Exhibit 10.9
AMENDMENT AGREEMENT
February 14, 1994
Lone Star Steel Company
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Gentlemen:
Reference is made to the Financing Agreement between us dated March 2, 1993,
as amended (the "Financing Agreement"). Further reference is made to the
waiver letter between us dated December 29, 1993 (the "Waiver Letter").
Capitalized terms used herein and defined in the Financing Agreement shall
have the same meanings as set forth in said Financing Agreement unless
otherwise specifically defined herein.
Effective immediately, pursuant to mutual understanding, the Financing
Agreement shall be, and hereby is, amended as follows:
1. Paragraph 9 of Section 7 of the Financing Agreement shall
be, and hereby is, amended by deleting the entries under
the headings, "Fiscal Period" and "Net Worth" for the
period from 1-1-94 through and including 12-31-94 and
inserting the following in lieu thereof:
"From 1-1-94 through and
including 3-31-94 $103,000,000.00
From 4-1-94 through and
including 6-30-94 $100,000,000.00
From 7-1-94 through and
including 9-30-94 $ 99,000,000.00
From 10-1-94 through and
including 12-31-94 $101,000,000.00"
2. Paragraph 12 of Section 7 of the Financing Agreement shall be, and
hereby is, amended by deleting the entries under the headings "Fiscal
Period" and "Working Capital" for the period "From 1-1-94 and at all
times thereafter" and inserting the following in lieu thereof:
"From 1-1-94 and at all times $27,800,000.00"
thereafter
3(a) The following definition of "EBITDA" shall be, and hereby is, added
to Section 1 of the Financing Agreement in the proper alphabetical
order:
"EBITDA shall mean, in any period, all earnings of the Company and
its consolidated subsidiaries before interest and tax obligations of
the Company and its consolidated subsidiaries for said period plus
(i) amortization, (ii)
depreciation, and (iii) similar noncash charges for the Company and
its consolidated subsidiaries for said period minus the sum of
(x) Capital Expenditures and (y) dividends paid with respect to
Preferred Stock by the Company and its consolidated subsidiaries for
said period, all determined in accordance with GAAP on a Lifo basis."
(b) The definition of "Interest Coverage Ratio" shall be, and hereby is,
amended by deleting the reference to "EBIT" as contained therein and
inserting "EBITDA" in lieu thereof.
(c) Paragraph 13 of Section 7 of the Financing Agreement shall be, and
hereby is, amended by (i) deleting therefrom the entries under the
headings "Fiscal Quarter Ending" and "Ratio" for the Fiscal Quarters
ending 3-31-94, 6-30-94, and 9-30-94 and (ii) amending the entry for
the quarter ending 12-31-94 from "2.75 to 1.0" to be ".50 to 1.0".
4. Paragraph 15 of Section 7 of the Financing Agreement shall be, and
hereby is, amended by the addition thereto at the end thereof of the
following three (3) entries under the headings "Period Ending"
and "EBIT":
"3-31-94 ($2,300,000) Loss
6-30-94 ($4,100,000) Loss
9-30-94 ($3,100,000) Loss
12-31-94 ($1,000,000) Loss
5. Paragraph 11 of Section 7 of the Financing Agreement shall be, and
hereby is, amended by deleting therefrom the entries under the
headings "Period" and "Amount" for the period "1-1-94 through and
including 12-31-94 and during each calendar year thereafter" and
inserting the following in lieu thereof:
"1-1-94 through and
including 12-31-94 $8,000,000.00
"1-1-95 through and
including 12-31-95
and during each calendar
year thereafter $15,000,000.00"
6. The expiration date of "February 15, 1994" with respect to the
effectiveness of the waivers set forth in the Waiver Letter shall
be, and hereby is, deleted and such waivers shall be, and hereby
are, made permanent waivers.
7. Paragraph 10(G) of Section 7 of the Financing Agreement shall be,
and hereby is, amended in its entirety to read as follows:
"G. Declare or pay any dividend of any kind on, or purchase,
acquire, redeem or retire, any of the capital stock or
equity interest (including, without limitation, any warrant
issued by the Company) of the Company or any subsidiary, of
any class whatsoever, whether now or hereafter outstanding,
except that (a) any subsidiary may pay such dividends to the
Company, and (b) the Company may declare and pay dividends
on its capital stock in an amount sufficient to enable the
Parent to i) redeem the capital stock owned by its retired,
deceased or terminated officers or shareholders which the
Parent is contractually obligated to redeem, provided that
in no event shall the aggregate amount of such dividend under
this clause (i) exceed $250,000.00 in the aggregate in any
fiscal year; or (ii) pay income or franchise taxes of the
Company due as a result of the filing of a consolidated,
combined or unitary tax return in which the operations of the
Company are included (as more fully described in the Tax
Allocation and Indemnification Agreement), and (c) commencing
on or after December 31, 1994, the Company may pay dividends
on its preferred stock which has been, or may hereafter be,
issued in connection with the OverLine Facility (as defined in
a certain letter agreement between the Company and CITBC dated
February 14, 1994 which shall be referred to herein as the
"OverLine Agreement") established under this Financing
Agreement (herein "Preferred Stock") and "Preferred Stock
Dividends" respectively), provided that such Preferred
Stock shall be issued as described in the Term Sheet for
Preferred Stock attached hereto as Schedule 1 and that such
Preferred Stock Dividends shall be (x) paid strictly in
accordance with, and subject to, the terms, provisions and
conditions of the Declaration of Rights and Preference under
which such Preferred Stock is issued and (y) paid only after
CITBC has received and reviewed the Company's financial
statements for the immediately preceding fiscal quarter or
year (as the case may be); and further provided that, in any
instance under this Paragraph (G), (A) the Company is not
then in breach or violation of this Financing Agreement, or
(B) after giving effect to such payment, no Event of Default
has occurred or would occur hereunder, or
8. Section 3 of the Financing Agreement shall be, and hereby is,
amended by the addition thereto of a new Paragraph 8 thereto as
follows:
"8. In the event that the sum of (i) the Company's Obligations "as
described in Clause "x")" of the
definition of Availability as contained in Section 1 of the
Financing Agreement) plus (ii) the Availability Reserve (as described
in such definition of Availability) at any time exceeds the maximum
amount thereof computed pursuant to clauses "a)" and "b)" of such
definition of Availability, the amount of such excess shall be
immediately due and payable upon CITBC's demand therefor."
In consideration of our execution of the foregoing amendment you agree to pay
to us an additional Loan Facility Fee in the amount of $30,000.00. Such fee
is due and payable on the date hereof and may, at our option, be charged to
your Revolving Loan Account on the date hereof.
Except as set forth hereinabove, no other change in, or waiver of the terms,
provisions and conditions of the Financing Agreement is intended or implied.
If the foregoing is in accordance with your understanding of our agreement
kindly so indicate by signing and returning the enclosed copy of this letter.
We have asked each of the guarantors to sign below to confirm their
respective agreements that the guaranties and security agreements executed by
each in our favor shall continue in full force and effect notwithstanding the
foregoing amendments.
THE CIT GROUP/BUSINESS CREDIT, INC.
By XXXXXXX X. XXXXX
-------------------------------------
Title: Assistant Secretary
Read and Agreed to:
LONE STAR STEEL COMPANY
By X. X. XXX
--------------------------------
Title: Executive Vice President
LONE STAR LOGISTICS, INC.
T & N LONE STAR WAREHOUSE CO.
TEXAS & NORTHERN RAILWAY COMPANY
FORT XXXXXXX PIPE COMPANY
TEXAS SPECIALTY FLAT-ROLLED, INC.
LONE STAR STEEL INTERNATIONAL, INC.
By X. X. XXX
--------------------------------
Title: Vice President
of each of the above companies
SCHEDULE 1 TO AMENDMENT AGREEMENT
LONE STAR STEEL COMPANY
TERM SHEET FOR PREFERRED STOCK
February 10, 1994
1. AMOUNT OF ISSUANCE. Each stockholder of LSS that guarantees a
portion of LLS' indebtedness or other liability to CIT will receive, in the
event such stockholder is required to make payment under such guarantee, an
amount of preferred stock equal to the indebtedness or liability paid by such
stockholder on LSS' behalf.
2. ISSUANCE DATE. The preferred stock will be issued contemporaneously
with, or as soon as reasonably practicable after, such date (if any) as a
stockholder is required to make payment under its guarantee.
3. DIVIDENDS. The preferred stock will be entitled to a 12% cumulative
dividend that will be payable quarterly. No dividends may be paid on LSS'
common stock at any time while the preferred stock is outstanding.
4. REDEMPTION. LSS may redeem the preferred stock at any time by
paying the holder thereof (i) the face amount of such stock and (ii) all
accrued and unpaid dividends through the date of redemption (including an
additionally pro rated dividend based on the number of days elapsed from the
last day of the most recent completed quarterly dividend period through the
redemption date.)
5. REGISTRATION RIGHTS. None
6. VOTING RIGHTS. The preferred stock will possess voting rights only
to the extent required by law.
7. LIQUIDATION PREFERENCE. In the event of the liquidation or
dissolution of LSS, prior to any payment to the holders of LSS' common stock,
the holders of the preferred stock shall be entitled to receive therefor an
amount equal to (i) the face amount of the preferred stock and (ii) all
accrued and unpaid dividends (including an additional pro rated dividend
based on the number of days elapsed from the last day of the most recent
completed quarterly dividend period through the date of liquidation or
dissolution).
8. OTHER RIGHTS. The preferred stock will have such other rights,
preferences and terms (including rights to be converted to common stock) as
are customary in nature and not inconsistent with the other provisions of
this term sheet.
