U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1996
|_| TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number 00-22690
CONSOLIDATED STAINLESS, INC.
State of Incorporation: Delaware
IRS Employer Identification Number: 59-1669166
1601 East Amelia Street
Orlando, Florida 32803
(407) 896-4000
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 |_|.
As of August 5, 1996, Consolidated Stainless, Inc. had outstanding
4,435,866 shares of Common Stock, par value $.01 per share.
<PAGE>
TABLE OF CONTENTS
Item Page (s)
Part I
Financial Information
1. FINANCIAL STATEMENTS
Consolidated Balance Sheets ................................. 1 - 2
Consolidated Statements of Operations ....................... 3
Consolidated Statements of Cash Flows ....................... 4
Notes to Consolidated Financial Statements .................. 5
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ......................... 6 - 10
Part II
Other Information
6. EXHIBITS AND REPORTS ON FORM 8-K ............................... 11
<PAGE>
PART I
Financial Information
Item 1. Financial Statements
CONSOLIDATED STAINLESS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
6/30/96
(Unaudited) 12/31/95
-------------------------
ASSETS
CURRENT:
Cash and cash equivalents $ 619,010 $ 94,319
Accounts Receivable:
Trade, less allowance for possible losses
of $104,289 and $100,000 7,573,413 5,584,943
Other 191,031 55,202
Insurance proceeds receivable 27,042 804,366
Due from stockholders 219,169 193,806
Inventories 27,005,651 22,281,240
Refundable income taxes 151,059 151,059
Prepaid expenses 292,987 300,681
Deferred income taxes 235,500 235,500
-------------------------
TOTAL CURRENT ASSETS 36,314,862 29,701,116
PROPERTY AND EQUIPMENT, less
accumulated depreciation and amortization 16,226,552 11,526,318
OTHER ASSETS:
Deferred financing costs, less accumulated
amortization $29,554 and $33,271 209,740 85,938
Deposits on property and equipment 653,255 599,127
Goodwill, less accumulated amortization 3,669,403 --
Other 316,272 350,520
-------------------------
TOTAL OTHER ASSETS 4,848,670 1,035,585
-------------------------
TOTAL ASSETS $57,390,084 $42,263,019
=========================
See the accompanying notes to the financial statements.
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<PAGE>
CONSOLIDATED STAINLESS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
6/30/96
(Unaudited) 12/31/95
-------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 7,781,759 $ 6,346,754
Book overdrafts 760,502 3,181,657
Accrued expenses:
Payroll and related taxes 682,057 494,509
Interest 231,551 270,765
Income taxes 194,302 194,302
Other 331,485 28,837
Current maturities of long-term debt 1,263,451 481,550
Current portion of capital lease obligations 851,601 778,631
-------------------------
TOTAL CURRENT LIABILITIES 12,096,708 11,777,005
LONG-TERM DEBT, less current maturities 30,079,277 17,097,544
LONG-TERM CAPITAL LEASE OBLIGATIONS,
less current portion 2,005,513 2,293,192
DEFERRED RENT 94,678 --
DEFERRED INCOME TAXES 903,982 570,800
-------------------------
TOTAL LIABILITIES 45,180,158 31,738,541
COMMITMENTS AND CONTIGENCIES -- --
STOCKHOLDERS' EQUITY:
Preferred stock $.01 par - shares authorized
1,000,000; none issued -- --
Common stock $.01 par - shares authorized
15,000,000; issued and outstanding 4,435,866
and 4,212,181 44,359 42,122
Additional paid-in capital 7,617,639 6,300,708
Retained earnings 4,547,928 4,181,648
-------------------------
TOTAL STOCKHOLDERS' EQUITY 12,209,926 10,524,478
-------------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $57,390,084 $42,263,019
=========================
See the accompanying notes to the financial statements.
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<PAGE>
CONSOLIDATED STAINLESS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
6/30/96 6/30/95 6/30/96 6/30/95
(UNAUDITED) (UNAUDITED)
------------------------------- -------------------------------
<S> <C> <C> <C> <C>
SALES $ 12,740,361 $ 12,389,640 $ 27,167,589 $ 24,153,628
COST OF SALES 10,524,911 8,008,466 21,788,066 16,227,529
------------------------------- -------------------------------
Gross profit 2,215,450 4,381,174 5,379,523 7,926,099
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,796,687 1,763,941 3,662,073 3,327,800
------------------------------- -------------------------------
Income from operations 418,763 2,617,233 1,717,450 4,598,299
OTHER INCOME (EXPENSES):
Interest (647,459) (343,546) (1,387,699) (657,840)
Other 240,863 34,766 280,716 66,971
------------------------------- -------------------------------
(406,596) (308,780) (1,106,983) (590,869)
------------------------------- -------------------------------
Income before taxes on income 12,167 2,308,453 610,467 4,007,430
TAXES ON INCOME 4,867 883,510 244,187 1,563,100
------------------------------- -------------------------------
NET INCOME $ 7,300 $ 1,424,943 $ 366,280 $ 2,444,330
=============================== ===============================
EARNINGS PER COMMON SHARE:
Primary $ 0.00 $ 0.32 $ 0.08 $ 0.55
Fully diluted $ 0.00 $ 0.31 $ 0.08 $ 0.54
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
AND SHARE EQUIVALENTS OUTSTANDING:
Primary 4,341,959 4,480,616 4,322,420 4,430,385
Fully diluted 4,398,348 4,524,284 4,378,808 4,524,284
</TABLE>
See the accompanying notes to the financial statements.
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<PAGE>
CONSOLIDATED STAINLESS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
6/30/96 6/30/95
---------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 366,280 $ 2,444,330
Adjustments to reconcile net income to net cash
used for operating activities:
Depreciation and amortization 698,689 437,413
Gain on disposal of property and equipment (23,000) (14,623)
Deferred income taxes 128,182 411,100
Cash provided by (used for):
Accounts receivable (259,299) (2,935,025)
Insurance proceeds receivable 777,324 --
Due from stockholders (25,363) (88,320)
Inventories (39,479) (3,504,446)
Refundable income taxes -- 466,165
Prepaid expenses 68,539 6,366
Accounts payable (1,727,699) 281,353
Due to stockholders -- (45,000)
Deferred rent 94,678 --
Accruals 136,751 639,105
Rental deposits -- (4,000)
---------------------------
Net cash provided by (used for)
operating activities 195,603 (1,905,582)
---------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (3,179,974) (319,234)
Proceeds from the sale of property and
equipment 23,000 36,759
Acquisition of Flow Components (4,093,101) --
Acquisition of 21st Century, net of
cash acquired (135,798) --
Increase in other assets (163,205) (39,489)
---------------------------
Net cash used for investing activities (7,549,078) (321,964)
---------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in book overdrafts (2,421,155) 680,736
Net proceeds under revolving line of credit 4,456,475 --
Proceeds from long-term debt 10,335,282 2,000,000
Repayments of long-term debt (1,614,810) (114,026)
Repayments of capital lease obligations (1,015,181) (260,343)
Deferred financing costs (151,404) (20,374)
Proceeds from exercise of stock options 142,145 --
Proceeds from exercise of stock warrants 351,898 --
Repayment of notes payable (2,205,084) --
Repayments of notes payable to stockholder -- (6,346)
---------------------------
Net cash provided by financing activities 7,878,166 2,279,647
---------------------------
Net increase in cash 524,691 52,101
CASH, beginning of period 94,319 18,456
---------------------------
CASH, end of period $ 619,010 $ 70,557
===========================
See the accompanying notes to the financial statements.
- 4 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The unaudited consolidated financial statements presented herein have been
prepared in accordance with the instructions to Form 10-Q, and do not include
all of the information and disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's Form 10-KSB for
the year ended December 31, 1995. The accompanying consolidated financial
statements have not been examined by an independent accountant in accordance
with generally accepted auditing standards, but in the opinion of management,
such consolidated financial statements include all adjustments, consisting only
of normal recurring adjustments and accruals, to fairly report the Company's
financial position and consolidated results of operations. The consolidated
results of operations for the interim periods shown in this report are not
necessarily indicative of results to be expected for the fiscal year.
In May 1995, the Company announced a 3 for 2 stock split for shareholders of
record on May 31, 1995, payable on June 2, 1995. The earnings per share
calculations and all share information included in these financial statements
have been retroactively adjusted to give effect to the stock split.
On April 22, 1996, the Performance Metals and Flow Components subsidiaries were
merged into the Company. On June 21, 1996, the Company acquired 21st Century
Metals, Inc. as a wholly-owned subsidiary. The final purchase price is based on
the final audit of 21st Century Metals, Inc. as of the closing date. The Company
estimates the purchase price to be $50,000 in cash and 26,300 shares of
Consolidated Stainless, Inc. common stock. For financial statement purposes the
"purchase method" of accounting was used.
NOTE 2 - SUPPLEMENTAL CASH FLOW INFORMATION
The Company incurred long-term debt and capital lease obligations of $778,053
and $605,339 in connection with the purchase of property and equipment during
the six months ended June 30, 1996 and 1995, respectively.
- 5 -
<PAGE>
Consolidated Stainless, Inc.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Sales for the three months ended June 30, 1996 were $12.7 million, reflecting an
increase of 2.8% from the comparable period in 1995. Sales for the six months
ended June 30, 1996 were $27.2 million, resulting in a 12.5% increase from the
first six months of 1995. These increases are primarily a result of the
acquisition of Flow Components, Inc. (a Houston-based manufacturer of stainless
steel forged flanges) which became effective as of January 1, 1996.
Gross profit for the second quarter of 1996 decreased 49.4% to $2.2 million from
$4.4 million for the comparable period in 1995. As a percentage of sales, gross
profit decreased to 17.4% for the second quarter of 1996 from 35.4% for the
comparable period in 1995. These decreases resulted from a period of declining
stainless steel selling prices at the same time that the Company's cost of
inventory continued to reflect higher average purchase prices that could have
been obtained during the period of selling price declines. The corresponding
period in 1995 was a period of increasing stainless steel selling prices. As
stainless steel selling prices decline, the Company's profit margin narrows as
relatively higher cost inventory is sold. The opposite is true as stainless
steel selling prices increase, which occurred in the first half of 1995.
- 6 -
<PAGE>
Selling, general and administrative ("SG&A") expenses, as a percentage of sales,
remained relatively consistent in the second quarter of 1996 with the comparable
period in 1995, declining to 14.1% from 14.2%, respectively. SG&A expenses, as a
percentage of sales, for the six months ended June 30, 1996 decreased to 13.5%
from 13.8% for the first six months of 1995.
Interest expense, as a percentage of sales, increased to 5.1% for the second
quarter of 1996 as compared with 2.8% for the second quarter in 1995. Interest
expense, as a percentage of sales, for the six months ended June 30, 1996 rose
to 5.1% compared to 2.7% for the comparable period of 1995. These increases were
primarily due to an increase in the level of indebtedness resulting from the
financing of the Flow Components' acquisition, and capital improvement projects
such as the buttweld fitting operation, the ornamental tubing operation and
expansion of the Auburndale manufacturing facility.
Other income increased almost six-fold to $0.2 million from approximately
$35,000 for the quarter ended June 30, 1996 compared to the second quarter of
1995, respectively. Other income for the six months ended June 30, 1996
increased more than three-fold to $0.3 million from $0.1 million for the
comparable period in 1995. These increases are primarily due to the Company
- 7 -
<PAGE>
receiving $0.2 million more in insurance proceeds over the amount originally
estimated for a building owned by the Company in New York which was destroyed by
fire in 1995.
Net income decreased to approximately $7,000 for the second quarter of 1996, as
compared with $1.4 million generated during the second quarter of 1995. Net
income for the six months ended June 30, 1996 was $0.4 million as compared to
$2.4 million for the six months ended June 30, 1995. These decreases are largely
attributable to narrower gross profit margins for the first half of 1996 as
compared to the comparable period in 1995.
Liquidity and Capital Resources
On June 18, 1996, the Company amended its Loan Agreement ("Amended Loan
Agreement") with SunTrust Bank, Central Florida, National Association
("SunTrust"), and SouthTrust Bank of Alabama, National Association
("SouthTrust"), as lenders (collectively, the "Lenders"), to increase its
revolving line of credit loan (the "Loan") from the previous amount of
$17,000,000 to $18,000,000 and the inventory cap from $15,000,000 to
$16,000,000. The $4,500,000 term loan with the Lenders remains unchanged. The
borrowing base for all loans under the Amended Loan Agreement remains the same
at 85% of qualified accounts receivable and 65% of eligible inventory. Under the
Amended
- 8 -
<PAGE>
Loan Agreement, the maturity date for the term loan shall continue to be the
earlier of December 31, 1997, or the completion of a public equity offering by
the Company. The maturity date for borrowings under the revolving loan remains
at May 31, 1998. The interest rates on all borrowings under the Amended Loan
Agreement continue to be variable margins over either the fluctuating prime rate
of interest or the fluctuating LIBOR rate. The Loan Agreement contains certain
negative covenants to be observed by the Company, as well as certain financial
ratios which the Company must maintain.
The Company failed to meet the Total Liabilities to Tangible Net Worth and
Funded Net Worth to EBITDA financial ratio covenants in the first quarter of
1996 as set forth in the Loan Agreement. In June 1996, when the Loan Agreement
was amended to increase maximum borrowings, these financial covenant ratio
requirements were modified and the Lenders waived any default of the Loan
Agreement as a result of the Company's prior financial ratio covenant
violations.
In the second quarter of 1996, the Company failed to meet the Interest Coverage
Ratio covenant as set forth in the Amended Loan Agreement. To date, the Lenders
have taken no action to declare the Amended Loan Agreement in default and
accelerate the Company's indebtedness as a result of the Interest Coverage
Ratio covenant violation. The Lenders are considering waiving the default of
the Amended Loan Agreement as a result of the Company's financial ratio covenant
violation.
- 9 -
<PAGE>
Borrowings under the Loan Agreement are secured by all of the assets of the
Company and its subsidiary, other than real property and specified equipment
already subject to liens in favor of other lenders.
At June 30, 1996, approximately $17.5 million was outstanding under the line of
credit owed to the Lenders with an additional $0.2 million reserved for
outstanding letters of credit.
On June 21, 1996, the Company acquired all of the capital stock of 21st Century
Metals, Inc. ("Century"), located in Elk Grove, Illinois, a suburb of Chicago.
Century is a master distributor of stainless steel products. The final purchase
price is based on the final audit of Century as of the closing date. The Company
estimates the purchase price to be $50,000 in cash and 26,300 shares of
Consolidated Stainless, Inc. common stock.
- 10 -
<PAGE>
Consolidated Stainless, Inc.
Part II: Other Information
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
10.1 - First Amendment to Revolving Line of Credit and Term Loan
Agreement, dated June 18, 1996 among SunTrust and SouthTrust (the
"Lenders") and CSI, as borrower.
10.2 - $10,800,000 Revolving Credit Note from CSI to SunTrust.
10.3 - $7,200,000 Revolving Credit Note from CSI to SouthTrust.
10.4 - Supplement to Subsidiary Guarantee Agreement, dated July 22,
1996 between 21st Century Metals, Inc. and SunTrust.
10.5 - Supplement to Security Agreement, dated July 22, 1996 between
21st Century Metals, Inc. and SunTrust and SouthTrust.
10.6 - Supplement to Contribution Agreement, dated July 22, 1996
between 21st Century Metals, Inc. and SunTrust.
10.7 - Joinder by Subsidiary to Revolving Line of Credit and Term Loan
Agreement, dated July 22, 1996 for 21st Century Metals, Inc.
(b) Form 8 - K
The Company filed a Form 8-K dated June 21, 1996 with respect to its
acquisition of 21st Century Metals, Inc.
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED STAINLESS, INC.
(Registrant)
Date: August 13, 1996 By: /s/ Burton R. Chasnov
----------------------------
Burton R. Chasnov
Executive Vice President
Chief Financial Officer
- 12 -
Exhibit 10.1
FIRST AMENDMENT TO REVOLVING LINE OF
------------------------------------
CREDIT AND TERM LOAN AGREEMENT
------------------------------
THIS FIRST AMENDMENT TO REVOLVING LINE OF CREDIT AND TERM LOAN AGREEMENT
(the "First Amendment") dated as of June 18, 1996, by and among CONSOLIDATED
STAINLESS, INC., a Delaware corporation (the "Borrower"), SUNTRUST BANK, CENTRAL
FLORIDA, NATIONAL ASSOCIATION, ("SunTrust") a national banking association,
SOUTHTRUST BANK OF ALABAMA, NATIONAL ASSOCIATION, a national banking association
(collectively, the "Lenders" and individually, a "Lender") and SUNTRUST BANK,
CENTRAL FLORIDA, NATIONAL ASSOCIATION, as Agent for the Lenders (the "Agent").
W I T N E S S E T H:
--------------------
WHEREAS, the Borrower, the Lenders, and the Agent previously entered into
that certain Revolving Line of Credit and Term Loan Agreement dated as of
January 22, 1996 (the "Credit Agreement"); and
WHEREAS, the Borrower has requested the Lenders to increase the aggregate
amount of the Revolving Loan Commitment by $1,000,000.00 to the maximum
aggregate principal amount of $18,000,000.00, to modify certain financial
covenants set forth in the Credit Agreement and to otherwise modify certain
terms of the Credit Agreement; and
WHEREAS, the Lenders and the Agent have agreed to so increase the aggregate
amount of the Revolving Loan Commitment and modify the Credit Agreement to
provide for the foregoing, subject to the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Amendments to the Credit Agreement. The Credit
----------------------------------
Agreement is hereby amended as follows:
(a) The definition of the term "Borrowing Base" as contained in Section
1.1 of the Credit Agreement is hereby deleted in its entirety and, in lieu
thereof, there is substituted the following:
"'Borrowing Base' shall mean:
--------------
(a) until such time as the Term Loans have been paid in full, the
greatest amount that may be borrowed or retained by the Borrower in respect
of the Revolving Loans in the aggregate, with such maximum
<PAGE>
amount to equal, at any date of calculation, the amount determined
by adding together:
(i) eighty-five percent (85%) of the face value of Qualified
Accounts; and
(ii) the lesser of (A) sixty-five percent (65%) of the
Eligible Inventory Value of the Inventory, or (B) $16,000,000.00; provided,
--------
however, that the reliance on work-in-process Inventory shall not exceed
-------
$2,000,000.00;
and subtracting therefrom:
(iii) the principal balance then outstanding in respect of the
Term Loan; or
(b) after the Term Loans have been paid in full, the greatest
amount that may be borrowed or retained by the Borrower in respect of the
Revolving Loans in the aggregate, with such maximum amount to equal, at any
date of calculation, the amount determined by adding together:
(i) eighty-five percent (85%) of the
face value of Qualified Accounts; and
(ii) the lesser of (A) fifty percent (50%) of the Eligible
Inventory Value of the Inventory or (B) $11,500,000.00; provided, however,
-----------------
that the reliance on work-in-process Inventory shall not exceed
$2,000,000.00;
provided, however, that the Borrower shall not in any event be permitted to
borrow or retain more than the Loan Limit, irrespective of the size of the
Borrowing Base."
(b) The definition of the term "Commitment Fees" as contained in
Section 1.1 of the Credit Agreement is hereby deleted in its entirety and, in
lieu thereof, there is substituted the following:
"'Commitment Fees' shall mean the one-time, non-refundable fees paid by
---------------
the Borrower to the Agent for the Loans as follows: (a) $10,000.00 for
the initial extension of the Revolving Loan, which was paid on the
Closing Date; (b) $17,500.00 for the Term Loan, which was paid on the
Closing Date; and (c) $5,000.00 for the $1,000,000.00 increase to the
aggregate Revolving Loan Commitment, payable on the date of the closing
of such increase."
2
<PAGE>
(c) The definition of the term "Loan Limit" as contained in Section 1.1
of the Credit Agreement is hereby deleted in its entirety and, in lieu thereof,
there is substituted the following:
"'Loan Limit' shall mean the greatest principal balance permitted to be
----------
outstanding at any time as Revolving Loans, such amount never to exceed
the lesser of (a) $18,000,000.00 or (b) the Borrowing Base."
(d) The definition of the term "Revolving Loan Commitment" as contained
in Section 1.1 of the Credit Agreement is hereby deleted in its entirety and, in
lieu thereof, there is substituted the following:
"'Revolving Loan Commitment' shall mean, at any time for any Lender,
-------------------------
the amount of such Lender's commitment for Revolving Loans, aggregating
up to $18,000,000.00 as to all such Lenders, which are set forth
opposite such Lender's name on the signature pages hereof, as the same
may be decreased from time to time as a result of any reduction thereof
pursuant to Section 2.7 hereof, any assignment thereof pursuant to
Section 11.6 hereof, or any amendment thereof pursuant to Section 11.2
hereof."
(e) Section 4.5(c) of the Credit Agreement is hereby deleted in its
entirety and, in lieu thereof, there is substituted the following:
"(c) Commitment Fees. Borrower shall pay to Agent, when due, the
---------------
Commitment Fees, all of which Commitment Fees are for the account of
and distribution of the respective Pro Rata Share to each Lender."
(f) Paragraphs (a), (b) and (d) of Section 7.8 of the Credit Agreement
are hereby deleted in their entirety and, in lieu thereof, there is substituted
the following:
"(a) Total Liabilities to Tangible Net Worth Ratio. The Borrower's
---------------------------------------------
Total Liabilities to Tangible Net Worth Ratio shall not exceed (i)
7.00:1 as at June 30, 1996, (ii) 6.00:1 as at September 30, 1996 and
(iii) 3.00:1 as at fiscal year end 1996 and all times thereafter,
tested quarterly; provided, however, if the Borrower completes a
private placement of subordinated debt by September 30, 1996 and raises
at least $10,000,000 through such placement, the Borrower's Total
Liabilities to Tangible Net Worth Ratio shall not exceed 3.25:1 as at
September 30, 1996.
3
<PAGE>
(b) Funded Debt to EBITDA. The Borrower's Funded Debt to EBITDA
---------------------
Ratio shall not exceed (i) 7.75:1 as at June 30, 1996, (ii) 7.00:1 as
at September 30, 1996 and (iii) 5.00:1 as at December 31, 1996 and at
all times thereafter, tested quarterly, calculated on a rolling
four-quarter basis.
(d) Interest Coverage Ratio. The Borrower's Interest Coverage
-----------------------
Ratio shall not exceed (i) 1.5:1 as at June 30, 1996, (ii), 1.40:1 as
at September 30, 1996 and (ii) 1.50:1 as at fiscal year end 1996 and
all times thereafter, tested quarterly, calculated on a rolling
four-quarter basis. "
(g) Section 8.21 of the Credit Agreement is hereby deleted in its
entirety and, in lieu thereof, there is substituted the following:
"Section 8.21 Capital Expenditures. Without the prior written
--------------------
consent of the Agent and the Required Lenders, expend, in any fiscal
year, in excess of $500,000.00 in the aggregate for capital assets
other than those expenditures disclosed to the Agent in the 1996
Capital Expenditures Budget. The Borrower will seek and must obtain the
prior written consent of the Agent and the Required Lenders for each
individual capital expenditure in excess of $100,000.00 and any such
expenditures consented to by the Agent and the Required Lenders shall
not count against the $500,000.00 limitation described in the preceding
sentence."
(h) The Revolving Loan Commitments of the Lenders shown on the
signature pages to the Credit Agreement shall be amended as follows:
Lender Revolving Loan Commitment
------ -------------------------
SunTrust $10,800,000.00
SouthTrust $ 7,200,000.00
2. Revolving Credit Notes. Borrower has executed new Revolving Credit
----------------------
Notes, in the form of Exhibit "A" attached to the Credit Agreement, dated of
even date herewith, in favor of the Lenders.
3. Consent to Acquisition of TFCMI. The Credit Agreement requires the
-------------------------------
Borrower to obtain the consent of the Required Lenders to the acquisition of any
new Subsidiary. The Lenders hereby conditionally approve the Borrower's intended
acquisition of Twenty First Century Metals, Inc. ("TFCMI"), subject to the
following:
(a) the receipt and satisfactory review by the Lenders of the contract
for such purchase;
4
<PAGE>
(b) the compliance by TFCMI with the provisions of Section 7.10 of the
Credit Agreement simultaneously with or as soon as possible after the
acquisition, but in no event later than thirty (30) Days after the consummation
of the acquisition (including, without limitation, joinder in the Credit
Agreement, the Contribution Agreement, the Subsidiary Guaranty Agreement and the
Security Agreement and the execution and delivery of appropriate UCC Financing
Statements);
(c) the payment in full of any existing indebtedness of TFCMI to other
lenders for borrowed money and the granting of and perfection of a first
priority security interest in all the assets of TFCMI to the Lenders within
ninety (90) days after the completion of the acquisition; and
(d) the merger of TFCMI into the Borrower within ninety (90) Days after
the consummation of the acquisition.
The Borrower hereby acknowledges and agrees that the assets of TFCMI shall not
be included in the Borrowing Base until the Lenders have a valid, perfected
first priority security interest therein and such assets are otherwise eligible
to be included in the Borrowing Base.
4. Consent to Subordinated Debt. The Credit Agreement requires the Borrower
----------------------------
to obtain the consent of the Required Lenders to any new Subordinated Debt. The
Lenders hereby conditionally approve the Borrower's intended private placement
of subordinated debt in the amount of $10,000,000, subject to the review and
approval of the terms and conditions thereof by the Lenders. The Borrower shall
complete a subordinated debt/equity offering, yielding at least $10,000,000 to
the Borrower, by December 31, 1996, the proceeds of which shall be used by the
Borrower to reduce its indebtedness for borrowed money, including the borrowings
under the Revolving Loans.
5. Waiver of Covenant Defaults. The Borrower is currently in default of the
---------------------------
Total Liabilities to Tangible Net Worth Ratio and the Funded Debt to EBITDA
Ratio requirements set forth in the Credit Agreement for the fiscal quarter
ended March 31, 1996. The Lenders hereby waive such defaults.
6. Conditions to Effectiveness. The effectiveness of this First Amendment
---------------------------
is subject to the satisfaction of the following conditions:
(a) The Agent shall have received the following, in form and substance
reasonably satisfactory in all respects to the Agent:
(i) the duly executed counterparts of this
First Amendment;
5
<PAGE>
(ii) the duly executed Revolving Notes evidencing the increased
Revolving Loan Commitments;
(iii) a Certificate of the Secretary or Assistant Secretary of the
Borrower, (A) certifying the name, title and true signature of each officer
of the Borrower executing the First Amendment and the Notes and (B)
attaching and certifying copies of the Resolutions of the Board of
Directors of the Borrower, authorizing as applicable the increased
borrowing and the execution, delivery and performance of the First
Amendment and the Notes;
(iv) the favorable opinion of counsel to the Borrower, in a form
acceptable to the Agent and addressed to the Agent and each of the Lenders;
(v) receipt of the most recent annual audited financial statements
and quarterly financial statements of the Borrower and its Subsidiaries, on
a consolidated basis, and the absence of any change in the financial
condition of the Borrower and its Subsidiaries as reflected in such
financial statements which would have a Materially Adverse Effect.
(b) In addition, the following conditions shall have been satisfied or
shall exist:
(i) there shall exist no Default or Event of Default;
(ii) all representations and warranties contained in the Credit
Agreement shall continue to be true and correct in all material respects
except those which are made as of a specific date; and
(iii) there shall be no action or proceeding instituted or pending
before any court or other governmental authority or, to the knowledge of
the Borrower, threatened which reasonably could be expected to have a
Materially Adverse Effect.
(c) Receipt by the Agent of a commitment fee in the amount of $5,000.00
for the increase to the Revolving Loan Commitment.
7. Counterparts. This First Amendment may be executed in any number of
------------
counterparts, each of which shall be deemed an original and shall be binding
upon all parties, their successors and permitted assigns, all of which taken
together shall constitute one and the same instrument and any of the parties
hereto may execute this First Amendment by signing any such counterpart.
6
<PAGE>
8. Capitalized Terms. All capitalized terms contained herein shall have the
-----------------
meanings assigned to them in the Credit Agreement unless the context herein
otherwise dictates or enlists different meanings as separately assigned to said
terms herein.
9. Ratification of Credit Documents; Miscellaneous. The Credit Agreement,
-----------------------------------------------
as amended hereby, and all of the other Credit Documents, shall remain in full
force and effect and this First Amendment shall not be deemed a novation. Each
and every reference to the Credit Agreement and the other Credit Documents shall
be deemed to refer to the Credit Agreement as amended by this First Amendment.
The Borrower hereby acknowledges and represents that the Credit Agreement and
the other Credit Documents are, as of the date hereof, valid and enforceable in
accordance with their respective terms and are not subject to any defenses,
counterclaims or rights of set-off whatsoever except that enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, arrangement,
moratorium, fraudulent conveyance or other similar laws and the effect of
general principles of equity (regardless of whether enforcement is considered in
proceedings at law or in equity).
10. Governing Law. THIS FIRST AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO
CONFLICT OF LAW PRINCIPLES.
11. Counterparts. This First Amendment may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this First Amendment as of
the day and year first above written.
BORROWER:
Signed, sealed and delivered CONSOLIDATED STAINLESS, INC.
in the presence of:
/s/ John By: /s/ Stephen A. Weiss,
- ------------------------------- -------------------------------
Signature of Witness Stephen A. Weiss,
Vice President-
John Administration
- -------------------------------
Print Name of Witness
/s/ Anthony J. Marsico (CORPORATE SEAL)
- ------------------------------- ALAN E. MANSFIELD
Signature of Witness Notary Public, State of New York
No. 31-4701562
Anthony J. Marsico Qualified in New York County
- ------------------------------- Commission Expires September 30, 1997
Print Name of Witness
/s/ Alan E. Mansfield
7
<PAGE>
LENDERS:
SUNTRUST BANK, CENTRAL
FLORIDA, NATIONAL ASSOCIATION
By:__________________________
W. Clifton Bargeron,
Assistant Vice President
SOUTHTRUST BANK OF ALABAMA,
NATIONAL ASSOCIATION
By:__________________________
Name:_____________________
Title:____________________
8
<PAGE>
AFFIDAVIT OF OUT-OF-STATE DELIVERY
----------------------------------
STATE OF GEORGIA
COUNTY OF FULTON
I, Susie Pilcher, being first duly sworn, upon my oath, depose and say:
1. That I am a Administrative Assistant of SunTrust Bank, Atlanta.
2. That on the 20th day of June, 1996, I received via Federal Express, that
certain First Amendment to Revolving Line of Credit and Term Loan Agreement (The
"First Amendment") dated June 18, 1996 by and among Consolidated Stainless, Inc.
as the Borrower (the "Borrower") and SunTrust Bank, Central Florida, National
Association, individually and as Agent, and Southtrust Bank of Alabama, National
Association (collectively, the "Leners") as the Lenders.
3. That, I accepted delivery of the First Amendment on behalf of the
Lenters in Atlanta, Georgia.
/s/ Susie Pilcher
------------------------------
Name: Susie Pilcher
Title: Administrative Assistant
Subscribed and sworn before me this 20th day of June, 1996.
/s/ Sherry L. Sikes
--------------------------------------------------
Signature of Notary Public - State of Georgia
Sherry L. Sikes
--------------------------------------------------
Print, Type or Stamp Commissioned Name of Notary
Public
Personally Known:__X__ or Produced
Identification:______
Type of Identification:___________________________
(NOTARIAL SEAL)
Notary Public, Henry County, Georgia
My Commission Expires March 6, 2000
Exhibit 10.2
REVOLVING CREDIT NOTE
June 18, 1996 $10,800,000.00
New York, New York
FOR VALUE RECEIVED, the undersigned, CONSOLIDATED STAINLESS, INC., a
Delaware corporation (the "Borrower"), promises to pay to the order of SUNTRUST
BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, a national banking association (the
"Lender") at the principal office of the Lender at 200 South Orange Avenue,
Orlando, Florida 32801, or at such other place as the holder hereof may
designate by notice in writing to Borrower, in immediately available funds in
lawful money of the United States of America, on the sooner of (i) the
Termination Date (as defined in the Loan Agreement hereinafter described), or
(ii) acceleration of this indebtedness as hereinafter provided, the lesser of
(i) the principal sum of Ten Million Eight Hundred Thousand and No/100 Dollars
($10,800,000.00) or (ii) so much thereof as shall have been from time to time
disbursed hereunder by the Lender in accordance with that certain Revolving Line
of Credit and Term Loan Agreement dated as of January 22, 1996, as amended by a
First Amendment dated as of June 18, 1996 (as amended, and as may be amended,
modified or supplemented from time to time in the future, the "Loan Agreement")
by and among the Borrower, the Lender, and the other Lenders which are parties
thereto from time to time, and not theretofore repaid, as shown on the grid
schedule attached hereto (the "Grid Schedule").
In addition to principal, Borrower agrees to pay interest on the principal
amounts disbursed hereunder from time to time from the date of each disbursement
until paid at such simple rates of interest per annum and upon such dates as
provided for in the Loan Agreement. Interest shall accrue on the outstanding
principal balance from the date hereof up to and through the date on which all
principal and interest hereunder is paid in full, and shall be computed on the
basis of the actual number of days elapsed in a 360-day year. Such interest is
to be paid to the Lender at its Lending Office or as otherwise specified in the
Loan Agreement.
This Revolving Credit Note ("Note") evidences a loan incurred pursuant to
the terms and conditions of the Loan Agreement to which reference is hereby made
for a full and complete description of such terms and conditions. All
capitalized terms used in this Note shall have the same meanings as set forth in
the Loan Agreement.
Lender shall at all times have a right of set-off against any deposit
balances of Borrower in the possession of the Lender and the Lender may apply
the same against payment of this Note or any other Obligations of Borrower to
the Lender as
<PAGE>
permitted in the Loan Agreement. The payment of any indebtedness evidenced by
this Note prior to the Termination Date or demand shall not affect the
enforceability of this Note as to any future, different or other indebtedness
incurred hereunder by the Borrower. In the event the indebtedness evidenced by
this Note is collected by legal action or through an attorney-at-law, the Lender
shall be entitled to recover from Borrower all costs of collection, including,
without limitation, reasonable attorneys' fees if collected by or through an
attorney-at-law. The foregoing shall also include recovery by the Lender of any
such costs, including reasonable attorneys' fees, in any bankruptcy or similar
proceeding.
Borrower acknowledges that the actual crediting of the amount of any
disbursement under the Loan Agreement to an account of Borrower or recording
such amount in the Grid Schedule shall, in the absence of manifest error,
constitute presumptive evidence of such disbursement and that such advance was
made and borrowed under the Loan Agreement. Such account records or Grid
Schedule shall constitute, in the absence of manifest error, presumptive
evidence of principal amounts outstanding and the payments made under the Loan
Agreement at any time and from time to time, provided that the failure of Lender
or any holder hereof to record on the Grid Schedule or in such account the type
or amount of any advance shall not affect the obligation of the undersigned to
repay such amount together with interest thereon in accordance with this Note
and the Loan Agreement.
Upon the existence or occurrence of any Event of Default as defined in the
Loan Agreement, the principal and all accrued interest hereof shall
automatically become, or may be declared, due and payable in the manner and with
the effect provided in the Loan Agreement.
Prepayment of the Note in part or in whole is permitted subject to the
conditions set forth in the Loan Agreement.
Failure or forbearance of Lender to exercise any right hereunder, or
otherwise granted by the Loan Agreement or by law, shall not affect or release
the liability of Borrower hereunder, and shall not constitute a waiver of such
right unless so stated by Lender in writing. This Note shall be deemed to be
made under, and shall be construed in accordance with and governed by, the laws
of the State of Florida. Time is of the essence of this Note.
This Note is secured by the Collateral as described in the Loan Agreement.
EXCEPT AS MAY BE EXPRESSLY REQUIRED IN THE LOAN AGREEMENT, PRESENTMENT FOR
PAYMENT, NOTICE OF DISHONOR AND PROTEST ARE HEREBY WAIVED.
2
<PAGE>
Executed under hand and seal of the Borrower as of the day and year first
above written.
CONSOLIDATED STAINLESS, INC.
By: /s/ Stephen A. Weiss,
-----------------------------------
Stephen A. Weiss,
Vice President-Administration
(CORPORATE SEAL)
ACKNOWLEDGMENT
--------------
STATE OF NEW YORK
COUNTY OF NEW YORK
On this the 18th day of June, 1996, personally appeared Stephen A. Weiss,
the Vice President-Administration of CONSOLIDATED STAINLESS, INC., a Delaware
corporation, on behalf of the corporation, and before me executed this Revolving
Credit Note in the principal amount of TEN MILLION EIGHT HUNDRED THOUSAND AND
NO/100 DOLLARS ($10,800,000.00), dated June 18, 1996, payable by CONSOLIDATED
STAINLESS, INC. to SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ ALAN E. MANSFIELD
---------------------------------------------
Signature of Notary Public, State of New York
---------------------------------------------
(Print, Type or Stamp Commissioned Name of Notary Public)
Personally known _X_; OR Produced identification ____ Type of
identification produced:
(NOTARIAL SEAL)
ALAN E. MANSFIELD
Notary Public, State of New York
No. 31-4701562
Qualified in New York County
Commission Expires September 30, 1997
3
<PAGE>
GRID SCHEDULE
-------------
REVOLVING CREDIT NOTE
ADVANCES BEARING INTEREST
AT THE PRIME RATE
============================================================================
Unpaid
Principal
Amount of Bearing Interest
Amount of Advance at the Above- Notation
Date Due Date Advance Repaid Referenced Rate Made by
============================================================================
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
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- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
============================================================================
4
<PAGE>
GRID SCHEDULE
-------------
REVOLVING CREDIT NOTE
ADVANCES BEARING INTEREST
AT LIBOR (30 DAYS)
============================================================================
Unpaid
Principal
Amount of Bearing Interest
Amount of Advance at the Above- Notation
Date Due Date Advance Repaid Referenced Rate Made by
============================================================================
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
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- ----------------------------------------------------------------------------
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- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
============================================================================
5
<PAGE>
GRID SCHEDULE
-------------
REVOLVING CREDIT NOTE
ADVANCES BEARING INTEREST
AT LIBOR (60 DAYS)
============================================================================
Unpaid
Principal
Amount of Bearing Interest
Amount of Advance at the Above- Notation
Date Due Date Advance Repaid Referenced Rate Made by
============================================================================
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
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- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
============================================================================
6
<PAGE>
GRID SCHEDULE
-------------
REVOLVING CREDIT NOTE
ADVANCES BEARING INTEREST
AT LIBOR (90 DAYS)
============================================================================
Unpaid
Principal
Amount of Bearing Interest
Amount of Advance at the Above- Notation
Date Due Date Advance Repaid Referenced Rate Made by
============================================================================
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
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- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
============================================================================
7
<PAGE>
GRID SCHEDULE
-------------
REVOLVING CREDIT NOTE
ADVANCES BEARING INTEREST
AT LIBOR (120 DAYS)
============================================================================
Unpaid
Principal
Amount of Bearing Interest
Amount of Advance at the Above- Notation
Date Due Date Advance Repaid Referenced Rate Made by
============================================================================
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
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============================================================================
8
<PAGE>
AFFIDAVIT OF OUT-OF-STATE DELIVERY
----------------------------------
STATE OF GEORGIA
COUNTY OF FULTON
I, Susie Pilcher, being first duly sworn, upon my oath, depose and say:
(a) That I am a Administrative Assistant of SunTrust Bank, Atlanta.
(b) That on the 20th day of June, 1996, I received via Federal
Express, that certain Revolving Credit Note, dated June 18, 1996, in the face
amount of Ten Million Eight Hundred Thousand and No/100 Dollars ($10,800,000.00)
payable by CONSOLIDATED STAINLESS, INC., as Maker, to SUNTRUST BANK, CENTRAL
FLORIDA, NATIONAL ASSOCIATION, as Payee (the "Note").
(c) That, I accepted delivery of the Note on behalf of the Payee in
Atlanta, Georgia.
/s/ Susie Pilcher
------------------------------
Name: Susie Pilcher
Title: Administrative Assistant
Subscribed and sworn before me this 20th day of June, 1996.
/s/ Sherry L. Sikes
--------------------------------------------------
Signature of Notary Public - State of Georgia
Sherry L. Sikes
--------------------------------------------------
Print, Type or Stamp Commissioned Name of Notary
Public
Personally Known:__X__ or Produced
Identification:______
Type of Identification:___________________________
(NOTARIAL SEAL)
9
Exhibit 10.3
REVOLVING CREDIT NOTE
---------------------
June 18, 1996 $7,200,000.00
New York, New York
FOR VALUE RECEIVED, the undersigned, CONSOLIDATED STAINLESS, INC., a
Delaware corporation (the "Borrower"), promises to pay to the order of
SOUTHTRUST BANK OF ALABAMA, NATIONAL ASSOCIATION, a national banking association
(the "Lender") at the principal office of the Lender at 420 North 20th Street,
Birmingham, Alabama 35203, or at such other place as the holder hereof may
designate by notice in writing to Borrower, in immediately available funds in
lawful money of the United States of America, on the sooner of (i) the
Termination Date (as defined in the Loan Agreement hereinafter described), or
(ii) acceleration of this indebtedness as hereinafter provided, the lesser of
(i) the principal sum of Seven Million Two Hundred Thousand and No/100 Dollars
($7,200,000.00) or (ii) so much thereof as shall have been from time to time
disbursed hereunder by the Lender in accordance with that certain Revolving Line
of Credit and Term Loan Agreement dated as of January 22, 1996, as amended by a
First Amendment dated as of June 18, 1996 (as amended, and as may be amended,
modified or supplemented from time to time in the future, the "Loan Agreement")
by and among the Borrower, the Lender, and the other Lenders which are parties
thereto from time to time, and not theretofore repaid, as shown on the grid
schedule attached hereto (the "Grid Schedule").
In addition to principal, Borrower agrees to pay interest on the principal
amounts disbursed hereunder from time to time from the date of each disbursement
until paid at such simple rates of interest per annum and upon such dates as
provided for in the Loan Agreement. Interest shall accrue on the outstanding
principal balance from the date hereof up to and through the date on which all
principal and interest hereunder is paid in full, and shall be computed on the
basis of the actual number of days elapsed in a 360-day year. Such interest is
to be paid to the Lender at its Lending Office or as otherwise specified in the
Loan Agreement.
This Revolving Credit Note ("Note") evidences a loan incurred pursuant to
the terms and conditions of the Loan Agreement to which reference is hereby made
for a full and complete description of such terms and conditions. All
capitalized terms used in this Note shall have the same meanings as set forth in
the Loan Agreement.
Lender shall at all times have a right of set-off against any deposit
balances of Borrower in the possession of the Lender and the Lender may apply
the same against payment of this Note or any other Obligations of Borrower to
the Lender as
<PAGE>
permitted in the Loan Agreement. The payment of any indebtedness evidenced by
this Note prior to the Termination Date or demand shall not affect the
enforceability of this Note as to any future, different or other indebtedness
incurred hereunder by the Borrower. In the event the indebtedness evidenced by
this Note is collected by legal action or through an attorney-at-law, the Lender
shall be entitled to recover from Borrower all costs of collection, including,
without limitation, reasonable attorneys' fees if collected by or through an
attorney-at-law. The foregoing shall also include recovery by the Lender of any
such costs, including reasonable attorneys' fees, in any bankruptcy or similar
proceeding.
Borrower acknowledges that the actual crediting of the amount of any
disbursement under the Loan Agreement to an account of Borrower or recording
such amount in the Grid Schedule shall, in the absence of manifest error,
constitute presumptive evidence of such disbursement and that such advance was
made and borrowed under the Loan Agreement. Such account records or Grid
Schedule shall constitute, in the absence of manifest error, presumptive
evidence of principal amounts outstanding and the payments made under the Loan
Agreement at any time and from time to time, provided that the failure of Lender
or any holder hereof to record on the Grid Schedule or in such account the type
or amount of any advance shall not affect the obligation of the undersigned to
repay such amount together with interest thereon in accordance with this Note
and the Loan Agreement.
Upon the existence or occurrence of any Event of Default as defined in the
Loan Agreement, the principal and all accrued interest hereof shall
automatically become, or may be declared, due and payable in the manner and with
the effect provided in the Loan Agreement.
Prepayment of the Note in part or in whole is permitted subject to the
conditions set forth in the Loan Agreement.
Failure or forbearance of Lender to exercise any right hereunder, or
otherwise granted by the Loan Agreement or by law, shall not affect or release
the liability of Borrower hereunder, and shall not constitute a waiver of such
right unless so stated by Lender in writing. This Note shall be deemed to be
made under, and shall be construed in accordance with and governed by, the laws
of the State of Florida. Time is of the essence of this Note.
This Note is secured by the Collateral as described in the Loan Agreement.
EXCEPT AS MAY BE EXPRESSLY REQUIRED IN THE LOAN AGREEMENT, PRESENTMENT FOR
PAYMENT, NOTICE OF DISHONOR AND PROTEST ARE HEREBY WAIVED.
2
<PAGE>
Executed under hand and seal of the Borrower as of the day and year first
above written.
CONSOLIDATED STAINLESS, INC.
By: /s/ Stephen A. Weiss,
--------------------------------------
Stephen A. Weiss,
Vice President-Administration
(CORPORATE SEAL)
ACKNOWLEDGMENT
--------------
STATE OF NEW YORK
COUNTY OF NEW YORK
On this the 18th day of June, 1996, personally appeared Stephen A. Weiss,
Vice President-Administration of CONSOLIDATED STAINLESS, INC., a Delaware
corporation, on behalf of the corporation, and before me executed this Revolving
Credit Note in the principal amount of SEVEN MILLION TWO HUNDRED THOUSAND AND
NO/100 DOLLARS ($7,200,000.00), dated June 18, 1996, payable by CONSOLIDATED
STAINLESS, INC. to SOUTHTRUST BANK OF ALABAMA, NATIONAL ASSOCIATION.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ ALAN E. MANSFIELD
---------------------------------------------
Signature of Notary Public, State of New York
---------------------------------------------
(Print, Type or Stamp Commissioned Name of Notary Public)
Personally known _X_; OR Produced identification ____ Type of
identification produced:
(NOTARIAL SEAL)
ALAN E. MANSFIELD
Notary Public, State of New York
No. 31-4701562
Qualified in new York County
Commission Expires September 30, 1996
3
<PAGE>
GRID SCHEDULE
-------------
REVOLVING CREDIT NOTE
ADVANCES BEARING INTEREST
AT THE PRIME RATE
============================================================================
Unpaid
Principal
Amount of Bearing Interest
Amount of Advance at the Above- Notation
Date Due Date Advance Repaid Referenced Rate Made by
============================================================================
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
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- ----------------------------------------------------------------------------
============================================================================
4
<PAGE>
GRID SCHEDULE
-------------
REVOLVING CREDIT NOTE
ADVANCES BEARING INTEREST
AT LIBOR (30 DAYS)
============================================================================
Unpaid
Principal
Amount of Bearing Interest
Amount of Advance at the Above- Notation
Date Due Date Advance Repaid Referenced Rate Made by
============================================================================
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
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- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
============================================================================
5
<PAGE>
GRID SCHEDULE
-------------
REVOLVING CREDIT NOTE
ADVANCES BEARING INTEREST
AT LIBOR (60 DAYS)
============================================================================
Unpaid
Principal
Amount of Bearing Interest
Amount of Advance at the Above- Notation
Date Due Date Advance Repaid Referenced Rate Made by
============================================================================
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
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- ----------------------------------------------------------------------------
============================================================================
6
<PAGE>
GRID SCHEDULE
-------------
REVOLVING CREDIT NOTE
ADVANCES BEARING INTEREST
AT LIBOR (90 DAYS)
============================================================================
Unpaid
Principal
Amount of Bearing Interest
Amount of Advance at the Above- Notation
Date Due Date Advance Repaid Referenced Rate Made by
============================================================================
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
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============================================================================
7
<PAGE>
GRID SCHEDULE
-------------
REVOLVING CREDIT NOTE
ADVANCES BEARING INTEREST
AT LIBOR (120 DAYS)
============================================================================
Unpaid
Principal
Amount of Bearing Interest
Amount of Advance at the Above- Notation
Date Due Date Advance Repaid Referenced Rate Made by
============================================================================
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
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============================================================================
8
<PAGE>
AFFIDAVIT OF OUT-OF-STATE DELIVERY
----------------------------------
STATE OF GEORGIA
COUNTY OF FULTON
I, Susie Pilcher, being first duly sworn, upon my oath, depose and say:
(a) That I am a Administrative Assisant of SunTrust Bank, Atlanta.
(b) That on the 20th day of June, 1996, I received via Federal
Express, that certain Revolving Credit Note, dated June 18, 1996, in the face
amount of Seven Million Two Hundred Thousand and No/100 Dollars ($7,200,000.00)
payable by Consolidated Stainless, Inc. as Maker, to SOUTHTRUST BANK OF ALABAMA,
NATIONAL ASSOCIATION, as Payee (the "Note").
(c) That, I accepted delivery of the Note on behalf of the Payee in
Atlanta, Georgia.
/s/ Susie Pilcher
------------------------------
Name: Susie Pilcher
Title: Administrative Assisant
Subscribed and sworn before me this 20th day of June, 1996.
/s/ Sherry L. Sikes
--------------------------------------------------
Signature of Notary Public - State of Georgia
Sherry L. Sikes
--------------------------------------------------
Print, Type or Stamp Commissioned Name of Notary
Public
Personally Known: _X_ or Produced
Identification:______
Type of Identification:___________________________
(NOTARIAL SEAL)
9
Exhibit 10.4
SUPPLEMENT TO CONTRIBUTION AGREEMENT
------------------------------------
SUPPLEMENT NO. 1 dated as of July 22, 1996, to the CONTRIBUTION AGREEMENT
dated as of January 22, 1996 (the "Contribution Agreement") by and among
CONSOLIDATED STAINLESS, INC., a Delaware corporation ("the Borrower"),
PERFORMANCE METALS, INC., a Texas corporation and FLOW COMPONENTS, INC., a Texas
corporation (together with any successors, referred to herein individually as a
"Guarantor" and collectively as "Guarantors") and SUNTRUST BANK, CENTRAL
FLORIDA, NATIONAL ASSOCIATION, individually and as Agent (the "Agent") for the
Lenders parties to the Revolving Line of Credit and Term Loan Agreement dated as
of January 22, 1996, among the Borrower, the Lenders and the Agent (as amended,
modified or supplemented from time to time, the "Loan Agreement"; capitalized
terms used herein but not otherwise defined herein have the meanings assigned to
such terms in the Loan Agreement or the Contribution Agreement, as the case may
be).
Guarantors have entered into the Contribution Agreement in order to induce
the Lenders to make the Loans. Pursuant to Section 7.10 of the Loan Agreement,
each Subsidiary incorporated in the United States that was not in existence or
incorporated in the United States on the date thereof is required to enter into
the Contribution Agreement as a Guarantor upon becoming a Subsidiary of the
Borrower incorporated in the United States. Section 14 of the Contribution
Agreement provides that additional Subsidiaries of the Borrower may become
Guarantors under the Contribution Agreement by execution and delivery of an
instrument in the form of this Supplement. The undersigned ("New Guarantor") is
a Subsidiary of the Borrower incorporated in the United States and is executing
this Supplement in accordance with the requirements of the Loan Agreement to
become a Guarantor under the Contribution Agreement in order to induce the
Lenders to make additional Loans and as consideration for the Loans previously
made.
Accordingly, Agent and New Guarantor agree as follows:
SECTION 1. Joinder to Contribution Agreement. In accordance with Section 14
---------------------------------
of the Contribution Agreement, New Guarantor by its signature below becomes a
Guarantor under the Contribution Agreement with the same force and effect as if
originally named therein as a Guarantor, and New Guarantor hereby agrees to all
the terms and provisions of the Contribution Agreement applicable to it as a
Guarantor thereunder. Each reference to a "Guarantor" in the Contribution
Agreement shall be deemed to include New Guarantor. The Contribution Agreement
is hereby incorporated herein by reference.
SECTION 2. Enforceability. This Supplement has been duly authorized,
--------------
executed and delivered by New Guarantor and
August 14, 1996 9:16PM
<PAGE>
constitutes a legal, valid and binding obligation of New Guarantor, enforceable
against it in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors rights generally and by general principles of
equity (regardless of whether such enforceability is considered in a proceeding
at law or in equity).
SECTION 3. Counterparts. This Supplement and any amendments, waivers,
------------
consents or supplements may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
shall constitute but one and the same instrument.
SECTION 4. Effective Date. This Supplement shall become effective upon the
--------------
execution of a counterpart hereof by each of the parties hereto, and written or
telephonic notification of such execution and authorization of delivery thereof
has been received by New Guarantor and Agent.
SECTION 5. Ratification of Contribution Agreement. Except as expressly
--------------------------------------
supplemented hereby, the Contribution Agreement shall remain in full force and
effect.
SECTION 6. CHOICE OF LAW. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND SHALL
-------------
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA
WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
SECTION 7. Severability. In case any provision in or obligation under this
------------
Supplement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 8. Notices. All communications and notices hereunder shall be in
-------
writing and given as provided in Section 16 of the Contribution Agreement. All
communications and notices hereunder to New Guarantor shall be given to it at
the address set forth under its signature.
SECTION 9. Fees and Expenses. New Guarantor agrees to reimburse Agent for
-----------------
its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, disbursements and other charges of counsel for
Agent, whether suit be brought or not, and all reasonable attorneys' fees, costs
and expenses if an appeal is taken.
<PAGE>
IN WITNESS WHEREOF, New Guarantor and Agent have duly executed this
Supplement to Contribution Agreement as of the day and year first above written.
NEW GUARANTOR:
TWENTY-FIRST CENTURY METALS, INC.
By:______________________________
Ronald J. Adams, President
Address: 990 Lunt Street
Elk Grove Village,
Illinois 60007
AGENT:
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION, as Agent
By:______________________________
W. Clifton Bargeron
Assistant Vice President
Exhibit 10.5
SUPPLEMENT TO SECURITY AGREEMENT
--------------------------------
SUPPLEMENT NO. 1 dated as of July 22, 1996, to the SECURITY AGREEMENT dated
as of January 22, 1996 (the "Security Agreement") by and among CONSOLIDATED
STAINLESS, INC., a Delaware corporation ("the Borrower"), PERFORMANCE METALS,
INC., a Texas corporation and FLOW COMPONENTS, INC., a Texas corporation
(together with any successors, referred to herein individually as a "Guarantor"
and collectively as "Guarantors") and SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION, individually and as agent (the "Agent") for the Lenders parties to
the Revolving Line of Credit and Term Loan Agreement dated as of January 22,
1996, among the Borrower, the Lenders and the Agent (as amended, modified or
supplemented from time to time, the "Loan Agreement" and SOUTHTRUST BANK OF
ALABAMA, NATIONAL ASSOCIATION ("SouthTrust"); capitalized terms used herein but
not otherwise defined herein have the meanings assigned to such terms in the
Loan Agreement or the Security Agreement, as the case may be).
Guarantors have entered into the Security Agreement in order to induce the
Lenders to make the Loans. Pursuant to Section 7.10 of the Loan Agreement, each
Subsidiary incorporated in the United States that was not in existence or
incorporated in the United States on the date thereof is required to enter into
the Security Agreement as a Subsidiary upon becoming a Subsidiary of the
Borrower incorporated in the United States. Section 22 of the Subsidiary
Agreement provides that additional Subsidiaries of the Borrower may become
Subsidiaries under the Security Agreement by execution and delivery of an
instrument in the form of this Supplement. The undersigned ("New Subsidiary") is
a Subsidiary of the Borrower incorporated in the United States and is executing
this Supplement in accordance with the requirements of the Loan Agreement to
become a Subsidiary under the Security Agreement in order to induce the Lenders
to make additional Loans and as consideration for the Loans previously made.
Accordingly, Agent, SouthTrust and New Subsidiary agree as follows:
1. Joinder to Security Agreement. In accordance with Section 22 of the
-----------------------------
Security Agreement, New Subsidiary by its signature below becomes a Subsidiary
under the Security Agreement with the same force and effect as if originally
named therein as a Subsidiary, and New Subsidiary hereby agrees to all the terms
and provisions of the Security Agreement applicable to it as a Subsidiary
thereunder. Each reference to a "Subsidiary" in the Security Agreement shall be
deemed to include New Subsidiary. The Security Agreement is hereby incorporated
herein by reference.
2. Enforceability. This Supplement has been duly authorized, executed and
--------------
delivered by New Subsidiary and constitutes a legal, valid and binding
obligation of New
<PAGE>
Subsidiary, enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors rights generally and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
3. Counterparts. This Supplement and any amendments, waivers, consents or
------------
supplements may be executed in any number of counterparts and by the different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
4. Effective Date. This Supplement shall become effective upon the
--------------
execution of a counterpart hereof by each of the parties hereto, and written or
telephonic notification of such execution and authorization of delivery thereof
has been received by New Subsidiary, SouthTrust and Agent.
5. Ratification of Security Agreement. Except as expressly supplemented
----------------------------------
hereby, the Security Agreement shall remain in full force and effect.
6. CHOICE OF LAW. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND SHALL BE
-------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA
WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
7. Severability. In case any provision in or obligation under this
------------
Supplement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
8. Notices. All communications and notices hereunder shall be given and
-------
shall be effective in the manner specified in the loan Agreement.
9. Fees and Expenses. New Subsidiary agrees to reimburse Agent for its
-----------------
reasonable out-of-pocket expenses in connection with this Supplement, including
the reasonable fees, disbursements and other charges of counsel for Agent,
whether suit be brought or not, and all reasonable attorneys' fees, costs and
expenses if an appeal is taken.
<PAGE>
IN WITNESS WHEREOF, New Subsidiary and Agent have duly executed this
Supplement to Security Agreement as of the day and year first above written.
NEW SUBSIDIARY:
---------------
TWENTY-FIRST CENTURY METALS, INC.
By:______________________________
Ronald J. Adams, President
Address: 990 Lunt Street
Elk Grove Village,
Illinois 60007
AGENT:
------
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION, individually
and as Agent
By:______________________________
W. Clifton Bargeron, Assistant
Vice President
SOUTHTRUST BANK OF ALABAMA,
NATIONAL ASSOCIATION
By:______________________________
Name:
Title:
Exhibit 10.6
SUPPLEMENT TO
SUBSIDIARY GUARANTY AGREEMENT
-----------------------------
THIS SUPPLEMENT TO SUBSIDIARY GUARANTY AGREEMENT (this "Supplement"), dated
as of July 22 , 1996, made by TWENTY-FIRST CENTURY METALS, INC., an Illinois
corporation (whether one or more, collectively, the "Additional Guarantor"), in
favor of SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, a national
banking association, individually and in its capacity as agent for Lenders at
any time parties to the Loan Agreement (as hereinafter defined) (the "Agent")
and each assignee thereof becoming a "Lender" as provided therein (the
"Lenders"; the Lenders and the Agent being collectively referred to herein as
the "Guaranteed Parties").
W I T N E S S E T H:
--------------------
WHEREAS, CONSOLIDATED STAINLESS, INC., a Delaware corporation (the
"Borrower"), the Lenders and the Agent are parties to a Revolving Line of Credit
and Term Loan Agreement, dated as of January 22, 1996 (as the same may hereafter
be amended, restated, supplemented or otherwise modified from time to time, the
"Loan Agreement") pursuant to which the Lenders have made commitments to make
loans to the Borrower;
WHEREAS, certain Subsidiaries (the "Subsidiary Guarantors") of the Borrower
have executed and delivered a Subsidiary Guaranty Agreement dated as of January
22, 1996 (the "Subsidiary Guaranty") pursuant to which the Subsidiary Guarantors
have agreed to guarantee all of the obligations of the Borrower under the Loan
Agreement and the other Credit Documents (as defined in the Loan Agreement);
WHEREAS, the Borrower, the Subsidiary Guarantors and the Additional
Guarantor share an identity of interests as members of a consolidated group of
companies engaged in substantially similar businesses; the Borrower provides
certain centralized financial, accounting and management services to the
Additional Guarantor; the making of the loans will facilitate expansion and
enhance the overall financial strength and stability of the Borrower's corporate
group, including the Additional Guarantor; and by virtue of intercompany
advances and loans, the financial accommodations to the Borrower under the Loan
Agreement shall inure to the direct and material benefit of the Additional
Guarantor; and
WHEREAS, it is a condition subsequent to the Lenders', obligation to make
Loans to the Borrower under the Loan Agreement
<PAGE>
that the Additional Guarantor execute and deliver to the Agent this Supplement,
and the Additional Guarantor desires to execute and deliver this Supplement to
satisfy such condition subsequent;
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lenders to make the Loans to the Borrower under the Loan Agreement, the
Additional Guarantor hereby agrees as follows:
1. Defined Terms. Capitalized terms not otherwise defined herein which are
-------------
used in the Subsidiary Guaranty are used herein with the meanings given to such
terms in the Subsidiary Guaranty and any capitalized terms not otherwise defined
herein which are used in the Loan Agreement are used herein with the meanings
given to such terms in the Loan Agreement.
2. Additional Guarantor. The Additional Guarantor agrees that it shall be
--------------------
and become a Guarantor for all purposes of the Subsidiary Guaranty and shall be
fully liable thereunder to the Agent and the other Guaranteed Parties to the
same extent and with the same effect as though the Additional Guarantor had been
one of the Guarantors originally executing and delivering the Subsidiary
Guaranty. Without limiting the foregoing, the Additional Guarantor hereby
jointly and severally (with respect to the guaranties made by the Subsidiary
Guarantors under the Subsidiary Guaranty), irrevocably and unconditionally,
guarantees the punctual and full payment when due, whether at stated maturity by
acceleration or otherwise, of all Loans and all other Obligations owing by the
Borrower to the Lenders and the Agent, or any of them, jointly or severally,
under the Loan Agreement, the Notes and the other Credit Documents, including
all renewals, extensions, modifications and refinancings thereof, now or
hereafter owing, whether for principal, interest, fees, expenses or otherwise,
and any and all reasonable out-of-pocket expenses (including reasonable
attorneys' fees actually incurred and reasonable out-of-pocket expenses whether
suit be brought or not, including reasonable attorneys' fees, costs and expenses
if an appeal is taken) incurred by the Agent or any other Guaranteed Party in
enforcing any rights under the Subsidiary Guaranty (as supplemented hereby),
subject, however, to the limitations expressly provided in the Subsidiary
Guaranty in Section 15 thereof. All references in the Subsidiary Guaranty to
"Guarantors" or any "Guarantor", shall be deemed to include and to refer to the
Additional Guarantor.
2
<PAGE>
3. Governing Law; Submission to Jurisdiction; Full Faith and Credit; Waiver
------------------------------------------------------------------------
of Jury Trial.
- --------------
(a) THIS SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE
OF FLORIDA (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF).
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SUPPLEMENT, THE
SUBSIDIARY GUARANTY OR OTHERWISE RELATED HERETO MAY BE BROUGHT IN THE CIRCUIT
COURT OF SEMINOLE COUNTY OF THE STATE OF FLORIDA OR IN THE DISTRICT COURT OF THE
UNITED STATES OF AMERICA FOR THE MIDDLE DISTRICT OF FLORIDA, AND, BY EXECUTION
AND DELIVERY OF THIS SUPPLEMENT, THE ADDITIONAL GUARANTOR HEREBY CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THE AFORESAID
COURTS SOLELY FOR THE PURPOSE OF ADJUDICATING ITS RIGHTS OR THE RIGHTS OF THE
AGENT OR OTHER GUARANTEED PARTIES WITH RESPECT TO THIS SUPPLEMENT, THE
SUBSIDIARY GUARANTY OR ANY DOCUMENT RELATED HERETO. THE ADDITIONAL GUARANTOR
HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS IN RESPECT OF THIS SUPPLEMENT, THE
SUBSIDIARY GUARANTY OR ANY DOCUMENT RELATED THERETO. NOTHING HEREIN SHALL AFFECT
THE RIGHT OF SUCH AGENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE ADDITIONAL
GUARANTOR IN ANY OTHER JURISDICTION.
(c) TO THE EXTENT THAT ANY GUARANTEED PARTY OBTAINS ANY JUDGMENT AGAINST
THE ADDITIONAL GUARANTOR UNDER THIS SUPPLEMENT AND THE SUBSIDIARY GUARANTY, THE
ADDITIONAL GUARANTOR DOES HEREBY AGREE THAT SUCH JUDGMENT SHALL BE ENTITLED TO
"FULL FAITH AND CREDIT" WITH THE SAME FORCE AND EFFECT AS IF SUCH JUDGMENT WAS
RENDERED AGAINST SUCH ADDITIONAL GUARANTOR BY A COURT OR OTHER TRIBUNAL LOCATED
IN THE DOMICILE OF SUCH ADDITIONAL GUARANTOR, IF DIFFERENT FROM THAT IN WHICH
SUCH JUDGMENT IS RENDERED. THE ADDITIONAL GUARANTOR HEREBY AGREES TO THE
VALIDITY AND ENFORCEABILITY OF ANY SUCH JUDGMENT AND SHALL NOT SEEK TO CHALLENGE
OR "GO BEHIND" THE FACE OF SUCH JUDGMENT.
(d) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE ADDITIONAL GUARANTOR
HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES ALL RIGHT OF
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN
CONNECTION WITH THIS SUPPLEMENT, THE SUBSIDIARY GUARANTY OR ANY OTHER CREDIT
DOCUMENT OR ANY MATTER ARISING IN CONNECTION HEREUNDER OR THEREUNDER. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE GUARANTEED PARTIES TO EXTEND CREDIT
TO OR OTHERWISE BECOME OR REMAIN A CREDITOR OF THE BORROWER. FURTHER, GUARANTORS
HEREBY
3
<PAGE>
CERTIFY THAT NO REPRESENTATIVE OR AGENT OF THE GUARANTEED PARTIES NOR ANY
COUNSEL FOR THE GUARANTEED PARTIES HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
THE GUARANTEED PARTIES WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO
ENFORCE THIS WAIVER OF RIGHT OF JURY TRIAL PROVISION. NO REPRESENTATIVE OR AGENT
OF THE GUARANTEED PARTIES NOR COUNSEL FOR THE GUARANTEED PARTIES HAS THE
AUTHORITY TO WAIVE, CONDITION OR MODIFY THIS PROVISION.
IN WITNESS WHEREOF, the Additional Guarantor has caused this Supplement to
be duly executed and delivered under seal by its duly authorized officers as of
the date first above written.
Address for Notices: ADDITIONAL GUARANTOR:
- -------------------- ---------------------
TWENTY-FIRST CENTURY METALS, INC.
990 Lunt Street
Elk Grove Village, By:_______________________________
Illinois 60007 Ronald J. Adams, President
Attest:___________________________
Daniel A. Rashy,
Secretary
[CORPORATE SEAL]
4
Exhibit 10.7
JOINDER BY SUBSIDIARY
---------------------
The undersigned, being and constituting a Subsidiary of CONSOLIDATED
STAINLESS, INC., a Delaware corporation (the "Borrower"), does hereby join in
and agree to be bound by all provisions applicable to such Subsidiary of that
certain Revolving Line of Credit and Term Loan Agreement (the "Loan Agreement"),
dated as of January 22, 1996, by and between SunTrust Bank, Central Florida,
National Association, individually and as Agent (the "Agent"), and the other
Lenders from time to time parties thereto and the Borrower with joinder by all
existing Subsidiaries of the Borrower.
The undersigned Subsidiary of the Borrower hereby agrees to execute and
deliver to the Agent a Security Agreement, appropriate financing statements to
perfect the security interests granted in the Security Agreement, a Supplement
to Guaranty Agreement and a Supplement to Contribution Agreement, the form and
substance of which shall be satisfactory to the Agent and the Required Lenders
(as defined in the Loan Agreement).
Dated this ____ day of _____________, 1996.
ATTEST TWENTY-FIRST CENTURY METALS, INC.
____________________________ By:______________________________
Daniel A. Rashy, Ronald J. Adams, President
Secretary
(CORPORATE SEAL)
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF INCOME FOUND
OF PAGES 1 THROUGH 3 OF THE COMPANY'S FORM 10-Q FOR THE YEAR-TO-DATE, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCES TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 619,010
<SECURITIES> 0
<RECEIVABLES> 7,677,702
<ALLOWANCES> 104,289
<INVENTORY> 27,005,651
<CURRENT-ASSETS> 36,314,862
<PP&E> 19,817,720
<DEPRECIATION> 3,591,168
<TOTAL-ASSETS> 57,390,084
<CURRENT-LIABILITIES> 12,096,708
<BONDS> 32,084,790
0
0
<COMMON> 44,359
<OTHER-SE> 12,165,567
<TOTAL-LIABILITY-AND-EQUITY> 57,390,084
<SALES> 27,167,589
<TOTAL-REVENUES> 27,167,589
<CGS> 21,788,066
<TOTAL-COSTS> 21,788,066
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 67,500
<INTEREST-EXPENSE> 1,387,699
<INCOME-PRETAX> 610,467
<INCOME-TAX> 244,187
<INCOME-CONTINUING> 366,280
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 366,280
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
