under the Intercreditor Agreement.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or similar
account maintained with a Person engaged in the business of banking, including a
savings bank, savings and loan association, credit union or trust company.
"INTERCREDITOR AGREEMENT" means the Collateral Agency and Intercreditor
Agreement dated as of July 1, 2003, substantially in the form of Exhibit H to
this Agreement, among the holders of the Senior Notes, the Lenders, the
Administrative Agent and the Collateral Agent, as amended from time to time.
"LEVERAGE RATIO EVENT" shall mean the earliest to occur of (i) the date
financial statements and a Compliance Certificate are delivered pursuant to
Section 6.1 for the Fiscal Year ending December 31, 2004 if the Borrowers'
Leverage Ratio for each of the Fiscal Quarters ending September 30, 2004 and
December 31, 2004 is less than 3.00 to 1.00 or (ii) thereafter the date on which
financial statements and a Compliance Certificate are delivered pursuant to
Section 6.1 showing that the Borrowers' Leverage Ratio has been less than 3.00
to 1.00 for the two previous consecutive Fiscal Quarters.
"SECURITY AGREEMENT" means the Security Agreement dated as of July 1,
2003 among the Collateral Agent, the Company, the Subsidiary Grantors as defined
and listed therein, and any Additional Grantors, as defined therein, from time
to time party thereto, substantially in the form of Exhibit G to this Agreement,
as the same may be amended, supplemented and modified from time to time.
"SENIOR NOTES" mean, collectively, those senior notes issued pursuant
to those Note Purchase Agreements dated November 1, 1996, September 15, 1997,
October 15, 1998, and July 1, 2003 and those senior notes to be issued from time
to time subsequent to the date hereof in compliance with Section 7.3(f).
"THIRD AMENDMENT" shall mean that certain Third Amendment to Credit
Agreement dated as of July 1, 2003 by and among the Borrowers, Lenders and
Administrative Agent.
"THIRD AMENDMENT EFFECTIVE DATE" has the meaning set forth in the Third
Amendment.
B. Subsection 1.1 of the Credit Agreement is hereby
amended by deleting the definition of "Loan Documents" in its entirety
and substituting the following therefor:
"LOAN DOCUMENTS" means, collectively, this Agreement, the
Committed Loan Notes, the Letters of Credit, the Master Subsidiary Guaranty, the
Security Agreement, the Swing Line Documents, any Request for Extension of
Credit, any Letter of Credit
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Application, any Compliance Certificate, and any other agreements of any type or
nature hereafter executed and delivered by Borrowers or any of their respective
Subsidiaries or Affiliates to Administrative Agent, the Issuing Lender or to any
Lender in any way relating to or in furtherance of this Agreement, in each case
either as originally executed or as the same may from time to time be
supplemented, modified, amended, restated, extended or replaced."
C. Subsection 1.1. of the Credit Agreement is hereby
amended by deleting the definition of "Material Domestic Subsidiary" in
its entirety and substituting the following therefor:
"MATERIAL DOMESTIC SUBSIDIARY" means, at any time, each Subsidiary of
RSA which is created, organized or domesticated in the United States or under
the laws of the United States or any state thereof, and either (i) is a
first-tier Subsidiary of RSA or (ii) the aggregate amount of its Assets exceeds
$1,000,000."
D. Subsection 1.1 of the Credit Agreement is hereby
amended by deleting the definition of "Permitted Acquisition" in its
entirety and substituting the following therefor:
"PERMITTED ACQUISITION" means the acquisition of Precision
Strip, Inc. and its related entities and an Acquisition with respect to which
all of the following conditions shall have been satisfied:
(a) no Default or Event of Default exists or will
exist as a result of the Acquisition;
(b) the Acquisition shall not be a Hostile
Acquisition;
(c) immediately after such Acquisition, Borrowers
would be in compliance with the terms and conditions of this Agreement
on a pro forma basis;
(d) the business of the Person to be acquired (the
"TARGET") is substantially similar to the existing business of
Borrowers and their respective Subsidiaries;
(e) immediately after such Acquisition, the sum of
Borrowers' cash and cash equivalents plus unused Commitments under this
Agreement is at least $40,000,000; and
(f) (i) for Acquisitions made during the period
beginning on the Third Amendment Effective Date and ending upon the
Leverage Ratio Event, the total cost of all such Acquisitions
(including debt of the Target assumed by Borrowers or their
Subsidiaries but excluding the value of any Capital Stock of RSA and
warrants or options to acquire Capital Stock of RSA exchanged in
connection with such Acquisition) of no more than $10,000,000 in the
aggregate through March 31, 2004 and no more than $25,000,000 in the
aggregate through December 31, 2004 or (ii) for all other Acquisitions
subsequent to December 31, 2004, the total cost of the Acquisition
(including debt of the Target assumed by Borrowers or their
Subsidiaries
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but excluding the value of any Capital Stock of RSA and warrants or
options to acquire Capital Stock of RSA exchanged in connection with
such Acquisition) is less than $150,000,000;
For all other Acquisitions, which shall require the approval of
Requisite Lenders, Borrowers shall provide Administrative Agent and Lenders with
the Requisite Information regarding the Acquisition. Upon receipt of all
Requisite Information, Lenders shall respond within two weeks of receiving such
information. If a Lender does not respond within such time period, then such
Lender shall be deemed to have approved the Acquisition. If Administrative Agent
reasonably requires additional material information regarding the proposed
Acquisition, Borrowers shall promptly provide such information to Administrative
Agent and Lenders and the two week time period to approve the Acquisition shall
be extended until all such information is received (at which time Lenders will
have five Business Days to respond). "REQUISITE INFORMATION" shall include a
brief business description of the Target, financial statements of the Target for
the preceding three years (to the extent available), pro forma financial
statements of Borrowers demonstrating pro forma covenant compliance, a brief
description of the proposed Acquisition (including the sources and uses of
funds), projections, and such other information as Borrowers deem relevant."
E. Subsection 1.1 of the Credit Agreement is hereby
amended by deleting the table in the definition of "Applicable Margin"
in its entirety and substituting the following therefor:
LETTERS OF CREDIT
PRICING -----------------
LEVEL LEVERAGE RATIO COMMITMENT FEE EURODOLLAR RATE + BASE RATE +
--------------------------------------------------------------------------------------------------------------------------------
1 < or = 1.75:1 17.5 75.0 0.00%
2 < or = 2.25:1 but > 1.75:1 20.0 100.0 0.00%
3 < or = 2.75:1 but > 2.25:1 22.5 125.0 0.00%
4 < or = 3.25:1 but > 2.75:1 25.0 150.0 0.00%
5 < or = 3.75:1 but > 3.25:1 37.5 200.0 0.50%
6 > 3.75:1 50.0 250.0 1.00%
1.2 AMENDMENTS TO SECTION 6: AFFIRMATIVE COVENANTS. Section 6 of
the Credit Agreement is hereby amended by adding a new subsection 6.16 at the
end thereof as follows:
"6.16 Execution of Security Agreement After the Closing Date. Prior
to the Leverage Ratio Event:
(a) Cause any of their respective Material Domestic
Subsidiaries, within 30 days after becoming a Material Domestic Subsidiary, to
execute and deliver to the Administrative Agent a counterpart of the Security
Agreement and to take all such further actions and execute all such further
documents and instruments as may be necessary or, in the opinion of the
Administrative Agent, desirable to create in favor of the Administrative Agent,
for the benefit of the Lenders, a valid and perfected Lien on all of the
Collateral described in the Security Agreement. In addition, as provided in the
Security Agreement, RSA shall, or
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shall cause the Material Domestic Subsidiary that owns the Capital Stock of such
Person, to execute and to deliver to Administrative Agent all certificates
representing such Capital Stock of such Person (accompanied by irrevocable
undated stock powers, duly endorsed in blank).
(b) Deliver to Administrative Agent, together with such
counterpart of the Security Agreement, (i) certified copies of such Material
Domestic Subsidiary's Organizational Documents, together with, if such Material
Domestic Subsidiary is organized under the laws of the United States of America,
any state thereof or in the District of Columbia, a good standing certificate
from the Secretary of State of the jurisdiction of its organization and each
other state in which such Person is qualified to do business and, to the extent
generally available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the appropriate taxing
authority of each of such jurisdictions, each to be dated a recent date prior to
their delivery to Administrative Agent, (ii) a certificate executed by the
secretary or similar officer of such Material Domestic Subsidiary as to (a) the
fact that the attached resolutions of the Governing Body of such Material
Domestic Subsidiary approving and authorizing the execution, delivery and
performance of the Security Agreement are in full force and effect and have not
been modified or amended and (b) the incumbency and signatures of the officers
of such Material Domestic Subsidiary executing such counterpart of the Security
Agreement, (iii) an executed supplement to the Security Agreement evidencing the
pledge of the Capital Stock of such Material Domestic Subsidiary by RSA or a
Subsidiary of RSA that owns such Capital Stock, accompanied by certificate
evidencing such Capital Stock, together with an irrevocable undated stock powers
duly endorsed in blank and reasonably satisfactory in form and substance to
Administrative Agent, and (iv) a favorable opinion of counsel to such Material
Domestic Subsidiary, in substantially the form attached as Exhibit I to the
Third Amendment."
1.3 AMENDMENTS TO SECTION 7: COMPANY'S NEGATIVE COVENANTS.
A. Subsection 7.3 of the Credit Agreement is hereby
amended by deleting clause (f) thereof in its entirety and substituting
the following therefor:
"(f) Senior Notes of Borrowers (which may be guaranteed by
Subsidiaries of RSA which are party to the Master Subsidiary Guaranty), secured
ratably with the Loans and the Senior Notes outstanding on the date hereof,
pursuant to the Security Agreement and the Intercreditor Agreement, issued after
the Closing Date having in the aggregate a principal amount of not more than
$150,000,000 at any time; provided, however, that the documentation evidencing
such indebtedness shall contain covenants no more restrictive than in this
Agreement and shall be on terms and conditions (including the maturity date and
amortization schedule) acceptable to Administrative Agent; and"
B. Subsection 7.11 of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
"7.11 Net Worth. Permit Consolidated Net Worth, as of the
last day of any Fiscal Quarter, to be less than the sum of (a) $548,868,600 plus
(b) an amount equal to 50% of the Net Income earned in each Fiscal Quarter
ending after December 31, 2002 (with no
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deduction for a net loss in any such Fiscal Quarter) plus (c) an amount equal to
100% of the aggregate increases in Shareholders' Equity of RSA and its
Subsidiaries after December 31, 2002 by reason of the issuance and sale of
capital stock of RSA or any Subsidiary thereof (including upon any conversion of
debt securities of RSA or any Subsidiary thereof into such capital stock)."
C. Subsection 7.13 is hereby amended and restated in its
entirety to read as follows:
"7.13 Leverage Ratio. Permit the Leverage Ratio at any time
(i) prior to December 31, 2002 to be greater than 3.25 to 1.00, (ii) during the
period beginning December 31, 2002 to the Third Amendment Effective Date to be
greater than 3.60 to 1.00, (iii) during the period beginning the Third Amendment
Effective Date to March 30, 2004 to be greater than 4.25 to 1.00, (iv) during
the period beginning March 31, 2004 to June 29, 2004 to be greater than 4.00 to
1.00, (v) during the period beginning on June 30, 2004 to September 29, 2004 to
be greater than 3.75 to 1.00, (vi) during the period beginning on September 30,
2004 to December 30, 2004 to be greater than 3.50 to 1.00 and (vii) thereafter,
to be greater than 3.25 to 1.00."
D. Subsection 7.16 is hereby amended by deleting clause
(c) thereof in its entirety and substituting the following therefor:
"(c) cash dividends payable to RSA stockholders and
purchases, redemptions or other acquisitions of shares of RSA capital stock or
warrants, rights or options to acquire any such shares, for cash not exceeding
an amount equal to (i) in any Fiscal Year, 25% of Net Income earned in the
immediately preceding Fiscal Year, provided that for the purposes of this
subsection 7.16(c)(i), the Net Income for the Fiscal Year ended December 31,
2002 shall include a pro forma adjustment so that the net income of any
Subsidiary acquired in 2002 is included in Net Income for the full Fiscal Year
2002, but no more than $3,000,000 in any Fiscal Quarter or (ii) in any Fiscal
Quarter, so long as (x) EBITDA of RSA and its Subsidiaries on a consolidated
basis for the immediately preceding Fiscal Quarter was at least $30,000,000 and
(y) the Leverage Ratio as of the last day of the immediately preceding Fiscal
Quarter was less than 3.00 to 1.00, $3,000,000; provided that during the period
from January 1, 2003 to the Leverage Ratio Event, such amount shall not exceed
$2,250,000 in any Fiscal Quarter; provided further that if a dividend permitted
by this Section 7.16(c) to be paid in any Fiscal Quarter is declared but not
paid in such Fiscal Quarter, such dividend may be paid in the immediately
following Fiscal Quarter without reducing the amount otherwise permitted by this
Section 7.16(c) to be paid in such following Fiscal Quarter; provided further
that immediately after giving effect to any such proposed action, no Default or
Event of Default would exist."
1.4 AMENDMENTS TO SECTION 8. EVENTS OF DEFAULT AND REMEDIES UPON
EVENT OF DEFAULT. Subsection 8.1 of the Credit Agreement is hereby amended by
deleting clause (g) thereof in its entirety and substituting the following
therefor:
"(g) Any Loan Document, at any time after its execution
and delivery and for any reason other than the agreement or action (or omission
to act) of Lenders or
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satisfaction in full of all the Obligations, ceases to be in full force and
effect or is declared by a court of competent jurisdiction to be null and void,
invalid or unenforceable in any respect which, in any such event in the
reasonable opinion of the Requisite Lenders, is materially adverse to the
interests of Lenders; or, prior to the Leverage Ratio Event, the Security
Agreement shall for any reason cease to be in full force and effect (other than
by reason of a release of Collateral thereunder in accordance with the terms
hereof or thereof or any other termination of such Security Agreement in
accordance with the terms hereof or thereof ) or shall be declared null and
void, or the Collateral Agent shall not have or shall cease to have a valid and
perfected Lien on any Collateral purported to be covered thereby (subject to the
express limitations set forth in the Security Agreement); or any Borrower Party
thereto denies in writing that it has any or further liability or obligation
under any Loan Document, or purports to revoke, terminate or rescind same; or"
1.5 AMENDMENTS TO SECTION 10. MISCELLANEOUS.
A. Subsection 10.2 of the Credit Agreement is hereby
amended by (i) deleting the "; or" at the end of clause (e) thereof and
substituting therefor ";"; (ii) adding "or" at the end of clause (f);
and (iii) adding a new clause (g) at the end thereof as follows:
"(g) prior to the Leverage Ratio Event, release any Lien
granted in favor of Collateral Agent with respect to all or substantially all of
the Collateral other than in accordance with the terms of the Loan Documents;"
B. Subsection 10.7 of the Credit Agreement is hereby
amended by deleting clause (b) thereof in its entirety and substituting
the following therefor:
"(b) Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans (including
for purposes of this subsection (b), participations in Letter of Credit Usage
and in Swing Line Loans) at the time owing to it); provided that (i) except in
the case of an assignment of the entire remaining amount of the assigning
Lender's Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender or an Affiliate of a Lender or an Approved Fund with
respect to a Lender, the aggregate amount of the Commitment (which for this
purpose includes Loans outstanding thereunder) subject to each such assignment,
determined as of the date the Assignment and Assumption (attached hereto as
Exhibit D) with respect to such assignment is delivered to Administrative Agent
or, if "Trade Date" is specified in the Assignment and Assumption, as of the
Trade Date, shall not be less than $5,000,000 unless each of Administrative
Agent and, so long as no Event of Default has occurred and is continuing,
Borrowers otherwise consent (each such consent not to be unreasonably withheld
or delayed), (ii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations under
this Agreement with respect to the Loans or the Commitment assigned, except that
this clause (ii) shall not apply to rights in respect of Swing Line Loans, (iii)
the parties to each assignment shall execute and deliver to Administrative Agent
an Assignment and Assumption, together with a processing and recordation fee of
$3,500 and (iv) the assignee becomes party to the Intercreditor Agreement by
delivering to the Administrative
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Agent a counterpart to the Intercreditor Agreement, duly executed by such
assignee. Subject to acceptance and recording thereof by Administrative Agent
pursuant to subsection (c) of this Section, from and after the effective date
specified in each Assignment and Assumption, the Eligible Assignee thereunder
shall be a party to this Agreement and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 3.1 through 3.3 with respect to facts
and circumstances occurring prior to the effective date of such assignment).
Upon request, Borrowers (at their expense) shall execute and deliver new or
replacement Notes to the assigning Lender and the assignee Lender. Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this subsection shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with subsection (d) of this Section."
C. Section 10 of the Credit Agreement is hereby amended
by adding a new subsection 10.28 at the end thereof as follows:
"10.28. RELEASE OF SECURITY INTEREST.
(a) Prior to the Leverage Ratio Event, upon the proposed
sale or other Disposition of any Collateral that is permitted by this Agreement
or the Security Agreement for which the Borrowers or its Subsidiaries desires to
obtain a security interest release, the Borrowers or such Subsidiary, as
applicable, shall deliver an Officer's Certificate (i) stating that the
Collateral subject to such Disposition is being sold or otherwise disposed of in
compliance with the terms hereof and the Security Agreement and (ii) specifying
the Collateral being sold or otherwise disposed of in the proposed transaction.
Upon the receipt of such Officer's Certificate, so long as the Administrative
Agent has no reason to believe that the facts stated in such Officer's
Certificate are not true and correct, the Administrative Agent shall execute and
deliver such releases of its security interest in such Collateral as may be
reasonably requested by the Borrowers or its Subsidiaries. The security interest
created by the Security Agreement shall be automatically released with respect
to the applicable sold asset upon (i) the sale in the ordinary course of
business of inventory and (ii) the sale of equipment for cash not exceeding
$5,000,000 in the aggregate for all such transactions until the Leverage Ratio
Event.
(b) Upon the occurrence of the Leverage Ratio Event, the
Administrative Agent shall take such actions as may be reasonably required to
terminate the security interest granted under the Security Agreement; provided
that the security interest for the benefit of the holders of the Senior Notes
shall be terminated simultaneously."
1.6 AMENDMENTS TO EXHIBITS TO THE CREDIT AGREEMENT.
A. The Exhibits to the Credit Agreement are hereby
amended by adding thereto a new Exhibit G, Form of Security Agreement,
in the form of Annex I
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attached hereto and Exhibit H, Form of Intercreditor Agreement, in the
form of Annex II attached hereto.
B. The Exhibits to the Credit Agreement are hereby
amended by deleting Exhibit C, Form of Committed Loan Note, thereto in
its entirety and substituting therefor a new Exhibit C, Form of
Committed Loan Note, in the form of Annex III attached hereto.
1.7 AMENDMENTS TO ISSUED COMMITTED LOAN NOTES. Each original
Committed Loan Note issued pursuant to the Credit Agreement prior to the Third
Amendment Closing Date shall hereby be deemed to include the following
amendments: (i) the following sentence shall be deemed to be inserted at the end
of the fifth paragraph of each such Note: "This Note is secured by the Security
Agreement and is guaranteed by the Subsidiary Guarantors pursuant to Master
Subsidiary Guaranty;" and (ii) the following legend shall be deemed to be added
at the top of each such Committed Loan Note:
"THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN A
COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT THAT, AMONG OTHER THINGS,
ESTABLISHES CERTAIN RIGHTS WITH RESPECT TO THE SECURITY FOR THIS NOTE AND THE
SHARING OF PROCEEDS THEREOF WITH CERTAIN OTHER SECURED CREDITORS (AS DEFINED IN
THE COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT). AS A CONDITION TO TRANSFER,
ANY TRANSFEREE OF A NOTE MUST BECOME A PARTY TO THE COLLATERAL AGENCY AND
INTERCREDITOR AGREEMENT. COPIES OF SUCH COLLATERAL AGENCY AND INTERCREDITOR
AGREEMENT WILL BE FURNISHED TO ANY HOLDER OF THIS NOTE UPON REQUEST TO RELIANCE
STEEL & ALUMINUM CO. AND RSAC MANAGEMENT CORP."
SECTION 2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective only upon the
satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "THIRD AMENDMENT
EFFECTIVE DATE"):
2.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Borrowers in the Loan Documents shall be correct when made and
at the time of the Third Amendment Effective Date.
2.2 PERFORMANCE; NO DEFAULT. Each Borrower Party shall have
performed and complied with all agreements and conditions contained in the Loan
Documents required to be performed or complied with by it prior to or on the
Third Amendment Effective Date and no Default or Event of Default shall have
occurred and be continuing.
2.3 CHANGES IN CORPORATE STRUCTURE. Except as set forth in Annex
IV hereof, the Borrowers shall not have changed their respective jurisdictions
of incorporation or been party to any merger or consolidation and shall not have
succeeded to all or any substantial
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part of the liabilities of any other entity, at any time following the date of
the most recent financial statements referred to in Section 6.1 of the Credit
Agreement.
2.4 OFFICER'S CERTIFICATE. The Borrowers shall have delivered to
Administrative Agent an Officer's Certificate, dated as of the Third Amendment
Effective Date, certifying that the conditions specified in Sections 2.1, 2.2
and 2.3 above have been fulfilled.
2.5 OPINIONS OF COUNSEL. The Administrative Agent shall have
received an opinion in form and substance reasonably satisfactory to the
Administrative Agent, dated the Third Amendment Effective Date from Xxx Xxxxxxx,
general counsel of the Borrowers and their respective Subsidiaries, covering the
matters set forth in Annex III, together with copies of all factual certificates
and legal opinions upon which such counsel has relied.
2.6 SECURITY INTERESTS IN PERSONAL PROPERTY. The Administrative
Agent shall have received satisfactory evidence that the Borrowers and their
respective Subsidiaries shall have taken or caused to be taken all such actions,
executed and delivered or caused to be executed and delivered all such
agreements, documents and instruments, and made or caused to be made all such
filings and recordings (other than the filing or recording of items described in
clauses B, C and D below) that may be necessary or, in the Administrative
Agent's reasonable opinion, desirable in order to create in favor of the
Collateral Agent, for the benefit of the Lenders, a valid and (upon such filing
and recording) perfected security interest in the personal property Collateral.
Such actions shall include the following:
A. Stock Certificates and Instruments. Delivery to the
Collateral Agent of (a) certificates (which certificates shall be
accompanied by irrevocable undated stock powers, duly endorsed in blank
and otherwise reasonably satisfactory in form and substance to
Administrative Agent) representing all Capital Stock pledged pursuant
to the Security Agreement and (b) promissory notes or other instruments
in favor of Borrowers or any Material Domestic Subsidiary (duly
endorsed, where appropriate, in a manner reasonably satisfactory to
Administrative Agent) evidencing any Collateral, to the extent delivery
is so required under the Security Agreement;
X. Xxxx Searches and UCC Termination Statements.
Delivery to the Collateral Agent of (a) the results of a recent search,
by a Person reasonably satisfactory to the Collateral Agent, of all
effective UCC financing statements and fixture filings and all judgment
and tax lien filings which may have been made with respect to any
personal or mixed property of any Borrower Party, together with copies
of all such filings disclosed by such search, and (b) UCC termination
statements duly executed by all applicable Persons for filing in all
applicable jurisdictions as may be necessary to terminate any effective
UCC financing statements or fixture filings against the Collateral
disclosed in such search (other than any such financing statements or
fixture filings in respect of Permitted Liens and other Liens permitted
to remain outstanding pursuant to the terms of this Agreement);
C. UCC Financing Statements. Delivery to the Collateral
Agent of UCC financing statements duly executed by each applicable
Borrower Party (if required) with respect to all personal property
Collateral of such Borrower Party, for filing in all
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jurisdictions as may be necessary or, in the opinion of Administrative
Agent, desirable to perfect the security interests created in such
Collateral pursuant to the Security Agreement; and
2.7 BORROWER PARTY DOCUMENTS. On or before the Third Amendment
Effective Date, the Borrowers shall, and shall cause each other Borrower Party
and each Material Domestic Subsidiary that is not presently a Borrower Party to,
deliver to Lenders (or to Administrative Agent with sufficient originally
executed copies, where appropriate, for each Lender) the following with respect
to the Borrowers or such Borrower Party, as the case may be, each, unless
otherwise noted, dated the Third Amendment Effective Date:
A. Copies of the Organizational Documents of such
Person, certified by the Secretary of State of its jurisdiction of
organization or, if such document is of a type that may not be so
certified, certified by the secretary or similar officer of the
applicable Borrower Party, together with a good standing certificate
from the Secretary of State of its jurisdiction of organization and
each other state in which such Person is qualified to do business and,
to the extent generally available, a certificate or other evidence of
good standing as to payment of any applicable franchise or similar
taxes from the appropriate taxing authority of each of such
jurisdictions, each dated a recent date prior to the Third Amendment
Effective Date;
B. Resolutions of the Governing Body of such Borrower
Party approving and authorizing the execution, delivery, and
performance of this Amendment and the Loan Documents executed by such
Borrower Party in connection herewith, certified as of the Third
Amendment Effective Date by the secretary or similar officer of such
Borrower Party as being in full force and effect without modification
or amendment;
C. Signature and incumbency certificates of its officers
executing this Amendment and the Loan Documents executed by each
Borrower Party in connection herewith; and
D. Executed originals of this Amendment, the Security
Agreement, a counterpart to the Master Subsidiary Guaranty (if
applicable) and the Intercreditor Agreement.
2.8 PAYMENT OF FEES. On or prior to the Third Amendment Effective
Date, the Borrowers shall have paid to the Administrative Agent certain fees in
the amounts and at the times separately agreed upon in a side letter between the
Borrowers and the Administrative Agent in connection with the execution and
delivery of this Amendment and the Security Agreement.
2.9 ACQUISITION OF PRECISION STRIP, INC.; FINANCING. On or before
the Third Amendment Effective Date, the Borrowers shall have satisfied the
following conditions:
A. Approval of Purchase Agreement. The Borrowers shall
have delivered to Administrative Agent and Lenders a fully executed purchase
agreement (the "PURCHASE AGREEMENT") providing for the acquisition of Precision
Strip, Inc. and its related entities (the
11
"PRECISION STRIP ACQUISITION"), reasonably satisfactory in form and substance to
the Administrative Agent and Requisite Lenders;
B. Consummation of Precision Strip Acquisition.
(i) All conditions to the Precision Strip
Acquisition set forth in the Purchase Agreement shall have been
satisfied or waived (which waiver shall be reasonably satisfactory to
the Administrative Agent and the Requisite Lenders);
(ii) Borrowers shall have provided evidence
reasonably satisfactory to the Administrative Agent and Requisite
Lenders demonstrating that RSA has circled new Senior Notes in a
private placement for a minimum principal amount of $100,000,000, with
no amortization or maturity dates prior to the Maturity Date and with
representations, warranties, covenants and events of default no more
restrictive than those contained in the Credit Agreement,
(iii) The aggregate cash consideration for the
Precision Strip Acquisition shall not have exceeded $220,000,000 and
assumed debt shall not have exceeded $26,000,000;
(iv) Immediately after the Precision Strip
Acquisition, the sum of Borrowers' cash and cash equivalents plus
unused Commitments under the Credit Agreement is at least $40,000,000;
and
(v) Borrowers shall have delivered to the
Administrative Agent an Officer's Certificate to the effect set forth
in clauses (i) through (iv) above.
C. Consent of Holders of Senior Notes; Amendment of
Senior Note Documents. Borrowers shall have provided evidence satisfactory to
the Administrative Agent and Requisite Lenders that (i) the holders of the
senior notes issued pursuant to those Note Purchase Agreements dated November 1,
1996, September 15, 1997, and October 15, 1998 (collectively, the "Senior Note
Purchase Agreements") have consented to the Precision Strip Acquisition and (ii)
the Senior Note Purchase Agreements have been amended in a manner reasonably
satisfactory to the Administrative Agent and Requisite Lenders.
SECTION 3. BORROWERS' REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Third Amendment
and to amend the Credit Agreement in the manner provided herein, the Borrowers
represent and warrant to each Lender that the following statements are true,
correct and complete:
3.1 CORPORATE POWER AND AUTHORITY. Each Borrower Party has all
requisite corporate power and authority to enter into this Third Amendment and
the Loan Documents to which it is party, and to carry out the transactions
contemplated thereby, and to perform its respective obligations under the
applicable Loan Documents and the Credit Agreement as amended by this Third
Amendment (the "AMENDED AGREEMENT").
12
3.2 AUTHORIZATION OF AGREEMENTS. The execution and delivery of
this Third Amendment and the Loan Documents, and the performance of the Amended
Agreement and the other Loan Documents to which it is a party, have been duly
authorized by all necessary corporate action on the part of each Borrower Party.
3.3 NO CONFLICT. The execution and delivery by each Borrower Party
of this Third Amendment and the Loan Documents and the performance by each
Borrower Party of the Loan Documents to which it is a party do not and will not
(i) violate any provision of any law or any governmental rule or regulation
applicable to such Borrower Party, the Certificate or Articles of Incorporation
or Bylaws of such Borrower Party or any order, judgment or decree of any court
or other agency of government binding on such Borrower Party, (ii) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any Contractual Obligation of such Borrower Party, (iii)
result in or require the creation or imposition of any Lien upon any of the
properties or assets of such Borrower Party (other than Liens created or
permitted under any of the Loan Documents in favor of Administrative Agent on
behalf of Lenders), or (iv) require any approval of stockholders or any approval
or consent of any Person under any Contractual Obligation of such Borrower Party
that has not been obtained.
3.4 GOVERNMENTAL CONSENTS. No authorization, consent, approval,
order, license or permit from, or filing, registration or qualification with,
any Governmental Authority is or will be required to authorize or permit under
applicable Laws the execution, delivery and performance by each Borrower Party
of this Third Amendment and the Loan Documents to which it is a party.
3.5 BINDING OBLIGATION. This Third Amendment and each of the Loan
Documents to which a Borrower Party is a party will, when executed and delivered
by such party, constitute the legal, valid and binding obligation of such party,
enforceable against such party in accordance with its terms, except as
enforcement may be limited by Debtor Relief Laws or equitable principles
relating to the granting of specific performance and other equitable remedies as
a matter of judicial discretion.
3.6 INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 5 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Third Amendment Effective Date to the same extent as
though made on and as of the Third Amendment Effective Date, except to the
extent such representations and warranties specifically relate to an earlier
date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.
3.7 ABSENCE OF DEFAULT. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this Third
Amendment or any of the Loan Documents that would constitute an Event of Default
or a Potential Event of Default.
3.8 CREATION, PERFECTION AND PRIORITY OF LIENS. The execution and
delivery of the Security Agreement by the Borrower Parties party thereto,
together with the actions taken
13
on or prior to the date hereof pursuant to Section 2.6 of this Amendment, are
effective to create in favor of the Collateral Agent for the benefit of the
Lenders, as security for the Loans, a valid First Priority Lien on all of the
Collateral, and all filings and other actions necessary or desirable to perfect
and maintain the perfection and First Priority status of such Liens have been
duly made or taken and remain in full force and effect, other than (i) the
filing of any UCC financing statements delivered to the Collateral Agent for
filing (but not yet filed) and (ii) the periodic filing of UCC continuation
statements in respect of UCC financing statements filed by or on behalf of the
Collateral Agent.
SECTION 4. MISCELLANEOUS
4.1 Reference to and Effect on the Credit Agreement and the Other
Loan Documents.
A. On and after the Effective Date, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Credit Agreement, and
each reference in the other Loan Documents to the "Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Amended Agreement.
B. Except as specifically amended by this Third
Amendment, the Credit Agreement and the other Loan Documents shall
remain in full force and effect and are hereby ratified and confirmed.
C. The execution, delivery and performance of this Third
Amendment shall not, except as expressly provided herein, constitute a
waiver of any provision of, or operate as a waiver of any right, power
or remedy of Agent or any Lender under, the Credit Agreement or any of
the other Loan Documents.
4.2 FEES AND EXPENSES. Borrowers acknowledge that all costs, fees
and expenses as described in subsection 10.3 of the Credit Agreement incurred by
Administrative Agent and its counsel with respect to this Third Amendment and
the documents and transactions contemplated hereby shall be for the account of
Borrowers.
4.3 HEADINGS. Section and subsection headings in this Third
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Third Amendment for any other purpose or be given any
substantive effect.
4.4 APPLICABLE LAW. THIS THIRD AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA (INCLUDING WITHOUT LIMITATION SECTION 1646.5 OF THE CIVIL CODE OF THE
STATE OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
14
4.5 COUNTERPARTS. This Third Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
SECTION 5. ACKNOWLEDGEMENT AND CONSENT
Each guarantor listed on the signatures pages hereof (each, a
"GUARANTOR") hereby acknowledges and agrees that the Master Subsidiary Guaranty
to which it is a party or otherwise bound shall continue in full force and
effect and that all of its obligations thereunder shall be valid and enforceable
and shall not be impaired or limited by the execution or effectiveness of this
Third Amendment. Each Guarantor represents and warrants that all representations
and warranties contained in the Amended Agreement and the Loan Documents to
which it is a party or otherwise bound are true, correct and complete in all
material respects on and as of the Third Amendment Effective Date to the same
extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material respects on and as of
such earlier date.
Each Guarantor acknowledges and agrees that (i)
notwithstanding the conditions to effectiveness set forth in this Third
Amendment, such Guarantor is not required by the terms of the Credit Agreement
or any other Loan Document to consent to the amendments to the Credit Agreement
effected pursuant to this Third Amendment and (ii) nothing in the Credit
Agreement, this Third Amendment or any other Loan Document shall be deemed to
require the consent of such Guarantor to any future amendments to the Credit
Agreement.
15
IN WITNESS WHEREOF, the parties hereto have caused this Third
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
RELIANCE STEEL & ALUMINUM CO.,
a California corporation
By:_________________________________________
Name: Xxxxx X. Xxxxxx
Title: Chief Executive Officer
By:_________________________________________
Name: Xxxxx XxXxxxxx
Title: Executive Vice President and
Chief Financial Officer
RSAC MANAGEMENT CORP.,
a California corporation
By:_________________________________________
Name: Xxxxx X. Xxxxxx
Title: Chief Executive Officer
By:_________________________________________
Name: Xxxxx XxXxxxxx
Title: Executive Vice President and
Chief Financial Officer
S-1
For the purposes of Section 5 hereof:
ALLEGHENY STEEL DISTRIBUTORS, INC.
ALUMINUM AND STAINLESS, INC.
AMI METALS, INC.
CCC STEEL, INC.
CENTRAL PLAINS STEEL CO.
CHATHAM STEEL CORPORATION
XXXXXXX XXXXXXXX STEEL CO., INC.
PHOENIX CORPORATION
PACIFIC METAL COMPANY
PDM STEEL SERVICE CENTERS, INC.
TOMA METALS, INC.
VIKING MATERIALS, INC.
By:_________________________________________
Name: Xxxxx XxXxxxxx
Title: Vice President and Secretary of each of
the foregoing
AMERICAN METALS CORPORATION
LIEBOVICH BROS., INC.
SISKIN STEEL & SUPPLY COMPANY, INC.
By:_________________________________________
Name: Xxxxx XxXxxxxx
Title: Vice President and Assistant Secretary of
each of the foregoing
S-2
XXXX METALS
SERVICE STEEL AEROSPACE CORP.
VALEX CORP.
By:_________________________________________
Name: Xxxxx XxXxxxxx
Title: Chief Financial Officer and Secretary of
each of the foregoing
S-3
BANK OF AMERICA, N.A.,
as Administrative Agent
By:
____________________________________________
Name: Xxx Xxxx
Title: Vice President
S-4
BANK OF AMERICA, N.A.,
as Issuing Lender and a Lender
By:_________________________________________
Name: Xxxxxx Xxxxxxxx
Title: Senior Vice President
S-5
WACHOVIA BANK, NATIONAL
ASSOCIATION, formerly known as First
Union National Bank,
as Syndication Agent and as a Lender
By:_________________________________________
Name:_______________________________________
Title:______________________________________
S-6
THE CHASE MANHATTAN BANK,
as a Lender
By:_________________________________________
Name:_______________________________________
Title:______________________________________
S-7
UNION BANK OF CALIFORNIA, N.A.,
as a Lender
By:_________________________________________
Name:_______________________________________
Title:______________________________________
S-8
COMERICA WEST INCORPORATED,
as a Lender
By:_________________________________________
Name:_______________________________________
Title:______________________________________
S-9
CREDIT SUISSE FIRST BOSTON,
as a Lender
By:_________________________________________
Name:_______________________________________
Title:______________________________________
S-10
THE NORTHERN TRUST COMPANY,
as a Lender
By:_________________________________________
Name:_______________________________________
Title:______________________________________
S-11
U.S. BANK NATIONAL ASSOCIATION,
as a Lender
By:_________________________________________
Name:_______________________________________
Title:______________________________________
S-12
MIZUHO CORPORATE BANK, LTD.,
formerly known as The Industrial Bank of
Japan, Limited, as a Lender
By:_________________________________________
Name:_______________________________________
Title:______________________________________
S-13
ANNEX I
EXHIBIT G
FORM OF SECURITY AGREEMENT
ANNEX II
EXHIBIT H
FORM OF INTERCREDITOR AGREEMENT
ANNEX III
EXHIBIT C
FORM OF COMMITTED LOAN NOTE
THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN A
COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT THAT, AMONG
OTHER THINGS, ESTABLISHES CERTAIN RIGHTS WITH RESPECT TO THE
SECURITY FOR THIS NOTE AND THE SHARING OF PROCEEDS THEREOF
WITH CERTAIN OTHER SECURED CREDITORS (AS DEFINED IN THE
COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT). AS A
CONDITION TO TRANSFER, ANY TRANSFEREE OF A NOTE MUST BECOME A
PARTY TO THE COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT.
COPIES OF SUCH COLLATERAL AGENCY AND INTERCREDITOR
AGREEMENT WILL BE FURNISHED TO ANY HOLDER OF THIS NOTE UPON
REQUEST TO RELIANCE STEEL & ALUMINUM CO. AND RSAC
MANAGEMENT CORP.
$_____________________ October 24, 2001
FOR VALUE RECEIVED, the undersigned ("BORROWERS"), hereby,
jointly and severally, promise to pay to the order of ("LENDER"), on the
Maturity Date (as defined in the Credit Agreement referred to below) the
principal amount of $[_____ ], or such lesser principal amount of Loans (as
defined in the Credit Agreement referred to below) payable by Borrowers to
Lender on such Maturity Date under that certain Credit Agreement dated as of
October 24, 2001, among Borrowers, the lenders from time to time party thereto,
and Bank of America, N.A., as Administrative Agent and Issuing Lender (as
extended, renewed, amended or restated from time to time, the "CREDIT
AGREEMENT;" the terms defined therein being used herein as therein defined).
Borrowers, jointly and severally, promise to pay interest on
the unpaid principal amount of each Loan from the date of such Loan until such
principal amount is paid in full, at such interest rates, and payable at such
times as are specified in the Credit Agreement.
All payments of principal and interest shall be made to
Administrative Agent for the account of Lender in United States dollars in
immediately available funds at Administrative Agent's Office.
If any amount is not paid in full when due hereunder, such
unpaid amount shall bear interest, to be paid upon demand, from the due date
thereof until the date of actual payment (and before as well as after judgment)
computed at the per annum rate set forth in the Credit Agreement.
III-1
This Note is one of the "Committed Loan Notes" referred to in
the Credit Agreement. Reference is hereby made to the Credit Agreement for
rights and obligations of payment and prepayment, events of default and the
right of Lender to accelerate the maturity hereof upon the occurrence of such
events. This Note is secured by the Security Agreement and is guaranteed by the
Subsidiary Guarantors pursuant to Master Subsidiary Guaranty.
Borrowers, for themselves, their successors and assigns,
hereby waive diligence, presentment, protest and demand and notice of protest,
demand, dishonor and non-payment of this Note.
Borrowers, jointly and severally, agree to pay all collection
expenses, court costs and Attorney Costs (whether or not litigation is
commenced) which may be incurred by Lender in connection with the collection or
enforcement of this Note.
III-2
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA.
RELIANCE STEEL & ALUMINUM CO.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
RSAC MANAGEMENT CORP.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
III-3
ANNEX IV
CHANGES IN CORPORATE STRUCTURE
IV-1
EXHIBIT I
FORM OF OPINION
I-1
