EXHIBIT 10.1
EXECUTION COPY
AMENDMENT NO. 3 TO FINANCING AND SECURITY AGREEMENT
THIS AMENDMENT NO. 3 TO FINANCING AGREEMENT AND SECURITY AGREEMENT (this
"Amendment") is made and entered into as of the 31st day of March, 2004, by and
among THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation ("CIT"), CIT
as agent for the Lenders (the "Agent"), LASALLE BUSINESS CREDIT, LLC, an
Illinois limited liability company ("LaSalle") and any other party which now or
hereafter becomes a lender hereunder (collectively with CIT and LaSalle, the
"Lenders"), NEWPORT STEEL CORPORATION, a Kentucky corporation ("Newport" and
individually, a "Company"), and XXXXXX STEEL CORPORATION, a Pennsylvania
corporation ("Koppel", and individually a "Company" and collectively Newport and
Xxxxxx, the "Companies").
RECITALS
A. The Companies are the borrowers under that certain Financing and
Security Agreement dated as of March 29, 2002, as amended by Amendment No. 1 to
Financing and Security Agreement dated as of May 19, 2003 and Amendment No. 2 to
Financing and Security Agreement dated as of December 29, 2003 (as amended, the
"Financing Agreement"), among the Lenders, the Agent, and the Companies.
B. Pursuant to Section 13 of the Financing Agreement, CIT, as Lender,
has agreed to sell and assign to LaSalle, and LaSalle has agreed to purchase and
assume, forty percent (40%) of CIT's rights and obligations under the Financing
Agreement.
C. Concurrently with the syndication to LaSalle referenced in
paragraph "B" above, the Companies, the Agent and Lenders desire to amend the
Financing Agreement in the manner set forth below.
NOW, THEREFORE, in consideration of the foregoing Recitals, the
representations, warranties, covenants and agreements set forth in this
Amendment and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Companies, the Agent and the Lenders
hereby agree as follows:
1. INCORPORATION BY REFERENCE.
(a) The foregoing Recitals are incorporated into this Amendment by
reference as if set forth in full in the body of this Amendment.
(b) Capitalized terms used in this Amendment and not expressly defined
herein shall have the meanings given to such terms in the Financing Agreement.
2. AMENDMENTS TO FINANCING AGREEMENT. Effective upon complete
satisfaction of the conditions set forth in Section 3 below:
2.1 The definition of "Documentation Fee" set forth in Section 1 is
amended by deleting the parenthetical therein and inserting in its place the
parenthetical "(and standard fees of Agent's in-house counsel or reasonable fees
and expenses of outside counsel hired by Agent)".
2.2 The definition of "Out-of Pocket Expenses" set forth in Section 1
is amended and restated in its entirety to read as follows:
"OUT-OF POCKET EXPENSES shall mean all of the Agent's (and the
Lenders upon the occurrence of an Event of Default which is not
waived by the Required Lenders) present and future expenses
incurred relative to this Financing Agreement or any other Loan
Documents, whether incurred heretofore or hereafter, which expenses
shall include, without being limited to: the cost of record
searches, all costs and expenses incurred by the Agent in opening
bank accounts, depositing checks, receiving and transferring funds,
and wire transfer charges, any charges imposed on the Agent due to
returned items and "insufficient funds" of deposited checks and the
Agent's standard fees relating thereto, any amounts paid by,
incurred by or charged to, the Agent and/or the Lenders by the
Issuing Bank under a Letter of Credit Guaranty or a Company's
reimbursement agreement, application for Letters of Credit or other
like document which pertain either directly or indirectly to such
Letters of Credit, and the Agent's standard fees relating to the
Letters of Credit and any drafts thereunder, travel, lodging and
similar expenses of the Agent's personnel in connection with
inspecting and monitoring the Collateral from time to time
hereunder, any applicable counsel fees and disbursements, fees and
taxes relative to the filing of financing statements, all expenses,
costs and fees set forth in Paragraph 10.3 of Section 10 of this
Financing Agreement, all fees and disbursements (including, without
limitation, all reasonable fees and disbursements of in-house and
outside counsel to Agent) incurred as a result of a workout,
restructuring, reorganization, liquidation, insolvency proceeding
and in any appeals arising therefrom whether incurred before,
during or after the termination of this Financing Agreement or the
commencement of any case with respect to any of the Companies or
Guarantors under the United States Bankruptcy Code or any similar
statute; and title insurance premiums, real estate survey costs,
note taxes, intangible taxes and mortgage or recording taxes and
fees ."
2.3 The definition of "Inventory Loan Cap" set forth in Section 1 is
amended and restated in its entirety to read as follows:
"INVENTORY LOAN CAP shall mean the amount of $35,000,000."
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2.4 The definition of "Revolving Line of Credit" set forth in Section 1
is amended by deleting the reference to the monetary amount of $45,000,000 set
forth in the last line, and inserting in its place the monetary amount of
"$50,000,000".
2.5 The last sentence of Section 7.3 of the Financing Agreement is
amended and restated in its entirety as follows:
"In addition to the foregoing, Agent may require the Companies to
obtain and deliver to Agent (or Agent may obtain, at the Companies'
expense) (i) one Inventory appraisal report and /or one Equipment
appraisal report during any calendar year so long as excess
Availability hereunder (excluding from the calculation of excess
Availability any and all Availability Reserves required under this
Financing Agreement) is $10,000,000 or more during such calendar
year, and (ii) two Inventory appraisal reports and/or two Equipment
appraisal reports during any calendar year in the event that excess
Availability hereunder (excluding from the calculation of excess
Availability any and all Availability Reserves required under this
Financing Agreement) is less than $10,000,000 at any time during
such calendar year; all such reports in form and substance and from
appraisers satisfactory to Agent; provided however, that after the
occurrence and during the continuance of a Default or if an Event
of Default exists hereunder, there shall be no limit on the number
of appraisal reports that Agent may obtain at the Companies'
expense as aforesaid."
2.6 Section 8.9(A) of the Financing Agreement shall be amended by
adding the following sentence to the end of Section 8.9(A).
"Such line usage fee shall be payable to the Agent for the ratable
benefit of the Lenders"
3. CONDITIONS. The terms of Section 2 above shall become effective
only when each of the following conditions have been completely satisfied as
determined by Agent in its sole and absolute discretion:
3.1 DOCUMENTS. Agent shall have received each of the following
agreements, instruments and other documents, in each case in form and substance
acceptable to Agent in its sole discretion:
(a) This Amendment duly executed and delivered by the Companies, the
Guarantors and the Lenders;
(b) The Assignment and Transfer Agreement (the "Assignment and Transfer
Agreement") duly executed by LaSalle;
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(c) Revolving Credit Notes dated as of the date hereof (the "Notes")
for each of LaSalle and CIT and cancellation of the existing Amended and
Restated Revolving Credit Note;
(d) Certified resolutions of the Board of Directors of each of the
Companies and the Guarantors; and
(e) Such other documents, instruments, agreements, opinions,
certificates and other items as Agent may reasonably request.
3.2 REPRESENTATIONS AND WARRANTIES; NO DEFAULT. As of the date of this
Amendment, the representations and warranties contained herein and in the
Financing Agreement shall be true and complete in all material respects (both
immediately before and after giving effect to consummation of the transactions
contemplated hereby), and no Default or Event of Default thereunder shall exist.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANIES.
4.1 In order to induce the Agent and the Lenders to enter into this
Amendment, the Companies (where appropriate) jointly and severally represent and
warrant to the Agent and the Lenders that: (a) each of the Companies has full
power, authority and legal right to execute, deliver and perform this Amendment,
and the execution, delivery and performance hereof and thereof have been duly
authorized by all necessary organizational action; (b) this Amendment has been
duly executed and delivered by each of the Companies and constitutes the legal,
valid and binding obligation of each of the Companies, enforceable in accordance
with its terms; (c) the execution and delivery of this Amendment by the
Companies does not violate any term, provision or condition of, or constitute a
default under, any loan agreement, mortgage, deed of trust, note, security
agreement, pledge agreement, lease or indenture to which any of the Companies is
a party or by which any of the Companies' assets are bound.
4.2 In addition to the representations and warranties set forth above,
the Companies jointly and severally reaffirm and remake all representations and
warranties made by the Companies in the Financing Agreement, effective as of the
date of this Amendment, and the Companies hereby confirm that, as of the date
hereof, (a) they have no offsets, counterclaims or defenses to the payment of
the Obligations and (b) the Lenders and the Agent have fully performed their
respective obligations under the Financing Agreement and the other Loan
Documents.
4.3 In consideration of the agreement of LaSalle to become a Lender
under the Financing Agreement, the Companies agree to pay to Agent for the
benefit of LaSalle a syndication fee of $100,000.00. The Agent may charge this
syndication fee to the Revolving Loan Account upon the execution of this
Amendment and the Assignment and Transfer Agreement.
5. REFERENCE TO AND EFFECT OF AMENDMENT; RESERVATION OF THE AGENTS'
AND THE LENDERS' RIGHTS.
5.1 Upon the effectiveness of this Amendment, (i) each reference in the
Financing Agreement to "this Financing Agreement," "hereunder," "hereof,"
"herein," "hereby" or words of
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like import, shall mean and be a reference to the Financing Agreement as amended
hereby, (ii) each reference to the Financing Agreement in the Promissory Notes
and in any other document, instrument or agreement executed and/or delivered by
the Companies in connection with the Financing Agreement shall mean and be a
reference to the Financing Agreement, as amended hereby, and (iii) each
reference to the Promissory Notes, Guaranties, Security Agreements, and any
other document, instrument or agreement executed and/or delivered by the
Companies or Guarantors in connection with this Amendment shall mean and be a
reference to such Promissory Notes, Guaranties, Security Agreements or any such
other document, instrument or agreement, as amended in connection with this
Amendment.
5.2 This Amendment is not, and shall not be construed as, a novation,
consent, waiver, release or modification with respect to any of the terms,
provisions, conditions, representations, warranties, covenants, rights, powers
or remedies set forth in the Financing Agreement or any of the other Loan
Documents, except for the specific instance and purpose for which it is granted
as expressly specified herein. Agent's or any Lender's failure, at any time or
times hereafter, to require strict performance by the Companies of any provision
or term of this Amendment shall not waive, affect or diminish any right of Agent
or any Lender thereafter to demand strict compliance and performance herewith.
None of the undertakings, agreements, warranties, covenants and representations
of the Companies contained in this Amendment shall be deemed to have been
suspended or waived by Agent or any Lender unless such suspension or waiver is
(a) in writing and signed by Agent on behalf of the Lenders and (b) delivered to
the Companies, notwithstanding any prior practice or course of dealing, or any
waiver, forbearance or other similar agreement or understanding, whether any of
the foregoing were or are oral or written, by or between the parties hereto.
5.3 Except as expressly modified by this Amendment, all of the terms
and provisions of the Financing Agreement are and shall remain in full force and
effect, and shall apply with such force and effect to this Amendment, and the
Agent and the Lenders hereby expressly reserve all rights, remedies, powers and
privileges contained in the Financing Agreement and in any other document
executed and/or delivered by the Companies pursuant thereto.
6. AFFIRMATION OF GUARANTEES. Each of NS Group, Inc., Erlanger Tubular
Corporation and Northern Kentucky Management, Inc. (i) consents to and approves
the execution an delivery of this Amendment by the parties hereto, (ii) agrees
that this Amendment does not and shall not limit or diminish in any manner the
obligations of the Guarantors under their respective Guaranties, or under any of
the other documents executed and/or delivered by any of the Guarantors in
connection therewith, and agrees that such obligations of the Guarantors would
not be limited or diminished in any manner even if the Guarantors had not
executed this Amendment, (iii) agrees that this Amendment shall not be construed
as requiring the consent of the Guarantors in any other circumstance, (iv)
reaffirms its obligations under its respective Guaranty and such other related
documents, and (v) agrees that the Guaranty and such other related documents
remain in full force and effect and are each hereby ratified and confirmed.
7. NO NOVATION. The parties agree and acknowledge that the unpaid
balance of the indebtedness hitherto evidenced by that certain Amended and
Restated Revolving Credit Note dated
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as of June 20, 2003, made by the Companies to the order of CIT in the principal
amount of $45,000,000 (the "Original Note"), and evidencing the Obligations
under the Financing Agreement, remains outstanding as of the date hereof and
shall continue to be secured pursuant to the terms of the Financing Agreement.
To the extent that the aggregate principal balance of the Notes include the
indebtedness hitherto evidenced by the Original Note, the Notes (i) merely
re-evidence the indebtedness hitherto evidenced by the Original Note, (ii) are
given in substitution for, and not as payment of, the Original Note and (iii)
are in no way intended to constitute a novation of the Original Note or any
prior promissory note.
8. NOTICES. For purposes of Section 12.6(C) of the Financing
Agreement, LaSalle's address for notices shall be: LaSalle Business Credit, LLC,
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000, Attention: Xxxxxx
Xxxxxxx.
9. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
AMENDMENT SHALL BE GOVERNED BY THE LAWS AND DECISIONS OF THE STATE OF ILLINOIS
WHICH ARE APPLICABLE TO CONTRACTS THAT ARE NEGOTIATED, EXECUTED, DELIVERED AND
PERFORMED SOLELY IN THE STATE OF ILLINOIS.
10. 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.
[SIGNATURE PAGE FOLLOWS]
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[Signature page to Amendment No. 3 to Financing and Security Agreement]
COMPANIES:
NEWPORT STEEL CORPORATION, a XXXXXX STEEL CORPORATION, a
Kentucky corporation Pennsylvania corporation
/S/: Xxxxxx X. Xxxxxxxxxx /S/: Xxxxxx X. Xxxxxxxxxx
---------------------------- ------------------------
Name: Xxxxxx X. Xxxxxxxxxx Name: Xxxxxx X. Xxxxxxxxxx
Title: Vice President & Treasurer Title: Vice President & Treasurer
AGENT AND LENDERS:
THE CIT GROUP/BUSINESS CREDIT, LASALLE BUSINESS CREDIT, LLC,
INC., as Agent and a Lender an Illinois limited liability company
/S/: Xxxxx X. Xxxxxxx /S/: Xxxxxx X. Xxxxxxx
---------------------------- -------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Vice President Title: Vice President
GUARANTORS
NORTHERN KENTUCKY ERLANGER TUBULAR
MANAGEMENT, INC., a Kentucky CORPORATION,
corporation an Oklahoma corporation
/S/: Xxxxxx X. Xxxxxxxxxx /S/: Xxxxxx X. Xxxxxxxxxx
---------------------------- ------------------------
Name: Xxxxxx X. Xxxxxxxxxx Name: Xxxxxx X. Xxxxxxxxxx
Title: Vice President & Treasurer Title: Vice President & Treasurer
NS GROUP, INC., a Kentucky corporation
/S/: Xxxxxx X. Xxxxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Vice President & Treasurer
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