SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q/A
(Mark One)
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period
ended February 28, 1995 or
[ ] Transaction report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
-------------------- ------------------
Commission file number 0-15838
NEW JERSEY STEEL CORPORATION
----------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 22-2137967
------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
NORTH CROSSMAN ROAD, SAYREVILLE, NEW JERSEY 08872
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, include area code: (908) 721-6600
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Not Applicable
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes ______ No _____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of February 28, 1995.
$.01 Par Value Common Stock 5,893,370
--------------------------- ------------------------------
(Title of Class) (Number of Shares Outstanding)
NEW JERSEY STEEL CORPORATION
INDEX
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance
Sheets at February 28, 1995 (unaudited)
and November 30, 1994
Condensed Consolidated Statements of
Operations for the Three-Month
Periods ended February 28, 1995 and 1994
(unaudited)
Condensed Consolidated Statements of
Cash Flows for the Three-Month Periods ended
February 28, 1995 and 1994 (unaudited)
Notes to Condensed Consolidated
Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis
of the Condensed Consolidated Financial
Statements
Part II. - Other Information
Item 1. Legal Proceedings
Item 2. Changes In Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of
Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Feb. Nov.
Assets 1995 1994
------ ------- -------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 98 337
Receivables:
Trade, less allowance for doubtful
receivables of $1,951 and $1,846 in
1995 and 1994, respectively 16,248 19,874
Trade - affiliates 3,148 2,858
Other 368 364
------ ------
Net receivables 19,764 23,096
Inventories 20,875 14,853
Prepaid expenses
and other current assets 1,463 1,620
------ ------
Total current assets 42,200 39,906
Property, plant and equipment, net 74,198 73,928
Other assets 4,281 3,931
Deferred income taxes 4,518 4,518
Real estate held for investment, net 13,826 13,953
------ ------
139,023 136,236
======= =======
Liabilities and Stockholder's Equity
------------------------------------
Current Liabilities:
Note payable - bank $ 16,634 --
Accounts payable - trade 26,288 27,824
Due to parent 450 339
Accrued expenses 4,716 5,015
Customer deposit 1,113 3,072
------ ------
Total current liabilities 49,201 36,250
Note payable - bank -- 10,536
Stockholders' equity:
Preferred stock, $.01 par value.
Authorized 5,000,000 shares;
none issued. Common stock,
$.01 par value. Authorized
15,000,000 shares; issued and
outstanding 5,893,370 shares
in 1995 and 1994 59 59
Additional paid-in capital 133,904 133,904
Accumulated deficit (44,141) (44,513)
-------- --------
Total stockholders' equity 89,822 89,450
Commitments and contingencies -- --
-------- --------
139,023 136,236
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial
statements.
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS of OPERATIONS
Three Month Periods ended February 28, 1995
and February 28, 1994
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
1995 1994
------- -------
(Unaudited)
<S> <C> <C>
Net sales $26,222 20,708
Net sales - affiliates 3,671 1,641
Cost of sales 27,934 21,787
------- -------
Gross profit 1,959 562
Selling, general and administrative
expenses 1,679 1,643
------- -------
Operating income (loss) 280 (1,081)
Other:
Interest, net (expense) income (59) 4
Rental income 48 174
Other, net (95) 0
------- -------
(106) 178
Earnings (loss) before provision
for income taxes and equity in
operations of investee 174 (903)
Provision for income taxes 44 -
Earnings (loss) before equity in ------- -------
operations of investee 130 (903)
Equity in operations of investee 242 -
------- -------
Net earnings (loss) 372 (903)
======= =======
Net earnings (loss) per common share $ 0.06 (0.15)
======= ========
Weighted average number of shares
outstanding 5,893,000 5,874,000
</TABLE>
See accompanying notes to condensed consolidated financial
statements.
NEW JERSEY STEEL CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
Three Month Periods Ended February 28, 1995 and 1994
(Dollars in Thousands)
<TABLE>
<CAPTION>
1995 1994
------ -----
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 372 $(903)
Adjustments to reconcile net earnings
(loss) to net cash used in operating
activities:
Depreciation 1,761 1,297
Provision for losses on trade
receivables 105 165
Equity in operations of investee (242) --
Changes in assets and liabilities:
Decrease in net receivables 3,227 939
Increase in inventories (6,022) (5,793)
Decrease (increase) in prepaid
expenses and other current assets 157 (168)
Increase in other assets (108) --
(Decrease) increase in accounts
payable - trade (1,536) 162
Decrease in due to parent,accrued
expenses and customer deposit (2,147) (201)
------- -------
Net cash used in operating
activities (4,433) (4,502)
------- -------
Cash flows from investing activities
Capital expenditures (1,904) (9,593)
------- -------
Cash flows from financing activities
Bank borrowings - net 6,098 11,700
------- -------
Net decrease in cash and
cash equivalents (239) (2,395)
Cash and cash equivalents at beginning of period 337 2,536
------ -------
Cash and cash equivalents at end of period $ 98 $ 141
====== =======
</TABLE>
See accompanying notes to condensed consolidated financial
statements.
New Jersey Steel Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
February 28, 1995 and November 30, 1994
(Dollars In Thousands, Except Per Share Amounts)
(Unaudited)
(1) Basis of Presentation
The unaudited condensed consolidated financial statements of
New Jersey Steel Corporation and subsidiary (the Company), in the
opinion of management, include all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation of
the results of such periods. The results of operations for the
three-month periods ended February 28, 1995 and 1994 are not
necessarily indicative of the results to be expected for the
entire year. The accompanying interim financial statements
should be read in conjunction with the Company's audited 1994
consolidated financial statements.
The Company's business is seasonal and is normally slower in
the winter months with inventory build-up during this period.
(2) Capital Stock
During the three-month periods ended February 28, 1995 and 1994
no stock options were granted or exercised.
(3) Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
Feb 28 Nov 30
1995 1994
------- ------
(Unaudited)
<S> <C> <C>
Finished goods $ 7,180 4,707
Work-in-process 3,379 305
Raw materials, spare
parts and supplies 10,316 9,841
------ ------
$20,875 14,853
====== ======
</TABLE>
(4) Per Common Share Amounts
Per common share amounts are based on the weighted average
number of shares of common stock outstanding during each period.
The effect of stock options for the three-month periods ended
February 28, 1995 was not material and for the three-month period
ended February 28,1994 was antidilutive.
(5) Line of Credit
As of February 28, 1995, the Company had bank borrowings of
$16,634 under its revolving credit facility. The available
credit facility will remain in effect until December 31, 1995.
Advances under the credit facility are secured by the Company's
accounts receivable and inventory. Total interest paid and
interest expense capitalized under the aforementioned facility
totaled $287 and $255, respectively for the three-month period
ended February 28, 1995.
(6) Commitments and Contingencies
On September 7, 1994, the New Jersey Department of
Environmental Protection (NJDEP) issued to the Company a "Permit
to Construct, Install or Alter Control Apparatus or Equipment"
and "Temporary Certificate to Operate Control Apparatus or
Equipment" and "Prevention of Significant Deterioration Permit"
(the "NJDEP Permit"). The NJDEP Permit authorizes the Company to
proceed with the mill modernization project, contains a temporary
operating permit and directs that the testing required for
issuance of a five-year certificate to operate be performed by
April 4, 1995, which was extended to December 8, 1995 by letter
dated March 7, 1995 from the NJDEP. By letter dated February 8,
1995, the NJDEP advised the Company that all obligations imposed
by the Amended ACO have been satisfied and that it had terminated
the Amended ACO effective February 3, 1995. Notwithstanding,
termination of the Amended ACO, the Company must perform and meet
the tests contained in the NJDEP Permit to obtain a five-year
operating permit. Managment believes the improvements necessary
to bring the Sayreville Mill up to the operating standards
contained in the NJDEP Permit have been included in the
Modernization Program, that its testing will demonstrate
compliance with the provisions of the NJDEP Permit and that new
five-year operating permit will be issued by the NJDEP. As a
consequence, management does not believe that the foregoing
regulatory matters will have a material adverse effect on the
Company financial condition or results of operations.
On June 7, 1994, the United States Environmental Protection
Agency (USEPA) issued a Notice of Violation (NOV) to the Company
stating that the Company had violated the New Jersey State
Implementation Plan because a "major modification" was commenced
without a Prevention of Significant Deterioration Permit from the
NJDEP. That permit was issued by the NJDEP on September 7, 1994.
The USEPA defines a "major modification" as any physical change
that would result in a significant net increase in emissions.
Since the Company's mill modernization project resulted in a net
decrease in emissions and because the Company acted in accordance
with an understanding with the NJDEP, management believes that no
violation of the New Jersey State Implementation Plan occurred.
There have been no further proceedings under the NOV. The
Company believes that the issuance of the Prevention of
Significant Deterioration Permit on September 7, 1994 addressed
the concerns raised by USEPA in the NOV. However, there can be
no assurances that USEPA will not assess additional penalties
resulting from the NOV, and the amount of such penalties, if any,
cannot be determined at this time.
In October 1994, the Company entered into an Agreement and
Plan of Merger (the "Merger Agreement") with International Metals
Acquisition Corporation ("IMAC"). Pursuant to the Merger
Agreement, each share of common stock of the Company was to be
converted into either $18.00 of cash, or at the election of the
holder of the Company's stock, a unit of IMAC securities.
Concurrent with the execution of the Merger Agreement, the
Company's majority stockholder, Von Roll Ltd. ("Von Roll")
entered into a Stock Purchase Agreement with IMAC pursuant to
which Von Roll agreed to sell all its holdings of the Company's
stock concurrent with the Merger.
On February 1, 1995, the Merger Agreement and related Stock
Purchase Agreement were terminated. IMAC, the Company and Von
Roll had asserted claims for damages for breach of the agreements
and were seeking reimbursement of the expenses incurred in
connection with the transaction. On March 15, 1995, IMAC, the
Company and Von Roll entered into a Termination and Settlement
Agreement whereby the parties settled all disputes between them
relating to the terminated Merger Agreement and the related stock
purchase agreement. Pursuant to the settlement, which involved
no payment by any of the parties, the parties exchanged full
releases and agreed not to purchase each others' stock for a
period of thirty months.
On September 22, 1994, the Company received a summons and
complaint in an action purported to be a class action on behalf
of minority stockholders of the Company and sought unspecified
damages and injunctive relief in connection with the proposed
merger between the Company and IMAC. With the termination of the
Merger Agreement between the Company and IMAC, the plaintiff and
the Company entered into a Stipulation and Order of Voluntary
Dismissal, filed on March 9,1995, dismissing the action.
The Company and Von Roll are defendants in an action
entitled MOUNTAINEER BOLT, INC. and ADVANCED MINING SYSTEMS, INC.
v. BRUCE A. CASSIDY, FREDERICK B. MUNSON, EXCEL MINING SYSTEMS,
INC., NEW JERSEY STEEL CORPORATION, VON ROLL LTD. In June 1992,
Mountaineer Bolt, Inc. and Advanced Mining, Inc. filed Chapter 11
bankruptcy petitions in the Bankruptcy court for the Southern
District of New York. The original complaint alleged causes of
action against the defendants other than the Company and Von
Roll, and sought damages in excess of $12 million. In 1992, an
amended complaint added the Company and Von Roll as additional
parties and claimed that they conspired with the original
defendants to destroy the business of Mountaineer Bolt. The
amended complaint alleges causes of action for tortious
conspiracy, tortious interference with contract and prospective
business relations and fraud and unfair competition. The amended
complaint seeks damages in excess of $12 million. The action has
been transferred from the U.S. District Court the Northern
District of West Virginia to the U.S. District Court for the
Southern District of New York. As defendants, the Company and
Von Roll have made a motion to dismiss the amended complaint on
jurisdictional and substantive grounds. In 1993, in connection
with the settlement of an unrelated action, the original
defendants were dropped as defendants in this action. The
Company believes the plaintiffs' claims are without merit and
intends to vigorously defend itself in this action.
In a letter dated July 7, 1994, the staff of the Securities
and Exchange Commission informed the Company that it is
conducting a private inquiry into whether there have been
violations of the federal securities laws. The staff requested
that the Company provide it with all the documents concerning its
investments in AJ Ross Logistics, Inc. and the Modernization
Program. The staff letter states that its request for documents
should not be construed as an indication by the Commission or its
staff that any violations of law have occurred, nor should it be
considered a reflection upon any person, entity or security. The
Company is cooperating with the staff and has provided the
requested documents.
On March 21, 1994, Novo-Plez SA and NASCO Brokers, Inc. (the
"Claimants"), steel brokers, commenced an arbitration against the
Company in the International Court of Arbitration. The Claimants
seek $721 in damages for steel purchased from the Company which
claimants assert was of inferior quality. Claimant's have
reserved the right to assert a claim for an additional $8,700 in
incidental and consequential damages. The Company filed an
answer to the Petition on May 2, 1994, in which it stated that
the steel billets fully conformed to the specifications provided
for in the contracts. While arbitration always involve risk,
based on the advice of legal counsel, management believes that
the Company will prevail in a successful defense against these
claims.
Egyptian Metals Company ("EMC"), the customer of the
Claimants in the above arbitration, and its broker have attempted
to pursue a related claim before the "Tribunal de Commerce" in
Paris, France alleging that the Company was liable to it for the
sale of the defective billets. EMC claimed damages of $2,121,
and an additional claim for payment of FF100 under the French
Code of Civil Procedure. Management believes that the Company is
not liable to EMC for any damages. The Company has not entered
an appearance in this French litigation as, based on the advice
of legal counsel, management believes that the French court is
without jurisdiction over the Company and that the litigation
will ultimately be dismissed or, if judgement is in fact entered,
that it will be unenforceable against the Company.
In November 1993, AJ Ross filed a petition for relief under
Chapter 11 of the U.S. Bankruptcy Code. As AJ Ross was a
significant customer, the Company received in excess of $5.6
million in payments on trade receivables from AJ Ross in the year
immediately preceding the filing date. AJ Ross has not asserted
any claim against the Company as a result of these payments. In
addition, based upon the advice of its bankruptcy counsel,
management does not believe that the $5.6 million constituted
voidable preferences. However, there can be no assurance that AJ
Ross, a trustee in AJ Ross' case (should one be appointed) or
other entities will not assert that some or all of such payments
are voidable preferences which must be returned to AJ Ross'
bankruptcy estate for distribution to AJ Ross creditors.
From time to time, the Company is involved in litigation
relating to claims arising out of its operations in the normal
course of business. Such claims against the Company are
generally covered by insurance. There can be no assurance that
insurance, including product liability insurance, will be
available in the future at reasonable rates.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three-Month Periods ended February 28, 1995 and 1994
A summary of the period-to-period changes in the "Condensed
Consolidated Statements of Operations" for the three-month
periods ended February 28, 1995 and 1994 is shown below:
<TABLE>
<CAPTION>
Percent of Net Sales
---------------------------- --------------------
1995 1994 Inc.(Dec) 1995 1994
---------------------------- --------------------
(Unaudited)
($000)
<S> <C> <C> <C> <C> <C>
Net sales $ 29,893 22,349 7,544 100.0 100.0
Gross profit 1,959 562 1,397 6.5 2.5
Selling,
general and
administrative
expenses 1,679 1,643 36 5.6 7.3
Other (expense)
income (106) 178 (284) (.4) 0.8
Earnings (loss)
before
provision for
income taxes
and equity in
operations
of investee 174 (903) 1,077 .5 (4.0)
Provision for
income
taxes 44 -- 44 .1 --
Earnings (loss)
before equity
in operations
of investee 130 (903) 1,033 .4 (4.0)
Equity in
operations of
investee 242 -- 242 .8 --
----------------------------- ----------------
Net earnings
(loss) $ 372 (903) 1,275 1.2 (4.0)
============================= ===============
</TABLE>
MANAGEMENT'S DISCUSSION - THREE MONTHS ENDED FEBRUARY 28, 1995
COMPARED TO THE THREE MONTHS ENDED FEBRUARY 28, 1994
Net sales for the first quarter ended February 28, 1995
increased 34% to $29,893,000 from $22,349,000 in the first
quarter of 1994, primarily as a result of a 21% increase in
shipment levels and higher selling prices. Average selling prices
increased to $316 per ton in the first quarter of 1995 from $285
per ton in the first quarter of 1994.
Gross profit for the first quarter ended February 28, 1995
increased $1,397,000 to $1,959,000 from $562,000 in the first
quarter of 1994. Higher scrap and material costs in the first
quarter of 1995 partially offset the benefit of these higher
shipment and rebar pricing levels. Scrap costs in the first
quarter of 1995 increased to $112 per ton from $109 per ton in
1994. Billet conversion costs in the first quarter of 1995 were
lower than 1994 reflecting the continued improvement in melt shop
operations since the installation of the new Consteel melt shop
process in 1994.
Selling, general and administrative expenses during the
quarter ended February 28, 1995 were consistent with the quarter
ended February 28, 1994. Other income (expense) decreased
$284,000 to $106,000 of expense for the first quarter 1995 from
$178,000 of income for the comparable 1994 period. This was
primarily the result of reduced rental income and the write-off
of merger-related expenses offset by a gain on the sale of
equipment.
New Jersey Steel's share of net income from operations of
its equity investee contributed $242,000 to the earnings of the
Company for the quarter ending February 28, 1995. This is
accounted for as an equity investment.
LIQUIDITY AND CAPITAL RESOURCES
As of February 28, 1995, the Company had cash and cash
equivalents of $98,000 and total outstanding indebtedness of
$16,634,000 under the Company's revolving credit facility. The
credit facility is secured by accounts receivable and inventory
and is due to expire in December 1995.
The quarter ended February 28, 1995 reflects reduced working
capital as compared to November 30, 1994. This is primarily the
result of the Company's credit facility becoming classified as a
current liability due to its expiration date in December 1995.
Net cash used in operating activities was $4,433,000 for the
quarter ended February 28, 1995, relatively consistent with
$4,502,000 used during the quarter ended February 28, 1994. Net
bank borrowings in the first quarter of 1995 were $6,098,000 as
compared to $11,700,000 in the first quarter of 1994 reflecting a
drop in capital expenditures in the 1995 first quarter to
$1,904,000 from $9,593,000 in the first quarter of 1994 and
improved earnings. The Company expects to incur capital
expenditures of $7,900,000, in fiscal 1995, primarily to install
a new continuous casting machine.
The Company believes that cash flow generated by future
operations and its available bank credit facilities will be
adequate to fund day-to-day operations and contemplated capital
expenditures for the balance of the year.<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
MERGER AGREEMENT. In October 1994, the Company entered
into an Agreement and Plan of Merger (the "Merger Agreement")
with International Metals Acquisition Corporation ("IMAC").
Pursuant to the Merger Agreement, each share of common stock of
the Company was to be converted into either $18.00 of cash, or at
the election of the holder of the Company's stock, a package of
IMAC securities. Concurrent with the execution of the Merger
Agreement, the Company's majority stockholder, Von Roll Ltd.
("Von Roll") entered into a Stock Purchase Agreement with IMAC
pursuant to which Von Roll agreed to sell all its holdings of the
Company's stock concurrent with the Merger.
On February 1, 1995, the Merger Agreement and related
Stock Purchase Agreement were terminated. IMAC and the Company
had asserted claims for damages for breach of the agreements and
were seeking reimbursement of the expenses incurred in connection
with the transaction. On March 15, 1995, IMAC, the Company and
Von Roll entered into a Termination and Settlement Agreement
whereby the parties settled all disputes between them relating to
the terminated Merger Agreement and the related stock purchase
agreement. Pursuant to the settlement, which involved no payment
by any of the parties, the parties exchanged full releases and
agreed not to purchase each others' stock for a period of thirty
months.
STOCKHOLDERS ACTION. On September 22, 1994, the
Company received a summons and complaint in an action in the
Court of Chancery for New Castle County, Delaware entitled LESLIE
SUSSER v. NEW JERSEY STEEL CORPORATION, WALTER H. BEEBE, DR. PAUL
J. CHOFFAT, H. GEORG HAHNLOSER, HARVEY L. KARP and ROBERT J.
PASQUARELLI (Civil Action No. 13747). The action purported to be
a class action on behalf of minority stockholders of the Company
and sought unspecified damages and injunctive relief in
connection with the proposed merger between the Company and IMAC.
With the termination of the Merger Agreement between the Company
and IMAC, plaintiff and the Company entered into a Stipulation
and Order of Voluntary Dismissal, filed on March 9,1995,
dismissing the action.
MOUNTAINEER BOLT, INC. LITIGATION. The Company and Von
Roll are defendants in an action entitled MOUNTAINEER BOLT, INC.
and ADVANCED MINING SYSTEMS, INC. v. BRUCE A. CASSIDY, FREDERICK
B. MUNSON, EXCEL MINING SYSTEMS, INC., NEW JERSEY STEEL
CORPORATION, VON ROLL LTD., a/k/a/ VON ROLL AG (United States
District Court, Southern District of New York; Case No. 93 Civ.
6612). In June 1992, Mountaineer Bolt, Inc. and Advanced Mining,
Inc. filed Chapter 11 bankruptcy petitions in the Bankruptcy
court for the Southern District of New York. The original
complaint alleged causes of action against the defendants other
than the Company and Von Roll, and sought damages in excess of
$12 million. In 1992, an amended complaint added the Company and
Von Roll as additional parties and claimed that they conspired
with the original defendants to destroy the business of
Mountaineer Bolt. The amended complaint alleges causes of action
for tortious conspiracy, tortious interference with contract and
prospective business relations and fraud and unfair competition.
The amended complaint seeks damages in excess of $12 million.
The action has been transferred from the U.S. District Court the
Northern District of West Virginia to the U.S. District Court for
the Southern District of New York. As defendants, the Company
and Von Roll have made a motion to dismiss the amended complaint
on jurisdictional and substantive grounds. In 1993, in
connection with the settlement of an unrelated action, the
original defendants were dropped as defendants in this action.
The Company believes the plaintiffs' claims are without merit and
intends to vigorously defend itself in this action.
SECURITIES AND EXCHANGE COMMISSION INQUIRY. In a
letter dated July 7, 1994, the staff of the Securities and
Exchange Commission informed the Company that it is conducting a
private inquiry into whether there have been violations of the
federal securities laws. The staff requested that the Company
provide it with all the documents concerning its investments in
AJ Ross Logistics, Inc. and the Modernization Program. The staff
letter states that its request for documents should not be
construed as an indication by the Commission or its staff that
any violations of law have occurred, nor should it be considered
a reflection upon any person, entity or security. The Company is
cooperating with the staff and has provided the requested
documents.
NOVO-PLEZ AND NASCO ARBITRATIONS. On March 21, 1994,
Novo-Plez SA and NASCO Brokers, Inc. (the "Claimants"), steel
brokers, commenced an arbitration against the Company in the
International Court of Arbitration. The Claimants seek $720,653
in damages for steel purchased from the Company which claimants
assert was of inferior quality. Claimant's have reserved the
right to assert a claim for an additional $8,700,000 in
incidental and consequential damages. The Company filed an
answer to the Petition on May 2, 1994, in which it stated that
the steel billets fully conformed to the specifications provided
for in the contracts. While arbitration always involve risk,
based on the advice of legal counsel, management believes that
the company will prevail in a successful defense against these
claims.
Egyptian Metals Company ("EMC"), the customer of the
Claimants in the above arbitration, and its broker have attempted
to pursue a related claim before the "Tribunal de Commerce" in
Paris, France alleging that the Company was liable to it for the
sale of the defective billets. EMC claimed damages of $2,120,666
and an additional claim for payment of FF100,000 under the French
Code of Civil Procedure. Management believes that the Company is
not liable to EMC for any damages. The Company has not entered
an appearance in this French litigation as, based on the advice
of legal counsel, management believes that the French court is
without jurisdiction over the Company and that the litigation
will ultimately be dismissed or, if judgement is in fact entered,
that it will be unenforceable against the Company.
From time to time, the Company is involved in
litigation relating to claims arising out of its operations in
the normal course of business. Such claims against the Company
are generally covered by insurance. There can be no assurance
that insurance, including product liability insurance, will be
available in the future at reasonable rates.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3(a) -- Restated Certificate of Incorporation, as
amended -- Incorporated by reference to Exhibit
3(a) of the Company's Registration Statement on
Form S-1 (No. 33-13298).
3(b) -- By-laws, as amended -- Incorporated by reference to
Exhibit 3(b) to the Company's Annual Report on
Form 10-K for the year ended November 30, 1983 (File
No. 0-15838).
4(a) -- Form of Certificate for shares of Common Stock of the
Company -- Incorporated by reference to Exhibit 4(a) of
the Company's Registration Statement on Form S-1 (No.
33-13298).
10(a)-- Electricity Supply Contract between the Company and
Central Jersey Power & Light Company effective May
1985 -- Incorporated by reference to Exhibit 10(d) of
the Company's Registration Statement on Form S-1
(No. 33-13298).
10(b)-- Technical Services and Management Consulting Agreement
between the Company and Von Roll Ltd. dated as of
April 1, 1987 -- Incorporated by reference to Exhibit
10(e) of the Company's Registration Statement on Form
S-1 (No. 33-13298).
10(c)-- Incentive Stock Option Plan of Company adopted October
2, 1987 with amendments -- Incorporated by reference to
Exhibit 10(f) of the Company's Registration Statement
on Form S-1 (No. 33-13298).
10(d)-- Form of Stock Option Agreement -- Incorporated by
reference to Exhibit 4(b) of the Company's Registration
Statement on Form S-8 (No. 33-17435).
10(e)-- New Jersey Steel Corporation Executive Thrift Savings
Plan -- incorporated by reference to Exhibit 10(I) of
the Company's Registration Statement of Form S-1 (No.
33-13298)
10(f)-- New Jersey Steel Corporation Thrift Savings Plan
(as amended 1994) -- Incorporated by reference to
Exhibit 10(g) of the Company's Annual Report on Form
10-K for the year ended November 30, 1994 (File No. 0-15838).
10(g)-- New Jersey Steel Corporation Thrift Savings Agreement
(as amended 1994) -- Incorporated by reference to
Exhibit 10(h) of the Company's Annual Report on Form
10-K for the year ended November 30, 1994 (File No. 0-15838).
10(h)-- Registration Agreement between the Company and
Von Roll Ltd. dated as of April 1, 1987 -- Incorporated
by reference to Exhibit 10(h) of the Company's
Registration Statement on Form S-1 (No. 33-13298).
10(i)-- Employment Agreement dated September 23, 1993 between
the Company and Robert J. Pasquarelli -- Incorporated
by reference to Exhibit 10(k) to the Company's Annual
Report on Form 10-K for the year ended November 30,
1993 (File No. 0-15838).
10(j)-- Revolving Loan and Security Agreement dated March 31,
1993 and Amendment dated April 1994 and Second
Amendment dated May 31, 1994 and Third Amendment dated
December 31, 1994 -- Filed herewith.
27 -- Financial Data Schedule
(B) No reports on Form 8-K were filed during this period.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
NEW JERSEY STEEL CORPORATION
Registrant
Dated: April 15, 1995
/s/ Robert J. Pasquarelli
-------------------------
Robert J. Pasquarelli
President
Dated: April 15, 1995
/s/ Paul Roik
--------------------------
Paul Roik, Vice President -
Finance and Treasurer
(Principal Finance and
Accounting Officer)
MIDLANTIC NATIONAL BANK
REVOLVING LOAN AND SECURITY AGREEMENT
Dated: March 31, 1993
NEW JERSEY STEEL CORPORATION (whether one or more, referred to
singly and collectively hereinafter as "Borrower") and MIDLANTIC
NATIONAL BANK ("Bank") agree as follows:
SECTION 1.01. THE LOANS. Bank agrees, on the terms and
conditions hereinafter set forth, to make loans (a "Loan" or
"Loans") to Borrower from time to time during the period from the
date hereof to and including December 31, 1994 (the "Termination
Date") in an aggregate amount not to exceed at any time
outstanding $10,000,000.00 (the "Commitment"). Each Loan shall
be in an amount of at least $50,000.00. The proceeds of Loans
shall be used only for capital expenditures and working capital.
SECTION 1.02. INTEREST AND REPAYMENT. Borrower shall
repay, and shall pay interest on, the aggregate unpaid principal
amount of all Loans in accordance with a promissory note or notes
of Borrower (collectively the "Note"). Borrower may prepay the
Note in whole or in part, with accrued interest to the date of
prepayment on the amount prepaid, provided that each partial
prepayment shall be in a principal amount of at least $50,000.00,
and may thereafter reborrow within the limits of the Commitment.
SECTION 1.03. FACILITY FEE. Borrower agrees to pay Bank
quarterly a facility fee on the Commitment, from the date hereof
until the Termination Date, at the rate of 1/4% per annum. This
fee may be paid via balances at the Borrower's option.
SECTION 1.04. MULTIPLE BORROWERS. If more than one
Borrower is named above, each shall be jointly and severally
liable for the Loans and all other sums payable under this
Agreement, without regard to which receives the proceeds of any
of the Loans, and each hereby acknowledges that it expects to
derive economic benefit from the Loans.
SECTION 2.01. CONDITIONS PRECEDENT TO LOANS. Each Loan is
subject to the conditions precedent that Bank shall have received
the Note, duly executed by Borrower, and that on the date of such
Loan: (a) the security interests provided for in Section 3.01
shall be perfected as first liens, (b) the representations and
warranties contained in this Agreement are correct as though made
on and as of the date of the Loan, no event has occurred and is
continuing, or would result from the Loan, which constitutes an
Event of Default or would constitute and Event of Default with
the giving of notice, lapse of time or other condition, (d) if
requested by Bank, Borrower shall have confirmed such matters by
delivery of a certificate dated the day of the Loan and signed by
a duly authorized officer (or partner) of Borrower satisfactory
to Bank, and (e) Bank shall have received such approvals,
certifications, opinions and other documents as Bank may request.
SECTION 3.01. GRANT OF SECURITY INTERESTS. As security for
the due and punctual payment and performance of all of the
Obligations as defined in Section 3.02, Borrower hereby pledges,
transfers and assigns to Bank, and grants to Bank security
interests in, all of the Collateral as defined in Section 3.03.
SECTION 3.02. DEFINITION OF "OBLIGATIONS". Wherever used
in this Agreement, the term "Obligations" shall mean (a) all
principal of and interest on the Loans and all other sums payable
by Borrower under the terms of this Agreement, and all
obligations of Borrower to Bank in respect of letters of credit
and bankers acceptances, (b) all other indebtedness, liabilities,
obligations, guaranties and agreements of every kind or nature of
Borrower to or with Bank or any affiliate of Bank, (c) all
guaranties of any of Borrower's Obligation, and (d) any
participation or interest of Bank or any affiliate of Bank in any
indebtedness, liabilities, obligations, guaranties or agreements
of Borrower or any such guarantor to or with others, in each case
described in clauses (a) through (d) whether now existing or
hereafter arising, whether pursuant to this Agreement or
otherwise, whether acquired directly or by assignment, whether
acquired outright, conditionally or as collateral security from
another, whether absolute or contingent, joint or several,
liquidated or unliquidated, secured or unsecured, and whether
arising by operation of law or otherwise, and including without
limitation any renewals, extensions, modifications or changes in
form of, or substitutions for, any of the items described in the
preceding clauses (a) through (d).
SECTION 3.03. DEFINITION OF "COLLATERAL". Wherever used in
this Agreement, the term "Collateral" shall mean all of
Borrower's interest in: (a) all monies, instruments, securities,
documents and other property of Borrower at any time held by or
in transit to Bank from or for Borrower for any purpose, and (b)
all accessions and additions to, replacements and substitutions
for, any of the foregoing.
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF BORROWER.
Borrower represents and warrants as follows:
(a) Borrower, if not an individual, is duly organized,
validly existing and in good standing under the laws of the State
of New Jersey.
(b) The execution, delivery and performance by Borrower of
this Agreement and the Note are within Borrower's powers, have
been duly authorized by all necessary action, and do not and will
not (I) violate Borrower's Certificate or Articles of
Incorporation or Bylaws or other governing instrument, (ii)
constitute a breach of, or default under, any agreement,
undertaking or instrument to which Borrower is a party or by
which it may be affected, or (iii) result in the imposition of
any lien, encumbrance or restriction on any assets of Borrower.
(c) The financial statements of Borrower furnished to Bank
fairly present the financial condition of Borrower and the
results of the operations of Borrower, all in accordance with
generally accepted accounting principles consistently applied,
and there has been no material adverse change in such condition
or operations.
(d) Except as disclosed in writing to Bank, no property
owned or used by Borrower and located in the State of New Jersey
is or has been used for any activity having a Standard Industrial
Classification Code listed in the definition of an "industrial
establishment" under the New Jersey Environmental Cleanup
Responsibility Act ("ECRA") and for the generation, manufacture,
refining, transportation, treatment, storage, handling or
disposal of any "hazardous substances" or "hazardous wastes"
within the meaning of ECRA.
(e) No part of the proceeds of any Loan will be used,
directly or indirectly, to purchase or carry any margin stock (as
defined in Regulation U issued by the Board of Governors of the
Federal Reserve System), to extend credit to others for the
purpose of purchasing or carrying any such margin stock, or for
any purpose that violates any provision of Regulations G, T, U or
X issued by the Board of Governors of the Federal Reserve System.
(f) The principal place of business and chief executive
office of Borrower is located at North Crossman Road, Sayreville,
New Jersey 08872. Borrower maintains its books and records
relative to its Accounts and its Inventory at North Crossman
Road, Sayreville, New Jersey 08872. No tangible property
constituting part of the Collateral is or will be, or has been
during the six months preceding execution of the Agreement,
located in or on any premises other than those identified in
writing to Bank.
(g) Except as disclosed in writing to Bank, none of
Borrower's business is conducted through any corporate
subsidiary, unincorporated association or other entity or under
any name not stated at the beginning of this Agreement, and
Borrower has not within the seven years preceding the date of
this Agreement (I) changed its name, (ii) used any name other
than the name stated at the beginning of this Agreement, or (iii)
merged or consolidated with, or acquired the assets of, any
corporation or other business.
(h) Borrower has good and marketable title to all of the
Collateral as sole owner thereof, free and clear of any mortgage,
security interest, assignment, pledge, or other lien or
encumbrance. None of the Collateral is subject to any
prohibition against encumbering, pledging, hypothecating or
assigning the same or requires notice or consent in connection
therewith.
SECTION 5.01. AFFIRMATIVE COVENANTS. Borrower covenants
and agrees that, so long as any amount remains unpaid under the
Note or this Agreement or Bank has any Commitment hereunder,
Borrower shall, unless Bank shall otherwise consent in writing:
(a) Maintenance of Properties and Rights. Maintain its
properties in good working order and condition, and preserve in
full force and effect its existence and good standing and all
other rights, powers, licenses and qualifications necessary or
desirable for its ownership or use of properties or the conduct
of its business.
(b) Payment of Taxes and Other Obligations. pay, before
they become delinquent, all taxes, assessments and governmental
charges imposed upon it or any of its property or required to be
collected by it.
(c) Compliance with Laws. Comply in all material respects
with all federal, state and local statutes, rules, regulations,
orders and other provisions of law applicable to its ownership or
use of properties or the conduct of its business (including,
without limitation, those relating to environmental, health and
safety matters, and the Employee Retirement Income Security Act
of 1974, as amended).
(d) Books, Records and Inspections. Maintain complete and
accurate books and records of all its operations and properties,
and permit the Bank (through its employees, accountants,
attorneys and other agents and at any reasonable time or times)
to inspect the books and records of Borrower (including, without
limitation, returns for federal income tax and other taxes) and
to make extracts therefrom and to inspect the properties and
operations of Borrower.
(e) Financial Statements: Other Information. Furnish to
Bank: (I) within 120 days after the end of Borrower's fiscal
year, a balance sheet of Borrower as of the end of such year and
statements of income, cash flows and changes in stockholders'
equity for such year (all in reasonable detail and with all notes
and supporting schedules), presenting fairly the financial
condition of Borrower as of the dates and for the periods
indicated, prepared in accordance with generally accepted
accounting principles consistently applied, and certified or
otherwise verified to Bank's satisfaction, and (ii) such interim
financial statements and other information relevant to the
financial condition, properties and operations of Borrower within
60 days of a fiscal quarter end.
(f) Financial Covenants. Maintain current assets,
excluding due form affiliate receivables and/or amounts due from
related parties, in excess of current liabilities by at least
$10,000,000.00 tested on a quarterly basis; maintain current
assets of at least 150% of current liabilities tested on a
quarterly basis; maintain total liabilities in an amount not in
excess of 50% of tangible net worth tested on a quarterly basis;
and maintain the following additional financial ratios:
EBITDA/Interest Expense (net of interest income) of 3.0 to 1
tested on an annual basis; Tangible Net Worth of $50,000,000.00
increasing by 20% of Net Profit per year; such foregoing
financial terms to be defined in accordance with generally
accepted accounting principles consistently applied.
(g) Additional Actions. Upon Bank's request, execute and
deliver such further documents and take such further actions as
Bank may request from time to time in order to create, perfect or
continue the security interests and other liens provided for by
this Agreement and otherwise carry out the purposes of this
Agreement and secure to bank the benefits thereof.
SECTION 6.02. NEGATIVE COVENANTS. Borrower covenants and
agrees that, so long as any amount remains unpaid under the Note
or this Agreement or Bank has any Commitment hereunder, Borrower
shall not, unless Bank shall otherwise consent in writing:
(a) Merger, Reorganization, Dissolution. Enter into any
merger, consolidation, reorganization or recapitalization; take
any steps in contemplation or dissolution or liquidation; or
conduct any substantial part of Borrower's business through any
corporate subsidiary, unincorporated association or other entity.
(b) Cessation or Material Change in Business. Cease
operation, or cause or permit a material change in the nature of
the business of Borrower as conducted on the date of this
Agreement.
(c) Transfer of Collateral. Sell, assign, lease, or
otherwise transfer or dispose of any of the Collateral or any of
its Accounts Receivable and/or Inventory as defined in the
Uniform Commercial Code except as sold in the ordinary course of
business.
(d) Other Liens. Incur, create or permit to exist any
mortgage, security interest, assignment, pledge, or other lien or
encumbrance upon or with respect to any of the Collateral.
(e) Change of Location or Name. Change any of the
following: (I) the location of any Collateral, (ii) the locations
stated in Subsection 4.01 (f) of this Agreement for the
maintenance of the books and records relative to Accounts and
Inventory and the principal place of business or chief executive
office of Borrower, or (iii) the name under which Borrower
conducts any of its business or operations.
(f) Settlements. Compromise, settle or adjust any claim in
a material amount relating to any of the Collateral.
SECTION 7.01 EVENTS OF DEFAULT. The occurrence of any of
the following shall constitute an "Event of Default": (a)
Borrower fails to pay when due (I) any principal of or interest
on the Loans, (ii) any other amount payable under this Agreement
or the Note, or (iii) any amount payable with respect to any of
the other Obligations; (b) any representation or warranty made by
Borrower herein, or otherwise by Borrower in connection with this
Agreement, proves to have been incorrect in any material respect
when made; (c) Borrower fails to perform or observe any other
term, covenant or agreement on its part to be performed or
observed contained in this Agreement, or a default occurs with
respect to any of the other Obligations; (d) Borrower (I) becomes
unable or fails to pay its debts generally as they become due,
(ii) admits in writing its inability to pay its debts, or (iii)
proposes or makes a general assignment for the benefit creditors;
(e) any proceeding is instituted by or against Borrower (I)
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of it or
its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or (ii) seeking appointment
of a receiver, trustee, or other similar official for it or for
any of its property, or Borrower takes any action to authorize or
consent to any action described in this subsection (e); (f) one
or more judgments or orders for the payment of money exceeding
$250,000.00 in the aggregate is rendered against Borrower and
continues unsatisfied and not effectively stayed for a period of
30 consecutive days, or any of the Collateral becomes subject to
attachment, execution, levy or like process which has not been
effectively stayed; (g) any material adverse change occurs in the
financial condition or operations of Borrower or of any guarantor
of any of the Obligations; (h) any guaranty of any of the
Obligations ceases to be effective, or any guarantor thereof
denies liability thereunder, dies or is liquidated or dissolved,
or any of the events described in Subsections 8.01 (d), (e) and
(f) occurs with respect to any such guarantor; (I) any individual
named in this Agreement as Borrower dies; (j) any material part
of the Collateral is lost, destroyed or damaged; or (k) Bank
believes at any time that the prospect of payment or performance
of any of the Obligations is impaired; however, Bank agrees that
it shall exercise its rights under this clause in a commercially
reasonable manner, in good faith, pursuant to the rights,
obligations, promises and covenants contained in this agreement.
SECTION 7.02. REMEDIES UPON DEFAULT. Automatically upon
the occurrence of an Event of Default described in Subsection
7.01 (e), and at the option of Bank upon the occurrence of any
other Event of Default, (a) the Commitment and all provisions for
additional Loans under this Agreement shall terminate, (b) the
principal and interest of the Loans, all other amounts payable
under the Note or this Agreement and all other Obligations shall
become and be immediately due and payable, without presentment,
demand, protest, or further notice of any kind, all of which are
hereby expressly waived, and Bank shall be entitled to exercise
forthwith (to the extent and in such order as Bank may elect, in
its sole and absolute discretion) any or all rights and remedies
provided for in this Agreement, the Note or any other agreement
relating to any of the Obligations, all rights and remedies of a
secured party under the Uniform Commercial Code, and all other
rights and remedies that may otherwise be available to Bank by
agreement or at law or in equity. Without limiting such other
rights and remedies, Borrower specifically agrees that (a) Bank
may enter upon the premises where any of the Collateral is
located and take possession of, and at Bank's option remove or
sell in place, any or all thereof, and (b) upon notice from
Bank, Borrower shall promptly at its expense assemble any or all
of the Collateral and make it available at a reasonably
convenient place designated by Bank. Borrower hereby further
specifically agrees that notice of the time and place of any
public sale, or of the time after which any private sale or other
intended disposition or action relating to any of the Collateral
is to be made or taken, shall be deemed commercially reasonable
notice thereof, and shall satisfy the requirements of any
applicable statute or other law, if such notice (a) is delivered
not less than three (3) business days prior to the date of the
sale, disposition or other action to which the notice relates, or
(b) is mailed (by ordinary first class mail, postage prepaid) not
less than five (5) business days prior thereto.
SECTION 7.03 APPLICATION OF PROCEEDS. Any cash proceeds
of sale, lease or other disposition of Collateral shall be
applied as follows: (a) First, to the expenses of collecting,
enforcing, safeguarding, holding and disposing of Collateral, and
to other expenses of Bank in connection with the enforcement of
this Agreement, the Note, or any of the other Obligations
(including, without limitation, court costs and the fees and
expenses of outside counsel for Bank and the allocated cost of
services of Bank's in-house counsel, and the fees and expenses of
accountants and appraisers) together with interest, at the rate
from time to time applicable to overdue principal of the Note,
from the respective dates such sums are expended, (b) any surplus
then remaining to the payment of principal and interest of the
Loans and other sums payable as part of the Obligations, in such
order as Bank elects, and (c) any surplus then remaining to
Borrower or whoever may be lawfully entitled thereto.
SECTION 7.04. CUMULATIVE REMEDIES; NO WAIVER. No remedy
referred to in this Agreement is intended to be exclusive, and
each shall be cumulative and in addition to any other remedy
referred to in this Agreement or otherwise available to Bank by
agreement or at law or in equity. No express or implied waiver
by Bank of any default or Event of Default shall in any way
constitute a waiver of any future or subsequent default or Event
of Default. The failure or delay of Bank in exercising any right
granted it hereunder shall not constitute a waiver of any such
right, and any single or partial exercise of any particular right
by Bank shall not exhaust the same or constitute a waiver of any
other right.
SECTION 7.05. WAIVERS AND CONSENTS RELATING TO REMEDIES.
In connection with any action or proceeding arising out of or
relating in any way to this Agreement, the Note, any of the
Loans, any of the other Obligations, any of the Collateral, or
any act or omission relating to any of the foregoing:
(a) BORROWER AND BANK WAIVE THE RIGHT TO TRIAL BY JURY, and
Borrower also waives all defenses and rights to interpose any
set-off or counterclaim of any nature except only a defense
pertaining to the existence of an Event of Default; and
(b) Borrower agrees that all of the Collateral constitutes
equal security for all of the Obligations, and agrees that Bank
shall be entitled to sell, retain or otherwise deal with any or
all of the Collateral, in any order or simultaneously as Bank
shall determine in its sole and absolute discretion, free of any
requirement for the marshaling of assets or other restriction
upon Bank in dealing with the Collateral. Borrower further
agrees that none of the Obligations shall be affected by Bank's
consent to any substitution or release of Collateral, release of
any party to an Obligation or waiver of any provision thereof, or
by loss of or damage to any Collateral or failure of Bank to
perfect or maintain its security interest therein.
SECTION 8.01. ENTIRE AGREEMENT RE LOANS: AMENDMENT OR
WAIVER. This Agreement and the Note (a) supersede with respect
to their subject matter all prior and contemporaneous agreements,
understandings, inducements or conditions between Borrower and
Bank (whether express or implied oral or written) with respect to
the Loans and other Obligations created by this Agreement, (b)
but shall not supersede or diminish any other Obligations of
Borrower to Bank. No amendment or waiver of any provision of
this Agreement or the Note, nor consent to any departure by
Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by an authorized officer of
Bank, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose of which
given.
SECTION 8.02. NOTICES. All notices and other
communications relating to this Agreement or the Note shall be in
writing and addressed as follows:
If to Bank: Mr. Michael Richards
Assistant Cashier
Midlantic National Bank
499 Thornall Street
Edison, New Jersey 08837
If to Borrower: Mr. Paul Roik
Vice President Finance, Treasurer
New Jersey Steel Corporation
North Crossman Road
Sayreville, New Jersey 08872
or to such other address as the respective party or its
successors or assigns may subsequently designate by proper
notice.
SECTION 8.03. COSTS AND EXPENSES. Borrower agrees to pay
to Bank (a) all legal fees and expenses of Bank in connection
with the preparation of this Agreement and other documents
delivered in connection herewith and the perfection and
maintenance of the security interests created hereby, and (b) on
demand, all losses and expenses incurred by Bank in connection
with the enforcement of this Agreement, the Note or any of the
other Obligations or the preservation of any rights of Bank
thereunder or in connection with legal advice relating to the
rights or responsibilities of Bank under this Agreement, the Note
or any of the other Obligations (including, without limitation,
the fees and expenses of outside counsel for Bank and the
allocated cost of services of Bank's in-house counsel, and the
fees and expenses of accountants and appraisers), together with
interest at the rate from time to time applicable to overdue
principal of the Note.
SECTION 8.04. YIELD PROTECTION. If any change in any law,
regulation or guideline or in the interpretation thereof, or any
order or ruling by any regulatory body, court or other
governmental authority, or compliance by Bank with any request or
directive (whether or not having the force of law) of any such
regulatory body, court or authority, shall impose, modify, or
deem applicable to Bank any reserve, capital, special deposit or
other requirement or condition affecting loans made or assets
held by Bank or deposits in or for the account of Bank, and the
result of any such event is increased cost or reduced benefit to
Bank in maintaining any Loan (as determined by Bank's reasonable
allocation of the aggregate of such increased costs or reduced
benefits to Bank resulting from such event), Borrower shall pay
to Bank upon demand from time to time additional amounts
sufficient to compensate Bank for such increased cost or reduced
benefit from the date of such event, together with interest on
each such amount from a date 10 days after the date demanded at
the rate then applicable to the Loan. A certificate setting
forth in reasonable detail such increased cost or reduced benefit
shall be conclusive as to the amount thereof, absent manifest
error.
SECTION 8.05. RIGHT OF SET-OFF. Upon the occurrence and
during the continuance of any Event of Default, Bank is hereby
authorized at any time and from time to time, without notice to
Borrower (any such notice being expressly waived by Borrower), to
set off and apply (or to cause any affiliate of Bank to set-off
and apply) any and all deposits at any time held and other
indebtedness at any time owing by Bank or such affiliate to or
for the credit or the account of Borrower, against any and all of
the Obligations, irrespective of whether Bank shall have made any
demand and although such Obligations may be unmatured. The
rights of Bank under this Section are in addition to other rights
of set-off or lien that Bank may have.
SECTION 8.06. BINDING EFFECT: TRANSFEREE: GOVERNING LAW.
This Agreement and the Note shall be binding upon and inure to
the benefit of Borrower and Bank and their respective heirs,
executors, administrators, successors and assigns, except that
Borrower shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of Bank.
Upon any transfer of any of the Collateral to a transferee of any
of the Obligations, Bank shall be discharged from all
responsibility with respect to the Collateral transferred and the
transferee shall have all rights and powers granted to Bank
hereunder with respect thereto. This Agreement, the Note and the
other documents delivered in connection herewith shall be
governed by, and construed in accordance with, the laws of the
State of New Jersey.
SECTION 8.07. SEVERABILITY OF PROVISIONS. Any provision of
this Agreement or the Note that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or the
Note or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 8.08. HEADINGS. The headings preceding the text of
this Agreement are inserted solely for convenience of reference
and shall not constitute a part of this Agreement nor affect its
meaning, construction or effect.
IN WITNESS WHEREOF, in consideration of the agreements
contained herein and intending to be legally bound hereby,
Borrower and Bank have caused this Agreement to be executed as
of the date first above written.
(CORPORATE SEAL)
Attest: NEW JERSEY STEEL CORPORATION
By:
Name: Name:
Title: Title:
Attest:
By:
Name: Name:
Title: Title:
MIDLANTIC NATIONAL BANK
By:
Name:
Title:
AMENDMENT TO REVOLVING LOAN AND SECURITY AGREEMENT
AND REVOLVING LOAN NOTE (BUSINESS)
This Amendment, dated as of April , 1994 (this
"Amendment"), is entered into between NEW JERSEY STEEL
CORPORATION (the "Borrower") and MIDLANTIC NATIONAL BANK
(the "Bank").
RECITALS
A. The Borrower and the Bank are parties to a certain
Revolving Loan and Security Agreement, dated as of March 31,
1993 (the "Loan Agreement").
B. The Loan Agreement provides for certain loans to
the Borrower and, as evidence of the loans, the Borrower has
delivered its Revolving Loan Note (Business), dated March
31, 1993 (the "Note") to the Bank, in the original principal
amount of $10,000,000.00.
C. The Borrower and the Bank wish to amend the Loan
Agreement and the Note as set forth in this Amendment.
D. Now, therefore, in consideration of the premises
and the mutual agreements contained herein, the parties
agree to amend the Loan Agreement and the Note on the
following terms and conditions.
1. DEFINED TERMS. Unless otherwise defined in this
Amendment, terms defined in the Loan Agreement shall be used
herein with their defined meanings.
2. AMENDMENT TO LOAN AGREEMENT. The Loan Agreement
is amended by:
(a) Section 1.01. The Loans is deemed amended to
delete the reference therein to $10,000,000.00 and
substitute therefor the following: commencing from the date
hereof until September 30, 1994, the maximum amount of the
loans will increase to $17,000,000.00; on October 1, 1994
said maximum amount will automatically revert back to
$10,000,000.00 where it will remain through maturity.
(b) Section 1.02. Interest and Repayment is deemed
amended to provide that the Note referred to therein shall
be the original Note as amended by the Endorsement of even
date more particularly described below, which Endorsement
shall reflect that the rate of interest shall increase from
the date hereof as stated in the Endorsement.
(c) Section 3.03. Definition of "Collateral" is
deemed amended to provide that the definition originally
contained in the Loan Agreement is deleted, and substituted
therefore, is the following definition of "Collateral":
Wherever used in this Agreement, the term "Collateral"
shall mean all of Borrower's interest in the types of
property which constitute ACCOUNTS, INVENTORY and EQUIPMENT
in each case as such type of property is defined in the
Uniform Commercial Code as in effect from time to time in
the State of New Jersey, and in each case wherever located
and whether now existing or hereafter created and whether
now owned or hereafter acquired by Borrower, together with
(a) all documents of title, policies or certificates of
insurance, insurance proceeds, proceeds of condemnation or
other seizure, securities, chattel paper and other documents
and instruments evidencing or pertaining to any such
Collateral, (b) all claims of Borrower against third parties
for loss or damage to, or otherwise relating to, any such
Collateral, (c) all files, correspondence, customer lists,
computer programs, tapes, discs and related data processing
software which identifies any such Collateral or any account
debtor or the amount owed by same, or which would otherwise
be necessary or helpful in the realization on any of the
Collateral, (d) all moneys, instruments, securities,
documents and other property of Borrower at any time held by
or in transit to Bank from or for Borrower for any purpose,
and (e) all accessions and additions to, replacements and
substitutions for, and proceeds and products of, any of the
foregoing.
(d) Section 5.01 (f) and (g) of the Loan Agreement are
deemed re-numbered as Sections 5.01 (g) and (h), and a new
Section 5.01 (f) shall be added as follows:
(f) Maintenance of Insurance. Maintain at Borrower's
expense (with such insurers, in such amounts and with such
deductibles as are satisfactory to Bank) public liability and
third party property damage insurance and other
insurance with respect to its business, and insurance on the
Collateral, which insurance shall be evidenced by policies
(I) in form and substance satisfactory to Bank, (ii)
designating Bank and its assigns as additional co-insureds
or loss payees as their interest may appear from time to
time, (iii) containing a "breach of warranty clause" whereby
the insurer agrees that a breach of the insuring conditions
or any negligence of Borrower or any other person shall not
invalidate the insurance as to Bank and its assigns, and
(iv) requiring at least 30 days' prior written notice to
Bank and its assigns before cancellation or any material
change shall be effective.
(e) Section 6.02. Negative Covenants, sub-section
(c)Transfer of Collateral, is deemed amended by deleting its
current language, and substituting therefore the following:
(c) Transfer of Collateral. Sell, assign, lease or
otherwise transfer or dispose of any of the Collateral,
other than the sale of Inventory in the ordinary course of
business and the retirement of other assets in the normal
course of operations.
(f) A new sub-section 6.02 (g) is added as follows:
(g) Fixtures. Permit any of the Collateral to become a
part of or affixed to real property.
(h) New Sections 7.01. POWERS OF ATTORNEY, and 7.02.
IRREVOCABILITY: BANK'S DISCRETION, are added as follows:
SECTION 7.01. POWERS OF ATTORNEY. Borrower hereby
constitutes and appoints Bank (and any employee or agent of
Bank, with full power of substitution) its true and lawful
attorney and agent in fact to take any or all of the
following actions in Bank's or Borrower's name and at
Borrower's expense: (a) to execute and file financing
statements and other documents and take such other actions
as Bank deems necessary in order to create, perfect or
continue the security interests and other liens provided for
by this Agreement, (b) to take any and all action that Bank
deems necessary to preserve its interest in the Collateral,
including without limitation the payment of debts of
Borrower, the purchase of insurance on Collateral, the
repair or safeguarding of Collateral, or the payment of
taxes, assessments or other liens thereon, and all sums to
expended shall be added to the Obligations, shall be secured
by the Collateral, and shall be payable on demand with
interest at the rate from time to time applicable to overdue
principal of the Note, (c) to execute proofs of claim in its
own name or Borrower's under insurance policies relating to
Collateral, to compromise claims thereunder, and to apply
any insurance proceeds to the replacement or repair of
Collateral, or, at Bank's option, to payment of any of the
Obligations, whether or not due, in such order as Bank
elects, and (d) upon the occurrence and continuance of any
Event of Default (I) to demand, sue for, collect, endorse
and give receipts for any money, instruments or property
payable or receivable on account of or in exchange for any
of the Collateral, or make any compromises it deems
necessary or proper, including without limitation extending
the time of payment, permitting payment in instalments, or
otherwise modifying the terms or rights relating to any of
the Collateral, all of which may be effected without notice
to or consent by Borrower and without otherwise discharging
or affecting the Obligations, the Collateral or the security
interests granted under this Agreement, (ii) to notify the
account debtors on any Accounts assigned under this
Agreement to make payment directly to Bank, and to endorse
all items of payment received by Bank that are payable to
Borrower, and (iii) to notify the postal authorities to
deliver to Bank all mail and other material addressed to
Borrower, and to open and deal with same as Bank deems
necessary or proper.
SECTION 7.02. IRREVOCABILITY; BANK'S DISCRETION.
Borrower covenants and agrees that (a) the powers of
attorney granted by Section 7.01 are coupled with an
interest and shall be irrevocable until full and final
payment and performance of the Loans and all other
Obligations under this Agreement, (b) said powers are
granted solely for the protection of Bank's interest and
Bank shall have no duty to exercise any of such powers, (c)
the decision whether to exercise any such powers and the
manner of exercise shall be solely within Bank's discretion,
and (d) neither Bank nor any of its directors, officers,
employees or agents shall be liable for any act of omission
or commission, or for any mistake or error of judgment, in
connection with any such powers.
(I) Sections 7.01, 7.02, 7.03, 7.04 and 7.05 of the
Loan Agreement are deemed renumbered as Sections 8.01, 8.02,
8.03, 8.04 and 8.05, with no changes in the content thereof.
(j) Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.06, 8.07
and 8.08 of the Loan Agreement are deemed re-numbered as
Sections 9.01, 9.02, 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08,
with no changes in the content thereof, except that the
party to whom notice directed to Bank shall be sent pursuant
to renumbered sub-section 9.02 shall be Michael Nardo
instead of Michael Richards.
3. NOTE. The Borrower and the Bank hereby agree
that each reference to the "note" in the Loan Agreement and
any document referred to therein shall refer to the Note as
amended by the endorsement in the form of Exhibit A (the
"Endorsement").
4. REPRESENTATIONS AND WARRANTIES. In order to
induce the Bank to enter into this Amendment, the Borrower
hereby represents and warrants to the Bank as follows:
(a) The representations and warranties contained in
Section 4.01 of the Loan Agreement are true and correct on
and as of the date of this Amendment and, upon the Effective
Date hereof and after giving effect hereto, no Event of
Default or unmatured Event of Default will be in existence
or will occur as a result of giving effect hereto.
(b) The execution, delivery and performance of this
Amendment and the Endorsement will not violate any provision
of any law or regulation, or of any writ or decree of any
court or governmental instrumentality, or of the Borrower's
articles of incorporation or by-laws.
(c) The Borrower has the power to execute, deliver and
perform this Amendment and the Endorsement and has taken all
necessary corporate action to authorize the execution,
delivery and performance of this Amendment and the
Endorsement and the performance of the Loan Agreement and
the note as amended thereby.
(d) The execution, delivery and performance of this
Amendment and the Endorsement does not require the consent
of any other party or the consent, license, approval or
authorization of, or registration or declaration with, any
governmental body, authority, bureau or agency and this
Amendment and the Endorsement and the Loan Agreement and the
Note as amended by the Amendment and the Endorsement,
constitute valid obligations of the Borrower, legally
binding upon it and enforceable in accordance with its
terms, subject to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting
creditor's rights.
5. COLLATERAL DOCUMENTS. The Borrower and the Bank
agree that the Note and any loans evidenced thereby, shall
continue to be secured by any Collateral previously granted
and by the additional Collateral presently being granted to
the Bank.
6. CONDITIONS PRECEDENT. This Amendment shall
become effective (the "Effective Date") upon the
satisfaction of the following conditions precedent:
(a) This Amendment shall have been duly executed and
delivered by the Borrower and the Bank.
(b) The Endorsement shall have been delivered by the
Borrower.
(c) All proceedings required to be taken by the
Borrower in connection with the transactions contemplated by
this Amendment shall be satisfactory in form and substance
to the Bank and its counsel, and the Bank shall have
received such counterpart originals or certified or other
copies of such documents as the Bank may reasonably request.
7. General.
(a) As herein amended or modified, the Loan Agreement
and the Note shall remain in full force and effect and are
hereby ratified, approved and confirmed in all respects.
(b) After the date hereof, all references in the Loan
Agreement, any collateral document and the Note to the "Loan
Agreement," "Agreement" or "Note" shall refer to the Loan
Agreement and the Note as herein amended or modified.
(c) This Amendment shall be binding upon the Borrower,
the Bank and their respective successors and assigns and
shall inure to the benefit of the Borrower and the Bank.
(d) This Amendment may be executed in any number of
counterparts. This Amendment shall be governed by the laws
of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their proper
and duly authorized officers as of the day and year first
above written.
MIDLANTIC NATIONAL BANK
By:__________________________
Title:_______________________
NEW JERSEY STEEL CORPORATION
By:__________________________
Title:_______________________
njscAMD
EXHIBIT A
ENDORSEMENT
The undersigned, NEW JERSEY STEEL CORPORATION, a
New Jersey Corporation (the "Borrower") hereby agrees with
MIDLANTIC NATIONAL BANK, a national banking association (the
"Bank") that the Borrower's Revolving Loan Note (Business),
dated March 31, 1993 (the "Note") in the face amount of
$10,000,000.00 and payable to the order of the Bank, be and
it hereby is amended by (I) providing for an increase to
$17,000,000.00 as the maximum amount available to be
borrowed under the Note during the period from the date of
execution hereof to September 30, 1994; on October 1, 1994,
said figure shall automatically revert to $10,000,000.00 as
the maximum available to be borrowed through the maturity of
the Note; and (ii) deleting therefrom the phrase "3/4% per
annum below" in the interest computation provision of the
Note such that interest shall be computed going forward at
the Bank's prime rate of interest as such rate shall change
from time to time.
This Endorsement shall not be deemed to extinguish
Borrower's obligation under the Note, nor a replacement,
substitution or novation thereof, but only serves to modify
the Note to provide for the specific amendments to the
maximum dollar amount and rate of interest as set forth
above.
NEW JERSEY STEEL CORPORATION
By:__________________________
Title:_______________________
ENDORSEMENT
The undersigned, NEW JERSEY STEEL CORPORATION, a
New Jersey Corporation (the "Borrower") hereby agrees with
MIDLANTIC NATIONAL BANK, a national banking association (the
"Bank") that the Borrower's Revolving Loan Note (Business),
dated March 31, 1993 (the "Note") in the face amount of
$10,000,000.00 and payable to the order of the Bank, be and
it hereby is amended by (I) providing for an increase to
$17,000,000.00 as the maximum amount available to be
borrowed under the Note during the period from the date of
execution hereof to September 30, 1994; on October 1, 1994,
said figure shall automatically revert to $10,000,000.00 as
the maximum available to be borrowed through the maturity of
the Note; and (ii) deleting therefrom the phrase "3/4% per
annum below" in the interest computation provision of the
Note such that interest shall be computed going forward at
the Bank's prime rate of interest as such rate shall change
from time to time.
This Endorsement shall not be deemed to extinguish
Borrower's obligation under the Note, nor a replacement,
substitution or novation thereof, but only serves to modify
the Note to provide for the specific amendments to the
maximum dollar amount and rate of interest as set forth
above.
NEW JERSEY STEEL CORPORATION
By:__________________________
Title:_______________________
SECOND AMENDMENT TO REVOLVING LOAN AND SECURITY AGREEMENT
AND REVOLVING LOAN NOTE (BUSINESS)
This Second Amendment, dated as of _________, 1994
(this "Amendment"), is entered into between NEW JERSEY STEEL
CORPORATION (the "Borrower") and MIDLANTIC NATIONAL BANK
(the "Bank").
RECITALS
A. The Borrower and the Bank are parties to a
certain Revolving Loan and Security Agreement, dated as of
March 31, 1993 (the "Loan Agreement").
B. The Loan Agreement provides for certain loans to
the Borrower and, as evidence of the loans, the Borrower has
delivered its Revolving Loan Note (Business), dated March
31, 1993 (the "Note") to the Bank, in the original principal
amount of $10,000,000.00.
C. The Borrower and the Bank heretofore amended the
Loan Agreement and the Note as set forth in an Amendment to
Revolving Loan and Security Agreement and Revolving Loan
Note (Business) dated as of April 12, 1994 (the "First
Amendment").
D. The Borrower and the Bank wish to further amend
the Loan Agreement and the Note as set forth in this Second
Amendment.
E. Now, therefore, in consideration of the premises
and the mutual agreements contained herein, the parties
agree to amend the Loan Agreement and the Note on the
following terms and conditions.
1. DEFINED TERMS. Unless otherwise defined in this
Amendment, terms defined in the Loan Agreement shall be used
herein with their defined meanings.
2. SECOND AMENDMENT TO LOAN AGREEMENT. The Loan
Agreement is further amended by:
(a) Section 1.01. The Loans is deemed amended to
delete the reference therein to $20,000,000.00 and substitute
therefor the following: commencing from the date
hereof until July 31, 1994, the maximum amount of the loans
will increase to $23,000,000.00 (subject to the further
limits on availability set forth below which are keyed to an
evaluation of Borrower's Accounts and Inventory); on August
1, 1994 said maximum amount will automatically reduce to
$20,000,000.00; on September 1, 1994, said maximum amount
will automatically reduce to $18,000,000.00; on October 1,
1994, said maximum amount will automatically reduce to
$15,000,000.00; on November 1, 1994, said maximum amount
will automatically reduce to $13,000,000.00 where it will
remain through maturity. Notwithstanding the aforesaid
limits as to maximum amount which may be borrowed as of the
various dates listed above, availability shall be further
limited as follows: the maximum which may be borrowed at any
given time shall be the lesser of (x) the sum of 80% of
Borrower's eligible Accounts (defined as those Accounts
under 90 days) plus 50% of Borrower's Inventory, or (y) the
maximum dollar amounts as listed above.
(b) Section 1.02. Interest and Repayment is deemed
amended to provide that the Note referred to therein shall
be the original Note as amended by the Second Endorsement of
even date more particularly described below.
(c) Former Section 5.01(f), renumbered as 5.01(g)
pursuant to the First Amendment, Financial Covenants is
deemed amended as follows: For the duration of the
facility, the tests calculating current assets minus current
liabilities, and current assets divided by current
liabilities, shall both except therefrom all outstandings
under the Bank's revolving credit facility under the Loan
Agreement.
(d) All references to Borrower as a Corporation
organized under the laws of the State of New Jersey are
deemed deleted and substituted therefor, in each instance,
is the representation that Borrower is a corporation duly
organized and validly existing under the laws of the State
of Delaware.
(e) With regard to Section 4.01(d) of the Loan
Agreement, the Bank acknowledges that, notwithstanding the
blanket representation contained in 4.01(d), Borrower does
generate dust in its steel melting process that comes within
the definition of "hazardous waste" within certain
environmental laws. Bank does not deem this disclosure to
constitute a violation of the environmental provisions of
the Loan Agreement or related documents.
(f) With regard to Section 4.01(f) of the Loan
Agreement, the Bank acknowledges that notwithstanding the
blanket representation contained in 4.01(f), Borrower does
maintain certain of its inventory which constitutes part of
the collateral base on premises other than its Sayreville
facility, to wit: in Bowie, Maryland and on a consignment
basis in Pennsylvania. Bank does not deem this disclosure
to constitute a violation of the collateral maintenance
provisions of the Loan Agreement or related documents.
3. NOTE. The Borrower and the Bank hereby agree
that each reference to the "note" in the Loan Agreement and
any document referred to therein shall refer to the Note as
amended by the Second endorsement in the form of Exhibit A
(the "Second Endorsement").
4. REPRESENTATIONS AND WARRANTIES. In order to
induce the Bank to enter into this Second Amendment, the
Borrower hereby represents and warrants to the Bank as
follows:
(a) The representations and warranties contained in
Section 4.01 of the Loan Agreement except as modified by way
of this Second Amendment are true and correct on and as of
the date of this Second Amendment and, upon the Effective
Date hereof and after giving effect hereto, no Event of
Default or unmatured Event of Default will be in existence
or will occur as a result of giving effect hereto.
(b) The execution, delivery and performance of this
Second Amendment and the Second Endorsement will not violate
any provision of any law or regulation, or of any writ or
decree of any court or governmental instrumentality, or of
the Borrower's articles of incorporation or by-laws.
(c) The Borrower has the power to execute, deliver
and perform this Second Amendment and the Second Endorsement
and has taken all necessary corporate action to authorize
the execution, delivery and performance of this Second
Amendment and the Second Endorsement and the performance of
the Loan Agreement and the note as amended thereby.
(d) The execution, delivery and performance of this
Second Amendment and the Second Endorsement does not require
the consent of any other party or the consent, license,
approval or authorization of, or registration or declaration
with, any governmental body, authority, bureau or agency and
this Second Amendment and the Second Endorsement and the
Loan Agreement and the Note as amended by the Second
Amendment and the Second Endorsement, constitute valid
obligations of the Borrower, legally binding upon it and
enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditor's
rights.
5. COLLATERAL DOCUMENTS. The Borrower and the Bank
agree that the Note and any loans evidenced thereby, shall
continue to be secured by any Collateral previously granted.
6. CONDITIONS PRECEDENT. This Second Amendment
shall become effective (the "Effective Date") upon the
satisfaction of the following conditions precedent:
(a) This Second Amendment shall have been duly
executed and delivered by the Borrower and the Bank.
(b) The Second Endorsement shall have been delivered
by the Borrower.
(c) All proceedings required to be taken by the
Borrower in connection with the transactions contemplated by
this Second Amendment shall be satisfactory in form and
substance to the Bank and its counsel, and the Bank shall
have received such counterpart originals or certified or
other copies of such documents as the Bank may reasonably
request.
7. General.
(a) As herein amended or modified, the Loan Agreement
and the Note shall remain in full force and effect and are hereby
ratified, approved and confirmed in all respects.
(b) After the date hereof, all references in the Loan
Agreement, any collateral document and the Note to the "Loan
Agreement," "Agreement" or "Note" shall refer to the Loan
Agreement and the Note as herein amended or modified.
(c) This Second Amendment shall be binding upon the
Borrower, the Bank and their respective successors and
assigns and shall inure to the benefit of the Borrower and
the Bank.
(d) This Second Amendment may be executed in any
number of counterparts. This Second Amendment shall be
governed by the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have caused this
Second Amendment to be duly executed and delivered by their
proper and duly authorized officers as of the day and year
first above written.
MIDLANTIC NATIONAL BANK
By: _________________________
Title: ______________________
NEW JERSEY STEEL CORPORATION
By: _________________________
Title: ______________________
njsc3AMD
<PAGE>
THIRD AMENDMENT TO REVOLVING LOAN AND SECURITY AGREEMENT
AND REVOLVING LOAN NOTE (BUSINESS)
This Third Amendment, dated as of December 31, 1994
(this "Amendment"), is entered into between NEW JERSEY STEEL
CORPORATION (the "Borrower") and MIDLANTIC BANK, N.A.,
formerly Midlantic National Bank (the "Bank").
RECITALS
A. The Borrower and the Bank are parties to a
certain Revolving Loan and Security Agreement, dated as of
March 31, 1993 (the "Loan Agreement").
B. The Loan Agreement provides for certain loans to
the Borrower and, as evidence of the loans, the Borrower has
delivered its Revolving Loan Note (Business), dated March
31, 1993 (the "Note") to the Bank, in the original principal
amount of $10,000,000.00.
C. The Borrower and the Bank heretofore amended the
Loan Agreement and the Note as set forth in an Amendment to
Revolving Loan and Security Agreement and Revolving Loan
Note (Business) dated as of April 12, 1994 (the "First
Amendment") and by a Second Amendment to Revolving Loan and
Security Agreement and Revolving Loan Note (Business) dated
as of May 31, 1994 (the "Second Amendment").
D. The Borrower and the Bank wish to further amend
the Loan Agreement and the Note as set forth in this Third
Amendment.
E. Now, therefore, in consideration of the premises
and the mutual agreements contained herein, the parties
agree to amend the Loan Agreement and the Note on the
following terms and conditions.
1. DEFINED TERMS. Unless otherwise defined in this
Amendment, terms defined in the Loan Agreement shall be used
herein with their defined meanings.
2. THIRD AMENDMENT TO LOAN AGREEMENT. The Loan
Agreement is further amended by:
(a) Section 1.01. The Loans is deemed amended to
delete the reference therein to $15,000,000.00 (which
represents the Bank's agreement with Borrower to refrain
from enforcing the step-down to $13,000,000.00, which the
Second Amendment had required as of November 1, 1994) and
substitute therefor the sum of $20,000,000.00, to remain
effective through the new maturity date, to wit: December
31, 1995. Notwithstanding the aforesaid limit as to maximum
amount which may be borrowed, availability shall be further
limited as follows: the maximum which may be borrowed at any
given time shall be the lesser of (x) the sum of 80% of
Borrower's eligible Accounts (defined as those Accounts
under 90 days) plus 50% of Borrower's Inventory, or (y) the
maximum dollar amounts as listed above.
(b) Section 1.02. Interest and Repayment is
deemed amended to provide that the Note referred to therein shall
be the original Note as amended by the Third Endorsement of even
date more particularly described below.
(c) Section 5.01(g). Financial Covenants is
deemed amended as follows:
(I) Regarding Working Capital, the figure
"$5,000,000.00" contained in the third line is deleted and
substituted therefor is the figure "$3,000,000.00;"
(ii) Regarding the ratio of Current Assets to
Current Liabilities, the percentage "110%" contained in the
fourth line is deleted and substituted therefore is the
percentage "100%".
3. NOTE. The Borrower and the Bank hereby agree
that each reference to the "note" in the Loan Agreement and
any document referred to therein shall refer to the Note as
amended by the Third Endorsement in the form of Exhibit A
(the "Third Endorsement").
4. REPRESENTATIONS AND WARRANTIES. In order to
induce the Bank to enter into this Third Amendment, the
Borrower hereby represents and warrants to the Bank as
follows:
(a) The representations and warranties contained
in Section 4.01 of the Loan Agreement except as modified by any
earlier amendment are true and correct on and as of the date of
this Third Amendment and, upon the Effective Date hereof and
after giving effect hereto, no Event of Default or unmatured
Event of Default will be in existence or will occur as a result
of giving effect hereto.
(b) The execution, delivery and performance of
this Third Amendment and the Third Endorsement will not violate
any provision of any law or regulation, or of any writ or decree
of any court or governmental instrumentality, or of
the Borrower's articles of incorporation or by-laws.
(c) The Borrower has the power to execute, deliver
and perform this Third Amendment and the Third Endorsement and
has taken all necessary corporate action to authorize the
execution, delivery and performance of this Third Amendment and
the Third Endorsement and the performance of the Loan Agreement
and the note as amended thereby.
(d) The execution, delivery and performance of
this Third Amendment and the Third Endorsement does not require
the consent of any other party or the consent, license, approval
or authorization of, or registration or declaration with, any
governmental body, authority, bureau or agency and this Third
Amendment and the Third Endorsement and the Loan Agreement and
the Note as amended by the Third Amendment and the Third
Endorsement, constitute valid obligations of the Borrower,
legally binding upon it and enforceable in accordance with its
terms, subject to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting
creditor's rights.
5. COLLATERAL DOCUMENTS. The Borrower and the Bank
agree that the Note and any loans evidenced thereby, shall
continue to be secured by any Collateral previously granted.
6. CONDITIONS PRECEDENT. This Third Amendment shall
become effective (the "Effective Date") upon the
satisfaction of the following conditions precedent:
(a) This Third Amendment shall have been duly
executed and delivered by the Borrower and the Bank.
(b) The Third Endorsement shall have been
delivered by the Borrower.
(c) All proceedings required to be taken by the
Borrower in connection with the transactions contemplated by this
Third Amendment shall be satisfactory in form and
substance to the Bank and its counsel, and the Bank shall
have received such counterpart originals or certified or
other copies of such documents as the Bank may reasonably
request.
7. GENERAL.
(a) As herein amended or modified, the Loan
Agreement and the Note shall remain in full force and effect and
are hereby ratified, approved and confirmed in all respects.
(b) After the date hereof, all references in the
Loan Agreement, any collateral document and the Note to the "Loan
Agreement," "Agreement" or "Note" shall refer to the Loan
Agreement and the Note as herein amended or modified.
(c) This Third Amendment shall be binding upon
the Borrower, the Bank and their respective successors and
assigns and shall inure to the benefit of the Borrower and
the Bank.
(d) This Third Amendment may be executed in any
number of counterparts. This Third Amendment shall be governed
by the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have caused this
Third Amendment to be duly executed and delivered by their
proper and duly authorized officers as of the day and year
first above written.
MIDLANTIC BANK, N.A.,
formerly Midlantic National Bank
By: __________________________
Title: _______________________
NEW JERSEY STEEL CORPORATION
By:_________________________
Title:______________________
EXHIBIT A
THIRD ENDORSEMENT
The undersigned, NEW JERSEY STEEL CORPORATION, a Delaware
Corporation (the "Borrower") hereby agrees with MIDLANTIC
BANK, N.A., formerly Midlantic National Bank, a national
banking association (the "Bank") that the Borrower's
Revolving Loan Note (Business), dated March 31, 1993
previously amended by an Endorsement and a Second
Endorsement (as amended the "Note") in the face amount of
$20,000,000.00 and payable to the order of the Bank, be and
it hereby is amended by providing that the maximum amount
available to be borrowed thereunder through the extended
maturity of December 31, 1995 shall be $20,000,000.00
(subject further to the provisions of the Agreement limiting
availability to the sum of Borrower's Eligible Accounts and
Inventory).
This Third Endorsement shall not be deemed to extinguish
Borrower's obligation under the Note, nor a replacement,
substitution or novation thereof, but only serves to modify
the Note to provide for the specific amendments to the
maximum dollar amount and rate of interest as set forth
above.
NEW JERSEY STEEL CORPORATION
By:_________________________
Title:______________________
THIRD ENDORSEMENT
The undersigned, NEW JERSEY STEEL CORPORATION, a Delaware
Corporation (the "Borrower") hereby agrees with MIDLANTIC
BANK, N.A., formerly Midlantic National Bank, a national
banking association (the "Bank") that the Borrower's
Revolving Loan Note (Business), dated March 31, 1993
previously amended by an Endorsement and a Second
Endorsement (as amended the "Note") in the face amount of
$20,000,000.00 and payable to the order of the Bank, be and
it hereby is amended by providing that the maximum amount
available to be borrowed thereunder through the extended
maturity of December 31, 1995 shall be $20,000,000.00
(subject further to the provisions of the Agreement limiting
availability to the sum of Borrower's Eligible Accounts and
Inventory).
This Third Endorsement shall not be deemed to extinguish
Borrower's obligation under the Note, nor a replacement,
substitution or novation thereof, but only serves to modify
the Note to provide for the specific amendments to the
maximum dollar amount and rate of interest as set forth
above.
NEW JERSEY STEEL CORPORATION
By:_________________________
Title:______________________
AMDNJSC3
