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EXHIBIT 10.11
CASH FLOW AGREEMENT
CASH FLOW AGREEMENT (this "Agreement"), dated as of December 18,
1998, between Acme Metals Incorporated, a Delaware corporation (the "Parent"),
Acme Steel Company, a Delaware corporation ("ASC"), Acme Packaging Corporation,
a Delaware corporation ("APC"), Alabama Metallurgical Corporation, a Washington
State corporation ("AMC") and Acme Steel Company International, Inc., a
Barbados, W.I. corporation ("ASCI", and together with the Parent, ASC, APC, AMC
and ASCI, the "Borrowers"), Alpha Tube Corporation, a Delaware corporation
("Alpha Tube") and BankAmerica Business Credit, Inc., a Delaware corporation, as
Agent (the "Agent").
The Borrowers, certain financial institutions (the "Lenders") and
the Agent are parties to a Loan and Security Agreement dated as of December 18,
1998 (as amended, restated, supplemented or otherwise modified from time to time
in accordance with its terms, the "Loan Agreement"), providing for extensions of
credit and certain other financial accommodations (including, without
limitation, the issuance of letters of credit and credit support) to the
Borrowers.
To induce the Lenders and the Agent to enter into the Loan and
Security Agreement and to extend credit thereunder, and to induce Alpha Tube to
guarantee the obligations of the Borrowers thereunder and to pledge its assets
in support thereof, the Borrowers, Alpha Tube and the Agent have agreed to enter
into this Agreement, providing for the continued implementation, subject to the
terms and conditions herein, of the integrated cash management system of the
Borrowers and Alpha Tube and the participation of Alpha Tube therein.
Accordingly, the parties hereto agree as follows:
Section 1. All cash of Alpha Tube will be deposited in a separate
account (the "Segregated Account"). Subject to Section 3 below, Alpha Tube will
continue to "upstream" its cash receipts to the Parent in the same manner as it
did prior to the Filing Date. Subject to Section 3 below, funds deposited in the
Segregated Account shall be freely accessible by the Parent (e.g., to fund the
Borrowers' operations and administrative expenses and pay debt service under the
Loan Agreement) and all amounts deposited in the Segregated Account may be
withdrawn by the Parent on a daily basis.
Section 2. Alpha Tube will have an allowed superpriority claim
against any Borrower for all funds upstreamed by Alpha Tube after the Filing
Date to such Borrower, net of all offsets as provided in Section 4. This claim
will be junior to the claims of the Lenders (and Carve-Out Expenses, as defined
in the Loan Agreement, and in any event not to exceed the sum of (i) amounts
payable pursuant to 28 U.S.C. ss.1930(a)(6) plus (ii) $3,000,000) and senior to
all other administrative and unsecured claims. The Final Bankruptcy Court Order
will provide for such junior superpriority claim.
Section 3. Alpha Tube will periodically compute and report to the
Agent and the Borrowers the following information: (i) Alpha Tube's Eligible
Inventory and Eligible
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Accounts (calculated separately for Alpha Tube using the same criteria for
eligibility as set forth in the Loan Agreement) and (ii) the sum of Alpha Tube's
pre-petition and post-petition trade debt (including trade debt to any trade
creditor that is a Borrower or an Affiliate) and Alpha Tube's accrued and unpaid
Chapter 11 administrative expenses, all as reflected in Alpha Tube's books and
records (such sum being referred to as the "Protected Amount"). Such reports
will be prepared and delivered as frequently as the Borrowers' periodic
borrowing base reports to the Agent under the Loan Agreement. As long as the
most recent report so delivered indicates that the sum of Alpha Tube's Eligible
Accounts and Eligible Inventory (as so computed) exceeds 110% of the Protected
Amount (an "Alpha Surplus Situation"), Alpha Tube will continue to upstream its
cash receipts as provided in Section 1 above. If any such report indicates that
the sum of Alpha Tube's Eligible Accounts and Eligible Inventory does not exceed
110% of the Protected Amount, Alpha Tube shall give the Parent and the Agent
written notice (a "Deficiency Notice") of such fact, and effective upon the
expiration of three Business Days from such Deficiency Notice and unless and
until such deficiency is cured, (i) no further upstreaming of cash may be made
by Alpha Tube to the Parent, and (ii) any funds remaining in the Segregated
Account may no longer be used for purposes other than Alpha Tube's business
operations (which business operation shall be deemed to include, without
limitation, intercompany obligations) and its administrative expenses, until
such time as Alpha Tube shall deliver a report demonstrating that an Alpha
Surplus Situation again exists. If any such deficiency is not cured by the end
of such three Business Day period, Alpha Tube shall deliver a copy of such
Deficiency Notice to the financial institution where the Segregated Account is
maintained immediately upon expiration of such three Business Day Period.
Section 4. The Borrowers agree that Alpha Tube's potential cash
needs to support its operations can be funded either through use of the
Borrowers funds on hand or through borrowings by the Borrowers (to the extent
that availability exists under the Loan Agreement) and in either case
downstreamed to Alpha Tube or else directly paid in satisfaction of
post-petition obligations, and pre-petition obligations permitted to be paid by
the Bankruptcy Court and agreed to by the Agent, incurred by Alpha Tube. Any
amounts so downstreamed to Alpha Tube or paid directly on its behalf will be
offset against (and will reduce) the post-petition inter-company balance of
advances from Alpha Tube to the Borrowers referred to in Section 2 above.
Section 5. Alpha Tube hereby covenants and agrees with each
Borrower as follows:
(i) Alpha Tube will perform and comply with all
covenants, agreement and conditions contained in the Loan
Agreement and other Loan Documents as they relate to Alpha Tube;
(ii) Alpha Tube will not knowingly take any action
that causes a Default or an Event of Default to occur, and will
cooperate with the Borrowers in attempting to cure any Default or
Event of Default; and
(iii) Alpha Tube will notify Parent immediately upon
becoming aware (x) of any Default or Event of Default, (y) that
the representations and warranties contained in
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the Loan Agreement and the other Loan Documents as they relate to
Alpha Tube are untrue or incorrect in any material respect on any
date or (z) that any condition to any Borrowing as it relates to
Alpha Tube shall not be satisfied.
Section 6. This Agreement is for the benefit of the Agent, the
Lenders, the Borrowers and Alpha Tube and may only be modified or amended with
the prior written consent of the Agent, the Parent and Alpha Tube. Neither the
Agent nor any Lender shall have any obligations, duties or liabilities
(including, without limitation, any obligations, duties or liabilities with
respect to the calculation of Alpha Tube's Eligible Accounts and Eligible
Inventory) under this Agreement.
Section 7. This Agreement may be executed by the parties hereto
individually or in any combination, in one or more counterparts, each of which
shall together constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by telecopier shall be
effective as delivery of a manually executed counterpart of this Agreement.
Section 8. This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York, without giving effect to the
conflict of law provisions thereof, and, upon execution by all parties hereto,
shall be binding upon the Borrower, Alpha Tube and the Agent.
Section 9. Upon payment in full of all Obligations, the
termination and cancellation of all Letters of Credit and the termination of all
Commitments, this Agreement shall terminate.
Section 10. Capitalized terms used herein and not otherwise
defined shall have the respective defined meanings set forth in the Loan
Agreement.
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IN WITNESS WHEREOF, the parties have entered into this Agreement
on the date first above written.
Acme Metals Incorporated
By:______________________________
Name: Xxxxx X. Xxxxxxxx
Title: Vice President - Finance and
Administration
Acme Steel Company
By:______________________________
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
Acme Packaging Corporation
By:______________________________
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
Alabama Metallurgical Corporation
By:______________________________
Name: Xxxxx X. Xxxxxxxx
Title: President
Acme Steel Company International, Inc.
By:______________________________
Name: Xxxxx X. Xxxxxxxx
Title: Chairman
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Alpha Tube Corporation
By:______________________________
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
BankAmerica Business Credit, Inc., as
Agent
By:______________________________
Name:
Title:
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