AMENDMENT NO. 2
TO
LOAN AND SECURITY AGREEMENT
DATED AS OF SEPTEMBER 7, 1994
AMENDED AND RESTATED
AS OF AUGUST 20, 1997
THIS AMENDMENT NO. 2 dated as of March 27, 1998 (this
"Amendment") is entered into among BANKAMERICA BUSINESS CREDIT, INC., a Delaware
corporation ("BABC"), BNY FINANCIAL CORPORATION, a New York corporation ("BNY")
formerly known as The Bank of New York Commercial Corporation, NATIONSBANK,
N.A., a national banking association ("NB") (BABC, BNY and NB and their
respective successors and assigns being sometimes hereinafter referred to
collectively as the "Lenders" and each of BABC, BNY and NB and its successors
and assigns being sometimes hereinafter referred to individually as a "Lender"),
BANKAMERICA BUSINESS CREDIT, INC., a Delaware corporation, as agent for the
Lenders (in such capacity as agent, the "Agent"), LACLEDE STEEL COMPANY, a
Delaware corporation (the "Parent"), LACLEDE CHAIN MANUFACTURING COMPANY, a
Delaware corporation ("Laclede Chain"), and LACLEDE MID AMERICA INC., an Indiana
corporation ("Laclede Mid America") (the Parent, Laclede Chain and Laclede Mid
America being sometimes hereinafter referred to collectively as the "Borrowers"
and each of the Parent, Laclede Chain and Laclede Mid America being sometimes
hereinafter referred to individually as a "Borrower").
W I T N E S S E T H:
WHEREAS, the Borrowers, the Lenders and the Agent are parties to
a certain Loan and Security Agreement dated as of September 7, 1994, amended and
restated as of August 20, 1997 and amended by that certain Amendment No. 1 dated
as of December 23, 1997 (the "Loan Agreement," capitalized terms used herein
without definition having the meanings given such terms in the Loan Agreement);
and
WHEREAS, the Borrowers, the Lenders and the Agent have agreed to
amend the Loan Agreement on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises set forth
above, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrowers, the Lenders and the
Agent hereby agree as follows:
Section 1. Amendment of the Loan Agreement. Subject to the
fulfillment of the conditions precedent set forth in Section 3 below, the Loan
Agreement is amended as follows:
(a) Section 8.24 is amended and restated as follows:
8.24 Consolidated Fixed Charge Coverage Ratio. The Borrowers
will maintain a Consolidated Fixed Charge Coverage Ratio, determined as
of the end of each period listed below, for the period indicated of not
less than the ratio indicated opposite such period:
Period Ratio
01/01/98 - 03/31/98 0.45 to 1.00
01/01/98 - 06/30/98 0.55 to 1.00
01/01/98 - 09/30/98 0.65 to 1.00
01/01/98 - 12/31/98 0.80 to 1.00
01/01/99 - 03/31/99 0.90 to 1.00
01/01/99 - 06/30/99 0.90 to 1.00
01/01/99 - 09/30/99 0.80 to 1.00
01/01/99 - 12/31/99 0.90 to 1.00
01/01/00 - 03/31/00 0.95 to 1.00
01/01/00 - 06/30/00 0.95 to 1.00
01/01/00 - 09/30/00 0.85 to 1.00
01/01/00 - 12/31/00 0.95 to 1.00
and commencing on
03/31/01 and as of
the last day of each
fiscal quarter in each
Fiscal Year thereafter,
for the twelve-month
period ending on such
date 0.95 to 1.00
For purposes of this Section 8.24, the Consolidated Fixed Charge
coverage Ratio shall be calculated without giving effect to a noncash
charge to the Parent's earnings and net worth during 1998, not to exceed
$3,000,000, for the early retirement of two key employees.
(b) Section 8.25 is amended and restated as follows:
8.25 Consolidated Adjusted Net Worth. The Borrowers will
maintain a Consolidated Adjusted Net Worth, determined as of the last
day of each fiscal quarter in each Fiscal Year, in an amount which is
not less than the sum of (a) the aggregate amount of any contributions
to the capital of the Parent made after February 26, 1997 plus (b) the
amount indicated opposite each of the following dates:
Quarter Ending Date Amount
03/31/98 $26,000,000
06/30/98 $26,000,000
09/30/98 $29,000,000
12/31/98 $31,600,000
Beginning with the fiscal quarter ending March 31, 1999, the Borrowers
will maintain a Consolidated Adjusted Net Worth, calculated as of the
last day of each fiscal quarter in each Fiscal Year, of not less than
the sum of (a) the aggregate amount of any contributions to the capital
of the Parent made after February 26, 1997, plus (b) $31,600,000, plus
(c) an amount (to the extent greater than zero and without deduction for
any losses) equal to the sum of (i) fifty percent (50.0%) of the amount
by which Consolidated Adjusted Net Worth at December 31, 1998 exceeds
$31,600,000, plus (ii) fifty percent (50.0%) of Consolidated Net
Earnings for each Fiscal Year thereafter.
For purposes of this Section 8.25, the Consolidated Adjusted Net Worth
shall be calculated without giving effect to a noncash charge to the
Parent's earnings and net worth during 1998, not to exceed $3,000,000,
for the early retirement of two key employees.
Section 2. Waiver; Margin Increase. (a) Subject to the
fulfillment of the conditions precedent set forth in Section 3 below, the
Lenders and the Agent hereby waive the Event of Default arising from the
Borrowers' failure pursuant to Section 8.25 to (i) have a Consolidated Adjusted
Net Worth, in accordance with such Section, as of December 31, 1997, of not less
than $30,000,000 (provided, that such Consolidated Adjusted Net Worth shall not
be less than $28,000,000), and (ii) have a pre-tax loss, in accordance with such
Section, for the Fiscal Year ending December 31, 1997, of not more than
$1,750,000 (provided, that such pre-tax loss shall not exceed $4,900,000).
(b) Effective as of April 1, 1998, each of the Margins shall be
increased by one half of one percent (0.50%) per annum.
(i) (A) In the event that the Borrowers shall have (i) a
Consolidated Fixed Charge Coverage ratio (calculated in accordance with
Section 8.24, as amended by this Amendment) for the period 01/01/98 -
06/30/98, of not less than 0.61 to 1.00, and (ii) Consolidated Adjusted
Net Worth (calculated in accordance with Section 8.25, as amended by
this Amendment), determined as of 06/30/98, of not less $26,914,000,
each of such increased Margins shall be reduced by one quarter of one
percent (0.25%) per annum, effective on August 1, 1998.
(B) In the event that the Borrowers shall not qualify for the
reduction described in the immediately preceding subparagraph (i)(A),
such reduction shall become effective on November 1, 1998 in the event
that the Borrowers shall have (i) a Consolidated Fixed Charge Coverage
ratio (calculated in accordance with Section 8.24, as amended by this
Amendment) for the period 01/01/98 - 09/30/98, of not less than 0.69 to
1.00, and (ii) Consolidated Adjusted Net Worth (calculated in accordance
with Section 8.25, as amended by this Amendment), determined as of
09/30/98, of not less $29,861,000.
(ii) In addition to the maximum reduction of one quarter of one percent
(0.25%) per annum pursuant to the foregoing subparagraph (i), such
increased Margins shall be reduced by one quarter of one percent (0.25%)
per annum on the first day of the first calendar month following the
Agent's receipt of financial statements as of the end of a fiscal
quarter demonstrating that the Borrowers would be in compliance with
Sections 8.24 and 8.25 of the Loan Agreement, as such Sections existed
prior to this Amendment (but calculated without giving effect to a
noncash charge to the Parent's earnings and net worth during 1998, not
to exceed $3,000,000, for the early retirement of two key employees).
Section 3. Conditions to Amendment. This Amendment shall
become effective upon the receipt by the Agent by facsimile transmission of a
counterpart of this Amendment executed by each Borrower and each Lender, and
execution of this Amendment by the Agent (provided, that each Borrower and each
Lenders shall promptly execute six applicable signature pages hereof and deliver
such pages to the Agent).
Section 4. Representations and Warranties. Each Borrower
hereby represents and warrants that (i) this Amendment constitutes a legal,
valid and binding obligation of such Borrower, enforceable against such Borrower
in accordance with its terms, (ii) the representations and warranties contained
in the Loan Agreement are correct in all material respects as though made on and
as of the date of this Amendment, and (iii) no Event of Default has occurred and
is continuing.
Section 5. Reference to and Effect on the Loan Agreement.
(a) Upon the effectiveness of this Amendment, each
reference in the Loan Agreement to "this Agreement", "hereunder", "hereof",
"herein", or words of like import shall mean and be a reference to the Loan
Agreement, as amended hereby, and each reference to the Loan Agreement in any
other document, instrument or agreement executed and/or delivered in connection
with the Loan Agreement shall mean and be a reference to the Loan Agreement, as
amended hereby.
(b) Except as specifically amended above, the Loan
Agreement and all other documents, instruments and agreements executed and/or
delivered in connection therewith shall remain in full force and effect and are
hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of the
Agent or the Lenders under the Loan Agreement, nor constitute a waiver of any
provision of the Loan Agreement, except as specifically set forth herein.
Section 6. Execution in Counterparts. This 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 to be an original and all of which taken together shall constitute but
one and the same instrument.
Section 7. Governing Law. This Amendment shall be governed by
and construed in accordance with the internal laws (as opposed to the conflicts
of laws provisions) of the State of Illinois.
Section 8. Legal Fees. The Borrowers agree to pay to the
Agent, for its benefit, on demand, all costs and expenses that the Agent pays or
incurs in connection with the negotiation, preparation, consummation,
administration, enforcement and termination of this Amendment, including,
without limitation, the allocated costs of the Agent's in-house counsel fees.
Section 9. Section Titles. The section titles contained in
this Amendment are and shall be without substance, meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered as of March 27, 1998.
LACLEDE STEEL COMPANY
By:________________________________
Vice President
LACLEDE CHAIN MANUFACTURING COMPANY
By:________________________________
Vice President
LACLEDE MID AMERICA INC.
By:________________________________
Vice President
BANKAMERICA BUSINESS CREDIT, INC., as the Agent
By:________________________________
Vice President
BANKAMERICA BUSINESS CREDIT,
INC., as a Lender
By:________________________________
Vice President
BNY FINANCIAL CORPORATION, as
a Lender
By:________________________________
Vice President
NATIONSBANK, N.A., as a Lender
By:________________________________
Vice President
