EXHIBIT 10.1
EXECUTION COPY
AMENDMENT NO. 3, WAIVER AND AGREEMENT dated
as of December 31, 2001 (this "Amendment"), to the
Credit Agreement dated as of April 30, 1997, as
amended and restated as of September 12, 1997, as of
April 3, 1998, and as of September 8, 1998, and as
further amended as of November 18, 1998 and March 23,
2001 (the "Credit Agreement"), among NEENAH FOUNDRY
COMPANY, a Wisconsin corporation (the "Borrower"),
NFC CASTINGS, INC., a Delaware corporation
("Holdings"), the Lenders from time to time party
thereto (the "Lenders"), and JPMORGAN CHASE BANK, a
New York banking corporation formerly named The Chase
Manhattan Bank, as issuing bank, as administrative
agent (in such capacity, the "Administrative Agent")
and as collateral agent (in such capacity, the
"Collateral Agent") for the Lenders.
A. Pursuant to the Credit Agreement, the Lenders have extended
and have agreed to extend credit to the Borrower on the terms and subject to the
conditions set forth therein.
B. The Borrower has informed the Lenders that an Event of
Default has occurred under the Credit Agreement as a result of the failure of
the Borrower and Holdings to comply with Sections 6.11, 6.12, 6.13 and 6.15 of
the Credit Agreement as of and for the period ending on December 31, 2001.
C. The Borrower and Holdings have informed the Administrative
Agent that from time to time and as part of one or more transactions or series
of related transactions, the Borrower proposes to liquidate, sell or otherwise
dispose of substantially all the assets or all the Capital Stock of Cast Alloys,
Inc. (the "Cast Alloys Liquidation").
D. The Borrower and Holdings have informed the Administrative
Agent that Cast Alloys, Inc. has ceased all manufacturing and distribution
operations, terminated substantially all of its employees, surrendered certain
property and equipment in Mexico and, from time to time, sold certain inventory
and equipment and compromised or settled certain claims, outside of the ordinary
course of business (collectively, the "Prior Actions").
E. The Borrower and Holdings have requested certain waivers
and amendments of the Credit Agreement as set forth herein. The Required Lenders
are willing to grant such waivers and to amend the Credit Agreement on the terms
and subject to the conditions set forth herein.
F. Capitalized terms used and not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement.
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Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Waivers. (a) Subject to paragraph (b) below, the
Required Lenders hereby waive compliance by Holdings and the Borrower with the
provisions of Sections 6.11, 6.12, 6.13 and 6.15 of the Credit Agreement.
(b) The waiver provided for by paragraph (a) above shall be
effective only during the period (the "Waiver Period") commencing on and as of
December 31, 2001, and ending on and including December 31, 2003, and
thereafter, in respect of any period ending after December 31, 2003, (i) the
provisions of Sections 6.11, 6.12, 6.13 and 6.15 of the Credit Agreement shall
apply in all respects as in effect on the date hereof without regard to such
waiver and (ii) the Administrative Agent and the Lenders shall have all rights
and remedies under the Credit Agreement that they would have had if such waiver
had never been granted.
(c) The Required Lenders hereby consent to the Cast Alloys
Liquidation and waive compliance by the Borrower and Holdings with Sections
5.01(a) (with respect to the existence of Cast Alloys, Inc. and its
subsidiaries) and 6.05 of the Credit Agreement, in each case to the extent (but
only to the extent) necessary to consummate the Cast Alloys Liquidation;
provided, however, that, to the extent Holdings, the Borrower or any Subsidiary
receives any cash payment in connection with the Cast Alloys Liquidation, the
Borrower shall prepay the Term Loans in accordance with Section 2.13 of the
Credit Agreement by an amount equal to 100% of the net cash proceeds thereof
(less the amount of accrued expenses and accounts payable of Cast Alloys that
are required to be paid).
(d) The Required Lenders hereby consent to the Prior Actions
taken with respect to the Cast Alloys Liquidation.
(e) The Required Lenders hereby release, and hereby authorize
and direct the Collateral Agent to execute any and all further documents
necessary or desirable to evidence the release, from the Lien of the Security
Documents, the assets of Cast Alloys, Inc. and its subsidiaries, from time to
time to permit the Cast Alloys Liquidation on or after the effective date
thereof.
SECTION 2. Agreements. (a) Effective on and as of the
Amendment Effective Date (as defined below), the Total Revolving Credit
Commitment shall be permanently reduced to $29,564,676 (the "Reduced Revolving
Credit Commitment"). In connection with such reduction, the Required Lenders
hereby waive compliance by the Borrower with the notice requirement of Section
2.09 of the Credit Agreement and with such section's requirement that such
reduction be in an integral multiple of $500,000.
(b) The Required Lenders hereby authorize and direct the
Collateral Agent to enter into amendments of the Security Documents and the
Guarantees to the extent necessary to permit Cash Management Obligations (as
defined below) to be "Obligations" (as defined in such Security Documents and
Guarantees), and each of the
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Borrower and Holdings hereby agrees to execute, and to cause each other Loan
Party to execute, each such amendment.
(c) On or after the Amendment Effective Date, each of Holdings
and the Borrower agrees that it will not, and it will not permit any Domestic
Subsidiary to, maintain cleared and collected cash (other than cash supporting
payroll obligations) or Permitted Investments outside the Lockbox System (as
defined in the Security Agreement) in an aggregate amount in excess of $200,000.
(d) On or prior to the Amendment Effective Date, the
Administrative Agent, after consultation with the Lenders, shall propose to
Holdings and the Borrower three or more independent firms as potential financial
advisors to Holdings and the Borrower. Holdings and the Borrower hereby agree
that, on or prior to June 15, 2002, they will engage one of such proposed firms,
or another financial advisor reasonably acceptable to the Required Lenders (the
"Financial Advisor"), as their financial advisor, with the scope of such
engagement to include the items described in Exhibit C hereto. Holdings and the
Borrower shall cooperate with the Financial Advisor and permit the Financial
Advisor such access to their respective officers, directors, management,
accountants, advisors, properties, financial records and other data as shall be
necessary for the Financial Advisor to perform its engagement. Holdings and the
Borrower shall permit and direct the Financial Advisor to confer with, and to
make its analyses, evaluations and reports available to, the Lenders, subject to
the confidentiality requirements of Section 9.16 of the Credit Agreement.
SECTION 3. Amendments. (a) Section 1.01 of the Credit
Agreement is hereby amended as follows:
(i) The following definitions are hereby inserted in the
appropriate alphabetical order therein:
(A) ""Amendment No. 3" shall mean Amendment No. 3,
Waiver and Agreement dated as of December 31, 2001, to this
Agreement.";
(B) ""Cash Management Obligations" shall mean all
obligations of the Loan Parties arising in the ordinary course
of business under or in respect of Cash Management Services
provided to any Loan Party by any Lender or any Affiliate of a
Lender (each, a "Cash Management Lender"), except to the
extent that such obligations result from the gross negligence
or willful misconduct of such Cash Management Lender.";
(C) ""Cash Management Services" shall mean any and all
services provided under the Lockbox and Depository Agreement
and any other cash management services provided by a Cash
Management Lender including without limitation, wire transfers
or ACH transactions authorized by the Lockbox and Depository
Agreement and provided at the request of a Grantor."
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(D) ""CVC Secured PIK Notes" shall mean the 14% senior
secured pay-in-kind notes due December 31, 2005 of the
Borrower, substantially on the terms attached as Exhibit A to
Amendment No. 3."; and
(E) ""Intercreditor Agreement" shall mean the
Intercreditor Agreement by and among the Borrower, Holdings,
certain Subsidiaries of the Borrower, the Collateral Agent and
CVC, substantially in the form attached as Exhibit B to
Amendment No. 3.".
(ii) The definition of the term "Applicable Percentage" is
hereby amended and restated in its entirety to read as follows:
""Applicable Percentage" shall mean, for any day
commencing on and including the Amendment Effective Date (as
defined in Amendment No. 3), with respect to any Loan, or with
respect to the Commitment Fees, as the case may be, the
applicable percentage set forth below under the caption
"Eurodollar Spread--Tranche A Term Loans, Revolving Loans and
Acquisition Loans", "Eurodollar Spread--Tranche B Term Loans
and Additional Tranche B Term Loans", "ABR Spread--Tranche A
Term Loans, Revolving Loans and Acquisition Loans", "ABR
Spread--Tranche B Term Loans and Additional Tranche B Term
Loans" or "Fee Percentage", as the case may be:
----------------------- --------------------- -------------------- --------------------- --------------------
Eurodollar Eurodollar
Spread-Tranche A Term ABR Spread-Tranche Spread-Tranche B ABR Spread-Tranche
Loans, Revolving A Term Loans, Term Loans and B Term Loans and
Loans and Acquisition Revolving Loans and Additional Tranche Additional Tranche Fee Percentage
Loans Acquisition Loans B Term Loans B Term Loans
----------------------- --------------------- -------------------- --------------------- --------------------
4.50% 3.50% 4.75% 3.75% .50%
----------------------- --------------------- -------------------- --------------------- --------------------
(iii) The definition of the term "Interest Payment Date" is
hereby amended and restated in it entirety to read as follows:
""Interest Payment Date" shall mean (a) with respect
to any Loan (including any Eurodollar Loan), (i) the last
Business Day of each month, and (ii) the Revolving Credit
Maturity Date, the Tranche A Maturity Date, the Tranche B
Maturity Date, the Additional Tranche B Maturity Date or the
Acquisition Loan Maturity Date, as applicable, and (b) with
respect to any Eurodollar Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a
part and the date of any prepayment of such Borrowing or
conversion of such Borrowing to an ABR Borrowing."
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(iv) The definition of the term "Interest Period" is hereby
amended and restated in its entirety to read as follows:
""Interest Period" shall mean, as to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing
and ending on the numerically corresponding day (or, if there
is no numerically corresponding day, on the last day) in the
calendar month that is 1, 2, 3, or 6 months thereafter, as the
Borrower may elect; provided, however, that if any Interest
Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding
Business Day, unless such next succeeding Business Day would
fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day."
(v) The definition of the term "Revolving Credit Maturity
Date" is hereby amended and restated in its entirety to read as
follows:
""Revolving Credit Maturity Date" shall mean
September 30, 2003."
(b) Section 2.06 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"SECTION 2.06. Interest on Loans. (a) Subject to the
provisions of Section 2.07, the Loans comprising each ABR Borrowing
shall bear interest (computed on the basis of the actual number of days
elapsed (including the first day but excluding the last day) over a
year of 365 or 366 days, as the case may be, when the Alternate Base
Rate is determined by reference to the Prime Rate and over a year of
360 days at all other times) at a rate per annum equal to the Alternate
Base Rate plus the Applicable Percentage in effect from time to time.
(b) Subject to the provisions of Section 2.07, the Loans
comprising each Eurodollar Borrowing shall bear interest (computed on
the basis of the actual number of days elapsed (including the first day
but excluding the last day) over a year of 360 days) at a rate per
annum equal to the Adjusted LIBO Rate for the Interest Period in effect
for such Borrowing plus the Applicable Percentage in effect from time
to time.
(c) Notwithstanding the foregoing, (i) with respect to all
Loans outstanding on or after November 1, 2002, the interest rate
otherwise applicable thereto pursuant to paragraph (a) or (b) above
shall be increased by 0.25% per annum, and (ii) with respect to all
Loans outstanding on or after May 1, 2003, the interest rate otherwise
applicable thereto pursuant to paragraph (a) or (b) above shall be
increased by an additional 0.25% per annum (the amount of all
additional interest described in this paragraph (c) is referred to
herein as the "Deferred Interest").
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(d) Interest on each Loan shall be payable on the Interest
Payment Dates applicable to such Loan except as otherwise provided in
this Agreement; provided, however, that Deferred Interest on the
Acquisition Loans, Revolving Loans, Tranche A Term Loans, Tranche B
Term Loans or Additional Tranche B Term Loans shall accrue and shall be
payable in full on the Acquisition Loan Maturity Date, the Revolving
Credit Maturity Date, the Tranche A Maturity Date, the Tranche B
Maturity Date and the Additional Tranche B Maturity Date, respectively,
or upon the earlier acceleration of the maturity of or payment in full
of such Loans. The applicable Alternate Base Rate or Adjusted LIBO Rate
for each Interest Period or day within an Interest Period, as the case
may be, shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error."
(c) Section 5.04(g) of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:
"(g) (i) within 20 days after the end of the first two months
of each fiscal quarter, its consolidated balance sheet and related
statements of operations, stockholders' equity and cash flows showing
the financial condition of the Borrower and its consolidated
Subsidiaries as of the end of and for such month and the results of its
operations and the operations of such Subsidiaries as of the end of and
for such month, all certified by one of its Financial Officers as
fairly presenting in all material respects the financial condition and
results of operations of the Borrower and its consolidated Subsidiaries
on a consolidated basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments; and (ii) within 20 days
after the end of each fiscal quarter, a reasonably detailed calculation
indicating whether or not the Borrower was in compliance (determined as
of the last day of such fiscal quarter) with Section 6.12 for the
period of four consecutive fiscal quarters then ended."
(d) Section 6.01 of the Credit Agreement is hereby amended as
follows:
(i) by deleting the word "and" at the end of subsection (j);
(ii) by relettering existing subsection (k) to subsection (l);
and
(iii) by inserting the following new subsection (k):
"(k) the CVC Secured PIK Notes in an initial aggregate
principal amount of $9,900,000, plus the CVC Secured PIK Notes issued
in addition thereto in respect of the interest owed thereon; and".
(e) Section 6.02 of the Credit Agreement is hereby amended as
follows:
(i) by deleting the word "and" at the end of subsection (k);
(ii) by relettering existing subsection (l) to subsection (m);
and
(iii) by inserting the following new subsection (l):
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"(l) Liens on the Collateral to secure the CVC Secured PIK
Notes; provided that such Liens shall be subject to the terms and
provisions of the Intercreditor Agreement; and".
(f) Section 6.09 of the Credit Agreement is hereby amended by
adding the following paragraph at the end thereof:
"(d) Consent to any assignment or transfer (other than to CVC
or an Affiliate thereof) of any or all of the CVC Secured PIK Notes."
(g) Section 6.12 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"SECTION 6.12. Minimum Adjusted EBITDA. Permit the
Consolidated EBITDA, excluding any portion thereof attributable to Cast
Alloys, Inc. and its subsidiaries, for any period of four consecutive
fiscal quarters ending during any period set forth below to be less
than the amount set forth below for such period:
Period Amount
------ ------
March 31, 2002 through September 30, 2002 $55,000,000
October 1, 2002 through December 31, 2002 $60,000,000
January 1, 2003 through March 31, 2003 $65,000,000
April 1, 2003 through September 30, 2003 $70,000,000
October 1, 2003 through December 31, 2003 $75,000,000"
(h) A new Section 6.16 shall be inserted after Section 6.15 of
the Credit Agreement and shall read as follows:
"SECTION 6.16. Minimum Liquidity. Permit the sum of the
aggregate amount of the Borrower's cash and Permitted Investments and
the unused and available Revolving Credit Commitments as of any
interest payment date in respect of the Senior Subordinated Notes or
any Qualified Subordinated Debt set forth below to be less than the
amount set forth below for such date, immediately after giving effect
to the payment of interest thereon due on such date:
Interest payment date
occurring on or about Amount
--------------------- ------
November 1, 2002 $1,500,000
May 1, 2003 $4,000,000
November 1, 2003 $6,500,000"
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SECTION 4. Representations and Warranties. (a) To induce the
other parties hereto to enter into this Amendment, each of Holdings and the
Borrower represents and warrants to each other party hereto that after giving
effect to this Amendment, (a) the representations and warranties set forth in
Article III of the Credit Agreement are true and correct in all material
respects on and as of the date hereof, except to the extent such representations
and warranties expressly relate to an earlier date, and (b) no Default or Event
of Default has occurred and is continuing.
SECTION 5. Amendment Fee. The Borrower agrees to pay to each
Lender that executes and delivers a copy of this Amendment to the Administrative
Agent (or its counsel) at or prior to 12:00 pm New York City time, on April 26,
2002 (each, a "Consenting Lender"), through the Administrative Agent, the
following non-refundable amendment fees (the "Amendment Fees"):
(a) in the case of each Consenting Lender that is a Revolving
Credit Lender, in consideration for the agreement of such Revolving
Credit Lender to extend the Revolving Credit Maturity Date, a fee in an
amount equal to 0.50% of such Revolving Credit Lender's Pro Rata
Percentage of the Reduced Revolving Credit Commitment; and
(b) in the case of each Consenting Lender (including each
Consenting Lender that is a Revolving Credit Lender), a fee in an
amount equal to 0.25% of the sum of the aggregate principal amount
outstanding of such Lender's Loans, L/C Exposure and unused Commitments
(without giving effect to the reduction of the Revolving Credit
Commitment effected by Section 2(a) hereof) as of such date;
provided, that the Borrower shall have no liability for any such Amendment Fees
if this Amendment does not become effective in accordance with Section 6 below.
Such Amendment Fees shall be payable in immediately available funds on, and
subject to the occurrence of, the Amendment Effective Date.
SECTION 6. Conditions to Effectiveness.
This Amendment shall become effective at such time (the "Amendment Effective
Date") as:
(a) the Administrative Agent (or its counsel) shall have
received counterparts hereof which, when taken together, bear the
signatures of the Borrower, Holdings, the Required Lenders and each
Revolving Credit Lender;
(b) CVC or an Affiliate thereof shall have contributed,
directly or indirectly, not less than $9.90 million in cash to the
Borrower in exchange for the CVC Secured PIK Notes (as defined above);
provided, that (i) principal and interest on such notes shall not be
payable in cash pursuant to the terms and provisions thereof until
December 31, 2005, and (ii) all Liens securing such notes shall be
subject to the terms and provisions of the Intercreditor Agreement (as
defined above);
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(c) the Intercreditor Agreement shall have been duly executed
by the parties thereto, shall have been delivered to the Administrative
Agent and shall be in full force and effect;
(d) the Administrative Agent shall have received payment of
(i) the Amendment Fees and (ii) the accrued and unpaid Commitment Fees
in respect of the portion of the Revolving Credit Commitments reduced
pursuant to Section 2(a) hereof; and
(e) all reasonable out-of-pocket expenses incurred by the
Administrative Agent in connection with the Loan Documents or the transactions
contemplated thereby, for which invoices shall have been submitted to the
Borrower on or prior to the Amendment Effective Date, shall have been paid by
the Borrower.
Without limiting the foregoing, (i) the amendments set forth
herein that affect the interest rates under the Credit Agreement shall apply to
all Loans outstanding on or after the Amendment Effective Date from and
including the Amendment Effective Date, and (ii) the first date on which accrued
interest on the Loans shall be payable on a monthly basis, as contemplated by
Section 3(a)(iii) hereof, shall be May 31, 2002.
SECTION 7. Effect of Amendment. Except as expressly set forth
herein, this Amendment shall not by implication or otherwise limit, impair,
constitute a waiver of, or otherwise affect, the rights and remedies of the
Lenders or the Administrative Agent under the Credit Agreement or any other Loan
Document, and shall not alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other Loan Document, all of which are ratified and affirmed in
all respects and shall continue in full force and effect. Nothing herein shall
be deemed to entitle Holdings or the Borrower to a consent to, or a waiver,
amendment, modification or other change of, any of the terms, conditions,
obligations, covenants or agreements contained in the Credit Agreement or any
other Loan Document in similar or different circumstances. This Amendment shall
apply and be effective only with respect to the provisions of the Credit
Agreement specifically referred to herein. This Amendment shall constitute a
"Loan Document" for all purposes under the Credit Agreement and the other Loan
Documents.
SECTION 8. Expenses. The Borrower agrees to pay the reasonable
out-of-pocket costs and expenses incurred by the Administrative Agent in
connection with the preparation of this Amendment.
SECTION 9. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto on separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all of which together shall constitute a single instrument. Delivery of an
executed counterpart of a signature page of this Amendment by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart hereof.
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SECTION 10. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 11. Headings. The headings of this Amendment are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their duly authorized officers, all as of the
date and year first above written.
NEENAH FOUNDRY COMPANY,
by
----------------------------------------
Name:
Title:
NFC CASTINGS, INC.,
by
----------------------------------------
Name:
Title:
JPMORGAN CHASE BANK, individually
and as Administrative Agent and Collateral
Agent,
by
----------------------------------------
Name:
Title:
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SIGNATURE PAGE TO AMENDMENT NO. 3, WAIVER AND AGREEMENT DATED AS OF DECEMBER 31,
2001, TO THE NEENAH FOUNDRY COMPANY CREDIT AGREEMENT DATED AS OF APRIL 30, 1997,
AS AMENDED AND RESTATED AS OF SEPTEMBER 12, 1997, APRIL 3, 1998, AND SEPTEMBER
8, 1998, AND AS FURTHER AMENDED AS OF NOVEMBER 18, 1998 AND MARCH 23, 2001
Name of Lender:____________________________________
By:________________________________________
Name:
Title:
