SECOND AMENDMENT TO
REVOLVING LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO REVOLVING LOAN AND SECURITY AGREEMENT
(the "Second Amendment") is entered into as of December 31, 1999 by and between
SHERMAN WIRE COMPANY f/k/a DeSoto, Inc., a Delaware corporation, as successor by
merger to DSO Acquisition Corporation ("Borrower"), and CONGRESS FINANCIAL
CORPORATION (CENTRAL), an Illinois corporation ("Lender"). Except for terms
which are expressly defined herein, all capitalized terms used herein shall have
the meaning subscribed to them in the Loan Agreement (as defined below).
RECITALS
WHEREAS, Borrower and Lender are parties to that certain
Revolving Loan And Security Agreement dated as of September 27, 1996 (as
amended, the "Loan Agreement").
WHEREAS, Borrower desires to amend the terms of the Loan
Agreement to reflect the renewal of the Loan Agreement and to provide further
financial accommodations under the Loan Agreement.
WHEREAS, Lender is willing to amend the Loan Agreement
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
I. AMENDMENTS TO THE LOAN AGREEMENT
A. The definition of "Maximum Credit" set forth in Section 1 of
the Loan Agreement is hereby amended and restated in its
entirety to read as follows:
"Maximum Credit" shall mean, for each business day,
the lesser of (i) $10,000,000 and (ii) $60,000,000
less the Keystone Facility Obligations for such
business day.
B. The definition of "Prime Rate" in Section 1 of the Loan
Agreement is hereby amended and restated in its entirety to
read as follows:
"Prime Rate" shall mean the rate from time to time
publicly announced by First Union National Bank, or
its successors, at its office in Charlotte, North
Carolina, as its prime rate, whether or not such
announced rate is the best rate available at such
bank.
C. Section 1 of the Loan Agreement is hereby amended by adding
the following defined terms in the appropriate alphabetical
order:
"Adjusted Eurodollar Rate" shall mean, with respect
to each Interest Period for any Eurodollar Rate Loan,
the rate per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for
such Interest Period by (b) a percentage equal to:
(i) one (1) minus (ii) the Reserve Percentage. For
purposes hereof, "Reserve Percentage" shall mean the
reserve percentage, expressed as a decimal,
prescribed by any United States or foreign banking
authority for determining the reserve requirement
which is or would be applicable to deposits of United
States dollars in a non-United States or an
international banking office of Reference Bank used
to fund a Eurodollar Rate Loan or any Eurodollar Rate
Loan made with the proceeds of such deposit, whether
or not the Reference Bank actually holds or has made
any such deposits or loans. The Adjusted Eurodollar
Rate shall be adjusted on and as of the effective day
of any change in the Reserve Percentage.
"Business Day" shall mean any day other than a
Saturday, Sunday, or other day on which commercial
banks are authorized or required to close under the
laws of the States of New York or Illinois or the
Commonwealth of Pennsylvania, and a day on which the
Reference Bank and Lender are open for the
transaction of business, except that if a
determination of a Business Day shall relate to any
Eurodollar Rate Loans, the term Business Day shall
also exclude any day on which banks are closed for
dealings in dollar deposits in the London interbank
market or other applicable Eurodollar Rate market.
"Eurodollar Rate Loans" shall mean any Loans or
portion thereof on which interest is payable based on
the Adjusted Eurodollar Rate in accordance with the
terms hereof.
"Eurodollar Rate" shall mean with respect to the
Interest Period for a Eurodollar Rate Loan, the
interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded
upwards, if necessary, to the next one-sixteenth
(1/16) of one (1%) percent) at which Reference Bank
is offered deposits of United States dollars in the
London interbank market (or other Eurodollar Rate
market selected by Borrower and approved by Lender)
on or about 9:00 a.m. (New York time) two (2)
Business Days prior to the commencement of such
Interest Period in amounts substantially equal to the
principal amount of the Eurodollar Rate Loans
requested by and available to Borrower in accordance
with this Agreement, with a maturity of comparable
duration to the Interest Period selected by Borrower.
"Interest Period" shall mean for any Eurodollar Rate
Loan, a period of approximately one (1), two (2), or
three (3) months duration as Borrower may elect, the
exact duration to be determined in accordance with
the customary practice in the applicable EURODOLLAR
RATE MARKET; PROVIDED, THAT, Borrower may not elect
an Interest Period which will end after the last day
of the then-current term of this Agreement.
"Interest Rate" shall mean, as to Prime Rate Loans, a
rate of one-half of one percent (.5%) per annum in
excess of the Prime Rate and, as to Eurodollar Rate
Loans, a rate of two and one-half of one percent
(2.5%) percent per annum in excess of the Adjusted
Eurodollar Rate (based on the Eurodollar Rate
applicable for the Interest Period selected by
Borrower as in effect three (3) Business Days after
the date of receipt by Lender of the request of
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 Borrower);
provided, that, the Interest Rate shall mean the rate
of two and one-half of one percent (2.5%) per annum
in excess of the Prime Rate as to Prime Rate Loans
and the rate of four and one-half of one percent
(4.5%) per annum in excess of the Adjusted Eurodollar
Rate as to Eurodollar Rate Loans, at Lender's option,
without notice, (a) for the period (i) from and after
the date of termination or non-renewal hereof until
Lender has received full and final payment of all
obligations (notwithstanding entry of a judgment
against Borrower) and (ii) from and after the date of
the occurrence of an Event of Default for so long as
such Event of Default is continuing as determined by
Lender, and (b) on the Revolving Loans at any time
outstanding in excess of the amounts available to
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).
"Prime Rate Loans" shall mean any Loans or portion
thereof on which interest is payable based on the
Prime Rate in accordance with the terms thereof.
"Reference Bank" shall mean First Union National Bank
or such other bank as Lender may from time to time
designate.
D. Section 2.1(a) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
2.1 REVOLVING LOANS.
(a) Subject to, and upon the terms and conditions
contained herein, Lender may, in its sole discretion, agree to
make Revolving Loans to Borrower from time to time in amounts
requested by Borrower up to the amount which is equal to the
lesser of the Maximum Credit or the sum of:
(i) the sum of:
(A) eighty-five percent (85%)
of the Net Amount of Eligible
accounts, plus
(B) the sum of (a) sixty
percent (60%) of the value
of Eligible Inventory which
constitutes finished goods
and (b) the fifty-five
percent (55%) of the value
of Eligible Inventory
EXCLUDING FINISHED GOODS;
LESS
(ii) any Availability Reserves.
E. Section 3.1 of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
3.1 Interest.
(a) Borrower shall pay to Lender interest on the outstanding
principal amount of the non-contingent Obligations at the
Interest Rate applicable to Prime Rate Loans. All interest
accruing hereunder on and after the date of any Event of
Default or termination or non-renewal hereof shall be
payable on demand.
(b) Borrower may from time to time request that Prime Rate
Loans be converted to Eurodollar Rate Loans or that any
existing Eurodollar Rate Loans continue for an additional
Interest Period. Such request from Borrower shall specify
the amount of the Prime Rate Loans which will constitute
Eurodollar Rate Loans (subject to the limits set forth
below) and the Interest Period to be applicable to such
Eurodollar Rate Loans. Subject to the terms and conditions
contained herein, three (3) Business Days after receipt by
Lender of such a request from Borrower, such Prime Rate
Loans shall be converted to Eurodollar Rate Loans or such
Eurodollar Rate Loans shall CONTINUE, AS THE CASE MAY BE,
PROVIDED, THAT, (i) no Event of Default, or event which
-------- ---- with notice or passage of time or both would
constitute an Event of Default exists or has occurred and is
continuing, (ii) no party hereto shall have sent any notice
of termination or non-renewal of this Agreement, (iii)
Borrower shall have complied with such customary procedures
as are established by Lender and specified by Lender to
Borrower from time to time for requests by Borrower for
Eurodollar Rate Loans, (iv) no more than four (4) Interest
Periods may be in effect at any one time, (v) the aggregate
amount of the Eurodollar Rate Loans must be in an amount not
less than $5,000,000 or an integral multiple of $1,000,000
in excess thereof, (vi) the maximum amount of the Eurodollar
Rate Loans at any time requested by Borrower shall not
exceed the amount equal to eighty (80%) percent of the
lowest principal amount of the Revolving Loans which it is
anticipated will be outstanding during the applicable
Interest Period as determined by Lender (but with no
obligation of Lender to make such Revolving Loans) and (vii)
Lender shall have determined that the Interest Period or
Adjusted Eurodollar Rate is available to Lender through the
Reference Bank and can be readily determined as of the date
of the request for such Eurodollar Rate Loan by Borrower.
Any request by Borrower to convert Prime Rate Loans to
Eurodollar Rate Loans or to continue any existing Eurodollar
Rate Loans shall be irrevocable. Notwithstanding anything to
the contrary contained herein, Lender and Reference Bank
shall not be required to purchase United States Dollar
deposits in the London interbank market or other applicable
Eurodollar Rate market to fund any Eurodollar Rate Loans,
but the provisions hereof shall be deemed to apply as if
Lender and Reference Bank had purchased such deposits to
fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to
Prime Rate Loans upon the last day of the applicable
Interest Period, unless Lender has received and approved a
request to continue such Eurodollar Rate Loan at least three
(3) Business Days prior to such last day in accordance with
the terms hereof. Any Eurodollar Rate Loans shall, at
Lender's option, upon notice by Lender to Borrower, convert
to Prime Rate Loans in the event that (i) an Event of
Default or event which, with the notice or passage of time,
or both, would constitute an Event of Default, shall exist,
(ii) this Agreement shall terminate or not be renewed, or
(iii) the aggregate principal amount of the Prime Rate Loans
which have previously been converted to Eurodollar Rate
Loans or existing Eurodollar Rate Loans continued, as the
case may be, at the beginning of an Interest Period shall at
any time during such Interest Period exceed either (A) the
aggregate principal amount of the Loans then outstanding, or
(B) the Revolving Loans then available to Borrower under
Section 2 hereof. Borrower shall pay to Lender, upon demand
by Lender (or Lender may, at its option, charge any loan
account of Borrower) any amounts required to compensate
Lender, the Reference Bank or any participant with Lender
for any loss (including loss of anticipated profits), cost
or expense incurred by such person, as a result of the
conversion of Eurodollar Rate Loans to Prime Rate Loans
pursuant to any of the foregoing.
(d) Interest shall be payable by Borrower to Lender monthly
in arrears not later than the first day of each calendar
month and shall be calculated on the basis of a three
hundred sixty (360) day year and actual days elapsed. The
interest rate on non-contingent Obligations (other than
Eurodollar Rate Loans) shall increase or decrease by an
amount equal to each increase or decrease in the Prime Rate
effective on the first day of the month after any change in
such Prime Rate is announced based on the Prime Rate in
effect on the last day of the month in which any such change
occurs. In no event shall charges constituting interest
payable by Borrower to Lender exceed the maximum amount or
the rate permitted under any applicable law or regulation,
and if any such part or provision of this Agreement is in
contravention of any such law or regulation, such part or
provision shall be deemed amended to conform thereto.
F. Section 3 of the Loan Agreement is hereby amended by adding,
at the end of such section, the following Section 3.2:
3.2 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary
contained herein, all Eurodollar Rate Loans shall,
upon notice by Lender to Borrower, convert to Prime
Rate Loans in the event that (i) any change in
applicable law or regulation (or the interpretation
or administration thereof) shall either (A) make it
unlawful for Lender, Reference Bank or any
participant to make or maintain Eurodollar Rate Loans
or to comply with the terms hereof in connection with
the Eurodollar Rate Loans, or (B) shall result in the
increase in the costs to Lender, Reference Bank or
any participant of making or maintaining any
Eurodollar Rate Loans by an amount deemed by Lender
to be material, or (C) reduce the amounts received or
receivable by Lender in respect thereof, by an amount
deemed by Lender to be material or (ii) the cost to
Lender, Reference Bank or any participant of making
or maintaining any Eurodollar Rate Loans shall
otherwise increase by an amount deemed by Lender to
be material. Borrower shall pay to Lender, upon
demand by Lender (or Lender may, at its option,
charge any loan account of Borrower) any amounts
required to compensate Lender, the Reference Bank or
any participant with Lender for any loss (including
loss of anticipated profits), cost or expense
incurred by such person as a result of the foregoing,
including, without limitation, any such loss, cost or
expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by
such person to make or maintain the Eurodollar Rate
Loans or any portion thereof. A certificate of Lender
setting forth the basis for the determination of such
amount necessary to compensate Lender as aforesaid
shall be delivered to Borrower and shall be
conclusive, absent manifest error.
(b) If any payments or prepayments in respect of the
Eurodollar Rate Loans are received by Lender other
than on the last day of the applicable Interest
Period (whether pursuant to acceleration, upon
maturity or otherwise), including any payments
pursuant to the application of collections under
Section 6.3 or any other payments made with the
proceeds of Collateral, Borrower shall pay to Lender
upon demand by Lender (or Lender may, at its option,
charge any loan account of Borrower) any amounts
required to compensate Lender, the Reference Bank or
any participant with Lender for any additional loss
(including loss of anticipated profits), cost or
expense incurred by such person as a result of such
prepayment or payment, including, without limitation,
any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other
funds acquired by such person to make or maintain
such Eurodollar Rate Loans or any portion thereof.
G. Section 12.1(a) is hereby amended and restated in its entirety to read
as follows:
(a) This Agreement and the other Financing Agreements shall continue
in full force and effect for a term ending on the date December 31,
2001 (the "Renewal Date"), with the Renewal Date being extended on
each Renewal Date to the date which is the year after the then current
Renewal Date unless sooner terminated pursuant to the terms hereof.
Lender or Borrower (subject to Lender's right to extend the Renewal
Date as provided above) may terminate this Agreement and the other
Financing Agreements effective on the Renewal Date or on the
anniversary of the Renewal Date in any year by giving to THE OTHER
PARTY AT LEAST SIXTY (60) DAYS PRIOR WRITTEN NOTICE; PROVIDED, THAT,
this Agreement and all other Financing Agreements must be terminated
simultaneously. Upon the effective date of termination or non-renewal
of the Financing Agreements, Borrower shall pay to Lender, in full,
all outstanding and unpaid Obligations and shall furnish cash
collateral to Lender in such amounts as Lender determines are
reasonably necessary to secure Lender from loss, cost, damage or
expense, including attorneys' fees and legal expenses, in connection
with any contingent Obligations, including issued and outstanding
Letter of Credit Accommodations and checks or other payments
provisionally credited to the Obligations and/or as to which Lender
has not yet received final and indefeasible payment. Such cash
collateral shall be remitted by wire transfer in Federal funds to such
bank account of Lender, as Lender may, in its discretion, designate in
writing to Borrower for such purpose. Interest shall be due until and
including the next business day, if the amounts so paid by Borrower to
the bank account designated by Lender are received in such bank
account later than 12:00 noon, Chicago time.
H. Section 12.1(c) is hereby amended and restated in its entirety to
read as follows:
(c) If for any reason this Agreement is terminated by
the Borrower prior to the end of the then current
term or renewal term of this Agreement, in view of
the impracticality and extreme difficulty of
ascertaining actual damages and by mutual agreement
of the parties as to a reasonable calculation of
Lender's lost profits as a result thereof, Borrower
agrees to pay to Lender, upon the effective date of
such termination, an early termination fee equal to
(i) two percent (2%) of the outstanding balance of
the Revolving Loans if such termination occurs on or
prior to December 31, 2000 and (ii) one percent (1%)
of the outstanding balance of the Revolving Loans if
such termination occurs after December 31, 2000 but
prior to the end of the then current term or renewal
term of this Agreement. Such early termination fee
shall be presumed to be the amount of damages
sustained by Lender as a result of such early
termination and Borrower agrees that it is reasonable
under the circumstances currently existing. The early
termination fee provided for in this Section 12.1
shall be deemed included in the Obligations.
II. CONDITIONS TO EFFECTIVENESS OF SECOND AMENDMENT. This Second Amendment
shall become effective on the date (the "Effective Date") when Borrower
shall satisfy all of the following conditions:
A. SECOND AMENDMENT. Borrower and Lender shall have duly executed and
delivered this Second Amendment.
B. ADDITIONAL MATTERS. Lender shall have received such other
certificates, opinions, UCC financing statements, documents
and instruments relating to the obligations or the
transactions contemplated hereby as may have been reasonably
requested by Lender, and all corporate and other proceedings
and all other documents and all legal matters in connection
with the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to Lender.
III. REPRESENTATIONS AND WARRANTIES. In order to induce Lender to enter into
this Second Amendment, Borrower represents and warrants to Lender, upon
the effectiveness of this Second Amendment, which representations and
warranties shall survive the execution and delivery of this Second
Amendment, that:
A. Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation;
B. the execution, delivery and performance of this Second Amendment
by Borrower are within its corporate powers and have been duly
authorized by all necessary corporate action;
C. this Second Amendment constitutes a legal, valid and binding
obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally,
and by general principles of equity; and
D. all of the representations and warranties contained in the Loan
Agreement and in the other Financing Agreements (other than those
which speak expressly only as of a different date) are true and
correct as of the date of this Second Amendment after giving
effect to this Second Amendment.
IV. MISCELLANEOUS.
A. EFFECT; RATIFICATION. The amendments set forth herein are
effective solely for the purpose set -------------------- forth
herein and shall be limited precisely as written, and shall not
be deemed to (i) be a consent to any amendment, waiver or
modification of any other term or condition of the Loan Agreement
or of any other Financing Agreements or (ii) prejudice any right
or rights that Lender may now have or may have in the future
under or in connection with the Loan Agreement or any other
Financing Agreements. Each reference in the Loan Agreement to
"this Agreement", "herein", "hereof" and words of like import and
each reference in the other Financing Agreements to the Loan
Agreement shall mean the Loan Agreement as amended hereby. This
Second Amendment shall be construed in connection with and as
part of the Loan Agreement and all terms, conditions,
representations, warranties, covenants and agreements set forth
in the Loan Agreement and each other Financing Agreement, except
as herein amended or waived, are hereby ratified and confirmed
and shall remain in full force and effect.
B. COSTS AND EXPENSES. Borrower shall pay to Lender on demand all
reasonable out-of-pocket costs, ------------------ expenses,
title fees, filing fees and taxes paid or payable in connection
with the preparation, negotiation, execution, delivery,
recording, administration, collection, liquidation, enforcement
and defense of the Obligations, Lender's rights in the
Collateral, this Second Amendment, the Loan Agreement, the other
Financing Agreements and all other documents related hereto or
thereto, including any amendments, supplements or consents which
may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including, but not
limited to: (a) all costs and expenses of filing or recording
(including Uniform Commercial Code financing statement filing
taxes and fees, documentary taxes, intangibles taxes and mortgage
recording and title insurance taxes and fees, if applicable); (b)
costs and expenses and fees for title insurance and other
insurance premiums, environmental audits, surveys, assessments,
engineering reports and inspections, appraisal fees and search
fees; (c) costs and expenses of remitting loan proceeds,
collecting checks and other items of payment; (d) charges, fees
or expenses charged by any bank or issuer in connection with the
Letter of Credit Accommodations; (e) costs and expenses of
preserving and protecting the Collateral; (f) costs and expenses
paid or incurred in connection with obtaining payment of the
Obligations, enforcing the security interests and liens of
Lender, selling or otherwise realizing upon the Collateral, and
otherwise enforcing the provisions of this Second Amendment, the
Loan Agreement and the other Financing Agreements or defending
any claims made or threatened against Lender arising out of the
transactions contemplated hereby and thereby (including, without
limitation, preparations for and consultations concerning any
such matters); and (g) the fees and disbursements of counsel
(including legal assistants) to Lender in connection with the
foregoing.
C. CERTAIN WAIVERS; RELEASE. Although Borrower does not believe that
it has any claims against ------------------------ Lender, it is
willing to provide Lender with a general and total release of all
such claims in consideration of the benefits which Borrower will
receive pursuant to this Second Amendment. Accordingly, Borrower
for itself and any successor of Borrower hereby knowingly,
voluntarily, intentionally and irrevocably releases and
discharges Lender and its respective officers, directors, agents
and counsel (each a "Releasee") from any and all actions, causes
of action, suits, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments,
extents, executions, losses, liabilities, costs, expenses, debts,
dues, demands, obligations or other claims of any kind
whatsoever, in law, admiralty or equity, which Borrower ever had,
now has or hereafter can, shall or may have against any Releasee
for, upon or by reason of any matter, cause or thing whatsoever
from the beginning of the world to the date of this Second
Amendment.
D. COUNTERPARTS. This Second Amendment may be executed in any number
of counterparts, each such counterpart constituting an original
but all together constituting one and the same instrument.
E. SEVERABILITY. Any provision contained in this Second Amendment
that is held to be inoperative, unenforceable or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative,
unenforceable or invalid without affecting the remaining
provisions of this Second Amendment in that jurisdiction or the
operation, enforceability or validity of that provision in any
other jurisdiction.
F. GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ILLINOIS.
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IN WITNESS WHEREOF, the parties hereto have executed this
Second Amendment as of the date first above written.
CONGRESS FINANCIAL CORPORATION (CENTRAL)
BY
NAME:
TITLE:
SHERMAN WIRE COMPANY
BY
NAME:
TITLE:
CONSENT
By Guarantee dated September 27, 1996 (as amended, the "Guarantee"),
the undersigned (the "Guarantor") guaranteed to Lender (as defined therein),
subject to the terms, conditions and obligations set forth therein, the prompt
payment and performance of all of the Guaranteed Obligations (as defined
therein). The Guarantor consents to Borrower's execution of the foregoing
Amendment No. 2 to Loan Agreement (the "Amendment;" capitalized terms not
otherwise defined herein shall have the meaning ascribed to them in the
Amendment) and acknowledges the continued validity, enforceability and
effectiveness of the Guarantee with respect to all loans, advances and
extensions of credit to Borrower, whether heretofore or hereafter made, together
with all interests thereon and all expenses in connection therewith. The
Guarantor hereby acknowledges and agrees to the increase in the amount of
maximum credit extended to Borrower pursuant to the Amendment and acknowledges
and agrees that the Guarantee applies to the Obligations owed by Borrower under
and pursuant to the Loan Agreement, as amended by the Amendment, including,
without limitation, the increase in the definition of Maximum Credit to
$60,000,000.
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
BY
NAME:
TITLE: