1
EXHIBIT 10.5
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT, dated as of February 2, 2001
(this "Fourth Amendment"), is among ROUGE INDUSTRIES, INC., a Delaware
corporation ("Holdings"), ROUGE STEEL COMPANY, a Delaware corporation (the
"Borrower"), the financial institutions party hereto (collectively with the
Agent (defined below), the "Banks") and BANK ONE, MICHIGAN, a Michigan banking
corporation, as agent for the Banks (in such capacity, the "Agent").
RECITALS
A. Holdings, the Borrower, the Agent and the Banks are parties to
a Credit Agreement dated as of December 16, 1997, as amended by the First
Amendment to Credit Agreement dated July 23, 1999, the Second Amendment to
Credit Agreement dated as of April 21, 2000, and as further amended by the Third
Amendment to Credit Agreement dated as of January 18, 2001 (as amended, and as
may be further amended, modified, or restated from time to time, the "Credit
Agreement").
B. Holdings and Borrower have informed Agent and the Banks that
its accountants have determined that certain net deferred tax assets must have a
100% valuation allowance placed against them in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS
109"). This would cause Holdings and Borrower to be in default under the Net
Worth financial covenant. Holdings and Borrower requested that Agent and the
Banks amend the Credit Agreement to provide that Net Worth is calculated without
regard to the valuation allowance established for deferred tax in accordance
with FAS 109.
C. Holdings and the Borrower desire to amend the Credit
Agreement, and the Agent and the Banks are willing to do so strictly in
accordance with the terms hereof.
TERMS
In consideration of the premises and of the mutual agreements herein
contained, the parties agree as follows:
ARTICLE 1
AMENDMENT
Upon fulfillment of the conditions set forth in Article III
hereof, the Credit Agreement is amended to provide that Net Worth is calculated
without regard to the valuation allowance established for deferred tax in
accordance with FAS 109.
2
ARTICLE 2
REPRESENTATIONS
Each of Holdings and Borrower represents and warrants to the
Agent and the Banks that:
2.1 The execution, delivery and performance of this Fourth
Amendment are within its powers, have been duly authorized and are not in
contravention with any law, of the terms of its Articles of Incorporation or
By-Laws, or any undertaking to which it is a party or by which it is bound.
2.2 This Fourth Amendment is the legal, valid and binding
obligation of it, enforceable against it in accordance with the terms hereof.
2.3 After giving effect to the amendments herein contained, the
representations and warranties contained in Section 4 of the Credit Agreement
and the representations and warranties contained in the other Loan Documents are
true on and as of the date hereof with the same force and effect as if made on
and as of the date hereof.
2.4 Each of Borrower, Holdings, and QS Steel is, and after giving
effect to the incurrence of all indebtedness and obligations being incurred in
connection herewith and will be and will continue to be, Solvent.
ARTICLE 3
CONDITIONS OF EFFECTIVENESS
This Fourth Amendment shall become effective on the date that
each of the following has been satisfied to Agent's satisfaction:
3.1 This Fourth Amendment shall be signed by Holdings, the
Borrower, Agent, and the Required Banks.
3.2 Holdings, QS Steel, and Borrower have delivered such
additional documents, instruments, resolutions, etc., as Agent may reasonably
require.
ARTICLE 4
MISCELLANEOUS
4.1 References in any Loan Document to the Credit Agreement shall
be deemed to be references to the Credit Agreement as amended hereby and as
further amended from time to time.
4.2 Holdings and Borrower, jointly and severally, agree to pay and
to save the Agent
3
harmless for the payment of all costs and expenses arising in connection with
the transactions contemplated by this Fourth Amendment, including the reasonable
fees of counsel to the Agent (Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx LLP),
consultants and advisers, and the fees, costs and expenses associated with any
appraisals conducted by the Agent or its agents. Holdings and Borrower agree to
cooperate, and to cause its Subsidiaries to cooperate, in all respects with the
Agent's consultants, advisers, appraisers, and their respective agents.
4.3 Each of Holdings and Borrower acknowledge and agree that (i)
the Agent and the Banks have fully performed all of their obligations under the
Loan Documents and all documents executed in connection with the Loan Documents
and (ii) all actions taken by the Agent and the Banks are reasonable and
appropriate under the circumstances and within their rights under the Loan
Documents.
4.4. Each of Holdings and Borrower acknowledge that neither the
Banks nor their affiliates will, under any circumstances, be obligated to honor
any checks or other items presented to Banks or their affiliates for payment for
which there are insufficient available funds in the respective Borrower's
account, and Banks or their affiliates may return any such items so presented.
4.5 Except as expressly amended hereby, each of Holdings and
Borrower agree that the Loan Documents are ratified and confirmed and shall
remain in full force and effect and that it has no set off, counterclaim or
defense with respect to any of the foregoing. Terms used but not defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement.
4.6 (a) This Fourth Amendment constitutes each of Holdings',
the Borrower's and the Banks' entire understanding with respect to the subject
matter hereof. Modifications or amendments to this Fourth Amendment must be in
writing and comply with Section 9.5 of the Credit Agreement in order to be
effective. This Fourth Amendment is governed by the internal laws of the State
of Michigan (without regard to conflicts of law principles). This Fourth
Amendment is binding on each of Holdings and Borrower and their respective
successors, assigns, heirs, and personal representatives and inures to Banks'
benefit and the benefit of its successors and assigns. If any provision of this
Fourth Amendment conflicts with any applicable statute or law, or is otherwise
unenforceable, such offending provision is null and void only to the extent of
such conflict or unenforceability, and is deemed separate from and does not
invalidate any other provision of this Fourth Amendment.
(b) This Fourth Amendment is being entered into among
competent persons, who are experienced in business and represented by counsel
(or who have had the opportunity to be represented by counsel), and has been
reviewed by each of Holdings and Borrower and their counsel, if any. Therefore,
any ambiguous language in this Fourth Amendment will not necessarily be
construed against any particular party as the drafter of such language.
4.7 This Fourth Amendment may be signed upon any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
3
4
IN WITNESS WHEREOF, the parties signing this Fourth Amendment have
caused this Fourth Amendment to be executed and delivered as of the day and year
first above written.
ROUGE INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxxxxxxxxx
-------------------------------------------------------
Xxxx X. Xxxxxxxxxxx
Vice Chairman And Chief Financial Officer
ROUGE STEEL COMPANY
By: /s/ Xxxx X. Xxxxxxxxxxx
-------------------------------------------------------
Xxxx X. Xxxxxxxxxxx
Vice Chairman And Chief Financial Officer
BANK ONE, MICHIGAN, as Agent, as Issuing Bank
and as a Bank
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------------------
Xxxxxxx X. Xxxxxx, Xx.
First Vice President
COMERICA BANK
By: /s/ Xxxxxx X. XxXxxxxxx
-------------------------------------------------------
Name: Xxxxxx X. XxXxxxxxx
--------------------------------------------------
Title: Assistant Vice President
--------------------------------------------
[Signatures continued
on following page]
4
5
[Signatures continued
from preceding page]
NATIONAL CITY BANK
By: /s/ Xxxx X. XxXxxxxxxxx
---------------------------------------------
Name: Xxxx X. XxXxxxxxxxx
----------------------------------------
Title Vice President
-----------------------------------
REAFFIRMATION OF AGREEMENTS
The undersigned, while not a party to this Fourth Amendment, is a party
to various other guaranties, security agreements, documents, instruments, and
agreements with or in favor of Agent, for the benefit of the Banks (each, a
"Related Agreement" and collectively, the "Related Agreements"). In order to
induce Agent and the Banks to enter into the Fourth Amendment set forth above,
the undersigned (1) acknowledges and agrees that all of its respective Related
Agreements remain in full force and effect and are hereby ratified, confirmed,
approved and, extend to and cover all of the obligations described in the Fourth
Amendment; (2) consents to all of the terms and conditions of the Fourth
Amendment; (3) if it has executed a guaranty in Lender's favor, it acknowledges
and agrees that its guaranty (and the collateral security therefor) extends to
and covers all of Borrower's obligations to Agent and the Banks, including those
arising under, in connection with, or described in the Fourth Amendment; (4) it
acknowledges and agrees that the fact that Agent has sought this reaffirmation
does not create any obligation, right, or expectation that Agent will seek its
consent to or reaffirmation with respect to any other or further amendments or
modifications to the relationship between it, the Banks and Borrower or any
other party; and (5) acknowledges and agrees that the references to it in the
Related Agreements (including in its Guaranty) as being a Delaware corporation
are amended to read that it is a Michigan corporation.
QS STEEL INC.
By: /s/ Xxxx X. Xxxxxxxxxxx
--------------------------------------------------
Xxxx X. Xxxxxxxxxxx
President
5
