AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT
June 8, 2001
Huntco Steel, Inc.
00000 X. Xxxxx Xxxxx Xxxxx
Xxxxx 000 Xxxxx
Xxxx and Country, Missouri 63017
Gentlemen:
Congress Financial Corporation (Central), an Illinois corporation
(together with its successors and assigns, "Lender"), Huntco Steel, Inc., a
Delaware corporation ("Huntco Steel"), Midwest Products, Inc., a Missouri
corporation ("Midwest", and together with Huntco Steel, individually, each a
"Borrower" and collectively, "Borrowers"), Huntco Inc., a Missouri corporation
("Huntco"), Huntco Nevada, Inc, a Nevada corporation ("Huntco Nevada") and
HSI Aviation, Inc., a Missouri corporation ("HSIA", and together with Huntco
and Huntco Nevada, individually, each a "Guarantor" and collectively,
"Guarantors") have entered into financing arrangements pursuant to which
Lender may make loans and advances and provide other financial accommodations
to Borrowers as set forth in the Loan and Security Agreement, dated April 15,
1999, among Lender, Borrowers and Guarantors (as amended hereby and as the
same may hereafter be further amended, modified, supplemented, extended,
renewed, restated or replaced, the "Loan Agreement", and together with all
agreements, documents and instruments at any time executed and/or delivered in
connection therewith or related thereto, as from time to time amended and
supplemented, collectively, the "Financing Agreements").
Borrowers and Guarantors have requested certain amendments to and
consents in connection with the Loan Agreement and Lender is willing to agree
to such amendments and grant such consents, subject to the terms and condi-
tions contained herein. By this Amendment, Lender, Borrowers and Guarantors
desire and intend to evidence such amendments and consents.
In consideration of the foregoing and the agreements and covenants
contained herein, the parties hereto agree as follows:
1. Definitions.
(a) Additional Definitions. As used herein, the following terms
shall have the meanings given to them below, and the Loan Agreement and the
other Financing Agreements are hereby amended to include, in addition and not
in limitation, the following definitions:
(i) "Amendment No. 1" shall mean this Amendment No. 1 to
Loan and Security Agreement by and among Lender, Borrowers and Guarantors, as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(ii) "Blytheville Asset Purchase Agreement" shall mean the
Asset Purchase Agreement, dated as of April 30, 2001, by and among Huntco
Steel, Huntco and Blytheville Purchaser, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
(iii) "Blytheville Fixed Assets" shall mean the Real
Property of Huntco Steel located in Blytheville, Arkansas, together with the
assets of Huntco Steel located therein used in connection with the operation
by Huntco Steel of its cold mill steel processing plant, all as more
particularly described on Exhibit A hereto, which includes, without
limitation, a pickling line, a reversing cold reduction mill, annealing
furnaces and a tempering mill, but which excludes the Retained Blytheville
Fixed Assets.
(iv) "Blytheville Purchaser" shall mean EBF LLC, a Delaware
limited liability company, and its successors and assigns.
(v) "Blytheville Sale" shall mean the sale by Huntco Steel
to the Blytheville Purchaser of the Blytheville Fixed Assets pursuant to the
Blytheville Asset Purchase Agreement (as in effect on the date hereof).
(vi) "Capital Expenditures" shall mean, with respect to any
Person, all expenditures made and liabilities incurred for the acquisition of
assets which are not, in accordance with GAAP, treated as expense items for
such Person in the year made or incurred or as a prepaid expense applicable
to a future year or years.
(vii) "Commodity" shall mean steel that conforms to the specifications
described on Exhibit B hereto.
(viii) "Consolidated Net Income" shall mean, with respect to
any Person for any period, the aggregate of the net income (loss) of such
Person and its Subsidiaries, on a consolidated basis, for such period
(excluding to the extent included therein any extraordinary and/or one time
or unusual and non-recurring gains) after deducting all charges which should
be deducted before arriving at the net income (loss) for such period and,
without duplication, after deducting the Provision for Taxes for such period,
all as determined in accordance with GAAP; provided, that, (A) the net income
of any Person that is not a wholly-owned Subsidiary or that is accounted for
by the equity method of accounting shall be included only to the extent of the
amount of dividends or distributions paid or payable to such Person or a
wholly-owned Subsidiary of such Person; (B) except to the extent included
pursuant to the foregoing clause, the net income of any Person accrued prior
to the date it becomes a wholly-owned Subsidiary of such Person or is merged
into or consolidated with such Person or any of its wholly-owned Subsidiaries
or that Person's assets are acquired by such Person or by its wholly-owned
Subsidiaries shall be excluded; and (C) the net income (if positive) of any
wholly-owned Subsidiary (which is not a Borrower) to the extent that the
declaration or payment of dividends or similar distributions by such wholly-
owned Subsidiary to such Person or to any other wholly-owned Subsidiary of
such Person is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to such wholly-owned Subsidiary shall
be excluded. For the purposes of this definition, net income excludes any
gain together with any related Provision for Taxes for such gain realized
upon the sale or other disposition of any assets that are not sold in the
ordinary course of business (including, without limitation, dispositions
pursuant to sale and leaseback transactions) or of any Capital Stock of such
Person or a Subsidiary of such Person and any net income realized or loss
incurred as a result of changes in accounting principles or the application
thereof to such Person.
(ix) "EBITDA" shall mean, as to any Person, with respect to
any period, an amount equal to: (A) the Consolidated Net Income of such Person
and its Subsidiaries for such period determined in accordance with GAAP, plus
(B) depreciation, amortization and other non-cash charges (including, but not
limited to, imputed interest and deferred compensation) for such period (to the
extent deducted in the computation of Consolidated Net Income of such Person),
all in accordance with GAAP, plus (C) Interest Expense for such period (to the
extent deducted in the computation of Consolidated Net Income of such Person),
plus (D) charges for Federal, State, local and foreign income taxes for such
period (to the extent deducted in the computation of Consolidated Net Income of
such Person).
(x) "Enron" shall mean Enron North America Corp., a Delaware corporation and its
successors and assigns.
(xi) "Enron Credit Agreements" shall mean, collectively, the Loan Agreement,
dated as of April 6, 2001, by and among Enron, Borrowers and Guarantors and all
agreements, documents and instruments at any time executed and/or delivered by
any Borrower or any Guarantor or any other person to, with or in favor of Enron
in connection therewith or related thereto, as all of the foregoing now exist
or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced, provided, that, the term "Enron Credit Agreements" as
used herein shall not include the Enron Inventory Agreements except for the
separate Guarantees, each dated as of April 6, 2001, by Huntco, Huntco Nevada
and Midwest in favor of Enron, the separate Security Agreements, each dated as
of April 6, 2001, by Huntco Steel, Huntco, Huntco Nevada and Midwest in favor
of Enron and the separate Pledge Agreements, each dated as of April 6, 2001, by
Huntco and Huntco Nevada in favor of Enron, and the financing statements
related to each of the foregoing.
(xii) "Enron Intercreditor Agreement" shall mean the Intercreditor and
Subordination Agreement, dated on or about the date hereof, by and between
Enron and Lender, as acknowledged by each Borrower and Guarantor, as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
(xiii) "Enron Inventory Agreements" shall mean, collectively, IMA1, IMA2, the
Master Purchase Agreement and all agreements, documents and instruments at any
time executed and/or delivered by any Borrower or Guarantor or any other person
to, with or in favor of Enron in connection therewith or related hereto, as all
of the foregoing now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, provided, that, the term "Enron
Inventory Agreements" shall not include the Enron Credit Agreements except for
the separate Guarantees, each dated as of April 6, 2001, by Huntco, Huntco
Nevada and Midwest in favor of Enron, the separate Security Agreements, each
dated as of April 6, 2001, by Huntco Steel, Huntco, Huntco Nevada and Midwest
in favor of Enron and the separate Pledge Agreements, each dated as of April 6,
2001, by Huntco and Huntco Nevada in favor of Enron, and the financing
statements related to each of the foregoing.
(xiv) "Enron Inventory Collateral" shall mean any of the following that is
owned by Enron or, notwithstanding having been purchased and paid for by Enron,
is at any time determined to be, through recharacterization or otherwise,
property of Huntco Steel: (a) all steel products, including all Commodity
(collectively, "Steel Products"), purchased by Enron after the date hereof
pursuant to or in connection with the provisions of IMA1 and/or IMA2 that has
not been sold by Enron to and paid for by Huntco Steel and (b) any proceeds,
insurance, indemnity, warranty, or guaranty of or for any such Steel Products.
In no event shall the term "Enron Inventory Collateral" include (i) any Steel
Products that were purchased by Enron from Huntco Steel with respect to which
Enron owes Huntco Steel any amounts or (ii) any rights to payment of any
Borrower or Guarantor, whether or not earned by performance, for any property
which a Borrower or Guarantor purchased from Enron and fully paid for that is
subsequently sold, leased, licensed, assigned or otherwise disposed of by such
Borrower or Guarantor.
(xv) "Fixed Charges" for any period shall mean the sum of,
without duplication, (A) all Interest Expense, plus (B) all regularly
scheduled (as determined at the beginning of the respective period) principal
payments of Indebtedness for borrowed money and Indebtedness with respect to
Capital Leases (and without duplicating amounts in item (A) of this
definition, the interest component with respect to Indebtedness under Capital
Leases) plus (C) the fees paid to Lender in respect of the financing
arrangements provided for herein, including unused line fees and monthly
servicing fees. The foregoing shall not be construed to include principal
payments on Indebtedness arising pursuant to revolving loans and advances.
(xvi) "Fixed Charge Coverage Ratio" for any Testing Period
shall mean, with respect to Huntco and its Subsidiaries, on a consolidated
basis, the ratio of (A) the amount equal to (1) EBITDA during such Testing
Period less (2) the product of the Capital Expenditures for such Testing
Period multiplied by the ratio of (a) the number of months in such Testing
Period divided by (b) 12 to (B) Fixed Charges of Huntco and its Subsidiaries
for such Testing Period.
(xvii) "IMA1" shall mean the Inventory Management Agreement
(Phase I), dated as of April 6, 2001, by and between Enron and Huntco Steel.
(xviii) "IMA2" shall mean the Inventory Management Agreement
(Phase II), dated as of April 6, 2001, by and between Enron and Huntco Steel.
(xix) "Interest Expense" shall mean, for any period, as to
any Person, as determined in accordance with GAAP, the total interest expense
of such Person, whether paid or accrued during such period (including the
interest component of Capital Leases for such period), including, without
limitation, discounts in connection with the sale of any Accounts and bank
fees, commissions, discounts and other fees and charges owed with respect to
letters of credit, banker's acceptances or similar instruments.
(xx) "Master Purchase Agreement" shall mean the Master Steel Purchase and
Sale Agreement, dated as of April 6, 2001, by and between Enron and Huntco
Steel, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(xxi) "Retained Blytheville Fixed Assets" shall mean the Real Property of
Huntco Steel located in Blytheville, Arkansas, together with the assets of
Huntco Steel located therein, all as more particularly described on Exhibit
C hereto.
(xxii) "Springfield Real Property" shall mean the Real Property of Huntco
Steel consisting of all of Suites 200, 300, 400 and 500 in Building J of
Tract II in Woodhurst Office Park located at 0000 Xxxx Xxxxxxxxx Xxxxx,
Xxxxxxxxxxx, Xxxxxxxx 00000.
(xxiii) "Springfield Purchaser" shall mean Sheldan, LLC, a Missouri limited
liability company and its successors and assigns.
(xxiv) "Springfield Real Property Sale" shall mean the sale by Huntco Steel
to the Springfield Purchaser of the Springfield Real Property pursuant to
the Springfield Sale Contract (as in effect on the date hereof).
(xxv) "Springfield Sale Contract" shall mean the Commercial and Industrial
Real Estate Contract, effective as of April 9, 2001, by and between Huntco
Steel and Springfield Purchaser, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
(xxvi) "Testing Period" shall mean, with respect to Huntco and its
Subsidiaries, at any time during any year, the period commencing on
the immediately preceding July 1 and ending on the last day of the most
recently ended month, which period shall not exceed twelve (12) months; it
being understood that the initial Testing Period shall begin on July 1, 2001
and end on July 31, 2001.
(b) Interpretation. For purposes of this Amendment, unless otherwise
defined herein, all terms used herein, including, but not limited
to, those terms used and/or defined in the recitals above, shall have the
respective meanings assigned to such terms in the Loan Agreement.
2. Consent to Enron Inventory Agreements. Subject to the terms and
conditions contained in this Amendment, to the extent such consent is or may
be required under the Loan Agreement, Lender hereby consents to the Enron
Inventory Agreements (as in effect on the date hereof) and the arrangements
contemplated thereunder, including sale by Huntco Steel of Commodity from
time to time to Enron pursuant to the exercise of the put option with respect
to such Commodity granted by Enron to Huntco Steel upon the purchase by
Huntco Steel of such Inventory in accordance with the terms of the Enron
Inventory Agreements (as in effect on the date hereof) and the purchase by
Huntco Steel from time to time of Commodity from Enron in accordance with
the Enron Inventory Agreements (as in effect on the date hereof).
3. Consent to Redemption of Blytheville 1992 Bonds. Subject to the
terms and conditions contained in this Amendment, to the extent such consent
is or may be required under the Loan Agreement, Lender hereby consents to
each of the following (the "1992 Redemption"): (a) the payment by Huntco Steel
to the Blytheville 1992 Bond Trustee in the amount of $257,118.77 plus per diem
interest thereon of $46.05 for each day from June 5, 2001, through the date of
redemption for the purpose of the redemption and cancellation of the
Blytheville 1992 Bonds and (b) the termination of each of the Blytheville 1992
Bond Agreements; provided, that, Lender shall have received evidence, in form
and substance satisfactory to Lender, that (i) the Blytheville 1992 Bonds have
been redeemed in full and cancelled, (ii) the liens on and security interests
in the assets of Huntco Steel granted pursuant to the 1992 Bond Agreements have
been released and discharged in full and no Borrower or Guarantor has any
liabilities or obligations pursuant to the 1992 Bond Agreements, (iii) the
City has conveyed to Huntco Steel by deed and xxxx of sale the Real Property
and other personal property included in the Blytheville Fixed Assets that was
subject to the Blytheville 1992 Bond Agreements, (iv) Huntco Steel has conveyed
to the Blytheville Purchaser by one or more deeds or bills of sale the
Blytheville Fixed Assets, (v) the City has conveyed to Huntco Steel by deed the
Retained Blytheville Fixed Assets and (vi) Lender shall have received evidence,
in form and substance satisfactory to Lender, that all consents from any
Governmental Authority or other Person required in connection with the
foregoing have been obtained and are in full force and effect, including,
without limitation, from the City of Blytheville and the Blytheville 1992
Bond Trustee.
4. Consent to Redemption of Blytheville 1995 and 1996 Bonds. Subject
to the terms and conditions contained in this Amendment, to the extent such
consent is or may be required under the Loan Agreement, Lender hereby consents
to each of the following (the "1995/1996 Redemption"): (a) the contribution of
capital by Huntco Nevada to Huntco Steel of the Blytheville Subordinate Bonds
and the subsequent surrender of such Bonds by Huntco Steel to the Blytheville
Subordinate Bond Trustee, (b) the redemption in full and cancellation of the
each of the Blytheville Subordinate Bonds (so long as no Borrower or Guarantor
is required to pay cash or incur any indebtedness in connection therewith) and
(c) the termination of each of the Blytheville Subordinate Bond Agreements;
provided, that, Lender shall have received evidence, in form and substance
satisfactory to Lender, that (i) the Blytheville Subordinate Bonds have been
redeemed in full and cancelled (without the payment of any cash or the
incurrence of any indebtedness by any Borrower or Guarantor), (ii) the lien on
and security interests in the assets of Huntco Steel granted pursuant to the
Blytheville Subordinate Bond Agreements have been released and discharged in
full and no Borrower or Guarantor has any liabilities or obligations pursuant
to the Blytheville Subordinate Bond Agreements, (iii) the City has conveyed to
Huntco Steel by deed and xxxx of sale the Real Property and other personal
property included in the Blytheville Fixed Assets that was subject to the
Blytheville Subordinate Bond Agreements, (iv) Huntco Steel has conveyed to the
Blytheville Purchaser by one or more deeds or bills of sale the Blytheville
Fixed Assets, (v) the City has conveyed to Huntco Steel by deed the Retained
Blytheville Fixed Assets and (vi) all consents from any Governmental Authority
or other Person required in connection with the foregoing have been obtained
and are in full force and effect, including, without limitation, from the City
of Blytheville and the Blytheville Subordinate Bond Trustee. Upon the
effectiveness of Lender's consent set forth in this Section 4, Lender shall
release its security interest in the Blytheville 1995 Bonds and the Blytheville
1996 Bonds.
5. Dissolution of HSIA. Notwithstanding anything to the contrary
contained in Section 9.1 of the Loan Agreement, HSIA may wind up, liquidate or
dissolve, provided, that, each of the following conditions is satisfied as
determined by Lender: (a) the winding up, liquidation and dissolution of HSIA
shall not violate any law or any order or decree of any court or other
Governmental Authority in any material respect and shall not conflict with or
result in the breach of, or constitute a default under, any material
indenture, mortgage, deed of trust, or any other agreement or instrument to
which any Borrower or Guarantor is a party or may be bound, (b) such winding
up, liquidation or dissolution shall be done in accordance with the
requirements of all applicable laws and regulations, (c) effective upon such
winding up, liquidation or dissolution, all of the assets and properties of
HSIA shall be duly and validly transferred and assigned to Huntco Steel free
and clear of any liens, restrictions or encumbrances other than the security
interests and liens of Lender or other security interests, liens, restrictions
or encumbrances expressly permitted hereunder (and Lender shall have received
such evidence thereof as Lender may require), (d) Lender shall have received
copies of all documents and agreements of HSIA to be filed with any
Governmental Authority or otherwise required to effectuate such winding up,
liquidation or dissolution, (e) no Borrower or Guarantor shall assume any
Indebtedness, obligations or liabilities as a result of such winding up,
liquidation or dissolution, or otherwise become liable in respect of any
obligations or liabilities of HSIA, unless such Indebtedness is otherwise
expressly permitted hereunder or such obligations or liabilities are not
prohibited under the Loan Agreement or any of the other Financing Agreements,
(f) Lender shall have received not less than three (3) Business Days' prior
written notice of the intention of HSIA to wind up, liquidate or dissolve,
(g) Lender shall have received copies of such deeds, assignments or other
agreements as Lender may reasonably request to evidence and confirm the
transfer of the assets of HSIA to Huntco Steel, and (h) as of the date of such
winding up, liquidation or dissolution and after giving effect thereto, no
Event of Default, or act, condition or event which with notice or passage of
time or both would constitute an Event of Default, shall exist or have occurred
and be continuing (after giving effect to the waiver set forth herein).
6. Eligible Inventory. Section 1.28 of the Loan Agreement is hereby
amended by adding the following new subsection (m) thereto:
"; and (m) Enron Inventory Collateral."
7. Equipment Availability. The first clause of Section 1.32 of the
Loan Agreement (up to but excluding clause (a) of such Section) is deleted in
its entirety and the following is substituted therefor:
"1.32 "Equipment Availability" shall mean, as to Huntco
Steel the amount equal to $11,428,180, as reduced effective as of
the first day of each month commencing on June 1, 2001 by an
amount equal to $190,470 per month and, as to Midwest, the amount
equal to $662,040, as reduced effective as of the first day of
each month commencing on June 1, 2001 by an amount equal to
$11,034 per month, provided, that:"
8. Interest Rate. Section 1.51 of the Loan Agreement is hereby deleted
in its entirety and the following substituted therefor:
"1.51 "Interest Rate" shall mean the following:
(a) subject to clause (b) below, as to Prime Rate Loans, a rate
equal to one (1%) percent per annum in excess of the Prime Rate and, as
to Eurodollar Rate Loans, a rate of two and three-quarters (2 3/4%)
percent per annum in excess of the Adjusted Eurodollar Rate (based on
the Eurodollar Rate applicable for the Interest Period selected by a
Borrower (or Huntco on behalf of such Borrower) as in effect three (3)
Business Days after the date of receipt by Lender of the request of a
Borrower (or Huntco on behalf of such Borrower) for such Eurodollar Rate
Loans in accordance with the terms hereof, whether such rate is higher
or lower than any rate previously quoted to such Borrower or Huntco);
and
(b) notwithstanding anything to the contrary contained herein, the
Interest Rate shall mean the rate of three (3%) percent per annum in
excess of the Prime Rate as to Prime Rate Loans and the rate of four and
three-quarters (4 3/4%) percent per annum in excess of the Adjusted
Eurodollar Rate as to Eurodollar Rate Loans, at Lender's option, without
notice, (i) either (A) for the period on and after the date of
termination or non-renewal hereof until such time as all Obligations are
indefeasibly paid in full, or (B) for the period from and after the date
of the occurrence of any Event of Default, and for so long as such Event
of Default is continuing as determined by Lender and (ii) on the Loans
to a Borrower at any time outstanding in excess of the amounts available
to such Borrower under Section 2 (whether or not such excess(es) arise
or are made with or without Lender's knowledge or consent and whether
made before or after an Event of Default)."
9. Maximum Credit. Section 1.56 of the Loan Agreement is hereby
deleted in its entirety and the following substituted therefor:
"1.56 "Maximum Credit" shall mean the following: (a) $80,000,000
from the date of Amendment Xx. 0 xxxxxxx xxx xxxxxxxxx Xxxx 00, 0000,
(x) $70,000,000 from July 1, 2001 through and including October 30, 2001
and (c) $60,000,000 from October 31, 2001 and at all times thereafter.
10. Loans. Section 2.1 of the Loan Agreement is hereby amended by
adding the following new Section 2.1(d) thereto:
"(d) Notwithstanding anything to the contrary contained herein or
in any of the other Financing Agreements, on each date when any
reduction to the Maximum Credit becomes effective, Borrowers agree
absolutely and unconditionally to automatically and without notice or
demand make a payment in respect of the Loans and Letter of Credit
Accommodations in an amount equal to the excess, if any, of the
aggregate amount of the Loans and Letter of Credit Accommodations
outstanding on such date over the Maximum Credit as so reduced in
immediately available funds."
11. Collateral Reporting. Section 7.1(a) of the Loan Agreement is
hereby amended by adding the following new Section 7.1(a)(iii) thereto:
"and (iii) reports identifying all Enron Inventory Collateral and
any other assets subject to the right of Borrowers to put any such
assets to Enron or the right of Enron to require that any Borrower sell
such assets to Enron and any assets that any Borrower has the right to
require that Enron sell to any Borrower, which set forth, among other
things, the type, value and location of such inventory, together with
copies of any notices or related materials received by Borrowers from
Enron in connection with the Enron Inventory Agreements;"
12. Financial Statements and Other Information. Section 9.6 of the
Loan Agreement is hereby amended by adding the following new Section
9.6(e) thereto:
"(e) At any time and from time to time upon Lender's request,
Borrowers shall provide Lender (whether on a consistent basis or
periodically as Lender may elect) with a copy of each written
confirmation or other written notice of any exercise by any Borrower of
any of the following promptly upon the receipt thereof by any Borrower
or Guarantor: (i) any put option with respect to any Commodity or other
product under the Enron Inventory Agreements, (ii) any exercise by any
Borrower of any call option with respect to any Commodity or other
product by any Borrower under the Enron Inventory Agreements and (iii)
the purchase by Enron of any Commodity or other product on behalf of any
Borrower pursuant to the Enron Inventory Agreements. On or before the
tenth (10th) day of each month, or more frequently as Lender may
request, Borrowers shall furnish to Lender a summary of the purchases
and sales of Commodity or other product between any Borrower and Enron
during the immediately preceding month, which summary shall include the
total amount owing by Borrowers to Enron and the total amount owing by
Enron to Borrower as of the end of such month."
13. Sale of Assets, Etc. Section 9.7(b) of the Loan Agreement is hereby
amended by adding the following new Sections 9.7(b)(v) and (vi) thereto:
"or (v) the Blytheville Sale, provided, that, each of the
following conditions is satisfied: (A) Lender shall have received
a true, correct and complete copy of the Blytheville Asset
Purchase Agreement and all other agreements, documents and
instruments related thereto requested by Lender, duly executed,
authorized and delivered by the parties thereto, (B) the
Blytheville Asset Purchase Agreement shall be in form and
substance satisfactory to Lender, (C) the gross purchase price in
connection with the Blytheville Sale shall be not less than
$17,000,000, (D) Lender shall have received, in cash or other
immediately available funds, the amount of not less than
$6,474,000 from the proceeds of the Blytheville Sale, for
application to the Obligations in such order and manner as Lender
may determine, (E) Lender shall have received evidence, in form
and substance satisfactory to Lender, that all consents from any
Governmental Authority or other Person required in connection with
the Blytheville Sale have been obtained and are in full force and
effect, including, without limitation, from the City of
Blytheville, the Blytheville 1992 Bond Trustee and the Blytheville
Subordinate Bond Trustee, (F) Lender shall have received copies of
the executed deed of sale and any such other transfer documents
and instruments in connection therewith, as duly authorized,
executed and delivered by the parties thereto, (G) Lender shall
have received a Collateral Access Agreement, in form and substance
satisfactory to Lender, with respect to the portion of the Real
Property located in Blytheville, Arkansas (which constitutes part
of the Blytheville Fixed Assets) in which Huntco Steel shall
continue to keep or store any of its Collateral, duly authorized,
executed and delivered by Blytheville Purchaser (the "Blytheville
Purchaser Collateral Access Agreement"), (H) Lender shall have
received, in form and substance satisfactory to Lender, a fully
executed original Modification Agreement No. 1 With Respect to Fee
and Leasehold Mortgage, Security Agreement and Assignment of
Leases and Rents, Partial Release, Partial Subordination and
Termination of Intercreditor Agreements, (I) Lender shall have
received, in form and substance satisfactory to Lender, an
endorsement issued by First American Title Insurance Company
("First American") in favor of Lender to title policy bearing
policy no. LP3621124 issued by First American in favor of Lender,
(J) the Blytheville Sale pursuant to the Blytheville Asset
Purchase Agreement shall have occurred and each of the conditions
set forth herein shall have been satisfied by no later than the
date of Amendment No. 1 and (K) as of the date of such sale and
after giving effect thereto, no Event of Default, or event, act or
condition which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred, or
(vi) the Springfield Real Property Sale, provided, that,
each of the following conditions is satisfied: (A) Lender shall
have received a true, correct and complete copy of the Springfield
Sale Contract and all other agreements, documents and instruments
related thereto requested by Lender, duly executed, authorized and
delivered by the parties thereto, (B) the Springfield Sale
Contract shall be in form and substance satisfactory to Lender,
(C) the purchase price in connection with the Springfield Real
Property Sale shall be not less than $470,000, (D) Lender shall
have received, in cash or other immediately available funds, the
amount of not less than $435,000 constituting all of the proceeds
of the Springfield Real Property Sale, for application to the
Obligations in such order and manner as Lender may determine, (E)
Lender shall have received copies of the executed deed of sale and
any such other transfer documents and instruments in connection
therewith, as duly authorized, executed and delivered by the
parties thereto, (F) the Springfield Real Property Sale pursuant
to the Springfield Sale Contract shall have occurred and each of
the conditions set forth herein shall have been satisfied by no
later than August 15, 2001 and (G) as of the date of such sale and
after giving effect thereto, no Event of Default, or event, act or
condition which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred;"
14. Encumbrances. Section 9.8 of the Loan Agreement is hereby amended
by adding the following new subsections (m) and (n) at the end thereof:
"(m) the security interests and liens on the assets of
Borrowers and Guarantors of Enron to secure Indebtedness permitted
under Section 9.9(k) below, provided, that, such security
interests and liens are and shall be subject to the Enron
Intercreditor Agreement; and
(n) the security interests and liens on the assets of
Borrowers and Guarantors of Enron to secure Indebtedness permitted
under Section 9.9(l) below and the other obligations of Borrowers
and Guarantors arising under the Enron Inventory Agreements,
provided, that, such security interests and liens are and shall be
subject the Enron Intercreditor Agreement."
15. Indebtedness. Section 9.9 of the Loan Agreement is hereby amended
by adding the following new subsections (k) and (l) at the end thereto:
"(k) secured Indebtedness of Borrowers and Guarantors to
Enron evidenced by the Enron Credit Agreements as amended from
time to time; provided, that, (i) the aggregate principal amount
of such Indebtedness shall not exceed $10,000,000, less the
aggregate amount of all repayments, repurchases or redemptions of
principal, whether optional or mandatory in respect thereof, (ii)
on the date of Amendment No.1, Lender shall receive the amount of
$4,664,000, in immediately available funds, from the loan proceeds
disbursed by Enron pursuant to such Enron Credit Agreements for
application to the Obligations in such order and manner as Lender
may determine, (iii) on the date of Amendment No.1, Huntco Steel
shall receive the balance of the loan proceeds disbursed by Enron
pursuant to such Enron Credit Agreements, in immediately available
funds, in the amount of $5,336,000 to be used exclusively for the
prompt payment by Huntco Steel of its existing trade payables
owing to its trade vendors and to pay for transaction expenses
incurred in connection with entering into the Enron Credit
Agreements, the Enron Inventory Agreements, the Blytheville Sale
and Amendment No.1, (iv) Lender shall have received true, correct
and complete copies of the Enron Credit Agreements requested by
Lender, as duly authorized, executed and delivered by the parties
thereto, (v) the Indebtedness evidenced by the Enron Credit
Agreements shall be subject and subordinate in right of payment to
the indefeasible payment and satisfaction in full of all of the
Obligations as set forth in the Enron Intercreditor Agreement,
(vi) the security interests in and liens upon the assets of
Borrowers and Guarantors that may secure such Indebtedness shall
be subject to the security interests and liens of Lender therein
as set forth in the Enron Intercreditor Agreement, (vii) Borrowers
and Guarantors shall not, directly or indirectly, (A) amend,
modify, alter or change the terms of the Enron Credit Agreements
as in effect on the date of Amendment No. 1 so as to cause the
forgiveness or cancellation of any portion of such Indebtedness
(other than pursuant to payments thereof), or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set
aside or otherwise deposit or invest any sums for such purpose
(excluding regularly scheduled payments of principal, interest and
fees, subject to the terms of the Enron Intercreditor Agreement),
(viii) Borrowers and Guarantors shall furnish to Lender all
notices or demands in connection with such Indebtedness either
received by any Borrower or any Guarantor or on its behalf,
promptly after the receipt thereof, or sent by any Borrower or any
Guarantor or on its behalf, concurrently with the sending thereof,
as the case may be and (ix) Lender shall have received, in form
and substance satisfactory to Lender, an original of the Enron
Intercreditor Agreement, providing for, among other things, the
subordination of the security interests in and liens upon the
assets of Borrowers and Guarantors of Enron to the security
interests and liens of Lender therein, duly authorized, executed
and delivered by Enron, Borrowers and Guarantors;
(l) Indebtedness of any Borrower or any Guarantor to Enron
arising pursuant to the sale of Inventory to Enron in accordance
with the Enron Inventory Agreements as amended from time to time;
provided, that, (i) the aggregate principal amount of such
Indebtedness shall not exceed $60,000,000, (ii) Lender shall have
received true, correct and complete copies of the Enron Inventory
Agreements requested by Lender, as duly authorized, executed and
delivered by the parties thereto, (iii) the security interests in
and liens upon the assets of Borrowers and Guarantors that may
secure such Indebtedness shall be subject to the Enron
Intercreditor Agreement, and (iv) Borrowers and Guarantors shall
furnish to Lender all notices or demands in connection with such
Indebtedness either received by any Borrower or Guarantor or on
its behalf, promptly after the receipt thereof, or sent by any
Borrower or Guarantor or on its behalf, concurrently with the
sending thereof, as the case may be."
16. Guarantees. Section 9.10 of the Loan Agreement is hereby amended
by deleting clause (c) of such Section in its entirety and replacing
it with the following:
"(c) (i) the guarantee by each Borrower and Guarantor of the
Obligations of any Borrower in favor of Lender; and (ii) the
guarantee in favor of Enron by each Borrower and Guarantor of the
Indebtedness of any Borrower owing to Enron permitted under
Sections 9.9(k) and (l);"
17. Dividends and Redemptions. Section 9.11 of the Loan Agreement is
hereby amended by deleting clauses (d) and (e) of such Section in their
entirety and replacing them with the following:
"(d) [Intentionally Deleted]; and
(e) [Intentionally Deleted]"
18. Transactions with Affiliates. Section 9.12 of the Loan Agreement
is hereby amended by deleting clause (b)(ii) of such Section in its
entirety and replacing it with the following:
"(b)(ii) payments by Borrowers to Huntco of the monthly base management
fee in accordance with the terms of the Management Services Agreement,
dated as of July 1, 1993, between Huntco and Midwest (as in effect on the
date hereof) and the Management Services Agreement, dated as of January 1,
1998, between Huntco and Huntco Steel (as in effect on the date hereof),
provided, that, (A) the aggregate amount of such payments in any month
shall not exceed $135,000 and (B) as of the date of any payment of such
fees and after giving effect thereto, no Event of Default, or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default shall exist or have occurred,"
19. Fixed Charge Coverage Ratio. Section 9.16 of the Loan Agreement is
hereby deleted in its entirety and the following substituted therefor:
"9.16 Fixed Charge Coverage Ratio. The Fixed Charge
Coverage Ratio shall not be less than 1:1 for any Testing Period."
20. Enron Accounts. Notwithstanding anything to the contrary contained
in the Loan Agreement or in any of the other Financing Agreements, none
of the following shall be considered an Eligible Account: (a) any Account
arising from the sale or other disposition of any Enron Inventory
Collateral or (b) any Account where Enron is the account debtor.
21. Additional Event of Default. Notwithstanding anything to the
contrary contained in the Loan Agreement or in any of the other Financing
Agreements, in addition to the Events of Default set forth therein, an
event of default under any of the Enron Credit Agreements or any of the
Enron Inventory Agreements shall also constitute an Event of Default
under the Financing Agreements.
22. Maximum Credit Reduction Fee. In consideration of the reductions
to the Maximum Credit set forth herein, Borrowers shall pay to Lender or
Lender may, at its option, charge any loan account of Borrowers maintained
by Lender, a line reduction fee in the aggregate amount of $150,000 which
fee is fully earned as of the date hereof and shall constitute part of the
Obligations, payable as follows: (a) $50,000 on the date hereof, (b) $50,000
on June 30, 2001, and (c) $50,000 on October 31, 2001, provided, that, all
such payments shall become immediately due and payable upon the occurrence of
an Event of Default.
23. Default Waiver.
(a) Subject to the terms and conditions set forth herein, Lender
hereby waives the Events of Default arising under Section 10.1(a) of the Loan
Agreement as a result of the failure of Borrowers and Guarantors to deliver
(a) the unaudited consolidated financial statements and unaudited
consolidating financial statements of Huntco and its Subsidiaries as required
under Section 9.6(a)(i) of the Loan Agreement for each of the fiscal months
ended October 31, 2000, November 30, 2000, December 31, 2000, January 31,
2001, February 28, 2001 and March 31, 2001, within forty-five (45) days after
the end of such fiscal month and (b) the audited consolidated financial
statements and unaudited consolidating financial statements of Huntco and its
Subsidiaries as required under Section 9.6(a)(ii) of the Loan Agreement for
the fiscal year ended December 31, 2000, together with the opinion of the
independent certified public accountants of Borrowers with respect thereto,
within ninety (90) days after the end of such fiscal year; provided, that, the
audited consolidated financial statements and the unaudited consolidating
financial statements as of December 31, 2000, together with such opinion of
independent certified public accountants, and the unaudited consolidated and
consolidating financial statements through the month ended March 31, 2001,
shall be delivered to Lender by no later than June 15, 2001. In the event
that Lender does not receive such financial statements and opinion by June 15,
2001, such failure shall constitute an Event of Default and the waivers set
forth herein shall be of no force and effect.
(b) Lender has not waived, is not by this Amendment waiving, and
has no intention of waiving any Event of Default which may have occurred on
or prior to the date hereof, whether or not continuing on the date hereof,
or which may occur after the date hereof (whether the same or similar to the
Events of Default referred to above or otherwise), other than the Events of
Default specifically referred to above. The foregoing waiver shall not be
construed as a bar to or a waiver of any other or further Event of Default on
any future occasion, whether similar in kind or otherwise and shall not
constitute a waiver, express or implied, of any of the rights and remedies of
Lender arising under the terms of the Loan Agreement or any other Financing
Agreements on any future occasion or otherwise.
24. Termination of Pledge Agreement and Intercreditor Agreement;
Release of Lien on Enron Inventory Collateral.
(a) Upon the consummation of each of the 1992 Redemption, the
1995/1996 Redemption and the Blytheville Sale in accordance with the terms
hereof and the satisfaction of the conditions set forth in Section 26 of this
Amendment, each of the Pledge and Security Agreement, dated April 15, 1999, by
and between Huntco Nevada and Congress and the Intercreditor and Subordination
Agreement, dated April 15, 1999, by and among the Blytheville Subordinate Bond
Trustee, Huntco Nevada (in its capacity as the sole owner and holder of the
Blytheville 1995 Bonds and the Blytheville 1996 Bonds) and Congress with
respect to the pledge to Congress of the Blytheville 1995 Bonds and the
Blytheville 1996 Bonds shall be deemed terminated and of no further force and
effect.
(b) Upon the closing of transactions contemplated by Section 15 hereof and the
satisfaction of the conditions set forth in Section 26 hereof, the Security
Interests in and liens upon the Enron Inventory Collateral (if any) that have
been granted by Borrowers pursuant to the Financing Agreements shall be
released and terminated.
25. Additional Representations, Warranties and Covenants. Borrower
represents, warrants and covenants with and to Lender as follows, which
representations, warranties and covenants are continuing and shall survive the
execution and delivery hereof, and the truth and accuracy of, or compliance
with each, together with the representations, warranties and covenants in the
other Financing Agreements, being a continuing condition of the making of Loans
by Lender to Borrower:
(a) No Event of Default or act, condition or event which with
notice or passage of time or both would constitute an Event of Default exists
or has occurred as of the date of this Amendment (after giving effect to the
amendments to the Financing Agreements and waivers made by this Amendment).
(b) This Amendment has been duly executed and delivered by
Borrowers and Guarantors and is in full force and effect as of the date hereof
and the agreements and obligations of Borrower contained herein constitute
legal, valid and binding obligations of Borrower enforceable against Borrower
in accordance with their respective terms.
(c) In no event will any Enron Inventory Collateral or other product at any
time owned by Enron be included in any report of the Inventory of Borrowers
provided by Borrowers or Guarantors to Lender, unless specifically,
conspicuously and separately identified as such in the report.
(d) Borrowers and Guarantors shall cause all Enron Inventory Collateral and
any other product at any time owned by Enron at any location in which
Borrowers and Guarantors keep or store Inventory to be specifically,
conspicuously and separately identified as Enron Inventory Collateral and
physically segregated from all other Inventory of Borrowers and Guarantors
and shall at all times maintain its records and reports in such a manner that
Lender may verify, in a manner satisfactory to Lender, that the Enron
Inventory Collateral or any other product at any time owned by Enron is not
or has not been included in any inventory report provided by any Borrower or
Guarantor to Lender.
(e) The security interests in and liens of Lender upon all assets
and properties of Huntco Steel, other than the Blytheville Fixed Assets (upon
the effectiveness of the Blytheville Sale), the Springfield Real Property
(upon the effectiveness of the Springfield Real Property Sale) and the Enron
Inventory Collateral, are and shall continue to be in full force and effect,
including, but not limited to, all amounts at any time payable to Huntco Steel
or any of its Affiliates, and all rights, benefits and remedies of Huntco Steel
or any of its Affiliates, pursuant to each of the Blytheville Asset Purchase
Agreement and the Springfield Sale Contract.
(f) To the extent set forth in Section 9.7(b)(v)(D) of the Loan Agreement,
Huntco Steel shall cause all amounts at any time payable to Huntco
Steel or any of its Affiliates pursuant to the Blytheville Asset Purchase
Agreement or any related agreements to be paid by Blytheville Purchaser
directly to Lender for application to the Obligations in such order and manner
as Lender may determine.
(g) Huntco Steel shall cause all amounts at any time payable to
Huntco Steel or any of its Affiliates pursuant to the Springfield Sale
Contract or any related agreements to be paid by Springfield Purchaser
directly to Lender for application to the Obligations in such order and manner
as Lender may determine.
(h) To the extent set forth in Section 9.7(b)(v)(D) of the Loan
Agreement, in the event Huntco Steel or any of its Affiliates receives any
amounts at any time payable to Huntco Steel or any of its Affiliates pursuant
to the Blytheville Asset Purchase Agreement or any related agreements,
documents and instruments, such amounts shall be collected by Huntco Steel or
its Affiliates as the property of Lender and held by it or them in trust for
Lender and shall on the day received be remitted to Lender in the form
received, with any necessary assignments or endorsements for application to
the Obligations of Borrowers to Lender in such order and manner as Lender may
determine.
(i) In the event Huntco Steel or any of its Affiliates receives any amounts
at any time payable to Huntco Steel or any of its Affiliates pursuant to the
Springfield Sale Contractor any related agreements, documents and instruments,
such amounts shall be collected by Huntco Steel or its Affiliates as the
property of Lender and held by it or them in trust for Lender and shall on the
day received be remitted to Lender in the form received, with any necessary
assignments or endorsements for application to the Obligations of Borrowers to
Lender in such order and manner as Lender may determine.
(j) Huntco Steel shall remove all of its assets and properties from the Real
Property that is subject to the Blytheville Sale prior to the expiration of
Congress' right to access such Real Property pursuant to the Blytheville
Purchaser Collateral Access Agreement.
26. Conditions Precedent for Amendment. The effectiveness of the amendments
contained herein shall be subject to the satisfaction of each of the following,
in a manner satisfactory to Lender and its counsel:
(a) Lender shall have received this Amendment duly authorized,
executed and delivered by the parties hereto;
(b) Lender shall have received, in form and substance satisfactory to Lender,
an original of the Enron Intercreditor Agreement, duly authorized, executed and
delivered by the parties thereto;
(c) Lender shall have received, in form and substance satisfactory to Lender,
an original of the Pledge and Security Agreement, dated on or about the date
hereof, by Huntco in favor of Congress with respect to the pledge of the stock
of Huntco Nevada, duly authorized, executed and delivered by Huntco, together
with the original stock certificates representing all of the issued and
outstanding shares of Huntco Nevada;
(d) Lender shall have received, in form and substance satisfactory to Lender,
an original of the Pledge and Security Agreement, dated on or about the date
hereof, by Huntco Nevada in favor of Congress with respect to the pledge of
the stock of Huntco Steel and Midwest, duly authorized, executed and delivered
by Huntco Nevada, together with the original stock certificates representing
all of the issued and outstanding shares of each of Huntco Steel and Midwest;
(e) Lender shall have received, in form and substance satisfactory
to Lender, the consent of each of the financial institutions which have
acquired a participation in the interests and Obligations of Lender under the
Financing Agreements to the terms and provisions of this Amendment;
(f) Lender shall have received, in form and substance satisfactory
to Lender, true correct and complete copies of each of the following as duly
authorized, executed and delivered by the parties thereto: (i) the Enron
Credit Agreements requested by Lender (including, without limitation, the
First Amendment to Loan Agreement, dated on or about the date hereof, by and
among Enron, Borrower and Guarantors), (ii) the Enron Inventory Agreements
requested by Lender and (iii) the Blytheville Asset Purchase Agreement and all
agreements, documents and instruments related thereto requested by Lender;
(g) Lender shall have received, in form and substance satisfactory
to Lender, an original of the Blytheville Purchaser Collateral Access
Agreement, duly authorized, executed and delivered by Enron; and
(h) Lender shall have received, in form and substance satisfactory
to Lender, letters from each counsel of Borrowers which have delivered
opinions to Enron in connection with the arrangements contemplated by the
Enron Credit Agreements and the Enron Inventory Agreements, stating that
Congress may rely on such opinions;
(i) no Event of Default, or event, act or condition which with
notice or passage of time or both would constitute an Event of Default, shall
exist or have occurred (after giving effect to the amendments to the Financing
Agreements made by this Amendment).
27. Effect of this Amendment. Except as modified pursuant hereto, no
other changes or modifications to the Financing Agreements are intended or
implied, and in all other respects the Financing Agreements are hereby
specifically ratified, restated and confirmed by all parties hereto as of the
effective date hereof. To the extent of conflict between the terms of this
Amendment and the other Financing Agreements, the terms of this Amendment
shall control. The Loan Agreement and this Amendment shall be read and
construed as one agreement.
28. Further Assurances. The parties hereto shall execute and deliver
such additional documents and take such additional action as may be necessary
or desirable to effectuate the provisions and purposes of this Amendment.
29. Governing Law. The validity, interpretation and enforcement of
this Amendment and the other Financing Agreements and any dispute arising out
of the relationship between the parties hereto whether in contract, tort,
equity or otherwise, shall be governed by the internal laws of the State of
Illinois (without giving effect to principles of conflicts of laws).
30. Binding Effect. This Amendment shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
31. Headings. The headings listed herein are for convenience only and
do not constitute matters to be construed in interpreting this Amendment.
32. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one
and the same agreement. In making proof of this Amendment, it shall not be
necessary to produce or account for more than one counterpart thereof signed
by each of the parties hereto. Delivery of an executed counterpart of this
Amendment by telefacsimile shall have the same force and effect as delivery
of an original executed counterpart of this Amendment. Any party delivering
an executed counterpart of this Amendment by telefacsimile also shall deliver
an original executed counterpart of this Amendment, but the failure to deliver
an original executed counterpart shall not affect the validity, enforceability,
and binding effect of this Amendment as to such party or any other party.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
Please sign the enclosed counterpart of this Amendment in the space
provided below, whereupon this Amendment, as so accepted by Lender, shall
become a binding agreement among Borrowers, Guarantors and Lender.
Very truly yours,
CONGRESS FINANCIAL CORPORATION(CENTRAL)
By:
Title:
AGREED:
HUNTCO STEEL, INC.
By:
Title:
MIDWEST PRODUCTS, INC.
By:
Title:
HUNTCO INC.
By:
Title:
HUNTCO NEVADA, INC.
By:
Title:
HSI AVIATION, INC.
By:
Title:
