Exhibit 10.33
December 28, 1999
Lone Star Steel Company
T&N Lone Star Warehouse Co.
Lone Star Logistics, Inc.
00000 X. Xxxxxx Xxxxxxx - Xxxxx 000
Xxxxxx, Xxxxx 00000
Gentlemen:
We refer to the Financing Agreement between the Companies, the Agent and the
Lenders party thereto, dated March 12, 1999, as the same may be amended from
time to time (the "Financing Agreement"). Capitalized terms used herein and
defined in the Financing Agreement shall have the same meanings as specified
therein unless otherwise specifically defined herein.
1. You have advised us that
(a) You intend to prepay Subordinated Debt due to your Parent in
the approximate amount of (i) $20,000,000 on or about the date
hereof, and (ii) $5,000,000 on or about March of 2000, and that
your Parent will use said proceeds, in whole or in part, to acquire
certain of the assets of (i) Bellville Tube Corporation
("Bellville") on or before March 31, 2000, and (ii) Fintube Limited
Partnership ("Fintube"), and thereby you are, or may be, in
violation of the covenants set forth in Section 7, Paragraphs 7.9
(g) and (h), and Section 10 Paragraph 10.1(i) of the Financing
Agreement, as well as the terms of the Subordination Agreement.
(b) We hereby consent to your payment of $20,000,000 to Parent on
or about the date hereof, and an additional $5,000,000 payment
contemporaneously with Parent's purchase of Bellville (contemplated
to occur on or before March 31, 2000, and all as further set forth
herein). This letter is to confirm our agreement that, effective
immediately upon fulfillment to the Agent's satisfaction of the
Conditions Precedent (as defined below) solely with respect to said
payment, the foregoing violations and/or breaches of the Financing
Agreement shall not be deemed to be Defaults and/or Events of
Default under the Financing Agreement. On and after the date hereof
you shall be in compliance with all of the terms and provisions of
the Financing Agreement as amended hereby.
2. (a) Upon fulfillment to the Agent's satisfaction of the Condition
Subsequent (as defined below), the Financing Agreement shall be, and
hereby is, amended as follows:
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Section 7, Paragraph 7.9(c) of the Financing Agreement shall be, and
each hereby is, amended in its entirety to read as follows:
"(c) Borrow any money on the security of any Company's Collateral or any
other assets or stock of the Companies from sources other than the
Agent and the Lenders, and the Companies shall not permit their
affiliate Bellville Tube Corporation to incur any secured
indebtedness, including any indebtedness secured by any assets,
collateral or any of the stock of the Bellville Tube Corporation
from sources other than the Agent and the Lenders;"
(b) in addition, effective immediately, the Financing Agreement shall be,
and hereby is, amended by the addition of paragraph numbered 7.15 as of the end
of Section 7, as follows:
"7.15 Without the prior written consent of the Agent, the Companies
agree that they will not enter into any transaction, including, without
limitation, any purchase, sale, lease, loan or exchange of property with
the Parent or any subsidiary or affiliate of either the Companies or
Parent, except as otherwise set for in this Financing Agreement and
except that the Companies may purchase or sell inventory, enter into
service transactions or enter into other similar transactions with each
other or their affiliates in the ordinary course of their business, and
upon fair and reasonable terms no less favorable to such Company than
such Company could obtain in a comparable arms length transaction,
provided further that no Default or Event of Default has occurred prior
to or after giving effect to any such transaction."
3. In addition to the reporting requirements set forth in Paragraph 7.8 of
the Financing Agreement, you hereby agree to provide us, within thirty
(30) days of the date hereof and thereafter, with the following
information:
(a) Weekly reports of gross Eligible Inventory, in such detail as
CITBC may reasonably require (gross inventory, including
ineligible inventory shall continue to be reported on a
monthly basis); and
(b) Monthly reports of the average slab purchase price for the
preceding month as well as the amount of consignment inventory
(including the number of slabs and the aggregate purchase
price therefor), in such detail as CiTBC may reasonably
require.
The effectiveness of all of the foregoing waivers and amendments shall be,
and hereby is, subject to the fulfillment to the Agent's satisfaction of the
Conditions Precedent. The "Conditions Precedent" shall mean each of the
following:
(A) The Companies shall take or cause to be taken all action, including,
the execution and delivery to us of all documentation requested by us to
obtain the
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documents contemplated hereunder;
(B) The receipt of a Guaranty from Parent limited to $20,000,000
(substantially in the form attached hereto); and
(C) The Guarantors signing the confirmation below.
The effectiveness of subparagraph 2(a) shall be, and hereby is, subject to
the fulfillment to the Agent's satisfaction of the following Condition
Subsequent The "Condition Subsequent" shall mean the following:
The receipt by the Agent on or before March 31, 2000 of a pledge of the stock
of Bellville, substantially in the form attached hereto.
If the Condition Subsequent is satisfied on or before March 31, 2000, the
Companies will prepay the remaining $3,000,000. of the Subordinated Debt, the
amount of the Guaranty from the Parent will be immediately increased from
$20,006,000 to $25,000,000, and the foregoing waivers and amendments shall
thereafter apply to the prepayment of $25,000,000 of the Subordinated Debt.
In consideration of (i) the Lenders execution of this Waiver and Amendment
Letter the Companies agree to pay the Agent on behalf of the Lenders an
Accommodation Fee of $125,000 and (ii) the preparation of this agreement by
CITBC's in-house legal department the Companies agree to pay to CITBC a
Documentation Fee of $2,500.00. Such fees shall be due and payable in full
on the date hereof and may, at the Agents option, be charged to the Companies
Revolving Loan Account on the due date thereof. The Companies further agree
to pay all Out-of-Pocket Expenses incurred in connection with this Waiver and
Amendment Agreement and the transactions contemplated hereby, all of which
may (at the Agent's option) be charged to the Companies Revolving Loan
Account.
Except to the extent set forth herein, no other waiver of, or change in any
of the terms, provisions or conditions of the Financing Agreement is intended
or implied. This agreement shall not constitute a waiver of any other
existing Defaults or Events of Default under the Financing Agreement (whether
or not we have knowledge thereof), and shall not constitute a waiver of any
future Defaults or Events of Default whatsoever.
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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.
In addition, we have asked the Guarantors to sign below to confirm that the
foregoing waivers shall not affect, modify or diminish the Guarantors
obligations under any instruments of Guaranty and/or any related pledge or
security agreements executed in favor of the Agent
Very truly yours,
THE CIT GROUP/BUSINESS
CREDIT, INC. as Agent and Lender
By: /s/ XXXX XXXXX
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Title: Vice President
BankBoston, NA
By: /s/ J. XXXX XXXXXXX
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Title: Authorized Officer
Fleet Capital Corporation
By: /s/ J. XXXX XXXXXXX
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Title: Vice President
Foothill Capital Corporation
By: /s/ XXXX HARBENT
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Title: Vice President
Congress Financial Corporation
By: /s/ X. Xxxxxx
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Title: Vice President
GMAC Commercial Credit LLC
(Formerly BNY Commercial Corporation)
By: /s/ Xxxxxx Nuythens
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Title: Vice President
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Read and Agreed to:
Lone Star Steel Company
By: /s/ Xxxxxxx X. Xxxxxxx
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Title: Vice President & Treasurer
T&N Lone Star Warehouse Co
By: /s/ Xxxxxxx X. Xxxxxxx
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Title: Vice President & Asst. Treasurer
Lone Star Logistics, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
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Title: Vice President & Asst. Treasurer
Confirmed:
Texas Northern Railway Company
By: /s/ Xxxxxxx X. Xxxxxxx
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Title: Vice President & Asst. Treasurer
Lone Technologies, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
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Title: Vice President-Finance and Treasurer
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