EX-10.53 3 l93093aex10-53.txt EXHIBIT 10.53 Exhibit 10.53 AMENDMENT AND LIMITED WAIVER TO DEBTOR-IN-POSSESSION REVOLVING CREDIT AGREEMENT AMENDMENT AND LIMITED WAIVER TO DEBTOR-IN-POSSESSION REVOLVING CREDIT AGREEMENT, dated as of September 28, 2001 (this "AMENDMENT"), by and among (a) REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC, a debtor and debtor-in-possession and a Delaware limited liability company (the "BORROWER"), (b) REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC, a debtor and debtor-in-possession and a Delaware limited liability company, RTI CAPITAL CORP., a debtor and debtor-in-possession and a Delaware corporation, CANADIAN DRAWN STEEL COMPANY INC., a Canadian corporation, and NIMISHILLEN AND TUSCARAWAS, LLC, a Delaware limited liability company (collectively, the "GUARANTORS"), (c) FLEET CAPITAL CORPORATION and the other lending institutions listed on the signature pages hereof (collectively the "LENDERS"), (d) FLEET CAPITAL CORPORATION, as Administrative Agent (in such capacity, the "ADMINISTRATIVE AGENT") for the Lenders, (e) BANK OF AMERICA, N.A., as syndication agent (the "SYNDICATION AGENT"), and (f) THE CHASE MANHATTAN BANK, as documentation agent (the "DOCUMENTATION AGENT", and together with the Administrative Agent and the Syndication Agent, the "AGENTS"). WHEREAS, the Borrower, the Guarantors, the Lenders, the Administrative Agent, the Syndication Agent and the Documentation Agent are parties to that certain Debtor-in-Possession Revolving Credit Agreement, dated as of April 3, 2001 (as amended and in effect from time to time, the "CREDIT AGREEMENT"); WHEREAS, the Borrower has informed the Agents and the Lenders that the Borrower is likely to fail to comply with Section 10.2 of the Credit Agreement for the Test Period ending on September 30, 2001, such failure to comply, when occurring, to constitute an Event of Default (such Event of Default being herein referred to as the "SPECIFIED DEFAULT"); and WHEREAS, at the request of the Borrower, the Borrower, the Guarantors, the Agents and the Lenders have agreed to waive the Specified Default, and to modify certain other terms and conditions of the Credit Agreement, all as specifically set forth in this Amendment; NOW, THEREFORE, in consideration of the mutual agreements contained in the Credit Agreement, herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. LIMITED WAIVER. Upon the effectiveness of this Amendment, the Administrative Agent and the Lenders hereby waive the Specified Default solely for the Test Period ending on September 30, 2001. Nothing contained in this waiver shall be construed to imply a willingness on the part of any Lender to grant any similar or other future waivers of any of the terms and conditions (including, without limitation, any failure to comply with Section 10.2 for any other Test Period) of the Credit Agreement or any other Loan Documents. SECTION 2. OTHER DEFAULTS. The waiver set forth in Section 1 shall apply only to the Specified Default. No waiver with respect to any other Default or Event of Default, whether presently -2- existing or hereafter arising, is granted hereby. Any obligation of the Lenders to make Revolving Credit Loans or of the Issuing Bank to issue, extend or renew Letters of Credit shall at all times be subject to the satisfaction of all of the terms and conditions of the Credit Agreement, including, without limitation, the conditions precedent set forth in the Credit Agreement. The Lenders and the Agents shall, at all times, retain all of the rights and remedies in respect of any Default or Event of Default under the Credit Agreement and the other Loan Documents. SECTION 3. AMENDMENTS TO THE CREDIT AGREEMENT. The Credit Agreement is hereby amended in the following respects: (a) The definition of "Borrowing Base" contained in Section 1.1 of the Credit Agreement is hereby amended by deleting clause (b) it in its entirety and replacing it with the following: "(b) the sum of (i) 60% of the net book value (determined on a first-in first-out basis at lower of cost or market) of Eligible Inventory and (ii) the Special Inventory Advance; PROVIDED, that in no event shall the amount of the Borrowing Base allocable to Eligible Inventory exceed (A) during the period commencing on October 1, 2001 through November 4, 2001, $173,000,000, (B) during the period commencing on November 5, 2001 through November 29, 2001, $167,000,000 and (C) at any time thereafter, $164,000,000." (b) Section 1.1 of the Credit Agreement is hereby amended by inserting the following new definitions in the appropriate alphabetical sequence: "ADJUSTED AVAILABILITY" Amount. As at any date of determination, the lesser of (a) the Maximum Amount, and (b) the Borrowing Base minus the Rate Protection Exposure." "KEY MANAGEMENT PERSONNEL. Those individuals listed in the letter agreement dated as of September 28, 2001, between the Administrative Agent and the Borrower. "MAXIMUM AMOUNT. During any period set forth in the table below, the amount set forth opposite such period in such table:" PERIOD AMOUNT ------ ------ 10/1/01 through 11/4/01 $360,000,000 11/5/01 through 11/29/01 $355,000,000 Thereafter $337,000,000 (c) Section 2.1 of the Credit Agreement is hereby amended by inserting the following new sentence at the end thereof: "Notwithstanding the foregoing, from and after October 1, 2001, the aggregate outstanding amount of Revolving Credit Loans plus the -3- Maximum Drawing Amount and all Unpaid Reimbursement Obligations shall not exceed the Adjusted Availability Amount. (d) Section 3.2 of the Credit Agreement is hereby amended by inserting the following new sentence at the end thereof: "Notwithstanding the foregoing, in the event that the sum of the outstanding amount of the Revolving Credit Loans, the Maximum Drawing Amount and all Unpaid Reimbursement Obligations exceeds Adjusted Availability as a result of (i) any reduction in the Maximum Amount, (ii) any decrease in the maximum amount of the Borrowing Base allocable to Eligible Inventory, or (iii) any failure to maintain the minimum liquidity required by Section 10.3(a), then the Borrower shall have a period of five (5) days from the date such event occurs to pay the amount of such excess to the Administrative Agent for the respective accounts of the Lenders." (e) Section 10.3 of the Credit Agreement is hereby amended by deleting it in its entirety and replacing it with the following: "10.3. MINIMUM LIQUIDITY. (a) The Borrower will not permit the sum of (i) (A) Availability LESS (B) the sum of the outstanding amount of the Revolving Credit Loans (after giving effect to all amounts requested) and the Maximum Drawing Amount and all Unpaid Reimbursement Obligations, PLUS (ii) the Net Cash Proceeds from the permitted sale or other disposition of assets constituting Collateral where such Net Cash Proceeds are deposited in a Swept Account, PLUS (iii) Unrestricted Cash to be less than (A) as at the last Business Day of any week ending during any period set forth in the table below, the amount set forth opposite such week in such table, and (B) as at the last Business Day of any week thereafter, eighty-five percent (85%) of the projected liquidity of the Borrower set forth in the 13-week rolling liquidity forecast to be delivered by the Borrower to the Lenders prior to the commencement of the applicable period of 13-weeks, such forecast to be acceptable to the Lenders: WEEK ENDED: AMOUNT ----------- ------ October 6, 2001 $11,000,000 October 13, 2001 $11,800,000 October 20, 2001 $10,975,000 October 27, 2001 $11,500,000 November 3, 2001 $10,350,000 November 10, 2001 $11,900,000 November 17, 2001 $14,650,000 November 24, 2001 $20,150,000 December 1, 2001 $21,700,000 December 8, 2001 $17,550,000 -4- December 15, 2001 $12,950,000 December 22, 2001 $9,650,000 December 29, 2001 $12,700,000 (b) In addition to, and not in limitation of the foregoing Section 10.3(a), the Borrower will not permit the sum of (i) (A) Availability LESS (B) the sum of the outstanding amount of the Revolving Credit Loans (after giving effect to all amounts requested) and the Maximum Drawing Amount and all Unpaid Reimbursement Obligations, PLUS (ii) the Net Cash Proceeds from the permitted sale or other disposition of assets constituting Collateral where such Net Cash Proceeds are deposited in a Swept Account, PLUS (iii) Unrestricted Cash to be less than $5,000,000 at any time." (f) Section 13.1(z) of the Credit Agreement is hereby amended by deleting it in its entirety and replacing it with the following: "(z) Any Key Management Personnel cease to be employed by the Borrower and such Key Management Personnel are not replaced with personnel acceptable to the Majority Lenders; and" SECTION 4. WAIVER FEE. The Borrower hereby agrees to pay to the Administrative Agent, for the ratable accounts of the Lenders, a waiver fee in the amount of $225,000 (the "WAIVER FEE") on November 30, 2001. The Waiver Fee shall be fully earned on the date hereof and nonrefundable when paid. SECTION 5. REPRESENTATIONS AND WARRANTIES. The Borrower and each Guarantor hereby represents and warrants to the Agents and the Lenders as follows: (a) Each of the representations and warranties of the Borrower or such Guarantor contained in the Credit Agreement as modified hereby or in any document or instrument delivered pursuant to or in connection with the Credit Agreement as modified hereby are true as of the date hereof and no Default or Event of Default has occurred and is continuing; and (b) The execution, delivery and performance of this Amendment and the transactions contemplated hereby (i) are within the corporate or limited liability company authority of the Borrower or such Guarantor, (ii) have been duly authorized by all necessary corporate or limited liability company proceedings, (iii) do not conflict with or result in any material breach or contravention of any provision of law, statute, rule or regulation to which the Borrower or such Guarantor is subject or any judgment, order, writ, injunction, license or permit applicable to the Borrower or such Guarantor so as to materially adversely affect the assets, business or any activity of the Borrower or such Guarantor, and (iv) do not conflict with any provision of the corporate charter or bylaws of the Borrower or such Guarantor or any agreement or other instrument binding upon it. The execution, delivery and performance of this Amendment will result in valid and legally binding obligations of the Borrower or such Guarantor enforceable against the Borrower or such Guarantor in accordance with the respective terms and provisions hereof. -5- SECTION 6. CONDITIONS TO EFFECTIVENESS. This Amendment shall become effective only upon the satisfaction of the following conditions: (a) this Amendment shall have been executed and delivered by the Borrower, each Guarantor and the Majority Lenders; (b) the Borrower shall have paid all unpaid fees and expenses of Bingham Dana LLP, Ernst & Young and all other advisors and professionals retained by the Administrative Agent to the extent that copies of invoices have been presented to the Borrower; (c) The Borrower and the Guarantors shall have delivered to the Administrative Agent and the Administrative Agent's Special Counsel, all closing documents reasonably requested by the Administrative Agent, such documents to be satisfactory in form and substance to the Administrative Agent and the Administrative Agent's Special Counsel; and (d) The Administrative Agent shall have received a signed copy of a Bankruptcy Court order, satisfactory to the Administrative Agent, approving and authorizing the Borrower and the Guarantors to enter into this Amendment, and such order shall be in full force and effect and shall not have been reversed, modified or amended in any respect. SECTION 7. RATIFICATION, ETC. The Borrower and each Guarantor hereby adopts again, ratifies and confirms in all respects, as its own act and deed, each of the Credit Agreement and the other Loan Documents to which such Person is a party; the Borrower and each Guarantor hereby adopts again, ratifies and confirms in all respects, as its own act and deed, the grant of a security interest under the Security Agreement to which such Person is a party and, in the case of the Borrower, the Mortgage, in all of the existing and after-acquired or arising inventory, including raw materials, work in progress and finished goods; accounts, including accounts receivable, chattel paper, and insurance refund claims and all other insurance claims and proceeds to which the Administrative Agent is entitled pursuant to the provisions of Section 8.7 of the Credit Agreement; all general intangibles, including, without limitation, all rights to the payment of money, to the extent relating to the Collateral described above; all rights to all short term Investments described in Section 9.3 of the Credit Agreement constituting Collateral described above or proceeds thereof, and to the extent such Investments do not constitute Collateral for the Notes, together with all income therefrom and increases therein; the Canton Fixed Assets and all insurance refund claims and all other insurance claims, tort claims, chattel paper and all general intangibles related to the Canton Fixed Assets; the Pledged Trademarks (as defined in the Trademark Agreement); and all real and personal property, and any proceeds and products therefrom, that was not encumbered as of the date on which the Borrower filed for Bankruptcy under Chapter 11 of the Bankruptcy Code, together with any and all Uniform Commercial Code financing statements and other instruments or documents previously executed in connection therewith to create, evidence, perfect or preserve the priority of such security interest in favor of the Administrative Agent for the benefit of the Lenders and the Administrative Agent; the Borrower and each Guarantor hereby adopts again, ratifies and confirms in all respects, as its own act and deed, any and all Uniform Commercial Code financing statements executed by the Administrative Agent in the name of such Person, pursuant to the power of attorney provisions contained in the Security Agreement to which such Person is a party, to perfect, preserve the perfection, or insure the priority of such security interest in favor of the Administrative Agent for the benefit of the Lenders and the -6- Administrative Agent; the Borrower under the Mortgage hereby adopts again, ratifies and confirms, as its own act and deed, the mortgage of certain real estate assets in which the Borrower has an ownership or other rights; each pledgor under the Master Pledge Agreement hereby adopts again, ratifies and confirms in all respects, as its own act and deed, each pledge granted by such pledgor thereunder; and the Borrower and each Guarantor hereby adopts again, ratifies and confirms, as its own act and deed, each of the other instruments or documents delivered in connection with the Credit Agreement or any of the Loan Documents and purported to be executed by it and acknowledges that all of the foregoing Loan Documents and other instruments, documents, filings and recordings shall continue in full force and effect. To the extent that it has not already done so, the Borrower and each Guarantor hereby waives all suretyship defenses of whatsoever nature, whether arising out of any Agents' or any Lender's dealings with the Borrower or any Guarantor, as the case may be, in respect of the Credit Agreement, any other Loan Document or otherwise. By its signature below, the Borrower and each Guarantor hereby consents to this Amendment, and after taking into account this Amendment, acknowledges that this Amendment shall not alter, release, discharge or otherwise affect any of its obligations under any Loan Document. SECTION 8. RELEASE. In order to induce the Agents and the Lenders to enter into this Amendment, the Borrower and each Guarantor acknowledges and agrees that: (a) neither the Borrower nor any Guarantor has any claim or cause of action against any Agent or any Lender (or any of its respective directors, officers, employees or agents); (b) neither the Borrower nor any Guarantor has any offset right, counterclaim or defense of any kind against any of its respective obligations, indebtedness or liabilities to any Agent or any Lender; and (c) each of the Agents and the Lenders has heretofore properly performed and satisfied in a timely manner all of its obligations to the Borrower and each Guarantor. The Borrower and each Guarantor wishes to eliminate any possibility that any past conditions, acts, omissions, events, circumstances or matters would impair or otherwise adversely affect any of the Agents' and the Lenders' rights, interests, contracts, collateral security or remedies. Therefore, the Borrower and each Guarantor unconditionally releases, waives and forever discharges (i) any and all liabilities, obligations, duties, promises or indebtedness of any kind of any Agent or any Lender to the Borrower or such Guarantor, except the obligations to be performed by any Agent or any Lender on or after the date hereof as expressly stated in this Amendment, the Credit Agreement and the other Loan Documents, and (ii) all claims, offsets, causes of action, suits or defenses of any kind whatsoever (if any), whether arising at law or in equity, whether known or unknown, which the Borrower or any Guarantor might otherwise have against any Agent, any Lender or any of its directors, officers, employees or agent, in either case (i) or (ii), on account of any past or presently existing condition, act, omission, event, contract, liability, obligation, indebtedness, claim, cause of action, defense, circumstance or matter of any kind. SECTION 9. EFFECT OF AMENDMENT. Except as expressly set forth herein, this Amendment does not constitute an amendment or waiver of any term or condition of the Credit Agreement or any other Loan Document, and all such terms and conditions shall remain in full force and effect and are hereby ratified and confirmed in all respects. Nothing contained in this Amendment shall be construed to imply a willingness on the part of the Lenders to grant any similar or other future waivers of any of the terms and conditions of the Credit Agreement or the other Loan Documents. Nothing contained herein shall in any way prejudice, impair or otherwise adversely affect any rights or remedies of the Agents and the Lenders under the -7- Credit Agreement, as amended, or any other Loan Document. This Amendment shall constitute a Loan Document. SECTION 10. REIMBURSEMENT OF EXPENSES. The Borrower acknowledges that all out of pocket costs and expenses incurred by the Agents and the Lenders in connection with (a) the preparation, negotiation, execution, delivery and monitoring of this Amendment, and (b) the discussions and meetings that preceded this Amendment (including, without limitation, the fees and disbursements of any investment banker, consultant or appraiser retained by the Administrative Agent, allocable costs of in-house counsel, and all legal and other professional and consultant's fees and disbursements). SECTION 11. GOVERNING LAW. This Amendment shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts. SECTION 12. COUNTERPARTS. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the undersigned have duly executed this Amendment as a sealed instrument as of the date first above written. REPUBLIC TECHNOLOGIES INTERNATIONAL, LLC By: /s/ Joseph F. Lapinsky ------------------------------------- Name: Joseph F. Lapinsky Title: President & CEO REPUBLIC TECHNOLOGIES INTERNATIONAL HOLDINGS, LLC By: /s/ Joseph F. Lapinsky ------------------------------------- Name: Joseph F. Lapinsky Title: President & CEO RTI CAPITAL CORP. By: /s/ Joseph F. Lapinsky ------------------------------------- Name: Joseph F. Lapinsky Title: President & CEO CANADIAN DRAWN STEEL COMPANY INC. By: /s/ Joseph F. Lapinsky ------------------------------------- Name: Joseph F. Lapinsky Title: President & CEO NIMISHILLEN & TUSCARAWAS, LLC By: /s/ Joseph F. Lapinsky ------------------------------------- Name: Joseph F. Lapinsky Title: President & CEO FLEET CAPITAL CORPORATION, individually and as Administrative Agent By: /s/ Joseph W. Johnson, Jr. ------------------------------------- Joseph W. Johnson, Jr. BANK OF AMERICA, N.A., individually and as Syndication Agent By: Name: Title: THE CHASE MANHATTAN BANK, individually and as Documentation Agent By: Name: Title: FOOTHILL CAPITAL CORPORATION By: Name: Title: HELLER FINANCIAL, INC. By: Name: Title: