Document:

Exhibit 10.16

 

EXHIBIT 10.16

AMENDMENT NO. 4 TO FINANCING AND SECURITY AGREEMENT

     THIS AMENDMENT NO. 4 TO FINANCING AGREEMENT AND SECURITY AGREEMENT (this
“Amendment”) is made and entered into as of the 10th day of September, 2004,
by and among THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation
(“CIT”), CIT as agent for the Lenders (the “Agent”), LASALLE BUSINESS CREDIT,
LLC, an Illinois limited liability company (“LaSalle”) and any other party
which now or hereafter becomes a lender hereunder (collectively with CIT and
LaSalle, the “Lenders”), NEWPORT STEEL CORPORATION, a Kentucky corporation
(“Newport” and individually, a “Company”), and KOPPEL STEEL CORPORATION, a
Pennsylvania corporation (“Koppel”, and individually a “Company” and
collectively Newport and Koppel, the “Companies”).

RECITALS

     A. The Companies are the borrowers under that certain Financing and
Security Agreement dated as of March 29, 2002, as amended from time to time (as
amended, the “Financing Agreement”), among the Lenders, the Agent, and the
Companies.

     B. The Companies, the Agent and the Lenders desire to amend the Financing
Agreement in the manner set forth below.

     NOW, THEREFORE, in consideration of the foregoing Recitals, the
representations, warranties, covenants and agreements set forth in this
Amendment and other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the Companies, the Agent and the
Lenders hereby agree as follows:

     1. Incorporation by Reference.

     (a) The foregoing Recitals are incorporated into this Amendment by
reference as if set forth in full in the body of this Amendment.

     (b) Capitalized terms used in this Amendment and not expressly defined
herein shall have the meanings given to such terms in the Financing Agreement.

     2. Amendments to Financing Agreement. Effective upon complete
satisfaction of the conditions set forth in Section 3 below:

   2.1 Section 3.4 of the Financing Agreement is amended and restated in its
entirety to read as follows:

 

 

3.4 Cash Management.

     (a) Until the Agent has advised the Companies in writing to the
contrary after the occurrence of an Event of Default that has not
otherwise been waived, the Companies, at their expense, will enforce,
collect and receive all amounts owing on their respective Accounts in the
ordinary course of their business and any proceeds they so receive shall
be subject to the terms hereof, and held on behalf of and in trust for
the Agent on behalf of the Lenders. Such privilege shall terminate at the
election of the Agent, upon the occurrence of an Event of Default, and
until such Event of Default is waived in writing by the Required Lenders.
The Companies shall maintain a Cash Management System whereby any and
all checks, cash, credit card sales and receipts, notes or other
instruments or property received by a Company with respect to any
Collateral, including Accounts, shall be held by such Company in trust
for the Agent, on behalf of the Lenders, separate from such Company’s own
or the Companies’ property and funds, and promptly turned over to the
Agent with proper assignments or endorsements by deposit to the
Depository Accounts. Each of the Companies shall: (i) indicate on all of
their invoices that funds should be delivered to and deposited in a
Depository Account; (ii) direct all of their Account Debtors to deposit
any and all Proceeds of Collateral into the Depository Accounts; (iii)
irrevocably authorize and direct any banks which maintain or hold either
of the Companies’ initial receipt of cash, checks and other items that
constitute Collateral or Proceeds of Collateral to promptly wire transfer
all available funds to a Depository Account; and (iv) advise all such
banks of the Agent’s security interest in such funds and take such other
actions as may be requested by Agent to obtain Control over any such
funds or account(s). All funds deposited in a Depository Account shall
be available to the Companies at their discretion, except after the
occurrence and during the continuance of a Dominion Event (as hereinafter
defined). After the occurrence and during the continuance of a Dominion
Event, Agent shall be entitled to deliver notice to any financial
institution at which any Depository Account is maintained notifying such
financial institution to comply with the instructions of Agent with
respect to such Depository Account without further consent of the
Companies. Following the delivery of such notice, upon direction of the
Agent, all funds remaining on deposit in each Depository Account at the
end of each Business Day shall be wire transferred to the Agent’s bank
account in New York City for application against the Obligations owed by
the Companies to the Agent and the Lenders in accordance with the terms
hereof. The Companies shall provide the Agent with prior written notice
of any and all deposit accounts opened or to be opened subsequent to the
Closing Date. As used herein, Dominion Event means either (i) the
occurrence and continuance of any Event of Default, or (ii) any time in
which the Companies have Revolving Loans made to the Companies pursuant
to Section 3 of this Agreement in the average amount outstanding of
$3,000,000 or greater for a period of 15 consecutive days. For purposes
of this Agreement, the occurrence of a Dominion Event shall be deemed
continuing (i) until such Event of Default has been cured or waived,
and/or (ii) the Companies have reduced Revolving Loans made pursuant to
Section 3 of this Agreement to zero and said Revolving Loans have
remained at zero for thirty (30) consecutive days.

 

 

     (b) All amounts received by the Agent in payment of Accounts will be
credited to the Revolving Loan Account when the Agent is advised by its
bank of its receipt of “collected funds” at the Agent’s bank account in
New York City on the Business Day of such advice if advised no later than
11:00 a.m. Chicago time or on the next succeeding Business Day if so
advised after 11:00 a.m. Chicago time. The Companies’ Revolving Loan
Account will be charged monthly with the cost associated with one (1)
Collection Day, provided, however, that if no Revolving Loan or advance
under the Revolving Line of Credit has been made by Agent at any time
during the preceding 30 day period, then no charge will be assessed or
imposed by Agent for such month. No checks, drafts or other instrument
received by the Agent shall constitute final payment to the Agent and/or
the Lenders unless and until such instruments have actually been
collected.”

     3. Conditions. The terms of Section 2 above shall become effective
only when each of the following conditions have been completely satisfied as
determined by Agent in its sole and absolute discretion:

     3.1 Amendment. Agent shall have received a counterpart of this
Amendment executed by the Companies, the Guarantors and the Lenders.

     3.2 Representations and Warranties; No Default. As of the date of
this Amendment, the representations and warranties contained herein and in the
Financing Agreement shall be true and complete in all material respects (both
immediately before and after giving effect to consummation of the transactions
contemplated hereby), and no Default or Event of Default thereunder shall
exist.

4. Representations, Warranties and Agreements of the Companies and the
Agent.

     4.1 In order to induce the Agent and the Lenders to enter into this
Amendment, the Companies (where appropriate) jointly and severally represent
and warrant to the Agents and the Lenders that: (a) each of the Companies has
full power, authority and legal right to execute, deliver and perform this
Amendment, and the execution, delivery and performance hereof and thereof have
been duly authorized by all necessary organizational action; (b) this
Amendment has been duly executed and delivered by each of the Companies and
constitutes the legal, valid and binding obligation of the each of the
Companies, enforceable in accordance with its terms; (c) the execution and
delivery of this Amendment by the Companies does not violate any term,
provision or condition of, or constitute a default under, any loan agreement,
mortgage, deed of trust, note, security agreement, pledge agreement, lease or
indenture to which any of the Companies is a party or by which any of the
Companies’ assets are bound.

     4.2 In addition to the representations and warranties set forth above, the
Companies jointly and severally reaffirm and remake all representations and
warranties made by the Companies in the Financing Agreement, effective as of
the date of this Amendment, and the Companies hereby confirm that, as of the
date hereof, (a) they have no offsets, counterclaims or defenses to the payment
of the Obligations and (b) the Lenders and the Agent have fully
performed their respective obligations under the Financing Agreement and
the other Loan Documents.

 

 

     5. Reference to and Effect of Amendment; Reservation of the Agents’ and
the Lenders’ Rights.

     5.1 Upon the effectiveness of this Amendment, (i) each reference in the
Financing Agreement to “this Financing Agreement,” “hereunder,” “hereof,”
“herein,” “hereby” or words of like import, shall mean and be a reference to
the Financing Agreement as amended hereby, (ii) each reference to the Financing
Agreement in the Promissory Notes and in any other document, instrument or
agreement executed and/or delivered by the Companies in connection with the
Financing Agreement shall mean and be a reference to the Financing Agreement,
as amended hereby, and (iii) each reference to the Promissory Notes,
Guaranties, Security Agreements, and any other document, instrument or
agreement executed and/or delivered by the Companies or Guarantors in
connection with this Amendment shall mean and be a reference to such Promissory
Notes, Guaranties, Security Agreements or any such other document, instrument
or agreement, as amended in connection with this Amendment.

     5.2 Except as expressly provided in this Amendment, the execution,
delivery and effectiveness of this Amendment shall not operate as a
waiver of any right, power or remedy of the Agent or the Lenders under
the Financing Agreement, nor constitute a waiver of noncompliance with,
or a modification of, any term or provision contained therein.

     5.3 Except as expressly modified by this Amendment, all of the terms and
provisions of the Financing Agreement are and shall remain in full force and
effect, and shall apply with such force and effect to this Amendment, and the
Agent and the Lenders hereby expressly reserve all rights, remedies, powers and
privileges contained in the Financing Agreement and in any other document
executed and/or delivered by the Companies pursuant thereto.

     6. Governing Law. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF
THIS AMENDMENT SHALL BE GOVERNED BY THE LAWS AND DECISIONS OF THE STATE OF
ILLINOIS WHICH ARE APPLICABLE TO CONTRACTS THAT ARE NEGOTIATED, EXECUTED,
DELIVERED AND PERFORMED SOLELY IN THE STATE OF ILLINOIS.

     7. Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and the
same instrument.

[Signature page follows]

 

 

[Signature page to Amendment No. 4]

	 	 	 
	COMPANIES:
	 	 
	 
	 	 
	NEWPORT STEEL CORPORATION,

	 	KOPPEL STEEL CORPORATION,
	a Kentucky corporation

	 	a Pennsylvania corporation
	 
	 	 
	By: /s/ Thomas J. Depenbrock

	 	By: /s/ Thomas J. Depenbrock
	Name: Thomas J. Depenbrock

	 	Name: Thomas J. Depenbrock
	Title: Vice President & Treasurer

	 	 Title: Vice President & Treasurer
	 
	 	 
	AGENT and LENDERS:
	 	 
	 
	 	 
	THE CIT GROUP/BUSINESS CREDIT, INC.,
	 	 
	as Agent and a Lender
	 	 
	 
	 	 
	By: /s/ Jack A. Myers
	 	 
	Name: Jack A. Myers
	 	 
	Title: Vice President
	 	 
	 
	 	 
	LASALLE BUSINESS CREDIT, LLC,
	 	 
	as Lender
	 	 
	 
	 	 
	By: /s/ Susan M. Davis
	 	 
	Name: Susan M. Davis
	 	 
	Title: Vice President
	 	 

 

 

     The undersigned Guarantors hereby acknowledge the foregoing amendments to
the Financing Agreement, and confirm and agree with the Agent and the Lenders
that the guaranty executed by the undersigned in connection with the Financing
Agreement remains unmodified and in full force and effect notwithstanding such
amendments, and that such guaranty shall continue to apply and extend to all
loans made by the Lenders to the Companies under the Financing Agreement.

NS GROUP, INC., a Kentucky corporation

	 	 	 
	By:	 	
/s/ Thomas J. Depenbrock

Name: Thomas J. Depenbrock

Title: Vice President & Treasurer

Address: 530 W. Ninth Street

Newport, Kentucky 41071

ERLANGER TUBULAR CORPORATION, an Oklahoma corporation

	 	 	 
	By:	 	
/s/ Thomas J. Depenbrock

Name: Thomas J. Depenbrock

Title: Vice President & Treasurer

Address: 530 W. Ninth Street

Newport, Kentucky 41071

NORTHERN KENTUCKY MANAGEMENT, INC., a Kentucky corporation

	 	 	 
	By:	 	
/s/ Thomas J. Depenbrock

Name: Thomas J. Depenbrock

Title: Vice President & Treasurer

Address: 530 W. Ninth Street

Newport, Kentucky 41071Exhibit 4.1

Exhibit 4.1

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS THEY HAVE BEEN REGISTERED UNDER THE ACT AND SUCH LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

	
Number *___*          

	
RIVERBEND HOLDINGS, INC.

	
          *__________* Shares of

 Common Stock

		
 

		
a Colorado Corporation

	

            THIS CERTIFIES THAT _____________________ is the record holder of __________ (__________) shares of Common Stock of RIVERBEND HOLDINGS, INC., transferable only
on the share register of said corporation, in person or by duly authorized attorney, upon surrender of this certificate properly endorsed or assigned.

            A statement of the powers, designations, preferences and relative, participating, optional, or other special rights of the stock, and the qualifications,
limitations or restrictions of such preferences and/or rights is available to any shareholder, upon request and without charge, from the secretary of the corporation at the corporation's principal office.

IN WITNESS WHEREOF, this certificate has been executed by the duly authorized officers of the corporation this ____ day of __________, 200_.

                                                           
                                                           

                                    ,
President                                                       
, Secretary

For Value Received, ___________________________________________ hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

[________________________________]

_________________________________________________________________________

     (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

_________________________________________________________________________

_________________________________________________________________________

___________________________________________________________________  Shares

of  Common Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint ______________________________________ attorney-in-fact to transfer the said stock on the books of the within-named
Corporation, with full power of substitution in the premises.

Dated: 
                                               

                                   
                                                                       

                                   
                                                                       

                                    Notice: 
THE SIGNATURE(S) TO THIS ASSIGNMENT MUST

                                    CORRESPOND WITH THE NAME(S) AS WRITTEN

                                    UPON THE FACE OF THE CERTIFICATE IN EVERY

                                    PARTICULAR, WITHOUT ALTERATION OR

                                    ENLARGEMENT OR ANY CHANGE WHATSOEVER.

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