Exhibit 10.4
AMENDMENT NO. 4 TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
AMENDMENT dated as of April 30, 1999 by and among Lodestar Energy,
Inc., a Delaware corporation ("Borrower"), Lodestar Holdings, Inc., a
Delaware corporation ("Guarantor"), the financial institutions from time to
time parties to the Loan Agreement (as hereinafter defined) as lenders
(individually, a "Lender" and collectively, the "Lenders"), Congress
Financial Corporation, a Delaware corporation, in its capacity as
administrative agent and collateral agent for the Lenders (in such capacity,
the "Agent") and The CIT Group/Business Credit, Inc., a New York corporation,
in its capacity as co-agent for Lenders (in such capacity, the "Co-Agent").
W I T N E S S E T H
WHEREAS, Agent, Co-Agent, Lenders, Borrower and Guarantor have
entered into financing arrangements pursuant to which Lenders, or Agent on
behalf of Lenders, have made and may make loans and advances and provide
other financial accommodations to Borrower as set forth in the Amended and
Restated Loan and Security Agreement, dated May 15, 1998, by and among Agent,
Co-Agent, Lenders, Borrower and Guarantor, as amended pursuant to Amendment
No. 1 to Amended and Restated Loan and Security Agreement, dated October 22,
1998, Amendment No. 2 to Amended and Restated Loan and Security Agreement,
dated December 21, 1998 and Amendment No. 3 to Amended and Restated Loan and
Security Agreement, dated January 15, 1999 (as amended by this Amendment and
as the same may be further amended, modified, supplemented, extended,
renewed, restated or replaced, the "Loan Agreement") and the agreements,
documents and instruments at any time executed and/or delivered in connection
therewith or related thereto (collectively, together with the Loan Agreement,
the "Financing Agreements");
WHEREAS, Borrower has requested that Lenders and Agent agree to an
amendment to the Loan Agreement;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements and covenants set forth herein, and for other good and valuable
consideration, the adequacy and sufficiency of which is hereby acknowledged,
the parties hereto agree as follows:
1. INTERPRETATION. For purposes of this Amendment, all terms used
herein, including but not limited to, those terms used and/or defined in the
recitals hereto shall have the respective meanings assigned thereto in the
Loan Agreement.
2. AMENDMENT.
2.1 RESTRICTED PAYMENTS.
(a) Section 7.7(b)(iii)(C) of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
" (C) as of the date of any such payments and after giving effect
thereto, the aggregate amount of all such payments made subsequent to
the date hereof shall not exceed the amount equal to fifty (50%)
percent of: (1) the cumulative Consolidated Net Income of Borrower (or
if cumulative Consolidated Net Income shall be a loss, minus one
hundred (100%) percent of such loss) earned subsequent to the date
hereof and prior to the date the payment occurs (treating such period
as a single accounting period) minus (2) all payments made to Guarantor
by Borrower pursuant to Section 7.7(b)(x) below for federal, state and
local income taxes based on the taxable income of the immediately
preceding fiscal year, and"
(b) Section 7.7(b)(ix) of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
" (ix) Borrower may make payments to Guarantor or to Renco Group
or an affiliate of Renco Group on behalf of Guarantor, itself and its
Subsidiaries pursuant to the tax sharing agreement between Guarantor,
Borrower and its Subsidiaries and Renco Group (as in effect on the date
hereof); provided, that, (A) Borrower, Guarantor and their Subsidiaries
are included in the consolidated federal income tax return filed by
Renco Group as to which Borrower is making such payments for the 1998
tax year or any prior year, or for any taxable period during which
Borrower, Guarantor and their Subsidiaries join with Renco Group or an
affiliate of Renco Group in filing any combined or consolidated (or
similar) state or local income tax return for a jurisdiction which does
not recognize Borrower, Guarantor and their Subsidiaries as a QSSS (as
defined in Section 7.7(b)(x) hereof), (B) the payments in any year
shall not exceed the tax liability that Borrower would have been liable
for if Borrower had filed its tax returns on a stand-alone basis except
that Borrower will not have the benefit of any of its tax loss carry
forwards and any intercompany items shall, for tax liability purposes,
be recorded on a cash basis rather than on an accrual basis, and
(C) such payments shall be made by Borrower no earlier than five
(5) days prior to the date on which Renco Group or an affiliate of
the Renco Group is required to make its payments to the Internal
Revenue Service or a state or local jurisdiction described in
Section 7.7(b)(ix)(A) hereof; and"
(c) The following is hereby added as a new Section 7.7(b)(x) to
the Loan Agreement:
" (x) With respect to any year that Borrower, Guarantor and their
Subsidiaries have effectively been designated as a qualified
Subchapter S subsidiary company ("QSSS") under the Code, Borrower may
pay cash dividends to Guarantor, from legally available funds
therefor, to the extent taxable income of Borrower is required to be
included in the taxable income shown by Renco Group as reported in
its subchapter S tax returns ("Form 1120S"), subject to the
following:
(A) Such cash dividends shall be with respect to any such
period, in an amount up to the product of (1) the taxable income of
Borrower and its Subsidiaries for such period which is the basis for
Renco Group being required to include such taxable income in its Form
1120S, as amended or modified or determined by audit, and the required
estimated taxable income related thereto and the comparable state and
local taxable income reports and estimated taxable income, multiplied
by (2) the corporate Federal, State and local tax rates, whether
calculated on regular taxable income or alternative minimum taxable
income, as applicable, in effect for the taxable period applicable to
Borrower and its Subsidiaries using the rates that would be applicable
if Borrower was not a QSSS and calculated in accordance with the tax
sharing arrangement by and among Guarantor, Borrower and its
Subsidiaries and Renco Group (as in effect on the date hereof),
(B) Borrower may pay such cash dividends to Guarantor with
respect to any such period so long as (1) in such period, Borrower,
Guarantor and their Subsidiaries are effectively designated a QSSS,
(2) the product of the taxable income of Borrower and its
Subsidiaries for such period multiplied by the applicable tax rates
as described above shall be reduced by any applicable tax credits or
deductions calculated in accordance with the tax sharing arrangement
by and among Guarantor, Borrower and its Subsidiaries and Renco
Group (as in effect on the date hereof) available to Borrower and
its Subsidiaries which would reduce the amount of the income taxes
payable by Borrower and its Subsidiaries, (3) any such dividends
shall be paid no more than five (5) days prior to the date that
Renco Group's shareholders are required to make payment of the taxes
based on the taxable income of Borrower and its Subsidiaries,
(4) not less than five (5) days prior to the payment of any such
dividends, Agent shall have received a certificate signed by the
chief financial officer of Borrower, in form and substance
satisfactory to Agent, stating the calculation of the amount which
is the basis for tax distributions permitted hereunder through such
period (if any) and providing full information and computations with
respect thereto and (5) such dividend shall not be in violation of
applicable law or any other agreement to which Borrower is a party
or by which Borrower or its assets are bound, and
(C) In no event shall dividends be paid to Guarantor based on
taxable income of Borrower and its Subsidiaries for jurisdictions
which do not recognize Borrower and its
Subsidiaries as a QSSS and where (1) Borrower and its Subsidiaries
are required to file and pay their individual taxes, and (2) where
Renco Group is not required to pay, or by virtue of a consolidated
(or similar) return does not make payments in respect of, the tax
liabilities of the Borrower or any of its Subsidiaries in such
jurisdictions;"
2.2 CONSOLIDATED NET WORTH. Sections 7.10(b), (c) and (d) of the
Loan Agreement are hereby deleted in their entirety and the following
substituted therefor:
"(b) On and after October 30, 1998 ($56,000,000)
and all times thereafter"
3. REPRESENTATIONS, WARRANTIES AND COVENANTS. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by Borrower to Lenders and Agent pursuant to the other Financing
Agreements, Borrower hereby represents, warrants and covenants with and to
Lenders and Agent as follows (which representations, warranties and covenants
are continuing and shall survive the execution and delivery hereof and shall
be incorporated into and made a part of the Financing Agreements):
3.1 NO DEFAULT. No Event of Default exists on the date of this
Amendment (after giving effect to the Amendment to the Loan Agreement made by
the Amendment).
3.2 CORPORATE POWER AND AUTHORITY. This Amendment has been duly
executed and delivered by Borrower and is in full force and effect as of the
date hereof and the agreements and obligations of Borrower contained herein
constitute legal, valid and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.
4. FEE. In consideration of the Amendment set forth herein,
Borrower shall on the date hereof, pay to Lenders, and Lenders may, at their
option, charge the account of Borrower maintained by Lenders, a fee in the
amount of $25,000, which fee is fully earned and payable as of the date
hereof and shall constitute part of the Obligations.
5. EFFECT OF THIS AMENDMENT. Except as modified pursuant hereto,
no other waivers, changes or modifications to the Financing Agreements are
intended or implied, and in all other respects, the Financing Agreements are
hereby specifically ratified, restated and confirmed by all parties hereto as
of the effective date hereof. To the extent of conflict between the terms of
this Amendment and the other Financing Agreements, the terms of this
Amendment shall control.
6. FURTHER ASSURANCES. The parties hereto shall execute and
deliver such additional documents and take such additional actions as may be
necessary to effectuate the provisions and purposes of this Amendment.
7. GOVERNING LAW. The rights and obligations hereunder of each of
the parties hereto shall be governed by and interpreted and determined in
accordance with the laws of the State of New York.
8. BINDING EFFECT. This Amendment shall be binding upon and inure
to the benefit of each of the parties hereto and their respective successors
and assigns. Any acknowledgment or consent contained herein shall not be
construed to constitute a consent to any other or further action by Borrower
or to entitle Borrower to any other consent. The Loan Agreement and this
Amendment shall be read and construed as one agreement.
9. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one
and the same agreement. In making proof of this Amendment, it shall not be
necessary to produce or account for more than one counterpart thereof signed
by each of the parties thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their authorized officers as of the date and year
first above written.
Very truly yours,
LODESTAR ENERGY, INC.
By: /s/ Xxxxx Xxx
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Title: Vice President
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LODESTAR HOLDINGS, INC.
By: /s/ Xxxxx Xxx
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Title: Vice President
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AGENT:
CONGRESS FINANCIAL CORPORATION, for
itself and as Agent
By: /s/ Xxxxxxxx X. Xxxxx
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Title: First Vice President
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THE CIT GROUP/BUSINESS CREDIT, INC., for
itself and as Agent
By: /s/ Xxxxxxxxxxx Xxxx
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Title: Assistant Vice President
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