FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "Amendment") dated as of
December 24, 1998, and is made by and among Lone Star Steel Company, a Delaware
corporation (the "Borrower"), each of the Guarantors and the BANKS (referred to
in the Credit Agreement as hereinafter defined), and PNC BANK, NATIONAL
ASSOCIATION, in its capacity as agent for the Banks under the Credit Agreement
(hereinafter referred to in such capacity as the "Agent") and Bank of America
National Trust and Savings Association, N.A., as Co-Agent, and joined by Lone
Star Technologies, Inc. ("Lone Star Technologies").
WITNESSETH:
WHEREAS, the parties hereto are parties to that certain Credit Agreement
dated as of October 2, 1997 (the "Credit Agreement") and desire to amend the
terms thereof as set forth herein;
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:
1. DEFINITIONS.
Defined terms used herein unless otherwise defined herein shall have the
meanings ascribed to them in the Credit Agreement as amended by this Amendment.
2. AMENDMENT OF CREDIT AGREEMENT.
2.1 NEW DEFINITIONS. The following new defined terms are hereby added
in alphabetical order in Section 1.1 of the Credit Agreement to read as follows:
"ACCOUNT shall mean any account, contract right, general
intangible, chattel paper, instrument or document representing any right to
payment for goods sold or services rendered, whether or not earned by
performance and whether or not evidenced by a contract, instrument or
document, which is now owned or hereafter acquired by any Loan Party. All
Accounts, whether Qualified Accounts or not, shall be subject to the Banks'
Prior Security Interest.
ACCOUNT DEBTOR shall mean any Person who is or who may
become obligated to any Loan Party under, with respect to, or on account
of, an Account.
APPLICABLE INVENTORY LIMITATION PERCENTAGE shall mean (i)
175% from the First Amendment Effective Date through Xxxxx 00, 0000, (xx)
135% from March 31, 1999 through June 29, 1999 and (iii) 100% on and after
June 30, 1999.
APPLICABLE INVENTORY INCLUSION PERCENTAGE shall mean (i) 60%
from the First Amendment Effective Date through Xxxxx 00, 0000, (xx) 55%
from March 31, 1999 through June 29, 1999 and (iii) 50% on and after June
30, 1999.
BORROWING BASE shall mean at any time the sum of (i) 85% of
Qualified Accounts ("Accounts Portion"), plus (ii) the lesser of (A) the
Applicable Inventory Inclusion Percentage times the amount of Qualified
Inventory, or (B) the Applicable Inventory Limitation Percentage times the
Accounts Portion. Notwithstanding anything to the contrary herein, the
Required Banks may, in their sole discretion, at any time hereafter,
decrease the advance percentage for Qualified Accounts and Qualified
Inventory, or increase the level of any reserves or ineligibles, or define
or maintain such other reserves or ineligibles, as the Required Banks may
deem necessary or appropriate. Any such change shall become effective
immediately upon written notice from the Agent to the Borrower for the
purpose of calculating the Borrowing Base hereunder.
BORROWING BASE CERTIFICATE shall have the meaning assigned
to such term in Section 8.3.4A.
EBIT for any period of determination shall mean (i) the sum
of net income, other non-cash charges to net income, interest expense and
income tax expense minus (ii) non-cash credits to net income, in each case
of the Borrower and its Subsidiaries for such period determined and
consolidated in accordance with GAAP.
FIRST AMENDMENT EFFECTIVE DATE shall mean the effective date
of the First Amendment to this Agreement.
INTEREST EXPENSE shall mean for any period of determination,
the interest expense of the Borrower and its Subsidiaries, determined and
consolidated in accordance with GAAP.
INTEREST COVERAGE RATIO (FOR PRICING) shall mean for any
period of determination the ratio of(i) EBIT to (ii) interest expense of
the Borrower and its Subsidiaries for such period
INVENTORY shall mean any and all goods, merchandise and
other personal property, including, without limitation, goods in transit,
wheresoever located and whether now owned or hereafter acquired by any Loan
Party which are or may at any time be held as raw materials, finished
goods, work-in-process, supplies or materials used or consumed in such Loan
Party's business or held for sale or lease, including, without limitation,
(a) all such property the sale or other disposition of which has given rise
to Accounts and which has been returned to or repossessed or stopped in
transit by such Loan Party, and (b) all packing, shipping and advertising
materials relating to all or any such property. All Inventory, whether
Qualified Inventory or not, shall be subject to the Banks' Prior Security
Interest.
QUALIFIED ACCOUNTS shall mean any Accounts which the Agent
in its sole discretion determines to have met all of the minimum
requirements set forth on SCHEDULE 1.1(Q)(1).
QUALIFIED INVENTORY shall mean any Inventory which the Agent
in its sole discretion determines to have met all of the minimum
requirements set forth on SCHEDULE 1.1(Q)(2).
SCHEDULE OF ACCOUNTS shall mean a detailed aged trial
balance of all then existing Accounts in form and substance satisfactory to
Agent, specifying in each case the names, addresses, face amount and dates
of invoice(s) for each Account Debtor obligated on an Account so listed
and, if reasonably requested by the Agent in connection with an audit or
after conclusion of an audit, copies of proof of delivery and customer
statements and the original copy of all documents, including, without
limitation, repayment histories and present status reports, and such other
matters and information relating to the status of the Accounts and/or the
Account Debtors so scheduled as the Agent may from time to time reasonably
request.
SCHEDULE OF INVENTORY shall mean a current schedule of
Inventory in form and substance satisfactory to the Agent, itemizing and
describing the kind, type, quantity of Inventory, as confirmed from time to
time by physical counts taken, the Loan Parties' costs therefor.
SCHEDULE OF PAYABLES shall mean a detailed listing of Loan
Parties' existing accounts payable, specifying the names of each creditor
and the amount owed to such creditor and such matters and information
relating to the status of the Loan Parties' accounts payable so scheduled
as the Agent may from time to time reasonably request.
TOTAL LIABILITIES shall mean the total liabilities of the
Loan Parties and their Subsidiaries as determined by GAAP."
2.2 EXISTING DEFINITIONS. The following defined terms in Section 1.1
of the Credit Agreement are hereby amended and restated to read as set forth
below:
"APPLICABLE COMMITMENT FEE RATE shall mean the
percentage rate per annum based on the Interest Coverage Ratio (For
Pricing) then in effect according to the pricing grid on SCHEDULE 1.1
(A) below the heading "Commitment Fee." The Applicable Commitment Fee
Rate shall be computed in accordance with the parameters set forth on
SCHEDULE 1.1 (A).
APPLICABLE MARGIN shall mean, as applicable:
(A) the percentage spread to be added to Base Rate
under the Base Rate Option based on the Interest Coverage Ratio (For
Pricing) then in effect according to the pricing grid on SCHEDULE 1.1
(A) below the heading "Base Rate Spread," or
(B) the percentage spread to be added to Euro-Rate
under the Euro-Rate Option based on the Interest Coverage Ratio (For
Pricing) then in effect according to the pricing grid on SCHEDULE 1.1
(A) below the heading "Euro-Rate Spread."
The Applicable Margin shall be computed in
accordance with the parameters set forth on SCHEDULE 1.1(A).
BASE NET WORTH shall mean the following amount:
(i) $124,000,000, PLUS
(ii) 50% of consolidated net income of the
Borrower and its Subsidiaries for each fiscal quarter in which net income
was earned (as opposed to a net loss) during the period from January 1,
2000 through the date of determination,
PLUS
(iii) the amount of any contributions made to the
capital of the Borrower after January 1, 2000 or proceeds received by the
Borrower after the January 1, 2000 from the sale of its capital stock, net
of ordinary and reasonable expenses directly related to such sale, and
MINUS
(iv) the amount of payments made by the Borrower
after January 1, 2000 to redeem its Preferred Stock to the extent that such
payments reduce the Consolidated Tangible Net Worth of the Borrower and are
permitted hereunder.
INTEREST COVERAGE RATIO (FOR COVENANTS) shall mean for
any period of determination the ratio of(i) EBITDA to (ii) the sum of (A)
interest expense of the Borrower and its Subsidiaries for such period plus
(B) cash dividend payments or other cash distributions paid by the Borrower
or cash or other consideration paid to purchase whether by way of
redemption or otherwise capital stock of the Borrower during such period,
excluding cash payments made by the Borrower to redeem the Preferred Stock
of the Borrower.
LEVERAGE RATIO shall be computed as of the end of each
fiscal quarter of the Borrower ending on or after March 31, 2000 as the
ratio of consolidated Indebtedness on such quarter-end to the EBITDA for
the four fiscal quarters ending on such quarter-end.
SLAB FINANCING ARRANGEMENT shall mean Borrower's
Product Financing Agreement with Lone Star Technologies dated as of
November 23, 1998, as hereafter amended or replaced from time to time,
provided that the Borrower's Obligations thereunder must be subject to the
Intercompany Subordination Agreement and the maximum principal amount owing
thereunder must not exceed $25,000,000 without the consent of the Required
Banks.
2.3 REVOLVING CREDIT COMMITMENTS.
Section 2..1.1 (Revolving Credit Loans) is hereby amended and restated
to read as set forth below.
"2.1.1 REVOLVING CREDIT LOANS.
Subject to the terms and conditions hereof and relying
upon the representations and warranties herein set forth, each Bank
severally agrees to make Revolving Credit Loans to the Borrower at any time
or from time to time on or after the date hereof to the Expiration Date
provided that (i) after giving effect to such Loan the aggregate amount of
Loans from such Bank shall not exceed such Bank's Revolving Credit
Commitment minus such Bank's Ratable Share of the Letters of Credit
Outstanding, and (ii) the Revolving Facility Usage shall not exceed the
Borrowing Base. Within such limits of time and amount and subject to the
other provisions of this Agreement, the Borrower may borrow, repay and
reborrow pursuant to this Section 2.1.1.
2.4 ISSUANCE OF LETTERS OF CREDIT. Section 2.10.1 (Issuance of
Letters of Credit) is hereby amended and restated to read as set forth below.
"2.10.1 ISSUANCE OF LETTERS OF CREDIT
Borrower may request the issuance of a letter of credit
(each a "Letter of Credit") on behalf of itself or another Loan Party by
delivering to the Agent a completed application and agreement for letters
of credit in such form as the Agent may specify from time to time by no
later than Noon Pittsburgh time, at least five (5) Business Days, or such
shorter period as may be agreed to by the Agent, in advance of the proposed
date of issuance. Each Letter of Credit shall be either a Standby Letter of
Credit or a Commercial Letter of Credit. Subject to the terms and
conditions hereof and in reliance on the agreements of the other Banks set
forth in this Section 2.10, the Agent will issue a Letter of Credit
provided that each Letter of Credit shall (A) have a maximum maturity of
twenty four (24) months from the date of issuance, and (B) in no event
expire later than ten (10) Business Days prior to the Expiration Date and
providing that in no event shall (i) the Letters of Credit Outstanding
exceed, at any one time, $20,000,000, (ii) the Revolving Facility Usage
exceed, at any one time, the Revolving Credit Commitments (for purposes of
this computation, PNC Bank's Swing Loans shall be deemed to be borrowed
amounts under its Revolving Credit Commitment), or (iii) the Revolving
Facility Usage exceed, at any one time, the Borrowing Base."
2.5 MANDATORY PREPAYMENTS WHEN THE BORROWING BASE IS EXCEEDED. A new
Section 5.7 (Mandatory Prepayments When the Borrowing Base is Exceeded) is
hereby added to Section 5.6 of the Credit Agreement to follow immediately after
Section 5. (Settlement Date Procedures) to read as follows:
"5.7 MANDATORY PREPAYMENTS WHEN THE BORROWING BASE IS EXCEEDED.
Whenever the outstanding principal balance of Revolving
Credit Loans by the Banks plus the aggregate undrawn face amount of
outstanding Letters of Credit issued pursuant to Section 2.10 exceed the
Borrowing Base, the Borrower shall make, within one (1) Business Day after
the Borrower learns of such excess and whether or not the Agent has given
notice to such effect, a mandatory prepayment of Revolving Credit Loans
equal to the excess of the outstanding principal balance over the Borrowing
Base, together with accrued interest on such Loans."
2.6 REPRESENTATIONS AND WARRANTIES. A new Section 6.1.26 (Year 2000)
is hereby added to Section 6 of the Credit Agreement to follow immediately after
Section 6.1.25 (Senior Debt Status) to read as follows:
"6.1.26 YEAR 2000.
The Borrower and its Subsidiaries have reviewed the
areas within their business and operations which could be adversely
affected by, and have developed or are developing a program to address on a
timely basis, the risk that certain computer applications used by the
Borrower or its Subsidiaries (or any of their respective material
suppliers, customers or vendors) may be unable to recognize and perform
properly date-sensitive functions involving dates prior to and after
December 31, 1999 (the "Year 2000 Problem"). The Year 2000 Problem will not
result in any Material Adverse Change.
2.7 AFFIRMATIVE COVENANTS--VISITATION. Section 8.1.6 (Visitation
Rights) is hereby amended and restated to read as set forth below.
"8.1.6 VISITATION RIGHTS.
Each Loan Party shall, and shall cause each of its
Subsidiaries to, permit any of the officers or authorized employees or
representatives of the Agent or any of the Banks to visit and inspect any
of its properties and to examine and make excerpts from its books and
records and discuss its business affairs, finances and accounts with its
officers, all in such detail and at such times and as often as any of the
Banks may reasonably request, PROVIDED that each Bank shall provide the
Borrower and the Agent with reasonable notice prior to any visit or
inspection. The Borrower shall reimburse (i) the Agent for reasonable
expenses associated with up to two audits in each year prior to an Event of
Default and prior to the making of an Audit Request (as defined below), and
(ii) the Agent for more than two audits and the Banks for audits if either
an Event of Default exists and is continuing or the Required Banks request
that such audits be undertaken. In the event any Bank desires to conduct an
audit of any Loan Party, such Bank shall make a reasonable effort to
conduct such audit contemporaneously with any audit to be performed by the
Agent."
2.8 NEGATIVE COVENANTS--INDEBTEDNESS. Clause (v) of Section 8.2.1
(Indebtedness) is hereby amended and restated to read as set forth below.
"(v) Indebtedness of a Loan Party to Lone Star Technologies
provided that
(a) such Indebtedness shall be subordinated in
accordance with the provisions of Section 8.1.12 [Subordination of
Intercompany Loans];
(b) no Potential Default or Event of Default shall
exist immediately prior to and after giving effect to the incurrence of
such Indebtedness; and
(c) the Borrower shall (A) if such Indebtedness is
incurred before March 31, 2000, demonstrate that it shall be in compliance
with the covenant
contained in Section 8.2.21 [Maximum Total Liabilities to Consolidated
Tangible Net Worth] after giving effect to such Indebtedness, and (B) if
such Indebtedness is incurred on or after March 31, 2000, demonstrate that
it shall be in compliance with the covenant contained in Section 8.2.16
[Maximum Leverage Ratio], provided that (i) Borrower shall compute the
numerator of such Leverage Ratio (Indebtedness) as of the date on which
Borrower incurs such Indebtedness and the denominator of Leverage Ratio as
of the four quarters ending on the last day of the quarter preceding such
date of incurrence. Borrower shall deliver to the Agent and the Banks at
least five (5) Business Days prior to the date on which Borrower incurs
such Indebtedness a certificate in the form of EXHIBIT 8.2.5 evidencing
such compliance; and"
2.9 NEGATIVE COVENANTS--DIVIDENDS AND ACQUISITIONS. Sections 8.2.5
(Dividends and Related Distributions) and 8.2.6 (Liquidations, Mergers, etc.)
are hereby amended and restated to read as set forth below.
"8.2.5 DIVIDENDS AND RELATED DISTRIBUTIONS.
Except as provided in this Section 8.2.5 below,
each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to:
(A) make or pay, or agree to become or remain
liable to make or pay, any dividend or other distribution of any nature
(whether in cash, property, securities or otherwise) on account of or in
respect of its shares of capital stock, partnership interests or limited
liability company interests or make any payments on account of the
purchase, redemption, retirement or acquisition of its shares of capital
stock (or warrants, options or rights therefor), partnership interests or
limited liability company interests, or
(B) make or pay any amounts, whether principal,
interest or otherwise, on or in respect of loans or other obligations of a
Loan Party to Lone Star Technologies or otherwise make payments, transfer
assets or pay or provide any consideration (including incurring or assuming
debt or other obligations) to Lone Star Technologies or any Affiliates of
Lone Star Technologies other than the Loan Parties.
Notwithstanding the preceding sentence, the Loan
Parties may
(i) make regularly scheduled payments of
principal or interest under the Slab Financing Arrangement provided that no
Potential Default or Event of Default shall exist immediately prior to and
after giving effect to such payment; or
(i) pay dividends or make other distributions or
payments to another Loan Party, or
(ii) pay a dividend or make a payment on
Indebtedness incurred in accordance with Section 8.2.1(v) to Lone Star
Technologies, provided that
(a) no Potential Default or Event of Default
shall exist immediately prior to and after giving effect to such dividend;
(b) the Borrower shall demonstrate that it
shall be in compliance with the covenants contained in the sections listed
in the grid on Exhibit 8.2 hereof computed as of the dates and subject to
the adjustments set forth in such grid. Borrower shall deliver to the Agent
and the Banks at least five (5) Business Days prior to the date on which
Borrower pays such dividend (the "Dividend Payment Date") a certificate in
the form of EXHIBIT 8.2.5 evidencing such compliance.
(iii) make reimbursements to Lone Star
Technologies for costs and expenses, including payroll expenses for
employees of Lone Star Technologies, incurred by Lone Star Technologies
provided that the aggregate amount per year shall not exceed $4,000,000 and
provided that one of the following ((A), (B) or (C) below) is true:
(A) If Lone Star Technologies has not formed
or acquired any Subsidiaries (each an "Affiliate Subsidiary") other than
the Borrower and the Loan Parties, and is not undertaking to form or
acquire, or investigating the formation or acquisition of, an Affiliate
Subsidiary, then all such costs and expenses incurred shall be for the
benefit of the Loan Parties, or
(B) If Lone Star Technologies has not formed
or acquired any Affiliate Subsidiary but is undertaking to form or acquire,
or investigating the formation or acquisition of, an Affiliate Subsidiary,
then all such costs and expenses shall either be for the benefit of the
Loan Parties or for such undertaking or investigation and for no other
purpose (including the making of a dividend to the shareholders of Lone
Star Technologies) and shall be allocated to the Loan Parties and to such
undertaking or investigation in a reasonable and customary manner, or
(C) if Lone Star Technologies has formed or
acquired any Affiliate Subsidiaries, then Lone Star Technologies may
allocate such costs and expenses between such Affiliate Subsidiaries and
the Loan Parties pursuant to a cost sharing agreement provided that
(1) such agreement is reasonable as
determined by the Agent prior to such time as such agreement is entered
into, and
(2) all such costs and expenses so incurred
and allocated to the Loan Parties and the Affiliate Subsidiaries shall be
for the benefit of the Loan Parties or such Affiliate Subsidiaries and for
no other purpose.
(iv) redeem by cash payment the Borrower's
Preferred Stock (including cash dividends payable on such Preferred Stock
that are accrued but not paid on the date of such redemption), provided
that:
(a) no Potential Default or Event of Default
shall exist immediately prior to and after giving effect to such
redemption;
(b) the Borrower shall demonstrate that it
shall be in compliance with the covenants contained in the sections listed
in the grid on Exhibit 8.2
computed as of the dates and subject to the adjustments set forth in such
grid. Borrower shall deliver at least five (5) Business Days prior to the
date on which Borrower makes such redemption payment (the "Redemption
Payment Date") a certificate in the form of EXHIBIT 8.2.5 evidencing such
compliance.
(v) pay dividends in the form of Borrower's
common stock or the Borrower's Preferred Stock.
8.2.6 LIQUIDATIONS, MERGERS, CONSOLIDATIONS, ACQUISITIONS.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, dissolve, liquidate or wind-up its
affairs, or become a party to any merger or consolidation, or (except as
provided under Section 8.2.7) acquire by purchase, lease or otherwise all
or substantially all of the assets or capital stock of any other Person,
PROVIDED that
(1) any Loan Party or Subsidiary other than the
Borrower may consolidate or merge into or be dissolved into the Borrower or
another Loan Party which is wholly-owned by one or more of the other Loan
Parties, and
(2) any Loan Party may acquire, whether by
purchase or by merger, whether accounted for as a purchase or a pooling or
otherwise (A) ownership interests of another Person or (B) substantially
all of the assets of another Person or of a business or division of another
Person (each a "Permitted Acquisition"), PROVIDED that each of the
following requirements is met:
(i) if the Loan Parties are acquiring the
ownership interests in such Person, such interest shall include a majority
of each class of voting securities and the power to elect a majority of the
directors or other equivalent governing individuals with respect to such
Person;
(ii) if the Loan Parties are acquiring the
ownership interests in such Person, such Person shall execute a Guarantor
Joinder and join this Agreement as a Guarantor pursuant to Section 11.18
[Joinder of Guarantors] on or before the date of such Permitted
Acquisition;
(iii) the Loan Parties, such Person and its
owners, as applicable, shall grant Liens in the assets of or acquired from
and stock or other ownership interests in such Person and otherwise comply
with Section 11.18 [Joinder of Guarantors] on or before the date of such
Permitted Acquisition;
(iv) the board of directors or other
equivalent governing body of such Person shall have approved such Permitted
Acquisition and, if the Loan Parties shall use any portion of the Loans to
fund such Permitted Acquisition, the Loan Parties also shall have delivered
to the Banks written evidence of the approval of the board of directors (or
equivalent body) of such Person for such Permitted Acquisition;
(v) the business acquired, or the business
conducted by the Person whose ownership interests are being acquired, as
applicable, shall be substantially
the same as one or more line or lines of business conducted by the Loan
Parties and shall comply with Section 8.2.10 [Continuation of or Change in
Business], EXCEPT that the Loan Parties may make an acquisition of assets
or stock of a Person in another line of business provided that total
Consideration paid or incurred in connection therewith does not exceed
$5,000,000 (the "Permitted Other Line of Business Acquisition");
(vi) no Potential Default or Event of Default
shall exist immediately prior to and after giving effect to such Permitted
Acquisition;
(vii) the Borrower shall demonstrate that it
shall be in compliance with the covenants contained in the sections listed
in the grid attached to as Exhibit 8.2 as of the dates and subject to the
adjustments set forth in such grid. Borrower shall deliver at least five
(5) Business Days prior to the date on which Borrower makes such Permitted
Acquisition payment (the "Acquisition Date") a certificate in the form of
EXHIBIT 8.2.6 evidencing such compliance.
(viii) the Loan Parties shall deliver to the
Agent at least five (5) Business Days before such Permitted Acquisition
then current drafts (with the executed versions to be delivered promptly
after their execution) of any agreements entered into or proposed to be
entered into by such Loan Parties in connection with such Permitted
Acquisition and shall deliver to the Agent such other information about
such Person or its assets as any Loan Party may reasonably require.
2.10 NEGATIVE COVENANTS--EXISTING FINANCIAL COVENANTS. Sections 8.2.15
(Minimum Interest Coverage Ratio) through 8.2.18 (Minimum Working Capital) are
hereby amended and restated to read as set forth below.
"8.2.15 MINIMUM INTEREST COVERAGE RATIO.
The Loan Parties shall not permit the Interest
Coverage Ratio (For Covenants), calculated as of the end of the fiscal
quarter ending March 31, 2000, and at the end of each fiscal quarter
thereafter, for the period of four (4) fiscal quarters then ended, to be
less than 4.0 to 1.0.
8.2.16 MAXIMUM LEVERAGE RATIO.
The Loan Parties shall not permit the Leverage
Ratio to exceed 3.0 to 1.0 at the end of the fiscal quarter ending March
31, 2000, and at the end of each fiscal quarter thereafter.
8.2.17 MINIMUM TANGIBLE NET WORTH.
The Borrower shall not at any time on or after
January 1, 2000 permit Consolidated Tangible Net Worth to be less than Base
Net Worth.
8.2.18 MINIMUM WORKING CAPITAL.
The Loan Parties shall not at any time on or after
March 31, 2000 permit the difference between the amounts in the following
clauses (i) and (ii) to be less than $75,000,000: (i) consolidated current
assets (excluding cash and marketable securities to the extent that the
amount thereof does not exceed the amount of the Revolving Credit Loans
outstanding at such time) of the Borrower and its Subsidiaries and (ii)
consolidated current liabilities of the Borrower and its Subsidiaries
(excluding from current liabilities the amount of the Revolving Credit
Loans outstanding, whether or not normally required to be included or
excluded under GAAP)."
2.11 NEGATIVE COVENANTS--NEW FINANCIAL COVENANTS. New Sections 8.2.21
(Maximum Total Liabilities to Consolidated Tangible Net Worth) through 8.2.22
(Minimum EBITDA) are hereby added to Section 8 of the Credit Agreement at the
end thereof and immediately following the text of Section 8.2.20 (Slab Financing
Agreement) to read as follows:
"8.2.21 MAXIMUM TOTAL LIABILITIES TO CONSOLIDATED TANGIBLE
NET WORTH.
The Loan Parties shall not permit the ratio of
Total Liabilities to Consolidated Tangible Net Worth, calculated as of the
end of each fiscal quarter beginning with the fiscal quarter ending
December 31, 1998 and ending with the fiscal quarter ending December 31,
1999, to be greater than 2.0 to 1.0.
"8.2.22 MINIMUM EBITDA.
The Loan Parties shall not permit the EBITDA of
the Loan Parties and their Subsidiaries to be less than the amount set
forth in the grid below as of the dates set forth in such grid for the
periods set forth in such grid.
MINIMUM PERMITTED
PERIODS INCLUDED IN EBITDA (NEGATIVE
DATE CALCULATION NUMBERS IN BRACKETS)
12-31-98 Four quarters then ended [$9,759,000]
3-31-99 One quarter then ended [$1,000,000]
6-30-99 Two quarters then ended $2,735,000
9-30-99 Three quarters then $10,314,000
ended
12-31-99 Four quarters then ended $21,406,000
2.12 FIRST AMENDMENT FEE. A new Section 8.2.23 (First Amendment Fee)
is hereby added to Section 8 of the Credit Agreement, immediately following the
text of new Section 8.2.22, to read as follows:
"The Borrower shall pay to the Agent for the benefit of
the banks a fee in the amount of $250,000 on or before 12:00 pm (Noon) on
January 4, 1999."
2.13 REPORTING REQUIREMENTS--MONTHLY FINANCIAL STATEMENTS. A new
Section 8.3.1A is hereby added to Section 8.3 of the Credit Agreement at the
beginning thereof and immediately preceding the text of Section 8.3.1 (Quarterly
Financial Statements) to read as follows:
"8.3.1A MONTHLY FINANCIAL STATEMENTS.
As soon as available and in any event within
fifteen (15) calendar days after the end of each of month in each fiscal
year, financial statements of the Borrower, consisting of a consolidating
and consolidated balance sheet as of the end of such month and related
consolidating and consolidated statements of income, stockholders' equity
and cash flows for the month then ended and the fiscal year through that
date, all in reasonable detail and certified (subject to normal year-end
audit adjustments) by the Chief Executive Officer, President or Chief
Financial Officer of the Borrower as having been prepared in accordance
with GAAP, consistently applied, and setting forth in comparative form the
respective financial statements for the corresponding date and period in
the previous fiscal year.
2.14 REPORTING REQUIREMENTS--WEEKLY BORROWING BASE CERTIFICATES, ETC.
A new Section 8.3.4A is hereby added to Section 8.3 of the Credit Agreement
immediately preceding the text of Section 8.3.4 (Notice of Default) to read as
follows:
"8.3.4A WEEKLY BORROWING BASE CERTIFICATES; MONTHLY SCHEDULES
OF ACCOUNTS, INVENTORY AND PAYABLES.
(i) On or before 10:00 am on the second Business Day
of each week, a Borrowing Base Certificate (the "Borrowing Base
Certificate") as of the end of the immediately preceding week in the form
of EXHIBIT 8.3.4A hereto, appropriately completed, executed and delivered
by an Authorized Officer,
(ii) As soon as available by the fifteenth calendar day
of each month a Schedule of Accounts and Schedule of Inventory as of the
end of the immediately preceding month.
(iii) Upon request by the Agent any of the following
reports: a detailed sales register, a cash receipts journal or a purchase
journal showing sales, receipts and purchases for the preceding month or a
Schedule of Payables as of the end of such month"
2.15 REPORTING REQUIREMENTS--BUDGET AND PROJECTIONS. Section 8.3.7
(Budgets, Forecasts, Other Reports and Information) is hereby amended and
restated to read as follows:
"8.3.7 BUDGETS, FORECASTS, OTHER REPORTS AND INFORMATION.
8.3.7.1 On or before January 15, 1999, the
annual budget and operating projections (showing projections on a month by
month basis) for the 1999 fiscal year
8.3.7.2 Promptly upon their becoming available
to the Borrower:
(i) the annual budget and any forecasts or
projections of the Borrower for years after 1999, to be supplied prior to
commencement of the fiscal year to which any of the foregoing may be
applicable,
(ii) any press releases relating to the
Borrower or any other Loan Party;
(iii) any management letters submitted to the
Borrower by independent accountants in connection with any annual, interim
or special audit,
(iv) any reports, notices or proxy statements
generally distributed by Lone Star Technologies to its stockholders on a
date no later than the date supplied to such stockholders,
(v) regular or periodic reports, including
Forms 10-K, 10-Q and 8-K, registration statements and prospectuses, filed
by Lone Star Technologies with the Securities and Exchange Commission,
(vi) a copy of any final order or judgment in
any proceeding to which the Borrower or any of its Subsidiaries is a party
issued by any Official Body, and
(vii) such other reports and information as
any of the Banks may from time to time reasonably request."
2.16 EXISTING SCHEDULES--CHANGE IN PRICING. Schedule 1.1(A) is hereby
amended and restated as set forth on Schedule 1.1(A) hereto and the Applicable
Margins related to interest rates Commitment Fees set forth on such Schedule
shall go into effect on the effective date of this Amendment.
2.17 NEW SCHEDULES. The following new Schedules are hereby added to
the Credit Agreement in the forms attached hereto:
Schedule 1.1(Q)(1) - Qualified Accounts
Schedule 1.1(Q)(2) - Qualified Inventory
2.18 EXISTING EXHIBITS TO CREDIT AGREEMENT. The following exhibits to
the Credit Agreement are hereby amended and restated to read in the forms
attached hereto:
Exhibit 8.2.5 - Dividend, Preferred Stock Redemption And
Intercompany Indebtedness Compliance
Certificate
Exhibit 8.2.6 - Acquisition Compliance Certificate
Exhibit 8.3.3 - Quarterly Compliance Certificate
2.19 NEW EXHIBITS TO CREDIT AGREEMENT. The following new exhibits are
hereby added to the Credit Agreement in the forms attached hereto:
Exhibit 8.2 - Covenants To Be Tested When Borrower Pays A
Dividend Or Redeems Its Stock Or Makes A
Permitted Acquisition
Exhibit 8.3.4A - Borrowing Base Certificate
3. AMENDMENT TO INTERCOMPANY SUBORDINATION AGREEMENT. Exhibit A to the
Intercompany Subordination Agreement between the Agent and Lone Star
Technologies is hereby amended and restated to read as set forth on Exhibit A
hereto. Lone Star Technologies joins this Amendment for the purpose of
confirming and agreeing to such amendment.
4. REPRESENTATIONS AND WARRANTIES. The Loan Parties hereby represent and
warrant to Agent and to the Bank as follows:
4.1 The representations and warranties of Borrower contained in the
Credit Agreement are true and correct on and as of the date hereof with the same
force and effect as though made by Borrower on such date, except to the extent
that any such representation or warranty expressly relates solely to a previous
date; and
4.2 The Borrower is in compliance with all terms, conditions,
provisions, and covenants contained in the Credit Agreement and the other Loan
Documents and the execution, delivery, and performance of this Amendment have
been duly authorized by all necessary corporate action, require no governmental
approval, and will neither contravene, conflict with, nor result in the breach
of any law, charter, articles, or certificate of incorporation, bylaws, or
agreement governing or binding upon Borrower or any of its property; and, no
Event of Default or Potential Default has occurred and is continuing or would
result from the making of this Amendment.
5. CONDITIONS TO EFFECTIVENESS. This Amendment shall become effective on
the date set forth above subject to the satisfaction of each of the following
conditions precedent:
5.1 OFFICER'S CERTIFICATE.
There shall be delivered to the Agent for the benefit of
each Bank a certificate of each of the Loan Parties, dated the Closing Date and
signed by the Chief Executive Officer, President or Chief Financial Officer of
each of the Loan Parties, to each such effect.
5.2 SECRETARY'S CERTIFICATE.
There shall be delivered to the Agent for the benefit of
each Bank a certificate dated the Closing Date and signed by the Secretary or an
Assistant Secretary of each of the Loan Parties, certifying as appropriate as
to:
(i) the directors' resolutions or similar action taken
by each Loan Party in connection with this Amendment; and
(ii) the names of the officer or officers authorized to
sign this Amendment and the true signatures of such officer or officers and
specifying the Authorized Officers permitted to act on behalf of each Loan Party
for purposes of this Amendment and the true signatures of such officers, on
which the Agent and each Bank may conclusively rely.
5.3 DELIVERY OF BORROWING BASE CERTIFICATE.
The Borrower shall deliver a Borrowing Base Certificate
prepared as of the date of this Amendment in substantially the form of EXHIBIT
8.3.4A, showing that the Revolving Facility Usage as of such date does not
exceed the Borrowing Base as of such date.
5.4 OPINION OF COUNSEL.
There shall be delivered to the Agent for the benefit of
each Bank written opinions of counsel for the Loan Parties and Lone Star
Technologies, dated the date hereof and in form and substance satisfactory to
the Agent and its counsel:
(i) as to the matters set forth in EXHIBIT 5.4; and
(ii) as to such other matters incident to the
transactions contemplated herein as the Agent may reasonably request.
5.5 PAYMENT OF FEES.
The Borrower shall have paid or caused to be paid to the
Agent for itself and for the account of the Banks to the extent not previously
paid all fees accrued through the Closing Date and the costs and expenses for
which the Agent and the Banks are entitled to be reimbursed and submitted bills
for reimbursement, if applicable.
6. AMENDMENT. The Credit Agreement and other Loan Documents referred to
herein and certain of the exhibits and schedules thereto are hereby amended in
accordance with the terms hereof and any reference to the Credit Agreement or
other Loan Documents in any document, instrument, or agreement shall hereafter
mean and include the Credit Agreement or such Loan Document, including such
schedules and exhibits, as amended hereby. In the event of irreconcilable
inconsistency between the terms or provisions hereof and the terms or provisions
of the Credit Agreement or such Loan Document, including such schedules and
exhibits, the terms and provisions hereof shall control.
7. FORCE AND EFFECT. The Borrower reconfirms, restates, and ratifies the
Credit Agreement and all other documents executed in connection therewith except
to the extent any such documents are expressly modified by this Amendment and
Borrower confirms that all such documents have remained in full force and effect
since the date of their execution.
8. GOVERNING LAW. This Amendment shall be deemed to be a contract under
the laws of the Commonwealth of Pennsylvania and for all purposes shall be
governed by and construed and enforced in accordance with the internal laws of
the Commonwealth of Pennsylvania without regard to its conflict of laws
principles.
9. COUNTERPARTS; EFFECTIVE DATE. This Amendment may be signed in any
number of counterparts each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Amendment is
effective on the date first written above.
[SIGNATURES BEGIN ON NEXT PAGE]
[SIGNATURE PAGE 1 OF 2 TO FIRST AMENDMENT]
IN WITNESS WHEREOF and intending to be legally bound hereby, the parties
hereto have executed this Amendment as of the date first above written.
LONE STAR STEEL COMPANY
By: /s/ X.X. Xxx
------------------------------------
Title: Executive Vice President
---------------------------------
PNC BANK, NATIONAL ASSOCIATION, individually
and as Agent
By: /s/ Xxxx Xxxxx
------------------------------------
Title: Vice President
---------------------------------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, N.A., individually and as
Co-Agent
By: /s/ Xxxx Xxxxxxxx
------------------------------------
Title: Vice President
---------------------------------
THE SANWA BANK, LTD.
By: /s/ Xxxxxxxx Xxxxxx
------------------------------------
Title: Senior Vice President
---------------------------------
BNY FINANCIAL CORPORATION
By: /s/ Xxxxx Xxxxxxxx
------------------------------------
Title: Vice President
---------------------------------
[SIGNATURE PAGE 2 OF 2 TO FIRST AMENDMENT]
GUARANTORS:
LONE STAR LOGISTICS, INC.
By: /s/ X.X. Xxx
------------------------------------
Title: Treasurer
---------------------------------
T & N LONE STAR WAREHOUSE CO.
By: /s/ X.X. Xxx
------------------------------------
Title: Treasurer
---------------------------------
TEXAS & NORTHERN RAILWAY COMPANY
By: /s/ X.X. Xxx
------------------------------------
Title: Treasurer
---------------------------------
JOINED BY LONE STAR TECHNOLOGIES, INC. FOR
THE LIMITED PURPOSE OF CONFIRMING THE MATTERS
ADDRESSED IN SECTION 3 (AMENDMENT TO
INTERCOMPANY SUBORDINATION AGREEMENT) OF THIS
AMENDMENT:
LONE STAR TECHNOLOGIES, INC.
By: /s/ Rhys J. Best
------------------------------------
Title: President
---------------------------------
LIST OF SCHEDULES AND EXHIBITS
Schedules
---------
Schedule 1.1(A) - Pricing Grid
Schedule 1.1(Q)(1) - Qualified Accounts
Schedule 1.1(Q)(2) - Qualified Inventory
Exhibits
--------
Exhibit 5.4 - Opinion of Counsel
Exhibit 8.2 - Covenants To Be Tested When Borrower Pays A Dividend Or
Redeems Its Stock Or Makes A Permitted Acquisition
Exhibit 8.2.5 - Dividend, Preferred Stock Redemption And Intercompany
Indebtedness Compliance Certificate
Exhibit 8.2.6 - Acquisition Compliance Certificate
Exhibit 8.3.3 - Quarterly Compliance Certificate
Exhibit 8.3.4A - Borrowing Base Certificate
Exhibit A to Slab
Financing Agr - List of Agreements
All of the Schedules and the first two Exhibits follow this List. The other
Exhibits are not filed with this First Amendment to Credit Agreement.
Registrant agrees to furnish supplementally a copy of any omitted Exhibit to the
Commission upon request.
SCHEDULE 1.1(A)
PRICING GRID-
VARIABLE PRICING AND FEES BASED ON THE INTEREST COVERAGE RATIO
(FOR PRICING)
-------------------------------------------------------------------------------
INTEREST COVERAGE RATIO COMMITMENT BASE RATE EURO-RATE
LEVEL (FOR PRICING) FEE SPREAD SPREAD
-------------------------------------------------------------------------------
Greater than or equal to
I 2.5 to 1.0 .25% 0 1.50%
-------------------------------------------------------------------------------
Greater than or equal to
2.0 to 1.0 but less than
II 2.5 to 1.0 .25% 0 2.00%
-------------------------------------------------------------------------------
Greater than or equal to
1.5 to 1.0 but less than
III 2.0 to 1.0 .375% .25 2.25%
-------------------------------------------------------------------------------
Greater than or equal to
1.0 to 1.0 but less than
IV 1.5 to 1.0 .375% .50 2.50%
-------------------------------------------------------------------------------
V Less than 1.0 to 1.0 .50% .75 2.75%
-------------------------------------------------------------------------------
For purposes of determining the Applicable Margin and the Applicable Commitment
Fee Rate:
(a) The Applicable Margin and the Applicable Commitment Fee Rate each
shall be the rate corresponding to Level V in the grid above on and after the
First Amendment Closing Date and until it is modified pursuant to clause (b)
below.
(b) The Applicable Margin and the Applicable Commitment Fee Rate shall be
recomputed as of the end of each fiscal quarter ending on or after December 31,
1999 based on the Interest Coverage Ratio (For Pricing) as of such quarter end.
Any increase or decrease in the Applicable Margin or the Applicable Commitment
Fee Rate computed as of a quarter end shall be effective on the date on which
the Compliance Certificate evidencing such computation is due to be delivered
under Section 8.3.3.
SCHEDULE 1.1(Q)(1)
QUALIFIED ACCOUNTS
Upon delivery to the Agent of each Schedule of Accounts, the Agent shall
make a determination, in its sole discretion, as to which Accounts listed
thereon shall be deemed Qualified Accounts. An Account shall not be considered a
Qualified Account unless the Agent determines, in its sole discretion, that such
Account has met the following minimum requirements:
(i) the Account represents a complete bona fide transaction for goods
sold and delivered or services rendered (but excluding any amounts in the
nature of a service charge added to the amount due on an invoice because
the invoice has not been paid when due) which requires no further act under
any circumstances on the part of the applicable Loan Party to make such
Account payable by the Account Debtor; the Account arises from an
arm's-length transaction in the ordinary course of such Loan Party's
business between such Loan Party and an Account Debtor which is not an
Affiliate of any Loan Party or an officer, stockholder or employee of any
Loan Party or any Affiliate of any Loan Party, or a member of the family of
an officer, stockholder or employee of any Loan Party or any Affiliate of
any Loan Party;
(ii) the Account shall not (a) be or have been unpaid more than ninety
(90) days from the invoice date, (b) be delinquent more than sixty (60)
days, or (c) be payable by an Account Debtor (1) more than 50% of whose
Accounts have remained unpaid for more than ninety (90) days from the
invoice date or are delinquent more than sixty (60) days, or (2) whose
Accounts constitute, in the Agent's determination, an unduly high
percentage of the aggregate amount of all outstanding Accounts;
(iii) the goods the sale of which gave rise to the Account were
shipped or delivered or provided to the Account Debtor on an absolute sale
basis and not on a xxxx and hold sale basis, a consignment sale basis, a
guaranteed sale basis, a sale or return basis, or on the basis of any other
similar understanding, and no part of such goods has been returned or
rejected;
(iv) the Account is not evidenced by chattel paper or an instrument of
any kind;
(v) the Account Debtor with respect to the Account (a) is solvent,
(b) is not the subject of any bankruptcy or insolvency proceedings of any
kind or of any other proceeding or action, threatened or pending, which
might have a materially adverse effect on its business, and (c) is not, in
the sole discretion of the Agent, deemed ineligible for credit for other
reasons (including, without limitation, unsatisfactory past experiences of
any Loan Party or any of the Banks with the Account Debtor or
unsatisfactory reputation of the Account Debtor);
(vi) the Account Debtor is not located outside Canada or the
continental United States of America, provided that if the Account Debtor
is located in Canada, the
Account is supported by a letter of credit or FICA insurance deemed
adequate and acceptable by the Agent;
(vii) the Account Debtor is not the government of the United States of
America, or any department, agency or instrumentality thereof, or (b) if
the Account Debtor is an entity mentioned in clause (vii)(a), the Federal
Assignment of Claims Act (or applicable similar legislation) has been fully
complied with so as to validly perfect the Banks' Prior Security Interest
to the Agent's satisfaction;
(viii) the Account is a valid, binding and legally enforceable
obligation of the Account Debtor with respect thereto and is not subject to
any dispute, condition, contingency, offset, recoupment, reduction, claim
for credit, allowance, adjustment, counterclaim or defense on the part of
such Account Debtor, and no facts exist which may provide a basis for any
of the foregoing in the present or future;
(ix) the Account is subject to the Agent's and the Banks' Prior
Security Interest and is not subject to any other Lien, claim, encumbrance
or security interest whatsoever;
(x) the Account is evidenced by an invoice or other documentation and
arises from a contract which is in form and substance satisfactory to the
Agent;
(xi) the applicable Loan Party has observed and complied with all laws
of the state in which the Account Debtor or the Account is located which,
if not observed and complied with, would deny to such Loan Party access to
the courts of such state;
(xii) the Account is not subject to any provision prohibiting its
assignment or requiring notice of or consent to such assignment;
(xiii) the goods giving rise to the Account were not, at the time of
sale thereof, subject to any Lien or encumbrance except the Agent and the
Banks' Prior Security Interest;
(xiv) the Account is payable in freely transferable United States
Dollars; and
(xv) the Account is not, or should not be, disqualified for any other
reason generally accepted in the commercial finance business.
In addition to the foregoing requirements, Accounts of any Account Debtor which
are otherwise Qualified Accounts shall be reduced to the extent of any accounts
payable (including, without limitation, the Agent's estimate of any contingent
liabilities) by any Loan Party to such Account Debtor ("Contras"); provided that
the Agent, in its sole discretion, may determine that none of the Accounts in
respect to such Account Debtor shall be Qualified Accounts in the event that
there exists an unreasonably large amount of payables owing to such Account
Debtor.]
Notwithstanding the qualification standards specified above, upon prior notice
to the Borrower, the Agent may at any time or from time to time revise such
qualification standards or, in its sole discretion, determine that one or more
Accounts are not eligible to be Qualified Accounts.
SCHEDULE 1.1(Q)(2)
QUALIFIED INVENTORY
Upon delivery to the Agent of each Schedule of Inventory, the Agent shall
make a determination, in its sole discretion, as to which Inventory listed
thereon shall be deemed Qualified Inventory. Inventory shall not be considered
Qualified Inventory unless the Agent determines, in its sole discretion, that
such Inventory has met the following minimum requirements:
(i) the Inventory is either (a) finished goods; (b) raw materials
other than supplies; or (c) work-in-process; including coils, slab steel,
ingots, two-thread tubulars, but excluding in all cases any goods which
have been shipped, delivered, sold by, purchased by or provided to, a Loan
Party on a xxxx and hold, consignment sale, guaranteed sale, or sale or
return basis, or any other similar basis or understanding other than an
absolute sale;
(ii) the Inventory is new, of good and merchantable quality, and
represents no more than a twelve (12) month supply of such finished goods
or raw materials;
(iii) the Inventory is located on premises listed on Schedule A to the
Security Agreement and, with respect to inventory locations at facilities
leased to such Loan Party Borrower, the Agent has received a landlord's
waiver in favor of the Agent in a form acceptable to the Agent, or is
Inventory which is in transit and is so identified on the relevant Schedule
of Inventory;
(iv) the Inventory is not stored with a bailee, warehouseman,
consignee or similar party unless the Agent has given its prior written
consent and such Loan Party has caused such bailee, warehouseman, consignee
or similar party to issue and deliver to the Agent, in form and substance
acceptable to the Agent, a bailee's, warehouseman's, or consignee's waiver
or similar documentation in a form reasonably acceptable to the Agent;
(v) the Inventory is subject to the Agent's and the Banks' Prior
Security Interest and is not subject to any other Lien;
(vi) the Inventory has not been manufactured in violation of any
federal minimum wage or overtime laws, including, without limitation, the
Fair Labor Standards Act, 29 U.S.C. Section 215(a)(1); and
(vii) the Inventory is not, and should not be, disqualified for any
other reason generally accepted in the commercial finance business.
Notwithstanding the qualification standards specified above, upon prior notice
to the Borrower, the Agent may at any time or from time to time revise such
qualification standards or, in its sole discretion, determine that certain
Inventory is not eligible to be Qualified Inventory.
EXHIBIT 5.4
OPINION OF COUNSEL
Opinions addressing the following warranties in the Credit Agreement with
references to the Credit Agreement and Loan Documents deemed to apply to this
Amendment and the documents related thereto and the Credit Agreement as amended
by this Amendment:
6.1.1 Organization and Qualification.
6.1.2 Capitalization and Ownership.
6.1.3 Subsidiaries
6.1.4 Power and Authority
6.1.5 Validity and Binding Effect
6.1.6 No Conflict.
6.1.7 Litigation.
6.1.13 Consents and Approvals
6.1.19 Compliance with Laws
EXHIBIT 8.2
COVENANTS TO BE TESTED WHEN BORROWER PAYS A DIVIDEND OR REDEEMS
ITS STOCK (SECTION 8.2.5) OR MAKES A PERMITTED
ACQUISITION (SECTION 8.2.6)
A. THE FOLLOWING GRID APPLIES IF THE DIVIDEND, REDEMPTION OR PERMITTED
ACQUISITION IS PAID OR MADE BEFORE MARCH 31, 2000.
Covenant - Section Covenant - Title Date of Computation; Adjustments
------------------
Section 8.2.19 Maximum Total FOR ALL DIVIDENDS, REDEMPTIONS AND PERMITTED ACQUISITIONS:
Liabilities to Computed as of the Dividend Payment Date, Redemption Payment
Consolidated Tangible Date or Acquisition Date, as the case may be, after giving effect
Net Worth to any Indebtedness incurred and payments made on such date
Section 8.2.20 Minimum EBITDA FOR ALL DIVIDENDS, REDEMPTIONS AND PERMITTED ACQUISITIONS: Four
quarters ending on the quarter preceding the Dividend Payment Date,
Redemption Payment Date or Acquisition Date, as the case may be
Section 8.2.17 Minimum Tangible FOR DIVIDENDS, REDEMPTIONS AND PERMITTED
Net Worth ACQUISITIONS PAID OR MADE ON OR AFTER JANUARY 1, 2000:
Base Net Worth--computed as of the end of the quarter preceding
the date of the dividend, redemption or acquisition, as the case
may be but decreased by the amount of the redemption payment if
the payment is a redemption
Consolidated Tangible Net Worth--computed as of the end of the
quarter preceding the Dividend Payment Date, Redemption Payment
Date or Acquisition Date, but decreased by the amount of the
dividend or redemption payment or adjusted for transactions
relating to the acquisition, as the case may be.
B. THE FOLLOWING GRID APPLIES IF THE DIVIDEND, REDEMPTION OR
PERMITTED ACQUISITION IS PAID OR MADE ON OR AFTER MARCH 31, 2000.
Covenant - Section Covenant - Title Date of Computation; Adjustments
------------------
Section 8.2.15 Minimum Interest FOR DIVIDENDS: Four quarters ending on the
Coverage Ratio (For quarter preceding the Dividend Payment Date,
Covenants) except that the denominator (clause (ii) in the definition of
"Interest Coverage Ratio(For Covenants)") shall be increased by the
amount of such dividend.
FOR REDEMPTIONS: Four quarters ending on the quarter preceding the
Redemption Payment Date, except that the denominator (clause (ii)
in the definition of "Interest Coverage Ratio (For Covenants)")
shall be increased by the amount of such redemption. This covenant
is to be tested in connection with a redemption, only if the
Borrower shall pay accrued cash dividends in connection with such
redemption.
FOR PERMITTED ACQUISITIONS: This covenant is not to be tested in
connection with Permitted Acquisitions.
Section 8.2.16 Maximum Leverage FOR DIVIDENDS, REDEMPTIONS AND PERMITTED
Ratio ACQUISITIONS: Numerator (Indebtedness)--As of the Dividend Payment
Date, Redemption Payment Date or Acquisition Date, as the case
may be, after giving effect to any Indebtedness incurred on such
date
Denominator--Four quarters ending on the quarter preceding the
Dividend Payment Date, Redemption Payment Date or Acquisition Date,
as the case may be
Section 8.2.17 Minimum Tangible FOR DIVIDENDS, REDEMPTIONS AND PERMITTED
Net Worth ACQUISITIONS:
Base Net Worth--computed as of the end of the quarter preceding the
date of the dividend, redemption or acquisition, as the case may be
but decreased by the amount of the redemption payment if the
payment is a redemption
Consolidated Tangible Net Worth--computed as of the end of the
quarter preceding the Dividend Payment Date, Redemption Payment
Date or Acquisition Date, but decreased by the amount of the
dividend or redemption payment or adjusted for transactions
relating to the acquisition, as the case may be.
Section 8.2.18 Minimum Working FOR DIVIDENDS, REDEMPTIONS AND PERMITTED
Capital ACQUISITIONS:
Computed as of the Dividend Payment Date
Redemption Payment Date or Acquisition
Date, as the case may be, in each case after
giving effect thereto
