EXHIBIT 10.1
SUBORDINATED LOAN AND SECURITY AGREEMENT
by and among
ROUGE STEEL COMPANY,
as the Borrower
and
ROUGE INDUSTRIES, INC.
QS STEEL INC.
EVELETH TACONITE COMPANY,
as the Guarantors
and
CLEVELAND-CLIFFS INC
as the Lender
Dated: July 12, 2002
TABLE OF CONTENTS
PAGE
1. LOAN....................................................................................................1
2. INTERCREDITOR AGREEMENT.................................................................................1
3. CONDITIONS TO BORROWING.................................................................................1
4. LOAN TERMS..............................................................................................1
5. CONDITIONS PRECEDENT....................................................................................2
6. GUARANTEES..............................................................................................3
7. GRANT OF SECURITY INTEREST..............................................................................4
8. INCORPORATION BY REFERENCE..............................................................................5
9. REPRESENTATIONS AND WARRANTIES..........................................................................5
10. COVENANTS...............................................................................................5
11. EVENTS OF DEFAULT; REMEDIES.............................................................................5
12. U.C.C. FINANCING STATEMENTS.............................................................................7
13. SUCCESSORS AND ASSIGNS; AMENDMENTS......................................................................7
14. COUNTERPARTS; EFFECTIVENESS.............................................................................7
15. MISCELLANEOUS...........................................................................................7
16. GOVERNING LAW; JURISDICTION.............................................................................8
17. DEFINITIONS.............................................................................................8
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INDEX TO SCHEDULES
Schedule A -- Note
Schedule B -- Description of Collateral
Schedule C -- Disclosure Schedule
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SUBORDINATED LOAN AND SECURITY AGREEMENT
This Subordinated Loan and Security Agreement (as may be amended from
time to time, this "AGREEMENT") is entered into as of July 12, 2002, by and
among Rouge Steel Company, a Delaware corporation (the "BORROWER"), Rouge
Industries, Inc., a Delaware corporation ("RII"), QS Steel Inc., a Michigan
corporation ("QS"), Eveleth Taconite Company, a Minnesota corporation
("EVELETH," and together with RII and QS, the "GUARANTORS"), and
Cleveland-Cliffs Inc, an Ohio corporation (the "LENDER").
1. Loan. Subject to the terms and conditions hereof, the Lender hereby agrees to
make a loan (the "LOAN") to the Borrower by wire transfer of immediately
available funds on the date hereof, in the principal amount of Ten Million and
No/100 Dollars ($10,000,000). The proceeds of the Loan shall be used for the
Borrower's working capital and other operating needs. The Loan shall be
evidenced by a promissory note of the Borrower substantially in the form of
Schedule A hereto (the "NOTE").
2. Intercreditor Agreement. The rights and obligations of the parties hereto are
subject to the provisions of the Intercreditor Agreement, and in the event of
any inconsistency between the provisions hereof and thereof, the provisions of
the Intercreditor Agreement shall prevail.
3. Conditions to Borrowing. The obligation of the Lender to make the Loan
hereunder is subject to the satisfaction of the following conditions, which
satisfaction will be determined in the reasonable discretion of Lender:
(a) No Event of Default shall have occurred and be continuing;
(b) The conditions precedent set forth in Section 5 shall have been
satisfied; and
(c) All representations and warranties of the Borrower as set forth in this
Agreement shall be true and correct in all material respects.
4. Loan Terms.
(a) The Borrower promises to repay the principal amount of the Loan in four
equal installments of Two Million Five Hundred Thousand and No/100
Dollars ($2,500,000) each on June 30 of each year commencing June 30,
2004, with the balance thereof, together with all unpaid interest
thereon, payable in full on June 30, 2007.
(b) (i) The principal amount of the Loan outstanding from time to
time shall bear interest for the period from and including the
date that the Loan is made to but excluding the date that the
Loan is paid in full at a rate equal to 10% per annum (the
"INTEREST RATE").
(ii) Notwithstanding the foregoing, if all or a portion of the
principal amount of the Loan or any interest payable thereon
shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear
interest at a rate of 12% per annum from the date of such
non-payment until such amount is paid in full. In no event
will the rate of interest hereunder exceed the maximum rate
allowable by law.
(iii) The Borrower shall pay interest on the unpaid principal
amount of the Loan outstanding from time to time from the date
thereof until paid, on December 15 of each year and at
the maturity of the Loan (whether by acceleration or
otherwise), commencing December 15, 2003, at a rate per annum
equal to the Interest Rate. Such interest shall be calculated
on the basis of a 365 day year and the actual number of days
elapsed.
(c) (i) The Borrower may, at any time and from time to time,
prepay the Loan, in whole or in part, without premium or
penalty, upon at least three Business Days' irrevocable
written notice to the Lender.
(ii) If any Pellet Agreement Prepayment Event shall occur, the
Borrower shall prepay the aggregate outstanding principal
amount of the Loan, together with all accrued and unpaid
interest thereon, no later than 30 days after the occurrence
of such Pellet Agreement Prepayment Event.
(d) The Borrower shall make all payments to the Lender no later than the
close of business on the date due to such account of the Lender as the
Lender may from time to time designate to the Borrower in writing. All
payments shall be made in Dollars in immediately available funds. If
any payment is due on a day that is not a Business Day, such payment
shall be due and payable on the next succeeding Business Day.
(e) The Borrower agrees to indemnify the Lender and to hold the Lender
harmless from any loss or expense which the Lender may sustain or incur
as a consequence of (i) default by the Borrower in payment when due of
the principal amount of or interest on any Loan or (ii) default by the
Borrower in making any prepayment after the Borrower has given notice
thereof in accordance with the provisions of this Agreement, including,
without limitation, in each case, any such loss or expense arising from
the reemployment of funds obtained by the Lender or from fees payable
to terminate the deposits from which such funds were obtained. This
covenant shall survive the termination of this Agreement and the
payment of the Loan and all other amounts payable hereunder.
5. Conditions Precedent. The obligation of the Lender to make the Loan is
subject to the Borrower satisfying each of the following conditions:
(a) The Borrower shall have executed and delivered to the Lender the Note.
(b) Each of the Guarantors shall have executed and delivered to the Lender
this Agreement.
(c) The Lender shall have received a copy of the fully executed
Intercreditor Agreement.
(d) The Borrower and each Guarantor shall have delivered to the Lender an
officer's certificate certifying the names of the officers of the
Borrower or such Guarantor authorized to sign the Financing Agreements,
together with the true signatures of such officers and certified copies
of (a) the resolutions of the board of directors of the Borrower and
each Guarantor evidencing approval of the execution and delivery of the
Financing Agreements to which the Borrower or such Guarantor, as the
case may be, is a party, and (b) the Articles (or Certificate) of
Incorporation and all amendments thereto of the Borrower and each
Guarantor.
(e) The Borrower and each Guarantor shall have delivered to the Lender
U.C.C. financing statements satisfactory to the Lender.
(f) The Borrower shall have delivered to the Lender (i) the executed
consent of Congress and the lenders party to the Congress Agreement to
this Agreement, and (ii) the executed consent of Ford
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Motor Company to this Agreement, each of which shall be in form and
substance satisfactory to the Lender.
(g) The Borrower shall have delivered to the Lender the July 2002 amendment
to the Pellet Agreement, in form and substance satisfactory to the
Lender.
(h) The Borrower shall have provided to the Lender such other items and
shall have satisfied such other conditions as are reasonably required
by the Lender.
6. Guarantees.
(a) Subject to Section 6(c) below, the Guarantors hereby jointly,
severally, unconditionally and irrevocably guarantee to the Lender the
due and punctual payment of all present and future indebtedness of the
Borrower evidenced by or arising out of the Financing Agreements,
including, but not limited to, the due and punctual payment of
principal of and interest on the Loan and the due and punctual payment
of all other sums now or hereafter owed by the Borrower under any
Financing Agreement as and when the same become due and payable,
whether at maturity, by declaration or otherwise, according to the
terms thereof. In case of failure by the Borrower punctually to pay the
indebtedness guaranteed hereby, the Guarantors, subject to Section 6(c)
below, hereby jointly, severally and unconditionally agree to cause
such payment to be made punctually as and when the same become due and
payable, whether at maturity or by declaration or otherwise, and as if
such payment were made by the Borrower.
(b) The obligations of each Guarantor hereunder are unconditional and
absolute and, without limiting the generality of the foregoing, will
not be released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower or any
other Guarantor under any Financing Agreement, by operation of
law or otherwise;
(ii) any modification or amendment of or supplement to any
Financing Agreement;
(iii) any modification, amendment, waiver, release, non-perfection
or invalidity of any direct or indirect security, or of any
guarantee or other liability of any third party, for any
obligation of the Borrower or any other Guarantor under any
Financing Agreement;
(iv) any change in the corporate existence, structure or ownership
of any other Guarantor, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the
Borrower or any other Guarantor or its assets or any resulting
release or discharge of any obligation of the Borrower or any
other Guarantor contained in any Financing Agreement;
(v) the existence of any claim, set-off or other rights which any
Guarantor may have at any time against the Borrower or any
other Guarantor, the Lender or any other person, whether or
not arising in connection with the Financing Agreements,
provided that nothing herein prevents the assertion of any
such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against the
Borrower or any other Guarantor for any reason of any
Financing Agreement, or any provision of applicable law or
regulation purporting to prohibit the payment by the Borrower
or any other Guarantor
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of the principal of or interest on any Note or any other
amount payable by the Borrower or any other Guarantor under
the Financing Agreements; or
(vii) any other act or omission to act or delay of any kind by the
Borrower or any other Guarantor, the Lender or any other
person or any other circumstance whatsoever (other than
payment) that might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of or defense to the
obligations of any Guarantor hereunder.
(c) Each Guarantor is liable under this Agreement only for amounts
aggregating up to the largest amount that would not render its
obligations hereunder subject to avoidance under Section 548 of the
United States Bankruptcy Code or any comparable provisions of any
applicable state law.
(d) Each Guarantor's obligations hereunder remains in full force and effect
until the principal of and interest on the Loan and all other amounts
payable by the Borrower under the Financing Agreements are paid in
full. If at any time any payment of the principal of or interest on the
Loan or any other amount payable by the Borrower under any Financing
Agreement is rescinded or must be otherwise restored or returned upon
the insolvency, bankruptcy or reorganization of the Borrower or any
other Guarantor or otherwise, each Guarantor's obligations hereunder
with respect to such payment will be reinstated at such time as though
such payment had become due but had not been made at such time.
(e) Each Guarantor irrevocably waives acceptance hereof, presentment,
demand, protest and any notice not provided for herein, as well as any
requirement that at any time any action be taken by any person against
any other Guarantor or any other person.
(f) Each Guarantor irrevocably waives any and all rights to which it may be
entitled, by operation of law or otherwise, upon making any payment
hereunder (i) to be subrogated to the rights of the payee against the
Borrower with respect to such payment or otherwise to be reimbursed,
indemnified or exonerated by the Borrower in respect thereof or (ii) to
receive any payment, in the nature of contribution or for any other
reason, from any other Guarantor with respect to such payment.
(g) If acceleration of the time for payment of any amount payable by the
Borrower under the Financing Agreements is stayed upon the insolvency,
bankruptcy or reorganization of the Borrower, all such amounts
otherwise subject to acceleration under the terms of the Financing
Agreements are nonetheless payable by each Guarantor hereunder
forthwith on demand by the Lender.
7. Grant of Security Interest.
(a) To secure payment and performance of all Obligations, the Borrower and
each Guarantor hereby grant to the Lender a continuing security
interest in, a lien upon, and a right of set off against, and hereby
assign to the Lender, as security, the property and interests in
property of the Borrower and such Guarantor, whether now owned or
hereafter acquired or existing, and wherever located, in the Collateral
described in Schedule B hereto.
(b) Notwithstanding anything to the contrary contained in Section 7(a)
above, the types or items of Collateral described in such Section shall
not include any rights or interest in any contract, lease, permit,
license, charter or license agreement covering real or personal
property of the Borrower or any Guarantor, as such, if under the terms
of such contract, lease, permit, license, charter or license agreement,
or applicable law with respect thereto, the valid grant of a security
interest or
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lien therein to the Lender is prohibited as a matter of law or under
the terms of such contract, lease, permit, license, charter or license
agreement and such prohibition has not been or is not waived or the
consent of the other party to such contract, lease, permit, license,
charter or license agreement has not been or is not otherwise obtained;
provided that the foregoing exclusion shall in no way be construed (i)
to apply if any such prohibition is unenforceable under the provisions
of Article 9 of the U.C.C. or other applicable law or (ii) so as to
limit, impair or otherwise affect the Lender's unconditional continuing
security interests in and liens upon any rights or interests of the
Borrower or any Guarantor in or to monies due or to become due under
any such contract, lease, permit, license, charter or license
agreement.
8. Incorporation by Reference. Certain provisions (the "INCORPORATED
PROVISIONS") contained in this Agreement are incorporated by reference from or
defined with reference to the Congress Agreement as in effect on the date hereof
solely for the convenience of the parties hereto in documenting this Agreement
and the transactions referred to herein. Each such Incorporated Provision is
incorporated or referred to as though all references therein to the "Agreement"
and any "Note(s)," and all references to the "Agent," the "Lenders" and the
"Required Lenders" were references to this Agreement, the Note and to the
Lender, respectively, and other changes shall be made (as required by the
context) so that such Incorporated Provisions are made solely for the benefit of
the Lender with respect to this Agreement. No Incorporated Provision shall be
amended, waived or otherwise modified after the date hereof for purposes of this
Agreement by any amendment, waiver or other modification by the parties to the
Congress Agreement without the agreement of the Lender, and such Incorporated
Provisions shall remain in effect hereunder as they existed prior to such
amendment, waiver or modification not agreed to by the Lender. If this Agreement
remains in effect after the commitments under the Congress Agreement have been
terminated and the loans thereunder have been paid in full, the Incorporated
Provisions shall continue to be incorporated herein by reference (and, without
limitation, the covenants incorporated herein shall continue to be in full force
and effect) as set forth above as such provisions were in effect on the date of
such termination and repayment, without regard to any amendment, waiver or other
modification not agreed to by the Lender hereunder. The Ford Agreement shall not
be amended without the consent of the Lender, which consent will not be
unreasonably withheld.
9. Representations and Warranties. The Borrower represents and warrants that
each of the representations and warranties set forth in Section 8 of the
Congress Agreement is true and correct in all material respects on and as of the
date hereof (except to the extent that such representations and warranties
expressly relate to an earlier date, in which case such representatives and
warranties are true and correct, in all material respects, on and as of such
earlier date and, in addition, except as set forth in the Disclosure Schedule
attached as Schedule C hereto), and all such representations and warranties are
hereby incorporated by reference into this Agreement.
10. Covenants. Unless compliance is waived in writing by the Lender, the
Borrower and each Guarantor will comply with each covenant contained in Section
9 of the Congress Agreement, and all such covenants are hereby incorporated by
reference into this Agreement.
11. Events of Default; Remedies.
(a) If any of the following events (each an "EVENT OF DEFAULT") shall occur
and be continuing: (i) if the principal of or any interest on any Note
is not paid in full punctually when due and payable, (ii) if the
Borrower or any Guarantor fails or omits to perform and observe any
agreement or other provision contained or referred to in this Agreement
or any Financing Agreement that is on the Borrower's or such
Guarantor's part, as the case may be, to be complied with, and that
default is not fully corrected within thirty (30) days after the giving
of written notice thereof to the Borrower by the Lender that the
specified default is to be remedied, (iii) if any representation,
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warranty or statement made in or pursuant to this Agreement or any
Financing Agreement or any other material information furnished by the
Borrower or any Guarantor to the Lender or any other holder of any
Note, proves false or erroneous in any material respect, or (iv) if any
"Event of Default" (as such term in defined in the Congress Agreement)
shall have occurred and be continuing then, in the case of any of the
Events of Default specified above, the Lender may, by written notice to
the Borrower, declare the Loan and other indebtedness hereunder to
become immediately due and payable, together with accrued interest and
any other charges, without presentment, demand, protest, or other
notice, all of which are hereby expressly waived, except that if an
Event of Default described in Section 10.1(f), 10.1(g) or 10.1(h) of
the Congress Agreement shall occur, such indebtedness shall
automatically become due and payable, without presentment, demand,
protest or other notice, all of which are hereby expressly waived.
(b) At any time an Event of Default has occurred and is continuing, the
Lender shall have all rights and remedies provided in this Agreement,
the other Financing Agreements, the U.C.C. and other applicable law,
all of which rights and remedies may be exercised without notice to or
consent by the Borrower or any Guarantor, except as such notice or
consent is expressly provided for hereunder or required by applicable
law. All rights, remedies and powers granted to the Lender hereunder,
under any of the other Financing Agreements, the U.C.C. or under other
applicable law are cumulative, not exclusive, and enforceable, in the
Lender's discretion, alternatively, successively or concurrently on any
one or more occasions, and shall include, without limitation, the right
to apply to a court of equity for an injunction to restrain a breach or
threatened breach by the Borrower of this Agreement or any of the other
Financing Agreements. The Lender may proceed directly against the
Borrower or any Guarantor without prior recourse to the Collateral.
(c) Without limiting the foregoing, at any time an Event of Default has
occurred and is continuing, the Lender may, in its discretion, (i) with
or without judicial process or the aid or assistance of others, enter
upon any premises on or in which any of the Collateral may be located
and take possession of the Collateral or complete processing,
manufacturing and repair of all or any portion of the Collateral, (ii)
require the Borrower or any Guarantor, at the Borrower's expense, to
assemble and make available to the Lender any part or all of the
Collateral at any place and time designated by the Lender, (iii)
collect, foreclose, receive, appropriate, set off and realize upon any
and all of the Collateral, (iv) remove any or all of the Collateral
from any premises on or in which the same may be located for the
purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose and/or (v) sell, lease, transfer, assign,
deliver or otherwise dispose of any and all of the Collateral
(including entering into contracts with respect thereto, public or
private sales at any exchange, broker's board, at any office of the
Lender or elsewhere) at such prices or terms as the Lender may deem
reasonable, for cash, upon credit or for future delivery, with the
Lender having the right to purchase the whole or any part of the
Collateral at any such public sale, all of the foregoing being free
from any right or equity of redemption of the Borrower or any
Guarantor, which right or equity of redemption is hereby expressly
waived and released by the Borrower and each Guarantor. If any of the
Collateral is sold or leased by the Lender upon credit terms or for
future delivery, the Obligations shall not be reduced as a result
thereof until payment therefor is finally collected by the Lender. If
notice of disposition of Collateral is required by law, ten (10) days'
prior notice by the Lender to the Borrower designating the time and
place of any public sale or the time after which any private sale or
other intended disposition of Collateral is to be made, shall be deemed
to be reasonable notice thereof and the Borrower and each Guarantor
waive any other notice. In the event the Lender institutes an action to
recover any Collateral or seeks recovery of any Collateral by way of
prejudgement remedy, the Borrower and each Guarantor waives the posting
of any bond which might otherwise be required.
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(d) For the purpose of enabling the Lender to exercise the rights and
remedies hereunder, the Borrower and each Guarantor hereby grants to
the Lender, to the extent assignable, an irrevocable, non-exclusive
license (exercisable at any time any Event of Default shall have
occurred and for so long as the same is continuing) without payment of
royalty or other compensation to the Borrower or any Guarantor, to use,
assign, license or sublicense any of the trademarks, service-marks,
trade names, business names, trade styles, designs, logos and other
source of business identifiers and other intellectual property and
general intangibles now owned or hereafter acquired by the Borrower or
any Guarantor, wherever the same may be located, including in such
license reasonable access to all media in which any of the licensed
items may be recorded or stored and to all computer programs used for
the compilation or printout thereof; provided that such license shall
terminate on the date that the Lender has received final and
indefeasible payment and satisfaction in full of all of the
Obligations.
(e) The Lender may apply the cash proceeds of Collateral actually received
by the Lender from any sale, lease, foreclosure or other disposition of
the Collateral to payment of the Obligations, in whole or in part in
such order as the Lender may elect, whether or not then due. The
Borrower and the Guarantors shall remain liable to the Lender for the
payment of any deficiency with interest at the highest rate provided
for herein and all costs and expense of collection and enforcement,
including outside counsel's reasonable fees and expenses.
12. U.C.C. Financing Statements. The Borrower and each Guarantor hereby
authorize the Lender to file U.C.C. financing statements with respect to the
Collateral. The Borrower and each Guarantor further specifically authorize the
Lender to file U.C.C. financing statements (and any amendments or continuation
statements with respect thereto) describing the Collateral.
13. Successors and Assigns; Amendments.
(a) This Agreement is binding upon and inures to the benefit of the parties
hereto and their respective successors and assigns, except that neither
the Borrower nor any Guarantor may transfer or assign any of its rights
or interests hereunder without the prior written consent of the Lender.
(b) Neither this Agreement nor the Note may be amended or modified, except
pursuant to a writing signed by each of the parties hereto.
14. Counterparts; Effectiveness. This Agreement may be executed in any number of
counterparts, and such counterparts taken together constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement. This Agreement shall become effective as of the
date hereof with respect to Lender and the Borrower when each such party
receives a counterpart hereof signed by each other such party. This Agreement
shall become effective as of the date hereof with respect to any Guarantor who
executes a counterpart hereof when the Lender, the Borrower and such Guarantor
executes a counterpart hereof.
15. Miscellaneous.
(a) Any waiver of any kind or character on the part of the Lender in
respect of this Agreement must be in writing and shall be effective
only to the extent specifically set forth in such writing. No delay on
the part of the Lender in exercising any of its powers or rights, and
no partial or single exercise, shall constitute a waiver thereof.
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(b) Any notice to be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received by the recipient.
16. GOVERNING LAW; JURISDICTION. THIS AGREEMENT IS GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. THE BORROWER AND EACH
GUARANTOR HEREBY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE
COURT SITTING IN NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF
OR RELATING TO THIS AGREEMENT. THE BORROWER AND EACH GUARANTOR IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH
COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT.
17. Definitions. As used in this Agreement the following terms have the
following meanings:
(a) "BUSINESS DAY" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York City or Detroit, Michigan are
authorized or required by law to close.
(b) "CONGRESS" means Congress Financial Corporation, as agent under the
Congress Agreement.
(c) "CONGRESS AGREEMENT" means the Loan and Security Agreement, dated as of
March 13, 2001, by and among the Borrower, the Guarantors, Congress,
and the financial institutions named therein, as amended to the date
hereof and as the same may be further amended from time to time in
accordance with this Agreement.
(d) "COLLATERAL" has the meaning set forth on Schedule C hereto.
(e) "DOLLARS" and "$" means dollars in lawful currency of the United States
of America.
(f) "EVENT OF DEFAULT" means an event or condition that constitutes an
event of default as described in Section 11 hereof.
(g) "FINANCING AGREEMENT" or "FINANCING AGREEMENTS" means this Agreement,
the Note and any other agreement, document or instrument now or at any
time hereafter executed and/or delivered by or on behalf of the
Borrower or any Guarantor in connection with this Agreement.
(h) "FORD AGREEMENT" means the Subordinated Loan and Security Agreement by
and among the Borrower, the Guarantors, and Ford Motor Company, dated
November 21, 2001, as the same may from time to time be amended,
restated or otherwise modified.
(i) "GUARANTORS" has the meaning set forth in the introductory paragraph
hereof.
(j) "INCORPORATED PROVISIONS" has the meaning set forth in Section 8
hereof.
(k) "INTERCREDITOR AGREEMENT" means the Amended and Restated Intercreditor
and Subordination Agreement dated as of July 12, 2002 by and among
Congress, Ford Motor Company and the Lender, as the same may from time
to time be amended, restated or otherwise modified.
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(l) "INTEREST RATE" has the meaning set forth in Section 4 hereof.
(m) "LENDER" has the meaning set forth in the introductory paragraph
hereof.
(n) "LOAN" has the meaning set forth in Section 1 hereof.
(o) "NOTE" has the meaning set forth in Section 1 hereof.
(p) "OBLIGATIONS" means the Loan and all other obligations, liabilities and
indebtedness of every kind, nature and description owing by the
Borrower or any Guarantor to the Lender and/or any of its affiliates,
including principal, interest, charges, fees, costs and expenses,
however evidenced, whether as principal, surety, endorser, guarantor or
otherwise, arising under this Agreement or any of the other Financing
Agreements, whether now existing or hereafter arising, whether arising
before, during or after the initial or any renewal terms of this
Agreement or after the commencement of any case with respect to the
Borrower or any Guarantor under the United States Bankruptcy Code or
any similar statute (including the payment of interest and other
amounts which would accrue and become due but for the commencement of
such case, whether or not such amounts are allowed or allowable in
whole or in part in such case), whether direct or indirect, absolute or
contingent, joint or several, due nor not due, primary or secondary,
liquidated or unliquidated, secured or unsecured, and however acquired
by the Lender.
(q) "PELLET AGREEMENT" means the Pellet Sale and Purchase and Trade
Agreement dated as of January 1, 1991, by and between the Borrower and
The Cleveland-Cliffs Iron Company, as amended by Letter Agreements,
dated as of July 1, 1996, April 7, 1997, June 3, 1997, March 31, 1998,
August 17, 2001 and July 12, 2002 and as the same may from time to time
be further amended, restated or otherwise modified or replaced.
(r) "PELLET AGREEMENT PREPAYMENT EVENT" means the occurrence of any of the
following events: (i) the failure of the Borrower or any Guarantor to
purchase or agree to receive trade pellets in accordance with the terms
and conditions that are specified under the Pellet Agreement, so long
as such failure is not as a result of The Cleveland-Cliffs Iron
Company's failure to meet the qualitative, quantitative and delivery
specifications relating to the pellets that are to be provided pursuant
to the Pellet Agreement; or (ii) the failure of the Borrower or any
Guarantor to pay any amounts when due and payable under the Pellet
Agreement, so long as such payment is not received by The
Cleveland-Cliffs Iron Company within fifteen (15) days of such payment
becoming due and payable.
(s) "U.C.C." means the Uniform Commercial Code as in effect from time to
time in the State of New York; provided that, if perfection or the
effect of perfection or non-perfection or the priority of any security
interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York, "U.C.C." means the
Uniform Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions hereof relating to such
perfection, effect of perfection or non-perfection or priority.
[signature pages begin on next page]
-9-
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
BORROWER
ROUGE STEEL COMPANY
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice Chairman and Chief Financial Officer
Address for notices:
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
GUARANTORS
ROUGE INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice Chairman and Chief Financial Officer
Address for notices:
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
QS STEEL INC.
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: President
Address for notices:
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
EVELETH TACONITE COMPANY
By: /s/ Xxxx X. Xxxxxxxxxxx
------------------------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: President
Address for notices:
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
LENDER
CLEVELAND-CLIFFS INC
By: /s/ X. X. Xxxxxx
------------------------------------------------
Name: X. X. Xxxxxx
Title: Executive Vice President -- Commercial
Address for notices:
0000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxx 00000
Facsimile: (000) 000-0000
SCHEDULE A
THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATE IN ACCORDANCE WITH THE
TERMS AND CONDITIONS OF THE AMENDED AND RESTATED INTERCREDITOR AGREEMENT DATED
AS OF JULY 12, 2002 AMONG THE LENDER, FORD MOTOR COMPANY AND CONGRESS FINANCIAL
CORPORATION TO INDEBTEDNESS INCURRED BY THE MAKER PURSUANT TO THE LOAN AND
SECURITY AGREEMENT BY AND AMONG ROUGE STEEL COMPANY (AS BORROWER) AND ROUGE
INDUSTRIES, INC., QS STEEL, INC., AND EVELETH TACONITE COMPANY (AS GUARANTORS)
AND CONGRESS FINANCIAL CORPORATION (AS AGENT) AND THE FINANCIAL INSTITUTIONS
NAMED THEREIN, DATED AS OF MARCH 13, 2001, AS AMENDED.
NOTE
$10,000,000
July 12, 2002
FOR VALUE RECEIVED, ROUGE STEEL COMPANY, a Delaware corporation (the
"BORROWER"), hereby promises to pay to the order of CLEVELAND-CLIFFS INC (the
"LENDER") in the times and place indicated in the Agreement referred to below,
or at such other place as the holder hereof may hereafter designate in writing,
in lawful money of the United States of America, the principal sum of TEN
MILLION DOLLARS or, if less than such principal sum, the aggregate unpaid
principal amount of the Loan made by the Lender to the Borrower pursuant to the
Agreement and outstanding hereunder from time to time, at the rate per annum
provided for in Section 4 of the Agreement. This Note is the note referred to in
the Subordinated Loan and Security Agreement, dated as of the date hereof, among
the Borrower, the Guarantors named therein and the Lender (as amended, modified
and supplemented from time to time, the "AGREEMENT").
If an Event of Default (as defined in the Agreement) shall have
occurred and be continuing, the principal of and accrued interest on this Note
may be declared to be due and payable in the manner and with the effect provided
in the Agreement. The Borrower hereby waives presentment, demand, protest or
notice of any kind in connection with this Note.
[signature page begins on next page]
ROUGE STEEL COMPANY
By:
---------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice Chairman and
Chief Financial Officer
SCHEDULE B
DESCRIPTION OF COLLATERAL
The following types (or items) of property of the Borrower or any
Guarantor are collectively referred to herein as the "COLLATERAL":
(a) (i) all present and future rights of the Borrower or any
Guarantor to payment for goods sold or leased or for services rendered, whether
or not evidenced by instruments or chattel paper, and whether or not earned by
performance (collectively, the "ACCOUNTS"); (ii) all amounts at any time payable
to the Borrower or any Guarantor in respect of the sale or other disposition by
the Borrower or such Guarantor of any Account or other obligation for the
payment of money; (iii) all interest, fees, late charges, penalties, collection
fees and other amounts due or to become due or otherwise payable in connection
with any Account; (iv) all letters of credit, indemnities, guarantees, security
or other deposits and proceeds thereof issued payable to the Borrower or any
Guarantor or otherwise in favor of or delivered to the Borrower or any Guarantor
in connection with any Account; and (v) all other contract rights, chattel
paper, instruments, notes, general intangibles and other forms of obligations
owing to the Borrower or any Guarantor, whether from the sale and lease of goods
or other property, licensing of any property (including intellectual property or
other general intangibles), rendition of services or from loans or advances by
the Borrower or any Guarantor or to or for the benefit of any third person
(including loans or advances to any affiliates or subsidiaries) or otherwise
associated with any Accounts, Inventory or general intangibles of the Borrower
or any Guarantor (including, without limitation, choses in action, causes of
action, tax refunds, tax refund claims, any funds which may become payable to
the Borrower or any Guarantor in connection with the termination of any employee
benefit plan and any other amounts payable to the Borrower or any Guarantor from
any employee benefit plan, rights and claims against carriers and shippers,
rights to indemnification, business interruption insurance and proceeds thereof,
casualty or any similar types of insurance and any proceeds thereof and proceeds
of insurance covering the lives of employees on which the Borrower or any
Guarantor is beneficiary) (all of the property and assets described in this
paragraph (a) being referred to herein collectively as "RECEIVABLES");
(b) all of the Borrower's and each Guarantor's present and future:
general intangibles (including, but not limited to, tax and duty refunds;
goodwill; licenses, whether as licensor or licensee; choses in action and other
claims and existing and future leasehold interests in real estate and fixtures;
patents, patent rights, patent applications, copyrights, works which are the
subject matter of copyrights, copyright registrations, trademarks, trade names,
trade styles, trademark and service xxxx applications, and licenses and rights
to use any of the foregoing; all extensions, renewals, reissues, divisions,
continuations, and continuations-in-part of any of the foregoing; all rights to
xxx for past, present and future infringement of any of the foregoing;
inventions, trade secrets, formulae, processes, compounds, drawings, designs,
blueprints, surveys, reports, manuals, and operating standards; customer and
other lists in whatever form maintained; trade secret rights, copyright rights,
rights in works of authorship, and contract rights relating to computer software
programs, in whatever form created or maintained; and interests in general
partnerships (including Double Eagle Steel Coating Company in the case of the
Borrower) or limited liability companies (including TWB Company L.L.C., Spartan
Steel Casting, L.L.C. and Delaco Processing L.L.C., in the case of QS, and
Eveleth Mines L.L.C., in the case of Eveleth)); chattel paper; documents;
instruments; securities and other investment property (including securities,
whether certificated or uncertificated, securities account, security
entitlements, commodity contracts or commodity accounts); letters of credit;
bankers' acceptances and guarantees;
(c) all present and future: monies, securities, credit balances,
deposits, deposit accounts and other property of the Borrower or any Guarantor
now or hereafter held or received by or in transit to the Lender or its
affiliates or at any other depositary or other institution from or for the
account of the
Borrower, whether for safekeeping, pledge, custody, transmission, collection or
otherwise, and all present and future liens, security interests, rights,
remedies, title and interest in, to and in respect of Receivables and other
Collateral, including, without limitation, rights and remedies under or relating
to guarantees, contracts of suretyship, letters of credit and credit and other
insurance related to the Collateral, rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, goods described in invoices, documents, contracts or
instruments with respect to, or otherwise representing or evidencing,
Receivables or other Collateral, including, without limitation, returned,
repossessed and reclaimed goods, and deposits by and property of account debtors
or other persons securing the obligations of account debtors;
(d) all of the Borrower's and each Guarantor's present and future: raw
materials, work in process, semi-finished goods, finished goods and all other
inventory of whatsoever kind or nature, wherever located (collectively,
"INVENTORY");
(e) all of the Borrower's present and future: real property, including
leasehold interests, together with all buildings, structures, and other
improvements located thereon and all licenses, easements and appurtenances
relating thereto, wherever located;
(f) all of the Borrower's and each Guarantor's present and future:
books of account of every kind or nature, purchase and sale agreements,
invoices, ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which the foregoing are stored (including any rights of the Borrower
with respect to the foregoing maintained with or by any other person); and
(g) all products and proceeds of the foregoing, in any form, including,
without limitation, insurance proceeds and any claims against third parties for
loss or damage to or destruction of any or all of the foregoing.
SCHEDULE C
Section 8.17. Payable Practices. Borrower and each Guarantor has not
made any material change in the historical accounts payable practices from those
in effect immediately prior to the date hereof.
During September 2001, the Borrower began to experience a tightening of
liquidity and, as a result, the Borrower began stretching payments to its
vendors by holding checks. During the subsequent two months, the Borrower
negotiated payment terms with many of its suppliers 15 days in excess of the
historical 45-day terms. The loan from Ford Motor Company under the Ford
Agreement allowed the Borrower to maintain adequate liquidity with the new
payment terms.
In March 2002, two events occurred that impacted the Borrower's payable
practices. The first was the filing of Chapter 11 bankruptcy protection by
National Steel. As a result of its proximity to the Great Lakes Division of
National Steel, the Borrower shares many suppliers with National Steel. National
Steel's bankruptcy filing caused many of the Borrower's suppliers to reduce
their exposure to steel companies in general and the Borrower in particular. As
a consequence, certain suppliers have placed credit limits on the Borrower,
which limits effectively reduce payment terms. The second event that impacted
the Borrower's payable practices was the going concern opinion filed with Rouge
Industries, Inc.'s Annual Report on Form 10-K. Although most suppliers were not
surprised by the opinion, it caused many to re-evaluate their exposure to the
Borrower. Again, the result of this evaluation was an effective reduction in
payment terms.
